Table of Contents



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM10-Q

(Mark One)

 

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

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

 

For the quarterly period ended SeptemberJune 30,, 2017 2021

 

OR

 

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

Commission file number001-06510

 

MAUI LAND& PINEAPPLE COMPANY,INC.

(Exact name of registrant as specified in its charter)

 

HAWAIIHawaii

99-0107542

(State or other jurisdiction

 

99-0107542(IRS Employer

(Stateof incorporation or other jurisdictionorganization)

 

(IRS Employer

of incorporation or organization)

Identification No.)

 

200 Village Road, Lahaina,, Maui, Hawaii 96761

(Address of principal executive offices)

 

Registrant’s(808) 877-3351

(Registrant’s telephone number, including area code: (808)877-3351code)

 

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 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-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 ☒ 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“large accelerated filer,” “accelerated filer,” “smaller reporting company,”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’sissuer’s classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at October 15, 2017July 27, 2021

Common Stock, no par value

 

19,109,49919,445,666 shares

 



 

 

 

MAUI LAND& PINEAPPLE COMPANY,INC.

AND SUBSIDIARIESQUARTERLY REPORT ON FORM 10-Q

FOR THE THREE MONTHS ENDED JUNE30, 2021

 

TABLE OF CONTENTS

 

Cautionary Note Regarding Forward-Looking Statements3

PART I. FINANCIAL INFORMATION

35

  

Item 1. Condensed Consolidated Financial Statements (unaudited)

35

  

Condensed Consolidated Balance Sheets, SeptemberJune 30, 20172021 and December 31, 20162020 (audited)

3

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), Three Months Ended September 30, 2017 and 2016

45

  

Condensed Consolidated Statements of Operations and Comprehensive Income, Nine monthsThree Months Ended SeptemberJune 30, 20172021 and 2016

5

Condensed Consolidated Statements of Stockholders’ Equity, Nine months Ended September 30, 2017 and 20162020

6

  

Condensed Consolidated Statements of Cash Flows, Nine monthsOperations and Comprehensive Income (Loss), Six Months Ended SeptemberJune 30, 20172021 and 20162020

7

Condensed Consolidated Statements of Changes in Stockholders’ Equity, Three and Six Months Ended June 30, 2021 and 2020

8

Condensed Consolidated Statements of Cash Flows, Six Months Ended June 30, 2021 and 2020

9

  

Notes to Condensed Consolidated Interim Financial Statements

810

  

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

13

Forward-Looking Statements and Risks

1716

  

Item 3. Quantitative and Qualitative Disclosures About Market Risk

1821

  

Item 4. Controls and Procedures

1821

  

PART II. OTHER INFORMATION

1821

Item 1. Legal Proceeding21
  

Item 1A. Risk Factors

1821

Item 5. Other Information21
  

Item 6. Exhibits

1922

  

Signature

2023

  

EXHIBIT INDEX

2124

  

Exhibit 31.1

 

Exhibit 31.2

 

Exhibit 32.1

 

Exhibit 32.2

 

Exhibit 101

 

2

 

PARTCAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTSI FINANCIAL INFORMATION

 

Item1. Financial StatementsThis Quarterly Report on Form 10-Q for the three months ended June 30, 2021 (this “Quarterly Report”) 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:

 

MAUI LAND& PINEAPPLE COMPANY,INC. AND SUBSIDIARIES

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;

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

  

September 30,

  

December 31,

 
  

2017

  

2016

 
  (in thousands except share data) 
    

ASSETS

        

CURRENT ASSETS

        

Cash

 $609  $602 

Accounts receivable, less allowance of $57 for doubtful accounts

  1,421   1,503 

Prepaid expenses and other current assets

  264   190 

Assets held for sale

  212   459 

Total current assets

  2,506   2,754 
         

PROPERTY

  65,640   58,959 

Accumulated depreciation

  (34,511)  (33,215)

Net property

  31,129   25,744 
         

OTHER ASSETS

        

Deferred development costs

  10,314   8,843 

Other noncurrent assets

  1,413   1,542 

Total other assets

  11,727   10,385 
         

TOTAL ASSETS

 $45,362  $38,883 
         

LIABILITIES & STOCKHOLDERS' EQUITY

        
         

CURRENT LIABILITIES

        

Accounts payable

 $606  $569 

Payroll and employee benefits

  588   607 

Current portion of accrued retirement benefits

  164   175 

Income taxes payable

  -   443 

Deferred revenue

  198   24 

Other current liabilities

  171   580 

Total current liabilities

  1,727   2,398 
         

LONG-TERM LIABILITIES

        

Long-term debt

  1,235   6,857 

Accrued retirement benefits

  8,980   9,059 

Deposits

  2,464   2,378 

Deferred revenue

  280   409 

Other noncurrent liabilities

  50   40 

Total long-term liabilities

  13,009   18,743 

COMMITMENTS AND CONTINGENCIES (Note 11)

        
         

STOCKHOLDERS' EQUITY

        

Common stock--no par value, 43,000,000 shares authorized, 19,031,289 and 18,958,018 shares issued and outstanding

  78,566   78,123 

Additional paid in capital

  9,246   9,246 

Accumulated deficit

  (35,503)  (47,332)

Accumulated other comprehensive loss

  (21,683)  (22,295)

Total stockholders' equity

  30,626   17,742 

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

 $45,362  $38,883 

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;

See Notes to Condensed Consolidated Financial Statements.

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.

3

 

MAUI LAND& PINEAPPLE COMPANY,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

  

Three Months Ended September 30,

 
  

2017

  

2016

 
  

(in thousands except

 
  

per share amounts)

 

OPERATING REVENUES

        

Real estate

 $290  $3,210 

Leasing

  1,353   1,680 

Utilities

  898   813 

Resort amenities and other

  299   359 

Total operating revenues

  2,840   6,062 
         

OPERATING COSTS AND EXPENSES

        

Real estate

  328   442 

Leasing

  661   1,120 

Utilities

  488   689 

Resort amenities and other

  242   167 

General and administrative

  648   648 

Share-based compensation

  253   67 

Depreciation

  463   498 

Pension and other postretirement expenses

  202   (257)

Total operating costs and expenses

  3,285   3,374 
         

OPERATING INCOME (LOSS)

  (445)  2,688 

Interest expense

  (39)  (213)

NET INCOME (LOSS)

 $(484) $2,475 

Pension, net of income taxes of $0

  204   974 

COMPREHENSIVE INCOME (LOSS)

 $(280) $3,449 
         

NET INCOME (LOSS) PER COMMON SHARE--BASIC AND DILUTED

 $(0.03) $0.13 

See NotesSuch 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, 2020 (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 Condensed Consolidated Financial Statements.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.

 

4

MAUI LAND& PINEAPPLE COMPANY,INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF PART I FINANCIAL INFORMATIONOPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

  

Nine Months Ended September 30,

 
  

2017

  

2016

 
  

(in thousands except

 
  

per share amounts)

 

OPERATING REVENUES

        

Real estate

 $14,281  $18,876 

Leasing

  4,309   4,572 

Utilities

  2,403   2,539 

Resort amenities and other

  866   1,030 

Total operating revenues

  21,859   27,017 
         

OPERATING COSTS AND EXPENSES

        

Real estate

  1,216   2,098 

Leasing

  1,717   2,377 

Utilities

  1,467   1,909 

Resort amenities and other

  788   673 

General and administrative

  1,723   1,698 

Share-based compensation

  1,065   741 

Depreciation

  1,296   1,486 

Pension and other postretirement expenses

  606   311 

Total operating costs and expenses

  9,878   11,293 
         

OPERATING INCOME

  11,981   15,724 

Interest expense

  (152)  (1,327)

NET INCOME

 $11,829  $14,397 

Pension, net of income taxes of $0

  612   1,481 

COMPREHENSIVE INCOME

 $12,441  $15,878 
         

NET INCOME PER COMMON SHARE--BASIC AND DILUTED

 $0.62  $0.76 

See Notes toItem 1. Condensed Consolidated Financial Statements.Statements (unaudited)

