Good day, ladies and gentlemen. My name is Melanie and I will be your conference operator today. At this time, I would like to welcome everyone to the NXT Energy Solutions Inc. Fourth Quarter 2023 Operating and Financial Results Conference Call. All participants will be in listen-only mode for the first part of the conference call with the ability to ask questions after the presentation by the company. [Operator Instructions] I would now like to turn the meeting over to Mr. Bruce Wilcox, Interim CEO of NXT Energy Solutions. Please go ahead, Mr. Wilcox.

Thank you, Melanie, and welcome and thank you everyone for joining us today for NXT Energy Solutions 2023 fourth quarter financial and operating results conference call. My name is Bruce Wilcox, NXT's Interim Chief Executive Officer. Joining me on today's conference call is Mr. Eugene Woychyshyn, VP of Finance and CFO; Mr. Enrique Hung, Director of Geosciences for the Americas; Mr. Rashid Tippu, Director of Geosciences for Africa, Asia and Middle East; and Mr. Mohammed Saqib, Operations and Interpretation Manager. So a little history on me, I joined the NXT board in 2015. I've had a 40-year career as an investor, primarily as an analyst/portfolio manager and ultimately CEO of one of the oldest long-short equity investment firms in the U.S. Among other things, I was responsible for all of our investments in the energy sector, both E&P and service companies. I was appointed Interim CEO of NXT in June of last year. As I observed in my opening remarks for the 2023 shareholders meeting, I want to be judged on the progression of our stock price and for reasons that I will outline later, I am optimistic. The purpose of today's call is to briefly discuss the highlights of the release of NXT's 2023 fourth quarter financial and operating results and to give some color on our business pipeline prospects. Our CFO, Eugene Woychyshyn will start with a financial view and I will follow with perspective on our business outlook. 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 Q4 2023 press release and MD&A, issued March 27, 2024. 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 2023 fourth quarter will be published on March 27 and are available on NXT's website, SEDAR's website, and soon will be available on EDGAR's website. Now, over to Eugene for the financial result.

Thank you, Bruce. First, I'll start with a review of our financial results. During the fourth quarter of 2023, the company commenced the Turkish SFD survey for an independent oil and gas exploration company in Turkey and recorded SFD related revenues of approximately CAD2.15 million for work completed up to December 31, 2023. Cash was CAD0.4 million at December 31, 2023. The net working capital was a negative CAD1.86 million, which was an improvement versus an approximate negative CAD3.47 million at September 30, 2023. Accounts receivable were CAD1.83 million at December 31, 2023. Approximately CAD1.43 million of the payments on accounts receivable received up to March 27, 2024. The debentures announced in November 2023 were finalized on January 12, 2024 for a total of $1.87 million, $0.72 million of these debentures were received in the first quarter of 2024. Insiders, including all the directors, participated in this adventure for a total of $1.5 million to $2 million. Working capital needs for operating activities due to approximately CAD1.47 million of cash during the fourth quarter and CAD4.83 million year-to-date. For the quarter, NXT recorded a net loss of approximately CAD0.43 million or CAD0.01 per share based on CAD78 million weighted average common shares outstanding. This compares to a net loss of CAD1.47 million in the fourth quarter of 2022 or CAD0.02 per share. Year-to-date, the next few quarter net loss of approximately CAD5.45 million or CAD0.07 per share based on CAD77.5 million rated average common shares outstanding. This compares to a net loss of CAD6.73 million in 2022 or CAD0.10 per share. The unit expenses decreased CAD37,000 or 5% in the fourth quarter of 2023, compared to 2022 for the following reasons. Salaries, benefits, and consulting charges decreased CAD37,000 or 10%. As a portion of some of the salaries are allocated as direct labor expenses to support the Turkish SFD survey. On the professional fees and public company costs decreased CAD15,000 or 9%. There's audit fees or significantly lower due to change of auditor. And business development costs decreased CAD35,000 to 75%. In the fourth quarter of 2022, the company traveled to the Middle East and Asia to pursue opportunities. While in Q4 ‘23, the company focused on the Turkish SFD survey. G&A expenses decreased CAD316,000 or 8% in 2023, compared to 2022 for the following reasons. Salaries, benefits, and consulting charges decreased CAD176,000 or 10%. The company had one less headcount for the first-half of 2023. In addition, a portion of some of the salaries are allocated to direct labor expense to support the SFD survey. The order of professional fees and public company costs increased CAD65,000 or 8%. Audit fees were lowered due to the company changing its auditor. This was offset by increased professional fees due to the venture financing. And finally, business development costs decreased to CAD105,000 or 53% due to less travel expense during 2023 versus 2022. The company engaged in more travel to the Middle East and Asia to pursue opportunities in 2022. While in 2023, the company focused on the Turkish survey and attended more virtual meetings. The company continues its programs to reduce costs. On March 22, 2024, the company extended its lease on its aircraft 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 three-year term. In addition, we're working with our landlord to reduce our office space by an additional 30% beginning May 1 of 2024. We're by reducing total space by approximately 40%, compared to the original lease agreement. We'll continue to negotiate and rate size of their service provider contracts as we come due. The 2023 financial statements and MD&A are filed on SEDAR+ website. We're filed on March 27 and will shortly be available on EDGAR. Excuse me. To summarize the key financial points, we ended the quarter with CAD0.4 million of cash and accounts receivable approximately CAD1.83 million. Our main forecast continues to be supporting the execution of NXT's commercial pipeline in a cost efficient way. Now I'd like to turn the call back over to Bruce. Thank you.

