United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[  X  ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period endedSeptember 30, 2017March 31, 2022

or

[     ]       Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______ to __________

Commission file#0-502730-50273

KAANAPALI LAND, LLC

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code:312-915-1987312-915-1987

Securities registered pursuant to Section 12(b) of the Act: None

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 (the "Exchange Act") during the preceding 12 months (or for such a shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [ X ]    No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-5S-T ('§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ X ]    No [   ]

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

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 [ X ]

As of November 13, 2017,May 12, 2022, the registrant had 1,792,613 shares of Common Shares and 52,000 Class C Shares outstanding.

TABLE OF CONTENTS

Part I.  Financial Information

     Item 1.  Condensed Consolidated Financial Statements

KAANAPALI LAND, LLC

Condensed Consolidated Balance Sheets

September 30, 2017March 31, 2022 and December 31, 20162021

(Dollars in Thousands, except share data)

(Unaudited)

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents 

KAANAPALI LAND, LLC

Condensed Consolidated Statements of Operations

Three Months Ended March 31, 2022 and Nine and Ended September 30, 2017 and 20162021

(Unaudited)

(Dollars in Thousands, except per share data)

The accompanying notes are an integral part of the condensed consolidated financial statements.

KAANAPALI LAND, LLC

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months and Nine Ended September 30, 2017 and 2016

(Unaudited)

(Dollars in Thousands)

The accompanying notes are an integral part of the condensed consolidated financial statements.

KAANAPALI LAND, LLC

Condensed Consolidated Statements of Cash FlowsComprehensive Income (Loss)

NineThree Months Ended September 30, 2017March 31, 2022 and 20162021

(Unaudited)

(Dollars in Thousands)

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table

KAANAPALI LAND, LLC

Condensed Consolidated Statements of ContentsEquity

Three Months Ended March 31, 2022 and 2021

(Unaudited)

(Dollars in Thousands)

The accompanying notes are an integral part of the condensed consolidated financial statements.

KAANAPALI LAND, LLC

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2022 and 2021

(Unaudited)

(Dollars in Thousands)

The accompanying notes are an integral part of the condensed consolidated financial statements.

KAANAPALI LAND, LLC

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands)

(1)  Summary of Significant Accounting Policies

Organization and Basis of Accounting

Kaanapali Land, LLC ("Kaanapali Land"), a Delaware limited liability company, is the reorganized entity resulting from the Joint Plan of Reorganization of Amfac Hawaii, LLC (now known as KLC Land Company, LLC ("KLC Land")), certain of its subsidiaries (together with KLC Land, the "KLC Debtors") and FHT Corporation ("FHTC" and, together with the KLC Debtors, the "Debtors") under Chapter 11 of the Bankruptcy Code, dated June 11, 2002 (as amended, the "Plan").

The accompanying condensed consolidated financial statements include the accounts of Kaanapali Land and all of its subsidiaries and its predecessors (collectively, the “Company”), which include KLC Land and its wholly-owned subsidiaries. The Kaanapali Coffee Farms Lot Owners’ Association is consolidated into the accompanying condensed consolidated financial statements. The interests of third-party owners are reflected as non-controlling interests. All significant intercompany transactions and balances have been eliminated in consolidation.

The Company's continuing operations are in two business segments - Agriculture and Property. The Agriculture segment remains engaged in farming, harvesting milling and sellingmilling operations relating to coffee orchards on behalf of the applicable land owners. The Company also cultivates, harvests and sells bananas and citrus fruits and engages in certain ranching operations. The Property segment primarily develops land for sale and negotiates bulk sales of undeveloped land. The Property and Agriculture segments operate exclusively in the State of Hawaii.

In 2013, the Kaanapali Coffee Farms Lot Owners’ Association was consolidated into the accompanying consolidated financial statements. The interests of third party owners are reflected as non controlling interests. All significant intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements, and therefore, should be read in conjunction with the Company's Annual Report on Form 10-K (File No. 0-50273) for the year ended December 31, 2016.2021. Capitalized terms used but not defined in this quarterly report have the same meanings as in the Company's 20162021 Annual Report on Form 10-K.

Property

The Company's significant property holdings are on the island of Maui consisting of approximately 3,900 acres, of which approximately 1,500 acres isare classified as conservation land which precludes development. The Company has determined, based on its current projections for the development and/or disposition of its property holdings, that the property holdings are not currently recorded in an amount in excess of proceeds that the Company expects that it will ultimately obtain from the operation and disposition thereof.

Inventory of land held for sale, of approximately $5,557$0 and $7,026,$3,045, representing primarily Kaanapali Coffee Farms, wasis included in Property, net in the consolidated balance sheets at September 30, 2017March 31, 2022 and December 31, 2016,2021, respectively, and is carried at the lower of cost or fair market value, less costs to sell, which is based on current and foreseeable market conditions, discussions with real estate brokers and review of historical land sale activity (level 2 and 3). Generally no landLand held for sale is recognized in the Property Segment as disclosed in Note 9 Business Segment Information. Land is currently in use exceptutilized for certain acreage ofcommercial specialty coffee treesfarming operations which are being maintained toalso support the Company's land development program, as well as, farming bananas, citrus and other farm products and ranching operations. Additionally, miscellaneous parcels of land that have been leased or licensed to third parties on a short term basis.

In August 2017, Pioneer Mill Company, LLC, pursuant to a property sales agreement with an unrelated third party, closed on the sale of approximately 230 acres known collectively as the “Wainee Lands”, which are located in Lahaina south of the mill site (“Wainee Sales Agreement”). The purchase price was $8,000, paid in cash at closing.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Operating results for the three and nine months ended September 30, 2017March 31, 2022 are not necessarily indicative of the results that may be achieved in future periods.

Cash and Cash Equivalents

The Company considers as cash equivalents all investments with maturities of three months or less when purchased. Included in this balance as of March 31, 2022 is a money market fund for $10,000$8,400 that is considered to be a Level 1 investment with a maturity of 30 days.investment. The Company’s cash balances are maintained primarily in two financial institutions. Restricted cash represents cash held by the Kaanapali Coffee Farms Lot Owners’ Association. Such balances significantly exceed the Federal Deposit Insurance Corporation insurance limits. Management does not believe the Company is exposed to significant risk of loss on cash and cash equivalents.equivalents or restricted cash.

Revenue Recognition of Profit From Real Property Sales

ForRevenue from real property sales profit is recognized in fullat the time of closing when the collectabilitycontrol of the sales price is reasonably assured andproperty transfers to the earnings process is virtually complete. Whencustomer. After closing of the sale does not meettransaction, the requirements for full profit recognition, all or a portion of the profit is deferred until such requirements are met.Company has no remaining performance obligation.

Other revenues are recognized when delivery has occurredcontrol of goods or services have been rendered,transfers to the sales price is fixedcustomers, in the amount that the Company expects to receive for the transfer of goods or determinable, and collectability is reasonably assured.

Recently Issued Accounting Pronouncementsservices.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance under the Accounting Standards Codification (“ASC”) 606, Revenue from Contract with Customers, which establishes a single comprehensive revenue recognition model for all contracts with customers and will supersede most existing revenue guidance. This guidance requiresstandards require entities to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange. Transition options include eitherThe revenue recognition standards have implications for all revenues, excluding those that are under the specific scope of other accounting standards.

The Company’s revenues that were subject to revenue recognition standards for the three months ended March 31, 2022 and 2021 were as follows (in thousands):

The revenue recognition standards require the use of a full or modified retrospective approach and early adoption is permitted.five-step model to recognize revenue from customer contracts. The implementation date for this guidance was effective for annual reporting periods beginning after December 15, 2016. The effective transition date was deferred by one year upon issuance of ASU 2015-14 in August 2015 and will now be effective at the beginning of our first quarter of fiscal year 2018. Whilefive-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is currently evaluatingprobable that a significant future reversal will not occur, (iv) allocate the impact oftransaction price to the adoption of this requirement on our Consolidated Financial Statements, particularlyrespective performance obligations in the contract, and (v) recognize revenue recognition from sales of property, significant impact is not anticipated.when (or as) the Company satisfies the performance obligation.

