CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the “Safe Harbor” provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements include, without limitation, the information contained under the heading “Outlook for Fiscal Year 20212022” in Item 7 of this report, and any statements containing forward-looking terminology including “may,” ”should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “projects,” or other similar words. These statements are not a guarantee of future performance and are subject to risks, uncertainties and other factors, some of which are set forth in “Item 1A. Risk Factors.” Many risks are beyond our control and difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Additional information may be contained in the Company’s future reports periodically filed with the SEC.

The “Company”, “we,” “us,” and “our,” refer to CKX Lands, Inc.

PART I

Business Description

CKX Lands, Inc., a Louisiana corporation, began operations in 1930 under the name Calcasieu Real Estate & Oil Co., Inc. It was originally organized as a spin-off by a bank operating in southwest Louisiana. The purpose of the spin-off was to form an entity to hold non-producing mineral interests which regulatory authorities required the bank to charge off. Over the years, as some of the mineral interests began producing, the Company used part of the proceeds to acquire land. In 1990, the Company made its largest acquisition when it was one of four purchasers who bought a fifty percent undivided interest in approximately 35,575 acres in southwest Louisiana.

Today the Company’s income is derived from mineral royalties, timber sales and surface payments from its lands. CKX receives income from royalty interests and mineral leases related to oil and gas production, timber sales, land sales and surface rents. Although CKX is active in the management of its land and planting and harvesting its timber, CKX is passive in the production of income from oil and gas production in that CKX does not explore for oil and gas or operate wells. These oil and gas activities are performed by unrelated third parties.

CKX leases its property to oil and gas operators and collects income through its land ownership in the form of oil and gas royalties and lease rentals and geophysical revenues. The Company’s oil and gas income fluctuates as new oil and gas production is discovered on Company land and then ultimately depletes or becomes commercially uneconomical to produce. The volatility in the daily commodity pricing of a barrel of oil or a thousand cubic feet, or “MCF,” of gas will also cause fluctuations in the Company’s oil and gas income. These commodity prices are affected by numerous factors and uncertainties external to CKX’s business and over which it has no control, including the global supply and demand for oil and gas, and domestic and global economic conditions, among other factors.

CKX has small royalty interests in 20 different producing oil and gas fields. The size of each royalty interest is determined by the Company’s net ownership in the acreage unit for the well. CKX’s royalty interests range from 0.0045% for the smallest to 7.62% for the largest. As the Company does not own or operate the wells, it does not have access to any reserve information. Eventually, the oil and gas reserves under the Company’s current land holdings will be depleted.

Timber income is derived from sales of timber on Company lands. The timber income will fluctuate depending on our ability to secure stumpage agreements in the regional markets, timber stand age, and/or stumpage commodity prices. Timber is a renewable resource that the Company actively manages.

Surface income is earned from various recurring and non-recurring sources. Recurring surface income is earned from lease arrangements for farming, recreational and commercial uses. Non-recurring surface income can include such activities as pipeline right of ways, and temporary worksite rentals.

In managing its lands, the Company relies on and has established relationships with real estate, forestry, environmental and agriculture consultants as well as attorneys with legal expertise in general corporate matters, real estate, and minerals.

The Company actively searches for additional real estate for purchase in Louisiana with a focus on southwest Louisiana and on timberland and agricultural land. When evaluating unimproved real estate for purchase, the Company will consider numerous characteristics including but not limited to, timber fitness, agriculture fitness, future development opportunities and/or mineral potential. When evaluating improved real estate for purchase, the Company will consider characteristics including, but not limited to, geographic location, quality of existing revenue streams, and/or quality of the improvements.

The Company’s Board of Directors regularly evaluates a range of strategic alternatives that could increase shareholder value, and the Board and management conduct due diligence activities in connection with such alternatives. These include opportunities for growth though the acquisitions of land or other assets, business combinations, dispositions of assets and reinvestment of the proceeds, and other alternatives. We cannot assure you that the Board’s evaluations or the Company’s due diligence activities will result in any transaction or other course of action.

