20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

o Registration Statement Pursuant To Section 12(b) or (g) of the Securities Exchange Act of 1934

OR

x Annual Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2014.

OR

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

OR

o Shell Company Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 000-24027

NXT Energy Solutions Inc.

(Exact Name of Registrant as Specified in its Charter)

Alberta, Canada

(Jurisdiction of incorporation or organization)

Suite 1400, 505 – 3rd Street SW

Calgary, Alberta, Canada, T2P 3E6

(Address of principal executive offices)

Greg Leavens

Phone: 403-206-0805

Facsimile: 403-264-6442

Suite 1400, 505 – 3rd Street SW

Calgary, Alberta, Canada, T2P 3E6

(Name, Telephone, E-mail and/or Facsimile number and address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act: None

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Common Shares

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

44,958,843 common shares and 8,000,000 convertible preferred shares outstanding as of December 31, 2014

(44,965,509 common shares and 8,000,000 convertible preferred shares outstanding as of April 27th, 2015).

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Yes o No x

Note-Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.

U.S. GAAP x International Financial Reporting Standards as issued by the International Accounting Standards Board o Other o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o Item 18 o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes o No x

TABLE OF CONTENTS

PART I
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	4
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	4
ITEM 3.	KEY INFORMATION	4
ITEM 4.	INFORMATION ON THE COMPANY	13
ITEM 4A.	UNRESOLVED STAFF COMMENTS	23
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	23
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	33
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	43
ITEM 8.	FINANCIAL INFORMATION	45
ITEM 9.	THE OFFER AND LISTING	46
ITEM 10.	ADDITIONAL INFORMATION	47
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	58
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	58
PART II
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	59
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	59
ITEM 15.	CONTROLS AND PROCEDURES	59
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	60
ITEM 16B.	CODE OF ETHICS	60
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	61
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	61
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	61
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	61
ITEM 16G.	CORPORATE GOVERNANCE	61
ITEM 16H.	MINE SAFETY DISCLOSURE	61
PART III
ITEM 17.	FINANCIAL STATEMENTS	62
ITEM 18.	FINANCIAL STATEMENTS	62
ITEM 19.	EXHIBITS	62

20-F for the year ended December 31, 2014

2

FORWARD-LOOKING STATEMENTS

Except for any historical information contained herein, the matters discussed in this Annual Report on Form 20-F contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business. These statements relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies. These forward-looking statements are identified by their use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “will” and similar terms and phrases, including references to assumptions. These forward-looking statements involve risks and uncertainties, including current trend information, projections for deliveries and other trend projections, that may cause our actual future activities and results of operations to be materially different from those suggested or described in this Annual Report on Form 20-F.

These risks include:

· our ability to generate sufficient cash flow from operations or to raise adequate capital to allow us to continue as a going concern;

· conducting operations in international markets;

· the availability, on a charter-hire basis, of suitable aircraft used in conducting our operations;

· the emergence of alternative competitive technologies;

· protection of our intellectual property and rights to our SFD® technology;

· the loss of key personnel;

· our dependence on a limited number of clients;

· foreign currency and interest rate fluctuations may affect our financial position;

· volatility in oil and natural gas commodity prices may reduce demand for our services; and

· other factors described herein under “Risk Factors” (see Item 3. D.)

If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or projected. Given these uncertainties, users of the information included in this Annual Report on Form 20-F, including investors and prospective investors, are cautioned not to place undue reliance on such forward-looking statements. We do not intend to update the forward-looking statements included in this Annual Report on Form 20-F.

In this Annual Report on Form 20-F, except as specified otherwise or unless the context requires otherwise, “we”, “our”, “us”, the “company”, and “NXT” refer to NXT Energy Solutions Inc. and its subsidiaries. All references to “fiscal” in connection with a year shall mean the year ended December 31.

All financial information contained herein is expressed in Canadian dollars (“Cdn$”) unless otherwise stated.

20-F for the year ended December 31, 2014

3

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A.           Selected financial data

The following historical financial information should be read in conjunction with the section entitled “Operating and Financial Review and Prospects” (see Item 5 herein) and our audited consolidated financial statements and related notes, which are included elsewhere in this document. The consolidated statements of income (loss) data for the years ended December 31, 2012, 2013 and 2014 and selected consolidated balance sheet data as of December 31, 2013 and 2014 are derived from, and qualified by reference to, our audited consolidated financial statements that are included elsewhere in this Form 20-F. The selected consolidated balance sheet data as of December 31, 2012, 2011, and 2010 and the consolidated statements of income (loss) data for the years ended December 31, 2011 and 2010 is derived from our previous audited consolidated financial statements (which are not included in this Form 20-F).

INCOME (LOSS) & COMPREHENSIVE INCOME (LOSS)

(expressed in Canadian Dollars)	2014			2013			2012			2011			2010
Survey revenues	$	3,913,367		$	2,684,095		$	10,937,575		$	144,650		$	443,011
Operating expenses
Survey costs		431,518			1,632,159			3,633,645			46,713			466,428
General and administrative		4,132,108			4,112,787			4,508,506			3,218,143			3,678,806
Stock based compensation expense		658,000			492,000			265,000			344,800			577,815
Amortization of property & equipment		67,162			85,484			125,015			160,478			164,065
		5,288,788			6,322,430			8,532,166			3,770,134			4,887,114
Other expense (income)
Interest expense (income), net		(50,824	)		(25,455	)		2,744			(16,353	)		(9,923	)
Foreign exchange (gain) loss		(158,817	)		(150,350	)		14,686			(28,209	)		16,509
Other expense (income)		354,781			107,985			66,973			3,679			1,739
Increase (decrease) in fair value of US$ Warrants		42,800			1,371,500			(168,143	)		-			-
		187,940			1,303,680			(83,740	)		(40,883	)		8,325
Income (loss) before income taxes		(1,563,361	)		(4,942,015	)		2,489,149			(3,584,601	)		(4,452,428	)
Income tax expense		-			399,546			426,421			-			-
Net income (loss) and comprehensive  income (loss) for the year		(1,563,361	)		(5,341,561	)		2,062,728			(3,584,601	)		(4,452,428	)
Net income (loss) per share -
Basic	$	(0.04	)	$	(0.13	)	$	0.05		$	(0.10	)	$	(0.14	)
Diluted (1)	$	(0.04	)	$	(0.13	)	$	0.04		$	(0.10	)	$	(0.14	)
Weighted average # of common shares outstanding
Basic		44,375,540			41,660,190			40,453,392			35,696,620			32,774,974
Diluted (1)		44,375,540			41,660,190			48,790,462			35,696,620			32,774,974
# of common shares outstanding		44,958,843			42,418,326			39,554,959			34,757,396			30,826,796

(1) in periods with a loss, the Diluted total excludes the 8,000,000 outstanding convertible preferred shares, as their effect is anti-dilutive.

20-F for the year ended December 31, 2014

4

Balance Sheet Data

(expressed in Canadian Dollars)
	2014			2013			2012			2011			2010
Working capital (deficiency)	$	5,029,013		$	1,618,719		$	4,948,556		$	(336,520	)	$	831,974
Current assets		5,811,639			6,577,175			7,130,383			2,796,492			1,419,246
Restricted cash		-			-			-			74,135			101,856
Property and equipment, net		237,464			262,818			327,839			404,301			525,804
Total assets		6,049,103			6,839,993			7,458,222			3,274,928			2,046,906
Current liabilities		782,626			4,958,456			2,181,827			3,133,012			587,272
Long-term liabilities		50,000			64,560			61,813			57,953			62,597
Total liabilities		832,626			5,023,016			2,243,640			3,190,965			649,869
Shareholders’ equity
Common shares		65,792,307			61,340,321			56,623,686			53,756,687			52,031,435
Preferred shares		232,600			232,600			3,489,000			3,489,000			3,489,000
Contributed capital		6,400,789			5,889,914			5,406,193			5,205,301			4,659,026
Deficit		(67,920,154	)		(66,356,793	)		(61,015,232	)		(63,077,960	)		(59,493,359	)
Accumulated other comprehensive income		710,935			710,935			710,935			710,935			710,935
		5,216,477			1,816,977			5,214,582			83,963			1,397,037

Throughout the history of the company there have been no dividends declared.

The following table sets forth certain exchange rates between our financial reporting currency, the Canadian dollar, and the United States dollar (“US$”) based on the noon rate of exchange for the US$, expressed in Canadian dollars, as reported by the Bank of Canada (ie. multiply by these rates to convert Cdn$ to US$).

Date	US$ per Cdn$ Exchange Rates
Last 6 months ended	High	Low
March 31, 2015	0.8039	0.7811
February 28, 2015	0.8063	0.7915
January 31, 2015	0.8527	0.7863
December 31, 2014	0.8815	0.8589
November 30, 2014	0.8900	0.8751
October 31, 2014	0.8980	0.8858
Last Quarter & Last 5 Years	Average
Quarter ended March 31, 2015	0.8057
Year ended December 31, 2014	0.9054
Year ended December 31, 2013	0.9710
Year ended December 31, 2012	1.0004
Year ended December 31, 2011	1.0111
Year ended December 31, 2010	0.9709
	Ending
April 27, 2015	0.8232

B.           Capitalization and indebtedness

Not applicable.

20-F for the year ended December 31, 2014

5

C.           Reasons for the offer and use of proceeds

Not applicable.

D.           Risk factors

Investing in our common shares involves a high degree of risk. In addition to the other information included in this document, you should carefully consider the risks described below before purchasing our common shares. If any of the following risks actually occur, our business, financial condition and results of operations could materially suffer. As a result, the trading price of our common shares could decline and you might lose all or part of your investment.

Our ability to continue operating is not certain.

We are in the early stage of commercializing the SFD® technology, during which we may have a significant economic dependency on a limited number of clients. As such, there is uncertainty about the timing and magnitude of future revenues. We recognize that there is limited ability to support operations indefinitely without generating sufficient new revenue sources or securing additional financing if required. Our ability to continue as a going concern is discussed within Note 1 of the consolidated financial statements that are incorporated by reference within this Form 20-F.

The financial statements rely upon estimates and assumptions that could be incorrect.

The preparation of financial statements requires our management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities including the disclosure of contingent assets and liabilities as well as revenues and expenses recorded in our financial statements. Estimates made relate primarily to measurement of stock-based compensation expense, valuation of US$ Warrants, valuation of deferred income tax assets, and estimates for asset retirement obligations.

The estimates and assumptions are reviewed periodically and are based upon the best information available to management, however, we cannot provide assurance that future events will not prove that these estimates and assumptions are inaccurate. Any revisions to our estimates and assumptions may have a material impact on our future reported net income or loss, and assets and liabilities.

Volatility in oil and natural gas price commodity prices may affect demand for our services.

We incur a risk of market changes in oil and natural gas prices. Prospective revenues from the sale of our services can be impacted by oil and natural gas price changes. The impact of price changes on our ability to enter into SFD® survey contracts cannot be readily determined; however, in general if commodity prices decline significantly, our opportunity to obtain and execute SFD® survey contract will also likely decline.

Our financial position is affected by foreign currency fluctuations.

We currently conduct cash transactions, and have holdings in Canadian dollars, U.S. dollars and a minor amount of Colombian pesos. We currently earn revenues in U.S. dollars, and potentially may earn revenues in Canadian dollars and other foreign currencies. Our reporting currency is in Canadian dollars. We currently do not engage in currency hedging activities. Our cash positions and potential foreign currency revenue streams in currencies other than Canadian dollars exposes us to exchange rate fluctuations between the Canadian dollar and foreign currencies. See Item 11.

Our financial position will be affected by exchange rate fluctuations. We may earn revenue and incur expenses denominated in foreign currencies, yet report our financial results in Canadian dollars. Furthermore we intend to enter into contracts to provide services in foreign countries and may periodically conduct business in other currencies such as the Euro. Changes in currency exchange rates could have an adverse effect on the company's business, financial condition and results of operations.

20-F for the year ended December 31, 2014

6

Our net income or loss is impacted by interest rate fluctuations.

We periodically invest available cash in short term investments that generate interest income that will be affected by any change in interest rates. See Item 11.

We rely upon the availability of charter aircraft to conduct our survey operations.

We do not currently own any aircraft, and rely upon the availability of aircraft which is operated under charter hire arrangements. Charter operators provide the aircraft used in SFD® survey operations on an as required basis in exchange for an hourly charter fee (plus payment of fuel and other direct operating costs). We are not required to make a capital investment in chartered aircraft, but in order to guarantee aircraft availability and rate certainty, we currently commit to a one year contract, with a minimum number of charter hours. We are thus exposed to potential financial penalty in the event that we fail to fulfill the minimum annual charter hours commitment.

In 2009, we entered into a charter agreement with Air Partners Corp., a Calgary, Alberta based international aircraft charter operator, to supply aircraft services for our survey requirements. This agreement is being renewed on an annual basis and currently covers a 12-month period expiring December 31, 2015. This original agreement has been included in this Form 20-F as Exhibit No. 4.6.

Although various charter operators have provided aircraft charter services since the disposal in 2003 of a previously owned aircraft, there is a risk that suitable aircraft may not be available from charter operators when needed.

If a chartered aircraft is not available, then we may have no option but to purchase a company owned aircraft and then engage a third party to operate the aircraft. A future requirement to acquire an aircraft would place significant strain on the financial and operational resources of the company. There is a risk that we would not have the financial resources or operational capacity to acquire an aircraft within an acceptable time frame to meet operational requirements.

In the future, should we be unable to receive aircraft services from a suitable charter operator and should we be unable to acquire an alternative suitable aircraft in a timely fashion, we would be unable to conduct SFD® surveys for clients. This inability would have a material adverse effect on the company's business, financial condition and results of operations.

We are a small business with limited personnel and our inability to segregate duties between administrative staff is an internal control weakness.

Certain duties that are most appropriately segregated between different employees are, due to our current limited staff, assigned to one individual.

Standard internal control methodology involves the separation of incompatible functions by assigning these functions to separate individuals, and in larger organizations, to separate departments. We often cannot allocate these functions to separate individuals because our administrative staff is too small.

Although we have adopted alternative control methods designed to compensate for the reduced ability to separate incompatible functions, these alternative controls are not effective and there is more than a remote likelihood that our internal control over financial reporting will not prevent or detect material misstatements if they should exist in our financial statements. This lack of separation of duties exposes us to potential misappropriation of funds, embezzlement and other forms of fraud and could have a material adverse effect on our business, financial condition and results of operations (see also Item 15).

We may engage in transactions with related parties.

We may periodically enter into related party transactions with our officers and directors. The most significant transaction was a “Technology Transfer Agreement” (the “TTA”) that was executed on December 31, 2006 between NXT and Mr. George Liszicasz, our Chief Executive Officer (“CEO”), president and director, wherein we issued 10,000,000 convertible preferred shares to him in exchange for the rights to the SFD® technology for use in hydrocarbon exploration. See also Item 7.B.

20-F for the year ended December 31, 2014

7

Although we manage this conflict of interest risk through maintenance of a strong independent board of directors (the “board”), all related party transactions have the potential for conflicts of interest that may compromise the ability of board members to exercise their fiduciary responsibility to NXT shareholders.

Our rights to SFD® technology may be challenged and we may need to defend our rights to the technology in the courts.

Our rights to ownership and use of SFD® technology depends on Mr. Liszicasz, our President & CEO and a director, having the lawful right to sell to NXT the exclusive rights to exploit the SFD® technology for the exploration of hydrocarbons as agreed to in the TTA. (For a full history of the TTA see Item 4.A., Information on the Company - History and development of the company, and Item 4.B., Business Overview – Technology Transfer Agreement).

A risk exists that an unknown party may claim some legal entitlement to Mr. Liszicasz’ intellectual property, our rights to commercialize this intellectual property or our right to create SFD® devices and processes. However, we believe that such a claim would be without merit.

The SFD® technology is an essential component of our business plan. If a third party challenged our lawful entitlement to this technology, the legal defense of our right to the technology may be expensive and could cause a loss of our right to the SFD® technology, or a protracted legal process to assert our right to the technology would have a material adverse effect on the company's business, financial condition and results of operations.

We rely on specialized equipment, including a limited number of SFD® sensors, and this limitation may affect our ability to conduct business.

We rely on specialized data acquisition equipment, including a limited number of SFD® sensor devices, to conduct our aerial SFD® survey operations. We would be at risk if these survey sensors were to become damaged, destroyed, worn out, stolen or in any way became unavailable for use in operations prior to us creating and testing additional sensors. Should the sensors become unavailable for any reason, our ability to conduct surveys could be delayed for several months as we built new sensors. During this period we may become unable to satisfy contractual obligations, which may jeopardize future revenue opportunities and may potentially result in a client drawing on a contract performance bond posted by the company or otherwise making claims against the company for breach of contract. In addition, an inability to satisfy contractual obligations may have an adverse effect on our developing reputation within the oil and gas community.

As the company is in the early commercialization phase, SFD® surveys have not been tested over all potential geological conditions. Some geological conditions may subsequently be proven to be unsuited for SFD® surveys thereby creating unforeseen limitations to the application of SFD® surveys.

Any limitation to the application of SFD® surveys has the potential of restricting future revenue opportunities and if not properly disclosed to industry clients, such limitations may impact the reputation of the company with these clients.

Unless we pursue ongoing technological improvement and development we may be unable to respond to changes in customer requirements or new competitive technologies.

We must continue to refine and develop our SFD® survey system to make it scalable for growth and to respond to potential future competitive pressures. These improvements require substantial time and resources. Furthermore, even if resources are available, there can be no assurance that the company will be commercially or technically successful in enhancing the technology. Our inability to keep pace with new technologies and evolving industry standards and demands could have a material adverse effect on our business, financial condition and results of operations.

20-F for the year ended December 31, 2014

8

We are dependent on key personnel and the loss of any of these key persons will impact our ability to conduct business.

The company's future success depends to a significant extent on the continued service of its key technical and management personnel and on our ability to continue to attract and retain qualified employees. The loss of the services of our employees or a failure to attract, retain and motivate qualified personnel could have a material adverse effect on our business, financial condition and results of operations. We do not have “key man” insurance on any of our personnel.

The company puts in place employment agreements with all of its executive officers, including George Liszicasz, its President and CEO.

We have a dependence on Mr. Liszicasz to be involved in theSFD® data interpretation process, and to continue to enhance our technology. We are working to minimize this dependency on one individual. Mr. Liszicasz has trained and continues to train a team of signal interpreters to minimize our reliance on him to perform these functions. Currently a total of six persons, two of which are highly experienced, (with two additional persons currently in process of training) are trained to interpret SFD® signals.

Although we have engaged employees with suitable credentials to work with Mr. Liszicasz to enhance our interpretation process and further develop the SFD® technology, if we are unable to reduce dependence on Mr. Liszicasz and he becomes incapable of performing or unwilling to perform these functions, then there may be an adverse effect on our ability to interpret the data from SFD® surveys or to enhance our technology.

We rely on a limited number of employees and contractors who collectively possess the knowledge and skills to conducted SFD® surveys, interpret SFD® data and provide other services required to meet contract obligations. Additional or replacement personnel cannot be found and trained quickly. The loss of any of these key persons or increased demand for our services from clients could impair our ability to meet contract obligations, thereby adversely impacting our reputation and our ability to earn future revenue from clients.

Within the province of Alberta the skilled personnel that we require may periodically be in short supply and there is specialized training required that can take several months in order for a new employee to become effective. If we cannot hire these key personnel, we have inadequate time to train them or should we lose current personnel, then our ability to accept contracts or meet contract commitments may be adversely affected, thereby restricting our ability to earn revenue.

A single major shareholder who is also a board member and an officer of the company retains the ability to influence or control the company and this influence or control may result in a conflict of interest.

Mr. George Liszicasz, our principal executive officer and largest shareholder, owns, as of April 27, 2015, approximately 16% of the common shares outstanding and therefore has a substantial influence in all shareholder matters. Additionally, he holds 8,000,000 convertible preferred shares, which are convertible on a one-to-one basis into NXT common shares at NXT’s option on or before their maturity date of December 31, 2015 or subject to conditions including NXT meeting cumulative revenue milestones. If all 8,000,000 of the preferred shares were to be converted and there was no other change in our share structure, he would own approximately 27% of the then outstanding common shares.

In January, 2014, Mr. Liszicasz granted to various individuals “Rights” to acquire from him a total of 1,000,000 of the common shares which may become issued to him upon future conversion of these preferred shares. See also the Notes to the Consolidated Financial Statements or Item 4.A. “Information on the Company – Technology Transfer Agreement”, for additional information relating to the preferred shares and the Rights.

Controls do exist to mitigate any potential risks associated with this conflict of interest. Mr. Liszicasz adheres to a code of conduct which includes a fiduciary responsibility to the company and its shareholders and this conduct is governed by the independent board of directors who collectively represent a majority of the board. Furthermore all material related party transactions are disclosed publicly.

However, should these conflict of interest controls not be effective, decisions could be made by the company that may advantage Mr. Liszicasz and negatively impact other shareholders.

20-F for the year ended December 31, 2014

9

There is no certainty that an investor can trade our common shares on public markets at a stable market price.

There is a limited public market for our common shares on the TSX Venture Exchange (the “TSX-V”), and the United States (“U.S.”) OTC Markets Group’s Venture Stage Marketplace (the “OTCQB”) and there is a risk that a broader or more active public trading market for our common shares will not develop or be sustained, or that current trading levels will not be sustained.

The market price for the common shares on the exchanges where our stock is listed has been, and we anticipate will continue to be, extremely volatile and subject to significant price and volume fluctuations in response to a variety of external and internal factors. This is especially true with respect to emerging companies such as ours. Examples of external factors, which can generally be described as factors that are unrelated to the operating performance or financial condition of any particular company, include changes in interest rates and worldwide economic and market conditions, as well as changes in industry conditions, such as changes in oil and natural gas prices, oil and natural gas inventory levels, regulatory and environment rules, and announcements of technology innovations or new products by other companies. Examples of internal factors, which can generally be described as factors that are directly related to our consolidated financial condition or results of operations, would include release of reports by securities analysts and announcements we may make from time to time relative to our operating performance, clients exploration results, financing, advances in technology or other business developments.

Because we have a limited operating history and a limited history of profitability to date, the market price for the common shares is more volatile than that of a seasoned issuer. Changes in the market price of the common shares, for example, may have no connection with our operating results or the quality of services provided to clients. No predictions or projections can be made as to what the prevailing market price for the common shares will be at any time, or as to what effect, if any, that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price. Given the relatively low historic trading volumes, small trades of the company’s common shares can adversely and potentially dramatically affect the market prices for those shares.

Accordingly investors in our common stock should anticipate both volatile stock price and poor liquidity unless these conditions change.

You will be subject to the penny stock rules to the extent our stock price on the OTCQB is less than $5.00.

Since the common shares are not listed on a national stock exchange within the United States, trading in the common shares on the OTCQB is subject, to the extent the market price for the common shares is less than $5.00 per share, to a number of regulations known as the "penny stock rules". The penny stock rules, subject to certain exemptions, require a broker-dealer to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission (the “SEC”), to provide the customer with additional information including current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to make a special written determination that the penny stock is a suitable investment for the purchaser and to receive the purchaser's written agreement to the transaction. To the extent these requirements may be applicable, they will reduce the level of trading activity in the secondary market for the common shares and may severely and adversely affect the ability of broker-dealers to sell the common shares.

You should not expect to receive dividends in the foreseeable future.

We have never paid any cash dividends on our common shares and we do not anticipate that we will pay any dividends in the foreseeable future. Our current business plan is to retain any future earnings to finance the expansion of our business. Any future determination to pay cash dividends will be at the discretion of our board of directors, and will be dependent upon our consolidated financial condition, results of operations, capital requirements and other factors as our board of directors may deem relevant at that time.

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Our right to issue additional capital stock at any time could have an adverse effect on your proportionate ownership and voting rights.

We are authorized under our Articles of Incorporation to issue an unlimited number of common shares and an unlimited number of preferred shares. We may issue these shares under such circumstances and in such manner and at such times, prices, amounts and purposes as our board of directors may, in their discretion, determine to be necessary and appropriate, subject to compliance with all applicable exchange regulations and corporate and securities laws. Proportionate ownership and voting rights of common shareholders could be adversely affected by the issuance of additional common shares which may result in common share value dilution.

We may not be able to protect our trade secrets and intellectual property from competitors who would use this knowledge to eliminate or reduce our technological advantage.

Our success and future revenue growth will depend, in part, on our ability to protect our intellectual property (“IP”). We have commenced an IP strategy process, and intend to obtain patents related to the SFD® technology. The patent protection process would require disclosure of at least some aspects of our SFD® technology to third parties and ultimately public disclosure. This disclosure could significantly increase the risk of unlawful use of our technology by third parties. Furthermore we have no assurance that, even if we seek patent protection, a patent could be registered to protect our IP in all or any jurisdictions within North America or other countries throughout the world. If registered, there can be no assurance that it would be sufficiently broad to protect our technology or that any potential patent would not be challenged, invalidated or circumvented or that any right granted thereunder would provide meaningful protection or a competitive advantage to us. Finally, protection afforded by patents is limited by the financial resources available to legally defend IP rights. We currently do not possess the required financial resources to fund a lengthy defense of our rights if challenged by a much larger competitor or an oil and gas company.

We do enjoy common and contract law protection of our technology and trade secrets. Employees and contractors are governed by confidentiality agreements as well as a fiduciary responsibility to protect our technology, supporting documentation and other proprietary information.

Our strongest protection of the SFD® technology comes from restricting access to knowledge concerning the technology. Only a very limited number of NXT personnel have access to or knowledge of the underlying SFD® technology and no one employee and only one officer has access or knowledge of all aspects of the SFD® system. Currently, no third party has any significant knowledge of the technology. As further protection, SFD® equipment does not leave the direct control of NXT employees, thereby preventing unauthorized replication of the equipment.

The company reassesses the appropriateness of its IP protection strategy on an ongoing basis and seeks advice from IP advisors as necessary.

It is possible that a third party will copy or otherwise obtain and use the company's technology without authorization, develop a similar technology independently or design around the company's secrets. Accordingly there can be no assurance that the steps taken by the company to prevent misappropriation or infringement of our IP will be successful.

An inability to protect our IP would make it possible for competitors to offer similar products and services that could have a material adverse effect on our business, financial condition and results of operations.

We experience operational hazards in our flight operations that may subject us to potential claims in the event that an incident or accident occurs.

The flight operations of SFD® surveys are subject to the hazards associated with general flight operations. An aircraft accident may cause personal injury and loss of life, as well as severe damage to and destruction of property, or the SFD® sensors and related equipment.

Independent third parties provide all the services required to maintain and operate the aircraft; they bear the primary risks of flight operations. These services are provided by an organization accredited by Transport Canada to operate aircraft in accordance with Transport Canada approved and audited operating procedures. The aircraft operator employs the required pilots, aircraft maintenance engineers and support personnel and ensures that they operate within their Transport Canada operating certificate. Our employees do not perform any airworthiness or flight safety operations.

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We require the flight contractor to maintain appropriate insurance coverage for the risks associated with aircraft operations, and we obtain insurance coverage to provide us with additional risk protection. In addition, we maintain general business insurance coverage, and believe that this insurance and the policy limits are appropriate for the operational risks that we incur.

Despite our policy to not operate the aircraft directly and our insurance coverage, we cannot avoid or alternatively be insured for all risks of flight operations. In the event of an incident or accident we may be sued by injured parties in excess of our policy limits or for damages that are not covered by our insurance policy. The magnitude of a lawsuit of this nature is not determinable. Furthermore, to the extent that our SFD® equipment is damaged we may be unable to conduct SFD® surveys for several months following an accident.

We are a Canadian company and our nationality may impair the enforceability of a judgment for any person resident outside Canada.

Since we are a Canadian company and most of our assets and key personnel are located in Canada, you may not be able to enforce a U.S. judgment for claims you may bring against us, our assets, our key personnel or many of the experts named in this document. This may prevent you from receiving compensation to which you may otherwise have a claim.

We are organized under the laws of Alberta, Canada and substantially all of our assets are normally located in Canada. In addition, all but two of our current members of our board of directors and all of our officers are residents of Canada. As a result, it may be impossible for you to affect service of process upon us or these individuals within the U.S. or to enforce any judgments in civil and commercial matters, including judgments under U.S. federal securities laws. In addition, a Canadian court may not permit you to bring an original action in Canada or to enforce in Canada a judgment of a U.S. court based upon civil liability provisions of the U.S. federal securities laws.

We conduct operations in foreign countries, which exposes us to several risks that may have a material adverse effect on the company.

Criminal Activity and Social Instability – in recent years we have operated in foreign countries such as Colombia, which over the past two decades has experienced significant social upheaval and criminal activity relating to drug trafficking, kidnapping and terrorist acts. While the situation has improved dramatically in recent years, there can be no guarantee that the situation will not deteriorate again nor are these risks eliminated as yet. Furthermore other potential international survey locations may have similar or other indeterminate criminal or social instability risks.

Systemic criminal activity in a country or isolated criminal acts may disrupt operations, impact our ability to earn revenue, dramatically add to our cost of operations or potentially prevent us from earning any survey revenue in a country.

In addition, foreign markets may be susceptible to a higher risk of corruption and bribery. All of NXT’s employees, contractors, and independent sales agents are required to adhere to the company’s code of conduct and business ethics, which prohibits illegal activities, including any acts of bribery or corruption.

Political Instability - Any changes in regulations or shifts in political attitudes are beyond the control of the company and may adversely affect our business. Exploration may be affected in varying degrees by government regulations which have the effect of restricting exploration and production activities. These changes may adversely impact the laws and policies governing price controls, export controls, foreign exchange controls, income taxes, expropriation of property, environmental legislation, site safety or other areas.

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Currently, there are no restrictions (other than local with-holding taxes) on the repatriation back to Canada of our earnings in foreign countries in which we have operated, such as Colombia; however, there can be no assurance that significant restrictions on repatriation to Canada of earnings will not be imposed in the future.

Our operations may also be adversely affected by changes in laws and policies in Canada impacting foreign travel and immigration, foreign trade, taxation and investment.

Commercial Disputes – While operating in a foreign country we are subjected to local commercial laws which often involve executing contracts in a foreign language. Although every effort is made to ensure we have access to an accurate English translation, misunderstanding and potential disputes between parties may arise.

In the event of a dispute arising in connection with our foreign operations for any reason, we may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdictions of the courts of Canada or enforcing Canadian judgments in such other jurisdictions. We may also be hindered or prevented from enforcing our rights with respect to a government instrumentality because of the doctrine of sovereign immunity.

Accordingly, these risk factors have the potential of adversely reducing the level of survey revenue from our clients, our ability to operate effectively or our ability to be paid for our services and may have a material adverse effect on our financial position.

We rely upon the right to conduct airborne surveys in foreign countries. These foreign operations expose us to the risks that we will be prevented from conducting surveys when requested by clients.

The operation of our business, namely conducting aerial SFD® surveys and interpreting SFD® data, is not subject to material governmental or environmental regulation in Canada and the United States with the exception of flight rules issued by Transport Canada and the U.S. Federal Aviation Administration (“FAA”) governing the use of commercial aircraft, including rules relating to low altitude flights. The requirements in other countries vary greatly and may require permits and/or provide other restrictions to conducting flight operations in the country that may restrict our ability to perform SFD® surveys.

For example, in Colombia SFD® surveys must comply with additional requirements not encountered in Canada and the United States, including customs obligations and bonds related to the importation and exportation of the aircraft into Colombia, obtaining permits from the local aviation authority, and obtaining permits from the Colombian Air Force. We have successfully operated in Colombia in accordance with these requirements.

With our North America and International experience to date, we do not anticipate any government controls or regulations that will prevent timely completion of SFD® surveys. However, we may encounter government restriction in other countries that may impact or restrict our ability to conduct surveys.

If we encounter government regulation and restrictions that impact or prevent us from conducting surveys in any country, then we will not be able to earn revenue in the country and we may be exposed to forfeiting any performance bonds which may have been issued.

We caution that the factors referred to above and those referred to as part of particular forward-looking statements may not be exhaustive and that new risk factors emerge from time to time in our rapidly changing business environment.

ITEM 4. INFORMATION ON THE COMPANY

A.           History and development of the company

We are a technology company focused on providing a service to oil and natural gas exploration clients using our proprietary Stress Field Detection (“SFD®”) remote sensing airborne survey system. SFD® and NXT® are both registered trademarks of NXT Energy Solutions Inc.

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NXT’s corporate history is summarized as follows:

· NXT was incorporated under the laws of the State of Nevada on September 27, 1994 as Auric Mining Corporation.

· In January 1996, NXT acquired all of the common stock of NXT Energy USA, Inc. (which was then known as Pinnacle Oil Inc.) from its shareholders in exchange for common shares. As a consequence of this reverse acquisition, NXT Energy USA became a wholly owned subsidiary and its shareholders acquired a 92% controlling interest in NXT’s common shares.

· Prior to this reverse acquisition transaction, NXT was a corporate shell conducting no active business, and NXT Energy USA was a development stage research and development enterprise holding the worldwide rights to use what is now our SFD technology for hydrocarbon exploration purposes.

· Shortly thereafter, on February 23, 1996 we changed our name to Pinnacle Oil International, Inc. and on June 13, 2000, subsequently changed our name to Energy Exploration Technologies.

· On October 24, 2003, our shareholders approved the continuance of the company from the State of Nevada to the Province of Alberta, Canada under the Business Corporations Act (Alberta). Also, our name was modified to Energy Exploration Technologies Inc. (“EETI”)

· On September 22, 2008 EETI changed its name to NXT Energy Solutions Inc. by way of Articles of Amendment filed pursuant to the Business Corporations Act (Alberta).

Our registered office is located at Suite 1400, 505 - 3rd Street SW, Calgary, Alberta, Canada and our telephone number is (403) 264-7020. In the United States our authorized agent is Parasec at: 318 North Carson Street, Suite 208, Carson City, NV and their telephone number is (888) 972-7273.

We are a reporting issuer in Alberta and British Columbia and are principally governed by the Alberta Securities Commission in accordance with the Securities Act (Alberta) and the Business Corporations Act (Alberta) (the “ABCA”). We are a foreign private issuer under United States securities laws and are subject to the regulation of the Securities and Exchange Commission of the United States (the “SEC”) in accordance with the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The underlying technology employed by our SFD® survey system was invented by George Liszicasz, our President and CEO, chairman and largest shareholder. The technology was initially licensed to the company by Mr. Liszicasz until December 31, 2006 through a series of consecutive license agreements. On December 31, 2006 we acquired the rights to the technology from Mr. Liszicasz pursuant to the terms of the TTA.

Upon execution of the TTA, Mr. Liszicasz transferred to us all his rights and entitlements to the SFD® technology for use in the field of hydrocarbon exploration. Mr. Liszicasz has retained the rights to the technology for use in all other applications.

SFD® technology for the purposes of the TTA is defined as the theories of quantum physics and engineering which are utilized in the operation of stress field detectors used by NXT for the reception, collection and recording of subsurface geological stresses for hydrocarbon exploration. See also Item 4.B “Summary information on dependence on patents, licenses and contracts” for more information on this TTA agreement.

On February 9, 2010, we registered a branch with both the Chamber of Commerce in Bogota, Colombia and with the office of Direction of Taxes and National Customs, the Colombian tax administration. The formation of this branch became a Colombian legal requirement following the company commencing permanent activity in Colombia in 2010 while conducting commercial survey operations.

Our business does not rely on significant capital expenditures. The company has made capital expenditures for property and equipment of $41,808, $20,463, and $48,553, respectively for the last three fiscal years 2014, 2013, and 2012. These expenditures relate largely to upgrades to office computer equipment and SFD® survey equipment.

The company does not currently have any significant capital expenditures in progress, or planned for the short term, for Canada or other international operations.

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B.           Business overview

Description of the nature of the company’s operations and principal activities

We utilize our proprietary, airborne SFD® survey system to provide a service for the oil and gas exploration industry. NXT provides a rapid and cost-effective method for our clients to evaluate large land areas for their exploration potential.

SFD® sensors remotely respond to gravity perturbations and changes in subsurface stress regimes that are meaningful for oil and gas exploration. These responses are captured as raw data that, when interpreted, can provide an indirect method to detect the presence of geological features such as structure, faults, fractures and reefs that are often associated with traps and reservoir accumulations. SFD® is effective over wide areas where surveys often exceed 5,000 square kilometers. The SFD® survey system has been shown effective by clients to quickly focus exploration resources, offering the benefit of reducing the risk, time and expense associated with frontier exploration.

