o | Registration Statement Pursuant To Section 12(b) or (g) of the Securities Exchange Act of 1934 |
x | Annual Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the fiscal year ended December 31, 2014. |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Shell Company Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Yes | o | No | x |
Yes | o | No | x |
Yes | x | No | o |
Yes | x | No | o |
Large accelerated filer | o | Accelerated filer | o | Non-accelerated filer | x |
U.S. GAAP | x | International Financial Reporting Standards as issued by the International Accounting Standards Board | o | Other | o |
Item 17 | o | Item 18 | o |
Yes | o | No | x |
PART I | |||||
ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 4 | |||
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE | 4 | |||
ITEM 3. | KEY INFORMATION | 4 | |||
ITEM 4. | INFORMATION ON THE COMPANY | 13 | |||
ITEM 4A. | UNRESOLVED STAFF COMMENTS | 23 | |||
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS | 23 | |||
ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES | 33 | |||
ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | 43 | |||
ITEM 8. | FINANCIAL INFORMATION | 45 | |||
ITEM 9. | THE OFFER AND LISTING | 46 | |||
ITEM 10. | ADDITIONAL INFORMATION | 47 | |||
ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 58 | |||
ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | 58 | |||
PART II | |||||
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES | 59 | |||
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 59 | |||
ITEM 15. | CONTROLS AND PROCEDURES | 59 | |||
ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT | 60 | |||
ITEM 16B. | CODE OF ETHICS | 60 | |||
ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES | 61 | |||
ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES | 61 | |||
ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS | 61 | |||
ITEM 16F. | CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT | 61 | |||
ITEM 16G. | CORPORATE GOVERNANCE | 61 | |||
ITEM 16H. | MINE SAFETY DISCLOSURE | 61 | |||
PART III | |||||
ITEM 17. | FINANCIAL STATEMENTS | 62 | |||
ITEM 18. | FINANCIAL STATEMENTS | 62 | |||
ITEM 19. | EXHIBITS | 62 |
· | our ability to generate sufficient cash flow from operations or to raise adequate capital to allow us to continue as a going concern; |
· | conducting operations in international markets; |
· | the availability, on a charter-hire basis, of suitable aircraft used in conducting our operations; |
· | the emergence of alternative competitive technologies; |
· | protection of our intellectual property and rights to our SFD® technology; |
· | the loss of key personnel; |
· | our dependence on a limited number of clients; |
· | foreign currency and interest rate fluctuations may affect our financial position; |
· | volatility in oil and natural gas commodity prices may reduce demand for our services; and |
· | other factors described herein under “Risk Factors” (see Item 3. D.) |
ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. | KEY INFORMATION |
(expressed in Canadian Dollars) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||
Survey revenues | $ | 3,913,367 | $ | 2,684,095 | $ | 10,937,575 | $ | 144,650 | $ | 443,011 | ||||||||||
Operating expenses | ||||||||||||||||||||
Survey costs | 431,518 | 1,632,159 | 3,633,645 | 46,713 | 466,428 | |||||||||||||||
General and administrative | 4,132,108 | 4,112,787 | 4,508,506 | 3,218,143 | 3,678,806 | |||||||||||||||
Stock based compensation expense | 658,000 | 492,000 | 265,000 | 344,800 | 577,815 | |||||||||||||||
Amortization of property & equipment | 67,162 | 85,484 | 125,015 | 160,478 | 164,065 | |||||||||||||||
5,288,788 | 6,322,430 | 8,532,166 | 3,770,134 | 4,887,114 | ||||||||||||||||
Other expense (income) | ||||||||||||||||||||
Interest expense (income), net | (50,824 | ) | (25,455 | ) | 2,744 | (16,353 | ) | (9,923 | ) | |||||||||||
Foreign exchange (gain) loss | (158,817 | ) | (150,350 | ) | 14,686 | (28,209 | ) | 16,509 | ||||||||||||
Other expense (income) | 354,781 | 107,985 | 66,973 | 3,679 | 1,739 | |||||||||||||||
Increase (decrease) in fair value of US$ Warrants | 42,800 | 1,371,500 | (168,143 | ) | - | - | ||||||||||||||
187,940 | 1,303,680 | (83,740 | ) | (40,883 | ) | 8,325 | ||||||||||||||
Income (loss) before income taxes | (1,563,361 | ) | (4,942,015 | ) | 2,489,149 | (3,584,601 | ) | (4,452,428 | ) | |||||||||||
Income tax expense | - | 399,546 | 426,421 | - | - | |||||||||||||||
Net income (loss) and comprehensive income (loss) for the year | (1,563,361 | ) | (5,341,561 | ) | 2,062,728 | (3,584,601 | ) | (4,452,428 | ) | |||||||||||
Net income (loss) per share - | ||||||||||||||||||||
Basic | $ | (0.04 | ) | $ | (0.13 | ) | $ | 0.05 | $ | (0.10 | ) | $ | (0.14 | ) | ||||||
Diluted (1) | $ | (0.04 | ) | $ | (0.13 | ) | $ | 0.04 | $ | (0.10 | ) | $ | (0.14 | ) | ||||||
Weighted average # of common shares outstanding | ||||||||||||||||||||
Basic | 44,375,540 | 41,660,190 | 40,453,392 | 35,696,620 | 32,774,974 | |||||||||||||||
Diluted (1) | 44,375,540 | 41,660,190 | 48,790,462 | 35,696,620 | 32,774,974 | |||||||||||||||
# of common shares outstanding | 44,958,843 | 42,418,326 | 39,554,959 | 34,757,396 | 30,826,796 |
(expressed in Canadian Dollars) | ||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | ||||||||||||||||
Working capital (deficiency) | $ | 5,029,013 | $ | 1,618,719 | $ | 4,948,556 | $ | (336,520 | ) | $ | 831,974 | |||||||||
Current assets | 5,811,639 | 6,577,175 | 7,130,383 | 2,796,492 | 1,419,246 | |||||||||||||||
Restricted cash | - | - | - | 74,135 | 101,856 | |||||||||||||||
Property and equipment, net | 237,464 | 262,818 | 327,839 | 404,301 | 525,804 | |||||||||||||||
Total assets | 6,049,103 | 6,839,993 | 7,458,222 | 3,274,928 | 2,046,906 | |||||||||||||||
Current liabilities | 782,626 | 4,958,456 | 2,181,827 | 3,133,012 | 587,272 | |||||||||||||||
Long-term liabilities | 50,000 | 64,560 | 61,813 | 57,953 | 62,597 | |||||||||||||||
Total liabilities | 832,626 | 5,023,016 | 2,243,640 | 3,190,965 | 649,869 | |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Common shares | 65,792,307 | 61,340,321 | 56,623,686 | 53,756,687 | 52,031,435 | |||||||||||||||
Preferred shares | 232,600 | 232,600 | 3,489,000 | 3,489,000 | 3,489,000 | |||||||||||||||
Contributed capital | 6,400,789 | 5,889,914 | 5,406,193 | 5,205,301 | 4,659,026 | |||||||||||||||
Deficit | (67,920,154 | ) | (66,356,793 | ) | (61,015,232 | ) | (63,077,960 | ) | (59,493,359 | ) | ||||||||||
Accumulated other comprehensive income | 710,935 | 710,935 | 710,935 | 710,935 | 710,935 | |||||||||||||||
5,216,477 | 1,816,977 | 5,214,582 | 83,963 | 1,397,037 |
Date | US$ per Cdn$ Exchange Rates | |||||
Last 6 months ended | High | Low | ||||
March 31, 2015 | 0.8039 | 0.7811 | ||||
February 28, 2015 | 0.8063 | 0.7915 | ||||
January 31, 2015 | 0.8527 | 0.7863 | ||||
December 31, 2014 | 0.8815 | 0.8589 | ||||
November 30, 2014 | 0.8900 | 0.8751 | ||||
October 31, 2014 | 0.8980 | 0.8858 | ||||
Last Quarter & Last 5 Years | Average | |||||
Quarter ended March 31, 2015 | 0.8057 | |||||
Year ended December 31, 2014 | 0.9054 | |||||
Year ended December 31, 2013 | 0.9710 | |||||
Year ended December 31, 2012 | 1.0004 | |||||
Year ended December 31, 2011 | 1.0111 | |||||
Year ended December 31, 2010 | 0.9709 | |||||
