NEHC.New Era Helium INC
10-Q: New Era Energy & Digital Q3 Loss Widens Amid Strategic Shift
Sentiment:
Quarterly Report
New Era Energy & Digital reported a significantly wider net loss in Q3 2025, driven by increased operating expenses and interest costs, despite higher natural gas revenues, as it navigates a strategic pivot to helium and data centers.
Delay expectedThe Pecos Slope Plant had not commenced operations by July 1, 2025, leading to the termination of the Gaseous Helium Agreement with Matheson Tri-Gas, Inc.The Commencement Date for the Liquid Helium Agreement with AirLife Gases USA Inc. is not anticipated to occur by November 30, 2025, leading to its termination and a $2,382,256 payment obligation.
Capital raiseThe company previously had an Equity Purchase Facility Agreement (EPFA) with an institutional investor for up to $1.0 billion in newly issued common stock, which was terminated on October 16, 2025.The EPFA included two pre-paid advances totaling $10 million, evidenced by senior secured convertible promissory notes, which were repaid on October 1, 2025.A new secured promissory note for $4,000,000 was entered into with Joel Solis, a related party, on October 23, 2025, maturing on December 6, 2025.Management stated the company 'may need to raise additional financing through loans' if it is unable to sell sufficient shares under equity facilities at high enough prices.
Worse than expectedNet loss for the nine months ended September 30, 2025, widened by 320.0% to $12,709,433.General & Administrative expenses increased by 161.0%, and interest expense surged by 1,687.8%.Management issued a 'going concern' warning due to liquidity issues.Two significant helium off-take agreements were terminated due to project delays, resulting in a substantial payment obligation.A material weakness in internal control over financial reporting was identified.
Summary
- Net loss for the nine months ended September 30, 2025, significantly widened to $12,709,433, compared to $3,026,033 for the same period in 2024.
- Total revenues increased by 80.6% to $694,980 for the nine months ended September 30, 2025, primarily driven by a 219.2% increase in natural gas revenue due to higher prices.
- Total costs and expenses nearly doubled, increasing by 99.4% to $8,831,763, largely due to a 161.0% surge in General & Administrative expenses.
- Interest expense soared by 1,687.8% to $4,788,442, mainly from convertible notes and associated amortization.
- The company's cash balance improved to $14,164,499 as of September 30, 2025, from $1,053,744 at December 31, 2024, primarily from financing activities.
- Management expressed substantial doubt about the company's ability to continue as a going concern due to liquidity challenges and difficulties in raising capital through equity sales.
- The company successfully regained compliance with Nasdaq's minimum market value of listed securities (MVLS) rule on October 10, 2025.
- Two key helium off-take agreements with Matheson Tri-Gas, Inc. and AirLife Gases USA Inc. were terminated due to delays in the Pecos Slope Plant's commencement, resulting in a $2,382,256 obligation to AirLife.
- A joint venture, Texas Critical Data Centers LLC (TCDC), was formed with SharonAI to develop a 250 MW gas-fired power plant and data center in Texas, with the company contributing $850,000 and recognizing an equity loss of $68,776.
- The Equity Purchase Facility Agreement (EPFA) for up to $1.0 billion was terminated by the company on October 16, 2025, as it deemed itself sufficiently capitalized without further equity dilution from that facility.
- A new $4,000,000 secured promissory note was entered into with Joel Solis, a related party, maturing on December 6, 2025.
- The company's disclosure controls and procedures were deemed not effective, indicating a material weakness in internal control over financial reporting.
Sentiment
Score: 3
Explanation: The company reported a substantially wider net loss, a going concern warning, and significant increases in G&A and interest expenses. Key helium off-take agreements were terminated due to project delays, and a material weakness in internal controls was identified. While cash balances improved from financing and Nasdaq compliance was regained, the overall financial health and operational execution present significant challenges.
Positives
- Total revenues increased by 80.6% for the nine months ended September 30, 2025, primarily driven by a 219.2% increase in natural gas revenue.
