nsfdf_6k

0001654954-21-005532.txt : 20210513 0001654954-21-005532.hdr.sgml : 20210513 20210512184544 ACCESSION NUMBER: 0001654954-21-005532 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20210331 FILED AS OF DATE: 20210513 DATE AS OF CHANGE: 20210512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NXT Energy Solutions Inc. CENTRAL INDEX KEY: 0001009922 STANDARD INDUSTRIAL CLASSIFICATION: OIL AND GAS FIELD EXPLORATION SERVICES [1382] IRS NUMBER: 611126904 STATE OF INCORPORATION: A0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24027 FILM NUMBER: 21916582 BUSINESS ADDRESS: STREET 1: 3320 - 17TH AVENUE SW STREET 2: SUITE 302 CITY: CALGARY, T3E 0B4 STATE: A0 ZIP: 90035 BUSINESS PHONE: 403-264-7020 MAIL ADDRESS: STREET 1: 3320 - 17TH AVENUE SW STREET 2: SUITE 302 CITY: CALGARY, T3E 0B4 STATE: A0 ZIP: 90035 FORMER COMPANY: FORMER CONFORMED NAME: ENERGY EXPLORATION TECHNOLOGIES / DATE OF NAME CHANGE: 20000628 FORMER COMPANY: FORMER CONFORMED NAME: PINNACLE OIL INTERNATIONAL INC DATE OF NAME CHANGE: 20000626 FORMER COMPANY: FORMER CONFORMED NAME: ENERGY EXPLORATION TECHNOLOGIES DATE OF NAME CHANGE: 20000616 6-K 1 nsfdf_6k.htm FORM 6-K nsfdf_6k

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934

For the month of May 2021

Commission File Number: 000-24027

NXT Energy Solutions Inc.

(Translation of registrant's name into English)

Suite 302, 3320-17th Avenue S.W.

Calgary, Alberta T3E 0B4

Canada
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F X Form 40-F _____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes _____ No X

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes _____ No X

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes _____ No X

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

The Issuer is filing material documents not previously filed.

Exhibit List:

99.1 Consolidated Financial Statements for the period ended March 31, 2021

99.2 Management’s Discussion and Analysis (“MD&A”) for the period ended March 31, 2021

99.3 Certification Interim Filings CEO

99.4 Certification Interim Filings CFO

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		NXT Energy Solutions Inc.
		(Registrant)


Date: March 31, 2021		/s/ Eugene Woychyshyn
		Eugene Woychyshyn
		Chief Financial Officer

EX-99.1 2 nsfdf_ex991.htm CONSOLIDATED FINANCIAL STATEMENTS nsfdf_ex991

Exhibit 99.1

NXT ENERGY SOLUTIONS INC.

Unaudited Condensed Consolidated Interim Financial Statements

For the three months ended

March 31, 2021

NXT ENERGY SOLUTIONS INC.

Condensed Consolidated Interim Balance Sheets

(Unaudited-expressed in Canadian dollars)

	March 31,	December 31,
	2021	2020
Assets
Current assets
Cash and cash equivalents	$2,003,223	$2,690,146
Short-term investments	150,000	341,261
Accounts receivable	702,789	965,548
Prepaid expenses	91,315	77,532
	2,947,327	4,074,487
Long term assets
Deposits	521,637	526,561
Property and equipment	686,686	707,326
Right of Use Assets	2,271,961	2,415,430
Intellectual property (Note 3)	15,864,150	16,285,333
	$22,291,761	$24,009,137
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities (Note 4, 14)	$514,141	$440,538
Contract obligations (Note 5)	126,209	127,507
Current portion of lease obligation (Note 6)	792,865	773,465
	1,433,215	1,341,510
Long-term liabilities
Long-term lease obligation (Note 6)	1,690,584	1,896,277
Asset retirement obligation	23,259	22,741
	1,713,843	1,919,018
	3,147,058	3,260,528

Shareholders' equity
Common shares (Note 8): - authorized unlimited
Issued: 64,494,356 (2020 - 64,437,790) common shares	95,363,018	95,327,123
Contributed capital	9,359,466	9,355,716
Deficit	(85,577,781)	(83,934,230)
	19,144,703	20,748,609
	$22,291,761	$24,009,137

Going concern (Note 1)

Commitments (Note 7)

Subsequent events (Note 15)

Signed "George Liszicasz"

Director

Signed "Bruce G. Wilcox"

Director

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

NXT ENERGY SOLUTIONS INC.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Unaudited-expressed in Canadian dollars)

For the three months ended March 31,
	2021	2020
Revenue
Survey revenue (Note 13)	$-	$-
Expenses
Survey costs, net	265,483	301,961
General and administrative expenses (Note 10)	900,309	995,999
Amortization	441,824	448,381
	1,607,616	1,746,341
Other expenses (income)
Interest (income) expense, net	6,115	(12,647)
Foreign exchange loss (gain)	20,210	(409,517)
Intellectual property and other	9,610	8,124
	35,935	(414,040)

Loss before income taxes	(1,643,551)	(1,332,301)

Income tax expense	-	-

Net loss and comprehensive loss	(1,643,551)	(1,332,301)
Net loss per share (Note 9)
Basic	$(0.03)	$(0.02)
Diluted	$(0.03)	$(0.02)

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

NXT ENERGY SOLUTIONS INC.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited-expressed in Canadian dollars)

	For the three months ended March 31,
	2021	2020
Cash provided by (used in):
Operating activities
Net loss	$(1,643,551)	$(1,332,301)
Items not affecting cash:
Stock based compensation expense (Note 10)	20,010	21,665
Amortization	441,824	448,381
Non-cash changes to asset retirement obligation	518	518
Non-cash lease and interest	(42,824)	(42,825)
Unrealized foreign exchange (gain) loss	25,529	(342,249)
Change in non-cash working capital balances (Note 12)	315,174	647,621
	760,231	733,111
Net cash used in operating activities	(883,320)	(599,190)

Financing activities
Proceeds from the Employee Share Purchase Plan (Note 10)	19,635	-
Repayment of finance lease obligation	-	(11,158)
Net cash from (used in) financing activities	19,635	(11,158)

Investing activities
Proceeds from disposal of short-term investments	191,261	29,424
Net cash from investing activities	191,261	29,424

Effect of foreign exchange rate changes on cash and cash equivalents	(14,499)	122,186

Net decrease in cash and cash equivalents	(686,923)	(458,738)
Cash and cash equivalents, beginning of the period	2,690,146	2,858,245
Cash and cash equivalents, end of the period	$2,003,233	$2,399,507

Supplemental information
Cash interest (received)	3,865	(8,154)
Cash taxes paid	-	-

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

NXT ENERGY SOLUTIONS INC.

Condensed Consolidated Interim Statements of Shareholders' Equity

(Unaudited-expressed in Canadian dollars)

	For the three months ending March 31,
	2021	2020
Common Shares (Note 8)
Balance at beginning of the period	$95,327,123	$95,313,064
Issuance of common stock on Employee Purchase Plan	35,895	-
Balance at end of the period	95,363,018	95,313,064
Contributed Capital (Note 10)
Balance at beginning of the period	9,355,716	9,306,493
Recognition of stock based compensation expense	3,750	21,665
Balance at end of the period	9,359,466	9,328,158
Deficit
Balance at beginning of the period	(83,934,230)	(77,934,555)
Net loss	(1,643,551)	(1,332,301)

Balance at end of the period	(85,577,781)	(79,266,856)

Total Shareholders' Equity at end of the period	$ 19,144,703	$ 25,374,366

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

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended March 31, 2021

(Expressed in Canadian dollars unless otherwise stated)

1. The Company and going concern

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

NXT's proprietary Stress Field Detection ("SFD®") technology is an airborne survey system that is used in the oil and natural gas exploration industry to identify subsurface trapped fluid accumulations.

These condensed consolidated interim financial statements of NXT have been prepared by management in accordance with U.S. GAAP. The accounting policies applied are consistent with those outlined in NXT’s annual audited consolidated financial statements for the year ended December 31, 2020, except as described in Note 2, Significant Accounting Policies and Changes.

