George Liszicasz - President and CEO Greg Leavens - CFO Andy Steedman - VP of Operations Sajid Sayeed - Director of Global Business Development

Mike Niehuser - Scarsdale Equities Stan Trilling - Morgan Stanley John Sullivan - JS Capital Management Jerome Hass - Lightwater Partners

Good afternoon. My name is Stephanie and I'll be your conference operator today. At this time, I would like to welcome everyone to the NXT Energy Solutions Third Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to George Liszicasz, President and CEO of NXT Energy Solutions Inc. Please go ahead sir.

Thank you very much Stephanie. Welcome to this investor conference call hosted by NXT Energy Solutions. My name is George Liszicasz, President and CEO, and with me today is Greg Leavens, our CFO; Andy Steedman, our VP, Operations and Sajid Sayeed, our Director of Global Business Development. The purpose of today’s call is to briefly discuss the highlights of yesterday's news release and our Q3 report to shareholders, both of which I hope you have had a chance to review. Today we'll cover the following; the results for our Q3 period and guidance on expectations for the 2015 year-end; highlights of our survey project conducted in Bolivia and new business development opportunities. This conference call of course contains forward-looking information. So we therefore note the standard disclaimer that such information is by its nature uncertain and therefore future results may vary from any estimates and expectations. So first we will review our Q3 results and also the Q4 outlook. On SEDAR in Canada and on EDGAR in the USA, you can find our MD&A and the related interim financial statements for the nine months Q3 period ended September 30. All amounts are in Canadian dollars unless otherwise noted. Recall that NXT followed the completed contract method of revenue recognition under U.S. GAAP, therefore project revenues and related costs are deferred until the quarter in which the survey project is completed. As expected, it took roughly five months from start to finish to deliver a $13 million project to YPFB, the National Oil Company of Bolivia with all our recommendations of prospective areas. Our Q3 2015 year-to-date results do not reflect any revenues or the related survey cost for the Bolivia project as they will be recognized in Q4. Therefore for Q3, we had a net loss after tax expense of C$1.9 million and C$5 million year to date. Q4 will be of course present a substantially improved picture as it will reflect completion of the Bolivia project. Press release noted various preliminary guidance or estimated totals for the 12-month fiscal year and December 31, including revenues approximately C$17.4 million and net income before tax of approximately C$5.8 million. We forecast that Q4 on its own will thus reflect net income before tax of C$10.2 million and forecasted income taxes of roughly C$1.1 million for Q4 2015. Also we expect to exit 2015 in a very strong financial position with net available cash resources of at least C$8 million and total assets of at least C$31 million. It should be also noted that the C$1.4 million of the Bolivia survey project represents an expansion of the initial scope for which we expect to deliver our final results to YPFB in January 2016 and will be reflected in our Q1 financial results. Cash resources at December 31 does not include C$0.7 million of billings related to this expansion, which we expect to receive from YPFB as final payment in mid January 2016. Also our forecast of cash resources is net of US$2 million cost of purchasing a U.S. – a survey aircraft. We're in process of closing this transaction, which we view as very strategic. We also wish to touch on the conversion of the 8 million outstanding NXT preferred shares, which occurred August 31. This conversion on a one-for-one basis into common shares culminates the initial 10-year licensing term of the SFD technology. NXT now has the exclusive ownership of the proven technology for use in global hydrocarbon exploration. The application of fair value accounting to the common shares issued resulted in NXT recognizing a new intellectual property asset of C$18.5 million on our balance sheet. The valuation of this transaction was based solely on the number of shares converted and a weighted average of NXT's common shares prior to the conversion and in no way reflects the total value of our intangible proprietary technology assets. Non-cash amortization expense of $102,000 resulted for Q3 of this asset and will be $307,000 per quarter going forward. I would like to now cover the highlights of our Bolivia survey project. Including the value of the project expansion and a small survey for one of YPFB's affiliated companies our 2015 SFD projects in Bolivia totaled US$14.2 million net of local taxes owing. Concurrently we started with the start of the YPFB project, we opened up an NXT Bolivia office in Santa Cruz in order to facilitate both the execution of our surveys and the creation of a suitable environment for working with YPFB geological and geophysical professionals. Although a small fixed cost, I can assure you that it was one of the best investments we made. We also hired bilingual geoscientist to aid in serving our existing and new target clients in Latin America. In the last half of November, many our staffs were in country working on integration of our SFD survey results with YPFB's existing geological and geophysical datasets. I’m pleased to report that the correlations of SFD anomalies that were recommended with those identified with other methods especially seismic are excellent. This again showcases the strategic advantages of how SFD can be utilized in conjunction with other tools to produce drillable prospect where trap, reservoir and seal indicators are present. At this moment, we're also working with YPFB on finalizing proposed new surveys, which we aim to have included in their 2016 exploration plans and budget. On other business opportunities I would like to talk about our efforts in 2015 that have generated a number of new client prospects where NOCs, the national oil companies, are working with their governments to realize the value of applying SFD on a larger scale on their sedimentary basins. This is viewed as a natural development of NXT’s business objectives. Our plans for the short term into Q1 2016 include the following: The finalization of existing and new opportunities in Bolivia, the expansion into new emerging markets in Malaysia, Sri Lanka, West Africa and the Middle East. A strategic initiative started in 2014 is meeting with key government and regulatory decision makers that demonstrate vision for the need of hi-grading their exploration areas in order to accelerate the country's resource development. Remember that NOCs cannot stop exploring. We expect that each initial survey in these new countries would likely to exceed US$7 million. We are also seeking closure on the prior opportunities we developed in Pakistan market, particularly with, OGDCL one of the NOCs of Pakistan. We're awaiting their decision of vendors prequalification for a large scale remote sensing aerial survey. Everyone knows that the opportunities are significant in Mexico and we hope that this will be translated into financial commitments on their part for SFD surveys following the release of their new budget in February 2016. In summary, the sales cycles for national oil companies is long, has significant amount of complexities and typically last from 12 to 18 months. In the past one, two years -- one to two years we have moved many of these prospects from the technical discussion stage to the project planning stage and now we're in the contract negotiation stages. Our existing pipeline is as robust as it has ever been and we are confident that 2016 will deliver a significant increase in revenue and contract coming to fruition. We anticipate providing additional updates on our expanded pipeline of prospects in the next few months and now lastly other interest of -- other items of interest I will cover. We're diligently working on expanding our patent portfolio with new applications in the coming months. On the Investor Relations front, many of our long term shareholders have been waiting for NXT to be able to upgrade its investment profile by moving to one or more well recognized stock exchanges. We're pleased that our forecasted level of profitability for 2015 will allow us to apply to graduate from one -- sorry, from the TSX Venture Exchange to the TSX. We're currently in the process of undertaking this application, which ideally should be granted by early February. Thank you for all of your interest today and we'll now ask the operator Stephanie to open up the lines for questions.

