EX-99.1 2 nsfdf_ex991.htm FINANCIAL STATEMENT nsfdf_ex991.htm

 

 

EXHIBIT 99.1

 

 

NXT ENERGY SOLUTIONS INC.

 

Unaudited Condensed Consolidated Interim Financial Statements

For the three and nine months ended

September 30, 2022

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Condensed Consolidated Interim Balance Sheets

(Unaudited-expressed in Canadian dollars)

 

 

 

  September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

 $ 573,842

 

 

 $ 2,257,855

 

Short-term investments

 

 

 -

 

 

 

 550,000

 

Accounts receivable (Note 3)

 

 

 25,996

 

 

 

 841,567

 

Prepaid expenses and deposits

 

 

 44,456

 

 

 

 265,436

 

 

 

 

 644,294

 

 

 

 3,914,858

 

Long term assets

 

 

 

 

 

 

 

 

Deposits

 

 

 248,427

 

 

 

 234,475

 

Property and equipment

 

 

 561,913

 

 

 

 624,763

 

Right of Use Assets  (Note 4)

 

 

 1,389,168

 

 

 

 1,943,252

 

Intellectual property (Note 5)

 

 

 13,593,137

 

 

 

 14,867,023

 

 

 

 $ 16,436,939

 

 

 $ 21,584,371

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities (Note 6, 16)

 

 $ 987,246

 

 

 $ 500,625

 

Current portion of long-term debt

 

 

 111,111

 

 

 

 64,815

 

Current portion of lease obligations (Note 7)

 

 

 606,795

 

 

 

 532,936

 

 

 

 

 1,705,152

 

 

 

 1,098,376

 

Long-term liabilities

 

 

 

 

 

 

 

 

Long-term debt

 

 

 851,852

 

 

 

 935,185

 

Long-term lease obligation (Note 7)

 

 

 750,402

 

 

 

 1,369,668

 

Asset retirement obligation

 

 

 23,889

 

 

 

 22,337

 

 

 

 

 1,626,143

 

 

 

 2,327,190

 

 

 

 

 3,331,295

 

 

 

 3,425,566

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

 

 

Common shares (Note 9): - authorized unlimited

 

 

 

 

 

 

 

 

     Issued:  65,585,902 (2021 - 65,250,710) common shares

 

 

 95,974,668

 

 

 

 95,779,352

 

Contributed capital

 

 

 9,397,018

 

 

 

 9,381,966

 

Deficit

 

 

 (92,266,042 )

 

 

 (87,002,513 )

 

 

 

 13,105,644

 

 

 

 18,158,805

 

 

 

 $ 16,436,939

 

 

 $ 21,584,371

 

 

Going concern (Note 1)

Commitments (Note 8)

Subsequent event (Note 17)

 

Signed “George Liszicasz”

Director

 

Signed “Bruce G. Wilcox”

Director

 

 

 

 

 

 

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

 

[1]

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Unaudited-expressed in Canadian dollars)

 

 

 

For the three months ended

September 30,

 

 

For the nine months ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

SFD® related revenue (Note 14)

 

 $ -

 

 

 $ -

 

 

 $ -

 

 

 $ 3,144,373

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Survey® related costs, net

 

 

 230,518

 

 

 

 303,426

 

 

 

 974,292

 

 

 

 950,737

 

General and administrative expenses (Notes 11, 15, 16)

 

 

 963,433

 

 

 

 765,120

 

 

 

 2,922,660

 

 

 

 2,348,280

 

Amortization (Note 5)

 

 

 442,096

 

 

 

 445,345

 

 

 

 1,326,630

 

 

 

 1,331,340

 

 

 

 

 1,636,047

 

 

 

 1,513,891

 

 

 

 5,223,582

 

 

 

 4,630,357

 

Other expenses (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

 10,393

 

 

 

 13,087

 

 

 

 26,251

 

 

 

 27,014

 

Foreign exchange loss (gain)

 

 

 (3,085 )

 

 

 (102,632 )

 

 

 (14,175 )

 

 

 10,329

 

Intellectual property and other

 

 

 4,633

 

 

 

 10,096

 

 

 

 27,869

 

 

 

 26,885

 

 

 

 

 11,941

 

 

 

 (79,449 )

 

 

 39,945

 

 

 

 64,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

 (1,647,988 )

 

 

 (1,434,442 )

 

 

 (5,263,527 )

 

 

 (1,550,212 )

Income tax expense

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

Loss and comprehensive loss

 

 $ (1,647,988 )

 

 $ (1,434,442 )

 

 $ (5,263,527 )

 

 $ (1,550,212 )

Loss per share (Note 10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 $ (0.03 )

 

 $ (0.02 )

 

 $ (0.08 )

 

 $ (0.02 )

