NXT Energy Solutions Inc.

Good day, ladies and gentlemen. My name is Michael, and I will be your conference operator today. At this time, I would like to welcome everyone to the NXT Energy Solutions Incorporated investor update conference call. All participants will be in listen-only mode for the first part of the conference call, with the ability to ask questions after the presentation by the company. I would now like to turn the meeting over to Mr. Eugene Wojcicin. Vice President of Finance and Chief Financial Officer of NXT Energy Solutions. Please go ahead, Mr. Wojcicin.

Thank you, Michael. Welcome, and thank you, everyone, for joining us today for the NXT Energy Solutions Investor Conference Call. My name is Eugene Wojcicin, NXT's Vice President of Finance and Chief Financial Officer. Joining me on today's conference call from our management team are Dr. Xiang Gui, Director of R&D, Enrique Hum, Director of Geosciences for the Americas, Rashid Tipu, Director of Geosciences for Africa, Asia, and the Middle East, and Mohamed Saqib, Head of Interpretation and Project Engineer. In addition, with us we have Charles Selby, Bruce Wilcox, and Jerry Sheehan, who are members of the Management Subcommittee of the Board of Directors. During today's call, we'll provide a 10-minute update on management changes business development, and technology status. We'll then open up the line for questions. Please note all statements made by the company and management during this call are subject to reader's advisory regarding forward-looking information for non-GAAP measures set forth in our Q3 2022 MD&A issued on November 9th, 2022. All dollar amounts discussed in today's conference call are in Canadian dollars unless otherwise stated. It was with great sadness that we announced that our Chief Executive Officer, George Lasichakatz, passed away last week. In 1986, George established an R&D company where his research in the field of physics and electronics led to an airborne gravity-based transducer named SFD, which is capable of detecting small-scale gravity anomalies applicable to hydrocarbon exploration by delineating boundaries, trap and seal of fluid-bearing formations. The technology was extensively developed, tested and improved in the Western Canadian sedimentary basins before commercialization. In 1996, George founded NXT Energy Solutions, which he led until his passing. George was charismatic, passionate and committed to the commercial application of SFD the technology to increase the effectiveness of oil, gas, and geothermal exploration worldwide. The NXT family is profoundly saddened by George's passing and extends its heartfelt condolences to George's loved ones. As previously announced, the board of directors has formally empowered the management subcommittee of the board to assume the CEO's duties until further notice. The committee, which meets three times weekly with NXT management, consists of lead director Charles Selby and directors Jerry Sheehan and Bruce G. Wilcox, who collectively possess senior operating and management experience in the energy and capital market industries. All committee members are present on today's call and are able to answer any questions you have for them. Priority of the committee is to formalize new contracts, including repeat business for NXT's proven SFD technology. The committee will undertake its executive role until further notice in close cooperation with NXT's qualified management team that will continue to manufacture SFD systems, perform SFD surveys, and provide vital interpretation work once SFD surveys are conducted. Management members included in this seamless process are on this call today also. On December 2nd, 2022, we reported the closing of the rights offering announced on October 31st. The company issued 2.15 million common shares at a price of 18 cents per common share for proceeds of approximately $387,000. Last week, on January 25th, we closed the private placement that was announced on December 22nd, 2022 for total proceeds of approximately $1.882 million. in connection with the issuance of 9.658 million common shares for 19.5 cents per common share. Insiders contributed a total of $1.7 million, or 95% of the private placement. Altogether, a total of $2.269 million was raised through the offerings, and all five directors and the chief financial officer participated in either the private placement, the rights offering, or have elected to take a portion of all their recent direct your fees in the form of options. Proceeds and rights offering and private placement are being used to support general administrative costs which include business development and marketing activities to transform the existing pipeline of opportunities into firm contracts which we will explain in more detail. We currently have a very robust project pipeline and are experiencing an increased level of business development engagement with our customers. This is attributable to a number of factors such as strong commodity prices, increased exploration activity around the world, and heightened empowerment of our senior operating staff. We have increased our focus on technical and commercial meetings that target markets directly and through qualified and informed agents to secure new SFD surveys. Since the passing of George, we have had several meetings with our sales agents around the world. While universally saddened and shocked by his passing, They remain very committed to securing future SFD surveys. Operationally, the aircraft stands ready, having completed all of its scheduled maintenance requirements, and is fully prepared for up to 300 flight hours. Additional logistics planning continues, and we are in active discussions to arrange ground operations in the targeted survey locations. Recently completed rights offering and private placement give the company sufficient working capital to execute on near-term business opportunities. The opportunities, our engaged network, and our committed team give us confidence that we can achieve near-term success. In the hydrocarbon segment, there are multiple opportunities that have our attention at various levels of probabilities. We'd like to highlight three SFD survey opportunities that we are currently focused on through daily communications. This level of focus is necessary when dealing with levels of bureaucracy in government-controlled companies. Progress continues to be made with our African SFD opportunity. This customer is very familiar with NXT and appreciates the value that our previous surveys have brought them. We believe that we are in the final stages before contract execution. Secondly, as mentioned last quarter, NXT carried out two consecutive business trips to the Middle East. After several technical meetings through the fall of 2022, the discussions have advanced the commercial stage with meetings during December 2022 and continuing through January, which are moving us closer to an SFD survey in the Middle East. Our clients, alongside their technical and financial partners in the UK and Canada. We are undertaking operational and readiness activities for one of these potential customers, including the approval of SFD process. prospecting technology as a work commitment for licensed blocks to conduct geophysical activities for oil and gas exploration. Thirdly, in Asia, we have navigated several necessary government approvals for our technology to be adopted for both hydrocarbon and geothermal applications. As of today, we have conducted the necessary technical meetings and submitted relevant documents to have SFD included at the strategy level of the national hydrocarbon and geothermal companies. We are in the final steps to secure phase two of the IWRAP funding to move NXT to the next stage of the SFD geothermal sensor development. We continue to improve the SFD hydrocarbon sensors and to constantly review our procedures to ensure the processes are properly and securely documented. highly trained and experienced SFD interpretation team will continue to improve or continue to provide quality lead recommendations for areas of exploration interest to our repeat and new customers. In summary, NXT has a strong team that is continuing to move the business forward and highly incented agents. Our SFD opportunity pipeline is strong with two plus SFD business opportunities, and commercial discussions. We remain confident in our ability to execute on our SFD survey opportunities. On behalf of our board of directors and the entire team at NXT, I want to thank all of our shareholders for their continued support. I'll now ask our operator, Michael, to open up the line for us to take a few of your questions. Thank you.

Certainly, sir. Ladies and gentlemen, we will now take questions from the telephone lines. If you have a question and you are using a speakerphone, please lift your handset before dialing your selection. If you have a question, you can register by dialing star 1 on your device keypad, and you can cancel the question if you wish by dialing star 2. Please dial star 1 at this time if you have a question, and there will be a brief delay while participants register. Once again, please press star 1 if you have a question at this time. And the first question is from Michael Mork of Mork Capital Management. Please go ahead. Your line is now open.