Good day, ladies and gentlemen. My name is Michael, and I will be your conference operator today. At this time, I would like to welcome everyone to the NXT Energy Solutions, Inc. Third Quarter Operating and Financial Results Conference Call. [Operator Instructions] I would now like to turn the meeting over to Mr. Eugene Woychyshyn, Vice President of Finance and CFO of NXT Energy Solutions. Please go ahead, Mr. Woychyshyn.

Thank you, Michael. Welcome, and thank you, everyone, for joining us today for NXT Energy Solutions 2022 Third Quarter Financial and Operating Results Conference Call. My name is Eugene Woychyshyn, NXT's Vice President of Finance and Chief Financial Officer. Joining me today on today's conference call is Dr. Xiang Gui, Director of R&D, Mr. Enrique Hung, Director of Geosciences for the Americas; and Mr. Rashid Tippu, Director of Geosciences for Africa, Asia and the Middle East. George Liszicasz, our CEO, is away today dealing with internal matters. Purpose of today's call is to briefly discuss the highlights of the release of NXT's 2022 3rd quarter financial and operating results. Following our update, we will open up the line for questions. Please note, all statements made by the company and management during this call are subject to the reader's advisory regarding forward-looking information and non-GAAP measures set forth in our Q3 2022 press release and MD&A issued on November 9. All dollar amounts discussed in today's conference call are in Canadian dollars, unless otherwise stated. The complete financial and operating results and consolidated financial statements for the 2022 3rd quarter were published on November 9 and are available on NXT's website, SEDAR's website and soon will be available on EDGAR's website. First, I'll start with a review of our financial results. Cash was $0.57 million at September 30, and net working capital was a negative $1.06 million. Accounts receivable payments of approximately $390,000 received in September 2022. Operating activities used approximately $534,000 of cash during the quarter and $2.23 million year-to-date. There was no revenue for the quarter or year-to-date. For the quarter, NXT recorded a net loss of approximately $1.65 million or $0.03 per share based on 65.4 million weighted average common shares outstanding. This compares to a net loss of $1.43 million in the third quarter of 2021 or $0.02 per share. Year-to-date, NXT recorded a net loss of approximately $5.24 million or $0.03 per share based on 65.3 million weighted average common shares outstanding. This compares to a net loss of $1.55 million in year-to-date 2021 or $0.02 per share. Total operating expenses for the third quarter were $1.64 million, including SFD related costs, this includes noncash expenses of $0.47 million related to the amortization and stock-based compensation. Our total operating expenses for year-to-date 2022 were $5.22 million including SFP-related costs. This included noncash expenses of $1.51 million related to amortization and stock-based compensation. G&A expenses increased $198,000 or 26% in Q3 '22 compared to Q3 '21 for the following reasons. Salaries benefits and consulting charges increased $98,000 or 31% as Q3 '21 costs reduced by the Canada emergency wage subsidy and partially offset by lower vacation expense. Board and professional fees and public company costs increased $38,000 or 22% due to increased professional and insurance fees. Pharmacy administrative overhead costs increased $58,000 or 39% as the Q3 '21 costs were reduced by the Canada Emergency Rent subsidy. Business development costs for Q3 '22 increased $108,000 from Q3 '21 due to meetings with potential customers during the third quarter. There is no business development travel in the third quarter of 2022 due to the pandemic travel restrictions. And stock-based compensation expenses were lower in Q3 '22, and by $103,000 or 82% due to lower stock option expenses and the lower share price. General and administrative expenses increased $574,000 or 24% year-to-date 2022 compared to 2021 for the following reasons. Salaries, benefits and consulting charges increased $219,000 or 20% as year-to-date 2021 costs were reduced by the Canada emergency wage subsidy. Board and professional fees and public company costs increased $52,000 or 9% due to increased professional and insurance fees. Premises and administrative overhead costs increased $180,000 or 40% as year-to-date 2021 costs were reduced by the Canada Emergency Rent subsidy. Business development costs for 2022 increased $140,000 due to meetings with potential customers during the second and third quarters of this year. There was no business development travel in the related quarter in the prior year due to pandemic travel restrictions. And stock-based compensation was lower in 2022 by $18,000 due to lower stock option expense and a lower share price. On October 31, the company launched its rights offering to holders of its common