As filed with the Securities and Exchange Commission on June 15, 2004

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SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________

FORM 10-K/A

AMENDMENT
NO. 1
_________________



[X]
      ANNUAL
        REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
        1934For
        the fiscal year ended December 31, 2002[
         ]
      TRANSITION
        REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
        EXCHANGE ACT OF 1934For
        the transition period from ___________ to ___________




Commission
file number:  0-24027



ENERGY
        EXPLORATION TECHNOLOGIES(Exact
        name of registrant as specified in its charter)Nevada
      
      61-1126904(State
        or other jurisdiction of incorporation or organization)
      
      (I.R.S.
        Employer Identification No.)700-840-7
        Avenue SW, Calgary, Alberta, Canada,
      T2P
        3G2(Address
        of principal executive offices)
      (Zip
        Code)




Registrant's
telephone number, including area code:  (403) 264-7020



Securities
registered pursuant to Section 12(b) of the Act:  None



Securities
registered pursuant to Section 12(g) of the Act:  Common stock,
par value $0.001 per share.



Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.

YES   [X] 
   NO   [   ]



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (Section 229.405 of this Chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.   [
 ]



Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act)  YES [  ]  NO [X]



The
aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 26, 2003 was approximately $1,565,547 based upon the
closing price per share of the registrant's common stock of $0.14 on that
date.



The
number of shares outstanding of the registrant's common stock as of March 26,
2003:  16,971,153 shares.



Documents
Incorporated By Reference: None



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ADVISEMENT



Unless
specified otherwise as used herein, the terms "we," "NXT",
"us" or "our" refers to Energy Exploration Technologies, its
wholly owned subsidiaries and its interest in its joint ventures.



We conduct our
transactions in the currency of both the United States and Canada, although we
consider the United States dollar to be our functional and reporting currency.
  All references to "dollars" in this annual report
refer to United States or U.S. dollars unless specific reference is made to
Canadian or CDN dollars.  The rate of exchange of Canadian dollars to
United States dollars as of December 31, 2002, was CDN $1.5776 to
U.S. $1.  For information relative to the conversion of Canadian
amounts into US dollars, see the section contained in explanatory Note 2 to
our consolidated financial statements captioned "Foreign Currency
Translation".



Special
Note Regarding The Observations, Beliefs And Opinions Expressed In This Annual
Report Relating To The Scientific Basis And Principles Of Our SFD Technology



The
observations, beliefs and opinions we express in this annual report relating to
the scientific basis and principles of our SFD technology, and the ability of
our SFD Technology to detect subsurface conditions, represent those of our
company and our management alone, and should not be construed as representing
those of any third party, except to the extent expressly stated in this annual
report.



Special
Note Regarding Forward Looking Statements



In this annual
report we have made a number of statements, which we refer to as "forward-looking
statements", which generally relate to our present expectations or
predictions as to the possible occurrence of future events or the existence of
trends and factors that may impact our future plans and operating results.
 These forward-looking statements are based upon assumptions and analyses
made by us in the context of our current business plan and information currently
available to us and in light of our experience and perceptions of historical
trends, current conditions and expected future developments and other factors we
believe to be appropriate in the circumstances.



You can
generally identify any forward-looking statements contained in this annual
report through words and phrases such as "seek", "anticipate",
"believe","estimate","expect",
"intend","plan", "budget",
"project","will be","will
continue","will likely result",and
similar expressions.  Forward-looking statements that may be contained in
this annual report would, for example, include statements relating to the timing
and likelihood of success of our drilling and production plans and the
performance of our joint venture partners.



Whenever you
read any forward-looking statements contained in this annual report you should
remain mindful that actual results may vary from the anticipated or predicted
results as expressed by the forward-looking statements for a number of reasons
or factors including, but not limited to, changes in our business plan and
corporate strategies or those of our joint venture partners, changes in
political climate and fluctuations in forecasted oil and natural gas prices.
 Moreover, you must read each forward-looking statement in context with,
and an understanding of, the various other disclosures concerning our company
and our business made elsewhere in this annual report.



Additionally,
the various uncertainties and risk factors described in this annual report are
not exhaustive, and new risks and uncertainties may emerge from time to time.
 It is not possible for us to predict all risks and uncertainties, nor can
we assess the impact of all risks and uncertainties on our business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking statement.
 Consequently, we can give you no assurance that the results or
developments anticipated or predicted by us will be realized, or even if
realized, that they will have the expected consequences or effects on us.



-2-





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PART
I



ITEM
1.  BUSINESS



OVERVIEW



We are a
reconnaissance exploration company that utilizes our Stress Field Detector (SFD)
technology, which is a remote-sensing airborne survey technology comprised of
SFD and integrated electronic data acquisition, processing and interpretation
subsystems and software. Our principal executive offices are located
at 700, 840 - 7 Avenue SW, Calgary, Alberta, Canada and our telephone
number is (403) 264-7020.



We use our SFD
to survey large exploration areas from aircraft at speeds of
approximately 200 mph to identify and prioritize leads for further
evaluation and potential drilling.   SFD has been successfully field
tested for independent geologists and joint venture partners.  Our SFD
affords us the relatively inexpensive ability to obtain near analysis and
interpretation of potential hydrocarbon prospects in a matter of days or weeks,
as compared to months or years, as in the case of the seismic methods currently
employed in wide-area exploration activities.  These advantages can
dramatically reduce finding costs as well as the exploration time cycle. Finding
costs include seismic acquisition, purchasing mineral rights and drilling and
completing exploration wells. Once SFD prospects are identified, highly focused
conventional geological and geophysical methods are employed to evaluate the
potential commercial viability of the prospects.



We conduct our
activities through two wholly-owned operating subsidiaries:  NXT Energy
USA, Inc., which focuses on United States-based exploration and NXT Energy
Canada, Inc. which focuses on Canadian-based exploration.  All survey
flight activities are conducted through our subsidiaries, NXT Aero USA, Inc and
NXT Aero Canada, Inc. NXT concentrates on research and development efforts to
improve our SFD survey system, and oversees the operations of and provides
management, financial and administrative services to our subsidiaries.



CORPORATE
HISTORY



We were
initially incorporated in Nevada on September 27, 1994 under the name
Auric Mining Corporation.  In January 1996, we acquired all of the
common stock of NXT Energy USA (then known as Pinnacle Oil Inc.) from its
stockholders in exchange for our common stock.  As a consequence of this
reverse acquisition, NXT Energy USA became our wholly-owned subsidiary and its
stockholders acquired a 92% controlling interest in our common stock.

Prior to this
transaction, we were a corporate shell conducting no active business, and NXT
Energy USA was a development stage research and development enterprise holding
world-wide rights to use the SFD technology for hydrocarbon exploration
purposes.  Immediately after this transaction, we changed our name to
Pinnacle Oil International, Inc, and subsequently, on June 13, 2000,
we changed our name to Energy Exploration Technologies.



CORPORATE
OBJECTIVE



Our corporate
objective is to become an industry leader in technology-driven oil and natural
gas exploration.  We believe our SFD technology has the potential to
provide significant competitive advantages.



BUSINESS
STRATEGY



Our primary
objective is to become profitable and self-sustaining:





- through
    the development or sales of our current inventory of properties;
- by taking
    the lead in identifying areas, which are most attractive for exploration,
    using SFD;
- through
    the early acquisition of mineral rights;

-3-





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- by direct
    participation in selection of drilling locations; and
- by the
    sale of the properties as they reach the developed stage.



We believe
that the majority of the value of hydrocarbon reserves is added early in the
development cycle and we plan to sell the reserves as the value-adding curve
begins to level off. We do not plan to be a long-term production based company,
although we may hold properties after they begin production for periods of time
while we wait for oil and natural gas prices to increase. Reserves will be
treated as portfolio investments and will be sold off as product prices rise and
held when prices drop. This strategy will require discipline and focus, as it
tends to be contrary to the activities of many industry players. Also, we will
need to build a financial reserve to enable us to sustain operations through the
cyclical price downturns that regularly occur in this industry.



We believe
that by successfully exploiting our SFD we will be able to achieve market
acceptance, and access to the additional capital to fund the exploration, land
acquisition and drilling efforts that will be necessary to fund our future
growth and expansion.



STRESS
FIELD DETECTOR TECHNOLOGY



Our SFD allows
us to measure variations in energy fields, which we believe to be related to
stressed subsurface structures and hydrocarbon accumulations.  By analyzing
these field patterns, we are able to determine the probability of locating
commercially viable hydrocarbon deposits.



Sedimentary
rocks are generally formed from silt and sand carried by rivers to the oceans
where they settle out in layers on the ocean floor. Over time these layers are
changed into sedimentary rock. A sedimentary basin is an area of sedimentary
rocks buried below the surface of the earth or the surface of a present day
ocean. Stress in older rocks is created by the mass of newer sediments on top.



Sedimentary
basins consisting of relatively undisturbed flat-lying or gently dipping
sediments or sedimentary rock generally maintain stability and therefore exhibit
low constant stress.



Stress is also
caused by shifting of the earth's crust. Where the sedimentary formation is
compressed, folded, faulted, or fractured, higher stress levels occur..
 Some of the additional stress is absorbed in the movement and change of
alignment of the sedimentary rocks and the balance is absorbed in the
crystalline structure of the sedimentary rocks. These areas  appear to
exhibit higher residual stress than the surrounding regional strata and we
believe that SFD detects this stress..



Subsurface
hydraulic stresses are caused by the presence of fluids (liquids and gases),
such as water, oil and natural gas, within the strata and, more particularly,
the inherent and directional pressures resulting from the relative buoyancy of
the fluids.  Oil and gas will percolate upwards through the strata by way
of fractures or permeable strata until they either reach the surface or are
stopped or trapped by a non-porous barrier, in which case they will continue to
exert pressure against the trapping barrier.



While the
response of our SFD to known structurally trapped accumulations is more readily
demonstrated, responses to stratigraphically trapped accumulations has led us to
infer that a hydraulic component of stress exists in certain trapping
conditions.  As a consequence, our SFD technology has practical
applications as an oil and natural gas finding tool.



The exact
nature of the energy fields the SFD reacts to and measures are unknown.
 The traditional concept of energy/force fields is that there are five (5)
known energy/force fields, which are electric, magnetic, gravitational, weak
nuclear and strong nuclear. NXT has evaluated the SFD sensor response against
each of these fields and found no sensor reaction.  The two known energy
sources to which the SFD may respond are electromagnetic fields (i.e., of an
electric, magnetic or electromagnetic character) and gravitational fields.
 For the reasons explained below, we believe that the energy fields we are
measuring are both non-electromagnetic and non-gravitational in character.

-4-





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- We have
    determined that when the SFD encounters changing natural or
    artificially-created electromagnetic fields, it does not appear to respond
    to the resulting changes in energy levels.  As a consequence, we
    believe that the energy fields measured are non-electromagnetic by nature.
- While
    conducting aerial surveys, the SFD is subjected to changes in horizontal and
    vertical acceleration arising from turbulence that exceed, by significant
    orders of magnitude, the changes in acceleration forces attributable to
    naturally occurring gravity.  Since the SFD does not appear to respond
    to these horizontal and vertical acceleration forces, it follows that the
    lesser forces of acceleration associated with gravity do not affect it.
     As a consequence of this lack of response, we believe that the energy
    fields measured are non-gravitational by nature.



We hypothesize
that the principal component of our SFD technology, which we refer to as the SFD
sensor, is a micro-electronic device that creates and maintains a stress-related
non-electromagnetic and non-gravitational energy field that interacts with
stress-related non-electromagnetic and non-gravitational energy fields
associated with subsurface conditions.



Our testing
and development of the SFD technology to date has been almost entirely focused
on an applied basis toward the identification of hydrocarbon related subsurface
conditions. We have not scientifically proven our hypothesis and at this time,
we do not plan to conduct more comprehensive scientific evaluations.



SFD Survey
System



Our SFD
technology is comprised of the following components, which we collectively refer
to as our SFD survey system, used for the following functions:





- Stress
    Field Detector-the stress field detector or SFD is a unit, which
    houses the SFD sensor, the principal component of our technology.  As
    discussed above, the SFD sensor is a passive transducer that interacts with
    energy fields created by subsurface stresses as our aircraft flies over
    those areas and registers that interaction in the form of digital electronic
    signals.  When NXT conducts SFD surveys, we use an SFD array
    incorporating eight interchangeable SFD sensors, which allows us to collect
    eight sets of SFD signals.  The ability to collect data from multiple
    SFD sensors is important for several reasons.  First, it facilitates
    repeatability and signal verification, and cuts down on the need for
    additional SFD survey flights.  Second, we use different SFD sensor
    designs, which allow us to collect different qualitative information.
     For example, one design of SFD sensor appears to better identify
    anomalies associated with subsurface structures, while another design
    appears to offer more information concerning faults.  Finally, the SFD
    sensors are extremely sensitive devices, and the operational ability of any
    one sensor while on an SFD survey flight may be adversely impacted by a
    number of factors, including turbulence, the turning motion and angle of the
    aircraft, signal saturation or over-load, and in some cases the age of a
    given sensor.
- Data
    Acquisition System-used in conjunction with the SFD array on
    surveys, our data acquisition system is a compact, portable computer system
    which concurrently acquires the eight electronic digital signals from the
    SFD array in two different data formats per sensor or sixteen signal sets in
    total, marks each of the signal sets with their geographic location using
    global positioning satellite coordinates, and then stores this information
    for subsequent processing and interpretation at our home base.



-5-





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- Data
    Processing and Interpretation Systems-once returned to our home
    base, the SFD data collected is processed and converted into a format that
    can be used by our interpretive staff.  All processing is performed by
    our staff using computer workstations and processing software, which has
    been developed in-house.  Once the SFD data has been processed, our
    geological and geophysical staff review the data, plot the flight lines, and
    produce computer-generated base maps using our processing software and
    industry standard mapping software and databases.

How Do We
Acquire SFD Data



Our SFD survey
system is flown over pre-selected exploration areas at varying altitudes and
from different directions.  The SFD sensors interact with the constantly
changing stress fields and responses are recorded in the form of digital
electronic signals resembling waveforms, referred to as SFD signals.
 Our proprietary data acquisition system acquires and records these signals
and marks their geographic location with global positioning satellites. These
integrated signals are now referred to as SFD data. The SFD signals are
also displayed in real time on board our survey aircraft, which allows our
on-board technical crew to immediately identify areas of particular interest for
further investigation.



How Do We
Interpret SFD Data



Once SFD
datasets are returned to our offices, our geological and geophysical
interpretive staff process the data, plot the flight lines, and produce
computer-generated base maps. We then commence the following screening and
interpretation process:





- First, we
    screen the SFD data for anomalous signals on the flight line, which we refer
    to as SFDanomalies.  These SFD anomalies include signals from
    both unknown or non-producing areas that we survey as well as signals
    obtained over known oil and natural gas pool crossings.
- Then our
    geological team puts each identified SFD anomaly into subsurface context
    using our in-house geological database.  The SFD anomaly may then
    become a SFDleadshould the signals of the SFD anomaly appear
    to coincide in proper geologic context.  In other words we answer the
    question, "Does the anomaly make sense where it appears in the
    sedimentary basin?".  Where we have sufficiently qualified an
    SFD lead with further SFD data acquired from additional surveys, we
    reclassify the lead as a "recommended SFD prospect" for
    further geological and geophysical evaluation.
- Lastly,
    should the recommended SFD prospect be targeted for exploration, traditional
    geological and geophysical methods, usually 2D or 3D seismic, are employed
    to evaluate the potential commercial viability of the prospect and to
    pinpoint drilling sites.



How Fast
Can We Acquire And Interpret SFD Data



We conduct our
SFD surveys at speeds of approximately 200 mph, and survey
approximately 600 linear miles in a three-hour survey.  For each
survey, it takes our staff between one to two days of data processing and
interpretation-including plotting flight routes, screening and analyzing
anomalies, putting the anomalies in geologic context, and ranking the anomalies-to
sufficiently identify and recommend the SFD prospects from that survey.



As a
consequence, we are able to record and interpret approximately 600 linear
miles of SFD data acquired in one SFD survey flight over a period of only a few
days.  By way of comparison, traditional land-based seismic crews record up
to five linear miles of 2D seismic per day.  Two or more weeks are
then required to process the data, followed by several weeks for interpretation.
 As a result, it can take a minimum of six months to record and
interpret 1,000 linear miles of new 2D seismic data.  Greatly
adding to these direct seismic expenses are the obvious opportunity costs of
allowing aggressive competitors with similar seismic capabilities an equal
chance to image oil and natural gas accumulations during the same six-month
interpretation period.

-6-





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The SFD
technology provides a competitive advantage in areas or regions where the
geological and geophysical information available to the oil and gas exploration
industry is reduced or access is restricted. From the limited data and
information available in the public domain we determine which ares have
potential for oil and gas production.  The second step in the evaluation is
to determine if land is available and what has been the historic cost to obtain
production rights in the area. The third step is to evaluate industry activitiy
in the areas. For example, if there is a new interest by conventional companies
in an area of interest the price to acquire the land may become prohibitive;
conversely, if the area has received little interest then the cost of the land
is less. We identify approximately twenty SFD leads on average for each
three-hour survey, and ultimately on average, two or 10% of these leads are
considered for further evaluation.  The SFD prospects which we tender can
be pool to field-sized targets that could require two to ten wells or more to
exploit depending upon the accumulation.  The actual number of these
recommended SFD prospects that are accepted and ultimately drilled would,
however, be dependent upon any number of competitive, geological and
environmental variables.



Business
And Geographic Segments



We currently
operate in only one business segment, oil and natural gas exploration, insofar
as we intend to develop all oil and natural gas exploration prospects identified
using our SFD technology either directly for our account or indirectly for our
account through working interest or overriding royalty interests.  We do
not currently sell or market our SFD data or surveying services as a separate
product to third parties but we are currently investigating opportunities to
provide this service. For geographical segment information, see explanatory
Note 17 to our consolidated financial statements included with this annual
report.



JOINT
VENTURES



Our United
States exploration activities to date have been conducted principally with
CamWest Exploration LLC, a privately held oil and natural gas exploration
company located in Denver, Colorado.  These activities were conducted
through an Exploration and Joint Venture Agreement which expired in February
2003.



Our Canadian
exploration activities in the past have been conducted principally through
Calpine Canada Resources Limited, located in Calgary, Alberta, Canada.
 These activities were governed by the terms of an Exploration and Joint
Venture Agreement, which expired during 2002.



We expect to
form joint ventures in the future but they will be on a prospect-by-prospect
basis and will be with a variety of industry partners.



ANALYSIS
OF SFD SURVEY RESULTS TO DATE



The results of
our drilling efforts to date have been mixed.  These limited results appear
to validate the effectiveness of our SFD technology insofar as most of the wells
drilled have encountered hydrocarbon bearing formations.



The following
Table illustrates the ability of the SFD technology to identify the location of
potential hydrocarbon deposits.



Survey
        Year
      Location
      Operator
      Date
        drilled
      Production
      Status2001
      Ice
        Caves ND
      Cam
        West
      Jan
        2002
      1400
        mcfd
      Sold
        to Cam West2001
      Beisiker
        AB
      Encal
        Energy
      Dec
        2001 - Mar 2002
      1000
        mcfd
      Sold
        to Encal2001
      Dalroy
        AB
      Encal
        Energy
      Mar
        2003
      Tested
        only
      W/O
        pipeline2003
      Adsett
        BC
      Seneca
        Resources
      Dec
        2003
      
      W/O
        completion




-7-





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The Company
performed the SFD surveys and the operator completed the geophysical surveys and
geological studies required to select the drilling locations.



Although the
utility of these results in empirically validating the SFD are hindered by a
number of factors.  The following factors have impacted our drilling
results:





- a number
    of prospects have not been developed due to environmental considerations;
- the
    process of acquiring hydrocarbon rights is highly competitive and we were
    outbid at auction on some propects;
- the
    volatility of oil and natural gas prices experienced over the last few years
    has affected our ability at times to justify the economics of drilling
    activity; and
- our lack
    of control in the past due to our minority-partner status has resulted in
    drilling which was not consistent with our corporate goals.

OPERATIONAL
RESULTS



During 2002,
the following events occurred:

- In
    January, we decided to take active steps to reduce our overhead. During the
    next nine months, staff levels were decreased from 22 to 7 and half of the
    office space was subleased. Salaries for management were reduced by 50%.
    During this period three of the senior officers left our company.
- In March,
    our Canadian property at Beiseker, Alberta, came on production from three
    wells and our share of production was approximately 200 thousand cubic feet
    of natural gas per day.
- In late
    April, our U.S. production commenced from the Beta Race 22-6 well in North
    Dakota and our share of production was approximately 500 thousand cubic feet
    of natural gas per day.
- In May, we
    sold our Piaggio aircraft and the associated debt was fully paid off.
- In July,
    we sold our Beiseker property.
- In August,
    we purchased our Adsett lands in B.C.
- In
    September, drilling commenced on our Antelope Tail prospect in Wyoming.
- In
    November, our Antelope Tail well was plugged and abandoned.
- In
    December, our 50% partner drilled the Fincastle prospect on a farm-in basis.
    The well tested gas but subsequently watered-out and has been abandoned.
- In late
    December, our Commander aircraft was sold and the hangar lease was
    terminated.



Summary Of
Exploration Costs



Summarized
below are the oil and natural gas property costs we capitalized for the year
ended and as of December 31, 2002 and 2001:

-8-





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Capitalized
        for the Years Ended December 31
      
      Capitalized
        As of
        December 312002
      2001
      
      2002
      2001Acquisition
        costs
      $
               232,226
      $
             573,479
      
      $
          1,268,667
      $
          1,036,441Exploration
        costs
      1,380,801
      2,813,401
      
      7,391,878
      6,011,077Development
        costs
      27,681
      55,553
      
      83,234
      55,553Oil
        and natural gas properties
      1,640,708
      3,442,433
      
      8,743,779
      7,103,071Less
        depletion
      (140,122)
      -
      
      (140,122)
      -Less
        impairment
      (3,495,970)
      (1,616,587)
      
      (5,612,387)
      (2,116,417)Less
        dispositions
      (158,255)
      (69,096)
      
      (227,351)
      (69,096)Net
        oil and natural gas properties
      $
         (2,153,639)
      $
          1,756,750
      
      $
         2,763,919
      $
          4,917,558




Net
proved and unproved oil and natural gas property costs are summarized below:



Capitalized
        for the Years Ended
        December 31
      
      Capitalized
        as of
        December 312002
      2001
      
      2002
      2001Proved
        property costs
      $
         (1,363,260)
      $
            2,144,706
      
      $
              781,446
      $
          2,144,706Unproved
        property costs
      (790,379)
      (387,956)
      
      1,982,473
      2,772,852$
         (2,153,639)
      $
            1,756,750
      
      $
           2,763,919
      $
          4,917,558




Summary Of
Drilling Results



Summarized
below are our drilling results relative to natural gas or oil wells in which we
have an interest.



Total
        Wells
        Drilled
        In Period (1)
      Wells
        Placed In
        Commercial
        Production
      Wells
        Shut-In Pending
      
      Wells
        Abandoned BecauseConnection
        To
        Pipeline
      Further
        Development
        Decisions
      
      Dry
        Or
        Non-Commercial
      Junked
        For
        Mechanical
        Reasons(Gross
        Wells / Net Wells)2002:United
        States
      1
        / 0.17
      (2)
      -
      -
      
      1
        / 0.17
      -Canada
      1
        / 0.21
    
    -
    -
    -
    
    1
      / 0.21
    -Total
      2
        / 0.38
      -
      -
      -
      
      2
        / 0.38
      -2001:United
        States
      2 / 0.46
      
      1 / 0.23
        (2)
      -
      
      1 / 0.23
      -Canada
      3 / 0.17
      -
      2 / 0.11
      -
      
      1 / 0.06
      -Total
      5 / 0.63
      -
      3 / 0.34
      -
      
      2
        / 0.29
      -2000:United
        States
      4 / 0.69
      -
      2 / 0.39
      1 / 0.15
      
      -
      1
        / 0.15Canada
      8 / 1.16
      -
      2 / 0.23
      3 / 0.48
      
      3 / 0.45
      -Total
      12 / 1.85
      -
      4 / 0.62
      4 / 0.63
      
      3
        / 0.45
      1
        / 0.15Cumulative
        to date
      22 / 3.20
      -
      9 / 1.19
      5 / 0.74
      
      7
        / 1.12
      1 / 0.15


(1)

Based
on rig release dates.

(2)

One
well drilled in 2001 in the U.S. was placed on production in 2002 and our
interest in it is 22.5%



-9-





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Summary Of
Proved Reserves



Summarized
below are our proved reserves and the present value of the future net revenues
(revenues less production and development cost) attributable to those reserves
(before income taxes) as of December 31, 2002, as estimated by Dobson
Resource Management Ltd., an independent engineering firm.