Following completion of the aerial surveys, we deliver to our clients a detailed report and maps of the surveyed area that identifies, ranks and recommends areas with SFD® indications of reservoir potential.

In 2006, we commenced our current business model and began providing SFD® survey services to clients on a fee-for-service basis. In accordance with this model, we have not invested either directly or indirectly in exploration or development wells or engage in other exploration or production activities. Our current business model minimizes our capital requirements thereby conserving cash, and minimizes any perceived or real conflicts between the interests of NXT and its survey clients.

NXT’s primary business model is to earn revenues by conducting SFD® surveys for clients on a fee-for-service basis. Secondly, we may be able to negotiate to earn revenue from gross overriding royalty income and/or other incentive fees from clients should they generate production on areas recommended by SFD® surveys. Finally, in the future, we may earn a fee by providing other related geological and geophysical integration services to clients.

Our objective is to obtain broad industry acceptance and appreciation of the value of our SFD® survey system. The main obstacle in achieving this objective is the oil and gas industry’s skepticism related to the adoption of any early-stage technology. Accordingly industry professionals are seldom prepared to devote resources or stake their professional reputation on an early stage technology. This reluctance is particularly acute when the fundamental science related to the technology is complex and not easily understood, as is the case with SFD®.

Our strategy to overcome skepticism in order to gain industry acceptance of SFD® include maximizing client endorsement opportunities (such as through joint case studies) and targeting the most appropriate markets (i.e. where SFD® provides the maximum benefits). Our specific tactics include:

1.   Focus the majority of sales resources on high profile primary markets which offer the maximum opportunity for success (such as Mexico, Colombia);

2.   Build upon success in this initial market, and step out to other markets (such as Argentina, Bolivia, Peru, Brazil) in Latin America, and in South Asia (Pakistan);

3.   Pursue requests of interest from qualified potential client "bluebirds" from all other locations in the world. The bluebird model is defined as an opportunity that arises, not from deliberate targeted sales initiatives, but in response to unsolicited client enquiries;

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4.   Continue to conduct pilot surveys to expand our knowledge base and provide documentation to support the use of SFD® in new applications. Each new application opens more market opportunities and provides valuable case studies to support our sales initiatives; and

5.   Respond to opportunities to present at technical conferences, publish papers in periodicals and generally maximize our opportunities to educate the industry on SFD® capabilities and document case study successes.

Description of the principal markets in which the company competes

Overview of markets

We have an opportunity to provide our services to any region in the world that conducts oil and gas exploration activities. However, we choose to be strategic and focus our limited sales resources in the early stages of commercialization on a limited number of markets.

A summary of revenues derived in our primary geographic market segments for the last 3 fiscal years is as follows:

Year ended December 31	2014		2013		2012
North America (United States)	$	3,913,367	$	-	$	-
South Asia (Pakistan)		-		2,659,292		-
Central America (Mexico, Belize, Guatemala)		-		24,803		6,403,534
South America (Colombia, Argentina)		-		-		4,534,041
		3,913,367		2,684,095		10,937,575

North America Market

We began marketing the SFD® survey system in 2006 largely in Canada and continued with this market focus until the end of 2008. Solely in Canada we earned survey revenue of $1.2 million, $5.6 million, and $2.9 million respectively in the fiscal years 2006, 2007 and 2008.

There were no revenues generated in North America for 2010, 2012 or 2013.

In Q1-2014 we completed for a new client two survey projects in Texas and Florida, US, with a total value of $3.9 million.

In 2011, we completed a US $150,000 contract to conduct a pilot SFD® survey in Montana for a Calgary based client. The purpose of the pilot survey was to utilize SFD® to provide indicators of trap and reservoir potential in a complex geological environment, over an area containing both large blanket gas and small oil fields.

Latin America and Central American Markets

In 2008 exploration activity seriously diminished in Canada as a result of the world-wide credit crisis and falling natural gas commodity prices. In response, in late 2008 we looked to international markets for new revenue opportunities, especially where there were emerging, frontier-type exploration markets. Latin and Central America became a target market for us, with Colombia viewed as an attractive initial proving ground.

Colombia has many characteristics desirable for achieving market success for our SFD® survey system. With a business-friendly approach and practical resource policies, Colombia attracts a large number of exploration and production companies from around the world. In Colombia there are obstacles to acquire geological and geophysical data as required to properly evaluate unexplored land. Obstacles include rain forests, environmental and community restrictions, security concerns and the high cost and time required to shoot seismic programs, particularly on-shore. SFD® can be a very effective tool to help overcome these obstacles.

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Colombia has been a primary international market focus in recent years. NXT is becoming well known in Colombia and we believe that it can continue to offer strong revenue opportunities. The company earned survey revenue in Colombia of $2.9 million in 2012, $0.4 million in 2010, and $3.7 million in 2009.

Building on our initial Colombia success, we have been pursuing many other South America countries as attractive potential markets. Many of the exploration companies active in Colombia are also active in other areas of South America, such as Peru, Bolivia, Argentina and Brazil. These countries often share a number of the same community, remote access and environmental issues that make SFD® an attractive solution.

In 2012, SFD® surveys were conducted in several new markets, including Argentina, Guatemala, Belize and most importantly Mexico. Our first contract with the Petroleos Mexicanos ((“PEMEX”), the National Oil Company of Mexico) was for US $4.7 million, which was subsequently expanded before its completion to a total of US $5.8 million. This was a significant milestone for NXT, as it was our single largest contract to date, and it was able to be delivered in roughly 4 months. Mexico continues to be a primary target market to pursue for new SFD® survey opportunities.

South Asia Market

In late 2010, we started to negotiate a US $2.66 million contract to conduct a survey in Pakistan. This opportunity arose through established prior relationships between our geophysical staff and key decision makers in the client’s exploration management. However, the contract was closed largely based upon case studies and client endorsements received from Colombian clients. Due to lengthy delays in securing approvals from all the relevant government bodies, the survey was not able to be commenced until late 2012, and was completed in Q1-2013. Our client subsequently presented the results of this project at an industry conference in Pakistan in November 2013, and this exposure has led to interest from new parties who are active in exploration in the region.

Description of seasonality of the company’s main business

There is no seasonality to our business. NXT does however, have a very cyclical business, as revenue activity is dependent upon the size and timing of a limited number of survey contracts each year.

Description of the sources and availability of raw materials

We do not foresee any constraints upon materials or equipment that will impede our ability to execute our business plan or affect our ability to conduct and/or expand our business. Our main direct project input costs are aircraft charterhire (and related fuel) and data interpretation staff. None of these expenses have been subject to significant price volatility.

In order to conduct our survey operations we require the following:

· Survey aircraft – Historically, we have both owned aircraft and chartered aircraft from independent charter aircraft companies.

In early 2009, in preparation for serving an international client base, we entered into a charter agreement with Air Partners Corp. (“Air Partners”), a Calgary based air-charter operator, to provide aircraft, crew and maintenance services for our survey operations worldwide. Further details of this agreement are noted in the “Item 4.B – Business Overview - Summary information on dependence on patents, licenses and contracts” section below.

· SFD® sensors - All of the survey sensors are manufactured in-house. Certain machining is required by third party machine shops, with final assembly performed by our technical staff. The sensors, once assembled, require flight testing prior to being considered acceptable for operational use. Not all sensors meet the performance criteria for operational use; however, we have demonstrated our ability to manufacture new functional SFD® sensors.

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· SFD® assembly - The units in which the sensors are incorporated are custom designed, fabricated and assembled in-house or through subcontracted vendors. We utilize the services of Transport Canada approved Design Approval Representatives to prepare subsequent type certificates (“STC”) for the installation of our SFD® units in each aircraft that we utilize for surveys. The time to obtain an STC approval for the installation of our SFD® units into any proposed aircraft type may require several months.

· Computer hardware and software - (Data Acquisition System, SFD® Signal Conditioning Unit, and data Interpretation software). The customized software used in our data acquisition system is written and modified by outside consulting programmers with whom we have long-standing relationships. The hardware we use in our SFD® survey systems (other than the SFD® unit), and the balance of the computer software we use, are all readily available from retail or wholesale sources.

We are not dependent upon any other third party contract manufacturers or suppliers to satisfy our technology requirements. We currently rely on Air Partners as a key supplier of the aircraft which we use in SFD® survey operations (see discussion below).

Description of marketing channels

We largely use direct sales methods with some use of commissioned sales representatives in international markets.

Summary information on dependence on patents, licenses and contracts

Patents

We have not yet received any patents on our SFD® technology. However, we understand that we may be able to obtain worldwide patents in the future. In May 2012, we commenced a “provisional” patent application process in the US, and formally filed a patent on May 22, 2013, which was subsequently published on November 28, 2013. We intend to continue expanding the process with additional formal patent applications in the future. We understand that our right to patent the SFD® technology is not compromised by our ongoing commercial use of the technology, as the components of the SFD® technology have never been disclosed to third parties (except under very limited confidential terms) or released in any manner into the public domain. See also Item 3.D Key Information – Risk factors.

Initiatives to protect our Intellectual Property ("IP" - patenting and new research & development (“R&D”) initiatives) continue, which should also serve to allow us to expand on our technology disclosures in order to build further industry awareness, understanding, and acceptance of SFD®. Squire Patton Boggs LLP, a US based leader in IP protection, is advising on our IP strategy, including the prior filing of an initial US provisional patent application in May 2013. In November, 2014, NXT filed a related patent amendment submission in the US and commenced to undertake new patent applications in select strategic international markets.

Technology Transfer Agreement (TTA)

Upon execution of the TTA on December 31, 2006, Mr. Liszicasz sold all his rights and entitlements to SFD® technology for use in the field of hydrocarbon exploration to us in exchange for receiving 10,000,000 preferred shares. The preferred shares carry no voting rights.

2,000,000 of these preferred shares became immediately convertible on a one-to-one basis into common shares of the company at the discretion of the holder. Effective May 22, 2013, Mr. Liszicasz formally converted these 2,000,000 preferred shares into 2,000,000 common shares.

The remaining 8,000,000 preferred shares are convertible on a one-to-one basis into common shares should we achieve the following cumulative revenue thresholds prior to the expiration of the TTA on December 31, 2015:

· 2,000,000 shares, should cumulative gross revenue reach US $50 million,

· an additional 2,000,000 shares, should cumulative gross revenue reach US $100 million,

· an additional 2,000,000 shares, should cumulative gross revenue reach US $250 million, and

· an additional 2,000,000 shares, should cumulative gross revenue reach US $500 million.

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At December 31, 2015, the SFD® technology can be retained by NXT by either:

· if we earned cumulative aggregate gross revenue of US $500 million or more in the 9-year period ended December 31, 2015, NXT can choose to retain the SFD® technology by issuing Mr. Liszicasz an additional 1,000,000 common shares and converting all of the then outstanding preferred shares; or

· if we did not earn cumulative aggregate gross revenue of US $500 million or more in the 9-year period ended December 31, 2015, NXT can choose to retain the SFD® technology by immediately converting all of the then outstanding preferred shares.

NXT has the option at December 31, 2015 to redeem any remaining unconverted preferred shares for a price of $0.001 per share and forfeit our rights to the SFD® technology, at which point it can be reacquired by Mr. Liszicasz for $10.00.

Cumulative revenue is defined as the sum of total revenue earned plus proceeds from the sale of assets accumulated since January 1, 2007, all denominated in US$, and calculated in accordance with US GAAP. As at the current date April 27, 2015, the Company has generated cumulative revenue of approximately US $29.5 million that is eligible to be applied to the above noted conversion thresholds as defined in the TTA.

NXT intends to continue to develop the SFD® technology, and retain it by exercising NXT’s option to convert the preferred shares in 2015. NXT’s board of directors is assessing the merits of accelerating the conversion (subject to regulatory considerations) in advance of the December 31, 2015 maturity date.

The following schedule provides a summary of the ownership of the preferred shares as of April 27, 2015:

Owner of Preferred Share	Preferred Shares Owned	Percent of Class of Share
George Liszicasz, President & CEO, and a Director	8,000,000	100.0%

See “Item 10.B – Memorandum and articles of association – Rights Attached to Preferred Shares – Conversion” below.

In January 2014, NXT’s CEO (the “Grantor”) personally granted (to a total of 17 persons, including NXT employees, directors, officers, advisors and others) “Rights” to acquire a total of 1,000,000 of the common shares which are expected to become issued to him in 2015 upon future conversion of the preferred shares by their Maturity Date. Each of the Rights are subject to certain vesting provisions and will entitle the holder to acquire from the Grantor one common share of NXT at a fixed exercise price of $1.77 and will expire on December 31, 2015. A total of 365,000 of these Rights were granted to certain directors and officers of NXT, and a total of 430,000 Rights were granted to NXT’s employees and advisors. These Rights are supplemental to existing incentives which have been granted under NXT’s stock option plan.

Second Amended and Restated Technical Services Agreement

This agreement was executed on December 31, 2006, outlining the terms of Mr. Liszicasz employment agreement with the company and establishes Mr. Liszicasz’ entitlement to normal employee remuneration such as salary, benefits, bonus and stock options and identifies grounds for termination of this agreement. This agreement has a term ending December 31, 2015 unless terminated by the company or Mr. Liszicasz. This Agreement is included as Exhibit 4.2 to this Form 20-F.

Air Partners Aircraft Charter Agreement

In May 2009, we executed an aircraft charter agreement with Air Partners Corp. (“Air Partners”), a subsidiary of Morgan Air Services, which has been providing aviation services worldwide since 1983. This agreement currently gives NXT priority access, on an as-needed basis, to two Citation 560 series jet aircraft, which are well suited for both domestic and international operations, and which have been modified to meet our SFD® survey operations requirements.

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The Air Partners’ service includes providing all aircraft personnel (including pilots, aircraft maintenance engineers and administration), insurance, aircraft maintenance, servicing and grooming all in accordance with Transport Canada and other regulatory standards.

The original term of this agreement was for a term of one year which has been extended through successive contract renewals. The current contract will expire on December 31, 2015. Our annual commitment is based upon chartering in aggregate a minimum of 100 aircraft hours per year. Any flight hours that may become required in excess of this 100 hour minimum shall be made available to us for survey operations subject to aircraft and crew availability.

NXT’s minimum aircraft charterhire commitment to be met by the end of the 2015 annual contract period is $641,250 (including a short-fall carried forward from the 2014 contract year). As part of the 2015 annual renewal of the charter agreement, NXT has made a deposit payment of $168,750 in February 2015, and an additional $135,000 is due by June 30, 2015. This total of $303,750 will be held as non-refundable deposits to be applied, as utilized to September 30, 2015, against the charterhire commitment carried forward from 2014.

As at April 27, 2015 the company has not yet met any portion of its $641,250 total 2015 annual charter hire commitment under this agreement.

The Air Partners Aircraft Charter Agreement dated January 11, 2011is included as Exhibit 4.6 to this Form 20-F.

Basis for statements made regarding competitive position

Our SFD® airborne survey service is based upon a proprietary technology, which is capable of remotely identifying, from a survey aircraft, subsurface anomalies associated with potential hydrocarbon traps with a resolution that we believe is technically superior to other airborne survey systems. To our knowledge there is no other company employing technology comparable to our SFD® survey system for oil and natural gas exploration.

Seismic is the standard technology used by the oil & gas industry to image subsurface structures. It is our view that the SFD® survey system is highly complementary to seismic analysis. Our system may reduce the need for seismic in wide-area reconnaissance but will not replace the role of seismic in verifying structure, closure and selecting drilling locations. The seismic industry is very competitive with many international and regional service providers.

The SFD® system can be used as a focusing tool for seismic. With an SFD® survey a large tract (i.e. over 5,000 square kilometers) of land can be evaluated quickly to identify locations with indications of reservoir potential. Seismic surveys, although effective in identifying these locations, are much more expensive, require significantly more time and impose a much greater negative impact on local communities and the environment. An SFD® survey deployed first can provide necessary information to target a seismic program over a limited area of locations selected by SFD®. This approach can result in a more effective seismic program and reduce the overall cost, time, community resistance and environmental impact required to locate and qualify a prospect.

The industry uses other technologies for wide area oil and natural gas reconnaissance exploration such as aeromagnetic and gravity surveys. These systems can provide regional geological information such as basement depth, sedimentary thickness and major faulting and structural development; however, these other airborne techniques are not as suitable for identifying areas with reservoir potential as the SFD® system.

20-F for the year ended December 31, 2014

20

Description of material effects of governmental & environmental regulation

SFD® Survey Flight Operations

The operation of our business, namely conducting aerial SFD® surveys and interpreting SFD® data, is not subject to material governmental or environmental regulation in Canada and the United States with the exception of flight rules issued by Transport Canada and the U.S. Federal Aviation Administration (“FAA”) governing the use of commercial aircraft, including rules relating to low altitude flights. The requirements in other countries vary greatly and may require permits and/or provide other restrictions to conducting flight operations in the country that may restrict our ability to perform SFD® surveys as freely as in Canada and the United States.

For example, in Colombia SFD® surveys must comply with three requirements not encountered in Canada and the United States. These requirements are: customs obligations and bonds related to the importation and exportation of the aircraft into Colombia; obtaining permits from the local aviation authority; and obtaining permits from the Colombian Air Force. NXT has successfully operated in Colombia in accordance with these requirements.

With our past experience in Canada, the United States, Colombia and other countries, we do not anticipate any unusual government controls or regulations that might significantly prevent timely completion of SFD® surveys. However, we may encounter unforeseen government regulations or restrictions in other countries that may impair or restrict our ability conduct surveys, which could limit our ability to earn revenue or potentially expose us to forfeiture of performance bonds.

C.           Organizational structure

The following table provides a list of all subsidiaries and other companies controlled by NXT:

Subsidiaries	Date and Manner of Incorporation	Authorized Share Capital	Issued and Outstanding Shares	Nature of the Business	% of each Class of Shares owned by NXT
NXT Energy USA, Inc.	October 20, 1995 by Articles of Incorporation – State of Nevada	20,000,000 common	5,000,000 common	Inactive	100%
NXT Aero USA, Inc.	August 28, 2000 by Articles of Incorporation – State of Nevada	1,000 common 4,000 preferred	100 common	Inactive	100%
Survey Services International Inc.	September 6, 2011 by Articles of Incorporation – Province of Alberta	Unlimited number of common shares	100 common	Inactive	100%
NXT Energy Services (SFD) Inc.	December 2008 by Federal Articles of Incorporation – Canada	Unlimited number of common shares	100 common	Inactive	100%

In addition, as at April 27, 2015, NXT is in process of finalizing the incorporation (in Alberta) of a new entity, which would initially be a wholly-owned subsidiary prior to it seeking to raise external equity financing. It is intended that post financing, this entity would then undertake oil & gas exploration activities using a specified portion of NXT’s proprietary SFD® data.

20-F for the year ended December 31, 2014

21

D.           Property, plant and equipment

Oil and Gas Properties

We have minor historical interests in a limited number of acreage holdings of undeveloped lands in western Canada. These assets are not a material asset and have been written off in our financial statements. Additionally, we are entitled to receive gross over-riding royalty (“GORR”) interests on production from portions of certain lands where we conducted past surveys for clients in Canada, such as in the Horn River shale gas basin in British Columbia, Canada. Royalty revenue is not significant at this time, and there is no certainty that wells on these lands will become placed on production, or that future royalty revenues will be earned from these entitlements prior to the expiry of the landowners related mineral leases. No asset value has been recorded in the financial statements for these GORRs.

Facilities / office premises

Our current head office is a 7,087 square foot leased office space located at Suite 1400, 505-3rd Street SW, in Calgary, Alberta, Canada. The original six year lease was entered into on November 1, 2006 and was subsequently extended. The current monthly minimum lease payment (including the company’s share of estimated building operating costs) is $26,894 to the lease expiry on July 31, 2015.

In July 2015, NXT will move to new office premises (11,298 square feet) at 3320 – 17th Avenue SW in Calgary under a 10 year lease at an initial estimated minimum monthly lease payment of $42,368 (including building operating costs) commencing in October, 2015. See also Item 5.F “Contractual Obligations”.

Equipment

Our SFD® technology is comprised of three main components, detailed below, which we collectively refer to as our SFD® survey system. This system is generally stored at our Calgary office facility unless deployed during survey operations when this equipment would travel with the aircraft or be stored in a locked facility at the survey location when not in use. In addition, there is extensive interpretation equipment located in Calgary. The main categories of equipment we use are:

· Stress Field Detector - the stress field detector, or SFD® system, including a unit which houses the SFD® sensors, is the principal component of our technology. SFD® sensors respond to changes in subsurface stress. These responses are transformed through a passive transducer into electronic digital signals. Airborne surveys are normally conducted utilizing an array of 22 SFD® sensors, consisting of 6 primary, 8 secondary and 8 development sensors, allowing the acquisition of multiple independent SFD® signals responses at all points of a survey.

· Data Acquisition System - used in conjunction with the SFD® sensor array on surveys, our data acquisition system is a compact, portable computer system which concurrently acquires the electronic digital signals from the SFD® sensor array and other pertinent client data, including the GPS location information of the data.

· SFD® Signal Conditioning Unit - this self-contained unit contains electronic circuits for stabilizing and conditioning electronic signals. All sensor output is directly connected to this unit and after signal conditioning is completed, all output is forwarded to the computer system.

· Interpretation Theatre - once returned to our home base, the SFD® data collected is processed and converted into a format that can be used by our interpretation staff using systems consisting of generally off-the-shelf computer equipment, high definition monitors, projectors and screens. This equipment is generally permanently set up at our Calgary office facility. A remote SFD® data interpretation theater is available and may be deployed during survey operations and would be set up in a facility at the survey client’s city.

We are not affected by any significant environmental concerns nor is there any planned significant capital additions contemplated.

20-F for the year ended December 31, 2014

22

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial condition and results of operations should be read in conjunction with the “Selected Financial Data” and the accompanying Consolidated Financial Statements and the notes to those statements incorporated by reference elsewhere in this Form 20-F. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report, particularly under the caption “Risk Factors”.

A.           Operating results

Overall Operational Performance

Selected Annual Information
	For the year ended December 31
	2014			2013			2012
Survey revenue	$	3,913,367		$	2,684,095		$	10,937,575
Net comprehensive income (loss)		(1,563,361	)		(5,341,561	)		2,062,728
Net income (loss) per common share - basic	$	(0.04	)	$	(0.13	)	$	0.05
Net income (loss) per common share - diluted	$	(0.04	)	$	(0.13	)	$	0.04
Net cash generated by (used in) operating activities		(3,581,186	)		(774,958	)		792,992
Cash and short term investments		5,224,065			5,769,077			5,107,594
Total assets		6,049,103			6,839,993			7,458,222
Long term liabilities		50,000			64,560			61,813

Financial Highlights for 2014

· In Q1-14, we completed US $3.7 million of survey projects with a new client, Kerogen Exploration LLC (“Kerogen”), which included surveys in both Texas and Florida. Based on initial results delivered to Kerogen, the initial project was expanded in a short period of time from US $1.1 million to an overall total of US $3.7 million.

· We incurred a net loss of $1,563,361 for 2014, compared to net loss of $5,341,561 in 2013.

· We received proceeds of $2,735,995 from the exercise of a total of 2,057,852 common share purchase warrants (exercise price of US $1.20 per share) which were issued in the 2012 private placement equity financing.

· We had cash and short-term investments of $5,224,165 at the end of 2014.

· Operating activities (including the net change in non-cash working capital balances) used net cash of $3,581,186 in 2014, compared to a $774,958 net use of cash in 2013.

Financial Highlights for 2013

· In Q1-13, we completed a US $2.7 million survey project for Pakistan Petroleum Ltd., a new national oil company client.

· We incurred a net loss of $5,341,561 for 2013, compared to net income of $2,062,728 in 2012. The 2013 loss includes a non-cash expense of $1,371,500 which relates to recognizing the change at year-end in the fair value of outstanding US$ common share purchase Warrants.

· We received $1,064,222 from the exercise of a total of 846,700 common share purchase warrants (exercise price of US $1.20 per share) which were issued in the 2012 private placement equity financing.

· We had cash and short-term investments of $5,769,077 at the end of 2013.

· Operating activities used net cash of $774,958 in 2013, compared to a $792,992 net source of cash in 2012.

20-F for the year ended December 31, 2014

23

Financial Highlights for 2012

· We realized a significant expansion in survey activity in 2012, completing projects in a total of 4 different countries (Colombia, Argentina, Guatemala, and Mexico), and generated revenues of $10,937,575.

· Net income for the year was $2,062,728 for 2012, compared to a loss of $3,584,601 in 2011.

· Operating activities generated net cash of $792,992 in 2012, compared to a $1,756,515 net use of cash in 2011.

· Cash and cash equivalents increased by $3,543,648 to $5,052,594 as at the end of 2012 and total net working capital increased by $5,285,076 to $4,948,556 at the end of 2012.

· Net proceeds of $2,886,024 were raised in 2012 from the completion of a private placement equity financing.

Net Income (Loss)

	2014			2013			2012
Survey revenue	$	3,913,367		$	2,684,095		$	10,937,575
Expenses
Survey costs		431,518			1,632,159			3,633,645
General and administrative		4,132,108			4,112,787			4,508,506
Stock based compensation expense		658,000			492,000			265,000
Amortization of property and equipment		67,162			85,484			125,015
		5,288,788			6,322,430			8,532,166
Other expense (income), net		187,940			1,303,680			(83,740	)
Income (loss) before income taxes		(1,563,361	)		(4,942,015	)		2,489,149
Income tax expense		-			399,546			426,421
Net income (loss) for the year		(1,563,361	)		(5,341,561	)		2,062,728

Expenses for the years ended December 31, 2014, 2013 and 2012

Survey costs – these costs depend on the number of survey projects conducted and completed in each fiscal year. We apply the completed contract basis of revenue recognition, with survey revenue and expenses recognized in the quarterly period in which the overall survey recommendations report is delivered to our client. Survey costs may also periodically include expenses related to some R&D and equipment test flights (as was the case in 2014 and 2013) as well as aircraft maintenance charges, which are not necessarily directly related to projects undertaken.

2014 reflects completion of US $3.7 million of survey projects in the US, while 2013 reflected completion of a US $2.7 million contract which commenced in Pakistan in December 2012, and which was completed and delivered in Q1-13. 2013 also includes revenues of $24,850 related to a small survey which was flown in Belize in fall 2012, and completed in Q1-13. The Belize project in 2013 also included potential additional future revenues to NXT, which are contingent upon future events, and as such, will be recognized if and when received.

The survey contract conducted in Pakistan in Q1-13 had some categories of costs which were higher, and thus a lower profit margin, and a higher rate of foreign income tax withholdings, than the surveys which were completed in 2012. This project was originally negotiated in 2010, at a survey rate per km that was lower than the average which was in effect in 2011.

As noted previously, surveys were completed in a total of four countries in 2012, whereas 2011 reflected a single, small scale survey. Survey costs include aircraft charter, fuel, and related permits and logistics, plus local travel and accommodations incurred. Survey costs as a percentage of revenue is not directly comparable each year, as costs can be a function of non-controllable factors such as weather and permitting delays, and if the project was subject to sales commissions or local sales taxes. For example, survey costs in 2012 included sales commissions of US $696,977 for projects completed in 2012 (and $nil in 2011).

20-F for the year ended December 31, 2014

24

Also, there will be inherent cost differences between operating in Colombia or elsewhere in Latin America as compared with Canada and the United States. Costs incurred to mobilize and demobilize the survey aircraft and crews will vary widely, depending on the distance travelled to the survey location. In addition, in some foreign countries we may incur many delays related to obtaining permits and approvals not required in Canada that can result in surveys taking several additional weeks to fly them. These delays result in additional aircraft, crew and accommodation costs.

General and administrative (“G&A”) expense - G&A is a major component of NXT's total expenses. All salaries and overhead costs related to SFD® data interpretation staff (other than out of country per diem allowances) are included in G&A, and not included with direct survey expenses. The categories included in G&A expense are as follows:

For the year ended December 31	2014		2013		2012
Salaries, benefits and consulting charges	$	2,383,388	$	2,050,587	$	2,397,859
Board, professional fees, and public company costs		612,847		802,450		779,346
Premises and administrative overhead		599,230		584,778		632,058
Business development		433,441		544,642		464,262
Colombia office		103,202		130,330		234,981
Total G&A		4,132,108		4,112,787		4,508,506

While total G&A for 2014 of $4.1 million is comparable to 2013 period, the overall net changes in G&A expense within the five individual categories noted above reflect several factors:

· staff levels were slightly higher in 2014 as compared to 2013.

· board, professional fees, & public company costs decreased in 2014 primarily due to lower expenses for discretionary investor relations activities.

· business development costs are affected by the timing of discretionary international trips, and for 2013 there was a higher number of international tradeshows and conferences attended.

· NXT previously maintained a one person administrative office in Colombia, and this person was laid off in Q3-14 due to an ongoing lack of survey activity in the region.

The overall net $0.4 million decrease in G&A expense in 2013 was a combination of several factors:

· although staff levels were higher in 2013 (rose mainly in the second half of 2012), a lower level of overall consulting fees were incurred due to a reduced headcount of consultants utilized. Also, the 2012 period included performance bonus expense of $352,000 related to the record survey activity and profit achieved in 2012.

· 2013 reflected slightly increased costs for such items as insurance and legal fees, partially offset by a decrease in investor relations activities.

· premises overhead costs declined slightly for 2013, primarily due to a decrease in average monthly base rent costs following a renewal of the office lease from November 2012.

· a high level of business development costs were incurred in 2012 and 2013, primarily related to expanding awareness of the SFD® technology, including costs of international tradeshows and conferences. The 2013 total included costs incurred in expanding on a 2013 geophysical data “integration study” which we undertook with our new client PEMEX, as well as hosting a technology workshop for PEMEX staff in Mexico in Q3-13.

· the Colombia office had much lower levels of activity, and a slightly reduced salary level, for 2013 as a result of there being no survey activity in the country in 2013.

20-F for the year ended December 31, 2014

25

G&A increased significantly in 2012 as compared to 2011, rising by $1,290,363 or 40%, due largely to the increase in survey activity, and the requirement to increase our headcount of operations and administration staff. In addition, with an increase in financial resources, we expanded efforts in the areas of investor relations and market awareness as well as client prospecting.

Stock Based Compensation Expense (“SBCE”) - this expense varies in any given quarter or year, as it is a function of several factors, such as the number of stock options issued in the period, and the period of amortization (based on the term of the contract and / or number of years for full vesting of the options, which is normally 3 years) of the resultant expense. Also, SBCE is a function of periodic changes in the inputs used in the Black-Scholes option valuation model, such as volatility in NXT's trailing share price.

There were a lower average number of stock options outstanding in 2014 (total of 2,541,435 as at the end of Q4-14 as compared to 2,888,100 at the end of Q4-13). Total SBCE for the 2014 periods, however, is higher than the 2013 totals, as it includes additional expense recognized related to new “Rights” which were issued in January 2014 (see discussion in “Item 4.B – Technology Transfer Agreement” related to the convertible preferred shares) as follows:

	2014		2013		2012
SBCE recognized related to:
Stock options	$	432,000	$	492,000	$	265,000
Rights		226,000		-		-
		658,000		492,000		265,000

The SBCE totals for 2013 were higher than in 2012 due to a higher number of stock options being outstanding in 2013, following the issuance of a large number of stock options in the Q3-12 period. Also, a number of stock options which were issued in Q4-13 had immediate vesting, resulting in the full expense being recognized in the Q4-13 period, rather than being amortized over the standard three year vesting period.

Amortization expense – most of our capital investment in property and equipment is in computer hardware, which is amortized on a 30% declining balance basis, such that amortization is high in the initial year of capital investment. In the last 3 years, capital spending has been minimal, resulting in declining levels of amortization expense.

Other Expense (Income)

For the year ended December 31	2014			2013			2012
Interest expense (income), net	$	(50,824	)	$	(25,455	)	$	2,744
Foreign exchange (gain) loss		(158,817	)		(150,350	)		14,686
Other expense, net		354,781			107,985			66,973
Increase (decrease) in fair value of US$ Warrants		42,800			1,371,500			(168,143	)
		187,940			1,303,680			(83,740	)

Interest income - Interest income, generated by short term investments, is offset by interest expense incurred on such items as capital lease obligations for office equipment, and varies by year based on the level of cash available for investment.

Foreign exchange (gain) loss – gains and losses on foreign exchange are caused by changes in the relative exchange values of the US$, Canadian dollar and to a minor extent, the Colombian peso ("COP"). For example, when the Canadian dollar trades higher relative to the US$ or COP, cash held in US$ or COP will decline in value and this decline will be reflected as a foreign exchange loss in the period. We normally hold cash and short-term investments in Canadian dollars to reduce the effect of market volatility; however, we occasionally are contractually obligated to hold certain restricted cash funds in US$ instruments to support performance bond commitments issued for projects in certain foreign countries.

20-F for the year ended December 31, 2014

26

Other expense, net– this category includes primarily discretionary costs related to intellectual property filings (which had a high level of activity in the Q4-14 period) and R&D activity related to the SFD® technology. “Other, net” includes ongoing other net expenses related to pre 2009 minority interests in oil & gas activities (these expenses are net of minor revenues from gross over-riding royalties (“GORR”) on certain properties).

NXT has certain asset abandonment and reclamation obligations (“ARO”) related to our historical minority working interests in various oil and gas wells in which NXT had participation prior to 2005. At December 31, 2014, the ARO is estimated to be $50,000, based on obligations which are estimated to be settled in the next three years. The net present value of the ARO is estimated based on inflation of 3.4% and discounted using a credit-adjusted risk-free interest rate of 10%.

In the Q4-14 period, NXT incurred significant geotechnical and consulting costs related to conducting a feasibility study undertaken with the aim of monetizing the value of specific portions of our proprietary SFD® data library. Total costs, by category, were as follows:

	2014			2013		2012
Other expenses incurred re:
Intellectual property and R&D	$	148,975		$	93,585		51,700
Other, net		(7,435	)		14,400		15,273
Feasibility study		213,241			-		-
		354,781			107,985		66,973

Change in fair value of US$ Warrants – we previously had outstanding common share purchase Warrants (which had a US $1.20 exercise price and a term of two years to expiry in March and May, 2014) that were issued in a $3.2 million private placement equity financing in early 2012. As these warrants were denominated in a currency other than the company's Canadian $ functional currency, they were classified as "derivative instruments" under US GAAP, and were recorded on a fair value basis at each period end (a total of $1,238,000 as at December 31, 2013 and $241,000 at December 31, 2012). This balance was adjusted to its estimated fair value at each period end (until expiry of the warrants in early 2014), based on the number of warrants outstanding. These derivative instruments were classified as a liability balance, but did not require any ongoing outlay of cash.

We currently have no other outstanding derivative financial instruments, such as foreign currency hedges.

Summary of Quarterly Results (Unaudited)

A summary of operating results for each of the trailing 8 quarters (including a comparison to each respective prior quarter) follows. The extent of the profit or loss each quarter is mainly due to the timing and the number of survey contracts that are underway, and variances in such non-cash items as SBCE, which can occasionally be a significant expense in any given quarter. In addition, in Q3-12, we commenced to recognize significant adjustments to the fair value of "derivative instruments", which include US$ denominated warrants to purchase NXT common shares.

		Q4-14			Q3-14			Q2-14			Q1-14
	Dec 31, 2014			Sep 30, 2014			Jun 30, 2014			Mar 31, 2014
Survey revenue	$-			$-			$-			$3,913,367
Net income (loss)		(1,532,466	)		(1,330,167	)		(1,286,461	)		2,585,733
Income (loss) per share - basic		(0.03	)		(0.03	)		(0.03	)		0.06
Income (loss) per share - diluted		( 0.03	)		(0.03	)		(0.03	)		0.05

20-F for the year ended December 31, 2014

27

	Q4-13	Q3-13	Q2-13	Q1-13
	Dec 31, 2013	Sep 30, 2013	Jun 30, 2013	Mar 31, 2013
Survey revenue	$ -	$ -	$ -	$ 2,684,095
Net income (loss)	(1,633,189)	(2,522,165)	(1,150,628)	(35,579)
Income (loss) per share - basic	(0.04)	(0.06)	(0.03)	(0.00)
Income (loss) per share - diluted	( 0.04)	(0.06)	(0.03)	(0.00)

Q4-14 to Q3-14 comparison – NXT had survey revenue of $nil ($nil in Q3-14), survey costs (related to equipment test flights and aircraft maintenance costs) of $33,221 ($54,472 in Q3-14), and SBCE of $186,000 ($191,000 in Q3-14).

