Helium Evolution Incorporated — Interim / Quarterly Report 2025

May 20, 2025

Financial Statements

First Quarter 2025

As at March 31, 2025 and for the three month periods ended March 31, 2025 and March 31, 2024

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Helium Evolution Incorporated

Condensed Interim Statements of Financial Position

(unaudited)

	As at	As at
(thousands of Canadian Dollars)	March 31, 2025	December 31, 2024
Assets
Current Assets
Cash and cash equivalents	3,004	3,829
Accounts receivable (note 10)	57	57
Deposits and prepaid expenses	196	34
Total Current Assets	3,257	3,920
Non-Current Assets
Property, plant and equipment (note 3)	16	19
Tubing and casing	104	422
Exploration and evaluation assets (note 4)	8,306	6,240
Total Non-Current Assets	8,426	6,681
Total Assets	11,683	10,601
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued liabilities (note 10)	1,271	734
Lease obligations (note 5)	20	20
Total Current Liabilities	1,291	754
Non-Current Liabilities
Lease obligations (note 5)	2	2
Decommissioning obligations (note 6)	207	150
Total Non-Current Liabilities	209	152
Total Liabilities	1,500	906
Shareholders' Equity
Share capital (note 7)	20,198	19,216
Warrants (note 7)	166	-
Contributed surplus	3,613	3,598
Deficit	(13,794)	(13,119)
Total Shareholders' Equity	10,183	9,695
Total Liabilities and Shareholders' Equity	11,683	10,601

See accompanying notes to the condensed interim financial statements.

Commitments (notes 4 and 11)

Subsequent Events (note 13)

Q1 2025 FINANCIAL STATEMENTS

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Helium Evolution Incorporated

Condensed Interim Statements of Loss and Comprehensive Loss

(unaudited)

(thousands of Canadian Dollars, except number of shares and per share amounts)	Three months ended March 31, 2025	Three months ended March 31, 2024
Expenses
Exploration and evaluation (note 4)	474	19
Share-based compensation (note 8)	12	68
Interest income (net)	(19)	(72)
Depletion and depreciation (note 3)	5	6
General and administrative	203	218
Total expenses	675	239
Net loss and comprehensive loss	(675)	(239)
Weighted average number of shares outstanding - basic and diluted	97,129,085	96,033,974
Net loss per common share - basic and diluted	(0.01)	(0.00)

See accompanying notes to the condensed interim financial statements.

Q1 2025 FINANCIAL STATEMENTS

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Helium Evolution Incorporated

Condensed Interim Statements of Cash Flows

(unaudited)

(thousands of Canadian Dollars)	Three months ended March 31, 2025	Three months ended March 31, 2024
Cash provided by (used in):
Operating activities:
Net loss	(675)	(239)
Exploration and evaluation (note 4)	474	19
Share-based compensation (note 8)	12	68
Depletion and depreciation (note 3)	5	6
Accretion (note 6)	1	1
Change in non-cash working capital (note 9)	(43)	(186)
Cash used in operating activities	(226)	(331)
Financing activities:
Units issued, net of share issuance costs (note 7)	1,148	-
Lease obligations (note 5)	-	(1)
Change in non-cash working capital (note 9)	(22)	-
Cash provided by (used in) financing	1,126	(1)
Investing activities:
Property, plant and equipment (note 3)	(2)	-
Exploration and evaluation assets (note 4)	(2,163)	(606)
Change in non-cash working capital (note 9)	440	(88)
Cash used in investing activities	(1,725)	(694)
Net change in cash and cash equivalents	(825)	(1,026)
Cash and cash equivalents, beginning of period	3,829	6,330
Cash and cash equivalents, end of period	3,004	5,304
Cash and cash equivalents is comprised of:
Cash	27	28
Cancellable guaranteed investment certificates	2,977	5,276

See accompanying notes to the condensed interim financial statements.

