MAUI LAND & PINEAPPLE CO INC 10-Q

mlp20220331_10q.htm   Table of Contents   UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549   FORM 10-Q (Mark One)   ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   For the quarterly period ended March 31, 2022   OR     ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   Commission file number 001-06510   MAUI LAND & PINEAPPLE COMPANY, INC. (Exact name of registrant as specified in its charter)   Hawaii   99-0107542 (State or other jurisdiction   (IRS Employer of incorporation or organization)   Identification No.)   200 Village Road , Lahaina , Maui, Hawaii 96761 (Address of principal executive offices)   ( 808 ) 877-3351 (Registrant’s telephone number, including area code)   None (Former name, former address and former fiscal year, if changed since last report)   Securities registered pursuant to Section 12(b) of the Act:   Title of each class   Trading Symbol(s)   Name of each exchange on which registered Common Stock, no par value   MLP     NYSE     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐   Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐   Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company" in Rule 12b-2 of the Exchange Act.   Large accelerated filer ☐   Accelerated filer ☐ Non-accelerated filer ☒   Smaller reporting company ☒ Emerging growth company ☐   If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐   Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒   Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.   Class   Outstanding at May 3, 2022 Common Stock, no par value   19,517,186 shares       Table of Contents     MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES   TABLE OF CONTENTS   Cautionary Note Regarding Forward-Looking Statements 2     PART I. FINANCIAL INFORMATION 3     Item 1. Condensed Consolidated Financial Statements (Unaudited) 3     Condensed Consolidated Balance Sheets, March 31, 2022 and December 31, 2021 (Audited) 3     Condensed Consolidated Statements of Operations and Comprehensive Loss, Three Months Ended March 31, 2022 and 2021 4     Condensed Consolidated Statements of Changes in Stockholders’ Equity, Three Months Ended March 31, 2022 and 2021 5     Condensed Consolidated Statements of Cash Flows, Three Months Ended March 31, 2022 and 2021 6     Notes to Condensed Consolidated Interim Financial Statements 7     Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 14     Item 3. Quantitative and Qualitative Disclosures About Market Risk 17     Item 4. Controls and Procedures 17     PART II. OTHER INFORMATION 18     Item 1. Legal Proceedings 18     Item 1A. Risk Factors 18     Item 6. Exhibits 19     Signature 20     EXHIBIT INDEX 21     Exhibit 3.2   Exhibit 10.1   Exhibit 10.2   Exhibit 10.3   Exhibit 31.1   Exhibit 31.2   Exhibit 32.1   Exhibit 32.2   Exhibit 101   Exhibit 104         Table of Contents     Cautionary Note Regarding Forward-Looking Statements   This Quarterly Report on Form 10-Q and other reports filed by us with the U.S. Securities and Exchange Commission contain “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These statements include all statements included in or incorporated by reference to this Quarterly report on Form 10-Q that are not statements of historical facts, which can generally be identified by words such as “anticipate,” “believe,” “continue” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “project,” “pursue,” “will,” “would,” or the negative or other variations thereof or comparable terminology. We caution you that the foregoing list may not include all of the forward-looking statements made in this Quarterly Report. Actual results could differ materially from those projected in forward-looking statements as a result of the following factors, among others:     • the impacts of the COVID-19 pandemic, including its impacts on us, our operations, or our future financial or operational results;     • unstable macroeconomic market conditions, including, but not limited to, energy costs, credit markets, interest rates and changes in income and asset values;     • risks associated with real estate investments generally, and more specifically, demand for real estate and tourism in Hawaii;     • risks due to joint venture relationships;     • our ability to complete land development projects within forecasted time and budget expectations, if at all;     • our ability to obtain required land use entitlements at reasonable costs, if at all;     • our ability to compete with other developers of real estate in Maui;     • potential liabilities and obligations under various federal, state and local environmental regulations with respect to the presence of hazardous or toxic substances;     • changes in weather conditions, the occurrence of natural disasters, or threats of the spread of contagious diseases;     • our ability to maintain the listing of our common stock on the New York Stock Exchange;     • our ability to comply with funding requirements of our defined benefit pension plan;     • our ability to comply with the terms of our indebtedness, including the financial covenants set forth therein, and to extend maturity dates, or refinance such indebtedness, prior to its maturity date;     • our ability to raise capital through the sale of certain real estate assets;     • risks related to reference rate reform;     • availability of capital on terms favorable to us, or at all; and     • failure to maintain security of internal and customer electronic information.   Such risks and uncertainties also include those risks and uncertainties discussed in the sections entitled “ Business ,” “ Risk Factors ,” and “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”) and the section entitled “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ,” as well as other factors described from time to time in our reports filed with the SEC. Although we believe 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.   