Diluted

 

 $ (0.03 )

 

 $ (0.02 )

 

 $ (0.08 )

 

 $ (0.02 )

 

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

 

[2]

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited-expressed in Canadian dollars)

 

 

 

For the three months ended

September 30,

 

 

For the nine months ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Cash from (used in):

 

 

 

Adjusted-Note 2

 

 

 

 

Adjusted-Note 2

 

Operating activities

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 $ (1,647,988 )

 

 $ (1,434,442 )

 

 $ (5,263,527 )

 

 $ (1,550,212 )

Items not affecting cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation expense

 

 

 23,391

 

 

 

 135,234

 

 

 

 188,092

 

 

 

 175,957

 

Amortization

 

 

 442,096

 

 

 

 445,345

 

 

 

 1,326,630

 

 

 

 1,331,340

 

Accretion expense

 

 

 518

 

 

 

 517

 

 

 

 1,552

 

 

 

 1,552

 

Non-cash lease costs

 

 

 (1,654 )

 

 

 (5,869 )

 

 

 (6,491 )

 

 

 (8,803 )

Change in carrying amount of right of use assets & lease liabilities

 

 

 115

 

 

 

 8,819

 

 

 

 9,857

 

 

 

 17,736

 

Unrealized foreign exchange (gain) loss

 

 

 5,572

 

 

 

 (138,005 )

 

 

 2,238

 

 

 

 (3,441 )

Loss on disposal of assets and lease modification

 

 

 -

 

 

 

 -

 

 

 

 11,922

 

 

 

 -

 

Change in non-cash working capital balances (Note 13)

 

 

 644,163

 

 

 

 (39,457 )

 

 

 1,499,911

 

 

 

 (1,072,914 )

 

 

 

 1,114,201

 

 

 

 406,584

 

 

 

 3,033,711

 

 

 

 441,427

 

Net cash used in operating activities

 

 

 (533,787 )

 

 

 (1,027,858 )

 

 

 (2,229,816 )

 

 

 (1,108,785 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from the Employee Share Purchase Plan (Note 11)

 

 

 11,343

 

 

 

 16,529

 

 

 

 40,414

 

 

 

 52,754

 

Proceeds from (repayment of) long-term debt

 

 

 (37,037 )

 

 

 -

 

 

 

 (37,037 )

 

 

 1,000,000

 

Repayment of financial liability and lease obligation (Notes 4, 7)

 

 

 -

 

 

 

 (38,208 )

 

 

 (27,950 )

 

 

 (111,037 )

Net cash from financing activities

 

 

 (25,694 )

 

 

 (21,679 )

 

 

 (24,573 )

 

 

 941,717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of intellectual property (Note 5)

 

 

 -

 

 

 

 (15,000 )

 

 

 -

 

 

 

 (65,310 )

Proceeds from (used in) short-term investments

 

 

 500,000

 

 

 

 (87,448 )

 

 

 550,000

 

 

 

 (22,494 )

Net cash from (used in) investing activities

 

 

 500,000

 

 

 

 (102,448 )

 

 

 550,000

 

 

 

 (87,804 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of foreign exchange rate changes on cash and cash equivalents

 

 

 16,481

 

 

 

 79,946

 

 

 

 20,376

 

 

 

 1,678

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

 (43,000 )

 

 

 (1,072,039 )

 

 

 (1,684,013 )

 

 

 (253,194 )

Cash and cash equivalents, beginning of the period

 

 

 616,842

 

 

 

 3,508,991

 

 

 

 2,257,855

 

 

 

 2,690,146

 

Cash and cash equivalents, end of the period

 

 

 573,842

 

 

 

 2,436,952

 

 

 

 573,842

 

 

 

 2,436,952

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash interest paid(received)

 

 

 6,306

 

 

 

 14,602

 

 

 

 27,386

 

 

 

 29,410

 

Cash taxes paid

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

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

 

[3]

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Condensed Consolidated Interim Statements of Shareholders’ Equity

(Unaudited-expressed in Canadian dollars)

 

 

 

For the three months

 

 

For the nine months

 

 

 

ended September 30,

 

 

ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of the period

 

 $ 95,831,418

 

 

 $ 95,392,821

 

 

 $ 95,779,352

 

 

 $ 95,327,123

 

Issuance of common stock on the Employee Purchase Plan (Notes 9, 11)

 

 

 20,325

 

 

 

 29,659

 

 

 

 72,391

 

 

 

 95,357

 

Issuance of common stock on Restricted Stock Unit Plan (Notes 9, 11)

 

 

 122,925

 

 

 

 114,604

 

 

 

 122,925

 

 

 

 114,604

 

Balance at end of the period

 

 

 95,974,668

 

 

 

 95,537,084

 