These condensed consolidated interim financial statements reflect adjustments, all of which are normal recurring adjustments that are, in the opinion of management, necessary to reflect fairly the financial position and results of operations for the respective periods. These condensed consolidated financial statements do not include all disclosures required in the annual financial statements and should be read in conjunction with the 2020 audited consolidated financial statements.

These condensed consolidated interim financial statements have been prepared on a going concern basis. 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.

The events described in the following paragraphs highlight that there is substantial doubt about NXT’s ability to continue as a going concern within one year after the date that these condensed consolidated interim financial statements have been issued. The Company’s current cash position is not expected to be sufficient to meet the Company’s obligations and planned operations for a year beyond the date that these condensed consolidated interim financial statements have been issued.

The Company is taking further steps to reduce operating costs including payroll and other general and administrative costs and is evaluating alternatives to reduce other costs. If required, further financing options that may or may not be available to the Company include issuance of new equity, debentures or bank credit facilities. The need for any of these options will be dependent on the timing of securing new SFD® survey contracts and obtaining financing on terms that are acceptable to both the Company and the financier.

NXT continues to develop its pipeline of opportunities to secure new revenue contracts. However, the Company’s longer-term success remains dependent upon its ability to convert these opportunities into successful contracts, to continue to attract new client projects, ultimately to expand the revenue base to a level sufficient to exceed fixed operating costs and generate positive cash flow from operations. The occurrence and timing of these events cannot be predicted with sufficient certainty.

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended March 31, 2021

(Expressed in Canadian dollars unless otherwise stated)

The condensed consolidated interim financial statements do not reflect adjustments that would be necessary if the going concern basis was not appropriate. If the going concern basis was not appropriate for these condensed consolidated interim financial statements, then adjustments would be necessary in the carrying value of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications used. These adjustments could be material.

Covid-19 Pandemic

As of the date of these condensed consolidated interim financial statements the Covid-19 pandemic continues to be a risk to the operations of the Company. The Company has made provisions so employees can work safely in the office or if necessary from home, followed all Alberta Services and Health Canada recommendations, and implemented hygiene and physical distancing policies. Demand for our services and prospective revenues may become adversely impacted the longer the Covid-19 pandemic continues. The impact of the continuation of the Covid-19 pandemic may hamper our ability to deliver SFD® surveys contracts in the following ways. If restrictions on international travel continue, our aircraft and personal may not be able to perform project surveys. An outbreak of the virus among our staff or our customers’ personnel could delay any survey in progress. Business development may be delayed when in-person meetings and technical presentations may be a superior delivery method to tele-conferences or on-line video conferencing.

The situation is dynamic and the ultimate duration and magnitude of the impact on the economy and the financial effect to the Company is not known at this time. Estimates and judgments made by management in the preparation of these condensed consolidated interim financial statements are subject to a higher degree of measurement uncertainty during this volatile period.

Use of Estimates and Judgements

In preparing these condensed consolidated interim financial statements, NXT is required to make estimates and assumptions that affect both the amount and timing of recording assets, liabilities, revenues and expenses since the determination of these items may be dependent on future events. The Company uses the most current information available and exercises careful judgment in making these estimates and assumptions. In the opinion of management, these condensed consolidated interim financial statements have been properly prepared within reasonable limits of materiality and within the framework of the Company’s significant accounting policies included in the annual audited consolidated financial statements for the year ended December 31, 2020.

2. Significant Accounting Policies and Changes

Basis of Presentation

These condensed consolidated interim financial statements for the period ended March 31, 2021 have been prepared by management in accordance with generally accepted accounting principles of the United States of America ("US GAAP”). Certain items have been presented in order to conform with current year presentation.

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended March 31, 2021

(Expressed in Canadian dollars unless otherwise stated)

3. Intellectual property

During 2015, NXT acquired the rights to the SFD® technology for use in the exploration of hydrocarbons from Mr. George Liszicasz, the Chief Executive Officer of the Company and Director, and recorded the acquisition as an intellectual property asset on the balance sheet. The asset was recorded at the fair value of the consideration transferred, including the related tax effect of approximately $25.3 million.

The asset is being amortized on a straight line basis over its estimated useful life of 15 years. The annual amortization expense expected to be recognized in each of the next five years is approximately $1.7 million per year for a 5 year aggregate total of $8.5 million.

	March 31,	December 31,
	2021	2020
Intellectual property acquired	$25,271,000	$25,271,000
Accumulated amortization	(9,406,850)	(8,985,667)
	15,864,150	16,285,333

4. Accounts payable and accrued liabilities

	March 31,	December 31,
	2021	2020
Accrued liabilities related to:
Consultants and professional fees	$223,640	$183,920
Payroll	124,780	120,318
Vacation Accrued	92,300	71,699
	440,720	375,937
Trade payables and other	73,421	64,601
	514,141	440,538

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended March 31, 2021

(Expressed in Canadian dollars unless otherwise stated)

5. Contract Obligations

In December, 2020, the Company received a deposit of US$100,000 to sell Pre-existing SFD® data. The SFD® data was delivered to the customer in April 2021, refer to Note 15.

	March 31,	December 31,
	2021	2020
Contract obligations	$126,209	$127,507

6. Lease obligation

	March 31,	December 31,
	2021	2020
Aircraft	$1,097,904	$1,220,425
Office Building	1,377,459	1,440,085
Printer	8,086	9,232
	2,483,449	2,669,742
Current Portion of lease obligations	(792,865)	(773,465)
Long-term lease obligations	1,690,584	1,896,277

Maturity of lease liabilities:
2021	$764,092
2022	1,128,243
2023	367,185
2024	367,185
2025	275,389
Total lease payments	2,902,094
Less imputed interest	(418,645)
Total discounted lease payments	2,483,449
Current portion of lease obligations	(792,865)
Non-current portion of lease obligations	1,690,584

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended March 31, 2021

(Expressed in Canadian dollars unless otherwise stated)

7. Commitments

The table below is the non-lease operating cost components associated with the costs of the building lease.

For the fiscal period ending December 31,	Office Premises
2021	$171,069
2022	228,091
2023	228,091
2024	228,091
2025	171,069
	1,026,411

In April 2017, NXT completed a sale and leaseback agreement of its aircraft with a Calgary based international aircraft services organization. The terms of the agreement resulted in NXT selling its Cessna Citation aircraft that was purchased in 2015 for US$2,000,000 for the sum of US$2,300,000. NXT has leased the aircraft over an initial term of 60 months and retains all existing operating rights and obligations. Net proceeds to NXT from the sale were approximately $2.7 million, after payment of all commissions and fees. The net book value of the asset of $2.4 million was derecognized and the resulting gain on disposition of $776,504 was deferred.

8. Common shares

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

	For the three months ended
	March 31, 2021		March 31, 2020
	# of shares	$ amount	# of shares	$ amount
As at the beginning of the period	64,437,790	$95,327,123	64,406,891	$95,313,064
Issuance for Employee Stock Purchase Plan (“ESP Plan”)	56,566	35,895	-	-
As at the end of the period	64,494,356	95,363,018	64,406,891	95,313,064

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended March 31, 2021

(Expressed in Canadian dollars unless otherwise stated)

9. Earnings (Loss) per share

	For the three months ended
	March 31, 2021	March 31, 2020
Net loss for the period	$(1,643,551)	$(1,332,301)
Weighted average number of shares outstanding for the period:
Basic	64,472,222	64,406,891
Diluted	64,472,222	64,406,891
Net loss per share – Basic	$(0.03)	$(0.02)
Net loss per share – Diluted	$(0.03)	$(0.02)

In periods in which a loss results, all outstanding stock options are excluded from the diluted loss per share calculations as their effect is anti-dilutive.

10. Share based compensation

The Company has an equity compensation program in place for its executives, employees and directors. Executives and employees are given equity compensation grants that vest based on a recipient's continued employment. The Company’s stock-based compensation awards outstanding as at March 31, 2021, include stock-options, restricted stock units (“RSUs”), deferred share units (“DSUs”) and the ESP Plan. The following tables provide information about stock option, RSU, DSU, and ESP Plan activity.

