Item 1. Financial Statements
NEW CONCEPT ENERGY, INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE SHEETS
|
(unaudited)
|
(dollars in thousands, except par value amount)
|
|
|
September 30,
2020
|
|
December 31,
2019
|
|
|
(unaudited)
|
|
(audited)
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
42
|
|
|
$
|
22
|
|
Current portion notes receivable (including $3,578 and 4,005 due to related parties in 2020 and 2019)
|
|
|
3,618
|
|
|
|
4,046
|
|
Other current assets
|
|
|
104
|
|
|
|
—
|
|
Total current assets
|
|
|
3,764
|
|
|
|
4,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net of depreciation
|
|
|
|
|
|
|
|
|
Land, buildings and equipment
|
|
|
659
|
|
|
|
668
|
|
|
|
|
|
|
|
|
|
|
Assets held for sale
|
|
|
—
|
|
|
|
840
|
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
|
181
|
|
|
|
214
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,604
|
|
|
$
|
5,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
NEW CONCEPT ENERGY, INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE SHEETS - CONTINUED
|
(unaudited)
|
(dollars in thousands, except par value amount)
|
|
|
|
|
|
|
|
|
September 30,
2020
|
|
|
|
December 31,
2019
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable (includes $32 and $180 due to related parties in 2020 and 2019)
|
|
$
|
39
|
|
|
$
|
226
|
|
Accrued expenses
|
|
|
18
|
|
|
|
20
|
|
Current portion of long term debt
|
|
|
40
|
|
|
|
44
|
|
Total current liabilities
|
|
|
97
|
|
|
|
290
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
|
|
Notes payable less current portion
|
|
|
150
|
|
|
|
177
|
|
|
|
|
|
|
|
|
|
|
Liabilities of assets held for sale
|
|
|
—
|
|
|
|
2,914
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
247
|
|
|
|
3,381
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
|
|
Preferred stock, Series B
|
|
|
1
|
|
|
|
1
|
|
Common stock, $.01 par value; authorized, 100,000,000
|
|
|
|
|
|
|
|
|
shares; issued and outstanding, 5,131,934 shares at
|
|
|
|
|
|
|
|
|
September 30, 2020 and December 31, 2019
|
|
|
51
|
|
|
|
51
|
|
Additional paid-in capital
|
|
|
63,579
|
|
|
|
63,579
|
|
Accumulated deficit
|
|
|
(59,274
|
)
|
|
|
(61,222
|
)
|
|
|
|
|
|
|
|
|
|
Total Shareholder Equity
|
|
|
4,357
|
|
|
|
2,409
|
|
|
|
|
|
|
|
|
|
|
Total liabilities & equity
|
|
$
|
4,604
|
|
|
$
|
5,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
NEW CONCEPT ENERGY, INC AND SUBSIDIARIES
|
CONSOLIDATED STATEMENT OF OPERATIONS
|
(unaudited)
|
(amounts in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months ended September 30,
|
|
For the Nine Months ended September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue
|
|
|
|
|
|
|
|
|
Rent
|
|
$
|
25
|
|
|
$
|
25
|
|
|
$
|
76
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
15
|
|
|
|
17
|
|
|
|
46
|
|
|
|
53
|
|
Corporate general and administrative
|
|
|
65
|
|
|
|
92
|
|
|
|
296
|
|
|
|
314
|
|
Total operating expenses
|
|
|
80
|
|
|
|
109
|
|
|
|
342
|
|
|
|
367
|
|
Operating loss
|
|
|
(55
|
)
|
|
|
(84
|
)
|
|
|
(266
|
)
|
|
|
(291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income from related parties
|
|
|
54
|
|
|
|
60
|
|
|
|
172
|
|
|
|
180
|
|
Interest Income from third parties
|
|
|
3
|
|
|
|
3
|
|
|
|
12
|
|
|
|
12
|
|
Interest expense
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(9
|
)
|
|
|
(12
|
)
|
Income other
|
|
|
83
|
|
|
|
46
|
|
|
|
83
|
|
|
|
199
|
|
Other income
|
|
|
137
|
|
|
|
106
|
|
|
|
258
|
|
|
|
379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
|
82
|
|
|
|
22
|
|
|
|
(8
|
)
|
|
|
88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) from discontinued operations
|
|
|
(38
|
)
|
|
|
(2,342
|
)
|
|
|
(182
|
)
|
|
|
(2,423
|
)
|
Gain (loss) from disposal of Oil & Gas Operations
|
|
|
2,138
|
|
|
|
—
|
|
|
|
2,138
|
|
|
|
—
|
|
|
|
|
2,100
|
|
|
|
(2,342
|
)
|
|
|
1,956
|
|
|
|
(2,423
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to common shares
|
|
|
2,182
|
|
|
|
(2,320
|
)
|
|
|
1,948
|
|
|
|
(2,335
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share-basic and diluted
|
|
$
|
0.43
|
|
|
$
|
(0.45
|
)
|
|
$
|
0.38
|
|
|
$
|
(0.45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common and equivalent shares outstanding - basic
|
|
|
5,132
|
|
|
|
5,132
|
|
|
|
5,132
|
|
|
|
5,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
NEW CONCEPT ENERGY, INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CASH FLOW
|
(unaudited)
|
(dollars in thousands, except par value amount)
