New Concept Energy Swings to Loss Amid Rising Costs, Lower Interest Income

Ticker: GBR · Form: 10-Q · Filed: 2025-08-13T00:00:00.000Z

Sentiment: bearish

Topics: Net Loss, Related Party Transactions, Declining Cash, Real Estate Operations, Management Fees, High Risk, Small Cap

TL;DR

**GBR is bleeding cash, and its reliance on related-party interest income is a red flag for any investor looking for sustainable growth.**

AI Summary

New Concept Energy, Inc. (GBR) reported a net loss of $18,000 for the three months ended June 30, 2025, a significant decline from a net income of $3,000 in the same period of 2024. For the six months ended June 30, 2025, the company posted a net loss of $38,000, compared to a net income of $5,000 in the prior year. Total revenues increased slightly to $40,000 for the three-month period, up from $37,000, driven by a rise in rental income to $26,000 and management fees to $14,000. However, corporate general and administrative expenses climbed to $85,000 from $78,000, and interest income from related parties decreased to $42,000 from $56,000. The company maintains a note receivable from American Realty Investors, Inc. (a related party) of $3,542,000, bearing interest at 4.45% SOFR. GBR is actively evaluating new business opportunities to enhance income and cash flow, as stated in Note 1 and Note 2 of the filing.

Why It Matters

This shift from profit to loss, coupled with declining interest income and rising administrative costs, signals potential challenges for GBR investors. The company's reliance on a significant related-party note receivable for interest income, which decreased by $14,000 quarter-over-quarter, introduces a concentration risk. For employees, the company's stated evaluation of new business opportunities could mean strategic shifts, while customers of its leased property and consulting services might see stability given the slight revenue increases. In a competitive market, GBR's struggle to generate consistent profit from its limited operations could make it less attractive compared to more diversified energy or real estate firms.

Risk Assessment

Risk Level: high — The company reported a net loss of $18,000 for the three months ended June 30, 2025, and a net loss of $38,000 for the six months ended June 30, 2025, indicating a negative trend in profitability. Furthermore, cash and cash equivalents decreased from $363,000 at December 31, 2024, to $356,000 at June 30, 2025, and net cash used in operating activities was $7,000 for the six months ended June 30, 2025, highlighting liquidity concerns.

Analyst Insight

Investors should exercise extreme caution and consider divesting GBR shares due to the company's consistent net losses and declining cash position. The heavy reliance on related-party interest income, which is also decreasing, suggests an unsustainable business model without significant new opportunities. Monitor for concrete announcements regarding new business ventures and their potential impact on profitability and cash flow before considering any new investment.

Financial Highlights

debt To Equity
N/A
revenue
$40,000
operating Margin
N/A
total Assets
$4,574,000
total Debt
$75,000
net Income
($18,000)
eps
($0.00)
gross Margin
N/A
cash Position
$356,000
revenue Growth
+8.1%

Revenue Breakdown

SegmentRevenueGrowth
Rent$26,000+4.0%
Management fee$14,000+16.7%

Key Numbers

Key Players & Entities

FAQ

What were New Concept Energy's revenues for the quarter ended June 30, 2025?

New Concept Energy's total revenues for the three months ended June 30, 2025, were $40,000, comprising $26,000 from rental income and $14,000 from management fees.

How did New Concept Energy's net income change from Q2 2024 to Q2 2025?

New Concept Energy reported a net loss of $18,000 for the three months ended June 30, 2025, a significant decrease from a net income of $3,000 for the comparable period in 2024.

What is the status of New Concept Energy's note receivable from related parties?

New Concept Energy has an unsecured Note Receivable from American Realty Investors, Inc. (a related party) in the amount of $3,542,000 at June 30, 2025. This note bears interest at the Secured Overnight Financing Rate (SOFR), which was 4.45% at June 30, 2025, and is due on September 30, 2027.

What are the key operating expenses for New Concept Energy?

For the three months ended June 30, 2025, New Concept Energy's total operating expenses were $100,000, with corporate general and administrative expenses accounting for $85,000 of that total.

What is New Concept Energy's liquidity position as of June 30, 2025?

As of June 30, 2025, New Concept Energy had current assets of $403,000 and current liabilities of $75,000. Cash and cash equivalents stood at $356,000, a slight decrease from $363,000 at December 31, 2024.

What business opportunities is New Concept Energy evaluating?

New Concept Energy is evaluating business opportunities to provide both additional income and cash flow, as stated in Note 1 and Note 2 of the filing. Specific details of these opportunities were not disclosed in the 10-Q.

What is the risk associated with New Concept Energy's deferred tax assets?