 

5

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MAUI LAND& PINEAPPLE COMPANY,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERSEQUITY

(UNAUDITED)

For the Nine months EndedSeptember 30, 2017 and 2016

(in thousands)

                  

Accumulated

     
          

Additional

      

Other

     
  

Common Stock

  

Paid in

  

Accumulated

  

Comprehensive

     
  

Shares

  

Amount

  

Capital

  

Deficit

  

Loss

  

Total

 

Balance, January 1, 2017

  18,958  $78,123  $9,246  $(47,332) $(22,295) $17,742 

Share-based compensation

  94   767   327           1,094 

Vested restricted stock issued

  44   327   (327)          - 

Shares cancelled to pay tax liability

  (65)  (651)              (651)

Other comprehensive income - pension

                  612   612 

Net income

              11,829       11,829 
                         

Balance, September 30, 2017

  19,031  $78,566  $9,246  $(35,503) $(21,683) $30,626 
                         

Balance, January 1, 2016

  18,868  $77,628  $9,246  $(69,146) $(28,667) $(10,939)

Share-based compensation

  99   504   186           690 

Vested restricted stock issued

  29   186   (186)          - 

Shares cancelled to pay tax liability

  (55)  (293)              (293)

Other comprehensive income - pension

                  1,481   1,481 

Net income

              14,397       14,397 
                         

Balance, September 30, 2016

  18,941  $78,025  $9,246  $(54,749) $(27,186) $5,336 

See Notes to Condensed Consolidated Financial Statements.

6

Table of Contents

MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

  

June 30,

  

December 31,

 
  

2021

  

2020

 
  

(unaudited)

  

(audited)

 
  

(in thousands)

 

CURRENT ASSETS

        

Cash

 $6,005  $869 

Accounts receivable, net

  1,336   1,362 

Prepaid expenses and other assets

  167   80 

Assets held for sale

  3,134   7,440 

Total current assets

  10,642   9,751 
         

PROPERTY

  51,414   51,956 

Accumulated depreciation

  (33,789)  (33,445)

Property, net

  17,625   18,511 
         

OTHER ASSETS

        

Deferred development costs

  8,964   8,901 

Other noncurrent assets

  1,222   1,307 

Total other assets

  10,186   10,208 

TOTAL ASSETS

 $38,453  $38,470 
         

LIABILITIES & STOCKHOLDERS' EQUITY

        
         

CURRENT LIABILITIES

        

Accounts payable

 $441  $899 

Payroll and employee benefits

  699   970 

Long-term debt, current portion

  0   200 

Accrued retirement benefits, currernt portion

  165   165 

Deferred revenue, current portion

  447   260 

Other current liabilities

  407   453 

Total current liabilities

  2,159   2,947 
         

LONG-TERM LIABILITIES

        

Accrued retirement benefits

  10,091   10,926 

Deferred revenue

  1,700   1,767 

Deposits

  2,355   2,680 

Other noncurrent liabilities

  75   83 

Total long-term liabilities

  14,221   15,456 
         

COMMITMENTS AND CONTINGENCIES

          
         

STOCKHOLDERS' EQUITY

        

Common stock--no par value, 43,000,000 shares authorized, 19,361,856 and 19,311,528 shares issued and outstanding

  82,104   81,485 

Additional paid-in-capital

  9,184   9,184 

Accumulated deficit

  (47,959)  (48,904)

Accumulated other comprehensive loss

  (21,256)  (21,698)

Total stockholders' equity

  22,073   20,067 

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

 $38,453  $38,470 

See Notes to Condensed Consolidated Interim Financial Statements.

5

MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSOPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

  

Three Months Ended
June 30,

 
  

2021

  

2020

 
  

(in thousands except

 
  

per share amounts)

 

OPERATING REVENUES

        

Real estate

 $2,700  $90 

Leasing

  1,962   1,436 

Resort amenities and other

  288   184 

Total operating revenues

  4,950   1,710 
         

OPERATING COSTS AND EXPENSES

        

Real estate

  454   192 

Leasing

  876   827 

Resort amenities and other

  278   169 

General and administrative

  574   559 

Share-based compensation

  370   402 

Depreciation

  302   323 

Total operating costs and expenses

  2,854   2,472 
         

OPERATING INCOME (LOSS)

  2,096   (762)
         

Other income

  0   894 

Pension and other post-retirement expenses

  (116)  (117)

Interest expense

  (32)  (30)

INCOME (LOSS) FROM CONTINUING OPERATIONS

  1,948   (15)

Loss from discontinued operations, net

  (69)  (142)

NET INCOME (LOSS)

 $1,879  $(157)

Other compreshensive income - pension, net

  221   206 

TOTAL COMPREHENSIVE INCOME

 $2,100  $49 
         

EARNINGS (LOSS) PER COMMON SHARE-BASIC AND DILUTED

        

Income (Loss) from Continuing Operations

 $0.10  $0 

Loss from Discontinued Operations

 $0  $(0.01)

Net Income (Loss)

 $0.10  $(0.01)

See Notes to Condensed Consolidated Interim Financial Statements.

6

MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

  

Six Months Ended
June 30,

 
  

2021

  

2020

 
  

(in thousands except

 
  

per share amounts)

 

OPERATING REVENUES

        

Real estate

 $2,700  $158 

Leasing

  3,763   3,172 

Resort amenities and other

  546   414 

Total operating revenues

  7,009   3,744 
         

OPERATING COSTS AND EXPENSES

        

Real estate

  552   367 

Leasing

  1,716   1,603 

Resort amenities and other

  691   740 

General and administrative

  1,291   1,318 

Share-based compensation

  719   827 

Depreciation

  602   645 

Total operating costs and expenses

  5,571   5,500 
         

OPERATING INCOME (LOSS)

  1,438   (1,756)
         

Other income

  13   894 

Pension and other post-retirement expenses

  (232)  (234)

Interest expense

  (65)  (76)

INCOME (LOSS) FROM CONTINUING OPERATIONS

  1,154   (1,172)

Loss from discontinued operations, net

  (209)  (59)

NET INCOME (LOSS)

 $945  $(1,231)

Other compreshensive income - pension, net

  442   412 

TOTAL COMPREHENSIVE INCOME (LOSS)

 $1,387  $(819)
         

EARNINGS (LOSS) PER COMMON SHARE-BASIC AND DILUTED

        

Income (Loss) from Continuing Operations

 $0.06  $(0.06)

Loss from Discontinued Operations

 $(0.01) $0 

Net Income (Loss)

 $0.05  $(0.06)

See Notes to Condensed Consolidated Interim Financial Statements.