 

 

 95,974,668

 

 

 

 95,537,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributed Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of the period

 

 

 9,397,018

 

 

 

 9,574,266

 

 

 

 9,381,966

 

 

 

 9,355,716

 

Issuance of equity for intellectual property (Note 5)

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 207,300

 

Recognition of stock based compensation expense (Note 11)

 

 

 -

 

 

 

 7,500

 

 

 

 15,052

 

 

 

 18,750

 

Balance at end of the period

 

 

 9,397,018

 

 

 

 9,581,766

 

 

 

 9,397,018

 

 

 

 9,581,766

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of the period

 

 

 (90,618,054 )

 

 

 (83,994,484 )

 

 

 (87,002,515 )

 

 

 (83,878,714 )

Net loss

 

 

 (1,647,955 )

 

 

 (1,434,442 )

 

 

 (5,263,527 )

 

 

 (1,550,212 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at end of the period

 

 

 (92,266,042 )

 

 

 (85,428,926 )

 

 

 (92,266,042 )

 

 

 (85,428,926 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Shareholders' Equity at end of the period

 

 $ 13,105,644

 

 

 $ 19,689,924

 

 

 $ 13,105,644

 

 

 $ 19,689,924

 

 

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

 

[4]

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(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 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 in both the hydrocarbon and geothermal industries.

 

These condensed consolidated interim financial statements of NXT have been prepared by management in accordance with generally accepted accounting principles of the United States of America ("US GAAP”). 

 

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 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 has deferred payment of operating costs, including payroll and other general and administrative costs, and is evaluating alternatives to reduce other costs.  Subsequent to September 30, 2022, the Company offered rights to holders of its common shares (Note 17).  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® related revenues and obtaining financing on terms that are acceptable to both the Company and the financier.

 

Page | 6

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

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, expand its revenue base to a level sufficient to exceed fixed operating costs, and generate consistent positive cash flow from operations.  The occurrence and timing of these events cannot be predicted with sufficient certainty. 

 

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.

 

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, 2021.  The estimates and assumptions used are based upon management's best estimate as at the date of the condensed consolidated interim 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.

 

Critical accounting estimates relate primarily to the use of the going concern assumption, estimated useful lives and the valuation of intellectual property, property and equipment and the measurement of stock-based compensation expense.

 

2. Significant Accounting Policies

 

Basis of Presentation

 

These condensed consolidated interim financial statements for the period ended September 30, 2022 have been prepared by management in accordance with generally accepted accounting principles of the United States of America (“US GAAP”).

 

Page | 7

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

New Standards Effective During the Period

 

Disclosures by Business Entities about Government Assistance

 

In June 2021 the Financial Accounting Standards Board issued new guidance that increases the transparency of government assistance including the disclosure of the types of assistance, and entity’s accounting for the assistance, and the effect of the assistance on an entity’s financial statements.  The new guidance is effective for annual periods beginning after December 15, 2021.  The Company adopted ASU 2021-10 on January 1, 2022.

 

Consolidated Statement of Cash Flows

 

In the preparation of the annual financial statements as at and for the year ended December 31, 2021, the Company has determined that certain amounts previously recorded were not correctly calculated in the consolidated statements of cash flows for the three and nine months ended September 30, 2021.  Not properly reflected were the payments on the financial liability, lease obligation payments and accretion, and application of exchange rates to calculate unrealized foreign exchange (gain) loss including the effect of foreign exchange on changes on cash and cash equivalents.  The adjustments to correct the respective financial statement line items were not material and did not change the Cash, SFD® related revenues, or Net income (loss) accounts or basic and diluted loss per share.  The Company has recorded the adjustments in the related line items in each of the comparative periods.  Line items affected on the Consolidated Statement of Cash Flows by the adjustment are: Non-cash lease costs, Change in the carrying amount of right of use assets and lease liabilities, unrealized foreign exchange (gain) loss, Repayment of financial liability and finance lease obligations, Proceeds from (used in) short-term investments, and Effect of foreign exchange rate changes on cash and cash equivalents.  The table below highlights the changes to each line item in each of the comparative periods.

 

 

 

For the three months ended September 30, 2021

 

Consolidated Statements of cash flows

 

As previously reported

 

 

Adjustments

 

 

Adjusted

 

Net income

 

 $ (1,434,442 )

 

 $ -

 

 

 $ (1,434,442 )

Non-cash lease costs

 

 

 (1,627 )

 

 

 (4,242 )

 

 

 (5,869 )

Change in carrying amount of right of use assets & lease liabilities

 

 

 -

 

 

 

 8,819

 

 

 

 8,819

 

Unrealized foreign exchange (gain) loss

 

 

 (177,850 )

 

 

 39,845

 

 

 

 (138,005 )

Operating activities

 

 

 (1,072,280 )

 

 

 44,422

 

 

 

 (1,027,858 )

Repayment of financial liability and lease obligations

 

 

 -

 

 

 

 (38,208 )

 

 

 (38,208 )

Financing activities

 

 

 16,529

 

 

 

 (38,208 )

 

 

 (21,679 )

Effect of foreign exchange rate changes on cash and cash equivalents.

