Leonard Jacob Corporation

2016 Summary 

To Our Shareholders:

2016 was, in many respects, a challenging year for the Leonard Jacob Corporation. Energy prices were volatile and mostly lower, opportunities for investments in new projects remained cost-prohibitive, while the history and the story of our long-standing presence in South Texas turned a new chapter.

Despite these challenges, the Corporation continues to transition from an “oil and gas” company, relying on legacy Texas and Oklahoma royalties, to a more dynamic and versatile one, based on family involvement and collaboration. Financial strength and the quarterly dividends remain fundamentally important, but success of the LJCorporation will be defined and enhanced by our shareholders, and our extended families.

In May of 2016, we sold the Lazy J ranch, a very difficult decision for the Board. But we sold it to our longtime friend and neighbor in Whitsett, Texas, and we retained the “right” to use the property on as-needed and occassional basis. This was a win-win-win outcome, for the new property owner, for the Corporation, and for our shareholders.

The sale of the property resulted in a net “book loss” on our 2016 financial report. Excluding this transaction, the Company broke-even for the year, with lower revenues offset by lower operating expenses and all driven by careful management of expenses by the Board of Directors.

Similar to last year, no new investments in exploration or development were made as the Board continues to evaluate the best opportunities to support and balance both short-term objectives and long term strategic goals. Instead, the investment portfolio was a priority and was re-balanced in 2016, with a higher percent of assets now invested in fixed income securities.

Shareholder engagement is our future and is critical to the long term health of the Leonard Jacob Corporation. As we reported a year ago, it is a priority for this Board. One recent example: we established a new Facebook page in 2016. We continue to look for ways to keep shareholders and the extended family connected and engaged.

On behalf of the Board of Directors,

Leonard Jacob Jr.                                                             Robert W Jacob

Chairman of the Board                                                  President & CEO