- Cash and cash equivalents significantly increased to $14,164,499 as of September 30, 2025, from $1,053,744 at December 31, 2024.
- Working capital improved to $8,944,481 as of September 30, 2025.
- Successfully regained compliance with Nasdaq's MVLS rule on October 10, 2025, avoiding delisting.
- The Equity Purchase Facility Agreement (EPFA) was terminated by the company on October 16, 2025, indicating management believes it is sufficiently capitalized without further equity dilution from that facility.
- Repaid all outstanding convertible promissory notes on October 1, 2025, extinguishing related debt and derivatives.
- Established a joint venture, Texas Critical Data Centers LLC, for a 250 MW gas-fired power plant and data center, signaling diversification into digital infrastructure.
Negatives
- Net loss for the nine months ended September 30, 2025, widened substantially to $12,709,433, a 320.0% increase from the prior year.
- General & Administrative expenses surged by 161.0% to $7,187,659 for the nine months, driven by legal, consulting, public relations, D&O insurance, and stock compensation costs.
- Interest expense increased by 1,687.8% to $4,788,442 for the nine months, primarily due to convertible notes.
- Management identified a material weakness in internal control over financial reporting, stating disclosure controls and procedures were not effective.
- Two significant helium off-take agreements with Matheson Tri-Gas, Inc. and AirLife Gases USA Inc. were terminated due to delays in the Pecos Slope Plant's commencement.
- The termination of the AirLife Liquid Helium Agreement resulted in an obligation to pay $2,382,255.55 within five days of the November 30, 2025, termination date.
- The company recorded an excise tax liability of $1,029,003 plus $347,995 in accrued interest and penalties related to prior stock redemptions under the Inflation Reduction Act.
- NGL revenues decreased by 14.3% due to lower prices and volumes.
- Oil revenues ceased entirely due to the sale of oil properties in 2024.
- Management raised substantial doubt about the company's ability to continue as a going concern.
Risks
- Substantial doubt about the company's ability to continue as a going concern due to liquidity conditions and challenges in raising capital.
- Dependence on prevailing and future prices for helium, natural gas, NGLs, and oil, which are highly volatile and subject to economic, political, and regulatory developments.
- Potential for material adverse effects on financial position, results of operations, cash flows, and reserves if energy prices decline substantially or for an extended period.
- Exposure to the 1% U.S. federal excise tax on stock repurchases under the Inflation Reduction Act of 2022, with an outstanding liability of $1,029,003 plus accrued interest and penalties of $347,995.
- Risk of additional interest and penalties if the excise tax obligation is not paid in full by the deadline (October 31, 2024, for 2023 liability).
- Inability to sell sufficient shares under equity purchase facilities at high enough prices to meet obligations.
- Uncertainty regarding the availability of new financing on commercially acceptable terms, if at all.
- Material weakness in internal control over financial reporting, with disclosure controls and procedures deemed not effective.
- Risk of future notices of deficiency from Nasdaq or further listing action, despite current compliance.
- Inherent uncertainties in estimating proved oil and gas reserves, which can materially impact depletion expense and ceiling test calculations.
- Difficulties and uncertainties in estimating asset retirement obligations due to long time horizons, changing technologies, and evolving regulatory environments.
- Potential for environmental liabilities and regulatory changes related to oil and gas operations.
- Risk of litigation or claims incident to the ordinary course of business, with uncertain outcomes and potential adverse impacts.
Future Outlook
Management has determined that the company's liquidity condition raises substantial doubt about its ability to continue as a going concern through the twelve months following the issuance date of the September 30, 2025, consolidated financial statements. While the company has terminated its Equity Purchase Facility Agreement, believing it is sufficiently capitalized at present, it acknowledges the need to potentially raise additional financing through loans if equity sales are insufficient. The company is evaluating the potential tax impacts of the One Big Beautiful Bill Act (OBBBA) on its financial statements.
Management Comments
- Management has determined that the Company's liquidity condition raises substantial doubt about the Company's ability to continue as a going concern through the twelve months following the issuance date of the September 30, 2025, consolidated financial statements.
