10-Q

______________________________________________________________________________________________       

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED June 30, 2019

Or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM           TO

Commission File Number 000-08187

NEW CONCEPT ENERGY, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada					75-2399477
(State or Other Jurisdiction of Incorporation or Organization)					(I.R.S. Employer Identification No.)
1603 LBJ Freeway Suite 800 Dallas, Texas
		(Address of principal executive offices)
		75234
		(Zip Code)
		(972) 407-8400
		(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
	Title of each class		Trading Symbol(s)	Name of each exchange on which registered
	Common Stock, par value $0.01		GBR	NYSE AMERICAN

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes: [X]   No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes: [X]   No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer £	Accelerated filer £
	Non-accelerated filer £	Smaller reporting company R
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).			Yes: £No: R

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

Common Stock, $.01 par value	5,131,934 shares
(Class)	(Outstanding at August 13, 2019)

1 

NEW CONCEPT ENERGY, INC. AND SUBSIDIARIES

Index to Quarterly Report on Form 10-Q

Period ended June 30, 2019

PART I:  FINANCIAL INFORMATION
Item 1.  Financial Statements
Consolidated Balance Sheets	3
Consolidated Statements of Operations	5
Consolidated Statements of Cash Flows	6
Consolidated Statements of Changes in Stockholders’ Equity	7
Notes To Consolidated Financial Statements	8
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	11
Item 4.  Controls and Procedures	11
PART II:  OTHER INFORMATION	11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 6. Exhibits	12
Signatures	13

2 

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

NEW CONCEPT ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(amounts in thousands)
	June 30, 2019		December 31, 2018
Assets
Current assets
Cash and cash equivalents	$	175	$	361
Accounts receivable from oil and gas sales		77		72
Current portion note receivable (including $4,136 and $4,017 in 2019 and 2018 from related parties		4,179		4,063
Other current assets		23		—
Total current assets		4,454		4,496
Oil and natural gas properties (full cost accounting method)
Proved developed and undeveloped oil and gas properties, net of depletion		2,492		2,517
Property and equipment, net of depreciation
Land, buildings and equipment - oil and gas operations		675		618
Note receivable		231		251
Total assets	$	7,852	$	7,882
The accompanying notes are an integral part of these consolidated financial statements.

3 

NEW CONCEPT ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
(unaudited)
(dollars in thousands, except par value amount)
		June 30,  2019			December 31, 2018
Liabilities and stockholders' equity
Current liabilities
Accounts payable - (including $59 and $37 due to related parties in 2019 and 2018)	$	85		$	59
Accrued expenses		13			32
Current portion of long term debt		51			59
Total current liabilities		149			150
Long-term debt
Notes payable less current portion		187			201
Asset retirement obligation		2,770			2,770
Total liabilities		3,106			3,121
Stockholders' equity
Preferred stock, Series B		1			1
Common stock, $.01 par value; authorized, 100,000,000 shares; issued and outstanding, 5,131,934 and 2,036,935 shares at June 30, 2019 and December 31, 2018		51			51
Additional paid-in capital		63,579			63,579
Accumulated deficit		(58,885	)		(58,870	)
Total shareholder equity		4,746			4,761
Total liabilities & equity	$	7,852		$	7,882
The accompanying notes are an integral part of these consolidated financial statements.

4 

NEW CONCEPT ENERGY, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
(amounts in thousands, except per share data)
	For the Three Months ended June 30,						For the Six Months ended June 30,
	2019			2018			2019			2018
Revenue
Oil and gas operations, net of royalties	$	164		$	173		$	344		$	377
Operating expenses
Oil and gas operations		231			239			410			514
Corporate general and administrative		134			108			222			183
Total Operating Expenses		365			347			632			697
Operating earnings (loss)		(201	)		(174	)		(288	)		(320	)
Other income (expense)
Interest income		64			4			129			11
Interest expense		(4	)		(5	)		(9	)		(11	)
Other income (expense), net		—			1			153			12
Expense		60			0			273			12
Net income (loss) applicable to common shares	$	(141	)	$	(174	)	$	(15	)	$	(308	)
Net income (loss) per common share-basic and diluted	$	(0.03	)	$	(0.08	)	$	(0.00	)	$	(0.14	)
Weighted average common and equivalent shares outstanding - basic		5,132			2,132			5,132			2,132
The accompanying notes are an integral part of these consolidated financial statements.