Proved
        Developed
        Reserves
      Proved
        Undeveloped
        Reserves
      Total
        Proved
        ReservesNatural
        Gas in thousands of cubic feet (mcf):United
        States
      988,000
      98,000
      1,086,000Canada
      119,000
      --
      119,000Total
      1,107,000
      98,000
      1,205,000Oil
        and Condensate Barrels (bbls):United
        States
      --
      --
      --Canada
      33,000
      --
      33,000Total
      33,000
      --
      33,000Future
        net revenue, before income taxes:United
        States
      3,314,000
      208,000
      3,522,000Canada
      395,000
      --
      395,000Total
      3,709,000
      208,000
      3,917,000Present
        value of future net revenue, before income taxes:United
        States
      2,000,000
      79,000
      2,079,000Canada
      249,000
      --
      249,000Total
      2,249,000
      79,000
      2,328,000




Summary Of
Acreage



Summarized
below is the acreage of land holdings in which we hold either direct working
interest agreements, or have a right to acquire a working interest, divided
between properties that are proved and are unproved.



Developed
      
      UndevelopedInterest
        (geographical area)
      Gross
        Acres
      Net
        Acres
      
      Gross
        Acres
      Net
        AcresWyoming
      
      640
      99
      
      48,101
      9,375North
          Dakota
        640
        108
        
        11,733
        4,401Alberta
        320
        72
        
        29,664
        10,926British
          Columbia
        -
        -
        
        8,938
        2,886Total
        1,600
        279
        
        98,436
        27,588




DESCRIPTION
  OF PROPERTIES



Williston
  Basin, North Dakota, United States



We hold
  a 22.5% working interest in this 7,680 acre prospect located in
  Billings County, North Dakota.  The Beta Race 22-6 well was drilled
  in the winter of 2001 and proved to be a commercial natural gas discovery
  which commenced production in April 2002 and is producing about 3 million
  cubic feet equivalent per day.



Green
  River Basin, Wyoming, United States



We have
  interests in three exploration blocks in the Green River basin:  the
  Poblano/Antelope Tail block, the Gold Coast prospect, and the Horsethief
  Canyon prospect.  We also hold prospective rights to acquire working
  interests in a number of other prospects in the Green River basin including
  Alkali Creek South and Stage Coach Draw North.



-10-





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- Poblano/Antelope
      Tail-We hold a combination 5.6% to 22.5% overall working
      interest and a 0.8% to 3.5% net overriding royalty interest on this
      exploration block.  It consists of 34 sections in Sublette County,
      Wyoming.   Four wells were drilled in prior years in the Poblano
      exploration block and encountered over-pressured gas sands in the Mesa
      Verde formation that have very low permeability.  The wells have been
      suspended as uneconomic at this time.
- In the
      fall of 2002, we participated in drilling the Habanero-Federal 14-21
      exploratory well on the Antelope Tail prospect. The well was plugged and
      abandoned at 13,995 feet. The drilling of the well earned us a 16.875%
      working interest in all rights from surface to basement in 3,660 gross
      acres of land encompassing both the Antelope Tail prospect and the
      southern end of the Pinedale Anticline. Our partner, CamWest, has obtained
      three additional permits targeting the Lance and Mesa Verde zones on the
      Pinedale Anticline. The 14-21 well showed the structural development
      predicted by SFD but the structure had  formed after the hydrocarbons
      had  migrated to other regions due to ongoing crust movements.
- Gold
      Coast-We hold a combination 11.25% overall working interest
      and a 1.6% overall net overriding royalty interest on the overall
      exploration block.  The Gold Coast prospect consists of
      a 34,560-acre exploration block located in Sweetwater County,
      Wyoming.  Two wells were drilled in prior years. One well was junked
      for mechanical reasons and the other was suspended as non-economic.
- Horsethief
      Canyon -We hold a combination 11.25% overall working interest
      and a 1.6% overall net overriding royalty interest in our Leucite
      Hills South prospect, located in Sweetwater County, Wyoming. A test well
      was drilled in 1999 by the mineral rights owner as operator in a location
      approximately one mile to the south of our recommended SFD prospect.
       This well was cased as a natural gas well.  We have not
      ascertained the potential estimated or proven reserves of this well to
      date, and will not be able to do so until the well is connected to a
      pipeline and production tested.



Alberta,
  Canada





- Monarch-We
      hold a combination 22.5% overall working interest and 3.1%
      overall net overriding royalty interest in this 3,723 acre
      exploration block located in the Kehoe area of southwestern Alberta.
        We are considering whether to drill and explore or sell this
      prospect at this time.
- 
- Carbon-We
      hold a 2.5% overall net overriding royalty interest in this 640
      acre exploration block located in the Carbon area of southwestern Alberta
      and receive a monthly royalty.
- Nanton-We
      hold a 22.5% interest in this 6,560 acre at this prospect in southern
      Alberta.
- Princess-We
      currently own the Mannville and deeper rights to 1,280 acres in the
      Princess area. We hold a 22.5% working interest in this prospect.We are currently negotiating the sale of this property.
- Reagan-
      We hold a 22.5% working interest in 2,560 acres in this prospect.
- Fincastle-We
      hold 21% to 50 % interest in 1,280 acres in this prospect which targets
      Jurassic Sawtooth sands in the Taber area.  In December 2002, a
      partner drilled a well on this prospect, resulting in initial gas shows
      but the well has since watered out and is being abandoned.





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British
  Columbia, Canada



- South
      Adsett-This land was purchased in August and we are in the
      process of negotiating a farm-in to have it drilled.  We hold a 33.3%
      interest in 8,235 acres.



FUTURE
  ACTIVITIES



We are in
  the process of implementing the changes we have made to our business strategy.
   In the past, we were compelled by our joint venture agreements to accept
  our partners' decisions on which prospects were to be drilled. The prospects
  selected by our partners were often not the preferred SFD targets.



As a result
  of the low success rates achieved in those joint ventures, which have now
  expired, we believe that we must:





- take the
      lead in applying SFD to larger relatively unexplored basins, including
      regions outside of North America; upon identification of likely prospects,
      run gravity and 2D seismic to pinpoint drilling locations;
- acquire
      mineral rights or negotiate participation rights, and
- drill
      the selected sites, either directly or with interested joint venture
      partners.



By taking
  control in certain circumstances, we will attempt to ensure that the following
  objectives are appropriately addressed:





- focus
      our exploration efforts on areas where SFD will be most effective;
- expeditiously
      pursue seismic, land acquisition and drilling operations to prove
      prospects when we believe the circumstances to be warranted;
- avoid
      exploration areas where we cannot acquire all prospective zones as our SFD
      technology cannot determine the depth of subsurface reservoirs or other
      potential hydrocarbon-bearing features with a sufficient degree of
      accuracy; and
- avoid
      exploration areas with inherent technical difficulties of a nature our SFD
      technology cannot currently satisfactorily address, asour SFD
      technology cannot to date determine whether reservoirs containing SFD
      identified prospects have sufficient porosity and permeability to enable
      any hydrocarbon accumulations to be extracted in commercial quantities.

Our future
  activities will be aggressively directed towards creating value from our
  existing lands through an active program of soliciting farm-ins, participating
  in the most attractive drilling prospects as well as dispositions of those
  prospects and reserves which we feel have limited upside potential or are not
  core to our plans.



Management
  will be seeking to monetize assets on a continuous basis to fund development
  efforts and working interest obligations. A number of properties have been
  identified as disposition candidates and are being marketed. Creating a
  consistent revenue stream to fund on-going operations is critical at this
  point and will be a prime focus for much of 2003. At the same time, we will be
  seeking opportunities that do not require large outlays of capital but which
  will enable us to earn interests in mineral rights through the application of
  SFD.



COMPETITION



Since we use
  our SFD technology for wide-area oil and natural gas reconnaissance
  exploration, our competition would generally be described as other companies
  using other technologies for wide-area oil and natural gas reconnaissance
  exploration.  The principal competitive technology in this regard is
  seismic, which is well accepted in

-12-





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the industry
  and has been used for over 70 years.  While there are numerous
  seismic service companies, none use their technology for their own exploration
  but rather they sell the service to the oil and gas industry. The largest
  seismic providers to our knowledge are Compagnie Generale de Geophysique, S.A,
  Seitel, Inc., Veritas DGC Inc. and Petroleum Geo-Services A.S.A.



There are
  also a number of other technologies used in the industry for passive wide-area
  oil and natural gas reconnaissance exploration, including aeromagnetic,
  gravity surveys, ground or surface radar, satellite surveys, telemetrics and
  spectrum analyzers.  However, we do not believe that any of these
  technologies have been accepted in the industry as a highly predictive general
  exploration tool.



To our
  knowledge, there are no other companies in the oil and natural gas exploration
  industry who commercially employ any technology similar to our SFD technology.



We have not
  offered SFD services to third parties in the past but we are currently
  considering opportunities in this aspect of the business. As our technology is
  unique, we feel that this may be a market which has not been tapped.



EMPLOYEES



We require
  specialized skill and knowledge in the identification and evaluation of
  prospects and in the research, development and improvement of the SFD
  technology.  We have obtained the necessary skill and knowledge through
  our current employees.  As of December 31, 2002, we had 7
  full-time employees and 6 consultants including 3 financial staff, 2
  operations staff, 1 landman, 1 geologist, 1 pilot, 1 electronics engineer, a
  research scientist holding a Ph.D. in micro-electronics and 3 administrative
  staff.



RESEARCH
  AND DEVELOPMENT



Our research
  and development activities have focused on developing, improving and testing
  our SFD survey system and related components.  We are expending a small
  amount of resources annually to continuously improve the technology as our
  major effort now is on practical applications.  Research and development
  expenses in 2002 were $152,862, $418,422 in 2001 and $368,249 in 2000.



MANUFACTURING
  CAPACITY AND SUPPLIERS



We are not
  dependent upon any third party contract manufacturers or suppliers to satisfy
  our technology requirements.  Our SFD sensors and the SFD unit in which
  they are incorporated are custom designed, fabricated and assembled in-house.
   The customized software used in our data acquisition system are written
  and modified by outside consulting programmers with whom we have long-standing
  relationships.  The computer hardware we use in our SFD survey systems
  (other than the SFD unit), and the balance of the computer software we use,
  are all readily available from retail or wholesale sources.



SUBSIDIARIES



We have four
  wholly-owned operating subsidiaries:  NXT Energy USA, Inc. and NXT
  Aero USA, Inc., Nevada corporations formed on October 20, 1995 and
  August 28, 2000, respectively; and NXT Energy Canada, Inc. and NXT
  Aero Canada, Inc., federal Canadian corporations formed on
  April 1, 1997 and October 30, 2000, respectively. NXT
  Energy USA focuses on United States-based exploration and NXT Energy Canada
  focuses on Canadian-based exploration. All survey flight activities are
  conducted through NXT Aero USA and NXT Aero Canada.



GOVERNMENTAL
  AND ENVIRONMENTAL REGULATION



SFD
  Survey Flight Operations



The
  operation of our business, namely, conducting aerial SFD surveys and
  interpreting SFD data, is not subject to material governmental or
  environmental regulation with the exception of flight rules issued by the
  Federal Aviation

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Administration
  (for activities in the United States) and Transport Canada (for activities in
  Canada) governing the use of private aircraft, including rules relating to low
  altitude flights.



Oil And
  Gas Exploration And Development Projects



The oil and
  natural gas industry in general is subject to extensive controls and
  regulations imposed by various levels of the federal and state governments in
  the United States and federal and provincial governments in Canada.  In
  particular, oil and natural gas exploration and production is subject to laws
  and regulations governing environmental quality and pollution control, limits
  on allowable rates of production by well or proration unit, and other similar
  regulations.  Laws and regulations are generally intended to prevent the
  waste of oil and natural gas, to protect rights to produce oil and natural gas
  between owners in a common reservoir, to control the amount of oil and natural
  gas produced by assigning allowable rates of production, and to reduce
  contamination of the environment.  We believe that the trend to stricter
  environmental legislation and regulations will continue.



We do not
  expect that any of these government controls or regulations will materially
  affect our business or projects in which we participate.  All current
  legislation is a matter of public record and we are not able to accurately
  predict what additional legislation or amendments may be enacted.
   Governmental regulations may be changed from time to time in response to
  economic or political conditions.  Any laws enacted or other governmental
  action taken which prohibit or restrict onshore and offshore drilling or
  impose environmental protection requirements that result in increased costs to
  the oil and natural gas industry in general would have a material adverse
  effect on our business, financial condition and results of operations.



OPERATING
  HAZARDS



SFD
  Survey Flight Operations



The
  operations of SFD survey flights are subject to the usual hazards incident to
  general and low-level flight operations.  These hazards can cause
  personal injury and loss of life, as well as severe damage to and destruction
  of property.  While we maintain general business insurance coverage, we
  do not carry insurance specific to the operation of a third party aircraft
  although we are currently investigating this type of insurance.   If
  we were unable to procure insurance for our flight operations at an acceptable
  cost, the occurrence of a significant adverse aircraft accident not fully
  insured or indemnified against could have a material, adverse effect on our
  business, financial condition and results of operations.



Oil And
  Gas Exploration And Development Projects



The oil and
  natural gas exploration and development projects in which we participate will
  be subject to the usual hazards incident to the drilling of oil and natural
  gas wells, including the risk of fire, explosion, blow-out, pipe failure,
  casing collapse, abnormally pressured formations and environmental hazards
  such as oil spills, gas leaks, ruptures and discharges of toxic gases.
   These hazards can cause personal injuries or loss of life, severe damage
  to or destruction of property, natural resources and equipment, pollution or
  other environmental damage, clean-up responsibilities, regulatory
  investigation and penalties and suspension of operations.



The project
  operator will, in accordance with prevailing industry practice, maintain
  insurance against some, but not all, of these risks.  The insurance
  maintained by the project operator generally would not cover claims relating
  to failure of title to oil and natural gas leases, trespass during survey
  acquisition or surface damage attributable to seismic operations, or business
  interruption, nor would it protect against loss of revenues due to well
  failure.  There can be no assurance that any insurance obtained by the
  project operator covering claims related to worker's compensation,
  comprehensive general liability for bodily injury and property damage,
  comprehensive automobile liability and pollution, cleanup, underground blowout
  and evacuation will be adequate to cover any losses or liabilities which may
  be incurred within projects in which we participate.  We also cannot
  predict the continued availability of insurance coverage or the availability
  of insurance at premium levels that justify its purchase.

In cases
  where we have direct liability as a result of our participation on a working
  interest basis, the failure or inability of the project operator to procure
  insurance at an acceptable cost or the occurrence of a significant adverse
  event not fully insured or indemnified against could have a direct material,
  adverse effect on our business, financial

-14-





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condition
  and results of operations.  In these cases, our exposure will be
  commensurate with our participation percentage.



While we
  would have no direct liability in cases where our participation is limited to
  an overriding royalty interest, the failure or inability of the project
  operator to procure insurance at an acceptable cost or the occurrence of a
  significant adverse event not fully insured or indemnified against could have
  an indirect material, adverse effect on our business, financial condition and
  results of operations to the extent it adversely affects our joint venture
  partner's ability to complete current projects or explore for and develop
  additional projects.



SFD
  TECHNOLOGY LICENSE



Our rights
  to use our SFD technology arises from a sharing of the technology with
  Momentum Resources Corporation, known throughout this report as Momentum
  Resources and an agreement pursuant to which we were originally granted
   the exclusive worldwide right to use, possess and control the SFD data
  for hydrocarbon identification and exploration purposes and any SFD data
  derived from that use for the same purpose.  We, independent of Momentum
  Resources, own and control all of the data acquisition, processing and
  interpretation systems used with the SFD for prospect identification and
  exploration purposes, all of which was developed exclusively by NXT. Momentum
  Resources was originally the exclusive owner of the SFD technology.



The terms of
  the agreement are set forth in a document entitled "Restated Technology
  Agreement" and dated August 1, 1996, which purpose was to supercede a prior
  agreement dated January 1, 1996. Momentum Resources is a Bahamas corporation
  which is directly owned and controlled by Messrs. George Liszicasz and R. Dirk
  Stinson, who were also parties parties to the Restated Technology Agreement.
  Mr. Liszicasz, who is the inventor of the SFD technology, is also our largest
  shareholder and the Chief Executive Officer and a director of our company.
   Mr. Stinson is a past director and officer of NXT.



The
  material terms of the Restated Technology Agreement, as amended by the
  Amendment to the Restated Technology Agreement, dated April 3, 1998, are
  summarized as follows:





- We hold
      the exclusive worldwide right to use, possess and control all SFDs created
      as of August 1, 1996, as well as any enhancements and know-how relating
      thereto.
- We are
      also entitled to the exclusive use of all SFD data and signals generated
      by the SFDs for hydrocarbon identification and exploration purposes.
- Momentum
      Resources is obligated to use its best efforts to survey with the SFD
      certain geographic areas throughout the world which have been mutually
      selected by us and Momentum Resources and to provide all raw SFD data
      resulting from such surveys to us for our exclusive use for the
      identification and exploitation of hydrocarbons. Momentum Resources
      further agreed to provide no less than 500 hours per year of trained
      manpower to generate the SFD data with respect to the selected areas.
      Despite this obligation, the Restated Technology Agreement does not set
      forth any provisions in the event that Momentum Resources fails to live up
      to these obligations.

-15-





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- The
      agreement provides for NXT to pay Momentum Resources contingent payments
      calculated as a percentage of project profits, less actual project
      expenses incurred. NXT is obligated to pay Momentum certain sums
      contingent on the commercial exploitation of the Prospects, including 1%
      of the "Prospect Profits" (as defined in the Restated Technology
      Agreement) earned by NXT on or before December 31, 2000, and 5% of the "Prospect
      Profits" earned by NXT after December 31, 2000.  "Prospect
      Profits" means the aggregate of all gross revenues received by NXT
      and/or its subsidiaries with respect to the commercial exploitation of all
      Prospects, whether through cash flows of a joint venture, sale of "leads"
      for Prospects, or revenues from NXT's direct ownership and sale of
      hydrocarbons from Prospects, less all project expenses actually paid by
      NXT and/or its subsidiaries with respect to the commercial exploitation of
      all SFD Prospects.
- In
      addition to the noted royalty payments, the agreement provides that NXT is
      obligated to grant Momentum Resources performance options entitling it to
      purchase 16,000 unregistered common shares for each month in which
      gross production from SFD prospects, in which we have an interest,
      exceeds 20,000 barrels of hydrocarbons, subject to certain
      limitations.  The exercise price for these options will be the fair
      market value of NXT's common shares as determined by reference to the
      closing price on the last business day of the quarter of the calculation
      (or such other calculation as set out in the agreement), and the options
      lapse to the extent unexercised three years from the date of grant.
       As of December 31, 2002, no performance warrants have been earned by
      Momentum Resources.
- Momentum
      Resources is prohibited during the term of the agreement from (i) engaging
      in the identification or exploitation of hydrocarbons for its own account
      or any party other than NXT; (ii)granting any license or sublicense to any
      third party to use SFDs or SFD data for any purpose; (iii) disclosing
      confidential and/or proprietary information relating to the SFD or SFD
      data to any other party; or (iv) selling, assigning or transferring its
      business to any party.
- NXT is
      prohibited during the term of the agreement from: (i) identifying or
      exploiting deposits other than hydrocarbons which have been identified
      using the SFD; (ii) licensing or sublicensing or providing the SFD data or
      interpretations thereof to any party (other than our subsidiaries and
      joint venture partners); (iii) disclosing confidential and/or proprietary
      information relating to the SFD or SFD data to any other party; or (iv)
      selling, assigning or transferring our business or rights to the SFD data.
- The
      initial term of the agreement expires on December 31, 2005,
      however, it renews automatically for additional one year terms unless we
      give written notice to Momentum Resources, no later than 60 days
      prior to the expiration of the pending term, of our election not to
      automatically renew the license.
- Momentum
      Resources, in turn, reserves the right to terminate the SFD technology
      license (with at least a 90 day grace period after notice of default)
      upon the occurrence of any of the following events



- our
      failure to make any payment required under theagreement
- our
      abandonment or discontinuance of the conducting of oil and natural gas
      exploration or exploitation   business;
- our
      dissolution or liquidation;
- our
      assignment of our assets for the benefit of our creditors, or our filing
      for bankruptcy, or the appointment of a receiver for our business or
      property; or

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- our
      failure to perform any other material covenant, agreement or term of the
      license.



ITEM
  2.  PROPERTIES



FACILITIES



Our
  principal executive office and research and development facilities are located
  at 700-840-7 Avenue SW, Calgary, Alberta, T2P 3G2.  Our lease on these
  premises expired on January 31, 2003.  Virtus Energy Ltd. assumed the
  main lease and we agreed to sub-lease our space from them.  As of the
  date of this report, terms of the sub-lease have been finalized but no
  contract has been entered into.  Our facilities, consisting
  of approximately 5,500 square feet, are sub-leased for an eighteen-month
  term extending through July 31, 2004.  Our combined obligations
  for base lease payments and building operating cost and other pass-through
  items under this lease is approximately CDN $10,000 per month. We also
  maintain executive office facilities in Las Vegas, Nevada, for United States
  operational requirements, which we rent for a nominal amount.  We believe
  that all of our current facilities are adequate for our needs for the
  foreseeable future.



Due to the
  sale of both of our aircraft during 2002, we terminated our hangar lease.



SURVEY
  AIRCRAFT



As we have
  recently developed a universal platform for our SFD equipment that can be
  readily installed into most types of aircraft, we no longer require custom
  fitted airplanes and have sold both our planes. On May 1, 2002, we
  completed the sale of our Piaggio Avanti P180 aircraft to a third party for
  approximately $2,600,000, and net proceeds of approximately $1,000,000 after
  settlement of principal and interest due on the related asset based loan.
   On December 24, 2002, we completed the sale of our Commander aircraft to
  a third party for approximately $150,000.  We intend to lease airplanes
  as needed to conduct surveys.



PETROLEUM
  PROPERTIES



For a
  description of our petroleum properties, see the sections of this annual
  report captioned "Business-Summarized Exploration Information"
  and "Business-Description Of Exploration Properties And Programs"
  and explanatory Notes 5, 16 and 17 of our consolidated
  financial statements included at the end of this annual report.



ITEM
  3.  LEGAL PROCEEDINGS



On November
  27, 2002, we were served a Statement of Claim which had been filed on November
  25, 2002, in the Court of Queen's Bench of Alberta, Judicial District of
  Calgary (Action No. 0201-19820), naming Energy Exploration Technologies Inc.
  and George Liszicasz as defendants.  Mr. Dirk Stinson, the plaintiff,
  alleges that NXT failed to pay him compensation under a consulting agreement
  and further alleges that NXT, without lawful justification, obstructed Mr.
  Stinson from trading his shares of NXT. Mr. Stinson is seeking, among other
  things, damages in the amount of $1,614,750 and an injunction directing NXT to
  instruct our transfer agent to immediately remove the legend from Mr. Stinson's
  shares.  On December 10, 2002, we filed our Statement of Defence and are
  awaiting on the Plaintiff to take further action on this matter.  At the
  time of the filing of this suite, Mr. Stinson was a major shareholder of our
  common stock.  He is a past President and director of NXT and is
  currently a director and shareholder of Momentum Resources.



We
  believe the claim against us is without merit and intend to vigorously defend
  ourselves against the claim and will seek an expeditious dismissal of the
  claim.

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On
  March 18, 2003, we were served a Statement of Claim which had been filed on
  March 14, 2003, in the Court of Queen's Bench of Alberta, Judicial District of
  Calgary (Action No. 0301-04309), naming Glen Coffey, Murray's Aviation Repairs
  (1980) Ltd., Energy Exploration Technologies, its wholly-owned subsidiary, NXT
  Energy Canada, Inc., Dennis Wolsky, as Administrator of the Estate of Jerry
  Wolsky, deceased and Embassy Aero Group Ltd. as defendants.  Tops
  Aviation Ltd., Spartan Aviation Inc. and John Haskakis (the "Plaintiffs")
  allege that the defendants were negligent and in breach of a Ferry Flight
  Contract between one or some of the defendants and one or some of the
  Plaintiffs under which Mr. Jerry Wolsky was to deliver a Piper Twin Comanche
  aircraft to Athens, Greece.  The aircraft crashed in Newfoundland enroute
  to Athens killing Mr. Wolsky. The Plaintiff is seeking, among other things,
  damages in the amount of $450,000 Cdn for loss and damages to the aircraft and
  cargo; and damages in respect to search and rescue expenses, salvage, storage,
  transportation expenses and pollution and contamination expenses.



Neither
  we nor our subsidiary, NXT Energy Canada, Inc., were parties to the Ferry
  Flight Contract.  We believe the claim against us and our subsidiary is
  without merit and intend to vigorously defend ourselves against the claim and
  will seek an expeditious dismissal of the claim.