For the three months ended
	March 31, 2021	March 31, 2020
Stock Option Expense	$3,750	$17,915
Deferred Share Units	-	3,750
Restricted Stock Units	(49)	-
Employee Share Purchase Plan	22,795	-
Total Stock Based Compensation Expense	26,496	21,665

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended March 31, 2021

(Expressed in Canadian dollars unless otherwise stated)

Stock Options:

The following is a summary of stock options which are outstanding as at March 31, 2021.

			Average remaining
Exercise price	# of options	#of options	contractual
	outstanding	exercisable	life (in years)
$0.49	8,500	8,500	5.0
$0.51	16,000	16,000	4.5
$0.52	100,000	100,000	3.3
$0.55	30,000	30,000	3.8
$0.59	150,000	150,000	2.6
$1.45	37,500	37,500	0.7
$1.48	37,500	37,500	0.3
$1.50	50,000	50,000	0.3
	429,500	429,500	2.3

A continuity of the number of stock options which are outstanding at the end of the current period and as at the prior fiscal year ended December 31, 2020 is as follows:

	For the three months ended,		For the year ended,
	March 31, 2021		December 31, 2020
		weighted		weighted
	# of stock	average	# of stock	average
	Options	exercise price	options	exercise price
Options outstanding, start of the period	421,000	$0.83	1,169,500	$1.48
Granted	8,500	$0.49	46,000	$0.54
Expired	-	-	(794,500)	$(1.77)
Forfeited	-	-	-	-
Options outstanding, end of the period	429,500	$0.82	421,000	$0.83
Options exercisable, end of the period	429,500	$0.82	421,000	$0.83

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:

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended March 31, 2021

(Expressed in Canadian dollars unless otherwise stated)

For the period ended	2021	2020
Expected dividends paid per common share	Nil	Nil
Expected life in years	5.0	5.0
Weighted average expected volatility in the price of common shares	150%	138%
Weighted average risk free interest rate	0.15%	1.12%
Weighted average fair market value per share at grant date	$0.49	$0.54

Deferred Stock Units (“DSUs”):

A continuity of the number of DSUs which are outstanding at the end of the current period and as at the prior fiscal year ended December 31, 2020 is as follows:

	For the three months ended March 31, 2021	For the year December 31, 2020
Opening balance	37,354	-
Granted	-	37,354
Closing balance	37,354	37,354

The DSUs plan is a long-term incentive plan that permits the grant of DSUs to qualified directors. DSUs granted under the DSUs plan are to be settled at the retirement, resignation or death of the Board member holding the DSUs.

Restricted Stock Units (“RSUs”):

The Company’s first grant of RSU’s began in 2020. RSUs entitle the holder to receive, at the option of the Company, either the underlying number of shares of the Company's Common Stock upon vesting of such units or a cash payment equal to the value of the underlying shares. The RSUs vest at a rate of one-third at the end of each of the first three years following the date of grant. The Company intends to settle the RSUs in cash. In the year ended December 31, 2020, the Company granted 1,200,000 RSU’s to employees and officers.

A continuity of the number of RSUs, including fair value (“FV”) which are outstanding at the end of the current period and as the end of the prior fiscal year ended December 31, 2020 is as follows:

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended March 31, 2021

(Expressed in Canadian dollars unless otherwise stated)

	For the three months ended,		For the year ended,
	March 31, 2021		December 31, 2020
	# of RSUs	FV/Unit	# of RSUs	FV/Unit
RSUs outstanding, start of the period	1,200,000	$0.79	-	$-
Granted	-	$-	1,200,000	$0.45
Converted	-	$-	-	$-
Forfeited	(155,000)	$(0.79)	-	$-
RSUs outstanding, end of the period	1,045,000	$0.53	1,200,000	$0.79

Employee Share Purchase Plan (“ESP Plan”):

The ESP Plan allows employees and other individuals determined by the Board to be eligible to contribute a minimum of 1% and a maximum of 10% of their earnings to the plan for the purchase of common shares in the capital of the Company, of which the Company will make an equal contribution. Common shares contributed by the Company may be issued from treasury or acquired through the facilities of the Toronto Stock Exchange (“TSX”). During 2020 and 2021 the Company has elected to issue common shares from treasury.

A continuity of the number of commons shares under the ESP Plan which are outstanding at the end of the current period and as at the prior fiscal year ended December 31, 2020 is as follows:

	For the three months ended,		For the year ended,
	March 31, 2021		December 31, 2020
	# of shares	$ amount	# of shares	$ amount
Purchased by employees	30,983	$19,635	16,686	$7,592
Matched by the Company	25,583	16,260	14,213	6,467
Total Common Shares issued	56,566	35,895	30,899	14,059

If the employee does not withdrawal common shares from the ESP Plan in the first year of their participation, the Company will match an additional 100% of the employee contributions, up to $15,000 per employee (the “Bonus Match”). As at March 31, 2021 the Company has accrued $8,201 for the Bonus Match ($1,666 as at December 31, 2020).

Effective for the year ended December 31, 2020, the Company began presenting stock based compensation expense within general and administrative expenses and has recorded an immaterial correction to classify the stock based compensation expense to be presented within general and administrative expenses. For the three month periods ended March 31, 2021 and 2020 the amounts were $26,496 and $21,665, respectively. While ASC 718 does not identify a specific line item in the income statement for presentation of the expense related to share based compensation arrangements, the SEC has released guidance under SAB Topic 14.F that the expense related to share-based payment arrangements should be presented in the same line or lines as cash compensation paid to the same employees. The Company’s presentation conforms to this guidance.

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended March 31, 2021

(Expressed in Canadian dollars unless otherwise stated)

11. Financial instruments

1) Non-derivative financial instruments:

The Company's non-derivative financial instruments consist of cash and cash equivalents, short-term investments, accounts receivable, deposits, accounts payables and accrued liabilities and lease obligations. The carrying value of these financial instruments, excluding leases, approximates their fair values due to their short terms to maturity.

Credit Risk

Credit risk arises from the potential that the Company may incur a loss if counterparty to a financial instrument fails to meet its obligation in accordance with agreed terms. The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments and accounts receivable. The carrying value of cash and cash equivalents, short-term investments, and accounts receivable reflects management’s assessment of credit risk. At March 31, 2021, cash and cash equivalents and short-term investments included balances in bank accounts, term deposits and guaranteed investment certificates, placed with financial institutions with investment grade credit ratings. The majority of the Company’s accounts receivable relate to sales to one customer in Nigeria and is exposed to foreign country credit risks. The Company manages this credit risk by requiring advance payments before entering into certain contract milestones and when possible accounts receivable insurance.

Foreign Exchange Risk

The Company is exposed to foreign exchange risk in relation to its holding of significant US$ balances in cash and cash equivalents, short-term investments, accounts receivable, deposits, accounts payables and accrued liabilities and entering into United States dollar revenue contracts. To mitigate exposure to fluctuations in foreign exchange, the Company does not currently enter into hedging contracts, but uses strategies to reduce the volatility of United States Dollar assets including converting excess United States dollars to Canadian dollars. As at March 31, 2021, the Company held net U.S dollar assets totaling US$1,961,441. Accordingly, a hypothetical 10% change in the value of one United States dollar expressed in Canadian dollars as at March 31, 2021 would have had an approximately $248,000 effect on the unrealized foreign exchange gain or loss for the period.

2) Derivative financial instruments

As at March 31, 2021 and December 31, 2020, the Company held no derivative financial instruments.

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended March 31, 2021

(Expressed in Canadian dollars unless otherwise stated)

12. Change in non-cash working capital

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

	For the three months ended
	March 31, 2021	March 31, 2020
Accounts receivable	$255,833	$629,868
Prepaid expenses	(13,783)	(14,168)
Accounts payable and accrued liabilities	73,124	31,921
	315,174	647,621

Portion attributable to:
Operating activities	315,174	647,621
Financing activities	-	-
Investing activities	-	-
	315,174	647,621

13. Geographic information

The Company generates revenue from its SFD® survey projects that assists the Company’s clients in the determination of where to focus their hydrocarbon exploration decisions concerning land commitments, data acquisition expenditures and prospect prioritization on areas with the greatest potential. NXT conducts all of its survey operations from its head office in Canada, and occasionally maintains administrative offices in foreign locations if and when needed. Revenue fluctuations are a normal part of SFD® survey system sales and can vary significantly year-over-year. There were no revenues in the quarters ended March 31, 2021 and 2020.