|
|
|
For the Nine Months Ended
|
|
|
September 30,
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net income (loss) from Continuing Operations
|
|
$
|
(8
|
)
|
|
$
|
88
|
|
Net income (loss) from Discontinued Operations
|
|
|
1,956
|
|
|
|
(2,423
|
)
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities
|
|
|
|
|
|
|
|
|
Gain on sale of oil and gas operations
|
|
|
(2,138
|
)
|
|
|
—
|
|
Impairment of oil and natural gas properties
|
|
|
—
|
|
|
|
2,285
|
|
Depreciation, and amortization
|
|
|
13
|
|
|
|
12
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Other current and non-current assets
|
|
|
(125
|
)
|
|
|
(78
|
)
|
Accounts payable and other liabilities
|
|
|
(189
|
)
|
|
|
511
|
|
Net cash provided by (used) in operating activities
|
|
|
(491
|
)
|
|
|
395
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Investment in drilling costs
|
|
|
—
|
|
|
|
(612
|
)
|
Fixed asset additions
|
|
|
—
|
|
|
|
(70
|
)
|
Proceeds for sale of Discontinued Operations
|
|
|
85
|
|
|
|
—
|
|
|
|
|
85
|
|
|
|
(682
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Collection on Notes Receivable
|
|
|
461
|
|
|
|
—
|
|
Payment on Notes Payable
|
|
|
(35
|
)
|
|
|
(32
|
)
|
Net cash provided by (used in) financing activities
|
|
|
426
|
|
|
|
(32
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
20
|
|
|
|
(319
|
)
|
Cash and cash equivalents at beginning of year
|
|
|
22
|
|
|
|
361
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
42
|
|
|
$
|
42
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
|
|
|
|
Cash paid for interest on notes payable
|
|
$
|
9
|
|
|
$
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
NEW CONCEPT ENERGY, INC AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
|
For the Three and Nine Months Ended September 30, 2020 and 2019
|
(Unaudited, dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, 2020
|
|
Series B Preferred stock
|
|
Common Stock
|
|
Additional Paid-in
|
|
Accumulated
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
deficit
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2020
|
|
|
1
|
|
|
$
|
1
|
|
|
|
5,132
|
|
|
$
|
51
|
|
|
$
|
63,579
|
|
|
$
|
(61,456
|
)
|
|
$
|
2,175
|
|
Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,182
|
|
|
|
2,182
|
|
Balance at September 30, 2020
|
|
|
1
|
|
|
$
|
1
|
|
|
|
5,132
|
|
|
$
|
51
|
|
|
$
|
63,579
|
|
|
$
|
(59,274
|
)
|
|
$
|
4,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, 2019
|
|
Series B Preferred stock
|
|
Common Stock
|
|
|
Additional Paid-in
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Capital
|
|
|
|
deficit
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2019
|
|
|
1
|
|
|
$
|
1
|
|
|
|
5,132
|
|
|
$
|
51
|
|
|
$
|
63,579
|
|
|
$
|
(58,885
|
)
|
|
$
|
4,746
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,320
|
)
|
|
|
(2,320
|
)
|
Balance at September 30, 2019
|
|
|
1
|
|
|
$
|
1
|
|
|
|
5,132
|
|
|
$
|
51
|
|
|
$
|
63,579
|
|
|
$
|
(61,205
|
)
|
|
$
|
2,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2020
|
|
Series B Preferred stock
|
|
Common Stock
|
|
|
Additional Paid-in
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Capital
|
|
|
|
deficit
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019
|
|
|
1
|
|
|
$
|
1
|
|
|
|
5,132
|
|
|
$
|
51
|
|
|
$
|
63,579
|
|
|
$
|
(61,222
|
)
|
|
$
|
2,409
|
|
Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,948
|
|
|
|
1,948
|
|
Balance at September 30, 2020
|
|
|
1
|
|
|
$
|
1
|
|
|
|
5,132
|
|
|
$
|
51
|
|
|
$
|
63,579
|
|
|
$
|
(59,274
|
)
|
|
$
|
4,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2019
|
|
Series B Preferred stock
|
|
Common Stock
|
|
|
Additional Paid-in
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Capital
|
|
|
|
deficit
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018
|
|
|
1
|
|
|
$
|
1
|
|
|
|
5,132
|
|
|
$
|
51
|
|
|
$
|
63,579
|
|
|
$
|
(58,870
|
)
|
|
$
|
4,761
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,335
|
)
|
|
|
(2,335
|
)
|
Balance at September 30, 2019
|
|
|
1
|
|
|
$
|
1
|
|
|
|
5,132
|
|
|
$
|
51
|
|
|
$
|
63,579
|
|
|
$
|
(61,205
|
)
|
|
$
|
2,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
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, 2019. Operating results for the three and six month periods ended September 30, 2020 are not necessarily
indicative of the results that may be expected for any subsequent quarter or for the fiscal year ending December 31, 2020.