7

MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

 

(UNAUDITED)

 

For the Three Months Ended and Six Months Ended June 30, 2021 and 2020

  

Nine Months Ended September 30,

 
  

2017

  

2016

 
  

(in thousands)

 
         

NET CASH PROVIDED BY OPERATING ACTIVITIES

 $7,746  $15,974 
         

INVESTING ACTIVITIES

        

Payments for deferred development costs

  (1,440)  (256)

NET CASH USED IN INVESTING ACTIVITIES

  (1,440)  (256)
         

FINANCING ACTIVITIES

        

Proceeds from long-term debt

  -   27,500 

Payments of long-term debt

  (5,622)  (43,565)

Debt and common stock issuance cost and other

  (677)  (292)

NET CASH USED IN FINANCING ACTIVITIES

  (6,299)  (16,357)
         

NET INCREASE (DECREASE) IN CASH

  7   (639)

CASH AT BEGINNING OF PERIOD

  602   1,087 

CASH AT END OF PERIOD

 $609  $448 
         

Cash paid during the period:

        

Interest

 $67  $1,327 

Income taxes

 $412  $30 

(in thousands)

                  

Accumulated

     
          

Additional

      

Other

     
  

Common Stock

  

Paid in

  

Accumulated

  

Comprehensive

     
  

Shares

  

Amount

  

Capital

  

Deficit

  

Loss

  

Total

 
                         

Balance, January 1, 2021

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

Share-based compensation

  60   748   163   0   0   911 

Vested restricted stock issued

  14   163   (163)  0   0   0 

Shares cancelled to pay tax liability

  (34)  (424)  0   0   0   (424)

Other comprehensive income - pension

      0   0   0   221   221 

Net loss

      0   0   (934)  0   (934)

Balance, March 31, 2021

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

Share-based compensation

  0   0   184   0   0   184 

Vested restricted stock issued

  15   184   (184)  0   0   0 

Shares cancelled to pay tax liability

  (5)  (52)  0   0   0   (52)

Other comprehensive income - pension

      0   0   0   221   221 

Net income

      0   0   1,879   0   1,879 

Balance, June 30, 2021

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

Balance, January 1, 2020

  19,238  $80,606  $9,184  $(46,300) $(20,798) $22,692 

Share-based compensation

  68   865   186   0   0   1,051 

Vested restricted stock issued

  17   186   (186)  0   0   0 

Shares cancelled to pay tax liability

  (42)  (522)  0   0   0   (522)

Other comprehensive income - pension

      0   0   0   206   206 

Net loss

      0   0   (1,074)  0   (1,074)

Balance, March 31, 2020

  19,281   81,135   9,184   (47,374)  (20,592)  22,353 
                         

Share-based compensation

  0   0   163   0   0   163 

Vested restricted stock issued

  14   163   (163)  0   0   0 

Shares cancelled to pay tax liability

  (4)  (47)  0   0   0   (47)

Other comprehensive income - pension

      0   0   0   206   206 

Net loss

      0   0   (157)  0   (157)

Balance, June 30, 2020

  19,291  $81,251  $9,184  $(47,531) $(20,386) $22,518 

See Notes to Condensed Consolidated Interim Financial Statements.

8

MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

  

Six Months Ended
June 30,

 
  

2021

  

2020

 
  

(in thousands)

 
         

NET CASH PROVIDED BY OPERATING ACTIVITIES

 $1,691  $435 
         

CASH FLOWS FROM INVESTING ACTIVITIES

        

Proceeds from sale of long-term assets

  4,203   0 

Proceeds from investment

  13   894 

Payments for property and deferred development costs

  (94)  (68)

NET CASH PROVIDED BY INVESTING ACTIVITIES

  4,122   826 
         

CASH FLOWS FROM FINANCING ACTIVITIES

        

Proceeds from long-term debt

  600   947 

Payments on long-term debt

  (800)  (1,982)

Debt and common stock issuance costs and other

  (477)  (569)

NET CASH USED IN FINANCING ACTIVITIES

  (677)  (1,604)
         

NET INCREASE (DECREASE) IN CASH

  5,136   (343)

CASH AT BEGINNING OF PERIOD

  869   683 

CASH AT END OF PERIOD

 $6,005  $340 
         

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

        

Cash paid during the period for interest:

 $8  $19 

 

 

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

Common stock issued to certain members of the Company’s management totaled $767,000$748,000 and $504,000$865,000 for the ninesix months ended SeptemberJune 30, 2017 2021 and 2016,2020, respectively.

Accounts payable at September 30, 2017 includes $110,000 for the estimated cost of subdividing the Kapalua Golf Academy practice course.

 

See Notes to Condensed Consolidated Interim Financial Statements.

 

7
9

MAUI LAND& PINEAPPLE COMPANY,INC. AND SUBSIDIARIES

 

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, 2021 and 2020

 

(UNAUDITED)

 

1.

BASIS OF PRESENTATION

 

The accompanying interim unaudited condensed consolidated interim financial statements have been prepared by Maui Land & Pineapple Company, Inc. (together with its subsidiaries, the “Company”) in accordance with U.S. generally accepted accounting principles (GAAP)(“GAAP”) for interim financial information that are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K10-K for the fiscal year ended December 31, 2016, 2020, and pursuant to the instructions to Form 10-Q10-Q and Article 8 promulgated by of Regulation S-X of the Securities and Exchange Commission (SEC).S-X. 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 financial position, results of operations and cash flows for the interim periods ended SeptemberJune 30, 2017 2021 and 2016.2020. 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-K10-K for the fiscal year ended December 31, 2016.2020.

 

2.

USE OF ESTIMATES AND RECLASSIFICATIONS

 

The Company’sCompany’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 reportsstatements are not necessarily indicative of results for a full year. Certain amounts in the December 31, 2016 June 30, 2020 condensed consolidated balance sheetstatements of operations and comprehensive income (loss) were reclassified to conform to the current period’s presentation. Such amounts had no impact on total assets and liabilities or net incomeloss and comprehensive income (loss) previously reported.

 

3.

EARNINGS (LOSS) PER SHARE BASIC AND DILUTED SHARES

 

Basic and diluted weighted-average shares outstanding for the periodsthree and six months ended SeptemberJune 30, 2017 2021 and 20162020 were as follows:

 

  

Three Months Ended

  Nine months Ended 
  

September 30,

  September 30, 
  

2017

  

2016

  2017  2016 
                 

Basic and diluted

  19,022,403   18,914,307   18,983,049   18,935,635 

Potentially dilutive

  27,500   25,281   27,500   25,281 
  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 
  

(unaudited)

  

(unaudited)

 
  

2021

  

2020

  

2021

  

2020

 
                 

Basic and diluted

  19,351,489   19,281,035   19,339,680   19,267,909 

 

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted-averageweighted-average number of common shares outstanding. Diluted net income (loss) per common share is computed similar to basic net income (loss) 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.

Potentially dilutive shares arise from non-qualified stock options to purchase common stock and non-vested restricted stock. The treasury stock method is applied to determine the number of potentially dilutive shares for non-vested restricted stock and stock options assuming that the shares of non-vested restricted stock are issued for an amount based on the grant date market price of the shares and that the outstanding stock options are exercised.

 

8
10

 

44..

PROPERTY

 

Property at September as of June 30, 2017 2021 and December 31, 2016 2020 consisted of the following:

 

 

June 30,

 

December 31,

 
 

2021

 

2020

 
 

September 30,
2017

  

December 31,

2016

  

(unaudited)

  

(audited)

 
 

(in thousands)

  

(in thousands)

 

Land

 $5,059  $5,059  $5,072  $5,072 

Land improvements

  24,732   18,051  12,943  12,943 

Buildings

  24,884   24,884  22,892  23,465 

Machinery and equipment

  10,965   10,965  10,485  10,476 

Construction-in-progress

  22   0 

Total property

  65,640   58,959  51,414  51,956 

Less accumulated depreciation

  34,511   33,215   33,789   33,445 

Net property

 $31,129  $25,744 

Property, net

 $17,625  $18,511 

 

Land

 

Most of the Company’s 23,000Company’s 22,800 acres of land were acquired between 1911 and 1932 and isare carried in its consolidated balance sheets at cost. Approximately 21,00020,700 acres of land are located in West Maui and comprise a largely contiguous parcel that extends from the shorelinesea 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 2,0002,100 acres of land are located in Upcountry Maui in an area commonly known as HaliimaileHali’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’sCompany’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 HaliimaileHali’imaile which are used in the Company’sCompany’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’sCompany’s leasing operations. Also included are machinery and equipment used in the Company’s utilities operations.

 

55..