 

 

 86,160

 

 

 

 (6,214 )

 

 

 79,946

 

Net increase (decrease) in cash and cash equivalents

 

 

 (1,072,039 )

 

 

 -

 

 

 

 (1,072,039 )

 

Page | 8

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

 

 

For the nine months ended September 30, 2021

 

Consolidated Statements of cash flows

 

As previously reported

 

 

Adjustments

 

 

Adjusted

 

Net loss

 

 $ (1,550,212 )

 

 

 -

 

 

 $ (1,550,212 )

Non-cash lease costs

 

 

 (74,409 )

 

 

 65,606

 

 

 

 (8,803 )

Change in carrying amount of right of use assets & lease liabilities

 

 

 -

 

 

 

 17,736

 

 

 

 17,736

 

Unrealized foreign exchange (gain) loss

 

 

 (37,350 )

 

 

 33,909

 

 

 

 (3,441 )

Operating activities

 

 

 (1,226,036 )

 

 

 117,251

 

 

 

 (1,108,785 )

Repayment of financial liability and lease obligations

 

 

 -

 

 

 

 (111,037 )

 

 

 (111,037 )

Financing activities

 

 

 1,052,754

 

 

 

 (111,037 )

 

 

 941,717

 

Effect of foreign exchange rate changes on cash and cash equivalents.

 

 

 7,892

 

 

 

 (6,214 )

 

 

 1,678

 

Net increase (decrease) in cash and cash equivalents

 

 

 (253,194 )

 

 

 -

 

 

 

 (253,194 )

 

3. Accounts Receivable

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Trade receivables

 

 $ -

 

 

 $ 806,460

 

Other receivables

 

 

 25,996

 

 

 

 35,107

 

 

 

 

 25,996

 

 

 

 841,567

 

Allowance for doubtful accounts

 

 

 -

 

 

 

 -

 

Net accounts receivable

 

 

 25,996

 

 

 

 841,567

 

 

The entire trade receivable was with one client as at December 31, 2021. 

 

Page | 9

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

4. Right of use assets

 

 

 

September 30, 2022

 

 

 

Cost

 

 

Accumulated

 

 

Right of

 

 

 

Base

 

 

Amortization

 

 

Use

 

Aircraft

 

 $ 1,847,617

 

 

 $ 1,332,879

 

 

 $ 514,738

 

Office Building

 

 

 1,725,414

 

 

 

 851,874

 

 

 

 873,540

 

Printer

 

 

 17,794

 

 

 

 16,904

 

 

 

 890

 

 

 

 

 3,590,825

 

 

 

 2,201,657

 

 

 

 1,389,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

Cost

 

 

Accumulated

 

 

Right of

 

 

 

Base

 

 

Amortization

 

 

Use 

 

Aircraft

 

 $ 1,870,808

 

 

 $ 1,073,365

 

 

 $ 797,443

 

Office Building

 

 

 1,805,447

 

 

 

 664,372

 

 

 

 1,141,075

 

Printer

 

 

 17,794

 

 

 

 13,060

 

 

 

 4,734

 

 

 

 

 3,694,049

 

 

 

 1,750,797

 

 

 

 1,943,252

 

 

In the fourth quarter of 2021, the Company determined it was reasonably certain it would extend the term of its Aircraft Leasing Agreement effective in the second quarter of 2022 for a period of 24 months with payments of approximately US$22,500 (CDN$28,675) per month, or US$270,000 (CDN$344,099) per year.  The incremental borrowing rate is 11.2%.  The Company recognized an additional $615,737 Aircraft ROU assets and US$493,166 ($615,570) additional Lease obligations at December 31, 2021.  Should NXT want to repurchase the aircraft at the end of the extended term, the purchase price will be US$1.21 million. 

 

On March 15, 2022, the Company surrendered 826 square feet of its office building lease to the landlord.  The Company incurred a surrender fee of $14,000.  The Company derecognized the following amounts on its balance sheet in the first quarter.

 

Right of Use Assets

 

 $ 80,033

 

Lease obligations

 

 

 83,095

 

 

Page | 10

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

5.  Intellectual property

 

Acquisition of SFD® Geothermal Right

 

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

 

 

1.

US$40,000 (CAD$50,310) signature payment, which became due immediately and was paid on April 22, 2021;

 

2.

300,000 common shares, which were issued in December 2021;

 

3.

