S-1: New Era Helium Faces Going Concern Doubts Amidst Contract Termination and Nasdaq Delisting Threat

New Era Helium Inc. is grappling with significant financial challenges, including a substantial net loss, a working capital deficit, and a Nasdaq delisting notice, compounded by the termination of a key helium sales agreement.

Summary

• New Era Helium Inc. (formerly Roth CH Acquisition V Co.) completed its business combination with New Era Helium Corp. on December 6, 2024, shifting its business model from hydrocarbon-focused to helium-focused.
• The company reported a net loss of $13,782,384 for the year ended December 31, 2024, a significant increase from a net income of $10,145 in 2023.
• For the three months ended March 31, 2025, the net loss was $3,320,256, compared to a net loss of $859,032 for the same period in 2024.
• Total revenues decreased by 13.0% to $532,780 for the year ended December 31, 2024, primarily due to an 83.4% decrease in oil revenue following the sale of oil properties, partially offset by a 71.9% increase in NGL revenue.
• Total costs and expenses surged by 96.9% to $13,265,510 in 2024, driven mainly by a 147.7% increase in general and administrative expenses, including $4,395,000 in stock-based compensation.
• As of March 31, 2025, the company had a working capital deficit of $4,231,795 and a cash balance of $1,033,596.
• Management has expressed substantial doubt about the company's ability to continue as a going concern for the next twelve months due to declining share price impacting its ability to raise sufficient capital through its Equity Purchase Facility Agreement (EPFA).
• New Era Helium received a Nasdaq delisting notice on March 4, 2025, as its market value of listed securities (MVLS) fell below the $50,000,000 threshold, with a compliance deadline of September 2, 2025.
• Matheson Tri-Gas, Inc. (MTG) terminated its Gaseous Helium Agreement on July 2, 2025, because the Pecos Slope Plant had not commenced operations by July 1, 2025, impacting 50% of anticipated gaseous helium sales.
• The company holds approximately 422 MMcf of net proved undeveloped helium reserves and 788 MMcf of net probable undeveloped helium reserves as of December 31, 2024.
• New Era Helium is constructing the Pecos Slope Plant, expected to commence operations in Q4 2025, with estimated additional capital requirements of $40 million to $45 million for development.
• The company entered into a joint venture, Texas Critical Data Centers LLC, with Sharon AI, Inc. on January 21, 2025, to develop a 250MW net-zero energy data center in the Permian Basin, with initial contributions of $75,000 each and an agreement for additional $750,000 contributions in July 2025.
• The company has access to an Equity Purchase Facility Agreement (EPFA) with ATW AI LLC for up to $75 million, having drawn $7 million in December 2024 and $3 million in January 2025 as prepaid advances via senior secured convertible promissory notes.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, evidenced by substantial losses, a worsening working capital deficit, and a going concern warning. The termination of a major helium sales contract and the Nasdaq delisting threat further compound these issues, indicating a highly precarious financial position despite future development plans and capital raising efforts which are themselves at risk due to low share price.

Positives

• The company holds substantial helium reserves, with 422 MMcf of net proved undeveloped helium reserves and 788 MMcf of net probable undeveloped helium reserves as of December 31, 2024.
• The ongoing construction of the Pecos Slope Plant is expected to significantly increase helium and natural gas production rates and lower costs, potentially generating substantial incremental revenue.
• The company has a 10-year Liquid Helium Agreement with AirLife Gases USA, Inc. for 50% of its anticipated liquid helium production, providing a foundation for future helium sales.
• A joint venture with Sharon AI, Inc. for a 250MW net-zero energy data center in the Permian Basin diversifies the company's strategic focus into energy transition opportunities.
• The Equity Purchase Facility Agreement (EPFA) provides access to up to $75 million in capital, with $10 million already received as prepaid advances, offering a potential source of funding for operations and development.