2 Table of Contents   PART I FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited)     MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES   CONDENSED CONSOLIDATED BALANCE SHEETS       March 31, 2022 (unaudited)     December 31 2021 (audited)       (in thousands except share data)   ASSETS                 CURRENT ASSETS                 Cash   $ 5,831     $ 5,596   Restricted cash     2,300       -   Accounts receivable, net     1,187       1,103   Prepaid expenses and other assets     278       333   Assets held for sale     3,157       3,144   Total current assets     12,753       10,176                     PROPERTY & EQUIPMENT     51,235       51,235   Accumulated depreciation     ( 34,510 )     ( 34,237 ) Property & equipment, net     16,725       16,998                     OTHER ASSETS                 Deferred development costs     9,566       9,564   Other noncurrent assets     1,181       1,181   Total other assets     10,747       10,745   TOTAL ASSETS   $ 40,225     $ 37,919                     LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES                 Accounts payable   $ 774     $ 580   Payroll and employee benefits     591       949   Accrued retirement benefits, current portion     142       142   Deferred revenue, current portion     2,796       217   Other current liabilities     503       509   Total current liabilities     4,806       2,397                     LONG-TERM LIABILITIES                 Accrued retirement benefits, net of current portion     7,862       7,937   Deferred revenue, net of current portion      1,600       1,633   Deposits     2,278       2,309   Other noncurrent liabilities     53       53   Total long-term liabilities     11,793       11,932   TOTAL LIABILITIES     16,599       14,329                     COMMITMENTS AND CONTINGENCIES                                       STOCKHOLDERS' EQUITY                 Common stock-- no par value, 43,000,000 shares authorized, 19,430,409 and 19,383,288 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively     82,876       82,378   Additional paid-in-capital     9,184       9,184   Accumulated deficit     ( 52,942 )     ( 52,324 ) Accumulated other comprehensive loss     ( 15,492 )     ( 15,648 ) Total stockholders' equity     23,626       23,590   TOTAL LIABILITIES & STOCKHOLDERS' EQUITY   $ 40,225     $ 37,919     See Notes to Condensed Consolidated Interim Financial Statements.   3 Table of Contents     MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS   (UNAUDITED)       Three Months Ended March 31,       2022     2021         (in thousands except per share amounts)   OPERATING REVENUES                 Real estate   $ -     $ -   Leasing     2,031       1,801   Resort amenities and other     217       258   Total operating revenues     2,248       2,059                     OPERATING COSTS AND EXPENSES                 Real estate     90       97   Leasing     741       840   Resort amenities and other     510       412   General and administrative     756       719   Share-based compensation     379       349   Depreciation     274       300   Total operating costs and expenses     2,750       2,717                     OPERATING LOSS     ( 502 )     ( 658 ) Other income     -       13   Pension and other post-retirement expenses     ( 114 )     ( 116 ) Interest expense     ( 2 )     ( 33 ) LOSS FROM CONTINUING OPERATIONS   $ ( 618 )   $ ( 794 ) Loss from discontinued operations, net     -       ( 140 ) NET LOSS   $ ( 618 )   $ ( 934 ) Pension, net     156       221   TOTAL COMPREHENSIVE LOSS   $ ( 462 )   $ ( 713 )                   LOSS PER COMMON SHARE-BASIC AND DILUTED                 Loss from Continuing Operations   $ ( 0.03 )   $ ( 0.04 ) Loss from Discontinued Operations   $ -     $ ( 0.01 ) Net Loss   $ ( 0.03 )   $ ( 0.05 )   See Notes to Condensed Consolidated Interim Financial Statements.   4 Table of Contents     MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES   CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY   (UNAUDITED)   For the Three Months Ended March 31, 2022 and 2021   (in thousands)       Common Stock       Additional Paid in     Accumulated       Accumulated Other Comprehensive               Shares     Amount     Capital     Deficit     Loss     Total                                                     Balance, January 1, 2022     19,383     $ 82,378     $ 9,184     $ ( 52,324 )   $ ( 15,648 )   $ 23,590   Share-based compensation     49       494       273                       767   Vested restricted stock issued     24       273       ( 273 )                     -   Shares canceled to pay tax liability     ( 26 )     ( 269 )                             ( 269 ) Other comprehensive income - pension                                     156       156   Net loss                         ( 618 )             ( 618 ) Balance, March 31, 2022     19,430     $ 82,876     $ 9,184     $ ( 52,942 )   $ ( 15,492 )   $ 23,626                                                                                                       Balance, January 1, 2021     19,312     $ 81,485     $ 9,184     $ ( 48,904 )   $ ( 21,698 )   $ 20,067   Share-based compensation     60       748       163                       911   Vested restricted stock issued     14       163       ( 163 )                     -   Shares canceled to pay tax liability     ( 34 )     ( 424 )                             ( 424 ) Other comprehensive income - pension                                     221       221   Net loss                             ( 934 )             ( 934 ) Balance, March 31, 2021     19,352     $ 81,972     $ 9,184     $ ( 49,838 )   $ ( 21,477 )   $ 19,841     See Notes to Condensed Consolidated Interim Financial Statements.   