Q3-14 to Q2-14 comparison – NXT had survey revenue of $nil ($nil in Q2-14), survey costs (related to equipment test flights) of $54,472 ($10,637 in Q2-14), and SBCE of $191,000 ($150,000 in Q2-14).

Q2-14 to Q1-14 comparison – NXT had survey revenue of $nil ($3,913,367 in Q1-14), survey costs of $10,637 ($333,188 in Q1-14), SBCE of $150,000 ($131,000 in Q1-14), and an increase in the fair value of US$ common share purchase Warrants (derivative financial instruments) expense of $nil ($42,800 expense in Q1-14).

Q1-14 to Q4-13 comparison – NXT had survey revenue of $3,913,367 ($nil in Q4-13), survey costs of $333,188 ($81,285 in Q4-13), SBCE of $131,000 ($183,000 in Q4-13), and an increase in the fair value of US$ common share purchase Warrants (derivative financial instruments) expense of $42,800 ($268,500 expense in Q4-13). Two survey projects (in Florida in Texas) commenced for a US based client in late December 2013, with the project completed and the related revenue and work-in-progress costs recognized in the Q1-14 period.

Q4-13 to Q3-13 comparison – NXT had survey revenue of $nil ($nil in Q3-13), survey costs of $81,285 ($8,626 in Q2-13), SBCE of $183,000 ($122,000 in Q3-13), and an increase in the fair value of US$ common share purchase Warrants (derivative financial instruments) expense of $268,500 ($1,243,000 expense in Q3-13). Two survey projects (in Florida and Texas) commenced for a US based client in late Q4-13, with the project completed and the related revenue and work-in-progress costs recognized in the Q1-14 period. The Q4-13 survey costs relate to non revenue generating test flights.

Q3-13 to Q2-13 comparison – NXT had survey revenue of $nil ($nil in Q2-13), survey costs of $8,626 ($nil in Q2-13), SBCE of $122,000 ($87,000 in Q2-13), and a change in fair value of US$ Warrants expense of $1,243,000 ($32,000 expense in Q2-13). No survey operations were conducted in the Q3-13 period.

Q2-13 to Q1-13 comparison – NXT had survey revenue of $nil ($2,684,095 in Q1-13), survey costs of $nil ($1,542,248 in Q1-13), SBCE of $87,000 ($100,000 in Q1-13), and a change in fair value of US$ Warrants expense of $32,000 ($172,000 income in Q1-13). No survey operations were conducted in the Q2-13 period.

Q1-13 to Q4-12 comparison – Q1-13 reflects primarily the completion of the Pakistan survey project, whereas Q4-12 reflects completion of a larger contract which was performed in Mexico for PEMEX. NXT had survey revenue of $2,684,095 ($5,727,392 in Q4-12), SBCE of $100,000 ($59,000 in Q4-12) and survey costs of $1,542,248 ($1,277,768 in Q4-12). In addition, a non-cash income amount of $172,000 ($336,000 in Q4-12) was recognized in relation to adjusting the fair value of the US$ Warrants, and income tax expense of $399,546 ($216,807 in Q4-12) was recognized related to foreign with-holding taxes incurred on the Pakistan survey project. Q1-13 reflects a small net loss of $35,579, as compared to a net income of $3,087,323 for Q4-12.

20-F for the year ended December 31, 2014

28

B.           Liquidity and capital resources

Our sources of liquidity include cash flow from operations, and the use of equity financings as needed. At present, there are no bank debt facilities available to us. We expect that our current working capital is sufficient to meet our present requirements.

We do not presently have any legal or economic restrictions that would affect the ability of any subsidiaries to transfer funds to us. As of the last fiscal year end, and the present date, we do not have any material outstanding commitments for capital expenditures that require funding.

NXT's cash and cash equivalents plus short-term investments at the end of Q4-14 was $5.2 million The total at each quarter end excludes any amounts classified on the Balance Sheet as restricted cash, which is required periodically as security related to performance of certain foreign survey contracts. Security issued by NXT is normally in the form of bank letters of credit (often for a term of 12 to 15 months), such as were issued to undertake a survey in Guatemala in 2012. The restricted cash balances were released to NXT when the related letters of credit expired in 2014.

Significant progress has been made in the recent past in securing new revenue contracts and expanding our working capital. NXT's ability to continue as a going concern, however, remains dependent upon our success in being able to continue to attract new client projects and expand the revenue base to a level sufficient to far exceed G&A expenses, and generate excess net cash flow from operations. Equity financings have been used on a limited basis in recent years to supplement working capital as required.

Private placement financings totaling $3.2 million ($2.9 million net of finders fees and share issue costs incurred) were conducted in early 2012 to enhance NXT's financial strength and fund its expansion plans. This financing also included the US$ common share purchase Warrants (which had a term of two years, expiring in March and May 2014), for which exercise proceeds of US $1.0 million were received in Q4-13 and US $2.5 million in 2014.

Risks related to having sufficient ongoing working capital to execute survey project contracts are mitigated through our normal practice of obtaining progress payments from clients throughout the course of the projects, which often span 3 to 4 months.

NXT has no secured debt, and had total “net working capital” of $5.0 million as at Q4-14, compared to a total of $1.6 million at Q4-13, as follows:

		December 31,			December 31,			net change
		2014			2013			2014 YTD
Current assets (current liabilities):
	Cash and cash equivalents	$	50,635		$	3,319,627		$	(3,268,992	)
	Short-term investments		5,173,430			2,449,450			2,723,980
			5,224,065			5,769,077			(545,012	)
	Restricted cash		-			53,921			(53,921	)
	Accounts receivable		248,930			295,879			(46,949	)
	Prepaid expenses and other		338,644			158,456			180,188
	Accounts payable and accrued liabilities		(782,626	)		(939,355	)		156,729
Net working capital before the undernoted items			5,029,013			5,337,978			(308,965	)
	Additional asset (liability) amounts:
	Work-in-progress		-			299,842			(299,842	)
	Deferred revenue		-			(2,781,101	)		2,781,101
	Fair value of US$ Warrants		-			(1,238,000	)		1,238,000
			-			(3,719,259	)		3,719,259
Net working capital			5,029,013			1,618,719			3,410,294

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This discussion includes references to terms such as “net working capital” and “net working capital before the undernoted items”, which do not have a standardized meaning prescribed by US GAAP and may not be comparable to similar measures presented by other entities. NXT management uses this non-GAAP measure to improve our ability to assess liquidity at a point in time. Net working capital is defined as total current assets less total current liabilities, excluding amounts accumulated in work in progress, deferred revenue and the fair value of US$ Warrants balance. Management excludes these amounts from the calculation as they do not represent future cash inflows or outflows to the Company.

NXT utilizes the above noted sub-total line “net working capital before the undernoted items” to assess a more relevant measure of financial liquidity (excluding items classified as liabilities such as the fair value of US$ Warrants and deferred revenue balances) as at the period end date.

The significant increase in net working capital in 2014 to a total of $5.0 million at the end of Q4-14 is primarily due to:

· the receipt in 2014 of exercise proceeds of $2.7 million upon exercise of 2,057,852 of the US$ Warrants.

· receipt of final progress billings of $1.2 million, and reversal of the Q4-13 $2.7 million deferred revenue balance, following completion and delivery of the US survey projects in Q1-14.

· the reversal (due to exercises and expiries) in 2014 of the $1.2 million recorded at Q4-13 for the fair value of the remaining 3,656,121 US$ Warrants which were then outstanding.

As noted previously, the fair value of US$ Warrants balance relates to the estimated fair value of the common share purchase Warrants (which had a US$ 1.20 exercise price) which were issued in the private placement financings in early 2012. Prior to Q4-14, this balance was adjusted to its estimated “fair value” at each period end (until expiry of the Warrants in March and May, 2014), based on the number of Warrants outstanding. These derivative financial instruments are classified in the balance sheet as a liability, but do not require any ongoing outlay of cash. These US$ Warrants had a term of two years, and all of them were either exercised or expired by the end of Q2-14.

NXT applies the "completed contract" method of revenue recognition - revenues and related project costs are deferred until the period in which the survey contract is completed. Deferred revenue (a current liability) represents progress billing amounts that are to be recognized in revenue in future periods. Similarly, work-in-progress ("WIP", a current asset) relates to deferred survey costs which will be expensed in future periods upon completion of the related contracts. The WIP balance at December 31, 2013 related to costs incurred on the US survey projects which were completed in March, 2014.

Also, deferred revenue represents only the portion of progress billings that were issued to the quarter end on the uncompleted contracts. The total as at Q4-13 related to the two US survey projects which were underway at year end.

The decreased total of accounts payable and accrued liabilities at Q4-14 as compared to Q4-13 is largely due to there being no survey activity in Q4-14.

The following summarizes NXT's net cash flows, and the total cash plus short-term investments held at the end of the periods:

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Sources and uses of cash

The following table, and the narrative below, summarizes NXT’s net cash flows, and the total cash plus short-term investments held at the end of the periods, for the last three fiscal years:

For the year ended December 31	2014			2013			2012
Cash provided by (used in):
Operating activities	$	(3,581,186	)	$	(774,958	)	$	792,992
Financing activities		3,024,061			1,077,456			3,203,443
Investing activities		(2,711,867	)		(2,035,465	)		(452,787	)
Net cash inflow (outflow)		(3,268,992	)		(1,732,967	)		3,543,648
Cash & cash equivalents, start of the year		3,319,627			5,052,594			1,508,946
Cash & cash equivalents, end of the year		50,635			3,319,627			5,052,594
Cash & cash equivalents		50,635			3,319,627			5,052,594
Short-term investments		5,173,430			2,449,450			55,000
Total		5,224,065			5,769,077			5,107,594

Operating Activities

Net cash flow from operating activities listed above is a function of net income (loss) for the year, an add back of the net non-cash revenue and expense items (such as SBCE and in 2013, the change in fair value of derivative instruments), and the net change in year-end working capital items (for example, a net decrease in working capital in the year gives rise to a source of cash), with these components each year as follows:

For the year ended December 31	2014			2013			2012
Net income (loss) for the year	$	(1,563,361	)	$	(5,341,561	)	$	2,062,728
Add back net non-cash expense and income items		753,402			1,951,731			225,732
		(809,959	)		(3,389,830	)		2,288,460
Change in non-cash working capital balances		(2,771,227	)		2,614,872			(1,495,468	)
Total cash provided by (used in) in operations		(3,581,186	)		(774,958	)		792,992

Financing Activities

2014 - no equity financings occurred in 2014 or 2013. In 2014 NXT received a total of $2,735,995 proceeds from exercise of US$ common share purchase Warrants which were issued in 2012 and $288,066 proceeds from exercise of a total of 482,665 stock options.

2013 – no financings occurred in 2013. The net cash source of $1,077,456 reflects $1,064,222 proceeds from exercise of a portion of the US $1.20 common share purchase Warrants that were issued in the 2012 private placement equity financing, plus $13,234 proceeds from the exercise of stock options.

2012 – the net cash source of $3,203,443 reflects $2,886,024 net proceeds from a private placement equity financing which closed in early 2012, plus $326,010 from the exercise of warrants which were issued in the February 2011 financing, $47,250 proceeds from the exercise of stock options, less a $8,591 reduction in a capital lease obligation.

In order to enhance our financial position, in 2012 we completed a large non-brokered private placement of units (the “Units”) for aggregate proceeds of US $3,193,505 (US $3,009,893 net of related finder’s fees paid) including $40,000 received from two officers of the company.

Each Unit was issued at a price of US $0.75 and consisted of one common share of the company and one warrant (the “Warrants”). Each Warrant entitles the holder to acquire an additional NXT common share at a price of US $1.20 for a two year period to expiry (which ranges from March 8 to May 4, 2014). The company also issued a total of 244,816 finder's warrants (as part of finder’s fees paid) with the same terms as the Warrants noted above.

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The expiry date was able to be accelerated at NXT's discretion if NXT’s shares traded on the US OTCBB at a price greater than US $1.50 for 20 consecutive trading days (the “Acceleration”). Although this condition was met in 2013, we did not invoke the Acceleration option in 2013 or 2014.

Investing Activities

2014 - the overall net cash used in investing activities of $2,711,867 reflects three components:

· a $2,723,980 use relating to a movement from cash into short-term, interest bearing investments.

· A $53,921 source from a decrease in restricted cash balances. Restricted cash balances relate primarily to balances used as security for bank letters of credit, which are often required to be issued to foreign clients as performance guarantees for survey contracts.

· and $41,808 used in purchases of property and equipment.

2013 - the overall net cash used in investing activities of $2,035,465 reflects three components:

· a $2,394,450 use relating to a movement from cash into short-term, interest bearing investments.

· A $379,448 source from a decrease in restricted cash balances. Restricted cash balances relate primarily to balances used as security for bank letters of credit, which are often required to be issued to foreign clients as performance guarantees for survey contracts.

· and $20,463 used in purchases of property and equipment.

2012 - the overall net cash use of $452,787 reflects a $45,000 funds outflow arising from an increase in short-term investments, $359,234 cash used to increase restricted cash balances, and $48,553 invested in purchases of property and equipment.

C.           Research and development, patents and licenses, etc.

There was no separate research and development (“R&D”) expense reported in the financial statements in the years 2014, 2013 and 2012. In these three years any expenditures related to R&D were not significant and were included within general and administrative expense (related to a portion of staff salaries) and in other expense.

D.           Trend information

We have historically conducted a limited number of service contracts each year, the dollar value and timing of securing and ultimate delivery of which are subject to numerous external factors. As at April 27, 2015 we do not have a significant committed “backlog” or order book of contracts to be performed.

We are not aware of any current external trends (such as in commodity prices, etc.) which could affect our operations for the next fiscal year. As noted previously, the amount and timing of our annual revenues can vary widely year to year, as we derive our revenues from a limited number of service contracts each year, and each individual contract may have a large effect on the aggregate annual revenues and profits. For example, in 2012, we conducted our first contract with PEMEX, the national oil company of Mexico. This project was completed in 2012 and was our largest to date, at US $5.8 million. We continue to seek future business projects with large exploration clients such as PEMEX, with the aim of having each new client become an ongoing repeat customer.

E.           Off-balance sheet arrangements

We do not have any off-balance sheet arrangements.

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F.           Tabular disclosure of contractual obligations

The following table sets forth our outstanding contractual obligations as at December 31, 2014:

			less than		2 to 3		4 to 5		more than
	total		1 year		years		years		5 years
Long-term debt	$	-	$	-	$	-	$	-	$	-
Capital (finance) lease obligations		-		-		-		-		-
Operating lease obligations:
Premises rent / operating lease		5,328,848		315,360		1,016,820		1,016,820		2,979,848
Purchase obligations		-		-		-		-		-
Other long term liabilities:
Aircraft charter commitment		641,250		641,250		-		-		-
Asset retirement obligation		50,000		-		50,000		-		-

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.           Directors and senior management

Our articles of incorporation provide for a minimum of one director and a maximum of 15 directors comprising our board of directors. At present, our board of directors consists of seven members.

Our directors are elected by our shareholders at our annual meeting of shareholders and hold the position either until the next annual shareholders’ meeting or until a successor is appointed.

The following table sets forth information, including directorships in other reporting issuers, as of April 27, 2015, for our directors, executive officers and key employees:

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Mickey Abougoush Age 68 Director since November 2007	Mr. Abougoush is a professional engineer with over 40 years of experience in the petroleum industry, largely in technical and executive positions. He is currently the chairman of Teknica Overseas Ltd., an international consulting company. He previously was chairman of SQFive Intelligent Oilfield Solutions Ltd., an international consulting and software development company and also served as president of Teknica Petroleum Services Ltd., an international consulting and software development company. He was formerly a director of both CCR Technologies Ltd. and WellPoint Systems Inc., both of which were public companies listed on the TSX Venture Exchange. Mr. Abougoush is a member of NXT’s Audit and Governance Committees.
John Agee Age 66 Director since July 2011	Mr. Agee is retired, following a 25+ year career in senior executive positions with various prominent US families, including the Carlson Family in Minneapolis, MN (owners of Radisson, Country Inns and Suites, and previously the TGI Friday's chain) from 2010 through February 2011, and the Steve Case Family in Washington, DC from 2000 through 2009 (Steve Case is the co-founder of America Online). Mr. Agee also served on numerous private, public, and non-profit Boards, and currently consults part-time in matters related to wealth management and is a CPA (inactive). He is a former director of Maui Land and Pineapple, a New York Stock Exchange listed company. Mr. Agee is the Chair of the Audit Committee and a member of the Compensation and Governance Committees. Mr. Agee has a BA in economics and accounting from St. John’s University, Collegeville, Minnesota, and an MBA from the University of Minnesota.
George Liszicasz Age 61 Director, Chairman and Chief Executive Officer since January 1996; President since July 2002	Mr. Liszicasz is the inventor of the company’s SFD® technology and has been our Chairman and CEO since the company’s inception in 1996. Mr. Liszicasz' primary responsibilities, as the President and CEO, are to oversee all operations and to further develop the SFD® technology. Mr. Liszicasz studied electronics and general sciences at the University of British Columbia and obtained a High Voltage Controls and Station Operations degree in Electronics from the Landler Jeno Technitken in Hungary in 1973.
Charles Selby Age 58 Director since January 2006	Mr. Selby holds a B. Sc. (Hons) in Chemical Engineering, a J.D. degree and is a registered professional engineer in the Province of Alberta. Mr. Selby is also the Chairman and CEO of Montana Exploration Corp. (formerly AltaCanada Energy Corp.) a TSX-V reporting issuer. He is the president of Caledonian Royalty Corporation and Caledonian Global Corporation, both private entities which are involved in oil & gas exploration and production. He is a former officer (1993 to 2010) of Pengrowth Corporation, which administered Pengrowth Energy Trust, a large North American energy royalty trust. Mr. Selby has also previously been a director of several other Canadian reporting issuers. Mr. Selby is the Chair of the Compensation Committee and a member of the Audit and Disclosure Committees.
John Tilson Age 71 Director since February 2015	Mr. Tilson is retired, and after obtaining MBA and CFA designations, had a distinguished career as an analyst, portfolio manager, and advisor in the US investment and financial industry with such firms as Sutro & Company and EF Hutton & Company. Mr. Tilson joined Roger Engemann and Associates in 1983 when assets under management were roughly US $160 million. During his tenure there, the Pasadena Group of Mutual Funds was started, with Pasadena Capital Corporation formed as the holding company for the mutual funds and investment management business. After working as an analyst and portfolio manager, John later became Executive Vice President & Managing Director of Pasadena Capital Corporation.

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Thomas E. Valentine Age 53 Director since November 2007 Corporate Secretary since April 18, 2014	Mr. Valentine is a Partner with Norton Rose Fulbright Canada LLP, where he has practiced law, both as a Barrister and a Solicitor, since his call to the Bar in 1987. He is a member of the firm’s Global Resources Practice Group and is involved in energy and energy related matters throughout the Middle East, North Africa, the CIS, Asia and South America. Mr. Valentine is a member of the Board of Directors of two other Canadian public companies, Calvalley Petroleum Inc. and  Touchstone Exploration Inc., and formerly was a director of Veraz Petroleum Ltd Mr. Valentine holds a BA from the University of British Columbia, a LLB from Dalhousie University, and a LL.M. from the London School of Economics. Mr. Valentine is the Chair of the Governance Committee and a member of the Compensation Committee.
Krishna Vathyam Age 51 Director since January 2013	Mr. Vathyam is currently an independent businessman, and was previously (until October 2013) the Chairman and CEO of Petrodorado Energy Ltd., a Colombia focused junior E&P which Mr. Vathyam founded in early 2009. He has extensive experience in international markets, having spent 23 years with Schlumberger, a leading global oilfield services company. Mr. Vathyam is a member of the Compensation and Governance Committees.
Greg Leavens Age 50 V-P Finance and CFO since July 2011	Mr. Leavens joined NXT in July 2011 as Vice-President of Finance and Chief Financial Officer. Mr. Leavens is a Chartered Accountant with over 24 years of financial reporting, treasury, regulatory and risk management experience. Mr. Leavens’ experience has included senior financial roles within the oil and gas exploration and production, as well as services sectors. Mr. Leavens was Chief Financial Officer of Result Energy Inc. (a public exploration and production company which traded on the TSX Venture Exchange) from 2003 until November 2009, after which he was involved in a variety of consulting roles prior to joining NXT. Mr. Leavens obtained a B.A. and M.Acc from the University of Waterloo, subsequent to which he articled with KPMG LLP, and was a Senior Manager in the Toronto audit services practice. Mr. Leavens is the Chair of NXT’s Disclosure Committee.
Andrew Steedman Age 54 V-P Operations since December 2005	Mr. Steedman joined NXT in December 2005 as Vice President of Operations. Mr. Steedman holds a B.Sc. in Electrical Engineering and an MBA, both from the University of Calgary. Prior to joining NXT, Mr. Steedman was the president of his own management consulting firm. From 2001 to 2003 he was President and CEO of Wireless Networks and was responsible for the overall strategic direction of the company. From 1999 to 2001, he was Senior Manager of Business Development with Nortel Networks. In this role he was responsible for developing Nortel’s unlicensed wireless strategy, identifying strategic partners, developing relationships with key customers and negotiating OEM agreements with key partners. From 1994 to 1999, Mr. Steedman held various positions within Nortel including product management, project management, international business development and marketing. From 1991 to 1994, Mr. Steedman consulted in Bangkok to the Telephone Organization of Thailand (“TOT”). He was responsible for the construction of a network management center that would monitor the TOT’s national network.

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None of our executive officers or directors have been involved in any bankruptcy proceedings within the last five years, been convicted of or have pending any criminal proceeding, been subject to any order, judgment or decree enjoining, barring, suspending or otherwise limiting involvement in any type of business, securities or banking activity or been found to have violated any federal, state or provincial securities or commodities laws.

Charles Selby was previously a member of the board of directors of Wellpoint Systems Inc. (“Wellpoint”, a reporting issuer on the TSX-V), which in January 2011 had a Receiver appointed by the Court of Queen’s Bench of the Province of Alberta on behalf of the holders of secured debts. Wellpoint was subsequently wound up following a restructuring and sale of its operating assets. Mickey Abougoush also had previously served as a director of Wellpoint, and resigned in July, 2010, prior to it entering Receivership in 2011.

Messrs. Abougoush, Agee, Selby, Tilson, Valentine, and Vathyam are considered "independent" within the meaning of Canadian National Instrument 58-101.

B.           Compensation

Executive Compensation

The following table sets out certain information regarding the annual and long-term compensation of the Chief Executive Officer, the Chief Financial Officer and the other two of the four most highly compensated executive officers serving as executive officers (of which there were only three) at December 31, 2014, as well as any additional individuals for whom disclosure would have been provided pursuant to the above criteria except that the individual was not serving as an officer of the company at the end of 2014. All officers of the company are based in the Calgary, Canada head office and are paid in Canadian dollars.

Summary compensation table for the year ended December 31, 2014:

Name & Principal Position	salary		bonus (1)		vacation (2)		other (3)		total
George Liszicasz, President & CEO (4)	$	239,800		-		9,223	$	15,992	$	265,015
Andrew Steedman, V-P Operations		198,000		-		-		7554		205,554
Greg Leavens, Chief Financial Officer		198,000		-		-		6,748		204,748

(1)   annual bonus amounts, based on such factors as NXT’s profitability and growth, are subject to the approval of NXT’s Compensation Committee.  These were no bonus amounts accrued for the fiscal year end December 31, 2014 which would be payable in 2015.

(2)   “vacation” represents a cash payout in the year of a portion of unused vacation entitlements carried forward.

(3)   “other” consists of any vehicle allowance paid ($9,000 for Mr. Liszicasz) plus the taxable portion of company paid amounts for group health benefits and parking.

(4)   salary and other totals exclude the cash portion of fees earned as Chairman of the board, which were $20,000 for 2014 ($10,000 of which was paid to Mr. Liszicasz in 2014 and $10,000 paid in January 2015).

(See Item 6.E “Share Ownership” for details regarding stock options granted to officers).

No amount is set aside or accrued by the company or its subsidiaries to provide pension, retirement or similar benefits to officers or directors.

Director Compensation

NXT compensates directors for serving on our board by paying a combination of a cash retainer as well granting stock options to purchase NXT common shares. For 2014, the cash retainer was based on $30,000 ($35,000 in the case of each of the Chairman of the Board and the Audit Committee) of which a maximum of 50% could be elected to be received in cash.

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In 2014, the directors group each individually elected to receive a mix of cash and / or stock option grants as payment of board of director fees earned for 2014, which was in aggregate $80,000 cash and 110,000 stock options granted (one director elected to instead receive no cash, and a total of 35,000 stock options, as compared to the grant of 15,000 stock options plus payment in cash as was elected by the other five directors who were serving in 2014).

The amount and terms of any stock options granted as compensation for board member services is determined by the board. We do not provide additional compensation for committee participation (other than as noted previously re the minor additional amount for service as the Chairman of the board and of the Audit Committee) or for special assignments of the board. (See Item 6.E “Share ownership” for details regarding stock options granted to directors.)

The company reimburses directors for out-of-pocket expenses for attending board and committee meetings. We do not provide termination benefits for directors.

C.           Board practices

Expiration Dates

No director or member of our administrative, supervisory or management bodies has an expiration date for their current term of office. Directors are elected by shareholders at the annual meeting of shareholders and hold the position either until the next annual shareholders’ meeting or until a successor is appointed. The period during which each individual has served as a director is set out in the table under Item 6.A – “Directors and senior management”.

Service Contracts

No directors (other than an employment contract for the CEO, Mr. Liszicasz) have service contracts with the company or any of its subsidiaries that provide benefits upon termination of employment.

Board of Directors Mandate

The principal role of the board is stewardship of the company through the creation of shareholder value, including the protection and enhancement of the value of its assets, as the fundamental objective. The stewardship responsibility means that the board oversees the general operation of the business and management, which is responsible for the day-to-day conduct of the business. The board must assess and ensure systems are in place to manage the risks of the company’s business with the objective of preserving the company’s assets. The board, through the CEO, sets the attitude and disposition of the company towards compliance with applicable laws, environmental, safety and health policies, financial practices and reporting. In addition to its primary accountability to shareholders, the board is also accountable to employees, government authorities, other stakeholders and the public. The Mandate of the board of directors is posted on the company website and may viewed at www.nxtenergy.com or you may request a copy be mailed to you by writing to our offices at Suite 1400, 505 – 3rd Street SW, Calgary, Alberta, Canada, T2P 3E6.

Board Committees

CORPORATE GOVERNANCE COMMITTEE

The company and the board recognize the importance of corporate governance to the effective management of the company and to its shareholders. The company’s approach to significant issues of corporate governance is designed with a view to ensuring that the business and affairs of the company are effectively managed so as to enhance shareholder value. The Mandate of the Corporate Governance Committee is posted on the company website and may be viewed at www.nxtenergy.com or you may request a copy be mailed to you by writing to our offices at Suite 1400, 505 – 3rd Street SW, Calgary, Alberta, Canada, T2P 3E6.

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The board and management endorse the need to establish forward-looking governance policies and to continuously evaluate and modify them to ensure their effectiveness.

Composition of the Corporate Governance Committee

Messrs. Valentine (Chair), Abougoush, Agee and Vathyam are members of the Corporate Governance Committee, and are all independent.

Responsibilities of the Corporate Governance Committee

The Corporate Governance Committee’s duties, as outlined in its charter, are to deal with the company’s approach to corporate governance and the promotion of compliance with industry and regulatory standards. The committee is responsible for overseeing and assessing the functioning of the board and the committees of the board and for the development, recommendation to the board, implementation and assessment of effective corporate governance principles and guidelines. The Committee’s responsibilities also include identifying new candidates for director and recommending that the board select qualified director candidates for election at the next annual meeting of shareholders.

DISCLOSURE COMMITTEE

Composition of the Disclosure Committee

The Disclosure Committee currently consists of Messrs. Selby (who is independent) and Leavens (Chair).

Responsibilities of the Disclosure Committee

The Disclosure Committee’s duties are to ensure that the company provides timely, accurate and balanced disclosure of all material information about the company and to provide fair and equal access to such information. All news releases, including but not limited to releases of material information, are managed by the Disclosure Committee. If the information has been determined by the Disclosure Committee to be material, news releases will be prepared, reviewed and then disseminated through a news-wire service that provides simultaneous service to widespread news services and financial media. Additionally, the Disclosure Committee is responsible for ensuring public disclosure through filing these news releases on SEDAR, EDGAR, and our website.

AUDIT COMMITTEE

Composition of the Audit Committee

The Audit Committee consists of Messrs. Agee (Chair), Abougoush and Selby. All members of the Audit Committee are independent and each member is financially literate. The company’s Audit Committee Charter is posted on our website and may be viewed at www.nxtenergy.com or you may request a copy be mailed to you by writing to our offices at Suite 1400, 505 – 3rd Street SW, Calgary, Alberta, Canada, T2P 3E6.

John Agee

Mr. Agee received a BA in Economics and Accounting from St. John's University in Collegeville, Minnesota and an MBA from the University of Minnesota. Mr. Agee received his CPA from the State of Minnesota in 1975 and he worked early in his career at Arthur Andersen & Co. His current CPA status is inactive. Mr. Agee has served on the audit committees of several private and public company boards of directors, most recently with Maui Land and Pineapple Company, a New York Stock Exchange Company. Mr. Agee has also served as chairman of the board of several private companies.

For the bulk of his career, Mr. Agee worked as head of private investment operations for a number of prominent US family offices. In this capacity Mr. Agee invested in a wide spectrum of asset classes including private equity and in public companies. In these executive positions, the CFO of the investment offices reported directly to Mr. Agee along with other senior members of his staff. Mr. Agee has a sound understanding of generally accepted accounting principles and the application of those principles, the ability to perform analysis of financial statements and an understanding of the internal controls necessary to prepare timely and accurate financial statements. Mr. Agee has a strong knowledge of the roles and responsibilities of the board of directors and related committees.

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M. S. (Mickey) Abougoush

Mr. Abougoush holds a B.Sc. Chemical Engineering degree from the University of Alberta and has completed the director’s education program sponsored by the Institute of Corporate Directors. He has previously served as audit committee chair of a publicly traded company.

Charles Selby

Mr. Selby is both a lawyer and Professional Engineer, holding B.Sc. (Hons) and LL.B degrees. He is the CEO of Montana Exploration Corp. (formerly AltaCanada Energy Corp.), and is the president of Caledonian Royalty Corporation and Caledonian Global Corporation. He was also formerly the Chairman and CEO of Canadian Star Energy Limited. Mr. Selby was formerly the Chief Financial Officer of AltaCanada Energy Corp., an oil and gas company listed on the TSX-Venture Exchange, and was formerly the Vice President and Corporate Secretary of Pengrowth Corporation, the administrator of Pengrowth Energy Trust.

All members of the Audit Committee have the educational background and experience that provides them with the knowledge and ability to understand accounting policies and related financial reporting and disclosure issues, in order to fulfill their duties and responsibilities as an Audit Committee member.

Audit Committee Oversight - The company’s board has adopted all recommendations by the Audit Committee with respect to the nomination and compensation of the external auditor.

Pre-Approval Policies and Procedures - The Audit Committee has adopted a formal policy requiring the pre-approval of all audit and non-audit related services to be provided by the company’s principal auditor prior to the commencement of the engagement, subject to the following:

· the Audit Committee will review annually a list of audit, audit related, recurring tax and other non-audit services and recommend pre-approval of those services for the upcoming year. Any additional requests will be addressed on a case-by-case specific engagement basis;

· for engagements not on the pre-approved list, the Audit Committee has delegated to the Chair of the Committee the authority to pre-approve individual non-audit service engagements with expected costs of up to $32,000 (annual aggregate total) subject to reporting to the Audit Committee, at its next scheduled meeting; and

· for engagements not on the pre-approved list and with expected costs greater than $32,000 (annual aggregate total), the entire Audit Committee must approve this service, generally at its next scheduled meeting.

COMPENSATION COMMITTEE

Composition of the Compensation Committee

Messrs. Selby (Chair), Agee, Valentine and Vathyam are members of the Compensation Committee, and are all independent. The charter or mandate of the Compensation Committee is posted on the company website and may viewed at www.nxtenergy.com or you may request a copy be mailed to you by writing to our offices at Suite 1400, 505 – 3rd Street SW, Calgary, Alberta, Canada, T2P 3E6.

Responsibilities of the CompensationCommittee

The Compensation Committee's duties, as outlined in its charter, are to deal with the assessment of management and succession to key positions and compensation within the company. The Compensation Committee shall assist the board in discharging the board’s oversight responsibilities relating to the compensation and retention of key senior management employees, and in particular the CEO, with the skills and expertise needed to enable the company to achieve its goals and strategies at fair and competitive compensation and appropriate performance incentives. In discharging its responsibilities, the Compensation Committee will report and, where appropriate, make recommendations to the board in respect of the matters identified in the charter.

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39

D.           Employees

Fiscal year ended December 31, 2014

As of the fiscal year ended December 31, 2014 we had a total of 14 employees and 3 full-time contractors. NXT has no employees that are members of a labor union. The following summarizes the number of employees and independent contractors by main job function as at December 31, 2014:

Function	employees		contractors		total
Senior management team		4		-		4
Finance, administration and sales		3		1		4
Operations and technical development		7		2		9
Total		14		3		17

All of the above noted staff are based in Calgary, Canada. The 9 operations staff includes one research scientist holding a Ph.D. and a geophysicist. We periodically engage other technical and administrative contract personnel as required on a project basis.

Fiscal year ended December 31, 2013

As at December 31, 2013, we had a staff of 16, all based in Calgary, Canada except for one in Bogota, Colombia. Our staff consisted of a 3 member senior management team, 5 finance and administrative persons (including one in Colombia), and 8 operations staff which includes one research scientist holding a Ph.D. and one consulting geophysicist. We also periodically engaged other technical and administrative contract personnel as required on a project basis.

Fiscal year ended December 31, 2012

At December 31, 2012 we had a staff of 16 (all based in Calgary, Canada except for one in Bogota, Colombia). This consisted of a 4 member senior management team, 4 finance and administrative persons (including one senior administrator in Colombia), and 8 operations staff (including one on short-term maternity leave) which includes one research scientist holding a Ph.D. and one consulting geophysicist. We also periodically engaged other technical and administrative contract personnel as required on a project basis. Additional staff were added in early 2012 as survey contract activity started to expand significantly.

E.           Share ownership

Information on the ownership of our common shares is given under Item 7, Major Shareholders and Related Party Transactions.

Summary of Stock Options and Stock Appreciation Rights Granted To Executive Officers and Directors

All stock options have been granted pursuant to the Stock Option Plan (the “Plan”) of the company or predecessor plans with substantially the same terms. The Plan is approved and ratified by shareholders annually at the company’s annual general meeting (“AGM”). The Plan, as was re-approved and ratified at the company’s last AGM held on June 26, 2014, is incorporated by reference into this Form 20-F as Exhibit No. 2.18. Pursuant to this Plan, all stock option grants must be approved by the board of directors of the company. Stock options may be granted to the directors, officers and employees of NXT and to consultants retained by the company. The aggregate number of common shares reserved for issuance under this Plan, and any other plan of the Corporation, shall not, at the time of the stock option grant, exceed ten percent of the total number of issued and outstanding shares (calculated on a non-diluted basis) unless the company receives the permission of the stock exchange or exchanges on which the shares are then listed to exceed such threshold. No stock option shall be exercisable for a period exceeding five (5) years from the date the stock option is granted unless the company receives the permission of the stock exchange or exchanges on which the shares are then listed and as specifically provided by the board and as permitted under the rules of any stock exchange or exchanges on which the shares are then listed, and in any event, no stock option shall be exercisable for a period exceeding ten (10) years from the date the option is granted.

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40

Stock options are generally issued with a three year vesting period wherein entitlement to exercise one third of the options granted shall vest at the end of each of the first three years following the grant date. The exercise price for an option grant is set at the last trade price on the date preceding the grant or some higher price at the discretion of the board.

The following stock options were granted to NXT’s executive officers and directors in the three prior fiscal years ended December 31, 2014, 2013, and 2012 and to date to April 27, 2015:

In 2014 and to date in 2015:

· 260,000 stock options with an exercise price of $1.35 were granted to an officer of NXT in December 2014.

· a total of 55,000 stock options with an exercise price of $1.35 per share were granted in January 2015 to directors as part of their board of director fees earned for the period July to December 2014. All of these options had immediate vesting at the grant date.

· a total of 55,000 stock options with an exercise price of $1.39 per share were granted in July 2014 to directors as part of their board of director fees earned for the period January to June 2014. All of these options had immediate vesting at the grant date.

