GBR

Business Context and Reporting Period

Company: New Concept Energy, Inc. (NYSE American: GBR)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: The Company operates primarily through two segments: leasing a 190-acre industrial/office property in Parkersburg, West Virginia, and providing management services for oil and gas operations sold in 2020. The Company receives a 10% management fee on the revenue of these third-party oil and gas wells. A significant portion of the Company's income is derived from interest on a $3.542 million note receivable from American Realty Investors, Inc.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased by $9,000 (6.2%) to $155,000. This was driven by a $7,000 increase in management fees (from $45,000 to $52,000) due to higher oil and gas sales, and a $2,000 increase in rental income.
• Expense Increase: Total operating expenses rose by $37,000 (9.7%) to $420,000. Corporate general and administrative expenses increased by $29,000, while property operating expenses increased by $8,000.
• Interest Income Decline: Interest income decreased by $44,000 (20.7%) to $169,000, attributed to lower interest rates on the Company's notes receivable.
• Other Income Spike: Other income increased significantly by $44,000 to $50,000, resulting from the collection of a note receivable that had been written off in prior years.
• Net Loss Expansion: The net loss widened from $18,000 in 2024 to $46,000 in 2025, primarily due to the decline in interest income and higher operating expenses, partially offset by the recovery of the written-off note.

Outlook, Risks, and Management Commentary

• Liquidity: The Company maintains a positive working capital position with $383,000 in cash and no long-term debt. Liquidity is supported by rental income, management fees, and interest from notes receivable.
• Deferred Tax Assets: The Company has a full valuation allowance against its net deferred tax assets ($1.224 million) due to uncertainty regarding future taxable income. Consequently, no income tax benefit was recorded for the net losses incurred.
• Related Party Transactions: The Company utilizes Pillar Income Asset Management, Inc. (affiliated with a major shareholder) for administrative, payroll, and IT services. A formal agreement effective September 2024 resulted in $36,000 in fees for 2025.
• Risk Factors: Key risks include anti-takeover provisions in the Articles of Incorporation, reliance on a single major tenant for real estate income, and the variability of oil and gas prices affecting management fees. The Company also notes reliance on third-party systems for cybersecurity.
• Guidance: The filing contains forward-looking statements but does not provide specific quantitative financial guidance for future periods. Management intends to continue operating the West Virginia property and seeking new business opportunities.

Investor Verification Checklist

• Note Receivable Status: Verify the collectability and interest rate terms of the $3.542 million note receivable from American Realty Investors, Inc., which matures in September 2027 and is a primary income source.
• Related Party Fees: Review the formal agreement with Pillar Income Asset Management to ensure the $36,000 fee structure is competitive and necessary.
• Tenant Lease Terms: Confirm the lease expiration date and renewal options for the 16,000 square foot tenant generating $103,000 in annual rent.
• Valuation Allowance: Assess the likelihood of the Company generating sufficient future taxable income to utilize its $6.5 million in net operating loss carryforwards.
• Stock Ownership: Note that directors and executive officers collectively hold 0% of the outstanding common stock, while Realty Advisors, Inc. holds approximately 7.79%.