10-Q 1 mlp20220630_10q.htm FORM 10-Q mlp20220630_10q.htm
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Table of Contents



 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2022

 

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-06510

 

MAUI LAND & PINEAPPLE COMPANY, INC.

(Exact name of registrant as specified in its charter)

 

delaware

99-0107542

(State or other jurisdiction

(IRS Employer

of incorporation or organization)

Identification No.)

 

200 Village Road, Lahaina, Maui, Hawaii 96761

(Address of principal executive offices)

 

(808) 877-3351

(Registrant’s telephone number, including area code)

 

None

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value

MLP

NYSE

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at August 1, 2022

Common Stock, no par value

 

19,514,931 shares

 



 

 

 

 

MAUI LAND & PINEAPPLE COMPANY, INC.

AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

Cautionary Note Regarding Forward-Looking Statements

3

   

PART I. FINANCIAL INFORMATION

5

   

Item 1. Condensed Consolidated Interim Financial Statements (unaudited)

5

   

Condensed Consolidated Balance Sheets, June 30, 2022 and December 31, 2021 (audited)

5

   

Condensed Consolidated Statements of Income and Comprehensive Income, Three Months Ended June 30, 2022 and 2021

6

   

Condensed Consolidated Statements of Income and Comprehensive Income, Six Months Ended June 30, 2022 and 2021

7

   

Condensed Consolidated Statements of Changes in Stockholders’ Equity, Three and Six Months Ended June 30, 2022 and 2021

8

   

Condensed Consolidated Statements of Cash Flows, Six Months Ended June 30, 2022 and 2021

9

   

Notes to Condensed Consolidated Interim Financial Statements

10

   

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

   

Item 3. Quantitative and Qualitative Disclosures About Market Risk

20

   

Item 4. Controls and Procedures

20
   

PART II. OTHER INFORMATION

20
   

Item 1. Legal Proceeding

20
   

Item 1A. Risk Factors

20
   

Item 6. Exhibits

21

   

Signature

22
   

EXHIBIT INDEX

23
   
Exhibit 10.1  
Exhibit 10.2  
Exhibit 31.1  

Exhibit 31.2

 

Exhibit 32.1

 

Exhibit 32.2

 

Exhibit 101

Exhibit 104

 

 

 

 

 

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q and other reports filed by us with the U.S. Securities and Exchange Commission (SEC) contain “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These statements include all statements included in or incorporated by reference to this Quarterly report on Form 10-Q that are not statements of historical facts, which can generally be identified by words such as “anticipate,” “believe,” “continue” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “project,” “pursue,” “will,” “would,” or the negative or other variations thereof or comparable terminology. We caution you that the foregoing list may not include all of the forward-looking statements made in this Quarterly Report. Actual results could differ materially from those projected in forward-looking statements as a result of the following factors, among others:

 

 

the impacts of the COVID-19 pandemic and its variants, including its impacts on us, our operations, the geographic region in which we operate, and our future financial or operational results;

 

 

unstable macroeconomic market conditions, including, but not limited to, energy costs, credit markets, interest rates and changes in income and asset values;

 

 

risks associated with real estate investments generally, and more specifically, demand for real estate and tourism in Hawaii;

 

 

risks due to joint venture relationships;

 

 

our ability to complete land development projects within forecasted time and budget expectations, if at all;

 

 

our ability to obtain required land use entitlements at reasonable costs, if at all;

 

 

our ability to compete with other developers of real estate in Maui;

 

 

potential liabilities and obligations under various federal, state and local environmental regulations with respect to the presence of hazardous or toxic substances;

 

 

changes in weather conditions, the occurrence of natural disasters, or threats of the spread of contagious diseases;

 

 

our ability to maintain the listing of our common stock on the New York Stock Exchange;

 

 

our ability to comply with funding requirements of our defined benefit pension plan;

 

 

our ability to comply with the terms of our indebtedness, including the financial covenants set forth therein, and to extend maturity dates, or refinance such indebtedness, prior to its maturity date;

 

 

our ability to raise capital through the sale of certain real estate assets;

 

 

risks related to reference reform;

 

 

availability of capital on terms favorable to us, or at all; and

 

 

failure to maintain security of internal and customer electronic information.

 

 

Such risks and uncertainties also include those risks and uncertainties discussed in the sections entitled “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”) and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report, as well as other factors described from time to time in our reports filed with the SEC. Although we believe that our opinions and expectations reflected in the forward-looking statements are reasonable as of the date of this report, we cannot guarantee future results, levels of activity, performance or achievements, and our actual results may differ substantially from the views and expectations set forth in this report. Thus, you should not place undue reliance on any forward-looking statements. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Further, any forward-looking statements speak only as of the date made and, except as required by law, we undertake no obligation to publicly revise our forward-looking statements to reflect events or circumstances that arise after the date of this report. We qualify all of our forward-looking statements by these cautionary statements.

 

 

 

PART I FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Interim Financial Statements (unaudited)

 

MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   

June 30,

   

December 31,

 
   

2022

   

2021

 
   

(unaudited)

   

(audited)

 
   

(in thousands except share data)

 

ASSETS

               

CURRENT ASSETS

               

Cash

  $ 16,949     $ 5,596  

Restricted cash

    273       -  

Accounts receivable, net

    1,093       1,103  

Prepaid expenses and other assets

    394       333  

Assets held for sale

    3,017       3,144  

Total current assets

    21,726       10,176  
                 

Property & equipment, net

    16,437       16,998  
                 

OTHER ASSETS

               

Deferred development costs

    9,566       9,564  

Other noncurrent assets

    1,184       1,181  

Total other assets

    10,750       10,745  

TOTAL ASSETS

  $ 48,913     $ 37,919  
                 

LIABILITIES & STOCKHOLDERS' EQUITY

               

CURRENT LIABILITIES

               

Accounts payable

  $ 845     $ 580  

Payroll and employee benefits

    671       949  

Accrued retirement benefits, current portion

    142       142  

Deferred revenue, current portion

    704       217  

Other current liabilities

    493       509  

Total current liabilities

    2,855       2,397  
                 

LONG-TERM LIABILITIES

               