ASSETS HELDHELD FOR SALE AND REAL ESTATE OPERATING REVENUES

 

Assets held for sale at Septemberas of June 30, 2017 2021 and December 31, 2016 2020 consisted of the following:

 

  

September 30,

2017

  

December 31,
2016

 
  

(in thousands)

 

Upcountry Maui, 630-acre parcel of agricultural land

 $156  $156 

Upcountry Maui, 80-acre parcel of agricultural land and wastewater treatment facility

  56   56 

Kapalua Resort, 15-acre Kapalua Golf Academy practice course

  -   247 

Assets held for sale

 $212  $459 
  

June 30,

  

December 31,

 
  

2021

  

2020

 
  

(unaudited)

  

(audited)

 
  

(in thousands)

 

Kapalua Resort, 46-acre Kapalua Central Resort project

 $2,978  $2,978 

Upcountry Maui, 630-acre parcel of agricultural land

  156   156 

Kapalua Resort, Kapalua Water and Kapalua Waste Treatment Company assets

  0   4,306 
  $3,134  $7,440 

11

In February 2020, the Company entered into an agreement to sell the Kapalua Central Resort project for $43.9 million. The closing of the transaction is contingent upon, among other things, the satisfaction of certain customary closing conditions, including an extended due diligence period ending on August 31, 2021. The closing date of the sale is expected to be 30 days after the last day of the due diligence period.

 

NoneIn December 2019, the Company entered into an Asset Purchase Agreement to sell the Public Utilities Commission (“PUC”)-regulated assets of Kapalua Water Company, Ltd. and Kapalua Waste Treatment Company, Ltd. located in the Kapalua Resort. In March 2021, the sale was approved by the State of Hawaii PUC subject to certain closing conditions of its Decision and Order. The Company received net proceeds of $4.2 million from the sale in May 2021. The results of discontinued operations related to the sale of the Kapalua Water Company, Ltd. and Kapalua Waste Treatment Company, Ltd. assets are reflected in Note 13.

The above assets held for sale have notbeen pledged as collateral under the Company’s credit facility.

9

Table of Contents

In April 2017, approximately $6.7 million of land improvements were conveyed to the Company by the owner of a 125-acre portion of the Company’s Kapalua Mauka project. The owner purchased the 125-acre property, commonly known as Mahana Estates, in 2009. As part of the sale, the owner agreed to subsequently develop and convey to the Company upon completion certain easements, subdivision and utility improvements related to the Mahana Estates property.

In February 2017, the Company sold the 15-acre Kapalua Golf Academy practice course located in the Kapalua Resort for $7.0 million to the owner of the Kapalua Plantation and Bay Golf Courses. The property was sold without any development entitlements. The sale resulted in a gain of approximately $6.4 million. The Company applied $5.6 million of the sale proceeds toward its revolving line of credit facility.

 

In August 2016, the Company sold a five-acre, fully-entitled 42-unit workforce housing project located in West Maui for $3.0 million. As part of the transaction, the buyer also agreed to provide to the Company 12 residential workforce housing credits by August 2021. The sale resulted in a gain of approximately $2.8 million. The Company utilized the proceeds from the sale to pay down its First Hawaiian Bank credit facility.

In June 2016, the Company sold a fully-entitled 304-acre working-class community project located in West Maui, commonly referred to as Pulelehua, for $15.0 million. The sale resulted in a gain of approximately $14.3 million. The Company utilized the proceeds from the sale to payoff the outstanding balance of a term loan.

6.

LONG-TERM DEBT

 

The Company has aLong-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)(“Credit Facility”). The Credit Facility matures on December 31, 2019 and provides for two optional one-year extension periods. 2021. Interest accrued on borrowingsborrowings is atbased on LIBOR plus 3.50% (4.46% at September. As of June 30, 2017).2021 and December 31, 2020, the Credit Facility’s interest rates were 3.59% and 3.65%, respectively. The Company has pledged its 800-acre Kapalua Mauka project and 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 no0 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 minimumminimum liquidity (as defined) of $1.0$2.0 million, a maximum of $45.0 million in total liabilities, and a limitation on new indebtedness.

The Company believes that it iswas in compliance with the covenants under the Credit Facility.Facility as of June 30, 2021.

 

77..

SHARE-BASED COMPENSATION

 

The Company’sCompany’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 2017Equity and Incentive Award Plans (Equity Plans)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 Plans.Plan. Restricted shares issued under the Equity PlansPlan 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.

 

Each ofShare-based compensation is determined and awarded annually to the Company’s non-employee directors and certain members of management receive restricted shares of common stock annually. Share-based compensations totaled $327,000 and $123,000 for the nine months ended September 30, 2017 and 2016, respectively, for vesting of restricted shares granted.

The Company’sCompany’s officers and certain members of management receive share-based compensation based on their achievement of certain predefined performance goals and objectives under an incentive compensation plan.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 compensationscompensation totaled $1,065,000$719,000 and $741,000$827,000 for the ninesix months ended SeptemberJune 30, 2017 2021 and 2016, respectively, for shares issued2020, respectively. Included in these amounts were $347,000 and the vesting$349,000 of restricted shares granted toof common stock which vested during the Company’s officersfirstsix months of 2021 and certain members of management.2020, respectively.

 

10
12

 

88..

ACCRUED RETIREMENT BENEFITS

 

Accrued retirement benefits at Septemberas of June 30, 2017 2021 and December 31, 2016 2020 consisted of the following:

 

 

September 30

  

December 31,

  

June 30,

 

December 31,

 
 

2017

  

2016

  

2021

 

2020

 
 

(in thousands)

  

(unaudited)

  

(audited)

 
         

(in thousands)

 

Defined benefit pension plans

 $7,490  $7,560 
 

Defined benefit pension plan

 $7,987  $8,790 

Non-qualified retirement plans

  1,654   1,674   2,269   2,301 

Total

  9,144   9,234  10,256  11,091 

Less current portion

  (164)  (175)  (165)  (165)

Non-current portion of accrued retirement benefits

 $8,980  $9,059  $10,091  $10,926 

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 unfunded non-qualified retirement plans covering nine of its former executives. The non-qualified retirement plans were frozen in 2009 and future vesting of additional benefits was discontinued.

 

The net periodic benefit costs for pension and postretirementpost-retirement benefits for the three and ninesix months ended SeptemberJune 30, 2017 2021 and 20162020 were as follows:

 

  

Three Months

  

Nine Months

 
  

Ended September 30,

  

Ended September 30,

 
  

2017

  

2016

  

2017

  

2016

 
  

(in thousands)

  

(in thousands)

 

Interest cost

 $560  $803  $1,680  $2,182 

Expected return on plan assets

  (562)  (659)  (1,686)  (1,977)

Amortization of net loss

  204   253   612   760 

Recognized gain due to settlements

  -   (654)  -   (654)

Pension and other postretirement expenses (income)

 $202  $(257) $606  $311 
                 
Other changes in plan assets and benefit obligations recognized in comprehensive income:                

Net loss

 $204  $253  $612  $760 

Recognized actuarial loss due to settlement

  -   721   -   721 
                 

Total recognized loss in comprehensive income

 $204  $974  $612  $1,481 
  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 
  

(unaudited)

  

(unaudited)

 
  

2021

  

2020

  

2021

  

2020

 
  

(in thousands)

 

Interest cost

 $309  $408  $618  $816 

Expected return on plan assets

  (418)  (497)  (836)  (994)

Amortization of net loss

  221   206   442   412 

Pension and other postretirement expenses

 $112  $117  $224  $234 

9.

CONTRACT ASSETS AND LIABILITIES

 

Receivables from contracts with customers were $539,000, $806,000 and $673,000 as of June 30, 2021, December 31, 2020, and December 31, 2019 respectively.

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 and $33,000 for the six months ended June 30, 2021 and 2020, respectively.

910..

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 effectiveprovision 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 ratebases of assets and liabilities using tax rates enacted by law or regulation. A full valuation allowance continues to be established for 2017 deferred income tax assets as of June 30, 2021 and 2016 reflects the recognition of expected federal alternative minimum tax liabilities and interim period tax benefits and changes to its tax valuation allowance. In 2017, the Company expects to fully utilize the special alternative minimum tax net operating loss carryforward from 2008 which allows for 100% offset to the alternative minimum taxable income in subsequent years. Subsequent to the full utilization of the 2008 carryforward balance, the Company can only offset the normally allowed 90% of alternative minimum taxable income with net operating loss carryforwards from other years.December 31, 2020, respectively.