In 2013:

· 150,000 options with an exercise price of $0.76 were granted to a new director who joined NXT in January 2013.

· 150,000 options with an exercise price of $0.66 were granted to a V-P who joined the company in April 2013 (and who left NXT before the end of 2013, forfeiting all of these stock options, none of which had vested).

· a total of 52,500 stock options with an exercise price of $0.86 per share were granted in July 2013 to directors in conjunction with board of director fees earned for the period January to June 2013.

· 20,000 options with an exercise price of $1.30 were granted to the new Corporate Secretary who joined NXT in August 2013 (and who resigned from the company in April, 2014).

· a total of 65,000 stock options with an exercise price of $1.83 per share were granted in December 2013 to directors as part of their board of director fees earned for the period July to December 2013. All of these options had immediate vesting at the grant date.

In 2012:

· 150,000 options with an exercise price of $0.89 were granted by NXT to a new V-P in January 2012.

· In July 2012, a total of 410,000 options were granted to five of the directors of the company, and a total of 420,000 options were granted to five officers of the company, all with an exercise price of $0.86 per share.

· a total of 90,000 options were granted to five directors of the company in December 2012, all with an exercise price of $0.76 per share.

20-F for the year ended December 31, 2014

41

The following table sets forth information regarding outstanding stock options which have been granted to our directors and officers as of April 27, 2015. All options are issued at an exercise price set at the closing trade price on the trading date prior to the grant. Each option entitles the option holder to acquire one common share of the company.

Issued and outstanding stock options held by directors and officers of the company

(as of April 27, 2015)

Name and  Position	Exercise  Price		Option Grant Date	Option Expiry  Date	# of options held		% of total outstanding options
George Liszicasz	$	0.86	23-Jul-2012	23-Jul-2017		100,000
CEO & Director	$	0.76	24-Dec-2012	24-Dec-2017		15,000
	$	0.86	5-Jul-2013	5-Jul-2018		7,500
	$	1.83	18-Dec-2013	18-Dec-1018		7,500
	$	1.39	9-Jul-2014	9-Jul-2019		7,500
	$	1.35	9-Jan-2015	9-Jan-2020		7,500
						145,000		4.5%
Andrew Steedman	$	1.16	22-Jul-2011	22-Jul-2016		80,000
V-P Operations	$	0.86	23-Jul-2012	23-Jul-2017		100,000
	$	1.35	9-Jan-2015	9-Jan-2020		260,000
						440,000		13.8%
Greg Leavens	$	1.16	22-Jul-2011	22-Jul-2016		150,000
V-P Finance & CFO	$	0.86	23-Jul-2012	23-Jul-2017		100,000
						250,000		7.8%
Mickey Abougoush	$	0.86	23-Jul-2012	23-Jul-2017		70,000
Director	$	0.76	24-Dec-2012	24-Dec-2017		15,000
	$	0.86	5-Jul-2013	5-Jul-2018		7,500
	$	1.83	18-Dec-2013	18-Dec-2018		7,500
	$	1.39	9-Jul-2014	9-Jul-2019		7,500
	$	1.35	9-Jan-2015	9-Jan-2020		7,500
						115,000		3.6%
John Agee	$	1.16	22-Jul-2011	22-Jul-2016		120,000
Director	$	0.86	23-Jul-2012	23-Jul-2017		30,000
	$	0.76	24-Dec-2012	24-Dec-2017		30,000
	$	0.86	5-Jul-2013	5-Jul-2018		15,000
	$	1.83	18-Dec-2013	18-Dec-2018		20,000
	$	1.39	9-Jul-2014	9-Jul-2019		17,500
	$	1.35	9-Jan-2015	9-Jan-2020		17,500
						250,000		7.8%
Charles Selby	$	0.86	23-Jul-2012	23-Jul-2017		120,000
Director	$	0.76	24-Dec-2012	24-Dec-2017		15,000
	$	0.86	5-Jul-2013	5-Jul-2018		7,500
	$	1.83	18-Dec-2013	18-Dec-2018		7,500
	$	1.39	9-Jul-2014	9-Jul-2019		7,500
	$	1.35	9-Jan-2015	9-Jan-2020		7,500
						165,000		5.2%
John Tilson
Director						-		0.0%
Thomas Valentine	$	0.86	23-Jul-2012	23-Jul-2017		70,000
Director	$	0.76	24-Dec-2012	24-Dec-2017		15,000
	$	0.86	5-Jul-2013	5-Jul-2018		7,500
	$	1.83	18-Dec-2013	18-Dec-2018		7,500
	$	1.39	9-Jul-2014	9-Jul-2019		7,500
	$	1.35	9-Jan-2015	9-Jan-2020		7,500
						115,000		3.6%

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42

Krishna Vathyam	$	0.76	25-Jan-2013	25-Jan-2018	150,000
Director	$	0.86	5-Jul-2013	5-Jul-2018	7,500
	$	1.83	18-Dec-2013	18-Dec-2018	15,000
	$	1.39	9-Jul-2014	9-Jul-2019	7,500
	$	1.35	9-Jan-2015	9-Jan-2020	7,500
					187,500	5.9%
Total number of stock options held by officers and directors					1,667,500	52.3%

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major shareholders

The following table sets forth information concerning the beneficial ownership of our common shares as of April 27, 2015 by persons who beneficially own 5% or more of the outstanding common shares of NXT, each person who is a director of NXT, each executive officer named in this Form 20-F, each individual referenced in Item 6.E above and all directors and executive officers as a group. For the purposes of this Form 20-F, a person is considered to be a “beneficial owner” of common shares in the company if that person has, or shares with another person, the power to direct the vote or disposition of the common shares or to receive the economic benefit of ownership of the common shares. A person is also deemed to be a beneficial owner of a common share if that person has the right to acquire the share within 60 days by option or other agreement (whether or not, in the case of a stock option, the current market price of the underlying common share is below the stock option exercise price). Therefore, the table below also reflects, for each such beneficial owner, the number of options, warrants and preferred shares either exercisable or convertible into common shares within 60 days of April 27, 2015 that are owned by each beneficial owner, but, in determining the percentage ownership and general voting power of such person, does not assume the exercise of options or the conversion of securities owned by any other person.

We believe that the beneficial owners of common shares listed below, based on information they furnished, have sole voting and investment power over the number of shares listed opposite their names. The percentage of beneficial ownership is based on 44,965,509 common shares issued and outstanding as of April 27, 2015. This total of 44,965,509 excludes all outstanding options and warrants that are exercisable within 60 days of April 27, 2015 (see also footnote 5 below).

Beneficial Ownership of Directors and Officers (“D&O”)	Beneficially Owned as at April 27, 2015 5	Percent of Common Shares 5
Directors and Officers:
George Liszicasz 1 & 2	7,304,156	15.9 %
Mickey S. Abougoush 1	161,666	* 3
John Agee 1	423,000	* 3
Charles Selby 1	523,161	1.1 %
John Tilson	2,711,748	5.9 %
Thomas E. Valentine 1	81,666	* 3
Krishna Vathyam 1	132,500	* 3
Greg Leavens 2	274,834	* 3
Andrew Steedman 2	741,200	1.6 %
Total D & O Common Shares	12,353,931	26.9 %
Major Shareholders (> 5%):
Mork Capital Management, MCAPM, L.P., and Michael Mork 4	3,540,394	7.9 %

20-F for the year ended December 31, 2014

43

1 Director of NXT

2 Officer of NXT

3 Beneficially owns less than one percent of the total outstanding common shares

4 based on information provided to the company as at April 10, 2015 by Mork Capital Management, MCAPM, L.P. and its principal, Mr. Michael Mork

5 For each beneficial owner’s percent of common shares calculation, any stock options that they hold which are or become exercisable within 60 days of April 27, 2015 have been included in both the numerator and denominator for purposes of their individual calculation as follows:

	common		vested &
	shares		exerciseable
	held		options		total
Liszicasz		7,202,490		101,666		7,304,156
Abougoush		80,000		81,666		161,666
Agee		203,000		220,000		423,000
Selby		408,161		115,000		523,161
Tilson		2,711,748		-		2,711,748
Valentine		-		81,666		81,666
Vathyam		-		117,500		117,500
Leavens		58,168		216,666		274,834
Steedman		594,534		146,666		741,200
		11,258,101		1,080,830		12,338,931

Major changes in percentage ownership of persons who beneficially own (as at the respective year end dates) 5% or more of the outstanding common shares of NXT in the last 3 years:

● in May 2013, George Liszicasz acquired 2,000,000 common shares upon conversion of an initial total of 2,000,000 of the 10,000,000 preferred shares which he held.

● In 2012, John Tilson participated in NXT’s private placement financing, and acquired 200,000 “Units” (which consisted of one common share and one warrant to acquire a common share at a price of US $1.20) at a price of US $0.75 per Unit.

● Subsequently in 2014, John Tilson exercised the 200,000 warrants and acquired 200,000 NXT common shares at an exercise price of US $1.20 per common share.

The following information is taken from the records of Computershare Trust Company located in Calgary, Alberta, Canada, the company's transfer agent for its common shares. As of April 27, 2015 there were 141 registered holders of record of the company's common shares including 83 in the United States who collectively held 21,147,946 common shares, representing 47.0% of NXT’s 44,965,509 total issued and outstanding common shares.

NXT is a foreign private issuer for its current fiscal year. As of the last business day of the company’s second fiscal quarter, the majority of the company’s executive officers and directors are Canadian citizens who reside in Canada, the majority of the company’s assets are in Canada, and the company is administered principally in Canada. The company’s major shareholders in common shares have the same voting rights as other holders of common shares. The company is not directly or indirectly owned or controlled by another corporation, a foreign government or any other natural or legal persons severally or jointly. There are no arrangements known to the company which may result in a change of control of the company.

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44

B. Related party transactions

Summarized below are certain other transactions and business relationships between NXT and persons who are related parties, for the current fiscal year ended December 31, 2014 through the current date, April 27, 2015:

· Details of stock options which have been granted to related parties during the above noted period are included with Item 6.E above. Details of stock options which have been exercised by related parties are noted below.

· NXT retains as legal counsel a law firm of which one of its directors is a partner. In 2014, we incurred legal expenses of $18,549 with this firm, for which a total of $124 is included in accounts payable as at December 31, 2014.

· Accounts payable and accrued liabilities at December 31, 2014 includes a total of $23,673 related to re-imbursement of expenses owing to persons who are directors and officers of the company.

· In March 2014, an officer of the company exercised a total of 13,334 common share purchase warrants (exercisable at US $1.20 per share) which had been received pursuant to participation in the 2012 private placement financing of units, and acquired 13,334 common shares of NXT.

· Directors and officers of NXT exercised stock options to acquire common shares of the company as follows:

		# options		exercise price		proceeds
	month exercised	exercised		per share		to NXT
Director	December 2014		30,000	$	0.63	$	18,900
Director	December 2014		30,000		0.63		18,900
Officer	December 2014		60,000		0.63		37,800
Director	March 2014		50,000		0.63		31,500
Officer	February 2014		150,000		0.53		79,500
			320,000				186,600

C. Interests of experts and counsel

Not applicable.

ITEM  8. FINANCIAL INFORMATION

Consolidated statements and other financial information

The company’s consolidated financial statements are stated in Canadian dollars and are prepared in accordance with U.S. generally accepted accounting principles.

The financial statements and notes thereto as required under Item 8 are attached as Exhibit 15.1 to this annual report and are incorporated by reference herein. The audit report of KPMG LLP is included therein immediately preceding the consolidated financial statements and is also incorporated by reference herein.

No significant events or changes have occurred subsequent to the date of the December 31, 2014 consolidated financial statements, except as otherwise disclosed therein.

20-F for the year ended December 31, 2014

45

Legal Proceedings

To the best of the company's knowledge, there are no legal or arbitration proceedings existing or pending which have had or may have, significant effects on the company's financial position or profitability and no such proceedings are pending or known to be contemplated by governmental authorities.

Dividend Policy

The company does not pay dividends.

ITEM 9. THE OFFER AND LISTING

A. Offer and listing details

The following tables set forth the price history of the company’s common shares listed on the OTC in the United States and on the TSX Venture Exchange (“TSX-V”) in Canada.1

		OTC QB				TSX-V
Period		High		Low		High		Low
		(in US$)		(in US$)		(in Cdn$)		(in Cdn$)
5 Prior fiscal years
Year ended	December 31, 2014	$	1.80	$	0.84	$	1.93	$	0.90
Year ended	December 31, 2013	$	1.99	$	0.56	$	2.04	$	0.56
Year ended	December 31, 2012	$	1.16	$	1.60	$	1.13	$	0.59
Year ended	December 31, 2011	$	1.29	$	0.40	$	1.20	$	0.32
Year ended	December 31, 2010	$	1.30	$	0.23	$	1.35	$	0.31
Prior Quarters
Quarter ended	Q1 - March 31, 2015	$	1.48	$	1.01	$	1.83	$	1.23
Quarter ended	Q4 - December 31, 2014	$	1.50	$	0.94	$	1.73	$	1.08
Quarter ended	Q3 - September 30, 2014	$	1.53	$	1.10	$	1.65	$	1.15
Quarter ended	Q2 - June 30, 2014	$	1.34	$	0.84	$	1.45	$	0.90
Quarter ended	Q1 - March 31, 2014	$	1.80	$	1.27	$	1.93	$	1.44
Quarter ended	Q4 - December 31, 2013	$	1.99	$	1.37	$	2.04	$	1.40
Quarter ended	Q3 - September 30, 2013	$	1.61	$	0.78	$	1.65	$	0.86
Quarter ended	Q2 - June 30, 2013	$	0.85	$	0.56	$	0.86	$	0.56
Quarter ended	Q1 - March 31, 2013	$	0.87	$	0.64	$	0.86	$	0.63
Last 6 months
Month ended	March 31, 2015	$	1.48	$	1.32	$	1.83	$	1.65
Month ended	February 28, 2015	$	1.45	$	1.18	$	1.80	$	1.48
Month ended	January 31, 2015	$	1.22	$	1.01	$	1.60	$	1.23
Month ended	December 31, 2014	$	1.25	$	0.94	$	1.43	$	1.08
Month ended	November 30, 2014	$	1.49	$	1.27	$	1.73	$	1.41
Month ended	October 31, 2014	$	1.50	$	1.32	$	1.70	$	1.41

(1)See section C. “Markets” below for further information on share trading history.

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46

B.           Plan of distribution

Not applicable.

C.           Markets

Our common shares are currently quoted in the United States on the OTC Markets QB Exchange under the symbol “NSFDF”, in Canada on the TSX-V under the symbol “SFD.V” and in Europe on the Frankfurt and Berlin Exchanges (both of these listings are inactive) under the symbol “EFW”. The company’s common shares commenced trading on the US Over-The-Counter Bulletin Board (“OTCBB”) pursuant to a reverse takeover transaction in 1996, and were approved for listing on the Frankfurt and Berlin Exchanges in January 2004 and on the TSX-V in December 2007.

D.           Selling shareholders

Not applicable.

E.           Dilution

Not applicable.

F.           Expenses of the issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A.           Share capital

Not applicable.

B.           Memorandum and articles of association

NXT was incorporated in the State of Nevada. With respect to the foregoing items, the law applicable to NXT in the Province of Alberta is not significantly different from that in the State of Nevada. NXT was established in Alberta pursuant to a Certificate of Continuance issued October 24, 2003 by the Registrar of Corporations of the Province of Alberta. NXT’s Alberta Corporate Access Number is 2010730915. The Articles of Continuance of NXT were amended to create the Series 1 Preferred Shares on December 28, 2006, and provide that there are no restrictions on the nature of the business that may be carried on by NXT. On September 19, 2008, pursuant to Articles of Amendment, the name of the company was changed from Energy Exploration Technologies Inc. to NXT Energy Solutions Inc.

Quorum

The board of directors of NXT may fix the quorum for meetings of the board or of a committee of the board, but unless so fixed, a majority of the directors or of a committee of directors holding office at the time of the meeting constitutes a quorum provided that no business may be transacted unless at least half of the directors present are resident Canadians. Business cannot be transacted without a quorum. A quorum of directors may vote on any matter of business properly brought before the meeting provided that where a director is a party to a material contract or proposed material contract or is a director or an officer of or has a material interest in any person who is a party to a material contract or proposed material contract with NXT, such director must disclose his or her interest at the earliest possible date, request the conflict be noted in the minutes of the meeting and, with few exceptions, refrain from voting on the matter in which the director has a conflict of interest. There is no limitation on the board of directors to vote on matters of their remuneration as a director, officer, employee or agent of NXT or of an affiliate of NXT.

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Borrowing Powers

The board of directors may, without authorization of the shareholders of NXT:

(a)   borrow money on the credit of NXT;

(b)   issue, reissue, sell or pledge debt obligations of NXT;

(c)   subject to restrictions respecting financial assistance prescribed in the ABCA, guarantee, on behalf of NXT, the performance of an obligation of any person; and

(d)   mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of NXT, owned or subsequently acquired, to secure any obligation of NXT.

The board of directors of NXT may, by resolution, delegate to a director, a committee of directors or an officer all or any of the foregoing borrowing powers.

Directors

A person is qualified to be or stand for election as a director provided such person is at least 18 years of age, is not bankrupt and is not mentally incapacitated pursuant to applicable mental health legislation of the Province of Alberta or pursuant to an order of the courts of the Province of Alberta. There is no provision in NXT’s Articles or By-Laws relating to the retirement or non-retirement of directors under an age limit requirement. There is also no requirement in NXT’s Articles or By-Laws for a director to hold securities of NXT.

Pursuant to the ABCA, a director or officer shall not be disqualified by his office, or be required to vacate his office, by reason only that he is a party to, or is a director or officer or has a material interest in any person who is a party to, a material contract or proposed material contract with NXT or subsidiary thereof. Such a director or officer shall, however, disclose the nature and extent of his interest in the contract at the time and in the manner provided by the ABCA. Any such contract or proposed contract shall be referred to the board of directors of NXT or shareholders for approval even if such contract is one that in the ordinary course of NXT's business would not require approval by the board or shareholders. Subject to the provisions of the ABCA, a director shall not by reason only of his office be accountable to NXT or to its shareholders for any profit or gain realized from such a contract or transaction, and such contract or transaction shall not be void or voidable by reason only of the director's interest therein, provided that the required declaration and disclosure of interest is properly made, the contract or transaction is approved by the directors or shareholders, and it is fair and reasonable to NXT at the time it was approved and, if required by the ABCA, the director refrains from voting as a director on the contract or transaction and absents himself from the director's meeting at which the contract is authorized or approved by the directors, except attendance for the purpose of being counted in the quorum.

Rights Attached to Common Shares

The holders of the common shares are entitled to dividends as and when declared by the directors of NXT, to one vote per share at meetings of shareholders of NXT, and upon liquidation, subject to the rights of the holders of preferred shares, are entitled to share rateably with the holders of the common shares in all distributions of assets of NXT.

Rights Attached to Preferred Shares

Preferred shares may be issued from time to time in one or more series. The board of directors of NXT is expressly authorized to provide by resolution duly adopted prior to issuance, for the creation of each such series and to fix the designation, rights, privileges, restrictions and conditions attached to the shares of each such series, including the rate or amount of dividends or the method of calculating dividends, the dates of payment of dividends, the redemption, purchase and/or conversion prices and terms and conditions of redemption, purchase and/or conversion, and any sinking fund or other provisions.

The preferred shares of each series shall, with respect to the payment of dividends and the distribution of assets or return of capital in the event of liquidation, dissolution or winding-up of NXT, whether voluntary or involuntary, or any other return of capital or distribution of the assets of NXT among its shareholders for the purpose of winding up its affairs, rank on a parity with the preferred shares of every other series and be entitled to preference over the common shares and over any other shares of NXT, if any, ranking junior to the preferred shares. The preferred shares of any series may also be given other preferences, not inconsistent with the articles of continuance of NXT (the "Articles"), over the common shares and any other shares of NXT ranking junior to the preferred shares of a series as may be fixed by the board of directors of NXT.

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48

If any cumulative dividends or amounts payable on the return of capital in respect of a series of preferred shares are not paid in full, all series of preferred shares shall participate rateably in respect of accumulated dividends and return of capital.

Unless the board of directors of NXT otherwise determine in the articles of amendment designating a series of preferred shares, the holder of each share of a series of preferred shares shall not, as such, be entitled to receive notice of or vote at any meeting of shareholders, except as otherwise specifically provided in the ABCA.

Rights Attached to Preferred Shares - Series 1

NXT is authorized to issue up to 10,000,000 preferred shares - Series 1. In 2006, NXT issued 10,000,000 preferred shares - Series 1 (the “Series 1 Shares”), of which 8,000,000 were outstanding as at December 31, 2014, with the following material attributes:

Voting Rights

Subject to applicable law, the holders of the Series 1 Shares shall not be entitled to any voting rights or to receive notice of or to attend any meeting of the shareholders of NXT.

Dividends

The holders of the Series 1 Shares shall not be entitled to receive any dividends on the Series 1 Shares.

Conversion

The Series 1 Shares are convertible under the terms of the TTA (see Item 4.B.), until its expiry on December 31, 2015, as follows:

(a)   as to 20% of the total issued Series 1 Shares on December 31, 2006 (this conversion to common shares formally occurred in May, 2013);

(b)   as to an additional 20% of the total issued Series 1 Shares on the date that gross cumulative aggregate revenues of NXT reach US $50 million;

(c)   as to an additional 20% of the total issued Series 1 Shares on the date that gross cumulative aggregate revenues of NXT reach US $100 million;

(d)   as to an additional 20% of the total issued Series 1 Shares on the date that gross cumulative aggregate revenues of NXT reach US $250 million; and

(e)   as to an additional 20% of the total issued Series 1 Shares on the date that gross cumulative aggregate revenues of NXT reach US $500 million.

An additional bonus of 1,000,000 NXT common shares are issuable in the event that cumulative SFD® revenues exceed US $500 million.

Upon a change of control of NXT, as to the amount of Series 1 Shares not yet expired, converted or redeemed, as the case may be, in accordance with the terms thereof, the Series 1 Shares shall become convertible as follows:

(a)   as to all of the total issued Series 1 Shares if the sale price per common share paid by an acquirer on transaction constituting a change of control of NXT or the per share amount received by the holders of common shares on a liquidation of the assets of NXT or the winding-up or re-arrangement of NXT's business is equal to or exceeds $10;

(b)   as to 60% of the total issued Series 1 Shares if the sale price per common share paid by an acquirer on a transaction constituting a change of control of NXT or the per share amount received by the holders of common shares on a liquidation of the assets of NXT or the winding-up or re-arrangement of NXT's business is equal to or exceeds $5; and

(c)   as to 20% of the total issued Series 1 Shares regardless of the sale price per common share paid by an acquirer on transaction constituting a change of control of NXT or the per share amount received by the holders of common shares on a liquidation of the assets of NXT or the winding-up or re-arrangement of NXT's business.

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The Series 1 Shares specified above held by the holder shall be convertible at the option of the holder, subject to the terms and provisions hereof, into common shares at the rate of one common share per each Series 1 Share, without payment of any additional consideration.

The board of directors shall have the right at any time to cause the conversion of all or a portion of the Series 1 Shares at the discretion of the board. NXT intends to convert the remaining 8,000,000 preferred shares, and is currently assessing a possible acceleration of the conversion prior to the December 31, 2015 maturity date.

Upon a change of control, a holder shall be entitled to convert, in full or in part, the Series 1 Shares specified above, until the expiration of ninety (90) days after the date on which the holder of the Series 1 Shares gives or receives notice that such holder will no longer be providing services to NXT, or the date on which such holder is terminated by NXT.

The conversion of Series 1 Shares into common shares shall be evidenced by the holder delivering at any time during usual business hours at the head office of NXT:

(a)   written notice, signed by the holder, specifying the number of Series 1 Shares to be converted; and

(b)   the certificate or certificates representing the Series 1 Shares to be converted.

The rights of the holder of such Series 1 Shares, as the holder thereof, shall cease at the date of conversion into common shares and the person or persons entitled to receive common shares upon such conversion shall be treated for all purposes as having become the holder or holders of record of such common shares at such time.

The registered holder of any common shares resulting from any such conversion shall be entitled to rank equally with the registered holders of all other common shares in respect of all dividends declared payable to holders of common shares of record on any date after the date of conversion into common shares.

NXT shall be entitled to make all tax withholdings, if any, as required by law, with respect to a conversion of Series 1 Shares for common shares.

Redemption

Subject to applicable law and subject to NXT's right to force the conversion of the Series 1 Shares, NXT shall be required to redeem and shall be deemed to have redeemed all of the Series 1 Shares held by the holder on December 31, 2015 at a price of $0.001 per Series 1 Share (the “Redemption Price”).

On any redemption of Series 1 Shares, NXT shall give a notice in writing of its redemption of the Series 1 Shares (the "Redemption Notice") to each person who at the date of giving of such notice is a registered holder of Series 1 Shares to be redeemed, setting out the date the Series 1 Shares are to be redeemed or are deemed to have been redeemed (the "Redemption Date") and the number of Series 1 Shares which are to be redeemed or are deemed to have been redeemed.

Liquidation

The holders of Series 1 Shares shall not be entitled in the event of any liquidation, dissolution or winding up of NXT, whether voluntary or involuntary, or any other distribution of the assets of NXT among its shareholders for the purpose of winding up its affairs to any return of capital other than payment of the Redemption Price for each Series 1 Share in preference to the holders of common shares.

After payment to the holders of the Series 1 Shares of the amounts so payable to them, the holders of Series 1 Shares shall not be entitled to share in any further distribution of the property or assets of NXT.

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Alteration of the Rights of Shareholders

Under the ABCA, any substantive change to the Articles (including, but not limited to, change of any maximum number of shares that NXT is authorized to issue, creation of new classes of shares, add, change or remove any rights, privileges, restrictions and conditions in respect of all or any of its shares, whether issued or unissued, change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series) or other fundamental changes to the capital structure of NXT, including a proposed amalgamation or continuance of NXT out of the jurisdiction, requires shareholder approval by not less than 2/3 of the votes cast by shareholders voting in person or by proxy at a shareholders’ meeting called for that purpose. In certain prescribed circumstances, holders of shares of a class or of a series are entitled to vote separately as a class or series on a proposal to amend the Articles whether or not shares of a class or series otherwise carry the right to vote. The holders of a series of shares of a class are entitled to vote separately as a series only if the series is affected by an amendment in a manner different from other shares of the same class.

Meetings of Shareholders

NXT’s By-Laws provide that the board of directors shall call an annual meeting of shareholders to be held not later than eighteen months after the date of incorporation and subsequently, not later than fifteen months after holding the last preceding annual meeting. NXT’s By-Laws provide that the board of directors may at any time call a special meeting of shareholders. Only the registered holders of shares are entitled to receive notice of and vote at annual and special meetings of shareholders, except to the extent that:

(a)   if a record date is fixed, the person transfers ownership of any of the person’s shares after the record date; or

(b)   if no record date is fixed, the person transfers ownership of any of the person’s shares after the date on which the list of shareholders is prepared; and

(c)   the transferee of those shares;

● produces properly endorsed share certificates; or

● otherwise establishes ownership of the shares; and

● demands, not later than ten (10) days before the meeting, that the transferee’s name be included in the list before the meeting;

in which case the transferee is entitled to vote the shares.

The ABCA also permits the holders of not less than 5% of the issued voting securities of NXT to give notice to the board of directors requiring them to call and hold a meeting of NXT.

The only persons entitled to be present at a meeting of shareholders are:

(a)   the shareholders entitled to vote at the meeting;

(b)   the board of directors of NXT;

(c)   the external auditor of NXT; and

(d)   any others who, although not entitled or required under the provisions of the ABCA, any unanimous shareholder agreement, or the Articles or the By-Laws, are allowed to be present at the meeting.

Any other person may be admitted only on the invitation of the Chairperson of the meeting or with the consent of the meeting.

There are no restrictions in NXT’s Articles or By-Laws as to the number of shares that may be held by non-residents other than restrictions set out in the Investment Canada Act (the “ICA”) (Canada), as further described under Item 10.D – “Exchange Controls” below.

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Change of Control

There are no specific provisions in the Articles or By-Laws of NXT that have the effect of delaying, deferring or preventing a change of control of NXT and that would operate only with respect to a merger, acquisition or corporate restructuring involving NXT (or any of its subsidiaries). Notwithstanding this, the board of directors, under the general powers conferred to it under NXT’s By-Laws, have the authority to approve and invoke a shareholders rights plan that will protect shareholders from unfair, abusive or coercive take-over strategies, including the acquisition or control of NXT by a bidder in a transaction or series of transactions that does not treat all shareholders equally or fairly or that does not afford all shareholders an equal opportunity to share in any premium paid upon an acquisition of control. NXT has not adopted such a plan.

Shareholder Ownership Disclosure

There are no provisions in NXT’s By-Laws regarding public disclosure of individual shareholdings.

C.           Material contracts

Each material contract, other than contracts entered into in the ordinary course of business, to which the company has been a party, for the two years immediately preceding publication of this annual report, is listed as an exhibit to this annual report and is summarized elsewhere herein.

D.           Exchange controls

There are no governmental laws, decrees or regulations in Canada relating to restrictions on the export or import of capital, or affecting the remittance of interest, dividends or other payments to non-residents. Dividends paid to U.S. residents, however, are subject to a 15% withholding tax or a 5% withholding tax for dividends if the shareholder is a corporation owning at least 10% of the outstanding voting shares of NXT pursuant to Article X of the reciprocal tax treaty between Canada and the U.S.

Except as provided in the ICA, which has provisions that restrict the holding of voting shares by non-Canadians, there are no limitations specific to the rights of non-Canadians to hold or vote the common shares under the laws of Canada or the Province of Alberta, or in the charter documents of NXT or its subsidiaries.

Management of NXT believes that the following summary fairly describes those provisions of the ICA pertinent to an investment in NXT by a person who is not a Canadian resident (a “non-Canadian”).

The ICA requires a non-Canadian making an investment which would result in the acquisition of control of a Canadian business (i.e. the gross value of the assets of which exceed a certain monetary threshold) to identify, notify, or file an application for review with the Investment Review Division of Industry Canada (“IRD”).

The notification procedure involves a brief statement of information about the investment on a prescribed form which is required to be filed with the IRD by the investor at any time up to 30 days following implementation of the investment. It is intended that investments requiring only notification will proceed without government intervention unless the investment is in a specific type of business activity related to Canada’s cultural heritage and national identity.

If an investment is reviewable under the ICA, an application for review in the form prescribed is normally required to be filed with the IRD prior to the investment taking place and the investment may not be implemented until the review has been completed and the Minister of Industry Canada (the “Minister”) (the Minister responsible for Investment Canada) is satisfied that the investment is likely to be of net benefit to Canada. The Minister has up to 75 days to make this determination. If the Minister is not satisfied that the investment is likely to be of net benefit to Canada, the non-Canadian must not implement the investment or, if the investment has been implemented, may be required to divest himself of control of the business that is the subject of the investment.

The following investments by non-Canadians are subject to notification under the ICA:

1.   An investment to establish a new Canadian business; and

2.   An investment to acquire control of a Canadian business that is not reviewable pursuant to the Act.

The following investments by a non-Canadian are subject to review under the ICA:

1.   An investment is reviewable if there is an acquisition of a Canadian business and the asset value of the Canadian business being acquired equals or exceeds the following thresholds:

(a)   For non-World Trade Organization (“WTO”) investors, the threshold is $5 million for a direct acquisition and $50 million for an indirect acquisition; the $5 million threshold will apply however for an indirect acquisition if the asset value of the Canadian business being acquired exceeds 50% of the asset value of the global transaction;

(b)   Except as specified in paragraph (c) below, a threshold is calculated annually for reviewable direct acquisitions by or from WTO investors. The threshold for 2012 was $330 million. Pursuant to Canada’s international commitments, indirect acquisitions by or from WTO investors are not reviewable;

(c)   The limits set out in paragraph (a) apply to all investors for acquisitions of a Canadian business that:

(i)   engages in the production of uranium and owns an interest in a producing uranium property in Canada;

(ii)   provides any financial service;

(iii)   provides any transportation services; or

(iv)   is a cultural business.

Notwithstanding the above, any investment which is usually only notifiable, including the establishment of a new Canadian business, and which falls within a specific business activity, including the publication and distribution of books, magazines, newspapers, film or video recordings, audio or video music recordings, or music in print or machine-readable form may be reviewed if an Order-in-Council directing a review is made and a notice is sent to the investor within 21 days following the receipt of a certified complete notification.

Generally speaking, an acquisition is direct if it involves the acquisition of control of the Canadian business or of its direct or indirect Canadian parent and an acquisition is indirect if it involves the acquisition of control of a non-Canadian direct or indirect parent of an entity carrying on the Canadian business. No change of voting control will be deemed to have occurred if less than one-third of the voting control of a Canadian corporation is acquired by an investor.

A WTO investor, as defined in the ICA, includes an individual who is a national of a member country of the WTO or who has the right of permanent residence in relation to that WTO member, a government or government agency of a WTO investor-controlled corporation, a limited partnership, trust or joint venture that is neither WTO-investor controlled or Canadian controlled of which two-thirds of its board of directors, general partners or trustees, as the case may be, are any combination of Canadians and WTO investors.

The ICA exempts certain transactions from the notification and review provisions of ICA, including, among others, (a) an acquisition of voting shares if the acquisition were made in the ordinary course of that person’s business as a trader or dealer in securities; (b) an acquisition of control of the company in connection with the realization of a security interest granted for a loan or other financial assistance and not for any purpose related to the provisions of the ICA; (c) the acquisition of voting interests by any person in the ordinary course of a business carried on by that person that consists of providing, in Canada, venture capital on terms and conditions not inconsistent with such terms and conditions as may be fixed by the Minister; and (d) acquisition of control of the company by reason of an amalgamation, merger, consolidation or corporate reorganization, following which the ultimate direct or indirect control in fact of the company, through the ownership of voting interests, remains unchanged.

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E.           Taxation

Certain United States Federal Income Tax Considerations

The following is a general summary of certain material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from and relating to the acquisition, ownership, and disposition of common shares of the company.

This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a U.S. Holder arising from and relating to the acquisition, ownership, and disposition of common shares. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences to such U.S. Holder, including specific tax consequences to a U.S. Holder under an applicable tax treaty. Except as specifically set forth below, this summary does not discuss applicable tax reporting requirements. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. Holder. This summary is not intended to be relied upon, and cannot be relied upon by you, for the purposes of avoiding penalties that may be imposed on you under the Internal Revenue Code. Each U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences relating to the acquisition, ownership and disposition of common shares.

No legal opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the “IRS”) has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of common shares. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the positions taken in this summary. In addition, because the authorities on which this summary is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions taken in this summary.

Scope of this Summary

Authorities

This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed), published rulings of the IRS, published administrative positions of the IRS, U.S. court decisions, the Convention Between Canada and the United States of America with Respect to Taxes on Income and Capital, signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”), and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date of this document. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis which could affect the U.S. federal income tax considerations described in this summary. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.

U.S. Holders

For purposes of this summary, the term "U.S. Holder" means a beneficial owner of common shares that is for U.S. federal income tax purposes:

· an individual who is a citizen or resident of the U.S.;

· a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the U.S., any state thereof or the District of Columbia;

· an estate whose income is subject to U.S. federal income taxation regardless of its source; or

a trust that (a) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions or (b) has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

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Non-U.S. Holders

For purposes of this summary, a “non-U.S. Holder” is a beneficial owner of common shares that is not a U.S. Holder. This summary does not address the U.S. federal income tax consequences to non-U.S. Holders arising from and relating to the acquisition, ownership, and disposition of common shares. Accordingly, a non-U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences (including the potential application of and operation of any income tax treaties) relating to the acquisition, ownership, and disposition of common shares.

U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed

This summary does not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions under the Code, including, but not limited to, U.S. Holders that: (a) are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) are dealers in securities or currencies or U.S. Holders that are traders in securities or currencies that elect to apply a mark-to-market accounting method; (d) have a “functional currency” other than the U.S. dollar; (e) own common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) acquired common shares in connection with the exercise of employee stock options or otherwise as compensation for services; (g) hold common shares other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); (h) are partnerships and other pass-through entities (and investors in such partnerships and entities); or (i) own or have owned (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding shares of the company.

