Business Context and Reporting Period
Company: New Era Helium Inc. (formerly Roth CH Acquisition V Co.)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: March 31, 2025
Business Overview: The Company is an exploration and production company focused on helium, natural gas, oil, and natural gas liquids (NGLs). Operations are primarily located in Chaves County, New Mexico. The Company completed a business combination with Roth CH Acquisition V Co. on December 6, 2024, which was accounted for as a reverse recapitalization. The Company is currently transitioning from a hydrocarbon-focused model to a helium-focused model.
Key Financial Metrics
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Total Revenues, Net | $326,455 | $329,211 |
| Net Loss | $(3,320,256) | $(859,032) |
| Net Loss Per Share (Basic & Diluted) | $(0.24) | $(0.13) |
| Cash and Cash Equivalents (End of Period) | $1,033,596 | $127,078 |
| Working Capital Deficit | $(4,231,795) | Not Reported |
| Total Assets | $9,927,940 | Not Reported |
| Total Liabilities | $12,674,841 | Not Reported |
| Stockholders' Deficit | $(2,746,901) | Not Reported |
Debt Obligations: As of March 31, 2025, outstanding principal on loans and financing (excluding accounts payable) totaled approximately $10.58 million, including a $2.0 million AirLife Note and convertible notes totaling $8.58 million.
Material Changes vs. Prior Period
- Revenue: Net revenue decreased slightly by 0.8% ($2,756) compared to Q1 2024. Natural gas revenue increased by 34.9% due to higher prices, offset by a 100% decrease in oil revenue (due to property sales in 2024) and a 29.8% decrease in NGL revenue.
- Operating Expenses: Total costs and expenses increased by 60.5% ($902,875). General and administrative (G&A) expenses surged 159.9% to $1.94 million, driven by increased public relations, D&O insurance, legal, and consulting costs. Lease operating expenses decreased 48.3% due to lower workover costs.
- Interest Expense: Interest expense increased dramatically by 2,290.1% to $1.44 million. This was primarily due to $1.16 million in amortization of debt discounts and issuance costs related to new convertible notes issued in late 2024 and early 2025.
- Derivatives: The Company recognized a $190,977 gain from the change in fair value of derivative liabilities and a $15,403 loss on derivative assets, items not present in the prior year.
Outlook, Risks, and Management Commentary
- Going Concern: Management has determined that the Company's liquidity condition raises substantial doubt about its ability to continue as a going concern for the twelve months following the issuance date. The Company relies on an Equity Purchase Facility Agreement (EPFA) to fund operations and debt service, but concerns exist regarding the ability to sell shares at sufficient prices to meet obligations.
- Nasdaq Delisting Notice: On March 4, 2025, the Company received notice from Nasdaq that its Market Value of Listed Securities (MVLS) fell below the $50 million threshold. The Company has until September 2, 2025, to regain compliance or risk delisting.
- Financing Activities: The Company entered into an EPFA with an institutional investor allowing for up to $75 million in share issuances. Two pre-paid advances totaling $10 million were drawn in late 2024 and early 2025, evidenced by senior secured convertible promissory notes.
- Joint Venture: In January 2025, the Company formed a joint venture with SharonAI to develop a 250 MW gas-fired power plant and data center in Texas. The Company contributed $75,000.
- Internal Controls: Management concluded that disclosure controls and procedures were not effective as of March 31, 2025, citing a material weakness due to limited accounting personnel and resources following the business combination.
- Executive Changes: The Chief Financial Officer, Michael J. Rugen, resigned effective May 31, 2025. Will Gray was appointed Interim CFO effective June 1, 2025.
Investor Verification Checklist
- Liquidity Runway: Verify the Company's ability to service $10.58 million in debt and meet monthly principal/interest payments given the current cash balance of ~$1.03 million and the "substantial doubt" going concern warning.
- EPFA Execution: Monitor the Company's ability to utilize the Equity Purchase Facility to raise capital, noting the "Floor Price" constraints and the recent decline in share price.
- Nasdaq Compliance: Track the Company's progress in regaining MVLS compliance by the September 2, 2025 deadline to avoid delisting.
- Internal Control Remediation: Review subsequent filings for updates on the remediation plan for the material weakness in internal controls over financial reporting.
- Helium Revenue Timeline: Confirm the status of the helium processing plant construction and the commencement of helium revenue, as the Company currently generates no revenue from helium production.