Ending | ||||||
April 27, 2015 | 0.8232 |
ITEM 4. | INFORMATION ON THE COMPANY |
· | NXT was incorporated under the laws of the State of Nevada on September 27, 1994 as Auric Mining Corporation. |
· | In January 1996, NXT acquired all of the common stock of NXT Energy USA, Inc. (which was then known as Pinnacle Oil Inc.) from its shareholders in exchange for common shares. As a consequence of this reverse acquisition, NXT Energy USA became a wholly owned subsidiary and its shareholders acquired a 92% controlling interest in NXT’s common shares. |
· | Prior to this reverse acquisition transaction, NXT was a corporate shell conducting no active business, and NXT Energy USA was a development stage research and development enterprise holding the worldwide rights to use what is now our SFD technology for hydrocarbon exploration purposes. |
· | Shortly thereafter, on February 23, 1996 we changed our name to Pinnacle Oil International, Inc. and on June 13, 2000, subsequently changed our name to Energy Exploration Technologies. |
· | On October 24, 2003, our shareholders approved the continuance of the company from the State of Nevada to the Province of Alberta, Canada under the Business Corporations Act (Alberta). Also, our name was modified to Energy Exploration Technologies Inc. (“EETI”) |
· | On September 22, 2008 EETI changed its name to NXT Energy Solutions Inc. by way of Articles of Amendment filed pursuant to the Business Corporations Act (Alberta). |
1. | Focus the majority of sales resources on high profile primary markets which offer the maximum opportunity for success (such as Mexico, Colombia); |
2. | Build upon success in this initial market, and step out to other markets (such as Argentina, Bolivia, Peru, Brazil) in Latin America, and in South Asia (Pakistan); |
3. | Pursue requests of interest from qualified potential client "bluebirds" from all other locations in the world. The bluebird model is defined as an opportunity that arises, not from deliberate targeted sales initiatives, but in response to unsolicited client enquiries; |
4. | Continue to conduct pilot surveys to expand our knowledge base and provide documentation to support the use of SFD® in new applications. Each new application opens more market opportunities and provides valuable case studies to support our sales initiatives; and |
5. | Respond to opportunities to present at technical conferences, publish papers in periodicals and generally maximize our opportunities to educate the industry on SFD® capabilities and document case study successes. |
Year ended December 31 | 2014 | 2013 | 2012 | |||||||||
North America (United States) | $ | 3,913,367 | $ | - | $ | - | ||||||
South Asia (Pakistan) | - | 2,659,292 | - | |||||||||
Central America (Mexico, Belize, Guatemala) | - | 24,803 | 6,403,534 | |||||||||
South America (Colombia, Argentina) | - | - | 4,534,041 | |||||||||
3,913,367 | 2,684,095 | 10,937,575 |
· | Survey aircraft – Historically, we have both owned aircraft and chartered aircraft from independent charter aircraft companies. |
· | SFD® sensors - All of the survey sensors are manufactured in-house. Certain machining is required by third party machine shops, with final assembly performed by our technical staff. The sensors, once assembled, require flight testing prior to being considered acceptable for operational use. Not all sensors meet the performance criteria for operational use; however, we have demonstrated our ability to manufacture new functional SFD® sensors. |
· | SFD® assembly - The units in which the sensors are incorporated are custom designed, fabricated and assembled in-house or through subcontracted vendors. We utilize the services of Transport Canada approved Design Approval Representatives to prepare subsequent type certificates (“STC”) for the installation of our SFD® units in each aircraft that we utilize for surveys. The time to obtain an STC approval for the installation of our SFD® units into any proposed aircraft type may require several months. |
· | Computer hardware and software - (Data Acquisition System, SFD® Signal Conditioning Unit, and data Interpretation software). The customized software used in our data acquisition system is written and modified by outside consulting programmers with whom we have long-standing relationships. The hardware we use in our SFD® survey systems (other than the SFD® unit), and the balance of the computer software we use, are all readily available from retail or wholesale sources. |
· | 2,000,000 shares, should cumulative gross revenue reach US $50 million, |
· | an additional 2,000,000 shares, should cumulative gross revenue reach US $100 million, |
· | an additional 2,000,000 shares, should cumulative gross revenue reach US $250 million, and |
· | an additional 2,000,000 shares, should cumulative gross revenue reach US $500 million. |
· | if we earned cumulative aggregate gross revenue of US $500 million or more in the 9-year period ended December 31, 2015, NXT can choose to retain the SFD® technology by issuing Mr. Liszicasz an additional 1,000,000 common shares and converting all of the then outstanding preferred shares; or |
· | if we did not earn cumulative aggregate gross revenue of US $500 million or more in the 9-year period ended December 31, 2015, NXT can choose to retain the SFD® technology by immediately converting all of the then outstanding preferred shares. |
Owner of Preferred Share | Preferred Shares Owned | Percent of Class of Share |
George Liszicasz, President & CEO, and a Director | 8,000,000 | 100.0% |
Subsidiaries | Date and Manner of Incorporation | Authorized Share Capital | Issued and Outstanding Shares | Nature of the Business | % of each Class of Shares owned by NXT | |||||
NXT Energy USA, Inc. | October 20, 1995 by Articles of Incorporation – State of Nevada | 20,000,000 common | 5,000,000 common | Inactive | 100% | |||||
NXT Aero USA, Inc. | August 28, 2000 by Articles of Incorporation – State of Nevada | 1,000 common 4,000 preferred | 100 common | Inactive | 100% | |||||
Survey Services International Inc. | September 6, 2011 by Articles of Incorporation – Province of Alberta | Unlimited number of common shares | 100 common | Inactive | 100% | |||||
NXT Energy Services (SFD) Inc. | December 2008 by Federal Articles of Incorporation – Canada | Unlimited number of common shares | 100 common | Inactive | 100% |
· | Stress Field Detector - the stress field detector, or SFD® system, including a unit which houses the SFD® sensors, is the principal component of our technology. SFD® sensors respond to changes in subsurface stress. These responses are transformed through a passive transducer into electronic digital signals. Airborne surveys are normally conducted utilizing an array of 22 SFD® sensors, consisting of 6 primary, 8 secondary and 8 development sensors, allowing the acquisition of multiple independent SFD® signals responses at all points of a survey. |
· | Data Acquisition System - used in conjunction with the SFD® sensor array on surveys, our data acquisition system is a compact, portable computer system which concurrently acquires the electronic digital signals from the SFD® sensor array and other pertinent client data, including the GPS location information of the data. |