[Operator Instructions] Your first question comes from the line of Ronald [Cardoi] [ph] with PMI.

Good afternoon, George.

Good afternoon.

I am wondering what are the outside revenue expectations for 2016.

Outside revenue.

I mean, are we going to do C$10 million, C$20 million?

I believe, and if anybody disagrees with me, we'll be doing -- we'll do more.

More than C$20 million.

So we'll be doing more than total C$14.2 million this year.

Okay. Terrific. And tell me, at the expense of this jet airplane is about C$2 million.

Yes.

Is it -- what year is this aircraft?

I'll answer that -- the statement calling, the aircraft is a citation 560 twin engine ultra business jet. It was 1996 is the airplane.

It's so cheap right now and that is one of the reasons we acquired it because of the current oil price market.

Maybe I can answer a question that you've probably -- your next question is going to why did we purchase the plane?

Yes.

So there is a number of reasons of it. One that George just mentioned that comes to the market for aircraft -- the market for aircraft is very, very soft right now. Two years ago this same plane was worth C$3 million, so it’s significantly cheaper. So -- but that's not the principal reason for purchasing it. That's just a timing thing. The principal reason is -- there is two. The first one is cost. The actual variable cost when you own the plane is about 50% of that when you charter the plane. So it will actually, based on the amount of work we did last year, it will actually reduce our operational cost. So it's actually the financial reason to buy it. The other reason is it provides us with operational flexibility and certainty. When the aircraft is owned by a third party, you’re subject to basically the whims of them. If they decide to sell the aircraft, they decide to use the aircraft etcetera, you don't have complete control over when it can be used. Now we have the complete operational control of the aircraft and when we're not using it, we have the opportunity to charter it to other people and actually gain revenue from it.

And please remember, we have been using the same aircraft for the last five years.

Oh! Well, lastly, I would like to say that I, and I, maybe speak for some of the other people that I know that are shareholders that we really appreciate these little conference calls every once in a while to update us and to further our investment opportunities with your company and we do really appreciate it. Thank you.

Thank you so much. We're extremely happy with the results this year and we're confident that we'll beat these results in 2016.

Good. Thank you very much gentlemen. I appreciate it.

You're most welcome.

Your next question comes from the line of Mike Niehuser with Scarsdale Equities.

Hi George, this is Mike Niehuser. Could you run over those other countries outside of Bolivia that you’re going to -- that you're targeting for next year? I didn’t get them all written down.

