CKX LANDS, INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES   Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures   We conducted an evaluation, under the supervision and with the participation of our principal executive and financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2021. Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures that are designed to provide reasonable assurance that such information is accumulated and communicated to our principal executive and financial officer, as appropriate, to allow timely decisions regarding required disclosure.   The evaluation of our disclosure controls and procedures included a review of the control objectives and design, our implementation of the controls and the effect of the controls on the information generated for use in this Annual Report on Form 10-K. After conducting this evaluation, our principal executive and financial officer concluded that our disclosure controls and procedures, as defined by Rule 13a-15(e) under the Exchange Act, were effective as of December 31, 2021 to provide reasonable assurance that information required to be disclosed in this Annual Report on Form 10-K was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and was accumulated and communicated to  our principal executive and financial officer, as appropriate, to allow timely decisions regarding required disclosure.    Management's Report on Internal Control Over Financial Reporting   Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). Internal control over financial reporting is the process designed under the principal executive and financial officer’s supervision, and effected by our Board of Directors, the principal executive and financial officer and other personnel, 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 principles in the United States.   There are inherent limitations in the effectiveness of internal control over financial reporting, including the possibility that misstatements may not be prevented or detected. Accordingly, an effective control system, no matter how well designed and operated, can provide only reasonable assurance of achieving the designed control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.   Under the supervision and with the participation of our principal executive and financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2021, as required by Exchange Act Rule 13a-15(c). In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the 2013 Internal Control - Integrated Framework. Based on our assessment under the framework in Internal Control - Integrated Framework (2013 framework), our principal executive and financial officer concluded that our internal control over financial reporting was effective as of December 31, 2021.   Changes in Internal Controls over Financial Reporting   During the year ended December 31, 2021, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the year ended December 31, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.   11     We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.   Item 9B. OTHER INFORMATION   None.   Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS   Not applicable.   PART III     ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE   The information required by Item 10 will be included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Exchange Act of 1934 and is incorporated herein by reference.   ITEM 11. EXECUTIVE COMPENSATION   The information required by Item 11 will be included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Exchange Act of 1934 and is incorporated herein by reference.   ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS   Certain information required by Item 12 will be included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Exchange Act and is incorporated herein by reference.   The following table provides information as of December 31, 2021, about equity compensation plans (including individual compensation arrangements) under which equity securities of the Registrant are authorized for issuance. The Registrant’s only equity compensation plan is its Stock Incentive Plan approved by its shareholders on May 6, 2021.  Awards under the plan must consist of restricted stock units and performance shares.  However, as of the date of this report, no awards have been made under the plan.    Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))   (a) (b) (c) Equity compensation plans approved by security holders 0 – 357,000 Equity compensation plans not approved by security holders – – –  Total 0 – 357,000   ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS   The information required by Item 13 will be included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Exchange Act and is incorporated herein by reference.   ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES   The information required by Item 14 will be included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Exchange Act and is incorporated herein by reference.   PART IV   ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES     (a) Documents filed as part of this report:     (1) Financial Statements. The financial statements filed as part of this report are listed in the Table of Contents to Financial Statements appearing immediately after the signature page of this Form 10-K and are included herein by reference.     (2) Financial Statement Schedules. Financial Statement Schedules are not required.     (3) Exhibits. See (b) below   12       (b) Exhibits:     3.1 Restated Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to Form 10-K (File No. 001-31905) for year ended December 31, 2018 filed on March 21, 2019).         3.2 Amendment to Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.2 to Form 10-K (File No. 001-31905)  for year ended December 31, 2003 filed on March 19, 2004).         3.3 Articles of Amendment to the Restated Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.3 to Form 10-K (File No. 001-31905) for year ended December 31, 2018 filed on March 21, 2019).         3.4 By-Laws of the Registrant (incorporated by reference to Exhibit 3.1 to Form 8-K (File No. 001-31905)     filed on August 9, 2019).         4.1 Description of capital stock (incorporated by reference to Exhibit 4.1 to Form 10-K (File No. 001-31905) for the year ended December 31,2019, filed on March 16, 2020).         10.1+ Executive Employment Agreement effective as of July 15, 2020. (incorporated by reference to Exhibit 10.1 to Form 8-K (File No. 001-31905) filed on July 16, 2020).         10.2+ First Amendment to Employment Agreement effective as of March 22, 2021 (incorporated by reference to Exhibit 10.1 to Form 8-K (File No. 001-31905) filed on March 25, 2021).         10.3+ CKX Lands, Inc. Stock Incentive Plan (incorporated by reference to Exhibit 4.5 to the Registration Statement on Form S-8 filed on May 28, 2021, Registration No. 333-256589).         31* Certification of W. Gray Stream, President and Treasurer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herewith.         32** Certification of W. Gray Stream, President and Treasurer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith.     101.INS* Inline XBRL Instance   101.SCH* Inline XBRL Taxonomy Extension Schema   101.CAL* Inline XBRL Taxonomy Extension Calculation   101.DEF* Inline XBRL Taxonomy Extension Definition   101.LAB* Inline XBRL Taxonomy Extension Labels   101.PRE* Inline XBRL Taxonomy Extension Presentation   104 Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)   * Filed herewith ** Furnished herewith + Management contract or compensatory plan or arrangement.   ITEM 16. FORM 10-K SUMMARY   None.   13     SIGNATURES   Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 28, 2022.   CKX LANDS, INC.   By:         /s/W. Gray Stream         W. Gray Stream         President and Treasurer         (Principal Executive and Financial Officer)           Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 28, 2022.   /s/ W. Gray Stream     W. Gray Stream   President, Treasurer and Director (Principal Executive and Financial Officer)       /s/ Lee W. Boyer     Lee W. Boyer   Secretary and Director       /s/ Keith Duplechin     Keith Duplechin   Director       /s/ Edward M. Ellington, II     Edward M. Ellington, II   Director       /s/ Daniel J. Englander     Daniel J. Englander   Director       /s/ Max H. Hart     Max H. Hart   Director       /s/   Lane LaMure     Lane LaMure   Director       /s   Eugene T. Minvielle, IV     Eugene T. Minvielle   Director   /s/ Mary Leach Werner     Mary Leach Werner   Director   14     CKX LANDS, INC.   CONTENTS   FINANCIAL STATEMENTS Page     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID: 206 ) F-2     BALANCE SHEETS F-3     STATEMENTS OF OPERATIONS F-4     STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY F-5     STATEMENTS OF CASH FLOWS F-6     NOTES TO FINANCIAL STATEMENTS F-7   F-1     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of CKX Lands, Inc.   Opinion on the Financial Statements   We have audited the accompanying balance sheets of CKX Lands, Inc. (the “Company”) as of December 31, 2021 and 2020, and the related statements of operations, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.   Basis for Opinion   These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.   We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.   Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.   Critical Audit Matters   Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.   /s/ MaloneBailey, LLP www.malonebailey.com We have served as the Company's auditor since 2015. Houston, Texas March 28, 2022     F-2       CKX LANDS, INC.   BALANCE SHEETS       December 31,       2021     2020   ASSETS                 Current assets:                 Cash and cash equivalents   $ 7,409,873     $ 6,463,255   Equity investment in mutual funds     502,832       502,595   Accounts receivable     50,739       98,515   Prepaid expense and other assets     35,405       8,711   Total current assets     7,998,849       7,073,076   Property and equipment, net     9,056,238       9,243,621   Total assets   $ 17,055,087     $ 16,316,697                     LIABILITIES AND STOCKHOLDERS' EQUITY                                   Current liabilities:                 Trade payables and accrued expenses   $ 111,123     $ 110,786   Unearned revenue     150,113       231,409   Total current liabilities     261,236       342,195   Deferred income tax payable     187,664       187,664   Total liabilities     448,900       529,859                     Stockholders' equity:                 Common stock, 3,000,000 shares authorized, no par value, 1,942,495 shares issued and outstanding as of December 31, 2021 and 2020     59,335       59,335   Retained earnings     16,546,852       15,727,503   Total stockholders' equity     16,606,187       15,786,838   Total liabilities and stockholders' equity   $ 17,055,087     $ 16,316,697     The accompanying notes are an integral part of these financial statements.   