MAUI LAND & PINEAPPLE CO INC 10-K/A

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Maui Land & Pineapple Company, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Maui Land & Pineapple Company, Inc. and its Subsidiaries (collectively, the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the two‑year period ended December 31, 2023 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022, and the results of their operations and their cash flows for each of the years in the two‑year period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Correction of Misstatement As discussed in Note 1A to the consolidated financial statements, the accompanying 2023 financial statements have been restated to correct a misstatement. Basis for Opinion The consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the U.S. Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 21 Revenue Recognition Description of the Matter The Company has multiple revenue streams including real estate sales, leasing and licensing arrangements, and resort amenities, which are recognized upon transfer of goods or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. Significant judgment is exercised by management in determining revenue recognition for these customer agreements, and may include the following: ● Determination of whether agreements entered into by the Company would be assessed under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , or other topics, including Topic 610, Other Income , and Topic 842, Leases . ● Determination of whether there is a single or multiple, distinct performance obligation for goods or services to be provided. ● The pattern of delivery for each performance obligation. ● Identification and treatment of contract terms that may impact the timing and amount of revenue recognized. ● Determination of stand-alone selling prices for each distinct performance obligation and for goods and services that are not sold separately. Given the factors, the related audit effort in evaluating management’s judgments in determining revenue recognition for these customer and lease agreements was extensive and involved subjective estimation and complex auditor judgment. How We Addressed the Matter in Our Audit Our audit procedures over revenue recognition and disclosures included the following: ● We obtained an understanding and evaluated the design and implementation of internal controls that address the risks of material misstatement relating to revenue recognized for various revenue streams, including for unique transactions. ● We evaluated management’s significant accounting policies related to these customer agreements for reasonableness. ● For significant agreements, we obtained and read the agreements; evaluated management’s assumptions used to identify appropriate contracts with customers, identify performance obligations and stand-alone prices for each distinct performance obligation, identify unique contract terms that may impact the timing and amount of revenue recognized, and identify the pattern of delivery; and examined the appropriateness of management’s application of accounting policies in accordance with ASC Topics 606, 610 and 842. Commitments and Contingencies Description of the Matter The Company is party to claims that arise in the normal course of business. Contingent liabilities are recorded in the consolidated financial statements when management determines it is probable that a liability has been incurred and the amount can be reasonably estimated. This determination requires significant judgment by management. In assessing whether the Company should accrue a liability in its consolidated financial statements as a result of the claims, the Company considers various factors, including the legal and factual circumstances of the claims and advisement from legal counsel. As discussed in Note 9 to the consolidated financial statements, management determined an accrual was necessary. Management is unable to estimate the remaining amount or range of amounts, of any additional probable liability, if any, related to the claims. We identified these potential contingent liabilities and disclosures as a critical audit matter because evaluating the likelihood of potential outcomes involves significant judgment by management. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the Company’s assertion that an additional loss is not probable and reasonably estimable as of December 31, 2023. How We Addressed the Matter in Our Audit Our audit procedures related to the potential contingent liabilities and disclosures included the following: ● We obtained an understanding and evaluated the design and implementation of internal controls that address the risks of material misstatement relating to management’s review of the claims and approval of the accounting treatment based on the most recent facts and circumstances. 