ITEM
  4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS



The Annual
  Meeting of Shareholders was held on September 20, 2002, at which the following
  items were voted upon:



1.The
  following directors were elected to the board of directors to hold such
  position until the next annual meeting of the shareholders or until their
  successor is duly elected and qualified:



Voting
          Results
        For
        Against
        AbstainDonald
          Foulkes
        9,685,222
        0
        11,500Dennis
          R. Hunter
        9,685,222
        0
        11,500George
          Liszicasz
        9,672,822
        12,400
        11,500Douglas
          Rowe
        9,685,222
        0
        11,500Robert
          Van Caneghan
        9,685,222
        0
        11,500






2. The 2000
  Pinnacle Oil International, Inc. Directors' Stock Option Plan was approved and
  adopted.  Under this plan, the Compensation Committee, acting as the plan
  administrator, is authorized to issue up to 400,000 shares of our common
  stock.  The plan does not mandate a formula for the pricing of options,
  however, the Compensation Committee has recently adopted a standard for the
  granting of options.  Generally, all options vest over a three-year
  period in thirds with each third vesting on the first through third
  anniversary of the grant.  All unexercised options expire on the fifth
  anniversary of the grant.  The exercise price of the option is generally
  priced at the closing price of our common stock on the date of grant.



Voting
          Results
        For
        Against
        Abstain9,562,251
        124,091
        10,380




3. The
  shareholders ratified the appointment of Deloitte & Touche LLP as our
  auditors, who have been our auditors since July 9, 2002.



Voting
          Results
        For
        Against
        Abstain9,693,522
        2,000
        1,200




There were
  no broker non-votes with respect to any matter presented for vote at our
  annual meeting.

-18-





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ITEM
  5.  MARKET PRICE OF AND DIVIDENDS ON OUR COMMON SHARES AND RELATED

SHAREHOLDER
  MATTERS



MARKET
  INFORMATION



Our
  common shares currently trade over-the-counter on the OTC Bulletin Board under
  the trading symbol "ENXT".The following table lists, by
  calendar quarter, the volume of trading and the high and low sales prices of
  our common shares for each of the periods indicated.



Sales
          PricePeriod
        Volume
        High
        Low2001:First
          Quarter
        489,200
        $8.00
        $2.12Second
          Quarter
        532,500
        $3.50
        $1.50Third
          Quarter
        701,700
        $4.05
        $1.65Fourth
          Quarter
        530,300
        $2.65
        $0.902002:First
          Quarter
        1,282,300
        $1.50
        $0.55Second
          Quarter
        757,800
        $1.10
        $0.32Third
          Quarter
        1,622,700
        $0.68
        $0.25Fourth
          Quarter
        4,236,300
        $0.44
        $0.06




The closing
  price for our common shares on the OTC Bulletin Board as of
  March 26, 2003 was $0.14. These over-the-counter market
  quotations reflect inter-dealer prices, without retail mark-up, mark-down or
  commission and may not necessarily represent actual transactions.



A
  shareholders' list provided by our transfer agent showed 130 registered
  shareholders and 16,971,153 common shares outstanding as of
  March 26, 2003.  We estimate that there are approximately 1,350
  beneficial holders of our common shares, based upon information provided by
  our stock transfer agent in anticipation of our upcoming annual meeting of
  shareholders to be held on June 20, 2003.  There were also outstanding as
  of that date 800,000 series 'A' preferred shares, held by one
  shareholder, for which no trading market presently exists.  These
  series 'A' preferred shares are convertible into
  approximately 2,368,762 common shares as of the date of this annual
  report.



DIVIDEND
  POLICY



We have
  never paid any cash dividends on shares of our capital stock, and we do not
  anticipate that we will pay any dividends in the foreseeable future.  Our
  current business plan is to retain any future earnings to finance the
  expansion and development of our business.  Any future determination to
  pay cash dividends will be at the discretion of our board of directors, and
  will be dependent upon our financial condition, results of operations, capital
  requirements and other factors as our board may deem relevant at that time.



-19-





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EQUITY
  COMPENSATION PLANS



Plan
          Category
        Number
          of securities to be issued upon exercise of outstanding options,
          warrants and rights
        Weighted
          average exercise price of outstanding options, warrants and rights
        Number
          of securities remaining available for future issuance under equity
          compensation plans (1)Independent
          Option Grants (3)
        120,00
        $2.00
        01997
          Pinnacle Oil International, Inc. Employee Stock Option Plan (2)
        632,042
        $2.99
        867,9581999
          Pinnacle Oil International, Inc. Executive Stock Option Plan (3)
        520,800
        $2.00
        479,2002000
          Pinnacle Oil International, Inc. Director Stock Option Plan (4)
        240,00
        $1.12
        160,000(1)
        Excluding
          securities reflected "Number of securities to be issued upon
          exercise of outstanding options, warrants and rights"(2)
        Approved
          by security holders on July 25, 1997.(3)
        Not
          approved by our shareholders.(4)
        Approved
          by security holders on September 20, 2002.




Independent
  Option Grants



The
  following individuals hold independent stock option certificates:



On May 12,
  1997, we granted stock options to Mr. Clive Boulton, then a director of NXT
  Energy Canada, Inc., entitling him to purchase 30,000 shares of our common
  stock.  The exercise price for the options was $5.81 per share which
  corresponded with the trading price of the common stock as of the date of
  grant.  The options were subject to vesting conditions based upon
  continued performance of services as a director, pursuant to which one-third
  of the granted options vested on the date of grant, and one-third of the
  granted options would prospectively vest on each of the first and second
  anniversaries of the date of grant, respectively.  Each vested increment
  of the noted options was to expire five years from date of vesting, except
  that vested options expire, if earlier, one year after the date on which a
  director's service is terminated.  All of these options were fully vested
  as of Mr. Boulton's last day as a director.  10,000 of these options
  expire on May 5, 2003 and the remaining options will expire on June 20, 2003.
   On January 3, 2001 as part of a broader arrangement for all of our then
  serving employees, our Board approved the cancellation of the foregoing
  outstanding options, and the grant of new options to Mr. Boulton on the same
  terms (including number of shares, vesting, term and lapse) as the original
  grant, with the exception of the exercise price, which would be fixed at the
  closing price for our common stock as of the close of business on July 5, 2001
  (subsequently fixed at $2).



On May 20,
  1997, we granted stock options to Mr. Liszicasz, our Chairman and Chief
  Executive Officer, entitling him to purchase 45,000 shares of our common
  stock.  The exercise price for the options was $5.25 per share which
  corresponded with the trading price of the common stock as of the date of
  grant.  The options were subject to vesting conditions based upon
  continued performance of services as a director, pursuant to which one-third
  of the granted options vested on the date of grant, and one-third of the
  granted options would prospectively vest on each of the first and second
  anniversaries of the date of grant, respectively.  All of these options
  are fully vested with 30,000 of these options set to expire in May of 2003.
   Each vested increment of the noted options expires five years from date
  of vesting, except that vested options expire, if earlier, one year after the
  date on which a director's service is terminated.  On January 3, 2001 as
  part of a broader arrangement for all of our then serving employees, our Board
  approved the cancellation of the foregoing outstanding options, and the grant
  of new options to Mr. Liszicasz on the same terms (including number of shares,
  vesting, term and lapse) as the original grant, with the exception of the

-20-





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exercise
  price, which would be fixed at the closing price for our common stock as of
  the close of business on July 5, 2001 (subsequently fixed at $2).



On March 10,
  1998, we granted stock options to Mr. Lorne Carson, then a director of NXT,
  entitling him to purchase 45,000 shares of our common stock.  The
  exercise price for the options was $5.31 per share which corresponded with the
  trading price of the common stock as of the date of grant.  The options
  were subject to vesting conditions based upon continued performance of
  services as a director, pursuant to which one-third of the granted options
  vested on the date of grant, and one-third of the granted options would
  prospectively vest on each of the first and second anniversaries of the date
  of grant, respectively.  Each vested increment of the noted options was
  to expire five years from date of vesting, except that vested options expire,
  if earlier, one year after the date on which a director's service is
  terminated.  All of these options were fully vested as of Mr. Carson's
  last day as a director.  15,000 of these options expire on May 5, 2003
  and the remaining options will expire on May 9, 2003.  On January 3, 2001
  as part of a broader arrangement for all of our then serving employees, our
  Board approved the cancellation of the foregoing outstanding options, and the
  grant of new options to Mr. Liszicasz on the same terms (including number of
  shares, vesting, term and lapse) as the original grant, with the exception of
  the exercise price, which would be fixed at the closing price for our common
  stock as of the close of business on July 5, 2001 (subsequently fixed at $2).



1999
  Pinnacle Oil International, Inc. Executive Stock Option Plan



Our board of
  directors approved the 1999 Pinnacle Oil International, Inc. Executive Stock
  Option Plan on April 27, 1999.  Under the plan, the plan administrator
  may issue up to 1,000,000 common shares to executive officers who are a
  natural person and an employee.  All options outstanding under this plan
  are held by either Mr. Jim Ehrets or Mr. Daniel Topolinsky, who are no longer
  employees.  Under the plan, Mr. Ehrets and Mr. Topolinsky have two years
  from their last day of employment to exercise any options which had vested
  prior to the end of their employment.



The
  Stock Option Plan is intended to attract, compensate and motivate selected
  executives providing them with the opportunity to share in the potential
  capital appreciation in NXT's stock.



Under the
  terms of this stock option plan, the Plan Administrator may issue Stock
  Options.  Each issuance of an award shall be deemed to vest immediately
  upon issuance and shall expire on the first business day prior to the tenth
  anniversary of the issuance, unless otherwise outlined in the agreement
  underlying the issuance.



The Plan
  Administrator fixes the exercise price for issuances in the exercise of its
  sole discretion, except that the exercise price for an incentive stock option
  must be at least the fair market value per share of the common stock at the
  date of grant (as determined by the plan administrator in good faith), or in
  the case of greater-than ten percent shareholders, at least one hundred ten
  percent of the fair market value per share.  At this time, the Plan
  Administrator has not formalized a methodology as to the setting of exercise
  prices.   The exercise price may be paid in cash or, with the
  approval of the Plan Administrator, by other means, including withholding of
  option shares or delivery of previously held shares.



Unless
  otherwise provided for in the agreement underlying the issuance, upon the
  termination of the recipient of the issuance, the expiry date of the vested
  portions of the issuance shall be accelerated to 30 days after the effective
  date of termination.  Any unvested portions of the issuance shall expire
  upon termination.  All issuances under this stock option plan made to
  date have a termination clause for vested portions of the issuance of two
  years from the date of termination.



Should the
  recipient pay the exercise price of their stock options with shares of NXT
  common stock previously held by them, then, at the discretion of the Plan
  Administrator, replacement stock options may be issued to the recipient to
  purchase shares equal to the number of shares of common stock delivered to NXT
  as payment of the exercise price.  These stock options shall vest
  immediately, have an exercise price equal to the fair market value of the
  common stock on the date of conversion and shall expire on the same date as
  the original stock option.

-21-





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ITEM
  6.  SELECTED CONSOLIDATED FINANCIAL INFORMATION



The
  following tables present selected historical consolidated financial data for
  each of our five most recent annual fiscal periods ended December 31,
  derived from our consolidated financial statements prepared in accordance with
  United States generally accepted accounting principles.



The selected
  statement of loss and comprehensive loss data set forth below for our fiscal
  period ended December 31, 2002 and the selected balance sheet data
  set forth below as of December 31, 2002, have been derived from our
  consolidated financial statements audited by Deloitte & Touche LLP,
  independent auditors, as indicated in their report contained in the
  consolidated financial statements included as part of this annual report.



The selected
  statement of loss and comprehensive loss data set forth below for our fiscal
  periods ended December 31 2001 and 2000 and the selected balance sheet data
  set forth below as of December 31, 2001 and 2000, have been derived from our
  consolidated financial statements audited by Arthur Andersen LLP, independent
  chartered accountants, as indicated in their report contained in the
  consolidated financial statements included as part of this annual report.



The selected
  statement of loss and comprehensive loss data set forth below for our fiscal
  periods ended December 31, 1999 and December 31, 1998 and
  the selected balance sheet data set forth below as of
  December 31, 1999 and December 31, 1998 are derived from
  our audited consolidated financial statements not included in this annual
  report.



The
  following selected financial data should be read in conjunction with our
  consolidated financial statements and the explanatory notes to those
  statements included as part of this annual report, as well as the section of
  this annual report captioned "Management's Discussion and Analysis of
  Financial Condition and Results of Operations".





Cash
          dividends per share
        $
                         -
        $
                      -
        $
                      -
        $
                      -
        $
                      -Weighted
          average shares outstanding
        16,971,153
        14,222,820
        12,987,297
        12,684,289
        12,392,011




-22-





---





As
          at December 31,CONSOLIDATED
          BALANCE SHEET DATA:
        2002
        2001
        2000
        1999
        1998Working
          capital
        $
               842,530
        $
            2,515,338
        $
            4,045,536
        $
            8,656,695
        $
            4,685,238Current
          assets.
        991,563
        3,342,224
        5,093,622
        9,259,016
        4,862,588Oil
          and natural gas properties, net
        2,763,919
        4,917,558
        3,160,808
        775,159
        -Other
          property and equipment, net
        229,131
        3,448,416
        3,854,206
        661,201
        575,190Total
          assets
        4,018,825
        11,763,100
        12,168,228
        10,729,926
        5,566,205Current
          liabilities
        149,033
        826,886
        1,048,086
        602,321
        177,350Long-term
          liabilities
        -
        1,463,729
        1,535,136
        -
        -Total
          liabilities
        149,033
        2,290,615
        2,583,222
        602,321
        177,350Shareholders'
          equity
        3,869,792
        9,472,485
        9,585,006
        10,127,605
        5,388,855




ITEM
  7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
  RESULTS

OF
  OPERATIONS



The
  following discussion of our consolidated financial condition and results of
  operations should be read in conjunction with our consolidated financial
  statements and their explanatory notes included as part of this annual report.



OVERVIEW



We are a
  technology-based reconnaissance exploration company that utilizes our SFD
  technology to identify and prioritize oil and natural gas prospects.  We
  conduct our activities through our two wholly-owned operating subsidiaries,
  NXT Energy USA, Inc. which focuses on United States-based exploration, and NXT
  Energy Canada, Inc. which focuses on Canada-based exploration.  NXT
  concentrates on research and development efforts as needed to improve the
  capability of our SFD survey system, and oversees the operations of and
  provides management, financial and administrative services to our
  subsidiaries.



Our
  exploration efforts have been conducted under two broad area joint venture
  agreements pursuant to which we conducted SFD surveys in exploration areas
  selected by joint venture partners.   We then had the right to
  participate in the prospects on a combination working interest/overriding
  royalty interest basis, typically up to a 22.5% working interest and
  a 4% overriding royalty.  Those joint venture agreements have now
  expired and we have commenced direct exploration activities.



Our rights
  to use our SFD technology arise from an SFD technology license, which we
  acquired from the owner and licensor of that technology, Momentum Resources,
  and we received the exclusive world-wide right to use the SFD technology for
  hydrocarbon exploration purposes.  We are obligated under the terms of
  that license to pay Momentum Resources a fee equal to 5% of any Prospect
  Profits (as that term is defined in the license) which we may receive after
  December 31, 2000.



Prior to
  December 31, 2001, we had not generated any operating income and were
  considered a development stage enterprise.  We now have a proved reserve
  base, and commenced production in the first quarter of 2002.



RESULTS
  OF CONSOLIDATED OPERATIONS



During 2002,
  the following events occurred:



-23-





---





- In
      January, we decided to take active steps to reduce our overhead. During
      the next nine months, staff levels were decreased from 22 to 7 and half of
      the office space was subleased. Salaries for management were reduced by
      50%. During this period three of the senior officers left the company.
- In
      March, our Canadian property at Beiseker, Alberta, came on production from
      three wells and our share of production was approximately 200 thousand
      cubic feet of natural gas per day.
- In late
      April, our U.S. production commenced from the Beta Race 22-6 well in North
      Dakota and our share of production was approximately 500 thousand cubic
      feet of natural gas per day.
- In May,
      we sold our Piaggio aircraft and the associated debt was fully paid off.
- In July,
      we sold our Beiseker property.
- In
      August, we purchased our Adsett lands in B.C.
- In
      September, drilling commenced on our Antelope Tail prospect in Wyoming.
- In
      November, our Antelope Tail well was plugged and abandoned.
- In
      December, our 50% partner drilled the Fincastle prospect on a farm-in
      basis. The well tested gas but subsequently watered-out and has been
      abandoned.
- In late
      December, our Commander aircraft was sold and the hangar lease was
      terminated.

Operating
  Revenues



We commenced
  production in late March from the Beiseker property in Alberta, Canada. Our
  share of production from the three wells was approximately 200 thousand cubic
  feet per day and it generated $75,628 in revenue for the period from
  commencement of production until the property was sold on July 1, 2002 for a
  gain of $42,046.



Our U.S.
  production commenced in late April and our share of on-going production was
  approximately 500 thousand cubic feet per day and it generated revenue of
  $453,947.



We had no
  oil and natural gas working interest or royalty revenues for our years ended
  December 31, 2001 and December 31, 2000.



Operating
  Loss - 2002 compared to 2001



The
  operating loss was $5,653,343 for 2002, compared to a loss of
  $4,344,835 for 2001, representing a $1,308,508 (30%) overall increase.
  This was attributable to the following:





- $154,425
      in oil and natural gas operating expenses compared to $Nil in 2001 as this
      was the first year of production;
- an
      increase of $51,661 (3%) in administrative expenses to $1,593,674 for 2002
      from $1,542,013 in 2001. The effects of management's decision in early
      2002 to cut costs and reduce staff will not be realized until 2003 as
      there were significant costs associated with the staff reductions as well
      as many costs which were contractual in nature and could only be reduced
      or cancelled at renewal time;

-24-





---





- an
      increase of $2,019,505 (125%) in depletion and impairment of oil and
      natural gas properties to $3,636,092 from $1,616,587 in 2001. This
      increase is made up of first year depletion of $140,122, ceiling test
      write-downs during the year of $263,000 and property impairments of
      $3,232,970. The property impairments related to the write-off of the costs
      ($636,000) associated with the unsuccessful Antelope Tail well which was
      drilled on unproved lands and the additional impairments of $2,596,970
      related to the Poblano prospect in the U.S. initial reserve evaluations in
      2001 related to the Poblano property, based upon production tests,
      indicated that there were economic reserves which were classified as
      proved. However, more extensive tests indicated low permeability and
      uneconomic reserves and we have written down the costs and reserves
      accordingly; and
- an
      increase of $208,270 (1,124%) in write-down of aircraft and flight
      equipment to $226,803 for 2002 from $18,533 in 2001. This was the result
      of the decision to sell the two aircraft. Both aircraft were sold during
      the year and the remaining equipment was written down to expected recovery
      value;



partially
  offset by:





- $97,158
      (29%) reduction in amortization and depreciation to $239,766 in 2002 from
      $336,924 in 2001 was the result of the decision to sell the aircraft. The
      aircraft were not depreciated from that point. The reduction related to
      the aircraft was partially offset by increased depreciation taken on
      leaseholds and office equipment to reflect the termination of the lease;
- a
      decrease of $265,560 (63%) in research and development to $152,862 in 2002
      from $418,422 in 2001. This reduction was due to less resources being
      applied to research and more to application of the technology as well as
      reduced staff levels in this area;
- a
      reduction of survey support costs of $147,474 (47%) to $167,296 in 2002
      from $314,770 in 2001. This is due to reduced activity as we were working
      at cost reductions and there were fewer flights; and
- survey
      operations and data analysis were also down by $85,586 (88%) for the
      reasons noted for survey support costs.



Operating
  Loss - 2001 compared to 2000



We incurred
  an operating loss of $4,344,835 for 2001, as compared to $3,013,545 for 2000,
  representing a $1,331,290 (44%) overall increase. The increase in our
  operating loss for 2001 over 2000 was attributable to the following:



- a
      $1,116,757 (223%) increase in impairment in our oil and natural gas
      properties from $499,830 to $1,616,587 for 2001 related to our write-down
      of the cost of drilling and completing six wells as non-commercial, the
      write-down of acquired Canadian leases to fair market value, and a ceiling
      test write-down of Canadian cost center oil and natural gas property
      costs;
- a
      $71,008 (267%) increase in survey operations and data analysis expense
      from $26,578 to $97,586 in 2001 over 2000 was primarily attributed to
      fewer survey flights being carried out and a greater portion of our
      surveys being carried out for our own account than for our joint venture
      partners;
- a
      $69,053(28.1%) increase in survey support expense from $245,717 to
      $314,770 for 2001 over 2000 was primarily attributable to higher costs to
      maintain our survey aircraft for the period and increased hangar costs;

-25-





---





- a
      $50,173(13.6%) increase in research and development expense from $368,249
      to $418,422 for 2001 was principally attributable to salaries associated
      with additional research and development staffing as we focused increased
      efforts to improve the operation and capability of our SFD survey system
      during these periods;
- a
      $18,533 write-down of aircraft and flight equipment costs; and
- a
      $12,067( 0.8%) increase in administrative expense from $1,529,946 to
      $1,542,013;



partially
  offset by a $6,301(1.8%) decrease in amortization and depreciation from
  $343,225 to $336,924 for 2001 from 2000 was primarily attributable to an
  increase in the estimated useful remaining life of the survey aircraft, and
  the consequential reduction in annual amortization as the overall remaining
  unamortized costs of these aircraft are spread over a longer amortization
  period.



-26-





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Other
  Income And Expense - 2002 compared to 2001





- Interest
      expense was down by $82,000 (54%) to $70,974 in 2002 from $152,974 in
      2001. This is due to the sale of the Piaggio aircraft in mid 2002 and the
      repayment of the associated debt.
- Interest
      income was down by $90,962 (82%) to $20,138 in 2002 from $111,100 in 2001
      and this was caused by reduced cash balances in 2002.
- Other
      income of $28,059 in 2002 , compared to a loss of $1,881 in 2001, is
      attributable to the gain made on the sale of the Beiseker property.



Other
  Income And Expense - 2001 compared to 2000





- We
      earned $111,100 in interest income for 2001, as compared
      to $357,483 for 2000.  The decrease in interest income for 2001
      was attributable to lower cash balances in our accounts as a result of our
      application of available cash for operational and capital requirements.
- We
      incurred $152,974 in interest expense in 2001 compared to $19,274 in
      2000 and the increase was due to the $1.6 million asset-based loan
      collateralized by our Piaggio P180 Avanti aircraft.



Relationships
  And Transactions On Terms That Would Not Be Available From Clearly Independent
  Third Parties



During 2002,
  we did not enter into any transactions with any parties that were not clearly
  independent on terms that might not be available from other clearly
  independent third parties.



LIQUIDITY
  AND CAPITAL RESOURCES



Sources
  Of Cash



Our cash
  flow requirements for 2002 were funded principally from a private placement
  which closed in September 2001 of 3,803,684 common shares for total
  gross proceeds of $4,374,237 and the sale of both our aircraft for
  $2,737,434 in 2002.



There are no
  guarantees, commitments, lease and debt agreements or other agreements that
  could trigger adverse change in our credit rating, earnings, cash flows or
  stock price, including requirements to perform under standby agreements.



Current
  Cash Position And Historical Changes In Cash Position



Our cash
  position as of December 31, 2002 was $585,070, as compared
  to $2,994, 608 as of December 31, 2001.



The $2,409,538
  decrease in our cash position for 2002 was attributable to:

- $2,123,426
      cash used in operating activities;
- $1,512,331
      cash used in financing activities; and
- partially
      offset by $1,187,008 cash raised through investing activities and
      a $39,211 comprehensive gain due to the effect of exchange rate
      changes.



The $1,284,671
  decrease in our cash position for 2001 was attributable to:



-27-





---





- $4,296,289
      in cash raised through financing activities;
- offset
      by $1,922,089 in cash used in operating activities; and
- $3,499,919
      in cash used in investing activities and a $158,952 comprehensive
      loss due to the effect of exchange rate changes.



Our
  operating activities required cash in the amount of $2,123,426 for 2002,
  as compared to cash requirements of $1,922,089 for 2001.





- The $2,123,426
      in cash used in operating activities for 2002 reflected our net loss
      of $5,676,120 for that period, adjusted for non-cash deductions and a
      net increase in non-cash working capital balances.
- The $1,922,089
      in cash used in operating activities for 2001 reflected our net loss
      of $4,388,590 for that period, as decreased for non-cash deductions
      and non-cash working capital balances.



Financing
  activities in 2002 used cash of $1,512,331 compared to the cash of $4,296,289
  generated from financing activities in 2001.





- The $1,512,331
      in cash used by financing activities in 2002 was related to the retirement
      of debt associated with the aircraft which was sold in 2002.
- The $4,296,289
      in cash raised through financing activities for 2001 was principally
      comprised of $4,359,252 in net proceeds from a private placement of
      common shares in September 2001, partially offset by loan payments
      proceeds on the debt related to the refinancing of our Piaggio P180 Avanti
      aircraft.