F-3       CKX LANDS, INC.   STATEMENTS OF OPERATIONS         Years Ended December 31,       2021     2020                     Revenues:                 Oil and gas   $ 364,907     $ 257,247   Timber sales     151,102       134,720   Surface revenue     190,203       241,644   Surface revenue - related party     38,333       38,333   Total revenue     744,545       671,944   Costs, expenses and (gains):                 Oil and gas costs     41,685       29,379   Timber costs     11,684       9,409   Surface costs     -       1,154   General and administrative expense     651,574       605,223   Depreciation expense     2,027       2,303   Gain on sale of land     ( 1,025,735 )     ( 354,577 ) Total costs, expenses and (gains)     ( 318,765 )     292,891   Income from operations     1,063,310       379,053                     Interest income     15,625       44,179   Miscellaneous income     4,384       14,992   Income before income taxes     1,083,319       438,224   Federal and state income tax expense:                 Current     263,970       98,841   Total income taxes     263,970       98,841   Net income   $ 819,349     $ 339,383                     Earnings per share, basic and diluted   $ 0.42     $ 0.17                     Weighted average shares outstanding, basic and diluted     1,942,495       1,942,495     The accompanying notes are an integral part of these financial statements.   F-4       CKX LANDS, INC.   STATEMENTS   OF CHANGES   IN STOCKHOLDERS ’  EQUITY       Common Stock     Retained     Total       Shares     Amount     Earnings     Equity   Balances, December 31, 2020     1,942,495     $ 59,335     $ 15,727,503     $ 15,786,838   Net income     -       -       819,349       819,349   Balances, December 31, 2021     1,942,495     $ 59,335     $ 16,546,852     $ 16,606,187         Common Stock     Retained     Total       Shares     Amount     Earnings     Equity   Balances, December 31, 2019     1,942,495     $ 59,335     $ 15,388,120     $ 15,447,455   Net income     -       -       339,383       339,383   Balances, December 31, 2020     1,942,495     $ 59,335     $ 15,727,503     $ 15,786,838     The accompanying notes are an integral part of these financial statements.   F-5       CKX LANDS, INC. STATEMENTS OF CASH FLOWS       Years Ended       December 31,       2021     2020   CASH FLOWS FROM OPERATING ACTIVITIES                 Net income   $ 819,349     $ 339,383   Adjustments to reconcile net income to net cash provided by (used in) operating activities:           Depreciation expense     2,027       2,303   Depletion expense     563       974   Gain on sale of land     ( 1,025,735 )     ( 354,577 ) Unrealized loss on equity investment in mutual funds     -       2,007   Changes in operating assets and liabilities:                 (Increase) decrease in current assets     21,082       35,291   Increase (decrease) in current liabilities     ( 80,959 )     114,784   Net cash provided by (used in) operating activities     ( 263,673 )     140,165                     CASH FLOWS FROM INVESTING ACTIVITIES                 Purchases of certificates of deposit     -       ( 1,985,920 ) Proceeds from maturity of certificates of deposit     -       4,682,920   Purchases of mutual funds     ( 237 )     ( 3,960 ) Costs of reforesting timber     ( 18,606 )     (9,321 ) Purchases of land     ( 4,063 )     -   Proceeds from the sale of fixed assets     1,233,197       359,082   Net cash provided by investing activities     1,210,291       3,042,801                     NET INCREASE IN CASH AND CASH EQUIVALENTS     946,618       3,182,966   Cash and cash equivalents, beginning of the period     6,463,255       3,280,289   Cash and cash equivalents, end of the period   $ 7,409,873     $ 6,463,255                     SUPPLEMENTAL CASH FLOW INFORMATION                 Cash paid for interest   $ -     $ -   Cash paid for income taxes   $ 289,423     $ 92,770     The accompanying notes are an integral part of these financial statements.   F-6     CKX LANDS, INC. NOTES TO FINANCIAL STATEMENTS         Note 1: Nature of Business and Significant Accounting Policies   Nature of Business   The Company was incorporated in the State of Louisiana on June 27, 1930. The Company’s business is the ownership and management of land. The primary activities consist of leasing its properties for minerals (oil and gas), raising and harvesting timber, and surface use (agriculture, right of ways, hunting).   Significant Accounting Policies   Basis of Presentation and Use of Estimates   The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.   Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.   Risks and Uncertainties   On March 11, 2020, the World Health Organization declared COVID- 19 a pandemic. While the Company did not incur significant disruptions to its operations during 2020 or 2021 from COVID- 19, it is unable at this time to predict the impact that COVID- 19 or new variants of the novel coronavirus will have on its business, financial position and operating results in future periods due to numerous uncertainties and is closely monitoring the impact of the pandemic on all aspects of its business.   Concentration of Credit Risk   The Company maintains its cash balances in seven financial institutions. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation’s insured limit of $250,000. The Company has not experienced any losses in such accounts and management believes the Company is not exposed to any significant credit risk on its cash balances.     Cash Equivalents   Cash equivalents are highly liquid debt instruments with original maturities of three months or less when purchased.   Equity Investment   In January 2016, the FASB issued ASU 2016 - 01, “ Financial Instruments – Overall (Subtopic 825 - 10 ): Recognition of Financial Assets and Financial Liabilities, ” (ASU 2016 - 01 ), which makes targeted amendments to the guidance for recognition, measurement, presentation and disclosure of financial instruments.  The guidance under ASU 2016 - 01 requires equity investments, other than equity method investments, to be measured at fair value with changes in fair value recognized in net income.  As of December 31, 2021 and 2020, the Company classified $ 502,832 and $ 502,595 , respectively, of mutual funds as equity securities.  The Company invests in ultra-short, high quality U.S. dollar money market funds, foreign funds, and obligations issued by the U.S. Government.   Accounts Receivable   The Company’s accounts receivable consists of incomes received after quarter-end for royalties produced prior to quarter-end.  When there are royalties that have not been received at the time of the preparation of the financial statements for months in the prior quarter, the Company estimates the amount to be received based on the average of the most recent 12 month’s royalties that were received from that particular well.  The Company does not maintain an allowance for doubtful accounts because other than the accrual for earned but not received royalties, it has no accounts receivable.   F- 7     Property, Building and Equipment   Property, building, and equipment is stated at cost. Major additions are capitalized. Maintenance and repairs are charged to income as incurred. Depreciation is computed on the straight-line and accelerated methods over the following estimated useful lives of the assets:   Furniture and equipment (years)     5 - 7   Land improvements (years)       15       Impairment of Long-lived Assets   Long-lived assets, such as land, timber and property, buildings, and equipment, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If events or circumstances arise that require a long-lived asset to be tested for potential impairment, the Company first compares undiscounted cash flows expected to be generated by the asset to its carrying value. If the carrying amount of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent that the carrying value exceeds the fair value. Fair value may be determined through various valuation techniques including quoted market prices, third -party independent appraisals and discounted cash flow models. During the year ended December 31, 2021, the Company performed a step zero impairment analysis on furniture and fixtures and land improvements and determined there were no qualitative factors that would indicate impairment. No impairment charges were recorded during the years ended December 31, 2021 and 2020.   On August 27, 2020, Hurricane Laura made landfall in Cameron, Louisiana as a major Category 4 hurricane. The hurricane caused widespread property damage, flooding, power outages, and water and communication service interruptions. The Company holds 13,941 acres of land in Southwest Louisiana across 11 parishes, with 10,495 acres classified as timber lands. Ten of these parishes are included in the Federal Emergency Management Agency’s disaster declaration related to Hurricane Laura. A percentage of the Company's timber assets were damaged during the storm. The Company performed an impairment analysis by comparing the undiscounted cash flow of the assets and the carrying value of the fixed assets and determined there was no impairment to its timber. During the year ended December 31, 2021, no impairment triggering factors were noted and no quantitative analysis was performed.   