CKX(US:CKX)2025-05-12 16:06markdown [PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) For the first quarter ended March 31, 2025, CKX Lands, Inc. reported a significant turnaround, posting a net income of $115,573 compared to a net loss of $401,329 in the same period of 2024. This was driven by a 145.5% increase in total revenues, primarily from oil and gas. Total assets slightly increased to $18.96 million, and the company maintained a strong liquidity position with no debt [Balance Sheets](index=4&type=section&id=BALANCE%20SHEETS) As of March 31, 2025, the company's total assets increased slightly to $18.96 million from $18.85 million at year-end 2024. The increase was primarily in cash and cash equivalents. Total liabilities remained low at $259,796, and stockholders' equity grew to $18.70 million Balance Sheet Summary (Unaudited) | Balance Sheet Items | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $9,751,251 | $9,579,388 | | **Total Assets** | **$18,958,423** | **$18,847,237** | | **Total Current Liabilities** | $259,796 | $264,183 | | **Total Liabilities** | **$259,796** | **$264,183** | | **Total Stockholders' Equity** | **$18,698,627** | **$18,583,054** | [Statements of Operations](index=5&type=section&id=STATEMENTS%20OF%20OPERATIONS) The company reported a net income of $115,573, or $0.06 per share, for the three months ended March 31, 2025, a significant improvement from a net loss of $401,329, or ($0.20) per share, in the prior-year period. The positive result was driven by a 145.5% increase in total revenue, mainly from oil and gas, and a substantial decrease in general and administrative expenses Quarterly Operating Results (Unaudited) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | **Total Revenue** | **$348,184** | **$141,849** | | Oil and gas | $268,508 | $82,500 | | Surface revenue | $79,676 | $57,074 | | **Income (Loss) from Operations** | **$112,150** | **($436,606)** | | **Net Income (Loss)** | **$115,573** | **($401,329)** | | **Basic and Diluted EPS** | **$0.06** | **($0.20)** | [Statements of Changes in Stockholders' Equity](index=6&type=section&id=STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS'%20EQUITY) Stockholders' equity increased from $18.58 million at the end of 2024 to $18.70 million as of March 31, 2025. The increase was solely due to the net income of $115,573 recorded during the quarter - For the three months ended March 31, 2025, total stockholders' equity increased by **$115,573**, reflecting the net income for the period[15](index=15&type=chunk) [Statements of Cash Flows](index=7&type=section&id=STATEMENTS%20OF%20CASH%20FLOWS) Net cash provided by operating activities was $118,664 for the first quarter of 2025, a reversal from net cash used in operating activities of $337,838 in the same period of 2024. The company's cash and cash equivalents increased by $290,907 during the quarter, ending at $3.71 million Quarterly Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | **$118,664** | **($337,838)** | | Net cash provided by investing activities | $172,243 | $34,485 | | **Net change in cash and cash equivalents** | **$290,907** | **($303,353)** | | Cash and cash equivalents, end of the period | $3,712,483 | $7,243,336 | [Notes to Financial Statements](index=8&type=section&id=NOTES%20TO%20FINANCIAL%20STATEMENTS) The notes detail the company's accounting policies, segment performance, and related party transactions. Operations are divided into three segments: oil and gas, timber, and surface. The oil and gas segment was the primary driver of revenue and gross profit in Q1 2025. The company has a significant concentration of revenue, with its largest customer accounting for $191,682. A related party lease agreement exists with Stream Wetlands Services, LLC, whose president is also the president of CKX Lands Segment Gross Profit - Q1 2025 vs Q1 2024 | Segment | Gross Profit (Q1 2025) | Gross Profit (Q1 2024) | | :--- | :--- | :--- | | Oil and Gas | $247,798 | $72,134 | | Timber | ($3,774) | ($1,708) | | Surface | $79,676 | $57,074 | | **Total Gross Profit** | **$323,700** | **$127,500** | - The company's revenue is concentrated, with the top customer generating **$191,682** in revenue for the three months ended March 31, 2025, compared to **$25,130** in the same period of 2024[47](index=47&type=chunk) - A related party transaction exists through a 25-year lease with Stream Wetlands Services, LLC, an entity whose president is also the President and a director of the Company[45](index=45&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes the strong Q1 2025 results to increased oil and gas revenue, driven by higher prices and production, and a significant reduction in general and administrative expenses. The company continues to evaluate strategic alternatives to enhance shareholder value and is actively developing and marketing ranchette-style subdivisions. The company maintains a strong liquidity position with no debt and believes its cash reserves are adequate for operations and potential land acquisitions [Overview and Strategic