This is Sajid Sayeed, I’ll answer that Mike. The other countries other than Bolivia, Mexico and Pakistan, we’re concentrating on Malaysia, Guiana, Sri Lanka, UAE and Qatar and we’ve been in discussions with them for a number of months right now and as mentioned been talking for technically presentations to project planning and we're negotiating a few projects right now with them.

Thank you. That helps. Also with you operating now in Bolivia and with the recent events in Argentina with the prior -- with the [PEF] [ph] contract getting broken because of lack of exploration and development, doesn’t this kind of provide a draw for your company to help jumpstart resource exploration in Argentina?

It's Andy Steedman, so the answer is it waits to be seen. We see it as the Government in Argentina, we see it as a very positive thing and opportunity there is no question, there is a tremendous amount of resource potential in Argentina. The challenge because we have done work in Argentina in the past, the challenge was it was a very close economy it's very difficult to operate there, it's very difficult to import things, export things from Argentina. So it made it very difficult to work because we haven’t been having a really strong focus there. This new government from what they're talking about and what they -- the plans that they have they’re very pro-business. So we believe this should open up opportunities for us, but it's going to take some time to sort themselves out to what they’re at and how they’re going to do that.

Thank you. I guess there are ways to be seen, but I would be on your plan right away. The why that you account for revenues and expenses is on a completed contract. Why -- I’m not in account, so Andy can you tell me what the rationale is for not doing it on a completion of contract basis so that if you get more contracts it’ll be easier to see the influence of that as opposed to waiting till the tail end.

Mike, it’s Greg Leavens speaking. The history with the revenue recognition policy is that traditionally the contracts have been -- it’s very hard to separate the cost by individual phase to measure what percentage you are actually complete. Over the last few years as the contracts we’ve been doing have been getting bigger we've been structuring them such that they have progressed payments built into them. So as we move forward, one of the things we’re looking to do is have the revenue recognition periods tied to when we complete the phase of the project. The phases that we generally do are mobilization to the project. Once the data acquisition itself is done, the flying, we generally issue a progress still after that and then the longer period is undertaking the data interpretation process and delivering our final results and in the past a lot of our contracts have generally been never more than say four months. So they usually wouldn’t span more than two quarters, but that is something that under U.S. GAAP is subject to changes in the next two years out from now, is something we’re looking at as well.

I would just hope that it would be better -- get a better feel as more contracts come online as well as the margins in a way the income statement is reported it doesn’t -- the margins you receive on the work don’t jump out at you as high as the margins really are here. And with the airplane that you’re acquiring, it seems that with the contract only being five months and you now owning the plane 12 months out of the year that your expenses will even -- the margins should be even improving from this point?

Yes, we will have some periods where there will be survey costs without any revenue in the coming quarters, just on the basis that there are some fixed cost to owning and maintaining the aircraft, but hopefully we’ll have a larger pipeline of projects that are always underway and therefore we’ll aim to smooth out some of the cyclicality and their lumpiness.

And one more question, I’ll jump back in the queue, is that with the contract work that you've done in Bolivia, was that on land that there had been a seismic completed before or was this more or less new ground territory and the reason I’m asking is did you learn anything relative to being able continue to build the case that your – that SFD is able to pick up on the nuances of large oil and gas reserves.

Okay. So the answer is there are some areas that were new with very little data. There is some areas with lot of data. There is some areas [indiscernible]. There is all variety and cross section that happened in that. And one of the things that we’ve done and we’ve been -- one of the reason that we’ve hired as George mentioned earlier, some additional geoscientists is the actual taking the data that we have and integrating it with client's existing data and working with the client is basically a strategic way to ensure and create value within the client to ensure that they’re using the results and they're getting the most value out of the results and then you’re working with them and how you define future projects with them. So we got from the data that we’ve done and the work that we’ve done in Bolivia do we have correlations that we can say with existing field, the answer is yes, with seismic, the answer is yes. Have they got drilling projects that they now identified on our recommendations, the answer to that is yes and that will just continue to grow etcetera in the future.

Okay. I'll jump back in the…

And there are areas that have no seismic at all that we recommended prospective areas, go ahead Mike.

No, that was it. It will be exciting to see how that plays out. Thanks for all my questions. I’ll be back in the queue.

Well, it must be playing out pretty much -- pretty well because we’re already negotiating two more contracts down there.

In Bolivia?

Yes.

Thank you.

You’re most welcome Mike.

Your next question comes from Stan Trilling with Morgan Stanley.

Good afternoon, gentlemen, nice projections. I have a couple of items old business I would like to ask about first, what is the status of your patents and how far along are you from divulging more about how SFD works?

Thank you, Stan. Welcome and I’m pleased to have you on the call.