· | SFD® Signal Conditioning Unit - this self-contained unit contains electronic circuits for stabilizing and conditioning electronic signals. All sensor output is directly connected to this unit and after signal conditioning is completed, all output is forwarded to the computer system. |
· | Interpretation Theatre - once returned to our home base, the SFD® data collected is processed and converted into a format that can be used by our interpretation staff using systems consisting of generally off-the-shelf computer equipment, high definition monitors, projectors and screens. This equipment is generally permanently set up at our Calgary office facility. A remote SFD® data interpretation theater is available and may be deployed during survey operations and would be set up in a facility at the survey client’s city. |
ITEM 4A. | UNRESOLVED STAFF COMMENTS |
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
Selected Annual Information | ||||||||||||
For the year ended December 31 | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Survey revenue | $ | 3,913,367 | $ | 2,684,095 | $ | 10,937,575 | ||||||
Net comprehensive income (loss) | (1,563,361 | ) | (5,341,561 | ) | 2,062,728 | |||||||
Net income (loss) per common share - basic | $ | (0.04 | ) | $ | (0.13 | ) | $ | 0.05 | ||||
Net income (loss) per common share - diluted | $ | (0.04 | ) | $ | (0.13 | ) | $ | 0.04 | ||||
Net cash generated by (used in) operating activities | (3,581,186 | ) | (774,958 | ) | 792,992 | |||||||
Cash and short term investments | 5,224,065 | 5,769,077 | 5,107,594 | |||||||||
Total assets | 6,049,103 | 6,839,993 | 7,458,222 | |||||||||
Long term liabilities | 50,000 | 64,560 | 61,813 |
· | In Q1-14, we completed US $3.7 million of survey projects with a new client, Kerogen Exploration LLC (“Kerogen”), which included surveys in both Texas and Florida. Based on initial results delivered to Kerogen, the initial project was expanded in a short period of time from US $1.1 million to an overall total of US $3.7 million. |
· | We incurred a net loss of $1,563,361 for 2014, compared to net loss of $5,341,561 in 2013. |
· | We received proceeds of $2,735,995 from the exercise of a total of 2,057,852 common share purchase warrants (exercise price of US $1.20 per share) which were issued in the 2012 private placement equity financing. |
· | We had cash and short-term investments of $5,224,165 at the end of 2014. |
· | Operating activities (including the net change in non-cash working capital balances) used net cash of $3,581,186 in 2014, compared to a $774,958 net use of cash in 2013. |
· | In Q1-13, we completed a US $2.7 million survey project for Pakistan Petroleum Ltd., a new national oil company client. |
· | We incurred a net loss of $5,341,561 for 2013, compared to net income of $2,062,728 in 2012. The 2013 loss includes a non-cash expense of $1,371,500 which relates to recognizing the change at year-end in the fair value of outstanding US$ common share purchase Warrants. |
· | We received $1,064,222 from the exercise of a total of 846,700 common share purchase warrants (exercise price of US $1.20 per share) which were issued in the 2012 private placement equity financing. |
· | We had cash and short-term investments of $5,769,077 at the end of 2013. |
· | Operating activities used net cash of $774,958 in 2013, compared to a $792,992 net source of cash in 2012. |
· | We realized a significant expansion in survey activity in 2012, completing projects in a total of 4 different countries (Colombia, Argentina, Guatemala, and Mexico), and generated revenues of $10,937,575. |
· | Net income for the year was $2,062,728 for 2012, compared to a loss of $3,584,601 in 2011. |
· | Operating activities generated net cash of $792,992 in 2012, compared to a $1,756,515 net use of cash in 2011. |
· | Cash and cash equivalents increased by $3,543,648 to $5,052,594 as at the end of 2012 and total net working capital increased by $5,285,076 to $4,948,556 at the end of 2012. |
· | Net proceeds of $2,886,024 were raised in 2012 from the completion of a private placement equity financing. |
2014 | 2013 | 2012 | ||||||||||
Survey revenue | $ | 3,913,367 | $ | 2,684,095 | $ | 10,937,575 | ||||||
Expenses | ||||||||||||
Survey costs | 431,518 | 1,632,159 | 3,633,645 | |||||||||
General and administrative | 4,132,108 | 4,112,787 | 4,508,506 | |||||||||
Stock based compensation expense | 658,000 | 492,000 | 265,000 | |||||||||
Amortization of property and equipment | 67,162 | 85,484 | 125,015 | |||||||||
5,288,788 | 6,322,430 | 8,532,166 | ||||||||||
Other expense (income), net | 187,940 | 1,303,680 | (83,740 | ) | ||||||||
Income (loss) before income taxes | (1,563,361 | ) | (4,942,015 | ) | 2,489,149 | |||||||
Income tax expense | - | 399,546 | 426,421 | |||||||||
Net income (loss) for the year | (1,563,361 | ) | (5,341,561 | ) | 2,062,728 |
For the year ended December 31 | 2014 | 2013 | 2012 | |||||||||
Salaries, benefits and consulting charges | $ | 2,383,388 | $ | 2,050,587 | $ | 2,397,859 | ||||||
Board, professional fees, and public company costs | 612,847 | 802,450 | 779,346 | |||||||||
Premises and administrative overhead | 599,230 | 584,778 | 632,058 | |||||||||
Business development | 433,441 | 544,642 | 464,262 | |||||||||
Colombia office | 103,202 | 130,330 | 234,981 | |||||||||
Total G&A | 4,132,108 | 4,112,787 | 4,508,506 |
· | staff levels were slightly higher in 2014 as compared to 2013. |
· | board, professional fees, & public company costs decreased in 2014 primarily due to lower expenses for discretionary investor relations activities. |
· | business development costs are affected by the timing of discretionary international trips, and for 2013 there was a higher number of international tradeshows and conferences attended. |
· | NXT previously maintained a one person administrative office in Colombia, and this person was laid off in Q3-14 due to an ongoing lack of survey activity in the region. |
· | although staff levels were higher in 2013 (rose mainly in the second half of 2012), a lower level of overall consulting fees were incurred due to a reduced headcount of consultants utilized. Also, the 2012 period included performance bonus expense of $352,000 related to the record survey activity and profit achieved in 2012. |
· | 2013 reflected slightly increased costs for such items as insurance and legal fees, partially offset by a decrease in investor relations activities. |
· | premises overhead costs declined slightly for 2013, primarily due to a decrease in average monthly base rent costs following a renewal of the office lease from November 2012. |
· | a high level of business development costs were incurred in 2012 and 2013, primarily related to expanding awareness of the SFD® technology, including costs of international tradeshows and conferences. The 2013 total included costs incurred in expanding on a 2013 geophysical data “integration study” which we undertook with our new client PEMEX, as well as hosting a technology workshop for PEMEX staff in Mexico in Q3-13. |
· | the Colombia office had much lower levels of activity, and a slightly reduced salary level, for 2013 as a result of there being no survey activity in the country in 2013. |
2014 | 2013 | 2012 | ||||||||||
SBCE recognized related to: | ||||||||||||
Stock options | $ | 432,000 | $ | 492,000 | $ | 265,000 | ||||||