CKX does not perform or cause to be performed oil and gas producing activities inasmuch as: (1) we do not search for crude oil or natural gas in their natural states; (2) we do not acquire property for the purpose of exploration or the removing of oil and gas; and (3) we are not involved in construction, drilling and/or production activities necessary to retrieve oil and gas.

The Company does not spend any money on research and development.

Because of the nature of the Company’s revenue streams, the effect of competition on the Company and its results of operations is not material.

In the first quarter of 2019, the Company began developing several ranchette-style subdivisions on certain of its lands in Calcasieu Parish and Beauregard Parish, Louisiana, using existing road rights of way. The Company actively markets for sale the subdivision lots, which consist of more than three acres each. The Company is working to identify additional undeveloped acres that it owns in Southwest Louisiana that would likewise be suitable for residential subdivisions.

Employees

The Company has one employee, who is part-time. The Company is not subject to union contracts nor does the Company have any medical benefit, pension, profit sharing, option or deferred compensation programs. The Company expects to seek the approval of its shareholders at its 2021 annual meeting of shareholders forhas a stock incentive plan to be adopted if approved, pursuant to its previously announcedin connection with the Executive Employment Agreement effective July 15, 2020, as amended, with its President and Treasurer. The plan permits the Company to grant restricted stock units or performance shares for up to 357,000 shares of its common stock. No awards have been made under the plan to date.

Customers

The Company’s customers are those who have mineral leases on Company lands, purchase timber in competitive bids or execute surface leases for farming, hunting, right of ways or other purposes. During 2020,2021, the Company received approximately 48.64%59.08% of its total revenues from the following customers:

Loss of cash receipts from any of these customers or revenue streams would have a material adverse effect on the Company.

Environmental and Other Governmental Regulations

The Company does not need government approval of its principal products or services except that the State of Louisiana must permit the size and location of all oil and gas producing units. The operator of the oil and gas units is responsible for this permitting process.

The operators of the wells are responsible for complying with environmental and other governmental regulations. However, should an operator abandon a well located on Company land without following prescribed procedures, the landowners could possibly be held responsible. The Company does not believe this would have a material effect on its financial condition.

Significant Risk Factors

In addition to the other information set forth in this report, you should carefully consider the following risks, which could materially affect our business, financial condition, or results of operations in future periods. The risks described below are not the only risks facing our Company. Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or results of operations in future periods.

`

The COVID-19 pandemic created a global health crisis and an unprecedented suspensiondisruption of commercial activity around the world, including in Louisiana. The severity and effect of the pandemic isare constantly evolving, and its future consequences are highlyar uncertain, so we cannot predict how it may affect our future financial condition and results of operations.

The novel coronavirus, which emerged in China in late 2019, has caused a deadlyIn response to the COVID-19 pandemic, that has spread to North America, including Louisiana. Governmentgovernment authorities around the world including in the State of Louisiana, implemented “stay-at-home” and other social distancing orders, travel restrictions, quarantines and other measures that required many businesses, including some of our business partners and customers, like timber mills who buy our timber, to close.close or limit their operations. Disruptions in commercial activity and changes in consumer spending resulting from the pandemic have significantly affected worldwide commerce and the global economy. Although we have been ableoperated continuously throughout the pandemic, and while effective COVID-19 vaccines, treatments and other measures have led to continue operating,improved conditions in the U.S. and many other countries, we cannot predict with any certainty how the pandemic and new variants of coronavirus could impact our operations in the future. Among other possible effects, the pandemic could materially and adversely affect us in the following ways:

The direct and indirect effects of the pandemic are extremely widespread and constantly evolving. In addition, its future effects are highly uncertain. It is possible that the pandemic could affect our business in the future in ways that we do not or cannot now anticipate.

A significant portion of our revenues is derived from oil and gas activities on our lands. We rely on third parties to conduct that activity.

We rely on third parties to conduct oil and gas exploration and production activity on our lands. If we are not successful in attracting third parties to conduct that activity or if there is any significant interruption in existing activity on our lands, our results of operations, financial condition and cash flows, would be adversely affected. Additionally, our ability to generate future earnings depends on third parties finding new production on our land to replace present production as it is depleted. Oil and gas prices, as well as new technology, will affect the possibility of replacing present production.