This summary also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are: (a) U.S. expatriates or former long-term residents of the U.S.; (b) persons that have been, are, or will be a resident or deemed to be a resident in Canada for purposes of the Income Tax Act (Canada) (the “Tax Act”); (c) persons that use or hold, will use or hold, or that are or will be deemed to use or hold common shares in connection with carrying on a business in Canada; (d) persons whose common shares constitute “taxable Canadian property” under the Tax Act; or (e) persons that have a permanent establishment in Canada for the purposes of the Canada-U.S. Tax Convention. U.S. Holders that are subject to special provisions under the Code, including, but not limited to, U.S. Holders described immediately above, should consult their own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences relating to the acquisition, ownership and disposition of common shares.

If an entity or arrangement that is classified as a partnership (or other “pass-through” entity) for U.S. federal income tax purposes holds common shares, the U.S. federal income tax consequences to such entity and the partners (or other owners) of such entity generally will depend on the activities of the entity and the status of such partners (or owners). This summary does not discuss the U.S. federal tax consequences to partners (or owners) of entities or arrangements that are classified as partnerships. Partners (or other owners) of entities or arrangements that are classified as partnerships or as “pass-through” entities for U.S. federal income tax purposes should consult their own tax advisor regarding the U.S. federal income tax consequences arising from and relating to the acquisition, ownership, and disposition of common shares.

Tax Consequences Not Addressed

This summary does not address the U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences to U.S. Holders of the acquisition, ownership, and disposition of common shares. Each U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences of the acquisition, ownership, and disposition of common shares.

U.S. Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Our Common Shares

The following discussion is subject in its entirety to the rules described below under the heading “Passive Foreign Investment Company Rules.”

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Distributions on Common Shares

A U.S. Holder that receives a distribution, including a constructive distribution, with respect to a common share will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of the current or accumulated “earnings and profits” of the company, as computed for U.S. federal income tax purposes. A dividend generally will be taxed to a U.S. Holder at ordinary income tax rates. To the extent that a distribution exceeds the current and accumulated “earnings and profits” of the company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder’s tax basis in the common shares and thereafter as gain from the sale or exchange of such common shares (see “Sale or Other Taxable Disposition of Common Shares” below). However, the company does not intend to maintain calculations of its earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder should therefore assume that any distribution by the company with respect to the common shares will constitute ordinary dividend income. Dividends received on common shares generally will not be eligible for the “dividends received deduction.”

Subject to applicable limitations and provided that the company is eligible for the benefits of the Canada-U.S. Tax Convention, dividends paid by the company to non-corporate U.S. Holders, including individuals, generally will be eligible for the preferential tax rates applicable to long-term capital gains for dividends, provided certain holding period and other conditions are satisfied, including that the company not be classified as a PFIC (as defined below) in the tax year of distribution or in the preceding tax year. The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.

Sale or Other Taxable Disposition of Common Shares

A U.S. Holder will recognize gain or loss on the sale or other taxable disposition of common shares in an amount equal to the difference, if any, between (a) the amount of cash plus the fair market value of any property received and (b) such U.S. Holder’s tax basis in such common shares sold or otherwise disposed of. Any such gain or loss generally will be capital gain or loss, which will be long-term capital gain or loss if, at the time of the sale or other disposition, such common shares are held for more than one year.

Gain or loss recognized by a U.S. Holder on the sale or other taxable disposition of common shares generally will be treated as “U.S. source” for purposes of applying the U.S. foreign tax credit rules unless the gain is subject to tax in Canada and is sourced as “foreign source” under the Canada-U.S. Tax Convention and such U.S. Holder elects to treat such gain or loss as “foreign source.”

Preferential tax rates apply to long-term capital gains of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential tax rates for long-term capital gains of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant limitations under the Code.

Additional Tax on Passive Income

Certain individuals, estates and trusts whose income exceeds certain thresholds will be required to pay a 3.8% Medicare surtax on "net investment income" including, among other things, dividends and net gain from dispositions of property (other than property held in certain trades or businesses). U.S. Holders should consult with their own tax advisors regarding the effect, if any, of this tax on their ownership and disposition of common shares.

Receipt of Foreign Currency

The amount of any distribution paid in foreign currency to a U.S. Holder in connection with the ownership of common shares, or on the sale, exchange or other taxable disposition of common shares, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that time). A U.S. Holder that receives foreign currency and converts such foreign currency into U.S. dollars at a conversion rate other than the rate in effect on the date of receipt may have a foreign currency exchange gain or loss, which generally would be treated as U.S. source ordinary income or loss. If the foreign currency received is not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who receives payment in foreign currency and engages in a subsequent conversion or other disposition of the foreign currency may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method. Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency.

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Foreign Tax Credit

A U.S. Holder who pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on common shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.

Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source”. Generally, dividends paid by a foreign corporation should be treated as foreign source for this purpose, and gains recognized on the sale of stock of a foreign corporation by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwise provided in an applicable income tax treaty, and if an election is properly made under the Code. However, the amount of a distribution with respect to the common shares that is treated as a “dividend” may be lower for U.S. federal income tax purposes than it is for Canadian federal income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S. Holder. In addition, this limitation is calculated separately with respect to specific categories of income. Dividends paid by the company generally will constitute “foreign source” income and generally will be categorized as “passive income.”

The foreign tax credit rules are complex, and each U.S. Holder should consult its own tax advisor regarding the foreign tax credit rules.

Information Reporting; Backup Withholding Tax for Certain Payments

Under U.S. federal income tax law and regulations, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on individuals who are U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts. The definition of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S. person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person and any interest in a foreign entity. U. S. Holders may be subject to these reporting requirements unless their common shares are held in an account at certain financial institutions. Penalties for failure to file certain of these information returns are substantial. U.S. Holders of common shares should consult with their own tax advisors regarding the requirements of filing information returns, including the requirements to file IRS Form 8938.

Payments made within the U.S., or by a U.S. payor or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition of, common shares generally will be subject to information reporting and backup withholding tax, at the current rate of 28%, if a U.S. Holder (a) fails to furnish such U.S. Holder’s correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax. However, certain exempt persons, such as corporations, generally are excluded from these information reporting and backup withholding tax rules. Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner.

The discussion of reporting requirements set forth above is not intended to constitute a complete description of all reporting requirements that may apply to a U.S. Holder. A failure to satisfy certain reporting requirements may result in an extension of the time during which the IRS can assess a tax, and under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement. Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding rules.

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Passive Foreign Investment Company Rules

If the company were to constitute a PFIC (as defined below) for any year during a U.S. Holder’s holding period, then certain different and potentially adverse rules will affect the U.S. federal income tax consequences to a U.S. Holder resulting from the acquisition, ownership and disposition of common shares. In addition, in any year in which the company is classified as a PFIC, such holder would be required to file an annual report with the IRS containing such information as Treasury Regulations and/or other IRS guidelines may require.

The company generally will be a “passive foreign investment company” (“PFIC”) under Section 1297 of the Code if, for a tax year, (a) 75% or more of the gross income of the company for such tax year is passive income (the “income test”) or (b) 50% or more of the value of the assets held by the company either produce passive income or are held for the production of passive income, based on the quarterly average of the fair market value of such assets (the “asset test”). “Gross income” generally includes sales revenues less the cost of goods sold, plus income from investments and from incidental or outside operations or sources, and “passive income” includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. Active business gains arising from the sale of commodities generally are excluded from passive income if substantially all (85% or more) of a foreign corporation’s commodities are stock in trade or inventory, depreciable property used in a trade or business or supplies regularly used or consumed in the ordinary course of its trade or business, and certain other requirements are satisfied.

In addition, for purposes of the PFIC income test and asset test described above, if the company owns, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, the company will be treated as if it (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation. In addition, for purposes of the PFIC income test and asset test described above, “passive income” does not include any interest, dividends, rents, or royalties that are received or accrued by the company from a “related person” (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.

Under certain attribution rules, if the company is a PFIC, U.S. Holders will be deemed to own their proportionate share of any subsidiary of the company which is also a PFIC (a ‘‘Subsidiary PFIC’’), and will be subject to U.S. federal income tax on (i) a distribution on the shares of a Subsidiary PFIC or (ii) a disposition of shares of a Subsidiary PFIC, both as if the holder directly held the shares of such Subsidiary PFIC.

The company does not believe that it was a PFIC during the tax year ending December 31, 2014. The determination of whether any corporation was, or will be, a PFIC for a tax year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. In addition, whether any corporation will be a PFIC for any tax year depends on the assets and income of such corporation over the course of each such tax year and, as a result, cannot be predicted with certainty as of the date of this document. Accordingly, there can be no assurance that the IRS will not challenge any determination made by the company (or a Subsidiary PFIC) concerning its PFIC status or that the company (and each Subsidiary PFIC) was not, or will not be, a PFIC for any tax year. Each U.S. Holder should consult its own tax advisor regarding the PFIC status of the company and each Subsidiary PFIC.

If the company were a PFIC in any tax year that a U.S. Holder held common shares, such holder generally would be subject to special rules with respect to “excess distributions” made by the company on the common shares and with respect to gain from the disposition of common shares. An “excess distribution” generally is defined as the excess of distributions with respect to the common shares received by a U.S Holder in any tax year over 125% of the average annual distributions such U.S. Holder has received from the company during the shorter of the three preceding tax years, or such U.S. Holder’s holding period for the common shares. Generally, a U.S. Holder would be required to allocate any excess distribution or gain from the disposition of the common shares ratably over its holding period for the common shares. Such amounts allocated to the year of the disposition or excess distribution would be taxed as ordinary income, and amounts allocated to prior tax years would be taxed as ordinary income at the highest tax rate in effect for each such year and an interest charge at a rate applicable to underpayments of tax would apply.

20-F for the year ended December 31, 2014

57

While there are U.S. federal income tax elections that sometimes can be made to mitigate these adverse tax consequences (including, without limitation, the “QEF Election” and the “Mark-to-Market Election”), such elections are available in limited circumstances and must be made in a timely manner. U.S. Holders should be aware that, for each tax year, if any, that the company is a PFIC, the company can provide no assurances that it will satisfy the record keeping requirements of a PFIC, or that it will make available to U.S. Holders the information such U.S. Holders require to make a QEF Election under Section 1295 of the Code with respect of the company or any Subsidiary PFIC. U.S. Holders should consult their own tax advisers regarding the potential application of the PFIC rules to the ownership and disposition of common shares, and the availability of certain U.S. tax elections under the PFIC rules.

F.           Dividends and paying agents

Not applicable – The company is filing this Form 20-F as an annual report.

G.           Statement by experts

Not applicable – The company is filing this form 20-F as an annual report.

H.           Documents on display

We will furnish our shareholders with annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP. We intend, although we are not obligated to do so, to furnish when requested by our shareholders quarterly reports by mail with the assistance of a corporate services provider, which will include unaudited interim financial information prepared in conformity with U.S. GAAP for each of the three quarters of each fiscal year following the end of each such quarter. We may discontinue providing quarterly reports at any time without prior notice to our shareholders. For additional information on the company, please consult our website at www.nxtenergy.com, or the SEDAR website at http://sedar.com.

Our reports and other information, including this annual report and the exhibits hereto, as filed with the SEC in accordance with the Exchange Act, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, Washington, D.C. 20549. In addition, copies of such reports and other information filed with the SEC can be obtained from www.sec.gov.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As at December 31, 2014 and to date in 2015, we do not have any interest bearing debt facilities or any forward / futures hedging contracts in place to manage risks related to foreign currency or interest rate fluctuations.

Currency Fluctuations

We currently hold our cash in both Canadian and U.S. currency, as we generally bill revenues in U.S. currency and hold certain monetary assets and liabilities in other foreign currencies. Any transaction in a currency other than the Canadian dollar exposes us to the impact of exchange rate fluctuations between the Canadian and the foreign currencies. We do not currently engage in hedging activities to mitigate the effects of foreign currency fluctuation.

At December 31, 2014 we held U.S dollar cash and short term investments totaling US $106,252. Accordingly, a hypothetical 10% change in the value of one U.S. dollar expressed in Canadian dollars as at December 31, 2014 would have had a $10,625 effect on the unrealized foreign exchange gain or loss for the year.

Interest Fluctuations

At December 31, 2014 we held $5,224,065 in cash, cash equivalents, short term investments and restricted cash. If all this cash was held in an interest bearing account for a full year, an actual 1% change in interest rates during the year ended December 31, 2014 would have resulted in approximately a $52,241 change in interest income for the year.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

20-F for the year ended December 31, 2014

58

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

There have not been any defaults, dividend arrears or delinquencies.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

There have been no material modifications to the rights of security holders except as outlined in Item 4.B “Summary information on dependence on patents, licenses and contracts” within this Form 20-F.

ITEM 15. CONTROLS AND PROCEDURES

We maintain a set of disclosure controls and procedures (“DCP”) designed to ensure that information required to be disclosed by the company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports is accumulated and communicated to management, to allow timely decisions regarding required disclosure.

The company's Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”, together the "Responsible Officers") are responsible for establishing and maintaining DCP, or causing them to be designed under their supervision, for NXT to provide reasonable assurance that material information relating to the company is made known to the Responsible Officers by others within the organization, particularly during the period in which the company's quarterly and year-end financial statements, Form 20-F and Canadian MD&A are being prepared.

As of December 31, 2014 we carried out an evaluation, under the supervision and with the participation of our management, including our Responsible Officers, of the effectiveness of the design and operation of the Company’s DCP as defined under the rules adopted by the Canadian securities regulatory authorities and in the US Exchange Act Rule 13a-15(e).

Our management, under the supervision of the Responsible Officers, is also responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”) as defined in Rule 13a-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of our consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Our Responsible Officers assessed the effectiveness of our ICFR as of December 31, 2014. In making this assessment, they used the criteria established in Internal Control – Integrated Framework 1992, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Our ICFR were not required to be independently audited. Accordingly, no independent audit was performed over the effectiveness of internal controls as at December 31, 2014 and this annual report does not include an attestation report of the company’s registered public accounting firm regarding ICFR. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to rules of the SEC that permit the company to provide only management’s report in this annual report.

20-F for the year ended December 31, 2014

59

During this process, we identified the following material weaknesses in the company’s ICFR that have a direct impact on the Company’s DCP:

· Due to NXT’s limited number of staff, it is currently not feasible to achieve adequate segregation of incompatible duties. We mitigate this deficiency by adding management and Audit Committee review procedures over the areas where inadequate segregation of duties are of the greatest concern; and

· NXT does not have a sufficient level of staff with specialized expertise to adequately conduct separate preparation and a subsequent independent review of certain complex or highly judgmental accounting issues. These complex areas include accounting for income taxes, stock based compensation expense, valuation of US$ Warrants. NXT mitigates this deficiency by preparing financial statements with their best judgments and estimates of the complex accounting matters and relies on reviews by management, external consultants and the Audit Committee for quality assurance.

As NXT continues to expand our operations, we seed to reduce these risks by adding additional staff resources and the use of out-sourced consultants as financial resources permit.

Notwithstanding NXT’s efforts to mitigate the risks associated with the above noted deficiencies, based upon this review the CEO and the CFO concluded that due to the foregoing material weakness, the company’s internal control over financial reporting are not effective as at December 31, 2014 and as a result its disclosure controls and procedures are not effective as at December 31, 2014. NXT reached this conclusion based upon their assessment that there is more than a remote likelihood that its ICFR will not prevent or detect material misstatements if they should exist in our financial statements.

Changes in Internal Controls

During the period ended December 31, 2014, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined that we have at least one audit committee financial expert (as defined under Item 16.A of Form 20-F) serving on our Audit Committee. Our Audit Committee financial expert is John Agee, a retired Certified Public Accountant (“CPA”, inactive). Mr. Agee is an “independent” director, as that term is defined under the listing standards of NASDAQ.

ITEM 16B. CODE OF ETHICS

NXT has in place a Code of Conduct & Business Ethics (the “Code of Conduct”) that applies to all of our directors, officers,  employees, and consultants. This Code of Conduct is an integral part of our employee contracts and our Employee Handbook, and contains company policies on Business Ethics, Employee Practices and Conflicts of Interest.

During 2014 the company did not significantly amend its Code of Conduct or grant any waiver, including any implicit waiver, from any provision of the Code of Conduct to any of its directors, officers or employees. Copies of NXT’s Code of Conduct are available without charge to any person upon request from NXT’s Chief Financial Officer at nxt_info@nxtenergy.com or at NXT’s headquarters at Suite 1400, 505 – 3rd Street SW, Calgary Alberta, Canada, T2P 3E6, and on the company website.

20-F for the year ended December 31, 2014

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ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the aggregate audit fees, audit-related fees, tax fees of our principal accountants and all other fees billed for products and services provided by our principal accountants for each of the fiscal years ended December 31, 2014 and 2013.

	2014		2013
Audit fees	$	126,000	$	136,000
Audit related fees – Colombia branch		10,500		15,434
		136,500		151,434
Tax fees		29,077		25,983
All other fees		-		-
Total fees		165,577		177,417

Audit Committee’s Pre-approval Policies and Procedures

Our Audit Committee nominates and engages our independent auditors to audit our financial statements. Our Audit Committee also requires management to obtain the Audit Committee’s approval on a case-by-case basis before engaging our independent auditors to provide any audit or permitted non-audit services to the company or any of our subsidiaries. All fees shown have been pre-approved by the Audit Committee.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

The company did not directly or through an affiliate purchaser, purchase shares or other units of any class of the issuer’s equity securities that is registered by the issuer pursuant to section 12 of the Exchange Act (15 U.S.C. 781).

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE

Not applicable.

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

20-F for the year ended December 31, 2014

61

PART III

ITEM 17. FINANCIAL STATEMENTS

The company’s consolidated financial statements and related notes are prepared in accordance with U.S. generally accepted accounting principles and included in Item 8 to this annual report.

ITEM 18. FINANCIAL STATEMENTS

Not applicable as the company has filed its consolidated financial statements and related notes in accordance with U.S. generally accepted accounting principles.

ITEM 19. EXHIBITS

20-F for the year ended December 31, 2014

62

EXHIBIT INDEX

Exhibit No.	Description
1.1	Articles of Incorporation of Auric Mining Corporation as filed with the Nevada Secretary of State on September 27, 1994 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 filed on June 29, 1998)
1.2	Amendment to Articles of Incorporation of Auric Mining Corporation as filed with the Nevada Secretary of State on February 23, 1996 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 filed on June 29, 1998)
1.3	Certificate of Amendment to Articles of Incorporation of Pinnacle Oil International, Inc. as filed with the Nevada Secretary of State on April 1, 1998 (incorporated by reference to Exhibit 3.3 to the Registration Statement on Form 10 filed on June 29, 1998)
1.4	Certificate of Amendment to Articles of Incorporation of Pinnacle Oil International, Inc. as filed with the Nevada Secretary of State on June 13, 2000 (incorporated by reference to Exhibit 3.4 to our Amendment No. 1 to the Annual Report on Form 10-K for the year ended December 31, 1999 as filed on July 28, 2000)
1.5	Articles of Amendment of Energy Exploration Technologies Inc. as filed with the province of Alberta, Canada on September 22, 2008 (incorporated by reference to Exhibit 1.8 to our Annual Report on Form 20-F for the year ended December 31, 2008 as filed on June 29, 2009)
1.6	Amendment to the Articles of NXT Energy Solutions Inc. (incorporated by reference to Item V of Exhibit 99.1 to Form 6-K as filed on September 20, 2013)
1.7	NXT Energy Solutions Inc. By-Law No. 1 (incorporated by reference to Schedule “D” to Exhibit 99.2 to Form 6-K as filed on September 20, 2013)
2.1	Schedule of Series Provisions, Preferred Shares, Series I (incorporated by reference to Exhibit 99.5 to Form 6-K as filed on January 12, 2007)
2.2	Amended and Restated Stock Option Plan, dated October 26, 2012 (incorporated by reference to Schedule “A” to Exhibit 99.1 to Form 6-K as filed on November 2, 2012)
4.1	Form of Indemnification Agreement between NXT Energy Solutions Inc. and each of its Directors and Executive Officers (incorporated by reference to Exhibit 4.6 to our Annual Report on Form 20-F for the year ended December 31, 2013 as filed on April 30, 2014)
4.2	Second Amended and Restated Technical Services Agreement dated December 31, 2006 (incorporated by reference to Exhibit 99.3 to Form 6-K as filed on January 12, 2007)
4.3	SFD® Technology Ownership Agreement dated December 31, 2006 (incorporated by reference to Exhibit 99.4 to Form 6-K as filed on January 12, 2007)
4.4	Technology Transfer Agreement dated December 31, 2006 (incorporated by reference to Exhibit 99.6 to Form 6-K as filed on January 12, 2007)
4.5	Aircraft Use and Charter Agreement dated May 8, 2009 (incorporated by reference to Exhibit 4.40 to the Annual Report on Form 20-F for the year ended December 31, 2008 as filed on June 29, 2009)
4.6	Aircraft Use and Charter Agreement dated January 6, 2010 (incorporated by reference to Exhibit 4.43 to the Form 20-F for the year ended December 31, 2010 as filed on June 30, 2011)
8.1	List of Subsidiaries (incorporated by reference to Exhibit 8.1 to our Annual Report on Form 20-F for the year ended December 31, 2013 as filed on April 30, 2014)
11.1	Code of Conduct and Business Ethics (incorporated by reference to Exhibit 11.1 to our Annual Report on Form 20-F for the year ended December 31, 2013 as filed on April 30, 2014)
12.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer and President
12.2	Rule 13a-14(a)/15d-14(a) Certification of VP Finance and Chief Financial Officer
13.1	Section 1350 Certification of Chief Executive Officer and President
13.2	Section 1350 Certification of VP Finance and Chief Financial Officer
15.1	Consolidated Financial Statements and Audit report of KPMG LLP for the year ended December 31, 2014 (incorporated by reference to Exhibit 15.1 to the Annual Report on Form 20-F for the year ended December 31, 2014)
15.2	Consent of KPMG LLP

20-F for the year ended December 31, 2014

63

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

NXT Energy Solutions Inc.
By:	/s/ George Liszicasz
	George Liszicasz
	Director, Chairman, Chief Executive Officer and President

Dated: April 27, 2015

20-F for the year ended December 31, 2014

64

EXHIBIT 12.1

CERTIFICATION

I, George Liszicasz, certify that:

1.           I have reviewed this annual report on Form 20-F of NXT Energy Solutions Inc.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.           The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)            Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)           Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.           The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Dated: April 27, 2015

/s/ George Liszicasz 

George Liszicasz,

Chief Executive Officer and President

65

EXHIBIT 12.2

CERTIFICATION

I, Greg Leavens, certify that:

1.           I have reviewed this annual report on Form 20-F of NXT Energy Solutions Inc.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.           The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)           Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)           Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.           The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Dated: April 27, 2015

/s/ Greg Leavens 

Greg Leavens,

V-P Finance and Chief Financial Officer

66

EXHIBIT 13.1

Certification

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chapter 63, Title 18 U.S.C. §§ 1350(a) and (b)), the undersigned hereby certifies in his capacity as an officer of NXT Energy Solutions Inc. (the “company”) that the Annual Report of the company on Form 20-F for the year ended December 31, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the company at the end of and for the periods covered by such Report.

Dated: April 27, 2015

/s/ George Liszicasz 

George Liszicasz,

Chief Executive Officer and President

A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO NXT ENERGY SOLUTIONS INC. AND WILL BE RETAINED BY NXT ENERGY SOLUTIONS INC. AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.

67

EXHIBIT 13.2

Certification

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chapter 63, Title 18 U.S.C. §§ 1350(a) and (b)), the undersigned hereby certifies in his capacity as an officer of NXT Energy Solutions Inc. (the “company”) that the Annual Report of the company on Form 20-F for the year ended December 31, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the company at the end of and for the periods covered by such Report.

Dated: April 27, 2015

/s/ Greg Leavens

Greg Leavens,

V-P Finance and Chief Financial Officer

A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO NXT ENERGY SOLUTIONS INC. AND WILL BE RETAINED BY NXT ENERGY SOLUTIONS INC. AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.

68

EXHIBIT 15.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

NXT Energy Solutions Inc.

We consent to the incorporation by reference in the registration statements (No. 333-89251, 333-108465, 333-129803 and 333-146890) on Form S-8 of NXT Energy Solutions Inc. of our report dated April 27, 2015, with respect to the consolidated balance sheets of NXT Energy Solutions Inc. as of December 31, 2014 and 2013 and the related consolidated statements of income (loss) and comprehensive income (loss), shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2014, which report is incorporated by reference in the December 31, 2014 annual report on Form 20-F of NXT Energy Solutions Inc.

Our report dated April 27, 2015, contains an explanatory paragraph that states NXT Energy Solutions Inc. is affected by conditions and events which raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.

/s/ KPMG LLP

Calgary, Canada

April 27, 2015

EX-15.1

NXT ENERGY SOLUTIONS INC.

Consolidated Financial Statements

As at and for the year ended

December 31, 2014

INDEPENDENT AUDITOR’S REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of NXT Energy Solutions Inc.

We have audited the accompanying consolidated financial statements of NXT Energy Solutions Inc., which comprise the consolidated balance sheets as at December 31, 2014 and 2013 and the consolidated statements of income (loss) and comprehensive income (loss), shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2014, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with US generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of NXT Energy Solutions Inc. as at December 31, 2014 and 2013, and its consolidated results of operations and its consolidated cash flows for each of the years in the three-year period ended December 31, 2014 in accordance with US generally accepted accounting principles.

Emphasis of Matter

Without modifying our opinion, we draw attention to Note 1 in the consolidated financial statements, which indicates that NXT Energy Solutions Inc. has accumulated losses and has uncertainty about the timing and magnitude of future revenue. These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty that casts substantial doubt about the Company’s ability to continue as a going concern.

Signed “KPMG LLP”

Chartered Accountants

April 27, 2015

Calgary, Canada

NXT ENERGY SOLUTIONS INC.

Consolidated Balance Sheets

(Expressed in Canadian dollars)

	As at December 31
	2014			2013
Assets
Current assets
Cash and cash equivalents	$	50,635		$	3,319,627
Short-term investments		5,173,430			2,449,450
Restricted cash [note 3]		-			53,921
Accounts receivable		248,930			295,879
Work-in-progress		-			299,842
Prepaid expenses and deposits		338,644			158,456
		5,811,639			6,577,175
Long term assets
Property and equipment [note 4]		237,464			262,818
	$	6,049,103		$	6,839,993
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities [note 5]	$	782,626		$	939,355
Deferred revenue		-			2,781,101
Fair value of US$ Warrants [note 12]		-			1,238,000
		782,626			4,958,456
Long term liabilities
Asset retirement obligation [note 6]		50,000			64,560
		832,626			5,023,016
Future operations [note 1]
Commitments and contingencies [note 15]
Subsequent events [note 10]
Shareholders' equity
Common shares [note 7]: - authorized unlimited
Issued:  44,958,843 (2013 - 42,418,326) common shares		65,792,307			61,340,321
Preferred shares [note 8]: - authorized unlimited
Issued: 8,000,000 (2013 - 8,000,000) Preferred shares		232,600			232,600
Contributed capital		6,400,789			5,889,914
Deficit		(67,920,154	)		(66,356,793	)
Accumulated other comprehensive income		710,935			710,935
		5,216,477			1,816,977
	$	6,049,103		$	6,839,993

Signed "George Liszicasz"	Signed "John Agee"
Director	Director

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

NXT ENERGY SOLUTIONS INC.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(Expressed in Canadian dollars)

	Year ended December 31
	2014			2013			2012
Revenue
Survey revenue [note 16]	$	3,913,367		$	2,684,095		$	10,937,575
Expense
Survey costs		431,518			1,632,159			3,633,645
General and administrative		4,132,108			4,112,787			4,508,506
Stock based compensation expense [notes 8 and 10]		658,000			492,000			265,000
Amortization of property and equipment		67,162			85,484			125,015
		5,288,788			6,322,430			8,532,166
Other expense (income)
Interest (income) expense, net		(50,824	)		(25,455	)		2,744
Foreign exchange (gain) loss		(158,817	)		(150,350	)		14,686
Increase (decrease) in fair value of US$ Warrants [note 12]		42,800			1,371,500			(168,143	)
Other expense		354,781			107,985			66,973
		187,940			1,303,680			(83,740	)
Income (loss) before income taxes		(1,563,361	)		(4,942,015	)		2,489,149
Income tax expense [note 13]		-			399,546			426,421
Income (loss) and comprehensive income (loss)	$	(1,563,361	)	$	(5,341,561	)	$	2,062,728
Income (loss) per share [note 9]
Basic	$	(0.04	)	$	(0.13	)	$	0.05
Diluted	$	(0.04	)	$	(0.13	)	$	0.04

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

NXT ENERGY SOLUTIONS INC.

Consolidated Statements of Cash Flows

(Expressed in Canadian dollars)

	Year ended December 31
	2014			2013			2012
Cash provided by (used in):
Operating activities
Comprehensive income (loss) for the year	$	(1,563,361	)	$	(5,341,561	)	$	2,062,728
Items not affecting cash:
Stock-based compensation expense		658,000			492,000			265,000
Amortization of property and equipment		67,162			85,484			125,015
Increase (decrease) in fair value of US$ Warrants		42,800			1,371,500			(168,143	)
Non-cash changes to asset retirement obligation		(12,449	)		3,960			3,860
Asset retirement obligations paid		(2,111	)		(1,213	)		-
		753,402			1,951,731			225,732
		(809,959	)		(3,389,830	)		2,288,460
Change in non-cash working capital balances [note 14]		(2,771,227	)		2,614,872			(1,495,468	)
Net cash (used in) operating activities		(3,581,186	)		(774,958	)		792,992
Financing activities
Proceeds from exercise of US$ Warrants [note 11]		2,735,995			1,064,222			-
Proceeds from exercise of common share purchase warrants		-			-			278,760
Proceeds from exercise of stock options		288,066			13,234			47,250
Issue of common shares and warrants, net of issue costs		-			-			2,886,024
Repayment of capital lease obligation		-			-			(8,591	)
Net cash generated by financing activities		3,024,061			1,077,456			3,203,443
Investing activities
Purchase of property and equipment		(41,808	)		(20,463	)		(48,553	)
Increase in short-term investments		(2,723,980	)		(2,394,450	)		(45,000	)
Decrease (increase) in restricted cash		53,921			379,448			(359,234	)
Net cash (used in) investing activities		(2,711,867	)		(2,035,465	)		(452,787	)
Net source (use) of cash		(3,268,992	)		(1,732,967	)		3,543,648
Cash and cash equivalents, beginning of the year		3,319,627			5,052,594			1,508,946
Cash and cash equivalents, end of the year	$	50,635		$	3,319,627		$	5,052,594
Supplemental information
Cash interest paid (received), net		(56,401	)		(14,518	)		2,744
Cash taxes paid	$	-		$	399,546		$	426,421

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

NXT ENERGY SOLUTIONS INC.

Consolidated Statements of Shareholders' Equity

(Expressed in Canadian dollars)

	Year ended December 31
	2014			2013			2012
Common Shares
Balance at beginning of the year		61,340,321			56,623,686			53,756,687
Issued through private placement financings, net of issue costs [note 7]		-			-			2,886,024
Value attributed to US$ Warrants issued in private
placement financings [notes 7 and 12]		-			-			(409,143	)
Issued upon exercise of  US$ Warrants [note 11]		2,735,995			1,064,222			-
Issued upon exercise of  common share purchase warrants		-			-			278,760
Issued upon exercise of stock options		288,066			13,234			47,250
Transfer from contributed capital upon exercise of stock options		147,125			8,279			18,375
Transfer from contributed capital upon exercise
of common share purchase warrants		-			-			45,733
Transfer from fair value of US$ Warrants
upon exercise of US$ Warrants [note 12]		1,280,800			374,500			-
Issued on conversion of preferred shares [notes 7 and 8]		-			3,256,400			-
Balance at end of the year		65,792,307			61,340,321			56,623,686
Preferred Shares
Balance at beginning of the year		232,600			3,489,000			3,489,000
Conversion of preferred shares to common shares [notes 7 and 8]		-			(3,256,400	)		-
Balance at end of the year		232,600			232,600			3,489,000
Contributed Capital
Balance at beginning of the year		5,889,914			5,406,193			5,205,301
Recognition of stock based compensation expense		658,000			492,000			265,000
Contributed capital transferred to common shares pursuant to
exercise of stock options and common share purchase warrants		(147,125	)		(8,279	)		(64,108	)
Balance at end of the year		6,400,789			5,889,914			5,406,193
Deficit
Balance at beginning of the year		(66,356,793	)		(61,015,232	)		(63,077,960	)
Net income (loss) and comprehensive income (loss) for the year		(1,563,361	)		(5,341,561	)		2,062,728
Balance at end of the year		(67,920,154	)		(66,356,793	)		(61,015,232	)
Accumulated Other Comprehensive Income
Balance at beginning and end of the year		710,935			710,935			710,935
Total Shareholders' Equity at end of the year	$	5,216,477		$	1,816,977		$	5,214,582

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

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 1
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

1. Future Operations

NXT Energy Solutions Inc. (the "Company" or "NXT") is a publicly traded company based in Calgary, Canada.

NXT's proprietary Stress Field Detection ("SFD®") technology is an airborne survey system that is used in the oil and natural gas industry to help aid in identifying areas with hydrocarbon reservoir potential.  Specific rights to this technology were acquired from NXT's current Chief Executive Officer and President (the "CEO") under a Technology Transfer Agreement (the "TTA") which has a term to December 31, 2015 (the “Maturity Date”).  The TTA requires the completion of various conditions, including conversion by NXT of the remaining 8,000,000 convertible preferred shares issued (see note 8), in order to retain the SFD® technology, which NXT intends to finalize before the Maturity Date.

Prior to 2006 the Company had engaged in extensive activities to develop, validate and obtain industry acceptance of SFD®, including conducting SFD® surveys for oil and gas industry partners on a cost recovery basis and participating as a joint venture partner in SFD® identified exploration wells. By December 31, 2005 the Company had accumulated a deficit of approximately $47.6 million in conducting these activities.

In 2006 SFD® survey services began to be offered to clients engaged in oil and gas exploration activities with an initial focus on companies operating in western Canada. Subsequently, in 2008, NXT commenced to focus its sales activities towards international and frontier exploration markets.

The generation of positive cash flow from operations will depend largely on NXT’s ability to demonstrate the value of the SFD® survey system to a much wider client base. NXT recognizes that its' financial position is currently dependent upon a limited number of client projects, on obtaining additional financing when needed, and attracting future clients.

These consolidated financial statements have been prepared on a "going concern" basis in accordance with generally accepted accounting principles of the United States of America ("US GAAP").  The going concern basis of presentation assumes that NXT will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.  There is substantial doubt about the appropriateness of the use of the going concern assumption, primarily due to current uncertainty about the timing and magnitude of potential future revenues.  NXT recognizes that ongoing use of the going concern assumption will depend on its ability to support operations for the foreseeable future beyond the next 12 months based on generating sufficient new revenue sources or securing additional financing if required.

NXT continues to work to expand its client base in order to generate revenues, positive net income and cash flow from operations in future years with its existing business model.  However, the occurrence and timing of this outcome cannot be predicted with certainty.

These consolidated financial statements do not include any adjustments to amounts and classifications of assets and liabilities or reported expenses that would be necessary should NXT be unable to raise additional capital or generate sufficient net income and cash flow from operations as required in future years in order to continue as a going concern.

2. Significant Accounting Policies

Basis of presentation

These consolidated financial statements as at and for the year ended December 31, 2014 have been prepared by management in accordance with US GAAP and by applying the same accounting policies and methods as used in preparing the consolidated financial statements as at and for the years ended December 31, 2013 and 2012.

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 2
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

Consolidation

These consolidated financial statements reflect the accounts of the Company and its wholly owned subsidiaries. All significant inter-company balances and transactions among NXT and its subsidiaries have been eliminated and are therefore not reflected in these consolidated financial statements.

Estimates and Assumptions

The preparation of these consolidated financial statements requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, including the disclosure of contingent assets and liabilities, at the date of these consolidated financial statements as well as revenues and expenses recorded during the reporting periods.

Estimates made relate primarily to measurement of stock-based compensation expense, valuation of the US$ Warrants, valuation of deferred income tax assets, and estimates for asset retirement obligations. The estimates and assumptions used are based upon management's best estimate. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period when determined. Actual results may differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and short term securities with an original maturity less than 90 days from the date of acquisition.

Short Term Investments

Short term investments are recorded at fair value, and include short term securities, held by a major Canadian chartered bank, with original maturity dates greater than 90 days but less than one year.