Investing
  activities generated cash of $1,187,008 in 2002 compared to a  $3,499,919
  use of cash 2001.



- The
      principal sources of cash under investing activities in 2002 were from the
      sale of the two aircraft ($2,737,434) and the proceeds on the sale of the
      Beiseker property ($199,326) which were partially offset by expenditures
      on oil and natural gas properties ($1,640,708).
- The
      principal use of cash for 2001 was to acquire drilling rights and seismic
      data in exploratory blocks  ($3,442,433).



Capital
  Requirements Going Forward



We have
  approximately $480,000 in cash on hand as of March 26, 2003 to fund our
  plans and to contribute toward our administration, operational and research
  and development requirements for the next twelve months.  We will be
  required to raise additional financing through equity issues, borrowings or
  property dispositions.



We have
  taken steps to significantly cut-back our administration, exploration and
  research and development costs through a number of cost-saving measures until
  such time as we attain substantial revenues.  We are also reducing
  geological, aerial survey and research and development functions.  We
  have terminated our hangar lease and are in the process of actively soliciting
  offers for some of our properties.



Assuming our
  success in a number of these activities, we believe we can maintain this
  minimal level of operations for approximately twelve to 16 months.
   At this time, we have no other capital commitments, however, if we
  ramp-up operations, we will be required to raise additional capital to support
  increased operations.



We can give
  no assurance that any or all projects in our pending programs will be
  commercial, or if commercial will generate sufficient revenues to cover our
  operating or other costs. Should this be the case, we would be forced, unless
  we can raise sufficient additional working capital, to suspend our operations,
  and possibly even liquidate our assets and wind-up and dissolve our company.



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OTHER
  MATTERS



Foreign
  Exchange



We recorded
  a $39,211 foreign currency translation gain for 2002 (2001 - loss of
  $158,952) as a comprehensive income(loss) item on our statements of loss and
  comprehensive loss and shareholders' equity (deficit) in consolidating our
  accounting records for financial reporting purposes as a result of the
  fluctuation in United States-Canadian currency exchange rates during that
  period.  We cannot give you any assurance that our future operating
  results will not be adversely affected by currency exchange rate fluctuations.



Effect Of
  Inflation



We do not
  believe that our operating results were unduly affected by inflation during
  our three years ended December 31, 2002.



Critical
  Accounting Policies



We follow
  the full cost method of accounting for oil and natural gas properties and
  equipment whereby we capitalize all costs relating to our acquisition of,
  exploration for and development of oil and natural gas reserves.  Our
  consolidated financial condition and results of operations are sensitive to,
  and may be adversely affected by, a number of subjective or complex judgments
  relating to methods, assumptions or estimates required under the full cost
  method of accounting concerning the effect of matters that are inherently
  uncertain.  For example:





- Capitalized
      costs under the full cost method of accounting are generally depleted and
      depreciated on a country-by-country cost center basis using the
      unit-of-production method, based on estimated proved oil and gas reserves
      as determined by independent engineers where significant.  In
      addition, capital costs in each cost center are also restricted from
      exceeding the sum of the present value of the estimated discounted future
      net revenues of those properties, plus the cost or estimated fair value of
      unproved properties (the "ceiling test").  Should
      this comparison indicate an excess carrying value, a write-down would be
      recorded.  In making these accounting determinations, we rely in part
      upon a reserve report prepared by independent engineers specifically
      engaged for this purpose.  To economically evaluate our proved oil
      and natural gas reserves, these independent engineers must necessarily
      make a number of assumptions, estimates and judgments that they believe to
      be reasonable based upon their expertise and professional and SEC
      guidelines.  Were the independent engineers to use differing
      assumptions, estimates and judgments, then our consolidated financial
      condition and results of operations would be affected.  For example,
      we would have lower revenues and net profits (or higher net losses) in the
      event the revised assumptions, estimates and judgments resulted in lower
      reserve estimates, since our depletion and depreciation rate would then be
      higher and it might also result in a write down under the ceiling test.
       Similarly, we would have higher revenues and net profits (or lower
      net losses) in the event the revised assumptions, estimates and judgments
      resulted in higher reserve estimates.
- Our
      management also periodically assesses the carrying values of unproved
      properties to ascertain whether any impairment in value has occurred.
       This assessment typically includes a determination of the
      anticipated future net cash flows based upon reserve potential and
      independent appraisal where warranted.  Impairment is recorded if
      this assessment indicates the future potential net cash flows are less
      than the capitalized costs. Were our management to use differing
      assumptions, estimates and judgments, then our consolidated financial
      condition and results of operations would be affected.  For example,
      we would have lower net profits (or higher net losses) in the event the
      revised assumptions, estimates and judgments resulted in increased
      impairment expense.



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Recent
  Accounting Pronouncements



In
  August 2001, the FASB issued SFAS No. 143, "Accounting
  for Asset Retirement Obligations".  SFAS No. 143
  requires that the fair value of a liability for an asset retirement obligation
  be recognized in the period in which it is incurred if a reasonable estimate
  of fair value can be made.  The associated asset retirement costs are
  capitalized as part of the carrying amount of the long-lived asset.  We
  are required to adopt the provisions of SFAS No. 143 on
  January 1, 2003.  We are currently evaluating the impact that
  the adoption of SFAS No. 143 will have on our consolidated financial
  condition and results of operations.  As we are in the process of
  divesting many of our properties and the associated liabilities, we expect
  that there may be a modest increase in our liabilities to recognize the fair
  value of restoration costs with respect to our oil and natural gas properties,
  with a commensurate increase in the capitalized cost of those assets and a
  resultant increase in amortization and depreciation expense associated with
  those increased capitalized costs.



In
  October 2001, the FASB issued SFAS No. 144, "Accounting
  for the Impairment or Disposal of Long-Lived Assets", which
  supercedes SFAS No. 121, "Accounting for the Impairment of
  Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", and
  provides a single accounting model for long-lived assets to be disposed of.
   We adopted the provisions of SFAS No. 144 on
  January 1, 2002.  The impact was not material to the
  consolidated financial statements included at the end of this annual report.



QUANTITATIVE
  AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK



OIL
  AND GAS PRICE FLUCTUATIONS



Our primary
  market risks will be related to market changes in oil and natural gas prices.
   Since our prospective revenues will be tied to the price at which NXT
  sells oil and natural gas products or properties, any fluctuations in these
  prices will directly impact our income base.  Similarly, our ability to
  acquire drilling rights is also directly affected by fluctuations in oil and
  natural gas prices, since competition for and the cost to acquire drilling
  rights is generally a function of oil and natural gas prices.
   Specifically, increases in oil and natural gas prices are generally
  accompanied by increases in industry competition and costs to acquire drilling
  rights, while decreases in oil and natural gas prices are generally
  accompanied by a similar decline in competition and costs to acquire drilling
  rights.



CURRENCY
  FLUCTUATIONS



An
  additional significant market risk relates to foreign currency fluctuations
  between United States and Canadian dollars.  Since any revenues generated
  by our Canadian-based operations will be denominated in Canadian currency, our
  consolidated financial condition and results of operations could be adversely
  affected by United States-Canadian currency fluctuations.  We have not
  previously engaged in activities to mitigate the effects of foreign currency
  fluctuations due to the absence of significant Canadian revenues to date, and
  we anticipate that the exchange rate between the United States and Canadian
  dollar will remain fairly stable.  If earnings from our Canadian
  operations increase, our exposure to fluctuations in the United
  States-Canadian exchange rate will increase, and we may utilize forward
  exchange rate contracts or engage in other efforts to mitigate these foreign
  currency risks.  We cannot give you any assurance that the use of
  exchange rate contracts or other mitigating efforts would effectively limit
  any adverse effects of foreign currency fluctuations on our consolidated
  financial condition and results of operations.



INTEREST
  RATE FLUCTUATIONS



We currently
  maintain the bulk of our available cash in Canadian dollars and our interest
  income from these short-term investments could be adversely affected by any
  material changes in interest rates within Canada.



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UNCERTAINTIES
  AND RISK FACTORS THAT MAY AFFECT OUR FUTURE RESULTS AND FINANCIAL CONDITION



We have
  described below a number of uncertainties and risk factors which, in addition
  to uncertainties and risks presented elsewhere in this annual report, may
  materially adversely affect our business, operating results and financial
  condition.  The uncertainties and risks enumerated below as well as those
  presented elsewhere in this annual report should be considered carefully in
  evaluating our company and our business and the value of our securities.



UNCERTAINTIES
  AND RISK FACTORS GENERALLY RELATING TO OUR BUSINESS



We can
  give you no assurance that our plans will be successful.  The failure of
  our plans could ultimately force us to reduce or suspend operations and even
  liquidate our assets and wind-up and dissolve our company



Exploration
  and development of oil and natural gas is extremely risky, particularly given
  our present stage of development.  An investment in our company should be
  considered highly speculative due to the nature of our involvement in the
  exploration, development and production of oil and natural gas.  Oil and
  gas exploration involves a high degree of risk, which even a combination of
  experience, knowledge and careful evaluation may not be able to overcome.
   There is no assurance that expenditures we make on future exploration
  will result in new discoveries of oil or gas.  Exploratory drilling is
  subject to numerous risks, including the risk that no commercially productive
  oil and natural gas reservoirs will be encountered.  The cost to drill,
  complete and operate wells is often uncertain, and drilling operations may be
  curtailed, delayed or cancelled as a result of a variety of factors including
  unexpected drilling conditions, abnormal pressures, equipment failures,
  premature declines of reservoirs, blow-outs, cratering, sour gas releases,
  fires, spills or other accidents, as well as weather conditions, compliance
  with governmental requirements, delays in receiving governmental approvals or
  permits, unexpected environmental issues and shortages or delays in the
  delivery of equipment.  Our inability to drill wells that produce
  commercial quantities of oil and natural gas would have a material adverse
  effect on our business, consolidated financial condition and results of
  operations.



Future oil
  and gas exploration may involve unprofitable efforts, not only from dry wells,
  but from wells that are productive but do not produce sufficient net revenues
  to return a profit after exploration, drilling, operating and other costs.
   Completion of wells does not ensure a profit on the investment or
  recovery of exploration, drilling, completion and operating costs.
   Drilling hazards or environmental damage could greatly increase the cost
  of operations, and various field operating conditions may adversely affect
  production.  Adverse conditions include delays in obtaining governmental
  approvals or consents, shut-ins of connected wells resulting from extreme
  weather conditions, insufficient storage or transportation capacity or other
  geological and mechanical conditions.



We have
  accumulated losses since our inception, and our continued inability to
  generate sufficient revenues and profits would adversely affect our ability to
  participate in land acquisition, seismic and drilling projects or raise
  additional capital, and could ultimately force us to reduce or suspend
  operations and even liquidate our assets and wind-up and dissolve our company



We
  anticipate that we will continue to incur operating losses well into 2003
  unless and until we are able to bring satisfactory producing wells and fields
  on-line.  We cannot give you any assurance that we will generate profits
  in the near future or at all.



If we do
  not raise sufficient additional capital to fully fund our further drilling
  and operational requirements, we will be forced to reduce or even suspend our
  operations, and may even be forced to liquidate our assets and wind-up and
  dissolve our company



We hope to
  activate our assets through farm-ins, drilling or dispositions to raise
  additional capital to fund drilling programs and operational requirements.
    We cannot give you any assurance that we will be able to secure
  the additional capital we require to fully or partially fund our plans in a
  manner which will not be objectionable to our company or our shareholders,
  including substantial dilution.  Our inability to raise sufficient
  additional working

-31-



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capital in
  the longer-term would likely force us to suspend our operations, and possibly
  even liquidate our assets and wind-up and dissolve our company.



Our
  future success is dependent upon our ability to successfully identify
  commercially viable hydrocarbon accumulations



Our future
  success is dependent upon our ability to successfully identify commercially
  viable hydrocarbon accumulations for development.  Based on our business
  plan, we will be dependent on:





- the
      capability of our SFD technology in identifying SFD prospects; and
- our
      ability to independently raise the funds necessary to exploit these
      prospects.



We cannot
  give you any assurance that we will be able to consistently discover
  commercial quantities of oil and natural gas or that we will successfully
  acquire and drill properties at low finding costs.



Our
  revenues and cash flow will be principally dependent upon the success of
  drilling and production from prospects in which we participate



Pursuant to
  our business plan, our revenues and cash flow will, at least in the near-term,
  be principally dependent upon the success of drilling and production from
  prospects in which we participate in the form of an overriding royalty or a
  working interest or other participation right.  Exploratory drilling is
  subject to numerous risks, including the risk that no commercially productive
  oil and natural gas reservoirs will be encountered.  The cost to drill,
  complete and operate wells is often uncertain, and drilling operations may be
  curtailed, delayed or cancelled as a result of a variety of factors including
  unexpected formation and drilling conditions, pressure or other irregularities
  in formations, equipment failures or accidents, as well as weather conditions,
  compliance with governmental requirements and shortages or delays in the
  delivery of equipment.



Our
  future operating results may fluctuate significantly



Our future
  operating results may fluctuate significantly depending upon a number of
  factors including industry conditions, prices of oil and natural gas, rate of
  drilling success, rates of production from completed wells and the timing of
  capital expenditures.  This variability could have a material adverse
  effect on our business, consolidated financial condition and results of
  operations.  In addition, any failure or delay in the realization of
  expected cash flows from initial operating activities could limit our future
  ability to continue exploration and to participate in economically attractive
  projects.



Volatility
  of oil and natural gas prices could have a material adverse effect on our
  business



Oil and
  natural gas are commodities whose prices are determined based on world demand,
  supply and other factors, all of which are beyond our control.  It is
  impossible to predict future oil and natural gas price movements with any
  certainty, as they have historically been subject to wide fluctuations in
  response to a variety of market conditions, including:





- relatively
      minor changes in the supply and demand for oil and natural gas,
- economic,
      political and regulatory developments, and
- competition
      from other sources of energy.



Any extended
  or substantial decline in oil and natural gas prices would have a material
  adverse effect on:



- our
      ability to negotiate favorable joint ventures with viable industry
      participants;

-32-



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- our
      ability to acquire drilling rights;
- the
      volume of oil and natural gas that could be economically produced;
- our cash
      flow; and
- our
      access to capital.



We do not
  currently intend to engage in hedging activities (although we reserve the
  right to do so in the future), and may be more adversely affected by
  fluctuations in oil and natural gas prices than other industry participants
  that do engage in such activities.  A sustained material decline in
  prices from historical average prices could add additional limitation factors
  to our borrowing base, reducing credit available to our company.  Our
  business, consolidated financial condition and results of operations would be
  materially and adversely affected by adverse changes in prevailing oil and
  natural gas prices.



The
  intense competition that is prevalent in the oil and natural gas industry
  could have a material adverse effect on our business



If we pursue
  development without a partner, we will have to establish markets for any oil
  and natural gas we do produce and we will also have to market our oil and
  natural gas to prospective buyers.  The marketability and price of oil
  and natural gas, which may be acquired or discovered by us, will be affected
  by numerous factors beyond our control.  We will be affected by the
  differential between the price paid by refiners for light quality oil and the
  grades of oil produced by us.  Our ability to market our natural gas may
  depend upon our ability to acquire space on pipelines which deliver natural
  gas to commercial markets.  We will also likely be affected by
  deliverability uncertainties related to the proximity of our reserves to
  pipelines and processing facilities and relating to price, taxes, royalties,
  land tenure, allowable production, the export of oil and natural gas and many
  other aspects of the oil and natural gas business.  We have limited
  direct experience in the marketing of oil and natural gas.



We
  compete directly with independent, technology-driven exploration and service
  companies, and with major oil and natural gas companies in our exploration for
  and development of commercial oil and natural gas properties.



We cannot
  give any assurance that our competitors will not develop exploration services
  that are superior to our SFD technology.  Increased competition could
  impair our ability to attract viable industry participants, and to negotiate
  favorable participations and joint ventures with such parties, which could
  materially and adversely affect our business, consolidated financial condition
  and results of operations.



The oil and
  natural gas industry is highly competitive.  Many companies and
  individuals are engaged in the business of acquiring interests in and
  developing oil and natural gas properties, and the industry is not dominated
  by any single competitor or a small number of competitors.  We will
  compete with numerous industry participants for the acquisition of land and
  rights to prospects, and for the equipment and labor required to drill and
  develop those prospects.  Many of these competitors have financial,
  technical and other resources substantially in excess of those available to
  us.  These competitive disadvantages could adversely affect our ability
  to participate in projects with favorable rates of return.



Our
  inability to retain our key managerial and research and development personnel
  could have a material adverse effect on our business



Our success
  depends to a significant extent on the continued efforts of our senior
  management team, which consists of Mr. George Liszicasz, the inventor of our
  SFD technology, who is our Chief Executive Officer and who is responsible for
  the continuing development of our SFD technology.  The loss of Mr.
  Liszicasz could have a material adverse effect on our business, consolidated
  financial condition and results of operations.  While we have entered
  into employment and non-competition agreements with Mr. Liszicasz, he would
  nevertheless not be prevented from

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working for
  other companies in the oil and natural gas industry so long as they did not
  employ SFD technology should he elect to terminate his employment with us. We
  also do not carry key person life insurance policies on our executive officer.



Our success
  also depends on the continued efforts of our SFD research and development
  team, which is composed of a small number of individuals.  While there
  are professionals who could replace these individuals, none of these
  professionals would have any theoretical or working knowledge of how to
  interpret SFD data or how our SFD technology operates, and it would take a
  significant period of time to train any replacement personnel.  Until
  such time as we have a fully trained complement of SFD research and
  development team, the loss of any members of this team could adversely affect
  the pace at which we interpret SFD data or affect improvements to our SFD
  technology, which could adversely impact our business, consolidated financial
  condition and results of operations.



We may be
  unable to attract the qualified managerial, geological and geophysical, and
  research and development personnel required to implement our longer-term
  growth strategies



Our ability
  to implement our longer-term growth strategies depends upon our continuing
  ability to attract and retain highly qualified geological, technical,
  scientific, information management and administrative personnel.  We
  cannot give you any assurance that we will be able to retain our key
  managerial, professional and technical employees, or that we will be able to
  attract and retain additional highly qualified managerial, professional and
  technical personnel in the future.  Our inability to attract and retain
  the necessary personnel could impede our growth.



Our
  limited operating history could adversely affect our business



We are
  subject to all the risks and issues inherent in the establishment and
  expansion of a new business enterprise including, among others, problems of
  using a newly developed technology, hiring and training personnel, acquiring
  reliable facilities and equipment, and implementing operational controls.
   In general, development stage businesses are subject to levels of risk
  that are often greater than those encountered by companies with established
  operations and relationships.  Startups often require significant capital
  from sources other than operations.  The management and employees of a
  startup business shoulder the burdens of the business operations and a
  workload associated with company growth and capitalization that is
  disproportionately greater than that for an established business.  Our
  limited operating history makes it difficult, if not impossible, to predict
  future operating results.  We cannot give any assurance that we will
  successfully address these risks.  Our failure to successfully address
  these risks could have a material, adverse effect on our business, financial
  condition and results of operations.



We may be
  unable to effectively manage our expected growth



Our success
  will depend upon the expansion of our business.  Expansion will place a
  significant strain on our financial, management and other resources, and will
  require us, among other things, to:



- change,
      expand and improve our operating, managerial and financial systems and
      controls; and
- improve
      coordination between our various corporate functions.



We cannot
  give you any assurance that we will be able to manage the expansion of our
  business effectively.  Our inability to effectively manage our growth,
  including the failure of any new personnel we hire to achieve anticipated
  performance levels, would have a material adverse effect on our business,
  consolidated financial condition and results of operations.



Our
  business may be adversely affected by currency fluctuation, regulatory,
  political and other risks associated with international transactions



We currently
  operate within the United States and Canada and anticipate we will also
  operate outside of these countries in the foreseeable future.  These
  operations will subject us to several potential risks, including risks
  associated with:

-34-





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- fluctuating
      exchange rates;
- the
      regulation by the governments of the United States and Canada as well as
      foreign governments of fund transfers and export and import duties and
      tariffs; and
- political
      instability and a potential war with Iraq.



We cannot
  give you any assurance that any of these risks will not have a material
  adverse effect upon our business.



We do not
  currently engage in activities to mitigate the effects of foreign currency
  fluctuations.  If earnings from international operations increase, our
  exposure to fluctuations in foreign currencies may increase, and we may
  utilize forward exchange rate contracts or engage in other efforts to mitigate
  foreign currency risks.  We can give you no assurance as to the
  effectiveness of these efforts in limiting any adverse effects of foreign
  currency fluctuations on our consolidated financial condition and results of
  operations.



Our
  business within Canada may be adversely affected by the enforcing of the Kyoto
  Accord



In December
  of 2002, the Canadian government ratified the Kyoto Accord.  Under the
  Kyoto Accord, industrialized countries and countries in transition to a market
  economy agreed to bring their emissions of greenhouse gases to 5% less than
  1990 levels. They also agreed to foster energy efficiency in their economies,
  promote the development of cleaner energy sources, and employ agricultural
  practices that have a sustainable environmental impact. By ratifying the Kyoto
  Accord, the Canadian government agreed to reduce greenhouse gas emissions to
  6% below 1990 levels by 2012. This would represent a 26% reduction from
  projected 2012 levels.   It is expected that the Canadian government
  will enact new environmental regulations in order to meet the goals set out in
  the Kyoto Accord.  We believe that these new regulations will have
  negative repercussions on our Canadian operations but cannot determine the
  full impact of these at this time.



A small
  number of our shareholders retain the ability to influence or control our
  company



Mr. George
  Liszicasz beneficially owns approximately 31% of the common shares outstanding
  as of the date of this annual report, and therefore has a substantial voice in
  all shareholder matters.



Our series 'A' preferred shareholder does not have voting rights except as outlined
  below, however, these preferred shares are convertible at any time into common
  shares at a prescribed rate.  As of the date of this annual report, the
  800,000 outstanding series 'A' preferred shares, if all converted, would be
  convertible into 2,368,762 common shares. While our series 'A' preferred
  shareholder holds the preferred shares, we cannot carry out any of the
  following transactions or actions without that shareholder's consent and
  approval:



- declare
      or pay any dividend (other than a stock split);
- redeem
      or purchase outstanding shares of our capital stock;
- sell our
      principal assets or business;
- merge or
      consolidate with any other company; or
- liquidate
      or dissolve.



An
  investment in the common shares will entail entrusting these and similar
  decisions to our present management subject to their fiduciary duties.



-35-



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There is
  an inherent conflict in interest arising as a result of the relationship
  between our principal stockholder and the licensor of our SFD technology



Mr. George
  Liszicasz indirectly controls our company and is a major shareholder and
  director of Momentum Resources, which has granted us an exclusive license to
  identify oil and natural gas prospects using the SFD while reserving the
  exclusive right to use the SFD technology for purposes other than oil and
  natural gas exploration. As a result of the foregoing relationships, certain
  conflicts of interests between our company, Momentum Resources and Mr.
  Liszicasz may directly or indirectly arise, including the proper exercise by
  Mr. Liszicasz of his fiduciary duties on our behalf as a controlling
  stockholder and, to the extent applicable, as a director of our company in
  connection with any matters concerning Momentum Resources such as, by way of
  example and not limitation:



- disputes
      regarding the validity, scope or duration of our SFD technology license;
- the
      exploitation of corporate opportunities;
- rights
      to proprietary property and information;
- maintenance
      of confidential information as between entities;
- the
      structure and amount of the compensatory arrangements under the license;
      and
- potential
      competition between our company and Momentum Resources.

While Mr.
  Liszicasz and our company have each executed certain disclosures and consents
  relating to these conflicts, these disclosures and consents will not remedy
  these conflicts, but will merely release Mr. Liszicasz from liability as a
  result of the conflicts so long as he uses reasonable efforts to minimize the
  conflicts.  In the event any of these conflicts prove to be
  irreconcilable, Mr. Liszicasz, who is currently an officer and director of NXT,
  may be forced to resign his positions with our company.



We may be
  unable to protect our intellectual property



The licensor
  of our SFD technology, Momentum Resources, claims common law ownership of that
  technology, but has not obtained patent or copyright protection for those
  rights.  Momentum Resources and our company each believe that the
  disclosure risks inherent in patent or copyright registration of our SFD
  technology outweigh the legal protections which might be afforded by that
  registration.  In the absence of significant patent or copyright
  protection, we may be vulnerable to competitors who attempt to imitate the
  SFDs, or to develop functionally similar technologies.



Although we
  believe that we have all rights necessary to market our services without
  infringing upon any patents or copyrights held by others, we cannot give any
  assurance that conflicting patents or copyrights do not exist.  We rely
  upon trade secret protection and confidentiality and non-disclosure agreements
  with our employees, consultants, joint venture partners and others to protect
  our proprietary rights.  Furthermore, we do not believe, were Momentum
  Resources to apply for and receive patent protection, that the patent would
  necessarily protect Momentum Resources or our company from competition.
   Momentum Resources and our company therefore anticipate continued
  reliance upon contractual rights and on common law to protect our trade
  secrets.  The steps taken by our company and Momentum Resources to
  protect our respective rights may not be adequate to deter misappropriation,
  or to preclude an independent third party from developing functionally similar
  technology.