5 

NEW CONCEPT ENERGY, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(amounts in thousands)
	For the Six Months Ended
	June 30,
	2019			2018
Cash flows from operating activities
Net income (loss)	$	(15	)	$	(308	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation, depletion and amortization		46			128
Other current and non-current assets		(124	)		44
Accounts payable and other liabilities		(7	)		(137	)
Net cash provided by (used) in operating activities		(86	)		(273	)
Cash flows from investing activities
Fixed asset additions		(69	)
Investment in mineral rights		(7	)		—
Net cash provided by (used in) investing activities		(76	)		—
Cash flows from financing activities
Payment on notes payable		(24	)		(39	)
Sale of common stock		—			171
Net cash provided by (used in) financing activities		(24	)		132
Net increase (decrease) in cash and cash equivalents		(186	)		(141	)
Cash and cash equivalents at beginning of year		361			419
Cash and cash equivalents at end of period	$	175		$	278
Supplemental disclosures of cash flow information
Cash paid for principal on notes payable	$	15		$	39
The accompanying notes are an integral part of these consolidated financial statements.

6 

NEW CONCEPT ENERGY, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(amounts in thousands)
	Series B				Common Stock				Additional		Accum-
	Preferred stock								paid in		ulated
	Shares		Amount		Shares		Amount		capital		deficit			Total
Balance at December 31, 2017		1	$	1		2,037	$	21	$	59,000		(58,386	)		636
Net Income												(134	)		(134	)
Balance at June 30, 2018		1	$	1		2,037	$	21	$	59,000	$	(58,520	)	$	502
Balance at December 31, 2018		1	$	1		5,132	$	51	$	63,579		(58,870	)		4,761
Net Income												(15	)		(15	)
Balance at June 30, 2019		1	$	1		5,132	$	51	$	63,579	$	(58,885	)	$	4,746
The accompanying notes are an integral part of these consolidated financial statements.

7 

NEW CONCEPT ENERGY, INC. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

NOTE A: BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of New Concept Energy, Inc. and its majority-owned subsidiaries (collectively, “NCE” or the “Company”).  All significant intercompany transactions and accounts have been eliminated.  Certain reclassifications have been made to the prior year revenue and operating expense amounts in the statement of operations to conform to the current year presentation.

The unaudited financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  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.  Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such rules and regulations.

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2018.  Operating results for the three and six month periods ended June 30, 2019 are not necessarily indicative of the results that may be expected for any subsequent quarter or for the fiscal year ending December 31, 2019.

NOTE B: NATURE OF OPERATIONS

The Company operates oil and gas wells and mineral leases in Athens and Meigs Counties in Ohio and in Calhoun, Jackson and Roane Counties in West Virginia through its wholly owned subsidiaries Mountaineer State Energy, Inc. and Mountaineer State Operations, LLC.

NOTE C: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

We consider accounting policies related to our estimates of depreciation amortization and depletion, segments, oil and gas properties, oil and gas reserves, gas gathering assets, office and field equipment, revenue recognition and gas imbalances, leases, revenue recognition for real estate operations, impairment, and sales of real estate as significant accounting policies.  The policies include significant estimates made by management using information available at the time the estimates are made.  However, these estimates could change materially if different information or assumptions were used.  These policies are summarized in our Annual Report on Form 10-K for the year ended December 31, 2018.

NOTE D: OIL AND GAS RESERVES

The Company uses the full cost method of accounting for its investment in oil and natural gas properties.  Under this method of accounting, all costs of acquisition, exploration and development of oil and natural gas properties (including such costs as leasehold acquisition costs, geological expenditures, dry hole costs, tangible and intangible development costs and direct internal costs) are capitalized as the cost of oil and natural gas properties when incurred.