- The Company determined that it is sufficiently capitalized at present and does not expect to sell any additional shares to the Investor [under the EPFA].
- The Company continues to monitor its market value of listed securities (MVLS) to ensure ongoing compliance with Nasdaq requirements and remains committed to maintaining the listing of its securities on The Nasdaq Stock Market. However, there can be no assurance that the Company will continue to meet all of Nasdaq's listing standards, that it will avoid future notices of deficiency, or that Nasdaq will not take further listing action.
- Our business model is moving from a hydrocarbon focus to a helium-focused model and centers on providing helium to various parties in the supply chain.
- Management did not adequately evaluate and test its controls and procedures. As a result, we were not able to rely upon the disclosure controls and procedures that were in place as of September 30, 2025, or as of the date of this filing, and therefore have a material weakness in our internal control over financial reporting.
Industry Context
New Era Energy & Digital is undergoing a significant strategic shift from a traditional hydrocarbon-focused exploration and production company to a helium-focused model, with an additional venture into digital infrastructure via a data center joint venture. This pivot aligns with broader energy transition trends and the increasing demand for helium in high-tech industries, but also introduces new operational complexities and capital requirements. The termination of key helium off-take agreements due to plant delays highlights the execution risks inherent in such transitions. The data center initiative, leveraging gas-fired power, positions the company to capitalize on the growing demand for AI and HPC infrastructure, a trend seen across various sectors seeking to integrate energy assets with digital capabilities.
Comparison to Industry Standards
- The company's significant net loss and the 'going concern' warning indicate performance well below industry standards for established energy companies, which typically aim for profitability and positive cash flow from operations.
- The termination of two major helium off-take agreements due to project delays (Pecos Slope Plant) suggests execution challenges that are not uncommon in complex energy infrastructure projects but are detrimental to a company pivoting its core business. For example, major industrial gas companies like Linde or Air Products typically have robust project management for their gas processing facilities.
- The substantial increase in General & Administrative expenses (161%) and interest expense (1,687.8%) far exceeds typical growth rates for mature energy companies and suggests high costs associated with the business combination, public company compliance, and financing a transitional strategy.
- The disclosure of a material weakness in internal controls over financial reporting is a significant governance concern, contrasting with the robust internal control environments expected of publicly traded companies, especially those listed on Nasdaq.
- The pivot to a helium-focused model and a data center joint venture is a strategic move, but the immediate financial results and operational setbacks (helium contract terminations) suggest a challenging path compared to more established players in the industrial gas or data center sectors.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Financial Officer | Michael J. Rugen | E. Will Gray II (Interim) | 2025-05-31 | Resignation of Michael J. Rugen; not due to disagreement. |
| Director, Audit Committee Chairman, Compensation Committee Member | N/A | Trent Yang | 2025-06-25 | Appointment to fill vacancy. |
| Director, Audit Committee Member | N/A | Peter P.J. Lee | 2025-06-25 | Appointment to fill vacancy. |
| Director, Compensation Committee Member | N/A | Ondrej Sestak | 2025-06-25 | Appointment to fill vacancy. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Internal Control Deficiency | Disclosure controls and procedures were not effective as of September 30, 2025, due to inadequate evaluation and testing and limited accounting personnel, resulting in a material weakness in internal control over financial reporting. | 2025-09-30 | Raises concerns about the reliability of financial reporting and the company's ability to accurately record, process, summarize, and report financial information. Remediation efforts are underway. |
| Board Composition | Appointment of three new independent directors (Trent Yang, Peter P.J. Lee, and Ondrej Sestak) to fill vacancies, with specific committee assignments (Audit and Compensation Committees). | 2025-06-25 | Strengthens board oversight and committee functions, particularly in audit and compensation, which is positive for corporate governance. |
| Name Change | Company name changed from New Era Helium Inc. to New Era Energy & Digital, Inc. to reflect strategic pivot. | 2025-08-13 | Reflects a strategic shift in business focus, potentially impacting investor perception and market positioning. |
| Nasdaq Listing Compliance | Cured deficiency under Nasdaq Listing Rule 5450(b)(2)(A) regarding market value of listed securities. | 2025-10-10 | Maintains listing on Nasdaq, avoiding potential delisting and its negative impact on liquidity and investor confidence. |
Legal Proceedings
- Not party to any material legal proceedings. May be involved in legal proceedings or subject to claims incident to the ordinary course of business, with inherently uncertain outcomes.