14. 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 issuances) incurred with this firm were as follows:

	For three months ended
	March 31, 2021	March 31, 2020
Legal Fees	$17,380	$67,513

Accounts payable and accrued liabilities includes a total of $18,247 ($1,570 as at December 31, 2020) payable to this law firm. A company owned by a family member of an executive officer was contracted to provide design services to the Company for a total cost of US$3,000.

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended March 31, 2021

(Expressed in Canadian dollars unless otherwise stated)

15. Subsequent events

Acquisition of SFD® Geothermal Rights

The Company acquired the SFD® technology rights for geothermal resources (“Geothermal Resources”) from Mr. George Liszicasz, President and CEO of NXT on April 18, 2021. The consideration deliverable by the Company in connection with the acquisition of the Geothermal Right is set forth below:

US$40,000 signature payment, which became due immediately and was paid on April 22, 2021;

300,000 Common Shares, which became due on April 18, 2021 and will be issued upon receipt of TSX approval;

CAD$20,000 milestone payment which will become due in the event that the Company receives research funding in excess of CAD$100,000, or CAD$25,000 in the event the Company receives research funding in excess of CAD$200,000;

US$200,000 milestone payment which will become due in the event that the Company's cash balance exceeds $5,000,000 due to receipt of funds from operations; and

US$250,000 milestone payment which will become due in the event that the Company executes and completes and receives full payment for an SFD® contract valued at US$10,000,000 or greater, provided such contract is entered into and completed and payment of at least US$5,000,000 is received by April 18, 2023.

Pre-existing Data Sale

In April 2021 the Company received a deposit of US$1,000,000 to sell Pre-existing SFD® data. The Pre-existing SFD® data was delivered to the customer in April 2021. The Company has received total payments of US$1,100,000 in respect of this Pre-existing SFD® data.

EX-99.2 3 nsfdf_ex992.htm MANAGEMENT'S DISCUSSION AND ANALYSIS nsfdf_ex992

Exhibit 99.2

NXT ENERGY SOLUTIONS INC.

Management's Discussion and Analysis

For the three months ended

March 31, 2021

Management's Discussion and Analysis

This discussion and analysis ("MD&A") was prepared by management of NXT Energy Solutions Inc. ("NXT", "we", "us", "our" or the "Company") based on information available as at May 11, 2021 unless otherwise stated, has been approved by the Board of Directors of the Company (the "Board"), and should be reviewed in conjunction with the unaudited condensed consolidated interim financial statements and related notes for the period ended March 31, 2021. This MD&A covers the unaudited three month period ended March 31, 2021, with comparative amounts for the unaudited three months ended March 31, 2020.

Our functional and reporting currency is the Canadian dollar. All references to "dollars", or "$", in this MD&A are to Canadian dollars unless specific reference is made to United States dollars ("US$").

NXT® and SFD® are registered trademarks of NXT in Canada and the United States.

Advisories

Forward-looking Information

Certain statements contained in this MD&A constitute "forward-looking information" within the meaning of applicable securities laws. These statements typically contain words such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "will" and similar words and phrases suggesting future outcomes or an outlook. Forward-looking statements in this document includes, but is not limited to:

●

payment of the Consideration (as defined below), and the satisfaction of the conditions thereto (including with respect to Toronto Stock Exchange approval, research funding, cash balances, receipt of funds, and the execution and completion of contracts);

●

the number of common shares in the capital of NXT ("Common Shares") owned by Mr. George Liszicasz, as well as the total number of Common Shares issued and outstanding, upon the issuance and receipt of the 300,000 Common Shares as part of the Consideration;

●

the development, commercialization and protection of the SFD® technology for geothermal resource exploration;

●

the extent to which expanding the Company's scope of business to include exploring for both hydrocarbon and geothermal resources is anticipated to result in an expansion of its scope of revenue sources;

●

estimates related to our future financial position and liquidity; and

●

general business strategies and objectives.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this document:

●

our ability to market our SFD® technology and services to current and new customers;

●

our ability to source personnel and equipment in a timely manner and at an acceptable cost;

●

our ability to obtain all permits and approvals required;

●

our ability to obtain financing on acceptable terms;

●

our ability to obtain insurance to mitigate the risk of default on client billings;

●

foreign currency exchange and interest rates; and

●

general business, economic and market conditions (including global commodity prices).

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

Although NXT believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on them as NXT can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by NXT and are described in the forward-looking information. Material risks and uncertainties include, but are not limited to:

●

the ability of management to execute its business plan;

●

health, safety and the environment (including risks related to the COVID-19 pandemic);

●

the emergence of alternative competitive technologies;

●

our ability to protect and maintain our intellectual property ("IP") and rights to our SFD® technology;

●

our reliance on a limited number of key personnel;

●

our reliance on a limited number of aircraft;

●

our reliance on a limited number of clients;

●

counterparty credit risk;

●

foreign currency and interest rate fluctuations;

●

changes in, or in the interpretation of, laws, regulations or policies; and

●

general business, economic and market conditions (including global commodity prices).

For more information relating to risks, see the section titled "Discussion of Operations – Risks and Uncertainties" in this MD&A and the section titled "Risk Factors" in NXT's most recently filed Annual Information Form. Except as required by applicable securities law, NXT undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.

Financial outlooks are provided for the purpose of understanding the Company's accounting practices and liquidity position, and the information may not be appropriate for other purposes.

Non-GAAP Measures

NXT's accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP” or “US GAAP"). This MD&A includes references to net working capital which does not have a standardized meaning prescribed by US GAAP and may not be comparable to similar measures be presented by other entities. Net working capital is the net result of the difference between current assets and current liabilities, and can be used by investors and management to assess liquidity at a particular point in time. See "Liquidity and Capital Resources – Net Working Capital" for further information.

Description of the Business

NXT Energy Solutions Inc. is a Calgary-based technology company whose proprietary and patented Stress Field Detection ("SFD®") survey system utilizes quantum-scale sensors to detect gravity field perturbations in an airborne survey method which can be used both onshore and offshore to remotely identify traps and reservoirs with exploration potential. The SFD® survey system enables NXT's clients to focus their exploration decisions concerning land commitments, data acquisition expenditures and prospect prioritization on areas with the greatest potential. SFD® is environmentally friendly and unaffected by ground security issues or difficult terrain and is the registered trademark of NXT. NXT provides its clients with an effective and reliable method to reduce time, costs and risks related to exploration.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

Financial and Operational Highlights

Key financial and operational highlights for Q1-21 are summarized below:

●

cash and short-term investments at March 31, 2021 were $2.15 million;

●

no survey revenue was recorded;

●

a net loss of $1.64 million was recorded, or ($0.03) per common share (basic and diluted), including stock-based compensation and amortization expense of $0.47 million;

●

cash flow used in operating activities was $0.88 million; and

●

general and administrative costs decreased by $0.10 million or 10% as compared to Q1-20, due primarily to the Company incurring no travel costs and lower professional fees.

Key financial and operational highlights occurring subsequent to Q1-21 are summarized below:

●

the Company acquired the right to use SFD® technology to explore for geothermal resources (the "Geothermal Right") from Mr. George Liszicasz, Chairman, President and Chief Executive Officer of NXT; and

●

in April 2021 the Company received a deposit of US$1,000,000 to in connection with the sale of pre-existing SFD® data.

Discussion of Operations

COVID-19 Pandemic

As of the date of the condensed consolidated interim financial statements the COVID-19 pandemic continues to be a risk on the operations of the Company. The Company has made provisions so employees can work safely in the office or from home, followed all Alberta Health Services and Health Canada recommendations, and implemented hygiene and physical distancing policies. Demand for our services, as well as our ability to provide services and to generate revenues may become adversely impacted the longer the COVID-19 pandemic continues if, for example, restrictions on international travel continue and/or an outbreak of the virus among our or our customers' personnel were to result in us not being able to perform surveys. Business development may be delayed when in-person meetings and technical presentations may be a superior delivery method when compared to tele-conferences or on-line video conferencing.

The situation is dynamic and the ultimate duration and magnitude of the impact on the economy and the financial effect to the Company is not known at this time. Estimates and judgments made by management in the preparation of these consolidated financial statements are subject to a higher degree of measurement uncertainty during this volatile period.