Accrued retirement benefits, net of current portion

    7,789       7,937  

Deferred revenue, net of current portion

    1,567       1,633  

Deposits

    2,193       2,309  

Other noncurrent liabilities

    53       53  

Total long-term liabilities

    11,602       11,932  

TOTAL LIABILITIES

    14,457       14,329  
                 

COMMITMENTS AND CONTINGENCIES

               
                 

STOCKHOLDERS' EQUITY

               

Common stock--no par value, 43,000,000 shares authorized, 19,443,623 and 19,383,288 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

    83,025       82,378  

Additional paid-in-capital

    9,184       9,184  

Accumulated deficit

    (42,417 )     (52,324 )

Accumulated other comprehensive loss

    (15,336 )     (15,648 )

Total stockholders' equity

    34,456       23,590  

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

  $ 48,913     $ 37,919  

 

See Notes to Condensed Consolidated Interim Financial Statements.

 

 

 

MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

(UNAUDITED)

 

   

Three Months Ended
June 30,

 
   

2022

   

2021

 
   

(in thousands except

 
   

per share amounts)

 

OPERATING REVENUES

               

Real estate

  $ 11,600     $ 2,700  

Leasing

    2,198       1,962  

Resort amenities and other

    189       288  

Total operating revenues

    13,987       4,950  
                 

OPERATING COSTS AND EXPENSES

               

Real estate

    707       454  

Leasing

    997       876  

Resort amenities and other

    330       278  

General and administrative

    759       574  

Share-based compensation

    276       370  

Depreciation

    277       302  

Total operating costs and expenses

    3,346       2,854  
                 

OPERATING INCOME

    10,641       2,096  
                 

Pension and other post-retirement expenses

    (114 )     (116 )

Interest expense

    (2 )     (32 )

INCOME FROM CONTINUING OPERATIONS

    10,525       1,948  

Loss from discontinued operations, net

    -       (69 )

NET INCOME

  $ 10,525     $ 1,879  

Other compreshensive income - pension, net

    156       221  

TOTAL COMPREHENSIVE INCOME

  $ 10,681     $ 2,100  
                 
EARNINGS PER COMMON SHARE-BASIC AND DILUTED                

Income from Continuing Operations

  $ 0.54     $ 0.10  

Loss from Discontinued Operations

  $ -     $ -  

Net Income

  $ 0.54     $ 0.10  

 

See Notes to Condensed Consolidated Interim Financial Statements.

 

 

MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

(UNAUDITED)

 

   

Six Months Ended
June 30,

 
   

2022

   

2021

 
   

(in thousands except

 
   

per share amounts)

 

OPERATING REVENUES

               

Real estate

  $ 11,600     $ 2,700  

Leasing

    4,228       3,763  

Resort amenities and other

    406       546  

Total operating revenues

    16,234       7,009  
                 

OPERATING COSTS AND EXPENSES

               

Real estate

    796       552  

Leasing

    1,739       1,716  

Resort amenities and other

    840       691  

General and administrative

    1,516       1,291  

Share-based compensation

    654       719  

Depreciation

    550       602  

Total operating costs and expenses

    6,095       5,571  
                 

OPERATING INCOME

    10,139       1,438  
                 

Other income

    -       13  

Pension and other post-retirement expenses

    (229 )     (232 )

Interest expense

    (3 )     (65 )

INCOME FROM CONTINUING OPERATIONS

    9,907       1,154  

Loss from discontinued operations, net

    -       (209 )

NET INCOME

  $ 9,907     $ 945  

Other compreshensive income - pension, net

    312       442  
                 

TOTAL COMPREHENSIVE INCOME

  $ 10,219     $ 1,387  
                 

EARNINGS PER COMMON SHARE-BASIC AND DILUTED

               

Income from Continuing Operations

  $ 0.51     $ 0.06  

Loss from Discontinued Operations

  $ -     $ (0.01 )

Net Income

  $ 0.51     $ 0.05  

 

See Notes to Condensed Consolidated Interim Financial Statements.

 

 

 

MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

 

For the Three and Six Months Ended June 30, 2022 and 2021

 

(UNAUDITED)

 

(in thousands)

 

                                   

Accumulated

         
                   

Additional

           

Other

         
   

Common Stock

    Paid in    

Accumulated

    Comprehensive          
   

Shares

    Amount     Capital     Deficit     Loss    

Total

 
                                                 

Balance, January 1, 2022

    19,383     $ 82,378     $ 9,184     $ (52,324 )   $ (15,648 )   $ 23,590  

Share-based compensation

    49       494       273                       767  

Vested restricted stock issued

    24       273       (273 )                     -  

Shares cancelled to pay tax liability

    (26 )     (269 )                             (269 )

Other comprehensive income - pension

                                    156       156  

Net loss

                            (618 )             (618 )

Balance, March 31, 2022

    19,430     $ 82,876     $ 9,184     $ (52,942 )   $ (15,492 )   $ 23,626  
                                                 

Share-based compensation

                    170                       170  

Vested restricted stock issued

    16       170       (170 )                     -  

Shares cancelled to pay tax liability

    (2 )     (21 )                             (21 )

Other comprehensive income - pension

                                    156       156  

Net income

                            10,525               10,525  

Balance, June 30, 2022

    19,444     $ 83,025     $ 9,184     $ (42,417 )   $ (15,336 )   $ 34,456  
                                                 
                                                 

Balance, January 1, 2021

    19,312     $ 81,485     $ 9,184     $ (48,904 )   $ (21,698 )   $ 20,067  

Share-based compensation

    60       748       163                       911  

Vested restricted stock issued

    14       163       (163 )                     -  

Shares cancelled to pay tax liability

    (34 )     (424 )                             (424 )

Other comprehensive income - pension

                                    221       221  

Net loss

                            (934 )             (934 )

Balance, March 31, 2021

    19,352       81,972       9,184       (49,838 )     (21,477 )     19,841  
                                                 

Share-based compensation

                    184                       184  

Vested restricted stock issued

    15       184       (184 )                     -  

Shares cancelled to pay tax liability

    (5 )     (52 )                             (52 )

Other comprehensive income - pension

                                    221       221  

Net income

                            1,879               1,879  

Balance, June 30, 2021

    19,362     $ 82,104     $ 9,184     $ (47,959 )   $ (21,256 )   $ 22,073  

 

See Notes to Condensed Consolidated Interim Financial Statements.