5 Table of Contents     MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS   (UNAUDITED)       Three Months Ended March 31,       2022     2021       (in thousands)                                       NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   $ 2,817     $ ( 513 )                   CASH USED IN INVESTING ACTIVITIES                 Payments for property and deferred development costs     ( 13 )     ( 74 )                   CASH FLOWS FROM FINANCING ACTIVITIES                 Proceeds from long-term debt     -       600   Debt and common stock issuance costs and other     ( 269 )     ( 424 ) NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES     ( 269 )     176                     NET INCREASE (DECREASE) IN CASH     2,535       ( 411 ) CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD     5,596       869   CASH AND RESTRICTED CASH AT END OF PERIOD   $ 8,131     $ 458                                       SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                 Cash paid during the period for interest   $ -     $ 5       SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:     ● The aggregate value of common stock of the Company issued to certain members of the Company’s management totaled $ 494,000 and $ 748,000 for the three months ended March 31, 2022 and 2021, respectively.   See Notes to Condensed Consolidated Interim Financial Statements.   6 Table of Contents   MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES   NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS   (UNAUDITED)     1. BASIS OF PRESENTATION   The accompanying unaudited condensed consolidated interim financial statements have been prepared by Maui Land & Pineapple Company, Inc. (together with its subsidiaries, collectively, the “Company”) in conformity with generally accepted accounting principles in the United States (“GAAP”) for interim financial information that are consistent in all material respects with those applied in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2021, and pursuant to the instructions to Form 10 -Q and Article 8 promulgated by Regulation S- X of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes to the annual audited consolidated financial statements required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated interim financial statements contain all normal and recurring adjustments necessary to fairly present the Company’s financial position, results of operations and cash flows for the interim periods ended March 31, 2022 and 2021. The unaudited condensed consolidated interim financial statements and notes should be read in conjunction with the annual audited consolidated financial statements and notes thereto included in the Company’s Form 10 -K for the year ended December 31, 2021.     2. USE OF ESTIMATES AND RECLASSIFICATIONS   The Company’s reports for interim periods utilize numerous estimates of general and administrative expenses and other costs for the full year. Future actual amounts may differ from these estimates. Amounts reflected in these condensed consolidated interim statements are not necessarily indicative of results for a full year.     3. RESTRICTED CASH   Restricted cash of $ 2.3 million at March 31, 2022 consisted of deposits held in escrow from the prospective buyers of properties held for sale.     4. SHARES – BASIC AND DILUTED   Basic and diluted weighted-average shares outstanding for the three months ended March 31, 2022 and 2021 were 19,398,085 and 19,327,739 , respectively.   Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding. Diluted net loss per common share is computed similar to basic net 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.   7 Table of Contents   5. PROPERTY   Property at March 31, 2022 and December 31, 2021 consisted of the following:         March 31, 2022 (unaudited)       December 31, 2021 (audited)       (in thousands)   Land   $ 5,063     $ 5,063   Land improvements     12,943       12,943   Buildings     22,869       22,869   Machinery and equipment     10,360       10,360   Total property     51,235       51,235   Less accumulated depreciation     34,510       34,237   Property & equipment, net   $ 16,725     $ 16,998       Land   Most of the Company’s 22,800 acres of land were acquired between 1911 and 1932 and are carried in its consolidated balance sheets at cost. Approximately 20,700 acres of land are located in West Maui and comprise a largely contiguous parcel that extends from the sea to an elevation of approximately 5,700 feet. This parcel includes approximately 900 acres within the Kapalua Resort, a master-planned, destination resort and residential community located in West Maui encompassing approximately 3,000 acres. The Company’s remaining 2,100 acres of land are located in Upcountry Maui in an area commonly known as Hali’imaile and are mainly comprised of leased agricultural fields, including related processing and maintenance facilities.   Land Improvements   Land improvements are comprised primarily of roads, utilities, and landscaping infrastructure improvements at the Kapalua Resort. Also included is the Company’s potable and non-potable water systems in West Maui. The majority of the Company’s land improvements were constructed and placed in service in the mid-to-late 1970’s or conveyed in 2017. Depreciation expense would be considerably higher if these assets were stated at current replacement cost.   Buildings   Buildings are comprised of restaurant, retail and light industrial spaces located at the Kapalua Resort and Hali’imaile which are used in the Company’s leasing operations. The majority of the buildings were constructed and placed in service in the mid-to-late 1970’s. Depreciation expense would be considerably higher if these assets were stated at current replacement cost.   Machinery and Equipment   Machinery and equipment are mainly comprised of zipline course equipment installed in 2008 at the Kapalua Resort and used in the Company’s leasing operations.   8 Table of Contents     6.           