We cannot
  give any assurance that others will not independently develop substantially
  equivalent proprietary information and techniques, or otherwise gain access to
  Momentum Resources' or our trade secrets, or otherwise disclose aspects of the
  SFD device, or that we will be able to meaningfully protect our trade secrets.
   We also cannot give you any assurance that Momentum Resources or our
  company will not be required to defend against litigation or to enforce or
  defend intellectual property rights relating to SFD devices.  Legal and
  accounting costs relating to prosecuting or defending intellectual property
  rights may be substantial.

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UNCERTAINTIES
  AND RISKS RELATING TO COMMON SHARES



There is
  only a limited public market for our common shares on the OTC Bulletin Board
  and that market is extremely volatile



There is
  only a limited public market for our common shares on the OTC Electronic
  Bulletin Board, and we cannot give you any assurance that a broader or more
  active public trading market for our common shares will develop or be
  sustained, or that current trading levels will be sustained.



The market
  price for the common shares on the OTC Bulletin Board has been and we
  anticipate will continue to be extremely volatile and subject to significant
  price and volume fluctuations in response to a variety of external and
  internal factors.  This is especially true with respect to emerging
  companies such as ours.  Examples of external factors, which can
  generally be described as factors that are unrelated to the operating
  performance or financial condition of any particular company, include changes
  in interest rates and worldwide economic and market conditions, as well as
  changes in industry conditions, such as changes in oil and natural gas prices,
  oil and natural gas inventory levels, regulatory and environment rules, and
  announcements of technology innovations or new products by other companies.
   Examples of internal factors, which can generally be described as
  factors that are directly related to our consolidated financial condition or
  results of operations, would include release of reports by securities analysts
  and announcements we may make from time-to-time relative to our operating
  performance, drilling results, advances in technology or other business
  developments.



Because we
  are a development stage enterprise with a limited operating history and no
  profits to date, the market price for the common shares is more volatile than
  that of a seasoned issuer.  Changes in the market price of the common
  shares, for example, may have no connection with our operating results or
  prospects.  No predictions or projections can be made as to what the
  prevailing market price for the common shares will be at any time, or as to
  what effect, if any, that the sale of shares or the availability of common
  shares for sale at any time will have on the prevailing market price.



Sales of
  substantial amounts of the common shares on the public market, or the
  perception that substantial sales could occur, could adversely affect the
  prevailing market prices for those shares and also, to the extent the
  prevailing market price for the common shares is reduced, adversely impact our
  ability to raise additional capital in the equity markets.  In addition,
  our employees, directors and consultants currently hold vested options
  entitling them to acquire 1,063,842 common shares.  Should these
  persons exercise these options, it is likely they would sell some or all of
  the underlying common shares on the public markets in order to procure
  liquidity to pay taxes as well as other reasons they may deem pertinent.
   The 800,000 series 'A' preferred shares outstanding are also
  each convertible into approximately 2.96 common shares as of the date of
  this annual report.



You will
  be subject to the penny stock rules to the extent our stock price on the OTC
  Bulletin Board is less

than $5.00



Since the
  common shares are not listed on a national stock exchange or quoted on the
  Nasdaq Market within the United States, trading in the common shares on the
  OTC Electronic Bulletin Board is subject, to the extent the market price for
  the common shares is less than $5.00 per share, to a number of
  regulations known as the "penny stock rules".  The penny stock
  rules require a broker-dealer to deliver a standardized risk disclosure
  document prepared by the SEC, to provide the customer with additional
  information including current bid and offer quotations for the penny stock,
  the compensation of the broker-dealer and its salesperson in the transaction,
  monthly account statements showing the market value of each penny stock held
  in the customer's account, and to make a special written determination that
  the penny stock is a suitable investment for the purchaser and receive the
  purchaser's written agreement to the transaction.  To the extent these
  requirements may be applicable they will reduce the level of trading activity
  in the secondary market for the common shares and may severely and adversely
  affect the ability of broker-dealers to sell the common shares.

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You
  should not expect to receive dividends



We have
  never paid any cash dividends on shares of our capital stock, and we do not
  anticipate that we will pay any dividends in the foreseeable future.  Our
  current business plan is to retain any future earnings to finance the
  expansion of our business.  Any future determination to pay cash
  dividends will be at the discretion of our board of directors, and will be
  dependent upon our consolidated financial condition, results of operations,
  capital requirements and other factors as our board of directors may deem
  relevant at that time.



You
  should not expect to receive a liquidation distribution



If we were
  to wind-up or dissolve our company and liquidate and distribute our assets,
  our common shareholders would share ratably in our assets only after we
  satisfy any amounts we would owe to our creditors and any amounts we would owe
  to our series 'A' preferred shareholder as a liquidation preference
  ($7.50 per share, or $6,000,000 in the aggregate).  If our
  liquidation or dissolution were attributable to our inability to profitably
  operate our business, then it is likely that we would have material
  liabilities at the time of liquidation or dissolution.  Accordingly, we
  cannot give you any assurance that sufficient assets will remain available
  after the payment of our creditors and preferred shareholder to enable you to
  receive any liquidation distribution with respect to any common shares you may
  hold.



Our right
  to issue additional capital stock at any time could have an adverse effect on
  your proportionate ownership and voting rights



We are
  authorized under our Articles of Incorporation to issue up to 50,000,000
  common shares.  Subject to compliance with applicable corporate and
  securities laws, we may issue these shares under such circumstances and in
  such manner and at such times, prices, amounts and purposes as our board of
  directors may, in their discretion, determine to be necessary and appropriate.
   The sale of common shares under certain prices may also result in the
  issuance of additional common shares to the holders of our series 'A'
  preferred shares should they elect to convert those shares into common shares
  pursuant to certain anti-dilution rights they hold.  Your proportionate
  ownership and voting rights as a common shareholder could be adversely
  affected by the issuance of additional common shares, including a substantial
  dilution in your net tangible book value per share.



ITEM
  8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Our
  consolidated financial statements and the report of our independent auditors
  are filed with this annual report in a separate section at the end of this
  annual report.



ITEM
  9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL
  DISCLOSURE



On July 9,
  2002, our board of directors accepted the resignation of Arthur Andersen LLP
  Canada, otherwise referred to as Andersen, as our independent auditors.
   The resignation was tendered as Andersen was no longer able to fulfill
  its responsibilities to NXT due to the recently completed transaction between
  Andersen and Deloitte & Touche LLP, Canada, referred to herein as D &
  T, whereby substantially all of the partners and staff of Andersen joined D
  & T.  Andersen audited our consolidated financial statements for our
  two most recent years ended December 31, 2001.



The report
  of Andersen accompanying the audited financial statements for our two most
  recent years ended December 31, 2001 was not qualified or modified as to audit
  scope or accounting principles and did not contain an adverse opinion or
  disclaimer of opinion.



During our
  two most recent years ended December 31, 2001, and also during the subsequent
  interim period through the date of resignation, there were (1) no
  disagreements between us and Andersen on any matter of accounting principles
  or practices, financial statement disclosure, or auditing scope or procedure;
  (2) no reportable events as

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such term is
  defined by paragraph (a)(1)(v) of Item 304 of Regulation S-K promulgated by
  the Securities and Exchange Commission; and (3) no matters identified by
  Andersen involving our internal control structure or operations which was
  considered to be material weakness.



On July 9,
  2002, our board of directors appointed D & T as our new independent
  accountants.



During our
  two most recent years ended December 31, 2001, and also during the subsequent
  interim period prior to the appointment of D & T, we did not consult with
  D & T regarding the application of accounting principles to a specified
  transaction, either completed or proposed, or the type of opinion that might
  be rendered regarding our financial statements, nor did we consult with D
  & T with respect to any accounting disagreement or any reportable event as
  such term is defined by paragraph (a)(1)(v) of Item 304 of Regulation S-K.



Prior to the
  appointment of Andersen as our independent auditor, D & T acted as our
  independent auditor for the two years ended December 31, 1999, and also during
  the subsequent interim period through the date of their resignation in June
  2000.  The resignation was tendered in anticipation of a conflict of
  interest that would arise under the rules of the Securities and Exchange
  Commission governing the independence of auditors as a consequence of a
  pending marriage between a sibling of NXT's controller and a partner in D
  & T's Calgary office.   Prior to the transaction between
  Andersen and D & T, both auditing firms reviewed the potential conflict of
  interest outlined above and concluded that under the recently amended
  Securities and Exchange Commission's rules governing independence of
  independent auditors, a conflict of interest no longer existed.



The report
  of D & T accompanying the audited financial statements for our two years
  ended December 31, 1999 was not qualified or modified as to audit scope or
  accounting principles and did not contain an adverse opinion or disclaimer of
  opinion.



During our
  two years ended December 31, 1999, and also during the subsequent interim
  period through the date of resignation, there were (1) no disagreements
  between us and D & T on any matter of accounting principles or practices,
  financial statement disclosure, or auditing scope or procedure; (2) no
  reportable events as such term is defined by paragraph (a)(1)(v) of Item 304
  of Regulation S-K; and (3) no matters identified by D & T involving our
  internal control structure or operations which was considered to be material
  weakness.



PART
  II



ITEM
  10.  DIRECTORS AND EXECUTIVE OFFICERS



Our bylaws
  permit our board of directors to fix the number of its authorized members from
  three to eleven.  At present, our board of directors consists of five
  members, of which five members are "common directors"
  appointed by our common shareholders, and there are currently no members
  designated as  "series 'A' directors" which are
  appointed by our series 'A' preferred shareholder.  This classification
  of our board of directors was made pursuant to an amendment to our articles of
  incorporation made in connection with the private placement in April 1998 of
  800,000 shares of our series 'A' preferred stock.



Specifically,
  our articles of incorporation were amended to provide that our common
  shareholders would retain the exclusive right to elect all members of our
  board of directors, unless there are 400,000 or more shares of our series 'A'
  preferred stock outstanding, in which case our series 'A' preferred
  shareholder would have the right to appoint one or more additional directors.
   The number of directors which our series 'A' preferred shareholder may
  elect under such circumstances would, when aggregated with the number of
  common directors, equal one-sixth of such aggregated number of directors (or
  such minimum whole number in excess of one-sixth in the event such number of
  aggregated directors is not a multiple of six).  The series 'A'
  preferred shareholder has not exercised their right to appoint a director but
  may do so at any time.



Our articles
  of incorporation specifically provide that our common shareholders shall have
  no right to vote for the series 'A' directors, and our series 'A' preferred
  shareholder shall have no right to vote for the common directors.  The
  removal of any series 'A' directors shall require only the affirmative vote of
  holders of a majority of the then outstanding

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shares of
  our series 'A' preferred stock.  The vacancy of any series 'A' director
  position, from whatever cause, shall require only the affirmative vote of
  holders of a majority of the then outstanding shares of our series 'A'
  preferred stock.



Our common
  directors are appointed by our common stock shareholders at our annual meeting
  of shareholders and holds the position either until the next annual
  shareholders meeting or until a successor is appointed.  The following
  table sets forth information, as of March 26, 2003, regarding our directors,
  executive officers and key employees:



DONALD
          E. FOULKESAge 54
          Director since May 2002
        Mr.
          Foulkes has been a director and the President of AltaCanada Energy
          Corp. (TSX:ANG), an oil and gas exploration company, since September
          2002.  Prior to joining AltaCanada, Mr. Foulkes was the Chairman
          of the Board of Bushmills Energy Corp. (TSE:BSH), an oil and gas
          exploration company, from September 2001 until January 2003.  Mr.
          Foulkes was with Causeway Energy Corporation (TSE:CUW), an oil and gas
          exploration and production company, from September 1995 to September
          2001, where he held the position of President from 1995 until 1998
          when he became the Chief Executive Officer.  From 1992 to 1995,
          Mr. Foulkes was the President of Highridge Exploration Ltd. (TSE:HRE)
          and from 1988 to 1992, he was the President of Union Pacific Resources
          Inc., a private oil and gas company.  Mr. Foulkes serves as a
          board member on our two Canadian subsidiaries, NXT Energy Canada, Inc.
          and NXT Aero Canada, Inc., as well; he also serves as a board member
          of 669677 Alberta Ltd., a private company.
          
          Mr.
          Foulkes is a professional geologist and received a Bachelor of Science
          degree in Geology from the University of Calgary in 1970.
          
          Mr.
          Foulkes sits on both our Audit Committee and our Compensation
          Committee.DENNIS
          HUNTERAge 61
          Director since September 1998
        Mr.
          Hunter is an entrepreneur who splits his time equally between private
          investment activities and real estate development and management.
           Since 1973, Mr. Hunter has been President and Chairman of
          the Board of Investment Development Management Corporation, which
          acquires, constructs, manages, develops and sells properties in
          California, Oregon and Nevada.  Mr. Hunter has also been Chairman
          of the Board since 1992, and Vice Chairman of the Board
          from 1984, of Northern Empire Bancshares, a holding company of
          Sonoma National Bank, of which Mr. Hunter was a founder in 1982.
           Mr. Hunter has also been a director, since 1988, of
          Northbay Corporation, a private holding company in the solid waste
          industry with 35 companies in solid waste hauling, transfer
          stations, portable toilets, land fill operations and real property
          ownership.  Mr. Hunter is also the trustee and an investment
          strategist for five charitable remainder trusts collectively holding
          over $30 million in net assets. Mr. Hunter sits on the board of
          directors of our two US subsidiaries, NXT Aero USA, Inc. and NXT
          Energy USA, Inc.
          
          Mr.
          Hunter received his Bachelor of Arts degree in Economics from
          California State University Sacramento.
          
          Mr.
          Hunter has served on our Compensation Committee since
          February 2000.


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GEORGE
          LISZICASZAge 50
          Director and Chief Executive Officer since January 1996
        Mr.
          Liszicasz is the inventor of the SFD technology and has been our
          Chairman and Chief Executive Officer since inception. Mr. Liszicasz
          was appointed our interim President and interim Chief Financial
          Officer in July 2002.  Mr. Liszicasz's primary responsibilities,
          as the Chief Executive Officer, interim President and interim Chief
          Financial Officer, are to ensure the smooth running of the day-to-day
          operations and to further develop our SFD technology.  Prior to
          founding NXT, Mr. Liszicasz was Vice President of Susa Petroleum Inc.
          from 1993 to 1994.  From 1987 to 1995, Mr. Liszicasz was
          President of Owl Industries Ltd., a developer of electronic
          controlling devices, where he had both engineering and business
          responsibilities.  Mr. Liszicasz serves as a board member of each
          of our four subsidiaries; NXT Energy Canada, Inc., NXT Energy USA,
          Inc., NXT Aero Canada, Inc. and NXT Aero USA, Inc.
          
          Mr.
          Liszicasz studied electronics and general sciences at the University
          of British Columbia and obtained a High Voltage Controls and Station
          Operations degree in Electronics from the Landler Jeno Technitken in
          Hungary in 1973.DOUGLAS
          ROWEAge 60
          Director since May 2002
        Mr.
          Rowe has been the President, Chief Executive Officer and a director of
          Birch Mountain Resources Ltd. (TSX:BMD; OTCBB:BHMNF), a Canadian
          junior mineral exploration company, since 1994.  Prior to that he
          was Chairman and President of Brougham Geoquest, Ltd., a company
          engaged in mineral exploration, from 1986 to 1993, and Brougham Energy
          Corporation, a company engaged in oil and gas exploration and
          development, from 1984 to 1986.  Mr. Rowe also sits on the board
          of directors of our two Canadian subsidiaries, NXT Aero Canada, Inc.
          and NXT Energy Canada, Inc.
          
          Mr.
          Rowe is a professional engineer with a Bachelors of Science degree in
          Electrical Engineering from Queen's University which he obtained in
          1967 and has over 30 years of industry experience.
          
          Mr.
          Rowe is chairman of our Compensation Committee.SCOTT
          R. SCHRAMMARAge 52
          Corporate Secretary since September 2002
        Mr.
          Schrammar is a retired businessman who has over 13 years of business
          law and stock brokerage experience.  Mr. Schrammar retired in
          1992. From 1989 to 1992, Mr. Schrammar was an independent trader at
          the American Stock Exchange.  From 1983 to 1988, he was Head
          Floor Broker for Moseley, Hallgarten, Estabrook and Weeden at the
          American Stock Exchange.  Mr. Schrammar is the Corporate
          Secretary of all of our subsidiaries.
          
          Mr.
          Schrammar graduated Summa Cum Laude from the City University of New
          York with his Bachelor degree in Psychology in 1974 prior to
          continuing his studies at the Brooklyn Law School and receiving his
          Juris Doctor Degree in 1978.


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ROBERT
          VAN CANEGHANAge 55
          Director since May 2002
        Mr.
          Van Caneghan is a retired businessman who has over 25 years of
          experience as a market maker and specialist broker.  Mr. Van
          Caneghan retired in 1994. From 1984 to 1994, he was a principal of
          Micilli-Van Caneghan, a specialist firm located on the AMEX floor.
           Mr. Van Caneghan was also a member of the American Stock
          Exchange Board of Governance from 1988 to 1994. Mr. Van Caneghan
          currently is a board member of our two U.S. subsidiaries, NXT Energy
          USA, Inc. and NXT Aero USA, Inc. and of the Financial Resources
          Federal Credit Union.
          
          In
          1969, Mr. Van Caneghan graduated from Wagner College with a Bachelor
          of Science in Economics.  He then obtained a Masters Degree in
          Finance from the New York University Stern School of Business in 1974.
          Mr. Van Caneghan attended Brooklyn Law School where he graduated with
          a Juris Doctor degree in 1978.
          
          Mr.
          Van Caneghan is a member of our Audit Committee.




None of our
  executive officers or directors have been involved in any bankruptcy
  proceedings within the last five years, been convicted in or has pending any
  criminal proceeding, been subject to any order, judgment or decree enjoining,
  barring, suspending or otherwise limiting involvement in any type of business,
  securities or banking activity or been found to have violated any federal,
  state or provincial securities or commodities laws.



Section
  16(a) Beneficial Ownership Reporting Compliance



The
  following represents each person who did not file on a timely basis reports
  required by Section 16(a) of the Exchange Act during the most recent year:



Name
        Reporting
          Person
        Form
          3/# of transactions
        Form
          4/# of transactions
        Form5/#
          of transactionsDouglas
          Rowe
        Director
        Late/1
        Late/1
        N/ADonald
          Foulkes
        Director
        Late/1
        N/A
        N/ARobert
          Van Caneghan
        Director
        Late/1
        N/A
        N/AScott
          Schrammar
        Corporate
          Secretary
        Late/1
        N/A
        N/AGeorge
          Liszicasz
        Chairman
          & Chief Executive Officer
        N/A
        N/A
        Late/1




Board
  Committees



Our board of
  directors has established two committees, a Compensation Committee and an
  Audit Committee.



Due to
  changes in our board and management in 2002, our Compensation Committee
  consisted of only Mr. Hunter until July 9, 2002, when our board of directors
  appointed Messrs. Foulkes and Rowe to assist Mr. Hunter.  Our
  Compensation Committee reviews and makes recommendations with respect to the
  compensation of our executive officers, and also administers our various stock
  plans.



Due to
  changes in our board and management in 2002, our Audit Committee had no
  members from May 9, 2002 to July 9, 2002, when the board of directors
  appointed Messrs. Foulkes and Van Caneghan to the committee.  The Audit
  Committee's duties, as outlined in its charter, include recommending to our
  board of directors the engagement of our independent auditors, reviewing the
  results of the auditor's examination of our periodic financial statements, and
  determining the independence of those accountants.  The Audit Committee
  held two meetings after the appointment of Messrs. Foulkes and Van Caneghan.
   The board of directors is in the process of locating a financial expert
  to sit on the Audit Committee.



Messrs.
  Foulkes and Van Caneghan are considered "independent" within the
  meaning of the rules of Nasdaq, the New York and American Stock Exchanges and
  the Securities and Exchange Commission.

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Compensation Committee Interlocks and Insider Participation



The Compensation Committee of the board of directors reviews and recommends to the board of directors the compensation and benefits of all our executive officers and establishes and reviews general policies relating to compensation and benefits of our employees.  None of our executive officers served as a director, executive officer or member of a compensation committee of another entity of which one of its executive officers served on our Compensation Committee.  Except as described in "Certain Relationships and Related Transactions", no interlocking relationships exist between our board of directors or compensation committee and the board of directors or compensation committee of any other company, nor has any interlocking relationship existed in the past.



In the past, our board of directors has negotiated all executive salaries of our employees, including our Chief Executive Officer.  Directors do not participate in approving or authorizing their own salaries as executive officers.  Compensation for our Chief Executive Officer was determined by the Compensation Committee after considering his efforts in assisting in the development of our business strategy, the salaries of executives in similar positions and our general financial condition.  The use of stock options and other awards is intended to strengthen the alignment of interests of executive officers and other key employees with those of our stockholders.



Board and Committee Meetings



Our board of directors was comprised of five directors for the majority of 2002, and they held six meetings during 2002. No director attended less than 80% of the total number of those meetings.  Our board of directors also approved three additional corporate matters during 2002 through unanimous written consents.



The Compensation Committee held two meetings during 2002.  Messrs. Foulkes and Rowe attended both meetings and Mr. Hunter attended neither.



The Audit Committee held two meetings during 2002 and all members were in attendance at both meetings.



ITEM 11.  EXECUTIVE COMPENSATION



The following table shows the compensation paid over the past three years with respect to the following persons:





- Our Chief Executive Officer;
- Our four other most highly compensated executive officers (if any), whose annual salary and bonus exceeded $100,000 in the aggregate; and
- Up to two additional individuals (if any) who would be included amongst our four other most highly compensated executive officers but for the fact that such individuals were not serving as an executive officer.



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(1)

NXT ordinarily pays salaries to our executive officers in Canadian dollars.  The amounts shown as paid in this table have been converted into United States dollars based upon the average exchange rate for the year of payment used in preparing our consolidated financial statements.

(2)

Includes, among other things, perquisites and other personal benefits, securities or property which exceed in the aggregate the lesser of either $50,000 or 10% of the total annual salary and bonus reported for that year.

(3)

Mr. Topolinsky resigned as NXT's President and Chief Operating Officer and as a director of NXT effective April 19, 2002.

(4)

Effective March 1, 2002, Mr. Ehrets became NXT's Vice President Exploration (U.S.).  Prior to that Mr. Ehrets was NXT's Executive Vice President of Operations.  Mr. Ehrets' contract expired on October 31, 2002 and was not renewed.

(5)

Mr. Woodbury's contract expired on July 8, 2002 and was not renewed at that time.

(6)

Common share purchase options granted to Mr. Topolinsky in connection with his appointment to that office.  As of the date of this annual report, Mr. Topolinsky has 270,000 outstanding options which are exercisable until April 19, 2004.

(7)

In January 2002, Mr. Liszicasz accepted a 50% reduction in his annual salary.

(8)

Common share purchase options granted to Mr. Ehrets in connection with his appointment to that office.  As of the date of this annual report, Mr. Ehrets has 250,800 outstanding options which are exercisable until April 30, 2004.



Summary Of Stock Options And Stock Appreciation Rights Granted To Executive Officers



There were no grants to our executive officers of options to purchase our common shares or stock appreciation rights relating to our common shares during 2002.



The following table sets forth information regarding stock option grants to our officers and directors as of March 26, 2003:



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|(1) | Based on options exercisable to acquire a total 1,512,842 shares to executive officers, directors and employees.                                                 
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The exercise price per share was equal to or greater than the fair market value of the common stock on the date of grant as determined by the board of directors.



The potential realizable value is calculated based on the assumption that the common stock appreciates at the annual rate shown, compounded annually, from the date of grant until the expiry of the term of the option.  These numbers are calculated based on SEC requirements and do not reflect our projection or estimate of future stock price growth.  Potential realizable values are computed by:





- multiplying the number of shares of common stock subject to a given option by the exercise price;
- assuming that the aggregate stock value derived from that calculation compounds at the annual 5% or 10% rate shown in the table for the entire term of the option; and
- subtracting from that result the aggregate option exercise price.