shares of record at the close of business on November 7. The offering will expire on November 30. A fully subscribed offering will raise gross proceeds of approximately $4 million. Shareholders of record have received 1 right for each common share held. 2.95 rights entitled the holder to purchase 1 common share of the company at a price of $0.18 per common share by November 30. The company will use the proceeds of the offering to commence anticipated SFD surveys and the related working capital needs. Company felt that a rights offering was an appropriate way to raise the required working capital for supporting our anticipated SFD surveys, and it gives our loyal shareholders a chance to acquire additional capital in the company at a favorable price. Shareholders will receive information shortly on how to exercise their rights. To summarize some of the key financial points. We ended the quarter with $0.57 million of cash on hand net working capital balance of negative $1.06 million. Our main focus continues to be on execution of NXT's commercial pipeline and successful execution of the rights offering. I would now like to discuss our business update and forward plans. Despite the tight financial situation just described, we are witnessing an increased level of business development, engagement and engagement with our customers. This is directly attributable to a number of factors such as strong commodity prices and increased exploration activity around the world. The war in Ukraine and economic consequences emerging from the pandemic have caused uncertainty but has also increased opportunities for our business. We have responded by increasing the scale and frequency of technical and commercial meetings in targeted markets to secure new survey contracts. Operationally, the aircraft stands ready, having completed all of its scheduled maintenance requirements and is fully prepared for up to 300 flight hours. Additionally, logistic planning continues, and we are in active discussions to range ground operations in the targeted survey locations. The recently announced rights offering will give the company sufficient working capital to execute on these opportunities. Collectively, these actions give us confidence in our near-term success. SFD is a proven technology that is patented in 46 countries worldwide, gives our clients higher drill success rates, lower costs and reduced time to discovery with lower environmental impact. It has an impressive 70% drill success rate, which is significant when compared to the 18% onshore and 7% offshore success rates achieved by traditional 2D and 3D seismic alone. Additionally, NXT has a library of over 133,000 line kilometers. Together, this brings significant value to our customers. Progress has accelerated with our African SFD opportunities in the last few weeks. Corporate reorganizations are completed and the new managerial appointments have been made. The new management team is well aware of NXT and have appreciated the value of our previous surveys have brought them. We believe we are in the final stages before contract execution. As mentioned last quarter, NXT carried out 2 consecutive business trips recently to Asia and the Middle East, following up on previously identified leads during the summer. Several additional meetings have now occurred with great success. These meetings include advanced technical discussions with our clients, alongside their technical and financial partners in the U.K. and Canada. These discussions have brought the possibility of extended application of our exclusive technology into the region. In Asia, we have diligently addressed several government approvals of our technology to be adopted on both oil and gas and geothermal applications. Follow-up discussions continue with these Middle Eastern and Asian opportunities and NXT is pleased to report that we are undertaking operational and readiness activities for one of these potential customers. On the Asian front, potential areas or regulatory level SFD surveys have been identified and discussions continue with the exploration departments to put pen to paper in short order. Luckily, there is progress being made with geothermal opportunities in Alberta. We'll update you as warranted. We believe that our efforts in pursuing SFD-GT survey opportunities will be fruitful, both domestically in Canada and abroad in the Asian region. Previously reported NXT successfully completed Phase I of its SFD-GT sensor development program and has submitted the Phase II submission to the NRC IRAP and we're awaiting their response, which we expect shortly. In summary, despite our current financial situation, we remain confident in our ability to execute on our SFD survey opportunities. On behalf of our Board of Directors and the entire team at NXT, I want to thank all of our shareholders for their continued support. Now I will ask our operator, Michael, to open the line for us to take a few of your questions.