Revenue Recognition   The Company accounts for revenue under ASU 2014 - 09, Revenue from Contracts with Customers (ASC 606 ). In accordance with ASC 606, we recognize revenues when the following criteria are met: (i) persuasive evidence of a contract with a customer exists, (ii) identifiable performance obligations under the contract exist, (iii) the transaction price is determinable for each performance obligation, (iv) the transaction price is allocated to each performance obligation, and (v) the performance obligations are satisfied. We derive a majority of our revenues from oil and gas royalties, timber sales, and surface leases. Surface leases are not within the scope of ASC 606 and are accounted for under ASC 842. See Note 9 for more detailed information about the Company’s reportable segments.   Oil and Gas   Oil and gas revenue is generated through customer contracts, where we provide the customer access to a designated tract of land upon which the customer performs exploration, extraction, production and ultimate sale of the oil and gas. The Company receives royalties on all oil and gas produced by the customer. The performance obligation identified in oil and gas related contracts is the oil and gas produced on the designated tract of land. The performance obligation is satisfied at a point in time, which is when the customer produces oil and gas. The transaction price is comprised of fixed fees (royalties) on all oil and gas produced. The Company accrues monthly royalty revenues based upon estimates and adjusts to actual as the Company receives payments. Net accrued royalty income was $ 50,379 and $ 49,113 as of December 31, 2021 and 2020, respectively. There are no capitalized contract costs associated with oil and gas contracts. The accounting for royalty income remains largely unchanged upon implementation of ASC 606.   Timber   Timber revenue is generated through customer contracts executed as a pay-as-cut arrangement, where the customer acquires the right to harvest specified timber on a designated tract for a set period of time at agreed-upon unit prices. The performance obligation identified in timber related contracts is the severing of a single tree.   We satisfy our performance obligation when timber is severed, at which time revenue is recognized. The transaction price for timber sales is determined using contractual rates applied to harvest volumes. The Company may receive a deposit at the time of entering into a stumpage agreement and this deposit is recorded in unearned revenue until earned. The Company held stumpage agreement deposits of $ 0 and $ 87,300 as of December 31, 2021 and 2020. There are no capitalized contract costs associated with timber contracts. No revenue has been recognized on the stumpage agreements held by the Company that are still open. The amount deposited by the customer is recognized as revenue against the first timber harvested.  If no timber is harvested by the end of the contract the deposit is retained and recognized as income at contract end.  The accounting of timber revenue remains largely unchanged upon implementation of ASC 606.   F- 8     Surface   Surface revenue is earned through annual leases for agricultural and hunting activities and the Company records revenues evenly over the term of these leases.  Surface revenues from these sources are recurring on an annual basis.    Surface revenue is also earned through right of way and related temporary work-space leases, both of which are not unusual in occurrence and are not recurring sources of revenue. Generally, a right of way lease relates to either a utility or pipeline right of way that is a permanent servitude or exists for fixed periods of time greater than thirty years. The Company retains ownership of the land and the servitude is limited to the use of the surface. Revenue is recorded at the time of the agreement’s execution date. For income tax purposes, these types of agreements are treated as sales of business assets.   Other sources of surface revenue can be commercial activities leases and sales of surface minerals, such as dirt.   Basic and Diluted Earnings per share   Net earnings per share is provided in accordance with FASB ASC 260 - 10, "Earnings per Share". Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive income per share excludes all potential common shares if their effect is anti-dilutive. As of December 31, 2021, and 2020 there were no dilutive shares outstanding.   Dividends   The Company does not currently pay dividends on a regular basis.  In determining whether to declare a dividend, the Board of Directors takes into account the Company’s prior fiscal year’s cash flows from operations and the current economic conditions, among other information deemed relevant. Dividends paid per common stock are based on the weighted average number of common stock shares outstanding during the period. No dividends were declared during the years ended December 31, 2021 and 2020.   Pursuant to a dividend reversion clause in the Company’s Articles of Incorporation, dividends not claimed within one year after the dividend becomes payable will expire and revert in full ownership to the Company and the Company’s obligation to pay such dividend will cease. Any dividend reversions are recorded in equity upon receipt.   Income Taxes   The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities.   Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.   