Rights | 226,000 | - | - | |||||||||
658,000 | 492,000 | 265,000 |
For the year ended December 31 | 2014 | 2013 | 2012 | |||||||||
Interest expense (income), net | $ | (50,824 | ) | $ | (25,455 | ) | $ | 2,744 | ||||
Foreign exchange (gain) loss | (158,817 | ) | (150,350 | ) | 14,686 | |||||||
Other expense, net | 354,781 | 107,985 | 66,973 | |||||||||
Increase (decrease) in fair value of US$ Warrants | 42,800 | 1,371,500 | (168,143 | ) | ||||||||
187,940 | 1,303,680 | (83,740 | ) |
2014 | 2013 | 2012 | ||||||||||
Other expenses incurred re: | ||||||||||||
Intellectual property and R&D | $ | 148,975 | $ | 93,585 | 51,700 | |||||||
Other, net | (7,435 | ) | 14,400 | 15,273 | ||||||||
Feasibility study | 213,241 | - | - | |||||||||
354,781 | 107,985 | 66,973 |
Q4-14 | Q3-14 | Q2-14 | Q1-14 | |||||||||||||
Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | |||||||||||||
Survey revenue | $- | $- | $- | $3,913,367 | ||||||||||||
Net income (loss) | (1,532,466 | ) | (1,330,167 | ) | (1,286,461 | ) | 2,585,733 | |||||||||
Income (loss) per share - basic | (0.03 | ) | (0.03 | ) | (0.03 | ) | 0.06 | |||||||||
Income (loss) per share - diluted | ( 0.03 | ) | (0.03 | ) | (0.03 | ) | 0.05 |
Q4-13 | Q3-13 | Q2-13 | Q1-13 | |||||||
Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | |||||||
Survey revenue | $ - | $ - | $ - | $ 2,684,095 | ||||||
Net income (loss) | (1,633,189) | (2,522,165) | (1,150,628) | (35,579) | ||||||
Income (loss) per share - basic | (0.04) | (0.06) | (0.03) | (0.00) | ||||||
Income (loss) per share - diluted | ( 0.04) | (0.06) | (0.03) | (0.00) |
December 31, | December 31, | net change | |||||||||||
2014 | 2013 | 2014 YTD | |||||||||||
Current assets (current liabilities): | |||||||||||||
Cash and cash equivalents | $ | 50,635 | $ | 3,319,627 | $ | (3,268,992 | ) | ||||||
Short-term investments | 5,173,430 | 2,449,450 | 2,723,980 | ||||||||||
5,224,065 | 5,769,077 | (545,012 | ) | ||||||||||
Restricted cash | - | 53,921 | (53,921 | ) | |||||||||
Accounts receivable | 248,930 | 295,879 | (46,949 | ) | |||||||||
Prepaid expenses and other | 338,644 | 158,456 | 180,188 | ||||||||||
Accounts payable and accrued liabilities | (782,626 | ) | (939,355 | ) | 156,729 | ||||||||
Net working capital before the undernoted items | 5,029,013 | 5,337,978 | (308,965 | ) | |||||||||
Additional asset (liability) amounts: | |||||||||||||
Work-in-progress | - | 299,842 | (299,842 | ) | |||||||||
Deferred revenue | - | (2,781,101 | ) | 2,781,101 | |||||||||
Fair value of US$ Warrants | - | (1,238,000 | ) | 1,238,000 | |||||||||
- | (3,719,259 | ) | 3,719,259 | ||||||||||
Net working capital | 5,029,013 | 1,618,719 | 3,410,294 |
· | the receipt in 2014 of exercise proceeds of $2.7 million upon exercise of 2,057,852 of the US$ Warrants. |
· | receipt of final progress billings of $1.2 million, and reversal of the Q4-13 $2.7 million deferred revenue balance, following completion and delivery of the US survey projects in Q1-14. |
· | the reversal (due to exercises and expiries) in 2014 of the $1.2 million recorded at Q4-13 for the fair value of the remaining 3,656,121 US$ Warrants which were then outstanding. |
For the year ended December 31 | 2014 | 2013 | 2012 | |||||||||
Cash provided by (used in): | ||||||||||||
Operating activities | $ | (3,581,186 | ) | $ | (774,958 | ) | $ | 792,992 | ||||
Financing activities | 3,024,061 | 1,077,456 | 3,203,443 | |||||||||
Investing activities | (2,711,867 | ) | (2,035,465 | ) | (452,787 | ) | ||||||
Net cash inflow (outflow) | (3,268,992 | ) | (1,732,967 | ) | 3,543,648 | |||||||
Cash & cash equivalents, start of the year | 3,319,627 | 5,052,594 | 1,508,946 | |||||||||
Cash & cash equivalents, end of the year | 50,635 | 3,319,627 | 5,052,594 | |||||||||
Cash & cash equivalents | 50,635 | 3,319,627 | 5,052,594 | |||||||||
Short-term investments | 5,173,430 | 2,449,450 | 55,000 | |||||||||
Total | 5,224,065 | 5,769,077 | 5,107,594 |
Operating Activities
For the year ended December 31 | 2014 | 2013 | 2012 | |||||||||
Net income (loss) for the year | $ | (1,563,361 | ) | $ | (5,341,561 | ) | $ | 2,062,728 | ||||
Add back net non-cash expense and income items | 753,402 | 1,951,731 | 225,732 | |||||||||
(809,959 | ) | (3,389,830 | ) | 2,288,460 | ||||||||
Change in non-cash working capital balances | (2,771,227 | ) | 2,614,872 | (1,495,468 | ) | |||||||
Total cash provided by (used in) in operations | (3,581,186 | ) | (774,958 | ) | 792,992 |
· | a $2,723,980 use relating to a movement from cash into short-term, interest bearing investments. |
· | A $53,921 source from a decrease in restricted cash balances. Restricted cash balances relate primarily to balances used as security for bank letters of credit, which are often required to be issued to foreign clients as performance guarantees for survey contracts. |
· | and $41,808 used in purchases of property and equipment. |
· | a $2,394,450 use relating to a movement from cash into short-term, interest bearing investments. |
· | A $379,448 source from a decrease in restricted cash balances. Restricted cash balances relate primarily to balances used as security for bank letters of credit, which are often required to be issued to foreign clients as performance guarantees for survey contracts. |
· | and $20,463 used in purchases of property and equipment. |
less than | 2 to 3 | 4 to 5 | more than | |||||||||||||||||
total | 1 year | years | years | 5 years | ||||||||||||||||
Long-term debt | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Capital (finance) lease obligations | - | - | - | - | - | |||||||||||||||
Operating lease obligations: | ||||||||||||||||||||
Premises rent / operating lease | 5,328,848 | 315,360 | 1,016,820 | 1,016,820 | 2,979,848 | |||||||||||||||
Purchase obligations | - | - | - | - | - | |||||||||||||||
Other long term liabilities: | ||||||||||||||||||||
Aircraft charter commitment | 641,250 | 641,250 | - | - | - | |||||||||||||||
Asset retirement obligation | 50,000 | - | 50,000 | - | - |
ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Mickey Abougoush Age 68 Director since November 2007 | Mr. Abougoush is a professional engineer with over 40 years of experience in the petroleum industry, largely in technical and executive positions. He is currently the chairman of Teknica Overseas Ltd., an international consulting company. He previously was chairman of SQFive Intelligent Oilfield Solutions Ltd., an international consulting and software development company and also served as president of Teknica Petroleum Services Ltd., an international consulting and software development company. He was formerly a director of both CCR Technologies Ltd. and WellPoint Systems Inc., both of which were public companies listed on the TSX Venture Exchange. Mr. Abougoush is a member of NXT’s Audit and Governance Committees. |
John Agee Age 66 Director since July 2011 | Mr. Agee is retired, following a 25+ year career in senior executive positions with various prominent US families, including the Carlson Family in Minneapolis, MN (owners of Radisson, Country Inns and Suites, and previously the TGI Friday's chain) from 2010 through February 2011, and the Steve Case Family in Washington, DC from 2000 through 2009 (Steve Case is the co-founder of America Online). Mr. Agee also served on numerous private, public, and non-profit Boards, and currently consults part-time in matters related to wealth management and is a CPA (inactive). He is a former director of Maui Land and Pineapple, a New York Stock Exchange listed company. Mr. Agee is the Chair of the Audit Committee and a member of the Compensation and Governance Committees. Mr. Agee has a BA in economics and accounting from St. John’s University, Collegeville, Minnesota, and an MBA from the University of Minnesota. |