I’m pleased to be here.

The patent process is a continuous process as you know and we’re in the process of putting together a new patent, patent application worldwide. We have now filed two major patents also worldwide, so it’s all over in Europe, Asia and U.S. and so on and so forth. So these are worldwide patents. Divulging the information is a step-by-step process. We want to maintain some advantages ongoing and we will be divulging new information about the technology as it’s required and there are a number of institutions that are interested in working with us and we will welcome that because we need to work with other universities and institutions as well and better the technology. The only caveat for us is to make sure that NXT benefits from any of the work or any of the applications that they would like to pursue.

I was concerned that you are going to talk about psychiatric institutions, but I’m glad you didn’t? The other question this is the elephant in the room. What is happening with Mexico?

Well we have done a number of meetings with them recently as well and they have plans, flight plans have been submitted and accepted to them of new surveys SFD surveys and our understanding is that they're having difficulties -- financial difficulties. So PEMEX is going to unveil its new exploration budget and plans in 2016 and our understanding is that, 2016 February yes and our understanding is that we will be a part of that. So we will never quit PEMEX because it's one of the greatest opportunities that are out there for NXT and I am just hoping or we're just hoping that they will get their ducks in orders or in row and we'll proceed in a manner in a way that is going to be acceptable to the international community and it's going to be doing drilling now and also I think Premier Oil is also shallow waters. They're going to be doing some drilling programs that have been announced.

Okay. And the last part of old business for me is what's happening with our U.S. companies that have been -- that have used product and we're very impressed with it and increased the contract? What's the latest on -- are they drilling any of the prospects and what is potential for more business in the United States?

Well it's Andy again. From the work that we've done, you're referring to Kerogen and the surveys we did in Florida [ph], have they drilled these as of yet? The answer is no. Have they been -- the drilling spots identified etcetera, is yes. So as you know funding for drilling projects right now especially from private equity firms is difficult. So they haven't got to that stage yet to actually do that. So can we forecast when they will actually drill; we can't, but we know that it's certainly in the plans based on having the finances to be able to do that. In terms of other things in the U.S., we have other initiatives in the U.S. principally in working with the U.S. government etcetera to look at the offshore and the opening of the offshore in the East Coast in the U.S. and the opportunities for SFD to help evaluate those areas and George has said and in Alaska as well as Alaska could be sort of an opening opportunity because they have severe problems in Alaska in terms of the pipeline is only 30% full and they need to have more exploration done there and Alaska wanted to happen. It's just whether the politics will allow it before the end of 2016, but we determine that as being a long term strategic initiative versus a short term opportunity.

Okay. And one more question and then I'll get back in the queue. I was a little shocked to see that we're paying taxes. I felt we had a relatively large NOL. Could somebody answer me why we're paying taxes?

Yes Stan, we do have large loss carry forwards and other tools available for use in Canada, but the nature of the contract we have in Bolivia is such that we incorporated a subsidiary company in Bolivia and in order to get funds from Bolivia to Canada, we have to pay withholding tax on amounts that we bill our subsidiary, which is 12.5%. We do have the ability to utilize those taxes paid outside Canada as a foreign tax credit against future Canadian taxes payable, but we have not recognized that benefit in our financial statements given the uncertainty as to when and how much of that will be realized in the future, but it's basically a necessary cost of operating.

Well I understand the cost, but okay so the -- yeah, so it is a Bolivian tax okay, I’ve got it. Okay I understand. Okay, and I’ll get back in the queue and I have a few more questions. Thank you.

Thank you, Stan.

Your next question comes from John Sullivan with JS Capital Management.

Thank you. Can you hear me all right?

Absolutely.

Okay. Appreciate you guys having this call and I want to follow up with that question on Mexico, you spend a lot of time on Mexico. It must be a little disgracing for you that you haven't gotten anything yet from that. Do you have people that are still hanging around in Mexico and trying to make sure that you get something out of that?

Absolutely, not only that, but the results of the SFD surveys show that we've made very significant progress and I can't go into too much of the details, but there have been predications made based on the SFD recommendations and those predications have come to fruition. So they're producing real results in Mexico. I think as Andy mentioned is the political wheel. It’s the uncertainty that this entire country is shrouded in that creates the problem and once they sold that, I think that the 2016 budget that being put forward in February will give us a very good indication what’s going on because we're supposed to be in that budget. We have flight lines planned. We have acceptance of the technology. We have everything, the recommendations actually C&H who is the governing body for regulations and so on in Mexico has approved SFD use in the country. So we're in a very strong position at the moment.