 

 

 

MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(UNAUDITED)

 

   

Six Months Ended
June 30,

 
   

2022

   

2021

 
   

(in thousands)

 
                 

NET CASH PROVIDED BY OPERATING ACTIVITIES

  $ 11,948     $ 1,691  
                 
CASH FLOWS FROM INVESTING ACTIVITIES                

Payments for property and deferred development costs

    (31 )     (94 )

Proceeds from sale of long-term assets

    -       4,203  

Proceeds from investment

    -       13  

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

    (31 )     4,122  
                 

CASH FLOWS FROM FINANCING ACTIVITIES

               

Debt and common stock issuance costs and other

    (291 )     (477 )

Proceeds from long-term debt

    -       600  

Payments on long-term debt

    -       (800 )

NET CASH USED IN FINANCING ACTIVITIES

    (291 )     (677 )
                 

NET INCREASE IN CASH

    11,626       5,136  

CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD

    5,596       869  

CASH AND RESTRICTED CASH AT END OF PERIOD

  $ 17,222     $ 6,005  
                 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

               

Cash paid during the period for interest:

  $ -     $ 8  

 

 

 

 

 

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

Common stock issued under the Company’s 2017 Equity and Incentive Award Plan was $0.6 million during each of the six months ended June 30, 2022 and 2021.

 

See Notes to Condensed Consolidated Interim Financial Statements.

 

9

 

MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

For the Three Months Ended and Six Months Ended June 30, 2022 and 2021

 

(UNAUDITED)

 

 

1.

BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated interim financial statements have been prepared by Maui Land & Pineapple Company, Inc. (together with its subsidiaries, collectively, the “Company”) in conformity with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information that are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes to the annual audited consolidated financial statements required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated interim financial statements contain all normal and recurring adjustments necessary to fairly present the Company’s consolidated financial position, results of operations and cash flows for the interim periods ended June 30, 2022 and 2021. The unaudited condensed consolidated interim financial statements and notes should be read in conjunction with the annual audited consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2021.

 

On June 29, 2022, the Company’s shareholders voted to approve a proposal to change the state of incorporation of the Company from Hawaii to Delaware. The reincorporation was effected through a plan of conversion completed on July 18, 2022. Total authorized capital stock provided by the Delaware certificate of incorporation include 48,000,000 million shares, consisting of 43,000,000 shares of common stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par value $0.0001 per share. No change in ownership resulted from the reincorporation as each outstanding share of common stock was automatically converted into one share of the newly established Company. The name of the Company after reincorporation remains Maui Land & Pineapple Company, Inc. and shares of common stock continue to be listed on the New York Stock Exchange under the ticker symbol “MLP.”

 

 

2.

USE OF ESTIMATES AND RECLASSIFICATIONS

 

The Company’s reports for interim periods utilize numerous estimates of general and administrative expenses and other costs for the full year. Future actual amounts may differ from these estimates. Amounts reflected in condensed consolidated interim statements are not necessarily indicative of results for a full year..

 

 

3.

RESTRICTED CASH

 

Restricted cash of $0.3 million at June 30, 2022 consisted of deposits held in escrow from the prospective buyer of a property held for sale.

 

 

4.

EARNINGS (LOSS) PER SHARE  BASIC AND DILUTED

 

Basic and diluted weighted-average shares outstanding for the three months ended June 30, 2022 and 2021 were 19,430,409 and 19,351,489, respectively. Basic and diluted weighted-average shares outstanding for the six months ended June 30, 2022 and 2021 were 19,414,336 and 19,339,680, respectively.

 

Basic net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted net income per common share is computed similar to basic net income per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares from share-based compensation arrangements had been issued.

 

 

 

 

5.

PROPERTY & EQUIPMENT

 

Property and equipment at June 30, 2022 and December 31, 2021 consisted of the following:

 

   

June 30,

   

December 31,

 
   

2022

   

2021

 
   

(unaudited)

   

(audited)

 
   

(in thousands)

 

Land

  $ 5,052     $ 5,063  

Land improvements

    12,943       12,943  

Buildings

    22,869       22,869  

Machinery and equipment

    10,360       10,360  

Total property and equipment

    51,224       51,235  

Less accumulated depreciation

    34,787       34,237  

Property and equipment, net

  $ 16,437     $ 16,998  

 

Land

 

Most of the Company’s 22,100 acres of land were acquired between 1911 and 1932 and are carried in its consolidated balance sheets at cost. Approximately 20,700 acres of land are located in West Maui and comprise a largely contiguous parcel that extends from the sea to an elevation of approximately 5,700 feet. This parcel includes approximately 900 acres within the Kapalua Resort, a master-planned, destination resort and residential community located in West Maui encompassing approximately 3,000 acres. The Company’s remaining 1,400 acres of land are located in Upcountry Maui in an area commonly known as Hali’imaile and are mainly comprised of leased agricultural fields, including related processing and maintenance facilities.

 

Land Improvements

 

Land improvements are comprised primarily of roads, utilities, and landscaping infrastructure improvements at the Kapalua Resort. Also included is the Company’s potable and non-potable water systems in West Maui. The majority of the Company’s land improvements were constructed and placed in service in the mid-to-late 1970’s or conveyed in 2017. Depreciation expense would be considerably higher if these assets were stated at current replacement cost.

 

Buildings

 

Buildings are comprised of restaurant, retail and light industrial spaces located at the Kapalua Resort and Hali’imaile which are used in the Company’s leasing operations. The majority of the buildings were constructed and placed in service in the mid-to-late 1970’s. Depreciation expense would be considerably higher if these assets were stated at current replacement cost.