Q1 2025 FINANCIAL STATEMENTS

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Helium Evolution Incorporated

Condensed Interim Statements of Changes in Shareholders' Equity

(unaudited)

(thousands of Canadian Dollars, except number of shares)	Number of Shares	Share Capital	Warrants	Contributed Surplus	Deficit	Total Shareholders' Equity
Balance, January 1, 2025	96,033,974	19,216	-	3,598	(13,119)	9,695
Units issued, net of share issue costs (note 7)	7,040,000	982	166	-	-	1,148
Share-based compensation (note 8)	-	-	-	15	-	15
Net loss for the period	-	-	-	-	(675)	(675)
Balance, March 31, 2025	103,073,974	20,198	166	3,613	(13,794)	10,183
(thousands of Canadian Dollars, except number of shares)	Number of Shares	Share Capital	Warrants	Contributed Surplus	Deficit	Total Shareholders' Equity
---	---	---	---	---	---	---
Balance, January 1, 2024	96,033,974	19,216	873	2,406	(11,728)	10,767
Share-based compensation (note 8)	-	-	-	97	-	97
Net loss for the period	-	-	-	-	(239)	(239)
Balance, March 31, 2024	96,033,974	19,216	873	2,503	(11,967)	10,625

See accompanying notes to the condensed interim financial statements.

Q1 2025 FINANCIAL STATEMENTS

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Helium Evolution Incorporated

Notes to the Condensed Interim Financial Statements (unaudited)

As at March 31, 2025 and for the three month periods ended March 31, 2025 and March 31, 2024

1. Organization and Nature of the Business

Helium Evolution Incorporated ("HEVI" or the "Company") is a public company trading on the TSX Venture Exchange ("TSXV") under the symbol HEVI. The Company was initially incorporated under the Business Corporations Act (British Columbia) on March 25, 2019. The Company is in the early stages of exploration for helium as a resource and has not yet determined whether its helium properties contain deposits that are economically recoverable.

The Company's principal office address and address of records is 400, 505 – 3 Street SW, Calgary, Alberta, Canada, T2P 3B6.

2. Basis of Preparation

The unaudited condensed interim financial statements (the "financial statements") have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting using accounting policies consistent with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board, and were prepared following the same material accounting policies and methods of computation as the annual financial statements for the year ended December 31, 2024 (the "Annual Financial Statements"). These financial statements are condensed as they do not include all the information required by IFRS for annual financial statements and therefore should be read in conjunction with the Company's Annual Financial Statements.

The Company's financial statements are expressed in thousands of Canadian dollars, unless otherwise stated. The presentation currency is Canadian dollars.

These financial statements have been prepared using the historical cost convention on an accrual basis except for, when outstanding, certain financial instruments which have been measured at fair value. In the opinion of management, all adjustments, including accruals, considered necessary for a fair presentation have been included.

The financial statements were authorized for issue by the board of directors of the Company on May 20, 2025.

3. Property, Plant and Equipment Assets

Cost	Total
Balance, December 31, 2023	147
Balance, December 31, 2024	147
Additions	2
Balance, March 31, 2025	149
Accumulated depletion and depreciation	Total
Balance, December 31, 2023	106
Depletion and depreciation	22
Balance, December 31, 2024	128
Depletion and depreciation	5
Balance, March 31, 2025	133
Net book value	Total
Balance, December 31, 2024	19
Balance, March 31, 2025	16

Q1 2025 FINANCIAL STATEMENTS

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Helium Evolution Incorporated

As at March 31, 2025, property, plant and equipment is comprised of office equipment with a net book value of $3,000 (December 31, 2024 – $1,000) and right-of-use assets with a net book value of $13,000 (December 31, 2024 – $18,000).

4. Exploration and Evaluation Assets

Cost	Total
Balance, December 31, 2023	4,343
Additions	2,056
Transfer from tubing and casing	326
E&E expense	(485)
Balance, December 31, 2024	6,240
Additions	2,222
Transfer from tubing and casing	318
E&E expense	(474)
Balance, March 31, 2025	8,306

The Company holds helium exploration permits in Saskatchewan with an initial three-year term. The March 31, 2025 additions include $3,000 of non-cash share-based compensation (December 31, 2024 – $100,000) and $56,000 of non-cash decommissioning obligations (December 31, 2024 – $24,000). During the three months ended March 31, 2025, $474,000 of exploration and evaluation ("E&E") assets were recognized in E&E expense based on historic costs incurred (three months ended March 31, 2024 – $19,000), due to unfavourable well results in the Mankota core area.