Our revenues could be negatively impacted by declines in commodity prices for oil, natural gas, and timber, among others.

We earn a significant portion of our operating income from the sale of commodities produced from our lands: oil and gas, and timber. Fluctuations in the prices for these commodities will directly impact our cash flow, net income and financial condition.

Additionally, because certain of our lands are leased to farmers, declines in the commodity prices for the crops they grow may impact their ability to make lease payments, and therefore could adversely affect our cash flow, results of operations and financial condition.

Our operations and properties could be adversely affected by hurricanes or other adverse weather events, natural disasters, or other significant disruptions.

Our properties are located principally in southwest Louisiana, where major hurricanes and flooding have occurred. Depending on where any hurricane makes landfall or flooding occurs, our properties could be significantly damaged, and income-producing activities on our properties could be disrupted. In fact, approximately a percentage33 percent of our standing timber was at least partially damaged, and oil and gas production on our lands was temporarily interrupted due to Hurricane Laura in August 2020. In addition, the occurrence and frequency of hurricanes and flooding in Louisiana could also negatively impact demand for the use of our real estate assets because of perceptions of hurricane and flooding risks. In addition to hurricanes, the occurrence of other natural disasters and climate conditions in Louisiana, such as tornadoes, fires, unusually heavy or prolonged rain, droughts, prolonged freezing temperatures and heat waves, could have an adverse effect on our ability to use our properties or realize income from our properties.

We have approximately 10,495 net acres of timberland in various stages of growth or age classes. A typical pine timber stand will be harvested after 30 to 35 years of growth with some thinning occurring during this time. A hardwood stand will be harvested after 45 to 50 years of growth. A natural disaster can have a material adverse effect on timber growth, reducing its value. In addition to hurricanes, natural disasters that could affect our timber lands include tornados, high winds, heavy rains and flooding, and/or fire caused by lightning or other sources.

If any of the events described above occurs, we may experience disruptions to our operations and damage to our properties, which could have an adverse effect on our business, our financial condition, our results of operations, and our cash flows.

Our land holdings are concentrated in southwest Louisiana, and we therefore may suffer economic harm because of adverse conditions in that region.

Our land holdings are located principally in southwest Louisiana. Due to the concentration of our properties in this area, our performance is dependent on local economic conditions. This area has experienced periods of economic decline in the past and may do so in the future.

We rely on third party managers for day-to-day property management of certain of our properties.

We rely on local third-party managers for the day-to-day management of our timberland properties. The cash flows from our timberland properties may be adversely affected if the property manager fails to provide quality services. These third-party managers may fail to manage our properties effectively or in accordance with the terms of our agreement with them. If any of these events occur,occurs, we could incur losses or face liabilities from the loss or injury to our property or to persons at our properties. In addition, disputes may arise between us and third-party managers, and we may incur significant expenses to resolve those disputes or terminate the relevant agreement with the third parties and locate and engage competent and cost-effective alternative service providers to manage the relevant properties. Additionally, third party managers may manage and own other properties that may compete with our properties, which may result in conflicts of interest and decisions regarding the operation of our properties that are not in our best interests.

Potential environmental liabilities could result in substantial costs to us or cause our land to lose value.

Under federal, state, and local environmental laws, ordinances and regulations, we may be required to investigate and clean up the effects of releases of hazardous substances or petroleum products on our properties because of current or past ownership or operation of oil and gas activities on our lands. If previously unidentified environmental problems arise, we may have to make substantial payments, which could adversely affect our cash flow. As an owner of properties, we may have to pay for property damage and for investigation and cleanup costs incurred in connection with a contamination. The law typically imposes cleanup responsibility and liability regardless of whether an owner knew of or caused the contamination. Changes in environmental regulations or the discovery of environmental damage on our lands may cause the value of our lands to decline, may impact the development potential of our undeveloped land or could increase operating costs due to the cost of complying with new regulations.

Our overall business is subject to risks associated with the real estate industry.

We are subject to all risks related to investment in real estate, many of which relate to the general lack of liquidity of real estate investments, including, but not limited to:

Our common stock may not have an active, liquid, and orderly trading market, and our stock price may be volatile.