The full cost method requires the Company to calculate quarterly, by cost center, a “ceiling,” or limitation on the amount of properties that can be capitalized on the balance sheet.  To the extent capitalized costs of oil and natural gas properties, less accumulated depletion and related deferred taxes exceed the sum of the discounted future net revenues of proved oil and natural gas reserves, the lower of cost or estimated fair value of unproved properties subject to amortization, the cost of properties not being amortized, and the related tax amounts, such excess capitalized costs are charged to expense.

NOTE E: CONTINGENCIES

Carlton Litigation

8 

Since December 2006, Carlton Energy Group, LLC (“Carlton”), an individual, Eurenergy Resources Corporation (“Eurenergy”) and several other entities, including New Concept Energy, Inc., which was then known as CabelTel International Corporation (the “Company”), have been involved in contentious litigation alleging tortuous conduct, breach of contract and other matters and, as to the Company, that it was the alter ego of Eurenergy. The Carlton claims were based upon an alleged tortuous interference with a contract by the individual and Eurenergy related to the right to explore a coal bed methane concession in Bulgaria which had never (and has not to this day) produced any hydrocarbons. At no time during the pendency of this project or since did the Company or any of its officers or directors have any interest whatsoever in the success or failure of the so-called “Bulgaria Project.” However, in the litigation Carlton alleged that the Company was the alter ego of certain of the other defendants, including Eurenergy.

During August 2017, the parties to the litigation reached an arrangement, the final terms of which will not be determined until the outcome of an appeal to the Supreme Court. Under the terms of the arrangement, the Company should have no financial responsibility to Carlton, nor should any potential final outcome materially adversely affect the Company, in management’s opinion.

NOTE F:  SUBSEQUENT EVENTS

The Company has evaluated subsequent events through August 13, 2019, the date the financial statements were available to be issued, and determined that there are none to be reported.

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 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.

Oil and Gas Property Accounting

The Company uses the full cost method of accounting for its investment in oil and natural gas properties.  Under this method of accounting, all costs of acquisition, exploration and development of oil and natural gas properties (including such costs as leasehold acquisition costs, geological expenditures, dry hole costs, tangible and intangible development costs and direct internal costs) are capitalized as the cost of oil and natural gas properties when incurred.

The full cost method requires the Company to calculate quarterly, by cost center, a “ceiling,” or limitation on the amount of properties that can be capitalized on the balance sheet.  To the extent capitalized costs of oil and natural gas properties, less accumulated depletion and related deferred taxes exceed the sum of the discounted future net revenues of proved oil and natural gas reserves, the lower of cost or estimated fair value of unproved properties subject to amortization, the cost of properties not being amortized, and the related tax amounts, such excess capitalized costs are charged to expense.

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 estimate of the required allowance, which is reviewed on a quarterly basis, is subject to revision as these factors change.

9 

Deferred Tax Assets

Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets.  The future recoverability of the Company’s net deferred tax assets is dependent upon the generation of future taxable income prior to the expiration of the loss carry forwards.  At June 30, 2018, the Company had a deferred tax asset due to tax deductions available to it in future years.  However, as management could not determine that it was more likely than not that the benefit of the deferred tax asset would be realized, a 100% valuation allowance was established.

Liquidity and Capital Resources

At June 30, 2019, the Company had current assets of $4,454,000 and current liabilities of $149,000.

Cash and cash equivalents at June 30, 2019 were $175,000 as compared to $361,000 at December 31, 2018.

Net cash used in operating activities was $86,000 for the six months ended June 30, 2019. 

Net cash used in investing activities was $76,000 for the six months ended June 30, 2019 

Net cash used in financing activities was $24,000 for the six months ended June 30, 2019.

Results of Operations

Comparison of the three months ended June 30, 2019 to the same period in 2018

The Company reported a net loss of $141,000 for three months ended June 30, 2019, as compared to a net loss of $174,000 for the similar period in 2018.