In accordance with generally accepted accounting principles, the Company has analyzed its filing positions in federal and state income tax returns for the tax returns that remain subject to examination. Generally, returns are subject to examination for three years after filing. The Company believes that all filing positions are highly certain and that all income tax filing positions and deductions would be sustained upon a taxing jurisdiction’s audit. Therefore, no reserve for uncertain tax positions is required. No interest or penalties have been levied against the Company and none are anticipated.   Other Taxes   Taxes, other than income taxes, which consisted of property, franchise and oil and gas production taxes were $ 146,095 and $ 125,124 , for the years ended December 31, 2021 and 2020, respectively.   Leases   The Company leases its lands to individuals and entities for various purposes. The Company accounts for these types of leases in accordance with ASC 842 , Leases, and subsequent amendments, which require that leases be evaluated and classified as operating or capital leases for financial reporting purposes. For leases classified as operating, the Company calculates rent expense on a straight-line basis over the lesser of the lease term including renewal options, if reasonably assured, or the economic life of the leased premises, taking into consideration rent escalation clauses and other lease concessions, if applicable. The Company has no capital leases as of December 31, 2021, or 2020.   F- 9     Recent Accounting Pronouncements   In December 2019, the FASB issued ASU No. 2019 - 12, Income Taxes (Topic 740 ): Simplifying the Accounting for Income Taxes. The new guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles, as well as improving consistent application in Topic 740 by clarifying and amending existing guidance. The amendments were effective for all entities for fiscal years beginning after December 15, 2020. The adoption of ASU 2019 - 12 did not have an impact on the Company’s consolidated financial statements.   In March 2020, the FASB issued ASU 2020 - 03,  “ Codification Improvements to Financial Instruments ” (“ASU 2020 - 03” ).  ASU 2020 - 03 improves and clarifies various financial instruments topics. ASU 2020 - 03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The Company adopted ASU 2020 - 03 upon issuance, which did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.   There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.     Note 2:       Fair Value of Financial Instruments   ASC 820 Fair Value Measurements and Disclosures (“ASC 820” ), defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. It defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:   Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.   Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities that are not active; and model-driven valuations whose inputs are observable or whose significant value drivers are observable. Valuations may be obtained from, or corroborated by, third -party pricing services.   Level 3: Unobservable inputs to measure fair value of assets and liabilities for which there is little, if any market activity at the measurement date, using reasonable inputs and assumptions based upon the best information at the time, to the extent that inputs are available without undue cost and effort.   The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it was practical to estimate that value:   Class Methods and/or Assumptions     Cash and cash equivalents: Carrying value approximates fair value due to its readily convertible characteristic.     Equity investment in mutual funds: Carrying value adjusted to and presented at fair market value.   F- 10     The estimated fair value of the Company's financial instruments are as follows:               December 31, 2021     December 31, 2020   Financial Assets:   Level     Carrying Value     Fair Value     Carrying Value     Fair Value                                             Cash and cash equivalents     1     $ 7,409,873     $ 7,409,873     $ 6,463,255     $ 6,463,255   Equity investment in mutual funds     1       504,606       502,832       504,369       502,595   Total           $ 7,914,479     $ 7,912,705     $ 6,967,624     $ 6,965,850       Note 3:       Property and Equipment   Property and equipment consisted of the following:       December 31,       2021     2020                     Land   $ 6,815,147     $ 7,018,547   Timber     2,214,985       2,196,942   Equipment     108,602       108,602         9,138,734       9,324,091   Accumulated depreciation     ( 82,496 )     ( 80,470 ) Total   $ 9,056,238     $ 9,243,621     Depreciation expense was $ 2,027 and $ 2,303 for the years ended December 31, 2021 and 2020, respectively.   Depletion expense was $ 563 and $ 974 for the years ended December 31, 2021 and 2020, respectively.     Note 4:       Land Purchases and Sales   Land Purchases   During the year ended December 31, 2021, the Company purchased the following lands:     +/- Louisiana         Mineral Quarter Acres Parish Ownership   Land   Rights % 3rd 10.84 Jefferson Davis 16.67 %    $ 4,063   0 %   The Company did not purchase any land during the year ended December 31, 2020.   