New Concept Energy, Inc. annual report, Q4 FY2009 (NYSE:GBR)

Oil and Gas: Acquired in September 2008 via Mountaineer State Energy, Inc. Operations include 122 producing wells in Ohio and West Virginia. The company utilizes the "full cost" method of accounting.
Retirement Community: Leases and operates Pacific Pointe Retirement Inn in King City, Oregon (114 resident capacity).

Key Financial Metrics (Year Ended Dec 31, 2009)

Metric	2009 (in thousands)	2008 (in thousands)
Total Revenue	$4,098	$3,560
Operating Expenses	$6,827	$3,702
Operating Loss	$(2,729)	$(142)
Net Loss	$(2,210)	$15,495 (Gain)
EPS (Basic & Diluted)	$(1.27)	$8.92
Cash & Equivalents	$155	$190
Net Cash from Operating Activities	$736	$427
Long-Term Debt	$1,524	$1,430
Total Assets	$25,121	$26,392
Total Liabilities	$6,839	$5,900

Oil & Gas Specifics:

Profitability Reversal: The company reported a net loss of $2.2 million in 2009, a sharp decline from the $15.5 million net income in 2008. The 2008 income was driven by a one-time $16.4 million gain on the sale of mineral rights in Arkansas, which did not recur in 2009.
Operating Expenses: Increased significantly to $6.8 million from $3.7 million. This was primarily due to a $1.7 million non-cash impairment charge on oil and gas properties (full-cost ceiling test) and higher operating costs from a full year of oil and gas operations.
Revenue Growth: Revenue increased 15% to $4.1 million, reflecting a full year of oil and gas operations compared to only four months in 2008. However, revenue growth was tempered by the expiration of a fixed-price gas contract in Q1 2009, forcing sales at lower spot prices.
Related Party Receivables: The company holds significant notes receivable from related parties (approx. $11.2 million), primarily from Prime Income Asset Management, Inc. (PIAMI).

Outlook & Strategy:

Management intends to focus on oil and gas investments, pursuing acquisitions of undervalued or distressed assets.
Planned activities for 2010 include "behind-the-pipe" drilling and new site drilling, subject to market conditions.
The retirement community is expected to remain a profitable, albeit secondary, part of operations.

Risks & Contingencies:

Customer Concentration: One purchaser accounts for approximately 90% of natural gas production. Loss of this customer could materially impact the company.
Legal Proceedings: Chesapeake Exploration Limited Partnership sued the company in 2007 regarding a disputed $556,217 invoice for drilling costs. The company disputes the validity of these costs.
Related Party Exposure: Significant exposure to related party loans (Eurenergy, PIAMI). While PIAMI acquired the Eurenergy notes, the receivable balance remains high ($10.9 million).
Asset Retirement Obligation (ARO): A liability of $2.45 million exists for future plugging and abandonment costs.
Control: A group of entities (Arcadian Energy, Inc. and affiliates) owns approximately 69% of outstanding stock, potentially blocking changes in control.

Related Party Receivables: Verify the collectability of the $11.2 million in notes receivable from affiliates (PIAMI/Eurenergy) and the status of the fully reserved Eurenergy service fees.
Impairment Charge: Review the assumptions used for the $1.7 million non-cash impairment charge on oil and gas properties.
Customer Concentration: Assess the stability of the contract with the single purchaser representing 90% of gas sales.
Legal Status: Confirm the current status of the litigation with Chesapeake Exploration regarding the $556k dispute.
Reserve Estimates: Validate the 7.6 million Mcf proved reserve estimate and the 32-year reserve life calculation provided by Lee Keeling & Associates.