George Liszicasz Age 61 Director, Chairman and Chief Executive Officer since January 1996; President since July 2002 | Mr. Liszicasz is the inventor of the company’s SFD® technology and has been our Chairman and CEO since the company’s inception in 1996. Mr. Liszicasz' primary responsibilities, as the President and CEO, are to oversee all operations and to further develop the SFD® technology. Mr. Liszicasz studied electronics and general sciences at the University of British Columbia and obtained a High Voltage Controls and Station Operations degree in Electronics from the Landler Jeno Technitken in Hungary in 1973. |
Charles Selby Age 58 Director since January 2006 | Mr. Selby holds a B. Sc. (Hons) in Chemical Engineering, a J.D. degree and is a registered professional engineer in the Province of Alberta. Mr. Selby is also the Chairman and CEO of Montana Exploration Corp. (formerly AltaCanada Energy Corp.) a TSX-V reporting issuer. He is the president of Caledonian Royalty Corporation and Caledonian Global Corporation, both private entities which are involved in oil & gas exploration and production. He is a former officer (1993 to 2010) of Pengrowth Corporation, which administered Pengrowth Energy Trust, a large North American energy royalty trust. Mr. Selby has also previously been a director of several other Canadian reporting issuers. Mr. Selby is the Chair of the Compensation Committee and a member of the Audit and Disclosure Committees. |
John Tilson Age 71 Director since February 2015 | Mr. Tilson is retired, and after obtaining MBA and CFA designations, had a distinguished career as an analyst, portfolio manager, and advisor in the US investment and financial industry with such firms as Sutro & Company and EF Hutton & Company. Mr. Tilson joined Roger Engemann and Associates in 1983 when assets under management were roughly US $160 million. During his tenure there, the Pasadena Group of Mutual Funds was started, with Pasadena Capital Corporation formed as the holding company for the mutual funds and investment management business. After working as an analyst and portfolio manager, John later became Executive Vice President & Managing Director of Pasadena Capital Corporation. |
Thomas E. Valentine Age 53 Director since November 2007 Corporate Secretary since April 18, 2014 | Mr. Valentine is a Partner with Norton Rose Fulbright Canada LLP, where he has practiced law, both as a Barrister and a Solicitor, since his call to the Bar in 1987. He is a member of the firm’s Global Resources Practice Group and is involved in energy and energy related matters throughout the Middle East, North Africa, the CIS, Asia and South America. Mr. Valentine is a member of the Board of Directors of two other Canadian public companies, Calvalley Petroleum Inc. and Touchstone Exploration Inc., and formerly was a director of Veraz Petroleum Ltd Mr. Valentine holds a BA from the University of British Columbia, a LLB from Dalhousie University, and a LL.M. from the London School of Economics. Mr. Valentine is the Chair of the Governance Committee and a member of the Compensation Committee. |
Krishna Vathyam Age 51 Director since January 2013 | Mr. Vathyam is currently an independent businessman, and was previously (until October 2013) the Chairman and CEO of Petrodorado Energy Ltd., a Colombia focused junior E&P which Mr. Vathyam founded in early 2009. He has extensive experience in international markets, having spent 23 years with Schlumberger, a leading global oilfield services company. Mr. Vathyam is a member of the Compensation and Governance Committees. |
Greg Leavens Age 50 V-P Finance and CFO since July 2011 | Mr. Leavens joined NXT in July 2011 as Vice-President of Finance and Chief Financial Officer. Mr. Leavens is a Chartered Accountant with over 24 years of financial reporting, treasury, regulatory and risk management experience. Mr. Leavens’ experience has included senior financial roles within the oil and gas exploration and production, as well as services sectors. Mr. Leavens was Chief Financial Officer of Result Energy Inc. (a public exploration and production company which traded on the TSX Venture Exchange) from 2003 until November 2009, after which he was involved in a variety of consulting roles prior to joining NXT. Mr. Leavens obtained a B.A. and M.Acc from the University of Waterloo, subsequent to which he articled with KPMG LLP, and was a Senior Manager in the Toronto audit services practice. Mr. Leavens is the Chair of NXT’s Disclosure Committee. |
Andrew Steedman Age 54 V-P Operations since December 2005 | Mr. Steedman joined NXT in December 2005 as Vice President of Operations. Mr. Steedman holds a B.Sc. in Electrical Engineering and an MBA, both from the University of Calgary. Prior to joining NXT, Mr. Steedman was the president of his own management consulting firm. From 2001 to 2003 he was President and CEO of Wireless Networks and was responsible for the overall strategic direction of the company. From 1999 to 2001, he was Senior Manager of Business Development with Nortel Networks. In this role he was responsible for developing Nortel’s unlicensed wireless strategy, identifying strategic partners, developing relationships with key customers and negotiating OEM agreements with key partners. From 1994 to 1999, Mr. Steedman held various positions within Nortel including product management, project management, international business development and marketing. From 1991 to 1994, Mr. Steedman consulted in Bangkok to the Telephone Organization of Thailand (“TOT”). He was responsible for the construction of a network management center that would monitor the TOT’s national network. |
Name & Principal Position | salary | bonus (1) | vacation (2) | other (3) | total | |||||||||||||||
George Liszicasz, President & CEO (4) | $ | 239,800 | - | 9,223 | $ | 15,992 | $ | 265,015 | ||||||||||||
Andrew Steedman, V-P Operations | 198,000 | - | - | 7554 | 205,554 | |||||||||||||||
Greg Leavens, Chief Financial Officer | 198,000 | - | - | 6,748 | 204,748 |
· | the Audit Committee will review annually a list of audit, audit related, recurring tax and other non-audit services and recommend pre-approval of those services for the upcoming year. Any additional requests will be addressed on a case-by-case specific engagement basis; |
· | for engagements not on the pre-approved list, the Audit Committee has delegated to the Chair of the Committee the authority to pre-approve individual non-audit service engagements with expected costs of up to $32,000 (annual aggregate total) subject to reporting to the Audit Committee, at its next scheduled meeting; and |
· | for engagements not on the pre-approved list and with expected costs greater than $32,000 (annual aggregate total), the entire Audit Committee must approve this service, generally at its next scheduled meeting. |