Lease Accounting

In February 2016, the FASB issued ASUFinancial Accounting Standards Board (“FASB”) updated Accounting Standards Codification (“ASC”) Topic 842 Leases (ASU 2016-02). Accounting Standards Update (“ASU”) 2016-02 Leases (Topic 842),requires lessees to increase transparencyrecord operating and comparability among organizations by recognizing leasefinancing leases as assets and lease liabilities on the balance sheet and disclosing keylessors to expense costs that are not direct leasing costs. Subsequently, the FASB issued additional ASUs that further clarified the original ASU. The ASUs became effective for the Company on January 1, 2019. Upon adoption of the lease ASUs, the Company elected the practical expedients allowable under the ASUs, which included the optional transition method permitting January 1, 2019 to be its initial application date. The adoption of this guidance did not result in an adjustment to retained earnings. Additionally, the Company elected the package of practical expedients, which permits the Company not to reassess expired or existing contracts continuing a lease, the lease classification for expired or existing contracts, and initial direct costs for any existing leases. Further, the Company elected the practical expedient regarding short-term leases, which allows lessees to elect not to apply the balance sheet recognition requirements in ASC 842 to short-term leases. Finally, under ASC 842, lessors are required to continually assess collectability of lessee payments, and, if operating lease payments are not probable of collection, to only recognize into income the lesser of (i) straight-line rental income or (ii) lease payments received to date. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

The Company’s lease arrangements, both as lessor and as lessee, are short-term leases. The Company leases land to tenants under operating leases, and the Company leases property, primarily office and storage space, from lessors under operating leases. During the three months ended March 31, 2022 and 2021, the Company recognized $262 and $181, respectively, of lease income, substantially comprised of non-variable lease payments. During the three months ended March 31, 2022 and 2021, the Company recognized $19 and $16, respectively, of lease expense, substantially comprised of non-variable lease payments.

Recently Issued Accounting Pronouncements

In June 2016, FASB updated ASC Topic 326 Financial Instruments – Credit Losses with ASU 2016-13 Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 enhances the methodology of measuring expected credit losses to include the use of forward-looking information about leasing arrangements. For public business entities, the standardto better inform credit loss estimates. ASU 2016-13 is effective for fiscal yearsannual periods beginning after December 15, 2018, including interim2019 for public companies except for smaller reporting companies whose effective date will be periods within those fiscal years. Early application of the amendments in this update is permitted for all entities.beginning after December 15, 2022. While the Company is currently evaluating the effect that implementation of this update will have on its condensed consolidated financial position and results of operations upon adoption,statements, no significant impact is not anticipated.

In August 2016, theMarch 2020, FASB issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments,ASU 2020-04, Reference Rate Reform (ASU 2020-04) which provides guidance on how certain cash receiptsoptional expedients and cash payments should be presentedexceptions for applying U.S. GAAP to contracts, hedging relationships, and classified inother transactions affected by the statementdiscontinuance of cash flows with the objective of reducing existing diversity in practice with respect to these items. This guidanceLIBOR or another referenced rate. ASU 2020-04 is effective for annual periods, and interim periods within thosefiscal years beginning after December 15, 2017 and shall be applied retrospectively to all periods presented. Early adoption of this update is permitted.31, 2022. While the Company is currently evaluating the impact ofeffect that the adoptionimplementation of this requirementguidance will have on our Consolidated Financial Statements,its condensed consolidated financial statements, no significant impact is not anticipated.

In November 2016, the Financial Accounting Standards Board (“FASB”) issued guidance under the Account Standards Codification (“ASC”) 2016-18, Statement of Cash Flows: Restricted Cash, which provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. While the Company is currently evaluating the impact of the adoption of this requirement on our Consolidated Financial Statements, significant impact is not anticipated.

In January 2017, the Financial Accounting Standards Board, or FASB, issued guidance to add the SEC Staff Announcement “Disclosure of the Impact that Recently Issued Accounting Standards will have on the Financial Statements of a Registrant when such Standards are Adopted in a Future Period (in accordance with Staff Accounting Bulletin Topic 11.M).” The announcement applies to the May 2014 guidance on revenue recognition from contracts with customers and the February 2016 guidance on leases. The announcement provides the SEC staff view that a registrant should evaluate certain recent accounting standards that have not yet been adopted to determine appropriate financial statement disclosures about the potential material effects of those recent accounting standards. If a registrant does not know or cannot reasonably estimate the impact that adoption of the recent accounting standards referenced in this announcement is expected to have on the financial statements, then the registrant should make a statement to that effect and consider the additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact that the recent accounting standards will have on the financial statements of the registrant when adopted. While the Company is currently evaluating the impact of this guidance on leases and its impact on its consolidated financial statements, significant impact is not anticipated.

(2)  Land Development

During the first quarter of 2006, the Company received final subdivision approval on an approximate 336 acre parcel in the region "mauka" (toward the mountains) from the main highway serving the area. This project, called Kaanapali Coffee Farms, consistsoriginally consisted of 51 agricultural lots, which are currently being offered to individual buyers. During the second quarter of 2021, the Company converted an approximate 55 acre cultural resources lot to an agricultural lot. The land improvements were completed during 2008.Company closed on the sale of this lot on March 22, 2022. The purchase price was $5,000, paid in cash at closing. As of September 30, 2017,March 31, 2022, the Company has sold forty-threeall the lots at Kaanapali Coffee Farms including one lot during the third quarterin December 2021 and one lot during the second quarter of 2017 and six lots during 2016. In conjunction with the sale of one lot sold in prior years, in addition to cash proceeds, the Company received a promissory note. As of September 30, 2017, $500 remains outstanding on said note.March 2022.

In September 2014, Kaanapali Land Management Corp. (“KLMC”), pursuant to a property and option purchase agreement with an unrelated third party, closed on the sale of an approximate 14.9 acre parcel in West Maui. The purchase price was $3,300,$3,300, paid in cash at closing. The agreement (as subsequently amended) commits KLMC to fund up to between $803 and $1,008,$583, depending on various factors, for off-site roadway, water, sewer and electrical improvements that will also provide service to other KLMC properties. The purchaser was also granted an option forAlthough certain off-site construction has begun at the purchasesite, the commitment remains outstanding as construction of an adjacent site of approximately 18.5 acres for $4,078, of which $525 was paid in cash upon the closing of the 14.9 acre site. The nonrefundable $525 option payment can be applied to the purchase of the adjacent 18.5 acre option site. The option which initially expired in September 2017 has been extended to December 31, 2018.such improvements does not yet trigger such funding. The 14.9 acre site is intended to be used for a critical access hospital, skilled nursing facility, assisted living facility, and medical offices, and the option site is intended to be used for other medical and health-related facilities.independent living facility.

(3)  Mortgage Note Payable

Certain subsidiaries of Kaanapali Land are jointly indebted to Kaanapali Land pursuant to a certain Secured Promissory Note in the principal amount of $70,000$70,000 dated November 14, 2002, and due September 30, 2020,2029, as extended. Such note had an outstanding balance of principal and accrued interest as of September 30, 2017March 31, 2022 and December 31, 20162021 of approximately $88,000$89,940 and $87,500,$90,565, respectively. The interest rate currently is 1.19%0.39% per annum and compounds semi-annually. The note, which is prepayable, is secured by substantially all of the remaining real property owned by such subsidiaries, pursuant to a certain Mortgage, Security Agreement and Financing Statement, dated as of November 14, 2002 and placed on record in December 2002. The note has been eliminated in the condensed consolidated financial statements because the obligors are consolidated subsidiaries of Kaanapali Land.

(4)  Employee Benefit Plans

The Company participates in a defined benefit pension plan that covers substantially all its eligible employees. The Pension Plan is sponsored and maintained by Kaanapali Land in conjunction with other plans providing benefits to employees of Kaanapali Land and its affiliates.