Revenue Recognition

Revenue from SFD® survey contracts (net of any related foreign sales tax) is recognized on a completed contract basis. Amounts received or invoiced in advance of completion of the contract are reflected as deferred revenue and classified as a current liability. All related survey expenditures and obligations related to uncompleted contracts are reflected as work-in-progress and classified as current assets. Upon completion of the related contract, unearned revenue and the related work-in-progress are reflected in the statement of income (loss) as either revenue or survey cost. Sales commissions incurred on the contracts are included in survey costs. Survey costs do not include any amortization or depreciation of property and equipment or staff and related overhead costs included in general and administrative expense.

Fair Value of Derivative Instruments

Derivative instruments are recognized on the balance sheet at fair value with any realized and unrealized gains (losses) recognized included in the determination of net income (loss) for the period. NXT does not apply hedge accounting to any of its derivatives. Any outstanding derivatives are classified into one of three categories based on a three level fair value hierarchy as noted below.

In Level I, the fair value of assets and liabilities is determined by reference to quoted prices in active markets for identical assets and liabilities that the Company has the ability to assess at the measurement date.

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 3
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

In Level II, determination of the fair value of assets and liabilities is based on the extrapolation of inputs, other than quoted prices included within Level I, for which all significant inputs are observable directly or indirectly. Such inputs include published exchange rates, interest rates, yield curves, and stock quotes from external data service providers. Transfers between Level I and Level II would occur when there is a change in market circumstances.

In Level III, the fair value of assets and liabilities measured on a recurring basis is determined using a market approach based on inputs that are unobservable and significant to the overall fair value measurement. Assets and liabilities measured at fair value can fluctuate between Level II and Level III depending on the proportion of the value of the contract that extends beyond the time frame for which inputs are considered to be observable. As contracts near maturity and observable market data becomes available, the contracts are transferred out of Level III and into Level II.

Property and Equipment

Property and equipment is recorded at cost, less accumulated depreciation and amortization, which is recorded over the estimated service lives of the assets using the following annual rates and methods:

Computer hardware (including survey equipment)	30% declining balance
Computer software	100% declining balance
Furniture and other equipment	20% declining balance
Leasehold improvements	over the remaining term of the lease

Management periodically reviews the carrying values of property and equipment to ensure that any impairment in value is recognized and reflected in results of operations.

Research and Development Expenditures

Research and development ("R&D") expenditures incurred to develop, improve and test the SFD® survey system and related components are expensed as incurred. Any intellectual property that is acquired for the purpose of enhancing research and development projects, if there is no alternative use for the intellectual property, is expensed in the period acquired. No significant external R&D was incurred in the years ended 2012, 2013 and 2014.

Foreign Currency Translation

The Company's functional currency is the Canadian dollar. Revenues and expenses denominated in foreign currencies are translated into Canadian dollars at the average exchange rate for the applicable period. Shareholders' equity accounts are translated into Canadian dollars using the exchange rates in effect at the time of the transaction. Monetary assets and liabilities are translated into Canadian dollars at the exchange rate in effect at the end of the applicable period. Non-monetary assets and liabilities (including work-in-progress and deferred revenue balances) are recorded at the relevant exchange rates for the period in which the balances arose. Any related foreign exchange gains and losses resulting from these translations are included in the determination of net income (loss) for the period.

Prior to 2010, NXT had active subsidiaries which had the US dollar as their functional currency. Foreign currency translation adjustments related to the consolidation of these subsidiaries is the only component of accumulated other comprehensive income, which is included in shareholders' equity.

Income Taxes

NXT follows the asset and liability method of accounting for income taxes. This method recognizes deferred income tax assets and liabilities based on temporary differences in reported amounts for financial statement and income tax purposes, at the income tax rates expected to apply in the future periods when the temporary differences are expected to be reversed or realized. The effect of a change in income tax rates on deferred income tax assets and deferred income tax liabilities is recognized in income in the period when the tax rate change is enacted. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount that is more likely than not to be realized.

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 4
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

Stock based compensation expense

NXT follows the fair value method of accounting for stock options that are granted to acquire common shares under NXT's stock option plan. Under this method, an estimate of the fair value of the cost of stock options that are granted to employees, directors and consultants is calculated using the Black-Scholes option pricing model and charged to income over the future vesting period of the stock options, with a corresponding increase recorded in contributed capital. Upon exercise of the stock options, the consideration received by NXT, and the related amount which was previously recorded in contributed capital, is recognized as an increase in the recorded value of the common shares of the Company.

Stock-based compensation expense related to stock options granted to non-employees is periodically re-measured until the earlier of the completion of their service period or when the vesting period is completed. Changes to the re-measured compensation are recognized in the period of change and amortized over the remaining life of the vesting period in the same manner as the original stock option.

Income (loss) per share

Basic income (loss) per share amounts are calculated by dividing net income (loss) by the weighted average number of common shares that are outstanding for the fiscal period. Shares issued during the period are weighted for the portion of the period that the shares were outstanding. Diluted income (loss) per share are computed using the treasury stock method, whereby the weighted average number of shares outstanding is increased to include any additional shares that would be issued from the assumed exercise of stock options and common share purchase warrants. The incremental number of shares added under the treasury stock method assumes that outstanding stock options and warrants that are exercisable at exercise prices below the Company's average market price (i.e. they were “in-the-money”) for the applicable fiscal period are exercised and then that number of incremental shares is reduced by the number of shares that could have been repurchased by the Company from the issuance proceeds, using the average market price of the Company’s shares for the applicable fiscal period.

No addition to the basic number of shares is made when calculating the diluted number of shares if the diluted per share amounts become anti-dilutive (such as occurs in the case where there is a net loss for the period).

Future Accounting Policy Changes

Revenue recognition:

In May 2014, the US Financial Accounting Standards Board (“FASB”) issued new guidance on accounting for “Revenue from Contracts with Customers”, which supersedes the current revenue recognition requirements and most industry-specific guidance. This new guidance will require that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

This new guidance will be effective from January 1, 2017, and early application is not permitted. There will be two methods in which the amendment can be applied: (1) retrospectively to each prior reporting period (which will include NXT’s fiscal years 2015 and 2016) presented, or (2) retrospectively with the cumulative effect recognized at the date of initial application. NXT is evaluating the impact of the adoption of this new guidance and has not yet determined the effect on its consolidated financial statements, which currently reflect the completed contract method of revenue recognition.

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 5
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

Going concern:

The FASB has established a going concern standard that becomes effective for reporting periods ending after December 31, 2016 (with early adoption permitted). The Company will be required to assess if there is substantial doubt about its’ ability to continue as a going concern, which will exist if it is probable that it will be unable to meet payment of its obligations within one year after the assessment date (which will be based on the date of issue of the period end financial statements). Disclosure will be required of the significance of and the conditions or events that give rise to the substantial doubt, as well as whether it is probable that managements’ plans can be effectively implemented to mitigate these conditions.

Further disclosure, including managements mitigation plans, will be required if it is assessed that the substantial doubt cannot be overcome. The Company has not yet adopted the new standard and will be assessing the required disclosures based on its analysis of the going concern assumption in the future period of adoption.

3. Restricted cash

Restricted cash consisted of US dollar money market securities which are periodically deposited by NXT with financial institutions as security in order for these institutions to issue bank letters of credit for the benefit of NXT’s clients. These letters of credit are related to contractual performance requirements on certain SFD® survey contracts.

4. Property and equipment

	2014			2013
Survey equipment		$643,319			$626,286
Furniture and other equipment		528,420			528,420
Computers and software		1,100,593			1,097,560
Leasehold improvements		403,898			382,157
		2,676,230			2,634,423
Accumulated amortization and impairment		(2,438,766	)		(2,371,605	)
		237,464			262,818

5. Accounts payable and accrued liabilities

	2014		2013
Accrued liabilities related to:
Consultants and professional fees		$122,500		$105,000
Board of Directors' fees		40,000		-
Survey and other projects		14,308		-
Vacation pay, wages and bonuses payable		121,632		115,831
		298,440		220,831
Trade payables, payroll withholdings and other		484,186		718,524
		782,626		939,355

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 6
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

6. Asset retirement obligation

Asset retirement obligations ("ARO") relate to minor interests in oil and natural gas wells in which NXT has outstanding abandonment and reclamation obligations in accordance with government regulations. The Company's obligation relates to its interests in 6 gross (1.2 net) wells.  ARO have an estimated future liability of approximately $58,000 which is based on estimates of the future timing and costs to abandon, remediate and reclaim the wellsites within the next three years.  The net present value of the ARO is as noted below, and has been calculated using an inflation rate of 3.4% and discounted using a credit-adjusted risk-free interest rate of 10%.

	2014			2013			2012
ARO balance, beginning of the year		$64,560			$61,813			$57,953
Accretion expense		800			3,960			3,860
Costs incurred		(2,111	)		(1,213	)		-
Change in ARO estimates		(13,249	)		-			-
ARO balance, end of the year		50,000			64,560			61,813

7. Common shares

The Company is authorized to issue an unlimited number of common shares, of which the following are issued and outstanding:

	# of shares		$ value
As at December 31, 2011		34,757,396	$	53,756,687
Transactions during the year ended December 31, 2012:
Issued through private placement
financing, net of issue costs (iii)		4,258,005		2,886,024
Value attributed to US$ Warrants issued in the
private placement financing (iii)		-		(409,143	)
Issued on exercise of stock options		75,000		47,250
Issued on exercise of warrants (ii)		464,558		278,760
Transfer from contributed capital upon exercise of:
Stock options		-		18,375
Warrants		-		45,733
As at December 31, 2012		39,554,959		56,623,686
Transactions during the year ended December 31, 2013:
Conversion of Preferred Shares (i)		2,000,000		3,256,400
Issued on exercise of stock options		16,667		13,234
Issued on exercise of US$ Warrants (note 11)		846,700		1,064,222
Transfer from contributed capital upon exercise of stock options		-		8,279
Transfer from fair value of US$ Warrants upon exercise (note 12)		-		374,500
As at December 31, 2013		42,418,326		61,340,321
Transactions during the year ended December 31, 2014:
Issued on exercise of stock options		482,665		288,066
Issued on exercise of US$ Warrants (note 11)		2,057,852		2,735,995
Transfer from contributed capital upon exercise of stock options		-		147,125
Transfer from fair value of US$ Warrants upon exercise (note 12)		-		1,280,800
As at December 31, 2014		44,958,843		65,792,307

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 7
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

(i)   NXT also has outstanding a total of 8,000,000 Preferred Shares (see note 8) which are convertible on a 1 for 1 basis into an additional maximum of 8,000,000 common shares by December 31, 2015. An initial total of 2,000,000 of these Preferred Shares were converted into 2,000,000 common shares of the Company effective May 22, 2013.

(ii)   In February, 2011 NXT closed a non-brokered private placement (the "2011 Placement") for aggregate proceeds of $1,600,300 ($1,487,827 net of finder’s fee and other costs incurred totalling $112,473). NXT issued a total of 3,200,600 units at a price of $0.50 per unit, each unit consisted of one NXT common share and one warrant, and each warrant entitled the holder to acquire an additional common share at a price of $0.60 per share until expiry on February 16, 2012.

Finder's fees incurred included $72,600 cash and 145,320 warrants issued. A continuity of the total warrants issued is as follows:

				exercise
	# of			proceeds
	warrants			received
Issued in the 2011 Placement		3,345,920		$	-
Exercised in 2011		(700,000	)		420,000
Outstanding as at December 31, 2011		2,645,920			420,000
Exercised in 2012		(464,558	)		278,760
Expired on February 16, 2012		(2,181,362	)		-
		-			698,760

In March and May 2012, NXT conducted private placement financings (the "2012 Financings") which consisted of units issued at a price of US $0.75 (the "Units"). Each Unit consisted of one NXT common share and one warrant (the "US$ Warrants") to purchase an additional NXT common share at a price of US $1.20 for a term of two years from the date of issue.

In connection with the 2012 Financings, NXT paid finder's fees totalling US $183,612 and issued a total of 244,816 finder's warrants (with the same terms as the US$ Warrants noted above). The 2012 Financings had three separate closings in March, 2012 and one on May 4, 2012, which are summarized as follows:

	March, 2012			4-May-12			2012 total
Proceeds (in US dollars)		2,216,005			977,500			3,193,505
Proceeds (in Cdn $)		2,210,690			972,442			3,183,132
Less share issue costs incurred		(187,844	)		(109,264	)		(297,108	)
Proceeds, net of issue costs		2,022,846			863,178			2,886,024
Number of common shares issued		2,954,672			1,303,333			4,258,005
Number of US$ Warrants issued		2,954,672			1,303,333			4,258,005
Number of finder’s warrants issued		162,416			82,400			244,816
		3,117,088			1,385,733			4,502,821
Fair value attributed to US$ Warrants		249,143			160,000			409,143

Two Officers of the Company subscribed for a total of US $40,000 of the 2012 Financings.

The common shares issued under the 2012 Financings were recorded at a value equal to the net proceeds received of $2,886,024, and reduced by $409,143 (see note 12) which was the estimated fair value attributed to the 4,502,821 US$ Warrants (see also note 11) issued.

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 8
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

8. Preferred shares

The Company is authorized to issue an unlimited number of preferred shares, issuable in series.

In 2005, the Company issued 10,000,000 series 1 preferred shares (the "Preferred Shares") to its CEO pursuant to the execution of the Technology Transfer Agreement (see note 1) in exchange for the rights to utilize the SFD® technology for hydrocarbon exploration.

The Preferred Shares do not participate in any dividends, and are not transferable except with the consent of the Board of Directors of NXT.

The number of Preferred Shares outstanding is as follows:

	# of shares			$ value
As at December 31, 2011 and 2012		10,000,000		$	3,489,000
Conversion of Preferred Shares in May 2013		(2,000,000	)		(3,256,400	)
As at December 31, 2013 and 2014		8,000,000			232,600

These Preferred Shares are non-voting, and are convertible into up to 8,000,000 NXT common shares (on a 1 for 1 basis) under the following terms:

· 2,000,000 of the Preferred Shares became convertible into common shares upon issue. Effective May 22, 2013, these 2,000,000 Preferred Shares were converted into 2,000,000 common shares.

· the remaining 8,000,000 Preferred Shares are subject to conditions related to potential future conversion.  They may become convertible into common shares in four separate increments of 2,000,000 Preferred Shares each, should NXT achieve specified cumulative revenue thresholds of US $50 million, US $100 million, US $250 million and US $500 million prior to the December 31, 2015 Maturity Date.

· an additional bonus of 1,000,000 common shares are issuable in the event that cumulative revenues exceed US $500 million.

· if the final US $500 million cumulative revenue threshold is not achieved by the Maturity Date, NXT can elect to retain ownership of the SFD® technology by converting all of the remaining Preferred Shares into common shares, which it intends to do in 2015 prior to the Maturity Date.

· cumulative revenue is defined as the sum of total revenue earned plus proceeds from the sale of assets accumulated since January 1, 2007, all denominated in US$, and calculated in accordance with generally accepted accounting principles.

· In the event of a change of control or other transaction involving a re-arrangement of the business of NXT prior to the Maturity Date, the number of outstanding Preferred Shares which can be converted will be dependent on the transaction value payable (“TVP”) per outstanding NXT common share as follows:

20% if TVP is less than $5 per common share

60% if TVP is between $5 and $10 per common share

100% if TVP exceeds $10 per common share

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 9
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

As at December 31, 2014, the Company had generated cumulative revenue of approximately US $29.5 million (December 31, 2013 - US $25.8 million) that is eligible to be applied to the above noted conversion thresholds.

The Preferred Shares were originally recorded at their estimated fair value as at December 31, 2005, with the total substantially assigned to the 2,000,000 Preferred Shares portion which was immediately convertible. The remaining Preferred Shares were assigned a nominal value in 2005, reflecting the uncertainty that the required revenue objectives would be achieved to allow conversion into common shares, as follows:

	# of Preferred
	Shares		$ value
convertible upon issue effective December 31, 2005		2,000,000		$3,256,400
conditionally convertible on or before December 31, 2015		8,000,000		232,600
		10,000,000		3,489,000

Rights related to Preferred Shares

In January 2014, NXT’s CEO (the “Grantor”) personally granted (to a total of 17 persons, including NXT employees, directors, officers, advisors and others) “Rights” to acquire a total of 1,000,000 of the common shares which are expected to become issued to him upon future conversion of the Preferred Shares by their Maturity Date. Each of the Rights are subject to certain vesting provisions and will entitle the holder to acquire from the Grantor one common share of NXT at a fixed exercise price of $1.77 and will expire on December 31, 2015.

A total of 795,000 of these Rights were granted to certain of NXT’s current directors, officers, employees and advisors, and are supplemental to existing incentives which have been granted under NXT’s stock option plan (see note 10). The grant date fair value of these 795,000 Rights was estimated as $483,000 (which will be recognized over the remaining term to expiry of the Rights in 2015) calculated using the Black-Scholes valuation model, based on the following assumptions:

Expected dividends paid per common share	Nil
Expected life in years		1.9
Expected volatility in the price of common shares		62	%
Risk free interest rate		1.0	%
Weighted average fair value per Right at grant date		$0.60

In connection with the Rights, NXT recognized $ 226,000 as a component of stock based compensation expense for the year ended December 31, 2014 (see note 10).

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 10
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

9. Income (loss) per share

	2014			2013			2012
Comprehensive income (loss) for the year	$	(1,563,361	)	$	(5,341,561	)	$	2,062,728
Weighted average number of shares outstanding:
Common shares issued		44,375,540			40,882,108			38,453,392
Convertible Preferred Shares (i)		-			778,082			2,000,000
Basic		44,375,540			41,660,190			40,453,392
Additional shares related to assumed
exercise of stock options and US$ Warrants
under the treasury stock method (ii)		-			-			337,070
Contingently issuable Preferred Shares (ii)		-			-			8,000,000
Fully diluted		44,375,540			41,660,190			48,790,462
Net loss per share – Basic	$	(0.04	)	$	(0.13	)	$	0.05
Net loss per share – Fully diluted	$	(0.04	)	$	(0.13	)	$	0.04

(i)   A total of 2,000,000 of the Preferred Shares (see note 8) are included in the above noted basic income (loss) per share calculation for the years ended December 31, 2012 and 2013, as the criteria for them to convert to common shares had been met up to their formal conversion in May 2013. The remaining 8,000,000 Preferred Shares are contingently issuable, and are included in the diluted number of shares outstanding if applicable.

(ii)   In periods in which a loss results, all outstanding stock options, common share purchase Warrants and the 8,000,000 Preferred Shares are excluded from the fully diluted loss per share calculations as their effect is anti-dilutive.

10. Stock options

The following is a summary of stock options which are outstanding as at December 31, 2014:

					average remaining
Exercise price	# of options		# of options		contractual
per share	outstanding		exercisable		life (in years)
$0.45		74,600		74,600		0.8
$0.75		355,000		236,664		2.5
$0.76		303,335		131,110		3.1
$0.86		707,500		454,163		2.6
$1.16		411,000		411,000		1.6
$1.20		300,000		300,000		2.6
$1.35		55,000		55,000		5.0
$1.39		55,000		55,000		4.5
$1.55		40,000		-		4.2
$1.61		25,000		-		4.1
$1.67		150,000		-		4.9
$1.83		65,000		65,000		4.0
$1.02		2,541,435		1,782,537		2.7

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 11
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

A continuity of the number of stock options which are outstanding at December 31, 2014 and 2013 is as follows:

	For the year ended					For the year ended
	December 31, 2014					December 31, 2013
				weighted					weighted
	# of stock			average		# of stock			average
	options			exercise price		options			exercise price
Options outstanding, start of the year		2,888,100		$	0.88		2,890,600		$	0.86
Granted		325,000		$	1.55		542,500		$	0.91
Exercised		(482,665	)	$	0.60		(16,667	)	$	0.79
Forfeited		(35,000	)	$	1.42		(423,333	)	$	0.79
Expired		(154,000	)	$	0.71		(105,000	)	$	0.75
Options outstanding, end of the year		2,541,435		$	1.02		2,888,100		$	0.88
Options exercisable, end of the year		1,782,537		$	1.01		1,733,930		$	0.90

Subsequent to December 31, 2014, the Company issued a total of 601,066 additional stock options with an average exercise price of $1.37 per share and a 5 year term to expiry in 2020.

Stock options granted generally expire, if unexercised, five years from the date granted and entitlement to exercise them generally vests at a rate of one-third at the end of each of the first three years following the date of grant.

Stock based compensation expense (“SBCE”) is calculated based on the fair value attributed to grants of stock options using the Black-Scholes valuation model and utilizing the following weighted average assumptions:

	2014			2013			2012
Expected dividends paid per common share	Nil			Nil			Nil
Expected life in years		5.0			5.0			4.0
Expected volatility in the price of common shares		113	%		74	%		79	%
Risk free interest rate		1.5	%		1.0	%		1.0	%
Weighted average fair market value per share at grant date	$	1.24		$	0.55		$	0.52
Intrinsic (or "in-the-money") value per share of options exercised	$	0.85		$	0.76		$	0.13

SBCE consists of the following amounts:

	2014			2013			2012
SBCE recognized related to:
Stock options		$	432,000		$	492,000		$	265,000
Preferred Share Rights (see note 8)			226,000			-			-
Total SBCE			658,000			492,000			265,000

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 12
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

The unamortized portion of SBCE related to the non-vested portion of stock options and the Preferred Share Rights, all of which will be recognized in future expense over the related remaining (2015 to 2017) vesting periods, is as follows:

As at December 31	2014		2013
Unamortized SBCE related to:
Stock options	$	367,000	$	475,000
Preferred Share Rights (see note 8)		234,000		-
		601,000		475,000

11. US$ Warrants to purchase common shares

The following is a continuity of the US$ Warrants issued in the 2012 Financings (see note 7 (iii)) and which had an exercise price of US $1.20 per common share and expiry in 2014:

				exercise
	# of US$			proceeds
	Warrants			received
Outstanding as at January 1, 2012
Issued in the 2012 Financings		4,502,821			-
US$ Warrants exercised in 2013		(846,700	)	$	1,064,222
Outstanding as at December 31, 2013		3,656,121			1,064,222
Activity in 2014:
US$ Warrants exercised in 2014		(2,057,852	)		2,735,995
US$ Warrants expired in 2014		(1,598,269	)		-
Outstanding as at December 31, 2014		-		$	3,800,217

12. Financial instruments

1) Non-derivative financial instruments:

The Company's non-derivative financial instruments consist of cash and cash equivalents, short-term investments, restricted cash, accounts receivable, and accounts payables and accrued liabilities. The carrying value of these financial instruments approximates their fair values due to their short terms to maturity. NXT is not exposed to significant interest or credit risks arising from these financial instruments. NXT is exposed to foreign exchange risk as a result of holding US and Colombian denominated financial instruments.

2) Derivative financial instruments:

As at December 31, 2014, no US$ Warrants remain outstanding. As the exercise price of the US$ Warrants that were issued in 2012 (see note 11) was in US dollars, which is a currency other than the functional currency of NXT, the US$ Warrants were considered to have an embedded derivative and were required to be recorded at fair value each reporting period. The amount recorded for this instrument, which was included with current liabilities, was adjusted to fair value at each period end over the life of the US$ Warrants, with the changes in fair value reflected in earnings.

Financial instruments that are recorded at fair value on a recurring basis are required to be classified into one of three categories based upon a fair value hierarchy. The Company's only financial instruments recorded at fair value on a recurring basis were the US$ Warrants. NXT classified these derivative financial instruments as level III where the fair value is determined by using valuation techniques that refer to both observable and unobservable market data. The valuation model was based on the Black-Scholes inputs noted below, as well as a discount to reflect the potential dilution impact upon exercise of the US$ Warrants and NXT's low stock market liquidity.

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 13
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

A continuity of the fair value of the US$ Warrants that were issued in the 2012 Financings is as follows:

Year ended December 31	2014			2013			2012
Fair value of US$ Warrants
Balance at beginning of the year	$	1,238,000		$	241,000		$	-
Value attributed to US$ Warrants issued in		-			-			-
the 2012 Financings (see note 7 (iii))		-			-			409,143
Transfer to common shares upon
exercise of US$ Warrants in the year		(1,280,800	)		(374,500	)		-
Increase (decrease) in fair value during the year		42,800			1,371,500			(168,143	)
Fair value of US$ Warrants, end of the year		-			1,238,000			241,000

The outstanding US$ Warrants were re-valued at each period end using the Black-Scholes valuation model utilizing the following weighted average assumptions:

As at December 31	2014		2013			2012
Expected dividends paid per common share		n/a	Nil			Nil
Expected life in years		n/a		0.3			1.0
Expected volatility in the price of common shares		n/a		65	%		80	%
Risk free interest rate		n/a		1.0	%		1.2	%
Weighted average fair market value per US$ Warrant issued during the year		n/a		n/a		$	US 0.08

13. Income tax expense

NXT periodically earns revenues while operating outside of Canada as a non-resident within certain foreign jurisdictions. Payments made to NXT for services rendered to clients in such countries may be subject to foreign withholding taxes, which are only recoverable in certain circumstances. For the year ended December 31, 2014, NXT recorded foreign withholding taxes of $nil (2013 - $399,546 and 2012 - $426,421) on a portion of its revenues that were generated on international projects. Although such foreign taxes incurred can potentially be utilized in Canada as a foreign tax credit against future taxable earnings from the foreign jurisdictions, a full valuation allowance has been provided against this benefit.

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 14
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

Income tax expense is different from the expected amount that would be computed by applying the statutory Canadian federal and provincial income tax rates to NXT's income (loss) before income taxes as follows:

	2014			2013			2012
Net income (loss) before income taxes	$	(1,563,361	)	$	(4,942,015	)	$	2,489,149
Canadian statutory income tax rate		25.00	%		25.00	%		25.00	%
Income tax (recovery) at statutory income tax rate		(390,840	)		(1,235,504	)		622,287
Effect of non- deductible expenses and other items:
Stock-based compensation and other expenses		176,719			157,993			12,149
Revaluation of US$ Warrants		10,700			342,875			-
Foreign exchange adjustment on USA losses		(185,093	)		(131,771	)		42,389
Other		1,474			(4,428	)		(2,148	)
		(387,040	)		(870,835	)		674,677
Change in valuation allowance		387,040			870,835			(674,677	)
Income taxes paid in foreign jurisdictions		-			399,546			426,421
Current income tax expense		-			399,546			426,421

The Company has significant unrecorded deferred income tax assets for which a full valuation allowance has been provided due to uncertainty regarding their potential future utilization, as follows:

	2014			2013			2012
Net operating losses carried forward:
Canada (expiration dates 2015 to 2034)	$	4,236,318		$	4,005,683		$	3,269,542
USA (expiration dates 2020 to 2026)		2,225,150			2,040,056			1,908,285
Timing differences on property & equipment and financing costs		2,106,780			2,135,468			2,132,545
		8,568,247			8,181,207			7,310,372
Less valuation allowance		(8,568,247	)		(8,181,207	)		(7,310,372	)
					-			-

14. Change in non-cash working capital

The changes in non-cash working capital balances are comprised of:

	2014			2013			2012
Accounts receivable		46,949			176,429			(350,077	)
Work-in-progress		299,842			676,621			135,747
Prepaid expenses and deposits		(180,188	)		(17,807	)		(97,544	)
Accounts payable and accrued liabilities		(156,729	)		(684,369	)		275,799
Deferred revenue		(2,781,101	)		2,463,998			(1,459,393	)
		(2,771,227	)		2,614,872			(1,495,468	)
Portion attributable to:
Operating activities		(2,771,227	)		2,614,872			(1,495,468	)
Financing activities		-			-			-
Investing activities		-			-			-
		(2,771,227	)		2,614,872			(1,495,468	)

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 15
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

15. Commitments and contingencies

Office premises lease

NXT has an operating lease commitment on its existing Calgary office space for a term through July 31, 2015 at a minimum monthly lease payment of $26,894 (including estimated operating costs). NXT has also committed to an operating lease on new office premises for a 10 year term commencing in 2015 at an initial estimated minimum monthly lease payment of $42,368 (including operating costs).

The total estimated future minimum annual commitment for these two premises leases is as follows:

	Existing		New
Year ending December 31	premises		premises		Total
2015	$	188,257	$	127,103	$	315,360
2016		-		508,410		508,410
2017		-		508,410		508,410
2018		-		508,410		508,410
2019		-		508,410		508,410
		188,257		2,160,743		2,349,000
Thereafter, 2020 through 2025		-		2,979,848		2,979,848
		188,257		5,140,591		5,328,848

Aircraft charterhire commitment

NXT currently does not own any of the aircraft which are used in its' survey operations, but has an annual agreement to utilize a minimum annual volume of aircraft charter hours (the “Charter Agreement”). The charterhire commitment to be met by the end of 2015, including a short-fall in hours carried forward from 2014, is $641,250.

As part of the 2015 annual renewal of the Charter Agreement, NXT has made a deposit payment of $168,750 in February 2015, and an additional $135,000 is due by June 30, 2015. This total of $303,750 will be held as non-refundable deposits to be applied, as utilized to September 30, 2015, against the charterhire commitment carried forward from 2014.

16. Geographic information

NXT conducts all of its survey operations from its head office in Canada, and until mid 2014 had a one person administrative office in Colombia. NXT has no long term assets outside of Canada. Revenues were derived by geographic area as follows:

	2014		2013		2012
North America (United States)	$	3,913,367	$	-		-
Asia (Pakistan)		-		2,659,292		-
Central America (Mexico, Guatemala, Belize)		-		24,803		6,403,534
South America (Colombia, Argentina)						4,534,041
		3,913,367		2,684,095		10,937,575

The Company’s revenues were derived almost entirely from a single client in the 2013 and 2014 periods.

NXT ENERGY SOLUTIONS INC.
Notes to the Consolidated Financial Statements	page | 16
As at and for the year ended December 31, 2014
(Expressed in Canadian dollars unless otherwise stated)

17. Other related party transactions

One of the members of NXT’s Board of Directors is a partner in a law firm which provides legal advice to NXT. Legal fees (including costs related to share issuance) incurred with this firm were as follows:

2014		2013		2012
$	18,549	$	39,966	$	80,550

Accounts payable and accrued liabilities includes a total of $124 ($29,274 as at December 31, 2013) payable to this law firm.

In addition, accounts payable and accrued liabilities includes $23,673 ($31,045 as at December 31, 2013) related to re-imbursement of expenses owing to persons who are Officers of NXT.

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Other related party transactions (Tables)

12 Months Ended

Dec. 31, 2014

Other Related Party Transactions Tables

Other related party transactions

2014		2013		2012
$	18,549	$	39,966	$	80,550

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Stock options (Details 1) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Number of stock options
Outstanding	3,656,121
Granted	601,066	542,500
Exercised	(2,057,852)	(846,700)
Forfeited	(35,000)	(423,333)
Expired	(1,598,269)
Outstanding		3,656,121
Options exercisable as at end of the year	1,782,537	1,733,930
Weighted average exercise price
Outstanding at beginning of the year	0.88	0.86
Granted	1.55	0.91
Exercised	0.60	0.79
Forfeited	1.42	0.79
Expired	0.71	0.75
Options outstanding as at end of the year	1.02	0.88
Options exercisable as at end of the year	1.01	0.9

XML

Preferred shares (Details) (CAD)	Dec. 31, 2014
Preferred Shares Details
Preferred shares upon issue outstanding, Shares	10,000,000
Preferred shares upon issue outstanding, Amount	3,489,000
Preferred shares upon issue convertible outstanding, Shares	(2,000,000)
Preferred shares upon issue convertible outstanding, Amount	(3,256,400)
Total Preferred shares upon issue outstanding, Shares	8,000,000
Total Preferred shares upon issue outstanding, Amount	232,600

XML

Stock options (Details 2)	12 Months Ended				12 Months Ended
	Dec. 31, 2014 CAD	Dec. 31, 2013 CAD	Dec. 31, 2012 CAD	Dec. 31, 2012 USD ($)	Dec. 31, 2014 Stock Option [Member] CAD	Dec. 31, 2013 Stock Option [Member] CAD	Dec. 31, 2012 Stock Option [Member] CAD
Expected dividends paid per common share						0	0
Expected life in years					5 years	5 years	4 years
Expected volatility in the price of common shares					113.00%	74.00%	79.00%
Risk free interest rate		1.00%	1.20%		1.50%	1.00%	1.00%
Weighted average fair market value per share at grant date				$ 0.08	1.24	0.55	0.52
Intrinsic (or "in-the-money") value per share of options exercised					0.85	0.76	0.13

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Common shares (Details 2)	12 Months Ended
	Dec. 31, 2012 CAD	Dec. 31, 2012 USD USD ($)	Dec. 31, 2012 USD CAD	Dec. 31, 2012 March 2012 CAD	Dec. 31, 2012 March 2012 USD USD ($)	Dec. 31, 2012 May 4, 2012 CAD	Dec. 31, 2012 May 4, 2012 USD USD ($)
Proceeds	3,183,132	$ 3,193,505		2,210,690	$ 2,216,005	972,442	$ 977,500
Less share issue costs incurred	(297,108)			(187,844)		(109,264)
Proceeds, net of issue costs	2,886,024		2,886,024	2,022,846		863,178
Number of common shares issued	4,258,005			2,954,672		1,303,333
Number of Warrants issued	4,258,005			2,954,672		1,303,333
Number of finder's warrants issued	244,816			162,416		82,400
Total number of warrants issued	4,502,821	4,502,821	4,502,821	3,117,088		1,385,733
Fair value attributed to Warrants issued	409,143		409,143	249,143		160,000

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US$ Warrants to purchase common shares (Tables)

12 Months Ended

Dec. 31, 2014

Warrants To Purchase Common Shares Tables

Summary of outstanding warrants to purchase common shares

				exercise
	# of US$			proceeds
	Warrants			received
Outstanding as at January 1, 2012
Issued in the 2012 Financings		4,502,821			-
US$ Warrants exercised in 2013		(846,700	)	$	1,064,222
Outstanding as at December 31, 2013		3,656,121			1,064,222
Activity in 2014:
US$ Warrants exercised in 2014		(2,057,852	)		2,735,995
US$ Warrants expired in 2014		(1,598,269	)		-
Outstanding as at December 31, 2014		-		$	3,800,217

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Stock options (Details Narrative) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Stock Options Details Narrative
Stock options Granted	601,066	542,500
Exercised price	1.37
weighted life cycle	5 years
Expiration period	2020

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Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2014

Significant Accounting Policies Tables

Property and equipment is recorded at cost

Computer hardware (including survey equipment)	30% declining balance
Computer software	100% declining balance
Furniture and other equipment	20% declining balance
Leasehold improvements	over the remaining term of the lease

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Preferred shares (Details 2) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Expected dividends paid per common share
Expected volatility in the price of common shares		65.00%	80.00%
Risk free interest rate		1.00%	1.20%
Preferred Shares [Member]
Expected dividends paid per common share	0
Expected life in years	1 year 10 months 24 days
Expected volatility in the price of common shares	62.00%
Risk free interest rate	1.00%
Weighted average fair value per Right at grant date	0.60

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Accounts payable and accrued liabilities (Details) (CAD)	Dec. 31, 2014	Dec. 31, 2013
Gross Accrued liabilities	298,440	220,831
Trade payables, payroll withholdings and other	484,186	718,524
Accrued liabilities Current	782,626	939,355
Consultants and professional fees
Gross Accrued liabilities	122,500	105,000
Board of Directors' fees
Gross Accrued liabilities	40,000
Survey and other projects
Gross Accrued liabilities	14,308
Vacation pay, wages and bonuses payable
Gross Accrued liabilities	121,632	115,831

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Commitments and contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Commitments And Contingencies Tables

Estimated remaining minimum annual lease commitment

	Existing		New
Year ending December 31	premises		premises		Total
2015	$	188,257	$	127,103	$	315,360
2016		-		508,410		508,410
2017		-		508,410		508,410
2018		-		508,410		508,410
2019		-		508,410		508,410
		188,257		2,160,743		2,349,000
Thereafter, 2020 through 2025		-		2,979,848		2,979,848
		188,257		5,140,591		5,328,848

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Income (loss) per share (Details) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Loss Per Share Details
Comprehensive income (loss) for the year	(1,563,361)	(5,341,561)	2,062,728
Weighted average number of common shares outstanding Common shares issued	44,375,540	40,882,108	38,453,392
Weighted average number of common shares outstanding Convertible preferred shares		778,082	2,000,000
Weighted average number of common shares outstanding Basic	44,375,540	41,660,190	40,453,392
Weighted average number of common shares outstanding Additional shares related to assumed exercise of Stock options under treasury stock method			337,070
Weighted average number of common shares outstanding Contingently issuable preferred shares			8,000,000
Weighted average number of common shares outstanding Fully diluted	44,375,540	41,660,190	48,790,462
Income (loss) per share - Basic	(0.04)	(0.13)	0.05
Income (loss) per share - Diluted	(0.04)	(0.13)	0.04

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Other related party transactions (Details) (CAD)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Other Related Party Transactions Details
Other related party transactions	18,549	39,966	80,550

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Income tax expense (Details) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Net income (loss) before income taxes	(1,563,361)
Canadian statutory income tax rate	25.00%
Income tax (recovery) at statutory income tax rate	(390,840)
Effect of non- deductible expenses and other items:
Stock-based compensation and other expenses	176,719
Revaluation of US$ Warrants	10,700
Foreign exchange adjustment in the year	(185,093)
Other	1,474
Effective Income Tax Rate Reconciliation, Nondeductible Expense	(387,040)
Change in valuation allowance	387,040
Income taxes paid in foreign jurisdictions		399,546	426,421
Current income tax expense
Canada
Net income (loss) before income taxes		(4,942,015)	2,489,149
Canadian statutory income tax rate		25.00%	25.00%
Income tax (recovery) at statutory income tax rate		(1,235,504)	622,287
Effect of non- deductible expenses and other items:
Stock-based compensation and other expenses		157,993	12,149
Revaluation of US$ Warrants		342,875
Foreign exchange adjustment in the year		(131,771)	42,389
Other		(4,428)	(2,148)
Effective Income Tax Rate Reconciliation, Nondeductible Expense		(870,835)	674,677
Change in valuation allowance		870,835	(674,677)
Income taxes paid in foreign jurisdictions		399,546	426,421
Current income tax expense		399,546	426,421

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Common shares (Details Narrative) (CAD)	12 Months Ended
	Dec. 31, 2012
Proceeds, net of issue costs	2,886,024
Fair value attributed to Warrants issued	409,143
Total number of warrants issued	4,502,821
USD
Finder's fees	183,612
Finder's warrants	244,816
Two Officers subscribed financing	40,000
Proceeds, net of issue costs	2,886,024
Fair value attributed to Warrants issued	409,143
Total number of warrants issued	4,502,821

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Restricted cash

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

3. Restricted cash

Restricted cash consisted of US dollar money market securities which are periodically deposited by NXT with financial institutions as security in order for these institutions to issue bank letters of credit for the benefit of NXT’s clients. These letters of credit are related to contractual performance requirements on certain SFD® survey contracts.