 

13

1011..

REPORTABLE OPERATING SEGMENTS

 

The Company’sCompany’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. The Company’s reportableReportable operating segments are as follows:

 

Real Estate – includes land planning and entitlement, development and sales activities. This segment also includes the operations of Kapalua Realty Company Ltd., a general brokerage real estate company located in the Kapalua Resort.

Real Estate includes the planning, entitlement, development and sale of real estate inventory. The segment included the operations of Kapalua Realty Company, a general brokerage real estate company located within the Kapalua Resort, through June 30, 2020.

 

11

Table of Contents

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.

 

Leasing – includes residential, resort, commercial, agricultural and industrial land and property leases, licensing of the Company’s registered trademarks and trade names, and stewardship and conservation efforts.

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

 

Utilities – includes the operations of the Company’s two Hawaii Public Utilities Commission-regulated subsidiaries which provide potable and non-potable water and wastewater transmission services to the Kapalua Resort. In addition, this segment also includes management of ditch, reservoir and well systems which provide non-potable irrigation water systems in West and Upcountry Maui.

Resort Amenities – include 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.

 

The Company’sCompany’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 ninesix months ended SeptemberJune 30, 2017 2021 and 20162020 were as follows:

 

 

Three Months Ended

 

Six Months Ended

 
 

Three Months

  

Nine Months

  

June 30,

 

June 30,

 
 

Ended September 30,

  

Ended September 30,

  

(unaudited)

  

(unaudited)

 
 

2017

  

2016

  

2017

  

2016

  

2021

  

2020

  

2021

  

2020

 
 

(in thousands)

  

(in thousands)

  

(in thousands)

 

(in thousands)

 

Operating Segment Revenues

                 

Real estate

 $290  $3,210  $14,281  $18,876  $2,700  $90  $2,700  $158 

Leasing

  1,353   1,680   4,309   4,572  1,962  1,436  3,763  3,172 

Utilities

  898   813   2,403   2,539 

Resort amenities and other

  299   359   866   1,030   288   184   546   414 

Total Operating Segment Revenues

 $2,840  $6,062  $21,859  $27,017  $4,950  $1,710  $7,009  $3,744 

Operating Segment Income (Loss)

                 

Real estate

 $(38) $2,768  $13,065  $16,778  $2,246  $(102) $2,148  $(209)

Leasing

  692   560   2,592   2,195  1,086  609  2,047  1,569 

Utilities

  410   124   936   630 

Resort amenities and other

  57   192   78   357   10   15   (145)  (326)

Total Operating Segment Income

 $1,121  $3,644  $16,671  $19,960  $3,342  $522  $4,050  $1,034 

14

12.

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 for the three and six months ended June 30, 2021 and 2020 were as follows:

  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 
  

(unaudited)

  

(unaudited)

 
  

2021

  

2020

  

2021

  

2020

 
  

(in thousands)

  

(in thousands)

 
                 

Minimum rentals

 $742  $712  $1,482  $1,410 

Percentage rentals

  417   37   534   304 

Licensing fees

  165   111   290   345 

Other

  315   321   863   608 

Total

 $1,639  $1,181  $3,169  $2,667 

 

 

113.1.

COMMITMENTS AND CONTINGENCIESDISCONTINUED OPERATIONS

 

There have been no changesThe results of discontinued operations related to the Kapalua Water Company, Ltd. and Kapalua Waste Treatment Company, Ltd. assets for the three and six months ended June 30, 2021 and 2020 were as follows:

  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 
  

(unaudited)

  

(unaudited)

 
  

2021

  

2020

  

2021

  

2020

 
  

(in thousands)

  

(in thousands)

 

Operating revenues

 $240  $577  $838  $1,317 

Operating costs and expenses

  (309)  (719)  (1,007)  (1,376)

Impairment loss

  0   0   (40)  0 

Loss from discontinued operations

 $(69) $(142) $(209) $(59)

14.

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 status of commitments and contingencies as reported1960’s to serve approximately 200 single-family homes developed for workers in the Company’s Annual Reportformer agricultural operations. The facility is made up of two1.5-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 Form 10-K fora previously approved corrective action plan to resolve and remediate the fiscal year ended December 31, 2016. facility’s wastewater effluent issues. The construction of additional leach fields, installation of a surface aerator, sludge removal system, and natural pond cover using water plants were completed through June 30, 2021. The DOH is currently reviewing the test results of these corrective action plan items.  No hearing date has been set as discussions with the DOH are still ongoing to address any other matters regarding the Order.

The Company is presently unable to estimate the amount, or range of amounts, of any probable liability, if any, related to the Order and no provision has been made in the accompanying unaudited condensed consolidated interim financial statements.

There are various other claims and legal actions pending against the Company. In the opinion of management, after consultation with legal counsel, theThe 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.operations after consultation with legal counsel.

 

Quarantine, travel restrictions and other public health measures to reduce the spread of COVID-19 has caused an adverse impact on local economic activity, including business closures, increased unemployment, financial market instability, and reduced tourism. The Company’s future business operations, including the results of operations, cash flows and financial position will be significantly affected should the spread of the COVID-19 pandemic, including its variants, accelerate in future periods.

15

1215..

FAIRFAIR 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.

 

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Table

The Company considers all cash on hand to be unrestricted cash for the purposes of Contents

the interim unaudited condensed consolidated balance sheets and interim unaudited condensed consolidated statements of cash flows. The fair value of cash, receivables and payables approximate their carrying value due to the short-term nature of the instruments. The fair value of income tax receivables approximate their carrying value due to the certainty of collection or 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. The fair value of long-term debt was estimated based on borrowing rates currently available to the Company for long-term debt with similar terms and maturities. The carrying amount of long-term debt, at September 30, 2017 and December 31, 2016 was $1.2 million and $6.9 million, respectively, which approximated fair value.value, was approximately $200,000 at December 31, 2020 (audited). The fair value of long-term debt has been classified inwas measured using the level Level 2 category. inputs, noted above.

 

1316..

NEWRECENT ACCOUNTING PRONOUNCEMENTSPRONOUCEMENTS

 

In May 2014, June 2016, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606)2016-13 to update the methodology used to measure current expected credit losses (“CECL”). This ASU requires that an entity use the defined five step processapples to recognize revenue. The ASU also requires additional disclosuresfinancial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investments in leases, and is effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. While the Company continues to assess its contracts with customers, it does not currently expect a material impact on results of operations, cash flows or financial position. The Company expects the consolidated financial statement disclosures over revenue recognition will expand in order to comply with the ASU.

In March 2017, FASB issued ASU No. 2017-07, Compensation-Retirement Benefits.trade accounts receivable as well as certain off-balance sheet exposures, such as loan commitments. This ASU aimsrequires consideration of a broader range of reasonable and supportable information to improve the presentation of the net periodic pension cost and net periodic postretirement benefit cost by requiring the reporting of the service cost componentexplain 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 same line item or items as other compensation costs arising from services rendered by employees duringperiod of adoption. ASU 2019-10 was subsequently issued delaying the period. The other componentseffective date to the first quarter of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations This ASU will be effective for public business entities for annual periods beginning after December 15, 2017.2023. The Company is in the process of assessing the impact of the ASU No, 2017-07 on its consolidated financial statements.

 

In May 2017, December 2019, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting2019-12 to simplify the accounting in ASC Topic 740,Income Taxes. This ASU clarifies which changesguidance removes certain exceptions related to the terms or conditionsapproach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of a share-based payment award require an entity to apply modification accountingdeferred tax liabilities for outside basis differences. The guidance also clarifies and simplifies other areas of ASC Topic 740. This ASU was effective beginning in Topic 718. The standard is effective for interim and annual reporting periods beginning after December 15, 2017,the first quarter of 2021 with early adoption permitted. The Company isCertain adjustments in this update must be applied on a prospective basis, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings/(accumulated deficit) in the processperiod of assessingadoption. The ASU did not have a significant impact on the impact of ASU No, 2017-09 on itsCompany’s consolidated financial statements.statements and related disclosures.