Our common stock may not have an active, liquid, and orderly trading market due to the relatively low number of shares that are available for trading. Active, liquid, and orderly trading markets usually result in less price volatility and more efficiency in carrying out purchase and sale orders. The trading volume in our common stock may fluctuate and cause price variations to occur.

The market price of our common stock could also vary significantly because of a number of other factors, some of which are beyond our control, including the following:

If the per share trading price of our common stock declines significantly, stockholders may be unable to resell their shares at or above the price paid for them. We cannot assure stockholders that the per share trading price of our common stock will not fluctuate or decline significantly in the future.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their common stock. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have an adverse effect on our financial condition, results of operations, cash flows and our ability to pay dividends on, and the per share trading price of, our common stock.

We could be adversely affected if we grow our Company by acquiring additional land or other assets, including operating businesses, but fail to successfully integrate the acquired asset into our existing business.

Our Board of Directors regularly evaluates a range of strategic alternatives and the Board and management conduct due diligence activities in connection with such alternatives. These include opportunities for growth though the acquisitions of land or other assets or business combinations, dispositions of assets and reinvestment of the proceeds, and other alternatives. We cannot assure you that the Board’s evaluations or the Company’s due diligence activities will result in any transaction or other course of action. For example, we may have difficulty identifying suitable assets to acquire or consummating transactions on terms that are favorable.

We also cannot assure you that any transaction we do enter into will be successful. Significant expansion involves risks, such as:

If we are unable to integrate a new asset into our existing business and manage a larger overall company efficiently, the expansion could adversely affect our operations, financial results and prospects, and we might not realize the cost savings and synergies we expected from the expansion. Additionally, the diversion of management’s time and attention from our day-to-day operations could adversely impact our performance.

Not applicable.

The Company owns approximately 13,94113,711 net acres all located in Louisiana. The approximate gross and net acres located in each Louisiana parish are presented below.

Included in the 13,94113,711 net acres presented above, are approximately 7,5097,392 acres owned 100% by the Company. The Louisiana parish location for these 100% owned lands is presented below:

For management purposes, the Company classifies the 13,94113,711 net acres owned by CKX as follows: 10,49510,369 net acres are timber lands, 2,3572,253 net acres are agriculture lands, 895 net acres are marsh lands and 194 net acres are located in metropolitan areas.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, an dand an adverse result in these or other matters may arise from time to time that may harm our business. The Company was not involved in any legal proceedings as of December 31, 2020.2021.

Not applicable.

PART II

The Company’s common stock trades on the NYSE American under the trading symbol CKX. 

Common Stock

As of March 24, 2021,25, 2022, there were 1,942,495 shares outstanding. There were no sales of unregistered securities of the Company and no purchases of CKX equity securities by the Company during 2020.2021.  

Holders

On March 24, 2021,23, 2022, we had 452325 stockholders of record.

Dividend Policy

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.

Pursuant to a dividend reversion clause in the Company’s Articles of Incorporation, dividends not claimed within one year after a dividend becomes payable will expire and revert in full ownership to the Company and the Company’s obligation to pay such dividend will cease. During 20202021 and 2019,2020, the Company received no dividend reversions.

Disclosure in response to this item is not required of a smaller reporting company.

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those financial statements appearing elsewhere in this Report.

Overview

CKX Lands, Inc., a Louisiana corporation, began operations in 1930 under the name Calcasieu Real Estate & Oil Co., Inc. It was originally organized as a spin-off by a bank operating in southwest Louisiana. The purpose of the spin-off was to form an entity to hold non-producing mineral interests which regulatory authorities required the bank to charge off. Over the years, as some of the mineral interests began producing, the Company used part of the proceeds to acquire land. In 1990, the Company made its largest acquisition when it was one of four purchasers who bought a fifty percent undivided interest in approximately 35,575 acres in southwest Louisiana.