 

Machinery and Equipment

 

Machinery and equipment are mainly comprised of zipline course equipment installed in 2008 at the Kapalua Resort and used in the Company’s leasing operations.

 

 

6.

ASSETS HELD FOR SALE

 

Assets held for sale at June 30, 2022 and December 31, 2021 consisted of the following:

 

   

June 30,

   

December 31,

 
   

2022

   

2021

 
   

(unaudited)

   

(audited)

 
   

(in thousands)

 

Kapalua Resort, 46-acre Kapalua Central Resort project

  $ 3,017     $ 2,988  

Upcountry Maui, 646-acre parcel of agricultural land

    -       156  
    $ 3,017     $ 3,144  

 

In December 2021, the Company entered into an agreement to sell the Kapalua Central Resort project for $40.0 million. On May 13, 2022, terms of the agreement were amended to include a closing condition requiring the Maui Planning Commission to approve a (5) five-year extension of a Special Management Area (SMA) permit issued by the County of Maui by April 10, 2023. If the extension is not approved by April 10, 2023, the purchase agreement will terminate. The amendment also allows the buyer to spend $290,000 of the initial $300,000 escrowed deposit on costs related to the extension of the SMA permit. If the extension is approved, the closing date is expected to be no later than (30) thirty days after the date of the extension approval.

 

 

In February 2022, the Company entered into an agreement to sell the 646-acre parcel of agricultural land in Upcountry Maui. Terms of the agreement, as amended, included a purchase price of $9.6 million, a diligence period ending on May 16, 2022, and other customary closing conditions. On May 20, 2022, net proceeds of $9.2 million were collected upon closing.

 

The above assets held for sale have not been pledged as collateral under the Company’s credit facility.

 

 

7.

LONG-TERM DEBT

 

Long-term debt is comprised of amounts outstanding under the Company’s $15.0 million revolving line of credit facility with First Hawaiian Bank (“Credit Facility”) maturing on December 31, 2025. The Credit Facility provides options for revolving or term loan borrowing. Interest on revolving loan borrowing is based on the Bank’s prime rate minus 1.125 percentage points. Interest on term loan borrowing is fixed at the Bank’s commercial loan rates with interest rate swap options available. The Company has pledged approximately 30,000 square feet of commercial leased space in the Kapalua Resort as security for the Credit Facility. Net proceeds from the sale of any collateral are required to be repaid toward outstanding borrowings and will permanently reduce the Credit Facility’s revolving commitment amount. There are no commitment fees on the unused portion of the Credit Facility.

 

The terms of the Credit Facility include various representations, warranties, affirmative, negative and financial covenants and events of default customary for financings of this type. Financial covenants include a minimum liquidity (as defined) of $2.0 million, a maximum of $45.0 million in total liabilities, and a limitation on new indebtedness.

 

The outstanding balance of the Credit Facility was zero at June 30, 2022. The Company was in compliance with the covenants under the Credit Facility at June 30, 2022.

 

 

8.

SHARE-BASED COMPENSATION

 

The Company’s directors, officers and certain members of management receive a portion of their compensation in shares of the Company’s common stock granted under the Company’s 2017 Equity and Incentive Award Plan (“Equity Plan”). Share-based compensation is valued based on the average of the high and low share price on the date of grant. Shares are issued upon execution of agreements reflecting the grantee’s acceptance of the respective shares subject to the terms and conditions of the Equity Plan. Restricted shares issued under the Equity Plan vest quarterly and have voting and regular dividend rights but cannot be disposed of until such time as they are vested. All unvested restricted shares are forfeited upon the grantee’s termination of directorship or employment from the Company.

 

Share-based compensation is determined and awarded annually to the Company’s officers and certain members of management based on their achievement of certain predefined performance goals and objectives under the Equity Plan. Such share-based compensation is comprised of an annual incentive paid in shares of common stock and a long-term incentive paid in restricted shares vesting quarterly over a period of three years.

 

Share-based compensation totaled $0.7 million for each of the six months ended June 30, 2022 and 2021. Included in these amounts were $0.4 million and $0.3 million of restricted common stock vested during the six months ended June 30, 2022 and 2021, respectively.

 

 

 

 

9.

ACCRUED RETIREMENT BENEFITS

 

Accrued retirement benefits at June 30, 2022 and December 31, 2021 consisted of the following:

 

   

June 30,

   

December 31,

 
   

2022

   

2021

 
   

(unaudited)

   

(audited)

 
   

(in thousands)

 
                 

Defined benefit pension plan

  $ 5,820     $ 5,932  

Non-qualified retirement plans

    2,111       2,147  

Total

    7,931       8,079  

Less current portion

    142       142  

Non-current portion of accrued retirement benefits

  $ 7,789     $ 7,937  

 

The Company has a defined benefit pension plan which covers substantially all of its former bargaining and non-bargaining full-time, part-time and intermittent employees. In 2011, pension benefits under the plan were frozen. The Company also has an unfunded non-qualified retirement plan covering nine of its former executives. The non-qualified retirement plan was frozen in 2009 and future vesting of additional benefits discontinued.

 

The net periodic benefit costs for pension and post-retirement benefits for the three and six months ended June 30, 2022 and 2021 were as follows:

 

   

Three Months Ended

   

Six Months Ended

 
   

June 30,

   

June 30,

 
   

(unaudited)

   

(unaudited)

 
   

2022

   

2021

   

2022

   

2021

 
   

(in thousands)

 

Interest cost

  $ 264     $ 309     $ 529     $ 618  

Expected return on plan assets

    (306 )     (418 )     (612 )     (836 )

Amortization of net loss

    156       221       312       442  

Pension and other postretirement expenses

  $ 114     $ 112     $ 229     $ 224  

 

 

10.

CONTRACT ASSETS AND LIABILITIES

 

Receivables from contracts with customers were $0.3 million at June 30, 2022 and December 31, 2021.

 

Deferred club membership revenue

 

The Company manages the operations of the Kapalua Club, a private, non-equity club program providing members special programs, access and other privileges at certain of the amenities within the Kapalua Resort. Deferred revenues from dues received from the private club membership program are recognized on a straight-line basis over one year.