Acquisition of the Geothermal Right

Description of the “Acquisition”

The Company acquired the SFD® Geothermal Right from Mr. George Liszicasz, Chairman, President and Chief Executive Officer of NXT on April 18, 2021 (the “Acquisition”). The agreement providing for the Acquisition was negotiated between Mr. Liszicasz a special committee of the Board comprised entirely of independent directors (the “Committee”). The consideration payable by the Company in connection with the Acquisition includes the following:

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

US$40,000 signature payment, which became due immediately and was paid on April 22, 2021;

300,000 Common Shares, which became due on April 18, 2021 and will be issued upon receipt of Toronto Stock Exchange (the “TSX”) approval;

CAD$20,000 milestone payment which will become due in the event that the Company receives research funding in excess of $100,000, or $25,000 in the event the Company receives research funding in excess of $200,000;

US$200,000 milestone payment which will become due in the event that the Company’s cash balance exceeds $5,000,000 due to receipt of funds from operations; and

US$250,000 milestone payment which will become due in the event that the Company executes and completes, and receives full payment for, an SFD® contract valued at US$10,000,000 or greater, provided such contract is entered into and completed, and payment of at least US$5,000,000 is received, by April 18, 2023, (collectively, the “Consideration").

Geothermal applications of the SFD® technology include naturally occurring sub-surface fluid reservoirs or rock conditions from which heat can be extracted and utilized for generating electric power, or for direct utilization in industrial, agricultural or domestic applications. The main subsurface properties such as porosity, permeability and impermeable cap rock that are vital in the search for oil and gas resources and are equally critical for locating the most prospective geothermal resources. For these reasons, the SFD® technology has a natural extension to geothermal applications.

Since first commercialized in 2007 for hydrocarbon use, NXT’s non-intrusive SFD® airborne technology enables its customers to significantly improve drill success rates while reducing the overall negative environmental impact of traditional large-scale ground surveys by minimalizing disruptions to community life and surface use. NXT anticipates applying for patent protection for the geothermal applications of SFD® once development of the SFD® sensors reach appropriate milestones.

As industries worldwide transition toward a low-carbon economy, geothermal energy has gained greater prominence for its environmental benefits as a non-intermittent renewable energy source. NXT will begin to utilize the research and marketing skillsets acquired in hydrocarbon resources to develop and commercialize the application of the SFD® technology for geothermal resource exploration. By expanding the Company’s scope of business to include exploring for both hydrocarbon and geothermal resources, the Company anticipates that its scope of revenue sources will expand as well.

Description of Review and Approval Process

The Acquisition constituted a “related party transaction” for the purposes of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101) on the basis that Mr. Liszicasz is a director, officer and control person of the Company.

The Acquisition was reviewed and unanimously approved by the Committee which took into consideration the fair market value of the Geothermal Right as determined by them acting in good faith. Due to the fair market value not being readily determinable, the Committee considered the potential value to be realized by the Company in exercising the Geothermal Right, the value of the consideration being offered to Mr. Liszicasz, and the effect on the Company’s share ownership before and after the completion of the Acquisition.

The Acquisition was exempt from the formal valuation and disinterested shareholder approval requirements typically applicable to related party transactions under MI 61-101 on the basis that, at the time the Acquisition was agreed to, neither the fair market value of the Geothermal Right (as determined by the Committee acting in good faith, due to the fair market value not being readily determinable), nor the fair market value of the Consideration to be received by Mr. Liszicasz for the Geothermal Right, exceeded 25% of the Company’s market capitalization, calculated as follows:

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

●

fair market value of the Geothermal Right and fair market value of the Consideration, approximately $820,000 if all of the milestones are met;

●

market capitalization of the Company, approximately $39,999,251; and

●

fair market value as a % of market capitalization, 2.0%.

Following the issuance of the 300,000 Common Shares, Mr. Liszicasz’s ownership is expected to increase from 15,037,234 Common Shares (representing approximately 23.3% of the 64,534,018 Common Shares issued and outstanding as at the date of this MD&A to 15,337,732 Common Shares (representing approximately 23.8% of the Company’s 64,834,018 Common Shares expected to then be issued and outstanding, assuming no other changes in the number of issued and outstanding Common Shares prior to issuance of the 300,000 Common Shares to Mr. Liszicasz).

Mr. Liszicasz retains all rights, title and interest in and to the SFD® technologies for all other commercial applications, except for respect to hydrocarbons and geothermal resources.

Pre-existing Data Sale

In April 2021, the Company received a deposit of US$1,000,000 to sell pre-existing SFD® data. The SFD® data was delivered to the customer in the second quarter of 2021. The Company has received payments of US$1,100,000 in respect of this pre-existing SFD® data.

Patents

As of the date of this MD&A, NXT has been granted SFD® patents in Russia (January 2017), Japan (July 2017), Canada (August 2017), Mexico (September 2017), the United States (two patents were granted in November 2017 and September 2018, respectively), China (April 2018), and Europe (January 2020). In total, NXT has obtained SFD® patents or received patent allowances in 44 countries. In addition, two more SFD® patent applications in Brazil and India are pending. These patents protect our proprietary SFD® technology and serve as independent third-party recognition of our technological invention in terms of practical applicability, conceptual novelty, and knowledge advancement.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

Summary of Operating Results

	Q1-21	Q1-20
Survey revenue	$-	$-
Expenses:
Survey costs, net	265,483	301,961
General and administrative expenses	900,309	995,999
Amortization	441,824	448,381
	1,607,616	1,746,341

Other Expenses (income):
Interest (income) expense, net	6,115	(12,647)
Foreign exchange loss (gain)	20,210	(409,517)
Intellectual property and other	9,610	8,124
	35,935	(414,040)
Loss before income taxes	(1,643,551)	(1,332,301)

Income tax expense	-	-

Net loss and comprehensive loss	(1,643,551)	(1,332,301)

Net loss per share – basic	$(0.03)	$(0.02)
Net loss per share – diluted	$(0.03)	$(0.02)

Quarterly operating results. Net loss for Q1-21 compared to Q1-20 increased by $311,250, or $0.01 per share-basic. Survey costs, net, were $36,478 lower due to lower maintenance costs and mapping software costs. General and administrative (“G&A”) expenses decreased by $95,690, or 10%, compared to Q1-20, due primarily to no business development travel and lower professional fees. Interest (income) expense, net decreased $18,762 in Q1-21 versus Q1-20 as interest rates have decreased versus the prior year quarter as well as less cash was held in short-term investments. With respect to foreign exchange, the Company held significant assets in US$ as at March 31, 2020, the Canadian dollar (“CDN$”) weakened as compared to the US$ at December 31, 2019, resulting in the corresponding foreign exchange gain for Q1-20. The foreign exchange loss for Q1-21 was the result of the strengthening of the CDN$ vs the US$ between December 31, 2020 and March 31, 2021. Intellectual property and other expenses in Q1-21 related mostly to costs associated with maintaining the validation process for certain SFD® patents and were consistent period over period.

Survey Costs, net

Survey Costs	Q1-21	Q1-20	Net change
Aircraft lease costs	$105,325	$102,596	$2,729
Aircraft operations	140,450	194,183	(53,733)
Survey projects	19,708	5,182	14,526
Total survey costs, net	265,483	301,961	(36,478)

Survey costs relate entirely to charter costs, lease expenses and aircraft handling and maintenance costs (net of charter hire reimbursements). In Q1-21, survey costs were lower as scheduled maintenance and mapping software costs were lower compared to Q1-20. In addition the Company incurred costs to prepare for the Pre-existing SFD® data sale.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

The aircraft is available for charter to third parties through our aircraft manager when it is not being used by NXT. Any charter hire reimbursements received are used to offset aircraft costs.

In April 2017, NXT completed a sale and leaseback agreement of its aircraft with a Calgary-based international aircraft services organization (the "Lessor"). NXT has leased the aircraft over an initial term of 60 months and retains all existing operating rights and obligations. NXT is required to make monthly payments to the Lessor of approximately US$39,500. NXT has the option to extend the term of the lease by an additional two years for payments of approximately US$22,500 per month. Should NXT want to repurchase the aircraft at the end of the initial lease term, the purchase price will be US$1.45 million.