New Concept Energy has a deferred tax asset due to tax deductions available in future years. However, management established a 100% valuation allowance because it could not determine that it was more likely than not that the benefit of the deferred tax asset would be realized, indicating a significant risk to future tax benefits.

How does New Concept Energy manage its cash balances?

New Concept Energy maintains its cash balances at financial institutions participating in the FDIC's Transaction Account Guarantee Program, which insures depositors up to $250,000. Management believes no significant concentration of credit risk exists with these cash balances at June 30, 2025.

What services does Pillar Income Asset Management provide to New Concept Energy?

Pillar Income Asset Management provides New Concept Energy with services including payroll processing, insurance acquisition, Information Technology, Cybersecurity, and other administrative matters. Effective September 1, 2024, a formal agreement was established, with fees of $9,000 for the three months and $18,000 for the six months ended June 30, 2025.

What is the lease term for New Concept Energy's main industrial/office building?

New Concept Energy leases approximately 16,000 square feet of its main industrial/office building at a rate of $104,000 per annum. The lease is classified as an operating lease and expires on October 1, 2029.

Risk Factors

Industry Context

New Concept Energy, Inc. operates in a sector that can be influenced by real estate rental markets and management services. The company's current strategy appears focused on generating income from rental properties and providing management services, alongside interest income from related party financing. The broader industry context for such companies often involves managing assets, navigating local economic conditions, and seeking opportunities for growth through acquisitions or diversification.

Regulatory Implications

As a publicly traded entity, GBR is subject to SEC regulations and accounting standards (GAAP). The company must ensure accurate financial reporting, including proper disclosure of related-party transactions and risk factors. Compliance with these regulations is crucial for maintaining investor confidence and avoiding penalties.

What Investors Should Do

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Key Dates

Glossary

SOFR
Secured Overnight Financing Rate, a benchmark interest rate for derivatives and loans. (It is the benchmark for the 4.45% interest rate on the significant note receivable from American Realty Investors, Inc.)
Accumulated deficit
The total cumulative net losses of a company since its inception, minus any net profits. (GBR has an accumulated deficit of $59,132,000 as of June 30, 2025, indicating historical unprofitability.)
Valuation allowance
An account used to reduce the carrying value of deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. (A 100% valuation allowance is recorded against GBR's deferred tax assets, signaling management's doubt about future profitability.)
Note receivable - related party
A loan made by the company to an entity with which it has a close relationship, such as common ownership or management. (GBR holds a significant note receivable of $3,542,000 from American Realty Investors, Inc., a related party.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, New Concept Energy, Inc. has seen a significant deterioration in profitability, moving from net income to net losses for both the three and six months ended June 30, 2025. Total revenues have seen a modest increase of 8.1% for the quarter, driven by rental and management fees. However, this revenue growth is overshadowed by a substantial increase in corporate general and administrative expenses, which rose by 8.9% for the quarter, leading to the negative net income. Interest income from related parties has also declined, further pressuring the company's financial results.

Filing Stats: 4,605 words · 18 min read · ~15 pages · Grade level 15.8 · Accepted 2025-08-12 17:41:58

Key Financial Figures

Filing Documents

: FINANCIAL INFORMATION

PART I: FINANCIAL INFORMATION

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) 3 Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Operations 5 Condensed Consolidated Statements of Changes in Stockholders' Equity 6 Condensed Consolidated Statements of Cash Flows 7 Notes to Condensed Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 12

Controls and Procedures

Item 4. Controls and Procedures 13

: OTHER INFORMATION

PART II: OTHER INFORMATION 14

Exhibits

Item 6. Exhibits 14

Signatures

Signatures 15 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements NEW CONCEPT ENERGY, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands) June 30, 2025 December 31, 2024 (Unaudited) (Audited) Assets Current assets Cash and cash equivalents $ 356 $ 363 Other current assets 47 9 Total current assets 403 372 Property and equipment, net of depreciation Land, buildings and equipment 629 636 Note and interest receivable - related party Note receivable 3,542 3,542 Interest receivable - 44 Note and interest receivable - related party 3,542 3,586 Total assets $ 4,574 $ 4,594 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents NEW CONCEPT ENERGY, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED (amounts in thousands, except share and par value amount) June 30, 2025 December 31, 2024 (Unaudited) (Audited) Liabilities and stockholders' equity Current liabilities Accounts payable $ 27 $ 20 Accrued expenses 48 37 Total current liabilities 75 57 Stockholders' equity Preferred stock, Series B, $ 10 par value; authorized 100,000 shares, 1 issued and outstanding at June 30, 2025 and December 31, 2024 1 1 Common stock, $ .01 par value; authorized, 100,000,000 shares; issued and outstanding, 5,131,934 shares at June 30, 2025 and December 31, 2024 51 51 Additional paid-in capital 63,579 63,579 Accumulated deficit ( 59,132 ) ( 59,094 ) Total stockholders' equity 4,499 4,537 Total liabilities & stockholders' equity $ 4,574 $ 4,594 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents NEW CONCEPT ENERGY, INC AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (amounts in thousands, except per share data) For the Three Months ended June 30, For the Six Months ended June 30, 2025 2024 2025 2024

