Form 20-F NXT Energy Solutions For: Dec 31
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
Registration Statement Pursuant To Section 12(b) or (g) of the Securities Exchange Act of 1934 | |
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Annual Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended | |
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the transition period from __ to __ | |
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OR | |
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Shell Company Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
Date of event requiring this shell company report: | |
Commission file number
(Exact Name of Registrant as Specified in its Charter) |
Alberta,
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Phone:
Facsimile:
(Name, Telephone, E-mail and/or Facsimile number and address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act: None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
118,596,228 common shares outstanding as of December 31, 2025 (
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Yes ☐
Note-Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “accelerated filer”, “large accelerated filer”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ☐ | Accelerated filer | ☐ |
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☒ | Emerging growth Company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.
☒ | International Financial Reporting Standards as issued by the International Accounting Standards Board | ☐ | Other | ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes
Auditor Name: | Firm ID# | Auditor Location: |
TABLE OF CONTENTS
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MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
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PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
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DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
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20-F for the year ended December 31, 2025
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FORWARD-LOOKING STATEMENTS
NXT Energy Solutions Inc. is a Calgary-based technology company whose proprietary airborne SFD® survey system, applied in numerous basins around the world, uses the principles of quantum mechanics to infer stress anomalies of exploration interest. The method can be used both onshore and offshore to remotely identify areas conducive to fluid entrapment in order to recommend areas with commercial hydrocarbon and/or geothermal potential. The SFD® survey system enables our clients to focus their exploration decisions concerning land commitments, data acquisition expenditures and prospect prioritization on areas with the greatest potential. SFD® is environmentally friendly and unaffected by ground security issues or difficult terrain and is the registered trademark of NXT Energy Solutions Inc. NXT Energy Solutions Inc. provides its clients with an effective and reliable method to reduce time, costs, and risks related to exploration.
Except for any historical information contained herein, the matters discussed in this Annual Report on Form 20-F contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business. These statements relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. This information also relates to our future prospects, developments and business strategies. These forward-looking statements are identified by their use of terms and phrases such as “anticipate”, “believe”, “can”, “continue”, “could”, “would”, “should”, “estimate”, “expect”, “intend”, “seek”, “may”, “plan”, “remain”, “shall”, “will”, “target”, “foresee” and similar terms and phrases, including references to assumptions. These forward-looking statements involve risks and uncertainties, including current trend information, projections for deliveries and other trend projections, that may cause our actual future activities and results of operations to be materially different from those suggested or described in this Annual Report on Form 20-F.
| · | Execution of the African SFD® Survey (as defined herein); |
| · | execution of the South Asia SFD® Survey (as defined herein); |
| · | execution of the AL-Haj Enterprises Private Limited SFD® Survey (as defined herein); |
| · | the Company’s ability to successfully work with Synergy and Ataraxia (each as defined herein) to develop future business in the African continent; |
| · | expectations regarding the amortization of the Company’s intellectual property (“IP”) assets; |
| · | that the SFD® technology may reduce the need for seismic in wide-area reconnaissance; |
| · | expectations regarding maintenance performed on the Company’s leased aircraft; |
| · | expectations regarding the future vesting, settlement and expiry of securities issued in connection with the Company’s share-based compensation plans; |
| · | the Company’s ability to use alternative strategies to reduce the volatility of US dollar liabilities; |
| · | expectations regarding the future vesting, settlement and expiry of securities issued in connection with the Company’s share-based compensation plans; |
| · | the development, commercialization, and protection of the SFD® technology for geothermal resource exploration; |
| · | the extent to which expanding the Company’s scope of business to include exploring for both hydrocarbon and geothermal resources is anticipated to result in an expansion of its scope of revenue sources; |
| · | the Company’s pursuit of opportunities to secure new revenue contracts; |
| · | expectations regarding competition within the industries in which the Company operates; |
| · | the Company’s ability to continue operating as a going concern; |
| · | the Company’s ability to continue making payments on its office lease, its aircraft lease and the effects of any default under either such lease; |
| · | the Company’s ability to repay the amounts owing under the HASCAP Loan (as defined herein) over it remaining term; |
| · | the timing and value of payments owing under the Company’s office lease; |
| · | the Company’s belief that its current cash position is not expected to be sufficient to meet obligations and planned operations for the year beyond the date that the audited consolidated financial statements have been issued; |
| · | expectations regarding the Company’s DCPs and ICFR (each as defined herein), including the Company’s ability to further adjust such DCPs and ICFR to mitigate material weaknesses going forward; |
| · | estimates related to the Company’s future financial position and liquidity, including certain contractual obligations; and |
| · | the Company’s general business strategies and objectives. |
20-F for the year ended December 31, 2025
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Such forward-looking information is based on several assumptions which may prove to be incorrect. Assumptions have been made with respect to the following matters, in addition to any other assumptions identified in this document:
| · | our ability to develop and market our SFD® technology and services to current and new customers; |
| · | our belief that our SFD® technology is technically superior to other airborne survey systems; |
| · | our ability to source personnel and equipment in a timely manner and at an acceptable cost; |
| · | our ability to obtain all permits and approvals required; |
| · | our ability to obtain financing on acceptable terms; |
| · | our ability to obtain insurance to mitigate the risk of default on client billings; |
| · | our assessment of the office lease being reasonable; |
| · | our assessment of potential indicators of impairment and recognition of SFD® related revenue; |
| · | the estimated minimum annual commitments for the Company’s lease components; |
| · | foreign currency exchange and interest rates; and |
| · | general business, economic, and market conditions (including global commodity prices and inflation. |
Although NXT believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on them as NXT can give no assurance that such expectations will prove to be correct. Forward-looking information is based on expectations, estimates, and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated by NXT and are described in the forward-looking information. Material risks and uncertainties include, but are not limited to:
| · | the ability of management to execute its business plan, including their ability to secure additional new revenue contracts; |
| · | our ability to successfully advance the application of the Company’s proprietary SFD® technology within select areas of Western Canada; |
| · | health, safety, and the environmental factors; |
| · | our ability to develop and commercialize the geothermal technology; |
| · | our ability to service existing debt; |
| · | our ability to protect and maintain our IP and rights to our SFD® technology; |
| · | our reliance on a limited number of key personnel; |
| · | our reliance on a single aircraft; |
| · | our reliance on a limited number of clients; |
| · | counterparty credit risk; |
| · | foreign currency and interest rate fluctuations; |
| · | trade and tariffs risks, especially on oil and gas imports and aircraft operating supplies; |
| · | the likelihood that the Company’s DCPs and ICFR (each as defined herein) will prevent or detect material misstatements in our audited consolidated financial statements; |
| · | changes in, or in the interpretation of, laws, regulations, or policies; and |
| · | general business, economic, and market conditions (including global commodity prices). |
If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or projected. Given these uncertainties, users of the information included in this Annual Report on Form 20-F, including investors and prospective investors, are cautioned not to place undue reliance on such forward-looking statements. We do not intend to update the forward-looking statements included in this Annual Report on Form 20-F.
In this Annual Report on Form 20-F, except as specified otherwise or unless the context requires otherwise, “we”, “our”, “us”, the “Company”, and “NXT” refer to NXT Energy Solutions Inc. and its subsidiaries. All references to “fiscal” in connection with a year shall mean the year ended December 31.
All financial information contained herein is expressed in Canadian dollars (“CDN$”) unless otherwise stated.
20-F for the year ended December 31, 2025
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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
This Form 20-F is being filed as an annual report under the United States Securities Exchange Act of 1934, as amended, (the “U.S. Exchange Act”) and, as such, there is no requirement to provide any information under this item.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
This Form 20-F is being filed as an annual report under the U.S. Exchange Act and, as such, there is no requirement to provide any information under this item.
ITEM 3. KEY INFORMATION
A. [Reserved].
B. Capitalization and indebtedness.
This Form 20-F is being filed as an annual report under the U.S. Exchange Act and, as such, there is no requirement to provide any information under this item.
C. Reasons for the offer and use of proceeds.
This Form 20-F is being filed as an annual report under the U.S. Exchange Act and, as such, there is no requirement to provide any information under this item.
D. Risk factors.
Investing in our common shares involves a high degree of risk. In addition to the other information included in this document, you should carefully consider the risks described below before purchasing our common shares. If any of the following risks actually occur, our business, financial condition and results of operations could materially suffer. As a result, the trading price of our common shares could decline and you might lose all or part of your investment.
Our ability to continue operating.
NXT continues to make progress toward realizing widespread commercialization of its SFD® technology. The Company’s ability to generate cash flow from operations will depend on its ability to service its existing clients and develop new clients for its SFD® services. Management recognizes that the commercialization phase can last for several years, and that it can have significant economic dependence on a small number of clients, which can have a material effect on the Company’s operating results and financial position. During 2025 the Company realized positive operating cash flow.
The events described in the following paragraphs highlight that there continues to be material uncertainties that cast substantial doubt about NXT’s ability to continue as a going concern within one year after the date that the Consolidated 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 the Consolidated Financial Statements have been issued.
During 2024 the Company completed an SFD® survey and received deposits on three other SFD® surveys planned to be executed in 2025 (the “2025 SFD® Surveys”). As of the date of this 20-F, the Company has finished one of those SFD® surveys and the interpretation phase of two of the 2025 SFD® Surveys. In addition, during 2023 and 2024 the Company completed convertible debenture financings which resulted in raising additional net proceeds of approximately US$6,172,000 of which US$6,127,000 of the original proceeds have been converted to common shares at December 31, 2025.
20-F for the year ended December 31, 2025
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The Company continues to develop its pipeline of opportunities to secure additional revenue contracts. The Company’s longer-term success remains dependent upon its ability to convert these revenue 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 certainty.
Further financing options that may or may not be available to the Company include the issuance of new equity, debentures or bank credit facilities. The need for any of these options will be dependent on the timing of securing additional SFD®-related revenues and obtaining financing on terms that are acceptable to both the Company and the financier.
The consolidated 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 consolidated 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.
If the Company were to default on its office lease, the current month rent plus the next three months become immediately due. If the Company were to default on the aircraft lease, the Company would be required to deliver the aircraft back to the Lessor (defined below).
We rely on a limited number of key personnel who collectively possess the knowledge and skills to conduct SFD® surveys and interpret SFD® data as required to meet contract obligations.
We rely on a limited number of key personnel who collectively possess the knowledge and skills to conduct SFD® surveys and interpret SFD® data as required to meet contract obligations. Additional or replacement personnel may not be found and trained quickly. The loss of any of these key persons or increased demand for our services from clients could impair our ability to meet contract obligations, thereby adversely impacting our reputation and our ability to earn future revenue from clients.
The Company’s future success depends, to a significant extent, on the continued service of its key technical and management personnel and on our ability to continue to attract and retain qualified employees. The loss of the services of our employees or a failure to attract, retain and motivate qualified personnel could have a material adverse effect on our business, financial condition and results of operations. We do not have “key person” insurance on any of our personnel.
We depend on key staff members that are involved in the SFD® data interpretation process and to continue to enhance our technology. We are working to minimize dependency on key personnel. Currently, a total of four persons, two of which are highly experienced, are trained to interpret SFD® signals. A process of formal documentation of the ongoing research and development of the sensor technology, the acquisition/survey methodologies, and the processing and interpretation work flows is ongoing and will be part of the management systems.
Within the Province of Alberta, the skilled personnel that we require may periodically be in short supply and there is specialized training required that can take several months in order for a new employee to become effective. If we cannot hire these key personnel, we have inadequate time to train them or should we lose current personnel, then our ability to accept contracts or meet contract commitments may be adversely affected, thereby restricting our ability to earn revenue.
Availability of Aircraft.
If NXT’s aircraft is not available (due to damage, a need for extensive repairs, or other unforeseen events) to conduct survey projects, there is a risk that suitable alternative aircraft may not be available on a timely basis from other charter operators when needed. This inability to conduct survey operations could have a material adverse effect on the Company’s business, financial condition and results of operations.
20-F for the year ended December 31, 2025
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Debt Service
NXT has financed a portion of its operations through debt. Amounts paid in respect of interest and principal on debt incurred by NXT may impair NXT’s ability to satisfy its other obligations. All of NXT’s debt is fixed rate. The lender has been provided with security over substantially all of the assets of NXT. If NXT becomes unable to pay its debt service charges or otherwise commits an event of default such as bankruptcy, the lender may be able to foreclose on or sell the assets of NXT.
We rely on specialized equipment, including a limited number of SFD® sensors and this limitation may affect our ability to conduct business.
NXT relies on specialized data acquisition equipment, including a limited number of SFD® sensor devices, to conduct our aerial SFD® survey operations. We would be at risk if these survey sensors were to become damaged, destroyed, worn out, stolen or in any way became unavailable for use in operations prior to us creating and testing additional sensors. Should the sensors become unavailable for any reason, our ability to conduct surveys could be delayed for several months as we built new sensors. During this period, we may become unable to satisfy contractual obligations, which may jeopardize future revenue opportunities and may potentially result in a client making claims against the Company for breach of contract. In addition, an inability to satisfy contractual obligations may have an adverse effect on our developing reputation within the oil and gas community. NXT mitigates this risk by researching new designs, constructing additional SFD® sensor devices and obtaining replacement cost insurance on each SFD® sensor.
Our financial position is affected by foreign currency fluctuations.
The Company is exposed to foreign exchange risk in relation to its potential 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 has not historically entered into hedging contracts to mitigate exposure to fluctuations in foreign exchange but has used strategies to reduce the volatility of US$ assets and liabilities, including converting excess US$ to Canadian dollars.
Changes in currency exchange rates could have an adverse effect on the Company’s business, financial condition and results of operations.
Our net income or loss is impacted by interest rate fluctuations.
We periodically invest available cash in short term investments that generate interest income that will be affected by any change in interest rates. The Company’s long-term debt interest is fixed at 4% until 2031. Any refinancing of the long-term debt could result in a significantly different interest rate.
Volatility in oil and natural gas commodity prices may affect demand for our services.
NXT’s customer base is in the oil and natural gas exploration industry, which is exposed to risks of volatility in oil and natural gas commodity prices. As such, demand for our services and prospective revenues may become adversely impacted by fluctuations in oil and natural gas prices. The impact of price changes on our ability to enter into SFD® survey contracts cannot be readily determined at this time. However, in general, if commodity prices decline significantly, our opportunity to obtain and execute SFD® survey contracts may also likely decline, at least in the short term. Therefore, NXT focuses on national oil companies as they have a long-term strategic view and are not as affected by short-term oil fluctuations.
We are a small business with limited personnel and our inability to segregate duties between administrative staff is an internal control weakness.
Certain duties that are most appropriately segregated between different employees are, due to our current limited staff, assigned to one individual.
Standard internal control methodology involves the separation of incompatible functions by assigning these functions to separate individuals and in larger organizations to separate departments. We often cannot allocate these functions to separate individuals because our administrative staff is limited.
20-F for the year ended December 31, 2025
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Although we have adopted alternative control methods designed to mitigate our reduced ability to separate incompatible functions, these alternative controls may not operate at the same level of precision and there is more than a remote likelihood that our internal control over financial reporting will not prevent or detect material misstatements if they should exist in our financial statements. This lack of separation of duties exposes us to potential misappropriation of funds, embezzlement and other forms of fraud and could have a material adverse effect on our business, financial condition and results of operations. (See also Item 15.)
We may periodically engage in transactions with related parties.
We may periodically enter into related party transactions. One of the members of NXT’s Board is a partner at the law firm Norton Rose Fulbright Canada LLP, which provides legal services to NXT. Another member of the Board was a board member of Pana Holdings Mauritius, the parent company of Ataraxia Capital (“Ataraxia”) until May 1, 2025. A third member of the Board is an employee of Mork Capital (defined below), which held two-year term convertible debentures until June 26, 2025.
Although we publicly disclose all related party transactions and manage potential conflicts of interest through mandated adherence to our Code of Conduct & Business Ethics and the maintenance of a strong independent Board, all related party transactions have the potential for conflicts of interest that may compromise the ability of Board members to exercise their fiduciary responsibility to the Company.
Our rights to SFD® technology may be challenged and we may need to defend our rights to the technology in the courts.
A risk exists that an unknown party may claim some legal entitlement to our IP, our rights to commercialize this IP, or our right to create SFD® devices and processes. However, we believe that such a claim would be without merit.
The SFD® technology is an essential component of our business plan. If a third party challenged our lawful entitlement to this technology, the legal defense of our right to the technology may be expensive and could cause a loss of our right to the SFD® technology, or a protracted legal process to assert our right to the technology would have a material adverse effect on the Company’s business, financial condition and results of operations.
As explained in more detail below, on December 22, 2025, all the retained or otherwise remaining rights, title and interest in and to the SFD® Technology were acquired by the Company from the estate of George Liszicasz.
Surveys have not been tested over all potential geological conditions.
SFD® surveys have not been tested over all potential geological conditions. Some geological conditions may subsequently be proven to be unsuited for SFD® surveys thereby creating unforeseen limitations to the application of SFD® surveys.
Any limitation to the application of SFD® surveys has the potential of restricting future revenue opportunities and if not properly disclosed to industry clients, such limitations may impact the reputation of the Company with these clients.
Unless we pursue ongoing technological improvement and development, we may be unable to respond to changes in customer requirements or new competitive technologies.
We must continue to refine and develop our SFD® survey system to make it scalable for growth and to respond to potential future competitive pressures. These improvements require substantial time and resources. Furthermore, even if resources are available, there can be no assurance that the Company will be commercially or technically successful in enhancing the technology. If we are unable to keep pace with new technologies, evolving industry standards and demands, that could have a material adverse effect on our business, financial condition and results of operations.
20-F for the year ended December 31, 2025
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The financial statements rely upon estimates and assumptions that could be incorrect.
In preparing these Consolidated 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 Consolidated Financial Statements have been properly prepared within reasonable limits of materiality and within the framework of the Company’s significant accounting policies. The estimates and assumptions used are based upon management’s best estimate as at the date of the Consolidated 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.
The estimates and assumptions are reviewed periodically and are based upon the best information available to management; however, we cannot provide assurance that future events will not prove that these estimates and assumptions are inaccurate. Any revisions to our estimates and assumptions may have a material impact on our future reported net income or loss and assets and liabilities.
Cyberattacks or other breaches of our technology hardware and software, as well as risks associated with compliance and data privacy could have an adverse effect on our systems, our service to our customers, our reputation, our competitive position, and financial results.
Our ability to manage our operations successfully is critical to our success. Our business relies on our ability to electronically gather, compile, process, store and distribute data and other information. Unintended interruptions or failures resulting from computer and telecommunications failures, equipment or software malfunction, power outages, catastrophic events, security breaches (such as unauthorized access by hackers), social engineering schemes, unauthorized access, errors in usage by our employees, computer viruses, ransomware or malware, and other events could harm our business.
We have undertaken efforts and other steps to enhance our data security infrastructure. Any security breach or failure in our computer equipment, systems or data could result in the interruption of our business operations and adversely impact our financial results.
There is no certainty that an investor can trade our common shares on public markets at a stable market price.
The Company has historically had a limited public market for our common shares on the TSX and the United States OTC Markets Group’s Venture Stage Marketplace (the “OTC”) and there is a risk that a broader or more active public trading market for our common shares will not develop or be sustained, or that current trading levels will not be sustained.
The market price for the common shares on the exchanges where our common shares are listed has been, and we anticipate will continue to be, very volatile and subject to significant price and volume fluctuations in response to a variety of external and internal factors. This is especially true with respect to emerging companies such as ours. Examples of external factors, which can generally be described as factors that are unrelated to the operating performance or financial condition of any particular company, include changes in interest rates and worldwide economic and market conditions, as well as changes in industry conditions, such as changes in oil and natural gas prices, oil and natural gas inventory levels, regulatory and environment rules, and announcements of technology innovations or new products by other companies. Examples of internal factors, which can generally be described as factors that are directly related to our consolidated financial condition or results of operations, would include release of reports by securities analysts and announcements we may make from time to time relative to our operating performance, clients’ exploration results, financing, advances in technology or other business developments.
Because we have a limited history of profitability to date, the market price for the common shares is more volatile than that of a seasoned issuer. Changes in the market price of the common shares, for example, may have no connection with our operating results or the quality of services provided to clients. No predictions or projections can be made as to what the prevailing market price for the common shares will be at any time, or as to what effect, if any, that the sale of common shares or the availability of common shares for sale at any time will have on the prevailing market price. Given the relatively low historic trading volumes, small trades of common shares can adversely and potentially dramatically affect the market prices for those shares. Accordingly, investors in our common shares should anticipate both a volatile stock price and poor liquidity unless these conditions change.
20-F for the year ended December 31, 2025
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Our right to issue additional capital stock at any time could have an adverse effect on your proportionate ownership and voting rights.
Our right to issue additional securities at any time could have an adverse effect on a shareholder’s proportionate ownership.
We are authorized under our Articles of Continuance to issue an unlimited number of common shares and unlimited number of Preferred Shares. We may issue common shares and Preferred Shares under such circumstances and in such manner and at such times, prices, amounts and purposes as our Board may, in its discretion, determine to be necessary and appropriate, subject to compliance with all applicable exchange regulations and corporate and securities laws. Any such issue of common shares or Preferred Shares would dilute the proportionate ownership of the current holders of those securities.
We may not be able to protect our trade secrets and IP from competitors who would use this knowledge to eliminate or reduce our technological advantage.
Our success and future revenue growth will depend, in part, on our ability to protect our IP. We have commenced an IP strategy process to obtain patents related to the SFD® technology, while also utilizing “trade secrets” protection of the proprietary nature of our technology, as applicable.
Initiatives to expand and protect our IP (including patenting and new research and development initiatives) have been very successful. Squire Patton Boggs LLP, a United States-based leader in IP protection, has been advising NXT on our IP strategy, including the prior filing of an initial United States provisional patent application in May 2012. In November 2014, NXT filed a related patent amendment submission in the United States and since that time has undertaken new patent applications in select strategic international markets.
So far, SFD® patents have been granted in India (July 2021), Russia (January 2017), Japan (July 2017), Canada (August 2017), Mexico (September 2017), the United States (two patents were granted in November 2017 and September 2018, respectively), China (April 2018), and in the European Patent Office (January 2020). In summary, the total number of countries granting our patents is forty-seven. The patents serve an important purpose of the protection for our proprietary SFD® technology. The patents also serve as multiple independent third-party recognitions of the technological invention in terms of practical applicability, conceptual novelty, and knowledge advancement.
The patent protection application process requires disclosure of at least some aspects of our SFD® technology to third parties and ultimately public disclosure. This disclosure could significantly increase the risk of unlawful use of our technology by third parties. Furthermore, we have no assurance that, even with patent protection, a patent could be registered to protect our IP in all or any jurisdictions within North America or other countries throughout the world. If registered, there can be no assurance that it would be sufficiently broad to protect our technology or that any potential patent would not be challenged, invalidated or circumvented or that any right granted thereunder would provide meaningful protection or a competitive advantage to us. Finally, protection afforded by patents is limited by the financial resources available to legally defend IP rights. We currently do not possess the required financial resources to fund a lengthy defense of our rights if challenged by a much larger competitor or an oil and gas company.
We enjoy common and contract law protection of our technology and trade secrets. Employees and contractors are governed by confidentiality agreements as well as a fiduciary responsibility to protect our technology, supporting documentation and other proprietary information.
Our strongest protection of the SFD® technology comes from restricting access to knowledge concerning the technology. Only a very limited number of NXT personnel have access to or knowledge of the underlying SFD® technology and no one employee has access or knowledge of all aspects of the SFD® system. Currently, no third party has any significant knowledge of the technology.
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The Company reassesses the appropriateness of its IP protection strategy on an ongoing basis and seeks advice from IP advisors as necessary.
It is possible that a third party will copy or otherwise obtain and use the Company’s technology without authorization, develop a similar technology independently or design around the Company’s secrets. Accordingly, there can be no assurance that the steps taken by the Company to prevent misappropriation or infringement of our IP will be successful.
An inability to protect our IP would make it possible for competitors to offer similar products and services that could have a material adverse effect on our business, financial condition and results of operations.
Development, Commercialization, and Protection of the Geothermal Rights
With the acquisition of the Geothermal Rights, the Company will continue to refine and develop the SFD® survey system to commercialize the Geothermal Rights. This development requires substantial time and resources, and continued government assistance is not guaranteed. Furthermore, even if resources are available, there can be no assurance that the Company will be commercially or technically successful in enhancing the technology. If we are unable to develop and commercialize the geothermal applications of SFD® technologies, or adapt to evolving industry standards and demands, these could have an adverse effect on our business, financial condition, and results of operations.
We experience operational hazards in our flight operations that may subject us to potential claims in the event that an incident or accident occurs.
We experience operational hazards in our flight operations that may subject us to potential claims in the event that an incident or accident occurs. The flight operations of SFD® surveys are subject to the hazards associated with general flight operations. An aircraft accident may cause personal injury and loss of life, as well as severe damage to and destruction of property or the SFD® sensors and related equipment.
Independent third parties provide all the services required to maintain and operate the aircraft and they mitigate the primary risks of flight operations. These services are provided by an organization accredited by Transport Canada to operate aircraft in accordance with Transport Canada’s approved and audited operating procedures. The aircraft operator employs the required pilots, aircraft maintenance engineers, support personnel and ensures that they operate within their Transport Canada operating certificate. Our employees do not perform any airworthiness or flight safety operations.
We require the flight contractor to maintain appropriate insurance coverage for the risks associated with aircraft operations and we obtain insurance coverage to provide us with additional risk protection. In addition, we maintain general business insurance coverage and believe that this insurance and the policy limits are appropriate for the operational risks that we incur.
