MD&A for the Q1 period ended March 31, 2015
● | estimates of the amount and expected timing of revenue and costs related to potential new SFD® survey contracts that may be obtained, conducted and completed in future periods. |
● | the timing and extent of potential future growth opportunities in new international markets, including new business ventures. |
● | the potential future conversion of the outstanding preferred shares, which mature on December 31, 2015. |
● | the Company's ability to continue as a going concern. |
● | limitations in disclosure controls, procedures, and internal controls over financial reporting. |
MD&A for the Q1 period ended March 31, 2015
MD&A for the Q1 period ended March 31, 2015
● | engaging an experienced exploration focused management team to aid in conducting an extensive geotechnical analysis of a defined portion of NXT’s proprietary SFD® data library, and further developing an inventory of prospect leads, and |
● | developing a financing and exploration plan, which we intend to use in marketing the initial Vertical concept, with a view to obtaining a commitment for sufficient external equity funding, with an initial financing to close in the second half 2015. |
Q1-2015 | Q4-2014 | Q3-2014 | Q2-2014 | |||||||||||||
Mar 31, 2015 | Dec 31, 2014 | Sept 30, 2014 | June 30, 2014 | |||||||||||||
Survey revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
Net income (loss) | (1,518,172 | ) | (1,532,466 | ) | (1,330,167 | ) | (1,286,461 | ) | ||||||||
Income (loss) per share – basic | (0.03 | ) | (0.03 | ) | (0.03 | ) | (0.03 | ) | ||||||||
Income (loss) per share – diluted | (0.03 | ) | (0.03 | ) | (0.03 | ) | (0.03 | ) | ||||||||
Q1-2014 | Q4-2013 | Q3-2013 | Q2-2013 | |||||||||||||
Mar 31, 2014 | Dec 31, 2013 | Sept 30, 2013 | June 30, 2013 | |||||||||||||
Survey revenue | $ | 3,913,367 | $ | - | $ | - | $ | - | ||||||||
Net income (loss) | 2,585,733 | (1,633,189 | ) | (2,522,165 | ) | (1,150,628 | ) | |||||||||
Income (loss) per share – basic | 0.06 | (0.04 | ) | (0.06 | ) | (0.03 | ) | |||||||||
Income (loss) per share – diluted | 0.05 | (0.04 | ) | (0.06 | ) | (0.03 | ) |
Q1-15 | Q1-14 | |||||||
Survey revenue | $ | - | $ | 3,913,367 | ||||
Expenses: | ||||||||
Survey costs | 25,440 | 333,188 | ||||||
General and administrative | 1,124,562 | 947,528 | ||||||
Stock based compensation expense | 194,000 | 131,000 | ||||||
Amortization of property and equipment | 15,525 | 14,929 | ||||||
1,359,527 | 1,426,645 | |||||||
Other expense (income): | ||||||||
Interest expense (income), net | (10,361 | ) | (7,627 | ) | ||||
Foreign exchange (gain) loss | (9,066 | ) | (158,659 | ) | ||||
Increase in fair value of US$ Warrants | - | 42,800 | ||||||
Other expense | 178,072 | 24,475 | ||||||
158,645 | (99,011 | ) | ||||||
Loss before income taxes | (1,518,172 | ) | 2,585,733 | |||||
Income tax expense | - | - | ||||||
Net income (loss) for the period | (1,518,172 | ) | 2,585,733 |
Q1-15 | Q1-14 | net change | % change | |||||||||||||
Salaries, benefits and consulting charges | $ | 622,863 | 550,876 | 71,987 | 13.1 | % | ||||||||||
Board, professional fees, & public company costs | 246,653 | 204,265 | 42,388 | 20.8 | % | |||||||||||
Premises and administrative overhead | 175,627 | 142,296 | 33,331 | 23.4 | % | |||||||||||
Business development | 74,176 | 20,258 | 53,918 | 266.2 | % | |||||||||||
Colombia office | 5,243 | 29,833 | (24,590 | ) | - 82.4 | % | ||||||||||
Total G&A | 1,124,562 | 947,528 | 177,034 | 18.7 | % |
● | staff levels and the related salaries were higher in Q1-15 as compared to Q1-14. |
● | Board, professional fees, & public company costs were higher in 2015 primarily due to the timing of discretionary investor relations activities. |
● | business development costs increased in 2015 based on the timing of activity in developing new client opportunities, primarily in Bolivian and Pakistan. |
● | a lay off in summer 2014 of the Colombia office administrator. |
Q1-15 | Q1-14 | |||||||
SBCE recognized related to: | ||||||||
Stock options | $ | 136,000 | $ | 80,000 | ||||
Rights | 58,000 | 51,000 | ||||||
194,000 | 131,000 |
March 31, | December 31, | net change | ||||||||||
2015 | 2014 | in Q1-15 | ||||||||||