The Company’s Pension Plan has excess assets of approximately $20 million. On October 6, 2016January 15, 2022, Pacific Trail Holdings LLC, the manager of the Company, adopted a plan to freeze the benefit accruals under and close participation in the Pension Plan entered into an agreement with Pacific Life Insuranceand terminate the Pension Plan on or about June 1, 2022. Effective February 7, 2022, the Level 1 and Level 2 plan asset investments were reallocated to a money market fund. Benefit accruals were frozen on March 31, 2022. The Company (“Pacific Life”),recognized a third party insurance company, to transfercurtailment gain of $12 qas of January 31, 0222 in the obligation to payconsolidated financial statements at March 31, 2022. After distribution of Pension Plan benefits to approximately 1,330 retired members and beneficiaries currently receiving monthly benefitsparticipants, remaining surplus Pension Plan assets are expected to be distributed from the Pension Plan and to approximately 168 membersin accordance with deferred annuities under the Pension Plan, through the purchase of a single premium group annuity contract. The action settled approximately 96%requirements of the Pension Plan’s benefit obligations. In order to fund the purchase, funds aggregating approximately $39.7 million were transferred to Pacific Life on October 11, 2016. The Pension Plan no longer has an obligation to pay benefits to those members and beneficiaries.

In the fourth quarterInternal Revenue Code of 2016 the Company recognized a non-cash accumulated other comprehensive loss, after tax, of approximately $3.5 million. Substantially all of the resultant total after tax accumulated other comprehensive loss of approximately $13 million has been recognized in accumulated earnings in the Company’s consolidated balance sheet.

The Company does not consider the excess assets of the Pension Plan (approximately $14 million after the above noted transaction) to be a source of liquidity due to the substantial cost, including Federal income tax consequences, associated with liquidating the Pension Plan.1986 (as amended) by certain regulatory deadlines.

The components of the net periodic pension benefit (credit), included in selling, general and administrative in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 are as follows:

The Company recognizes the over funded or under funded status of its employee benefit plans as an asset or liability in its statement of financial position and recognizes changes in its funded status in the year in which the changes occur through comprehensive income. Included in accumulated other comprehensive income at September 30, 2017March 31, 2022 and December 31, 20162021 are the following amounts that have not yet been recognized in net periodic pension cost: unrecognized prior service costs of $1 ($1 net of tax)$0 and $14 ($9 net of tax)$0, respectively, and unrecognized actuarial lossgain of $1,935$3,089 ($1,180,2,286, net of tax) and $1,993$3,106 ($1,216,2,298, net of tax), respectively. The prior service cost, curtailment gain and actuarial lossgain recognized in net periodic pension costcredit for the ninethree months ending September 30, 2017March 31, 2022 are $1$0, $12 ($19 net of tax) and $39$5 ($244 net of tax), respectively.

The Company maintains a nonqualified deferred compensation arrangement (the "Rabbi Trust") which provides certain former directors of Amfac and their spouses with pension benefits. The Rabbi Trust invests in marketable securities and cash equivalents (Level 1). The deferred compensation liability of $646 represented$356 is included in the Rabbi Trust and assets funding such deferred compensation liability of $34 are consolidatedOther liabilities in the Company's condensed consolidated balance sheet.sheet as of March 31, 2022.

(5)  Income Taxes

Federal tax return examinations have been completed for all years through 2005 and for the year 2013. The statutes of limitations have run for the tax years 2006 through 2012.

The statutes of limitations with respect to the Company's taxes for 2014 through 20162018 and more recent years remain open to examinations by tax authorities, subject to possible utilization of loss carryforwards from earlier years. Notwithstanding the foregoing, all net operating losses (“NOL”) generated and not yet utilized are subject to adjustment by the IRS. The Company believes adequate provisions for income tax have been recorded for all years, although there can be no assurance that such provisions will be adequate. To the extent that there is a shortfall, any such shortfall for which the Company could be liable could be material.

The Tax Cuts and Jobs Act (the “Act”) repealed the corporate AMT and provided that prior AMT credits would be refundable. Any remaining AMT credit amount became refundable incrementally from 2018 through 2021. The CARES Act accelerated the refund schedule, enabling the Company to claim the refund in full. In February and July 2021, the Company received $1,483 and $1,486, respectively, including interest, of the refundable tax credit from the Internal Revenue Service.

The Act is a comprehensive tax reform bill containing a number of other provisions that either currently or in the future could impact the Company, particularly the effect of certain limitations effective for the tax year 2018 and forward (prior losses remain subject to the prior 20 year carryover period) on the use of federal NOL carryforwards which will generally be limited to being used to offset 80% of future annual taxable income.

(6)  Transactions with Affiliates

An affiliated insurance agency, JMB Insurance Agency, Inc., which has some degree of common ownership with the Company, earns insurance brokerage commissions in connection with providing the placement of insurance coverage for certain of the properties and operations of the Company. Such commissions are believed by management to be comparable to those that would be paid to such affiliate insurance agency in similar dealings with unaffiliated third parties. CommissionsNaN such commissions were paid for the three and nine months ended September 30, 2017 were $0March 31, 2022 and $12, respectively, and $0 and $12 for the three and nine months ended September 30, 2016, respectively.2021.

The Company reimburses theirits affiliates for general overhead expense and for direct expenses incurred on its behalf, including salaries and salary-related expenses incurred in connection with the management of the Company's operations. Generally, the entity that employs the person providing the services receives the reimbursement. Substantially all of such reimbursable amounts were incurred by JMB Realty Corporation or its affiliates, 900 Financial Management Services,900FMS, LLC, 900Work, LLC, and JMB Financial Advisors, LLC, all of which have some degree of common ownership with the Company. The total costs recorded in cost of sales and selling, general and administrative expenses in the condensed consolidated statement of operations for the three and nine months ended September 30, 2017March 31, 2022 and 2021 were $323$370 and $982, respectively, and $323 and $961 for the three and nine months ended September 30, 2016,$368, respectively, of which $353$28 was unpaid as of September 30, 2017.March 31, 2022.

The Company derives revenue from farming and common area maintenance services and for providing non-potable water to the Kaanapali Coffee Farms Lot Owners Association (“LOA”). The LOA is the association of the owners of the Kaanapali Coffee Farms. The revenues were $266$313 and $880$323 for the three and nine months ended September 30, 2017, respectively,March 31, 2022 and $296 and $888 for the three and nine months ended September 30, 2016, respectively.2021. Such revenue is recognized in the Agriculture Segment as disclosed in footnoteNote 9 Business Segment Information. The 2017 and 2016revenue amounts have been eliminated in consolidation.the condensed consolidated financial statements.

(7)  Commitments and Contingencies

At September 30, 2017,March 31, 2022, the Company has no principal contractual obligations related to the land improvements in conjunction with Phase I of the Kaanapali Coffee Farms project.

On November 23, 2015, the SEC contacted Kaanapali Land regarding the Company’s compliance with the reporting requirements under Section 13(a) of the Securities Exchange Act of 1934, as the Company was delinquent on its annual and interim SEC filings. In light of this letter, Kaanapali Land is unable to determine whether the SEC might pursue some future action related to this matter. As of the Company’s filing of its 2016 Annual Report on Form 10-K, the Company is now current on its annual and interim SEC filings.

Material legal proceedings of the Company are described below. Unless otherwise noted, the parties adverse to the Company in the legal proceedings described below have not made a claim for damages in a liquidated amount and/or the Company believes that it would be speculative to attempt to determine the Company's exposure relative thereto, and as a consequence believes that an estimate of the range of potential loss cannot be made. Any claims that were not filed on a timely basis under the Plan have been discharged by the Bankruptcy Court and thus the underlying legal proceedings should not result in any liability to the Debtors. All other claims have been satisfied. Proceedings against subsidiaries or affiliates of Kaanapali Land that are not Debtors were not stayed by the Plan and were permitted to proceed. However, two such

Two former subsidiaries, Oahu Sugar Company, LLC (“Oahu Sugar”) and D/C Distribution Corporation (“D/C”), filed subsequent petitions for liquidation under Chapter 7 of the Bankruptcy Code in April 2005 and July 2007, respectively, as described below. On December 17, 2019, the Oahu Sugar bankruptcy case was closed. As a consequence of the Chapter 7 filings, both subsidiaries arefiling, D/C has not been under control of the Company.Company since the bankruptcy filing.