CAD$15,000 signature milestone payment paid in August 2021;

 

4.

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

 

5.

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.

 

As of September 30, 2022, the Company has recognized $275,610 for the acquisition Geothermal Right which is the combination of the US$40,000 (CAD$50,310) and CAD$15,000 signature payments, the value of the 300,000 common shares of $207,300 and other costs of $3,000.  Before the 300,000 common shares were issued by the Company, the value of the common shares was recorded as Contributed capital.  Upon Toronto Stock Exchange (the “TSX”) approval, the amount recognized of $207,300 less issuance costs of $42,697 were reclassified to common shares.  The cost of the remaining two milestones will be recognized when it is deemed probable that these two milestones will be achieved by a special committee of the Board of Directors, comprised entirely of independent directors.  The Board of Directors delegated authority to the special committee to determine when the milestones have been achieved.  As of September 30, 2022 the remaining two milestones are still deemed not probable of being achieved.

 

The current book value of the Geothermal Right is being amortized on a straight line basis over its estimated useful life of 20 years. The annual amortization expense expected to be recognized is approximately $13,781 per year for a 5 year aggregate total of approximately $68,902.

 

Page | 11

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

SFD® Hydrocarbon Right

 

During 2015, NXT acquired the rights to the SFD® technology for use in the exploration of hydrocarbons (“Hydrocarbon Right”) from the CEO, 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 Hydrocarbon Right is being amortized on a straight line basis over its estimated useful life of 15 years. The annual amortization expense expected to be recognized is approximately $1.7 million per year for a 5 year aggregate total of $8.5 million.

 

 

 

September 30, 2022

 

 

 

Cost

 

 

Accumulated

 

 

Net book

 

 

 

Base

 

 

amortization

 

 

Value

 

SFD® Hydrocarbon Right acquired

 

 $ 25,271,000

 

 

 $ 11,933,951

 

 

 $ 13,337,049

 

SFD® Geothermal Right acquired

 

 

 275,610

 

 

 

 19,522

 

 

 

 256,088

 

 

 

 

 25,546,610

 

 

 

 11,953,473

 

 

 

 13,593,137

 

 

 

 

December 31, 2021

 

 

 

Cost

 

 

Accumulated

 

 

Net book

 

 

 

Base

 

 

amortization

 

 

Value

 

SFD® Hydrocarbon Right acquired

 

 $ 25,271,000

 

 

 $ 10,670,400

 

 

 $ 14,600,600

 

SFD® Geothermal Right acquired

 

 

 275,610

 

 

 

 9,187

 

 

 

 266,423

 

 

 

 

 25,546,610

 

 

 

 10,679,587

 

 

 

 14,867,023

 

 

Page | 12

 

 

 

 

6.  Accounts payable and accrued liabilities

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

 

 

September 30,

 

 

December 31,

 

 

 

              2022

 

 

            2021

 

Accrued liabilities related to:

 

 

 

 

 

 

Consultants and professional fees

 

 $ 370,907

 

 

 $ 203,732

 

Payroll

 

 

 319,763

 

 

 

 79,544

 

Board of director’s fees

 

 

 123,750

 

 

 

 -

 

Expenses owed to an executive officer (Note 16)

 

 

 5,574

 

 

 

 11,467

 

Vacation Accrued

 

 

 104,087

 

 

 

 102,536

 

 

 

 

 924,081

 

 

 

 397,279

 

Trade payables and other

 

 

 63,165

 

 

 

 103,346

 

 

 

 

 987,246

 

 

 

 500,625

 

 

7. Lease obligation

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Aircraft

 

 $ 462,295

 

 

 $ 712,762

 

Office Building

 

 

 894,012

 

 

 

 1,185,356

 

Printer

 

 

 890

 

 

 

 4,486

 

 

 

 

 1,357,197

 

 

 

 1,902,604

 

Current portion of lease obligations

 

 

 606,795

 

 

 

 532,936

 

Long-term lease obligations

 

 

 750,402

 

 

 

 1,369,668

 

 

Page | 13

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

Maturity of lease liabilities:

 

 

 

 

Weighted Average Remaining Lease Term

2022

 

 $ 178,571

 

 

2.5 years

2023

 

 

 710,684

 

 

2.3 years

2024

 

 

 379,761

 

 

1.7 years

2025

 

 

 256,103

 

 

0.8 years

Total lease payments

 

 

 1,525,119

 

 

 

Less imputed interest

 

 

 (167,922 )

 

 

Total discounted lease payments

 

 

 1,357,197

 

 

 

Current portion of lease obligations

 

 

 606,795

 

 

 

Non-current portion of lease obligations

 

 

 750,402

 

 

 

 

 

 

Lease Term

 

Option to Extend

 

Incremental Borrowing Rate

 

Aircraft

 

April 2024

 

Executed

 

 

 11.2 %

Office Building

 

September 2025

 

         No

 

 

 6.1 %

Printer

 

November 2022

 

              No

 

 

 7.4 %

 

The Company’s total lease expenditures for the nine month period ended September 30, 2022 was$624,441 (2021 - $724,818).

