10-Q: New Concept Energy Reports Q3 2025 Loss Amid Rising Expenses

New Concept Energy, Inc. reported a net loss of $20 (in thousands) for the third quarter of 2025, widening from a $4 (in thousands) loss in the prior year, primarily due to increased corporate general and administrative expenses and lower interest income.

Summary

• Reported a net loss of $20 (in thousands) for the three months ended September 30, 2025, compared to a net loss of $4 (in thousands) for the same period in 2024.
• Reported a net loss of $58 (in thousands) for the nine months ended September 30, 2025, compared to net income of $1 (in thousands) for the same period in 2024.
• Total revenues for the three months ended September 30, 2025, were $39 (in thousands), including $26 (in thousands) from rental revenue and $13 (in thousands) from management fees, an increase from $37 (in thousands) in the comparative period of 2024.
• Total revenues for the nine months ended September 30, 2025, were $117 (in thousands), including $78 (in thousands) from rental revenue and $39 (in thousands) from management fees, an increase from $110 (in thousands) in the comparative period of 2024.
• Corporate general and administrative expenses increased to $88 (in thousands) for Q3 2025 from $79 (in thousands) for Q3 2024, and to $262 (in thousands) for 9M 2025 from $235 (in thousands) for 9M 2024.
• Interest income decreased to $43 (in thousands) for Q3 2025 from $52 (in thousands) for Q3 2024, and to $128 (in thousands) for 9M 2025 from $165 (in thousands) for 9M 2024, primarily due to lower interest rates.
• Cash and cash equivalents stood at $307 (in thousands) as of September 30, 2025, down from $363 (in thousands) at December 31, 2024.
• The company holds an unsecured Note Receivable from American Realty Investors, Inc. (a related party) of $3,542 (in thousands) at September 30, 2025, bearing interest at SOFR (4.24% at September 30, 2025) and due September 30, 2027.
• Net operating loss carryforwards are approximately $6.5 million, with $4.8 million expiring between 2025 and 2036, and $1.7 million not expiring. A full valuation allowance has been recorded against these deferred tax assets.

Sentiment

Score: 3

Explanation: The company reported increased net losses, a decrease in cash and cash equivalents, and higher operating expenses, indicating a negative financial trend. While revenues saw a slight increase and current liquidity is adequate, the overall performance and accumulated deficit suggest ongoing challenges in achieving profitability.

Positives

• Total revenues showed a slight increase for both the three-month ($39 thousand vs. $37 thousand) and nine-month ($117 thousand vs. $110 thousand) periods compared to the prior year.
• Current assets of $334 (in thousands) significantly exceed current liabilities of $63 (in thousands) at September 30, 2025, indicating a strong current liquidity position.
• Management believes no significant concentration of credit risk exists with respect to cash balances.
• Disclosure controls and procedures were evaluated as effective by management.
• No material changes in internal control over financial reporting were reported during the quarter.
• The company has extinguished all its outstanding debt, minimizing risk from exposure to changes in interest rates.

Negatives

• Net loss for the three months ended September 30, 2025, widened to $20 (in thousands) from $4 (in thousands) in the comparable prior-year period.
• The company shifted from a net income of $1 (in thousands) for the nine months ended September 30, 2024, to a net loss of $58 (in thousands) for the same period in 2025.
• Cash and cash equivalents decreased by $56 (in thousands) from $363 (in thousands) at December 31, 2024, to $307 (in thousands) at September 30, 2025.
• Net cash used in operating activities increased to $56 (in thousands) for the nine months ended September 30, 2025, from $17 (in thousands) in the prior year.
• Interest income decreased due to lower interest rates, impacting overall profitability.
• Corporate general and administrative expenses increased for both the three-month and nine-month periods.
• The accumulated deficit increased to $59,152 (in thousands) at September 30, 2025.
• A full valuation allowance has been recorded against deferred tax assets due to uncertainty regarding the realization of future benefits from net operating loss carryforwards.