General and Administrative Expenses

G&A Expenses	Q1-21	Q1-20	Net change	%
Salaries, benefits and consulting charges	$473,455	$439,027	$34,428	8
Board and professional fees, public company costs	193,004	228,009	(35,005)	(15)
Premises and administrative overhead	202,900	175,642	27,258	16
Business development	4,454	131,656	(127,202)	(97)
Stock-based compensation	26,496	21,665	4,831	22
Total G&A Expenses	900,309	995,999	(95,690)	(10)

G&A expenses decreased $95,690, or 10%, in Q1-21 compared to Q1-20 for the following reasons:

●

salaries, benefits and consulting charges increased $34,428, or 8%, due primarily due to an increase in temporary headcount;

●

board and professional fees and public company costs decreased $35,005, or 15%, due primarily to decreased insurance costs and legal fees;

●

premises and administrative overhead costs increased $27,258, or 16%, due to building common area charges begin higher, and increased software and information technology costs;

●

business development costs decreased by $127,202, or 97%, due primarily to the restrictions on travel from the COVID-19 epidemic; and

●

Stock-based compensation expenses (“SBCE”) were higher in Q1-21 vs Q1-20 by $4,831, or 22% due to the employee share purchase plan which was commenced in Q4-20 and has approximately 75% employee participation. Details of SBCE as explained below.

Stock-based Compensation Expenses

Stock-based Compensation Expenses	Q1-21	Q1-20	Net change	% change
Stock Option Expense	$3,750	$17,915	$(14,165)	(79%)
Deferred Share Units	-	3,750	(3,750)	(100%)
Restricted Stock Units	(49)	-	(49)	(100%)
Employee Share Purchase Plan	22,795	-	22,795	100%
Total SBCE	26,496	21,665	4,831	22%

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

SBCE varies in any given quarter or year as it is a function of several factors including the number of units of each type of stock based compensation plan issued in the period and the amortization term (based on the term of the contract and/or number of years for full vesting of the units, which is normally three 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 and for cash-settled stock-based compensation awards variability will occur based on changes to observable prices.

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. The DSUs plan is a long-term incentive plan that permits the grant of DSUs to qualified directors. DSUs granted under the DSUs plan are to be settled at the retirement, resignation or death of the Board member holding the DSUs. RSUs entitle the holder to receive, at the option of the Company, either the underlying number of shares of the Company's Common Stock upon vesting of such units or a cash payment equal to the value of the underlying shares. The RSUs vest at a rate of one-third at the end of each of the first three years following the date of grant. The Company intends to settle the RSUs in cash. In the year ended December 31, 2020, the Company granted 1,200,000 RSU’s to employees and officers. The ESP Plan allows employees and other individuals determined by the Board to be eligible to contribute a minimum of 1% and a maximum of 10% of their earnings to the plan for the purchase of common shares in the capital of the Company, of which the Company will make an equal contribution. Common shares contributed by the Company may be issued from treasury or acquired through the facilities of the TSX. During 2020 and 2021 the Company has elected to issue common shares from treasury.

SBCE in Q1-21 was higher compared to Q1-20 by $4,831. The ESP Plan expense was not incurred in Q1-20 as the ESP Plan commenced in Q4-20. Option expense in Q1-21 was an option grant to a director who elected to take options, compared to cash payments for part of his fees. Option expense in Q1-20 was a grant an award of 30,000 fully vested stock options.

Amortization

Amortization	Q1-21	Q1-20	Net change	%
Property and equipment	$20,641	$27,198	$(6,557)	(24)
Intellectual property	421,183	421,183	-	-
Total Amortization Expenses	441,824	448,381	(6,557)	(1)

Property and equipment and related amortization expense. Property and equipment amortization was lower in Q1-21 compared to Q1-20 due to additional assets becoming fully amortized during the period and the Company not acquiring new assets. Amortization also decreases each year as the Company uses the declining balance method of depreciation, thereby having the effect of lowering amortization each year on existing assets.

Intellectual property and related amortization expense. NXT acquired specific rights to utilize the proprietary SFD® technology in global hydrocarbon exploration applications from the inventor of the SFD® technology, NXT's Chairman, President and Chief Executive Officer, on August 31, 2015. The value attributed to the acquired IP assets was $25.3 million. The IP assets are being amortized on a straight-line basis over a 15-year period (future amortization expense of $1,685,000 per year) and are also being subject to ongoing assessment of potential indicators of impairment of the recorded net book value. No impairments were recognized in Q1-21 or Q1-20. The Company acquired the SFD® technology rights for the Geothermal Right from NXT’s Chairman, President and Chief Executive Officer on April 18, 2021. Amortization expense will increase beginning in Q2-21 as a result of the Acquisition.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

Other Expenses (Income)

Other Expenses	Q1-21	Q1-20	Net change	%
Interest (income) expense, net	$6,115	$(12,647)	$18,762	148
Foreign exchange loss (gain)	20,210	(409,517)	429,727	105
Intellectual property and other	9,610	8,124	1,486	18
Total Other Expenses, net	35,935	(414,040)	449,975	109

Interest (income) expense, net. This category of other expenses includes interest income earned on short-term investments netted by interest expense from lease obligations. Q1-21 interest (income) expense decreased $18,762 compared to Q1-20 as interest rates have decreased and less cash was held in short-term investments.

Foreign exchange loss (gain). This category of other expenses includes losses and gains caused by changes in the relative currency exchange values of US$ and CDN$. The Company held significant assets in US$ at March 31, 2021, including accounts receivable, cash and cash equivalents, short-term investments and the security deposit for the aircraft, all of which have an effect on the unrealized foreign exchange gain and loss. At Q1-21, the CDN$ strengthened as compared to the US$ at Q1-20, resulting in the corresponding foreign exchange loss for Q1-21. During Q1-20 the CDN$ weakened versus the US$, as well as the Company having larger US$ balances in cash and short-term investments, resulting in a substantial foreign exchange gain.

The Company does not currently enter into hedging contracts, however uses alternative strategies to reduce the volatility of US dollar assets including converting excess US dollars to CDN dollars.

Intellectual Property and other. This category of other expenses primarily includes costs related to Intellectual Property filings and research & development activity related to the SFD® technology.

In all periods, the Company's IP and other expenses related mostly to costs associated with maintaining patents and were consistent period over period.

Income Tax Expense.

There was no income tax expense in Q1-21 or Q1-20.

Competition

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 and 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 than more traditional methods. 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.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

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.

Risk and Uncertainties

Hydrocarbon exploration operations involve a number of risks and uncertainties that have affected our financial statements and are reasonably likely to affect them in the future. These risks and uncertainties are discussed further below.

Credit Risk

Foreign Exchange Risk

The Company is exposed to foreign exchange risk in relation to its holding of significant US$ balances in cash and cash equivalents, short-term investments, accounts receivable, deposits, accounts payables and accrued liabilities and entering into United States dollar revenue contracts. To mitigate exposure to fluctuations in foreign exchange, the Company does not currently enter into hedging contracts, however uses strategies to reduce the volatility of United States Dollar assets including converting excess United States dollars to Canadian dollars. As at March 31, 2021, the Company held net U.S dollar assets totaling US$1,961,441. Accordingly, a hypothetical 10% change in the value of one United States dollar expressed in Canadian dollars as at March 31, 2021 would have had an approximately $248,000 effect on the unrealized foreign exchange gain or loss for the period.

Interest Rates

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

Tax Rates

Changes in tax rates in the jurisdictions that we operate in would impact the amount of current taxes that we pay. In addition, changes to substantively enacted tax rates would impact the carrying balance of deferred tax assets and liabilities, potentially resulting in a deferred tax recovery or incremental deferred tax expense.

In addition to the above, we are exposed to risk factors that may impact the Company and our business. For further information on these risk factors, please refer to our Annual Information Form, available on NXT's website at www.nxtenergy.com and on SEDAR at www.sedar.com.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

Summary of Quarterly Results

A summary of operating results for each of the trailing eight quarters (including a comparison of certain key categories to each respective prior quarter) follows.