It's Andy. One of the things to add from is being disappointed from Mexico, the one really important thing that's happened from that is the work that we did that and the subsequent report that came from that has resulted in being a very strong reason why we got the work in Bolivia and then the work in Bolivia is a very strong reason why we've these opportunities in the other parts of the world. This is all building up the base case for the tool and how the tool works and how the tool can benefit people and that’s why we have the opportunities that are sitting there now. So yes we wish we had 10 more contracts with PEMEX, but unfortunately the rules in the country changed and the environment changed, but we still think the future there is very strong for us.

Also the last meeting that we had with PEMEX, high level PEMEX officials, they indicated that they will activate the framework agreement that we have signed with them so that the contracts can be directly -- purchase orders can be directly issued given to NXT. So we’re very hopeful, we’re very positive, we have made significant imprint of our value in their process.

Good. One more question and that is does the price of oil have any bearing on your successes fairly so far?

Very positive. That’s how -- for us whether the oil price is $100 a barrel or $40 a barrel if the NOC or the company recognizes the value it really should not make any difference, actually it should be better for us in this range between $40 to $60 range to get contracts because what we deliver is significant.

One other things you need to understand about the national oil companies and our focus is on national oil companies is we've explained in the past because of their vast land holdings etcetera and so the national oil companies, they have strong reliance in these countries for the production of oil. For Bolivia, they’ve got contracts with Argentina and Brazil to produce for gas and they have a very short reserve life left and they’ll lose these contracts if they don’t discover more it's very important. So that’s why they’re actually doing a lot of strategic things in the country to try to actually expand direct exploration. And also there is a very -- as soon as the cost get tight then -- rather than somebody engaging in a seismic program it cost $100 million to engage in an SFD program they cost C$10 and they can do better -- make their explorations more cost effective.

Actually John they announced -- Bolivia announced that they will reduce their seismic cost, which is US$70,000 per line kilometer, right per line kilometer by using SFD.

They reduced it from US$70,000.

No the seismic cost won’t per kilometer won’t reduce. The total amount of seismic that they have to do will reduce because we’re providing that focusing for them.

We are essentially a biggest value prop is that we are a finding cost reducing tool. For anybody in exploration, we are enabling them to high grade the prospect, focus the binding cost to extrapolate potentials and be more strategic and more successful in what they do does. Thus the value prop and thus what the NOC they're seeing and very soon we generally -- we hope to -- the E&P world will recognize the same value.

Okay. Thank you.

Thank you, John.

Your next question comes from the line of Mike Niehuser with Scarsdale Equities.

Yeah, thanks for taking a follow up call. It just seemed that the countries that you’re excited about and doing business pretty much ring the equator and in terms of just as you look back at your pipeline, what are the three top areas from a contract size, culture, political ranking? How would your prioritize your top three and please include Mexico and the USA in that as well.

Thank you Mike, once again. Our priority is basically we’re looking for people who have the will and the vision and the necessity to develop their prospects. We are targeting areas like Africa, where there is a lot of interest on a global level because they’re sitting on very prospective basins right now and countries that actually have the funding and will have the political will and the intention to develop not just because of what they could do but because of that own necessity and the need to fulfill their own energy requirements, that’s our strategy. And hence we’ve been very strategic in approaching these countries and talking at a very high level to first evaluate where the intentions are, what their plans are and what are they doing right now in terms of exploring their basins and once we see a very clear path of well and they're backed by financial resources and funding then we engage with them in a very strong manner and show them what we can do and what value we can bring in the process. And also with regards to National Oil companies like Mexico and PETRONAS in Malaysia they also are sitting in very good prospects right now, but the oil price and all these conditions are of concern, but they have the need, they have the need to sustain their own business values and their own business to keep growing and to fulfill their own needs of the country for their energy requirements. Hence these kinds of companies they see us as a added tool, as an added value in the process where we can streamline even in such extreme market conditions that can enable them to explore efficiently and find hydrocarbons in a more rapidly at a much more faster manner than they usually do. So if you see as you had mentioned yes, you’re seeing around the equator yes the interest in our sales efforts have brought these countries closer to us just due to the conversation that we've been having in these people. And in Africa particularly when we talk to one Nation and they see the value, the news start spreading pretty much, the neighboring countries too. So we're getting a lot of interest from them too. So we're engaged in a lot of conversations at different levels and multiple organizations right now and this we actually see right now, this is only going to expand by what we're doing and what we're offering and once the country sees the value it starts using and engaging us the next year. We only see this thing expanding rapidly.