22 ● We obtained and evaluated legal confirmations from the Company’s external legal counsel involved in the claims confirming the facts and circumstances of the claims and to understand the basis for management’s conclusion that any additional losses from the claims are not probable and reasonably estimable as of December 31, 2023. ● We evaluated the accuracy and completeness of management’s disclosures in the consolidated financial statements by comparing the disclosures to management’s internal analysis of the claims and known facts of the claims based on the information provided by the Company’s external legal counsel. Accrued Retirement Benefits Description of the Matter The Company has defined benefit retirement plans that require actuarial valuations to determine estimated benefit obligations and related amounts reported in the Company’s consolidated financial statements as of and for the year ended December 31, 2023. Management engages actuarial specialists to perform the valuation and provides the specialists with the assumptions used to measure the amounts reported in the consolidated financial statements and disclosures in the notes to the consolidated financial statements. We identified the valuation of the accumulated retirement benefit obligation as a critical audit matter because of the highly judgmental nature of actuarial assumptions made by management. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures. How We Addressed the Matter in Our Audit Our audit procedures over accrued retirement benefits and related amounts and disclosures included the following: ● We obtained an understanding and evaluated the design and implementation of internal controls that address the risks of material misstatement relating to management’s review of the determination of the actuarial assumptions used in calculating accrued retirement benefits and related amounts. ● We evaluated the reasonableness of the methods and significant assumptions used by management and assessed the work and competency of the third-party actuarial specialists engaged by management. ● We evaluated management specialists’ reports related to accrued retirement benefits for accuracy and reasonableness. Share-based Compensation Description of the Matter In 2023, the Company began awarding stock options to its directors. The stock options require fair value calculations to determine the share-based compensation expense for the year ended December 31, 2023. Management engages valuation specialists to perform the stock option valuations and reviews the assumptions by the specialists used to measure the amounts reported in the consolidated financial statements and disclosures in the notes to the consolidated financial statements. We identified the valuation of the share-based compensation as a critical audit matter because of the highly judgmental nature of valuation assumptions made by management for stock options awarded. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures. How We Addressed the Matter in Our Audit Our audit procedures over share-based compensation expense and related amounts and disclosures included the following: ● We obtained an understanding and evaluated the design and implementation of internal controls that address the risks of material misstatement relating to management’s review of the determination of the valuation assumptions used in calculating share-based compensation expense and related amounts. ● We evaluated the reasonableness of the methods and significant assumptions used by management and assessed the work and competency of the third-party valuation specialists engaged by management. ● We evaluated management specialists’ reports related to the stock options valuation for accuracy and reasonableness. We have served as the Company’s auditor since 2014. /s/ ACCUITY LLP Honolulu, Hawai i February 19, 2025 23 Table of Contents MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2023 2022 (in thousands except share data) ASSETS CURRENT ASSETS Cash and cash equivalents $ 5,700 $ 8,499 Cash, restricted - 10 Accounts receivable, net 1,166 892 Investment in bond securities, current portion 2,671 2,432 Prepaid expenses and other assets 467 368 Assets held for sale - 3,019 Total Current Assets 10,004 15,220 PROPERTY & EQUIPMENT Land 5,052 5,052 Land improvements 13,853 12,943 Buildings 22,869 22,869 Machinery and