 

Deferred license fee revenue

 

The Company entered into a trademark license agreement with the owner of the Kapalua Plantation and Bay golf courses, effective April 1, 2020. Under the terms and conditions set forth in the agreement, the licensee is granted a perpetual, terminable on default, transferable, non-exclusive license to use the Company’s trademarks and service marks to promote its golf courses and to sell its licensed products. The Company received a single royalty payment of $2.0 million in March 2020. Revenue recognized on a straight-line basis over its estimated economic useful life of 15 years was $67,000 for the six months ended June 30, 2022 and 2022.

 

Escrowed deposits

 

The Company had $0.3 million of deposits held in escrow from the prospective buyers of properties held for sale at June 30, 2022

 

 

 

 

11.

INCOME TAXES

 

The Company uses a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company’s provision for income taxes is calculated using the liability method. Deferred income taxes are provided for all temporary differences between the financial statement and income tax bases of assets and liabilities using tax rates enacted by law or regulation. A full valuation allowance was established for deferred income tax assets at June 30, 2022 and December 31, 2021, respectively.

 

 

12.

REPORTABLE OPERATING SEGMENTS

 

The Company’s reportable operating segments are comprised of the discrete business units whose operating results are regularly reviewed by the Company’s Chief Executive Officer – its chief decision maker – in assessing performance and determining the allocation of resources. Reportable operating segments are as follows:

 

 

Real Estate includes the planning, entitlement, development and sale of real estate inventory.

 

 

Leasing includes revenues and expenses from real property leasing activities, license fees and royalties for the use of certain of the Company’s trademarks and brand names by third parties, and the cost of maintaining the Company’s real estate assets, including conservation activities. The operating segment also includes the management of ditch, reservoir and well systems that provide non-potable irrigation water to West and Upcountry Maui areas.

 

 

Resort Amenities include a membership program that provides certain benefits and privileges within the Kapalua Resort for its members.

 

The Company’s reportable operating segment results are measured based on operating income (loss), exclusive of interest, depreciation, general and administrative, share-based compensation, pension and other postretirement expenses.

 

Reportable operating segment revenues and income for the three and six months ended June 30, 2022 and 2021 were as follows:

 

   

Three Months Ended

   

Six Months Ended

 
   

June 30,

   

June 30,

 
   

(unaudited)

   

(unaudited)

 
   

2022

   

2021

   

2022

   

2021

 
   

(in thousands)

   

(in thousands)

 

Operating Segment Revenues

                               

Real estate

  $ 11,600     $ 2,700     $ 11,600     $ 2,700  

Leasing

    2,198       1,962       4,228       3,763  

Resort amenities and other

    189       288       406       546  

Total Operating Segment Revenues

  $ 13,987     $ 4,950     $ 16,234     $ 7,009  

Operating Segment Income (Loss)

                               

Real estate

  $ 10,893     $ 2,246     $ 10,804     $ 2,148  

Leasing

    1,201       1,086       2,489       2,047  

Resort amenities and other

    (141 )     10       (434 )     (145 )

Total Operating Segment Income

  $ 11,953     $ 3,342     $ 12,859     $ 4,050  

 

 

 

 

13.

LEASING ARRANGEMENTS

 

The Company leases land primarily to agriculture operators and space in commercial buildings, primarily to restaurant and retail tenants through 2048. These operating leases generally provide for minimum rents and, in some cases, licensing fees, percentage rentals based on tenant revenues, and reimbursement of common area maintenance and other expenses. Certain leases allow the lessee an option to extend or terminate the agreement. There are no leases allowing a lessee an option to purchase the underlying asset. Total leasing income subject to ASC Topic 842 for the three and six months ended June 30, 2022 and 2021 were as follows:

 

   

Three Months Ended

   

Six Months Ended

 
   

June 30,

   

June 30,

 
   

(unaudited)

   

(unaudited)

 
   

2022

   

2021

   

2022

   

2021

 
   

(in thousands)

   

(in thousands)

 
                                 

Minimum rentals

  $ 818     $ 742     $ 1,641     $ 1,482  

Percentage rentals

    578       417       971       534  

Licensing fees

    275       165       498       290  

Other

    264       315       603       863  

Total

  $ 1,935     $ 1,639     $ 3,713     $ 3,169  

 

 

14.

DISCONTINUED OPERATIONS

 

In December 2019, the Company entered into an Asset Purchase Agreement to sell the Public Utilities Commission regulated assets of Kapalua Water Company, Ltd. and Kapalua Waste Treatment Company, Ltd. located in the Kapalua Resort. The Company received net proceeds of approximately $4.2 million upon closing of the sale in May 2021. A loss of approximately $0.2 million was reported in discontinued operations for the six months ended June 30, 2021.

 

 

15.

COMMITMENTS AND CONTINGENCIES

 

On December 31, 2018, the State of Hawaii Department of Health (“DOH”) issued a Notice and Finding of Violation and Order (“Order”) for alleged wastewater effluent violations related to the Company’s Upcountry Maui wastewater treatment facility. The facility was built in the 1960’s to serve approximately 200 single-family homes developed for workers in the Company’s former agricultural operations. The facility is made up of two 1.5-acre wastewater stabilization ponds and surrounding disposal leach fields. The Order includes, among other requirements, payment of a $230,000 administrative penalty and development of a new wastewater treatment plant, which become final and binding – unless a hearing is requested to contest the alleged violations and penalties.

 

The DOH agreed to defer the Order without a hearing date while the Company continues working on a previously approved corrective action plan to resolve and remediate the facility’s wastewater effluent issues. Continued testing of wastewater effluent consistently returns results within the allowable ranges. No hearing date has been set as discussions with the DOH are still ongoing to address any other matters regarding the Order. At June 30, 2022 and December 31, 2021, approximately $23,000 was accrued related to the administrative penalty. The Company is presently unable to estimate the remaining amount, or range of amounts, of any probable liability, if any, related to the Order and no additional provision has been made in the accompanying unaudited condensed consolidated financial statements.