Despite our policy to not operate the aircraft directly and our insurance coverage, we cannot avoid or alternatively be insured for all risks of flight operations. In the event of an incident or accident, we may be sued by injured parties in excess of our policy limits or for damages that are not covered by our insurance policy. The magnitude of a lawsuit of this nature is not determinable. Furthermore, to the extent that our SFD® equipment is damaged, we may be unable to conduct SFD® surveys for several months following an accident.
We conduct operations in foreign countries, which exposes us to several risks that may have a material adverse effect on the Company.
Criminal Activity and Social Instability – We operate in foreign countries that can experience significant social upheaval and criminal activity. Systemic criminal activity in a country or isolated criminal acts may disrupt operations, impact our ability to earn revenue, dramatically add to our cost of operations or potentially prevent us from earning any survey revenue in a country.
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Political Instability - Any changes in regulations or shifts in political attitudes are beyond the control of the Company and may adversely affect our business. Exploration may be affected in varying degrees by government regulations which have the effect of restricting exploration and production activities. These changes may adversely impact the laws and policies governing price controls, export controls, foreign exchange controls, income taxes, expropriation of property, environmental legislation, site safety or other areas.
Currently, there are no restrictions (other than the payment of local withholding taxes) on the repatriation back to Canada of our earnings in foreign countries in which we have operated, however, there can be no assurance that significant restrictions on repatriation to Canada of earnings will not be imposed in the future.
Our operations may also be adversely affected by changes in laws and policies in Canada impacting foreign travel and immigration, foreign trade, taxation and investment.
Commercial Disputes – While operating in a foreign country, we are subjected to local commercial laws which often involve executing contracts in a foreign language. Although every effort is made to ensure we have access to an accurate English translation, misunderstanding and potential disputes between parties may arise.
In the event of a dispute arising in connection with our foreign operations for any reason, we may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdictions of the courts of Canada or enforcing Canadian judgments in such other jurisdictions. We may also be hindered or prevented from enforcing our rights with respect to a government instrumentality because of the doctrine of sovereign immunity.
Accordingly, these risk factors have the potential of adversely reducing the level of survey revenue from our clients, our ability to operate effectively or our ability to be paid for our services and may have a material adverse effect on our financial position.
Where possible, NXT utilizes risk mitigation products offered by entities such as Export Development Canada (“EDC”). EDC financial products include insurance coverage of contract accounts receivable, guarantee support for contract performance bonds and wrongful call insurance for such bonds.
Corruption and Bribery - Foreign markets may be susceptible to a higher risk of corruption and bribery. All of NXT’s employees, contractors and independent sales agents are required to adhere to the Company’s code of conduct and business ethics, which prohibits illegal activities, including any acts of bribery or corruption.
We rely upon the right to conduct airborne surveys in foreign countries. These foreign operations expose us to the risks that we will be prevented from conducting surveys when requested by clients.
The operation of our business, namely conducting aerial SFD® surveys and interpreting SFD® data, is not subject to material governmental or environmental regulation in Canada and the United States with the exception of flight rules issued by Transport Canada and the Federal Aviation Administration governing the use of commercial aircraft, including rules relating to low altitude flights. The requirements in other countries vary greatly and may require permits and/or provide other restrictions to conducting flight operations in the country that may restrict our ability to perform SFD® surveys.
For example, in South American countries in which we have operated, SFD® surveys must comply with additional requirements not encountered in Canada and the United States, including customs obligations and bonds related to the importation and exportation of the aircraft into the country, obtaining permits from the local aviation authority, and obtaining permits from the local Air Force. We have successfully operated in South America, Africa, Asia, and other global regions in accordance with these typical requirements.
Based on our North America and international experience to date, we do not anticipate any government controls or regulations that will prevent timely completion of SFD® surveys. However, we may encounter government restrictions in other countries that may impact or restrict our ability to conduct surveys.
If we encounter government regulation and restrictions that impact or prevent us from conducting surveys in any country, then we will not be able to earn revenue in the country and we may be exposed to forfeiting any performance bonds which may have been issued.
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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. On December 31, 2025, 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.
Tax Matters
The Company and its subsidiaries are subject to income, value added and other taxes in Canada, the United States and numerous foreign jurisdictions. Changes in tax laws or interpretations thereof or tax rates in the jurisdictions in which the Company or its subsidiaries do business could adversely affect the Company’s results from operations, returns to shareholders, and cash flow. Our effective tax rates could also be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation. While management believes the Company and its subsidiaries are in compliance with current prevailing tax laws and requirements, one or more taxing jurisdictions could seek to impose incremental or new taxes on the Company or its subsidiaries or the Company or its subsidiaries could be subject to assessment, reassessment, audit, investigation, inquiry or judicial or administrative proceedings by any such taxing jurisdiction. The timing or impacts of any such assessment, reassessment, audit, investigation, inquiry or judicial or administrative proceedings or any future changes in tax laws, including the impacts of proposed regulations, cannot be predicted. Any adverse tax developments, including legislative changes, judicial holdings or administrative interpretations, could have a material and adverse effect on the results of operations, financial condition and cash flows of the Company.
Occurrence of Natural Disasters, Epidemics or Other Events
Our business could be materially and adversely affected by natural disasters, such as fires or floods, the outbreak of a widespread health epidemic or pandemic, or other events, such as wars, including the military conflicts, acts of terrorism, power shortages or communication interruptions. The occurrence of a disaster or similar event could materially disrupt our business and operations. These events could also cause us to close our operating facilities temporarily, which would severely disrupt our operations and have a material adverse effect on our business, financial condition and results of operations. In addition, our net sales could be materially reduced to the extent that a natural disaster, health epidemic or other major event harms the economies of the countries in which we operate. As such, the outbreak of hostilities between Russia and Ukraine could result in more widespread conflict and could have a severe adverse effect on the surrounding regions and the related markets, and on our business, financial condition and results of operations. The duration of the conflicts and related events and whether they escalate further cannot be predicted. Our operations could also be severely disrupted if our customers, partners and other third-party providers or other participants were affected by natural disasters, health epidemics, or other major events, such as wars and military conflicts.
Tariff and Trade Risk
Ongoing geopolitical tensions may lead to trade restrictions or tariffs that may impact NXT’s business. Tariffs, imposed on products imported into ANADA, including operating and aircraft supplies would and do increase costs. Tariffs may disrupt trade and increase energy costs. Depending on responses from Canada on tariffs, trade tensions may exacerbate and could potentially escalate into a broader trade war, further impacting the economy and destabilizing markets – including the oil and natural gas market. Trade restrictions and tariffs may also increase volatility in, or have an adverse impact on, exchange rates and interest rates. Such occurrences may materially affect NXT’s business, cashflows and financial position.
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You will be subject to the penny stock rules to the extent our stock price on the OTCQB is less than $5.00.
Since the common shares are not listed on a national stock exchange within the United States, trading in the common shares on the OTCQB is subject, to the extent the market price for the common shares is less than $5.00 per share, to a number of regulations known as the “penny stock rules”. The penny stock rules, subject to certain exemptions, require a broker‑dealer to deliver a standardized risk disclosure, the form of which is developed by the U.S. Securities and Exchange Commission (the “SEC”) to provide the customer with additional information, including current bid and offer quotations for the penny stock, the compensation of the broker‑dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer’s account, make a special written determination that the penny stock is a suitable investment for the purchaser and to receive the purchaser’s written agreement to the transaction. To the extent these requirements may be applicable, they will reduce the level of trading activity in the secondary market for the common shares and may severely and adversely affect the ability of broker‑dealers to sell the common shares.
You should not expect to receive dividends in the foreseeable future.
We have never paid any cash dividends on our common shares and we do not anticipate that we will pay any dividends in the foreseeable future. Our current business plan is to retain any future earnings to finance the expansion of our business. Any future determination to pay cash dividends will be at the discretion of our Board and will be dependent upon our consolidated financial condition, results of operations, capital requirements and other factors as our Board may deem relevant at that time.
We are a Canadian company and our nationality may impair the enforceability of a judgment for any person resident outside Canada.
Since we are a Canadian company and most of our assets and key personnel are located in Canada, you may not be able to enforce a U.S. judgment for claims you may bring against us, our assets, our key personnel or many of the experts named in this document. This may prevent you from receiving compensation to which you may otherwise have a claim.
We are organized under the laws of Alberta, Canada and substantially all of our assets are normally located in Canada. In addition, three of our current members of our Board and our officers are residents of Canada or Ireland. As a result, it may be impossible for you to affect service of process upon us or these individuals within the U.S. or to enforce any judgments in civil and commercial matters, including judgments under U.S. federal securities laws. In addition, a Canadian court may not permit you to bring an original action in Canada or to enforce in Canada a judgment of a U.S. court based upon civil liability provisions of the U.S. federal securities laws.
We caution that the factors referred to above and those referred to as part of particular forward-looking statements may not be exhaustive and that new risk factors emerge from time to time in our rapidly changing business environment.
ITEM 4. INFORMATION ON THE COMPANY
A. History and development of the Company.
We are a technology company focused on providing a service to oil and natural gas exploration clients using our proprietary SFD® remote sensing airborne survey system. SFD® and NXT® are both registered trademarks of NXT Energy Solutions Inc.
NXT’s corporate history is summarized as follows:
· | 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 Inc. became a wholly owned subsidiary and its shareholders acquired a 92% controlling interest in NXT’s common shares. |
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· | Prior to this reverse acquisition transaction, NXT was a corporate shell conducting no active business, and NXT Energy USA Inc. was a development stage R&D 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) (the “ABCA”). 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 ABCA. |
· | At the Annual Meeting of Shareholders on August 2, 2023 shareholders approved the cancellation of the outstanding Series 1 preferred shares and approve the creation of the Series 2 Preferred Shares to facilitate the conversion of the convertible debentures to be issued under the Ataraxia Subscription Agreement (as defined herein). |
Our registered office is located at 302, 3320 – 17th AVE SW, Calgary, Alberta, Canada, T3E 0B4 and our telephone number is (403) 264‑7020.
We are a reporting issuer in Alberta, Ontario, and British Columbia and are principally governed by the Alberta Securities Commission in accordance with the Securities Act (Alberta) and the Business Corporations Act (Alberta).We are a foreign private issuer under United States securities laws and are subject to the regulation of the US Securities and Exchange Commission in accordance with the Exchange Act.
The underlying technology employed by our SFD® survey system was invented by Mr. Liszicasz, our former Chairman, President and Chief Executive Officer (“CEO”). The technology was initially licensed to the Company by Mr. Liszicasz until December 31, 2006 through a series of consecutive license agreements. On December 31, 2006, we obtained the rights to the technology from Mr. Liszicasz pursuant to the terms of the TTA.
Upon execution of the TTA, Mr. Liszicasz transferred to us all his rights and entitlements to the SFD® technology for use in the field of hydrocarbon exploration. For further details of the TTA, see “Exhibit 4.1”.
On April 18, 2021 the TTA was amended so that Mr. Liszicasz transferred to us all his rights and entitlements to the SFD® technology for the use in the field of geothermal resources. All other all rights, title, and interest in and to the SFD® technologies for all other commercial applications remained with Mr. Liszicasz.
On December 23, 2025, NXT acquired remaining SFD® rights for all present and future applications, sensor uses, and geophysical targets using SFD®, and as a result has full ownership of the SFD® technology. As a result of this transaction, NXT now holds full ownership of the SFD® technology across all present and future applications, sensor uses, and geophysical targets, including, but not limited to mineral systems and other strategic subsurface resources.
Our business does not normally rely on significant capital expenditures other than required regulatory additions to the aircraft. For 2026 we do not anticipate further significant upgrades for the aircraft. For the last three fiscal years, the Company made capital expenditures for property and equipment of $89,448 (2025), $27,029 (2024), and $32,322 (2023).
The Company does not currently have any significant capital expenditures in progress, or planned for the short term.
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SEC maintains an internet site (http://www.sec.gov), which contains reports, proxy and statements, and other information regarding NXT that we file electronically with the SEC. Our website is http://www.nxtenergy.com.
B. Business overview.
Description of the nature of the Company’s operations and principal activities
NXT Energy Solutions Inc. is a Calgary-based technology company whose proprietary airborne SFD® survey system, applied in numerous basins around the world, uses the principles of quantum mechanics to infer stress anomalies of exploration interest. The method can be used both onshore and offshore to remotely identify areas conducive to fluid entrapment in order to recommend areas with commercial hydrocarbon and/or geothermal potential. The SFD® survey system enables our clients to focus their exploration decisions concerning land commitments, data acquisition expenditures and prospect prioritization on areas with the greatest potential. SFD® is environmentally friendly and unaffected by ground security issues or difficult terrain and is the registered trademark of NXT Energy Solutions Inc. NXT Energy Solutions Inc. provides its clients with an effective and reliable method to reduce time, costs, and risks related to exploration.
We utilize our proprietary, airborne SFD® survey system to provide a service for the geothermal and oil and gas exploration industry. NXT provides a rapid and cost-effective method for our clients to evaluate large land areas for their exploration potential. Recently NXT’s principal markets have been in Africa and Asia.
SFD® sensors remotely respond to gravity perturbations that are associated with subsurface density and stress regimes that are meaningful for hydrocarbon and geothermal exploration. These responses are captured as raw data that, when interpreted, can provide a qualitative method to detect the presence of geological features such as structures, faults, fractures and reefs that are often associated with fluid accumulations and transport. The SFD® technology can be deployed over any terrain in onshore, offshore and near-shore environments and has been used both for prospect level exploration and as a reconnaissance tool in frontier and under-explored areas. The SFD® survey system has been demonstrated to quickly focus exploration resources, offering the benefit of reducing the risk, time and expense associated with the upstream cycle. As part of NXT’s SFD® services, recommendations with rankings are provided to the customer enabling them to prioritize their highest value prospects for exploration.
Following completion of the aerial surveys, we deliver to our clients a detailed report and maps of the surveyed area that identifies, ranks and recommends areas with SFD® indications of reservoir potential.
In 2006, we commenced our current business model and began providing SFD® survey services to clients on a fee-for-service basis. In accordance with this model, we have not invested either directly or indirectly in exploration or development wells or engaged in other exploration or production activities. Our current business model minimizes our capital requirements, thereby conserving cash and minimizes any perceived or real conflicts between the interests of NXT and its survey clients.
NXT’s primary business model is to earn revenues by conducting SFD® surveys for clients on a fee-for-service basis. Secondly, we may be able to negotiate to earn revenue from gross overriding royalty income and/or other incentive fees from clients should they generate production on areas recommended by SFD® surveys. Finally, in the future, we may earn a fee by providing other related geological and geophysical integration services to clients.
We also continue to utilize high quality local sales representatives with key knowledge of their respective areas, potential clients and the exploration potential of a region allowing NXT to cover larger areas and more clients with minimum fixed cost. Our sales representatives continue to pursue SFD® opportunities in numerous regions including Africa, Latin America, and Asia. Furthermore, to ensure our sales representatives follow industry best practices, each representative is required to annually certify they adhere to NXT’s code of conduct and business ethics.
NXT has been effective in positioning the SFD® method as an established geophysical tool for oil and gas exploration following the successful completion of projects in Canada, the United States, Columbia, Argentina, Bolivia, Mexico, Pakistan, Africa, Türkiye, and most recently in South East Asia. Our efforts have been supported with the publication of technical papers, creation of project case studies and the development of a strong list of references and recommendation letters. In addition, NXT has now been granted patents or received patent allowance in forty-seven separate countries.
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Our overall objective remains to continue to increase industry awareness and appreciation of the value of our SFD® survey system and our strategy to achieve this includes maximizing client endorsement opportunities (such as through joint case studies) and targeting the most appropriate markets (i.e., where SFD® provides the maximum benefits). Our specific tactics include:
1. | focusing the majority of sales resources on high profile primary markets with national oil companies that offer maximum opportunities for success; |
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2. | building upon success in this initial market, and step out to other markets in Latin America, the Middle East, Africa South East Asia, and South Asia; |
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3. | pursuing expressions 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; |
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4. | continuing 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 |
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5. | responding 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. |
As we continue to progress and grow our project pipeline on a fee-for-survey-projects basis, we remain optimistic given our progress during 2025. We conduct our operations in line with the Company’s HS&E policies and safety management systems.
Description of the principal markets in which the Company competes
We provide our services in any region of the world where oil and gas exploration activities are conducted. However, we choose to be strategic and focus our limited marketing and sales resources in a limited number of markets.
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® related revenue and can vary significantly year-over-year.
Revenues for 2025, 2024 and 2023 were generated solely from the Hydrocarbon Right. There were no revenues from the Geothermal Right in any of the periods.
A summary of SFD® related revenues derived in our primary geographic market segments for the last 3 fiscal years, and highlights of global survey operations, follows:
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| For the years ended December 31, |
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| 2025 |
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| 2024 |
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| 2023 |
| |||
Asia |
| $ | 2,886,268 |
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| $ | 644,294 |
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| $ | 2,145,716 |
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Africa |
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| 13,465,018 |
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Total International |
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| 16,351,286 |
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| 644,294 |
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| $ | 2,145,716 |
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Canada |
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| - |
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| - |
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| - |
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| 16,351,286 |
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| 644,294 |
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| 2,145,716 |
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International Markets
SFD® Survey in Pakistan
On December 4, 2025, the Company announced that it successfully completed the data acquisition phase in Pakistan for its SFD® survey with AL-Haj Enterprises Private Limited (the “AL-Haj SFD® Survey”). NXT’s interpretations were completed in Q1-26 and recommendations are expected to be delivered to the customer by the end of Q2-26.
SFD® Surveys in Africa
On September 24, 2024, the Company announced that it signed a contract with its Strategic Alliance Partner, Synergy, to provide a second SFD® survey for an oil and gas exploration company in Africa (the “African SFD® Survey”). NXT has now completed SFD® data acquisition and interpretation of the African SFD® Survey.
On May 1, 2025, the Company announced that it has entered into an additional contract with Synergy, to provide an SFD® survey in Africa. Data acquisition operations for this SFD® contract are expected to commence in the second quarter of 2026, and NXT’s interpretations and recommendations for both African SFD® Surveys are expected to be delivered to the client in the third quarter of 2026.
SFD® Survey in Southeast Asia
On May 22, 2024, the Company announced that it entered a contract to provide an SFD® survey to an independent oil and gas exploration company in Southeast Asia (the “Southeast Asia SFD® Survey”). Interpretation of the survey results and recommendations with respect to this survey were completed in July 2025.
SFD® Survey in Türkiye
On September 5, 2023, the Company announced that it had signed a contract to provide an SFD® survey to an independent oil and gas exploration company in Türkiye, which is strategically located at the junction of Eastern Europe, Central Asia and the Middle East (the “Turkish SFD® Survey”). NXT delivered the final SFD® survey results to its Turkish customer and performed the integration of SFD® data with the customers’ existing geological and geophysical data in March 2024. All flight operations related to the data acquisition survey phase were completed in January 2024. As part of NXT’s SFD® services, recommendations with rankings are provided to the customer identifying their highest value prospects for exploration. NXT has been fully paid for this survey and is actively pursuing additional SFD® survey opportunities in the Turkish region.
SFD® Survey in South Asia
On April 8, 2026 NXT announced that it has entered into a contract to provide an SFD® survey to an independent oil and gas exploration company in South Asia. Details of this typical survey are to remain confidential at this time, at the Client’s request. Data acquisition operations for this contract are expected to commence by the third quarter of 2026, and NXT’s interpretations and recommendations are expected to be delivered during the fourth quarter of 2026.
Geothermal Update
Geothermal SFD® Survey in Alberta, Canada
On August 21, 2024, the Company announced that it entered into a contract to provide a geothermal SFD® survey to Alberta Geothermal Resource Recovery Inc. (“AGRRI”). The AGRRI survey is an important milestone in NXT’s development of the geothermal application of our SFD® technology; our first geothermal survey for a client. The value to NXT is to demonstrate the commerciality of SFD® in the geothermal domain. The survey has been performed and results are being reviewed.
Description of seasonality of the Company’s main business
There is no seasonality to our business. NXT does however, have a very cyclical business, as revenue activity is dependent upon the level of capital investment in exploration drilling in the oil & gas industry and the size and timing of a limited number of SFD® survey contracts each year.
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Description of the sources and availability of raw materials
We do not foresee any constraints upon materials or equipment that will impede our ability to execute our business plan or affect our ability to conduct and/or expand our business. Our main direct project input costs are aircraft operating costs and data interpretation staff.
In order to conduct our survey operations, we require the following:
· | Survey aircraft – Air Partners Corp. (“Air Partners”), a Calgary-based air-charter operator, provides crew and maintenance services for our survey operations worldwide. In December 2015, we acquired a 1997 Cessna Citation Ultra 560 jet aircraft, from Air Partners, which was previously made available to NXT to charter. In April, 2017, NXT completed a sale and leaseback agreement of its aircraft with a Calgary-based international aircraft services organization. On March 22, 2024, the Company extended its Aircraft lease for three years, until March 28, 2027 (the “Aircraft Lease”). The Aircraft Lease was converted to a capital lease and the Company will own the aircraft at the end of the lease. We currently rely on Air Partners to manage and operate the aircraft which we use for our SFD® survey operations. |
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· | SFD® sensors – All of our current 35 survey sensors were 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. |
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· | SFD® assembly – The units in which the sensors are housed in 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. |
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· | Computer hardware and software (Data Acquisition System, SFD® Signal Conditioning Unit, and data interpretation software) – The Data Acquisition System and software was developed by in-house personnel and is being utilized on SFD® surveys (“Data Acquisition System”). 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. |
We are not dependent upon any other third-party contract manufacturers or suppliers to satisfy our technology requirements.
Description of marketing channels
We largely use direct sales methods with use of independent commissioned sales representatives in international markets.
Summary information on dependence on patents, licenses, and contracts
Patents
In May 2012, we commenced a “provisional” patent application process in the United States and formally filed an SFD® technology patent on May 22, 2013, which was subsequently published on November 28, 2013. We intend to continue expanding the process with additional formal patent applications in the future. We understand that our right to patent the SFD® technology is not compromised by our ongoing commercial use of the technology, as the components of the SFD® technology have never been disclosed to third parties (except under very limited and confidential terms) or released in any manner into the public domain.
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| Table of Contents |
In 2017, NXT expanded and protected its IP (including patenting and new research and development initiatives). Squire Patton Boggs LLP, a United States-based leader in IP protection, has been advising NXT on its IP strategy, including the prior filing of an initial United States provisional patent application in May 2012. In November 2014, NXT filed a related patent amendment submission in the United States and since undertaken new patent applications in select strategic international markets.
NXT has been granted SFD® patents in India (July 2021), Russia (January 2017), Japan (July 2017), Canada (August 2017), Mexico (September 2017), the United States (two patents were granted in November 2017 and September 2018, respectively), China (April 2018), and in the European Union (January 2020). In total, NXT has obtained SFD® patents in forty-seven jurisdictions. These patents protect our proprietary SFD® technology and serve as independent third-party recognition of our technological invention in terms of practical applicability, conceptual novelty, and knowledge advancement.
Basis for statements made regarding competitive position
Our SFD® airborne survey service is based upon a proprietary technology, which is capable of remotely identifying, from a survey aircraft, subsurface anomalies associated with potential hydrocarbon traps with a resolution that we believe is technically superior to other airborne survey systems. To our knowledge there is no other company employing technology comparable to our SFD® survey system for oil and natural gas exploration.
Seismic is the standard technology used by the oil and gas industry to image subsurface structures. It is our view that the SFD® survey system is highly complementary to seismic analysis. Our system may reduce the need for seismic in wide‑area reconnaissance but will not replace the role of seismic in verifying structure, closure and selecting drilling locations. The seismic industry is competitive with many international and regional service providers.
The SFD® system can be used as a focusing tool for seismic. With an SFD® survey, a large tract (that is, a tract over 5,000 square kilometers) of land can be evaluated quickly to identify locations with indications of reservoir potential. Seismic surveys, although effective in identifying these locations, are much more expensive, require significantly more time and impose a much greater negative impact on local communities and the environment. An SFD® survey deployed first can provide necessary information to target a seismic program over a limited area of locations selected by SFD®. This approach can result in a more effective seismic program as compared to traditional seismic surveying, and can reduce the overall cost, time, community resistance and environmental impact required to locate and qualify a prospect.
The industry uses other technologies for wide area oil and natural gas reconnaissance exploration, such as aeromagnetic and gravity surveys. These systems can provide regional geological information, such as basement depth, sedimentary thickness and major faulting and structural development; however, these other airborne techniques are not as suitable for identifying areas with reservoir potential as the SFD® system.
Description of material effects of governmental & environmental regulation
SFD® Survey Flight Operations
The operation of our business, namely conducting aerial SFD® surveys and interpreting SFD® data, is not subject to material governmental or environmental regulation in Canada or the United States with the exception of flight rules issued by Transport Canada and the Federal Aviation Authority governing the use of commercial aircraft, including rules relating to low altitude flights. The requirements in other countries vary greatly and may require permits and/or provide other restrictions to conducting flight operations in the country that may restrict our ability to perform SFD® surveys as freely as in Canada and the United States.
SFD® surveys in other countries must often comply with three requirements not encountered in Canada and the United States. These requirements usually include, but are not limited to:
i) | customs obligations and bonds related to the importation and exportation of the aircraft into the country; |
|
|
ii) | obtaining permits from the local aviation authority; and |
|
|
iii) | obtaining permits from the Air Force. |
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| 20 |
| Table of Contents |
NXT has successfully operated in several different countries in accordance with these requirements.