Alternatives](index=14&type=section&id=Overview%20and%20Strategic%20Alternatives) CKX Lands derives income from oil and gas royalties, timber sales, and surface leases. The company is passive in oil and gas production, relying on third-party operators. In August 2023, the Board initiated a formal process to evaluate strategic alternatives, which is ongoing with advanced discussions with a potential counterparty. The company is also developing ranchette-style subdivisions, having sold 22 of 39 lots as of March 31, 2025 - The company's income is derived from three main sources: mineral royalties (oil and gas), timber sales, and surface payments (leases, rents)[52](index=52&type=chunk) - The Board of Directors is actively evaluating strategic alternatives to enhance shareholder value and has advanced discussions with a potential counterparty[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - The company is developing and selling ranchette-style lots, with **22 of 39** developed lots sold as of March 31, 2025[65](index=65&type=chunk) [Results of Operations](index=16&type=section&id=Results%20of%20Operations) Total revenues for Q1 2025 increased by 145.5% year-over-year to $348,184, primarily due to a 225.5% surge in oil and gas revenue from higher prices and production. Surface revenue also grew by 39.6%. General and administrative expenses decreased significantly by $352,360, mainly due to lower share-based compensation and professional fees Revenue by Source - Q1 2025 vs Q1 2024 | Revenue Source | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Oil and gas | $268,508 | $82,500 | $186,008 | 225.5% | | Timber sales | $0 | $2,275 | ($2,275) | (100.0)% | | Surface revenue | $79,676 | $57,074 | $22,602 | 39.6% | | **Total revenues** | **$348,184** | **$141,849** | **$206,335** | **145.5%** | - The increase in oil and gas revenue was due to higher average gas sales prices and an increase in net oil and gas produced from a larger number of wells (**71 vs 58**)[70](index=70&type=chunk) - General and administrative expenses decreased by **$352,360** compared to Q1 2024, primarily due to lower share-based compensation and professional fees[76](index=76&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) The company has a strong liquidity position with $9.75 million in current assets and only $259,796 in current liabilities as of March 31, 2025. The company holds no outstanding debt. Cash flow from operations improved significantly, providing $118,664 in Q1 2025 compared to a use of $337,838 in Q1 2024 - As of March 31, 2025, the company had no outstanding debt[78](index=78&type=chunk) - Management believes that cash and cash equivalents are adequate for projected operations and potential land acquisitions[79](index=79&type=chunk) - Net cash from operating activities increased significantly to **$118,664** in Q1 2025 from a use of **$(337,838)** in Q1 2024, driven by higher net income[81](index=81&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=19&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This item is not applicable for the reporting period, as stated by the company - The company has indicated that this section is not applicable[87](index=87&type=chunk) [Item 4. Controls and Procedures](index=19&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025. A material weakness in internal control over financial reporting, identified as of December 31, 2024, related to the classification of cash equivalents and investments, was addressed during the first quarter of 2025 through the adoption of a new policy for reviewing third-party journal entries - Based on an evaluation, management concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[87](index=87&type=chunk) - A material weakness in internal control over financial reporting was identified as of December 31, 2024, due to inadequate controls over the accounting and classification of cash equivalents and short-term investments[88](index=88&type=chunk) - During Q1 2025, management adopted a new policy requiring review and approval of quarter-end closing journal entries to remediate the previously identified material weakness[89](index=89&type=chunk) [PART II - OTHER INFORMATION](index=19&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 5. Other Information](index=20&type=section&id=ITEM%205.%20OTHER%20INFORMATION) During the first quarter of fiscal year 2025, no director or officer of the company adopted or terminated any contract, instruction, or written plan for the purchase or sale of the company's securities - No director or officer adopted or terminated a plan for the purchase or sale of company securities during the first fiscal quarter of 2025[92](index=92&type=chunk) [Item 6. Exhibits](index=21&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q. Key exhibits include the CEO and CFO certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as Inline XBRL data files - The filing includes certifications from the President (Principal Executive Officer) and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002[93](index=93&type=chunk)