 

In March 2020, the FASB issued ASU 2020-04 as an update to provide optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in the ASU are elective and apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The ASU is effective through December 31, 2022. Management is evaluating its impact on the Company’s consolidated financial statements and related disclosures, if elected.

Item 2. MMANAGEMENTANAGEMENT’SS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our unaudited interim condensed consolidated 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 ended December 31, 2016 and the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report. 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, on Form 10-Q.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.

16

 

Overview

 

Maui Land & Pineapple Company, Inc. is a Hawaii corporation 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.

 

We own approximately 23,00023,000 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. This segment also included the operations of Kapalua Realty Company, Ltd., a general brokerage real estate company located in the Kapalua Resort, through June 30, 2020.

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

 

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.

Leasing—Our leasing activities include residential, resort, commercial, agricultural and industrial land and property leases, licensing of our registered trademarks and trade names, and stewardship and conservation efforts.

 

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.

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.

Impact of COVID-19 Pandemic on Our Business

As of the date of this filing, there continue to be widespread concerns regarding the ongoing impacts and disruptions caused by the COVID-19 pandemic in the geographic region in which we operate. The extent to which the COVID-19 pandemic will impact our business, financial condition, and results of operations in the future is highly uncertain and will be affected by a number of factors. These include the duration and extent of the COVID-19 pandemic, the development of new variants of the COVID-19 virus that may be more contagious or virulent than prior versions, the scope of mandated or recommended containment and mitigation measures, the effect of government stabilization and recovery efforts, and the success of vaccine distribution programs.

In the State of Hawaii, the Governor issued “stay-at-home” orders for its residents and visitors beginning in March 2020, followed by subsequent “safer-at-home” and “act with care” proclamations. In addition, the Governor issued emergency proclamations ordering all transpacific passengers to a mandatory self-quarantine. Beginning in October 2020, travelers to the State of Hawaii were able avoid the 10-day quarantine requirement under a pre-travel testing program if proof of a negative result from a valid COVID-19 Nucleic Acid Amplification Test is presented.

During the three months ended June 30, 2021, there were several amendments to state and local law to ease social distancing guidelines and travel restrictions, including the elimination of quarantine and testing requirements for interisland travel. As a result of these amendments, as well as increased vaccination rates among travelers, passenger volume to Maui County during the three months ended June 30, 2021 increased to approximately 791,000, compared to approximately 4,000 during the three months ended June 30, 2020. Effective July 8, 2021, domestic travelers to Hawaii may be exempt from quarantine restrictions by providing evidence of full vaccination.

The overall impact of the pandemic on our business and future results of operations remains highly uncertain and subject to change. 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.

Utilities—We operate two publicly-regulated utility companies which provide potable and non-potable water and wastewater transmission services to the Kapalua Resort. In addition, we also manage several major non-potable irrigation water systems in West and Upcountry Maui.

 

13
17

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

 

Critical Accounting Policies and Estimates

The preparationResults of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of accounting estimates. Changes in these estimates and assumptions are considered reasonably possible and may have a material effect on the consolidated financial statements and thus actual results could differ from the amounts reported and disclosed herein. Our critical accounting policies that require the use of estimates and assumptions were discussed in detail in our most recently filed Form 10-K. There have been no significant changes in our critical accounting policies during the first nine months of 2017.

RESULTS OF OPERATIONSOperations

 

Three and Nine monthsSix Months Ended SeptemberJune 30,, 2017 2021 compared to Three and Nine monthsSix Months Ended June 30, 2020September 30, 2016

 

CONSOLIDATED

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 
 

Three Months Ended September 30,

  

Nine Months Ended September 30,

  

(unaudited)

  

(unaudited)

 
 

2017

  

2016

  

2017

  

2016

  

2021

  

2020

  

2021

  

2020

 
 

(in thousands)

  

(in thousands)

  

(in thousands)

 

(in thousands)

 
                 

Operating revenues

 $2,840  $6,062  $21,859  $27,017  $4,950  $1,710  $7,009  $3,744 

Operating costs and expenses

  (1,719)   (2,418)   (5,188)   (7,057)  (1,608) (1,188) (2,959) (2,710)

General and administrative

  (648)   (648)   (1,723)   (1,698)  (574) (559) (1,291) (1,318)

Share-based compensation

  (253)   (67)   (1,065)   (741)  (370) (402) (719) (827)

Depreciation

  (463)   (498)   (1,296)   (1,486)   (302)  (323)  (602)  (645)

Operating income (loss)

 2,096  (762) 1,438  (1,756)

Other income

 -  894  13  894 

Pension and other postretirement expenses

  (202)   257   (606)   (311)  (116) (117) (232) (234)

Operating income

  (445)   2,688   11,981   15,724 

Interest expense

  (39)   (213)   (152)   (1,327)   (32)  (30)  (65)  (76)

Net income (Loss)

 $(484)  $2,475  $11,829  $14,397 

Income (Loss) from Continuing Operations

 1,948  (15) 1,154  (1,172)

Loss from Discontinued Operations

  (69)  (142)  (209)  (59)

Net income (loss)

 $1,879  $(157) $945  $(1,231)
                 

Net income (Loss) per common share

 $(0.03)  $0.13  $0.62  $0.76 

Income (Loss) from Continuing Operations per Common Share

 $0.10  $-  $0.06  $(0.06)

Loss from Discontinued Operations per Common Share

 $-  $(0.01) $(0.01) $- 

Net income (loss) per Common Share

 $0.10  $(0.01) $0.05  $(0.06)

 

The increase in share-based compensation during the three and nine months ended September 30, 2017 compared to the same periods in 2016 was the result of higher performance-based awards under our equity and incentive award plan. The decrease in depreciation during the three and nine months ended September 30, 2017 compared to the same periods in 2016 reflects our sale of a 26,000 square foot building, commonly referred to as the Kapalua Village Center, in December 2016. The decrease in interest expense during the three and nine months ended September 30, 2017 compared to the same periods in 2016 is the result of the reduction and refinancing of our long-term debt. Included in pension and other postretirement expenses for the three and nine months ended September 30, 2016 is a reduction of approximately $0.7 million resulting from a one-time payment settlement with certain participants of our non-qualified retirement plans, which was paid in October 2016.

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Table of Contents

REAL ESTATE

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 
 

Three Months Ended September 30,

  

Nine Months Ended September 30,

  

(unaudited)

  

(unaudited)

 
 

2017

  

2016

  

2017

  

2016

  

2021

  

2020

  

2021

  

2020

 
 

(in thousands)

  

(in thousands)

  

(in thousands)

 

(in thousands)

 
                 

Operating revenues

 $290  $3,210  $14,281  $18,876  $2,700  $90  $2,700  $158 

Operating costs and expenses

  (328)  (442)  (1,216)  (2,098)  (454)  (192)  (552)  (367)

Operating income (loss)

 $(38) $2,768  $13,065  $16,778  $2,246  $(102) $2,148  $(209)

 

In April 2017, approximately $6.7 million of land improvements were conveyed to us by

In May 2021, we sold the owner of a 125-acre portion of our Kapalua Mauka project. The owner purchased the 125-acre property commonly known as Mahana Estates, in 2009. As part of the sale, the owner agreed to subsequently develop and convey to us upon completion certain easements, subdivision and utility improvements related to the Mahana Estates property.