Today the Company’s income is derived from mineral royalties, timber sales and surface payments from its lands. CKX receives income from royalty interests and mineral leases related to oil and gas production, timber sales, land sales and surface rents. Although CKX is active in the management of its land and planting and harvesting its timber, CKX is passive in the production of income from oil and gas production in that CKX does not explore for oil and gas or operate wells. These oil and gas activities are performed by unrelated third parties.

CKX leases its property to oil and gas operators and collects income through its land ownership in the form of oil and gas royalties and lease rentals and geophysical revenues. The Company’s oil and gas income fluctuates as new oil and gas production is discovered on Company land and then ultimately depletes or becomes commercially uneconomical to produce. The volatility in the daily commodity pricing of a barrel of oil or a thousand cubic feet, or “MCF,” of gas will also cause fluctuations in the Company’s oil and gas income. These commodity prices are affected by numerous factors and uncertainties external to CKX’s business and over which it has no control, including the global supply and demand for oil and gas, and domestic and global economic conditions, among other factors.

CKX has small royalty interests in 20 different producing oil and gas fields. The size of each royalty interest is determined by the Company’s net ownership in the acreage unit for the well. CKX’s royalty interests range from 0.0045% for the smallest to 7.62% for the largest. As the Company does not own or operate the wells, it does not have access to any reserve information. Eventually, the oil and gas reserves under the Company’s current land holdings will be depleted.

Timber income is derived from sales of timber on Company lands. The timber income will fluctuate depending on our ability to secure stumpage agreements in the regional markets, timber stand age, and/or stumpage commodity prices. Timber is a renewable resource that the Company actively manages.

Surface income is earned from various recurring and non-recurring sources. Recurring surface income is earned from lease arrangements for farming, recreational and commercial uses. Non-recurring surface income can include such activities as pipeline right of ways, and temporary worksite rentals.

In managing its lands, the Company relies on and has established relationships with real estate, forestry, environmental and agriculture consultants as well as attorneys with legal expertise in general corporate matters, real estate, and minerals.

The Company actively searches for additional real estate for purchase in Louisiana with a focus on southwest Louisiana and on timberland and agricultural land. When evaluating unimproved real estate for purchase, the Company will consider numerous characteristics including but not limited to, timber fitness, agriculture fitness, future development opportunities and/or mineral potential. When evaluating improved real estate for purchase, the Company will consider characteristics including, but not limited to, geographic location, quality of existing revenue streams, and/or quality of the improvements.

The Company’s Board of Directors regularly evaluates a range of strategic alternatives that could increase shareholder value, and the Board and management conduct due diligence activities in connection with such alternatives. These include opportunities for growth though the acquisitions of land or other assets, business combinations, dispositions of assets and reinvestment of the proceeds, and other alternatives. We cannot assure you that the Board’s evaluations or the Company’s due diligence activities will result in any transaction or other course of action.

Recent Developments

In the first quarter of 2019, the Company began developing several ranchette-style subdivisions on certain of its lands in Calcasieu and Beauregard Parishes using existing road rights of way.  The Company has identified demand in those areas for ranchette-style lots, which consist of more than three acres each, and the Board of Directors and management believe this project will allow the Company to realize a return on its investment in the applicable lands after payment of expenses.  The Company has completed and recorded plats for two subdivisions and obtained approval to complete a third subdivision during the first quarter of 2021.  The three subdivisions are located on approximately 415 acres in Calcasieu Parish and approximately 160 acres in Beauregard Parish and contain an aggregate of 39 lots.  As of December 31, 2020,2021, the Company has closed on the sale of six21 of the 39 lots. As of the date of this report the Company sold an additional seven lots, has fiveno sales were pending, and itthe Company is actively marketing the remaining lots.

The Company is working to identify additional undeveloped acres owned by the Company in Southwest Louisiana that would likewise be suitable for residential subdivisions.

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 was damaged during the storm and oil and gas production was temporarily interrupted.  No other business operations were affected by the storm.  The Company assessed and determined that that the Company did not incur an impairment loss on the value of its timber and determined the temporary interruption had an immaterial effect on its financial condition and results of operations. 