And just going back to the U.S. for example, there is tremendous interest right now before us in Alaska as Andy talked about and also the Eastern Seaboard. The mainland there is some highly explored, very few opportunities exist there for elephants. We have elephant hunters. So we want to go the areas where there is a vast land position that is able and as such willing and have the vision to move forward now and the underdeveloped or developing countries are coming to the forefront and just to point out to you, you know that some of you know that we've been in discussion with PETRONAS for some time now and PETRONAS is an international E&P company. So even though it's also national, it's also international. So many of these companies are moving out of their countries and exploring elsewhere. So it's not the ExxonMobil or the Shell going to create the next revenue for NXT. We'll get them. Probably once there is going to be a volume of evidence out there that is absolutely undeniable that this just happened again in Mexico and we have reduced the paper now on that, we're waiting for them to approve it to publish, those are the things, those are the results that are going to change everything out there. In the meantime, we're going to be working with this countries that are able and willing and wanting to accelerate their -- we'll be able to fund their resources.

Well I am sure it will be an evolving process and just trying to get a good fix on what I might be paying attention to internationally is where the opportunities maybe. So thank you very much and look forward to next quarter when all that is reported.

Thank you, Mike.

Your next question comes from Jerome Hass with Lightwater Partners.

Yes, I just want to get some clarifications. So at the end of the last quarter you had C$6.8 million in cash and just looking at MD&A it sounds you'll be invoicing a further US$6.2 million is that correct?

Yes, that was in Q4. I think that was building up over.

Right. So you'll be recognizing that in Q4 and you'll be receiving those revenues.

Correct.

Okay. So that's surprisingly C$8.3 million on top of the C$6.8 million that you've already got, which comes out to about C$15 million on cash. So if we assume your normal burn rate of approximately C$1 million a quarter, so that's about C$14 million, is that fair to say?

Sorry, back up a second.

So you've already got C$6.8 million on the books as of the end of the last quarter in cash, you're bringing in US$6.2 million, which is the equivalent of C$8.3 million Canadian? If we add those together, that's C$15 million. We assume then that you've got a burn rate let's call it C$1 million a quarter, so we're down to C$14 million and then you're going to take the liberty of your plane in Q4, which is approximately C$2.6 million, correct?

Yes, it's US$2 million less.

US$2 million is equivalent to C$2.6 million approximately C$2.7 million Canadian.

Yes.

So you're left with let's call it C$12 million, C$12.5 million at the end of the Q4 projection for cash position, correct.

No, we have lessened that because we've also got some large liabilities that were payable in Q4.

What were those liabilities because in your MD&A it's stated that virtually all the direct survey cost for the projects have been occurred at the end of Q3?

Yes, and we've got some commissions payable that arise on that associated with when the billings are issued.

Commissions could you clarify that, were those stable to?

Well we've got third party agents that are involved in generating revenues in mobile operations.

Okay. Could you have some color on the size of this?

Pardon me.

Could you give us some color on what the size of those tenants will be then?

It varies by country, but they range from -- some countries are five, some are up to 10.

Okay. You only have sales in one country, which is Bolivia so why don’t we focus on Bolivia?

Well, it’s Andy. One of the things that’s very important in terms of on conference calls and disclosures etcetera as we negotiate deals with agents all over the world and to…

Okay. Let’s call it -- you're paying -- let’s just make your argument simpler. Let's say you're spending C$2 million to C$2.5 million in commissions, I don’t really care what the number is, you're still left with C$10 million cash in your balance sheet at the end of the year correct?

We’re not forecasting that being an amount. It's about eight is what we said in the guidance.

So you’re going to bring in wow, you're bring in C$8.6 million in the quarter and your cash position is only going to go up by C$1.2 million?

There is additional amounts that are, there is some of its receivable in January as well.

Okay. So C$8 million is your projection for the cash position at the end of the year.

Plus the C$40 million in receivable that will come in at January.

Okay. So that’s roughly two years worth of burn rate assuming that you don’t have any further sales in the next two years. So I guess my question is at one point does the Board and Management of NXT Energy site that they want to show some confidence in their future prospects and in their share price and in purchasing some other owned shares of their own company. So we wrote to you the Board and to the Management in June of 2014 and suggested that you purchase your shares when your share price was trading at less than a C$1, which you received and so now that you’re sitting at C$8 million and presumably your growth prospects for you and Reuters when are we going to see Management and the Board engage at either a normal course issuer bid or substantial issuer bid?

Well I guess the big question is how big of a cushion would you like to see if you’re looking at a burden rate maybe you want to see C$4 million of that used for a normal course issuer bid or C$2 million or what the rate amount.

Well let’s ask the other question, so instead of using out shareholders money to invest in your shares in June of 2014 you started your bank account and you probably earned what a 0.25% or not whereas you missed at 85% return on that money during that period. So don’t you think that there is better use of shareholder's money than having it sit in a bank account and at what point are we going to see vote of confidence in the Board and the Management in themselves?