To keep the Company's leases in good standing, the Company has annual lease expenditure commitments as follows: remainder of 2025 – $321,000, 2026 – $555,000 and 2027 – $4,362,000 and annual permit expenditure commitments as follows: remainder of 2025 – $60,000, 2026 – $60,000 and 2027 – $60,000. Permit expenditures can be grouped and carried forward to future years if the expenditure amount is greater than the minimum expenditure required. If the above commitments are not satisfied, the Company will relinquish the associated helium permits.

There were no impairment indicators for the exploration and evaluation assets as of March 31, 2025 or December 31, 2024.

5. Lease Obligations

	Total
Balance, December 31, 2023	43
Lease payments	(21)
Balance, December 31, 2024	22
Lease payments	-
Balance, March 31, 2025	22
Current portion of lease obligations	20
Non-current portion of lease obligations	2
	March 31, 2025
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Lease payments	1
Interest payments	(1)
Total cash outflow	-

The Company has lease liabilities for contracts related to office space and office equipment. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The discount rate applied during the period ended March 31, 2025 was 10.0% (December 31, 2024 – 10.0%).

Q1 2025 FINANCIAL STATEMENTS

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Helium Evolution Incorporated

6. Decommissioning Obligations

	March 31, 2025	December 31, 2024
Decommissioning obligations, beginning of period	150	121
Additions	54	19
Change in estimates	2	5
Accretion	1	5
Decommissioning obligations, end of period	207	150

The Company's decommissioning obligations result from its ownership interest in helium assets currently comprised of well sites. The total decommissioning obligation is estimated based on the Company's net ownership interest in all wells, estimated costs to reclaim and abandon these wells and the estimated timing of the costs to be incurred in future years.

The following significant assumptions were used to estimate the decommissioning obligations:

	March 31, 2025	December 31, 2024
Undiscounted, uninflated cash flows	205	148
Risk free rate	2.99%	3.21%
Inflation rate	2.62%	2.62%
Timing of cash flows	9.9 years	9.7 years

7. Share Capital

The authorized capital of HEVI consists of an unlimited number of common and an unlimited number of preferred shares, issuable in series with no par value.

On March 10, 2025, the Company announced a private placement of 15,940,000 units ("Units") at a price of $0.17 per Unit for total gross proceeds of $2.7 million ($2.6 million, net of estimated share issuance costs) (the "First Private Placement"). Each Unit was comprised of one common share of the Company (each, a "Unit Share") and one half of one common share purchase warrant (each whole warrant, a "Warrant"). Each Warrant will entitle the holder thereof to acquire one common share of the Company (each, a "Warrant Share") at a price of $0.27 for a period of one year from the applicable closing dates with an acceleration feature if the closing price over a 30-day period remains at or above $0.51 per common share at any time following the six-month anniversary of closing. The first closing of the First Private Placement was on March 17, 2025 (the "First Closing"), with the second closing taking place on April 4, 2025. Of the gross proceeds for the First Closing, $1.02 million ($0.98 million, net of share issuance costs) was allocated to share capital and $0.17 million ($0.17 million, net of warrant issuance costs) was allocated to warrant capital.

The following table details the number of common shares issued and outstanding as at March 31, 2025:

	Number of Class A Common Shares	Share Equity
Balance, December 31, 2023 and December 31, 2024	96,033,974	19,216
Shares issued	7,040,000	1,024
Share issuance costs	-	(42)
Balance, March 31, 2025	103,073,974	20,198

Q1 2025 FINANCIAL STATEMENTS

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Helium Evolution Incorporated

The following table details the number of warrants issued and outstanding as at March 31, 2025:

	Number of Warrants	Warrant Equity
Balance, December 31, 2023	5,940,152	873
Expired	(5,940,152)	(873)
Balance, December 31, 2024	-	-
Issued	3,520,000	173
Warrant issuance costs	-	(7)
Balance, March 31, 2025	3,520,000	166