Summary Of Stock Options And Stock Appreciation Rights Exercised By Executive Officers And Year End Balances



The following table provides certain information with respect to each of our executive officers in 2002 concerning any options to purchase our common shares or stock appreciation rights they may have exercised in 2002, and the number and value of their unexercised options as of December 31, 2002:



at December 31, 2002Named Executive OfficerShares
Acquired On Exercise
Value
RealizedOptions at FY-End(Exercisable/Unexercisable)Value of In-the-Money Options at FY-End (1) (2)(Exercisable/Unexercisable)George Liszicasz------45,000  / 0$0  /  $0Daniel C. Topolinsky (3)------270,000  / 270,000$0  /  $0James R. Ehrets (4)------250,800  / 250,800$0  /  $0John M. Woodbury (5)------33,167 / 33,167$0  /  $0


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(1)The dollar amount shown represents the difference between the fair market value of our common shares underlying the options as of the date of exercise and the option exercise price.(2)The dollar value provided represents the cumulative difference in the fair market value of our common shares underlying all in-the-money options as of December 31, 2002 and the exercise prices for those options.  Options are considered "in-the-money" if the fair market value of the underlying common shares as of the last trading day in 2002 exceeds the exercise price of those options.  The fair market value of our common shares for purposes of this calculation is $0.09, based upon the closing price for our common shares on December 31, 2002, the last trading day in 2002.(3)Mr. Topolinsky resigned as NXT's President and Chief Operating Officer and as a director of NXT effective April 19, 2002.  He has two years to exercise any options that had vested prior to his resignation.  All unvested options expired upon his resignation.(4)Effective March 1, 2002, Mr. Ehrets became NXT's Vice President Exploration (U.S.).  Prior to that Mr. Ehrets was NXT's Executive Vice President of Operations.  Mr. Ehrets' contract expired on October 31, 2002 and was not renewed.  He has two years to exercise any options that had vested prior to the end of his contract.  All unvested options expired at the end of his contract.(5)Mr. Woodbury's contract expired on July 8, 2002 and was not renewed at that time.  He has two years to exercise any options that had vested prior to the end of his contract.  All unvested options expired at the end of his contract.




Director Compensation



We do not currently pay any cash compensation to directors for serving on our board, but we do reimburse directors for out-of-pocket expenses for attending board and committee meetings.  Our independent directors receive stock options to purchase shares of our common stock as compensation for their service as directors.  The terms of stock option g

rants made to independent directors are determined by the board of directors.  We do not provide additional compensation for committee participation or special assignments of the board of directors.



Indemnification Of Directors, Officers And Others



Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the company, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.



Our By-laws provide that, to the fullest extent permitted by law, we may indemnify our directors, officers and others who were or are a party to, or are threatened to be made a party to, any threatened, pending or completed action, suit or proceeding.



We do not maintain directors and officers indemnity insurance.



EMPLOYMENT AGREEMENTS WITH OUR EXECUTIVE OFFICERS



Mr. Liszicasz is employed as our Chief Executive Officer under a five-year employment agreement entered into on December 1, 2002, which contains the following principal compensatory provisions:





- An initial base salary of CDN $21,000 per month, with an automatic increase of 5% on each anniversary date.  However, Mr. Liszicasz reduced his monthly salary to CDN $10,500.
- An annual bonus equal to 5% of our "net income after taxes" in the event we earn more than $5 million in net income after taxes in any year.
- An annual performance bonus, as determined in the sole discretion of our board of directors.



At the conclusion of his initial term, Mr. Liszicasz's employment agreement renews automatically each year for a successive one-year term, unless we or Mr. Liszicasz elects by a written, 60-day notice not to renew; or the agreement is terminated earlier in accordance with its terms.

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Mr. Liszicasz's employment agreement provides for early termination in the case of any of the following events as defined in the employment agreement:





- death or disability;
- a "change in control" of NXT;
- termination of employment by NXT for "cause;" or
- termination of employment by Mr. Liszicasz for "good reason."



Under the employment agreement a "change in control" means any of the following:





- an acquisition whereby immediately after such acquisition, a person holds beneficial ownership of more than 50% of the total combined voting power of our then outstanding voting securities;
- if in any period of three consecutive years after the date of the employment agreement, the then incumbent members of our board of directors cease to constitute a majority of the board for reasons other than voluntary resignation, refusal by one or more members of our board of directors to stand for election, or removal of one or more board member for good cause; or
- our board of directors or shareholders approve a merger, consolidation or reorganization of NXT; the complete liquidation or dissolution of NXT; or the agreement for the sale or other disposition of all or substantially all of NXT's assets.



In general, where a termination is for death, disability, "cause" or by Mr. Liszicasz without "good reason", Mr. Liszicasz's compensation allowances and benefits will accrue only through the effective date of the termination.  However, where a termination is due to a "change in control", without "cause", or Mr. Liszicasz for "good reason", the employment agreement provides that we will pay compensation and certain allowances and benefits to Mr. Liszicasz through the end of the then applicable term.



ITEM 12.  OWNERSHIP OF OUR SECURITIES BY BENEFICIAL OWNERS AND MANAGEMENT



The following table sets forth certain selected information, computed as of March 26, 2003, about the amount and nature of our securities "beneficially owned" by the following persons as of that date:



- each of our current directors and executive officers;
- each person who is a beneficial owner of more than 5% of any class of our outstanding securities with voting rights;
    and
- the group comprised of our current directors and executive officers.



The information contained in the following tables was given to us by the individuals, our transfer agent or entities named.  We believe that each of these individuals or entities has sole or shared investment and voting power with respect to the securities indicated as beneficially owned by them, subject to community property laws, where applicable, except where otherwise noted.



-47-





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STOCKNAMEAmount%
    (1)


Directors & OfficersGeorge Liszicasz (2)
383 Arbour Lake Way NE
Calgary, Alberta
T3G 4A25,211,529(3)30.9%Dennis R. Hunter
Box 9069
Santa Rosa, CA
95405406,266(4)2.4%Donald E. Foulkes
39 Pinnacle Ridge Dr.
Calgary, Alberta
T3Z 3N700%Douglas Rowe
246 Artist View Way
Calgary, Alberta
T3N 3N100%Robert Van Caneghan
123 Redcliff Road
Staten Island, NY
1030500%Scott Schrammar
9438 US 19 North, PMB 210
Port Richey, FL
3466800%Current directors, director-nominees
and executive officers, as a group5,662,795(5)33.2%5% ShareholdersSFD Investment LLC
c/o Stephens Group Inc.
2500-111 Center Street
Little Rock, AR
722012,476,700(6)12.8%Stephens Group Inc.
2500-111 Center Street
Little Rock, AR
722012,476,700(7)12.8%


-48-





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(1)Rule 13d-3 under the Securities Exchange Act defines the term, "beneficial ownership". Under this rule, the term includes shares over which the indicated beneficial owner exercises voting and/or investment power.  The rules also deem common stock subject to options currently exercisable, or exercisable within 60 days, to be outstanding for purposes of computing the percentage ownership of the person holding the options but do not deem such stock to be outstanding for purposes of computing the percentage ownership of any other person.  The applicable percentage of ownership for each shareholder is based on 16,971,153 shares of common stock outstanding as of March 26, 2003, together with applicable options and Series A preferred shares for that shareholder.  Except as otherwise indicated, we believe the beneficial owners of the common stock have sole voting and investment power over the number of shares listed opposite their names.(2)Executive officer.(3)Includes 5,083,751 shares of common stock directly by Mr. Liszicasz, 127,778 shares of common stock held by Irina Iascisina, Mr. Liszicasz's spouse and options exercisable within 60 days of March 26, 2003 to acquire 45,000 shares of common stock.(4)Includes 361,266 shares of common stock and options exercisable within 60 days of March 26, 2003 to acquire 45,000 shares of common stock.(5)Includes 5,572,795 shares of common stock and options exercisable within 60 days of March 26, 2003 to acquire 90,000 shares of common stock.(6)Includes 107,938 common shares held by SFD Investment LLC, and 800,000 Series A preferred shares convertible at any time to acquire 2,368,762 shares of common stock at a conversion rate of 2.96 common shares for each preferred share.  SFD Investment LLC owns all the outstanding Series A preferred shares.(7)Stephens Group Inc. is the manager of both SFD Investment LLC and in that capacity indirectly holds (or in certain circumstances shares with the members of that company) voting and investment control of the NXT shares held by the limited liability company.  Includes 107,938 common shares held by SFD Investment LLC and 800,000 Series A preferred stock, held by SFD Investment LLC which are convertible at any time to acquire 2,368,762 shares of common stock at a conversion rate of 2.96 common shares for each preferred share. Mr. Todd Ferguson has acted as Stephens Group LLC's attorney-in-fact in regards to its investment in NXT.




ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



Summarized below are certain transactions and business relationships between NXT and persons who are or were our executive officers, directors or holders of more than five percent of any class of our securities since January 1, 1999:



a)

On May 15,1999, we sold 190,066 and 66,667 common shares to Mr. Dennis R. Hunter and SFD Investment II, LLC, respectively, for gross proceeds of $2,850,990 and $1,000,005, respectively.  These sales were effectuated as part of a $6,000,000 private placement of 400,000 common shares at a price of $15 per share.  Mr. Hunter has been one of our directors since September 1998, while SFD Investment II, LLC, is an affiliate, through Stephens Group, of SFD Investment LLC, which holds all series 'A' preferred shares outstanding.



b)

On February 9, 2000, we loaned the sum of CDN $250,000 to Mr. George Liszicasz, our Chief Executive Officer and a director and principal shareholder of our company.  The principal amount of this loan, which was extended pursuant to an unsecured promissory note providing for interest at the rate of 51⁄2% per annum, was repaid by Mr. Liszicasz in full on April 14, 2000.



c)

On December 31, 2000, we amended our license agreement with Momentum Resources relating to the use, possession and control of our Stress Field Detector or SFD technology.  Momentum Resources is a Bahamas corporation which is indirectly owned and controlled by Messrs. George Liszicasz and R. Dirk Stinson, who are also parties to the license.  Mr. Liszicasz, who is the inventor of the SFD technology, is also our largest shareholder and the Chief Executive Officer, Chairman of the Board and a director of our company.  Mr. Stinson is a past director and officer.



Previously, Momentum Resources retained legal possession and control of the Stress Field Detector units while SFD data was collected and remitted to us for our exclusive worldwide use for hydrocarbon identification and exploration purposes.  Under the new agreement, we acquired the full and exclusive right to use, possess and control all existing Stress Field Detector units for hydrocarbon identification and exploration purposes, as well as the right to exclusively conduct and control all SFD data collection activities, thereby eliminating the control and participation

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of Momentum Resources with respect to any of these activities.



The amendment also formally documented our research and development practice with Momentum Resources.  Under this practice, we would continue research and development activities to design, fabricate and assemble improved Stress Field Detector units while acquiring the exclusive right to use, possess and control these units, and would continue to charge Momentum Resources for these costs in the form of an offset against any royalties payable to Momentum Resources under the license agreement.



The new license agreement also contained several revisions relating to termination and amendment, including the deletion of a provision which would terminate the license should there be a change of control of NXT, and the addition of provisions requiring the approval of a majority of non-Momentum Resources related directors and, in certain cases, non-Momentum Resources related shareholders, to amend or terminate the license.  All other terms of the license, including compensation payable to Momentum Resources, remained unchanged.



d)

Mr. Lorne W. Carson, who resigned as a director in May 2002, is a partner of Bennett Jones LLP, a law firm located in Calgary, Alberta, Canada, which received compensation for the provision of legal services in the amount of $46,958, $22,652, $8,061 and $50,896 during our 2002, 2001, 2000 and 1999 years, respectively.



ITEM 14.  CONTROLS AND PROCEDURES



We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.



Within 90 days prior to the date of this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.  Based upon the foregoing, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective in connection with the filing of this Annual Report on Form 10-K for the year ended December 31, 2002.



There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any significant deficiencies or material weaknesses of internal controls that would require corrective action.



-50-



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ITEM 15.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K



(a)   Financial Statements:



Report of Independent Auditors (Deloitte & Touche LLP)F-1Report of Independent Chartered Accountants (Arthur Andersen LLP)F-2Consolidated Balance Sheets at December 31, 2002 and 2001F-3Consolidated Statements of Loss and Comprehensive Loss for the years ended December 31, 2002, 2001 and 2000
F-4Consolidated Statements of Stockholders' Equity (Deficit) for the years ended December 31, 2002, 2001 and 2000
F-5Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000
F-6Explanatory notes to Consolidated Financial StatementsF-7




(b)

Exhibits



2.1 (1)Reorganization Plan dated September 28, 1994 between Mega-Mart, Inc. and Auric Mining Corporation2.2 (1)Reorganization Plan dated December 31, 1995 between Auric Mining Corporation and Fiero Mining Corporation2.3 (1)Reorganization Plan dated January 20, 1996 between Auric Mining Corporation and Pinnacle Oil Inc.2.4 (1)Articles of Incorporation of Auric Mining Corporation as filed with the Nevada Secretary of State on September 27, 19943.2 (1)Amendment to Articles of Incorporation of Auric Mining Corporation as filed with the Nevada Secretary of State on February 23, 19963.3 (1)Certificate of Amendment to Articles of Incorporation of Pinnacle Oil International, Inc. as filed with the Nevada Secretary of State on April 1, 19983.4 (6)Certificate of Amendment to Articles of Incorporation of Pinnacle Oil International, Inc. as filed with the Nevada Secretary of State on June 13, 20003.5 (1)Amended Bylaws for Energy Exploration Technologies3.6 (1)Pinnacle Oil International, Inc. specimen common stock certificate3.7 (1)Pinnacle Oil International, Inc. specimen series 'A' preferred stock certificate3.8 (1)Energy Exploration Technologies specimen common stock certificate3.9 (1)Form of Non-Qualified Stock Option Agreement for grants to directors3.10 (1)1997 Pinnacle Oil International, Inc. Stock Plan3.11 (3)Form of Stock Option Certificate for grants to employees under the 1997 Pinnacle Oil International, Inc. Stock Plan3.12 (1)Warrant certificate for 200,000 Common Shares issued to SFD Investment LLC3.13 (4)1999 Pinnacle Oil International, Inc. Executive Stock Option Plan3.14 (4)Form of Stock Option Certificate for grants to directors under the 2000 Pinnacle Oil International, Inc. Executive Stock Option Plan3.15 (7)2000 Pinnacle Oil International, Inc. Directors' Stock Plan3.16 (7)Form of Stock Option Certificate for grants to directors under the 2000 Pinnacle Oil International, Inc. Directors' Stock Plan


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3.17 (1)Stockholder Agreement dated April 3, 1998 among Pinnacle Oil International, Inc., R. Dirk Stinson, George Liszicasz and SFD Investment LLC3.18  (10)Amended By-laws of Energy Exploration Technologies, Inc. - Amended September 20, 200210.1 (1)Partnership Agreement of Messrs. Liszicasz and Stinson dated September 1, 199510.2 (1)Agreement between Pinnacle Oil Inc. and Mr. Liszicasz dated January 1, 199610.3 (1)Transfer Agreement by Momentum Resources Corporation dated June 18, 199610.4 (1)Restated Technology Agreement dated August 1, 199610.5 (1)Amendment to Restated Technology Agreement with Momentum Resources Corporation dated April 3, 199810.6 (8)SFD Technology License Agreement with Momentum Resources Corporation dated December 31, 200010.7 (1)Letter Agreement with Encal Energy Ltd. dated December 13, 199610.8 (1)Exploration Joint Venture Agreement with Encal Energy Ltd. dated February 19, 199710.9 (1)Exploration Joint Venture Agreement with Encal Energy Ltd. dated September 15, 199710.10 (8)Letter Amending Joint Venture Agreement with Encal Energy Ltd. dated April 1, 200010.11 (1)Letter Agreement with Renaissance Energy Ltd. dated April 16, 199710.12 (1)SFD Survey Agreement with Renaissance Energy Ltd. dated November 1, 199710.13 (1)SFD Survey Agreement with Renaissance Energy Ltd. dated February 1, 1998 (Prospect Lands #1)10.14 (1)SFD Survey Agreement with Renaissance Energy Ltd. dated February 1, 1998 (Prospect Lands #2)10.15 (1)Joint Exploration and Development Agreement with CamWest Limited Partnership dated April 3, 199810.16 (1)Assignment of Joint Exploration and Development Agreement with CamWest Exploration LLC dated January 29, 199910.17 (1)Canadian Data License Agreement with Pinnacle Oil Canada Inc. dated April 1, 199710.18 (1)American Data License Agreement with Pinnacle Oil Inc. dated April 1, 199710.19 (1)Cost Recovery Agreement with Pinnacle Oil Canada Inc. dated April 1, 199710.20 (1)Assignment Agreement with Pinnacle Oil Canada Inc. dated September 15, 199710.21 (1)Assignment Agreement with Pinnacle Oil Canada Inc. dated April 1, 199710.22 (1)Assignment Agreement with Pinnacle Oil Canada Inc. dated November 1, 199710.23 (1)Employment Agreement dated April 1, 1997 with Mr. Dirk Stinson10.24 (1)Employment Agreement dated April 1, 1997 with Mr. George Liszicasz10.25 (1)Unsecured Convertible Promissory Note ($500,000) in favor of Mr. Liszicasz10.26 (1)Unsecured Convertible Promissory Note ($500,000) in favor of Mr. Stinson10.27 (1)Promissory Notes of Pinnacle Oil Inc. in favor of Messrs. Liszicasz and Stinson dated October 21, 199510.28 (1)Registration and Participation Rights Agreement dated April 3, 1998 between Pinnacle Oil International, Inc. and SFD Investment LLC10.29 (1)Form of Indemnification Agreement between Pinnacle Oil International, Inc. and each Director and Executive Officer10.30 (1)Lease Agreement between Phoenix Place Ltd. and Pinnacle Oil International, Inc. dated November 25, 199710.31 (2)Employment Agreement dated July 9, 1998 with John M. Woodbury, Jr.10.32 (5)Assignment Of Joint Exploration and Development Agreement between CamWest Limited Partnership and CamWest Exploration LLC dated January 29, 199910.33 (5)Settlement Agreement dated April 27, 1999


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10.34 (5)Employment Agreement dated May 1, 1999 with Daniel C. Topolinsky10.35 (5)Employment Agreement dated May 1, 1999 with James R. Ehrets10.36 (9)Promissory Note by NXT Aero USA Inc. dated November 6, 2000 to Aviation Finance Group LLC10.37 (9)Aircraft Loan Agreement by NXT Aero USA Inc. dated November 6, 2000 with Aviation Finance Group LLC10.38 (9)Aircraft Security Agreement by NXT Aero USA Inc. dated November 6, 2000 with Aviation Finance Group LLC10.39 (9)Commercial Guaranty by Energy Exploration Technologies dated November 6, 2000 to Aviation Finance Group LLC10.40 (9)Terminating Events Addendum dated November 6, 2000 with Aviation Finance Group LLC10.41Employment Agreement dated December 1, 2002 with George Liszicasz21 (8)List of significant subsidiaries23.2Consent of Deloitte Touche LLP99.1 (1)Report captioned "Evaluation of Stress Field Detector Technology-Implications for Oil and Gas Exploration in Western Canada" dated September 30, 1996 prepared by Rod Morris, P. geologist, A.P.E.G.G.A.99.2 (1)Report regarding "Stress Field Detector Technology" dated May 22, 1998 prepared by Encal Energy Ltd.99.3 (2)Report captioned "SFD Data Summary" dated August 26, 1998 prepared by CamWest, Inc.99.4 (1)Report captioned "Pinnacle Oil International Inc.-Stress Field Detector Documentation of Certain Exploration and Evaluation Activities" dated February 27, 1998 prepared by Gilbert Laustsen Jung Associates Ltd.99.5Certification Pursuant to 18
    U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(1)Previously filed by our company as part of our Registration Statement on Form 10 filed on June 29, 1998 (SEC File No. 0-24027)(2)Previously filed by our company as part of our Amendment No. 1 to Registration Statement on Form 10 filed on August 31, 1998(3)Previously filed by our company as part of our Annual Report on Form 10-K for our year ended December 31, 1998 as filed on March 31, 1999(4)Previously filed by our company as part of our Registration Statement on Form S-8 (SEC File No. 333-89251) as filed on March 31, 1999(5)Previously filed by our company as part of our Annual Report on Form 10-K for our  year ended December 31, 1999 as filed on April 17, 2000(6)Previously filed by our company as part of Amendment No. 1 to our Annual Report on Form 10-K for our year ended December 31, 1999 as filed on July 28, 2000(7)Previously filed by our company as part of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 as filed on May 15, 2000.(8)Previously filed by our company as part of our Annual Report on Form 10-K for the year ended December 31, 2000 as filed on April 2, 2001.(9)Previously filed by our company as part of our Annual Report on Form 10-K for the year ended December 31, 2001 as filed on April 1, 2002.(10)Previously filed by our company as part of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 as filed on November 14, 2002




(c)

Form 8-Ks



The following 8-Ks were filed subsequent to September 30, 2002:





1.Form 8-K filed December 12, 2002 reporting litigation commenced by Mr. Dirk Stinson.2.Form 8-K filed December 20, 2002 reporting the abandonment of our Habanero-Federal 14-21 exploratory well.3.Form 8-K filed March 21, 2003 reporting litigation commenced by Tops Aviation Ltd., Spartan Aviation Inc. and John Haskakis.


-53-





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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this amended annual report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized on June 9, 2004.



Calgary, Alberta, Canada





ENERGY EXPLORATION TECHNOLOGIES
a Nevada corporationBy:/s/George Liszicasz                   George Liszicasz,
                   Chief Executive Officer






Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report on form 10-K has been signed below by the following persons on behalf of the registrant on June 9, 2004, and in the capacities indicated.

SignatureTitleDate/s/ George LiszicaszGeorge Liszicasz


/s/ Donald FoulkesChief Executive Officer and Director
(Principal Executive Officer and
Principal Financial Officer)June 9, 2004Donald FoulkesDirectorJune 9, 2004Dennis Hunter


/s/ Douglas RoweDirector__________Douglas Rowe


/s/ Robert Van CaneghanDirectorJune 9, 2004Robert Van CaneghanDirectorJune 9, 2004




-55-





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SECTION 302 CERTIFICATION





I, George Liszicasz, certify that:



1.  I have reviewed this amended annual report of Energy Exploration Technologies.



2.  Based on my knowledge, this amended annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this amended annual report;



3.  Based on my knowledge, the financial statement, and other financial information included in this amended annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this amended annual report;



4.  As the registrant's sole certifying officer I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which the amended annual report is being prepared;



b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this amended annual report (the
"Evaluation Date"); and



c) presented in this amended annual report our conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date;



5.  As the registrant's sole certifying officer I have disclosed, based on my most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function);



a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and



b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls, and



6.  As the registrant's sole certifying officer I have indicated in this amended annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



|Date:  June 9, 2004 | By: | /s/ George LiszicaszName:George Liszicasz
      Title:
      Chief Executive Officer and interim Chief Financial
Officer (Principal Executive and Accounting Officer)
|------------------- | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------





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REPORT OF INDEPENDENT AUDITORS



To the Shareholders of Energy Exploration Technologies:



We have audited the consolidated balance sheet of Energy Exploration Technologies as at December 31, 2002 and the consolidated statements of loss and comprehensive loss, cash flows and shareholders' equity (deficit) for the year then ended.  These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.



We conducted our audit in accordance with generally accepted auditing standards in the United States of America.  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.



In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Energy Exploration Technologies as at December 31, 2002 and the results of its operations and its cash flows for the year then ended in accordance with generally accepted accounting principles in the United States of America.



The consolidated financial statements of Energy Exploration Technologies as at December 31, 2001 and for each of the years in the two year period ended December 31, 2001 were audited by other auditors who have ceased operations.  Those auditors expressed an opinion without reservation on those consolidated financial statements in their report dated March 22, 2002.



The accompanying consolidated financial statements, for the year ended December 31, 2002, have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the consolidated financial statements, the Company's recurring losses from operations raise substantial doubt about its ability to continue as a going concern.  Management's plans concerning these matters are also described in Note 1.  The consolidated financial statements do not include any adjustments that might results from the outcome of this uncertainty.









Calgary, Canada

/s/ Deloitte & Touche LLP

March 31, 2003

Chartered Accountants



F-1



---



THIS REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS IS A COPY OF THE REPORT

PREVIOUSLY ISSUED BY ARTHUR ANDERSEN LLP AND HAS NOT BEEN REISSUED.







REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS




To the Shareholders ofEnergy Exploration Technologies:



We have audited the consolidated balance sheets of ENERGY EXPLORATION TECHNOLOGIES as at December 31, 2001 and 2000, and the consolidated statements of loss and comprehensive loss, shareholders' equity (deficit) and cash flows for the years then ended.  These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with generally accepted auditing standards in Canada and the United States.  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.



In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2001 and 2000 and the results of its operations and its cash flows for the years then ended in accordance with generally accepted accounting principles in the United States.