[Operator Instructions] And the first question is from Rob McCarter at Collective Asset Management. Your line is now open.

Can you talk about the cash sequence, if you end up getting a new contract, do you receive 25% cash on signing and talk about the rest of how long you typically end up waiting for the cash to arrive?

So let's assume a contract is signed tomorrow -- I apologize for that. If a contract is signed tomorrow, we would expect within the week, if not on signing our [indiscernible] costs and then upon arrival in the location, we typically expect 10% to 20% to 25% of the fees for on landing there, which effectively covers a good portion of our cost to operate. And then once we are -- have completed the survey and before we submit the initial results after interpretation and integration. We expect another probably up to 20% or up to 80% of the total payment. So basically what I'm effectively saying is we control -- before we start the survey before we release results, we expect significant milestone payments.

Great. And you talked about Phase II with an NRC IRAP. I would describe it as a funding submission. Can you provide a bit more color on that as far as dollar amount. And if you do get the funds how long would it take to basically work on the new technology?

So we are -- our current application is well into the low 6 figures. And the approval process for that amount of money will probably take at least a month. We've got actually a meeting set for Monday to get some initial feedback on this on the proposal. But we would -- once we get the approval, which conservatively, let's say, it's 2 months from now, we could start claiming the funding for the work being done as soon as it's approved. So the last time we were approved in late June, and we started getting money or earning or incurring the expenses in July and were paid by the end of August for the first batch.

[Operator Instructions] The next question is from Rob McCarter at Collective Asset Management.

The money that you received for the previous batch from IRAP, you talked about some money for June and July, can you talk about the dollar amounts related to that and the total dollar amount?

Right. So if I understand correctly, you're talking about the first Phase I. So we received the money this is -- the money was received in 2021 between July and November of 2021. So it was a total of $50,000. And it was -- we submitted our application for the -- for reimbursement end of each month and received it within 3 weeks during the third and fourth quarter of 2021.

Okay. And then turning to the geothermal opportunity. You suggested there's opportunities in Alberta. Is there a difference in your selling price for a kilometer of survey, if you wish, of geothermal versus generic oil and gas?

So I'll ask Rashid to respond to that.

Yes. So for the geothermal, because this is a different kind of acquisition parameter as well for geothermal and also here tapping a different resource potential than the hydrocarbon. So definitely, the rate in terms of the turnkey fee that will be lower than the hydrocarbon because of to compete with other existing technology and also the efforts to do a survey. So that's why that cost will be definitely lower than hydrocarbon survey.

Is the ballpark guess would be 50% less? Or any kind of guidance as to how much different geothermal going to gas?

To begin Mike because this is over it could be like a first pilot project. So to begin with, we will go maybe towards 50% of the cost. And then as we have more case studies as we did with hydrocarbon more approval success then definitely the pricing can go up.

So [indiscernible] is minimum.

Yes. So [indiscernible] be minimum because since it's in Alberta. So -- that's why. So [indiscernible] is close to nothing. And -- but the initial cost of our cost will be around 50% to begin with of hydrocarbon. Until we have more success and more project and then definitely, that's a value in the entire geothermal exploration and exploitation process, then we can increase over turnkey fee. It's introductory price right now what we are taking.

[Operator Instructions] The next question is from Rob McCarter again at Collective Asset Management. Please go ahead. Your line is now open.

Okay. Related back to oil and gas versus geothermal, is there a difference in the depth that you're going to of one resource versus the other because in some cases, it turns out that in many cases, oil and gas is just effectively floating above the big body of water. So I assume that the depth that you're probing to is pretty similar as a guess, but please advise.

