20-F/A: NXT Energy Solutions Files Amended 20-F Report Including KPMG Audit and Consent

NXT Energy Solutions Inc. files an amendment to its 20-F report to include the audit report from KPMG LLP for fiscal years 2021 and 2022, along with KPMG's consent.

Summary

• NXT Energy Solutions Inc. has filed an amendment to its Annual Report on Form 20-F for the fiscal year ended December 31, 2023.
• The amendment includes the audit report from KPMG LLP for the financial statements for the fiscal years ended December 31, 2022, and 2021.
• The filing also includes a consent from KPMG LLP.
• The original filing was made on April 26, 2024.
• No other changes have been made to the original filing, and the amendment speaks as of the date of the original filing.
• Revised certifications from the Chief Executive Officer and Chief Financial Officer are included in the amendment.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there are positive developments like the Turkish SFD survey and strategic alliances, the company faces significant financial challenges, including a net loss, going concern uncertainties, and reliance on future financing. The sentiment is therefore cautiously negative.

Positives

• The company completed a SFD survey in Trkiye, generating operating funds.
• The company completed private placements which resulted in raising an additional net proceeds of $5,079,612.

Negatives

• 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 the consolidated financial statements have been issued.
• The company has deferred payment of certain operating costs, including payroll and other general and administrative costs, since 2022.
• The company recorded a net loss of approximately $5.45 million for YE-23.

Risks

• The company's ability to continue operating depends on securing new revenue contracts and obtaining financing on acceptable terms.
• The company relies on a limited number of key personnel and a single aircraft.
• The company's financial position is affected by foreign currency fluctuations.
• Volatility in oil and natural gas commodity prices may affect demand for the company's services.
• The company's rights to SFD technology may be challenged.
• The company may be unable to protect its trade secrets and IP from competitors.
• The company conducts operations in foreign countries, which exposes it to several risks.
• The company is a small business with limited personnel, leading to internal control weaknesses.

Future Outlook

The company's future success depends on securing new revenue contracts, obtaining financing on acceptable terms, and converting opportunities into successful contracts.

Industry Context

The SFD survey system is positioned as a complementary technology to seismic analysis in the oil and gas exploration industry, offering a cost-effective and environmentally friendly method for evaluating large land areas.

Comparison to Industry Standards

• The document does not provide a direct comparison to industry standards.
• However, it positions SFD as a complementary technology to seismic surveys, which are a standard in the oil and gas industry.
• The document mentions aeromagnetic and gravity surveys as other technologies used for wide area oil and natural gas reconnaissance exploration, but states that SFD is more suitable for identifying areas with reservoir potential.

Management Changes

Related Party Transactions

• One of the members of NXTs Board, Mr. Thomas Valentine is a partner in the law firm Norton Rose Fulbright, which provides legal advice to NXT.
• Another member of NXTs Board of Directors is a board member of Pana Holdings Mauritius, the parent company of Ataraxia Capital, which holds the Ataraxia Debentures.

Stakeholder Impact

• Shareholders are subject to the risks associated with investing in a company with going concern uncertainties.
• Employees may be affected by the company's ability to pay deferred operating costs such as payroll.
• Customers may be affected by the company's ability to continue operations and provide services.

Next Steps

• The company will continue to develop its pipeline of opportunities to secure new revenue contracts.
• The company will work with Synergy and Ataraxia to develop future business in the African continent.
• The company will pursue funding under the NRC IRAP for geothermal applications.

Key Dates