As a result of an administrative order issued to Oahu Sugar by the Hawaii Department of Health (“HDOH”), Order No. CH 98-001, dated January 27, 1998, Oahu Sugar was engaged in environmental site assessment of lands it leased from the U.S. Navy and located on the Waipio Peninsula. Oahu Sugar submitted a Remedial Investigation Report to the HDOH. The HDOH provided comments that indicated that additional testing may be required. Oahu Sugar responded to these comments with additional information. On January 9, 2004, the Environmental Protection Agency (“EPA”) issued a request to Oahu Sugar seeking information related to the actual or threatened release of hazardous substances, pollutants and contaminants at the Waipio Peninsula portion of the Pearl Harbor Naval Complex National Priorities List Superfund Site. The request

sought, among other things, information relating to the ability of Oahu Sugar to pay for or perform a clean upcleanup of the land formerly occupied by Oahu Sugar. Oahu Sugar responded to the information requests and had notified both the Navy and the EPA that while it had some modest remaining cash that it could contribute to further investigation and remediation efforts in connection with an overall settlement of the outstanding claims, Oahu Sugar was substantially without assets and would be unable to make a significant contribution to such an effort. Attempts at negotiating such a settlement were fruitless and Oahu Sugar received an order from EPA in March 2005 that would purportpurported to require certain testing and remediation of the site. As Oahu Sugar was substantially without assets, the pursuit of any action, informational, enforcement, or otherwise, would have had a material adverse effect on the financial condition of Oahu Sugar. Counsel for the trustee, EPA, the Navy, and for Fireman’s Fund, one of Kaanapali Land’s insurers, are exploring ways in which to conclude the Oahu Sugar bankruptcy. There are no assurances that such an agreement can be reached.

Therefore, as a result of the pursuit of further action by the HDOH and EPA as described above and the immediate material adverse effect that the actions had on the financial condition of Oahu Sugar, Oahu Sugar filed with the United States Bankruptcy Court, Northern District of Illinois, Eastern Division in April 2005, its voluntary petition for liquidation under Chapter 7 of Title 11, United States Bankruptcy Code. Such filing iswas not expected to have a material adverse effect on the Company as Oahu Sugar was substantially without assets at the time of the filing. While it iswas not believed that any other affiliates havehad any responsibility for the debts of Oahu Sugar, the EPA has indicated that it intends to makemade a claim against Kaanapali Land as further described below, and therefore, there can be no assurance that the Company will not incur significant costs in conjunction with such claim.below.

The deadline for filing proofs of claim with the bankruptcy court passed in April 2006.

Prior to the claims filing deadline, Kaanapali Land, on behalf of itself and certain subsidiaries, filed claims that aggregated approximately $224,000,$224,000, primarily relating to unpaid guarantee obligations made by Oahu Sugar that were assigned to Kaanapali Land pursuant to the Plan on the Plan Effective Date. In addition, the EPA and the U.S. Navy filed a joint proof of claim that seekssought to recover certain environmental response costs relative to the Waipio Peninsula site discussed above. The proof of claim contained a demand for previously spent costs in the amount of approximately $260,$260, and additional anticipated response costs of between approximately $2,760$2,760 and $11,450.$11,450. No specific justification of these costs, or what they are purported to represent, was included in the EPA/Navy proof of claim. Due to theThere was an insignificant amount of assets remaining in the debtor's estate and it iswas unclear whether the United States Trustee who has takentook control of Oahu Sugar willwas going to take any action to contest the EPA/Navy claim, or how it willwas going to reconcile such claim for the purpose of distributing any remaining assets of Oahu Sugar. Counsel for the trustee, EPA, the Navy, and for Fireman’s Fund, one of Kaanapali Land’s insurers, explored ways in which to conclude the Oahu Sugar bankruptcy. On December 16, 2019, the Oahu Sugar bankruptcy trustee filed its final accounting with no distribution to claimants. On December 17, 2019, the Oahu Sugar bankruptcy case was closed and the trustee was discharged.

With regard to the alleged Waipio Penisula alleged environmental issues, EPA has sent three requests for information to Kaanapali Land regarding, among other things, Kaanapali Land's organization and relationship, if any, to entities that may have, historically, operated on the site and with respect to operations conducted on the Waipio site. Kaanapali Land responded to these requests for information. By letter dated February 7, 2007, pursuant to an allegation that Kaanapali Land iswas a successor to Oahu Sugar Company, Limited, a company that operated at the site prior to 1961 ("Old Oahu"), EPA advised Kaanapali that it believesbelieved it iswas authorized by the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”) to amend the existing Unilateral Administrative Order against Oahu Sugar Company, LLC, for the clean upcleanup of the site to include Kaanapali Land as an additional respondent. The purported basis for the EPA's position iswas that Kaanapali Land, by virtue of certain corporate actions, iswas jointly and severally responsible for the performance of the response actions, including, without limitation, clean-up at the site. No such amendment has taken place as of the date hereof.was made. Instead, after a series of discussions between Kaanapali and the EPA, on or about September 30, 2009, the EPA issued a Unilateral Administrative Order to Kaanapali Land for the performance of work in support of a removal action at the former Oahu Sugar pesticide mixing site located on Waipio peninsula. The work consistsconsisted of the performance of soil and groundwater sampling and analysis, a topographic survey, and the preparation of an

engineering evaluation and cost analysis of potential removal actions to abate an alleged "imminent and substantial endangerment" to public health, welfare or the environment. The order appearsappeared to be further predicated primarily on the alleged connection of Kaanapali Land to Old Oahu and its activities on the site. Kaanapali Land is currentlyengaged in performing work, including the conduct of sampling at the site, required by the order while reserving its rights to contest liability regarding the site. With regard to liability for the site, Kaanapali Land believesbelieved that its liability, if any, should relatehave related solely to a portion of the period of operation of Old Oahu at the site, although in some circumstances CERCLA apparently permits imposition of joint and several liability, which can exceed a responsible party's equitable share. Kaanapali Land believesbelieved that the U.S. Navy bearsbore substantial liability for the site by virtue of its ownership of the site throughout the entire relevant period, both as landlord under its various leases with Oahu Sugar and Old Oahu and by operating and intensively utilizing the site directly during a period when no lease was in force. The Company believesbelieved that the cost of the work as set forth in the currentpending order willwould not behave been material to the Company as a whole; however, in the event that the EPA were to issue an order requiring remediation of the site, there can bethe Company gave no assurances that the cost of said remediation would not ultimately have a material adverse effect on the Company. In addition, the Company believed that if there iswere litigation regarding the site, there cancould be no assuranceassurances that the cost of such litigation willwould not be material or that such litigation willwould result in a judgment in favor of the Company. Currently, Kaanapali and the EPA are exchangingexchanged comments

relative to further studies to be performed at the site, including a possible ecological risk assessment. Kaanapali expects that after a further review,After years of performing work at the next phase is likely a consideration ofsite, the remedial alternatives forparties engaged in discussions to resolve the Site.matter. The matter was ultimately resolved pursuant to the Consent Decree set forth below.

On February 11, 2015, the Company filed a complaint for declaratory judgment, bad faith and damages against Fireman’s Fund Insurance Company (“Fireman’s Fund”) in the Circuit Court of the First Circuit, State of Hawaii, Civil No. 15-1-0239-02, in connection with costs and expenses it has incurred or maymight incur in connection with the Waipio site. In the five-count complaint, the Company seeks,sought, among other things, a declaratory judgment of its rights under various Fireman’s Fund policies and an order that Fireman’s Fund defend and indemnify Kaanapali Land from all past, present and future costs and expenses in connection with the site, including costs of investigation and defense incurred by Kaanapali and the professionals it has engaged. In addition, Kaanapali seekssought general, special, and punitive damages, prejudgment and post judgment interest, and such other legal or equitable relief as the court deems just and proper. Fireman’s Fund has filed a responsive pleading. There are no assurancesThis litigation was settled and dismissed with prejudice pursuant to an agreement between Fireman’s Fund and the Company dated on or about November 24, 2021 (“Insurance Settlement”). The dismissal order was entered on March 31, 2022.