With our past experience in Canada, the United States, Türkiye, Nigeria, Bolivia, Mexico, Colombia and other countries, we do not anticipate any unusual government controls or regulations that might significantly prevent timely completion of SFD® surveys. However, we may encounter unforeseen government regulations or restrictions in other countries that may impair or restrict our ability to conduct surveys, which could limit our ability to earn revenue or potentially expose us to forfeiture of performance bonds.
C. Organizational structure.
The following table provides a list of all subsidiaries and other companies controlled by NXT:
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 shares | 5,000,000 common shares | Inactive | 100% |
NXT Aero USA, Inc. | August 28, 2000 by Articles of Incorporation – State of Nevada | 1,000 common shares 4,000 preferred shares | 100 common shares | Inactive | 100% |
Cascade Petroleum Inc. (Formerly Survey Services International Inc.)¹ | September 6, 2011 by Articles of Incorporation – Province of Alberta | Unlimited number of common shares | 100 common shares | Inactive | 100% |
NXT Energy Services (SFD) Inc. | December 2008 by Federal Articles of Incorporation – Canada | Unlimited number of common shares | 100 common shares | Inactive | 100% |
PetroCaza Exploration Inc. | May 2015 by Articles of Incorporation Province of Alberta | Unlimited number of common and preferred shares | 100 common shares | Inactive | 100% |
¹On January 16th, 2017, the name of Survey Services International Inc. was changed to “Cascade Petroleum Inc.”
D. Property, plant and equipment.
Facilities / Office Premises
NXT leases 7,300 square feet of office premises at 3320 – 17th Avenue SW in Calgary, Alberta, Canada. The lease expires in September 2030.
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| Table of Contents |
Aircraft
In order to perform our survey services, NXT is required to fly the survey area in a jet aircraft. On March 22, 2024 the Company extended its aircraft lease for three years, until March 28, 2027. The aircraft lease was converted to a capital lease and the Company will own the aircraft at the end of the lease. Terms of the extension include a principal of US$1,210,000, an interest rate of 12%, and monthly payments of US$40,189. The Company has an early purchase option to acquire the aircraft on September 28, 2026.
Equipment
Our SFD® technology is comprised of three main components, as detailed in the first three items below, which we collectively refer to as our SFD® survey system. This system is generally stored at our Calgary office facility unless deployed during survey operations when this equipment would travel with the aircraft or be stored in a locked facility at the survey location when not in use. In addition, there is extensive interpretation equipment located in Calgary. The main categories of equipment we use are:
· | 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. The SFD® sensors respond to fine-scale perturbations in the gravitational field caused by changes in subsurface density and stress distribution. These responses are transformed through electromechanical transduction into electronic digital signals as the output. The SFD® method has proven highly effective at identifying potential hydrocarbon traps in a wide variety of geological settings onshore and offshore. Airborne SFD® surveys are currently conducted utilizing an array of 22 SFD® sensors, consisting of six primary, eight secondary and eight research and development sensors, allowing multiple independent SFD® signals to be acquired at all points of a designed survey. |
· | SFD® Signal Conditioning Unit – This self-contained unit contains electronic circuits and high-capacity batteries for powering the sensors and 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. |
· | Data Acquisition System – This is 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. |
· | Interpretation Theatre – Once returned to our base of operations, 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 theatre is available and may be deployed during survey operations and would be set up in a facility at the survey client’s city. |
Oil and Gas Properties
We have minor historical interests in a limited number of acreage holdings of undeveloped lands in western Canada. These assets are not a material asset and have been written off in our financial statements. We are not affected by any significant environmental concerns, nor is there any planned significant capital additions contemplated. We have accrued approximately $23,311 for asset retirement obligations related to the minor non-operating interest in these oil and gas wells in which NXT has outstanding abandonment and reclamation obligations in accordance with government regulations. The estimated future abandonment liability is based on estimates of the future timing and costs to abandon, remediate and reclaim the well sites within the next five years.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
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| 22 |
| Table of Contents |
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of our financial condition and results of operations should be read in conjunction with the accompanying consolidated Financial Statements and the notes to those statements incorporated by reference elsewhere in this Form 20-F. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report, particularly under the caption “Risk Factors”.
A. Operating results.
Overall Operational Performance
Selected Annual Information |
| For the year ended December 31, |
| |||||||||
|
| 2025 |
|
| 2024 |
|
| 2023 |
| |||
SFD® related revenue |
| $ | 16,351,286 |
|
| $ | 644,294 |
|
| $ | 2,145,716 |
|
Net loss and comprehensive loss |
|
| (2,317,149 | ) |
|
| (9,077,795 | ) |
|
| (5,451,112 | ) |
Net loss per common share - basic |
| $ | (0.02 | ) |
| $ | (0.12 | ) |
| $ | (0.07 | ) |
Net loss per common share-diluted |
| $ | (0.02 | ) |
| $ | (0.12 | ) |
| $ | (0.07 | ) |
Net increase in cash |
|
| 2,846,743 |
|
|
| 328,682 |
|
|
| 138,276 |
|
Cash and cash equivalents |
|
| 3,577,138 |
|
|
| 730,395 |
|
|
| 401,713 |
|
Short-term investments |
|
| 343,075 |
|
|
| - |
|
|
| - |
|
Total assets |
|
| 19,311,880 |
|
|
| 14,026,301 |
|
|
| 15,184,760 |
|
Lease liabilities |
|
| 1,573,302 |
|
|
| 2,301,542 |
|
|
| 595,517 |
|
Long-term debt |
|
| 601,852 |
|
|
| 712,963 |
|
|
| 824,074 |
|
Convertible debentures |
|
| 89,826 |
|
|
| 9,174,957 |
|
|
| 3,355,989 |
|
Summary financial highlights for the last three fiscal years are as follows:
Financial Highlights for 2025
2025 has been a transformational year for NXT. Strategic initiatives undertaken in 2023 are now taking shape. Revenue increased from 644,284 in 2024 to $16,351,286 in 2025, a 2,437% increase. Operating cash inflow improved $5,132,508 versus 2024. Net loss improved by $6,760,646 versus 2024. These favourable financial numbers were all the result of the Company executing on three SFD® surveys in three different parts of the world. In December 2025 we acquired all the remaining and future rights and applications for the SFD® technology giving us unencumbered ability to further develop the technology. In November 2025 we secured a US$2.0 million investment to advance the application of the Company’s proprietary SFD® technology within select areas of Western Canada, opening up new opportunities for the Company. With this progress, convertible debenture holders showed their confidence by converting 100% of their convertible debentures into common shares giving NXT a strong balance sheet with strengthened working capital and overall financial position.
The 2025 result was heavily skewed by a non-cash accounting charge. The company recognized a loss of $5.4 million on the fair value remeasurement of its convertible debentures. This charge is a direct result of the increase in NXT’s common share price during the period and conversion dates, which increased the liability value of the conversion feature. This accounting requirement masks a much stronger underlying operational performance.
· | the Company recorded SFD®-related revenues of approximately $16.35 million for YE-25 versus $0.64 million for YE-24; |
· | Net loss for YE-25 compared to YE-24 improved by $6.76 million or by $0.10 per share-basic and share-diluted; |
· | on December 23, 2025, NXT acquired all remaining SFD® rights for all present and future applications, sensor uses, and geophysical targets using SFD® SFD®, and as a result has full ownership of the SFD® technology; |
· | in December 2025 the Company completed the acquisition phase of the Al-Haj SFD® Survey in Pakistan; |
· | net working capital was approximately $5.26 million at December 31, 2025, an increase of $11.9 million since December 31, 2024, or 179%; |
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| 23 |
| Table of Contents |
· | cash and short-term investments as at December 31, 2025 were approximately $3.92 million; |
· | on November 24, 2025, the Company received a US$2,000,000 strategic investment by way of the 2025 Private Placement (Defined below) of common shares to its largest shareholder MCAPM LP to advance the application of the Company’s proprietary SFD® technology within select areas of Western Canada; |
· | cash flow provided by operating activities was approximately $1.16 million during YE-25, compared to $3.97 million used by operating activities in YE-24; |
· | for YE-25 the net loss was $2.32 million, including non-cash charges for stock-based compensation expenses (“SBCE”), amortization expenses and remeasurement loss, all totaling approximately $8.04 million, versus a net loss of $9.08 million in YE-24; |
· | net loss per share for YE-25 was $0.02 per share (basic and diluted), versus a net loss of $0.12 per share (basic and diluted) in YE-24; |
· | general and administrative expenses (“G&A”) increased by approximately $0.28 million (7%) in YE-25 as compared to YE-24; |
· | in July 2025 the Company completed the integration phase of the Southeast Asia SFD®; |
· | On May 1, 2025, the Company announced that it has entered into a second contract for 2025 with its Strategic Alliance Partner, Synergy E&P Limited (“Synergy”), to provide an SFD® survey in Africa. Data acquisition operations for this SFD® contract are still expected to commence in 2026; |
· | the Company completed data interpretation for the first African SFD® survey flown for Synergy; and |
· | on May 30, 2025, Ataraxia converted US$2,300,000 of convertible debentures into 13,540,208 commons shares and on June 26, 2025, MCAPM LP and Micheal P. Mork (“Mork Capital”) converted US$3,375,000 of convertible debentures into 15,605,088 common shares |
Financial Highlights for 2024
· | On September 24, 2024 the Company announced that it entered a contract with its Strategic Alliance Partner, Synergy E&P Technologies Limited (“Synergy”) to provide a repeat SFD® survey in Africa for an oil and gas exploration company. The Company mobilized for this SFD® survey on December 30, 2024. In January 2025, NXT completed SFD® data acquisition over 14 flight days for the SFD® survey in Africa. NXT’s interpretation and recommendations are expected to be delivered during the second quarter of 2025; |
· | NXT was awarded an SFD® survey in Pakistan, by AL-Haj Enterprises Private Limited, in the Northern Suleiman Fold Belt, commenced in Q4-25; |
· | On August 21, 2024 the Company entered into a contract to provide a geothermal SFD® survey to Alberta Geothermal Resource Recovery Inc; |
· | NXT completed the Turkish SFD® Survey, delivered the final results thereof to its Turkish customers and completed the integration of SFD® data with existing geological and geophysical data; |
· | NXT’s SFD® awarded Best Exploration Technology at the 2024 Gulf Energy Information Excellence Awards; |
· | NXT was named a finalist for the Energy Transition Award - Upstream category at the 2024 Annual Platts Global Energy Awards; |
· | the debentures issued to MCAPM, LP were finalized for a total of US$2.0 million (approximately CDN$2.7 million); |
· | the Company received US$900,000 (approximately CDN$1,227,291) for convertible debentures from Ataraxia under the same terms as the Ataraxia Subscription Agreement (defined herein) signed between Ataraxia and NXT in 2023, except for the conversion price of US$0.24 per common share versus US$0.143 in 2023; |
· | On March 22, 2024 the Company extended its lease on its aircraft for an additional three years as a capital lease. Under the terms of the lease, the Company will own the aircraft at the end of the term; |
· | NXT surrendered approximately 3,207 square feet, or approximately 31% of its current office space to its landlord, and extended its lease on the reduced office space until September 30, 2030; |
· | cash and short-term investments at December 31, 2024 was approximately $0.73 million; |
· | net working capital was approximately ($6.68) million at December 31, 2024 versus approximately ($1.86) million at December 31, 2023; |
· | the Company recorded SFD®-related revenues of approximately $0.64 million 2024 versus $2.15 million for 2023; |
· | a net loss of $9.08 million was recorded for 2024, including SBCE, amortization expense and remeasurement loss, all totaling approximately $2.45 million; |
· | net loss per common share for 2024 was $0.12 per share (basic) and $0.12 per share (diluted); |
· | cash flow used in operating activities was approximately $3.97 million during 2024, compared to $4.83 million used in 2023; and |
· | G&A increased by approximately $0.63 million (16%) in 2024 as compared to 2023. |
20-F for the year ended December 31, 2025
| 24 |
| Table of Contents |
Financial Highlights for 2023
· | the Company commenced the Turkish SFD® Survey for an independent oil and gas exploration company in Türkiye. |
· | the first two tranches of the November Debentures (defined below) were received for a total of US$1.15 million (CDN$1.58 million) of cash; |
· | ten-year strategic partnership in Africa with Synergy as described below; |
· | The 2023 Ataraxia Debenture contributed $1.90 million of cash as defined and described below; |
· | 2022 Private Placement (defined below) contributed $1.62 million of cash; |
· | In Q1-23 the Company announced the grant of 2,050,000 incentive stock options at a price of $0.216 to employees, officers and directors. These incentive stock options will vest upon receipt of cash for SFD® services performed: 1/3 upon collection of US$6.5 million, 1/3 upon the collection of the next US$7.0 million and the final 1/3 upon collection of an additional US$7.5 million; |
· | cash at December 31, 2023 was approximately $0.40 million; |
· | net working capital was approximately ($1.86) million at December 31, 2023; |
· | the Company recorded SFD®-related revenues of approximately $2.15 million; |
· | a net loss of approximately $5.45 million was recorded for 2023, including SBCE and amortization expense of approximately $1.97 million; |
· | net loss per common share for 2023 was $0.07 per share (basic) and $0.07 per share (diluted); |
· | cash flow used in operating activities was approximately $4.83 million in the 2023 financial year; and |
· | G&A expenses decreased by approximately $0.32 million (8%) in 2023 as compared to 2022. |
Consolidated Statements of Net Loss |
|
| ||||||||||
|
| 2025 |
|
| 2024 |
|
| 2023 |
| |||
SFD® related revenue |
| $ | 16,351,286 |
|
| $ | 644,294 |
|
| $ | 2,145,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SFD® related costs |
|
| 5,758,141 |
|
|
| 2,021,768 |
|
|
| 2,249,126 |
|
General and administrative |
|
| 4,329,325 |
|
|
| 4,045,778 |
|
|
| 3,420,143 |
|
Amortization expense |
|
| 1,920,733 |
|
|
| 1,887,013 |
|
|
| 1,759,473 |
|
|
|
| 12,008,199 |
|
|
| 7,954,559 |
|
|
| 7,428,742 |
|
Other expense, net |
|
| 6,163,271 |
|
|
| 1,767,530 |
|
|
| 168,086 |
|
Loss before income taxes |
|
| (1,820,184 | ) |
|
| (9,077,795 | ) |
|
| (5,451,112 | ) |
Income tax expense |
|
| 496,965 |
|
|
| - |
|
|
| - |
|
Net loss for the year |
|
| (2,317,149 | ) |
|
| (9,077,795 | ) |
|
| (5,451,112 | ) |
Revenue and expenses for the years ended December 31, 2025, 2024 and 2023
SFD® related revenues – During 2025 NXT continued to diversify its sources of revenue through contracts in several regions allowing it to reduce concentration risk in a single geography and showing the broader acceptance of the SFD® technology. In YE-25, SFD®- related revenue was from three SFD® surveys.
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| 25 |
| Table of Contents |
In 2024 and 2023 the Company recorded revenues from Turkish SFD® surveys.
SFD® related costs – SFD® related costs include lease expenses and aircraft operation and maintenance costs. In 2025, 2024 and 2023, the Company incurred aircraft operation costs for aircraft lease, handling, maintenance costs and SFD® survey operations. In 2025, aircraft lease costs were $nil because as of March 22, 2024, the Company extended its aircraft lease for an additional three years and converted the lease into a finance lease. As a result, amortization and interest increased $21,794 in 2025 versus 2024. Aircraft operations were $1,306,600 (86%) higher as scheduled maintenance was performed on the aircraft after the African SFD® and Southeast Asia surveys. Survey project costs were $2,521,010 (approximately 621%) higher versus 2024 as the Company incurred costs for the three SFD® surveys in 2025 versus two smaller surveys in 2024.
During 2024, aircraft operations were $647,939 (approximately 74%) higher as pilot training and required maintenance were performed before the mobilization of upcoming SFD® Surveys. Survey projects were $602,521 lower due to costs incurred to perform the Turkish SFD® Survey in Q4-23. Aircraft lease costs were approximately 75% lower due to the conversion of the lease from an operation lease to a finance lease. $364,013 of lease costs in 2023 were partially offset by approximately $311,190 of lease, depreciation and interest costs in 2024.
In 2023 the Company incurred increased SFD® related costs due to the Turkish SFD® survey.
G&A- G&A is a major component of NXT’s total expenses. The categories included in G&A are as follows:
G&A |
|
|
|
| For the year ended December 31, |
| ||||||
|
| 2025 |
|
| 2024 |
|
| 2023 |
| |||
Salaries, benefits, and consulting charges |
| $ | 1,636,261 |
|
| $ | 1,791,482 |
|
| $ | 1,512,150 |
|
Board, professional fees, and public company costs |
|
| 899,523 |
|
|
| 899,797 |
|
|
| 753,468 |
|
Premises and administrative overhead |
|
| 779,575 |
|
|
| 782,218 |
|
|
| 822,019 |
|
Business development |
|
| 311,086 |
|
|
| 303,546 |
|
|
| 91,235 |
|
Total G&A before Stock based compensation |
|
| 3,626,445 |
|
|
| 3,777,043 |
|
|
| 3,178,872 |
|
Stock based compensation |
|
| 702,880 |
|
|
| 268,735 |
|
|
| 241,271 |
|
Total G&A |
|
| 4,329,325 |
|
|
| 4,045,778 |
|
|
| 3,420,143 |
|
G&A expenses increased $283,547, or 7%, in 2025 compared to 2024 for the following reasons:
· | salaries, benefits, and consulting charges decreased $155,211 or 9%, due to salaries being allocated to SFD®-related costs to support the SFD® surveys, offset by one additional staff, annual salary and benefit increase, and vacation timing; |
· | board and professional fees and public company costs decreased $274 or 0% due to SEC related regulatory costs that were offset by board fees being taken as SBCE by five directors in YE-25, lower legal fees due to the 2025 Private Placement (defined below) expenses being capitalized and lower TSX fees due to reduced financing in YE-25; |
· | premises and administrative overhead costs decreased $2,643 or 0%, due to the 31% space reduction as of May 1, 2024. This was partially offset by additional SFD® survey software expenditures as the Company prepared for its SFD® surveys; |
· | SBCE’s were higher in YE-25 versus YE-24 by $434,145 or 162%, as the Company granted RSU to employees in February 2025 and options to directors and employees in February and December 2025.Please see the next section Stock-based Compensation Expenses for further information on the SBCE. |
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| 26 |
| Table of Contents |
G&A increased $625,635 or 18%, in 2024 compared to 2023 for the following reasons:
· | Salaries, benefits, and consulting charges increased $279,332 or approximately 18%, due to commissions and retainers paid for SFD®-related revenue and one additional headcount; |
· | Board and professional fees and public company costs increased $146,329 or approximately 19%, due to professional fees related to the convertible debentures and less Board fees were taken as SBCE in YE-24; |
· | premises and administrative overhead costs decreased $39,801 or approximately 5%, due to the approximately 30% space reduction as of May 1, 2024. Please see the section “Contractual Obligations – Leases”. This was offset by additional SFD® survey software expenditures as the Company prepares for its SFD® surveys; |
· | business development costs increased $212,311 or approximately 233% due to increased travel related to finalizing SFD® survey contracts.; and |
· | SBCE’s were higher in YE-24 versus YE-23 by $27,464 or approximately 11%, mostly due to the Company recognizing expenses related to the Performance Options and increased employee participation in the ESP Plan. Please see the next section “Discussion of Operations – Stock-based Compensation” for further information on the SBCE. |
Stock-based compensation
Stock-based compensation expense |
| For the year ended December 31, |
| |||||||||
|
| 2025 |
|
| 2024 |
|
| 2023 |
| |||
Stock Option Expense |
| $ | 205,859 |
|
| $ | 118,849 |
|
| $ | 92,500 |
|
Deferred Share Units |
|
| 155,000 |
|
|
| 15,000 |
|
|
| - |
|
Restricted Stock Units |
|
| 298,527 |
|
|
| 40,632 |
|
|
| 62,441 |
|
Employee Share Purchase Plan |
|
| 43,494 |
|
|
| 41,619 |
|
|
| 30,508 |
|
Consultant Compensation |
|
| - |
|
|
| 52,634 |
|
|
| 55,822 |
|
Total SBCE Expenses |
|
| 702,880 |
|
|
| 268,734 |
|
|
| 241,271 |
|
SBCE varies in any given year as it is a function of several factors including the number of units of each type of stock-based compensation plan issued in the period and the amortization term (based on the term of the contract and/or number of years for full vesting of the units. Also, SBCE is a function of periodic changes in the inputs used in the Black-Scholes option valuation model, such as volatility in NXT’s trailing share price and for cash-settled stock-based compensation awards variability will occur based on changes to observable prices. Stock options granted generally expire, if unexercised, five years from the date granted and entitlement to exercise them generally vests at a rate determined by the Board. On January 6, 2023, the Company granted 2,050,000 incentive stock options at a strike price of $0.216 to employees, officers and directors (the “2023 Options”). The 2023 Options vest upon the occurrence of several milestones relating to the cash received for SFD® services performed as follows: (i) one-third of the 2023 Options vest upon the collection of US$6.5 million for SFD® services performed; (ii) one-third of the 2023 Options vest upon the collection of the next US$7.0 million for SFD® services performed; and (iii) the final one-third of the 2023 Options vest upon collection of an additional US$7.5 million for SFD® services performed. The Company has reached the first milestone of collecting US$6.5 million for the 2023 Options. The Company estimates that it should reach the remaining two milestones in 2026.
On February 24, 2025, the Company granted 1,400,000 incentive stock options at a strike price of $0.203 to directors of the Company (the “Incentive Options”). The Incentive Options will vest upon the Company achieving a trailing twelve-month free cash flow per share of $0.10. The Company currently estimates that it will achieve this target of $0.10 during Q1-27. Reaching the target has been delayed by one year due to the delayed start date for the second African SFD® Survey and the increase in the outstanding shares due to the 2025 Private Placement (defined below).
On December 16, 2025, the Company granted 4,300,000 additional incentive stock options at a strike price of $0.309 to employees and directors of the Company (the “December 25 Incentive Options”). One half of the December 25 Incentive Options will vest when the Company achieves a trailing twelve-month free cash flow per share of $0.15. The other half will vest when the Company achieves a trailing 12-month revenue of $25,000,000. The Company currently estimates that it will achieve both targets during Q1-27.
The deferred share unit (“DSUs”) plan (the “DSU Plan”) is a long-term incentive plan that permits the grant of DSUs to qualified directors. DSUs granted under the DSU Plan are to be settled at the retirement, resignation or death of the Board member holding the DSUs. RSUs entitle the holder to receive, at the option of the Company, either the underlying number of shares of the Company’s common stock upon vesting of such units or a cash payment equal to the value of the underlying shares.
20-F for the year ended December 31, 2025
| 27 |
| Table of Contents |
Restricted Share Units (“RSUs”) entitle the holder to receive, at the option of the Company, either the underlying number of shares of the Company’s common shares upon vesting of such RSUs or a cash payment equal to the value of the underlying shares. The RSUs vest at a rate of one-third on the first, second and third anniversaries of the date of grant. The Company has historically settled the exercise of vested RSUs with common shares and cash. On February 21, 2024, the Company granted 1,035,000 RSUs to employees and officers which will vest over a three-year period. On February 24, 2025, the Company granted 1,875,000 RSUs to employees and officers which will vest over a three-year period.
The 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 Toronto Stock Exchange. During 2025, 2024 and 2023 the Company has elected to issue Common Shares from treasury.
SBCE in 2025 was higher compared to 2024 by $434,146 or 162%. The Company began to recognize the expense for both the 2023 Options, the Incentive Options and the December 25 Incentive Options, versus only the 2023 Options in 2024. In addition, five directors received their fees as DSUs during 2025, versus none in 2024. Also, the ESP Plan costs increased as employee contributions increased in 2025 versus 2024. The RSU expense in 2025 reflected the costs of two RSU grants versus one in 2024 and a higher share price.
SBCE in 2024 was higher compared to 2023 by $27,463 or approximately 11%. The Company began to recognize expense for the first two milestones of the 2023 Options in 2024. Stock option expense in 2023 was for director fees reimbursed via stock options. In addition, $15,000 of director fees were reimbursed by DSUs during Q4-24, but there were zero DSUs issued in Q4-23. The ESP Plan expense increased as employee participation in the plan increased in 2024 versus 2023. The RSU expense decreased year over year as the 2024 RSU grant versus the 2023 RSU grant accrued a lower cost due to the lower share price and less units in the 2024 grant versus the previous 2020 RSU grant which had its final vesting period in 2023.
On October 1, 2023 the Company entered into a service agreement with a marketing consultant to provide sales and market services to introduce potential customers to the SFD® technology, attend trade shows, and update the Company’s market systems. The consultant agreed to be compensated in common shares only for approximately US$16,000 per month, based on the five-day volume average price at the end of each month until February 29, 2024. On December 31, 2024, a total of 634,439 common shares were due to the marketing consultant (360,139 common shares at December 31, 2023). On January 29, 2025, 634,439 common shares were issued to the marketing consultant.
Amortization Expense
Property and equipment and Intellectual property is recorded at cost, less accumulated amortization, which is recorded over the estimated service lives of the assets using annual rates and methods which are also subject to ongoing tests of potential impairment of the recorded net book value.