Management's Discussion and Analysis of Financial Condition

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies and Estimates The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Certain of the Company's accounting policies require the application of judgment in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments and estimates are based upon the Company's historical experience, current trends and information available from other sources that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company's significant accounting policies are summarized in Note B to our consolidated financial statements in our annual report on Form 10-K. The Company believes the following critical accounting policies are more significant to the judgments and estimates used in the preparation of its consolidated financial statements. Revisions in such estimates are recorded in the period in which the facts that give rise to the revisions become known. Doubtful Accounts The Company's allowance for doubtful accounts receivable and notes receivable is based on an analysis of the risk of loss on specific accounts. The analysis places particular emphasis on past due accounts. Management considers such information as the nature and age of the receivable, the payment history of the tenant, customer or other debtor and the financial condition of the tenant or other debtor. Management's estimat

Forward Looking Statements

Forward Looking Statements "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: A number of the matters and subject areas discussed in this filing that are not historical or current facts deal with potential future circumstances, operations, and prospects. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from the Company's actual future experience involving any one or more of such matters and subject areas relating to interest rate fluctuations, the ability to obtain adequate debt and equity financing, demand, pricing, competition, construction, licensing, permitting, construction delays on new developments, contractual and licensure, and other delays on the disposition, transition, or restructuring of currently or previously owned, leased or managed properties in the Company's portfolio, and the ability of the Company to continue managing its costs and cash flow while maintaining high occupancy rates and market rate charges in its retirement community. The Company has attempted to identify, in context, certain of the factors that it currently believes may cause actual future experience and results to differ from the Company's current expectations regarding the relevant matter of subject area. These and other risks and uncertainties are detailed in the Company's reports filed with the Securities and Exchange Commission ("SEC"), including the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Inflation The Company's principal source of revenue is rent fees for services rendered and interest income. Although the Company has not historically experienced any adverse effects of inflation on salaries or other operating expenses, there can be no assurance that such trends will continue. Environmental Matters The Company has conducted environmental assessments on most of its existing owne

Quantitative and Qualitative Disclosures about Market

Item 3. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk The Company has extinguished all its outstanding debt; therefore, the Company has minimal risk from exposure to changes in interest rates. 12 Table of Contents

CONTROLS AND PROCEDURES

Item 4. CONTROLS AND PROCEDURES (a) Based on an evaluation by our management (with the participation of our Principal Executive Officer and Principal Financial Officer), as of the end of the period covered by this report, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures. (b) There has been no change in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 13 Table of Contents

OTHER INFORMATION

PART II. OTHER INFORMATION

Exhibits

Item 6. Exhibits The following exhibits are filed herewith or incorporated by reference as indicated below. Exhibit Designation Exhibit Description 3.1 Articles of Incorporation of Medical Resource Companies of America (incorporated by reference to Exhibit 3.1 to Registrant's Form S-4 Registration Statement No. 333-55968 dated December 21, 1992) 3.2 Amendment to the Articles of Incorporation of Medical Resource Companies of America (incorporated by reference to Exhibit 3.5 to Registrant's Form 8-K dated April 1, 1993) 3.3 Restated Articles of Incorporation of Greenbriar Corporation (incorporated by reference to Exhibit 3.1.1 to Registrant's Form 10-K dated December 31, 1995) 3.4 Amendment to the Articles of Incorporation of Medical Resource Companies of America (incorporated by reference to Exhibit to Registrant's PRES 14-C dated February 27, 1996) 3.5 Bylaws of Registrant (incorporated by reference to Exhibit 3.2 to Registrant's Form S-4 Registration Statement No. 333-55968 dated December 21, 1992) 3.6 Amendment to Section 3.1 of Bylaws of Registrant adopted October 9, 2003 (incorporated by reference to Exhibit 3.2.1 to Registrant's Form S-4 Registration Statement No. 333-55968 dated December 21, 1992) 3.7 Certificate of Decrease in Authorized and Issued Shares effective N

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