Thanks, Eugene. Well, first I want to convey my sincere thanks to everyone for their support over the last year. Our last conference call was over one year ago, and we're pleased to provide an update on our progress since then and our forward plans. We intend to make these investor calls more regular. My opinion is that 2023 will be looked back upon as a watershed period for the company as we continue efforts to increase revenues and ultimately enhance shareholder value. In May 2023, NXT announced the strategic alliance partnership with Energy EMP Technologies Limited, which included an exclusive license to market and distribute NXT's SFD Solutions in Africa. Synergy, by the way, is the successor of the company to PE Energy that executed our 2000 for whom we did our 2019 survey in Nigeria. In September 2023, NXT announced its first SFD survey contract in Turkey and we have completed all of the deliverables. We will be jointly publishing a paper on the survey with the operator once initial drilling of prospects is completed, anticipated to be within six months. In October 2023, the company was a finalist for Best Exploration Technology at the World Oil 2023 Gulf Energy Excellence Awards in Houston. World Oil is the publisher of a widely read energy magazine and a number of industry data services. By the way, our competition for that category included Schlumberger, now known as SLB, Halliburton and a couple of companies I'd never heard of. Schlumberger got the award, but we were pleased to be in that company. Most recently, a new sales agency agreement was announced with Coal Cube Limited, known as [Indiscernible], an Abu Dhabi-based startup focused on “deep tech disruptive technologies” which covers United Arab Emirates. So through our collective efforts on these and other strategic initiatives, I have increased confidence that 2024 should bode well for the future of the company. To get a little more granular on our outlook, we've had a very active business pipeline, and we have a very active business pipeline. In total, we currently have outstanding two draft contracts, three formal written proposals, and a number of detailed outlines with customers. A firm has historically targeted large opportunities almost exclusively with National Oil Companies or NOCs, due to their financial strength and ongoing exploration commitments. Smaller scale projects with Independent Oil Companies or IOCs were deemed secondary primarily, because that segment of the industry was suffering financially due to low commodity prices and the lack of consistent exploration activity. Although the company did achieve periodic significant success with the NOCs, this approach resulted in extended periods of inactivity for the company, during which no survey revenue was achieved. This, unfortunately, resulted, among other things, in balance sheet stress and a declining share price. This is obviously an unsustainable trajectory. We frequently said, “we are elephant hunting”. I prefer to think of us as hunting smaller, more plentiful game with an elephant gun in the truck should the need arise. So my vision for the company can be summarized in a handful of key words. Actively market, high grade, diversify, monetize, collaborate, and grow. So to define those, with [Indiscernible], we have retained the services of a deeply seasoned marketing consultant, who is recommended by a larger shareholder. We have subscribed to the Act customer relationship management software. This is raising our visibility with a wide range of prospects. High grade, we're ranking prospects with regards to size, timing, and collateral benefits, like being able to execute several contracts in a single geography. Diversify, by diversifying by geography, we have concentrated opportunities, particularly in Africa, the Middle East, and Southeast Asia. Diversify by company size and type. We will continue to target NOCs, but they are bureaucratic and slow. We are increasingly engaging with IOCs, such as our client in Turkey. Surveys may be smaller, but they develop more quickly. We are in fairly advanced stages with the number of IOCs worldwide, diversified by agents. So we currently have four agency agreements covering Africa, the Middle East, Indonesia, and most recently the United Arab Emirates. Monetize. NXT possesses over 140,000 line kilometers of survey data, which we believe could be marketed to IOCs, who are now enjoying much stronger financial positions and are undertaking more robust exploration programs. Collaborate. We have initiated dialogues with other service providers such as seismic survey companies, the library service providers, to explore opportunities to work together to our mutual benefit. And finally, grow. Grow revenues and earnings. In summary, 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. And then I'll ask our operator, Melanie, to open the line for us to take your questions.

Thank you, Mr. Wilcox. We will now take questions from the telephone lines. [Operator Instructions] The first question is from Jerome Hass from Lightwater Partners. Please go ahead. Your line is now open. Please go ahead. I'm sorry, we were unable to hear you at this time. If you have a question, please go ahead. Mr. Jerome Hass from Lightwater Partners.

Hi, this is a question for either Bruce or for Eugene. It's with regards to the Turkish contract, so we note that in Q4 you booked CAD2.1 million in revenues and approximately CAD2.2 million over the course of the year in survey costs. We also note that you have trade receivables of CAD1.74 million. So firstly, we assume that those receivables are all related to the Turkish contract, but it would appears though if we take those numbers without any more survey costs that your margins on a gross basis have fallen to about 42% on that contract versus in 2021 you had about 61% gross margin. So is there something about the Turkish contract that was lower margin?