Amortization Expense |
| For the year ended December 31, |
| |||||||||
|
| 2025 |
|
| 2024 |
|
| 2023 |
| |||
Property and equipment |
| $ | 222,219 |
|
| $ | 188,499 |
|
| $ | 60,959 |
|
Intellectual property |
|
| 1,698,514 |
|
|
| 1,698,514 |
|
|
| 1,698,514 |
|
Total Amortization Expense |
|
| 1,920,733 |
|
|
| 1,887,013 |
|
|
| 1,759,473 |
|
Property and equipment and related amortization expense. Property and equipment depreciation was higher in 2025 versus 2024 and versus 2023 as the Company converted its aircraft lease to a finance lease in Q2-24, and as a result, began to record the amortization of the aircraft as a depreciating expense over the estimated remaining useful life of approximately ten years for the aircraft. Amortization also decreases each year as the Company uses the declining balance method of amortization, thereby having the effect of lowering amortization each year on existing assets.
20-F for the year ended December 31, 2025
| 28 |
| Table of Contents |
IP and related amortization expense. NXT acquired specific rights to utilize the proprietary SFD® technology in global hydrocarbon exploration applications from the inventor of the SFD® technology, NXT’s former Chairman, President and Chief Executive Officer, on August 31, 2015. The value attributed to the acquired IP assets was $25.3 million. The IP assets are amortized on a straight-line basis over a 15-year period (future amortization expense of $1,685,000 per year) and are also being subject to an ongoing assessment of potential indicators of impairment of the recorded net book value.
As discussed in Item 4.B., the Company acquired the SFD® technology for the Geothermal Right from NXT’s Chairman, President and Chief Executive Officer on April 18, 2021. 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 five-year aggregate total of $68,902.
No impairments were recognized in 2025, 2024, or 2023.
Other Expense (Income) |
| For the year ended December 31, |
| |||||||||
|
| 2025 |
|
| 2024 |
|
| 2023 |
| |||
Interest expense , net |
| $ | 516,775 |
|
| $ | 750,611 |
|
| $ | 160,262 |
|
Foreign exchange loss (gain) |
|
| (32,923 | ) |
|
| 574,106 |
|
|
| (8,028 | ) |
Loss of fair value remeasurement |
|
| 5,418,502 |
|
|
| 296,534 |
|
|
| - |
|
Intellectual property |
|
| 16,154 |
|
|
| 12,565 |
|
|
| 12,864 |
|
ARO and related expenses |
|
| 5,727 |
|
|
| (1,741 | ) |
|
| 2,988 |
|
Loss on disposal of assets & lease modifications |
|
| 7,136 |
|
|
| 135,455 |
|
|
| - |
|
Purchase of remaining SFD® technology & rights |
|
| 231,900 |
|
|
| - |
|
|
| - |
|
Total Other Expense, net |
|
| 6,163,271 |
|
|
| 1,767,530 |
|
|
| 168,086 |
|
Interest expense, net. This category of other expenses includes interest income earned on short-term investments net of interest expense from the convertible debentures, and long-term debt.
Interest expense decreased $233,836 (31%) in 2025 versus 2024, due to the conversion of convertible debentures in the period between Q2-25 to Q4-25.
Interest expense increased in 2024 versus 2023, due to the Company issuing the Debentures during 2023 and 2024.
Foreign exchange loss (gain). This category of other expenses includes losses and gains caused by changes in the relative currency exchange values of US$ and CDN$. The Company held net US$ asset at December 31, 2025 and a net US$ liability at December 31, 2023 and 2022, which included accounts receivable, cash and cash equivalents, short-term investments, US$ lease obligations, convertible debentures and the security deposit for the aircraft, all of which have an effect on the unrealized foreign exchange gain and loss.
In 2025, even though the CDN$ strengthened versus the US$ by 4.6% since December 31, 2024, the Company still recorded a foreign exchange gain in 2025 as the conversion of the debentures in May and June 2025 was at a higher CDN$/US$ exchange rate.
For 2024 the exchange loss was the result of (i) the 8.7% weaker CDN$ to US$ between December 31, 2024 and December 31, 2023 and (ii) the Company having a net liability of US$7,130,144.
For 2023, the exchange gain was the result of (i) the 2.4% stronger CDN$ to US$ rate between December 31, 2022 and December 31, 2023 and (ii) the Company having a net liability of US$1,179,649.
The Company does not currently enter into hedging contracts, but does however use alternative strategies to reduce the volatility of US dollar assets including converting excess US dollars to CDN dollars.
Loss on fair value remeasurement. The Company recognized a loss of $5,418,502 in 2025 on the fair value remeasurement of the November Debentures (defined below) as of December 31, 2025, and also on the debentures converted to common shares (as at June 26, 2025 and September 23, 2025) which have been revalued at their fair value, using level 3 inputs which include the market price, volatility and conversion price of the Company’s common stock as at the conversion dates through 2025, and December 31, 2025. As the share price increased, the fair value of the convertible debentures also increased and vice versa.
20-F for the year ended December 31, 2025
| 29 |
| Table of Contents |
The Company recognized a loss of $296,534 in the 2024 financial year on the fair value remeasurement of the November Debentures and 2024 Debentures (each as defined herein) due to changes in the US$/CDN$ exchange rates and the Company’s share price.
Intellectual property. In 2025, 2024 and 2023, the Company’s IP and other expenses were associated with periodic patent maintenance and renewal fees required during these time periods.
ARO and related expenses. This category of other expenses primarily includes Asset retirement obligations (“ARO”) related to minor non-operated interests in oil and natural gas wells in which NXT has outstanding abandonment and reclamation obligations in accordance with government regulations. The estimated future abandonment liability is based on estimates of the future timing and costs to abandon, remediate and reclaim the well sites within the next five years.
Loss on disposal of assets & lease modifications. During Q2-24 the Company reduced its office space by approximately 31% and extended its office lease until September 2030. In Q1-24, the Company extended its Aircraft lease for three years, until March 28, 2027. As a result, the Company recognized a loss on lease modifications in YE-24. In YE-25 the Company disposed of obsolete equipment.
Purchase of remaining SFD® technology & rights. On December 23, 2025, NXT acquired remaining SFD® rights for all present and future applications, sensor uses, and geophysical targets using SFD®, and as a result has full ownership of the SFD® technology. The consideration paid for these remaining SFD® rights have been expensed.
Income tax expense – The Company anticipates that operations in foreign countries during 2025 will give rise to a tax liability in those countries. Below is the estimated tax expense. There was no tax expense in 2024 or 2023.
For the years ended December 31, | ||||||||||||
|
| 2025 |
|
| 2024 |
|
| 2023 |
| |||
|
|
|
|
|
|
|
|
|
| |||
Foreign net income |
|
| 1,656,552 |
|
|
| - |
|
|
| - |
|
Statutory income tax rate |
|
| 30.0 | % |
|
| - |
|
|
| - |
|
Foreign Income tax expense |
|
| 496,965 |
|
|
| - |
|
|
| - |
|
At the end of 2025, NXT has available for future Canadian income tax deduction purposes significant unrecorded deferred income tax assets, the benefit of which has not been recorded in the Company’s financial statements due to uncertainty regarding the amount and timing of their potential future utilization. These deferred income tax assets include non-capital losses carried-forward (expiring in 2031 to 2044) and other resource deductions totaling approximately $12.5 million.
20-F for the year ended December 31, 2025
| 30 |
| Table of Contents |
Summary of Quarterly Results (Unaudited)
A summary of operating results for each of the trailing 8 quarters (including a comparison to each respective prior quarter) follows. The extent of the profit or loss each quarter is mainly due to the timing and the number of survey contracts that are underway, and variances in such non-cash items as SBCE, which can occasionally be a significant expense in any given quarter
Q4-25 |
|
| Q3-25 |
|
| Q2-25 |
|
| Q1-25 |
| ||||||
SFD® related revenue |
| $ | 2,138,817 |
|
| $ | 91,992 |
|
| $ | 1,656,476 |
|
| $ | 12,464,071 |
|
Net (loss) income |
|
| (1,237,969 | ) |
|
| (1,781,040 | ) |
|
| (6,982,658 | ) |
|
| 7,684,518 |
|
(Loss) income per share - basic |
|
| (0.01 | ) |
|
| (0.02 | ) |
|
| (0.08 | ) |
|
| 0.10 |
|
(Loss) income per share diluted |
|
| (0.01 | ) |
|
| (0.02 | ) |
|
| (0.08 | ) |
|
| 0.08 |
|
Q4-24 |
|
| Q3-24 |
|
| Q2-24 |
|
| Q1-24 |
| ||||||
SFD® related revenue |
| $ | 42,222 |
|
| $ | - |
|
| $ | - |
|
| $ | 602,072 |
|
Net loss |
|
| (2,800,582 | ) |
|
| (1,477,400 | ) |
|
| (3,013,213 | ) |
|
| (1,786,600 | ) |
Loss per share - basic |
|
| (0.04 | ) |
|
| (0.02 | ) |
|
| (0.04 | ) |
|
| (0.02 | ) |
Loss per share – diluted |
|
| (0.04 | ) |
|
| (0.02 | ) |
|
| (0.04 | ) |
|
| (0.02 | ) |
Significant or Unusual Items Impacting Net Loss:
During Q4-25, SFD®-related revenue versus the previous two quarters increased due to the Al-Haj SFD® survey in Q4-25 and as a result also decreased the net loss. During Q3-25, the loss was driven by SFD®-related costs, net increasing due to costs to support the SFD® flown surveys and aircraft maintenance costs for upcoming SFD® surveys. During Q2-25, the Company recorded a net loss due to the fair value remeasurement on the convertible debentures. During Q1-25, the Company’s earned net income due to the African SFD® Survey. During Q4-24, the Company’s net loss increased due to unrealized foreign exchange losses due to the weakening CDN$ and interest increases due to the issuance of the debentures. In Q3-24, the Company incurred additional G&A costs in anticipation of increased commercial activity, recognized a gain for the fair value remeasurement of the convertible debentures, and unrealized foreign exchange loss (gain) improved due to a strengthening CDN$. In Q2-24, the Company wrote off leasehold improvements due to the 31% office space reduction, recognized a loss for the fair value remeasurement of the convertible debentures, related increased interest expense, and unrealized foreign exchange loss increased due to the net US$ liabilities held by the Company. In Q1-24, SFD® related-revenues were from the Turkish SFD® Survey. Net loss reflected higher SFD®-related costs, net due to the Turkish SFD® Survey an additional headcount, sales commissions and higher business development travel costs as well as interest expense due to the Debentures issued during 2023 and 2024 financial years. In each quarter between Q1-24 and Q4-24, the Company incurred net losses due to incurred SFD®-related costs related to aircraft lease and aircraft maintenance costs, G&A expenses, and non-cash items such as SBCE, which can be a significant expense in any given quarter. More details are provided below:
· | In Q4-25, the Company recorded a net loss of $1,237,969. The net loss improved versus the previous two quarters due to the contribution of the Al-Haj SFD® Survey, lower SBCE expenses, lower interest expense due to the conversion of convertible debentures, and the partial reversal of previous estimates for the non-cash fair value adjustment to the convertible debentures, given the decrease in the price of the Company’s common shares. This was offset by the expensing of the acquisition of the remaining SFD® rights and technologies the Company did not previously own and foreign income tax expense; |
· | In Q3-25, the Company recorded a net loss of $1,781,040 driven by SFD®-related costs, net increasing due to costs to support the SFD® flown surveys and aircraft maintenance costs for upcoming SFD® surveys. The Company recorded SFD®-related revenues in Q3-25 from the Southeast Asia SFD® survey and SBCE increasing due to the increase in the price of the Company’s common shares; |
· | In Q2-25, the Company recorded a net loss of $6,982,658. The Q2-25 loss was attributed to the non-cash fair value adjustment to the convertible debentures, given the significant increase in the price of the Company’s common shares; |
20-F for the year ended December 31, 2025
| 31 |
| Table of Contents |
· | In Q1-25, the Company earned net income due to the African SFD® Survey and incurring a foreign exchange gain due to the US$ accounts receivable balance. This was offset partially by the loss for the fair value remeasurement of the convertible debentures; |
· | In Q4-24, the Company incurred additional interest costs due to the addition of the 2024 Ataraxia Debentures (defined below) and the 6.5% weakening of the CDN$ during the quarter with the 2024 Ataraxia Debentures increasing the net US$ liability. The Company also recognized a gain for the fair value remeasurement of the 2024 Debentures and the November Debentures; |
· | in Q3-24, the Company incurred additional G&A costs in anticipation of increased commercial activity, recognized a gain for the fair value remeasurement of the convertible debentures, and unrealized foreign exchange loss (gain) improved due to a strengthening CDN$; |
· | in Q2-24, the Company wrote off leasehold improvements due to the 31% office space reduction, interest expense increased and fair value remeasurement due to the addition of the 2024 Debentures, and with the strengthening US$ versus the CDN$ unrealized foreign exchange loss increased due to the net US$ liabilities; and |
· | in Q1-24, SFD®-related revenue and SFD®-related costs increased due to the Turkish SFD® Survey. G&A increased due to an additional headcount and business development costs. Interest expense increased due to the issuance of the November Debentures; |
Advance Application of SFD® Technology in Canada
On November 24, 2025, the Company received a US$2,000,000 strategic investment by way of a private placement of common shares to its largest shareholder Mork Capital to advance the application of the Company’s proprietary SFD® technology within select areas of Western Canada. Mork Capital was issued 7,050,500 common shares of the Company at a price of CAD$0.40 per share for total gross proceeds of approximately US$2,000,000 (the “2025 Private Placement”). The 2025 Private Placement proceeds are providing NXT with enhanced balance sheet flexibility to accelerate widespread usage of SFD® data in Canada while preserving its core business model as a technology and service provider.
As part of this process, the Company engaged Baycrest Energy Ltd. to assist in evaluating strategic pathways related to this initiative. The Company believes this initiative represents a meaningful opportunity to unlock shareholder value from NXT’s extensive proprietary SFD® data library, which includes more than 50,000 line-kilometers of airborne geophysical data in the Western Canadian sedimentary basin.
Strategic Investment Africa
On May 24, 2023, the Company entered into a ten-year strategic alliance and associated financing with Synergy which grants Synergy an exclusive license to use, distribute, sub-license, market and sell NXT’s SFD® solutions in Africa. In addition, on September 30, 2023, NXT extended the exclusive license to include Ataraxia, an affiliate of Synergy.
PE Energy Limited, an affiliate of Synergy and Ataraxia, has performed several commercial projects with NXT in Africa in the past, in addition to the African SFD® Survey.
Synergy and Ataraxia, with this arrangement, will be advancing the SFD® technology to address energy security and transition in the African continent for both oil and gas and geothermal sources. Synergy, Ataraxia and NXT have and will continue to work closely together to train local technical teams and regulatory authorities on the patented SFD® technology. The local content is a commercial advantage for NXT and has shown early signs of increasing our operational efficiency.
Building upon a record of successful collaborations underpinned by the continued market demand in Africa, in 2023 Ataraxia executed the subscription agreement (the Ataraxia Subscription Agreement) pursuant to which Ataraxia agreed to subscribe for an aggregate of US$2.3 million convertible debentures (collectively, the “Ataraxia Debentures”), with a subscription price to be advanced in instalments, of which it completed US$1.4 million during Q3-23. In November 2024 Ataraxia funded the remaining balance of US$900,000. On May 30, 2025, Ataraxia converted US$2,300,000 of convertible debentures into 13,540,208 common shares
20-F for the year ended December 31, 2025
| 32 |
| Table of Contents |
B. Liquidity and capital resources.
Going Concern
The Consolidated 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 continues to be material uncertainties that cast substantial doubt about NXT’s ability to continue as a going concern within one year after the date that the Consolidated 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 the Consolidated Financial Statements have been issued.
During 2024 the Company completed an SFD® survey and had received deposits on three other SFD®surveys planned to be executed in 2025 (the “2025 SFD® Surveys”). As of the date of these financial statements, the Company has finished one of those SFD® surveys and the interpretation phase of two of the 2025 SFD® Surveys. In addition, during 2023 and 2024 the Company completed convertible debenture financings which resulted in raising additional net proceeds of approximately US$6,172,000 of which US$6,127,000 of the original proceeds have been converted to common shares as of December 31, 2025.
The Company continues to develop its pipeline of opportunities to secure additional revenue contracts. The Company’s longer-term success remains dependent upon its ability to convert these revenue 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 certainty.
Further financing options that may or may not be available to the Company include the issuance of new equity, debentures or bank credit facilities. The need for any of these options will be dependent on the timing of securing additional SFD® related revenues and obtaining financing on terms that are acceptable to both the Company and the financier.
The Consolidated 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 Consolidated Financial Statements, then adjustments would be necessary in the carrying value of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used. These adjustments could be material.
NXT’s cash and cash equivalents and short-term deposits as at December 31, 2025, totaled $3,920,213. Net working capital totaled $5,257,017.
Risks related to having sufficient ongoing net working capital to execute survey project contracts are mitigated through NXT’s normal practice of obtaining advance payments and progress payments from customers throughout the course of projects, which often span three to four months. In addition, where possible, risk of default on client billings are mitigated using export insurance programs offered by Export Development Canada.
The Company does not have provisions in its leases, contracts, or other arrangements that would trigger additional funding requirements or early payments except if the Company were to default on its office lease, where the current month’s rent plus the next three months would become immediately due. If the Company were to default on the aircraft lease, the Company would be required to deliver the aircraft back to the lessor.
20-F for the year ended December 31, 2025
| 33 |
| Table of Contents |
2025 Private Placement
On November 24, 2025, the Company received a US$2,000,000 strategic investment by way of the 2025 Private Placement to advance the application of the Company’s proprietary SFD® technology within select areas of Western Canada. Mork Capital was issued 7,050,500 common shares of the Company at a price of CAD$0.40 per share for total gross proceeds of approximately US$2,000,000. The 2025 Private Placement proceeds are providing NXT with enhanced balance sheet flexibility to accelerate widespread usage of SFD® data in Canada while preserving its core business model as a technology and service provider. Please see the section above “Advance Application of SFD® Technology in Canada”
Debentures
Repayment of principal and interest as of December 31, 2025 |
| US$ |
|
| CDN$1 |
| ||
2026 |
| $ | 54,611 |
|
| $ | 74,943 |
|
Less interest |
|
| (9,611 | ) |
|
| (13,189 | ) |
Principal remaining |
|
| 45,000 |
|
|
| 61,754 |
|
Accumulated change in fair value of convertible debentures |
|
| 20,456 |
|
|
| 28,072 |
|
Fair value of convertible debentures |
|
| 65,456 |
|
|
| 89,826 |
|
| 1. | US$ payments have been converted to CDN$ at a rate of 1.3723. |
2024 Debentures
On May 31, 2024, the Company issued convertible debentures (the “2024 Debentures”) to MCAPM LP for the principal amount of US$2,000,000 (approximately CDN$2,773,660). The 2024 Debentures bore interest at 10.0% per annum, paid quarterly in arrears, and were due on May 31, 2026. The 2024 Debentures were convertible into common shares at a conversion price of US$0.25 (approximately CDN$0.3428) per common share, which provided MCAPM LP with the right to obtain up to 8,000,000 common shares of the Company.
The proceeds from the 2024 Debenture were used to support the working capital needs of SFD® surveys and other G&A costs, which include business development and marketing activities required to transform the existing pipeline of SFD® opportunities into firm contracts.
November Debentures
On November 8, 2023, the Company issued the first tranche of a multi-tranche unsecured convertible debenture (the “November Debentures”). The November Debentures bore interest at 10.0% per annum, paid quarterly in arrears, and were due and payable two years after issuance. The November Debentures were convertible into common shares in the capital of NXT at a fixed conversion price of US$0.1808 (CDN$0.25). During 2023, the Company issued the first two tranches of the November Debentures for US$1,150,000 (approximately CDN$1,577,600).
On January 12, 2024, the Company closed the final tranche of the November Debentures for an additional US$722,000 (approximately CDN$966,036). Including the final tranche, the Company issued a total of US$1,872,000 (approximately CAD$2,543,636) of the November Debentures, which will allow the subscribers to obtain an aggregate of up to 10,353,982 common shares. Insiders, which include Mork Capital and all the directors of NXT, were issued November Debentures valued, in the aggregate principal amount, at US$1,522,000 (approximately CDN$2,076,776).
Ataraxia Debentures
In May 2023, the Company signed the Ataraxia Subscription Agreement in which Ataraxia would purchase US$2,300,000 of convertible debentures. The terms of the convertible debentures issued to Ataraxia included an annual interest rate of 10% paid quarterly in arrears. The convertible debentures can also be converted into voting preferred shares with an annual dividend rate of 10% paid per quarter. The preferred shares were not transferable, but could be converted on a one-to-one basis into common shares. The convertible debentures were payable on demand two years after the issue date and were secured by a general security agreement, subordinate to the long-term debt.
On May 31, 2023, the Company issued a two-year term convertible debenture for US$1,200,000 (approximately CDN$1,631,954) to Ataraxia and an additional US$200,000 (approximately CDN$265,560) on July 10, 2023 (the “2023 Ataraxia Debentures”). The 2023 Ataraxia Debentures had a fixed conversion price of US$0.143 per common share.
20-F for the year ended December 31, 2025
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| Table of Contents |
On November 4, 2024, the Company issued a two-year term convertible debenture for US$500,000 (approximately CDN$676,995) to Ataraxia and an additional US$400,000 (approximately CDN$550,296) on November 12, 2024 (the “2024 Ataraxia Debentures”). The 2024 Ataraxia Debentures had a fixed conversion price of US$0.24 per common share. The proceeds from the 2024 Ataraxia Debentures have been used to support the working capital needs of the SFD® surveys in Africa.
Debenture Conversions
On June 26, 2025, Mork Capital converted all of their convertible debentures into 15,605,088 common shares of NXT. On September 23, 2025, US$49,000 of the November Debentures were converted into 271,017 common shares of NXT. During December 2025, US$677,000 of November Debentures were converted into 2,228,979 common shares of NXT.
The remaining US$45,000 of the November Debentures at December 31, 2025, were converted into 248,893 common shares of NXT on January 5, 2026.
On May 30, 2025, Ataraxia converted US$2,300,000 of the Ataraxia Debentures into 13,540,208 common shares.
Mork Capital currently owns 37,576,821 common shares. This represents approximately 31.5% of the issued and outstanding common shares as of the date of this 20-F.
Investor’s Rights Agreement
On May 31, 2023, the Company and Ataraxia entered into an Investor Rights Agreement (the “Investor Rights Agreement”) pursuant to which Ataraxia has been granted the right: (i) to nominate one person for election or appointment as a director of the Company; (ii) to have one representative of Ataraxia attend the Company’s Board meetings as an observer (except any portion of a Board meeting where the Company’s relationship with Ataraxia is to be a subject of discussion); (iii) to purchase up to its pro rata portion (calculated on a fully diluted basis) of any securities offered by the Company, subject to certain limitations set forth in the Investor Rights Agreement; and (iv) receive certain information regarding the Company, including annual and quarterly financial statements, annual budgets, the capitalization tables, and access to its premises upon reasonable notification. In each case, Ataraxia will retain the rights set forth in the Investor Rights Agreement for so long as Ataraxia holds common shares representing at least 5% of the outstanding common shares of the Company. Ataraxia currently owns 13,540,208 common shares. This represents approximately 11.3% of the issued and outstanding common shares as of the date of this 20-F.
The Investor Rights Agreement is publicly available under the Company’s profile on SEDAR+ at www.sedarplus.ca.
2022 Private Placement
On December 22, 2022, the Company announced a multi-tranche private placement (the “2022 Private Placement”) at $0.195 per share. On December 22, 2022, the Company issued 1,148,282 common shares for gross proceeds of $223,915 in the first tranche, less issuance costs of $7,732. On January 25, 2023, the Company closed the 2022 Private Placement by issuing an additional 8,510,000 common shares, at $0.195 per common share, for additional aggregate gross proceeds of approximately $1,659,450, less issuance costs of $37,393. The proceeds from the 2022 Private Placement were used to support G&A, which include business development and marketing activities required to transform the pipeline of SFD® survey opportunities into firm contracts. Mork Capital purchased 8,750,000 common shares or $1,706,250 of the 2022 Private Placement along with two members of the Board for a total of $83,515.
Non-GAAP Measure: This discussion includes references to the term “net working capital”, which does not have a standardized meaning prescribed by U.S. GAAP and may not be comparable to similar measures presented by other entities. NXT management uses this non-GAAP measure to improve our ability to assess liquidity at a point in time. Net working capital is defined as total current assets less total current liabilities, excluding amounts accumulated in work in progress and deferred revenue. Management excludes these amounts from the calculation as they do not represent future cash inflows or outflows to the Company.