In February 2017, we sold the 15-acre Kapalua Golf Academy practice courseSteeple House located in the Kapalua Resort for $7.0 million to$1.7 million. The sale included the ownerfee simple interest of the Kapalua Plantation1.1 acre parcel as well as buildings and Bay Golf Courses. The property was sold without any development entitlements. The sale resulted in a gain of approximately $6.4 million. The property was not pledged as collateral under our revolving line of credit facility. We applied $5.6 million ofimprovements located on the sale proceeds toward our revolving line of credit facility.

In August 2016, we sold a five-acre, fully-entitled 42-unit workforce housing project located in West Maui for $3.0 million. As part of the transaction, the buyer also agreed to provide us with 12 residential workforce housing credits by August 2021. The sale resulted in a gain of approximately $2.8 million. Proceeds from the sale were used to pay down our First Hawaiian Bank credit facility.property.

 

In June 2016,2021, we soldentered into a fully-entitled 304-acre working-class community project located in West Maui, commonly referredPurchase and Sale Agreement with a local buyer to as Pulelehua, for $15.0 million.sell and grant to a conservation organization a perpetual, non-exclusive conservation easement. The sale resulted in a gainconservation easement consists of approximately $14.3 million.791 acres of unimproved land in Honolua Valley, Maui, Hawaii. We utilized thecollected proceeds from the sale to payoff the outstanding balance of a term loan.approximately $0.9 million upon closing.

 

Also included in ourThere were no sales of real estate operating revenues wereduring the six months ended June 30, 2020.

During the six months ended June 30, 2020, our wholly-owned subsidiary, Kapalua Realty Company, Ltd., earned sales commissionstotaling $290,000 and $210,000 for the three months ended September 30, 2017 and 2016, respectively, and $600,000 and $876,000 for the nine months ended September 30, 2017 and 2016, respectively, from resales of properties owned by private residents in the Kapalua Resort and surrounding areas by our wholly-owned subsidiary, Kapalua Realty Company, Ltd.areas. Effective July 1, 2020, we entered into an office lease agreement and license agreement with a real estate company to provide general brokerage services to the area. No sales commissions were earned in 2021.

 

Real estate salesdevelopment expenditures were $63,000 during the six months ended June 30, 2021. There were no real estate developments expenditures during the six months ended June 30, 2020.

Real estate development and developmentsales are cyclical and depend on a number of factors, many of which are beyond our control.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.

 

18

 

LEASING

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2017

  

2016

  

2017

  

2016

 
  

(in thousands)

  

(in thousands)

 
                 

Operating revenues

 $1,353  $1,680  $4,309  $4,572 

Operating costs and expenses

  (661)  (1,120)  (1,717)  (2,377)

Operating income

 $692  $560  $2,592  $2,195 
                 

Commercial and Industrial Leasing Occupancy:

             

Kapalua Resort

  100%  86%  100%  86%

Other West Maui

  90%  37%  90%  37%

Upcountry Maui

  95%  90%  95%  90%
  

Three Months Ended

  

Six Months Ended

 
  

June 30

  

June 30,

 
  

(unaudited)

  

(unaudited)

 
  

2021

  

2020

  

2021

  

2020

 
  

(in thousands)

  

(in thousands)

 
                 

Operating revenues

 $1,962  $1,436  $3,763  $3,172 

Operating costs and expenses

  (876)  (827)  (1,716)  (1,603)

Operating income

 $1,086  $609  $2,047  $1,569 

 

The decreaseincrease in operating revenue and operating costs and expenses during the three and nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 were primarily due to the sale of the Kapalua Village Center in December 2016. In addition, operating costs and expensesrevenues for the three and ninesix months ended SeptemberJune 30, 2016 included2021 compared to the three and six months ended June 30, 2020 was primarily due to increased percentage rental income from our commercial leasing portfolio. Percentage rental income is contingent upon the sales of the tenant exceeding a write-offdefined threshold and recognized after those thresholds are achieved. For the three and six months ended June 30, 2021, percentage rental income was $417,000 and $534,000, respectively. The impact of approximately $0.5 million of lease rent from an agricultural land and property tenantCOVID-19 on tenants’ sales activity in Upcountry Maui.2020 resulted in no percentage rental income recognized for the three months ended June 30, 2020.

 

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

 

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Table of Contents

RESORT AMENITIES AND OTHER  

  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 
  

(unaudited)

  

(unaudited)

 
  

2021

  

2020

  

2021

  

2020

 
  

(in thousands)

  

(in thousands)

 
                 

Operating revenues

 $288  $184  $546  $414 

Operating costs and expenses

  (278)  (169)  (691)  (740)

Operating income (loss)

 $10  $15  $(145) $(326)

 

UTILITIES

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2017

  

2016

  

2017

  

2016

 
  

(in thousands)

  

(in thousands)

 
                 

Operating revenues

 $898  $813  $2,403  $2,539 

Operating costs and expenses

  (488)  (689)  (1,467)  (1,909)

Operating income (loss)

 $410  $124  $936  $630 
                 

Consumption (in million gallons):

                

Potable

  39   35   105   109 

Non-potable/irrigation

  197   165   497   480 

We have contracted a third-party water engineering and management company to manageOur Resort Amenities segment includes the operations of our wholly-owned subsidiaries:the Kapalua Water Company, Ltd.Club, a private, non-equity club providing its members special programs, access and other privileges at certain of the amenities at the Kapalua Waste Treatment Company, Ltd. We haveResort, 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 a water maintenance companyfees for member access to manage our non-potable/irrigation water systems in Westthe spa, beach club, golf courses and Upcountry Maui.other resort amenities.

 

The decrease in operatingIn March 2020, access to certain facilities and amenities was restricted due to regulations related to COVID-19. As a result of these restrictions, a partial refund of member dues reduced revenue during the three months ended June 30, 2020. Fees paid for contracted services correspondingly reduced operating costs and expenses during the three and nine months ended SeptemberJune 30, 2017 compared to the same periods in 20162020. There were primarily due to higher operational efficiencies and a decreaseno refunds of member dues or reductions of contracted rates in the amount of potable water loss.three months ending June 30, 2021.

 

RESORT AMENITIES AND OTHER

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2017

  

2016

  

2017

  

2016

 
  

(in thousands)

  

(in thousands)

 
                 

Operating revenues

 $299  $359  $866  $1,030 

Operating costs and expenses

  (242)  (167)  (788)  (673)

Operating income

 $57  $192  $78  $357 
                 

Kapalua Club Members

  477   509   477   509 

Dues collected from our Kapalua Club members are utilized principally to pay for access and other privileges to amenities operated by outside third parties in the Kapalua Resort. INCOME

 

The decreaseCompany had a 51% ownership interest in operating revenues duringKapalua Bay Holdings, LLC (KBH). In 2009, the three and nine months ended September 30, 2017 comparedinvestment was written down to zero. As part of the same periods in 2016 was primarily due todissolution of KBH, the decrease in the numberCompany received $894,000 as a return of members and annual membership dues. The increase in operating costs and expenses was duecash collateral related to an increaseowner controlled insurance program in amounts paid to operatorsMay 2020. In April 2021, the Company received a final distribution of certain resort amenities used by club members.$13,000 from KBH.

 

19

 

LIQUIDITY AND CAPITAL RESOURCES

 

Revolving Line of LiquidityCredit Facility

 

We have ahad cash on hand of approximately $6.0 million and $0.9 million (audited) at June 30, 2021 and December 31, 2020, respectively.

As of June 30, 2021, $15.0 million was available under our revolving line of credit facility with First Hawaiian Bank.Bank (“Credit Facility”). The Credit Facility matures on December 31, 2019 and provides for two optional one-year extension periods.2021. Interest on borrowings isborrowings accrues at LIBOR plus 3.50% (4.46% at September 30, 2017). We have pledged our 800-acre Kapalua Mauka project and 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 minimumminimum liquidity (as defined) of $1.0$2.0 million, a maximum of $45.0 million in total liabilities, and a limitation on new indebtedness. We believe

As of June 30, 2021, we arewere in compliance with the covenants under the Credit Facility. If economic conditions are negatively impacted by the COVID-19 pandemic in future periods, we expect to borrow under our Credit Facility.

