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NXT Announces US$0.5 Million Convertible Debenture

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NXT Energy Solutions has received the first US$500,000 tranche of a planned US$900,000 convertible debenture from Ataraxia Capital. The debentures carry a 10% annual interest rate, payable quarterly, with a two-year maturity. They are convertible into common shares at US$0.24 per share or into voting preferred shares. Ataraxia currently holds US$1.4M in previous debentures and could own up to 14.7% of outstanding shares after full conversion. The proceeds will support working capital needs for upcoming SFD® surveys in Africa and Southeast Asia, with operations expected to commence in Q4 2024.

NXT Energy Solutions ha ricevuto la prima tranche di US$500.000 di un previsto debenture convertibile da US$900.000 da Ataraxia Capital. I debenture portano un tasso d'interesse annuale del 10%, pagabile trimestralmente, con una scadenza di due anni. Sono convertibili in azioni ordinarie a US$0,24 per azione o in azioni privilegiate con diritto di voto. Ataraxia detiene attualmente US$1,4 milioni in debenture precedenti e potrebbe possedere fino al 14,7% delle azioni in circolazione dopo la conversione completa. Il ricavato sosterrà le esigenze di capitale circolante per i prossimi sondaggi SFD® in Africa e nel sud-est asiatico, con operazioni previste per iniziare nel quarto trimestre del 2024.

NXT Energy Solutions ha recibido el primer tramo de US$500,000 de un planificado debenture convertible de US$900,000 de Ataraxia Capital. Los debentures tienen una tasa de interés anual del 10%, pagadera trimestralmente, con un vencimiento de dos años. Son convertibles en acciones comunes a US$0.24 por acción o en acciones preferentes con derecho a voto. Ataraxia actualmente posee US$1.4 millones en debentures anteriores y podría poseer hasta el 14.7% de las acciones en circulación tras la conversión completa. Los ingresos apoyarán las necesidades de capital operativo para las próximas encuestas SFD® en África y el sudeste asiático, con operaciones previstas para comenzar en el cuarto trimestre de 2024.

NXT Energy SolutionsAtaraxia Capital로부터 계획된 US$900,000의 전환사채에서 첫 번째 US$500,000의 분할금을 받았습니다. 이 전환사채는 연 10%의 이자율을 가지며, 분기마다 지급되며, 2년의 만기를 가집니다. 이들은 주당 US$0.24에 보통주로 또는 의결권이 있는 우선주로 전환될 수 있습니다. Ataraxia는 현재 US$1.4M의 이전 전환사채를 보유하고 있으며, 완전 전환 후에 최대 14.7%의 유통 주식을 소유할 수 있습니다. 이 수익금은 아프리카 및 동남아시아에서 예정된 SFD® 조사에 대한 운영 자본 필요를 지원할 것입니다. 운영은 2024년 4분기에 시작될 것으로 예상됩니다.

NXT Energy Solutions a reçu la première tranche de 500 000 $ US d'un emprunt convertible prévu de 900 000 $ US de Ataraxia Capital. Les emprunts portent un taux d'intérêt annuel de 10 %, payable trimestriellement, avec une maturité de deux ans. Ils peuvent être convertis en actions ordinaires à 0,24 $ US par action ou en actions privilégiées avec droit de vote. Ataraxia détient actuellement 1,4 million $ US d'emprunts précédents et pourrait posséder jusqu'à 14,7 % des actions en circulation après conversion complète. Les produits serviront à soutenir les besoins en fonds de roulement pour les futures enquêtes SFD® en Afrique et en Asie du Sud-Est, les opérations devant commencer au quatrième trimestre 2024.

NXT Energy Solutions hat die erste Tranche von US$500.000 eines geplanten wandelbaren Debentures von US$900.000 von Ataraxia Capital erhalten. Die Debentures haben einen jährlichen Zinssatz von 10%, zahlbar vierteljährlich, mit einer Laufzeit von zwei Jahren. Sie sind umwandelbar in Stammaktien zu einem Preis von US$0,24 pro Aktie oder in stimmberechtigte Vorzugsaktien. Ataraxia hält derzeit US$1,4 Millionen in früheren Debentures und könnte nach vollständiger Umwandlung bis zu 14,7% der ausstehenden Aktien besitzen. Die Einnahmen werden die Betriebskapitalbedürfnisse für die bevorstehenden SFD® Befragungen in Afrika und Südostasien unterstützen, wobei der Betrieb voraussichtlich im 4. Quartal 2024 beginnt.

Positive
  • Secured US$500,000 in immediate funding through convertible debentures
  • Confirmed upcoming SFD® survey contract in Africa with operations starting Q4 2024
  • Strategic partnership strengthened with Ataraxia Capital's increased investment
Negative
  • High interest rate of 10% on debentures increases debt servicing costs
  • Potential significant shareholder dilution with Ataraxia's ownership reaching 14.7% upon conversion
  • Debentures are payable on demand, creating potential financial vulnerability

CALGARY, AB / ACCESSWIRE / November 1, 2024 / NXT Energy Solutions Inc. ("NXT" or the "Company") (TSX:SFD)(OTCQB:NSFDF) is pleased to announce it has received the first tranche of a planned US$900,000 (approximately CDN$1,252,080) convertible debenture (the "Debentures") from Ataraxia Capital ("Ataraxia") for the principal amount of US$500,000, (approximately CDN$,695,600), pursuant to the terms of the subscription agreement signed between Ataraxia and NXT in 2023. The Toronto Stock Exchange (the "TSX") has provided conditional approval of the final phase of this 2023 agreement.