F- 11     Land Sales   During the year ended December 31, 2021, the Company sold the following lands:     +/- Louisiana         Mineral Quarter Acres Parish Ownership   Land   Rights % 1st 3.38 Beauregard 100.00 %    $ 31,018   0 % 1st 10.00 Calcasieu 100.00 %    $ 70,500   0 % 1st 10.00 Calcasieu 100.00 %    $ 68,500   0 % 1st 5.40 Beauregard 100.00 %    $ 51,520   0 % 1st 10.00 Calcasieu 100.00 %    $ 65,295   0 % 1st 3.36 Beauregard 100.00 %    $ 31,610   0 % 1st 10.00 Calcasieu 100.00 %    $ 68,620   0 % 1st 20.98 Calcasieu 16.67 %    $ 16,408   0 % 1st 10.00 Calcasieu 100.00 %    $ 68,090   0 % 1st 10.00 Calcasieu 100.00 %    $ 65,800   0 % 2nd 10.00 Calcasieu 100.00 %    $ 68,315   0 % 2nd 6.62 Beauregard 100.00 %    $ 63,415   0 % 2nd 70.44 St. Landry 40.00 %    $ 50,688   0 % 2nd 32.52 Calcasieu 16.67 %    $ 25,458   0 % 3rd 51.89 Calcasieu 16.67 %    $ 233,483   0 % 3rd 3.38 Beauregard 100.00 %    $ 31,730   0 % 3rd 40.00 Calcasieu 50.00 %    $ 19,200   0 % 4th 138.57 Allen 40.00 %    $ 62,992   0 % 4th 25.34 Calcasieu 100.00 %    $ 140,555   0 %   During the year ended December 31, 2020, the Company sold the following lands:     +/- Louisiana         Mineral Quarter Acres Parish Ownership   Land   Rights % 1st 3.17 Calcasieu 100.00 %    $ 35,500   0 % 2nd 2.62 Calcasieu 16.67 %    $ 128,140   0 % 2nd 6.75 Beauregard 100.00 %    $ 64,000   0 % 2nd 5 Beauregard 100.00 %    $ 35,000   0 % 3rd 3.14 Calcasieu 100.00 %    $ 34,195   0 % 3rd 40 Calcasieu 16.67 %    $ 13,333   0 % 4th 2.88 Calcasieu 100.00 %    $ 28,800   0 % 4th 3.17 Calcasieu 100.00 %    $ 35,190   0 %   For the years ended December 31, 2021 and 2020, gains on sales of land were $ 1,025,735 and $ 354,577 , respectively.   F- 12       Note 5:       Oil and Gas Leases   Results of oil and gas leasing activities for the years ended December 31, 2021 and 2020 are as follows:       2021     2020   Gross revenues                 Royalty interests   $ 364,907     $ 257,247   Lease fees     -       5,882         364,907       263,129   Production costs     ( 41,685 )     ( 29,379 ) Results before income tax expense     323,222       233,750   Estimated income tax expense     ( 93,734 )     ( 67,788 ) Results of operations from producing activities excluding corporate overhead   $ 229,488     $ 165,962     Reserve information relating to estimated quantities of the Company's interest in proved reserves of natural gas and crude including condensate and natural gas liquids is not available. Such reserves are located entirely within the United States. A schedule indicating such reserve quantities is, therefore, not presented. All oil and gas royalties come from Company owned properties that were developed and produced by producers, unrelated to Company, under oil and gas mineral lease agreements.   The Company’s royalty and working interests share of oil and gas, exclusive of plant products, produced from leased properties were:       2021     2020   Net gas produced (MCF)     10,410       12,376   Net oil produced (Bbl)     5,072       5,043       Note 6:       Segment Reporting   The Company’s operations are classified into three principal operating segments that are all located in the United States: oil and gas, surface and timber. The Company’s reportable business segments are strategic business units that offer income from different products. They are managed separately due to the unique aspects of each area.   The tables below present financial information for the Company’s three operating business segments:       Years Ended December 31,       2021     2020   Identifiable Assets, net of accumulated depreciation                 Timber   $ 2,214,985     $ 2,196,942   General corporate assets     14,840,102       14,119,755   Total   $ 17,055,087     $ 16,316,697                     Capital expenditures:                 Timber   $ 18,606     $ 9,321   Surface     4,063       -   General corporate assets     -       -   Total segment costs and expenses   $ 22,669     $ 9,321                     Depreciation and depletion                 Oil and gas   $ -     $ -   Timber     563       974   General corporate assets     2,027       2,303   Total   $ 2,590     $ 3,277     F- 13         Years Ended December 31,       2021     2020   Revenues:                 Oil and gas   $ 364,907     $ 257,247   Timber sales     151,102       134,720   Surface revenue     228,536       279,977   Total segment revenues   $ 744,545     $ 671,944                     Cost and expenses:                 Oil and gas costs   $ 41,685     $ 29,379   Timber costs     11,684       9,409   Surface costs     -       1,154   Total segment costs and expenses   $ 53,369     $ 39,942                     Net income from operations:                 Oil and gas   $ 323,222     $ 227,868   Timber     139,418       125,311   Surface     228,536       278,823   Total segment net income from operations   $ 691,176     $ 632,002   Unallocated other income (expense) before income taxes     392,143       ( 193,778 ) Income before income taxes   $ 1,083,319     $ 438,224     There are no intersegment sales reported in the accompanying statements of operations. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on income or loss from operations before income taxes excluding nonrecurring gains and losses on equity investment. Income before income tax represents net revenues less costs and expenses less other income and expenses of a general corporate nature. Identifiable assets by segment are those assets used solely in the Company's operations within that segment.     Note 7:       Concentrations   Revenues from customers representing 5% or more of total revenue for the years ended December 31, 2021 and 2020, respectively were:         Years Ended December 31,   Count     2021     2020   1     $ 68,404     $ 87,871   2       64,575       67,416   3       59,420       47,452   4       56,951       45,520   5       54,300       40,289   6       53,625       38,333   7       45,183       -   8       38,333       -       Note 8:       Income Taxes         The Company files federal and state income tax returns on a calendar year basis. The net deferred tax liability in the accompanying balance sheets includes the following components at December 31, 2021 and 2020:       2021     2020   Deferred tax assets   $ -     $ -   Deferred tax liabilities     ( 187,664 )     ( 187,664 )     $ ( 187,664 )   $ ( 187,664 )   F- 14     Reconciliations between the United States federal statutory income tax provision, using the statutory rate of 21 %, and the Company’s provision for income taxes at December 31, 2021 and 2020 are as follows:       2021     2020   Income tax on income before extraordinary item:                 Tax at statutory rates   $ 310,412     $ 123,335   Tax effect of the following:                 Federal statutory depletion     ( 11,495 )     ( 8,103 ) State statutory depletion     ( 6,130 )     ( 4,322 ) State income tax deduction     ( 12,751 )     ( 3,740 ) Federal income tax deduction     ( 18,200 )     ( 7,362 ) Other     2,134       ( 967 ) Income tax on income   $ 263,970     $ 98,841     Deferred income taxes payable result from timing differences in the recognition of revenue and expenses for tax and financial statement purposes. The effect of these timing differences at December 31, 2021  and 2020  is as follows:       2021     2020   Casualty loss   $ ( 77,714 )   $ ( 77,714 ) Deferred gain     ( 109,950 )     ( 109,950 )     $ ( 187,664 )   $ ( 187,664 )   The Company files income tax returns for federal and state purposes. Generally, the Company’s tax returns remain open for three years for tax examination purposes. Tax positions are recognized when they are more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is more likely than not to be realized upon settlement. The Company is subject to periodic audits by the Internal Revenue Service and other state and local taxing authorities. These audits may challenge certain of the Company’s tax positions such as timing and amount of income and deductions and the allocation of taxable income to various tax jurisdictions. The Company evaluates its tax positions and establishes liabilities if significant in accordance with the applicable accounting guidance on uncertainty in income taxes. With few exceptions, the Company is no longer subject to U.S. Federal and state income tax examinations by the tax authorities for calendar years ending before December 31, 2018.     Note 9:      Related Party Transactions   The Company and Stream Wetlands Services, LLC (“Stream Wetlands”) are parties to an option to lease agreement dated April 17, 2017 ( the “OTL”). The OTL provided Stream Wetlands an option to lease certain lands from the Company, subject to the negotiation and execution of a mutually acceptable lease form. On February 28, 2021, the Company renewed the OTL for a period of 12 months through February 28, 2022 in exchange for a payment by Stream Wetlands of $ 38,333 , and Stream Wetlands may extend the option for one more year through February 28, 2023 upon payment of an additional $38,333. William Gray Stream, the President and Treasurer and a director of the Company, is the president of Stream Wetlands.   The Company’s President and Treasurer is also the President of Matilda Stream Management, Inc. Matilda Stream Management provides administrative and accounting services to the Company for no compensation.   The Company’s immediate past President and current Secretary and director is a partner in Stockwell, Sievert, Viccellio, Clements, LLP (“Stockwell”). Beginning in August 2018, the Company began renting office space from Stockwell. The Company paid Stockwell $ 750 per month as rent for office space and associated services, $ 2,000 per month to reimburse the firm for an administrative assistant and reimbursed Stockwell for miscellaneous office supplies and legal expenses. For the year ended December 31, 2020, the Company recorded $ 22,407 in total of such expense, of which $ 6,000 was rent expense. These expenses were paid through August 31, 2020 and Stockwell ceased providing these services to the Company on August 31, 2020.   Surface revenue-related party was $ 38,333 for each of the years ended December 31, 2021 and 2020. All of this amount was attributable to the OTL with Stream Wetlands described above.     Note 10:   Subsequent Events   On February 28, 2022 Stream Wetlands exercised the OTL and signed a lease in exchange for paying the Company $ 38,333 .   F-15