Related Party Transactions
- A secured promissory note for $4,000,000 was entered into on October 23, 2025, with Joel Solis, who formerly served as a director and currently owns approximately 4% of the company's outstanding common stock. The note bears interest at 18% compounded annually (or Maximum Rate) and matures on December 6, 2025.
Stakeholder Impact
- Shareholders: Significant net losses and a 'going concern' warning could negatively impact share price and investor confidence. Dilution from past equity issuances and the termination of the EPFA, while positive for avoiding future dilution, also signals a shift in financing strategy. Regaining Nasdaq compliance is positive for liquidity.
- Employees: Changes in management (CFO resignation, CEO employment agreement amendment) and the strategic pivot could affect employee morale and stability. Stock-based compensation was issued to executive officers and employees.
- Customers (Helium Off-takers): Termination of key helium off-take agreements (MTG, AirLife) due to plant delays means the company failed to meet contractual obligations, potentially damaging future customer relationships in the helium market.
- Creditors: The repayment of convertible notes is positive, but the new $4M secured note with a related party and the $2.38M obligation to AirLife (due to contract termination) represent new short-term liabilities. The 'going concern' warning increases credit risk.
- Suppliers: Delays in the Pecos Slope Plant and the strategic pivot could impact relationships with suppliers involved in the helium processing infrastructure.
Next Steps
- Continue efforts to develop, implement, and test internal controls over financial reporting to address the identified material weakness.
- Evaluate options for payment of the $1,029,003 excise tax liability and associated interest/penalties of $347,995.
- Address the $2,382,256 payment obligation to AirLife Gases USA Inc. by November 30, 2025.
- Secure project financing for the construction of a processing plant, gathering system, and production enhancement program.
- Continue development of the Texas Critical Data Centers LLC joint venture, including the 250 MW gas-fired power plant and data center.
- Monitor ongoing compliance with Nasdaq listing standards.
- Repay the $4,000,000 secured promissory note to Joel Solis by December 6, 2025.
Key Dates
| Date | Description |
|---|---|
| 2020-09-24 | Company entered into an irrevocable standby letter of credit (LOC) and a promissory note with West Texas National Bank for $25,000. |
| 2021-10-29 | Amendment of the LOC and a new promissory note, increasing the amount to $425,000. |
| 2022-01-01 | LOC amended, and new promissory notes executed increasing the amount to $650,000. |
| 2022-03-29 | LOC amended, and new promissory notes executed increasing the amount to $920,000. |
| 2022-08-16 | Inflation Reduction Act of 2022 (IR Act) signed into federal law. |
| 2023-01-01 | Effective date for new U.S. federal 1% excise tax on certain stock repurchases. |
| 2023-02-02 | New Era Energy & Digital, Inc. (formerly New Era Helium, Inc.) formed in Nevada. |
| 2023-02-06 | Company entered into a Reorganization Agreement and Plan Share Exchange with Solis Partners, LLC. |
| 2023-05-31 | ROCL public stockholders redeemed 8,989,488 shares for $93,010,772. |
| 2023-08-04 | NEH Midstream LLC formed. |
| 2023-08-25 | Company entered into a Promissory Note (AirLife Note) with AirLife Gases USA Inc. for $2,000,000. |
| 2023-08-25 | Company entered into a Contract for Sale and Purchase of Liquid Helium (Liquid Helium Agreement) with AirLife Gases USA Inc. |
| 2023-09-01 | Company entered into an agreement with Matheson Tri-Gas, Inc. (MTG) to supply 50% of helium production. |
| 2023-12-01 | 927,715 shares of ROCL common stock tendered for redemption. |
| 2023-12-15 | Effective date for ASU 2023-07 (Segment Reporting) for public entities for fiscal years beginning after this date. |