Under the Insurance Settlement Fireman’s Fund paid $6,800 into an escrow that was used to fund the Consent Decree, described below, that was entered into with various federal agencies. The $6,800 was included as a reduction of Selling, general and administrative expenses on the Company’s Consolidated Statement of Operations for the year ended December 31, 2021. The insurance recovery caused the total Selling, general and administrative expense for the year ended December 31, 2021 to be a negative expense. That Consent Decree, entered by United States District Court for the District of Hawaii (the “Court”), and as more fully described below, resolved certain environmental claims against the Company with respect to the former mixing site on Waipio Peninsula on Oahu in Hawaii (the “Mixing Site”). After the Consent Decree was entered and finally approved by the Court in the form initially submitted by the Company and the federal government, the escrowed funds plus interest were paid to the Environmental Protection Agency on March 3, 2022 to fund the settlement that is the subject of the amountsConsent Decree. The Insurance Settlement provided, among other terms and conditions, mutual releases of Claims for coverage for Environmental Claims at the Mixing Site under known and unknown Fireman’s Fund insurance proceedspolicies.

On April 16, 2021, the U.S. Department of Justice and the U.S. Environmental Protection Agency, on behalf of various federal agencies of the United States of America, executed a Consent Decree with Kaanapali Land, LLC, a Delaware limited liability company (the “Company”) that, may or may not be ultimately recovered.if entered by the U.S. District Court sitting in the District of Hawaii, United States of America v. Kaanapali Land, and Oahu Sugar Company, LLC Case No. 1:21-CV-00190, resolved the U.S. federal government’s current environmental claims against the Company with respect to contamination at the former mixing site on Waipio Peninsula on Oahu in Hawaii that had been leased by Oahu Sugar Company LLC, a former subsidiary of the Company. In return for payments by the Company totaling $7,500, the Consent Decree resolved liability asserted by the U.S. government against the Company under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) as well as under the Clean Water Act, both for response costs (those costs expended for investigation and cleanup) and for natural resource damages. The U.S. District Court in Hawaii entered an Order approving the Consent Decree on February 11, 2022 and payment of the settlement amount was received by the government on March 3, 2022.

Kaanapali Land, as successor by merger to other entities, and D/C have been named as defendants in personal injury actions allegedly based on exposure to asbestos. While there are relatively few cases that name Kaanapali Land, there were a substantial number of cases that were pending against D/C on the U.S. mainland (primarily in California). Cases against Kaanapali Land (hereafter, “Kaanapali Land asbestos cases”) are allegedly based on its prior business operations in Hawaii and cases against D/C are allegedly based on sale of asbestos-containing products by D/C's prior distribution business operations primarily in California. Each entity defending these cases believes that it has meritorious defenses against these actions, but can give no assurances as to the ultimate outcome of these cases. The defense of these cases has had a material adverse effect on the financial condition of D/C as it has been forced to file a voluntary petition for liquidation as discussed below. Kaanapali Land does not believe that it has liability, directly or indirectly, for D/C's obligations in those cases. Kaanapali Land does not presently believe that the cases in which it is named will result in any material liability to Kaanapali Land; however, there can be no assurance in that regard.

On February 12, 2014, counsel for Fireman’s Fund, the carrier that has been paying defense costs and settlements for the Kaanapali Land asbestos cases, stated that it would no longer advance fundpay settlements or judgments in the Kaanapali Land asbestos cases due to the pendency of thethen pending D/C and Oahu Sugar bankruptcies. In its communications with Kaanapali Land, Fireman’s fund expressed its view that the automatic stay in effect in the D/C bankruptcy case barsbarred Fireman’s Fund from making any payments to resolve the Kaanapali Land asbestos claims because D/C Distribution iswas also alleging a right to coverage under those policies for asbestos claims against it. However, in the interim, Fireman’s Fund advised that it presently intendsintended to continue to pay defense costs for those cases, subject to whatever reservations of rights maythat might be in effect and subject further to the policy terms. Fireman’s Fund has also indicated that to the extent that Kaanapali Land cooperatescooperated with Fireman’s Fund in addressing settlement of the Kaanapali Land asbestos cases through coordination with its adjusters, it iswas Fireman’s Fund’s present intention to reimburse any such payments by Kaanapali Land, subject, among other things, to the terms of any lift-stay order, the limits and other terms and conditions of the policies, and prior approval of the settlements. Kaanapali Land continues to pursue discussions withand Fireman’s Fund in an attempt to resolve the issues, however, Kaanapali Land is unable to determine what portion, if any, of settlementsentered into a settlement agreement on or judgments in theabout November 24, 2021 whereby Fireman’s Fund paid $2,441 for certain listed Kaanapali Land asbestos cases willupon a Final Order of the D/C bankruptcy court lifting the automatic stay to allow the payments. The D/C court issued the lift-stay order on March 1, 2022. On April 12, 2022, the Company received $2,441 as reimbursement for the various settlements Kaanapali made that were subject to the lift-stay order of March 1, 2022. The $2,441 was included as a reduction of Selling, general and administrative expenses on the Company’s Consolidated Statement of Operations for the three months ended March 31, 2022. The insurance recovery caused the total Selling, general and administrative expense for the three months ended March 31, 2022 to be covered by insurance.a negative expense.

On February 15, 2005, D/C was served with a lawsuit entitled American & Foreign Insurance Company v. D/C Distribution and Amfac Corporation, Case No. 04433669 filed in the Superior Court of the State of California for the County of San Francisco, Central Justice Center. No other purported party was served. In the eight-count complaint for declaratory relief, reimbursement and recoupment of unspecified amounts, costs and for such other relief as the court might grant, plaintiff alleged that it is an insurance company to whom D/C tendered for defense and indemnity various personal injury lawsuits allegedly based on exposure to asbestos containing products. Plaintiff alleged that because none of the parties have been able to produce a copy of the policy or policies in question, a judicial determination of the material terms of the missing policy or policies is needed. Plaintiff sought, among other things, a declaration: of the material terms, rights, and obligations of the parties under the terms of the policy or policies; that the policies were exhausted; that plaintiff is not obligated to reimburse D/C for its attorneys' fees in that the amounts of attorneys' fees incurred by D/C have been incurred unreasonably; that plaintiff was entitled to recoupment and reimbursement of some or all of

the amounts it has paid for defense and/or indemnity; and that D/C breached its obligation of cooperation with plaintiff. D/C filed an answer and an amended cross-claim. D/C believed that it had meritorious defenses and positions, and intended to vigorously defend. In addition, D/C believed that it was entitled to amounts from plaintiffs for reimbursement and recoupment of amounts expended by D/C on the lawsuits previously tendered. In order to fund such action and its other ongoing obligations while such lawsuit continued, D/C entered into a Loan Agreement and Security Agreement with Kaanapali Land, in August 2006, whereby Kaanapali Land provided certain advances against a promissory note delivered by D/C in return for a security interest in any D/C insurance policy at issue in this lawsuit. In June 2007, the parties settled this lawsuit with payment by plaintiffs in the amount of $1,618.$1,618. Such settlement amount was paid to Kaanapali Land in partial satisfaction of the secured indebtedness noted above.

Because D/C was substantially without assets and was unable to obtain additional sources of capital to satisfy its liabilities, D/C filed with the United States Bankruptcy Court, Northern District of Illinois, its voluntary petition for liquidation under Chapter 7 of Title 11, United States Bankruptcy Code during July 2007, Case No. 07-12776. Such filing is not expected to have a material adverse effect on the Company as D/C was substantially without assets at the time of the filing. Kaanapali Land filed claims in the D/C bankruptcy that aggregated approximately $26,800,$26,800, relating to both secured and unsecured intercompany debts owed by D/C to Kaanapali Land. In addition, a personal injury law firm based in San Francisco that represents clients with asbestos-related claims, filed proofs of claim on behalf of approximately two thousand claimants. While it is not likely that a significant number of these claimants have a claim against D/C that could withstand a vigorous defense, it is unknown how the trustee will deal with these claims. It is not expected, however, that the Company will receive any material additional amounts in the liquidation of D/C.