ASSETS HELD FOR SALE   Assets held for sale at March 31, 2022 and December 31, 2021 consisted of the following:           March 31, 2022 (unaudited)       December 31, 2021 (audited)       (in thousands)   Kapalua Resort, 46 -acre Kapalua Central Resort project   $ 3,001     $ 2,988   Upcountry Maui, 646 -acre parcel of agricultural land     156       156       $ 3,157     $ 3,144     In December 2021, the Company entered into an agreement to sell the Kapalua Central Resort project for $ 40.0 million. On May 5, 2022, terms of the agreement were amended to extend the diligence period to May 19, 2022 and extend the closing date to two weeks following the expiration of the diligence period. The buyer transferred a non-refundable deposit of $ 300,000 into escrow on March 31, 2022.    In February 2022, the Company entered into an agreement to sell the 646 -acre parcel in Upcountry Maui for $ 9.7 million. Terms of the agreement include a 30 -day due diligence period, a closing date 30 days after the last day of the due diligence period, and other customary closing conditions. On May 2, 2022, the agreement was amended to extend the diligence period to May 16, 2022 and extend the closing date to no later than May 20, 2022. A $ 2.0 million deposit that was transferred into escrow on March 31, 2022 becomes non-refundable at the end of the diligence period.   The above assets held for sale have not been pledged as collateral under the Credit Facility (as defined in Note 7 ).     7.           LONG-TERM DEBT   Long-term debt is comprised of amounts outstanding under the Company’s $ 15.0 million revolving line of credit facility with First Hawaiian Bank (“Credit Facility”) maturing on December 31, 2025. The Credit Facility provides options for revolving or term loan borrowing. Interest on revolving loan borrowing is based on the Bank’s prime rate minus 1.125 percentage points. Interest on term loan borrowing is fixed at the Bank’s commercial loan rates with interest rate swap options available. The Company has pledged approximately 30,000 square feet of commercial leased space in the Kapalua Resort as security for the Credit Facility. Net proceeds from the sale of any collateral are required to be repaid toward outstanding borrowings and will permanently reduce the Credit Facility’s revolving commitment amount. There are no commitment fees on the unused portion of the Credit Facility.     The terms of the Credit Facility include various representations, warranties, affirmative, negative and financial covenants and events of default customary for financings of this type. Financial covenants include a minimum liquidity (as defined) of $ 2.0 million, a maximum of $ 45.0 million in total liabilities, and a limitation on new indebtedness.   The outstanding balance of the Credit Facility was zero as of March 31, 2022. The Company believes it was in compliance with the covenants under the Credit Facility as of March 31, 2022.     8.           SHARE-BASED COMPENSATION   The Company’s directors, officers and certain members of management receive a portion of their compensation in restricted shares of the Company’s common stock granted under the Company’s 2017 Equity and Incentive Award Plan (“Equity Plan”). Share-based compensation is valued based on the average of the high and low share price on the date of grant. Shares are issued upon execution of agreements reflecting the grantee’s acceptance of the respective shares subject to the terms and conditions of the Equity Plan. Restricted shares issued under the Equity Plan vest quarterly and have voting and regular dividend rights but cannot be disposed of until such time as they are vested. All unvested restricted shares are forfeited upon the grantee’s termination of directorship or employment from the Company.   Share-based compensation is determined and awarded annually to the Company’s officers and certain members of management based on their achievement of certain predefined performance goals and objectives under the Equity Plan.  Such share-based compensation is comprised of an annual incentive paid in shares of common stock and a long-term incentive paid in restricted shares vesting quarterly over a period of three years.   Share-based compensation totaled [approximately] $ 379,000 and $ 349,000 for the three months ended March 31, 2022 and 2021, respectively. Included in these amounts were $ 273,000 and $ 163,000  of restricted shares of common stock which vested during the first three months of 2022 and 2021, respectively.   9 Table of Contents   9.           ACCRUED RETIREMENT BENEFITS   Accrued retirement benefits at March 31, 2022 and December 31, 2021 consisted of the following:           March 31, 2022 (unaudited)       December 31, 2021 (audited)       (in thousands)                     Defined benefit pension plan   $ 5,875     $ 5,932   Non-qualified retirement plans     2,129       2,147   Total     8,004       8,079   Less current portion     142       142   Non-current portion of accrued retirement benefits   $ 7,862     $ 7,937     The Company has a defined benefit pension plan which covers substantially all of its former bargaining and non-bargaining full-time, part-time and intermittent employees. In 2011, pension benefits under the plan were frozen. The Company also has an unfunded non-qualified retirement plan covering nine of its former executives. The non-qualified retirement plan was frozen in 2009 and future vesting of additional benefits was discontinued.   The net periodic benefit costs for pension and postretirement benefits for the three months ended March 31, 2022 and 2021 were as follows:           Three Months Ended March 31, (unaudited)       2022     2021       (in thousands)   Interest cost   $ 264     $ 309   Expected return on plan assets     ( 306 )     ( 414 ) Amortization of net actuarial loss     156       221   Pension and other postretirement expenses   $ 114     $ 116       10.           CONTRACT ASSETS AND LIABILITIES   Receivables from contracts with customers were $ 0.4 million and $ 0.3 million at March 31, 2022 and December 31, 2021, 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 $ 33,000 for the three months ended March 31, 2022.   Escrowed deposits   The Company has $ 2.3 million of deposits held in escrow from the prospective buyers of properties held for sale at March 31, 2022.     11.           