/s/ Arthur Andersen LLP

Chartered Accountants





Calgary, Canada
March 22, 2002





F-2



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|ENERGY EXPLORATION TECHNOLOGIES
    CONSOLIDATEDBALANCESHEETS
    (expressed in U.S. dollars) |             
|--------------------------------------------------------------------------------------------- | ------------
|                                                                                             
|                                                                                             
|                                                                                              | December 31,
|                                                                                              | 2002        
|                                                                                              |             
|ASSETS                                                                                        |             
|Current assets:                                                                               |             
|Cash and cash equivalents                                                                     | $           
|Accounts receivable                                                                           |             
|Due from officers and employees                                                               |             
|Prepaid expenses and other                                                                    |             
|                                                                                              |             
|Note receivable from officer [note 3]                                                         |             
|Debt issuance costs [notes 2 and 7]                                                           |             
|                                                                                              |             
|Aircraft and flight equipment held for sale [notes 2 and 4]                                   |             
|Oil and natural gas properties, on the basis of full cost accounting,                         |             
|net of impairments [notes 2 and 5]                                                            |             
|Other property and equipment, net of accumulated depreciation,                                |             
|amortization and impairment [notes 2 and 6]                                                   |             
|                                                                                              |             
|                                                                                              | $           
|                                                                                              |             
|LIABILITIESANDSHAREHOLDERS' EQUITY                                                            |             
|Current liabilities:                                                                          |             
|Trade payables                                                                                | $           
|Wages and employee benefits payable                                                           |             
|Accrued oil and natural gas property costs                                                    |             
|Current portion long-term debt [note 7]                                                       |             
|Other accrued liabilities                                                                     |             
|                                                                                              |             
|Long-term debt [note 7]                                                                       |             
|                                                                                              |             

|Commitments and contingencies [notes 1 and 15]                                                                                                                                                                        |   |              |  |   |              | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ |  | - | ------------ | 
|                                                                                                                                                                                                                      |   |              |  |   |              | 
|Shareholders' equity:                                                                                                                                                                                                 |   |              |  |   |              | 
|Series 'A' convertible preferred stock; par value $0.001 per share,
liquidation preference $7.50 per share
800,000 shares authorized and 800,000 shares issued as of
December 31, 2002 and December 31, 2001 [note 9] |   | 800          |  |   | 800          | 
|Common stock, par value $0.001 per share:                                                                                                                                                                             |   |              |  |   |              | 
|50,000,000 shares authorized;                                                                                                                                                                                         |   |              |  |   |              | 
|16,971,153 shares issued as of December 31, 2002, and December 31, 2001,                                                                                                                                              |   |              |  |   |              | 
|respectively [note 8]                                                                                                                                                                                                 |   | 16,971       |  |   | 16,971       | 
|Warrants [notes 9 and 10]                                                                                                                                                                                             |   | -            |  |   | -            | 
|Additional paid-in capital                                                                                                                                                                                            |   | 24,077,655   |  |   | 24,043,439   | 
|Deficit                                                                                                                                                                                                               |   | (20,041,865) |  |   | (14,365,745) | 
|Accumulated other comprehensive loss                                                                                                                                                                                  |   | (183,769)    |  |   | (222,980)    | 
|                                                                                                                                                                                                                      |   | 3,869,792    |  |   | 9,472,485    | 
|                                                                                                                                                                                                                      | $ | 4,018,825    |  | $ | 11,763,100   | 
|                                                                                                                                                                                                                      |   |              |  |   |              | 





The accompanying notes to consolidated financial statements 
are an integral part of these consolidated balance sheets

F-3



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|ENERGY EXPLORATION TECHNOLOGIES
    CO NSOLIDATEDSTATEMENTSOFLOSSANDCOMPREHENSIVELOSS |        
|------------------------------------------------------------------------------------- | -------
|                                                                                     
|                                                                                      |        
|                                                                                      |        
|                                                                                      |        
|                                                                                      |        
|                                                                                      |        
|                                                                                      |        
|Revenues:                                                                             |        
|                                                                                      |        
|Oil and natural gas revenues                                                          | $      
|                                                                                      |        
|Operating expenses:                                                                   |        
|                                                                                      |        
|Oil and natural gas operating expenses                                                |        
|Administrative [note 12]                                                              |        
|Depletion and impairment of oil and natural gas                                       |        
|properties [notes 2 and 5]                                                            |        
|Amortization and depreciation [notes 2 and 6]                                         |        
|Research and development [note 2]                                                     |        
|Survey support [note 2]                                                               |        
|Survey operations and data analysis [note 2]                                          |        
|Write-down of aircraft and flight equipment [note 4]                                  | 226,803
|                                                                                      |        
|Operating loss                                                                        |        
|                                                                                      |        
|Other income (expense):                                                               |        
|Interest expense                                                                      |        
|Interest income                                                                       |        
|Other income (expense)                                                                |        
|                                                                                      |        
|Net loss for the period                                                               |        
|Other comprehensive income (loss):                                                    |        
|Foreign currency translation adjustment                                               |        
|Comprehensive loss for the period                                                     | $      
|                                                                                      |        
|Basic and diluted loss per share [note 2]                                             | $      
|                                                                                      |        
|Weighted average shares outstanding                                                   |        
|                                                                                      |        



The accompanying notes to consolidated financial statements are 
an integral part of these consolidated statements of loss and comprehensive loss



F-4



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ENERGY EXPLORATION TECHNOLOGIES

CONSOLIDATEDSTATEMENTSOFSHAREHOLDERS' EQUITY(DEFICIT)

(expressed in U.S. dollars)

|                                                          | Accumulated
    Other
    Comprehensive
    Loss |              |          |            |            |        |        | Series 'A'
    Convertible
    Preferred Stock |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|--------------------------------------------------------- | ------------------------------------------------ | ------------ | -------- | ---------- | ---------- | ------ | ------ | ---------------------------------------------- | ------- | ------- | - | ------- | ------ | ---------------------------------- | - | --------- | - | ----------- | --------- | ---------- | ---------
|                                                          |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        | Additional
    Paid-in
    Capital |   |           |   |             |          
|                                                          |                                                  | Common Stock |          |            |            |        |        | Warrants                                       |         |         |   |         |        |                                    |  
|                                                          |                                                  |              |          |            |            |        |        |                                                |         |         |   | Deficit |       
|                                                          |                                                  | Share s      |          | Amount     |            | Shares |        | Amount                                         |         | Number  |   |         | Amount |                                    |   |           |   |             |           |           
|Balance
    - December 31, 1999                           |                                                  | $            | (29,403) |            | 12,856,816 |        | $      | 12,857                                         |         | 800,000 |   |         | $      | 800                                |   | 200,000   |   | $           | 1,132,000 |            | $        
|                                                          |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|2000:                                                     |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|Warrants exercised for cash at $7.50 per share on         |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|March 31, 2000                                            |                                                  |              | -        |            | 200,000    |        |        | 200                                            |         | -       |   |         |        | -                                  |   | (200,000) |   | (1,132,000) |           |            | 2,631,800
|Options exercised for cash at prices between $8.25        |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|and $17.00 per share during fiscal 2000                   |                                                  |              | -        |            | 56,100     |        |        | 56                                             |         | -       |   |         |        | -                                  |   | -         |   |             | -         |            |          
|Net loss for fiscal 2000                                  |                                                  |              | -        |            | -          |        |        | -                                              |         | -       |   |         |        | -                                  |   | -         |   |             | -         |            |          
|Net other comprehensive loss for fiscal 2000              |                                                  |              | (34,625) |            | -          |        |        | -                                              |         | -       |   |         |        | -                                  |   | -         |   |             | -         |            |          
|Balance
    - December 31, 2000                           |                                                  |              | (64,028) |            | 13,112,916 |        |        | 13,113                                         |         | 800,000 |   |         |        | 800                                |   | -         |   |             | -         |            |          
|                                                          |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|2001:                                                     |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|Issued for cash at $1.15 per share on September 18, 2001, |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|net of issuance costs                                     |                                                  |              | -        |            | 3,858,237  |        |        | 3,858                                          |         | -       |   |         |        | -                                  |   | -         |   |             | -         |            |          
|Grant and vesting of options to investor relations        |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|consultant (note 12)                                      |                                                  |              | -        |            | -          |        |        | -                                              |         | -       |   |         |        | -                                  |   | -         |   |             | -         |            |          
|Net loss for fiscal 2001                                  |                                                  |              | -        |            | -          |        |        | -                                              |         | -       |   |         |        | -                                  |   | -         |   |             | -         |            |          
|Net other comprehensive loss for fiscal 2001              |                                                  | (158,952)    |          | -          |            |        | -      |                                                | -       |         |   |         | -      |                                    | - |           |   | -           |           |            | -        
|Balance
    - December 31, 2001                           |                                                  | (222,980)    |          | 16,971,153 |            |        | 16,971 |                                                | 800,000 |         |   | 800     |        | -                                  |   |           | - |             |           | 24,043,439 |          
|                                                          |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|                                                          |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|2002:                                                     |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|Grant and vesting of options to investor relations        |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          
|consultant (note 12)                                      |                                                  |              | -        |            | -          |        |        | -                                              |         | -       |   |         |        | -                                  |   | -         |   |             | -         |            |          
|Net loss for fiscal 2002                                  |                                                  |              | -        |            | -          |        |        | -                                              |         | -       |   |         |        | -                                  |   | -         |   |             | -         |            |          
|Net other comprehensive income for fiscal 2002            |                                                  |              | 39,211   |            | -          |        |        | -                                              |         | -       |   |         |        | -                                  |   | -         |   |             | -         |            |          
|Balance
    - December 31, 2002                           | $                                                | (183,769)    |          | 16,971,153 |            | $      | 16,971 |                                                | 800,000 |         | $ | 800     |        | -                                  |   | $         | - |             | $         | 24,077,655 |          
|                                                          |                                                  |              |          |            |            |        |        |                                                |         |         |   |         |        |                                    |   |           |   |             |           |            |          



The accompanying notes to consolidated financial statements are
an integral part of these consolidated statements of shareholders' equity (deficit)



F-5



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|ENERGY EXPLORATION TECHNOLOGIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  (expressed in U.S. dollars)
|-----------------------------------------------------------------------------------------------------
|                                                                                                     



|                                                        | Years ended
December 31,                                                    
|------------------------------------------------------- | ----------------------------------------------------------------------------
|                                                        | 2002                                                                        
|Operating activities:                                   |                                                                             
|                                                        | Net loss for the period                                                     
|                                                        | Adjustments to reconcile net loss to net cash 
used in operating activities:
|                                                        |                                                                             
|                                                        |                                                                             
|                                                        |                                                                             
|                                                        |                                                                             
|                                                        |                                                                             
|                                                        |                                                                             
|                                                        |                                                                             
|                                                        |                                                                             
|                                                        |                                                                             
|                                                        |                                                                             
|                                                        |                                                                             
|                                                        |                                                                             
|                                                        | Net cash used in operating activities                                       
|Financing activities:                                   |                                                                             
|                                                        | Funds borrowed (repaid) for aircraft financing                              
|                                                        | Funds raised through the sale of common stock, net of costs                 
|                                                        | Funds raised through the exercise of options                                
|                                                        | Funds raised through the exercise of warrants                               
|                                                        | Debt issuance costs                                                         
|                                                        | Net cash generated by (used in) financing activities                        
|Investing activities:                                   |                                                                             
|                                                        | Funds invested in other property and equipment                              
|                                                        | Proceeds on sale of aircraft                                                
|                                                        | Proceeds on sale of other property and equipment                            
|                                                        | Funds invested in oil and natural gas properties                            
|                                                        | Proceeds on sale of oil and natural gas properties                          
|                                                        | Funds repaid (interest accrued) on loan to former employee                  
|                                                        |                                                                             
|                                                        |                                                                             
|                                                        | Net cash provided by (used in) investing activities                         
|Effect of net other comprehensive income (loss)         | 39,211                                                                      
|Net cash  outflow                                       | (2,409,538)                                                                 
|Cash and cash equivalents position, beginning of period | 2,994,608                                                                   
|Cash and cash equivalents position, end of period       | $                 585,070                                                   
|                                                        |                                                                             

The accompanying notes to consolidated financial statements are an integral part of
 these consolidated statements of cash flows

F-6



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|ENERGY EXPLORATION TECHNOLOGIES
      EXPLANATORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      (expressed in U.S. dollars)
|-------------------------------------------------------------------------------------------------------------------------------





1. Organization And Ability To Continue Operations



Energy Exploration Technologies ("we","our company" or "NXT") was incorporated under the laws of the State of Nevada on September 27, 1994.  We are a technology-based reconnaissance exploration company which utilizes our proprietary stress field detection (SFD) remote-sensing airborne survey technology to quickly and inexpensively identify and high-grade oil and natural gas prospects.  We conduct our reconnaissance exploration activities, as well as land acquisition, drilling, completion and production activities through our wholly-owned subsidiaries-NXT Energy USA Inc. ("NXT Energy USA") and NXT Energy Canada Inc. ("NXT Energy Canada"), in the United States and Canada, respectively. NXT Aero USA Inc. ("NXT Aero USA") and NXT Aero Canada Inc. ("NXT Aero Canada") are the two subsidiaries through which we conduct the aerial surveys.



For the year ended December 31, 2002, we incurred a loss of $5,676,120 and our ability to continue as a going concern will be dependent upon successfully identifing hydrocarbon bearing prospects, and financing, developing, extracting and marketing oil and natural gas from these prospects for a profit. We anticipate that we will continue to incur further operating losses until such time as we receive additional revenues from increased production with respect to currently held prospects or through prospects we identify and exploit for our own account.



We have taken steps to significantly cut-back our administration, exploration and research and development costs from approximately $250,000 per month to approximately $80,000 per month through a number of cost-saving measures.  We have reduced staffing by more than half.  We have reduced our office space and, having sold the aircraft, we have terminated the hangar lease. As well, plans are in place to sell certain properties. We believe these actions will enable us to maintain a minimal level of operations over the 2003 fiscal year.



We can give no assurance that any or all pending projects will generate sufficient revenues to cover our operating or other costs.  Should this be the case, we would be forced, unless we can raise sufficient additional working capital, to suspend our operations, and possibly even liquidate our assets and wind-up and dissolve our company.



These consolidated financial statements are prepared using generally accepted accounting principles that are applicable to a going concern, which assumes the realization of assets and the settlement of liabilities in the normal course of operations. Should this assumption not be appropriate, adjustments in the carrying amounts of the assets and liabilities to their realizable amounts and the classification thereof will be required and these adjustments and reclassifications may be material.



2. Significant Accounting Policies



Basis Of Presentation



We have prepared these consolidated financial statements for our years ended December 31, 2002, 2001 and 2000 and as at December 31, 2002 and 2001 in accordance with accounting principles generally accepted in the United States for annual financial reporting.



F-7



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|ENERGY EXPLORATION TECHNOLOGIES
      EXPLANATORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      (expressed in U.S. dollars)
|-------------------------------------------------------------------------------------------------------------------------------





Consolidation



We have consolidated the accounts of our wholly-owned subsidiaries with those of NXT in the course of preparing these consolidated financial statements.  All significant inter-company balances and transactions amongst NXT and its subsidiaries have been eliminated as a consequence of the consolidation process, and are therefore not reflected in these consolidated financial statements.



Estimates And Assumptions



The preparation of these consolidated financial statements in accordance with generally accepted accounting principles in the United States requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of these consolidated financial statements and the reported amount of revenues and expenses during the reporting periods.  Actual results may differ from those estimates.



Cash And Cash Equivalents



For purposes of preparing the consolidated balance sheets and statements of cash flows contained in these consolidated financial statements, we consider all investments with original maturities of ninety days or less to constitute "cash and cash equivalents".



Debt Issuance Costs



We amortize debt issuance costs on a straight-line basis over the life of the related debt.



Fair Value Of Financial Instruments



Our financial instruments consist of cash and cash equivalents, accounts receivable, notes receivable, trade payables, wages and employee benefits payable, accrued liabilities and long-term debt.  The book value of these financial instruments, other than long-term debt, approximates their fair values due to their short-term to maturity and similarity to current market rates.  It is the opinion of our management that we are not exposed to significant interest, currency or credit risks arising from these financial instruments.



Aircraft And Flight Equipment Held For Sale



Both aircraft were sold in 2002. We carry our flight equipment held for sale at the lower of the carrying amount or the fair value less cost to sell. These assets are not depreciated as long as they are held for sale.



Oil And Natural Gas Properties



We follow the full cost method of accounting for oil and natural gas properties and equipment whereby we capitalize all costs relating to our acquisition of, exploration for and development of oil and natural gas reserves.  These capitalized costs include:





- land acquisition costs;



F-8



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|ENERGY EXPLORATION TECHNOLOGIES
      EXPLANATORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      (expressed in U.S. dollars)
|-------------------------------------------------------------------------------------------------------------------------------





- geological and geophysical costs;
- costs of drilling both productive and non-productive wells;
- cost of production equipment and related facilities; and
- various costs associated with evaluating petroleum and natural gas properties for potential acquisition.



We only capitalize overhead that is directly identified with acquisition, exploration or development activities. All costs related to production, general corporate overhead and similar activities are expensed as incurred.

Under the full cost method of accounting, capitalized costs are accumulated into cost centers on a country-by-country basis.  These costs, plus a provision for future development costs (including estimated dismantlement, restoration and abandonment costs) of proved undeveloped reserves, are then depleted and depreciated using the unit-of-production method, based on estimated proved oil and gas reserves as determined by independent engineers where significant.  For purposes of the depletion and depreciation calculation, proved oil and gas reserves are converted to a common unit of measure on the basis of their approximate relative energy content. NXT was a development stage enterprise until 2002 and any net revenues received prior to achieving commercial production were accounted for as an adjustment to capitalized costs. NXT achieved commercial operations at the beginning of the second quarter of 2002.



In applying the full cost method of accounting, capital costs in each cost center less accumulated depletion and depreciation and related deferred income taxes are restricted from exceeding an amount equal to the sum of the present value of their related estimated future net revenues discounted at 10% less estimated future expenditures, and the lower of cost or estimated fair value of unproved properties included in the costs being amortized, net of related tax effects.  Should this comparison indicate an excess carrying value, a write-down would be recorded.



The carrying values of unproved oil and natural gas properties, which are excluded from the depletion calculation, are assessed on a quarterly basis to ascertain whether any impairment in value has occurred.  This assessment typically includes a determination of the anticipated future net cash flows based upon reserve potential and independent appraisal where warranted.  Impairment is recorded if this assessment indicates the future potential net cash flows are less than the capitalized costs.



All recoveries of costs through the sale or other disposition of oil and gas properties and equipment are accounted for as adjustments to capitalized costs, with no gain or loss recorded, unless the sale or disposition involves a significant change in the relationship between costs and the value of proved reserves or the underlying value of unproved property, in which case the gain or loss is computed and recognized.

We conduct oil and natural gas exploration, drilling, development and production activities through joint venture partners.  These consolidated financial statements reflect only our proportionate interest in these activities.



F-9



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|ENERGY EXPLORATION TECHNOLOGIES
      EXPLANATORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      (expressed in U.S. dollars)
|-------------------------------------------------------------------------------------------------------------------------------





Other Property And Equipment



We carry our other capitalized property and equipment at cost, and depreciate or amortize them over their estimated service lives using the declining balance method as follows:

Aircraft5%Computer and SFD system equipment30%Computer and SFD system software100%Equipment20%Furniture and fixtures20%Flight equipment10%Leasehold improvements20%Tools20%Vehicle30%




When we retire or otherwise dispose of our other capitalized property and equipment, we remove their cost and related accumulated depreciation or amortization from our accounts, and record any resulting gain or loss in the results of operations for the period.  Our management periodically reviews the carrying value of our property and equipment to ensure that any permanent impairment in value is recognized and reflected in our results of operations.



Revenue Recognition



Revenue associated with sales of crude oil and natural gas is recorded when title passes to the customer.



Research And Development Expenditures



We expense all research and development expenditures we incur to develop, improve and test our SFD survey system and related components, including allocable salaries.



Survey Support Expenditures



We expense all survey support expenditures we incur, after netting costs, which are reimbursable by our joint venture partners.  Survey support expenditures consist primarily of the cost, including allocable salaries, to:





- conduct field evaluations designed by our joint venture partners to evaluate the SFD survey system; and
- develop, organize, staff and train our survey and interpretation operational functions.



Survey Operations And Data Analysis Expenditures



We expense all survey operations and data analysis expenditures we incur, after netting costs which are reimbursable by our joint venture partners.  Survey operations and data analysis expenditures consist primarily of:





- aircraft operating costs, travel expenses and allocable salaries of our personnel while on survey assignment; and



F-10



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|ENERGY EXPLORATION TECHNOLOGIES
      EXPLANATORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      (expressed in U.S. dollars)
|-------------------------------------------------------------------------------------------------------------------------------









- allocable salaries of our personnel while interpreting SFD data.



Foreign Currency Translation



Our only operations outside of the United States are in Canada.  Foreign currency translation adjustments resulting from the translation of the financial statements of our Canadian subsidiaries, whose functional currency is Canadian dollars, into U.S. dollar equivalents for purposes of consolidating our financial statements, are included in other comprehensive income (loss).  For purposes of consolidation, we use the following methodology to convert Canadian dollar denominated accounts and transactions into U.S. dollars:



- all asset and liability accounts are translated into U.S. dollars at the rate of exchange in effect as of the end of the applicable fiscal
    period;
- all shareholders' equity accounts are translated into U.S. dollars using historical exchange rates;
    and
- all revenue and expense accounts are translated into U.S. dollars at the average rate of exchange for the applicable fiscal period.



We record the cumulative gain or loss arising from the conversion of the noted Canadian dollar denominated accounts and transactions into U.S. dollars as a foreign currency translation adjustment as a component of the accumulated other comprehensive loss for that period.



Basic And Diluted Loss Per Share



Our basic loss per share is computed in accordance with SFAS No. 128, "Earnings Per Share", by dividing the net loss for the period by the weighted average number of common shares outstanding for the period.  Our diluted loss per share is computed, also in accordance with SFAS No. 128, by including the potential dilution that could occur if holders of our dilutive securities were to exercise or convert these securities into common shares.



In calculating our basic and diluted loss per share, we take into consideration deemed distributions analogous to the declaration of a dividend attributable to the beneficial conversion features affording a discount or benefit to the holders of our securities.  See note 9.



Stock-Based Compensation For Employees And Directors



In accounting for the grant of our employee and director stock options, we have elected to follow Accounting Principles Board Opinion No. 25,"Accounting for Stock Issued to Employees" ("APB 25"), and related interpretations. Under APB 25, companies are not required to record any compensation expense relating to the grant of options to employees or directors where the awards are granted upon fixed terms with an exercise price equal to fair value and the only condition of exercise is continued employment.  See note 11.



Recent Accounting Pronouncements



In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations".  SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the

F-11



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|ENERGY EXPLORATION TECHNOLOGIES
      EXPLANATORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      (expressed in U.S. dollars)
|-------------------------------------------------------------------------------------------------------------------------------





period in which it is incurred if a reasonable estimate of fair value can be made.  The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset.  We are required to adopt the provisions of SFAS No. 143 on January 1, 2003.  We are currently evaluating the impact that the adoption of SFAS No. 143 will have on our consolidated financial condition and results of operations.  As we are in the process of divesting many of our properties and the associated liabilities, we expect that there may be a modest increase in our liabilities to recognize the fair value of restoration costs with respect to our oil and natural gas properties, with a commensurate increase in the capitalized cost of those assets and a resultant increase in amortization and depreciation expense associated with those increased capitalized costs.



In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", and provides a single accounting model for long-lived assets to be disposed of.  We adopted the provisions of SFAS No. 144 on January 1, 2002.  The impact was not material to the consolidated financial statements included at the end of this annual report.



3. Note Receivable  From Former Officer



In September 1998, we loaned the sum of CDN $54,756 (US $35,760 as of that date) to one of our officers in connection with his relocation to Calgary, Alberta.  Pursuant to the terms of an underlying promissory note, the officer was required to repay the loan on a monthly basis, with a balloon payment due on October 3, 2003. The officer left our company in 2002 and will repay the outstanding balance on October 3, 2003.



4. Aircraft And Flight Equipment Held For Sale



As of December 31, 2001, management decided to place on the market our two aircraft and related flight equipment in order to decrease our operating costs.  Both aircraft were sold in 2002 for a net loss of        $ 12,357.



Summarized below are our capitalized costs for the aircraft and flight equipment held for sale as of December 31, 2002 and December 31, 2001:



December 31,20022001Aircraft and flight equipment held for sale$    108,244$   3,383,538Less accumulated depreciation-(378,202)Less write-down(85,259)(18,533)Net aircraft and flight equipment held for sale$      22,985$   2,986,803




These assets are reported as part of assets from our United States operations as of December 31, 2002 and December 31, 2001.  See note 16.