For the three months ended June 30, 2019, the Company recorded oil and gas revenues of $164,000 as compared to $173,000 for the comparable period of 2018. The decrease was principally due to a lower price received for the sale of natural gas.

For the three months ended June 30, 2019, the Company recorded oil and gas operating expenses of $231,000 as compared to $239,000 for the comparable period of 2018.

For the three months ended June 30, 2019, corporate general & administrative expenses were $134, 000 as compared to $108,000 for the comparable periods in 2018.  The increase was due to an increase in general operating expenses

Comparison of the six months ended June 30, 2019 to the same period in 2018

The Company reported a net loss of $15,000 for the six months ended June 30, 2019, as compared to a net loss of $308,000 for the similar period in 2018.

For the six months ended June 30, 2019, the Company recorded oil and gas revenues of $344,000 as compared to $377,000 for the comparable period of 2018. The decrease was principally due to a lower price received for the sale of natural gas.

For the six months ended June 30, 2019, the Company recorded oil and gas operating expenses of $410,000 as compared to

$514, 000 for the comparable period of 2018. The decrease was principally due to lower depletion and depreciation and general operating expenses in 2019

For the six months ended June 30, 2019, corporate general & administrative expenses were $222,000 as compared to $183,000 for the comparable periods in 2018.  The increase was due to an increase in general operating expenses.

10 

For the six months ended June 30, 2019, other income was $153,000 as compared to $12,000 for the comparable periods in 2018.  In the first quarter of 2019 the Company received $136,000 as payment for a receivable the Company had written off in previous years

“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 rents from a retirement community and fees for services rendered.  The real estate operation is affected by rental rates that are highly dependent upon market conditions and the competitive environment in the areas where the property is located.  Compensation to employees and maintenance are the principal cost elements relative to the operation of this property.  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 or that, should inflationary pressures arise, the Company will be able to offset such costs by increasing rental rates in its real estate operation.

Environmental Matters

The Company has conducted environmental assessments on most of its existing owned or leased properties.  These assessments have not revealed any environmental liability that the Company believes would have a material adverse effect on the Company’s business, assets or results of operations.  The Company is not aware of any such environmental liability.  The Company believes that all of its properties are in compliance in all material respects with all federal, state and local laws, ordinances and regulations regarding hazardous or toxic substances or petroleum products.  The Company has not been notified by any governmental authority and is not otherwise aware of any material non-compliance, liability or claim relating to hazardous or toxic substances or petroleum products in connection with any of its communities.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Nearly all of the Company’s debt is financed at fixed rates of interest.  Therefore, the Company has minimal risk from exposure to changes in interest rates.

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.

PART II:  OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

11 

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 November 30, 2001 (incorporated by reference to Exhibit 2.1.7 to Registrant’s Form 10-K dated December 31, 2002)
3.8	Certificate of Designations, Preferences and Rights of Preferred Stock dated May 7, 1993 relating to Registrant’s Series B Preferred Stock (incorporated by reference to Exhibit 4.1.2 to Registrant’s Form S-3 Registration Statement No. 333-64840 dated June 22, 1993)
3.9	Certificate of Voting Powers, Designations, Preferences and Rights of Registrant’s Series F Senior Convertible Preferred Stock dated December 31, 1997 (incorporated by reference to Exhibit 2.2.2 of Registrant’s Form 10-KSB for the fiscal year ended December 31, 1997)
3.10	Certificate of Voting Powers, Designations, Preferences and Rights of Registrant’s Series G Senior Non-Voting Convertible Preferred Stock dated December 31, 1997 (incorporated by reference to Exhibit 2.2.3 of Registrant’s Form 10-KSB for the fiscal year ended December 31, 1997)
3.11	Certificate of Designations dated October 12, 2004 as filed with the Secretary of State of Nevada on October 13, 2004 (incorporated by reference to Exhibit 3.4 of Registrant’s Current Report on Form 8-K for event occurring October 12, 2004)
3.12	Certificate of Amendment to Articles of Incorporation effective February 8, 2005 (incorporated by reference to Exhibit 3.5 of Registrant’s Current Report on Form 8-K for event occurring February 8, 2005)
3.13	Certificate of Amendment to Articles of Incorporation effective March 21, 2007 (incorporated by reference to Exhibit 3.13 of Registrant’s Current Report on Form 8-K for event occurring March 21, 2005)
31.1*	Certification pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended, of Principal Executive Officer and Chief Financial Officer
32.1*	Certification of Principal Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350
101	Interactive data files pursuant to Rule 405 of Regulation S-T.
*Filed herewith.