Risks

• Inherent risks and uncertainties surrounding future expectations generally.
• Interest rate fluctuations could impact interest income from the related-party note receivable.
• The ability to obtain adequate debt and equity financing for future business opportunities.
• Demand, pricing, and competition in the company's real estate and consulting management service sectors.
• Potential construction, licensing, and permitting 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.
• The ability to continue managing costs and cash flow.
• Uncertainty regarding the realization of deferred tax assets from net operating loss carryforwards.
• Potential adverse effects of inflation on salaries or other operating expenses.
• Environmental liabilities, although none are currently identified as material.

Future Outlook

The company is actively evaluating business opportunities to generate additional income and improve cash flow. However, operating results for the reported periods are not necessarily indicative of future performance. The company acknowledges inherent risks and uncertainties, including interest rate fluctuations, the ability to secure adequate financing, market demand, pricing, competition, and potential delays in property-related activities.

Management Comments

• "The financial statements reflect all adjustments that are, in the opinion of management, necessary to fairly present such information. All such adjustments are of a normal recurring nature."
• "The Company is evaluating business opportunities to provide both additional income and cash flow."
• "Management believes that no significant concentration of credit risk exists with respect to these cash balances at September 30, 2025."
• "Management believes that by purchasing these services through Pillar it can get lower costs and better service."
• "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 disclosure controls and procedures... were effective to provide reasonable assurance..."
• "There has been no change in our internal control over financial reporting... that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting."

Industry Context

The filing provides limited specific industry context beyond the company's niche operations in real estate and consulting for oil and gas operations. The decrease in interest income is attributed to lower interest rates, reflecting a broader economic trend. The company's focus on evaluating new business opportunities suggests an effort to adapt or expand beyond its current, relatively small-scale operations.

Related Party Transactions

• Pillar Income Asset Management, a wholly owned subsidiary of Realty Advisors, Inc. (where Mr. Bertcher serves as a director), provides management administrative and advisory services. Fees for Q3 2025 were $9 (in thousands) and for 9M 2025 were $27 (in thousands).
• An unsecured Note Receivable from American Realty Investors, Inc. (a related party) in the amount of $3,542 (in thousands) at September 30, 2025, bearing interest at SOFR (4.24%) and due September 30, 2027.

Stakeholder Impact

• Shareholders: Likely negative impact due to increased net losses, declining cash, and a negative shift from net income to net loss year-over-year, potentially affecting future share value.
• Employees: No direct impact on employees is mentioned, but increased expenses could imply pressure on operational efficiency.
• Customers (tenants/consulting clients): Stable rental revenue and increased management fees suggest ongoing relationships with existing clients.
• Creditors: Minimal impact as the company has extinguished all outstanding debt, except for the related-party note receivable where NCE is the creditor, indicating a low external debt risk.

Next Steps

• Evaluate business opportunities to provide additional income and cash flow.
• Evaluate the impact of new accounting pronouncements (ASU 2023-09, ASU 2024-03, ASU 2025-01) on consolidated financial statements.

Key Dates

Recommendation

The company's financial performance shows a clear negative trend with widening net losses, decreasing cash, and increased operating expenses. While current assets exceed liabilities, the reliance on related-party interest income and the lack of significant growth in core revenues, combined with a history of accumulated deficits and a full valuation allowance on NOLs, indicates a challenging outlook. The absence of a clear growth strategy beyond 'evaluating business opportunities' and the continued losses suggest that the company is struggling to achieve profitability, making it a high-risk investment with limited upside potential based on this filing.

Keywords

New Concept Energy, GBR, Quarterly Report, SEC Filing, Financial Results, Net Loss, Revenue, Real Estate, Management Fees, Corporate Governance, Risk Factors, SOFR, Note Receivable, Operating Lease, Cash Flow, Accumulated Deficit, Net Operating Loss Carryforwards