 

8.  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

 

2022

 

 $ 55,624

 

2023

 

 

 222,496

 

2024

 

 

 222,496

 

2025

 

 

 166,872

 

 

 

 

 667,488

 

 

Page | 14

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

9.  Common shares

 

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

 

 

 

 

 

 

 

For the nine months ended

 

 

 

September 30, 2022

 

 

September 30, 2021

 

 

 

# of shares

 

 

$ amount

 

 

# of shares

 

 

$ amount

 

As at the beginning of the period

 

 

 65,250,710

 

 

 $ 95,779,352

 

 

 

 64,437,790

 

 

 $ 95,327,123

 

Issuance for Employee Share Purchase Plan

 

 

 122,888

 

 

 

 72,391

 

 

 

 183,394

 

 

 

 95,357

 

Issuance of Restricted Share Units

 

 

 212,304

 

 

 

 122,925

 

 

 

 208,370

 

 

 

 114,604

 

As at the end of the period                                            

 

 

 65,585,902

 

 

 

 95,974,668

 

 

 

 64,829,554

 

 

 

 95,537,084

 

 

10.  Loss per share

 

 

 

For the three months

 

 

For the nine months

 

 

 

ended September 30,

 

 

ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss for the period              

 

 $ (1,647,988 )

 

 $ (1,434,442 )

 

 

 (5,263,526 )

 

 $ (1,550,212 )

Weighted average number of shares outstanding for the period:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 65,386,959

 

 

 

 64,661,410

 

 

 

 65,333,954

 

 

 

 64,554,049

 

Diluted  

 

 

 65,386,959

 

 

 

 64,661,410

 

 

 

 65,333,954

 

 

 

 64,554,049

 

Net loss per share – Basic               

 

 $ (0.03 )

 

 $ (0.02 )

 

 $ (0.08 )

 

 $ (0.02 )

Net loss per share – Diluted                          

 

 $ (0.03 )

 

 $ (0.02 )

 

 $ (0.08 )

 

 $ (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. 

 

Page | 15

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

11.  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 September 30, 2022, include stock options, restricted stock units (“RSUs”), deferred share units (“DSUs”) and the employee share purchase plan (“ESP Plan”).  The following tables provide information about stock option, RSU, DSU, and ESP Plan activity.

 

For the three months ended 

September 30,

 

 

For the nine months ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Stock Option Expense

 

 $ -

 

 

 $ 7,500

 

 

 $ 15,052

 

 

 $ 18,750

 

Restricted Stock Units

 

 

 14,410

 

 

 

 82,965

 

 

 

 141,063

 

 

 

 102,511

 

Employee Share Purchase Plan

 

 

 8,982

 

 

 

 36,367

 

 

 

 31,977

 

 

 

 84,724

 

Total stock based compensation expense

 

 

 23,392

 

 

 

 126,832

 

 

 

 188,092

 

 

 

 205,985

 

 

Stock Options:

The following is a summary of stock options which are outstanding as at September 30, 2022.

 

Exercise price per share

 

 

# of options outstanding

 

 

# of options exercisable

 

 

Average remaining life (in years)

 

$0.44

 

 

 

 21,360

 

 

 

 21,360

 

 

 

 3.7

 

$0.51

 

 

 

 16,000

 

 

 

 16,000

 

 

 

 3.0

 

$0.52

 

 

 

 100,000

 

 

 

 100,000

 

 

 

 1.8

 

$0.55

 

 

 

 30,000

 

 

 

 30,000

 

 

 

 2.3

 

$0.59

 

 

 

 150,000

 

 

 

 150,000

 

 

 

 1.1

 

$0.62

 

 

 

 18,050

 

 

 

 18,050

 

 

 

 4.3

 

$0.68

 

 

 

 14,750

 

 

 

 14,750

 

 

 

 4.0

 

$0.68

 

 

 

 17,500

 

 

 

 17,500

 

 

 

 4.7

 

$0.72

 

 

 

 24,460

 

 

 

 24,460

 

 

 

 4.7

 

 

 

 

 

 

 392,120

 

 

 

 392,120

 

 

 

 2.2

 

 

Page | 16

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

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, 2021 is as follows:

 

 

 

For the nine months ended

 

 

For the year ended

 

 

 

September 30, 2022

 

 

 December 31, 2021

 

 

 

 

 

 

weighted

 

 

 

 

 