The number of warrants issued and outstanding, weighted average exercise price and weighted average remaining life are as follows:

	Number of Warrants	Weighted Average Exercise Price ($/share)	Weighted Average Remaining Life (years)
Balance, December 31, 2023	5,940,152	0.70	-
Expired	(5,940,152)	0.70	-
Balance, December 31, 2024	-	-	-
Issued	3,520,000	0.27	0.96
Balance, March 31, 2025	3,520,000	0.27	0.96

The fair value of the warrants issued in the three months ended March 31, 2025 was determined using the following weighted average Black-Scholes pricing model inputs:

	March 31, 2025
Share price	0.18
Risk-free interest rate	2.55%
Expected life (years)	1
Expected volatility	117%
Forfeiture rate	0.0%
Expected dividends	Nil
Fair value	0.06

8. Share Option Plan

The Company has an incentive Share Option Plan (the "Option Plan") for directors, officers, employees, and consultants, under which the Company may issue share options to purchase common shares of the Company provided that the amount of incentive share options which may be granted and outstanding under the Option Plan at any time shall not exceed 10% of the then issued and outstanding common shares of the Company.

The number of share options issued and outstanding, weighted average exercise price and weighted average remaining life is as follows:

	Number of Options	Weighted Average Exercise Price ($/share)	Weighted Average Remaining Life (years)
Balance, December 31, 2023	9,575,718	0.30	3.5
Balance, December 31, 2024	9,575,718	0.29	2.5
Balance, March 31, 2025	9,575,718	0.29	2.3

Q1 2025 FINANCIAL STATEMENTS

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Helium Evolution Incorporated

The number of share options exercisable and the weighted average exercise price is as follows:

	Exercisable Options	Weighted Average Exercise Price ($/share)
December 31, 2024	8,553,718	0.30
March 31, 2025	9,023,718	0.29

9. Supplemental Cash Flow Information

	March 31, 2025	March 31, 2024
Accounts receivable	-	-
Deposits and prepaid expenses	(162)	(53)
Accounts payable and accrued liabilities	537	(221)
Change in non-cash working capital	375	(274)
Allocated to:
Operating	(43)	(186)
Financing	(22)	-
Investing	440	(88)
Change in non-cash working capital	375	(274)

10. Risk and Capital Management

The Company's activities expose it to a variety of financial and non-financial risks inherent in the business. Financial risks include: equity price, commodity price, foreign exchange, credit availability and liquidity. Financial risks can be managed, at least to a degree, through the utilization of financial instruments. Certain non-financial risks can be mitigated through the use of insurance and/or other risk transfer mechanisms, good business practices and process controls, while others must simply be borne. All risks can have an impact upon the financial performance of the Company.

Credit risk

Credit risk is the risk that a third party will not complete its contractual obligations under a financial instrument and cause the Company to incur a financial loss.

The Company's maximum exposure to credit risk is the sum of the carrying values of its cash and cash equivalents and accounts receivable. As at March 31, 2025, the Company's accounts receivables consisted of an amount expected to be returned by the Government of Saskatchewan due to the overpayment of unfulfilled work commitments. To mitigate the credit risk on its cash and cash equivalents, the Company maintains its cash and cash equivalents balance with a major Canadian chartered bank.

Market risk

Market risk is the risk that the fair value or future cash flow from operating activities of the Company's financial instruments will fluctuate because of changes in market prices. This could include changes in market conditions, such as commodity prices, foreign exchange rates and interest rates. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while maximizing the Company's return.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities as they come due. The Company's financial liabilities consist of accounts payable and accrued liabilities.

Accounts payable consists of sales taxes due and invoices payable to trade suppliers for general and administrative activities and E&E expenditures. The Company processes invoices within a normal payment period. Accounts payable have contractual maturities of less than one year. The Company maintains and monitors a certain level of cash which is used to finance all operating and capital

Q1 2025 FINANCIAL STATEMENTS

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Helium Evolution Incorporated

expenditures.

