Business Overview New Concept Energy, Inc. (GBR) is a diversified real estate and management services company based in Dallas, Texas. With a history spanning over three decades, the company has evolved from its origins in the oil and gas industry to become a versatile player in the real estate and consulting arenas.
New Concept Energy, Inc. has a rich history dating back to its founding as Medical Resource Companies of America in 1992. The company underwent several name changes over the years, transitioning to Greenbriar Corporation in 1995 and then to its current name, New Concept Energy, Inc., in 2007. During its early years, the company was primarily focused on the healthcare industry, operating medical facilities. However, in the late 1990s, the company shifted its business strategy and began investing in oil and gas operations. This transition was a significant milestone for the company as it moved into a new industry and diversified its revenue streams.
Over the next two decades, New Concept Energy navigated various challenges in the oil and gas industry, including fluctuating commodity prices and increasing competition. In 2020, the company made another pivotal move by selling its oil and gas operations to a third party. This allowed the company to refocus its efforts on its remaining real estate holdings and management services.
Today, the company's primary business activities include real estate leasing and the provision of management and administrative services. The company owns approximately 190 acres of land in Parkersburg, West Virginia, with several structures totaling around 53,000 square feet. Approximately 16,000 square feet of this space is currently leased to a third party at an annual rate of $101,000. Additionally, the company provides management, supervisory, and administrative services to a third party's oil and gas operations, for which it receives a fee of 10% of the gross revenue.
Financial Performance For the fiscal year ended December 31, 2023, New Concept Energy, Inc. reported total revenue of $152,000, a decrease from the $212,000 generated in the previous year. This decline was primarily attributable to a decrease in management fees, which fell from $111,000 in 2022 to $51,000 in 2023. Rental revenue, on the other hand, remained consistent at $101,000 for both years.
The company's net income for the fiscal year 2023 was a loss of $21,000, a significant decrease from the $181,000 in net income recorded in 2022. This decline was driven by an increase in corporate general and administrative expenses, which rose from $317,000 in 2022 to $338,000 in 2023.
For the third quarter ended September 30, 2024, New Concept Energy reported quarterly revenue of $37,000, a 5.71% increase compared to the same period in 2023. This growth was driven by a $1,000 increase in rental revenue and a $1,000 increase in management fees. However, the company's net income for the quarter decreased by $11,000 year-over-year, resulting in a loss of $4,000. This decrease was primarily due to a $9,000 increase in corporate general and administrative expenses.
For the nine months ended September 30, 2024, the company generated total revenues of $110,000, comprising $76,000 from rental income and $34,000 from management fees. This compares to total revenues of $115,000 in the corresponding nine-month period of 2023, which included $76,000 from rentals and $39,000 from management fees. Net income for the first nine months of 2024 was $1,000, compared to $18,000 in the same period of 2023.
Liquidity In terms of liquidity, New Concept Energy, Inc. maintained a strong cash position, with $447,000 in cash and cash equivalents as of December 31, 2023, compared to $436,000 at the end of the previous year. As of September 30, 2024, the company's cash and cash equivalents stood at $430,000.
The company's current ratio, a measure of its ability to meet short-term obligations, stood at 6.12 as of the end of 2023. This ratio further improved to 7.48 as of September 30, 2024, indicating a healthy liquidity position. The quick ratio was also 7.48, reflecting the company's strong ability to cover its short-term liabilities with its most liquid assets.
New Concept Energy has extinguished all outstanding debt, resulting in a debt-to-equity ratio of 0 as of September 30, 2024. The company does not have any available credit lines or other credit facilities.
Recent Developments and Outlook In August 2020, New Concept Energy, Inc. sold its oil and gas operations to a third party, marking a significant shift in the company's business model. On January 1, 2022, the company entered into a Consulting Management Agreement with respect to these oil and gas operations, whereby it provides management, supervisory, and administrative services for a fee.
Looking ahead, the company is evaluating various business opportunities to provide additional income and cash flow streams. In September 2024, the company entered into a formal agreement with Pillar Income Asset Management, a wholly owned subsidiary of Realty Advisors, Inc., to provide certain management, administrative, and advisory services for an agreed-upon fee.
Risks and Challenges As with any business, New Concept Energy, Inc. faces a range of risks and challenges. The company's reliance on a limited number of customers for its rental and management services revenue could expose it to potential volatility. Additionally, the ongoing COVID-19 pandemic and its impact on the real estate and consulting industries may pose operational and financial risks.
The company's ability to identify and capitalize on new business opportunities will be crucial in driving future growth and profitability. Furthermore, the company's success will depend on its ability to effectively manage its costs and maintain high occupancy rates and market-rate charges in its real estate operations.
Conclusion New Concept Energy, Inc. is a diversified real estate and management services provider with a history of navigating changing market conditions. While the company has faced recent financial challenges, its strong liquidity position and the potential for new business opportunities suggest that it may be well-positioned to weather the current uncertainties and pursue a path of long-term sustainable growth. The company's focus on its real estate operations in Parkersburg, West Virginia, and its management consulting services for former oil and gas operations provide a foundation for its current business model.
Despite the recent decline in net income, the company has maintained stable rental income and has seen a slight increase in overall revenue in the most recent quarter. The company's debt-free status and strong liquidity ratios indicate financial stability, which could provide a buffer against market uncertainties.
As New Concept Energy continues to adapt its business strategy, investors should closely monitor the company's progress in executing its strategic initiatives, particularly the new agreement with Pillar Income Asset Management, and its ability to manage operational and financial risks. The company's performance in the coming quarters will be crucial in determining its trajectory and potential for long-term growth in the real estate and management services sectors.