Weighted

 

 

 

# of stock

 

 

average

 

 

# of stock

 

 

Average

 

 

 

options

 

 

exercise price

 

 

options

 

 

exercise price

 

Options outstanding, start of the year

 

 

 358,660

 

 

 $ 0.56

 

 

 

 421,000

 

 

 $ 0.83

 

Granted

 

 

 64,860

 

 

 $ 0.64

 

 

 

 62,660

 

 

 $ 0.56

 

Expired

 

 

 -

 

 

 

 -

 

 

 

 (125,000 )

 

 $ (1.48 )

Cancelled

 

 

 (31,400 )

 

 $ (0.51 )

 

 

 -

 

 

 

 -

 

Options outstanding, end of the year

 

 

 392,120

 

 

 $ 0.57

 

 

 

 358,660

 

 

 $ 0.56

 

Options exercisable, end of the year

 

 

 392,120

 

 

 $ 0.57

 

 

 

 358,660

 

 

 $ 0.56

 

 

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:

 

 

 

September 30,

 

 

December 31,

 

For the period ended

 

2022

 

 

2021

 

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

 

76%

 

 

     150%

 

Weighted average risk free interest rate

 

2.73%

 

 

  0.15%

 

Weighted average fair market value per share at grant date

 

 $ 0.64

 

 

 $ 0.49

 

 

Page | 17

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

Deferred Stock Units:

 

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, 2021 are as follows:

 

 

 

     For the nine months ended

 

 

For the year ended

 

Opening balance

 

September 30, 2022

 

 

December 31, 2021

 

Opening balance

 

 

 37,354

 

 

 

 37,354

 

Granted

 

 

 -

 

 

 

 -

 

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 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.  In the third quarter of 2022, the Company settled the RSUs that vested with shares and cash, and intends to continue to settle the RSUs in shares and cash.    

 

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, 2021 is as follows:

 

 

 

For the nine months ended,

 

 

For the year ended,

 

 

 

    September 30, 2022

 

 

December 31, 2021

 

 

 

# of RSUs

 

 

FV/Unit

 

 

# of RSUs

 

 

FV/Unit

 

RSUs outstanding, start of the period

 

 

 696,666

 

 

 $ 0.61

 

 

 

 1,200,000

 

 

 $ 0.79

 

Granted

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

Common shares issued

 

 

 (212,304 )

 

 $ (0.58 )

 

 

 (208,370 )

 

 $ (0.55 )

Payroll withholdings settled in cash

 

 

 (136,028 )

 

 $ (0.58 )

 

 

 (139,964 )

 

 $ (0.55 )

Forfeited

 

 

 -

 

 

 

 -

 

 

 

 (155,000 )

 

 $ (0.79 )

RSUs outstanding, end of the period

 

 

 348,334

 

 

 $ 0.40

 

 

 

 696,666

 

 

 $ 0.61

 

 

Page | 18

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

Employee Share Purchase 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 TSX.  During 2022 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, 2021 is as follows:

 

 

For the nine months ended,

 

 

For the year ended,

 

 

 

September 30, 2022

 

 

December 31, 2021

 

 

 

# of shares

 

 

$ amount

 

 

# of shares

 

 

$ amount

 

Purchased by employees

 

 

 68,606

 

 

 $ 40,414

 

 

 

 127,790

 

 

 $ 69,260

 

Matched by the Company

 

 

 54,282

 

 

 

 31,977

 

 

 

 102,641

 

 

 

 55,733

 

Bonus match by the Company

 

 

 -

 

 

 

 -

 

 

 

 74,119

 

 

 

 48,030

 

Total Common Shares issued

 

 

 122,888

 

 

 

 72,391

 

 

 

 304,550

 

 

 

 173,023

 

 

If the employee does not withdraw 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”).  The Company matched employee contributions for a total of $52,867, less any payroll withholdings in 2021.  As at September 30, 2022 the Company has accrued $nil for the Bonus Match ($nil as at December 31, 2021).

 

12.  Financial instruments

 

a) Non-derivative financial instruments:

 

The Company's non-derivative financial instruments consist of cash and cash equivalents, accounts receivable, deposits, accounts payables and accrued liabilities, long-term debt and lease obligations.  The carrying value of these financial instruments, excluding lease obligations and long-term debt, 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 September 30, 2022, cash and cash equivalents included balances in bank accounts placed with financial institutions with investment grade credit ratings.  The Company manages Accounts Receivable credit risk by requiring advance payments before entering into certain contract milestones and when possible, accounts receivable insurance.