Jerome this is George. It has been discussed at the Board level and the decision was made that at this time we're not going to move forward.

Okay. So you have no plans to consider a normal course issuer bid?

It has been meted and the Board said that we needed two years of cash position.

Which is where you're now?

It hasn’t been ruled off, but it’s -- I don’t think it's the right time to do that until we got some certainty on future projects and contracts in hand.

Okay. So instead of doing that you decided that we’re going to go ahead and buy a plant. Now let’s think about that plane decision, so looking back at your drawdown, looking back here where is it here, with your minimum annual volume of charter hours commitment in 2014 was C$337,000 so that means when you spent C$2 million in that, it’s basically eight years worth of that annual budget. So given the utilization rate that you've had late how can you possibly justify the expenditure on that airplane given that you can’t be allowed to purchase your own shares?

Well I can answer the aircraft question in two ways. As I explained earlier, the reason for the plane is actually reduce operational cost not increase the operational cost. The second thing is operational uncertainty. We have an aircraft that's owned by a third party, it’s important to understand that and we're in the position to take control of our operations. If we didn’t own the plane in the past because it was financially not viable but now it's viable. If the person that owns that aircraft decides to sell that aircraft then we’re unable to do surveys until we procure another aircraft to do it and therefore you delay timelines and it takes you three, six, eight months depending on where you have to get the aircraft in order to do it. And so it was a strategic decision to purchase the aircraft as we wanted to ensure because of the pipeline we have that we have the ability in Q1 to be able to provide survey services for our clients. That’s why it was done. It wasn’t because, hey we could buy our shares back or it was a choice between the two. We did it as a strategic initiative to move our company forward and to expand and ensure that we can expand revenues.

Yeah and perhaps I’m looking at a different market, but as I understand your headquarters at Calgary it's not exactly a boom town for the last 18 months. So I don’t think there is a huge demand for airplanes over that period. Secondly, you indicated that your cost savings would be approximately 50%. So, given that it would take eight years just to cover your revenues you’re essentially the payback period on that plane the 16 years and where it comes from that’s a terrible return on investment.

Well, you can -- from your analysis the way you've done it, the answer is yes, if there is an infinite amount of aircraft that are sitting around that are equipped and capable of doing the surveys. The problem is that that’s just simply not the case. In order to make an airplane capable and that we can use it takes time. The second thing is you have to understand that in the world of Jet aircraft people that owned them tend to be very particular about their plans until anybody running around taking all the seats out to run a bunch of survey equipment in them necessarily. So the market for the planes, decision was made because it was in the best interest of the company to move forward and to have operational control. That was a decision to make. It wasn’t entirely a financial decision although we think financials decision was a good one.

But you operated since inception without owning a plan and now you've made the decision to do so.

We made the decision to do so because it was in our best interest to do it and because of the market requirement.

Yeah, that’s my point. Your quote is in your best interest unfortunately it's not in shareholder's best interest.

It's absolutely in the shareholder's best interest.

Totally disagree, we have to deal, we have the customized aircraft in order to perform the service.

Okay. Well if the Board and the Management is now prepared to engage in a substantial issuer bidder or normal course issuer bid, at some point would the Board and the Management undertake to personally purchase some shares. We know that there is only two Board Directors have shown any purchasing of NXT shares in the last two years. We’ve seen none from Senior Management. At what point does the Management going to show some confidence in themselves.

That is absolutely there and I don’t think that this investor conference is the portal to discuss and go into this kind of details that you’re bringing up.

Just a general comment, what’s in undertaking by the Management to do so?

Jerome just one second, there are board members who own over two million shares in this company. Also there are board members who own several 100,000 shares in this company. There are executives beside me who are sitting here who own over 700,000 shares in this company. So don’t say that people don’t buy and so on. Let’s take a look at the filings and so on and so forth could be better, yes it could be better. But to say that just because Jerome Hass wants NXT Board to decide that we're going to buy shares that this is the time. The Board disagrees with you. So what’s the problem? We’re going to do everything at the right time. It is on the agenda and it was on the agenda, not only that, it was on the strategic planning meeting as well. But everybody believes that this is not the time to do it. Okay. There are uncertainties out there such that the Board decided it's not time yet to do so.

Okay. Well I appreciate you listening to that and good luck with your plan.

Thank you.

[Operator Instructions] Our next question comes from the line of Ronald with PMI.

Hi George, I wanted to know a little bit more about your comment on getting on additional stock exchanges if I heard correctly before?

That's correct.

And the other comment that I have is I’m basically a salesmen and actually maybe that investment is in question by some, but as a salesmen when you get a contract you need to move and if you don’t have the ability to load your equipment up and go some place, it can tarnish the company rather than moving forward.