	Q1-21	Q4-20	Q3-20	Q2-20
Survey revenue	$-	$-	$-	$136,566
Net income (loss)	(1,643,551)	(1,685,210)	(1,502,456)	(1,479,709)

Income (loss) per share – basic	$(0.03)	$(0.03)	$(0.02)	$(0.02)
Income (loss) per share – diluted	$(0.03)	$(0.03)	$(0.02)	$(0.02)

	Q1-20	Q4-19	Q3-19	Q2-19
Survey revenue	$-	$-	$1,021,532	$10,954,618
Net income (loss)	(1,332,301)	(1,775,287)	(774,373)	8,085,888

Income (loss) per share – basic	$(0.02)	$(0.03)	$(0.01)	$0.12
Income (loss) per share – diluted	$(0.02)	$(0.03)	$(0.01)	$0.11

In Q1-21 costs were lower due to lower aircraft costs, a reduction in RSU accruals and less fluctuation of exchange rates. In Q4-20 the Company received the Canada Emergency Wage Subsidy (“CEWS”) and the Canada Emergency Rent Subsidy (“CERS”) which reduced costs. In Q3-20 the Company received the CEWS and the Scientific Research and Experimental Development Credit (“SR&ED”) which also reduced costs. During Q2-20, revenue was earned on the recognition of the forfeited deposit from Alberta Green Ventures Limited Partnership (“AGV”), payable pursuant to the existing co-operation agreement between NXT and AGV (the “Co-operation Agreement”). In Q3-19 and Q2-19, the Company earned revenue from the Nigerian SFD® Survey. Excluding Q3-19 and Q2-19, the Company incurred net losses primarily due to incurred survey costs related to aircraft lease and aircraft maintenance costs, G&A expenses and non-cash items like SBCE, which can be a significant expense in any given quarter. More specific details are provided below:

●

in Q4-20, costs were reduced primarily due to recognizing $123,105 benefits under the CEWS and the CERS, and due to reduced travel;

●

in Q3-20, costs were reduced primarily due to recognizing $189,135 benefits under the CEWS and the SR&ED, and reduced travel;

●

in Q2-20, $136,566 revenue was earned on the recognition of the forfeited deposit from AGV, payable pursuant to the Co-operation Agreement, and the Company incurred a $135,991 foreign exchange loss partially offsetting the Q1-20 foreign exchange gain described below;

●

in Q1-20, the Company incurred a $409,517 foreign exchange gain as it held significant monetary assets in US dollars at March 31, 2020, including accounts receivable, cash and cash equivalents, short-term investments and the security deposit for the aircraft, and the CDN$ devalued by approximately 9%;

●

in Q4-19, survey costs were higher as final integration costs from the Nigerian SFD® Survey were incurred; and

●

in Q3-19, NXT recognized $1,021,532 of revenue for services rendered in connection with the Nigerian SFD® Survey, compared to $10,954,618 in Q2-19.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

Liquidity and Capital Resources

Going Concern

The Q1-21 condensed consolidated interim financial statements have been prepared on a going concern basis. 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.

The Company is taking further steps to reduce operating costs including payroll and other G&A costs and is evaluating alternatives to reduce other costs. If required, further financing options that may or may not be available to the Company include issuance of new equity, debentures or bank credit facilities. The need for any of these options will be dependent on the timing of securing new SFD® survey contracts and obtaining financing on terms that are acceptable to both the Company and the financier.

The Q1-21 condensed consolidated interim financial statements do not reflect adjustments that would be necessary if the going concern basis was not appropriate. If the going concern basis was not appropriate for these condensed consolidated interim financial statements, then adjustments would be necessary in the carrying value of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications used. These adjustments could be material.

NXT's cash and cash equivalents plus short-term investments at March 31, 2021 totaled $2.15 million. Net working capital totaled $1.51 million. See the information under the heading "Liquidity and Capital Resources – Net Working Capital" for further information.

Risks related to having sufficient ongoing net working capital to execute survey project contracts are mitigated through our normal practice of obtaining advance payments and progress payments from customers throughout the course of the projects, which often span three to four months. In addition, where possible, risk of default on client billings has been mitigated through the use of export insurance programs offered by Export Development Canada.

The Company does not have provisions in its leases, contracts, or other arrangements that would trigger additional funding requirements or early payments except that if the Company were to default on its office lease, the current month rent plus the next three months become immediately due. If the Company were to default on the aircraft lease, the Company would be required to deliver the aircraft back to the Lessor.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

Net Working Capital

Net Working Capital	Mar 31, 2021	Dec 31, 2020	Net Change	%
Current assets (current liabilities)
Cash, cash equivalents and short-term investments	$2,153,223	$3,031,407	$(878,184)	(29)
Accounts receivable	702,789	965,548	(262,759)	(27)
Prepaid expenses	91,315	77,532	13,783	18
Accounts payable and accrued liabilities	(514,141)	(440,538)	(73,603)	(17)
Contract obligations	(126,209)	(127,507)	1,298	1
Current portion of lease obligation	(792,865)	(773,465)	(19,400)	(3)
Total Net Working Capital	1,514,112	2,732,977	(1,218,865)	(45)

NXT had no secured debt and had net working capital of $1,514,112 as at March 31, 2021.

The decrease in net working capital at March 31, 2021 compared to December 31, 2020 was due to cash used in operating activities off-set to a degree by the receipt of payments on accounts receivable including $130,850 from an SFD® data sale customer, $67,429 in benefits under the SR&ED program and $58,526 in benefits under the CERS program.

Accounts Payable

Accounts Payable	Mar 31, 2021	Dec 31, 2020	Net Change	%
Trade accounts payable	$(104,249)	$(62,872)	$(41,377)	(66)
Deferred advisor board payable	(23,664)	(23,908)	244	1
Accrued liabilities	(169,148)	(161,742)	(7,406)	(5)
Vacation pay accrued	(92,300)	(71,699)	(20,601)	(29)
RSU and ESP Plan Liability	(124,780)	(120,317)	(4,463)	(4)
Total Accounts Payable	(514,141)	(440,538)	(73,603)	(17)

Accounts payable increased by $73,603 or 17%, as at March 31, 2021 compared to December 31, 2020 for the following reasons:

●

trade accounts payable increased by $41,377, or 66%, due primarily to the purchase of mapping licenses;

●

accrued liabilities increased by $7,406, or 5%, due to professional fee accruals;

●

vacation pay accrued increased by $20,601, or 29%, as employees typically take less vacation in Q1; and

●

payroll related accruals increased by $4,463 as accruals were made for the equity compensation plan withholding requirements.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

Cash Flow

Cash Flow - from / (used in)	Q1-21	Q1-20
Operating activities	$(883,320)	$(599,190)
Financing activities	19,635	(11,158)
Investing activities	191,261	29,424
Effect of foreign exchange on cash	(14,499)	122,186
Net use of cash	(686,923)	(458,738)
Cash and cash equivalents, start of period	2,690,146	2,858,245
Cash and cash equivalents, end of period	2,003,223	2,399,507

Cash and cash equivalents	2,003,223	2,399,507
Short-term investments	150,000	3,843,212
Total Cash and Short-Term Investments, end of period	2,153,223	6,242,719

The overall net changes in cash balances in each of the quarters noted above is a function of several factors including any inflows (outflows) due to changes in net working capital balances and net of any cash transferred into/out of short-term investments. Further information on the net changes in cash, by each of the operating, financing and investing activities, is as follows:

Operating Activities	Q1-21	Q1-20
Net loss for the period	$(1,643,551)	$(1,332,301)
Total non-cash expense items	445,057	85,490
	(1,198,494)	(1,246,811)
Change in non-cash working capital balances	315,174	647,621
Total Cash used in Operating Activities	(883,320)	(599,190)

Operating cash flow decreased by $284,130 in Q1-21 as compared to Q1-20 as cash received on accounts receivable were higher in Q1-20.

Financing Activities	Q1-21	Q1-20
Proceeds from the employee share purchase plan	$19,635	$-
Repayment of finance lease obligation	-	(11,158)
Total Cash from (used in) Financing Activities	19,635	(11,158)

In Q1-21, the financing activity was for employee contributions under the ESP Plan which began in Q4-20. Financing payments in Q1-20 were for payments on the finance lease for office equipment which was terminated in Q2-20.