Negatives

• The company reported a significant net loss of $13,782,384 for the year ended December 31, 2024, a substantial deterioration from a net income in the prior year.
• A working capital deficit of $4,231,795 as of March 31, 2025, indicates a strained short-term liquidity position.
• Management has raised substantial doubt about the company's ability to continue as a going concern due to its liquidity condition and challenges in raising capital.
• The company received a Nasdaq delisting notice on March 4, 2025, for failing to maintain the minimum $50,000,000 market value of listed securities, with a compliance deadline of September 2, 2025.
• Matheson Tri-Gas, Inc. (MTG) terminated its Gaseous Helium Agreement on July 2, 2025, due to the Pecos Slope Plant not commencing operations by the July 1, 2025 deadline, eliminating 50% of anticipated gaseous helium sales.
• The Helium Tolling Agreement with Keyes Helium Company (KHC) is subject to termination by KHC due to delays in securing financing for the Pecos Slope Plant, and KHC's commitment is on a 'space available' basis, posing a risk to tolling capacity.
• The company's share price has significantly declined, impacting its ability to sell sufficient shares under the EPFA at favorable prices to meet its obligations.
• General and administrative expenses increased by 147.7% in 2024, largely due to stock-based compensation and public company costs.
• The company has a material weakness in internal control over financial reporting, specifically over the control environment, which could impair accurate and timely financial statements.
• The exercise price of the Tradeable Warrants ($11.50) is significantly higher than the current market price of the Common Stock ($0.54 as of July 17, 2025), making it highly unlikely for warrant holders to exercise for cash in the foreseeable future.

Risks

• The company has a short operating history, making it difficult to evaluate its business and future prospects.
• There is no assurance of the completed construction and commencement of operations of the Pecos Slope Plant, and even if operational, profitability is not guaranteed.
• The company may not be able to raise the estimated additional capital of $45.0 million required for the Pecos Slope Plant development, which could lead to delays in revenue generation and jeopardize helium delivery contracts.
• Scientific and technological changes may impact the demand for helium, potentially reducing demand in certain industries or leading to the discovery of substitutes.
• Global health crises, catastrophes, or unforeseen market conditions could dampen helium demand and negatively impact financial performance.
• Helium demand in certain applications is price-elastic, meaning significant price increases could reduce long-term demand.
• Increases in extraction and production costs or disruptions in natural gas supplies could materially and adversely impact the business.
• Operating costs may exceed estimates due to factors like labor shortages or external price increases, and the company may be unable to pass these costs to customers.
• Exploration efforts may not yield helium in commercial quantities or quality, or at all, and Appraisal Reports involve significant uncertainty.
• The company's business may be adversely affected by the departure of members of its management team and key employees.
• Uncertainty and costly compliance with government regulations, including environmental, health, and safety laws, could negatively impact financial performance.
• Restrictions or lack of access to waste wells could prevent the operation of wells that generate helium.
• Ownership or operation of lands with material releases into the environment may require costly remediation.
• Obtaining necessary permits for the Pecos Slope Plant is uncertain in terms of cost, time, and outcome, potentially leading to delays or inability to operate.
• Legislation, regulation, and other government actions related to greenhouse gas (GHG) emissions and climate change could increase operational costs and reduce demand for helium products.
• The price of the company's securities may be volatile due to various factors, including financial results, competition, regulatory changes, and general economic conditions.
• Future resales of common stock by selling shareholders could cause the market price of securities to drop significantly.
• The issuance of additional shares under the EPFA, Notes, and Warrants may result in substantial dilution to existing stockholders and negatively impact the market price.
• The company may not have access to the full $75 million available under the EPFA, depending on market prices and other funding sources.
• The senior secured convertible promissory notes provide the note holder with liens on substantially all assets and contain financial covenants and restrictions, increasing financial risk.
• Failure to maintain proper and effective internal controls over financial reporting could impair the ability to produce accurate and timely financial statements.
• The company may not be able to comply with Nasdaq's continued listing standards, leading to delisting.
• Lack of research coverage or unfavorable commentary from securities analysts could cause the stock price to decline.
• Unexpired Tradeable Warrants may be redeemed prior to exercise at a disadvantageous time, potentially making them worthless.
• The company may be subject to the Excise Tax included in the Inflation Reduction Act of 2022 in connection with redemptions of common stock.