On or about April 28, 2015, eight litigants who filedJanuary 21, 2020, certain asbestos claims in California state court (hereinafter, “Petitioners”)claimants filed a motion for relief from the automatic stayStay Relief Motion in the D/C bankruptcy (hereinafter “life stay motion”). Under relevant provisions of the bankruptcy rules and on the filing of the D/C bankruptcy action, all pending litigation claims against D/C were stayed pending resolution of the bankruptcy action. In their motion, Petitioners asked the bankruptcy court to lift the stay in the bankruptcy court to name D/C and/or its alternate entities as defendants in their respective California state court asbestos actions and to satisfy their claims against insurance policies that defend and indemnify D/C and/or their alternate entities. The Petitioner’s motion to lift stay thus in part has as an objective ultimate recovery, if any, from, among other things, insurance policy proceeds that were allegedly assets of both the D/C and Oahu Sugar bankruptcy estates. As noted above, Kaanapali, the EPA, and the Navy are claimants in the Oahu Sugar bankruptcy and the Fireman’s Fund policies are allegedly among the assets of the Oahu Sugar bankruptcy estate as well. For this and other reasons, Kaanapali, the EPA and the Navy opposed the motion to lift stay. After briefing and argument, on May 14, 2015, the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division, Case No. 07-12776 (“motion to lift stay”) in In Reconnection with the D/C proceeding. The motion sought the entry of an order, among other things, modifying the automatic stay in the D/C bankruptcy to permit those claimants to prosecute various lawsuits in state courts against D/C Distribution, LLC, Bankruptcy Case No. 07-12776,and to recover on any judgment or settlement solely from any available insurance coverage. Various oppositions to the motion to lift stay were filed, and the matter was heard and taken under advisement in April 2020. On July 21, 2020, the bankruptcy court issued an order liftinggranting the stay. Inmotion to lift stay to permit the order, the court permitted the Petitionersmovants to “proceed in the applicable nonbankruptcy forum to final judgment (including any appeals) in accordance with applicable nonbankruptcy law. Claimants are entitled to settle or enforcepursue their claims only by collecting uponand to recover any judgment or settlement from and to the extent of any available insurance Debtor’s liability to them in accordance with applicable nonbankruptcy law. No recovery may be made directly against the propertycoverage of Debtor, or property of the bankruptcy estate.” Kaanapali, Firemen’s Fund and the United States appealed the bankruptcy court order lifting the stay. In March 2016, the district court reversed the bankruptcy court order finding that the bankruptcy court did not apply relevant law to the facts in the case to arrive at a reasoned decision. On appeal the district court noted that the law requires consideration of a number of factors when lifting a stay to permit certain claims to proceed, including consideration of the adequacy of remaining insurance to meet claims still subject to the stay. Among other things, the court noted that the bankruptcy court failed to explain why it was appropriate for the petitioners to liquidate their claims before the other claimants whose claims remained subject to the stay. The district court remanded the case for further proceedings. It is uncertain whether such further proceedings on the lift stay will take place.D/C Distribution, LLC, only.

The partiesbankruptcy trustee for D/C is now in the D/C and Oahu Sugar bankruptcies have reached out to each other to determine if there is any interest in pursuing a global settlementprocess of closing the bankruptcy case. All of the asbestos-related proofs claims filed by the San Francisco personal injury firm in the Oahu Sugarbankruptcy case have been withdrawn in connection with closing. There is a small amount of money on-hand for possible distribution on closing. Although D/C will no longer have any assets after the trustee’s final distribution and D/C bankruptcies insofar as the Fireman’s Fund insurance policies are concerned. If such discussions take place, they may take the form of a mediation or other format and involve some form of resolution of Kaanapali’s interest in variousclosing of the Fireman’s Fund insurance policies for Kaanapali’s various and future insurance claims. Kaanapali may consider entering into such discussions, butcase, there is no assuranceguaranty that such discussionspersonal injury claimants will take place or prove successfulnot assert asbestos-related claims against D/C in resolving any of the claims in whole or in part.future.

The Company has received notice from Hawaii’s Department of Land and Natural Resources (“DNLR”) that DNLR on a periodic basis bi-annually would inspect all significant dams and reservoirs in Hawaii, including those maintained by the Company on Maui in connection with its agricultural operations. A series of such inspections have taken place over the period from 2006 through the most recent inspections that occurred in November 2016.July 2021. To date, the DLNR has cited certain deficiencies concerning two of the Company’s reservoirs relating to dam and reservoir safety standards established by the State of Hawaii. These deficiencies include, among other things, vegetative overgrowth, erosion of slopes, uncertainty of inflow control, spillway capacity, and freeboard, and uncertainty of structural stability under certain loading and seismic conditions. The Company has taken certain corrective actions, including lowering the reservoir operating level; as well as updating important plans to address emergency events and basic operations and maintenance. The November 2016 inspection resulted in a notice of dam safety deficiency requiringIn 2018, the Company contracted with an engineering firm to develop plans to address certain actions needing immediate attention. The Company is in the process of addressing the action items, with the loweringDLNR cited deficiencies on one of the reservoir water level the most immediate.Company’s reservoirs. In 2012, the State of Hawaii issued new Hawaii Administrative Rules for Dams and Reservoirs which require dam owners to obtain from DLNR Certificates of Impoundment (“permits”) to operate and maintain dams or reservoirs. Obtaining such permits requires owners to completely resolve all cited deficiencies. Therefore, the process may involve further analysis of dam and reservoir safety requirements, which would likelywill involve hiringcontinuing engagement with specialized engineering consultants, and ultimately could result in significant and costly improvements which may be material to the Company.

The DLNR categorizes the reservoirs as "high hazard" under State of Hawaii Administrative Rules and State Statutes concerning dam and reservoir safety. This classification, which bears upon government oversight and reporting requirements, may increase the cost of managing and maintaining these reservoirs in a material manner. The Company does not believe that this classification is warranted for either of these reservoirs and has initiated a dialogue with DLNR in that regard. In April 2008, the Company received further correspondence from DLNR that included the assessment by their consultants of the potential losses that result from the failure of these reservoirs. In April 2009, the Company filed a written response to DLNR to correct certain factual errors in its report and to request further analysis on whether such "high hazard" classifications are warranted. It is unlikely that the “high hazard” designation will be changed.

Other than as described above, the Company is not involved in any material pending legal proceedings, other than ordinary routine litigation incidental to its business. The Company and/or certain of its affiliates have been named as defendants in several pending lawsuits. While it is impossible to predict the outcome of such routine litigation that is now pending (or threatened) and for which the potential liability is not covered by insurance, the Company is of the opinion that the ultimate liability from any of this litigation will not materially adversely affect the Company's consolidated results of operations or its financial condition.

The Company often seeks insurance recoveries under its policies for costs incurred or expected to be incurred for losses or claims under which the policies might apply. While payouts from various coverages are being sought and may be recovered in the future, no anticipatory amounts have been reflected in the Company’s consolidated financial statements.

Kaanapali Land Management Corp. (KLMC) is a party to an agreement with the State of Hawaii for the development of the Lahaina Bypass Highway. An approximate 2.4 mile portion of this two lane state highway has been completed. Construction to extend the southern terminus has recently started with a projected completion of early 2018.was completed mid-2018. The northern portion of the Bypass Highway, which extends to KLMC’s lands, remains uncompleted.is in the early stage of planning. Under certain circumstances, which have not yet occurred, KLMC remains committed for approximately $1,100$1,100 of various future costs relating to the planning and design of the uncompleted portion of the Bypass Highway. Under certain conditions, which have not yet been met, KLMC has agreed to contribute an amount not exceeding $6,700$6,700 toward construction costs. Any such amount contributed would be reduced by the value of KLMC’s land actually contributed to the State for the Bypass Highway.

These potential commitments have not been reflected in the accompanying condensed consolidated financial statements. While the completion of the Bypass Highway would add value to KLMC’s lands north of the town of Lahaina, there can be no assurance that it will be completed or when any future phases will be undertaken.