equipment 10,500 10,360 Total Property & Equipment 52,274 51,224 Less accumulated depreciation ( 36,215 ) ( 35,346 ) Property & Equipment, net 16,059 15,878 OTHER ASSETS Investment in bond securities, less current portion 464 551 Investment in joint venture 1,608 - Deferred development costs 12,815 9,566 Other noncurrent assets 1,273 1,191 Total Other Assets 16,160 11,308 TOTAL ASSETS $ 42,223 $ 42,406 LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES CURRENT LIABILITIES Accounts payable $ 1,154 $ 589 Payroll and employee benefits 502 869 Accrued retirement benefits, current portion 142 142 Deferred revenue, current portion 217 227 Other current liabilities 465 480 Total Current Liabilities 2,480 2,307 LONG-TERM LIABILITIES Accrued retirement benefits 1,550 2,612 Deferred revenue, less current portion 1,367 1,500 Deposits 2,108 2,185 Other noncurrent liabilities 14 30 Total Long-Term Liabilities 5,039 6,327 TOTAL LIABILITIES 7,519 8,634 COMMITMENTS & CONTINGENCIES STOCKHOLDERS’ EQUITY Common stock--$ .0001 par value at December 31, 2023 and 2022, respectively; 43,000,000 shares authorized; 19,615,350 and 19,476,671 shares issued and outstanding at December 31, 2023 and 2022, respectively 84,680 83,392 Additional paid in capital 10,538 9,184 Accumulated deficit ( 53,617 ) ( 50,537 ) Accumulated other comprehensive loss ( 6,897 ) ( 8,267 ) Total Stockholders’ Equity 34,704 33,772 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 42,223 $ 42,406 See Notes to Consolidated Financial Statements 24 Table of Contents MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) Years Ended December 31 , 2023 2022 (As Restated) (in thousands except per share amounts) OPERATING REVENUES Land development and sales $ - $ 11,600 Leasing 8,461 8,513 Resort amenities and other 828 847 Total operating revenues 9,289 20,960 OPERATING COSTS AND EXPENSES Land development and sales 595 1,026 Leasing 4,420 3,598 Resort amenities and other 1,532 1,547 General and administrative 3,998 2,795 Share-based compensation 2,846 1,278 Depreciation 869 1,109 Total operating costs and expenses 14,260 11,353 OPERATING INCOME (LOSS) ( 4,971 ) 9,607 Gain from dercognition of nonfinancial asset 1,626 - Other income 707 71 Pension and other post-retirement expenses ( 436 ) ( 7,885 ) Interest expense ( 6 ) ( 6 ) NET INCOME (LOSS) $ ( 3,080 ) $ 1,787 Other comprehensive income - pension, net 1,370 7,381 TOTAL COMPREHENSIVE INCOME (LOSS) $ ( 1,710 ) $ 9,168 NET INCOME (LOSS) PER COMMON SHARE-BASIC AND DILUTED $ ( 0.15 ) $ 0.09 See Notes to Consolidated Financial Statements 25 Table of Contents MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY For the Years Ended December 31, 2023 and 2022 (in thousands) Accumulated Additional Other Common Stock Paid in Accumulated Comprehensive Shares Amount Capital Deficit Loss Total Balance, January 1, 2022 19,383 $ 82,378 $ 9,184 $ ( 52,324 ) $ ( 15,648 ) $ 23,590 Share-based compensation expense 855 855 Issuance of shares for incentive plan 49 494 494 Vested restricted stock issued 78 855 ( 855 ) - Shares canceled to pay tax liability ( 33 ) ( 335 ) ( 335 ) Other comprehensive income-pension 7,381 7,381 Net income 1,787 1,787 Balance, December 31, 2022 19,477 $ 83,392 $ 9,184 $ ( 50,537 ) $ ( 8,267 ) $ 33,772 Share-based compensation expense 2,596 2,596 Issuance of shares for incentive plan 67 620 620 Vested restricted stock issued 123 1,242 ( 1,242 ) - Shares canceled to pay tax liability ( 52 ) ( 574 ) ( 574 ) Other comprehensive income-pension 1,370 1,370 Net loss ( 3,080 ) ( 3,080 ) Balance, December 31, 2023 19,615 $ 84,680 10,538 $ ( 53,617 ) $ ( 6,897 ) $ 34,704 See Notes to Consolidated Financial Statements 26 Table of Contents MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2023 2022 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers and other receipts $ 9,846 $ 20,916 Cash paid to vendors ( 8,792 ) ( 13,296 ) Cash paid for payroll and taxes ( 2,425 ) ( 1,357 ) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ( 1,371 ) 6,263 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of bond securities ( 3,107 ) ( 3,079 ) Maturities of bond securities 2,955 97 Purchases of property and equipment ( 618 ) - Payments for other assets ( 94 ) ( 33 ) NET CASH USED IN INVESTING ACTIVITIES ( 864 ) ( 3,015 ) CASH FLOWS FROM FINANCING ACTIVITIES Common stock issuance costs and other ( 574 ) ( 335 ) NET CASH USED IN FINANCING ACTIVITIES ( 574 ) ( 335 ) NET INCREASE (DECREASE) IN CASH ( 2,809 ) 2,913 CASH AND RESTRICTED CASH AT BEGINNING OF YEAR 8,509 5,596 CASH AND RESTRICTED CASH AT END OF YEAR $ 5,700 $ 8,509 RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net