| 2024-01-01 | Company adopted ASU 2023-07 (Segment Reporting). |
| 2024-10-31 | Deadline to file return and remit payment for 2023 excise tax liability incurred from January 1, 2023, to December 31, 2023. |
| 2024-11-01 | Date from which additional interest and penalties apply if excise tax obligation is unpaid. |
| 2024-11-01 | Effective date for ASU 2024-03 (Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosure) for public entities for fiscal years beginning after December 15, 2026. |
| 2024-12-06 | Business Combination with Roth CH Acquisition V Co. (ROCL) completed. |
| 2024-12-06 | Company and an institutional investor (EPFA Investor) entered into an Equity Purchase Facility Agreement (EPFA) for up to $75 million. |
| 2024-12-06 | First pre-paid advance of $7,000,000 drawn under the EPFA. |
| 2024-12-06 | Company and Warrant Investor entered into a securities purchase agreement for warrants to purchase up to $30,000,000 shares of Common Stock. |
| 2024-12-30 | Company's Registration Statement on Form S-1 initially filed with the SEC. |
| 2024-12-31 | Effective date for ASU 2023-09 (Income Taxes) for public business entities for annual periods beginning after this date. |
| 2025-01-14 | Board of Directors approved issuance of 125,000 shares for services performed during 2024. |
| 2025-01-15 | Company's resale registration statement on Form S-1 declared effective. |
| 2025-01-16 | Second pre-paid advance of $3,000,000 drawn under the EPFA. |
| 2025-01-21 | Company entered into a Limited Liability Company Agreement with SharonAI for Texas Critical Data Centers LLC (Joint Venture). |
| 2025-01-22 | 800,000 shares issued under EPFA at approximately $2.64 per share. |
| 2025-01-31 | 15,000 shares issued under EPFA at approximately $2.67 per share. |
| 2025-02-06 | 125,000 shares issued for services performed during 2024. |
| 2025-02-21 | Company and Investor entered into an Amended and Restated Equity Purchase Facility Agreement (A&R EPFA). |
| 2025-02-25 | 20,000 shares issued under EPFA at approximately $2.28 per share. |
| 2025-03-04 | Company received a letter from Nasdaq regarding MVLS below $50,000,000 threshold. |
| 2025-04-01 | 523,257 shares issued under EPFA during April 2025 at a weighted average price of approximately $0.82 per share. |
| 2025-04-16 | Company made a $75,000 contribution to the Texas Critical Data Centers LLC Joint Venture. |
| 2025-04-22 | Michael J. Rugen resigned as Chief Financial Officer. |
| 2025-05-01 | 1,181,026 shares issued under EPFA during May 2025 at a weighted average price of approximately $0.56 per share. |
| 2025-05-05 | Company and Investor entered into two amendments to the Promissory Notes, allowing deferral of principal payments for May, June, or July 2025. |
| 2025-05-31 | Effective date of Michael J. Rugen's resignation as CFO. |
| 2025-06-01 | 9,827,193 shares issued under EPFA during June 2025 at a weighted average price of approximately $0.52 per share. |
| 2025-06-25 | Trent Yang, Peter P.J. Lee, and Ondrej Sestak appointed to the Board of Directors. |
| 2025-07-01 | Deadline for Pecos Slope Plant to commence operations for MTG agreement. |
| 2025-07-01 | 497,265 shares issued under EPFA during July 2025 at a weighted average price of approximately $0.42 per share. |
| 2025-07-02 | Matheson Tri-Gas, Inc. (MTG) exercised its right to terminate the Gaseous Helium Agreement. |
| 2025-07-02 | Board approved issuance of 1,313,644 shares of common stock and options to purchase 665,000 shares of common stock. |
| 2025-07-10 | Company and Investor entered into a Third Amended and Restated Equity Purchase Facility Agreement (Third A&R EPFA). |
| 2025-07-15 | First Floor Price Reset Date for EPFA, adjusted downwards to 20% of average VWAP. |
| 2025-07-16 | Company and CEO E. Will Gray, II, entered into an amendment to the Employment Agreement for relocation and housing expenses. |