20-F for the year ended December 31, 2025
| 35 |
| Table of Contents |
NXT had net working capital of $5,257,017 as at December 31, 2025, broken down as follows:
|
| December 31, |
|
| December 31, |
|
| Net change |
| |||
|
| 2025 |
|
| 2024 |
|
| in 2025 |
| |||
Current assets (current liabilities): |
|
|
|
|
|
|
|
|
| |||
Cash and cash equivalents |
| $ | 3,920,213 |
|
| $ | 730,395 |
|
| $ | 3,189,818 |
|
Accounts receivable and contract assets |
|
| 4,231,891 |
|
|
| 105,858 |
|
|
| 4,126,033 |
|
Prepaid expenses and deposits |
|
| 217,241 |
|
|
| 274,799 |
|
|
| (57,558 | ) |
Accounts payable and accrued liabilities |
|
| (1,662,048 | ) |
|
| (1,233,974 | ) |
|
| (428,074 | ) |
Deferred revenue |
|
| - |
|
|
| (840,768 | ) |
|
| 840,768 |
|
Income tax payable |
|
| (496,965 | ) |
|
| - |
|
|
| (496,965 | ) |
Current portion of convertible debentures |
|
| (89,826 | ) |
|
| (4,915,248 | ) |
|
| 4,825,422 |
|
Current portion of long-term debt |
|
| (111,111 | ) |
|
| (111,111 | ) |
|
| - |
|
Current portion of lease obligation |
|
| (752,378 | ) |
|
| (693,607 | ) |
|
| (58,771 | ) |
Total Net Working Capital |
|
| 5,257,017 |
|
|
| (6,683,656 | ) |
|
| 11,940,673 |
|
Net working capital as at December 31, 2025, compared to December 31, 2024, increased by $11,940,673, or 179%. Funds were received from the African SFD® Survey and the 2025 Private Placement as well as accounts receivable increasing from the Al-Haj SFD® and African SFD® Surveys. Funds were used to settle scheduled lease and long-term liability obligations. Accounts payable and accrued liabilities increased due to costs accrued for the Al-Haj SFD® Surveys and aircraft scheduled maintenance. Deferred revenue decreased 100% as both the African SFD® Survey and the Southeast Asia SFD® Survey were flown in 2025. The Company incurred foreign income taxes payable due to work in international locations in 2025. Convertible debentures decreased 98% as debentures were converted to common shares in 2025.
Long-term Debt (HASCAP Loan)
On May 26, 2021, the Company received $1,000,000 from the BDC’s HASCAP Loan. The HASCAP Loan is a $1,000,000 non-revolving ten-year term credit facility with an interest rate of 4%. Repayment terms were interest only until May 26, 2022, and monthly principal plus interest payments for the remaining nine years. The HASCAP Loan is secured by a general security agreement and is guaranteed by BDC.
Repayment of long-term debt principal and interest: |
|
|
| |
2026 |
|
| 133,148 |
|
2027 |
|
| 128,704 |
|
2028 |
|
| 124,259 |
|
2029 |
|
| 119,815 |
|
2030 to 2031 |
|
| 162,130 |
|
Total principal and interest payments |
|
| 668,056 |
|
Less interest |
|
| (66,204 | ) |
Total principal remaining |
|
| 601,852 |
|
Current portion of long-term debt |
|
| 111,111 |
|
Non-current portion of long-term debt |
|
| 490,741 |
|
20-F for the year ended December 31, 2025
| 36 |
| Table of Contents |
Sources and uses of cash
The overall net changes in cash balances in each of the years noted below is a function of several factors including any inflows (outflows) due to changes in net working capital balances and net of any cash transferred into/out of short-term investments. Further information on the net changes in cash, by each of the operating, financing, and investing activities, for the last three fiscal years is as follows:
For the year ended December 31 |
| 2025 |
|
| 2024 |
|
| 2023 |
| |||
Cash provided by (used in): |
|
|
|
|
|
|
|
|
| |||
Operating activities |
| $ | 1,162,917 |
|
| $ | (3,969,591 | ) |
| $ | (4,831,950 | ) |
Financing activities |
|
| 2,209,120 |
|
|
| 4,305,807 |
|
|
| 5,009,117 |
|
Investing activities |
|
| (439,108 | ) |
|
| (27,029 | ) |
|
| (32,322 | ) |
Effect of foreign rate changes on cash |
|
| (86,186 | ) |
|
| 19,495 |
|
|
| (6,569 | ) |
Net cash inflow |
|
| 2,846,743 |
|
|
| 328,682 |
|
|
| 138,276 |
|
Cash & cash equivalents, start of the year |
|
| 730,395 |
|
|
| 401,713 |
|
|
| 263,437 |
|
Cash & cash equivalents, end of the year |
|
| 3,577,138 |
|
|
| 730,395 |
|
|
| 401,713 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents |
|
| 3,577,138 |
|
|
| 730,395 |
|
|
| 401,713 |
|
Short-term investments |
|
| 343,075 |
|
|
| - |
|
|
| - |
|
Total |
|
| 3,920,213 |
|
|
| 730,395 |
|
|
| 401,713 |
|
Operating Activities
Net cash flow from operating activities listed above is a function of net income (loss) for the year, an add back of the net non-cash revenue and expense items (such as SBCE, amortization expense, deferred tax expense / (recovery) and the net change in year-end working capital items (for example, a net decrease in working capital in the year gives rise to a source of cash), with these components each year as follows:
For the year ended December 31, |
| 2025 |
|
| 2024 |
|
| 2023 |
| |||
Comprehensive loss for the year |
|
| (2,317,149 | ) |
|
| (9,077,795 | ) |
| $ | (5,452,708 | ) |
Total non-cash expense items and lease items |
|
| 7,745,495 |
|
|
| 3,239,208 |
|
|
| 1,914,845 |
|
|
|
| 5,428,346 |
|
|
| (5,838,587 | ) |
|
| (3,537,863 | ) |
Change in non-cash working capital balances |
|
| (4,265,429 | ) |
|
| 1,868,996 |
|
|
| (1,294,087 | ) |
Total cash provided by (used in) in operations |
|
| 1,162,917 |
|
|
| (3,969,591 | ) |
|
| (4,831,950 | ) |
Operating cash flow was positive for 2025. It improved by $5,132,508 in 2025 versus 2024 due to receipts for the African SFD® Survey.
Operating cash flow increased by $862,359 in 2024 as compared to 2023 due to payment of outstanding accounts receivable from the Turkish SFD® Survey, net of accounts payable and accrued liability payments related to the Turkish SFD® Survey and deposits received on the 2025 SFD® Surveys.
Financing Activities
2025 – In 2024, proceeds were received from employees under the ESP Plan and stock option exercises. The 2025 Private Placement net of issuance costs contributed $2,777,168. Repayment of lease obligations increased as the Company’s revised aircraft lease converted into a finance lease in 2024.
2024 – In 2024, proceeds were received from employee contributions under the ESP Plan and from convertible debentures. Beginning in Q2-24, the Company began payment on its revised aircraft lease, which as of Q2-24 is a finance lease, and continued long-term debt payments.
2023 – Net proceeds from the 2022 Private Placement was $1,622,057. Proceeds from the Convertible Debentures were $3,457,555 (US$2,550,000). Please see the Item 5 B sections “Ataraxia Debentures”and“November Debentures”. Proceeds were also received from employee contributions under the ESP Plan and RSU’s. The Company began to repay its long-term debt, the HASCAP Loan, at the beginning of Q3-22. The repayment of financial liability was for the sales and leaseback agreement on NXT’s aircraft which ended in Q1-22.
Investing Activities
2025 – The Company upgraded certain SFD® equipment in 2025 to enhance data acquisition of SFD® surveys. The Company also purchased and used US$ short-term investments to segregate funds that mature just prior to monthly payment obligations for the Aircraft Lease.
20-F for the year ended December 31, 2025
| 37 |
| Table of Contents |
2024 – The Company upgraded certain SFD® equipment in 2024 to enhance the data acquisition phase of the SFD® Survey.
2023 – The Company upgraded certain SFD® equipment in Q4-23 to enhance the data acquisition phase of the SFD® Survey.
C. Research and development, patents, and licenses, etc.
R&D expenditures incurred to develop, improve, and test the SFD® survey system and related components are expensed as incurred. Any IP that is acquired for the purpose of enhancing R&D projects, if there is no alternative use for the IP, is expensed in the period acquired.
Patents
As of the date of this 20-F, NXT has been granted SFD® patents on its SFD® technology in forty-seven jurisdictions, including Brazil (February 2022), India (July 2021), Russia (January 2017), Japan (July 2017), Canada (August 2017), Mexico (September 2017), the United States (two patents were granted in November 2017 and September 2018, respectively), China (April 2018), and Europe (January 2020). These patents protect our proprietary SFD® technology and serve as independent third-party recognition of our technological invention.
D. Trend information.
We have historically conducted a limited number of service contracts each year, the dollar value and timing of securing and ultimate delivery of which are subject to numerous external factors.
As noted previously, the amount and timing of our annual revenues can vary widely year to year, as we derive our revenues from a limited number of service contracts each year and each individual contract may have a large effect on the aggregate annual revenues and profits. At the date of this 20-F current external trends such as in commodity prices could affect our operations for the current fiscal year. Please see Item 3 D for a discussion on these risks.
E. Critical Accounting Estimates
In preparing the Consolidated 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, the Consolidated Financial Statements have been properly prepared within reasonable limits of materiality and within the framework of the Company’s significant accounting policies. The estimates and assumptions used are based upon management’s best estimate as at the date of the Consolidated 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.
Certain estimates and judgments have a material impact where the assumptions underlying these accounting estimates relate to matters that are highly uncertain at the time the estimate or judgment is made or are subjective. In 2025 and 2024, the estimates and judgments included the assessment of impairment indicators of IP and recognition of SFD®-related revenue.
The Company reviews IP for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. The Company considers both internal and external factors when assessing potential indicators of impairment of its IP, including the consideration of historical and forecasted SFD®-related revenues, market capitalization, and the SFD®-related revenue multiples compared to industry peers. When indicators of impairment exist, the Company first compares the total of the estimated undiscounted future cash flows or the estimated sale price to the carrying value of an asset. If the carrying value exceeds these amounts, an impairment loss is recognized for the excess of the carrying value over the estimated fair value of the IP.
20-F for the year ended December 31, 2025
| 38 |
| Table of Contents |
The Company recognizes SFD®-related revenue in the Consolidated Financial Statements based on the performance obligation for NXT in SFD® surveys, which are the acquisition, processing, interpretation and integration of SFD® data. Revenue from the sale of SFD® survey contracts is recognized over time by measuring the progress toward satisfaction of its performance obligation to the customer. The Company uses direct survey costs as the input measure to recognize revenue in any fiscal period. The percentage of direct survey costs incurred to date over the total expected survey costs to be incurred, provides an appropriate measure of the stage of the performance obligation being satisfied over time. The accounting for contracts that are not complete at the reporting date involves significant judgment, particularly as it relates to determining the total anticipated costs at completion.
Off-balance sheet arrangements.
The Company has no off-balance sheet arrangements as of the date of this 20-F other than office premise non-lease operating costs with Interloq Capital (the “Landlord”). If the Company were to default on its office lease the current month rent including operation costs plus the next three months become immediately due.
NXT pays an estimated operating cost during the current year, but has the obligation to pay the actual operating costs incurred as defined in the office lease with the Landlord early in the first quarter of the preceding year if the estimate was low, or will receive a refund if the estimate was too high. Currently, the Company believes that the current operating cost estimate is reasonable and is constant with discussions with the Landlord under the Company’s office lease.
Safe Harbor.
The Company seeks safe harbor for our forward-looking statements. Please see the section titled “Forward-Looking Statements” above.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and senior management.
Our articles of incorporation provide for a minimum of one director and a maximum of 15 directors comprising our Board. At present, our Board consists of eight members.
Our directors are elected by our shareholders at our annual meeting of shareholders and hold the position either until the next annual shareholders’ meeting, the date of their resignation or until a successor is appointed.
The following sets forth information, including directorships in other reporting issuers, as of the date of this 20-F, for our directors, and executive officers:
Peter Mork Healdsburg, California, USA
Director since July 2024 | Mr. Mork, has served as a Portfolio Manager at Mork Capital Management, LLC in Healdsburg, California since 2021, and in similar roles over the last two decades, drawing on investment sector expertise. Previously, he led Institutional Sales & Research at La Jolla Economics in San Diego. He is a Chartered Financial Analyst (CFA) charter holder and earned a Bachelor’s degree in Business/Economics from the University of California, Santa Barbara.
Mr. Mork is chair of the Compensation Committee and a member of the Governance and Audit Committees. |
20-F for the year ended December 31, 2025
| 39 |
| Table of Contents |
Theodore Patsellis Athens, Hellenic Republic
Director since June 2023 | Mr. Patsellis is a Greek attorney admitted to the Athens Bar Association since 1996, a Greek Ministry of Justice certified Mediator and the Owner of a boutique Law firm since 2013. He holds a Bachelor Degree from the National and Kapodistrian University of Athens - Law Faculty and an LL.M. degree from the Ludwig-Maximilian University of Munich. Having worked for many years with Ernst & Young, Hill International Inc. and other renowned law firms, Mr. Patsellis has acquired extensive experience working in diversified environments and a variety of business cultures. With a strong German background and the experience of having lived and worked in Germany, Greece, Serbia and Romania as a lawyer and tax professional, he was able to lead various teams of professionals involved in large business transactions in the South-East European region. His expertise spans across M&A, Corporate & Transaction Law, Local and International taxation, Corporate Governance and Compliance. His industry knowledge ranges from the Telecommunications and Energy sectors to the Retail, Hospitality and Consumer Products, Pharmaceuticals, Marketing Services and Real Estate. He is currently sitting on the Board of Directors of NXT Energy Solutions in Canada and Vivid Living Co. S.A. in Greece. In addition, he is acting as legal representative of Oliver Marketing LTD in Greece since 2018. As of November 2025, he has also been appointed as liquidator of Pepper Hellas Asset Management Solutions S.A.
Mr. Patsellis’ term on the Board will end June 9, 2026. |
Charles Selby Calgary, Alberta, Canada
Chairman since June 2024
Director since January 2006 |
Mr. Selby obtained a Bachelor of Science (Hons.) degree in Chemical Engineering from Queen’s University, a Juris Doctorate degree from the University of Calgary, and was a registered Professional Engineer and lawyer in the Province of Alberta. Since 2017 he has been President and Director of Caledonian Midstream Corporation, a company that has natural gas and oil production together with a sour natural gas plant and infrastructure in the Alberta foothills and is also the CEO and a director of Wildcat Royalty Corporation. Mr. Selby served as Vice President of Pengrowth Corporation for almost 20 years participating in the growth of that entity to an enterprise value of more than $4 billion. He previously practiced law for two large Canadian law firms, specializing in securities and international transactions primarily in the energy business. As a professional engineer. Mr. Selby worked for Chevron in Canada, the US and Saudi Arabia. He has also served as a director and/or officer of a number of reporting issuers in the oil and natural gas industry including Arakis Energy Corp., with operations in the Sudan.
Mr. Selby is the Chairman of NXT. He is also Chair of the Audit and Disclosure Committees and a member of the Strategic Planning Committee. |
|
|
Gerry Sheehan Dublin, Leinster, Ireland
Director since July 2021; and CEO since April 2026.
|
Mr. Sheehan has worked continuously in international oil and gas exploration, development, and production for over 40 years. He has broad technical and business development experience in Africa, South Asia and Europe.
Mr. Sheehan began his career in 1982 as a geophysicist working with the British National Oil Corporation (“BNOC”), after privatization becoming Britoil plc. He evaluated acreages in the United Kingdom, Dutch, Danish, Irish and Norwegian sectors. In 1986, he transferred to the BNOC Houston office as a technical auditor. He was later seconded to the Global Basin Evaluation Team, focusing on Africa and Asia.
In 1987, Mr. Sheehan joined the fledgling oil company Tullow Oil plc. as part of the founding technical team. The company was successful in Senegal on a World Bank-sponsored gas to power project. New acreage was secured in the UK onshore, Pakistan, Syria and Yemen, with follow-on successful exploration and field development projects. |
20-F for the year ended December 31, 2025
| 40 |
| Table of Contents |
| From 1992 to 1998, Mr. Sheehan held the position of Chief Geophysicist. The company operated in South Asia culminating in the discovery and development of the one trillion cubic feet-sized Bangora gas field in Bangladesh on behalf of Texaco and Chevron. His project team also deployed a successful re-development of the offshore Espoir field in Cote d’Ivoire, West Africa, with partners Canadian Natural Resources Limited and Addax Petroleum.
From 1998 to 2006, he held the post of International Exploration Manager, this role also encompassed a business development responsibility. This was a time of rapid growth and expansion in the company with new assets acquired in West Africa, North Africa, Central and Eastern Europe and South Asia. In 2004, Mr. Sheehan led the technical due-diligence team on the corporate acquisition of Energy Africa plc. The enlarged company rapidly expanded its footprint in Africa with notable oil exploration successes in Ghana and Uganda, both countries now seen as significant oil countries.
In 2007, Mr. Sheehan founded a private company, Blackstairs Energy. The company acquired oil field rehabilitation projects in Romania, and exploration acreage in Armenia and Senegal. The company also undertook technical and commercial asset evaluations on behalf of third parties.
In 2014, Mr. Sheehan was a founder of T5 Oil & Gas, a private London-based oil and gas company. T5 is a licence partner in a portfolio of assets in Gabon, comprising offshore oil production and a suite of un-developed oil and gas fields, both offshore and onshore, now being advanced to development. He has been continuously employed by T5 Oil & Gas since 2014.
Mr. Sheehan holds a Bachelor of Science degree in Geology and a Master of Science in Applied Geophysics, both obtained from the National University of Ireland. He is a Fellow of the Geological Society (FGS, elected 2009) and is an active member of the American Association of Petroleum Geologists (AAPG, 1986) and the Society of Exploration Geophysicists (SEG, 1996).
Mr. Sheehan became the CEO of NXT on April 20, 2026.
Mr. Sheehan is the Chair of the Strategic Planning Committee and a member of the Disclosure Committee. |
|
|
Jeffrey Tilson Seal Beach, California, USA
Director since December 2024 | Mr. Tilson is a Fee-Only Investment Advisor and the President of JST Investment Consulting, a Seal Beach-based firm he founded in 2011. With over two decades of experience in financial advising, Mr. Tilson is dedicated to providing clients with personalized, transparent, and fiduciary-focused investment strategies.
Previously, Mr. Tilson spent 10 years as a financial advisor with Ameriprise Financial Services, where he co-managed and serviced approximately US$220 million in client investment assets. Recognizing an opportunity to offer a higher level of service on a more cost-effective platform, he established JST Investment Consulting as a referral-only firm that prioritizes client success over sales-driven models.
Mr. Tilson holds a double major in Finance, Real Estate and Law, and Management Information Systems from California State University, Long Beach. He also holds professional designations from the College for Financial Planning, including: • Chartered Retirement Planning Counselor (CRPC) • Accredited Asset Management Specialist (AAMS) • Accredited Wealth Management Advisor (AWMA)
|
20-F for the year ended December 31, 2025
| 41 |
| Table of Contents |
| Mr. Tilson maintains memberships in industry organizations, including:
• National Association of Personal Financial Advisors (NAPFA) • Fee-Only Network • Professional Fiduciary Association of California (PFAC) • Association of Financial Educators (AFE) Mr. Tilson has held leadership roles in nonprofit organizations, including: • President of Friends of the Child Development Center, an organization supporting early childhood education and development programs. • President of Business Networking International (BNI).
Mr. Tilson is a member of the Audit, Governance, and Compensation Committees. |
|
|
|
|
Thomas E. Valentine Calgary, Alberta, Canada
Director since November 2007
Corporate Secretary since April 2014 | Mr. Valentine is a Partner at Norton Rose Fulbright Canada LLP, where he has practiced law, both as a barrister and a solicitor, since being admitted to the Law Society of Alberta in 1987. He is a member of the firm’s Energy and Infrastructure practice group and is involved in energy-related matters in Canada and throughout the Middle East, Africa, Asia and South America. He holds a Bachelor of Arts degree from the University of British Columbia, a Bachelor of Laws degree from Dalhousie University, and a Master of Laws degree from the London School of Economics.
Over the past twenty years, Mr. Valentine has delivered lectures and held workshops around the globe on a wide range of international oil and gas law topics in locations such as Afghanistan, Mozambique, Uruguay, Argentina, Singapore, Dubai, Doha, London, Amsterdam and South Korea.
Mr. Valentine is Corporate Secretary of Touchstone Exploration Inc., and formerly was a director of two other Canadian public companies, Calvalley Petroleum Inc. (to May 2015) and Veraz Petroleum Ltd. (to December 2012).
Mr. Valentine is the Chair of the Governance Committee and a member of the Compensation Committee. |
Bruce G. Wilcox New York, New York, USA
Chief Executive Officer June 2024 to April 2026;
Interim Chief Executive Officer June 2023 to June 2024; and
Director since June 2015
|
Mr. Wilcox has had a long career as an investment company CEO, analyst and portfolio manager. He spent most of his career with Cumberland Associates, LLC, a New York equity fund, from 1986 through retirement in 2010, progressing from analyst/portfolio manager to partner (1989), and Chairman of the Management Committee (1997). Mr. Wilcox specialized in Cumberland’s investments in the energy industry (exploration and production and service companies), with an emphasis on value and long- term holdings. During his tenure, the fund’s assets under management ranged from US$0.7 billion to $1.5 billion.
From 1984 to 1986, Mr. Wilcox was with Central National-Gottesman, Inc. as an analyst and portfolio manager on a team responsible for a $500 million listed equity portfolio.
Mr. Wilcox was CEO of E Street Management, LLC from 2016 through 2020, which managed a long/short equity fund of funds.
From January 2011 to present he has also been one of three managing members of Xiling Fund III, LLC, part of a series of private equity funds (US$100+ million) which invests in museum-quality Imperial Chinese porcelains, archaic bronzes and ink paintings.
Mr. Wilcox obtained a Bachelor of Arts (Honors) in Modern Chinese from the University of California, Santa Barbara (1977); and a Master of International Management from the American Graduate School of International Management in Phoenix (1980, now a part of Arizona State University).
Mr. Wilcox is a member of several boards, including the Teachers College of Columbia University (2003 to date, including serving as the Chair of the Investment Committee for that entire period), the University of California Santa Barbara Foundation (2003 to date, including as former Chair of the Board of Trustees, Investment and Finance Committees), and was a Trustee (2001 to May 2023) of the Manhattan Institute For Policy Research, a leading urban, state, and national policy institution, which works on matters such as energy policy.
Mr. Wilcox is a member of the Strategic Planning Committee. |
20-F for the year ended December 31, 2025
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| Table of Contents |
Eugene Woychyshyn Calgary, Alberta, Canada
Chief Financial Officer since December 2018; President since November 2025; and Director since July 2024 | Mr. Woychyshyn brings to NXT over 30 years of leadership experience in multiple industries and worldwide regions including North America, Europe and Asia. Mr. Woychyshyn has extensive hands-on experience and accomplishments in mergers and acquisitions, organizational restructuring, purchasing, treasury, financial reporting and control, compliance, human resource management and tax planning. In almost ten years as an expatriate with assignments in Norway, China, the United States and Southeast Asia, Mr. Woychyshyn developed international business competencies.
Mr. Woychyshyn originally served as a consultant to NXT from November 2017 to November 2018, providing controllership services. From 2015 to 2017 he was the Chief Financial Officer of Imaging Dynamics Company Limited.
Mr. Woychyshyn is a Chartered Professional Accountant, CA, who holds a Bachelor of Commerce (Hons) degree from the University of Manitoba and a Masters of Business Administration degree from St. Joseph’s University, Philadelphia PA.
Mr. Woychyshyn is a member of the Disclosure Committee. |
None of the directors or executive officers is, or has been in the last ten years, a director, CEO or chief financial officer of any company, including NXT, except as noted below that: (i) was subject to a cease trade order or order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation for a period of more than 30 consecutive days that was issued while the director or executive officer was acting in that capacity; or (ii) was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation after the proposed director ceased to be a director, CEO or chief financial officer and which resulted from an event that occurred while that person was acting in such a capacity.
None of the directors or executive officers is, or has been in the last ten years, a director or executive officer of any company, including NXT, that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.
None of the directors or executive officers has, within the last ten years, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold their assets.
Charlies Selby was a board member of Montana Exploration Corp. (“MEC”) when it was issued a cease trade order by the Alberta Securities Commission on May 4, 2018 against MEC for failing to file its annual audited financial statements, annual management’s discussion and analysis and certification of annual filings within the required time period. MEC ceased operations in June 2021.
Messrs. Mork, Patsellis, Selby, Tilson and Valentine are considered “independent” within the meaning of Canadian securities law.
20-F for the year ended December 31, 2025
| 43 |
| Table of Contents |
B. Compensation
Executive Compensation
The following table sets out certain information regarding the annual and long‑term compensation of the Chief Executive Officer and the Chief Financial Officer as at December 31, 2025. The Chief Financial Officer is based in the Calgary, Canada head office and the Chief Executive officer is based in New York, New York, USA. Both are paid in Canadian dollars.
Summary compensation table for the year ended December 31, 2025:
Name & Principal Position |
| Salary |
|
| Cash bonus |
|
| Share-based rewards(1) |
|
| Other (2) |
|
| Total |
| |||||
Bruce G. Wilcox CEO(3) |
| $ | 224,375 |
|
| $ | - |
|
| $ | 203,960 |
|
| $ | - |
|
| $ | 428,335 |
|
Eugene Woychyshyn, VP of Finance & CFO |
| $ | 185,208 |
|
| $ | - |
|
| $ | 226,006 |
|
| $ | 1,883 |
|
| $ | 413,097 |
|
__________________________
(1) | Share-based rewards represent the Company match to the executive’s contribution to the ESP Plan, RSU Grants, stock option grants, and DSU grants. |
(2) | “Other” consists of the taxable portion of company paid amounts for group health benefits. |
(3) | Mr. Wilcox retired as the CEO on April 20, 2026. |
(See Item 6.E “Share Ownership” for details regarding stock options, DSUs, RSUs, and ESP Plan shares granted to officers).
No amount is set aside or accrued by the Company or its subsidiaries to provide pension, retirement or similar benefits to officers or directors.