 

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Table of Contents

Cash Flows

 

During the first nine months of 2017, netNet cash flow provided by our operating activities was $7.8 million as compared to $16.0approximately $1.7 million for the first ninesix months ending June 30, 2021. In June 2021, proceeds of 2016.$1.7 million and $0.9 million were received from the sales of the Steeple House in the Kapalua Resort and conservation easement in Honolua Valley, respectively.

 

In May 2021, we received proceeds of $4.2 million upon closing of the Kapalua Water Company, Ltd. and Kapalua Waste Treatment Company, Ltd. asset sale.

The outstanding balance of our Credit Facility was reduced to zero as of June 30, 2021. Interest payments on our Credit Facility totaled $10,000 and $19,000 for the six months ended June 30, 2021 and 2020, respectively.

We made a minimum funding contribution of $553,000 to our defined benefit pension plan in January 2021. The CARES Act included limited funding relief provisions for single employer defined benefit plans allowing us to defer the required contributions that would have been otherwise due in 2020. No further contributions are required to be made to the plan in 2021.

Future Cash Inflows and Outflows

 

Our plansbusiness initiatives include investing in our operating infrastructure, continued planning and entitlement efforts to generate cash flow by employingon our development projects, and monitoring the impact of COVID-19 on our business segments. Our income from real estate, assetsleasing activities and Kapalua Club membership dues, were all impacted since March 2020, and may be impacted in leasingthe future for an uncertain period of time should public health measures and other arrangements, by the sale of non-core real estate assets, and by continued cost containment efforts. We intend to utilize a portion oftravel restrictions become reinstated. This may require borrowing under our Credit Facility and the proceeds from the saleor other indebtedness, repayment of anywhich may be dependent on selling of our real estate assets at acceptable prices in our development efforts, including planning, permitting and securing further entitlements for our projects and other landholdings. We also plan to utilize available working capital in addressing deferred maintenance and improvements in our commercial leasing properties.condensed timeframes.

 

We do not expectOur indebtedness could have the effect of, among other things, increasing our exposure to be requiredgeneral adverse economic and industry conditions, limiting our flexibility in planning for, or reacting to, make minimum contributionschanges in our business and industry, and limiting our ability to our pension plans in 2017.borrow additional funds.

 

FORWARD-LOOKING STATEMENTS AND RISKSCritical Accounting Policies and Estimates

 

ThisThe preparation of the unaudited condensed consolidated interim financial statements in conformity with GAAP requires the use of accounting estimates. Changes in these estimates and other reports filed by us withassumptions  are considered reasonably  possible and may have a material effect on the Securitiesunaudited condensed consolidated interim financial statements and Exchange Commission, or 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 involve known and unknown risks, uncertainties and other factors that may cause ourthus 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 can be identified by the fact that they do not relate strictly to historical or current facts. They contain words such as “may,” “will,” “project,” “might,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue” or “pursue,” or the negative or other variations thereof or comparable terminology. Actual results could differ materially from those projected in forward-looking statements as a result of the following factors, among others:

unstable macroeconomic market conditions, including, but not limited to, energy costs, credit markets, interest ratesamounts reported 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;

disclosed herein. For additional information regarding 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 tocritical accounting policies, see the presence of hazardous or toxic substances;

changes in weather conditions or the occurrence of natural disasters;

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 plans;

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; and

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

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Table of Contents

Such risks and uncertainties also include those risks and uncertainties discussed in the sectionssection entitled “Business,” “Risk Factors,” and “Management’sManagements Discussion and Analysis of Financial Condition and Results of Operations”Operations Critical Accounting Policies” contained within our Annual Report. There have been no significant changes in our Annual Report on Form 10-K for the year ended December 31, 2016 and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in this Quarterly Report on Form 10-Q, 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.critical accounting policies.

 

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Item 3. QUANTITATIVEQUANTITATIVE 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 not requiredsubject to provide disclosurepotential changes in responseconsumer behavior and regulatory risks through travel and social distancing restrictions due to Part 1: Item 3 of Form 10-Q because we are considered to beour location as a “smaller reporting company.”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 ChiefPrincipal Executive Officer and ChiefPrincipal 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(e) 13a-15(b) and 15d-15(e)15d-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our ChiefPrincipal Executive Officer and ChiefPrincipal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the fiscal quarter covered by this report. Based upon the foregoing, our ChiefPrincipal Executive Officer and ChiefPrincipal 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

 

We are in the process of reviewing and updating the internal controls and related procedures to reflect our change in filing status as an accelerated filer in January 2018. Except as otherwise noted above, there has notThere have been any changeno significant changes in our internal controlcontrols over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f) or 15d-15(f)) occurred during the fiscal quarterthree months ended SeptemberJune 30, 2017 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.2021.

 

PARTII OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

For information related to Item 1. Legal Proceedings, refer to Note 14, 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 “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, 20162020 and the section entitled “Management’s 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. During the three months ended June 30, 2021, there were no material changes to the risks and uncertainties described in the section entitled “Risk Factors” in our Annual Report. 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.

Item 5. OTHER INFORMATION

On August 10, 2021, Michael Hotta notified us that he will resign from his position as Chief Financial Officer of the Company. The effective date of his resignation will be September 3, 2021.

 

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Item 6. EEXHIBITSXHIBITS

 

31.131.1*

Certification of ChiefPrincipal Executive Officer Pursuant to Rule 13a-14(d) 13a-14(a) / 15d-14(a) of the Securities Exchange Act of 1934.

1934, as amended.
  

31.231.2*

Certification of ChiefPrincipal Financial Officer Pursuant to Rule 13a-14(d) 13a-14(a) / 15d-14(a) of the Securities Exchange Act of 1934.

1934, as amended.
  

32.132.1**

Certification of ChiefPrincipal Executive Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Art of 2002.
  

32.232.2**

Certification of ChiefPrincipal Financial Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the Securities Exchange Act of 1934, as amended and 18 U.S.C. Section 1350.

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Art of 2002.
  

101.INS101.INS*

Inline XBRL Instance Document

  

101.SCH101.SCH*

Inline XBRL Taxonomy Extension Schema Document

  

101.CAL101.CAL*

Inline XBRL Taxonomy ExtensionExtension Calculation Document

  

101.DEF101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase

  

101.LAB101.LAB*

Inline XBRL Taxonomy Extension Labels Linkbase Document

  

101.PRE101.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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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.

   

November 2, 2017August 11, 2021

 

/s/ TIM T. ESAKIMICHAEL S. HOTTA

Date

 

Tim T. EsakiMichael S. Hotta

Chief Financial Officer

  

Chief Financial Officer

(Principal Financial Officer)

 

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EXHIBITINDEX

 

Exhibit

Number

 

Description

   

31.1

 

Certification of ChiefPrincipal Executive Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of the Securities Exchange Act of 1934.1934, as amended. (1)

   

31.2

 

Certification of ChiefPrincipal Financial Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of the Securities Exchange Act of 1934.1934, as amended. (1)

   

32.1

 

Certification of ChiefPrincipal Executive Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the Securities Exchange Act of 1934, as amended and 18 U.S.C. Section 1350.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)

   

32.2

 

Certification of ChiefPrincipal Financial Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the Securities Exchange Act of 1934, as amended and 18 U.S.C. Section 1350.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)

   

101.INS

 

Inline XBRL Instance Document (2)(1)

   

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document (2)(1)

   

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Document (2)(1)

   

101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase (2)(1)

   

101.LAB

 

Inline XBRL Taxonomy Extension Labels Linkbase Document (2)(1)

   

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Link Document (2)(1)

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

 

 


(1)

Filed herewith.

(2)

Furnished herewith

(2)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 Securities Exchange Act, and shall not be incorporated by reference into any of 1934, as amended.

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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