INCOME TAXES   The Company uses a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company’s provision for income taxes is calculated using the liability method. Deferred income taxes are provided for all temporary differences between the financial statement and income tax basis of assets and liabilities using tax rates enacted by law or regulation. A full valuation allowance was established for deferred income tax assets as of March 31, 2022 and December 31, 2021, respectively.   10 Table of Contents Table of Contents       12.           REPORTABLE OPERATING SEGMENTS   The Company’s reportable operating segments are comprised of the discrete business units whose operating results are regularly reviewed by the Company’s Chief Executive Officer – its chief decision maker – in assessing performance and determining the allocation of resources. Reportable operating segments are as follows:     • Real Estate includes the planning, entitlement, development and sale of real estate inventory.     • Leasing includes revenues and expenses from real property leasing activities, license fees and royalties for the use of certain of the Company’s trademarks and brand names by third parties, and the cost of maintaining the Company’s real estate assets, including conservation activities. The operating segment also includes the management of ditch, reservoir and well systems that provide non-potable irrigation water to West and Upcountry Maui areas.     • Resort Amenities include a membership program that provides certain benefits and privileges within the Kapalua Resort for its members.     The Company’s reportable operating segment results are measured based on operating income (loss), exclusive of interest, depreciation, general and administrative, share-based compensation, pension and other postretirement expenses.   Reportable operating segment revenues and income for the three months ended March 31, 2022 and 2021 were as follows:           Three Months Ended March 31, (unaudited)       2022     2021       (in thousands)   Operating Segment Revenues                 Real estate   $ -     $ -   Leasing     2,031       1,801   Resort amenities and other     217       258   Total Operating Segment Revenues   $ 2,248     $ 2,059   Operating Segment Income (Loss)                 Real estate   $ ( 90 )   $ ( 97 ) Leasing     1,290       961   Resort amenities and other     ( 293 )     ( 154 ) Total Operating Segment Income   $ 907     $ 710     11 Table of Contents   13.           LEASING ARRANGEMENTS   The Company leases land primarily to agriculture operators and space in commercial buildings, primarily to restaurant and retail tenants through 2048. These operating leases generally provide for minimum rents and, in some cases, licensing fees, percentage rents based on tenant revenues, and reimbursement of common area maintenance and other expenses. Certain leases allow the lessee an option to extend or terminate the agreement. There are no leases allowing a lessee an option to purchase the underlying asset. Total leasing income subject to ASC Topic  842 for the three months ended March 31, 2022 and 2021 were as follows:         Three Months Ended March 31, (unaudited)       2022     2021       (in thousands)                     Minimum rentals   $ 823     $ 757   Percentage rentals     394       117   Licensing fees     222       125   Other (primarily common area recoveries)     237       214   Total   $ 1,676     $ 1,213       14.           DISCONTINUED OPERATIONS   In 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. The Company received net proceeds of approximately $ 4.2 million upon closing of the sale in May 2021. A loss of approximately $ 0.1 million was reported in discontinued operations for the three months ended March 31, 2021.     15.           COMMITMENTS AND CONTINGENCIES   On December 31, 2018, the State of Hawaii Department of Health (“DOH”) issued a Notice and Finding of Violation and Order (“Order”) for alleged wastewater effluent violations related to the Company’s Upcountry Maui wastewater treatment facility. The facility was built in the 1960’s to serve approximately 200 single-family homes developed for workers in the Company’s former agricultural operations. The facility is made up of two 1.5 -acre wastewater stabilization ponds and surrounding disposal leach fields. The Order includes, among other requirements, payment of a $ 230,000 administrative penalty and development of a new wastewater treatment plant, which become final and binding – unless a hearing is requested to contest the alleged violations and penalties.   The DOH agreed to defer the Order without a hearing date while the Company continues working on a previously approved corrective action plan to resolve and remediate the facility’s wastewater effluent issues. Continued testing of wastewater effluent consistently returns results within the allowable ranges. No hearing date has been set as discussions with the DOH are still ongoing to address any other matters regarding the Order. At March, 31 2022 and  December 31, 2021, approximately $ 23,000 was accrued related to the administrative penalty. The Company is presently unable to estimate the remaining amount, or range of amounts, of any probable liability, if any, related to the Order and no additional provision has been made in the accompanying consolidated financial statements.   There are various other claims and legal actions pending against the Company. The resolution of these other matters is not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations after consultation with legal counsel.     16.           FAIR VALUE MEASUREMENTS   GAAP establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements to enable the reader of the unaudited condensed consolidated interim financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. GAAP requires that financial assets and liabilities be classified and disclosed in one of the following three categories:   Level 1: Quoted market prices in active markets for identical assets or liabilities.   Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.   Level 3: Unobservable inputs that are not corroborated by market data.   The Company considers all cash on hand to be unrestricted cash for the purposes of the unaudited condensed consolidated balance sheets and unaudited condensed consolidated statements of cash flows. The fair value of receivables and payables approximate their carrying value due to the short-term nature of the instruments. The valuation is based on settlements of similar financial instruments all of which are short-term in nature and are generally settled at or near cost.   12 Table of Contents   17.           RECENT ACCOUNTING PRONOUNCEMENTS   In June 2016, the FASB issued ASU 2016 - 13 to update the methodology used to measure current expected credit losses (“CECL”). This ASU apples to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investments in leases, and trade accounts receivable as well as certain off-balance sheet exposures, such as loan commitments. This ASU requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. The guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings/(accumulated deficit) in the period of adoption. ASU 2019 - 10 was subsequently issued delaying the effective date to the first quarter of 2023. The Company is in the process of assessing the impact of the ASU on its consolidated financial statements.   In November 2021, the FASB issued ASU 2021 - 10 as an update of ASC Topic 832 to increase the transparency of government assistance received by a business entity, including disclosure of the types of transactions, the accounting for those transactions, and the effect of those transactions on its financial statements. The ASU is effective for annual periods beginning after December 15, 2021. The Company is currently evaluating the impact of the ASU on its consolidated financial statements and related disclosures.   13 Table of Contents     Item 2.  MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   The following discussion and analysis of our unaudited condensed consolidated interim financial condition and results of operations should be read in conjunction with our annual audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 and the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those expressed or implied by the forward-looking statements below. Factors that could cause or contribute to those differences in our actual results include, but are not limited to, those discussed below and those discussed elsewhere within this Quarterly Report, particularly in the section entitled “ Cautionary Note Regarding Forward-Looking Statements .” Depending upon the context, the terms the “Company,” “we,” “our,” and “us,” refer to either Maui Land & Pineapple Company, Inc. alone, or to Maui Land & Pineapple Company, Inc. and its subsidiaries collectively.   Overview   Maui Land & Pineapple Company, Inc. 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 23,000 acres of land on the island of Maui, Hawaii and develop, sell, and manage residential, resort, commercial, agricultural and industrial real estate through the following business segments:     • Real Estate—Our real estate operations consist of land planning and entitlement, development and sales activities.     • Leasing—Our leasing operations include commercial, agricultural and industrial land and property leases, licensing of our registered trademarks and trade names, management of ditch, reservoir, and well systems that provide potable and non-potable water in West and Upcountry Maui, and the stewardship of conservation areas.     • Resort Amenities—We manage the operations of the Kapalua Club, a private, non-equity club program providing our members special programs, access and other privileges at certain amenities at the Kapalua Resort.   We continue to monitor the effects of the COVID-19 pandemic on us, our customers, and our vendors. While we are not able to accurately predict the magnitude or scope of such impacts at this time, should the existence of the COVID-19 pandemic continue for an extended period, our future business operations, including the results of operations, cash flows and financial position will be significantly affected. Appropriate remote work arrangements continue to be established for our employees in order to maintain our financial reporting systems.   14 Table of Contents   Results of Operations   Three Months Ended March 31, 2022 compared to Three Months Ended March 31, 2021   CONSOLIDATED         Three Months Ended March 31, (unaudited)       2022     2021       (in thousands)                     Operating revenues   $ 2,248     $ 2,059   Segment operating costs and expenses     (1,341 )     (1,349 ) General and administrative     (756 )     (719 ) Share-based compensation     (379 )     (349 ) Depreciation     (274 )     (300 ) Operating loss     (502 )     (658 ) Other income     -       13   Pension and other postretirement expenses     (114 )     (116 ) Interest expense     (2 )     (33 ) Loss from Continuing Operations     (618 )     (794 ) Loss from Discontinued Operations     -       (140 ) Net loss   $ (618 )   $ (934 )                   Loss from Continuing Operations per Common Share   $ (0.03 )   $ (0.04 ) Loss from Discontinuing Operations per Common Share   $ -     $ (0.01 ) Net loss per Common Share   $ (0.03 )   $ (0.05 )     REAL ESTATE         Three Months Ended March 31, (unaudited)       2022     2021       (in thousands)                     Operating revenues   $ -     $ -   Operating costs and expenses     (90 )     (97 ) Operating loss   $ (90 )   $ (97 )     There were no sales of real estate for the three months ended March 31, 2022 and March 31, 2021, respectively.   There were no significant real estate development expenditures in the first three months of 2022 and 2021, respectively.   