Director Compensation
NXT compensates directors for serving on our Board by paying a combination of an annual cash retainer, which may be compensated in DSUs, as well periodically granting stock options to purchase NXT common shares. No options were granted to directors in 2025 for director fees. A total of 1,400,000 stock options with an exercise price of $0.203 per common share were issued to directors of the Company on February 24, 2025. A total of 2,000,000 stock options with an exercise price of $0.309 per common share were issued to directors of the Company on December 16, 2025.
In 2024, the directors’ fees were not paid in cash. Mr. Mork, Mr. Selby, Mr. Tilson, Mr. Wilcox, and Mr. Woychyshyn elected to take their director fees in DSUs. The annual retainer was based on $30,000 ($35,000 in the case of the Chairman of the Audit Committee). Total compensation payable to non-executive directors during 2025 is summarized as follows:
|
| 2024 |
| |
Peter Mork |
| $ | 30,000 |
|
Theodore Patsellis |
|
| 30,000 |
|
Charles Selby |
|
| 35,000 |
|
Gerry Sheehan |
|
| 30,000 |
|
Jeffrey Tilson |
|
| 30,000 |
|
Tom Valentine |
|
| 30,000 |
|
We do not provide additional compensation for committee participation (other than as noted previously regarding the minor additional amount for service as the Chairman of the Audit Committee). (See Item 6.E “Share ownership” for details regarding stock options and DSUs granted to directors.)
The Company reimburses directors for out-of-pocket expenses for attending Board and committee meetings. We do not provide termination benefits for directors.
20-F for the year ended December 31, 2025
| 44 |
| Table of Contents |
C. Board practices.
Expiration Dates
No director or member of our administrative, or supervisory bodies has an expiration date for their current term of office. Directors are elected by shareholders at the annual meeting of shareholders and hold the position either until the next annual shareholders’ meeting or until a successor is appointed. The period during which each individual has served as a director is set out in the table under Item 6.A – “Directors and senior management”.
Service Contracts
No independent directors have service contracts with the Company or any of its subsidiaries that provide benefits upon termination of employment.
Board of Directors Mandate
The principal role of the Board is stewardship of the Company through the creation of shareholder value, including the protection and enhancement of the value of its assets, as the fundamental objective. The stewardship responsibility means that the Board oversees the general operation of the business and management, which is responsible for the day-to-day conduct of the business. The Board must assess and ensure systems are in place to manage the risks of the Company’s business with the objective of preserving the Company’s assets. The Board, through the CEO, sets the attitude and disposition of the Company towards compliance with applicable laws, environmental, safety and health policies, financial practices and reporting. In addition to its primary accountability to shareholders, the Board is also accountable to employees, government authorities, other stakeholders and the public. The Mandate of the Board is posted on the Company website and may be viewed at www.nxtenergy.com or you may request a copy be mailed to you by writing to our offices at Suite 302, 3320 - 17th Avenue SW Calgary, Alberta, Canada, T3E 0B4.
Board Committees
CORPORATE GOVERNANCE COMMITTEE
The Company and the Board recognize the importance of corporate governance to the effective management of the Company and to its shareholders. The Company’s approach to significant issues of corporate governance is designed with a view to ensuring that the business and affairs of the Company are effectively managed so as to enhance shareholder value. The Mandate of the Corporate Governance Committee is posted on the Company website and may be viewed at www.nxtenergy.com or you may request a copy be mailed to you by writing to our offices at Suite 302, 3320 - 17th Avenue SW Calgary, Alberta, Canada, T3E 0B4.
The Board and management endorse the need to establish forward-looking governance policies and to continuously evaluate and modify them to ensure their effectiveness.
Composition of the Corporate Governance Committee
Mr. Valentine (Chair), Mr. Tilson and Mr. Mork are members of the Corporate Governance Committee. All members of the Corporate Governance Committee are independent within the meaning of Canadian National Instrument 58-101.
Responsibilities of the Corporate Governance Committee
The Corporate Governance Committee’s duties, as outlined in its charter, are to deal with the Company’s approach to corporate governance and the promotion of compliance with industry and regulatory standards. The committee is responsible for overseeing and assessing the functioning of the Board and the committees of the Board and for the development, recommendation to the Board, implementation and assessment of effective corporate governance principles and guidelines. The Committee’s responsibilities also include identifying new candidates for director and recommending that the Board select qualified director candidates for election at the next annual meeting of shareholders.
20-F for the year ended December 31, 2025
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DISCLOSURE COMMITTEE
Composition of the Disclosure Committee
The Disclosure Committee currently consists of Mr. Selby, Mr. Sheehan and Mr. Woychyshyn.
Responsibilities of the Disclosure Committee
The Disclosure Committee’s duties are to ensure that the Company provides timely, accurate and balanced disclosure of all material information about the Company and to provide fair and equal access to such information. All news releases, including but not limited to releases of material information, are managed by the Disclosure Committee. If the information has been determined by the Disclosure Committee to be material, news releases will be prepared, reviewed and then disseminated through a news-wire service that provides simultaneous service to widespread news services and financial media. Additionally, the Disclosure Committee is responsible for ensuring public disclosure through filing these news releases on SEDAR+, EDGAR, and our website.
STRATEGIC PLANNING COMMITTEE
Composition of the Strategic Planning Committee
Messrs. Sheehan (Chair), Selby, and Wilcox are the current members of the Strategic Planning Committee. Mr. Selby is independent within the meaning of National Instrument 58-101 – Disclosure of Corporate Governance Practices.
Responsibilities of the Strategic Planning Committee
The Strategic Planning Committee’s duties are to set out the long-term goals of the Company and to take an active role in the development and execution of plans to achieve those goals. The Committee participates in establishing priority areas of Company business, assessment of strategic initiatives from Company senior executives with regard to development and implementation control of the Company Strategy and business area specific strategies of the Company. The Committee also makes recommendations regarding the overall organization and management structure including areas where management needs to be strengthened, reviewing the organizational job descriptions, requirements and also procedures for coordination of organizational management and Board resources. The Committee is actively involved in the Company’s strategic planning process and reviews all materials relating to the strategic plan with management. The Board is responsible for reviewing and approving the strategic plan. At least one Board meeting each year is centered on discussing and considering the strategic plan, which takes into account the risks and opportunities of the business. Management must seek the Board’s approval for any transaction that would have a significant impact on the strategic plan.
AUDIT COMMITTEE
Composition of the Audit Committee
The Audit Committee consists of Messrs. Selby (Chair), Tilson, and Mork. All members of the Audit Committee are independent within the meaning of National Instrument 52-110 –Audit Committees, and each member is financially literate. The Company’s Audit Committee Charter is posted on our website and may be viewed at www.nxtenergy.com or you may request a copy be mailed to you by writing to our offices at Suite 302, 3320 – 17th Avenue SW, Calgary, Alberta, Canada, T3E 0B4. All members of the Audit Committee have an educational background and experience that provides them with the knowledge and ability to understand accounting policies and related financial reporting and disclosure issues, in order to fulfill their duties and responsibilities as a member of the Audit Committee.
Charles Selby
Mr. Selby is both a lawyer and professional engineer, with past legal experience specializing in securities and corporate finance matters. He has served on the board or in senior management roles with a number of private firms as well as reporting issuers in the oil and natural gas industry. Mr. Selby has previously served on the audit committees of Alta Canada Energy Corp. and served as the audit committee chairman for Idaho Natural Resources Corp. (formerly Bridge Resources Corp.).
20-F for the year ended December 31, 2025
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| Table of Contents |
Jeffrey Tilson
Mr. Tilson spent 10 years as a financial advisor with Ameriprise Financial Services and currently owns, where he co-managed and serviced approximately US$220 million in client investment assets. He currently runs his referral-only firm, JST Investment Consulting, that he established. He holds a double major in Finance, Real Estate & Law, and Management Information Systems from California State University, Long Beach and holds professional designations from the College for Financial Planning, including:
| · | Chartered Retirement Planning Counselor (CRPC) |
| · | Accredited Asset Management Specialist (AAMS) |
| · | Accredited Wealth Management Advisor (AWMA) |
Mr. Tilson maintains active memberships in industry organizations, including:
| · | National Association of Personal Financial Advisors (NAPFA) |
| · | Fee-Only Network |
| · | Professional Fiduciary Association of California (PFAC) |
| · | Association of Financial Educators (AFE). |
Peter Mork
Mr. Mork is a Chartered Financial Analyst (CFA) charter holder and earned a Bachelor’s degree in Business/Economics from the University of California, Santa Barbara. He has served on several non-profit boards in leadership positions and has served as a Portfolio Manager at Mork Capital Management, LLC in Healdsburg, California since 2021, and in similar roles over the last two decades, drawing on investment sector and financial statement expertise.
Audit Committee Oversight - The Company’s Board has adopted all recommendations by the Audit Committee with respect to the nomination and compensation of the external auditor.
Pre-Approval Policies and Procedures - The Audit Committee has adopted a formal policy requiring the pre-approval of all audit and non-audit related services to be provided by the Company’s principal auditor prior to the commencement of the engagement, subject to the following:
· | 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 $50,000 (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 $50,000 (annual aggregate total), the entire Audit Committee must approve this service, generally at its next scheduled meeting. |
COMPENSATION COMMITTEE
Composition of the Compensation Committee
Messrs. Mork (Chair), Tilson and Valentine are the current members of the Compensation Committee. All members are independent within the meaning of NI 58-101 and have extensive direct financial and legal experience which is relevant to fulfilling their responsibilities related to executive compensation. In his career as a portfolio manager, Mr. Mork has advised on and analyzed compensation plans for public companies. In addition, he has gained relevant human resource experience serving on various boards. Mr. Valentine has served on the compensation committee of two public companies and has dealt with compensation and employment law issues for 30 years. Mr. Tilson has advised on compensation plans for not-for-profit organizations and holds relevant education and certifications in finance and financial planning. In addition, he has gained relevant human resource experience running his own business. The charter of the Compensation Committee is posted on the Company’s website and may viewed at www.nxtenergy.com. Investors may also request a copy be mailed to them by writing to our offices at Suite 302, 3320 – 17th Avenue SW, Calgary, Alberta, Canada, T3E 0B4.
20-F for the year ended December 31, 2025
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| Table of Contents |
Responsibilities of the Compensation Committee
The Compensation Committee’s duties, as outlined in its charter, are to deal with the assessment of management and succession to key positions and compensation within the Company. The Compensation Committee shall assist the Board in discharging the Board’s oversight responsibilities relating to the compensation and retention of key senior management employees, and in particular the CEO, with the skills and expertise needed to enable the Company to achieve its goals and strategies at fair and competitive compensation and appropriate performance incentives. In discharging its responsibilities, the Compensation Committee will report and where appropriate, make recommendations to the Board in respect of the matters identified in the charter.
D. Employees
Fiscal year ended December 31, 2025
As of the fiscal year ended December 31, 2025, we had a total of 12 employees. NXT has no employees that are members of a labor union. The following summarizes the number of employees and independent contractors by main job function as at December 31, 2025:
Function |
| employees |
|
| contractors |
|
| total |
| |||
Senior management team |
|
| 2 |
|
|
| - |
|
|
| 2 |
|
Finance, administration and sales |
|
| 2 |
|
|
| - |
|
|
| 2 |
|
Operations and technical development |
|
| 8 |
|
|
| - |
|
|
| 8 |
|
Total |
|
| 12 |
|
|
| - |
|
|
| 12 |
|
Ten of the above noted staff are based in Canada; our CEO is based in New York City, New York, USA. The seven operations and technical development staff include one research scientist holding a Ph.D., two geoscientists, two engineers, a logistics and safety professional, and an information technology professional. We periodically engage other technical and administrative contract personnel as required on a project basis.
Fiscal year ended December 31, 2024
As of the fiscal year ended December 31, 2024, we had a total of 11 employees. NXT has no employees that are members of a labor union. The following summarizes the number of employees and independent contractors by main job function as at December 31, 2024:
Function |
| employees |
|
| contractors |
|
| total |
| |||
Senior management team |
|
| 2 |
|
|
| - |
|
|
| 2 |
|
Finance, administration and sales |
|
| 2 |
|
|
| - |
|
|
| 2 |
|
Operations and technical development |
|
| 7 |
|
|
| - |
|
|
| 7 |
|
Total |
|
| 11 |
|
|
| - |
|
|
| 11 |
|
Ten of the above noted staff are based in Canada; our CEO is based in New York City, New York, USA. The seven operations and technical development staff include one research scientist holding a Ph.D., two geoscientists, two engineers, a logistics and safety professional, and an information technology professional. We periodically engage other technical and administrative contract personnel as required on a project basis.
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| 48 |
| Table of Contents |
Fiscal year ended December 31, 2023
As of the fiscal year ended December 31, 2023, we had a total of 11 employees. NXT has no employees that are members of a labor union. The following summarizes the number of employees and independent contractors by main job function as at December 31, 2023:
Function |
| employees |
|
| contractors |
|
| total |
| |||
Senior management team |
|
| 2 |
|
|
| - |
|
|
| 2 |
|
Finance, administration and sales |
|
| 3 |
|
|
| - |
|
|
| 3 |
|
Operations and technical development |
|
| 6 |
|
|
| - |
|
|
| 6 |
|
Total |
|
| 11 |
|
|
| - |
|
|
| 11 |
|
Ten of the above noted staff were based in Canada; our CEO was based in New York City, New York, USA. The six operations and technical development staff include one research scientist holding a Ph.D., two geoscientists, two engineers and an information technology professional. We periodically engaged other technical and administrative contract personnel as required on a project basis.
E. Share ownership.
Information on the ownership of our common shares is given under Item 7, Major Shareholders and Related Party Transactions.
Summary of Stock Options, Restricted Share Units, Employee Share Purchase Plan and Deferred Share Units Granted To Executive Officers and Directors
All stock options have been granted pursuant to the Stock Option Plan (the “Plan”) of the Company. The Plan is approved and ratified by shareholders every three years at the Company’s annual general meeting (“AGM”). The Plan, was re-approved and ratified at the Company’s AGM held on June 2, 2025. Pursuant to this Plan, all stock option grants must be approved by the Board. Stock options may be granted to the directors, officers and employees of NXT and to consultants retained by the Company. The aggregate number of common shares reserved for issuance under this Plan, and any other plan of the Company, shall not, at the time of the stock option grant, exceed ten percent of the total number of issued and outstanding shares (calculated on a non-diluted basis) unless the Company receives the permission of the stock exchange or exchanges on which the shares are then listed to exceed such threshold. No stock option shall be exercisable for a period exceeding five (5) years from the date the stock option is granted unless the Company receives the permission of the stock exchange or exchanges on which the shares are then listed and as specifically provided by the Board and as permitted under the rules of any stock exchange or exchanges on which the shares are then listed, and in any event, no stock option shall be exercisable for a period exceeding ten (10) years from the date the option is granted.
Stock options are generally issued with vesting criteria set at rates determined by the Board. The exercise price for an option grant is set at the five-day volume weighted price on the date preceding the grant or some higher price at the discretion of the Board.
The RSU is approved and ratified by shareholders every three years at the Company’s AGM. The RSU, as was re-approved and ratified at the Company’s AGM held on August 2, 2023. Pursuant to the RSU, all grants must be approved by the Board of the Company. RSU’s may be granted to the directors, officers and employees of NXT and to consultants retained by the Company. The aggregate number of common shares reserved for issuance under this Plan, and any other plan of the Company, shall not, at the time of the RSU grant, exceed ten percent of the total number of issued and outstanding shares (calculated on a non-diluted basis). The RSU’s are generally issued with a three-year vesting where they shall vest at the end of each of the first three years following the grant date. The price is determined on the vesting date.
DSU Plan was approved and ratified by the shareholders at the Company’s annual meeting on June 2, 2025. The DSU Plan is a long-term incentive plan that permits the grant of DSUs to qualified directors, as determined by the Board in its absolute discretion (collectively, the “Designated Participants”). Designated Participants are required to elect (in respect of each calendar year) the amount of the aggregate annual retainer or fee to be received in the form of DSUs, cash, Common Shares purchased on the secondary market, or a combination thereof, subject to requirements imposed by the Board to receive a specified minimum value of his or her annual retainer or fee in the form of DSUs. DSUs granted under the DSU Plan are to be settled at the election of the Board in cash, Common Shares issued from treasury (subject to Shareholder approval of unallocated entitlements thereunder every three years thereafter), or, at the election of the Board, or a combination of cash and Common Shares.
20-F for the year ended December 31, 2025
| 49 |
| Table of Contents |
The ESP Plan is approved and ratified by shareholders every three years at the Company’s AGM. The ESP Plan was initially approved and ratified at the Company’s AGM held on August 2, 2023. The shareholders of the Company and subsequently the TSX approved, the ESP Plan. The ESP Plan allows employees and other individuals determined by the Board to be eligible to contribute a minimum of 1% and a maximum of 10% of their earnings to the plan for the purchase of common shares in the capital of the Company, of which the Company will make an equal contribution. Common shares contributed by the Company may be issued from treasury or acquired through the facilities of the TSX. During 2025, 2024 and 2023 the Company has elected to issue common shares from treasury.
The following stock options, RSUs, DSUs and ESP Plan matches were granted to NXT’s executive officers and directors in the three prior fiscal years ended December 31, 2025, 2024, and 2023 and to date of this 20-F.
2026 to the date of this 20-F:
| · | A total of 103,607 DSUs were earned by directors of the Company; and |
· | A total of 27,946 common shares were matched by the Company through the ESP Plan for an executive officer for the year-to-date period ended as of the date of this 20-F. |
In 2025:
| · | A total of 1,400,000 stock options with an exercise price of $0.203 per common share were issued to directors of the Company on February 24, 2025; |
| · | A total of 2,000,000 stock options with an exercise price of $0.309 per common share were issued to directors of the Company on December 16, 2025; |
| · | A total of 404,927 DSUs were earned by directors of the Company; |
· | A total of 400,000 RSU were granted to officers of the Company on February 24, 2025; and |
· | A total of 65,169 common shares were matched by the Company through the ESP Plan for an executive officer. |
In 2024:
· | A total of 82,872 DSUs were earned by directors of the Company; |
· | A total of 200,000 RSU were granted to officers of the Company on February 21, 2024; and |
· | A total of 112,904 common shares were matched by the Company through the ESP Plan for an executive officer. |
In 2023:
· | A total of 150,000 of stock options held by an officer of the Company expired; |
· | A total of 566,500 stock options with an average exercise price of $0.222 per common share were earned by a director of the Company in lieu of director fees; |
· | A total of 850,000 stock options with an average exercise price of $0.216 per common share were granted to directors and an officer of the Company; |
· | A director forfeited 100,000 stock options with an average exercise price of $0.216 upon his resignation from the Board; |
· | No RSUs were granted to officers of the Company; |
· | No DSUs were earned by directors of the Company; and |
· | A total of 78,571 common shares were matched by the Company through the ESP Plan for executive officers for the year ended December 31, 2023. |
20-F for the year ended December 31, 2025
| 50 |
| Table of Contents |
The following table sets forth information regarding outstanding stock options which have been granted to our directors and officers as of the date of the 20-F. All options are issued at an exercise price set at the weighted average trading price on the five trading dates prior to the grant date. Each option entitles the option holder to acquire one common share of the Company.
Issued and outstanding stock options held by directors and officers of the Company (as of the date of this 20-F)
|
|
|
| Option |
| Option |
| # of |
|
| % of total |
| ||||
Name and |
| Exercise |
|
| Grant |
| Expiry |
| options |
|
| outstanding |
| |||
Position |
| Price |
|
| Date |
| Date |
| held |
|
| options |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Theodore Patsellis |
| $ | 0.259 |
|
| 14-Sep-23 |
| 14-Sep-28 |
|
| 100,000 |
|
|
|
| |
Director |
| $ | 0.252 |
|
| 28-Sep-23 |
| 28-Sep-28 |
|
| 36,400 |
|
|
|
| |
|
| $ | 0.203 |
|
| 24-Feb-25 |
| 24-Feb-30 |
|
| 200,000 |
|
|
|
| |
|
| $ | 0.309 |
|
| 16-Dec-25 |
| 16-Dec-30 |
|
| 200,000 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| 536,400 |
|
|
| 6.8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles Selby |
| $ | 0.216 |
|
| 06-Jan-23 |
| 06-Jan-28 |
|
| 100,000 |
|
|
|
|
|
Chairman |
| $ | 0.264 |
|
| 11-Jan-23 |
| 11-Jan-28 |
|
| 177,200 |
|
|
|
|
|
|
| $ | 0.200 |
|
| 05-Jun-23 |
| 05-Jun-28 |
|
| 55,400 |
|
|
|
|
|
|
| $ | 0.252 |
|
| 28-Sep-23 |
| 28-Sep-28 |
|
| 42,450 |
|
|
|
|
|
|
| $ | 0.203 |
|
| 24-Feb-25 |
| 24-Feb-30 |
|
| 200,000 |
|
|
|
|
|
|
| $ | 0.309 |
|
| 16-Dec-25 |
| 16-Dec-30 |
|
| 400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 975,050 |
|
|
| 12.4 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerry Sheehan |
| $ | 0.216 |
|
| 06-Jan-23 |
| 06-Jan-28 |
|
| 100,000 |
|
|
|
|
|
CEO & Director |
| $ | 0.203 |
|
| 24-Feb-25 |
| 24-Feb-30 |
|
| 200,000 |
|
|
|
|
|
|
| $ | 0.309 |
|
| 16-Dec-25 |
| 16-Dec-30 |
|
| 200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 500,000 |
|
|
| 6.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Tilson |
| $ | 0.203 |
|
| 24-Feb-25 |
| 24-Feb-30 |
|
| 200,000 |
|
|
|
|
|
Director |
| $ | 0.309 |
|
| 16-Dec-25 |
| 16-Dec-30 |
|
| 200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 400,000 |
|
|
| 5.1 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Valentine |
| $ | 0.216 |
|
| 06-Jan-23 |
| 06-Jan-28 |
|
| 100,000 |
|
|
|
|
|
Director |
| $ | 0.200 |
|
| 05-Jun-23 |
| 05-Jun-28 |
|
| 110,800 |
|
|
|
|
|
|
| $ | 0.203 |
|
| 24-Feb-25 |
| 24-Feb-30 |
|
| 200,000 |
|
|
|
|
|
|
| $ | 0.309 |
|
| 16-Dec-25 |
| 16-Dec-30 |
|
| 200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 610,800 |
|
|
| 7.8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce G. Wilcox |
| $ | 0.216 |
|
| 06-Jan-23 |
| 06-Jan-28 |
|
| 100,000 |
|
|
|
|
|
Director |
| $ | 0.264 |
|
| 09-Jan-23 |
| 09-Jan-28 |
|
| 52,650 |
|
|
|
|
|
|
| $ | 0.203 |
|
| 24-Feb-25 |
| 24-Feb-30 |
|
| 200,000 |
|
|
|
|
|
|
| $ | 0.309 |
|
| 16-Dec-25 |
| 16-Dec-30 |
|
| 400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 752,650 |
|
|
| 9.5 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eugene Woychyshyn |
| $ | 0.216 |
|
| 06-Jan-23 |
| 06-Jan-28 |
|
| 250,000 |
|
|
|
|
|
Director, President and CFO |
| $ | 0.203 |
|
| 24-Feb-25 |
| 24-Feb-30 |
|
| 200,000 |
|
|
|
|
|
|
| $ | 0.309 |
|
| 16-Dec-25 |
| 16-Dec-30 |
|
| 400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 850,000 |
|
|
| 10.8 | % |
Total held by officers and directors |
|
|
|
|
|
|
|
|
|
| 4,624,900 |
|
|
| 58.7 | % |
20-F for the year ended December 31, 2025
| 51 |
| Table of Contents |
Issued and outstanding RSUs held by directors and officers of the Company (as of the date of this 20-F)
Name and Position |
| RSU Grant Date |
| RSU Expiry Date |
| Outstanding RSUs |
|
| % of total Outstanding RSUs |
| ||
Bruce G. Wilcox |
| 21-Feb-24 |
| 21-Feb-27 |
|
| 26,666 |
|
|
|
| |
Director |
| 24-Feb-25 |
| 24-Feb-28 |
|
| 133,333 |
|
|
|
| |
|
|
|
|
|
|
| 159,999 |
|
|
| 10.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Eugene Woychyshyn |
| 21-Feb-24 |
| 21-Feb-27 |
|
| 40,000 |
|
|
|
|
|
Director, President and CFO |
| 24-Feb-25 |
| 24-Feb-28 |
|
| 133,333 |
|
|
|
|
|
|
|
|
|
|
|
| 173,333 |
|
|
| 11.1 | % |
% |
|
|
|
|
|
| 333,332 |
|
|
| 21.4 | % |
Outstanding DSUs held by directors of the Company (as of the date of this 20-F)
Name |
| Position |
| Outstanding DSUs |
|
| % of Outstanding |
| ||
Peter Mork |
| Director |
|
| 139.862 |
|
|
| 22.2 | % |
Charles Selby |
| Chairman |
|
| 152,184 |
|
|
| 24.2 | % |
Jeffrey Tilson |
| Director |
|
| 98,426 |
|
|
| 15.7 | % |
Bruce G. Wilcox |
| Director |
|
| 98,426 |
|
|
| 15.7 | % |
Eugene Woychyshyn |
| Director, President and CFO |
|
| 139.862 |
|
|
| 22.2 | % |
|
|
|
|
| 628,760 |
|
|
| 100.0 | % |
F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major shareholders.