 

There are various other claims and legal actions pending against the Company. The resolution of these other matters is not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations after consultation with legal counsel.

 

 

16.

FAIR VALUE MEASUREMENTS

 

GAAP establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements to enable the reader of the unaudited condensed consolidated interim financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. GAAP requires that financial assets and liabilities be classified and disclosed in one of the following three categories:

 

Level 1: Quoted market prices in active markets for identical assets or liabilities.

 

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

 

Level 3: Unobservable inputs that are not corroborated by market data.

 

The Company considers all cash on hand to be unrestricted cash for the purposes of the unaudited condensed consolidated balance sheets and unaudited condensed consolidated statements of cash flows. The fair value of receivables and payables approximate their carrying value due to the short-term nature of the instruments. The valuation is based on settlements of similar financial instruments all of which are short-term in nature and are generally settled at or near cost.

 

 

 

 

17.

RECENT ACCOUNTING PRONOUNCEMENTS

 

In June 2016, the FASB issued ASU 2016-13 to update the methodology used to measure current expected credit losses (“CECL”). This ASU apples to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investments in leases, and trade accounts receivable as well as certain off-balance sheet exposures, such as loan commitments. This ASU requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. The guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings/(accumulated deficit) in the period of adoption. ASU 2019-10 was subsequently issued delaying the effective date to the first quarter of 2023. The Company is in the process of assessing the impact of the ASU on its consolidated financial statements.

 

In November 2021, the FASB issued ASU 2021-10 as an update of ASC Topic 832 to increase the transparency of government assistance received by a business entity, including disclosure of the types of transactions, the accounting for those transactions, and the effect of those transactions on its financial statements. The ASU is effective for annual periods beginning after December 15, 2021. The Company is currently evaluating the impact of the ASU on its consolidated financial statements and related disclosures.

 

 

 

Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our unaudited condensed consolidated interim financial condition and results of operations should be read in conjunction with our annual audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ending December 31, 2021 and the unaudited condensed consolidated interim financial statements and related notes included in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those expressed or implied by the forward-looking statements below. Factors that could cause or contribute to those differences in our actual results include, but are not limited to, those discussed below and those discussed elsewhere within this Quarterly Report, particularly in the section entitled “Cautionary Note Regarding Forward-Looking Statements.”  Depending upon the context, the terms the “Company,” “we,” “our,” and “us,” refer to either Maui Land & Pineapple Company, Inc. alone, or to Maui Land & Pineapple Company, Inc. and its subsidiaries collectively.

 

Overview

 

Maui Land & Pineapple Company, Inc. was a Hawaii corporation at June 30, 2022 and the successor to a business organized in 1909. The Company consists of a landholding and operating parent company, its principal subsidiary, Kapalua Land Company, Ltd. and certain other subsidiaries of the Company.

 

On June 29, 2022, the Company’s shareholders voted to approve a proposal to change the state of incorporation of the Company from Hawaii to Delaware. The principal reasons to reincorporate were: 1) the predictability, flexibility, and responsiveness of Delaware law, 2) access to specialized courts, and 3) the enhanced ability to attract and retain qualified candidates for Board of Directors and management. The reincorporation was effected through a plan of conversion completed on July 18, 2022. Total authorized capital stock provided by the Delaware certificate of incorporation include 48,000,000 million shares, consisting of 43,000,000 shares of common stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par value $0.0001 per share.  No change in ownership resulted as each outstanding share of common stock was automatically converted into one share of the reincorporated Company. The name of the Company after reincorporation remains Maui Land & Pineapple Company, Inc. and shares of common stock continue to be listed on the New York Stock Exchange under the ticker symbol “MLP.”

 

We own approximately 22,000 acres of land on the island of Maui, Hawaii and develop, sell, and manage residential, resort, commercial, agricultural and industrial real estate through the following business segments:

 

• Real Estate—Our real estate operations consist of land planning and entitlement, development and sales activities.

 

• Leasing—Our leasing operations include residential, resort, commercial, agricultural and industrial land and property leases, licensing of our registered trademarks and trade names. This operating segment also includes the management of ditch, reservoir, and well systems in West and Upcountry Maui and the stewardship of conservation areas.

 

 

• Resort Amenities—We manage the operations of the Kapalua Club, a private, non-equity club program providing our members special programs, access and other privileges at certain amenities at the Kapalua Resort.

 

We continue to monitor the effects of the COVID-19 pandemic on us, our customers, and our vendors. While we are not able to accurately predict the magnitude or scope of such impacts at this time, should the existence of the COVID-19 pandemic continue for an extended period, our future business operations, including the results of operations, cash flows and financial position will be significantly affected. Appropriate remote work arrangements continue to be established for our employees in order to maintain our financial reporting systems

 

 

Results of Operations

 

Three and Six Months Ended June 30, 2022 compared to Three and Six Months Ended June 30, 2021

 

CONSOLIDATED

 

   

Three Months Ended
June 30,

   

Six Months Ended
June 30,

 
   

(unaudited)

   

(unaudited)

 
   

2022

   

2021

   

2022

   

2021

 
   

(in thousands)

   

(in thousands)

 
                                 

Operating revenues

  $ 13,987     $ 4,950     $ 16,234     $ 7,009  

Segment operating costs and expenses

    (2,034 )     (1,608 )     (3,375 )     (2,959 )

General and administrative

    (759 )     (574 )     (1,516 )     (1,291 )

Share-based compensation

    (276 )     (370 )     (654 )     (719 )

Depreciation

    (277 )     (302 )     (550 )     (602 )

Operating income

    10,641       2,096       10,139       1,438  

Other income

    -       -       -       13  

Pension and other postretirement expenses

    (114 )     (116 )     (229 )     (232 )

Interest expense

    (2 )     (32 )     (3 )     (65 )

Income from Continuing Operations

    10,525       1,948       9,907       1,154  

Loss from Discontinued Operations

    -       (69 )     -       (209 )