Investing Activities	Q1-21	Q1-20
Purchase of property and equipment	$-	$-
Decrease in short-term investments	191,261	29,424
Total Cash from Investing Activities	191,261	29,424

Short-term investments decreased in Q1-21 and Q1-20 as the Company used investments in Guaranteed Investment Certificates to fund operations.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

Contractual Obligations

The estimated minimum annual commitments for leases are as follows, as at March 31, 2021:

For the period ended December 31	Office Premises
April to December 2021	$171,069
2022	228,091
2023	228,091
2024	228,091
2025	171,069
	1,026,411

Off-balance Sheet Arrangements

The Company has no off-balance sheet arrangements as of the date of this MD&A other than office premise non-lease operating costs with Interloq Capital (the "Landlord"). If the Company were to default on its office lease the current month rent including operation costs plus the next three months become immediately due. Operating cost amounts are disclosed under the heading "Liquidity and Capital Resources – Contractual Commitments". NXT pays an estimated operating cost during the current year, but has the obligation to pay the actual operating costs incurred as defined in the office lease with the Landlord early in the first quarter of the preceding year if the estimate was low, or will receive a refund if the estimate was too high. Currently, the Company believes that the current operating cost estimate is reasonable and is constant with discussions with the Landlord.

Transactions with Related Parties

One of the members of NXT's Board, Thomas Valentine, is a partner in the law firm Norton Rose Fulbright Canada LLP which provides legal advice to NXT. Legal fees incurred with Norton Rose Fulbright Canada LLP were as follows:

	Q1-21	Q1-20
Legal fees	$17,380	$67,513

Accounts payable and accrued liabilities includes a total of $18,247 ($1,570 as at December 31, 2020) payable to Norton Rose Fulbright Canada LLP. A company owned by a family member of an executive officer was contracted to provide design services to the Company for a total cost of US$3,000.

As discussed under the section heading, Acquisition of Geothermal Right the Company acquired the Geothermal Right from its Chairman, President and Chief Executive Officer, Mr. Liszicasz in Q2-21. The Consideration payable in connection with the Acquisition is valued at approximately $820,000, assuming all of the milestones are met.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

Critical Accounting Estimates

Critical accounting estimates relate primarily to the use of the going concern assumption, estimated useful lives and the valuation of intellectual property and property and equipment, the measurement of stock-based compensation expense, valuation of deferred income tax assets, and estimates for asset retirement obligations. Estimates and assumptions used are based upon management's best estimate as at the date of the financial statements. 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. Descriptions of estimates and assumptions, the methodologies used to calculate such estimates and assumptions, and trends, commitments, events and uncertainties relevant to such estimates and assumptions, are substantially unchanged from those described in NXT's annual audited consolidated financial statements as at and for the year-ended December 31, 2020.

Changes in Accounting Policies

The condensed consolidated interim financial statements of NXT for Q1-21 have been prepared by management in accordance with US GAAP. The accounting policies applied are consistent with those outlined in NXT’s annual audited consolidated financial statements for the year ended December 31, 2020, except as described in Note 2, Significant Accounting Policies and Changes.

Financial Instruments and Other Instruments

The Company's non-derivative financial instruments consist of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities and leases. 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 arising from these financial instruments, but is exposed to significant credit risk with accounts receivable. For accounts receivable, where possible, NXT requests advance payments and utilizes risk mitigation products offered by entities such as Export Development Canada including, for example, insurance coverage of contract accounts receivable, guarantee support for contract performance bonds and wrongful call insurance for such bonds.

NXT is exposed to foreign exchange risk as a result of holding foreign denominated financial instruments. Any unrealized foreign exchange gains and losses arising on such holdings are reflected in earnings at the end of each period.

As at March 31, 2021 and March 31, 2020, the Company held no derivative financial instruments. For more information relating to risks, see the section titled "Liquidity and Capital Resources – Net Working Capital".

Outstanding Share Capital

	May 11, 2021	March 31, 2021	December 31, 2020
Common Shares	64,534,018	64,494,356	64,437,790
Options	429,500	429,500	421,000
Deferred Share Units	37,354	37,354	37,354
Restricted Share Units	1,045,000	1,045,000	1,200,000
ESP Plan Shares	57,386	48,923	23,532
Total share capital and dilutive securities	66,103,258	66,055,133	66,119,676

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

Disclosure Controls and Procedures ("DCPs") and

Internal Controls over Financial Reporting ("ICFR")

NXT's Chief Executive Officer and Chief Financial Officer (together the "Responsible Officers") are responsible for establishing and maintaining DCPs, 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 year-end consolidated financial statements and MD&A are being prepared.

DCPs and other procedures are designed to ensure that information required to be disclosed in reports that are filed is recorded, summarized and reported within the time periods specified by the relevant security authority in either Canada or the United States of America. DCPs include controls and procedures designed to ensure that information required to be disclosed in our reports is communicated to management, including our Responsible Officers, to allow timely decisions regarding required disclosure.

The Company has established and maintains ICFR using the criteria that were set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013). The control framework was designed or caused to be designed under the supervision of the Responsible Officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US GAAP.

In evaluating the effectiveness of the Company's DCPs as defined under the rules adopted by the Canadian securities regulatory authorities and by the United States Securities and Exchange Commission, the Company's Responsible Officers concluded that there are material weaknesses in the Company's ICFR that have a direct impact on the Company's DCPs:

●

due to the limited number of staff, it is not feasible to achieve adequate segregation of incompatible duties – NXT partially mitigates 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 – NXT partially 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.

From time to time to reduce these risks and to supplement a small corporate finance function, the Company engages various outside experts and advisors to assist with various accounting, controls and tax issues in the normal course.

Given the small size of the Company's finance team, management has established a practice of increased engagement of the Company's Disclosure Committee and Audit Committee in reviewing the public disclosure and has increased engagement of external consultants and legal counsel as well.

The Responsible Officers concluded that, as at March 31, 2021, its ICFR are not effective and as a result its DCPs are not sufficiently effective. NXT reached this conclusion based upon its assessment that there is a more than remote likelihood that its ICFR will not prevent or detect material misstatements if they should exist in the Company's consolidated financial statements. The Responsible Officers continue to take certain actions to mitigate these material weaknesses including: (i) the implementation of controls with regards to the review procedures surrounding its disclosure; and (ii) engagement of third-party specialists. In addition, the Chief Financial Officer engages subject matter consultants as the need arises. There were no changes to the Company’s ICFR in Q1-21.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

It should be noted that a control system, including the Company's DCPs and ICFR, no matter how well conceived, can provide only reasonable, but not absolute assurance that the objectives of the control system will be met, and it should not be expected that the DCPs and ICFR will prevent all errors or fraud.

Additional Information

Additional information related to the Company, including the Company's Annual Information Form, is available on NXT's website at www.nxtenergy.com and on SEDAR at www.sedar.com.

NXT Energy Solutions Inc.

MD&A for the period ended March 31, 2021

EX-99.3 4 nsfdf_ex993.htm CERTIFICATION nsfdf_ex993

Exhibit 99.3

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, George Liszicasz, Chairman and Chief Executive Officer, NXT Energy Solutions Inc., certify the following:

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of NXT Energy Solutions Inc. (the “issuer”) for the interim period ended March 31, 2021.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)

designed ICFR, or caused it 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 the issuer’s GAAP.

5.1

Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2

ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

(a)

a description of the material weakness;

(b)

the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c)

the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3

N/A

Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2021 and ended on March 31, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 11, 2021

“/s/ George Liszicasz”

George Liszicasz

Chairman, President and Chief Executive Officer

EX-99.4 5 nsfdf_ex994.htm CERTIFICATION nsfdf_ex994

Exhibit 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Eugene Woychyshyn, Chief Financial Officer, NXT Energy Solutions Inc., certify the following:

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)

(b)

5.1

5.2

ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

(a)

a description of the material weakness;

(b)

the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c)

the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3

N/A

Date: May 11, 2021

“/s/ Eugene Woychyshyn”

Eugene Woychyshyn

Chief Financial Officer

GRAPHIC 6 nsfdf_ex991000.jpg IMAGE begin 644 nsfdf_ex991000.jpg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end GRAPHIC 7 nsfdf_ex992000.jpg IMAGE begin 644 nsfdf_ex992000.jpg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end