Economic uncertainty relating to COVID-19 continues and the effects of an improving economy could be negatively impacted by surges in COVID-19 and new variants, the administration and effectiveness of vaccines and government responses to future developments as well as supply chain disruptions, labor shortages and rising inflation. A resurgence of COVID-19 or the emergence of new, significant variants, could negatively impact the Maui real estate market, which could negatively impact the Company’s results and financial position.

(8)  Calculation of Net LossIncome (Loss) Per Share

The following tables set forth the computation of net loss per share - basic and diluted:

(9)  Business Segment Information

As described in Note 1, the Company operates in two business segments. Total revenues and operating profit by business segment are presented in the tables below.

Total revenues by business segment includes primarily (i) sales, all of which are to unaffiliated customers and (ii) interest income that is earned from outside sources on assets which are included in the individual industry segment's identifiable assets.

Operating income (loss) is comprised of total revenue less cost of sales and operating expenses. In computing operating income (loss), none of the following items have been added or deducted: general corporate revenues and expenses, interest expense and income taxes.

The Company’s property segment consists primarily of revenue received from land sales and lease and licensing agreements.

The Company’s agricultural segment consists primarily of coffee operations. For the threeoperations and nine months ended September 30, 2017, property revenues and operating income includes the sale of the Wainee Lands.licensing agreements.

The Company is exploring alternative agricultural operations, but there can be no assurance that replacement operations at any level will result.

(10)  Subsequent Events

On April 12, 2022, the Company received $2,441 as reimbursement for various settlements of asbestos cases paid by the Company. Such reimbursement was pursuant to a settlement agreement between the Company and Fireman’s Fund. Reference is made to Note 7 for discussion of this matter.

Part I.  Financial Information

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

Liquidity and Capital Resources

General

In addition to historical information, this Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations about its businesses and the markets in which the Company operates. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties or other factors which may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual operating results may be affected by various factors including, without limitation, changes in international, national and Hawaiian economic conditions, competitive market conditions, uncertainties and costs related to the imposition of conditions on receipt of governmental approvals and costs of material and labor, the effect of the outbreak of the COVID-19 virus, and actual versus projected timing of events all of which may cause such actual results to differ materially from what is expressed or forecast in this report.

Certain subsidiaries of Kaanapali Land are jointly indebted to Kaanapali Land pursuant to a certain Secured Promissory Note in the principal amount of $70 million, dated November 14, 2002, and due September 30, 2020,2029, as extended. Such note had an outstanding balance of principal and accrued interest as of September 30, 2017March 31, 2022 and December 31, 20162021 of approximately $88$90 million and $87$91 million, respectively. The interest rate currently is 1.19%0.39% per annum and compounds semi-annually. The note, which is prepayable, is secured by substantially all of the remaining real property owned by such subsidiaries, pursuant to a certain Mortgage, Security Agreement and Financing Statement, dated as of November 14, 2002 and placed on record in December 2002. The note has been eliminated in the consolidated financial statements because the obligors are consolidated subsidiaries of Kaanapali Land.

In addition to such Secured Promissory Note, certain other subsidiaries of Kaanapali Land continue to be liable to Kaanapali Land under certain guarantees (the "Guarantees") that they had previously provided to support certain Senior Indebtedness (as defined in the Plan) and the Certificate of Land Appreciation Notes ("COLA Notes") formerly issued by Amfac/JMB Hawaii, Inc. (as predecessor to KLC Land). Although such Senior Indebtedness and COLA Notes were discharged under the Plan, the Guarantees of the Non-Debtor KLC Subsidiaries were not. Thus, to the extent that the holders of the Senior Indebtedness and COLA Notes did not receive payment on the outstanding balance thereof from distributions made under the Plan, the remaining amounts due thereunder remain obligations of the Non-Debtor KLC Subsidiaries under the Guarantees. Under the Plan, the obligations of the Non-Debtor KLC Subsidiaries under such Guarantees were assigned by the holders of the Senior Indebtedness and COLA Notes to Kaanapali Land on the Plan Effective Date. Kaanapali Land has notified each of the Non-Debtor KLC Subsidiaries that are liable under such Guarantees that their respective guarantee obligations are due and owing and that Kaanapali Land reserves all of its rights and remedies in such regard. Given the financial condition of such Non-Debtor KLC Subsidiaries, however, it is unlikely that Kaanapali Land will realize payments on such Guarantees that are more than a small percentage of the total amounts outstanding thereunder or

that in the aggregate will generate any material proceeds to the Company. Nevertheless, Kaanapali Land has submitted a claim in the Chapter 7 bankruptcy proceeding of Oahu Sugar in order that it may recover substantially all of the assets remaining in the bankruptcy estate, if any, that become available for creditors of Oahu Sugar. Any amounts so received would not be material to the Company. These Guarantee obligations have been eliminated in the consolidated financial statements because the obligors are consolidated subsidiaries of Kaanapali Land, which is now the sole obligee thereunder.

Those persons and entities that were not affiliated with the predecessor of Kaanapali Land and were holders of COLAs on the date that the Plan was confirmed by the Bankruptcy Court, and their successors in interest, represent approximately 9% of the ownership of the Company.

The Company had cash and cash equivalents of approximately $29$20 million and $21$17 million, as of September 30, 2017March 31, 2022 and December 31, 2016,2021, respectively, which is available for, among other things, working capital requirements, including future operating expenses, in each of the Agriculture and Property segments, and the Company's expendituresobligations for engineering, planning, regulatory and development costs, drainage and utilities, water storage and distribution, utilities, environmental remediation costs on existing and former properties, potential liabilities resulting from tax audits, and existing and possible future litigation. The Company does not anticipate making any distributions for the foreseeable future.

The primary business of Kaanapali Land is the investment in and development of the Company's assets on the Island of Maui. The various development plans will take many years at significant expense to fully implement. Proceeds from land sales are the Company's only source of significant cash proceeds and the Company's ability to meet its liquidity needs is dependent on the timing and amount of such proceeds.

The Company's operations have in recent periods been primarily reliant upon the net proceeds of sales of developed and undeveloped land parcels.

DuringKaanapali Land and Fireman’s Fund entered into a settlement agreement on or about November 24, 2021, whereby Fireman’s Fund, the first quartercarrier that had been paying defense costs and settlements for the Kaanapali Land asbestos cases, would pay $2.4 million for certain listed Kaanapali Land asbestos cases upon a Final Order of 2006,the D/C bankruptcy court lifting the automatic stay to allow the payments. The D/C court issued the lift-stay order on March 1, 2022. On April 12, 2022, the Company received final subdivision approval$2.4 million as reimbursement for the various settlements Kaanapali made that were subject to the lift-stay order of March 1, 2022. Reference is made to Note 7 of the Company’s consolidated financial statements for further discussion of this matter.

In September 2014, Kaanapali Land Management Corp. (“KLMC”), pursuant to a property and option purchase agreement with an unrelated third party, closed on the sale of an approximate 33614.9 acre parcel in West Maui. The purchase price was $3.3 million, paid in cash at closing. The agreement (as subsequently amended) commits KLMC to fund up to $0.6 million, depending on various factors, for off-site roadway, sewer and electrical improvements that will also provide service to other KLMC properties. Although certain offsite construction has begun at the site, the commitment remains outstanding as construction of such improvements does not yet trigger such funding. The 14.9 acre site is intended to be used for a critical access hospital, skilled nursing facility, assisted living facility, and independent living facility.