The Debentures bear interest at 10.0% per annum, paid quarterly in arrears, and are due and payable two years after the issue date. The Debentures are convertible into common shares of NXT (the "Common Shares") at a conversion price of US$0.24 (CDN$0.324) per Common Share which provides Ataraxia with the right to obtain up to 2,083,333 Common Shares of NXT. The Debentures may also be converted into voting preferred shares of NXT (the "Preferred Shares") with an annual dividend rate of 10% paid quarterly in arrears. The Preferred Shares are not transferable, but may be converted on a one-to-one basis into Common Shares. The Debentures are payable on demand and are secured by a general security agreement, subordinate to the Business Development Bank of Canada's Highly Affected Sectors Credit Availability Program loan.

Ataraxia currently holds US$1,400,000 (approximately CDN$1,947,680) of previously issued debentures under the 2023 subscription agreement (the "2023 Debentures") with a conversion price of US$0.143 per Common Share. Once Ataraxia has completed the tranches of its US$900,000 investment, Ataraxia will own an aggregate of US$2,300,000 Debentures and 2023 Debentures (collectively, the "Ataraxia Debentures"). With the acquisition of the Debentures, Ataraxia will have the right to own, after conversion of the Ataraxia Debentures, up to 13,540,209 Common Shares, representing approximately 14.7% of the issued and outstanding Common Shares (after giving effect to the conversion of the full amount of the Ataraxia Debentures).

The proceeds from the Debentures will be used to support the working capital needs of the upcoming SFD® surveys in Africa and Southeast Asia, and other general and administrative costs which include business development and marketing activities required to transform the existing pipeline of SFD® opportunities into firm contracts.

Commenting on the Debenture offering, Bruce G. Wilcox, CEO of NXT said, "We are very pleased and grateful that our strategic alliance partner, Ataraxia Capital, has increased its ownership position in fulfillment of its commitment from 2023. This provides NXT with additional capital to support the successful execution of our upcoming surveys. As previously disclosed, NXT was recently awarded an SFD® survey contract in Africa by Synergy Exploration and Production Technologies Limited., an affiliate of Ataraxia Capital. Data acquisition operations for this contract are expected to commence in the fourth quarter of 2024, and NXT's interpretations and recommendations are expected to be delivered during the first quarter of 2025."

In accordance with MI 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the Company's issuance of the Debentures to Ataraxia constitutes a "related party transaction".

The Company has relied on exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 in respect to the issuance of the Debentures to Ataraxia as the fair market value of the Debentures is below 25% of the Company's market capitalization (in each case as determined in accordance with MI 61-101).

Please note that the securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any state securities laws, and accordingly, may not be offered or sold within the United States except in compliance with the registration requirements of the 1933 Act and applicable state securities requirements or pursuant to exemptions therefrom. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in the United States or in any other jurisdiction in which such offer, solicitation or sale would be unlawful.

About NXT Energy Solutions Inc.

NXT Energy Solutions Inc. is a Calgary-based technology company whose proprietary SFD® survey system utilizes quantum-scale sensors to detect gravity field perturbations in an airborne survey method which can be used both onshore and offshore to remotely identify traps and reservoirs with hydrocarbon and geothermal exploration 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.

Contact Information

For investor and media inquiries please contact for NXT Energy Solutions Inc.:

Eugene Woychyshyn

Michael Baker

Vice President of Finance & CFO

Investor Relations

302, 3320 - 17th AVE SW

302, 3320 - 17th AVE SW

Calgary, AB, T3E 0B4

Calgary, AB, T3E 0B4

+1 403 206 0805

+1 403 264 7020

nxt_info@nxtenergy.com

nxt_info@nxtenergy.com

www.nxtenergy.com

www.nxtenergy.com

Forward-Looking Statements

Certain information provided in this press release may constitute forward-looking information within the meaning of applicable securities laws. Forward-looking information typically contains statements with words such as "will", "may", "can", "enable" or similar words suggesting future outcomes or an outlook. Forward-looking information in this press release includes, but is not limited to, information regarding: the conversion of any issued and outstanding Ataraxia Debentures into Common Shares or Preferred Shares, as applicable, the shareholdings of Ataraxia following conversion of its issued and outstanding Ataraxia Debentures, the use of the proceeds raised through the issuance of the Debentures, the Company's ability to transform existing SFD® opportunities into firm contracts, the effect of increased capital on NXT's ability to deploy its SFD® technology in Southeast Asia, Africa, and other regions, and the expected timing of commencement of NXT's data acquisition operations for the SFD® survey contract and for the delivery of NXT's interpretations and recommendations. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Risk factors facing the Company are described in its most recent annual information form for the year ended December 31, 2023 and MD&A for the three and six months ended June 30, 2024, which have been filed electronically by means of the System for Electronic Document Analysis and Retrieval ("SEDAR+") located at www.sedarplus.ca. The forward-looking statements contained in this press release are made as of the date hereof, and except as may be required by applicable securities laws, the Company assumes no obligation to update publicly or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

SOURCE: NXT Energy Solutions, Inc.



View the original press release on accesswire.com

FAQ

What is the conversion price of NXT Energy's (NSFDF) new convertible debentures?

The new convertible debentures have a conversion price of US$0.24 per common share.

When will NXT Energy (NSFDF) begin its SFD® survey operations in Africa?

NXT Energy's SFD® survey operations in Africa are expected to commence in the fourth quarter of 2024.

What is the total value of Ataraxia's debenture holdings in NXT Energy (NSFDF)?

Once completed, Ataraxia will hold an aggregate of US$2.3 million in debentures, including both the new and 2023 debentures.

What is the interest rate on NXT Energy's (NSFDF) new convertible debentures?

The convertible debentures bear interest at 10.0% per annum, paid quarterly in arrears.

NXT ENERGY SLTNS INC ORD

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