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Income tax expense (Details1) (CAD)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Timing differences on property and equipment and financing costs	2,106,780	2,135,468	2,132,545
Deferred Tax Assets, Operating Loss Carryforwards	8,568,247	8,181,207	7,310,372
Less valuation allowance	(8,568,247)	(8,181,207)	(7,310,372)
Net Operating loss carry forward
Canada
Operating losses carried forward	4,236,318	4,005,683	3,269,542
US
Operating losses carried forward	2,225,150	2,040,056	1,908,285

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Asset retirement obligation (Details) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Asset Retirement Obligation Details
ARO balance, beginning of the year	64,560	61,813	57,953
Accretion expense	800	3,960	3,860
Costs incurred	(2,111)	(1,213)
Change in ARO estimates	(13,249)
ARO balance, end of the year	50,000	64,560	61,813

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Common shares (Tables)

12 Months Ended

Dec. 31, 2014

Common Shares Tables

Common shares

	# of shares		$ value
As at December 31, 2011		34,757,396	$	53,756,687
Transactions during the year ended December 31, 2012:
Issued through private placement
financing, net of issue costs (iii)		4,258,005		2,886,024
Value attributed to US$ Warrants issued in the
private placement financing (iii)		-		(409,143	)
Issued on exercise of stock options		75,000		47,250
Issued on exercise of warrants (ii)		464,558		278,760
Transfer from contributed capital upon exercise of:
Stock options		-		18,375
Warrants		-		45,733
As at December 31, 2012		39,554,959		56,623,686
Transactions during the year ended December 31, 2013:
Conversion of Preferred Shares (i)		2,000,000		3,256,400
Issued on exercise of stock options		16,667		13,234
Issued on exercise of US$ Warrants (note 11)		846,700		1,064,222
Transfer from contributed capital upon exercise of stock options		-		8,279
Transfer from fair value of US$ Warrants upon exercise (note 12)		-		374,500
As at December 31, 2013		42,418,326		61,340,321
Transactions during the year ended December 31, 2014:
Issued on exercise of stock options		482,665		288,066
Issued on exercise of US$ Warrants (note 11)		2,057,852		2,735,995
Transfer from contributed capital upon exercise of stock options		-		147,125
Transfer from fair value US$ Warrants upon exercise (note 12)		-		1,280,800
As at December 31, 2014		44,958,843		65,792,307

warrants issued

				exercise
	# of			proceeds
	warrants			received
Issued in the 2011 Placement		3,345,920		$	-
Exercised in 2011		(700,000	)		420,000
Outstanding as at December 31, 2011		2,645,920			420,000
Exercised in 2012		(464,558	)		278,760
Expired on February 16, 2012		(2,181,362	)		-
		-			698,760

Financings

	March, 2012			May 4, 2012			2012 total
Proceeds (in US dollars)		2,216,005			977,500			3,193,505
Proceeds (in Cdn $)		2,210,690			972,442			3,183,132
Less share issue costs incurred		(187,844	)		(109,264	)		(297,108	)
Proceeds, net of issue costs		2,022,846			863,178			2,886,024
Number of common shares issued		2,954,672			1,303,333			4,258,005
Number of US$ Warrants issued		2,954,672			1,303,333			4,258,005
Number of finder’s warrants issued		162,416			82,400			244,816
		3,117,088			1,385,733			4,502,821
Fair value attributed to US$ Warrants		249,143			160,000			409,143

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Asset retirement obligation (Tables)

12 Months Ended

Dec. 31, 2014

Asset Retirement Obligation Tables

Net present value of the ARO

	2014			2013			2012
ARO balance, beginning of the year		$64,560			$61,813			$57,953
Accretion expense		800			3,960			3,860
Costs incurred		(2,111	)		(1,213	)		-
Change in ARO estimates		(13,249	)		-			-
ARO balance, end of the year		50,000			64,560			61,813

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Stock options (Details 3)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
SBCE recognized related to:
Stock options	432,000	492,000	265,000
Preferred Share Rights (see note 8)	226,000
Total SBCE	658,000	492,000	265,000

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Common shares (Details) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Common Shares Details
Beginning Balance, Shares	42,418,326	39,554,959	34,757,396
Beginning Balance, Amount	61,340,321	56,623,686	53,756,687
Issued through private placement financing, net of issue costs (iii), Shares			4,258,005
Issued through private placement financing, net of issue costs (iii), Amount			2,886,024
Value attributed to US$ Warrants issued in the private placement financing (iii), Shares
Value attributed to US$ Warrants issued in the private placement financing (iii), Amount			(409,143)
Issued on exercise of stock options, Shares	482,665	16,667	75,000
Issued on exercise of stock options, Amount	288,066	13,234	47,250
Issued on exercise of warrants (ii), Shares	2,057,852	846,700	464,558
Issued on exercise of warrants (ii), Amount	2,735,995	1,064,222	278,760
Transfer from contributed capital upon exercise of stock options, Amount	147,125	8,279	18,375
Transfer from contributed capital upon exercise of warrants, Amount			45,733
Conversion of Preferred Shares (i), Shares		2,000,000
Conversion of Preferred Shares (i), Amount		3,256,400
Transfer from fair value of US$ Warrants upon exercise, Amount	1,280,800	374,500
Ending Balance, Shares	44,958,843	42,418,326	39,554,959
Ending Balance, Amount	65,792,307	61,340,321	56,623,686

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Preferred shares (Tables)

12 Months Ended

Dec. 31, 2014

Preferred Shares Tables

Preferred shares outstanding schedule

	# of shares			$ value
As at December 31, 2011 and 2012		10,000,000		$	3,489,000
Conversion of Preferred Shares in May 2013		(2,000,000	)		(3,256,400	)
As at December 31, 2013 and 2014		8,000,000			232,600

Preferred Shares conversion into common shares

	# of Preferred
	Shares		$ value
convertible upon issue effective December 31, 2005		2,000,000		$3,256,400
conditionally convertible on or before December 31, 2015		8,000,000		232,600
		10,000,000		3,489,000

Rights granted to certain of NXT’s

Expected dividends paid per common share	Nil
Expected life in years		1.9
Expected volatility in the price of common shares		62	%
Risk free interest rate		1.0	%
Weighted average fair value per Right at grant date		$0.60

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Income (loss) per share (Tables)

12 Months Ended

Dec. 31, 2014

Income Loss Per Share Tables

Income (loss) per share

	2014			2013			2012
Comprehensive income (loss) for the year	$	(1,563,361	)	$	(5,341,561	)	$	2,062,728
Weighted average number of shares outstanding:
Common shares issued		44,375,540			40,882,108			38,453,392
Convertible Preferred Shares (i)		-			778,082			2,000,000
Basic		44,375,540			41,660,190			40,453,392
Additional shares related to assumed
exercise of stock options and US$ Warrants
under the treasury stock method (ii)		-			-			337,070
Contingently issuable Preferred Shares (ii)		-			-			8,000,000
Fully diluted		44,375,540			41,660,190			48,790,462
Net loss per share – Basic	$	(0.04	)	$	(0.13	)	$	0.05
Net loss per share – Fully diluted	$	(0.04	)	$	(0.13	)	$	0.04

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

2. Significant Accounting Policies

Basis of presentation

These consolidated financial statements as at and for the year ended December 31, 2014 have been prepared by management in accordance with US GAAP and by applying the same accounting policies and methods as used in preparing the consolidated financial statements as at and for the years ended December 31, 2013 and 2012.

Consolidation

These consolidated financial statements reflect the accounts of the Company and its wholly owned subsidiaries. All significant inter-company balances and transactions among NXT and its subsidiaries have been eliminated and are therefore not reflected in these consolidated financial statements.

Estimates and Assumptions

The preparation of these consolidated financial statements requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, including the disclosure of contingent assets and liabilities, at the date of these consolidated financial statements as well as revenues and expenses recorded during the reporting periods.

Estimates made relate primarily to measurement of stock-based compensation expense, valuation of the US$ Warrants, valuation of deferred income tax assets, and estimates for asset retirement obligations. The estimates and assumptions used are based upon management's best estimate. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period when determined. Actual results may differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and short term securities with an original maturity less than 90 days from the date of acquisition.

Short Term Investments

Short term investments are recorded at fair value, and include short term securities, held by a major Canadian chartered bank, with original maturity dates greater than 90 days but less than one year.

Revenue Recognition

Revenue from SFD® survey contracts (net of any related foreign sales tax) is recognized on a completed contract basis. Amounts received or invoiced in advance of completion of the contract are reflected as deferred revenue and classified as a current liability. All related survey expenditures and obligations related to uncompleted contracts are reflected as work-in-progress and classified as current assets. Upon completion of the related contract, unearned revenue and the related work-in-progress are reflected in the statement of income (loss) as either revenue or survey cost. Sales commissions incurred on the contracts are included in survey costs. Survey costs do not include any amortization or depreciation of property and equipment or staff and related overhead costs included in general and administrative expense.

Fair Value of Derivative Instruments

Derivative instruments are recognized on the balance sheet at fair value with any realized and unrealized gains (losses) recognized included in the determination of net income (loss) for the period. NXT does not apply hedge accounting to any of its derivatives. Any outstanding derivatives are classified into one of three categories based on a three level fair value hierarchy as noted below.

In Level I, the fair value of assets and liabilities is determined by reference to quoted prices in active markets for identical assets and liabilities that the Company has the ability to assess at the measurement date.

In Level II, determination of the fair value of assets and liabilities is based on the extrapolation of inputs, other than quoted prices included within Level I, for which all significant inputs are observable directly or indirectly. Such inputs include published exchange rates, interest rates, yield curves, and stock quotes from external data service providers. Transfers between Level I and Level II would occur when there is a change in market circumstances.

In Level III, the fair value of assets and liabilities measured on a recurring basis is determined using a market approach based on inputs that are unobservable and significant to the overall fair value measurement. Assets and liabilities measured at fair value can fluctuate between Level II and Level III depending on the proportion of the value of the contract that extends beyond the time frame for which inputs are considered to be observable. As contracts near maturity and observable market data becomes available, the contracts are transferred out of Level III and into Level II.

Property and Equipment

Property and equipment is recorded at cost, less accumulated depreciation and amortization, which is recorded over the estimated service lives of the assets using the following annual rates and methods:

Computer hardware (including survey equipment)	30% declining balance
Computer software	100% declining balance
Furniture and other equipment	20% declining balance
Leasehold improvements	over the remaining term of the lease

Management periodically reviews the carrying values of property and equipment to ensure that any impairment in value is recognized and reflected in results of operations.

Research and Development Expenditures

Research and development ("R&D") expenditures incurred to develop, improve and test the SFD® survey system and related components are expensed as incurred. Any intellectual property that is acquired for the purpose of enhancing research and development projects, if there is no alternative use for the intellectual property, is expensed in the period acquired. No significant external R&D was incurred in the years ended 2012, 2013 and 2014.

Foreign Currency Translation

The Company's functional currency is the Canadian dollar. Revenues and expenses denominated in foreign currencies are translated into Canadian dollars at the average exchange rate for the applicable period. Shareholders' equity accounts are translated into Canadian dollars using the exchange rates in effect at the time of the transaction. Monetary assets and liabilities are translated into Canadian dollars at the exchange rate in effect at the end of the applicable period. Non-monetary assets and liabilities (including work-in-progress and deferred revenue balances) are recorded at the relevant exchange rates for the period in which the balances arose. Any related foreign exchange gains and losses resulting from these translations are included in the determination of net income (loss) for the period.

Prior to 2010, NXT had active subsidiaries which had the US dollar as their functional currency. Foreign currency translation adjustments related to the consolidation of these subsidiaries is the only component of accumulated other comprehensive income, which is included in shareholders' equity.

Income Taxes

NXT follows the asset and liability method of accounting for income taxes. This method recognizes deferred income tax assets and liabilities based on temporary differences in reported amounts for financial statement and income tax purposes, at the income tax rates expected to apply in the future periods when the temporary differences are expected to be reversed or realized. The effect of a change in income tax rates on deferred income tax assets and deferred income tax liabilities is recognized in income in the period when the tax rate change is enacted. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount that is more likely than not to be realized.

Stock based compensation expense

NXT follows the fair value method of accounting for stock options that are granted to acquire common shares under NXT's stock option plan. Under this method, an estimate of the fair value of the cost of stock options that are granted to employees, directors and consultants is calculated using the Black-Scholes option pricing model and charged to income over the future vesting period of the stock options, with a corresponding increase recorded in contributed capital. Upon exercise of the stock options, the consideration received by NXT, and the related amount which was previously recorded in contributed capital, is recognized as an increase in the recorded value of the common shares of the Company.

Stock-based compensation expense related to stock options granted to non-employees is periodically re-measured until the earlier of the completion of their service period or when the vesting period is completed. Changes to the re-measured compensation are recognized in the period of change and amortized over the remaining life of the vesting period in the same manner as the original stock option.

Income (loss) per share

Basic income (loss) per share amounts are calculated by dividing net income (loss) by the weighted average number of common shares that are outstanding for the fiscal period. Shares issued during the period are weighted for the portion of the period that the shares were outstanding. Diluted income (loss) per share are computed using the treasury stock method, whereby the weighted average number of shares outstanding is increased to include any additional shares that would be issued from the assumed exercise of stock options and common share purchase warrants. The incremental number of shares added under the treasury stock method assumes that outstanding stock options and warrants that are exercisable at exercise prices below the Company's average market price (i.e. they were “in-the-money”) for the applicable fiscal period are exercised and then that number of incremental shares is reduced by the number of shares that could have been repurchased by the Company from the issuance proceeds, using the average market price of the Company’s shares for the applicable fiscal period.

No addition to the basic number of shares is made when calculating the diluted number of shares if the diluted per share amounts become anti-dilutive (such as occurs in the case where there is a net loss for the period).

Future Accounting Policy Changes

Revenue recognition:

In May 2014, the US Financial Accounting Standards Board (“FASB”) issued new guidance on accounting for “Revenue from Contracts with Customers”, which supersedes the current revenue recognition requirements and most industry-specific guidance. This new guidance will require that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

This new guidance will be effective from January 1, 2017, and early application is not permitted. There will be two methods in which the amendment can be applied: (1) retrospectively to each prior reporting period (which will include NXT’s fiscal years 2015 and 2016) presented, or (2) retrospectively with the cumulative effect recognized at the date of initial application. NXT is evaluating the impact of the adoption of this new guidance and has not yet determined the effect on its consolidated financial statements, which currently reflect the completed contract method of revenue recognition.

Going concern:

The FASB has established a going concern standard that becomes effective for reporting periods ending after December 31, 2016 (with early adoption permitted). The Company will be required to assess if there is substantial doubt about its’ ability to continue as a going concern, which will exist if it is probable that it will be unable to meet payment of its obligations within one year after the assessment date (which will be based on the date of issue of the period end financial statements). Disclosure will be required of the significance of and the conditions or events that give rise to the substantial doubt, as well as whether it is probable that managements’ plans can be effectively implemented to mitigate these conditions.

Further disclosure, including managements mitigation plans, will be required if it is assessed that the substantial doubt cannot be overcome. The Company has not yet adopted the new standard and will be assessing the required disclosures based on its analysis of the going concern assumption in the future period of adoption.

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Stock options (Tables)

12 Months Ended

Dec. 31, 2014

Stock Options Tables

Summary of stock options

					average remaining
Exercise price	# of options		# of options		contractual
per share	outstanding		exercisable		life (in years)
$0.45		74,600		74,600		0.8
$0.75		355,000		236,664		2.5
$0.76		303,335		131,110		3.1
$0.86		707,500		454,163		2.6
$1.16		411,000		411,000		1.6
$1.20		300,000		300,000		2.6
$1.35		55,000		55,000		5.0
$1.39		55,000		55,000		4.5
$1.55		40,000		-		4.2
$1.61		25,000		-		4.1
$1.67		150,000		-		4.9
$1.83		65,000		65,000		4.0
$1.02		2,541,435		1,782,537		2.7

Number of stock options outstanding

	For the year ended					For the year ended
	December 31, 2014					December 31, 2013
				weighted					weighted
	# of stock			average		# of stock			average
	options			exercise price		options			exercise price
Options outstanding, start of the year		2,888,100		$	0.88		2,890,600		$	0.86
Granted		325,000		$	1.55		542,500		$	0.91
Exercised		(482,665	)	$	0.60		(16,667	)	$	0.79
Forfeited		(35,000	)	$	1.42		(423,333	)	$	0.79
Expired		(154,000	)	$	0.71		(105,000	)	$	0.75
Options outstanding, end of the year		2,541,435		$	1.02		2,888,100		$	0.88
Options exercisable, end of the year		1,782,537		$	1.01		1,733,930		$	0.90

Stock based compensation expense

	2014			2013			2012
Expected dividends paid per common share	Nil			Nil			Nil
Expected life in years		5.0			5.0			4.0
Expected volatility in the price of common shares		113	%		74	%		79	%
Risk free interest rate		1.5	%		1.0	%		1.0	%
Weighted average fair market value per share at grant date	$	1.24		$	0.55		$	0.52
Intrinsic (or "in-the-money") value per share of options exercised	$	0.85		$	0.76		$	0.13

SBCE amounts

	2014			2013			2012
SBCE recognized related to:
Stock options		$	432,000		$	492,000		$	265,000
Preferred Share Rights (see note 8)			226,000			-			-
Total SBCE			658,000			492,000			265,000

SBCE related to the non-vested portion

As at December 31	2014		2013
Unamortized SBCE related to:
Stock options	$	367,000	$	475,000
Preferred Share Rights (see note 8)		234,000		-
		601,000		475,000

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Significant Accounting Policies (Details)	12 Months Ended
	Dec. 31, 2014
Computer hardware
Annual rates and methods of depriciation	30% declining balance
Computer software
Annual rates and methods of depriciation	100% declining balance
Furniture and other equipment
Annual rates and methods of depriciation	20% declining balance
Leasehold improvements
Annual rates and methods of depriciation	over the remaining term of the lease

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Stock options (Details) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Exercise price	1.02	0.88	0.86
Outstanding		3,656,121
Number of stock options exercisable	1,782,537	1,733,930
Range One
Exercise price	0.45
Outstanding	74,600
Number of stock options exercisable	74,600
Average remaining contractual life (years)	9 months 18 days
Range Two
Exercise price	0.75
Outstanding	355,000
Number of stock options exercisable	236,664
Average remaining contractual life (years)	2 years 6 months
Range Three
Exercise price	0.76
Outstanding	303,335
Number of stock options exercisable	131,110
Average remaining contractual life (years)	3 years 1 month 6 days
Range Four
Exercise price	0.86
Outstanding	707,500
Number of stock options exercisable	454,163
Average remaining contractual life (years)	2 years 7 months 6 days
Range Five
Exercise price	1.16
Outstanding	411,000
Number of stock options exercisable	411,000
Average remaining contractual life (years)	1 year 7 months 6 days
Range Six
Exercise price	1.20
Outstanding	300,000
Number of stock options exercisable	300,000
Average remaining contractual life (years)	2 years 7 months 6 days
Range Seven
Exercise price	1.35
Outstanding	55,000
Number of stock options exercisable	55,000
Average remaining contractual life (years)	5 years
Range Eight
Exercise price	1.39
Outstanding	55,000
Number of stock options exercisable	55,000
Average remaining contractual life (years)	4 years 6 months
Range Nine
Exercise price	1.55
Outstanding	40,000
Number of stock options exercisable
Average remaining contractual life (years)	4 years 2 months 12 days
Range Ten
Exercise price	1.61
Outstanding	25,000
Number of stock options exercisable
Average remaining contractual life (years)	4 years 1 month 6 days
Range Eleven
Exercise price	1.67
Outstanding	150,000
Number of stock options exercisable
Average remaining contractual life (years)	4 years 10 months 24 days
Range Twelve
Exercise price	1.83
Outstanding	65,000
Number of stock options exercisable	65,000
Average remaining contractual life (years)	4 years
Range Thirteen
Exercise price	1.02
Outstanding	2,541,435
Number of stock options exercisable	1,782,537
Average remaining contractual life (years)	2 years 8 months 12 days

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Consolidated Balance Sheets (CAD)	Dec. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	50,635	3,319,627
Short term investments	5,173,430	2,449,450
Restricted cash [note 3]		53,921
Accounts receivable	248,930	295,879
Work-in-progress		299,842
Prepaid expenses and other	338,644	158,456
Total current assets	5,811,639	6,577,175
Long term assets
Property and equipment [note 4]	237,464	262,818
Total assets	6,049,103	6,839,993
Current liabilities:
Accounts payable and accrued liabilities [note 5]	782,626	939,355
Deferred revenue		2,781,101
Fair value of US$ Warrants [note 12]		1,238,000
Net current liabilities	782,626	4,958,456
Long term liabilities:
Asset retirement obligation [note 6]	50,000	64,560
Total liabilities	832,626	5,023,016
Future operations [note 1]
Commitments and contingencies [note 15]
Subsequent events [note 10]
Shareholders' equity:
Common shares [note 7]: - authorized unlimited, Issued: 44,958,843 (2013 - 42,418,326) common shares	65,792,307	61,340,321
Preferred shares [note 8]: - authorized unlimited, Issued: 8,000,000 (2013 - 8,000,000) Preferred shares	232,600	232,600
Contributed capital	6,400,789	5,889,914
Deficit	(67,920,154)	(66,356,793)
Accumulated other comprehensive income	710,935	710,935
Net Shareholders' equity	5,216,477	1,816,977
Total Liabilities and Shareholders' equity	6,049,103	6,839,993

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Common shares (Details 1) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Outstanding	3,656,121
Number of warrants issued in the 2011 Placement, Shares	601,066	542,500
Number of warrants exercised, Shares	(2,057,852)	(846,700)
Number of warrants expired on February 16, 2012, Shares	(1,598,269)
Outstanding		3,656,121
Warrant [Member]
Outstanding, Amount			420,000
Number of warrants issued in the 2011 Placement, Shares				3,345,920
Number of warrants issued in the 2011 Placement, Amount
Number of warrants exercised, Amount			278,760	420,000
Number of warrants expired on February 16, 2012, Amount
Outstanding, Amount			698,760	420,000

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Consolidated Statements of Shareholders' Equity (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Common Shares
Balance at beginning of the year	61,340,321	56,623,686	53,756,687
Issued through private placement financings, net of issue costs [note 7]			2,886,024
Value attributed to US$ Warrants issued in private placement financings [note 7 and 12]			(409,143)
Issued upon exercise of US$ Warrants [note 11]	2,735,995	1,064,222
Issued upon exercise of common share purchase warrants			278,760
Issued upon exercise of stock options	288,066	13,234	47,250
Transfer from contributed capital upon exercise of stock options	147,125	8,279	18,375
Transfer from contributed capital upon exercise of common share purchase warrants			45,733
Transfer from fair value of US$ Warrants upon exercise of US$ Warrants [note 12]	1,280,800	374,500
Issued on conversion of preferred shares [notes 7 and 8]		3,256,400
Balance at end of the year	65,792,307	61,340,321	56,623,686
Preferred Shares
Balance at beginning of the year	232,600	3,489,000	3,489,000
Conversion of preferred shares to common shares [notes 7 and 8]		(3,256,400)
Balance at end of the year	232,600	232,600	3,489,000
Contributed Capital
Balance at beginning of the year	5,889,914	5,406,193	5,205,301
Recognition of stock based compensation expense	658,000	492,000	265,000
Contributed capital transferred to common shares pursuant to exercise of stock options and common share purchase warrants	(147,125)	(8,279)	(64,108)
Balance at end of the year	6,400,789	5,889,914	5,406,193
Deficit
Balance at beginning of the year	(66,356,793)	(61,015,232)	(63,077,960)
Net income (loss) and comprehensive income (loss) for the year	(1,563,361)	(5,341,561)	2,062,728
Balance at end of the year	(67,920,154)	(66,356,793)	(61,015,232)
Accumulated Other Comprehensive Income
Balance at beginning and end of the year	710,935	710,935	710,935
Total Shareholders' Equity at end of the year	5,216,477	1,816,977	5,214,582

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Financial instruments (Details 1) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Financial Instruments Details
Balance, start of the year fair value of US$ Warrants	1,238,000	241,000
Value attributed to US$ Warrants issued in the 2012 Financings (see note 7 (iii))			409,143
Transfer to common shares upon exercise of US$ Warrants in the year	(1,280,800)	(374,500)
Increase (decrease) in fair value during the year	42,800	1,371,500	(168,143)
Fair value of US$ Warrants, end of the year		1,238,000	241,000

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Income tax expense (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Expense Tables

Income tax expense

Income tax expense is different from the expected amount that would be computed by applying the statutory Canadian federal and provincial income tax rates to NXT's income (loss) before income taxes as follows:

	2014			2013			2012
Net income (loss) before income taxes	$	(1,563,361	)	$	(4,942,015	)	$	2,489,149
Canadian statutory income tax rate		25.00	%		25.00	%		25.00	%
Income tax (recovery) at statutory income tax rate		(390,840	)		(1,235,504	)		622,287
Effect of non- deductible expenses and other items:
Stock-based compensation and other expenses		176,719			157,993			12,149
Revaluation of US$ Warrants		10,700			342,875			-
Foreign exchange adjustment on USA losses		(185,093	)		(131,771	)		42,389
Other		1,474			(4,428	)		(2,148	)
		(387,040	)		(870,835	)		674,677
Change in valuation allowance		387,040			870,835			(674,677	)
Income taxes paid in foreign jurisdictions		-			399,546			426,421
Current income tax expense		-			399,546			426,421

Unrecorded deferred income tax assets

The Company has significant unrecorded deferred income tax assets for which a full valuation allowance has been provided due to uncertainty regarding their potential future utilization, as follows:

	2014			2013			2012
Net operating losses carried forward:
Canada (expiration dates 2015 to 2034)	$	4,236,318		$	4,005,683		$	3,269,542
USA (expiration dates 2020 to 2026)		2,225,150			2,040,056			1,908,285
Timing differences on property & equipment and financing costs		2,106,780			2,135,468			2,132,545
		8,568,247			8,181,207			7,310,372
Less valuation allowance		(8,568,247	)		(8,181,207	)		(7,310,372	)

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Commitments and contingencies (Details) (CAD)	Dec. 31, 2014
2015	315,360
2016	508,410
2017	508,410
2018	508,410
2019	508,410
Estimated future minimum annual commitment	2,349,000
Thereafter, 2020 through 2025	2,979,848
Total leases	5,328,848
Existing premises[Member]
2015	188,257
2016
2017
2018
2019
Estimated future minimum annual commitment	188,257
Thereafter, 2020 through 2025
Total leases	188,257
New premises[Member]
2015	127,103
2016	508,410
2017	508,410
2018	508,410
2019	508,410
Estimated future minimum annual commitment	2,160,743
Thereafter, 2020 through 2025	2,979,848
Total leases	5,140,591

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Geographic information

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

16. Geographic information

NXT conducts all of its survey operations from its head office in Canada, and until mid 2014 had a one person administrative office in Colombia. NXT has no long term assets outside of Canada. Revenues were derived by geographic area as follows:

	2014		2013		2012
North America (United States)	$	3,913,367	$	-		-
Asia (Pakistan)		-		2,659,292		-
Central America (Mexico, Guatemala, Belize)		-		24,803		6,403,534
South America (Colombia, Argentina)						4,534,041
		3,913,367		2,684,095		10,937,575

The Company’s revenues were derived almost entirely from a single client in the 2013 and 2014 periods.

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Changes in non-cash working capital (Tables)

12 Months Ended

Dec. 31, 2014

Changes In Non-Cash Working Capital Tables

Change in non-cash working capital

	2014			2013			2012
Accounts receivable		46,949			176,429			(350,077	)
Work-in-progress		299,842			676,621			135,747
Prepaid expenses and deposits		(180,188	)		(17,807	)		(97,544	)
Accounts payable and accrued liabilities		(156,729	)		(684,369	)		275,799
Deferred revenue		(2,781,101	)		2,463,998			(1,459,393	)
		(2,771,227	)		2,614,872			(1,495,468	)
Portion attributable to:
Operating activities		(2,771,227	)		2,614,872			(1,495,468	)
Financing activities		-			-			-
Investing activities		-			-			-
		(2,771,227	)		2,614,872			(1,495,468	)

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Significant Accounting Policies Policies

Basis of presentation

These consolidated financial statements as at and for the year ended December 31, 2014 have been prepared by management in accordance with US GAAP and by applying the same accounting policies and methods as used in preparing the consolidated financial statements as at and for the years ended December 31, 2013 and 2012.

Consolidation

These consolidated financial statements reflect the accounts of the Company and its wholly owned subsidiaries. All significant inter-company balances and transactions among NXT and its subsidiaries have been eliminated and are therefore not reflected in these consolidated financial statements.

Estimates and Assumptions

The preparation of these consolidated financial statements requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, including the disclosure of contingent assets and liabilities, at the date of these consolidated financial statements as well as revenues and expenses recorded during the reporting periods.

Estimates made relate primarily to measurement of stock-based compensation expense, valuation of the US$ Warrants, valuation of deferred income tax assets, and estimates for asset retirement obligations. The estimates and assumptions used are based upon management's best estimate. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period when determined. Actual results may differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and short term securities with an original maturity less than 90 days from the date of acquisition.

Short Term Investments

Short term investments are recorded at fair value, and include short term securities, held by a major Canadian chartered bank, with original maturity dates greater than 90 days but less than one year.

Revenue Recognition

Revenue from SFD® survey contracts (net of any related foreign sales tax) is recognized on a completed contract basis. Amounts received or invoiced in advance of completion of the contract are reflected as deferred revenue and classified as a current liability. All related survey expenditures and obligations related to uncompleted contracts are reflected as work-in-progress and classified as current assets. Upon completion of the related contract, unearned revenue and the related work-in-progress are reflected in the statement of income (loss) as either revenue or survey cost. Sales commissions incurred on the contracts are included in survey costs. Survey costs do not include any amortization or depreciation of property and equipment or staff and related overhead costs included in general and administrative expense.

Fair Value of Derivative Instruments

Derivative instruments are recognized on the balance sheet at fair value with any realized and unrealized gains (losses) recognized included in the determination of net income (loss) for the period. NXT does not apply hedge accounting to any of its derivatives. Any outstanding derivatives are classified into one of three categories based on a three level fair value hierarchy as noted below.

In Level I, the fair value of assets and liabilities is determined by reference to quoted prices in active markets for identical assets and liabilities that the Company has the ability to assess at the measurement date.

In Level II, determination of the fair value of assets and liabilities is based on the extrapolation of inputs, other than quoted prices included within Level I, for which all significant inputs are observable directly or indirectly. Such inputs include published exchange rates, interest rates, yield curves, and stock quotes from external data service providers. Transfers between Level I and Level II would occur when there is a change in market circumstances.

In Level III, the fair value of assets and liabilities measured on a recurring basis is determined using a market approach based on inputs that are unobservable and significant to the overall fair value measurement. Assets and liabilities measured at fair value can fluctuate between Level II and Level III depending on the proportion of the value of the contract that extends beyond the time frame for which inputs are considered to be observable. As contracts near maturity and observable market data becomes available, the contracts are transferred out of Level III and into Level II.

Property and Equipment

Property and equipment is recorded at cost, less accumulated depreciation and amortization, which is recorded over the estimated service lives of the assets using the following annual rates and methods:

Computer hardware (including survey equipment)	30% declining balance
Computer software	100% declining balance
Furniture and other equipment	20% declining balance
Leasehold improvements	over the remaining term of the lease

Management periodically reviews the carrying values of property and equipment to ensure that any impairment in value is recognized and reflected in results of operations.

Research and Development Expenditures

Research and development ("R&D") expenditures incurred to develop, improve and test the SFD® survey system and related components are expensed as incurred. Any intellectual property that is acquired for the purpose of enhancing research and development projects, if there is no alternative use for the intellectual property, is expensed in the period acquired. No significant external R&D was incurred in the years ended 2012, 2013 and 2014.

Foreign Currency Translation

The Company's functional currency is the Canadian dollar. Revenues and expenses denominated in foreign currencies are translated into Canadian dollars at the average exchange rate for the applicable period. Shareholders' equity accounts are translated into Canadian dollars using the exchange rates in effect at the time of the transaction. Monetary assets and liabilities are translated into Canadian dollars at the exchange rate in effect at the end of the applicable period. Non-monetary assets and liabilities (including work-in-progress and deferred revenue balances) are recorded at the relevant exchange rates for the period in which the balances arose. Any related foreign exchange gains and losses resulting from these translations are included in the determination of net income (loss) for the period.

Prior to 2010, NXT had active subsidiaries which had the US dollar as their functional currency. Foreign currency translation adjustments related to the consolidation of these subsidiaries is the only component of accumulated other comprehensive income, which is included in shareholders' equity.

Income Taxes

NXT follows the asset and liability method of accounting for income taxes. This method recognizes deferred income tax assets and liabilities based on temporary differences in reported amounts for financial statement and income tax purposes, at the income tax rates expected to apply in the future periods when the temporary differences are expected to be reversed or realized. The effect of a change in income tax rates on deferred income tax assets and deferred income tax liabilities is recognized in income in the period when the tax rate change is enacted. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount that is more likely than not to be realized.

Stock based compensation expense

NXT follows the fair value method of accounting for stock options that are granted to acquire common shares under NXT's stock option plan. Under this method, an estimate of the fair value of the cost of stock options that are granted to employees, directors and consultants is calculated using the Black-Scholes option pricing model and charged to income over the future vesting period of the stock options, with a corresponding increase recorded in contributed capital. Upon exercise of the stock options, the consideration received by NXT, and the related amount which was previously recorded in contributed capital, is recognized as an increase in the recorded value of the common shares of the Company.

Stock-based compensation expense related to stock options granted to non-employees is periodically re-measured until the earlier of the completion of their service period or when the vesting period is completed. Changes to the re-measured compensation are recognized in the period of change and amortized over the remaining life of the vesting period in the same manner as the original stock option.