Thank you very much. I will ask Greg to answer your question regarding the exchanges.

Yes, I think as we touched on earlier that the short term plan is to re-process of doing an application to upgrade and quote “graduate” as they call it from the TSX Venture Exchange to the TSX. In the past we’ve also looked at -- we’re currently on the OTC Exchange in the U.S. We’re also looking at upgrading moving from that. There are different requirements in Canada, in the U.S., one of which in the U.S. is a market cap test as well as shareholder's equity and trailing trading price. So at this point, we were not meeting all the tests, but we intend to within the short term in 2016 for U.S.

Thank you. Appreciate it.

Ronald, we do meet the requirements for the TSX and we applied and also just to speak a little bit to the financial strength of the company, it is also required to graduate to the TSX or to a better U.S. Exchange beside the share price.

Your next question comes from Stan Trilling with Morgan Stanley.

People who invest who don’t agree with what Management is doing have an option. They have a very simple option. They don’t agree they leave. So I think that the issue of spending money when the people are looking at nickels and dimes and letting the dollars fly away, that’s my opinion. So my humble opinion okay, let’s get back to work. Number one, I left one piece of unfinished business off my list. Can you tell us what the hell is going on with Pakistan?

Okay. It’s Andy again. So Pakistan is a challenging country. So as we talked about it earlier, the National Oil Company of Pakistan is called OGDCL issued a tender, which we responded to on the 29 of September. It was a tender to allow a significant amount of exploration in Pakistan. We’re waiting for them to come back and with the evaluation of that tender. To be honest with you, it's expected any time, but we have to understand in Pakistan it is a bureaucratic challenge is the nice way to put it and things take time, things that should take two days to do sometimes takes three days, sometimes take five months and you don’t have any control over that process. So we’re definitely in contact with the senior people there and discussing with them and they say yes they plan, everything is good, all that sort of stuff, which they got to go through the logistical processes and they’re just not short. So we expect that that result in the short term, but it’s always subject to change there, it is challenge.

All right. All right. Let's move on, can we get little bit more color on the pipeline and get a little more specifics on what the market potential is and is there a lead person at the company for each project because if you remember at the Annual Meeting, I want to put some people's seat to the fire and I would like to know whose seat I have to burn.

I just would like to answer, thank you very much for your question that yes we have created a new chart actually, organization chart that involves and allows the expansion for different regions where you have their sales and marketing below which there is the geosciences people, which are going to be the people who are going to be able to execute contracts and interpretation teams and so on. So all that is now underway and on that note I will like Sajed to explain the rest of your question.

Okay. Thank you.

Talking about putting the seat to fire, but thanks George. Stan, we've been, again we're very deep involved in each prospect. Between Andy and myself we hold most of the top relationships on a very close level and George personally has been involved in each and every single part of the sales cycle and meeting the top decision makers and giving them new presentations. To give you some color, everybody has been asking this. We have a very high level technical confidence, most likely a final one to discuss a project with PETRONAS. Guiana has -- we went there, we met the top delegates, the ministers, the Petroleum Commission CEO and we have given a difficult presentation where they're very impressed with what we had to say and we're just waiting for the process to go through. We're having the same level of meetings in the Middle East as well and these are very highly promising prospects that we're pursing very closely and we plan to bring them very soon on board. I am not very keen on giving exact numbers or specifics, but I am a strong believer in letting the numbers show for itself and we are on course, we're on Board with this. We have the right people. We've dumped the right people. We have very firm verbal commitments and very firm -- we're seeing very clearly seeing the process being followed through every single stage. We're keeping a very close eye on these prospects. So very soon we'll be making some news releases that you will see the real color come to.

One other thing you have to understand Stan is the nature of the clients themselves and we know investors want to know what's going on and where are the prospects and all these things, but all these negotiations are very sensitive and talking about them before they want us to talk about them and before the release, they're very sensitive about and especially in the national oil companies, there is a lot of politics. So we have to be very careful not to disclose stuff until after they sign the contracts and they want it public. So that's why we're a little bit shy about saying this is exactly in this country and that country with this company in that country. That's why we're shy in disclosing that until the contracts are signed. And it puts -- disclosing things early can put projects at risk. So that's why we're very careful about doing that.

And the very fact that we're investing in our aircraft, we're reorganizing, re-strategizing, building the teams on very strong platform here is for us we prepare to what we're actually going towards right now and we see it coming very soon. Hence we're actually preparing ourselves for this.

We focus on performance and contracts now and then the market will take care of itself.

At this time, there are now additional questions. I'll turn it back over to management.

Thank you very much everybody to participate in our conference call -- investor conference call and we will talk again next following quarter. Thank you.

Thank you. This concludes today's conference. You may now disconnect.