NXT Announces Fully Subscribed US$2.0 Million Convertible Debenture

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CALGARY, AB / ACCESSWIRE / June 3, 2024 / NXT Energy Solutions Inc. ("NXT" or the "Company") (TSX:SFD)(OTCQB:NSFDF) is pleased to announce it has issued convertible debentures (the "Debentures") to MCAPM LP for the principal amount of US$2,000,000, being approximately CDN$2,742,800, pursuant to the terms of a subscription agreement with NXT. The Toronto Stock Exchange (the "TSX") has provided conditional approval of the private placement. 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$0.25 (CDN$0.3428) per Common Share which provides MCAPM LP with the right to obtain up to 8,000,000 common shares of NXT (the "Common Shares").

MCAPM LP will now have the right to obtain up to an additional 8,000,000 Common Shares upon the conversion of the Debentures. However, due to the current shareholdings of MCAPM LP in NXT, MCAPM LP cannot convert the full amount of the Debentures until approval by the majority of NXT's shareholders, after excluding the votes of MCAPM LP and any of its affiliates and associates (together "MCAPM") is obtained at NXT's annual meeting of shareholders on July 15, 2024 (the "AGM"). MCAPM currently owns an aggregate of 14,921,233 Common Shares, representing 19.1% of the currently issued and outstanding Common Shares of NXT. In addition, MCAPM holds US$1,375,000 (approximately CDN$1,885,675) of previously issued debentures (the "November Debentures") with a conversion price of US$0.1808. With the acquisition of the Debentures, MCAPM will have the right to own, after conversion of the Debentures and the November Debentures, up to 30,526,321 Common Shares, representing approximately 28.1% of the issued and outstanding Common Shares (after giving effect to the conversion of the full amount of the Debentures and the November Debentures). MCAPM's conversion rights therefore entitle it to own more than 20% of the issued and outstanding Common Shares and become a new control person under the rules of the TSX, which requires disinterested shareholder approval for the creation of a new control person.

Additionally, MCAPM is also considered an insider of NXT pursuant to the TSX rules such that a private placement of Common Shares greater than 10% of the issued and outstanding Common Shares to MCAPM during a given six-month period requires shareholder approval. Since the conversion of the Debentures and the November Debentures would exceed this threshold, approval by the majority of the shareholders of NXT (after excluding the votes of MCAPM) is required before MCAPM can fully exercise its conversion rights.