Function | employees | contractors | total | |||||||||
Senior management team | 4 | - | 4 | |||||||||
Finance, administration and sales | 3 | 1 | 4 | |||||||||
Operations and technical development | 7 | 2 | 9 | |||||||||
Total | 14 | 3 | 17 |
· | 260,000 stock options with an exercise price of $1.35 were granted to an officer of NXT in December 2014. |
· | a total of 55,000 stock options with an exercise price of $1.35 per share were granted in January 2015 to directors as part of their board of director fees earned for the period July to December 2014. All of these options had immediate vesting at the grant date. |
· | a total of 55,000 stock options with an exercise price of $1.39 per share were granted in July 2014 to directors as part of their board of director fees earned for the period January to June 2014. All of these options had immediate vesting at the grant date. |
· | 150,000 options with an exercise price of $0.76 were granted to a new director who joined NXT in January 2013. |
· | 150,000 options with an exercise price of $0.66 were granted to a V-P who joined the company in April 2013 (and who left NXT before the end of 2013, forfeiting all of these stock options, none of which had vested). |
· | a total of 52,500 stock options with an exercise price of $0.86 per share were granted in July 2013 to directors in conjunction with board of director fees earned for the period January to June 2013. |
· | 20,000 options with an exercise price of $1.30 were granted to the new Corporate Secretary who joined NXT in August 2013 (and who resigned from the company in April, 2014). |
· | a total of 65,000 stock options with an exercise price of $1.83 per share were granted in December 2013 to directors as part of their board of director fees earned for the period July to December 2013. All of these options had immediate vesting at the grant date. |
· | 150,000 options with an exercise price of $0.89 were granted by NXT to a new V-P in January 2012. |
· | In July 2012, a total of 410,000 options were granted to five of the directors of the company, and a total of 420,000 options were granted to five officers of the company, all with an exercise price of $0.86 per share. |
· | a total of 90,000 options were granted to five directors of the company in December 2012, all with an exercise price of $0.76 per share. |
Name and Position | Exercise Price | Option Grant Date | Option Expiry Date | # of options held | % of total outstanding options | |||||||||
George Liszicasz | $ | 0.86 | 23-Jul-2012 | 23-Jul-2017 | 100,000 | |||||||||
CEO & Director | $ | 0.76 | 24-Dec-2012 | 24-Dec-2017 | 15,000 | |||||||||
$ | 0.86 | 5-Jul-2013 | 5-Jul-2018 | 7,500 | ||||||||||
$ | 1.83 | 18-Dec-2013 | 18-Dec-1018 | 7,500 | ||||||||||
$ | 1.39 | 9-Jul-2014 | 9-Jul-2019 | 7,500 | ||||||||||
$ | 1.35 | 9-Jan-2015 | 9-Jan-2020 | 7,500 | ||||||||||
145,000 | 4.5% | |||||||||||||
Andrew Steedman | $ | 1.16 | 22-Jul-2011 | 22-Jul-2016 | 80,000 | |||||||||
V-P Operations | $ | 0.86 | 23-Jul-2012 | 23-Jul-2017 | 100,000 | |||||||||
$ | 1.35 | 9-Jan-2015 | 9-Jan-2020 | 260,000 | ||||||||||
440,000 | 13.8% | |||||||||||||
Greg Leavens | $ | 1.16 | 22-Jul-2011 | 22-Jul-2016 | 150,000 | |||||||||
V-P Finance & CFO | $ | 0.86 | 23-Jul-2012 | 23-Jul-2017 | 100,000 | |||||||||
250,000 | 7.8% | |||||||||||||
Mickey Abougoush | $ | 0.86 | 23-Jul-2012 | 23-Jul-2017 | 70,000 | |||||||||
Director | $ | 0.76 | 24-Dec-2012 | 24-Dec-2017 | 15,000 | |||||||||
$ | 0.86 | 5-Jul-2013 | 5-Jul-2018 | 7,500 | ||||||||||
$ | 1.83 | 18-Dec-2013 | 18-Dec-2018 | 7,500 | ||||||||||
$ | 1.39 | 9-Jul-2014 | 9-Jul-2019 | 7,500 | ||||||||||
$ | 1.35 | 9-Jan-2015 | 9-Jan-2020 | 7,500 | ||||||||||
115,000 | 3.6% | |||||||||||||
John Agee | $ | 1.16 | 22-Jul-2011 | 22-Jul-2016 | 120,000 | |||||||||
Director | $ | 0.86 | 23-Jul-2012 | 23-Jul-2017 | 30,000 | |||||||||
$ | 0.76 | 24-Dec-2012 | 24-Dec-2017 | 30,000 | ||||||||||
$ | 0.86 | 5-Jul-2013 | 5-Jul-2018 | 15,000 | ||||||||||
$ | 1.83 | 18-Dec-2013 | 18-Dec-2018 | 20,000 | ||||||||||
$ | 1.39 | 9-Jul-2014 | 9-Jul-2019 | 17,500 | ||||||||||
$ | 1.35 | 9-Jan-2015 | 9-Jan-2020 | 17,500 | ||||||||||
250,000 | 7.8% | |||||||||||||
Charles Selby | $ | 0.86 | 23-Jul-2012 | 23-Jul-2017 | 120,000 | |||||||||
Director | $ | 0.76 | 24-Dec-2012 | 24-Dec-2017 | 15,000 | |||||||||
$ | 0.86 | 5-Jul-2013 | 5-Jul-2018 | 7,500 | ||||||||||
$ | 1.83 | 18-Dec-2013 | 18-Dec-2018 | 7,500 | ||||||||||
$ | 1.39 | 9-Jul-2014 | 9-Jul-2019 | 7,500 | ||||||||||
$ | 1.35 | 9-Jan-2015 | 9-Jan-2020 | 7,500 | ||||||||||
165,000 | 5.2% | |||||||||||||
John Tilson | ||||||||||||||
Director | - | 0.0% | ||||||||||||
Thomas Valentine | $ | 0.86 | 23-Jul-2012 | 23-Jul-2017 | 70,000 | |||||||||
Director | $ | 0.76 | 24-Dec-2012 | 24-Dec-2017 | 15,000 | |||||||||
$ | 0.86 | 5-Jul-2013 | 5-Jul-2018 | 7,500 | ||||||||||
$ | 1.83 | 18-Dec-2013 | 18-Dec-2018 | 7,500 | ||||||||||
$ | 1.39 | 9-Jul-2014 | 9-Jul-2019 | 7,500 | ||||||||||
$ | 1.35 | 9-Jan-2015 | 9-Jan-2020 | 7,500 | ||||||||||
115,000 | 3.6% |
Krishna Vathyam | $ | 0.76 | 25-Jan-2013 | 25-Jan-2018 | 150,000 | |||||||||
Director | $ | 0.86 | 5-Jul-2013 | 5-Jul-2018 | 7,500 | |||||||||
$ | 1.83 | 18-Dec-2013 | 18-Dec-2018 | 15,000 | ||||||||||
$ | 1.39 | 9-Jul-2014 | 9-Jul-2019 | 7,500 | ||||||||||
$ | 1.35 | 9-Jan-2015 | 9-Jan-2020 | 7,500 | ||||||||||
187,500 | 5.9% | |||||||||||||
Total number of stock options held by officers and directors | 1,667,500 | 52.3% |
ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
A. | Major shareholders |
Beneficial Ownership of Directors and Officers (“D&O”) | Beneficially Owned as at April 27, 2015 5 | Percent of Common Shares 5 | ||
Directors and Officers: | ||||
George Liszicasz 1 & 2 | 7,304,156 | 15.9 % | ||
Mickey S. Abougoush 1 | 161,666 | * 3 | ||
John Agee 1 | 423,000 | * 3 | ||
Charles Selby 1 | 523,161 | 1.1 % | ||
John Tilson | 2,711,748 | 5.9 % | ||
Thomas E. Valentine 1 | 81,666 | * 3 | ||
Krishna Vathyam 1 | 132,500 | * 3 | ||
Greg Leavens 2 | 274,834 | * 3 | ||
Andrew Steedman 2 | 741,200 | 1.6 % | ||
Total D & O Common Shares | 12,353,931 | 26.9 % | ||
Major Shareholders (> 5%): | ||||
Mork Capital Management, MCAPM, L.P., and Michael Mork 4 | 3,540,394 | 7.9 % |
1 | Director of NXT |
2 | Officer of NXT |
3 | Beneficially owns less than one percent of the total outstanding common shares |
4 | based on information provided to the company as at April 10, 2015 by Mork Capital Management, MCAPM, L.P. and its principal, Mr. Michael Mork |
5 | For each beneficial owner’s percent of common shares calculation, any stock options that they hold which are or become exercisable within 60 days of April 27, 2015 have been included in both the numerator and denominator for purposes of their individual calculation as follows: |
common | vested & | |||||||||||
shares | exerciseable | |||||||||||
held | options | total | ||||||||||
Liszicasz | 7,202,490 | 101,666 | 7,304,156 | |||||||||
Abougoush | 80,000 | 81,666 | 161,666 | |||||||||
Agee | 203,000 | 220,000 | 423,000 | |||||||||
Selby | 408,161 | 115,000 | 523,161 | |||||||||
Tilson | 2,711,748 | - | 2,711,748 | |||||||||
Valentine | - | 81,666 | 81,666 | |||||||||
Vathyam | - | 117,500 | 117,500 | |||||||||
Leavens | 58,168 | 216,666 | 274,834 | |||||||||
Steedman | 594,534 | 146,666 | 741,200 | |||||||||