 

Page | 19

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

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, deposits, accounts payables, accrued liabilities, and lease obligations, and entering into United States dollar revenue contracts.  The Company does not currently enter into hedging contracts, but to mitigate exposure to fluctuations in foreign exchange the Company uses strategies to reduce the volatility of United States Dollar assets including converting excess United States dollars to Canadian dollars.  As at September 30, 2022, the Company held net U.S. dollar liabilities totaling US$24,665.  Accordingly, a hypothetical 10% change in the value of one United States dollar expressed in Canadian dollars as at September 30, 2022 would have had an approximately $3,373 effect on the unrealized foreign exchange gain or loss for the period.

 

b) Derivative financial instruments

 

As at September 30, 2022 and December 31, 2021, the Company held no derivative financial instruments.

 

13.  Change in non-cash operating working capital

 

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

 

 

 

For the three months ended

September 30, 

 

 

For the nine months ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Accounts receivable

 

 $ 402,132

 

 

 $ 35,281

 

 

 $ 815,571

 

 

 $ (920,722 )

Prepaid expenses and deposits

 

 

 8,829

 

 

 

 35,848

 

 

 

 220,980

 

 

 

 (35,147 )

Accounts payable and accrued liabilities

 

 

 233,202

 

 

 

 (110,586 )

 

 

 463,360

 

 

 

 10,462

 

Contractual obligations

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 (127,507 )

 

 

 

 644,163

 

 

 

 (39,457 )

 

 

 1,499,911

 

 

 

 (1,072,914 )

 

Page | 20

 

 

 

 

NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

14.  Geographic information

 

The Company generates revenue from its SFD® survey system that enables the clients to focus their 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. 

 

Revenues for the nine month period ended September 30, 2021 were generated solely from a single client and the Hydrocarbon Right.  There were no revenues from the Geothermal Right. 

 

 

 

For the three months ended

September 30,

 

 

For the nine months ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Africa

 

 $ -

 

 

 $ -

 

 

 $ -

 

 

 $ 3,144,373

 

 

15. Government Grants

 

During the three and nine month periods ended September 30, 2021, the Company received government grants through the Canada Emergency Wage Subsidy (“CEWS”), the Canada Emergency Rent Subsidy (“CERS”) and the National Research Council of Canada Industrial Research Assistance Program (“NRC IRAP”).  The CEWS, CERS and the NRC IRAP were recognized as a reduction to general and administrative expenses.   

 

 

 

For the three months ended

September 30,

 

 

For the nine months ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

CEWS

 

 $ -

 

 

 $ 39,741

 

 

 $ -

 

 

 $ 188,769

 

CERS

 

 

 -

 

 

 

 62,880

 

 

 

 -

 

 

 

 181,681

 

NRC IRAP

 

 

 

 

 

 

 27,943

 

 

 

 

 

 

 

 27,943

 

Government grants recognized              

 

 

 -

 

 

 

 130,564

 

 

 

 -

 

 

 

 398,393

 

 

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NXT ENERGY SOLUTIONS INC.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

As at and for the period ended September 30, 2022

(Expressed in Canadian dollars unless otherwise stated)

 

16.  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.  Accounts payable and accrued liabilities includes a total of $21,070 ($16,000 as at December 31, 2021) payable to this law firm.  

 

Accounts payable and accrued liabilities includes $5,574 ($11,467 as at December 31, 2021) related to reimbursement of expenses owing to an executive officer and $123,750 ($nil as at December 31, 2021) for Board of Director’s fees.

 

A company owned by a family member of an executive officer was contracted to provide presentation design services to the Company during 2021. 

 

The Geothermal Right was acquired from the Company’s CEO on April 18, 2021. As discussed in Note 5, the Company acquired the Geothermal Right from its Chairman, President and Chief Executive Officer, Mr. Liszicasz.

 

 

 

For three months ended

September 30,

 

 

For the nine months ended

September 30

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Legal Fees

 

 $ 15,344

 

 

 $ 15,087

 

 

 $ 45,800

 

 

 $ 65,698

 

Design Services1

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 4,013

 

 

1. US$3000

 

17.  Subsequent event 

 

On October 31, 2022 the Company advised that it will be offering rights (the "Offering") to holders of its common shares of record at the close of business on November 7, 2022.  The Offering will expire on November 30, 2022.  A fully subscribed Offering will raise gross proceeds of approximately $4.0 million. There is no minimum commitment required and no standby purchase agreement. Certain executive officers and directors of NXT intend to participate in the Offering.

 

Shareholders of record on November 7, 2022 received one right (a "Right") for each common share held. 2.95 Rights entitles the holder to purchase one common share of the Company at a price of $0.18 per Common Share. Exercise of the Rights and purchase of the common shares must be completed by November 30, 2022. Up to 22,238,553 additional common shares would be issued if 100% of the Offering is subscribed.

 

The proceeds from the Offering will be used to commence SFD® surveys and for general and administrative costs.

    

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