F-12



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|ENERGY EXPLORATION TECHNOLOGIES
      EXPLANATORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      (expressed in U.S. dollars)
|-------------------------------------------------------------------------------------------------------------------------------





5. Oil And Natural Gas Properties



Summarized below are the oil and natural gas property costs we capitalized for our years ended December 31, 2002 and December 31, 2001, and as of December 31, 2002 and December 31, 2001:



Years Ended
December 31As of
December 312002200120022001Acquisition costs$         232,226$    573,479$     1,268,667$   1,036,441Exploration costs1,380,8012,813,4017,391,8786,011,077Development costs27,68155,55383,23455,5531,640,7083,442,4338,743,7797,103,071Less depletion.(140,122)-(140,122)-Less impairment(3,495,970)(1,616,587)(5,612,387)(2,116,417)Less dispositions(158,255)(69,096)(227,351)(69,096)Net oil and natural gas properties$    (2,153,639)$ 1,756,750$    2,763,919$   4,917,558




The property costs net of depletion, impairments and dispositions, by proved and unproved classification, are as follows at December 31, 2002 and for the years ended December 31 for 2002, 2001 and 2000:



Years Ended
December 31As of
December 312002200120002002Proved property costs$  (1,363,260)$     2,144,706$                    -$       781,446Unproved property costs(790,379)(387,956)2,385,6491,982,473$  (2,153,639)$     1,756,750$     2,385,649$    2,763,919






We performed cost center ceiling tests of our oil and natural gas properties under the full cost method of accounting presented by the Securities and Exchange Commission for our U.S. and Canadian cost centers.  For 2002, the ceiling tests resulted in write-downs of $263,000 (2001 - $90,000).



The impairment of oil and natural gas properties also includes the write-down of the cost of drilling and completing wells which are either non-commercial or which we are unable to complete for technical reasons. While, as noted below, our management believes in the prospective commercial viability and non-impairment of the overall prospects of which each of these wells are a part and is continuing active exploration and development activities with respect to each of these prospects, we have nevertheless written-off these individual well costs as an impairment cost since this determination was made prior to the establishment of proved reserves.



At the end of each quarter, our management performs an overall assessment of each of our unproved oil and natural gas properties to determine if any of these properties had been subject to any impairment in value (see note 2).  Based upon these evaluations, our management has determined that each of our oil and natural gas properties continued to have prospective commercial viability as of these dates, including each of those properties noted above that contain wells which we have written-off.  Based upon these considerations, we have not recorded any impairment against our properties to date other than the above noted write-offs.  We are currently seeking offers for our U.S. properties and selected Canadian properties. We anticipate that these properties will be sold in 2003 and any associated gains or losses will be recorded at that time.

F-13





---

|ENERGY EXPLORATION TECHNOLOGIES
      EXPLANATORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      (expressed in U.S. dollars)
|-------------------------------------------------------------------------------------------------------------------------------







6. Other Property And Equipment



Summarized below are our capitalized costs for other property and equipment as of December 31, 2002 and December 31, 2001:



December, 3120022001Computer and SFD equipment$   268,254$   272,918Computer and SFD software118,470117,493Equipment80,91280,835Furniture and fixtures165,984180,095Leasehold improvements195,983194,113SFD survey system (including software)115,471115,336Tools1,5591,544Vehicle18,82818,828965,461981,162Less accumulated depreciation, amortization and impairment(759,315)(519,549)Net other property and equipment$   206,146$   461,613




7. Long-Term Debt



At December 31, 2001, we owed $1,535,136 on an asset-based loan collateralized by our Piaggio P180 Avanti aircraft.  The principal and interest on this loan, which accrued at the rate of 9.65% per annum, was repayable in equal installments of $18,037 each with the last payment due on December 1, 2013. The loan contained no restrictive or financial ratio covenants.  We also paid $24,706 in fees with respect to this loan that we recorded as debt issuance costs.



On May 1, 2002, we completed the sale of our Piaggio Avanti P180 aircraft to a third party and used the proceeds to settle the principal and interest due on this loan in full.  See note 4.  We also expensed the remaining unamortized debt issuance costs of $22,805.  For 2002, we paid $61,264 (2001 -$151,581) of interest on this long-term debt.



8. Common Stock



On September 18, 2001, we raised $4,374,237 in gross proceeds through a private placement of 3,803,684 common shares at $1.15 per share.  Net proceeds to our company from this offering were $4,359,252 after deducting $14,985 in offering expenses.  An additional 54,553 shares of common stock were issued as finders' fees in connection with the private placement.



9. Preferred Stock And Warrants



The series 'A' preferred shares are not entitled to payment of any dividends, although they are entitled under certain circumstances to participate in dividends on the same basis as if converted into common shares.  Each series 'A' preferred share carries a $7.50 liquidation preference should our company wind-up and dissolve.  Each series 'A' preferred share is convertible by either the holder or NXT into common shares based upon a $7.50 per share conversion price, subject to adjustment should NXT sell common shares or common share purchase options or warrants at prices less than $7.50 per share in specified circumstances.  As a consequence of the 2001 private placement of common shares at $1.15 per share and the issuance of certain options, the

F-14





---

|ENERGY EXPLORATION TECHNOLOGIES
      EXPLANATORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      (expressed in U.S. dollars)
|-------------------------------------------------------------------------------------------------------------------------------





current conversion price for the series 'A' preferred shares as of the date of this report has been adjusted to $2.53 which would result in each series 'A' preferred shareholder receiving approximately 2.96 common shares for each series 'A' preferred share he may convert should he exercise this right, or an aggregate of 2,368,762 common shares.



10. Performance Warrants



On August 1, 1996, we granted a performance-based contractual right to acquire NXT warrants to the licensor of our SFD technology, Momentum Resources Corporation ("Momentum Resources"), in connection with the amendment of our exclusive SFD technology license with Momentum Resources to use the SFD technology for hydrocarbon exploration.  The primary purpose of the amendment was to indefinitely extend the termination date of the license.  Pursuant to this contractual right, Momentum Resources is entitled to a separate grant of warrants entitling it to purchase 16,000 common shares at the then current trading price for each month after December 31, 2000 in which production from SFD-identified prospects during that month exceeds 20,000 barrels of hydrocarbons.  Momentum Resources has not earned any warrants under the SFD technology license as of December 31, 2002.



11. Employee And Director Options



Description Of Plans



Through December 31, 2002, we have granted options to selected employees and directors of our company pursuant to the following separate arrangements or plans (the "Plans"):





- separate stand-alone directors' options which we granted to selected directors as compensation for serving on our board of directors;
- the 1997 Pinnacle Oil International, Inc. Stock Plan (the "1997 Plan"), pursuant to which 1,500,000 common shares are reserved for issuance to employees, directors and consultants in the form of stock options or outright stock
    grants;
- the 1999 Pinnacle Oil International, Inc. Executive Option Plan (the "1999 Plan"), pursuant to which 1,000,000 common shares are reserved for issuance to executive officers in the form of stock options;
    and
- the 2000 Pinnacle Oil International, Inc. Directors' Option Plan (the "2000 Plan"), pursuant to which 400,000 common shares are reserved for issuance to selected directors in the form of stock options.



Summary Of Option Grants



We have summarized below all transactions involving option grants under the Plans for our three fiscal years ended December 31, 2002:

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200220012000Common
Shares
Under
OptionsWeighted
Average
Exercise
PriceCommon
Shares
Under
OptionsWeighted
Average
Exercise
PriceCommon
Shares
Under
OptionsWeighted
Average
Exercise
PriceOutstanding at beginning of year2,174,900$         2.252,219,900$   15.461,715,000$     12.33Granted344,0000.361,692,9002.00655,00024.38Exercised----(56,100)(11.58)Cancelled or lapsed(1,017,058)(2.10)(1,737,900)(18.88)(94,000)(22.84)Outstanding at end of year1,501,842$         2.022,174,900$     2.252,219,900$    15.46Exercisable at end of year1,063,842824,067466,900Available for grant at end of year438,000299,000299,000




We have summarized below all outstanding options under the Plans as of December 31, 2002:



As of December 31, 2002Stock Option PlanGrant DateExercise PriceOutstandingVestedIndependent GrantsJanuary 4, 2001 (1)$2.0030,00030,000January 4, 2001 (1)$2.0045,00045,000January 4, 2001 (1)$2.0045,00045,0001997 Employee Stock Option PlanJanuary 4, 2001 (1)$2.0025,00025,000January 4, 2001 (1)$2.0058,54258,542January 4, 2001 (1)$2.0020,00015,000January 4, 2001 (1)$2.008,0008,000January 4, 2001 (1)$2.00100,00060,000January 4, 2001 (1)$2.0041,75031,750January 4, 2001 (1)$2.009,0008,000January 4, 2001 (1)$2.0018,00018,000January 4, 2001 (1)$2.0030,00012,000January 4, 2001 (1)$2.0035,00035,000January 4, 2001 (1)$2.0025,00025,000January 4, 2001 (1)$2.007,7507,750December 27, 2000$4.12515,0009,000February 1, 2001$2.006,0005,000July 5, 2001$2.0030,00010,000August 13, 2002$0.38141,0000September 20, 2002$0.2951,00001999 Executive Stock Option PlanMay 1, 1999$2.00520,800520,8002000 Directors Stock Option PlanMay 15, 2000$2.0040,00035,000April 17, 2000$2.0070,00060,000August 13, 2002$0.38120,0000September 20, 2002$0.2910,00001,501,8421,063,842(1)Effective January 4, 2001, the recipients elected to cancel these original grants and to receive new options generally having the same terms as the original grant, except that the exercise price for the new options would be fixed at the closing price for NXT common shares as of July 5, 2001, subsequently determined to be $2.00.




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The employee options outstanding as of December 31, 2002 vest over three to five years from the grant date, depending upon the recipient, based upon the continued provision of services as an employee.  The director options granted before January 1, 2000 that are outstanding as of December 31, 2002 vest one-third on date of grant, and an additional one-third each on the first anniversary and second anniversary of the grant date, respectively, based upon the continued provision of services as a director.  The director options granted after January 1, 2000 that are outstanding as of December 31, 2002 vest one-third each on the first through third anniversaries of the grant date, respectively, based upon the continued provision of services as a director.  Both the employee and director options generally lapse, if unexercised, five years from the date of vesting.



On January 3, 2001, NXT's board of directors ratified the cancellation of all outstanding options held by our employees in Canada and directors employed or engaged as of that date subject to the approval by those persons, and the grant of new options to those persons on the same terms (including number of shares, vesting, term and lapse) as the cancelled grant, except that (1) the exercise price for the new options would equal the closing price for common shares as of the close of business on July 5, 2001, and (2) the term of the new options would be extended to July 5, 2003 with respect to any options which would otherwise lapse, if unexercised, on or prior to that date.  Our employees and directors who accepted the offer acknowledged that they could not exercise their new options until they were priced.



Compensation Expense Associated With Grant Of Options



Pursuant to APB 25, we have not recorded any compensation expense relating to the grant of options for any period in these consolidated financial statements insofar as the exercise price for all options we have granted to date to our employees and directors have equaled the market price of the underlying common shares on the effective date of grant.  See note 2.



Had we elected to follow the alternative fair value accounting provided for under SFAS No. 123, "Accounting for Stock-Based Compensation", we would have recorded additional compensation expense of approximately $738,176, $686,211 and $4,730,890 for the years ended December 31, 2002, December 31, 2001 and December 31, 2000, respectively.  These amounts are determined using an option-pricing model with the following assumptions:





- no dividends are paid;
- an average vesting period of four and one-half years;
- an annualized volatility of our common share price of 57%;
    and
- an annualized risk free interest rate of 4.00%.



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Summarized below is pro forma financial information for the three twelve-month periods ended December 31, 2002 which presents the net loss for the period and loss per common share for the period calculated in accordance with SFAS No. 123:



December 31200220012000Net loss for the period as reported$  (5,676,120)$  (4,388,590)$  (2,657,814)Compensation expense computed under SFAS No. 123(738,176)(686,211)(4,730,890)Pro forma net loss for the period$  (6,414,296)$  (5,074,801)$  (7,388,704)Pro forma basic and diluted loss per common share$           (0.37)$           (0.36)$           (0.57)




12. Investor Relations Options



On May 15, 2001, as additional compensation to our investor relations consultant pursuant to an investor and public relations services agreement, we granted that consultant options to purchase 155,000 common shares at $2.50 per share.  The underlying agreement provided that 50,000 options would vest immediately, and an additional 35,000 options would vest upon each of the first, second and third anniversary dates of the agreement, respectively, even if the agreement was not subsequently renewed by those dates so long as NXT has not terminated this agreement for "good cause" as defined in the agreement.  These options lapse, to the extent vested and unexercised, five years after the date of vesting.  Pursuant to SFAS No. 123, for our twelve-month period ended December 31, 2002, we recorded compensation expense, as part of administrative expenses, determined in accordance with the Black-Scholes option pricing model in the amount of $34,216 in connection with the grant and vesting of these options.



13. Income Taxes



Net Operating Losses Carried Forward



As of December 31, 2002, the following net operating losses are available to reduce our taxable income in future years:



CountryAmountExpiration DatesUnited States$        9,449,8862010-2022Canada$        3,233,1032004-2009






Deferred Income Tax Assets and Liabilities



As of December 31, 2002, our accounts contained the following deferred income tax assets and liabilities:



United States
AmountStatutory
Tax RateTax
BenefitTax benefit of loss carry forwards$     9,449,88634%$      3,212,961Tax asset related to depreciation127,04134%43,194Valuation reserve(3,256,155)$                    --


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Canada
AmountStatutory
Tax RateTax
BenefitTax benefit of loss carry forwards$      3,233,10339.25%$     1,268,831Tax asset related to depreciation2,656,55139.25%1,042,563Valuation reserve(2,311,394)$                    --




As of December 31, 2001, our accounts contained the following deferred income tax assets and liabilities:



United States
AmountStatutory
Tax RateTax
BenefitTax benefit of loss carry forwards$     5,683,43434%$     1, 932,367Tax liability related to depreciation(435,142)34%(147,948)Valuation reserve(1,784,419)$                    --Canada
AmountStatutory
Tax RateTax
BenefitTax benefit of loss carry forwards$      2,613,76742.11%$     1,100,657Tax asset related to depreciation2,267,58842.11%954,881Valuation reserve(2,055,538)$                    --




We have not provided for any amount of current or deferred U.S. federal, state or foreign income taxes for the current period or any prior period presented.  We have provided a full valuation allowance on the deferred tax asset and liability, consisting primarily of net operating loss carry forwards, because of uncertainty regarding its realization.  The increase in the valuation allowance on the deferred tax asset and liability during the year ended December 31, 2002 was $1,727,592 as compared to $1,321,780 for the year ended December 31, 2001.



14. Related Party Transactions



Summarized below is information concerning related party transactions and balances not disclosed elsewhere in these consolidated financial statements for the twelve-month periods ended December 31, 2002, 2001 and 2000:



December 31200220012000Collective legal fees expensed to law firms in fiscal 2002, 2001 and 2000 with partners who were also directors of NXT or NXT Energy Canada$   72,440
$    61,411$   21,914Collective wages, fees and benefits paid to executive officers of NXT in fiscal 2002, 2001 and 2000, who were also directors of NXT$ 234,958
$  487,607$ 494,707Accounts receivable due from executive officers$     5,004$         790$     4,410




Our rights to use our SFD technology arises from an SFD technology license which we acquired from the owner and licensor of that technology, Momentum Resources, pursuant to which we received the exclusive world-wide right to use, possess and control our SFD technology for hydrocarbon exploration purposes.  Momentum Resources is controlled and indirectly owned by two of our significant stockholders, one of whom

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is a director and an executive officer of NXT as of December 31, 2002.  We are obligated under the terms of the SFD technology license to pay Momentum Resources an SFD Royalty equal to 5% of any Net SFD Profits (as those terms are defined in the license) which we may receive.  No SFD Royalty was earned or payable as of December 31, 2002.



15. Commitments and Contingencies



As of December 31, 2002, we had a joint venture agreement with an oil and natural gas exploration company. We were required under this joint venture agreement to conduct SFD surveys to identify oil and natural gas prospective prospects on selected exploration areas, and our joint venture partners were required to drill each SFD-identified prospect they accept under their respective agreement.  This agreement expired in February 2003.



The lease for the principal offices expired on January 31, 2003.  A new sub-lease from another tenant has been negotiated with a term of eighteen months ending July 31, 2004.  The space is approximately 5,500 square feet and the monthly cost is about $10,000 CDN.



On November 27, 2002, we were served a Statement of Claim which had been filed on November 25, 2002, in the Court of Queen's Bench of Alberta, Judicial District of Calgary (Action No. 0201-19820), naming Energy Exploration Technologies, Inc. and George Liszicasz as defendants.  Mr. Dirk Stinson, the plaintiff, alleges that NXT failed to pay him compensation under a consulting agreement and further alleges that NXT, without lawful justification, obstructed Mr. Stinson from trading his shares of NXT. Mr. Stinson is seeking, among other things, damages in the amount of $1,614,750 and an injunction directing NXT to instruct our transfer agent to immediately remove the legend from Mr. Stinson's shares. Having consulted legal counsel, we consider the lawsuit to be without merit.



16. Segment Information



We operate in only one business segment, oil and natural gas exploration, insofar as we develop oil and natural gas exploration prospects identified using our proprietary SFD airborne survey technology.

Summarized below with respect to our twelve-month periods ended December 31, 2002, December 31, 2001 and December 31, 2000, is geographic information relating to:





- revenues we have received during the period from our external customers, allocated amongst the geographic areas in which the revenue was generated;
- revenues we have received during the period from sources other than our external customers, allocated amongst the geographic areas in which the revenue was generated; and
- our net loss for the period, allocated amongst the geographic areas in which the revenue and associated expenses were generated.



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Years EndedUnited StatesCanadaTotalDecember 31, 2002:Revenues from external customers$         453,947$       75,628$        529,575Revenues from other sources2,50345,69448,197Net loss$   (4,672,818)$ (1,003,302)$   (5,676,120)December 31, 2001:Revenues from external customers$                   -$                 -$                  -Revenues from other sources106,1934,907111,100Net loss(2,884,620)(1,503,970)(4,388,590)December 31, 2000:Revenues from external customers$                   -$                -$                  -Revenues from other sources364,64510,360375,005Net loss(1,673,822)(983,992)(2,657,814)




Summarized below is geographic information relating to our assets as of December 31, 2002 and 2001 and 2000, allocated amongst the geographic areas in which the assets were physically located or principally connected:



Assets as of:United StatesCanadaTotalDecember 31, 2002$     1,682,768$    2,336,057$     4,018,825December 31, 2001$    9,672,447$   2,090,653$   11,763,100




In preparing the above tables, we have eliminated all inter-segment revenues, expenses and assets.



17. Supplemental Information On Oil and Natural Gas Producing Activities (Unaudited)



In accordance with SFAS No. 69,"Disclosures About Oil and Gas Producing Activities", this section provides supplemental information on our oil and natural gas exploration and production activities.  Tables I and II provide historical cost information pertaining to costs incurred in acquisitions, exploration, development and capitalized costs.  Tables III through IV present information on our estimated proved reserve quantities and standardized measure of estimated discounted future net cash flows related to proved reserves.

Table I 
Total Costs Incurred In Oil And Natural Gas Acquisition, Exploration And Development Activities



Years EndedUnited StatesCanadaTotalDecember 31, 2002:Acquisition costs$               8,260$         223,966$       232,226Exploration costs1,169,339211,4621,380,801Development costs-27,68127,681$       1,177,599$      463,109$   1,640,708December 31, 2001:Acquisition costs$      486,573$        86,906$      573,479Exploration costs1,940,284873,1172,813,401Development costs-55,55355,553


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$   2,426,857$   1,015,576$   3,442,433December 31, 2000:Acquisition costs$        13,144$        45,233$        58,377Exploration costs1,474,7621,352,3382,827,100$   1,487,906$   1,397,571$   2,885,477




Table II 
Capitalized Costs Related To Oil And Natural Gas Producing Activities



United StatesCanadaTotalAs At December 31, 2002:Proved property costs$  1,977,950$        524,197$         2,502,147Less dispositions-(227,351)(227,351)Less impairment(1,262,360)(90,868)(1,353,228)Less depletion(121,290)(18,832)(140,122)Net proved property costs594,300187,146781,446Unproved property costs3,673,2922,568,3406,241,632Less impairment(2,994,094)(1,265,065)(4,259,159)Net unproved property costs679,1981,303,2751,982,473$        1,273,498$      1,490,421$          2,763,919As At December 31, 2001:Proved property costs$   1,775,899$      458,807$   2,234,706Less impairment-(90,000)(90,000)Net proved property costs1,775,899368,8072,144,706Unproved property costs2,700,2462,099,0234,799,269Less impairment(955,023)(1,071,394)(2,026,417)Net unproved property costs1,745,2231,027,6292,772,852$   3,521,122$   1,396,436$   4,917,558As At December 31, 2000:Proved property costs$                  -$                 -$                  -Unproved property costs2,049,3181,611,3203,660,638Less impairment(253,964)(245,866)(499,830)$   1,795,354$   1,365,454$   3,160,808




Table III
Quantities Of Oil And Natural Gas Reserves



Proved reserves are estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable from known reservoirs under existing economic and operating conditions.  Proved developed reserves are those which are expected to be recovered through existing wells with existing equipment and operating methods.



The SEC requires the reserve presentation to be calculated using year-end prices and costs and assuming a continuation of existing economic conditions.  Proved reserves cannot be measured exactly, and the estimation of reserves involves judgmental determinations.  Reserve estimates must be reviewed and adjusted periodically to reflect additional information gained from reservoir performance, new geological and

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geophysical data and economic changes.  The estimates are based on current technology and economic conditions, and we consider such estimates to be reasonable and consistent with current knowledge of the characteristics and extent of production.  The estimates include only those amounts considered to be proved reserves and do not include additional amounts which may result from new discoveries in the future, or from application of secondary and tertiary recovery processes where facilities are not in place or for which transportation and/or marketing contracts are not in place.



Proved developed reserves are reserves which can be expected to be recovered through existing wells with existing equipment and existing operating methods.  This classification includes: (1) proved developed producing reserves which are reserves expected to be recovered through existing completion intervals now open for production in existing wells; and (2) proved developed non-producing reserves which are reserves that exist behind the casing of existing wells which are expected to be produced in the predictable future, where the cost of making such oil and natural gas available for production should be relatively small compared to the cost of a new well.



Any reserves expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing primary recovery methods are included as proved developed reserves only after testing by a pilot project or after the operation of an installed program has confirmed through production response that increased recovery will be achieved.



Proved undeveloped reserves are proved reserves which are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage are limited to those drilling units offsetting productive units, which are reasonably certain of production when drilled. Estimates of recoverable reserves for proved undeveloped reserves may be subject to substantial variation and actual recoveries may vary materially from estimates.

Proved reserves for other undrilled units are claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation.  No estimates for proved undeveloped reserves are attributable to or included in this table for any acreage for which an application of fluid injection or other improved recovery technique is contemplated unless proved effective by actual tests in the area and in the same reservoir.



Dobson Resource Management Ltd., independent petroleum engineers, prepared the evaluation of the oil and natural gas reserves as of December 31, 2002.



Year ended December 31, 2002:United StatesCanadaTotalProved Reserves
    - Natural Gas And Condensate (BOE)Proved reserves, beginning of year387,80086,600474,400Adjustments(149,466)-(149,466)Production(24,234)(3,541)(27,775)Property dispositions-(63,259)(63,259)Proved reserves, end of year214,10019,800233,900




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Table IV
Standardized Measure Of Discounted Future Net Cash Flows Related To Proved 
Oil And Natural Gas Reserve Quantities



The standardized measure of discounted future net cash flows is presented in accordance with the provisions of SFAS No. 69.  In preparing this data, assumptions and estimates have been used, and we caution against viewing this information as a forecast of future economic conditions.



Future cash inflows were estimated by applying year-end prices to the estimated future production of year-end proved reserves.  Future cash inflows were reduced by estimated future production and development costs to determine pre-tax cash inflows.  Future income taxes were estimated by applying the year-end statutory tax rates to the future pre-tax cash inflows, less the tax basis of the properties involved, and tax credits and allowances.  The resultant future net cash inflows are discounted using a ten percent discount rate.



Year Ended December 31, 2002:United StatesCanadaTotalFuture cash inflows$      4,770,000$       448,000$  5,218,000Future production costs(1,135,000)(19,000)(1,154,000)Future development costs113,000(34,000)(147,000)Future net revenue before income taxes3,522,000395,0003,917,00010% annual discount for estimated timing of cash flows(1,443,000)(146,000)(1,589,000)Discounted future net cash flows before income taxes2,079,000249,0002,328,000Future income taxes, discounted at 10% per annum---Standardized measure of discounted future net cash flows$      2,079,000$       249,000$    2,328,000Year Ended December 31, 2001:United StatesCanadaTotalFuture cash inflows$   4,891,000$   967,000$   5,858,000Future production costs(1,397,000)(276,000)(1,673,000)Future development costs(451,000)(64,000)(515,000)Future net revenue before income taxes3,043,000627,0003,670,00010% annual discount for estimated timing of cash flows(1,034,000)(258,000)(1,292,000)Discounted future net cash flows before income taxes2,009,000369,0002,378,000Future income taxes, discounted at 10% per annum---Standardized measure of discounted future net cash flows$   2,009,000$   369,000$   2,378,000




18. Supplemental Quarterly Financial Data (Unaudited)



Summarized quarterly financial data is as follows:

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