11,258,101 | 1,080,830 | 12,338,931 |
● | in May 2013, George Liszicasz acquired 2,000,000 common shares upon conversion of an initial total of 2,000,000 of the 10,000,000 preferred shares which he held. |
● | In 2012, John Tilson participated in NXT’s private placement financing, and acquired 200,000 “Units” (which consisted of one common share and one warrant to acquire a common share at a price of US $1.20) at a price of US $0.75 per Unit. |
● | Subsequently in 2014, John Tilson exercised the 200,000 warrants and acquired 200,000 NXT common shares at an exercise price of US $1.20 per common share. |
B. | Related party transactions |
· | Details of stock options which have been granted to related parties during the above noted period are included with Item 6.E above. Details of stock options which have been exercised by related parties are noted below. |
· | NXT retains as legal counsel a law firm of which one of its directors is a partner. In 2014, we incurred legal expenses of $18,549 with this firm, for which a total of $124 is included in accounts payable as at December 31, 2014. |
· | Accounts payable and accrued liabilities at December 31, 2014 includes a total of $23,673 related to re-imbursement of expenses owing to persons who are directors and officers of the company. |
· | In March 2014, an officer of the company exercised a total of 13,334 common share purchase warrants (exercisable at US $1.20 per share) which had been received pursuant to participation in the 2012 private placement financing of units, and acquired 13,334 common shares of NXT. |
· | Directors and officers of NXT exercised stock options to acquire common shares of the company as follows: |
# options | exercise price | proceeds | |||||||||||
month exercised | exercised | per share | to NXT | ||||||||||
Director | December 2014 | 30,000 | $ | 0.63 | $ | 18,900 | |||||||
Director | December 2014 | 30,000 | 0.63 | 18,900 | |||||||||
Officer | December 2014 | 60,000 | 0.63 | 37,800 | |||||||||
Director | March 2014 | 50,000 | 0.63 | 31,500 | |||||||||
Officer | February 2014 | 150,000 | 0.53 | 79,500 | |||||||||
320,000 | 186,600 |
C. | Interests of experts and counsel |
ITEM 8. | FINANCIAL INFORMATION |
ITEM 9. | THE OFFER AND LISTING |
A. | Offer and listing details |
OTC QB | TSX-V | |||||||||||||||||
Period | High | Low | High | Low | ||||||||||||||
(in US$) | (in US$) | (in Cdn$) | (in Cdn$) | |||||||||||||||
5 Prior fiscal years | ||||||||||||||||||
Year ended | December 31, 2014 | $ | 1.80 | $ | 0.84 | $ | 1.93 | $ | 0.90 | |||||||||
Year ended | December 31, 2013 | $ | 1.99 | $ | 0.56 | $ | 2.04 | $ | 0.56 | |||||||||
Year ended | December 31, 2012 | $ | 1.16 | $ | 1.60 | $ | 1.13 | $ | 0.59 | |||||||||
Year ended | December 31, 2011 | $ | 1.29 | $ | 0.40 | $ | 1.20 | $ | 0.32 | |||||||||
Year ended | December 31, 2010 | $ | 1.30 | $ | 0.23 | $ | 1.35 | $ | 0.31 | |||||||||
Prior Quarters | ||||||||||||||||||
Quarter ended | Q1 - March 31, 2015 | $ | 1.48 | $ | 1.01 | $ | 1.83 | $ | 1.23 | |||||||||
Quarter ended | Q4 - December 31, 2014 | $ | 1.50 | $ | 0.94 | $ | 1.73 | $ | 1.08 | |||||||||
Quarter ended | Q3 - September 30, 2014 | $ | 1.53 | $ | 1.10 | $ | 1.65 | $ | 1.15 | |||||||||
Quarter ended | Q2 - June 30, 2014 | $ | 1.34 | $ | 0.84 | $ | 1.45 | $ | 0.90 | |||||||||
Quarter ended | Q1 - March 31, 2014 | $ | 1.80 | $ | 1.27 | $ | 1.93 | $ | 1.44 | |||||||||
Quarter ended | Q4 - December 31, 2013 | $ | 1.99 | $ | 1.37 | $ | 2.04 | $ | 1.40 | |||||||||
Quarter ended | Q3 - September 30, 2013 | $ | 1.61 | $ | 0.78 | $ | 1.65 | $ | 0.86 | |||||||||
Quarter ended | Q2 - June 30, 2013 | $ | 0.85 | $ | 0.56 | $ | 0.86 | $ | 0.56 | |||||||||
Quarter ended | Q1 - March 31, 2013 | $ | 0.87 | $ | 0.64 | $ | 0.86 | $ | 0.63 | |||||||||
Last 6 months | ||||||||||||||||||
Month ended | March 31, 2015 | $ | 1.48 | $ | 1.32 | $ | 1.83 | $ | 1.65 | |||||||||
Month ended | February 28, 2015 | $ | 1.45 | $ | 1.18 | $ | 1.80 | $ | 1.48 | |||||||||
Month ended | January 31, 2015 | $ | 1.22 | $ | 1.01 | $ | 1.60 | $ | 1.23 | |||||||||
Month ended | December 31, 2014 | $ | 1.25 | $ | 0.94 | $ | 1.43 | $ | 1.08 | |||||||||
Month ended | November 30, 2014 | $ | 1.49 | $ | 1.27 | $ | 1.73 | $ | 1.41 | |||||||||
Month ended | October 31, 2014 | $ | 1.50 | $ | 1.32 | $ | 1.70 | $ | 1.41 |
ITEM 10. | ADDITIONAL INFORMATION |
(a) | borrow money on the credit of NXT; |
(b) | issue, reissue, sell or pledge debt obligations of NXT; |
(c) | subject to restrictions respecting financial assistance prescribed in the ABCA, guarantee, on behalf of NXT, the performance of an obligation of any person; and |
(d) | mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of NXT, owned or subsequently acquired, to secure any obligation of NXT. |
(a) | as to 20% of the total issued Series 1 Shares on December 31, 2006 (this conversion to common shares formally occurred in May, 2013); |
(b) | as to an additional 20% of the total issued Series 1 Shares on the date that gross cumulative aggregate revenues of NXT reach US $50 million; |
(c) | as to an additional 20% of the total issued Series 1 Shares on the date that gross cumulative aggregate revenues of NXT reach US $100 million; |
(d) | as to an additional 20% of the total issued Series 1 Shares on the date that gross cumulative aggregate revenues of NXT reach US $250 million; and |
(e) | as to an additional 20% of the total issued Series 1 Shares on the date that gross cumulative aggregate revenues of NXT reach US $500 million. |
(a) | as to all of the total issued Series 1 Shares if the sale price per common share paid by an acquirer on transaction constituting a change of control of NXT or the per share amount received by the holders of common shares on a liquidation of the assets of NXT or the winding-up or re-arrangement of NXT's business is equal to or exceeds $10; |
(b) | as to 60% of the total issued Series 1 Shares if the sale price per common share paid by an acquirer on a transaction constituting a change of control of NXT or the per share amount received by the holders of common shares on a liquidation of the assets of NXT or the winding-up or re-arrangement of NXT's business is equal to or exceeds $5; and |
(c) | as to 20% of the total issued Series 1 Shares regardless of the sale price per common share paid by an acquirer on transaction constituting a change of control of NXT or the per share amount received by the holders of common shares on a liquidation of the assets of NXT or the winding-up or re-arrangement of NXT's business. |
(a) | written notice, signed by the holder, specifying the number of Series 1 Shares to be converted; and |
(b) | the certificate or certificates representing the Series 1 Shares to be converted. |
(a) | if a record date is fixed, the person transfers ownership of any of the person’s shares after the record date; or |
(b) | if no record date is fixed, the person transfers ownership of any of the person’s shares after the date on which the list of shareholders is prepared; and |
(c) | the transferee of those shares; |
● | produces properly endorsed share certificates; or |
● | otherwise establishes ownership of the shares; and |
● | demands, not later than ten (10) days before the meeting, that the transferee’s name be included in the list before the meeting; |