On October 9, 2020, Hurricane Delta made landfall in Creole, Louisiana as a Category 2 hurricane.  The hurricane caused property damage, flooding, power outages, and water and communication service interruptions.  The Company holds property in seven of the parishes included in the Federal Emergency Management Agency’s disaster declaration related to the hurricane.  The Company assessed the damage to its timber and the effects of any temporary interruption in oil and gas production on its lands and determined that the effects of the hurricane on its assets and operations were minimal.

Summary of Fiscal Year 20202021 Results

DuringThe Company’s results of operations for the year ended December 31, 2020, the Company experienced2021, were driven primarily by a substantial decline in oil and gas revenue compared to the year ended December 31, 2019.  This was primarily due to decreased production as well as lower average sale prices, partially as a result of the COVID-19 pandemic.  Timber and surface sales increased approximately 33% as compared to fiscal year 2019. The Company had a much higher gain on the sale of land in 2021 and a minimal decreasean increase in general and administrative expenses for fiscal year 2020overall revenue of 11% as compared to fiscal year 2019. 2020. The higher gain on sale of land in 2021 is due to the variable nature of land sales. The increase in revenue is due in part to higher commodity prices for oil and gas as the energy market recovers from the effects of the pandemic.

Results of Operations - for the years ended December 31, 20202021 and 20192020

Revenue

Total revenues for 20202021 were $671,944, a decrease$744,545, an increase of approximately 17%11% when compared with 20192020 revenues of $811,271.$671,944. Total revenue consists of oil and gas, timber, and surface revenues. Components of revenues for the year ended December 31, 20202021 as compared to 2019,2020, are as follows:

Oil and Gas

Oil and gas revenues were 38%49% and 62%38% of total revenues for 20202021 and 2019,2020, respectively. A breakdown of oil and gas revenues for the years ended December 31, 20202021, as compared to 20192020 are as follows:

CKX received oil and/or gas revenues from 9473 and 10194 wells during the years ended December 31, 2021 and 2020, and 2019, respectively.

The following schedule summarizes barrels and MCF produced and average price per barrel and per MCF for the years ended December 31, 20202021 and 2019:2020:

Oil revenues decreasedincreased for the year ended December 31, 2020,2021, as compared to 2019,2020, by $155,007.$95,627. Gas revenues decreasedincreased for the year ended December 31, 2020,2021, as compared to 2019,2020, by $82,803.$10,596. As indicated from the schedule above, the decreaseincrease in oil revenues was due to a decreasean increase in net oil produced and a decreasean increase in the average oil sales price per barrel. The decreaseincrease in gas revenues was due to an increase in the average price per MCF offset by a decrease in net gas produced.

The following eight fields produced and a decrease in96.42% of the average price per MCF. Management believes the decrease inCompany’s oil and gas revenues is a factorin 2021. The following table shows the number of the extreme weakness inbarrels of oil (Bbl Oil) and MCF of gas markets due to the COVID-19 pandemic.(MCF Gas) produced from these fields.

The following eight fields produced 92.31% of the Company’s oil and gas revenues in 2020. The following table shows the number of barrels of oil (Bbl Oil) and MCF of gas (MCF Gas) produced from these fields.

The following eight fields produced 92.33% of the Company’s oil and gas revenues in 2019. The following table shows the number of barrels of oil (Bbl Oil) and MCF of gas (MCF Gas) produced from these fields.

The Company was a lessor in the following non-producing mineral leases:

Lease and geophysical revenues decreasedincreased for the year ended December 31, 2020,2021, as compared to 2019,2020, by $5,369.$1,437. These revenues are dependent on oil and gas producers’ activities, are not predictable and can vary significantly from year to year.

Timber

Timber revenues were 20% and 9% of total revenues for 20202021 and 2019,2020, respectively. Timber revenues increased for the year ended December 31, 2020,2021, as compared to the year ended December 31, 2019,2020, by $61,873.$16,382. The increase in timber revenues was due to some holdersrecognition of timber contracts determining to harvest timber on Company lands and favorable weather conditions for harvesting.expired stumpage agreements.

Surface

Surface revenues were 42%31% and 29%42% of total revenues for 20202021 and 2019,2020, respectively. Surface revenues increaseddecreased for the year ended December 31, 2020,2021, as compared to 2019,2020, by $41,979.$51,441. This increasedecrease is due to an increasereductions in the price per acre charge for leases. one time right of way income.