The following table sets forth information concerning the beneficial ownership of our common shares as of the date of this 20-F by persons who beneficially own 5% or more of the outstanding common shares of NXT, each person who is a director of NXT, each executive officer named in this Form 20-F, each individual referenced in Item 6.E above and all directors and executive officers as a group. For the purposes of this Form 20-F, a person is considered to be a “beneficial owner” of common shares in the Company if that person has, or shares with another person, the power to direct the vote or disposition of the common shares or to receive the economic benefit of ownership of the common shares.
A person is also deemed to be a beneficial owner of a common share if that person has the right to acquire the share within 60 days by option or other agreement (whether or not, in the case of a stock option, the current market price of the underlying common share is below the stock option exercise price). Therefore, the table below also reflects, for each such beneficial owner, the number of options exercisable into common shares, RSUs and DSUs to vest, within 60 days of the date of this 20-F that are owned by each beneficial owner, but, in determining the percentage ownership and general voting power of such person, does not assume the exercise of options or the conversion of securities owned by any other person.
20-F for the year ended December 31, 2025
| 52 |
| Table of Contents |
We believe that the beneficial owners of common shares listed below, based on information they furnished, have sole voting and investment power over the number of shares listed opposite their names. The percentage of beneficial ownership is based on 119,487,040 common shares issued and outstanding as of the date of this 20-F. This total of 119,487,040 excludes all outstanding options that are exercisable within 60 days of 20-F, but which are adjusted for each person’s % purposes as noted in footnote 5 below).
Beneficial Ownership of Directors and Officers (“D&O”) |
| Beneficially Owned as at the date of this 20-F |
|
| Percent of Common Shares5 |
| ||
Directors and Officers: |
|
|
|
|
|
| ||
Peter Mork1 |
|
| 545,099 |
|
| *3 |
| |
Theodore Patsellis1 |
|
| 108,449 |
|
| *3 |
| |
Charles Selby 1 |
|
| 935,099 |
|
| *3 |
| |
Gerry Sheehan1,2 |
|
| 359,226 |
|
| *3 |
| |
Jeffrey Tilson1 |
|
| 8,007,638 |
|
|
| 6.70 | % |
Thomas Valentine1 |
|
| 332,186 |
|
| *3 |
| |
Bruce G. Wilcox 1 |
|
| 1,248,401 |
|
|
| 1.04 | % |
Eugene Woychyshyn1,2 |
|
| 1,444,257 |
|
|
| 1.21 | % |
Total D & O Common Shares |
|
| 12,980,355 |
|
|
| 10.85 | % |
Major Shareholders (> 5%): |
|
|
|
|
|
|
|
|
Alberta Green Ventures Limited Partnership |
|
| 6,764,945 |
|
|
| 5.66 | % |
Ataraxia |
|
| 13,540,208 |
|
|
| 11.33 | % |
Chee Pheng Cheng |
|
| 11,256,869 |
|
|
| 9.42 | % |
Mork Capital4 |
|
| 37,576,821 |
|
|
| 31.45 | % |
1 Director of NXT
2 Officer of NXT
3 Beneficially owns less than one percent of the total outstanding common shares.
4 Mr. Michael Mork controls MCAPM, LP. Mr. Mork owns 2,886,233 common shares included in this total.
5 For each beneficial owner’s percentage of common shares calculation, it is assumed that any stock options, DSUs and convertible debenture that they hold which are, or will become exercisable within 60 days of the date of this 20-F have been exercised (while also assuming that no one else similarly exercises), and such options are thus included in both the numerator and denominator for purposes of each of their own person’s calculations as follows:
|
| Common shares held |
|
| vested & exercisable options |
|
| Vested DSUs |
|
| Pro forma total |
| ||||
Peter Mork |
|
| 405,237 |
|
|
| - |
|
|
| 139,862 |
|
|
| 545,099 |
|
Theodore Patsellis |
|
| 38,716 |
|
|
| 69,733 |
|
|
| - |
|
|
| 108,449 |
|
Charles Selby |
|
| 474,532 |
|
|
| 308,383 |
|
|
| 152,184 |
|
|
| 935,099 |
|
Gerry Sheehan |
|
| 325,893 |
|
|
| 33,333 |
|
|
| - |
|
|
| 359,226 |
|
Jeffrey Tilson |
|
| 7,909,212 |
|
|
| - |
|
|
| 98,426 |
|
|
| 8,007,638 |
|
Thomas Valentine |
|
| 188,053 |
|
|
| 144,133 |
|
|
| - |
|
|
| 332,186 |
|
Bruce G. Wilcox |
|
| 1,063,992 |
|
|
| 85,983 |
|
|
| 98,426 |
|
|
| 1,248,401 |
|
Eugene Woychyshyn |
|
| 1,221,062 |
|
|
| 83,333 |
|
|
| 139,862 |
|
|
| 1,444,257 |
|
|
|
| 11,626,697 |
|
|
| 724,898 |
|
|
| 628,760 |
|
|
| 12,980,355 |
|
Major changes in the last 3 years in the percentage ownership of persons who beneficially own (as at the respective December 31, year-end dates) 5% or more of the outstanding common shares of NXT were:
1. | On November 28, 2025, Mr. Tilson acquired 525,000 common shares through a private transaction an additional 500,000 on January 2, 2026. |
2. | Mork Capital was issued 7,050,500 common shares through the 2025 Private Placement on November 24, 2025. |
3. | On September 3, 2025, Ms. Cheng acquired beneficial ownership of 625,717 common shares pursuant to the settlement of the Estate of George Liszicasz, the former CEO of NXT, which estate Ms. Cheng is a beneficiary. |
4. | Mr. Tilson has acquired common shares on the public markets since he became a director on December 16, 2024. |
5. | Ataraxia acquired US$500,000 of convertible debentures on November 4 and US$400,000 on November 12, 2024 which were converted to 3,750,000 common shares on May 30, 2025. |
20-F for the year ended December 31, 2025
| 53 |
| Table of Contents |
6. | Mork Capital acquired US$2,000,000 of convertible debentures on May 31, 2024, which were converted to 8,000,000 common shares on June 26, 2025. |
7. | Mork Capital acquired US$1,000,000 of convertible debentures on November 8, 2023, and US$375,000 on January 12, 2024, which were converted to 7,605,088 common shares June 26, 2025. |
8. | On March 5, 2024, Ms. Cheng acquired beneficial ownership of 2,000,000 common shares pursuant to the settlement of the Estate of George Liszicasz. |
9. | On August 4, 2023, Ms. Cheng acquired beneficial ownership of 11,072,001 common shares pursuant to the settlement of the Estate of George Liszicasz. |
10. | During 2023, 2024 and 2025 Ms. Cheng has sold common shares on the public markets. |
11. | Ataraxia acquired US$1,200,000 of convertible debentures on May 31, 2023 and US$200,000 on July 10, 2023 which together may be converted to 9,790,208 common shares on May 30, 2025. |
12. | Mork Capital acquired 8,750,000 common shares through the 2022 Private Placement between December 23, 2022 and January 11, 2023. |
NXT is a foreign private issuer for its current fiscal year. As of the last business day of the Company’s second fiscal quarter, the 50% of the Company’s executive officers are Canadian citizens who reside in Canada, the majority of the Company’s assets are in Canada and the Company is administered principally in Canada. Three of the eight directors of the Company are Canadian citizens as of the date of this 20-F. The Company’s major shareholders in common shares have the same voting rights as other holders of common shares. The Company is not directly or indirectly owned or controlled by another corporation, a foreign government or any other natural or legal persons severally or jointly. There are no arrangements known to the Company which may result in a change of control of the Company.
B. Related party transactions.
Summarized below are certain other transactions and business relationships between NXT and persons who are related parties, for the current fiscal year ended December 31, 2025, through the date of this 20-F:
· | Details of stock options, DSUs and RSUs which have been granted to related parties during the above noted period are included with Item 6.E above. No stock options have been exercised by related parties in these periods; |
· | Details of Board of Director fees and Management Compensation for 2025 are included above with Item 6.B. In 2026, as of the date of this 20-F, total Director fees incurred are approximately $81,667 and Management Compensation is approximately $225,628; |
· | One of the members of NXT’s Board, Mr. Thomas Valentine is a partner in the law firm Norton Rose Fulbright, which provides legal advice to NXT. In 2025, NXT incurred legal costs of $145,177 with this firm, for which a total of $41,450 is included in accounts payable as at December 31, 2025. Norton Rose Fulbright continues to provide legal services to NXT. In 2026, as of the date of this 20-F, approximately $26,813 of legal fees with Norton Rose Fulbright have been incurred, for which $26,238 is still outstanding; |
· | Another member of NXT’s Board of Directors was a board member of Pana Holdings Mauritius, the parent company of Ataraxia until May 1, 2025, which held the Ataraxia Debentures until May 30, 2025. Total interest expense was $134,806 (US$94,521). Details of the convertible debentures and conversion are included with Item 5.B above; |
· | A third member of Board is an employee of MCAPM LP, which held convertible debentures until June 26, 2025. Total interest expense in 2025 was $232,440 (US$163,664). Details of the convertible debentures and conversion are included with Item 5.B above; and |
· | During 2025 convertible debentures held by members of the Board of Directors included in accounts payable and accrued liabilities, a total of $2,954 (US$2,152) and total interest expense was $18,718 (US$13,348). Details of the convertible debentures and conversion are included with Item 5.B above. |
C. Interests of experts and counsel.
Not applicable.
20-F for the year ended December 31, 2025
| 54 |
| Table of Contents |
ITEM 8. FINANCIAL INFORMATION
A. Consolidated statements and other financial information.
The Company’s consolidated financial statements are stated in Canadian dollars and are prepared in accordance with U.S. generally accepted accounting principles.
The financial statements and notes thereto as required under Item 8 are attached as Exhibit 15.1 to this annual report and are incorporated by reference herein. The audit reports of MNP LLP (“MNP”) are included therein immediately preceding the consolidated financial statements and is also incorporated by reference herein.
No significant events or changes have occurred subsequent to the date of the December 31, 2025 consolidated financial statements, except as otherwise disclosed herein Item 8.B.
Legal Proceedings
To the best of the Company’s knowledge, there are no legal or arbitration proceedings existing or pending which have had or may have, significant effects on the Company’s financial position or profitability and no such proceedings are pending or known to be contemplated by governmental authorities.
Dividend Policy
The Company does not pay dividends.
B. Significant Changes.
As of the date of this 20-F, three subsequent events have occurred subsequent to the date of consolidated financial statements for the year ended December 31, 2025:
· | On April 20, 2026, Mr. Gerry Sheehan became the CEO of NXT and Mr. Bruce G. Wilcox retired as CEO of the Company; |
· | On April 8, 2026, NXT announced that it has entered into a contract to provide an SFD® survey to an independent oil and gas exploration company in South Asia; and |
· | The remaining debentures with a face value of US$45,000 were converted into 248,893 common shares at a fixed conversion price of US$0.1808 on January 5, 2026. |
NXT’s interim unaudited consolidated financial statements for the 3-month period ended March 31, 2026, are planned to be released on or before May 14, 2026.
ITEM 9. THE OFFER AND LISTING
A. Offer and listing details.
Our common shares are currently quoted in the U.S. on the OTC Markets QB Exchange under the symbol “NSFDF”, in Canada on the TSX under the symbol “SFD”. There have been no trading suspensions over the last three years.
B. Plan of distribution.
Not applicable.
20-F for the year ended December 31, 2025
| 55 |
| Table of Contents |
C. Markets.
Our common shares are currently quoted in the U.S. on the OTC Markets QB Exchange under the symbol “NSFDF”, in Canada on the TSX under the symbol “SFD” effective from March 22, 2016, and in Europe on the Frankfurt and Berlin Exchanges (both of these listings are inactive) under the symbol “EFW”.
D. Selling shareholders.
Not applicable.
E. Dilution.
Not applicable.
F. Expenses of the issue.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share capital.
Not applicable.
B. Memorandum and articles of association.
NXT was incorporated in the State of Nevada in 1994. With respect to the foregoing items, the law applicable to NXT in the Province of Alberta is not significantly different from that in the State of Nevada. NXT was established in Alberta pursuant to a Certificate of Continuance issued October 24, 2003 by the Registrar of Corporations of the Province of Alberta. NXT’s Alberta Corporate Access Number is 2010730915. The Articles of Continuance of NXT were amended to create the Series 1 Preferred Shares on December 28, 2006, and provide that there are no restrictions on the nature of the business that may be carried on by NXT. On September 19, 2008, pursuant to Articles of Amendment, the name of the Company was changed from Energy Exploration Technologies Inc. to NXT Energy Solutions Inc. At the Annual Meeting of Shareholders on August 2, 2023 shareholders approved the cancellation of the outstanding Series 1 preferred shares and approve the creation of the Series 2 Preferred Shares under the Ataraxia Subscription Agreement.
Quorum
The Board of NXT may fix the quorum for meetings of the Board or of a committee of the Board, but unless so fixed, a majority of the directors or of a committee of directors holding office at the time of the meeting constitutes a quorum provided that no business may be transacted unless at least half of the directors present are resident Canadians. Business cannot be transacted without a quorum. A quorum of directors may vote on any matter of business properly brought before the meeting provided that where a director is a party to a material contract or proposed material contract or is a director or an officer of or has a material interest in any person who is a party to a material contract or proposed material contract with NXT, such director must disclose his or her interest at the earliest possible date, request the conflict be noted in the minutes of the meeting and with few exceptions, refrain from voting on the matter in which the director has a conflict of interest. There is no limitation on the Board to vote on matters of their remuneration as a director, officer, employee or agent of NXT or of an affiliate of NXT.
Borrowing Powers
The Board may, without authorization of the shareholders of NXT:
| (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. |
20-F for the year ended December 31, 2025
| 56 |
| Table of Contents |
The Board of NXT may, by resolution, delegate to a director, a committee of directors or an officer all or any of the foregoing borrowing powers.
Directors
A person is qualified to be or stand for election as a director provided such person is at least 18 years of age, is not bankrupt and is not mentally incapacitated pursuant to applicable mental health legislation of the Province of Alberta or pursuant to an order of the courts of the Province of Alberta. There is no provision in NXT’s Articles or By-Laws relating to the retirement or non-retirement of directors under an age limit requirement. There is also no requirement in NXT’s Articles or By-Laws for a director to hold securities of NXT.
Pursuant to the ABCA, a director or officer shall not be disqualified by his office, or be required to vacate his office, by reason only that he is a party to, or is a director or officer or has a material interest in any person who is a party to, a material contract or proposed material contract with NXT or subsidiary thereof. Such a director or officer shall, however, disclose the nature and extent of his interest in the contract at the time and in the manner provided by the ABCA. Any such contract or proposed contract shall be referred to the Board of NXT or shareholders for approval even if such contract is one that in the ordinary course of NXT’s business would not require approval by the Board or shareholders. Subject to the provisions of the ABCA, a director shall not by reason only of his office be accountable to NXT or to its shareholders for any profit or gain realized from such a contract or transaction, and such contract or transaction shall not be void or voidable by reason only of the director’s interest therein, provided that the required declaration and disclosure of interest is properly made, the contract or transaction is approved by the directors or shareholders, and it is fair and reasonable to NXT at the time it was approved and, if required by the ABCA, the director refrains from voting as a director on the contract or transaction and absents himself from the director’s meeting at which the contract is authorized or approved by the directors, except attendance for the purpose of being counted in the quorum.
Rights Attached to Common Shares
The holders of the common shares are entitled to dividends as and when declared by the directors of NXT, to one vote per share at meetings of shareholders of NXT, and upon liquidation, subject to the rights of the holders of preferred shares, are entitled to share rateably with the holders of the common shares in all distributions of assets of NXT.
Rights Attached to Preferred Shares
The Company is authorized to issue an unlimited number of Preferred Shares, issuable in series. The Board may by resolution fix before issuance, the designation, rights, privileges, restrictions and conditions to attach to the Preferred Shares of each series, subject to shareholder approval. The Preferred Shares are entitled to preference over the common shares with respect to the payment of dividends, if any, and in the event of liquidation, dissolution or winding-up of the Company. As of March 31, 2026, there are no Preferred Shares outstanding.
As of May 29, 2025, the Series 2 Preferred Shares terms are no longer valid with the conversion of the Ataraxia Debentures into common shares of NXT. Therefore, the Board is planning to ask shareholders to cancel the Series 2 Preferred Shares at the 2026 Annual and Special Meeting of shareholders.
The complete description of the rights, privileges, restrictions and conditions of the Preferred Shares is included in our Articles of Continuance, a copy of which is available through the Company’s issuer profile on SEDAR+ at www.sedarplus.ca.
20-F for the year ended December 31, 2025
| 57 |
| Table of Contents |
Alteration of the Rights of Shareholders
Under the ABCA, any substantive change to the Articles (including, but not limited to, change of any maximum number of shares that NXT is authorized to issue, creation of new classes of shares, add, change or remove any rights, privileges, restrictions and conditions in respect of all or any of its shares, whether issued or unissued, change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series) or other fundamental changes to the capital structure of NXT, including a proposed amalgamation or continuance of NXT out of the jurisdiction, requires shareholder approval by not less than 2/3 of the votes cast by shareholders voting in person or by proxy at a shareholders’ meeting called for that purpose. In certain prescribed circumstances, holders of shares of a class or of a series are entitled to vote separately as a class or series on a proposal to amend the Articles whether or not shares of a class or series otherwise carry the right to vote. The holders of a series of shares of a class are entitled to vote separately as a series only if the series is affected by an amendment in a manner different from other shares of the same class.
Meetings of Shareholders
NXT’s By-Laws provide that the Board shall call an annual meeting of shareholders to be held not later than fifteen months after holding the last preceding annual meeting. NXT’s By-Laws provide that the Board may at any time call a special meeting of shareholders. Only the registered holders of shares are entitled to receive notice of and vote at annual and special meetings of shareholders, except to the extent that:
| (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; and |
| · | in which case the transferee is entitled to vote the shares. |
The ABCA also permits the holders of not less than 5% of the issued voting securities of NXT to give notice to the Board requiring them to call and hold a meeting of NXT.
The only persons entitled to be present at a meeting of shareholders are:
| (a) | the shareholders entitled to vote at the meeting; |
| (b) | the Board 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. |
Any other person may be admitted only on the invitation of the Chairperson of the meeting or with the consent of the meeting.
There are no restrictions in NXT’s Articles or By-Laws as to the number of shares that may be held by non-residents other than restrictions set out in the Investment Canada Act (the “ICA”) (Canada), as further described under Item 10.D – “Exchange Controls” below.
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Change of Control
There are no specific provisions in the Articles or By-Laws of NXT that have the effect of delaying, deferring or preventing a change of control of NXT and that would operate only with respect to a merger, acquisition or corporate restructuring involving NXT (or any of its subsidiaries). Notwithstanding this, the Board, under the general powers conferred to it under NXT’s By-Laws, have the authority to approve and invoke a shareholders rights plan that will protect shareholders from unfair, abusive or coercive take-over strategies, including the acquisition or control of NXT by a bidder in a transaction or series of transactions that does not treat all shareholders equally or fairly or that does not afford all shareholders an equal opportunity to share in any premium paid upon an acquisition of control. NXT has not adopted such a plan.
Shareholder Ownership Disclosure
There are no provisions in NXT’s By-Laws regarding public disclosure of individual shareholdings.
C. Material contracts.
On May 31, 2023, the Company and Ataraxia entered into an Investor Rights Agreement (the “Investor Rights Agreement”) pursuant to which Ataraxia has been granted the right: (i) to nominate one person for election or appointment as a director of the Company; (ii) to have one representative of Ataraxia attend the Company’s Board meetings as an observer (except any portion of a Board meeting where the Company’s relationship with Ataraxia is to be a subject of discussion); (iii) to purchase up to its pro rata portion (calculated on a fully diluted basis) of any securities offered by the Company, subject to certain limitations set forth in the Investor Rights Agreement; and (iv) receive certain information regarding the Company, including annual and quarterly financial statements, annual budgets, the capitalization tables, and access to its premises upon reasonable notification. In each case, Ataraxia will retain the rights set forth in the Investor Rights Agreement for so long as Ataraxia holds common shares representing at least 5% of the outstanding common shares of the Company. Ataraxia currently owns 13,540,208 common shares. This represents approximately 11.3% of the issued and outstanding common shares as of the date of this 20-F.
The Investor Rights Agreement is publicly available under the Company’s profile on SEDAR+ at www.sedarplus.ca.
Executive Employment Agreements
The Company occasionally enters into employment agreements with the Company’s executive officers, with such agreements setting out the principal terms of the employment relationship as between the executive officer and the Company, including the individual’s overall role, the expectations of the Company around business practices including confidentiality, ethical behavior and conflict of interest and financial terms. In addition, the agreements detail any severance payments that may be provided on termination of employment.
Mr. Bruce G. Wilcox served as the Chief Executive Officer of the Company up to April 20, 2026. As a result, his executive employment agreement is no longer valid. Mr. Sheehan, the Chief Executive Officer of the Company, does not have an executive employment agreement as of the date of this 20-F.
Mr. Eugene Woychyshyn serves as the President and Chief Financial Officer of the Company pursuant to an executive employment agreement effective as of May 1, 2024 (the “Woychyshyn EEA”). Pursuant to the terms of the Woychyshyn EEA, the employment of Mr. Woychyshyn (the “Executive”) may be terminated by the Company. Upon termination of employment without cause, and for any other reason excluding termination with cause, disability, death, or voluntary resignation, the Executive is entitled to immediately receive:
(i) | an amount equal to the greater of 8 months of such Executive’s base salary, or 2 months of the base salary plus 1.5 months of the base salary for each year of service completed or commenced; |
(ii) | an amount equal to 50 percent of any bonuses paid to the Executive for the prior calendar year; |
(iii) | any declared but unpaid bonuses and any accrued benefits and vacation; |
(iv) | accrued or vested rights under the Company’s equity-based incentive plans, subject to compliance and conditions of such plans; and |
(v) | an amount equal to 15 percent of the amount calculated pursuant to item (i) above. |
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In addition to the above benefits, if the termination is pursuant to a change of control, all outstanding unvested rights under the Company’s equity-based incentive plans shall immediately accelerate and vest upon the occurrence of the change of control, and the Executives will have 90 days to exercise such rights. A change of control is defined in the Woychyshyn EEA as:
(i) | the acceptance by the 50 percent of the holders of voting securities of the Company, of any offer, whether by way of a takeover bid or otherwise, for more than 50 percent of the outstanding voting securities of the Company; |
(ii) | the acquisition of the beneficial ownership of more than 50 percent of the combined voting rights of the Company’s then outstanding voting securities by a person or two or more persons acting jointly; |
(iii) | the entering into of any agreement by the Company to merge, consolidate, amalgamate, initiate an arrangement or be absorbed by or into another company, except where such agreement relates to a bona fide reorganization of the Company in circumstances where the business of the Company is continued, and where the shareholdings or ownership interests remain substantially the same following the reorganization; |
(iv) | the passing of a resolution by the Board, or shareholders of the Company, to substantially liquidate assets or wind-up its business or significantly rearrange its affairs, except where such resolution or commencement relates to a bona fide reorganization of the Company in circumstances where the business of the Company is continued, and where the ownership interests remain substantially the same following the reorganization as existed prior to the reorganization; |
(v) | the sale by the Company of all or substantially all of the assets; or |
(vi) | individuals who were proposed as nominees by the management of the Company to become members of the Board immediately prior to a meeting of the shareholders of the Company involving a contest for or, an item of business relating to the election of directors shall not constitute a majority of the Board following such election. |
The following table sets out the estimated amounts payable by the Company to the Executive under the Woychyshyn EEA if the Executive had been terminated by the Company without cause on December 31, 2025:
Name |
| Cash Portion ($) |
|
| Option Value ($)(1) |
|
| RSU Value ($)(2) |
|
| DSU Value ($)(2) |
| ||||
Eugene Woychyshyn |
|
| 507,014 |
|
|
| 79,300 |
|
|
| 37,333 |
|
|
| 48,952 |
|
Notes:
| (1) | Options held by Executive at December 31, 2025, valued at the December 31, 2025, market price less the exercise price. |
| (2) | These amounts were calculated using $0.35, which was the closing trading price of the Common Shares on the TSX on December 31, 2025, the last day of trading of the year. |
There are no benefits payable to the Executives upon termination with cause, disability, death, or voluntary resignation.
D. Exchange controls.
There is no law, governmental decree or regulation in Canada that restricts the export or import of capital, or which would affect the remittance of dividends or other payments by the Company to non-resident holders of Common Shares, other than withholding tax.
E. Taxation.
Certain United States Federal Income Tax Considerations
The following is a general summary of certain anticipated material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from and relating to the acquisition, ownership, and disposition of common shares of the Company.
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This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a U.S. Holder arising from and relating to the acquisition, ownership and disposition of common shares. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax considerations applicable to such U.S. Holder, including, without limitation, specific tax considerations applicable to a U.S. Holder under an applicable income tax treaty. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any particular U.S. Holder. This summary does not address the U.S. federal net investment income tax, U.S. federal alternative minimum tax, U.S. federal estate and gift tax, U.S. state and local tax, and non-U.S. tax considerations applicable to U.S. Holders arising from or relating to the acquisition, ownership or disposition of common shares. In addition, except as specifically set forth below, this summary does not discuss applicable tax reporting requirements. Each prospective U.S. Holder should consult its own tax advisors regarding the U.S. federal, U.S. state and local, and non-U.S. tax considerations arising from and relating to the acquisition, ownership and disposition of common shares.