Jerome, this is Bruce. How are you doing? I'll take a quick overview stab at that, but I'll let Eugene give the details. So we have a remaining balance within the receivables of around the numbers about CAD600,000, which we should be paid very soon. But in terms of the margin, we book the revenues basically on the percentage of costs that are incurred in comparison to the total cost. Eugene, can you give Jerome some more color on margin?

Sure. So first of all, I'm not going to discuss specific numbers because we are in active negotiation with other potential customers and we'll talk specifically about margins. But on the Turkish survey, what we're experiencing is lower volume of total line kilometers, so you do lose a little bit of the volume based with the spread of the cost. But overall, the margins were lower than we expected.

So when we look at, for the year, you actually had negative gross margin. I'm not sure how we're supposed to interpret that.

So our SFD related costs include the full, all the costs, especially in the first three quarters when we were still maintaining the aircraft. So the -- what you're seeing there is the need for us to be -- keep that aircraft in the air every quarter. So we are covering our full costs. So the actual incremental costs of the survey are together with the fixed costs that we are incurring. So the message which we know and what we're trying to achieve here is to get volume.

All right. Okay. Thank you.

The next question is from Thomas Wood from [Wood] (ph). Please go ahead. Mr. Wood, please unmute your line at this moment.

Oh, I'm not muted.

I can hear you.

You're not hearing me?

Yes, I can hear you clearly. Please go ahead.

Okay, thanks. Hey, Bruce. Hey, everybody. So, I think anyone who's been an investor with this company for a long time, as I have believed in the technology and its ability to disrupt what has been like a pretty slow to evolve process and industry. But something I spoke at length with George about before his passing was that it felt like the public face of the company, the marketing materials, the brand, it felt pretty old-fashioned. And I feel like it's probably still that way. So obviously we need to be pretty cost-conscious, but I wonder if you could just talk a little bit about some of this new strategy you have with the marketing firm that you guys are engaged? And maybe a little bit more about like their work, their background and how that approach is going to be coming into this industry?

So thank you. This is Bruce speaking. So Les Hribar is the name of our marketing consultant. He is a retired independent practitioner with a very long and very successful career in marketing, primarily in the technology and related industry. But he's really animated our process. So, you know, it's echo-age to buy, you know, email or phone or flyers, conference attending. Less has been to, I believe now, three conferences. And it's just the face-to-face. And I think the -- I want to tell you a little bit about my personal approach. So we always talk a lot about the technology. My preference is really to talk to somebody typically in the C-suite, like the CEO, CFO, Director of Exploration, to make one point. We can speed up the survey process. We have an approaching 70% commercial success rate on the body wells that have been drilled on the recommendations since 2009, 30 wells. That's a huge number. It compares to say 19% onshore and about 9% offshore for wildcat exploration. So we can save time, we can save money, we can de-risk exploratory acreage, and all of that adds up to much higher returns on the exploration invested capital. That's my pitch. And I have a very capable geophysicist on the team, and they can talk about the science, but I think we over emphasize. Quite frankly we would sometimes end up in arguments with our potential customers about the details of the technology. So we have a big enough body to illustrate that this works. So Les's job is to really keep us moving and cover a really wide swath of ground. And he's a real task master, I can tell you. Does that help?

Yes, I think so. I mean, I think if I was to frame it differently, and part of this is my generation and my connections with people in Silicon Valley, but like this to me feels like it should be also something like Tech Crunch, and obviously it's completely different industries. But I think from a framing standpoint, like this is such a disruptive, incredible technology, and I've been following it for over a decade. And it's just incredible to me that it's not out there pitching next to the Twitters of the world? Obviously it's a very different industry, but I just mean in terms of that sort of youthful disruption, world changing potential, and certainly George was passionate and I agree that things could get a bit bogged down, but I think what I'm curious about is just in terms of the public face, the branding, the marketing [Indiscernible] is a little bit of my background. Just if there is talk about strategy of having some of that, kind of, startup mentality or energy or if that seems valuable in terms of the pitch?

I think we've got that, notwithstanding the fact the company's been around for 20-years. But there's a lot of things that we need to upgrade. We need to upgrade our website, which looks archaic. The content, I spent a lot of time going over the content when I first came aboard and I think the content is good, but the appearance is very, very old school. Social media, but you know, less is pursuing a lot of different avenues for us. So, you know, we're open to anything that works, that brings business.

Wonderful, thanks, we appreciate it.

Okay.

Thank you. There are no further questions registered at this time. I would now like to turn the meeting back over to Mr. Wilcox.

Well, thank you very much, all the attendees, and thank you for three questions. We will be releasing our first quarter, you know, under the regulatory time limit, which will be means before May 15. And it's our current intention to do, you know, to make these conference calls a regular part of the process. So thank you very much everybody. Have a wonderful evening and we'll talk to you soon.

Thank you. The conference has now ended. Please disconnect your lines at this time. We Thank you for your participation.