Costs and Expenses

Oil and gas costs decreasedincreased for the year ended December 31, 20202021 as compared to 20192020 by $28,075.$12,306. These variances are due to the normal variations in year to year costs, which correlate directly with variations in revenues.

Timber costs decreasedincreased for the year ended December 31, 20202021 as compared to 20192020 by $11,735.$2,275. This is primarily due to decreasedincreased timber management costs.

General and administrative expenses decreasedincreased for the year ended December 31, 20202021 as compared to 20192020 by $13,696.$46,351. This is primarily due to decreased costs to prepareincreased commissions and file SEC reports, salaries, contract servicestransaction fees and director’slegal fees, partially offset by an increasea decrease in officer salaries and property management expense.

Gain on Sale of Land and Equipment

Gain on sale of land was $1,025,735 and equipment was $354,577 and $80,876 for the years ended December 31, 2021 and 2020, respectively. For the year ended December 31, 2021, this consisted of 19 tracts of land including 13 lots in subdivisions and 2019, respectively.one sale to a local government for a water plant. For the year ended December 31, 2020, this consisted of a gain on sale of eight tracts of land including six lots in subdivisions and one sale to local government for roadway construction.

Outlook for Fiscal Year 20212022

The Company will continue to consider and evaluate commercial, agricultural and timber lands, and other business opportunities for acquisitions and to evaluate its current holdings for divestiture. The Company will consider purchases outside of southwest Louisiana and will consider developing its properties for commercial or residential purposes.  

The Company will continue to actively market its timber. Weather in 20202021 was generally better for timber harvesting than in 2019.2020. Due to damage to the Company’s timber stands from Hurricanes Laura and Delta in 2020, the Company sold some of its timber in 2021 at salvage prices. Stumpage prices have remained depressed when compared to recent historical prices.prices but seem to be improving. The Company will seek to enter into additional stumpage agreements.

The Company began directly managing its lands in 2017, except for approximately 5,030 acres of timber property in which the Company owns an undivided 1/6 interest, which is managed by Walker Louisiana Properties. The Company believes direct land management and continuing economic activity in southwest Louisiana willmay be a catalyst for increased surface revenue.

Liquidity and Capital Resources

Sources of Liquidity

The Company’s current assets totaled $7,073,076$7,998,849 and current liabilities equaled $342,195$261,236 at December 31, 2020.2021.

The Company entered into an unsecured revolving line of credit with Hancock Whitney Bank on June 25, 2018. The line of credit permitted the Company to draw a maximum aggregate amount of $1,000,000. Borrowings under the line of credit bore interest at a rate of 4.25%. The line of credit expired on June 25, 2019 and was not extended. As of December 31, 2020,2021, and 2019,2020, the Company had no outstanding debt.

In the opinion of management, cash and cash equivalents are adequate for projected operations and possible land acquisitions.

The Company’s Board of Directors regularly evaluates a range of strategic alternatives that could increase shareholder value, and the Board and management conduct due diligence activities in connection with such alternatives. These include opportunities for growth though the acquisitions of land or other assets or business combinations, dispositions of assets and reinvestment of the proceeds, and other alternatives. The cost and terms of any financing to be raised in conjunction with any growth opportunity, including the Company’s ability to raise debt or equity capital on terms and at costs satisfactory to the Company, and the effect of such opportunities on the Company’s balance sheet, are critical considerations in any such evaluation.

Analysis of Cash Flows

Net cash provided by (used in) operating activities decreasedchanged by $54,546$403,838 to ($263,673) for the year ended December 31, 2021, compared to $140,165 for the year ended December 31, 2020, compared to $194,711 for the year ended December 31, 2019.2020. The decreasechange in cash provided by (used in) operating activities was attributable primarily to the increase in net income and the change on the gain on the sale of land.