Net income

  $ 10,525     $ 1,879     $ 9,907     $ 945  
                                 

Income from Continuing Operations per Common Share

  $ 0.54     $ 0.10     $ 0.51     $ 0.06  

Loss from Discontinued Operations per Common Share

  $ -     $ -     $ -     $ (0.01 )

Net income per Common Share

  $ 0.54     $ 0.10     $ 0.51     $ 0.05  

 

 

REAL ESTATE

 

   

Three Months Ended
June 30,

   

Six Months Ended
June 30,

 
   

(unaudited)

   

(unaudited)

 
   

2022

   

2021

   

2022

   

2021

 
   

(in thousands)

   

(in thousands)

 
                                 

Operating revenues

  $ 11,600     $ 2,700     $ 11,600     $ 2,700  

Operating costs and expenses

    (707 )     (454 )     (796 )     (552 )

Operating income

  $ 10,893     $ 2,246     $ 10,804     $ 2,148  

 

In June 2022, we sold for $2.0 million approximately 50 acres in West Maui to the County of Maui for development of a regional park.

 

In February 2022, we entered into an agreement to sell the 646-acre parcel of agricultural land in Upcountry Maui. Terms of the agreement, as amended, included a purchase price of $9.6 million, a diligence period ending on May 16, 2022, and other customary closing conditions. On May 20, 2022, net proceeds of $9.2 million were collected upon closing.

 

 

In June 2021, we entered into an agreement with a local buyer to sell and grant to a conservation organization a perpetual, non-exclusive conservation easement. The conservation easement included approximately 791 acres of unimproved land in Honolua Valley, Maui, Hawaii. We collected proceeds of approximately $0.9 million upon closing.

 

In May 2021, we sold the property commonly known as the Steeple House located in the Kapalua Resort for $1.7 million. The sale included the fee simple interest of the 1.1 acre parcel as well as buildings and improvements located on the property.

 

In December 2021, the Company entered into an agreement to sell the Kapalua Central Resort project for $40.0 million. On May 13, 2022, terms of the agreement were amended to include a closing condition requiring the Maui Planning Commission to approve a (5) five-year extension of a Special Management Area (SMA) permit issued by the County of Maui by April 10, 2023. If the extension is not approved by April 10, 2023, the purchase agreement will terminate.  The amendment also allows the buyer to spend $290,000 of the initial $300,000 escrowed deposit on costs related to the extension of the SMA permit. If the extension is approved, the closing date is expected to be no later than (30) thirty days after the date of the extension approval.

 

There were no significant real estate development expenditures during the six months ended June 30, 2022 and 2021, respectively.

 

Real estate development and sales are cyclical and depend on a number of factors. Results for one period are therefore not necessarily indicative of future performance trends in this business segment. Uncertainties associated with the COVID-19 pandemic may, among other things, reduce demand for real estate and impair prospective purchasers’ ability to obtain financing, which would adversely affect revenues from our real estate operations.

 

LEASING

 

   

Three Months Ended

   

Six Months Ended

 
   

June 30,

   

June 30,

 
   

(unaudited)

   

(unaudited)

 
   

2022

   

2021

   

2022

   

2021

 
   

(in thousands)

   

(in thousands)

 
                                 

Operating revenues

  $ 2,198     $ 1,962     $ 4,228     $ 3,763  

Operating costs and expenses

    (997 )     (876 )     (1,739 )     (1,716 )

Operating income

  $ 1,201     $ 1,086     $ 2,489     $ 2,047  

 

The island of Maui experienced an increase in visitor traffic during the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. As a result of increased tourism, income recognized from our commercial leasing portfolio was higher. Certain of our leasing income is contingent upon the sales of the tenant exceeding a defined threshold and is recognized as a percentage of sales after those thresholds are achieved. For the three and six months ended June 30, 2022, percentage rental income was $0.6 million and $1.0 million, respectively.

 

Our leasing operations face substantial competition from other property owners in Maui and Hawaii.

 

RESORT AMENITIES AND OTHER         

 

   

Three Months Ended

   

Six Months Ended

 
   

June 30,

   

June 30,

 
   

(unaudited)

   

(unaudited)

 
   

2022

   

2021

   

2022

   

2021

 
   

(in thousands)

   

(in thousands)

 
                                 

Operating revenues

  $ 189     $ 288     $ 406     $ 546  

Operating costs and expenses

    (330 )     (278 )     (840 )     (691 )

Operating income (loss)

  $ (141 )   $ 10     $ (434 )   $ (145 )

 

Our Resort Amenities segment includes the operations of the Kapalua Club, a private, non-equity club providing its members special programs, access and other privileges at certain of the amenities at the Kapalua Resort, including a 30,000 square foot full-service spa and a private pool-side dining beach club. The Kapalua Club does not operate any resort amenities and the dues collected are primarily used to pay contracted fees for member access to the spa, beach club, golf courses and other resort amenities.

 

The decrease in operating revenues for the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, was due to lower membership levels of the Kapalua Club.

 

 

The increase in operating costs for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021, was primarily due to higher golf course fees charged to the Company.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Liquidity

 

We had cash on hand of approximately $16.9 million and $5.6 million (audited) at June 30, 2022 and December 31, 2021, respectively.

 

At June 30, 2022, $15.0 million was available under our revolving line of credit facility with First Hawaiian Bank (“Credit Facility”). The Credit Facility which matures on December 31, 2025 provides for revolving or term loan borrowing options. Interest on revolving loan borrowings is calculated using the Bank’s prime rate minus 1.125 percentage points. Interest on term loan borrowing is fixed at the Bank’s commercial loan rates with interest rate swap options available. We have pledged approximately 30,000 square feet of commercial leased space in the Kapalua Resort as security for the Credit Facility. Net proceeds from the sale of any collateral are required to be repaid toward outstanding borrowings and will permanently reduce the Credit Facility’s revolving commitment amount. There are no commitment fees on the unused portion of the Credit Facility.

 

The terms of the Credit Facility include various representations, warranties, affirmative, negative and financial covenants and events of default customary for financings of this type. Financial covenants include a minimum liquidity (as defined) of $2.0 million, a maximum of $45.0 million in total liabilities, and a limitation on new indebtedness.