Real estate development and sales are cyclical and depend on a number of factors. Results for one period are therefore not necessarily indicative of future performance trends in this business segment. Uncertainties associated with COVID-19 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 in future periods.     LEASING         Three Months Ended March 31, (unaudited)       2022     2021       (in thousands)                     Operating revenues   $ 2,031     $ 1,801   Operating costs and expenses     (741 )     (840 ) Operating income   $ 1,290     $ 961     15 Table of Contents   The continued easing of travel restrictions and social distancing guidelines by state and local authorities have contributed to higher passenger volume to the island of Maui during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. As a result of increased visitor traffic, we collected higher leasing income from our commercial leasing portfolio. Certain leasing income is contingent upon tenant sales exceeding a defined threshold and is recognized as a percentage of sales after those thresholds are achieved. Recognized percentage leasing income was $394,000 and $117,000 for the three months ended March 31, 2022 and 2021, respectively.   The impact of COVID-19 during the three months ended March 31, 2021 adversely affected our tenants’ sales activity and ability to pay rent. Additional reserves of $60,000 were recorded as of March 31, 2021. No provision for doubtful accounts were recorded for the three months ended March 31, 2022.   Our leasing operations face competition from other property owners in Maui and Hawaii.     RESORT AMENITIES AND OTHER                  Three Months Ended March 31, (unaudited)       2022     2021       (in thousands)                     Operating revenues   $ 217     $ 258   Operating costs and expenses     (510 )     (412 ) Operating loss   $ (293 )   $ (154 )     Our Resort Amenities segment includes the operations of the Kapalua Club, a private, non-equity club providing its members special programs, access and other privileges at certain of the amenities at the Kapalua Resort, including a 30,000 square foot full-service spa and a private pool-side dining beach club. The Kapalua Club does not operate any resort amenities and the member dues collected are primarily used to pay contracted fees to provide access for its members to the spa, beach club, golf courses, and other resort amenities.   The decrease in operating revenues was primarily due to lower membership levels for the three months ended March 31, 2022, compared to the three months ended March 31, 2021.   The increase in operating costs and expenses for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, was primarily due to higher golf course fees charged to the Company.   LIQUIDITY AND CAPITAL RESOURCES   Liquidity   We had cash on hand of $5.8 million and $5.6 million at March 31, 2022 and December 31, 2021, respectively.   At March 31, 2022, the entire $15.0 million revolving Credit Facility was available for borrowing. The Credit Facility, which matures on December 31, 2025, provides for revolving or term loan borrowing options. Interest on revolving loan borrowing is calculated based on the Bank’s prime rate minus 1.125 percentage points. Interest on term loan borrowing is fixed at the Bank’s commercial loan rates with interest rate swap options available. We have pledged approximately 30,000 square feet of commercial leased space in the Kapalua Resort as security for the Credit Facility. Net proceeds from the sale of any collateral are required to be repaid toward outstanding borrowings and will permanently reduce the Credit Facility’s revolving commitment amount. There are no commitment fees on the unused portion of the Credit Facility.   The terms of the Credit Facility include various representations, warranties, affirmative, negative and financial covenants and events of default customary for financings of this type. Financial covenants include a minimum liquidity (as defined) of $2.0 million, a maximum of $45.0 million in total liabilities, and a limitation on new indebtedness.   As of March 31, 2022, we believe we were 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.   Cash Flows   Net cash flow provided by our operating activities was $2.8 million for the three months ended March 31, 2022. There were no interest payments due for the three months ended March 31, 2022.   In December 2021, the Company entered into an agreement to sell the Kapalua Central Resort project for $40.0 million. On May 5, 2022, terms of the agreement were amended to extend the diligence period to May 19, 2022 and extend the closing date to two weeks following the expiration of the diligence period. The buyer transferred a non-refundable deposit of $300,000 into escrow on March 31, 2022.    16 Table of Contents   In February 2022, we entered into an agreement to sell a 646-acre parcel located in Upcountry Maui for $9.7 million. Terms of the agreement, subsequently amended in May 2022, include a diligence period ending on May 16, 2022 and a closing date no later than May 20, 2022. A $2.0 million deposit is currently held in escrow.   No contributions are required to be made to our defined benefit pension plan in 2022. During the three months ended March 31, 2021, we made a minimum funding contribution of $553,000 to the plan.   Future Cash Inflows and Outflows   Our business initiatives include investing in our operating infrastructure, continued planning and entitlement efforts on our development projects. This may require borrowing under our Credit Facility or other indebtedness, repayment of which may be dependent on selling of our real estate assets at acceptable prices in condensed timeframes.   Our indebtedness could have the effect of, among other things, increasing our exposure to general adverse economic and industry conditions, limiting our flexibility in planning for, or reacting to, changes in our business and industry, and limiting our ability to borrow additional funds.   