12 

Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	New Concept Energy, Inc.
Date: August 13, 2019	By:	/s/ Gene Bertcher
		Gene S. Bertcher, Principal Executive
		Officer, President and Chief Financial
		Officer

13 

EXHIBIT 31.1

CERTIFICATIONS

PRINCIPAL EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER’S RULE 13a-14(a)/15d-14(a)

I, Gene S. Bertcher, certify that:

1)       I have reviewed this annual report of Form 10-Q of New Concept Energy, Inc.;

2)       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made in light of the circumstances under which such statements were made, and is not misleading with respect to the period covered by this report;

3)       Based on my knowledge, the financial statements and other financial information included in this report fairly present, in all material respects, the financial condition, results of operations and cash flows of the Registrant as of and for the periods presented in this report;

4)       I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) for the Registrant and have:

(a)       Designed such disclosure controls and procedures, or used such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;

(c)       Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d)       Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

5)       I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

(a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b)       Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls.

Dated: August 13, 2019
	By:	/s/ Gene S. Bertcher
		Gene S. Bertcher
		Principal Executive Officer
		President and Chief Financial Officer

14 

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. § 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of New Concept Energy, Inc. (the “Company”) of Form 10-Q for the period ended March 31, 2016, as filed with the Securities Exchange Commission on the date hereof (the “Report”), I, Gene S. Bertcher, President and Chief Financial Officer of the Company, do hereby certify pursuant to 18 U.S.C. §1350 that:

(i) The Report fully complies with the requirements of Section 13(a) or I 5(d) of the Securities Exchange Act of 1934, as amended; and

(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company, at the end of the period indicated and for the periods indicated.

Dated: August 13, 2019
	By:	/s/ Gene S. Bertcher
		Gene S. Bertcher
		Principal Executive Officer
		President and Chief Financial Officer

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 13, 2019
Document And Entity Information
Entity Registrant Name	New Concept Energy, Inc.
Entity Central Index Key	0000105744
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Is Entity Emerging Growth Company?	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Common Stock, Shares Outstanding		5,131,934
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019

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CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 175,000	$ 361,000
Accounts receivable from oil and gas sales	77,000	72,000
Current portion note receivable (including $4,136 and $4,017 in 2019 and 2018 from related parties	4,179,000	4,063,000
Other current assets	23,000
Total current assets	4,454,000	4,496,000
Oil and natural gas properties (full cost accounting method)
Proved developed and undeveloped oil and gas properties, net of depletion	2,492,000	2,517,000
Property and equipment, net of depreciation
Land, buildings and equipment - oil and gas operations	675,000	618,000
Note receivable	231,000	251,000
Total assets	7,852,000	7,882,000
Current liabilities
Accounts payable - (including $59 and $37 due to related parties in 2019 and 2018)	85,000	59,000
Accrued expenses	13,000	32,000
Current portion of long term debt	51,000	59,000
Total current liabilities	149,000	150,000
Long-term debt
Notes payable less current portion	187,000	201,000
Asset retirement obligation	2,770,000	2,770,000
Total liabilities	3,106,000	3,121,000
Stockholders' equity
Preferred stock, Series B	1,000	1,000
Common stock, $.01 par value; authorized, 100,000,000 shares; issued and outstanding, 5,131,934 and 2,036,935 shares at June 30, 2019 and December 31, 2018	51,000	51,000
Additional paid-in capital	63,579,000	63,579,000
Accumulated deficit	(58,885,000)	(58,870,000)
Total shareholder equity	4,746,000	4,761,000
Total liabilities & equity	$ 7,852,000	$ 7,882,000