NOTE B: NATURE OF OPERATIONS
The Company also owns approximately 190 acres of land located in
Parkersburg West Virginia. Located on the land are four structures totaling approximately 53,000 square feet. Of this total area
the main industrial / office building contains approximately 24,800 square feet of which approximately 16,000 square feet is leased
at a rate of $101,000 per annum.
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, 2019.
NOTE D: DISCONTINUED OPERATIONS
On August 31, 2020 the Company sold its entire oil and
gas operation for $85,000 to an independent third party. In the prior years the Company has accrued a liability of $2,745,000
to plug and abandon the existing wells. This obligation has been assumed by the buyer. Upon the sale of the wells the Company
recorded a gain of $2,138,000.
Also included in discontinued operations are net
operating expenses the company incurred during the period presented. For the nine months ended September 31, 2020 and 2019
the Company recorded an operating loss of $182,000 and $2,423,000. In September 2019 the Company wrote down the accounting
value of its oil and gas reserves of by $2,285,000.
NOTE E: LIQUIDITY
The Company’s ability to meet current cash obligations relies
on cash received from current operations and the collection of notes receivable. The Company is evaluating business opportunities
to provide both additional income and cash flow.
NOTE F: CONTINGENCIES
During the first quarter of 2020 and continuing thereafter,
both the COVID-19 pandemic and attempts at containment have resulted in decreased economic activity which has adversely affected
the broader global economy. At this time, the full extent to which COVID-19 pandemic will negatively impact the global economy
and our business is uncertain.
NOTE G: SUBSEQUENT EVENTS
The Company has evaluated subsequent events through November 12,
2020, 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.
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.
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 September 30, 2019, 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 September 30, 2020, the Company had current assets of $3,764,000
and current liabilities of $97,000.
Cash and cash equivalents at September 30, 2020 were $42,000 as
compared to $22,000 at December 31, 2019.
Net cash used in operating activities was $491,000 for the nine months
ended September 30, 2020.
Net cash received from investing activities was $85,000 for the nine months ended September 30, 2020. This is the cash received from the sale of oil & gas operations.
Net cash received from financing activities was $426,000 for the nine months ended September 30, 2020. This is the cash received from the collection of notes receivable.
Results of Operations
Comparison of the three months ended September 30, 2020 to
the same period in 2019
The Company reported net income of $2,182,000 for three months ended
September 30, 2020, as compared to net loss of $2,320,000 for the similar period in 2019.
For the three months ended September 30, 2020 and 2019, the Company
recorded rental revenue of $25,000.
For the three months ended September 30, 2020, corporate general
& administrative expenses were $65,000 as compared to $92,000 for the comparable periods in 2019.
For the three months ended September 30, 2020 the Company reported
other income of $84,000 which represents a tax refund for taxes paid in prior years.
For the three months ended September 30, 2020 the company recorded
a gain of $2,182,000 from the sale of its oil and gas operations.
For the three months ended September 30, 2020 recorded a gain
from discontinued operation of $2,100,000 as compared to a loss of $2,342,000 for the comparable periods in 2019. Included in
2020 is a gain from the sale of the oil and gas business of $2,138,000. Included in 2019 is impairment loss for its oil and
gas properties of $2,285,000.
Comparison of the nine months ended September 30,
2020 to the same period in 2019
The Company reported net income of $1,948,000 for nine months ended
September 30, 2020, as compared to net loss of $2,335,000 for the similar period in 2019.
For the three months ended September 30, 2020 and 2019, the Company
recorded rental revenue of $25,000.
For the nine months ended September 30, 2020, corporate general
& administrative expenses were $296,000 as compared to $314,000 for the comparable periods in 2019.
For the nine months ended September 30, 2020 recorded a gain
from discontinued operation of $1,956,000 as compared to a loss of $2,423,000 for the comparable periods in 2019. Included in
2020 is a gain from the sale of the oil and gas business of $2,138,000. Included in 2019 is impairment loss for its oil and
gas properties of $2,285,000.
“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
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 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.