No legal opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the “IRS”) has been requested, or will be obtained, regarding the U.S. federal income tax considerations applicable to a U.S. Holder arising from or relating to the acquisition, ownership, and disposition of common shares. This summary is not binding on the IRS and the IRS is not precluded from taking a position that is different from, or contrary to, the positions taken in this summary. In addition, because the authorities on which this summary is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the conclusions described in this summary.
This summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed) promulgated thereunder (the “Treasury Regulations”), published rulings of the IRS, published administrative positions of the IRS, the Convention between Canada and the United States of America with Respect to Taxes on Income and Capital, signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”), and U.S. court decisions that are applicable, and, in each case, as in effect and available, as of the date of this document. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis, which could affect the U.S. federal income tax considerations described in this summary. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.
U.S. Holders
For purposes of this summary, the term “U.S. Holder” means a beneficial owner of common shares that is for U.S. federal income tax purposes:
| · | an individual who is a citizen or resident of the United States; |
| · | a corporation organized under the laws of the United States, any state thereof or the District of Columbia; |
| · | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
| · | a trust that (1) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. |
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U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed
This summary does not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions under the Code, including, but not limited to, U.S. Holders that: (a) are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) are banks, financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) are broker-dealers, dealers, or traders in securities or currencies that elect to apply a mark-to-market accounting method; (d) have a “functional currency” other than the U.S. dollar; (e) own common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other integrated transaction; (f) acquire common shares in connection with the exercise or cancellation of employee or director stock options or otherwise as compensation for services; (g) hold common shares other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); (h) are partnerships or other “pass-through” entities (and investors in such partnerships or pass-through entities); (i) are S corporations (and shareholders or investors in such S corporations); (j) own, have owned or will own (directly, indirectly, or by attribution) 10% or more of the total combined voting power or value of the outstanding shares of the Company; (k) are U.S. expatriates or former long-term residents of the U.S.; (l) hold common shares in connection with a trade or business, permanent establishment, or fixed base outside the United States; or (m) are subject to special tax accounting rules with respect to the common shares. U.S. Holders that are subject to special provisions under the Code, including, but not limited to, U.S. Holders described immediately above, should consult their own tax advisors regarding the U.S. federal, U.S. state and local, and non-U.S. tax considerations arising from and relating to the acquisition, ownership and disposition of common shares.
If an entity or arrangement that is classified as a partnership (or other pass-through entity) for U.S. federal income tax purposes holds common shares, the U.S. federal income tax considerations applicable to such entity or arrangement and the partners (or other owners or participants) of such entity or arrangement generally will depend on the activities of the entity or arrangement and the status of such partners (or owners or participants). This summary does not address the tax considerations applicable to any such partner (or owner or participants). Partners (or other owners or participants) of entities or arrangements that are classified as partnerships or as “pass-through” entities for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax considerations arising from and relating to the acquisition, ownership and disposition of common shares.
Passive Foreign Investment Company Rules
If the Company were to constitute a “passive foreign investment company” within the meaning of Section 1297(a) of the Code (a “PFIC”) for any year during a U.S. Holder’s holding period, then certain potentially adverse rules would affect the U.S. federal income tax considerations applicable to a U.S. Holder resulting from the acquisition, ownership and disposition of common shares. The Company believes that it was not a PFIC for its most recently completed tax year and, based on current business plans and financial expectations, the Company does not anticipate that it will be a PFIC for its current tax year. No opinion of legal counsel or ruling from the IRS concerning the status of the Company as a PFIC has been obtained or is currently planned to be requested. However, PFIC classification is fundamentally factual in nature, generally cannot be determined until the close of the tax year in question and is determined annually. Additionally, the analysis depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. In addition, whether any corporation will be a PFIC for any tax year depends on the assets and income of such corporation over the course of each tax year and, as a result, cannot be predicted with certainty as of the date of this document. Accordingly, there can be no assurance that the IRS will not challenge any determination made by the Company (or any subsidiary of the Company) concerning its PFIC status. Each U.S. Holder should consult its own tax advisors regarding the PFIC status of the Company and each subsidiary of the Company.
In addition, in any year in which the Company is classified as a PFIC, a U.S. Holder will be required to file an annual report with the IRS containing such information as Treasury Regulations and/or other IRS guidance may require. A failure to satisfy such reporting requirements may result in an extension of the time period during which the IRS can assess a tax. U.S. Holders should consult their own tax advisors regarding the requirements of filing such information returns under these rules, including the requirement to file an IRS Form 8621 annually.
The Company generally will be a PFIC if, after the application of certain “look-through” rules with respect to subsidiaries in which the Company holds at least 25% of the value of such subsidiary, for a tax year, (a) 75% or more of the gross income of the Company for such tax year is passive income or (b) 50% or more of the value of the Company’s assets either produce passive income or are held for the production of passive income, based on the quarterly average of the fair market value of such assets. “Gross income” generally includes all sales revenues less the cost of goods sold, plus income from investments and incidental or outside operations or sources, and “passive income” generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. Active business gains arising from the sale of commodities generally are excluded from passive income if substantially all of a foreign corporation’s commodities are stock in trade or other inventory, depreciable property used in its trade or business or supplies regularly used or consumed in the ordinary course of its trade or business, and certain other requirements are satisfied.
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If the Company were a PFIC in any tax year during which a U.S. Holder held common shares, such U.S. Holder generally would be subject to special rules with respect to “excess distributions” made by the Company on the common shares and with respect to gain from the disposition of common shares. An “excess distribution” generally is defined as the excess of distributions with respect to the common shares received by a U.S Holder in any tax year over 125% of the average annual distributions such U.S. Holder has received from the Company during the shorter of the three preceding tax years, or such U.S. Holder’s holding period for the common shares. Generally, a U.S. Holder would be required to allocate any excess distribution or gain from the disposition of the common shares ratably over its holding period for the common shares. Such amounts allocated to the year of the disposition or excess distribution would be taxed as ordinary income, and amounts allocated to prior tax years would be taxed as ordinary income at the highest tax rate in effect for each such year and an interest charge at a rate applicable to underpayments of tax would apply.
While there are U.S. federal income tax elections that sometimes can be made to alter these adverse tax consequences (including the “QEF Election” under Section 1295 of the Code and the “Mark-to-Market Election” under Section 1296 of the Code), such elections are available in limited circumstances and must be made in a timely manner.
U.S. Holders should be aware that, for each tax year, if any, that the Company is a PFIC, the Company can provide no assurances that it will satisfy the record keeping requirements of a PFIC, or that it will make available to U.S. Holders the information such U.S. Holders require to make a QEF Election with respect to the Company or any subsidiary that also is classified as a PFIC.
Certain additional adverse rules may apply with respect to a U.S. Holder if the Company is a PFIC, regardless of whether the U.S. Holder makes a QEF Election. These rules include special rules that apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution from a PFIC. Subject to these special rules, foreign taxes paid with respect to any distribution in respect of stock in a PFIC are generally eligible for the foreign tax credit. U.S. Holders should consult their own tax advisors regarding the potential application of the PFIC rules to the ownership and disposition of shares, and the availability of certain U.S. tax elections under the PFIC rules.
General Rules Applicable to the Ownership and Disposition of Common Shares
The following discussion is subject, in its entirety, to the rules described above under the heading “Passive Foreign Investment Company Rules”.
Distributions on Common Shares
A U.S. Holder that receives a distribution, including a constructive distribution, with respect to a common share will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of the current and accumulated “earnings and profits” of the Company, as computed for U.S. federal income tax purposes. A dividend generally will be taxed to a U.S. Holder at ordinary income tax rates if the Company is a PFIC for the tax year of such distribution or the preceding tax year. To the extent that a distribution exceeds the current and accumulated “earnings and profits” of the Company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder’s adjusted tax basis in the common shares and thereafter as gain from the sale or exchange of such common shares. (See more detailed discussion at “Sale or Other Taxable Disposition of Common Shares” below). However, the Company does not intend to maintain calculations of its earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder should assume that any distribution by the Company with respect to the common shares will constitute ordinary dividend income. Dividends received on common shares by corporate U.S. Holders generally will not be eligible for the “dividends received deduction.” Subject to applicable limitations and provided the Company is eligible for the benefits of the Canada-U.S. Tax Convention, dividends paid by the Company to non-corporate U.S. Holders, including individuals, generally will be eligible for the preferential tax rates applicable to long-term capital gains for dividends, provided certain holding period and other conditions are satisfied, including that the Company not be classified as a PFIC in the tax year of distribution or in the preceding tax year. The dividend rules are complex, and each U.S. Holder should consult its own tax advisors regarding the application of such rules.
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Sale or Other Taxable Disposition of Common Shares
Upon the sale or other taxable disposition of common shares, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference, if any, between (a) the U.S. dollar value of cash received plus the fair market value of any property received and (b) such U.S. Holder’s adjusted tax basis in the common shares sold or otherwise disposed of. A U.S. Holder’s tax basis in common shares generally will be such holder’s U.S. dollar cost for such common shares. Gain or loss recognized on such sale or other disposition generally will be long-term capital gain or loss if, at the time of the sale or other disposition, the common shares have been held for longer than one year.
Preferential tax rates currently apply to long-term capital gain of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential tax rates for long-term capital gain of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant limitations under the Code.
Receipt of Foreign Currency
The amount of any distribution paid to a U.S. Holder in foreign currency, or payment received on the sale, exchange or other taxable disposition of common shares, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt or, if applicable, the date of settlement if the common shares are traded on an established securities market (regardless of whether such foreign currency is converted into U.S. dollars at that time). If the foreign currency received is not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who receives payment in foreign currency and engages in a subsequent conversion or other disposition of the foreign currency after the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method of tax accounting. Each U.S. Holder should consult its own U.S. tax advisors regarding the U.S. federal income tax considerations of the acquisition, ownership and disposition of foreign currency.
Foreign Tax Credit
Dividends paid on the common shares will be treated as foreign-source income, and generally will be treated as “passive category income” or “general category income” for U.S. foreign tax credit purposes. Any gain or loss recognized on a sale or other disposition of common shares generally will be U.S.-source gain or loss. Certain U.S. Holders that are eligible for the benefits of the Canada-U.S. Tax Convention may elect to treat such gain or loss as Canadian-source gain or loss for U.S. foreign tax credit purposes. The Code applies various complex limitations on the amount of foreign taxes that may be claimed as a result by U.S. taxpayers. In addition, Treasury Regulations that apply to taxes paid or accrued (the “Foreign Tax Credit Regulations”) impose additional requirements for Canadian withholding taxes to be eligible for a foreign tax credit, and there can be no assurance that those requirements will be satisfied. The Treasury Department has released guidance temporarily pausing the application of certain of the Foreign Tax Credit Regulations.
Subject to the PFIC rules and the Foreign Tax Credit Regulations, each as discussed above, a U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the common shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid or accrued (whether directly or through withholding) by a U.S. Holder during a year. The foreign tax credit rules are complex and involve the application of rules that depend on a U.S. Holder’s particular circumstances. Accordingly, each U.S. Holder should consult its own U.S. tax advisors regarding the foreign tax credit rules.
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Information Reporting and Backup Withholding
Under U.S. federal income tax law and Treasury Regulations, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on individuals who are U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts. The definition of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S. person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person and any interest in a non-U.S. entity. U.S. Holders may be subject to these reporting requirements unless their common shares are held in an account at certain financial institutions. Penalties for failure to file certain of these information returns are substantial. U.S. Holders should consult with their own tax advisors regarding the requirements of filing information returns, including the requirement to file an IRS Form 8938.
Payments made within the United States, or by a U.S. payer or U.S. middleman, of dividends on, and proceeds arising from certain sales or other taxable dispositions of, common shares generally will be subject to information reporting and backup withholding, currently at the rate of 24%, if a U.S. Holder (a) fails to furnish such U.S. Holder’s correct U.S. taxpayer identification number (generally on IRS Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding. However, certain exempt persons, such as U.S. Holders that are corporations, generally are excluded from these information reporting and backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner.
The discussion of reporting requirements set forth above is not intended to constitute a complete description of all reporting requirements that may apply to a U.S. Holder. A failure to satisfy certain reporting requirements may result in an extension of the time period during which the IRS can assess a tax and, under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement. Each U.S. Holder should consult its own financial advisor, legal counsel or other tax advisor regarding the information reporting and backup withholding rules.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF COMMON SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
F. Dividends and paying agents.
Not applicable.
G. Statement by experts.
Not applicable.
H. Documents on display.
We will furnish our shareholders with annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP. We intend, although we are not obligated to do so, to furnish when requested by our shareholders quarterly reports by mail with the assistance of a corporate services provider, which will include unaudited interim financial information prepared in conformity with U.S. GAAP for each of the three quarters of each fiscal year following the end of each such quarter. We may discontinue providing quarterly reports at any time without prior notice to our shareholders. For additional information on the Company, please consult our website at www.nxtenergy.com, or the SEDAR+ website at http://www.sedarplus.ca.
Our reports and other information, including this annual report and the exhibits hereto, as filed with the SEC in accordance with the Exchange Act, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, Washington, D.C. 20549. In addition, copies of such reports and other information filed with the SEC can be obtained from www.sec.gov.
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J. ANNUAL REPORT TO SECURITY HOLDERS.
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As at December 31, 2025 and to date in 2026, we do not have any variable interest-bearing debt facilities. We have fixed interest-bearing debt facilities with the HASCAP Loan, the 2024 Debentures, the Ataraxia Debentures, and the November Debentures (See Item 5B.). As at December 31, 2025, and to date in 2026, we do not have any forward/futures hedging contracts in place to manage risks related to foreign currency or interest rate fluctuations.
Currency Fluctuations
The Company is exposed to foreign exchange risk in relation to its holding of significant US$ balances in cash and cash equivalents, accounts receivable, deposits, accounts payables, accrued liabilities, convertible debentures, and lease obligations, and pricing its SFD® survey contracts in US$. 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 of December 31, 2025, the Company held net United States dollar assets totaling approximately US$5,033,705. Accordingly, a hypothetical 10% change in the value of one United States dollar expressed in Canadian dollars as at December 31, 2025, would have had an approximately $690,775 effect on the unrealized foreign exchange gain or loss for the year.
Interest Fluctuations
The Company’s long-term debt interest is fixed at 4%. Any refinancing of the long-term debt could result in a significantly different interest rate. We currently do not have any variable interest rate debt.
We caution that the factors referred to above and those referred to as part of particular forward-looking statements may not be exhaustive and that new risk factors emerge from time to time in our rapidly changing business environment.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
There have not been any defaults, dividend arrears or delinquencies.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
There have been no material modifications to the rights of security holders except as outlined in Item 4.B “Summary information on dependence on patents, licenses and contracts” within this Form 20-F.
ITEM 15. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures (“DCP”) designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports is accumulated and communicated to management, to allow timely decisions regarding required disclosure. As discussed below, the Responsible Officers (as defined below) concluded that, as at December 31, 2025, its DCPs are not effective.
Management’s Annual Report on Internal Control Over Financial Reporting
The Company’s CEO and CFO, together the “Responsible Officers”, are responsible for establishing and maintaining DCP, or causing them to be designed under their supervision, for NXT to provide reasonable assurance that material information relating to the Company is made known to the Responsible Officers by others within the organization, particularly during the period in which the Company’s quarterly and year-end consolidated financial statements, Form 20-F and Management Discussion and Analysis are being prepared.
As of December 31, 2025, we carried out an evaluation, under the supervision and with the participation of our management, including our Responsible Officers, of the effectiveness of the design and operation of the Company’s DCP as defined under the rules adopted by the Canadian securities regulatory authorities and in Rule 13a-15(e) of the Exchange Act. The evaluation concluded that there are material weaknesses in the Company’s ICFR (defined below) that have a direct impact on the Company’s DCP as discussed in more detail below.
Our management, under the supervision of the Responsible Officers, is also responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”) as defined in Rule 13a-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of our consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Our Responsible Officers assessed the effectiveness of our ICFR as of December 31, 2025. In making this assessment, they used the criteria established in Internal Control – Integrated Framework 2013, issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control (“COSO”).
Our ICFR were not required to be independently audited. Accordingly, no independent audit was performed over the effectiveness of internal controls as at December 31, 2025 and this annual report does not include an attestation report of the Company’s registered public accounting firm regarding ICFR. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.
During this process, we identified the following material weaknesses in the Company’s ICFR that have a direct impact on the Company’s DCP:
· | due to the limited number of staff, it is not feasible to achieve adequate segregation of incompatible duties. NXT partially mitigates this deficiency by adding management and Audit Committee review procedures over the areas where inadequate segregation of duties are of the greatest concern; and |
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· | NXT does not have a sufficient level of staff with specialized expertise to adequately conduct separate preparation and a subsequent independent review of certain complex or highly judgmental accounting issues. NXT partially mitigates this deficiency by preparing financial statements with their best judgments and estimates of the complex accounting matters, and relies on reviews by management, external consultants, and the Audit Committee. |
From time to time to reduce these risks and to supplement a small corporate finance function, the Company engages various outside experts and advisors to assist with various accounting, controls and tax issues in the normal course. Given the small size of the Company’s finance team, management has established a practice of increased engagement of the Company’s Disclosure Committee and Audit Committee in reviewing the public disclosure and has increased the engagement of external consultants and legal counsel as well.
20-F for the year ended December 31, 2025
| 67 |
| Table of Contents |
The Responsible Officers concluded that, as at December 31, 2025, its ICFR is not effective and as a result its DCPs are not sufficiently effective. NXT reached this conclusion based upon its assessment that there is a more than remote likelihood that its ICFR will not prevent or detect material misstatements if they should exist in the Company’s consolidated financial statements. The Responsible Officers continue to take certain actions to mitigate these material weaknesses including: (i) the implementation of controls with regards to the review procedures surrounding its disclosure; and (ii) engagement of third-party specialists. In addition, the CFO engages subject matter consultants as the need arises.
Changes in Internal Controls
There were no changes to the Company’s ICFR in 2025.
It should be noted that a control system, including the Company’s DCPs and ICFR, no matter how well conceived, can provide only reasonable, but not absolute assurance that the objectives of the control system will be met, and it should not be expected that the DCPs and ICFR will prevent all errors or fraud.
There were no other changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the period ended December 31, 2025.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Board has determined that we have at least one audit committee “financial expert” (as defined under Item 16.A of Form 20-F) serving on our Audit Committee. The Audit Committee consists of Messrs. Selby (Chair), Tilson, and Mork. All members of the NXT Audit Committee has relevant experience in understanding and evaluating financial information, generally accepted accounting principles, control systems and audit committee functions. They are considered financial experts, and all are “independent” directors, as that term is defined under the listing standards of NASDAQ.
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 incorporated in our Employee Handbook, 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 2025, 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 [email protected] or at NXT’s headquarters at Suite 302, 3320 – 17th Avenue SW, Calgary Alberta, Canada, T3E 0B4, and on the Company website, www.nxtenergy.com.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate audit fees, audit-related fees, tax fees of our principal accountants and all other fees billed for products and services provided by our principal accountants for each of the fiscal years ended December 31, 2025, 2024 and 2023.
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| 2025 |
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| 2024 |
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| 2023 |
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Audit fees1. |
| $ | 271,145 |
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| $ | 260,010 |
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| $ | 261,803 |
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Audit-related fees |
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| - |
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|
| - |
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| - |
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Tax fees2. |
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| - |
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| - |
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| - |
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Total fees |
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| 271,145 |
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| 260,010 |
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|
| 261,803 |
|
1. | Aggregate of fees for audit of annual financial statements, review of quarterly financial statements and consent letters. |
2. | Fees for reviewing annual tax returns and foreign jurisdiction tax compliance. |
20-F for the year ended December 31, 2025
| 68 |
| Table of Contents |
Audit Committee’s Pre-approval Policies and Procedures
Our Audit Committee nominates and engages our independent auditors to audit our financial statements. Our Audit Committee also requires management to obtain the Audit Committee’s approval on a case-by-case basis before engaging our independent auditors to provide any audit or permitted non-audit services to the Company or any of our subsidiaries. All fees shown have been pre-approved by the Audit Committee.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
Not applicable.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I – DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J – INSIDER TRADING POLICIES
NXT has adopted an insider trading policy. NXT’s insider trading policy is contained in its code of ethics. The policy governs the purchase, sale, and other dispositions of the registrant’s securities by directors, senior management, and employees that are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to NXT.
The trading of NXT stock and other NXT securities in the market by an insider, based upon material, non-public information, or by others who have acquired material, non-public information by any means, is prohibited and subjects the user of such information to legal risks, including civil or even criminal penalties.
Material information is any information that an independent investor might consider important in deciding whether to buy, sell or hold securities of NXT. Such information includes financial results; financial forecasts; changes in dividends; possible mergers, acquisitions, divestitures or joint ventures; and information concerning significant discoveries, important product developments, major litigation developments, and major changes in business directions.
Insiders may not buy or sell NXT stock until a “reasonable time” (defined as a minimum of 2 full business days) has passed after the information has been disclosed to the public via a press release that is issued by NXT on a newswire service.
20-F for the year ended December 31, 2025
| 69 |
| Table of Contents |
A blackout period prohibiting any Insider trading is imposed by NXT when material information has not been disclosed to the public. Examples include the period of time prior to the public release of scheduled quarterly and year-end financial results on SEDAR+ and prior to news releases related to other material information.
Material information is considered to be non-public unless it has been adequately disclosed to the public by way of public filings with securities regulatory authorities (such as SEDAR+ in Canada, and EDGAR in the USA) or issuance of Company press releases.
All insiders must exercise caution not to disclose material information to outsiders, either intentionally or inadvertently, under any circumstances. NXT policy forbids giving confidential information about the Company to outsiders except under limited circumstances as approved by legal counsel.
The Insider Trading Policy is filed as Exhibit 11.2 to this Form 20-F.
ITEM 16K – CYBERSECURITY
The Company recognizes the importance of cybersecurity in protecting our intellectual property, operations, and data. The Company’s cybersecurity risk management processes are integral to our risk management framework. We conduct regular cybersecurity risk analysis to identify potential threats and vulnerabilities within our IT infrastructure, applications, and operational procedures. We have implemented and maintain various information security processes and software designed to identify, assess and manage material cybersecurity threats to our computer networks, third party hosted services, communications systems, hardware/software, customer/internal data, intellectual property and confidential information.
Our IT department helps identify, assess and manage our cybersecurity threats and risks by monitoring and evaluating our threat environment using various methods including, for example, manual tools, automated tools, analyzing reports of threats from credible third parties such as Microsoft and the Canadian Centre for Cyber Security, conducting scans of the network footprint and authentication methods. We implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data such as disaster recovery/business continuity plans, network security controls, data segregation, access controls, physical security, systems monitoring and employee training.
We integrate cybersecurity risk considerations into our planning processes, ensuring that potential impacts on our business operations, reputation, and financial condition are adequately assessed and mitigated. Our contracts with third-party providers include specific security requirements and obligations to protect our data and systems. We acquire appropriate liability coverage to cover potential losses from a cybersecurity breach.
Our cybersecurity risk assessment and management processes are implemented and maintained by our CFO and our IT Manager wo conduct regular briefing with our staff for education and compliance. The Company’ board of directors plays a crucial role in overseeing our company’s cybersecurity posture including receiving periodic updates on cybersecurity matters from our IT Manager.
20-F for the year ended December 31, 2025
| 70 |
| Table of Contents |
PART III
ITEM 17. FINANCIAL STATEMENTS
The Company’s consolidated financial statements and related notes are prepared in accordance with U.S. generally accepted accounting principles and included in Item 18 to this annual report.
ITEM 18. FINANCIAL STATEMENTS
The Company’s consolidated financial statements and related notes for the years ended December 31, 2025, 2024 and 2023, together with the reports of MNP LLP, Chartered Professional Accountants (Exhibit 15.1), have been prepared in accordance with U.S. generally accepted accounting principles and are attached as exhibit 15.1 hereto and are incorporated into the annual report.
20-F for the year ended December 31, 2025
| 71 |
| Table of Contents |
ITEM 19. EXHIBITS [note: remember that this need to be hyperlinked to previously posted docs.]
EXHIBIT INDEX
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) |
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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) |
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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) |
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4.5 |
| Stock Option Plan |
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5.1 |
| Ataraxia Convertible Debenture Subscription Agreement |
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5.2 |
| Ataraxia Investor Rights Agreement |
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11.2 |
| Insider Trading Policy |
20-F for the year ended December 31, 2025
| 72 |
| Table of Contents |
Exhibit No. |
| Description |
| Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer | |
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| Rule 13a-14(a)/15d-14(a) Certification of VP Finance and Chief Financial Officer | |
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| Section 1350 Certification of VP Finance and Chief Financial Officer | |
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| Management’s Discussion and Analysis for the year ended December 31, 2025 | |
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15.4 |
| Management’s Discussion and Analysis for the year ended December 31, 2024 |
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101.INS |
| Inline XBRL Instance Document |
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101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
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101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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104 |
| Cover Page Interactive Data File |
# Indicates management contract or compensatory plan.
20-F for the year ended December 31, 2025
| 73 |
| Table of Contents |
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
NXT Energy Solutions Inc. |
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By: | “/s/ Gerry Sheehan” |
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Gerry Sheehan |
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Director and Chief Executive Officer |
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Dated: April 30, 2026 |
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74 |
ATTACHMENTS / EXHIBITS
EXECUTIVE EMPLOYMENT AGREEMENT
MANAGEMENT'S DISCUSSION AND ANALYSIS
XBRL TAXONOMY EXTENSION SCHEMA
XBRL TAXONOMY EXTENSION LABEL LINKBASE
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
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