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Current portion note receivable	$ 4,136,000	$ 4,017,000
Accounts payable due to related parties	$ 59,000	$ 37,000
Common Stock, Par Value	$ .01	$ 0.01
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares Issued	5,131,934	2,036,935
Common Stock, Shares Outstanding	5,131,934	2,036,935

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CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue
Oil and gas operations, net of royalties	$ 344,000	$ 377,000	$ 164,000	$ 173,000
Operating expenses
Oil and gas operations	410,000	514,000	231,000	239,000
Corporate general and administrative	222,000	183,000	134,000	108,000
Total Operating Expenses	632,000	697,000	365,000	347,000
Operating earnings (loss)	(288,000)	(320,000)	(201,000)	(174,000)
Other income (expense)
Interest income	129,000	11,000	64,000	4,000
Interest expense	(9,000)	(11,000)	(4,000)	(5,000)
Other income (expense), net	153,000	12,000		1,000
Expense	273,000	12,000	60,000	0
Net income (loss) applicable to common shares	$ (15,000)	$ (308,000)	$ (141,000)	$ (174,000)
Net income (loss) per common share-basic and diluted	$ (0.00)	$ (0.14)	$ (0.03)	$ (0.08)
Weighted average common and equivalent shares outstanding - basic	5,132	2,132	5,132	2,132

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CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities
Net income (loss)	$ (15,000)	$ (134,000)
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation, depletion and amortization	46,000	128,000
Other current and non-current assets	(124,000)	44,000
Accounts payable and other liabilities	(7,000)	(137,000)
Net cash provided by (used) in operating activities	(86,000)	(273,000)
Cash flows from investing activities
Fixed asset additions	(69,000)
Investment in mineral rights	(7,000)
Net cash provided by (used in) investing activities	(76,000)
Cash flows from financing activities
Payment on notes payable	(24,000)	(39,000)
Sale of common stock		171,000
Net cash provided by (used in) financing activities	(24,000)	132,000
Net increase (decrease) in cash and cash equivalents	(186,000)	(141,000)
Cash and cash equivalents at beginning of year	361,000	419,000
Cash and cash equivalents at end of period	175,000	278,000
Supplemental disclosures of cash flow information
Cash paid for principal on notes payable	$ 15,000	$ 39,000

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CONSOLIDATED SHAREHOLDERS EQUITY - USD ($)	Series B Preferred Stock	Common Stock	Additional Paid-In Capital	Retained Earnings / Accumulated Deficit	Total
Beginning Balance Preferred Stock, Shares at Dec. 31, 2017	1
Beginning Balance Preferred Stock, Value at Dec. 31, 2017	$ 1,000
Beginning Balance Common Stock, Shares at Dec. 31, 2017		2,037
Beginning Balance Common Stock, Value at Dec. 31, 2017		$ 21,000	$ 59,000,000	$ (58,386,000)	$ (636,000)
Net income				(134,000)	(134,000)
Ending Balance Preferred Stock, Shares at Jun. 30, 2018	1
Ending Balance Preferred Stock, Value at Jun. 30, 2018	$ 1,000
Ending Balance Common Stock, Shares at Jun. 30, 2018		2,037
Ending Balance Common Stock, Value at Jun. 30, 2018		$ 21,000	59,000,000	(58,386,000)	502,000
Beginning Balance Preferred Stock, Shares at Dec. 31, 2018	1
Beginning Balance Preferred Stock, Value at Dec. 31, 2018	$ 1,000
Beginning Balance Common Stock, Shares at Dec. 31, 2018		5,132
Beginning Balance Common Stock, Value at Dec. 31, 2018		$ 51,000	63,579,000	(58,870,000)	4,761,000
Net income				(15,000)	(15,000)
Ending Balance Preferred Stock, Shares at Jun. 30, 2019	1
Ending Balance Preferred Stock, Value at Jun. 30, 2019	$ 1,000
Ending Balance Common Stock, Shares at Jun. 30, 2019		5,132
Ending Balance Common Stock, Value at Jun. 30, 2019		$ 51,000	$ 63,579,000	$ (58,870,000)	$ 4,746,000

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A. BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

NOTE A: BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of New Concept Energy, Inc. and its majority-owned subsidiaries (collectively, “NCE” or the “Company”).  All significant intercompany transactions and accounts have been eliminated.  Certain reclassifications have been made to the prior year revenue and operating expense amounts in the statement of operations to conform to the current year presentation.