The Company is in the planning stages for the development of a 295-acre parcel in the region "mauka" (towardmauka of the mountains) from the main highway serving the area. This project, called Kaanapali Coffee Farms consists(“KCF Mauka”). The parcel is to be comprised of 5161 agricultural lots which are currently beingthat will be offered to individual buyers. The land improvements were completed during 2008. AsCompany expects to develop the parcel in phases and all phases have been submitted to the County for subdivision approval. The Company is working with the County to resolve certain of September 30, 2017,the County’s comments relating to the subdivision. Upon final subdivision approval and receipt of final plat of the first phase from the County, which requires a bond in the amount of the cost to develop the first phase, the Company sold forty-three lots at Kaanapali Coffee Farms including one lot duringcan pre-sell the third quarter, one lot during the second quarter of 2017 and sixundeveloped lots in 2016. In conjunction with the salefirst phase. The Company expects to market the lots in the first phase upon receiving final approvals from the County of one lot sold in prior years, in additionMaui, subject to cash proceeds,various contingencies, including, but not limited to, governmental and market factors and the Company receivedavailability of a promissory note. Asbond to secure the first phase of September 30, 2017, $0.5 million remains outstanding on said notes. There are currently four lots under contract to sell during the fourth quarter 2017, althoughdevelopment. Therefore, there iscan be no assurance the salesCompany will occur.be able to meet such timetable, that the subdivision will ultimately be approved or that the lots will sell for prices deemed advantageous by the Company.

In January 2021, the Company entered into agreements with an unrelated third party for that third party to prepare plans to develop Puukolii Village Mauka and another subdivision on the Company’s property. The plans are to include development segments and timeline, offsite and onsite infrastructure, construction cost analysis, proposed budgets and proforma financial statements. If after discussion and negotiation the Company and the third party are unable to agree on the plans, then either the Company or the third party may terminate the agreements. Such discussions are ongoing.

At a public meeting on January 18, 2022, the staff of the State of Hawaii Commission on Water Resource Management (“CWRM”) presented an informational briefing on the “Designation of the Lahaina Aquifer Section; Maui as a Surface Water and Ground Water Management Area” as recommended by the Chair of the Commission. The Commission’s primary responsibilities are to implement and administer the State Water Code by planning, surveying, regulating, enforcing, and conserving the State’s water resources. This includes regulating the use of water resources in water management areas. At its meeting on February 15, 2022, the Commissioners of CWRM unanimously voted to accept the Chairperson’s recommendation. The next step in the designation process is for CWRM to hold public hearings on the recommended designation. The proposed designation would regulate the surface and groundwaters supplying the Company’s irrigation systems that take water from streams, development tunnels, and wells. The Company is evaluating the potential effects, if any, this designation may have on its agricultural operations and developments. Further, the Company continues to respond to CWRM to set forth its views on the proposed designation and prepares for CWRM’s further action.  

The Company’s Pension Plan has excess assets of approximately $20 million. On October 6, 2016January 15, 2022, Pacific Trail Holdings LLC, the manager of the Company, adopted a plan to freeze the benefit accruals under and close participation in the Pension Plan entered into an agreement with Pacific Life Insurance Company (“Pacific Life”),and terminate the Pension Plan on or about June 1, 2022. Effective February 7, 2022, the Level 1 and Level 2 plan asset investments were reallocated to a third party insurance company, to transfer the obligation to paymoney market fund. After distribution of Pension Plan benefits to approximately 1,330 retired members and beneficiaries currently receiving monthly benefitsparticipants, remaining surplus Pension Plan assets are expected to be distributed from the Pension Plan and to approximately 168 membersin accordance with deferred annuities under the Pension Plan, through the purchase of a single premium group annuity contract. The action settled approximately 96%requirements of the Pension Plan’s benefit obligations. In order to fund the purchase, funds aggregating approximately $39.7 million were transferred to Pacific Life on October 11, 2016. The Pension Plan no longer has an obligation to pay benefits to those members and beneficiaries.

In the fourth quarter of 2016, the Company recognized a non-cash accumulated other comprehensive loss, after tax, of approximately $3.5 million. Substantially all of the resultant total after tax accumulated other comprehensive loss of approximately $13 million has been recognized in accumulated earnings in the Company’s consolidated balance sheet.

The Company does not consider the excess assets of the Pension Plan (approximately $14 million after the above noted transaction) to be a source of liquidity due to the substantial cost, including Federal income tax consequences, associated with liquidating the Pension Plan.1986 (as amended) by certain regulatory deadlines.

Although the Company does not currently believe that it has significant liquidity problems over the near term, should the Company be unable to satisfy its liquidity requirements from its existing resources and future property sales, it will likely pursue alternate financing arrangements. However it cannot be determined at this time what, if any, financing alternatives may be available and at what cost.

Economic uncertainty relating to COVID-19 continues and the effects of an improving economy could be negatively impacted by surges in COVID-19 and new variants, the administration and effectiveness of vaccines and government responses to future developments as well as supply chain disruptions, labor shortages and rising inflation. A resurgence of COVID-19 or the emergence of new, significant variants, could negatively impact the Maui real estate market, which could negatively impact the Company’s results and financial position.

Results of Operations

Reference is made to the footnotes to the financial statements for additional discussion of items addressing comparability between years.

Property, net decreased as of March 31, 2022 due to the sale of a lot during first quarter 2022.

The decrease in other assets at September 30, 2017March 31, 2022 as compared to December 31, 20162021 is primarily due to payments receivedinsurance recoveries related to promissory notes.the Waipio site received in March 2022, offset by insurance recoveries receivable related to asbestos claims.

The decrease in property, netother liabilities at September 30, 2017March 31, 2022 as compared to December 31, 20162021 is due to the reversal of a contingency reserve pursuant to the settlement payment made in March 2022 related to the Waipio site.

The increase in sales and the related increase in sales and costcosts of sales for the three and nine months ended September 30, 2017March 31, 2022 as compared to the three and nine months ended September 30, 2016March 31, 2021 is primarily due to twosale of one lot during the first quarter 2022, as compared to no lot sales during the ninefirst quarter 2021.

The decrease in selling, general and administrative expenses for the three months ended September 30, 2017 as well as the sale of the Wainee Lands that occurred during the third quarter 2017,March 31, 2022 as compared to the sale of six lots during the ninethree months ended September 30, 2016.March 31, 2021 is due to the insurance recoveries related to asbestos claims offset by the adjustment of the loss contingency during first quarter 2021.

Inflation

Due to the lackAs a result of significant fluctuations in the levelincreasing signs of inflation in recent years, inflation generally has not hadmonths, the Federal Reserve approved a material effect on real estate development..25% rate increase in March 2022 and a .5% rate increase in May 2022.

In the future, highHigh rates of inflation may adversely affect real estate development generally because of their impact on interest rates. High interest rates not only increase the cost of borrowed funds to the Company, but can also have a significant effect on the affordability of permanent mortgage financing to prospective purchasers. However, high rates of inflation may permit the Company to increase the prices that it charges in connection with real property sales, subject to general economic conditions affecting the real estate industry and local market factors,factors.

Critical Estimates and therefore may be advantageous where property investmentsSignificant Accounting Policies

The discussion and analysis of the Company's financial condition and results of operations are based upon the Company's unaudited condensed consolidated interim financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these unaudited condensed consolidated interim financial statements requires management to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates are based on historical experience and on various other assumptions that management believes are reasonable under the circumstances; additionally management evaluates these results on an on-going basis. Management's estimates form the basis for making judgments about the carrying values of assets and liabilities that are not highly leveraged with debtreadily apparent from other sources. Different estimates could be made under different assumptions or whereconditions, and in any event, actual results may differ from the costestimates. The impact of such debt has been previously fixed.a change in these estimates, assumptions, and judgments could materially affect the amounts reported in the Company’s consolidated financial statements.

Not applicable as Registrant is a smaller reporting company.

Item 4.  Controls and Procedures

Disclosure controls and procedures. The principal executive officer and the principal financial officer of the Company have evaluated the effectiveness of the Company's disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and the officer/principal financial officer havehas concluded that the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed was recorded, processed, summarized and reported within the time periods specified in the applicable rules and form of the Securities and Exchange Commission.

Internal control over financial reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the thirdfirst quarter of 20172022 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Part II.  Other Information

Item 1.  Legal Proceedings

SeeThe information set forth under “Commitments and Contingencies” in Note 7 of the Notes to the Condensed Consolidated Financial Statements, included in Part I, Item 1 of this report.report is incorporated herein by reference.

Item 1A.  Risk Factors

There has been no known material changes from risk factors as previously disclosedReference is made to the risks described in the Company'ssection entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2021.

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.       Defaults Upon Senior Securities

None

Item 4.       Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

Item 6.  Exhibits

SIGNATURES

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.

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