Future Outlook

The company's business model is shifting from a hydrocarbon focus to a helium-focused model, centering on producing and selling helium to various parties in the supply chain. The Pecos Slope Plant is expected to commence operations in the fourth quarter of 2025, which is anticipated to significantly increase helium and natural gas production rates and lower costs, potentially generating substantial incremental revenue. The company also plans to diversify revenue by supplying natural gas as feedstock for energy transition products like net-zero energy, blue hydrogen, and blue ammonia, and to engage in the Methane Performance Certificate (MPC) market. However, the ability to secure necessary project financing and achieve profitability remains uncertain, with management expressing substantial doubt about the company's ability to continue as a going concern.

Management Comments

• Management believes its existing helium production distinguishes it from other emerging companies in the helium exploration and production space.
• Management believes that the operation of its own Pecos Slope Plant will significantly increase production rates of helium and natural gas and lower costs, thereby generating significant incremental revenue.
• Management believes the Pecos Slope Plant can conceivably produce a sizeable revenue stream for decades to come and allow the company to achieve consistent profitability under ideal circumstances.
• Management believes that it is unlikely that the company will be able to secure funding, complete construction of the helium extraction plant, and commence helium deliveries prior to July 1, 2025, but believes it is possible it will occur prior to November 30, 2025.
• Management believes that it is more likely that AirLife and KHC would try to renegotiate their agreements on terms less favorable for the company, rather than terminate them, in situations of delayed commencement.
• Management believes that in the event of early termination of sales agreements, the company would have the ability to secure replacement agreements with price, terms, and conditions reflecting then-current market conditions.
• Management believes it will be able to obtain alternative tolling services if KHC terminates the Helium Tolling Agreement, as there is significant excess helium liquefaction capacity available in the United States.
• Management has concern about the company's ability to sell sufficient shares under the EPFA at high enough prices to produce cash flow to meet its obligations within the assessment period as necessary.
• 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 March 31, 2025, financial statements.
• Management intends to actively monitor the company's MVLS and may evaluate available options to resolve Nasdaq listing deficiencies.
• Management does not believe that there is any pending or threatened legal proceeding against the company which, if determined adversely, would have a material adverse effect on its business, results of operations, or financial condition.

Industry Context

The company operates in the highly competitive helium exploration and production industry, which has experienced recurring supply shortages and price surges. The global helium market has seen periods of supply and demand imbalances due to unpredictable events like major supply outages and geopolitical risks. Demand for helium is expected to increase in certain fields, particularly electronics, which is anticipated to surpass MRI as the leading application. The company aims to capitalize on this market opportunity by providing a reliable domestic helium supply from its New Mexico reserves. The industry is dominated by six major multinational industrial gas companies (Helium Majors), with many new startup companies entering the market, though most have not reached actual production. The company also plans to diversify into energy transition opportunities like net-zero energy, blue hydrogen, and blue ammonia, and engage in the Methane Performance Certificate (MPC) market, aligning with broader trends towards clean energy solutions and innovative technologies in the data industry.

Comparison to Industry Standards

• The company's current business model is moving from a hydrocarbon focus to a helium-focused model, aiming to compete with Helium Majors (e.g., Air Products and Chemicals, Inc., Air Liquide S.A., Linde PLC, Matheson Tri-Gas & Messer Group) and Tier 2 gas companies.
• The company's existing helium production and substantial inventory of reliable drilling locations and associated reserves are presented as unique competitive strengths compared to other emerging companies in the helium exploration and production space, many of which have not progressed to actual production.
• The company's estimated royalty rate for helium produced on federal land (approximately 12.5% of gross proceeds for refined gaseous helium or 10% for refined liquid helium) is based on discussions with the BLM and rates applied to other helium producers, suggesting it aligns with industry norms for federal land operations.
• The company's plan to develop its Pecos Slope Plant with a nameplate capacity of 20,000 MCF/day of inlet gas aims to achieve production rates and cost reductions that management believes will be competitive and generate significant incremental revenue, though specific comparative benchmarks are not provided.
• The company's entry into the Methane Performance Certificate (MPC) market by seeking designation of its natural gas production as responsibly sourced gas aligns with growing industry trends towards ESG (Environmental, Social, and Governance) practices and carbon footprint reduction, similar to efforts by other Permian Basin oilfield service providers.

Management Changes

Corporate Governance

Legal Proceedings

• The company is subject to various federal, provincial, state, and local laws and regulations relating to environmental matters, including discharge of materials and protection of the environment, which may impose liability for pollution clean-up or damages.
• The company is currently in negotiations with the Bureau of Land Management (BLM) to determine the royalty rate for helium produced on federal land, which is required prior to any helium production.