 

We were in compliance with the covenants under the Credit Facility at June 30, 2022. If economic conditions are negatively impacted in future periods, we may borrow under our Credit Facility.

 

Cash Flows

 

Net cash flow provided by our operating activities was approximately $11.9 million for the six months ending June 30, 2022.

 

In June 2022, we sold approximately 50 acres in West Maui to the County of Maui for $2.0 million.

 

In May 2022, we collected net proceeds of $9.2 million upon closing of the 646-acre parcel in Upcountry Maui.

 

The outstanding balance of our Credit Facility remained zero at June 30, 2022. No interest payments on our Credit Facility were due for the six months ended June 30, 2022.

 

No minimum funding contributions are required to be made to our defined benefit pension plan in 2022.

 

Future Cash Inflows and Outflows

 

Our business initiatives include investing in our operating infrastructure, continued planning and entitlement efforts on our development projects. This may require borrowing under our Credit Facility or other indebtedness, repayment of which may be dependent on selling of our real estate assets at acceptable prices in condensed timeframes. We believe that our cash on-hand and cash received from operations, together with borrowing capacity under our Credit Facility, will provide sufficient financial flexibility to meet working capital requirements and to fund capital expenditures through the next twelve months and the foreseeable future.

 

Our indebtedness could have the effect of, among other things, increasing our exposure to general adverse economic and industry conditions, limiting our flexibility in planning for, or reacting to, changes in our business and industry, and limiting our ability to borrow additional funds.

 

Critical Accounting Policies and Estimates

 

The preparation of the unaudited condensed consolidated interim financial statements in conformity with GAAP requires the use of accounting estimates. Changes in these estimates and assumptions are considered reasonably possible and may have a material effect on the unaudited condensed consolidated interim financial statements and thus actual results could differ from the amounts reported and disclosed herein. For additional information regarding our critical accounting policies, see the section entitled “Managements Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies” contained within our Annual Report. There have been no significant changes in our critical accounting policies.

 

 

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We have no material exposure to changes in interest rates related to our borrowing and investing activities used to maintain liquidity and to fund business operations. We have no material exposure to foreign currency risks.

 

We are subject to potential changes in consumer behavior and regulatory risks through travel and social distancing restrictions due to our location as a vacation destination. Potential deferrals and abatements may impact our rental income.

 

Item 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 

As required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures at the end of the fiscal quarter covered by this report. Based upon the foregoing, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in applicable SEC rules and forms.

 

Changes in Internal Controls Over Financial Reporting

 

There have been no significant changes in our internal controls over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f) or 15d-15(f)) during the six months ended June 30, 2022.

 

 

PART II OTHER INFORMATION

 

Item 1. LEGAL PROCEEDINGS

 

For information related to Item 1. Legal Proceedings, refer to Note 15, Commitments and Contingencies, to our condensed consolidated financial statements included herein.

 

Item 1A. RISK FACTORS

 

Potential risks and uncertainties include, among other things, those factors discussed in the sections entitled “Business,” “Risk Factors” and “Managements Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 and the section entitled “Managements Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q. Readers should carefully review those risks and the risks and uncertainties disclosed in other documents we file from time to time with the SEC. We undertake no obligation to publicly release the results of any revisions to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements. During the six months ended June 30, 2022, there were no material changes to the risks and uncertainties described in Part I, Item 1A., “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2021.

 

 

Item 6. EXHIBITS

 

10.1*

Fifth Loan Modification Agreement, by and between the Company and First Hawaiian Bank, dated July 15, 2022

   

10.2*

Amendment No. 3 to Purchase and Sale Agreement and Escrow Instructions, by and between Maui Land & Pineapple Company, Inc. and Fakhry LLC, dated May 13, 2022
   

31.1*

Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.
   

31.2*

Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.

   

32.1**

Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.
   

32.2**

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.
   

101.INS*

Inline XBRL Instance Document

   

101.SCH*

Inline XBRL Taxonomy Extension Schema Document

   

101.CAL*

Inline XBRL Taxonomy Extension Calculation Document

   

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase

   

101.LAB*

Inline XBRL Taxonomy Extension Labels Linkbase Document

   

101.PRE*

Inline XBRL Taxonomy Extension Presentation Link Document

   

104*

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
   
   

*

Filed herewith

   

**

The certifications attached as Exhibit 32.1 and 32.2 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act, and shall not be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report, irrespective of any general incorporation language contained in any such filing.

 

 

SIGNATURE

 

Pursuant to the requirements 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.

 

   

MAUI LAND & PINEAPPLE COMPANY, INC.

     

August 11, 2022

 

/s/ WADE K. KODAMA

Date

 

Wade K. Kodama

   

Chief Financial Officer

   

(Principal Financial Officer)

 

 

EXHIBIT INDEX

 

Exhibit
Number

 

Description

     

10.1*

  Fifth Loan Modification Agreement, by and between the Company and First Hawaiian Bank, dated July 15, 2022
     

10.2*

  Amendment No. 3 to Purchase and Sale Agreement and Escrow Instructions, by and between Maui Land & Pineapple Company, Inc. and Fakhry LLC, dated May 13, 2022
     

31.1*

 

Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.

     

31.2*

 

Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.

     

32.1**

 

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.

     

32.2**

 

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.

     

101.INS*

 

Inline XBRL Instance Document

     

101.SCH*

 

Inline XBRL Taxonomy Extension Schema Document

     

101.CAL*

 

Inline XBRL Taxonomy Extension Calculation Document

     

101.DEF*

 

Inline XBRL Taxonomy Extension Definition Linkbase

     

101.LAB*

 

Inline XBRL Taxonomy Extension Labels Linkbase Document

     

101.PRE*

 

Inline XBRL Taxonomy Extension Presentation Link Document

     

104*

 

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

 

 


*

Filed herewith.

 

**

The certifications attached as Exhibit 32.1 and 32.2 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act, and shall not be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report, irrespective of any general incorporation language contained in any such filing.

 

 

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