(a) | the shareholders entitled to vote at the meeting; |
(b) | the board of directors of NXT; |
(c) | the external auditor of NXT; and |
(d) | any others who, although not entitled or required under the provisions of the ABCA, any unanimous shareholder agreement, or the Articles or the By-Laws, are allowed to be present at the meeting. |
1. | An investment to establish a new Canadian business; and |
2. | An investment to acquire control of a Canadian business that is not reviewable pursuant to the Act. |
1. | An investment is reviewable if there is an acquisition of a Canadian business and the asset value of the Canadian business being acquired equals or exceeds the following thresholds: |
(a) | For non-World Trade Organization (“WTO”) investors, the threshold is $5 million for a direct acquisition and $50 million for an indirect acquisition; the $5 million threshold will apply however for an indirect acquisition if the asset value of the Canadian business being acquired exceeds 50% of the asset value of the global transaction; |
(b) | Except as specified in paragraph (c) below, a threshold is calculated annually for reviewable direct acquisitions by or from WTO investors. The threshold for 2012 was $330 million. Pursuant to Canada’s international commitments, indirect acquisitions by or from WTO investors are not reviewable; |
(c) | The limits set out in paragraph (a) apply to all investors for acquisitions of a Canadian business that: |
(i) | engages in the production of uranium and owns an interest in a producing uranium property in Canada; |
(ii) | provides any financial service; |
(iii) | provides any transportation services; or |
(iv) | is a cultural business. |
· | an individual who is a citizen or resident of the U.S.; |
· | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the U.S., any state thereof or the District of Columbia; |
· | an estate whose income is subject to U.S. federal income taxation regardless of its source; or |
ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. | CONTROLS AND PROCEDURES |
· | Due to NXT’s limited number of staff, it is currently not feasible to achieve adequate segregation of incompatible duties. We mitigate this deficiency by adding management and Audit Committee review procedures over the areas where inadequate segregation of duties are of the greatest concern; and |
· | NXT does not have a sufficient level of staff with specialized expertise to adequately conduct separate preparation and a subsequent independent review of certain complex or highly judgmental accounting issues. These complex areas include accounting for income taxes, stock based compensation expense, valuation of US$ Warrants. NXT mitigates this deficiency by preparing financial statements with their best judgments and estimates of the complex accounting matters and relies on reviews by management, external consultants and the Audit Committee for quality assurance. |
ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. | CODE OF ETHICS |
NXT has in place a Code of Conduct & Business Ethics (the “Code of Conduct”) that applies to all of our directors, officers, employees, and consultants. This Code of Conduct is an integral part of our employee contracts and our Employee Handbook, and contains company policies on Business Ethics, Employee Practices and Conflicts of Interest.
During 2014 the company did not significantly amend its Code of Conduct or grant any waiver, including any implicit waiver, from any provision of the Code of Conduct to any of its directors, officers or employees. Copies of NXT’s Code of Conduct are available without charge to any person upon request from NXT’s Chief Financial Officer at nxt_info@nxtenergy.com or at NXT’s headquarters at Suite 1400, 505 – 3rd Street SW, Calgary Alberta, Canada, T2P 3E6, and on the company website.
ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
2014 | 2013 | |||||||
Audit fees | $ | 126,000 | $ | 136,000 | ||||
Audit related fees – Colombia branch | 10,500 | 15,434 | ||||||
136,500 | 151,434 | |||||||
Tax fees | 29,077 | 25,983 | ||||||
All other fees | - | - | ||||||
Total fees | 165,577 | 177,417 |
ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
ITEM 16F. | CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
ITEM 16G. | CORPORATE GOVERNANCE |
ITEM 16H. | MINE SAFETY DISCLOSURE |
ITEM 17. | FINANCIAL STATEMENTS |
ITEM 18. | FINANCIAL STATEMENTS |
ITEM 19. | EXHIBITS |
Exhibit No. | Description | |
1.1 | Articles of Incorporation of Auric Mining Corporation as filed with the Nevada Secretary of State on September 27, 1994 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 filed on June 29, 1998) | |
1.2 | Amendment to Articles of Incorporation of Auric Mining Corporation as filed with the Nevada Secretary of State on February 23, 1996 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 filed on June 29, 1998) | |
1.3 | Certificate of Amendment to Articles of Incorporation of Pinnacle Oil International, Inc. as filed with the Nevada Secretary of State on April 1, 1998 (incorporated by reference to Exhibit 3.3 to the Registration Statement on Form 10 filed on June 29, 1998) | |
1.4 | Certificate of Amendment to Articles of Incorporation of Pinnacle Oil International, Inc. as filed with the Nevada Secretary of State on June 13, 2000 (incorporated by reference to Exhibit 3.4 to our Amendment No. 1 to the Annual Report on Form 10-K for the year ended December 31, 1999 as filed on July 28, 2000) | |
1.5 | Articles of Amendment of Energy Exploration Technologies Inc. as filed with the province of Alberta, Canada on September 22, 2008 (incorporated by reference to Exhibit 1.8 to our Annual Report on Form 20-F for the year ended December 31, 2008 as filed on June 29, 2009) | |
1.6 | Amendment to the Articles of NXT Energy Solutions Inc. (incorporated by reference to Item V of Exhibit 99.1 to Form 6-K as filed on September 20, 2013) | |
1.7 | NXT Energy Solutions Inc. By-Law No. 1 (incorporated by reference to Schedule “D” to Exhibit 99.2 to Form 6-K as filed on September 20, 2013) | |
2.1 | Schedule of Series Provisions, Preferred Shares, Series I (incorporated by reference to Exhibit 99.5 to Form 6-K as filed on January 12, 2007) | |
2.2 | Amended and Restated Stock Option Plan, dated October 26, 2012 (incorporated by reference to Schedule “A” to Exhibit 99.1 to Form 6-K as filed on November 2, 2012) | |
4.1 | Form of Indemnification Agreement between NXT Energy Solutions Inc. and each of its Directors and Executive Officers (incorporated by reference to Exhibit 4.6 to our Annual Report on Form 20-F for the year ended December 31, 2013 as filed on April 30, 2014) |
Code of Conduct and Business Ethics (incorporated by reference to Exhibit 11.1 to our Annual Report on Form 20-F for the year ended December 31, 2013 as filed on April 30, 2014)
NXT Energy Solutions Inc. | |||
By: | /s/ George Liszicasz | ||
George Liszicasz | |||
Director, Chairman, Chief Executive Officer and President | |||
/s/ George Liszicasz | |||
George Liszicasz, | |||
Chief Executive Officer and President |
/s/ Greg Leavens | |||
Greg Leavens, | |||
V-P Finance and Chief Financial Officer |
/s/ George Liszicasz | |||
George Liszicasz, | |||
Chief Executive Officer and President |
/s/ Greg Leavens | |||
Greg Leavens, | |||
V-P Finance and Chief Financial Officer |