Net cash provided by investing activities was $3,042,801$1,210,291 and $1,224,842$3,042,801 for the year ended December 31, 2021, and 2020, respectively.  For the year ended December 31, 2021, this included proceeds from the sale of fixed assets of $1,233,197, partially offset by purchases of mutual funds of $237, costs of reforesting timber of $18,606 and 2019, respectively.purchases of land of $4,063. For the year ended December 31, 2020, this included proceeds from maturity of certificates of deposit of $4,682,920 and proceeds from the sale of fixed assets of $359,082 offset by purchases of certificates of deposit of $1,985,920, purchases of mutual funds of $3,960, and costs of reforesting timber of $9,321 offset by proceeds from maturity of certificates of deposit of $4,682,920 and proceeds from the sale of fixed assets of $359,082. For the year ended December 31, 2019, this included purchases of certificates of deposit of $2,456,000, purchases of mutual funds of $255,578 and costs of reforesting timber of $26,815, offset by proceeds from maturity of certificates of deposit of $3,854,000, and proceeds from the sale of fixed assets of $109,235.$9,321.

Net cash used in financing activities was $0 and $0 for the year ended December 31, 2020,2021, and 2019,2020, respectively.

Significant Accounting Policies

For a discussion of significant accounting policies, see Note 1 in the notes to our audited financial statements included elsewhere in this Form 10-K.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Disclosure in response to this item is not required of a smaller reporting company.

The Company’s financial statements, together with the report of the independent registered public accounting firm thereon and the notes thereto, are presented beginning at page F-1. The Company’s balance sheets as of December 31, 20202021 and 20192020 and the related statements of operations, changes in stockholders’ equity and cash flows for the years then ended have been audited by MaloneBailey, LLP. MaloneBailey, LLP is an independent registered public accounting firm. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to Regulation S-K as promulgated by the Securities and Exchange Commission and are included herein pursuant to Part II, Item 8 of this Form 10-K. 

None.

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, 2020.2021. 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, 20202021 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, 2020,2021, 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, 2020.2021.

Changes in Internal Controls over Financial Reporting

During the year ended December 31, 2020,2021, there were some changes to our internal controls to improve segregation of duties. No otherno 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, 20202021 that has materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

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.

None.

Not applicable.

PART III

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.

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.

TheCertain 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. 

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.

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

None.

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 25, 2021.28, 2022.

CKX LANDS, INC.

By:

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 25, 2021.28, 2022.

CKX LANDS, INC.

CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the StockholdersShareholders 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, 20202021 and 2019,2020, 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, 20202021 and 2019,2020, 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 MatterMatters

The criticalCritical audit matter communicated below is a mattermatters 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. The communication ofWe determined that there are no critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Impairment of long-lived assets – Timber assets

Description of the Matter

As disclosed in Notes 2 and 4 of the financial statements, the Company has recorded net property and equipment of $9.2 million as of December 31, 2020. The Company reviews its long-lived assets for impairment whenever events and changes in circumstances indicate the carrying value of such assets may not be recoverable. During the quarter ended September 30, 2020, the Company’s timber assets were damaged as a result of Hurricane Laura. The Company performed an impairment analysis of its timber assets by comparing the undiscounted cash flows of the related assets with their carrying value. The Company utilized a third-party specialist to assist in its impairment analysis.

We identified the impairment assessment of the Company’s timber assets as a critical audit matter given the significant judgement and use of specialist in developing the estimates of its future cash flows. In turn, auditing the inputs and assumptions used required a high degree auditor judgement.

How We Addressed the Matter in Our Audit

The audit procedures we performed to address this critical audit matter included the following, among others:

●         Evaluating the experience, qualification and objectivity of the third-party specialist.

●         Evaluating the reasonableness of the assumptions used to estimate expected future cash flows including timber volumes and prices.

matters.

/s/ MaloneBailey, LLP

www.malonebailey.com

We have served as the Company's auditor since 2015.

Houston, Texas

March 25, 202128, 2022

CKX LANDS, INC. 

BALANCE SHEETS

The accompanying notes are an integral part of these financial statements.

CKX LANDS, INC. 

STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these financial statements.

CKX LANDS, INC.

STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these financial statements.

CKX LANDS, INC.

NOTES TO FINANCIAL STATEMENTS