| 2025-07-16 | Company made an additional contribution of $750,000 to the Texas Critical Data Centers LLC Joint Venture. |
| 2025-07-17 | Texas Critical Data Centers LLC (TCDC) executed a purchase agreement for approximately 235 acres in Ector County, Texas. |
| 2025-07-25 | Closing of the TCDC land purchase in Ector County, Texas. |
| 2025-07-31 | Company provided notice to vacate Hermosa Beach office no later than August 29, 2025. |
| 2025-08-11 | Board of Directors approved an amendment to change the company's name to New Era Energy & Digital, Inc. |
| 2025-08-12 | Company and Investor entered into a Fourth Amended and Restated Equity Purchase Facility Agreement (Fourth A&R EPFA), increasing commitment to $1.0 billion. |
| 2025-08-13 | Name change from New Era Helium Inc. to New Era Energy & Digital, Inc. became effective; trading symbol changed from NEHI to NUAI for common stock and NHECW to NUAIW for warrants. |
| 2025-08-29 | Deadline to vacate Hermosa Beach office. |
| 2025-09-01 | 19,535,990 shares issued under EPFA during September 2025 at a weighted average price of approximately $0.70 per share. |
| 2025-09-02 | End of MVLS Compliance Period for Nasdaq listing. |
| 2025-09-26 | Company made an additional contribution of $25,000 to the Texas Critical Data Centers LLC Joint Venture. |
| 2025-09-29 | Maturity date for LOC promissory note. |
| 2025-09-30 | End of the quarterly reporting period. |
| 2025-10-01 | Company repaid in full all outstanding amounts under its convertible promissory notes. |
| 2025-10-10 | Nasdaq notified the Company that it had cured the MVLS deficiency and is in compliance with listing standards. |
| 2025-10-16 | Company provided notice of termination of the EPFA to the Investor. |
| 2025-10-22 | AirLife provided notice of termination of the Liquid Helium Agreement. |
| 2025-10-23 | Company entered into a secured promissory note for $4,000,000 with Joel Solis, a related party. |
| 2025-10-24 | Effective date of EPFA termination. |
| 2025-11-13 | Date of filing of this Quarterly Report on Form 10-Q. |
| 2025-11-30 | Effective date of AirLife Liquid Helium Agreement termination if Commencement Date has not occurred. |
| 2025-12-06 | Maturity date for the secured promissory note with Joel Solis. |
| 2026-12-15 | Effective date for ASU 2024-03 (Income Statement Expense Disaggregation) for public entities for fiscal years beginning after this date. |
| 2027-05-30 | Latest maturity date for AirLife Note Payable. |
Recommendation
sellThe company faces severe financial distress, evidenced by a significantly widened net loss, a formal 'going concern' warning from management, and a material weakness in internal controls. Operational setbacks, including the termination of two major helium off-take agreements due to project delays, undermine the company's strategic pivot. While cash balances improved from financing activities and Nasdaq compliance was regained, the underlying business performance and the high cost structure, particularly in G&A and interest expenses, are unsustainable. The reliance on related-party financing and the inability to execute on key strategic projects raise serious concerns about future profitability and long-term viability. A seasoned investor would likely view these factors as strong indicators to exit the position due to high risk and poor performance.
Keywords
New Era Energy & Digital, NUAI, SEC Filing, 10-Q, Quarterly Report, Oil and Gas, Helium, Natural Gas Liquids, Energy Exploration, Production, Financial Results, Net Loss, Revenue Growth, Operating Expenses, Interest Expense, Going Concern, Nasdaq Compliance, Equity Purchase Facility, Convertible Notes, Data Center, Joint Venture, Texas Critical Data Centers, Internal Controls, Material Weakness, Management Changes, Related Party Transactions, Inflation Reduction Act, Excise Tax, Pecos Slope Plant
Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.