Yes. The process for geothermal in Alberta, what the company is looking at. So they are going for existing blow hole. So they will have existing blow hole data and they don't have to be and just simply have to reenter the hole and tap the reservoir. So they don't have to drill a new well. So it's like they already have existing borrow all which is depleted. There is no hydrocarbon potential, but they have right subsurface temperature which can be good for geothermal production in those wells. So SFD technology will pinpoint the area of interest, which has a higher potential in terms of the water and if they have a temperature gradient in that area, so within that, they will pick the well which falls within the SFD recommendation, and then they go from there. So that's the value addition for a company instead of going over 300 well so they can pick easily 5 or 6 well and go with the geothermal project.

The depth of the target will be the same as in oil and gas. The problem here has identified which of the wells of the many, many wells that we have in Alberta, the ones that can be used.

Okay. So since geothermal well diameters are much bigger than conventional oil and gas, which in some cases, they are 4 inches. Is it one where the hole so has to be redrilled you just basically saying, okay, we're going to go downhole and then do directional drilling to zip over and find the hot water and then figure out from there.

Yes. So it's like the well as we are trying to say that could be 300 wells, but you have to find the best candidate out of those 300 wells. So SFD-GT will lead them to the best candidate well and then definitely how to unitize all the 5 wells or 6 wells. That definitely will have some engineering work, which could be the direction drilling to connect to each other or maybe produce a stand-alone well to the surface, it based on the pressure detention.

And one mechanical -- or sorry, a financial question. On the expectation of [ Yip ] 2023 is going to be the year of follow-on contracts in a big way. how much have you got in the way of tax loss carryforwards to be able to shield any future sales/income from the effect of the tax man?

Over CAD 30 million.

The next question is from Thomas Wood at [ Woodlet ].

So correct me on the math, but if the rights offering goes forward, I'm just like rough guess, that gives you like a year or 2 of leeway at the current run rates, again, correct me. I'm just wondering if there's like a contingency plan because I know that you guys are really confident about contracts moving forward. But as like a long-time shareholder. We've been pretty confident for a long time. So if those don't move, is there like a date where you're like, Oh, we're going to be running out of cash. We need to do something else to try and maximize shareholder value. Yes.

I guess the short answer is, as you said, we're very confident that we're going to execute on our commercial plan. But as always, we will -- it is our responsibility to reassess that situation on a monthly basis whether we would have to do anything else. But I reiterate, we're quite confident we're on the plan. And -- but I also have to be realistic as we deal in interesting parts of the world and things don't always happen as planned.

Okay. I guess -- I guess the last question or the follow-up to that would just be, it sounds like you are confident enough that at this point, there is no worry about a continuous plan. You're just pretty sure these contracts are going to get done. That's the sentiment.

Yes.

Thank you. The next question is from Rob McCarter at Collective Asset Management.

We talk about receiving $390,000 and round figures with accounts receivable during the quarter. Can you tell me if there's any further accounts receivable balance we expect to receive in the current quarter?

So currently, we are fully paid. Just as a follow-up to that, that's just this money was owed to us from our African customer, and it's just evidence that, again, of the power we have on collecting our funds. And the value we bring because we can collect the money and we bring the value, so people are happy to pay it.

[Operator Instructions] And the next question is from Rob McCarter at Collective Asset Management.

Turning back to the Phase II portion of the NRC, assuming you get the funding, when would you expect the technology be completed? And will it make a difference as far as either the accuracy or the operating expenses of your kind of surveying technology?

I'll ask Dr. Xiang Gui to answer that.

Okay. We will have to go through some tests we create some plans to change the existing SFD sensor to make them more suitable for geothermal exploration. So currently, we are waiting for the approval for the -- the proposal we submitted. And after that, we need to go, hopefully, to get some fabrication done. And then we need to do some test flights. So there are a lot of things to do, but we feel, based on our previous test result, it shows some promising results. So we will start from there.

[Operator Instructions] There are no questions at the moment, Mr. Woychyshyn.

Okay. Thank you. So and I want to thank everybody for attending today's call, and we'll keep you updated as we progress. And we will hopefully talk to you soon. Thank you.

Thank you. Ladies and gentlemen, your conference has now ended. All callers are asked to hang up their lines at this time, and thank you for joining today's call.