Current assets (current liabilities): | ||||||||||||
Cash and cash equivalents | 168,918 | $ | 50,635 | $ | 118,283 | |||||||
Short-term investments | 3,550,289 | 5,173,430 | (1,623,141 | ) | ||||||||
3,719,207 | 5,224,065 | (1,504,858 | ) | |||||||||
Accounts receivable | 273,240 | 248,930 | 24,310 | |||||||||
Prepaid expenses and deposits | 358,167 | 338,644 | 19,523 | |||||||||
Accounts payable and accrued liabilities | (679,477 | ) | (782,626 | ) | 103,149 | |||||||
Net working capital | 3,671,137 | 5,029,013 | (1,357,876 | ) |
Cash flows from (used in): | Q1-15 | Q1-14 | ||||||
Operating activities | $ | (1,455,629 | ) | $ | (1,033,146 | ) | ||
Financing activities | 5,066 | 2,828,416 | ||||||
Investing activities | 1,568,846 | (1,009,685 | ) | |||||
Net source (use) of cash | 118,283 | 785,585 | ||||||
Cash and cash equivalents, start of period | 50,635 | 3,319,627 | ||||||
Cash and cash equivalents, end of period | 168,918 | 4,105,212 | ||||||
Cash and cash equivalents | 168,918 | 4,105,212 | ||||||
Short-term investments | 3,550,289 | 3,457,010 | ||||||
Total | 3,719,207 | 7,562,222 |
Q1-15 | Q1-14 | |||||||
Net income (loss) for the period | $ | (1,518,172 | ) | $ | 2,585,733 | |||
Total non-cash income and expense items | 209,525 | 188,729 | ||||||
(1,308,647 | ) | 2,774,462 | ||||||
Change in non-cash working | ||||||||
capital balances | (146,982 | ) | (3,807,608 | ) | ||||
Cash used in operating activities | (1,455,629 | ) | (1,033,146 | ) |
● | In Q1-15, the only financing activity was $5,066 proceeds from exercise of stock options. No equity financings occurred in 2015 or 2014. In Q1-14 NXT received a total of $2,683,301 proceeds from exercise of US$ common share purchase Warrants which were issued in 2012 and $145,115 proceeds from exercise of stock options. |
● | the overall net cash source (use) noted above for Q1-15 and Q1-14 are virtually all related to the movement from cash out of and into short-term interest bearing investment balances, as follows: |
Q1-15 | Q1-14 | |||||||
Purchase of property and equipment | $ | (54,295 | ) | $ | - | |||
Decrease (increase) in short-term investments | 1,623,141 | (1,007,560 | ) | |||||
(Increase) in restricted cash | - | (2,125 | ) | |||||
Cash from (used in) investing activities | 1,568,846 | (1,009,685 | ) |
Existing | New | |||||||||||
For the fiscal year ending December 31 | premises | premises | Total | |||||||||
2015 | $ | 114,283 | $ | 127,103 | $ | 241,386 | ||||||
2016 | - | 508,410 | 508,410 | |||||||||
2017 | - | 508,410 | 508,410 | |||||||||
2018 | - | 508,410 | 508,410 | |||||||||
2019 | - | 508,410 | 508,410 | |||||||||
Thereafter, 2020 through 2025 | - | 2,979,848 | 2,979,848 | |||||||||
114,283 | 5,140,591 | 5,254,874 |
as at | as at | as at | ||||||||||
May 28, | March 31, | December 31, | ||||||||||
2015 | 2015 | 2014 | ||||||||||
Shares issued and outstanding: | ||||||||||||
Common shares | 44,965,509 | 44,965,509 | 44,958,843 | |||||||||
Convertible preferred shares | 8,000,000 | 8,000,000 | 8,000,000 | |||||||||
Common shares reserved for issue re: | ||||||||||||
Stock options | 3,135,835 | 3,135,835 | 2,541,435 | |||||||||
56,101,344 | 56,101,344 | 55,500,278 |
The FASB has established a going concern standard that becomes effective for reporting periods ending after December 31, 2016 (with early adoption permitted). The Company will be required to assess if there is substantial doubt about its’ ability to continue as a going concern, which will exist if it is probable that it will be unable to meet payment of its obligations within one year after the assessment date (which will be based on the date of issue of the period end financial statements). Disclosure will be required of the significance of and the conditions or events that give rise to the substantial doubt, as well as whether it is probable that managements’ plans can be effectively implemented to mitigate these conditions. Further disclosure, including managements mitigation plans, will be required if it is assessed that the substantial doubt cannot be overcome.
The Company has not yet adopted the new standard and in future periods will assess if the required disclosures related to the going concern assumption are applicable.