Critical Accounting Policies and Estimates   The preparation of the unaudited condensed consolidated interim financial statements in conformity with 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 unaudited condensed consolidated interim 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 2021 Annual Report. There have been no significant changes in our critical accounting policies during the three months ended March 31, 2022.   Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   We have no material exposure to changes in interest rates related to our borrowing and investing activities used to maintain liquidity and to fund business operations. We have no material exposure to foreign currency risks.   We are subject to potential changes in consumer behavior and regulatory risks through travel and social distancing restrictions due to our location as a vacation destination. Potential deferrals and abatements of tenant lease rents may impact our base and percentage rental income.     Item 4.  CONTROLS AND PROCEDURES   Evaluation of Disclosure Controls and Procedures   We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.   In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.   As required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief 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 Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in applicable SEC rules and forms.   Changes in Internal Controls Over Financial Reporting   There have been no significant changes in our internal controls over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f) or 15d-15(f)) during the three months ended March 31, 2022.   17 Table of Contents   PART   II OTHER INFORMATION   Item 1. LEGAL PROCEEDINGS   For information related to Item 1. Legal Proceedings, refer to Note 15, Commitments and Contingencies , to our condensed consolidated financial statements included herein.   Item 1A. RISK FACTORS   Potential risks and uncertainties include, among other things, those factors discussed in the sections entitled “ Business ,” “ Risk Factors ” and “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” in our 2021 Annual Report 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. We undertake no obligation to publicly release the results of any revisions to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements. During the three months ended March 31, 2022, there were no material changes to the risks and uncertainties described in Part I, Item 1A, “ Risk Factors ,” of our Annual Report on Form 10-K for the year ended December 31, 2021.   18 Table of Contents   Item 6. EXHIBITS   3.2* Amended By-Laws of Maui Land & Pineapple Company, Inc. (as of April 22, 2013).     10.1* Amendment No. 1 to Purchase and Sale Agreement and Escrow Instructions, by and between the Maui Land & Pineapple Company, Inc. and Fakhry LLC, dated March, 29, 2022.     10.2* Amendment No. 6 to the Purchase Contract and Counter Offer, by and among Maui Land & Pineapple Company, Inc., Mr. Michl Binderbauer, and Mr. Hong, Liang, dated May 2, 2022.     10.3* Amendment No. 2 to Purchase and Sale Agreement and Escrow Instructions, by and between Maui Land & Pineapple Company, Inc. and Fakhry LLC, dated May, 5, 2022.     31.1* Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.     31.2* Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.     32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.     32.2** Certification of Principal Financial Officer pursuant to18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.     101.INS* Inline XBRL Instance Document     101.SCH* Inline XBRL Taxonomy Extension Schema Document     101.CAL* Inline XBRL Taxonomy Extension Calculation Document     101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase     101.LAB* Inline XBRL Taxonomy Extension Labels Linkbase Document     101.PRE* Inline XBRL Taxonomy Extension Presentation Link Document     104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101   * Filed herewith     ** The certifications attached as Exhibit 32.1 and 32.2 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act, and shall not be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report, irrespective of any general incorporation language contained in any such filing.   19 Table of Contents   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.       May 10, 2022   /s/ Wade K. Kodama Date   Wade K. Kodama     Chief Financial Officer     (Principal Financial Officer)   20 Table of Contents   EXHIBIT   INDEX   3.2* Amended By-Laws of Maui Land & Pineapple Company, Inc. (as of April 22, 2013).     10.1* Amendment No. 1 to Purchase and Sale Agreement and Escrow Instructions, by and between the Maui Land & Pineapple Company, Inc. and Fakhry LLC, dated March, 29, 2022.     10.2* Amendment No. 6 to the Purchase Contract and Counter Offer, by and among Maui Land & Pineapple Company, Inc., Mr. Michl Binderbauer, and Mr. Hong, Liang, dated May 2, 2022.     10.3* Amendment No. 2 to Purchase and Sale Agreement and Escrow Instructions, by and between Maui Land & Pineapple Company, Inc. and Fakhry LLC, dated May, 5, 2022.     31.1* Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.     31.2* Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.     32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.     32.2** Certification of Principal Financial Officer pursuant to18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.     101.INS* Inline XBRL Instance Document     101.SCH* Inline XBRL Taxonomy Extension Schema Document     101.CAL* Inline XBRL Taxonomy Extension Calculation Document     101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase     101.LAB* Inline XBRL Taxonomy Extension Labels Linkbase Document     101.PRE* Inline XBRL Taxonomy Extension Presentation Link Document     104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101     * Filed herewith     ** The certifications attached as Exhibit 32.1 and 32.2 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act, and shall not be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report, irrespective of any general incorporation language contained in any such filing.     21