Related Party Transactions

• On July 31, 2024, the company entered into a Retention and Consulting/Services Agreement with Tall City Well Service Co., LP, an entity controlled by Joel G. Solis (former Chairman), for $720,000 as a retainer fee, paid with a 10% Secured Convertible Debenture which was repaid as a result of the Business Combination.
• In June 2024, the company assigned interest in certain properties in Chaves County, New Mexico, valued at $166,449, to Earnest Producing Corporation, an entity controlled by Joel Solis, as compensation for his past contributions and non-continuation as a director.
• The company had various loan and expense reimbursement transactions with E. Will Gray II (CEO), Joel Solis (former Chairman), and Michael J. Rugen (former CFO), which were largely repaid by December 2024.

Stakeholder Impact

• **Shareholders**: Face significant dilution risk from future equity issuances under the EPFA, convertible notes, and warrants. The declining share price and Nasdaq delisting threat pose substantial risks to investment value. The going concern warning indicates potential for total loss of investment.
• **Employees**: The company's financial instability and need to manage costs could impact job security and compensation. The departure of the CFO and the CEO taking on an interim CFO role may indicate resource constraints.
• **Customers (AirLife, KHC)**: The termination of the MTG agreement and potential termination of the KHC tolling agreement create uncertainty regarding the company's ability to reliably supply helium as per contracts, potentially leading to renegotiations on less favorable terms or a need for customers to seek alternative suppliers.
• **Suppliers/Creditors**: The company's working capital deficit and reliance on future capital raises for operations and debt payments pose risks to timely payments. The senior secured convertible notes grant liens on substantially all assets, prioritizing certain creditors.
• **Regulatory Bodies (Nasdaq, SEC, BLM, IRS)**: The company is under scrutiny for Nasdaq listing compliance and faces potential penalties for excise tax obligations. Ongoing negotiations with the BLM for royalty rates are critical for federal land operations.

Next Steps

• Complete construction and commence operations of the Pecos Slope Plant, expected in Q4 2025.
• Secure additional buyers for the uncontracted helium volumes following the termination of the Gaseous Helium Agreement with MTG.
• Request an extension for the Helium Tolling Agreement deadline with Keyes Helium Company (KHC) to avoid termination.
• Secure project financing arrangements to fund the Pecos Slope Plant construction, gathering system, and production enhancement program (estimated $40M-$45M).
• Actively monitor the company's market value of listed securities (MVLS) and evaluate options to regain compliance with Nasdaq's $50,000,000 MVLS threshold by September 2, 2025, to avoid delisting.
• Address the material weakness in internal control over financial reporting.
• Continue to make monthly payments on the Senior Secured Convertible Promissory Notes, potentially deferring principal payments for May, June, or July 2025 with a deferral fee.
• Evaluate options for payment of the $1,155,726 excise tax liability to the IRS, including accrued interest and penalties.
• Continue development of the Texas Critical Data Centers LLC joint venture with Sharon AI, including the agreed $750,000 capital contribution in July 2025 for real property acquisition.
• Develop probable undeveloped hydrocarbon and helium reserves starting in 2029 and beyond to maintain plant capacity and fulfill helium contracts.

Key Dates

Recommendation

The company is in a highly distressed financial state, evidenced by a substantial net loss, a worsening working capital deficit, and an explicit 'going concern' warning from management. The termination of a major helium sales contract and the Nasdaq delisting notice are critical negative developments that severely undermine future revenue prospects and market access. While the company has access to an equity facility, its significantly depressed share price makes it challenging to raise sufficient capital without extreme dilution. The combination of operational delays, contract losses, regulatory non-compliance, and a precarious financial position presents an exceptionally high risk profile, making the stock a strong sell for investors.

Keywords

Helium, Natural Gas, Oil and Gas Production, SEC Filing, S-1, Energy Transition, Data Center, Permian Basin, Nasdaq Delisting, Going Concern, Capital Raise, Convertible Notes, Warrants, New Mexico, Exploration and Production, Pecos Slope Plant, Risk Factors, Financial Performance