The unaudited financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  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.  Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such rules and regulations.

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2018.  Operating results for the three and six month periods ended June 30, 2019 are not necessarily indicative of the results that may be expected for any subsequent quarter or for the fiscal year ending December 31, 2019.

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B. NATURE OF OPERATIONS

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

B. NATURE OF OPERATIONS

NOTE B: NATURE OF OPERATIONS

The Company operates oil and gas wells and mineral leases in Athens and Meigs Counties in Ohio and in Calhoun, Jackson and Roane Counties in West Virginia through its wholly owned subsidiaries Mountaineer State Energy, Inc. and Mountaineer State Operations, LLC.

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C. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE C: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

We consider accounting policies related to our estimates of depreciation amortization and depletion, segments, oil and gas properties, oil and gas reserves, gas gathering assets, office and field equipment, revenue recognition and gas imbalances, leases, revenue recognition for real estate operations, impairment, and sales of real estate as significant accounting policies.  The policies include significant estimates made by management using information available at the time the estimates are made.  However, these estimates could change materially if different information or assumptions were used.  These policies are summarized in our Annual Report on Form 10-K for the year ended December 31, 2018.

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D. OIL AND GAS RESERVES

6 Months Ended

Jun. 30, 2019

Extractive Industries [Abstract]

OIL AND GAS RESERVES

NOTE D: OIL AND GAS RESERVES

The Company uses the full cost method of accounting for its investment in oil and natural gas properties.  Under this method of accounting, all costs of acquisition, exploration and development of oil and natural gas properties (including such costs as leasehold acquisition costs, geological expenditures, dry hole costs, tangible and intangible development costs and direct internal costs) are capitalized as the cost of oil and natural gas properties when incurred.

The full cost method requires the Company to calculate quarterly, by cost center, a “ceiling,” or limitation on the amount of properties that can be capitalized on the balance sheet.  To the extent capitalized costs of oil and natural gas properties, less accumulated depletion and related deferred taxes exceed the sum of the discounted future net revenues of proved oil and natural gas reserves, the lower of cost or estimated fair value of unproved properties subject to amortization, the cost of properties not being amortized, and the related tax amounts, such excess capitalized costs are charged to expense.

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E. CONTINGENCIES

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

CONTINGENCIES

NOTE E: CONTINGENCIES

Carlton Litigation

Since December 2006, Carlton Energy Group, LLC (“Carlton”), an individual, Eurenergy Resources Corporation (“Eurenergy”) and several other entities, including New Concept Energy, Inc., which was then known as CabelTel International Corporation (the “Company”), have been involved in contentious litigation alleging tortuous conduct, breach of contract and other matters and, as to the Company, that it was the alter ego of Eurenergy. The Carlton claims were based upon an alleged tortuous interference with a contract by the individual and Eurenergy related to the right to explore a coal bed methane concession in Bulgaria which had never (and has not to this day) produced any hydrocarbons. At no time during the pendency of this project or since did the Company or any of its officers or directors have any interest whatsoever in the success or failure of the so-called “Bulgaria Project.” However, in the litigation Carlton alleged that the Company was the alter ego of certain of the other defendants, including Eurenergy.

During August 2017, the parties to the litigation reached an arrangement, the final terms of which will not be determined until the outcome of an appeal to the Supreme Court. Under the terms of the arrangement, the Company should have no financial responsibility to Carlton, nor should any potential final outcome materially adversely affect the Company, in management’s opinion.

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F. SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE F:  SUBSEQUENT EVENTS

The Company has evaluated subsequent events through August 13, 2019, the date the financial statements were available to be issued, and determined that there are none to be reported.