Income (loss) per share

Basic income (loss) per share amounts are calculated by dividing net income (loss) by the weighted average number of common shares that are outstanding for the fiscal period. Shares issued during the period are weighted for the portion of the period that the shares were outstanding. Diluted income (loss) per share are computed using the treasury stock method, whereby the weighted average number of shares outstanding is increased to include any additional shares that would be issued from the assumed exercise of stock options and common share purchase warrants. The incremental number of shares added under the treasury stock method assumes that outstanding stock options and warrants that are exercisable at exercise prices below the Company's average market price (i.e. they were “in-the-money”) for the applicable fiscal period are exercised and then that number of incremental shares is reduced by the number of shares that could have been repurchased by the Company from the issuance proceeds, using the average market price of the Company’s shares for the applicable fiscal period.

No addition to the basic number of shares is made when calculating the diluted number of shares if the diluted per share amounts become anti-dilutive (such as occurs in the case where there is a net loss for the period).

Future Accounting Policy Changes

Revenue recognition:

In May 2014, the US Financial Accounting Standards Board (“FASB”) issued new guidance on accounting for “Revenue from Contracts with Customers”, which supersedes the current revenue recognition requirements and most industry-specific guidance. This new guidance will require that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

This new guidance will be effective from January 1, 2017, and early application is not permitted. There will be two methods in which the amendment can be applied: (1) retrospectively to each prior reporting period (which will include NXT’s fiscal years 2015 and 2016) presented, or (2) retrospectively with the cumulative effect recognized at the date of initial application. NXT is evaluating the impact of the adoption of this new guidance and has not yet determined the effect on its consolidated financial statements, which currently reflect the completed contract method of revenue recognition.

Going concern:

The FASB has established a going concern standard that becomes effective for reporting periods ending after December 31, 2016 (with early adoption permitted). The Company will be required to assess if there is substantial doubt about its’ ability to continue as a going concern, which will exist if it is probable that it will be unable to meet payment of its obligations within one year after the assessment date (which will be based on the date of issue of the period end financial statements). Disclosure will be required of the significance of and the conditions or events that give rise to the substantial doubt, as well as whether it is probable that managements’ plans can be effectively implemented to mitigate these conditions.

Further disclosure, including managements mitigation plans, will be required if it is assessed that the substantial doubt cannot be overcome. The Company has not yet adopted the new standard and will be assessing the required disclosures based on its analysis of the going concern assumption in the future period of adoption.

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Other related party transactions (Details Narrative) (CAD)	Dec. 31, 2014	Dec. 31, 2013
Other Related Party Transactions Details Narrative
Accounts payable and accrued liabilities	124	29,274
Accounts payable and accrued liabilities	23,673	31,045

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Future Operations

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

1. Future Operations

NXT Energy Solutions Inc. (the "Company" or "NXT") is a publicly traded company based in Calgary, Canada.

NXT's proprietary Stress Field Detection ("SFD®") technology is an airborne survey system that is used in the oil and natural gas industry to help aid in identifying areas with hydrocarbon reservoir potential.  Specific rights to this technology were acquired from NXT's current Chief Executive Officer and President (the "CEO") under a Technology Transfer Agreement (the "TTA") which has a term to December 31, 2015 (the “Maturity Date”).  The TTA requires the completion of various conditions, including conversion by NXT of the remaining 8,000,000 convertible preferred shares issued (see note 8), in order to retain the SFD® technology, which NXT intends to finalize before the Maturity Date.

Prior to 2006 the Company had engaged in extensive activities to develop, validate and obtain industry acceptance of SFD®, including conducting SFD® surveys for oil and gas industry partners on a cost recovery basis and participating as a joint venture partner in SFD® identified exploration wells. By December 31, 2005 the Company had accumulated a deficit of approximately $47.6 million in conducting these activities.

In 2006 SFD® survey services began to be offered to clients engaged in oil and gas exploration activities with an initial focus on companies operating in western Canada. Subsequently, in 2008, NXT commenced to focus its sales activities towards international and frontier exploration markets.

The generation of positive cash flow from operations will depend largely on NXT’s ability to demonstrate the value of the SFD® survey system to a much wider client base. NXT recognizes that its' financial position is currently dependent upon a limited number of client projects, on obtaining additional financing when needed, and attracting future clients.

These consolidated financial statements have been prepared on a "going concern" basis in accordance with generally accepted accounting principles of the United States of America ("US GAAP").  The going concern basis of presentation assumes that NXT will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.  There is substantial doubt about the appropriateness of the use of the going concern assumption, primarily due to current uncertainty about the timing and magnitude of potential future revenues.  NXT recognizes that ongoing use of the going concern assumption will depend on its ability to support operations for the foreseeable future beyond the next 12 months based on generating sufficient new revenue sources or securing additional financing if required.

NXT continues to work to expand its client base in order to generate revenues, positive net income and cash flow from operations in future years with its existing business model.  However, the occurrence and timing of this outcome cannot be predicted with certainty.

These consolidated financial statements do not include any adjustments to amounts and classifications of assets and liabilities or reported expenses that would be necessary should NXT be unable to raise additional capital or generate sufficient net income and cash flow from operations as required in future years in order to continue as a going concern.

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Consolidated Balance Sheets (Parenthetical)	Dec. 31, 2014	Dec. 31, 2013
Consolidated Balance Sheets Parenthetical
Common shares Issued	44,958,843	42,418,326
Preferred shares Issued	8,000,000	8,000,000

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US$ Warrants to purchase common shares

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

11. Warrants to purchase common shares

The following is a continuity of the US$ Warrants issued in the 2012 Financings (see note 7 (iii)) and which had an exercise price of US $1.20 per common share and expiry in 2014:

				exercise
	# of US$			proceeds
	Warrants			received
Outstanding as at January 1, 2012
Issued in the 2012 Financings		4,502,821			-
US$ Warrants exercised in 2013		(846,700	)	$	1,064,222
Outstanding as at December 31, 2013		3,656,121			1,064,222
Activity in 2014:
US$ Warrants exercised in 2014		(2,057,852	)		2,735,995
US$ Warrants expired in 2014		(1,598,269	)		-
Outstanding as at December 31, 2014		-		$	3,800,217

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Document and Entity Information	12 Months Ended
	Dec. 31, 2014	Apr. 23, 2015
Document And Entity Information
Entity Registrant Name	NXT Energy Solutions Inc.
Entity Central Index Key	0001009922
Document Type	20-F
Document Period End Date	Dec. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		44,958,843
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2014

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Financial instruments

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

12. Financial instruments

1) Non-derivative financial instruments:

The Company's non-derivative financial instruments consist of cash and cash equivalents, short-term investments, restricted cash, accounts receivable, and accounts payables and accrued liabilities. The carrying value of these financial instruments approximates their fair values due to their short terms to maturity. NXT is not exposed to significant interest or credit risks arising from these financial instruments. NXT is exposed to foreign exchange risk as a result of holding US and Colombian denominated financial instruments.

2) Derivative financial instruments:

As at December 31, 2014, no US$ Warrants remain outstanding. As the exercise price of the US$ Warrants that were issued in 2012 (see note 11) was in US dollars, which is a currency other than the functional currency of NXT, the US$ Warrants were considered to have an embedded derivative and were required to be recorded at fair value each reporting period. The amount recorded for this instrument, which was included with current liabilities, was adjusted to fair value at each period end over the life of the US$ Warrants, with the changes in fair value reflected in earnings.

Financial instruments that are recorded at fair value on a recurring basis are required to be classified into one of three categories based upon a fair value hierarchy. The Company's only financial instruments recorded at fair value on a recurring basis were the US$ Warrants. NXT classified these derivative financial instruments as level III where the fair value is determined by using valuation techniques that refer to both observable and unobservable market data. The valuation model was based on the Black-Scholes inputs noted below, as well as a discount to reflect the potential dilution impact upon exercise of the US$ Warrants and NXT's low stock market liquidity.

A continuity of the fair value of the US$ Warrants that were issued in the 2012 Financings is as follows:

Year ended December 31	2014			2013			2012
Fair value of US$ Warrants
Balance at beginning of the year	$	1,238,000		$	241,000		$	-
Value attributed to US$ Warrants issued in		-			-			-
the 2012 Financings (see note 7 (iii))		-			-			409,143
Transfer to common shares upon
exercise of US$ Warrants in the year		(1,280,800	)		(374,500	)		-
Increase (decrease) in fair value during the year		42,800			1,371,500			(168,143	)
Fair value of US$ Warrants, end of the year		-			1,238,000			241,000

The outstanding US$ Warrants were re-valued at each period end using the Black-Scholes valuation model utilizing the following weighted average assumptions:

As at December 31	2014		2013			2012
Expected dividends paid per common share		n/a	Nil			Nil
Expected life in years		n/a		0.3			1.0
Expected volatility in the price of common shares		n/a		65	%		80	%
Risk free interest rate		n/a		1.0	%		1.2	%
Weighted average fair market value per US$ Warrant issued during the year		n/a		n/a		$	US 0.08

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Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenue
Survey revenue [note 16]	3,913,367	2,684,095	10,937,575
Expense
Survey cost	431,518	1,632,159	3,633,645
General and administrative	4,132,108	4,112,787	4,508,506
Stock based compensation expense [note 10]	658,000	492,000	265,000
Amortization of property and equipment	67,162	85,484	125,015
Total expense	5,288,788	6,322,430	8,532,166
Other expense (income)
Interest expense (income), net	(50,824)	(25,455)	2,744
Foreign exchange loss (gain)	(158,817)	(150,350)	14,686
Increase (decrease) in fair value of US$ Warrants [note 12]	42,800	1,371,500	(168,143)
Other expense	354,781	107,985	66,973
Total other income (expense)	187,940	1,303,680	(83,740)
Income (loss) before income taxes	(1,563,361)	(4,942,015)	2,489,149
Income tax expense [note 13]		399,546	426,421
Income (loss) and comprehensive income (loss)	(1,563,361)	(5,341,561)	2,062,728
Income (loss) per share [note 9] - Basic	(0.04)	(0.13)	0.05
Income (loss) per share [note 9] - Diluted	(0.04)	(0.13)	0.04

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Asset retirement obligation

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

6. Asset retirement obligation

Asset retirement obligations ("ARO") relate to minor interests in oil and natural gas wells in which NXT has outstanding abandonment and reclamation obligations in accordance with government regulations. The Company's obligation relates to its interests in 6 gross (1.2 net) wells.  ARO have an estimated future liability of approximately $58,000 which is based on estimates of the future timing and costs to abandon, remediate and reclaim the wellsites within the next three years.  The net present value of the ARO is as noted below, and has been calculated using an inflation rate of 3.4% and discounted using a credit-adjusted risk-free interest rate of 10%.

	2014			2013			2012
ARO balance, beginning of the year		$64,560			$61,813			$57,953
Accretion expense		800			3,960			3,860
Costs incurred		(2,111	)		(1,213	)		-
Change in ARO estimates		(13,249	)		-			-
ARO balance, end of the year		50,000			64,560			61,813

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Accounts payable and accrued liabilities

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

5. Accounts payable and accrued liabilities

	2014		2013
Accrued liabilities related to:
Consultants and professional fees		$122,500		$105,000
Board of Directors' fees		40,000		-
Survey and other projects		14,308		-
Vacation pay, wages and bonuses payable		121,632		115,831
		298,440		220,831
Trade payables, payroll withholdings and other		484,186		718,524
		782,626		939,355

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Other related party transactions

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

17. Other related party transactions

One of the members of NXT’s Board of Directors is a partner in a law firm which provides legal advice to NXT. Legal fees (including costs related to share issuance) incurred with this firm were as follows:

2014		2013		2012
$	18,549	$	39,966	$	80,550

Accounts payable and accrued liabilities includes a total of $124 ($29,274 as at December 31, 2013) payable to this law firm.

In addition, accounts payable and accrued liabilities includes $23,673 ($31,045 as at December 31, 2013) related to re-imbursement of expenses owing to persons who are Officers of NXT.

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Income tax expense

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

13. Income tax expense

NXT periodically earns revenues while operating outside of Canada as a non-resident within certain foreign jurisdictions. Payments made to NXT for services rendered to clients in such countries may be subject to foreign withholding taxes, which are only recoverable in certain circumstances. For the year ended December 31, 2014, NXT recorded foreign withholding taxes of $nil (2013 - $399,546 and 2012 - $426,421) on a portion of its revenues that were generated on international projects. Although such foreign taxes incurred can potentially be utilized in Canada as a foreign tax credit against future taxable earnings from the foreign jurisdictions, a full valuation allowance has been provided against this benefit.

Income tax expense is different from the expected amount that would be computed by applying the statutory Canadian federal and provincial income tax rates to NXT's income (loss) before income taxes as follows:

	2014			2013			2012
Net income (loss) before income taxes	$	(1,563,361	)	$	(4,942,015	)	$	2,489,149
Canadian statutory income tax rate		25.00	%		25.00	%		25.00	%
Income tax (recovery) at statutory income tax rate		(390,840	)		(1,235,504	)		622,287
Effect of non- deductible expenses and other items:
Stock-based compensation and other expenses		176,719			157,993			12,149
Revaluation of US$ Warrants		10,700			342,875			-
Foreign exchange adjustment on USA losses		(185,093	)		(131,771	)		42,389
Other		1,474			(4,428	)		(2,148	)
		(387,040	)		(870,835	)		674,677
Change in valuation allowance		387,040			870,835			(674,677	)
Income taxes paid in foreign jurisdictions		-			399,546			426,421
Current income tax expense		-			399,546			426,421

The Company has significant unrecorded deferred income tax assets for which a full valuation allowance has been provided due to uncertainty regarding their potential future utilization, as follows:

	2014			2013			2012
Net operating losses carried forward:
Canada (expiration dates 2015 to 2034)	$	4,236,318		$	4,005,683		$	3,269,542
USA (expiration dates 2020 to 2026)		2,225,150			2,040,056			1,908,285
Timing differences on property & equipment and financing costs		2,106,780			2,135,468			2,132,545
		8,568,247			8,181,207			7,310,372
Less valuation allowance		(8,568,247	)		(8,181,207	)		(7,310,372	)

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Income (loss) per share

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

9. Income (loss) per share

	2014			2013			2012
Comprehensive income (loss) for the year	$	(1,563,361	)	$	(5,341,561	)	$	2,062,728
Weighted average number of shares outstanding:
Common shares issued		44,375,540			40,882,108			38,453,392
Convertible Preferred Shares (i)		-			778,082			2,000,000
Basic		44,375,540			41,660,190			40,453,392
Additional shares related to assumed
exercise of stock options and US$ Warrants
under the treasury stock method (ii)		-			-			337,070
Contingently issuable Preferred Shares (ii)		-			-			8,000,000
Fully diluted		44,375,540			41,660,190			48,790,462
Net loss per share – Basic	$	(0.04	)	$	(0.13	)	$	0.05
Net loss per share – Fully diluted	$	(0.04	)	$	(0.13	)	$	0.04

(i)   A total of 2,000,000 of the Preferred Shares (see note 8) are included in the above noted basic income (loss) per share calculation for the years ended December 31, 2012 and 2013, as the criteria for them to convert to common shares had been met up to their formal conversion in May 2013. The remaining 8,000,000 Preferred Shares are contingently issuable, and are included in the diluted number of shares outstanding if applicable.

(ii)   In periods in which a loss results, all outstanding stock options, common share purchase Warrants and the 8,000,000 Preferred Shares are excluded from the fully diluted loss per share calculations as their effect is anti-dilutive.

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Financial instruments (Details 2)	12 Months Ended
	Dec. 31, 2014 CAD	Dec. 31, 2013 CAD	Dec. 31, 2012 CAD	Dec. 31, 2012 USD ($)
FinancialInstrumentsDetails1Abstract
Expected dividends paid per common share
Expected life in years		3 months 18 days	1 year
Expected volatility in the price of common shares		65.00%	80.00%
Risk free interest rate		1.00%	1.20%
Weighted average fair market value per US$ Warrant issued during the year				$ 0.08

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Common shares

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

7. Common shares

The Company is authorized to issue an unlimited number of common shares, of which the following are issued and outstanding:

	# of shares		$ value
As at December 31, 2011		34,757,396	$	53,756,687
Transactions during the year ended December 31, 2012:
Issued through private placement
financing, net of issue costs (iii)		4,258,005		2,886,024
Value attributed to US$ Warrants issued in the
private placement financing (iii)		-		(409,143	)
Issued on exercise of stock options		75,000		47,250
Issued on exercise of warrants (ii)		464,558		278,760
Transfer from contributed capital upon exercise of:
Stock options		-		18,375
Warrants		-		45,733
As at December 31, 2012		39,554,959		56,623,686
Transactions during the year ended December 31, 2013:
Conversion of Preferred Shares (i)		2,000,000		3,256,400
Issued on exercise of stock options		16,667		13,234
Issued on exercise of US$ Warrants (note 11)		846,700		1,064,222
Transfer from contributed capital upon exercise of stock options		-		8,279
Transfer from fair value of US$ Warrants upon exercise (note 12)		-		374,500
As at December 31, 2013		42,418,326		61,340,321
Transactions during the year ended December 31, 2014:
Issued on exercise of stock options		482,665		288,066
Issued on exercise of US$ Warrants (note 11)		2,057,852		2,735,995
Transfer from contributed capital upon exercise of stock options		-		147,125
Transfer from fair value of US$ Warrants upon exercise (note 12)		-		1,280,800
As at December 31, 2014		44,958,843		65,792,307

(i)   NXT also has outstanding a total of 8,000,000 Preferred Shares (see note 8) which are convertible on a 1 for 1 basis into an additional maximum of 8,000,000 common shares by December 31, 2015. An initial total of 2,000,000 of these Preferred Shares were converted into 2,000,000 common shares of the Company effective May 22, 2013.

(ii)   In February, 2011 NXT closed a non-brokered private placement (the "2011 Placement") for aggregate proceeds of $1,600,300 ($1,487,827 net of finder’s fee and other costs incurred totalling $112,473). NXT issued a total of 3,200,600 units at a price of $0.50 per unit, each unit consisted of one NXT common share and one warrant, and each warrant entitled the holder to acquire an additional common share at a price of $0.60 per share until expiry on February 16, 2012.

Finder's fees incurred included $72,600 cash and 145,320 warrants issued. A continuity of the total warrants issued is as follows:

				exercise
	# of			proceeds
	warrants			received
Issued in the 2011 Placement		3,345,920		$	-
Exercised in 2011		(700,000	)		420,000
Outstanding as at December 31, 2011		2,645,920			420,000
Exercised in 2012		(464,558	)		278,760
Expired on February 16, 2012		(2,181,362	)		-
		-			698,760

In March and May 2012, NXT conducted private placement financings (the "2012 Financings") which consisted of units issued at a price of US $0.75 (the "Units"). Each Unit consisted of one NXT common share and one warrant (the "US$ Warrants") to purchase an additional NXT common share at a price of US $1.20 for a term of two years from the date of issue.

In connection with the 2012 Financings, NXT paid finder's fees totalling US $183,612 and issued a total of 244,816 finder's warrants (with the same terms as the US$ Warrants noted above). The 2012 Financings had three separate closings in March, 2012 and one on May 4, 2012, which are summarized as follows:

	March, 2012			May 4, 2012			2012 total
Proceeds (in US dollars)		2,216,005			977,500			3,193,505
Proceeds (in Cdn $)		2,210,690			972,442			3,183,132
Less share issue costs incurred		(187,844	)		(109,264	)		(297,108	)
Proceeds, net of issue costs		2,022,846			863,178			2,886,024
Number of common shares issued		2,954,672			1,303,333			4,258,005
Number of US$ Warrants issued		2,954,672			1,303,333			4,258,005
Number of finder’s warrants issued		162,416			82,400			244,816
		3,117,088			1,385,733			4,502,821
Fair value attributed to US$ Warrants		249,143			160,000			409,143

Two Officers of the Company subscribed for a total of US $40,000 of the 2012 Financings.

The common shares issued under the 2012 Financings were recorded at a value equal to the net proceeds received of $2,886,024, and reduced by $409,143 (see note 12) which was the estimated fair value attributed to the 4,502,821 US$ Warrants (see also note 11) issued.

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Preferred shares

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

8. Preferred shares

The Company is authorized to issue an unlimited number of preferred shares, issuable in series.

In 2005, the Company issued 10,000,000 series 1 preferred shares (the "Preferred Shares") to its CEO pursuant to the execution of the Technology Transfer Agreement (see note 1) in exchange for the rights to utilize the SFD® technology for hydrocarbon exploration.

The Preferred Shares do not participate in any dividends, and are not transferable except with the consent of the Board of Directors of NXT.

The number of Preferred Shares outstanding is as follows:

	# of shares			$ value
As at December 31, 2011 and 2012		10,000,000		$	3,489,000
Conversion of Preferred Shares in May 2013		(2,000,000	)		(3,256,400	)
As at December 31, 2013 and 2014		8,000,000			232,600

These Preferred Shares are non-voting, and are convertible into up to 8,000,000 NXT common shares (on a 1 for 1 basis) under the following terms:

• 2,000,000 of the Preferred Shares became convertible into common shares upon issue. Effective May 22, 2013, these 2,000,000 Preferred Shares were converted into 2,000,000 common shares.

• the remaining 8,000,000 Preferred Shares are subject to conditions related to potential future conversion.  They may become convertible into common shares in four separate increments of 2,000,000 Preferred Shares each, should NXT achieve specified cumulative revenue thresholds of US $50 million, US $100 million, US $250 million and US $500 million prior to the December 31, 2015 Maturity Date.

• an additional bonus of 1,000,000 common shares are issuable in the event that cumulative revenues exceed US $500 million.

• if the final US $500 million cumulative revenue threshold is not achieved by the Maturity Date, NXT can elect to retain ownership of the SFD® technology by converting all of the remaining Preferred Shares into common shares, which it intends to do in 2015 prior to the Maturity Date.

• cumulative revenue is defined as the sum of total revenue earned plus proceeds from the sale of assets accumulated since January 1, 2007, all denominated in US$, and calculated in accordance with generally accepted accounting principles.

• In the event of a change of control or other transaction involving a re-arrangement of the business of NXT prior to the Maturity Date, the number of outstanding Preferred Shares which can be converted will be dependent on the transaction value payable (“TVP”) per outstanding NXT common share as follows:

20% if TVP is less than $5 per common share

60% if TVP is between $5 and $10 per common share

100% if TVP exceeds $10 per common share

As at December 31, 2014, the Company had generated cumulative revenue of approximately US $29.5 million (December 31, 2013 - US $25.8 million) that is eligible to be applied to the above noted conversion thresholds.

The Preferred Shares were originally recorded at their estimated fair value as at December 31, 2005, with the total substantially assigned to the 2,000,000 Preferred Shares portion which was immediately convertible. The remaining Preferred Shares were assigned a nominal value in 2005, reflecting the uncertainty that the required revenue objectives would be achieved to allow conversion into common shares, as follows:

	# of Preferred
	Shares		$ value
convertible upon issue effective December 31, 2005		2,000,000		$3,256,400
conditionally convertible on or before December 31, 2015		8,000,000		232,600
		10,000,000		3,489,000

Rights related to Preferred Shares

In January 2014, NXT’s CEO (the “Grantor”) personally granted (to a total of 17 persons, including NXT employees, directors, officers, advisors and others) “Rights” to acquire a total of 1,000,000 of the common shares which are expected to become issued to him upon future conversion of the Preferred Shares by their Maturity Date. Each of the Rights are subject to certain vesting provisions and will entitle the holder to acquire from the Grantor one common share of NXT at a fixed exercise price of $1.77 and will expire on December 31, 2015.

A total of 795,000 of these Rights were granted to certain of NXT’s current directors, officers, employees and advisors, and are supplemental to existing incentives which have been granted under NXT’s stock option plan (see note 10). The grant date fair value of these 795,000 Rights was estimated as $483,000 (which will be recognized over the remaining term to expiry of the Rights in 2015) calculated using the Black-Scholes valuation model, based on the following assumptions:

Expected dividends paid per common share	Nil
Expected life in years		1.9
Expected volatility in the price of common shares		62	%
Risk free interest rate		1.0	%
Weighted average fair value per Right at grant date		$0.60

In connection with the Rights, NXT recognized $ 226,000 as a component of stock based compensation expense for the year ended December 31, 2014 (see note 10).

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Stock options

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

10. Stock options

The following is a summary of stock options which are outstanding as at December 31, 2014:

					average remaining
Exercise price	# of options		# of options		contractual
per share	outstanding		exercisable		life (in years)
$0.45		74,600		74,600		0.8
$0.75		355,000		236,664		2.5
$0.76		303,335		131,110		3.1
$0.86		707,500		454,163		2.6
$1.16		411,000		411,000		1.6
$1.20		300,000		300,000		2.6
$1.35		55,000		55,000		5.0
$1.39		55,000		55,000		4.5
$1.55		40,000		-		4.2
$1.61		25,000		-		4.1
$1.67		150,000		-		4.9
$1.83		65,000		65,000		4.0
$1.02		2,541,435		1,782,537		2.7

A continuity of the number of stock options which are outstanding at December 31, 2014 and 2013 is as follows:

	For the year ended					For the year ended
	December 31, 2014					December 31, 2013
				weighted					weighted
	# of stock			average		# of stock			average
	options			exercise price		options			exercise price
Options outstanding, start of the year		2,888,100		$	0.88		2,890,600		$	0.86
Granted		325,000		$	1.55		542,500		$	0.91
Exercised		(482,665	)	$	0.60		(16,667	)	$	0.79
Forfeited		(35,000	)	$	1.42		(423,333	)	$	0.79
Expired		(154,000	)	$	0.71		(105,000	)	$	0.75
Options outstanding, end of the year		2,541,435		$	1.02		2,888,100		$	0.88
Options exercisable, end of the year		1,782,537		$	1.01		1,733,930		$	0.90

Subsequent to December 31, 2014, the Company issued a total of 601,066 additional stock options with an average exercise price of $1.37 per share and a 5 year term to expiry in 2020.

Stock options granted generally expire, if unexercised, five years from the date granted and entitlement to exercise them generally vests at a rate of one-third at the end of each of the first three years following the date of grant.

Stock based compensation expense (“SBCE”) is calculated based on the fair value attributed to grants of stock options using the Black-Scholes valuation model and utilizing the following weighted average assumptions:

	2014			2013			2012
Expected dividends paid per common share	Nil			Nil			Nil
Expected life in years		5.0			5.0			4.0
Expected volatility in the price of common shares		113	%		74	%		79	%
Risk free interest rate		1.5	%		1.0	%		1.0	%
Weighted average fair market value per share at grant date	$	1.24		$	0.55		$	0.52
Intrinsic (or "in-the-money") value per share of options exercised	$	0.85		$	0.76		$	0.13

SBCE consists of the following amounts:

	2014			2013			2012
SBCE recognized related to:
Stock options		$	432,000		$	492,000		$	265,000
Preferred Share Rights (see note 8)			226,000			-			-
Total SBCE			658,000			492,000			265,000

The unamortized portion of SBCE related to the non-vested portion of stock options and the Preferred Share Rights, all of which will be recognized in future expense over the related remaining (2015 to 2017) vesting periods, is as follows:

As at December 31	2014		2013
Unamortized SBCE related to:
Stock options	$	367,000	$	475,000
Preferred Share Rights (see note 8)		234,000		-
		601,000		475,000

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Changes in non-cash working capital (Details) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Changes In Non-Cash Working Capital Details
Accounts receivable	46,949	176,429	(350,077)
Work-in-progress	299,842	676,621	135,747
Prepaid expenses and deposits	(180,188)	(17,807)	(97,544)
Accounts payable and accrued liabilities	(156,729)	(684,369)	275,799
Deferred revenue	(2,781,101)	2,463,998	(1,459,393)
Change in non-cash working capital	(2,771,227)	2,614,872	(1,495,468)
Portion attributable to:
Operating activities	(2,771,227)	2,614,872	(1,495,468)
Financing activities
Investing activities
Change in non-cash working capital	(2,771,227)	2,614,872	(1,495,468)

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Geographic information (Details) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenues derived by geography	3,913,367	2,684,095	10,937,575
North America (United States) [Member]
Revenues derived by geography	3,913,367
Asia (Pakistan) [Member]
Revenues derived by geography		2,659,292
Central America (Mexico, Belize, Guatemala) [Member]
Revenues derived by geography		24,803	6,403,534
South America (Colombia, Argentina) [Member]
Revenues derived by geography			4,534,041

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Income tax expense (Details Narrative) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Expense Details Narrative
Foreign withholding taxes		399,546	426,421

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Financial instruments (Tables)

12 Months Ended

Dec. 31, 2014

Financial Instruments Tables

Fair value of non-derivative instruments balance

Year ended December 31	2014			2013			2012
Fair value of US$ Warrants
Balance at beginning of the year	$	1,238,000		$	241,000		$	-
Value attributed to US$ Warrants issued in		-			-			-
the 2012 Financings (see note 7 (iii))		-			-			409,143
Transfer to common shares upon
exercise of US$ Warrants in the year		(1,280,800	)		(374,500	)		-
Increase (decrease) in fair value during the year		42,800			1,371,500			(168,143	)
Fair value of US$ Warrants, end of the year		-			1,238,000			241,000

Value attributed to warrants

As at December 31	2014		2013			2012
Expected dividends paid per common share		n/a	Nil			Nil
Expected life in years		n/a		0.3			1.0
Expected volatility in the price of common shares		n/a		65	%		80	%
Risk free interest rate		n/a		1.0	%		1.2	%
Weighted average fair market value per US$ Warrant issued during the year		n/a		n/a		$	US 0.08

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Preferred shares (Details Narrative)	12 Months Ended
	Dec. 31, 2014 CAD	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Preferred Shares Details Narrative
Cumulative revenue		$ 29,500,000	$ 25,800,000
Stock based compensation expense	226,000

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Commitments and contingencies

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

15. Commitments and contingencies

Office premises lease

NXT has an operating lease commitment on its existing Calgary office space for a term through July 31, 2015 at a minimum monthly lease payment of $26,894 (including estimated operating costs). NXT has also committed to an operating lease on new office premises for a 10 year term commencing in 2015 at an initial estimated minimum monthly lease payment of $42,368 (including operating costs).

The total estimated future minimum annual commitment for these two premises leases is as follows:

	Existing		New
Year ending December 31	premises		premises		Total
2015	$	188,257	$	127,103	$	315,360
2016		-		508,410		508,410
2017		-		508,410		508,410
2018		-		508,410		508,410
2019		-		508,410		508,410
		188,257		2,160,743		2,349,000
Thereafter, 2020 through 2025		-		2,979,848		2,979,848
		188,257		5,140,591		5,328,848

Aircraft charterhire commitment

NXT currently does not own any of the aircraft which are used in its' survey operations, but has an annual agreement to utilize a minimum annual volume of aircraft charter hours (the “Charter Agreement”). The charterhire commitment to be met by the end of 2015, including a short-fall in hours carried forward from 2014, is $641,250.

As part of the 2015 annual renewal of the Charter Agreement, NXT has made a deposit payment of $168,750 in February 2015, and an additional $135,000 is due by June 30, 2015. This total of $303,750 will be held as non-refundable deposits to be applied, as utilized to September 30, 2015, against the charterhire commitment carried forward from 2014.

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Property and equipment (Tables)

12 Months Ended

Dec. 31, 2014

Property And Equipment Tables

Property and equipment

	2014			2013
Survey equipment		$643,319			$626,286
Furniture and other equipment		528,420			528,420
Computers and software		1,100,593			1,097,560
Leasehold improvements		403,898			382,157
		2,676,230			2,634,423
Accumulated amortization and impairment		(2,438,766	)		(2,371,605	)
		237,464			262,818

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Preferred shares (Details 1) (CAD)	Dec. 31, 2014
Preferred Shares Details 1
Convertible upon issue, Shares	2,000,000
Convertible upon issue, Amount	3,256,400
Conditionally convertible, Shares	8,000,000
Conditionally convertible, Amount	232,600
Total Convertible Shares	10,000,000
Total Convertible Amount	3,489,000

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Property and equipment (Details) (CAD)	Dec. 31, 2014	Dec. 31, 2013
Gross property and equipment	2,676,230	2,634,423
Less accumulated depreciation, amortization and impairment	(2,438,766)	(2,371,605)
Net property and equipment	237,464	262,818
Survey equipment
Gross property and equipment	643,319	626,286
Furniture and other equipment
Gross property and equipment	528,420	528,420
Computers and software
Gross property and equipment	1,100,593	1,097,560
Leasehold improvements
Gross property and equipment	403,898	382,157

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Consolidated Statements of Cash Flows (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash provided by (used in): Operating activities
Comprehensive income (loss) for the year	(1,563,361)	(5,341,561)	2,062,728
Items not affecting cash:
Stock-based compensation expense	658,000	492,000	265,000
Amortization of property and equipment	67,162	85,484	125,015
Increase (decrease) in fair value of US$ Warrants	42,800	1,371,500	(168,143)
Non-cash changes to asset retirement obligation	(12,449)	3,960	3,860
Asset retirement obligations paid	(2,111)	(1,213)
Total non-cash items	753,402	1,951,731	225,732
Total before working capital changes	(809,959)	(3,389,830)	2,288,460
Change in non-cash working capital balances [note 14]	(2,771,227)	2,614,872	(1,495,468)
Net cash (used in) operating activities	(3,581,186)	(774,958)	792,992
Financing activities
Proceeds from exercise of US$ Warrants [note 11]	2,735,995	1,064,222
Proceeds from exercise of common share purchase warrants			278,760
Proceeds from exercise of stock options	288,066	13,234	47,250
Issue of common shares and warrants, net of issue costs			2,886,024
Repayment of capital lease obligation			(8,591)
Net cash generated by financing activities	3,024,061	1,077,456	3,203,443
Investing activities
Purchase of property and equipment	(41,808)	(20,463)	(48,553)
Increase in short-term investments	(2,723,980)	(2,394,450)	(45,000)
Decrease (increase) in restricted cash	53,921	379,448	(359,234)
Net cash (used in) investing activities	(2,711,867)	(2,035,465)	(452,787)
Net source (use) of cash	(3,268,992)	(1,732,967)	3,543,648
Cash and cash equivalents, beginning of the year	3,319,627	5,052,594	1,508,946
Cash and cash equivalents, end of the year	50,635	3,319,627	5,052,594
Supplemental information:
Cash interest paid (received), net	(56,401)	(14,518)	2,744
Cash taxes paid		399,546	426,421

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Property and equipment

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

4. Property and equipment

	2014			2013
Survey equipment		$643,319			$626,286
Furniture and other equipment		528,420			528,420
Computers and software		1,100,593			1,097,560
Leasehold improvements		403,898			382,157
		2,676,230			2,634,423
Accumulated amortization and impairment		(2,438,766	)		(2,371,605	)
		237,464			262,818

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Warrants to purchase common shares (Details) (CAD)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Number of warrants
Outstanding	3,656,121
Issued in the 2012 Financings		4,502,821
US$ Warrants exercised in 2013	(2,057,852)	(846,700)
US$ Warrants expired in 2014	(1,598,269)
Outstanding		3,656,121
Exercise proceeds received
Outstanding	1,064,222
US$ Warrants exercised in 2014	2,735,995	1,064,222
US$ Warrants expired in 2014
Outstanding	3,800,217	1,064,222

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Accounts payable and accrued liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Accounts Payable And Accrued Liabilities Tables

Accounts payable and accrued liabilities

	2014		2013
Accrued liabilities related to:
Consultants and professional fees		$122,500		$105,000
Board of Directors' fees		40,000		-
Survey and other projects		14,308		-
Vacation pay, wages and bonuses payable		121,632		115,831
		298,440		220,831
Trade payables, payroll withholdings and other		484,186		718,524
		782,626		939,355

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Geographic information (Tables)

12 Months Ended

Dec. 31, 2014

Geographic Information Tables

Revenues derived by geographic area

	2014		2013		2012
North America (United States)	$	3,913,367	$	-		-
Asia (Pakistan)		-		2,659,292		-
Central America (Mexico, Guatemala, Belize)		-		24,803		6,403,534
South America (Colombia, Argentina)						4,534,041
		3,913,367		2,684,095		10,937,575

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Changes in non-cash working capital

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

14. Change in non-cash working capital

The changes in non-cash working capital balances are comprised of:

	2014			2013			2012
Accounts receivable		46,949			176,429			(350,077	)
Work-in-progress		299,842			676,621			135,747
Prepaid expenses and deposits		(180,188	)		(17,807	)		(97,544	)
Accounts payable and accrued liabilities		(156,729	)		(684,369	)		275,799
Deferred revenue		(2,781,101	)		2,463,998			(1,459,393	)
		(2,771,227	)		2,614,872			(1,495,468	)
Portion attributable to:
Operating activities		(2,771,227	)		2,614,872			(1,495,468	)
Financing activities		-			-			-
Investing activities		-			-			-
		(2,771,227	)		2,614,872			(1,495,468	)