Note

Nature of Business and Significant Accounting Policies

Nature of

usiness

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

ccounting

olicies

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.

Concentration of Credit Risk

The Company maintains its cash balances in

four

financial institutions. The amount on deposit in each financial institution is insured by the Federal Deposit Insurance Corporation up to

$250,000.

Cash

quivalents

Cash equivalents are highly liquid debt instruments with original maturities of

three

months or less when purchased.

Certificate of

eposits

Certificates of deposit have maturities greater than

three

months when purchased, in amounts

not

greater than

$250,000.

All certificates of deposit are held until maturity and recorded at cost which approximates fair value. Certificates of deposit mature through

2020.

Equity Investment

January 2016,

the FASB issued ASU

2016

01,

“Financial Instruments – Overall (Subtopic

825

): Recognition of Financial Assets and Financial Liabilities,” (ASU

2016

which makes targeted amendments to the guidance for recognition, measurement, presentation and disclosure of financial instruments. The guidance under ASU

2016

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, 2018,

the Company classified

$244,831

of mutual funds as equity securities. The Company invests in ultra-short, high quality U.S. dollar money market, foreign funds, and obligations issued by the US Government. The Company did

not

hold any equity investments until the

fourth

quarter of

2018,

accordingly, there are

effects on the Company’s investments under the adoption of ASU

2016

01.”

Accounts Receivable

The Company’s accounts receivable consists of incomes received after year end for royalties produced prior to year-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 year, the Company estimates the amount to be received based on the last month’s royalties that were received from that particular company. The Company does

not

maintain an allowance for doubtful accounts because other than the accrual for earned but

not

received royalties, it has

accounts receivable.

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

ong-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 maybe determined through various valuation techniques including quoted market prices,

third

-party independent appraisals and discounted cash flow models. The Company recorded

impairment charges during

2018

and

2017.

Revenue Recognition

Effective

January 1, 2018,

we adopted ASU

2014

09,

Revenue from Contracts with Customers (Topic

606

). Under the new standard, 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) when 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.

See Note

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. Accrued royalty income was

$93,594

and

$84,333

as of

December 31, 2018

and

2017,

respectively. There are

capitalized contract costs associated with oil and gas contracts. The accounting of 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 a single tree severed.

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 trade payables and accrued expenses until earned. The Company held stumpage agreement deposits of

$30,600

and

$94,600

December 31, 2018

and

2017,

respectively. There are

capitalized contract costs associated with timber contracts. The accounting of timber revenue remains largely unchanged upon implementation of ASC

606.

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. Unearned surface revenues are recorded in trade payables and accrued expenses and were

$58,893

and

$45,651

December 31, 2018

and

2017,

respectively.

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, 2018,

and

2017

there were

dilutive shares outstanding.

Dividends

The Company has changed the manner in which it determines whether a dividend will be declared. The Company will

longer have a “regular” or “extra” dividend as have been defined in prior reports. In determining whether a dividend will be declared, the Board of Directors will take 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.

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.

come 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

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,

reserve for uncertain tax positions is required.

interest or penalties have been levied against the Company and

none

are anticipated.

Other

axes

Taxes, other than income taxes, of

$159,573

and

$154,167,

were charged to expense during

2018

and

2017,

respectively.

Recent Accounting Pronouncements

May 2014,

the Financial Accounting Standards Board (“FASB”) issued ASU

2014

09,

Revenue from Contracts with Customers

(Topic

606

which supersedes the most current revenue recognition guidance, including industry-specific guidance. Subsequently, the FASB issued updates that provide additional implementation guidance. The new guidance requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The Company adopted this guidance in the

first

quarter of

2018

applying the modified retrospective approach. The Company has completed its review of all revenue sources in scope for the new standard, and oil, gas and mineral agreements and stumpage agreements are within this scope. In accordance with the new standard, the basis for determining revenue and expenses allocable to oil, gas and mineral agreements (royalty revenue) and stumpage agreements (timber revenue) was

not

modified. There was

net cumulative effect adjustment for this change as of

January 1, 2018.

November 2016,

the FASB issued ASU

2016

18,

Statement of Cash Flows (Topic

230

which provides guidance requiring companies to report net cash provided or used by operating, investing and financing activities and the net effect of those flows on the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents during the period. The statement of cash flows shall report that information in a manner that reconciles beginning and ending totals of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Companies shall also disclose information about the nature of the restrictions on restricted cash and restricted cash equivalents. The Company adopted this guidance in the

first

quarter of

2018.

In accordance with the new standard,

modification to our presentation for restricted cash was made.

January 2016,

the FASB issued ASU

2016

01,

“Financial Instruments – Overall (Subtopic

825

): Recognition of Financial Assets and Financial Liabilities,” (ASU

2016

which makes targeted amendments to the guidance for recognition, measurement, presentation and disclosure of financial instruments. The guidance under ASU

2016

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, 2018,

the Company classified

$244,831

of mutual funds as equity securities. The Company invests in ultra-short, high quality U.S. dollar money market, foreign funds, and obligations issued by the US Government.

February 2016,

the FASB issued ASU

2016

02,

which amended the accounting treatment for leases. Lessees (for capital and operating leases) and lessors (for sales-type leases, direct financing leases and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would

not

require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors

may

not

apply a full retrospective transition approach. In

July 2018,

the FASB issued ASU

2018

and ASU

2018

11.

ASU

2018

provides certain areas for improvement in ASU

2016

and ASU

2018

provides an additional optional transition method by allowing entities to initially apply the new leasing standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The new leasing standard is effective for fiscal years beginning after

December

15,

2018,

including interim periods within those fiscal years. Early adoption is permitted. The Company is reviewing its service agreements and other arrangements to evaluate whether they meet the definition of a lease under ASU

2016

and what impact, if any, that the adoption of the new leasing standard

may

have on its financial statements.

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.