The timing of undiscounted cash outflows relating to the financial liabilities outstanding at March 31, 2025 are outlined in the table below:

	1 year	2 years	3 years	> 3 years	Total
Accounts payable and accrued liabilities	1,271	-	-	-	1,271
Lease obligations	20	2	-	-	22
Total	1,291	2	-	-	1,293

HEVI anticipates having adequate cash on hand to meet its contractual obligations and commitments and discharge its liabilities as they come due. In order to ensure it has sufficient liquidity, the Company may selectively elect not to participate in joint operations or access debt or capital markets (see note 13). Management anticipates that these efforts will provide enough financial flexibility to meet the Company's contractual obligations and commitments and discharge its liabilities, until it generates cash flows from operations.

Capital management

The Company's capital structure includes shareholders' equity and working capital. HEVI's general policy is to maintain a strong financial position to allow for exploration of its existing land base. The Company's objective is to maintain a capital structure that allows it to finance its business strategy using primarily internally generated cash flow and equity markets, and to optimize the use of its capital to provide an appropriate investment return to its shareholders.

HEVI monitors its capital structure and makes adjustments on an ongoing basis in order to maintain the flexibility needed to achieve the Company's long-term objectives. To manage its capital structure, the Company may adjust capital spending, issue new equity, issue new debt or obtain alternative financing. To date, the Company's main source of funding has been the issuance of equity and warrant securities for cash, through private placements.

The Company continues to explore its helium properties. The Company's continuing operations and underlying value and recoverability of the amounts shown for E&E assets are entirely dependent upon the existence of economically recoverable resources, the ability of the Company to obtain the necessary financing to complete the exploration and development of its helium property interests and on future profitable production or proceeds from the disposition of the helium property interests. These and other factors may adversely affect the Company's liquidity and ability to generate income and future cash flows.

As at March 31, 2025, the Company had a positive working capital balance of $2.0 million (December 31, 2024 - $3.2 million).

11. Commitments

The Company holds helium permits that require minimum expenditures on an annual basis (see note 4).

The Company entered into a two-year office lease agreement, commencing November 1, 2023 and ending October 31, 2025. Additionally, the Company has entered into certain office equipment leases. The lease commitments as at March 31, 2025 are as follows:

	1 year	2 years	3 years	> 3 years	Total
Lease obligations	20	2	-	-	22

12. Financial Instruments

At March 31, 2025, the Company's financial instruments include cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities.

Q1 2025 FINANCIAL STATEMENTS

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Helium Evolution Incorporated

The Company's cash and cash equivalents are classified as Level 1 measurements. The Company has no level 2 or level 3 financial instruments. Assessment of the significance of a particular input to the fair value measurement requires judgement and may affect the placement within the fair value hierarchy level.

The carrying value of the Company's accounts receivable and accounts payable and accrued liabilities at March 31, 2025 approximate their respective fair values due to the short-term nature of these instruments.

13. Subsequent Events

On April 4, 2025, the Company issued 8,900,000 Units related to the second closing of the First Private Placement (note 7).

On April 7, 2025, the Company closed a private placement of 317,000 Units for gross and net proceeds of $0.05 million with the same terms and conditions as the First Private Placement.

On April 7, 2025, the Company announced an additional private placement of 9,422,000 Units at a price of $0.19 per Unit for total gross proceeds of $1.8 million ($1.7 million, net of estimated share issuance costs) (the "Second Private Placement") to the same investor as the First Private Placement. Consistent with the First Private Placement, each Unit will be comprised of one Unit Share and one half of one Warrant. Each Warrant will entitle the holder thereof to acquire one Warrant Share at a price of $0.305 for a period of one year from the closing date of the Second Private Placement, with an acceleration feature if the closing price over a 30-day period remains at or above $0.57 per common share at any time following the six-month anniversary of closing.

On April 7, 2025, the Company announced a private placement of 1,000,000 Units for gross and net proceeds of $0.2 million (the "Insider Private Placement") with the same terms and conditions as the Second Private Placement.

Closing of the Second Private Placement and the Insider Private Placement is anticipated to be on or around May 31, 2025, subject to approval by the TSXV and the shareholder vote, as applicable. There can be no assurance that the Second Private Placement or the Insider Private Placement will close.

Q1 2025 FINANCIAL STATEMENTS