income (loss) $ ( 3,080 ) $ 1,787 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 785 1,116 Bad debt provision 142 28 Share-based compensation 2,596 855 Gain on disposal of property ( 1,608 ) - Cost of real estate sales - 167 Changes in operating assets and liabilities: Accounts receivable ( 416 ) 183 Retirement liabilities 308 2,056 Accounts payable 102 9 Other operating assets and liabilities ( 200 ) 62 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ ( 1,371 ) $ 6,263 SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: • Common stock issued to certain members of the Company’s management totaled $ 0.6 million and $ 0.5 million during the years ended December 31, 2023 and 2022, respectively. • Capitalized property, equipment, and development costs in accounts payable were $ 0.5 million at December 31, 2023. See Notes to Consolidated Financial Statements. 27 Table of Contents MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 2023 and 2022 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF BUSINESS Maui Land & Pineapple Company, Inc. is a Delaware corporation and the successor to a business organized in 1909 as a Hawaii corporation. The Company reincorporated from Hawaii to Delaware pursuant to a plan of conversion completed on July 18, 2022. Total authorized capital stock of the Company includes 48,000,000 shares, consisting of 43,000,000 shares of common stock, par value $ 0.0001 per share, and 5,000,000 shares of preferred stock, par value $ 0.0001 per share. Shares of the Company’s common stock are listed on the New York Stock Exchange under the ticker symbol “MLP.” The Company consists of a landholding and operating parent company, has a principal subsidiary, Kapalua Land Company, Ltd., and certain other subsidiaries (collectively, the “Company”). The Company owns approximately 22,300 acres of land and 268,000 square feet of commercial property on the island of Maui, Hawaii, which we put into productive use by planning, managing, developing, and selling, residential, resort, commercial, agricultural, and industrial real estate through the following business segments: Land Development & Sales : 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 potable and non-potable water systems in West and Upcountry Maui, and 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. 1A. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS Subsequent to the filing of the Annual Report on Form 10 -K of the Company for the fiscal year ended December 31, 2023, originally filed with the Securities and Exchange Commission (“SEC”) on March 28, 2024 ( the “Original Report”), the Company identified and corrected an error related to the reporting of approximately $ 1.6 million in operating revenues in the Land Development and Sales segment due to the value of a 30 -acre parcel of land in Haliimaile, Hawaii, that the Company contributed as an equity contribution to the BRE2 LLC joint venture. The Company evaluated guidance from ASC 610 - 20 - 15 and 610 - 20 - 25 and determined that the recognition of the transfer of nonfinancial assets as a gain would be appropriate in accordance with the application of guidance in Topic 810 on consolidation and Topic 606 on revenue from contracts with customers. On January 3, 2025, the Company's management and the Company's Board of Directors concluded that the previously issued audited consolidated financial statements as of and for the fiscal year ended December 31, 2023, should be restated. This Amendment No. 1 on Form 10 -K/A (the “Amended Report”) includes the restated audited financial statements as of and for the year ended December 31, 2023. 28 Table of Contents The table below sets forth the consolidated statements of operations and comprehensive income (loss), including the balances originally reported and the restated balances as of December 31, 2023 ( in thousands): Year Ended December 31, 2023 As Previously Reported Adjustments As Restated (in thousands except per share amounts) OPERATING REVENUES Land development and sales $ 1,626 $ ( 1,626 ) $ - Leasing 8,461 - 8,461 Resort amenities and other 828 - 828 Total operating revenues 10,915 ( 1,626 ) 9,289 OPERATING COSTS AND EXPENSES Land development and sales 595 - 595 Leasing 4,420 - 4,420 Resort amenities and other 1,532 - 1,532 General and administrative 3,998 - 3,998 Share-based compensation 2,846 - 2,846 Depreciation 869 - 869 Total operating costs and expenses 14,260 - 14,260 OPERATING LOSS ( 3,345 ) ( 1,626 ) ( 4,971 ) Gain from dercognition of nonfinancial asset - 1,626 1,626 Other income 707 - 707 Pension and other post-retirement expenses ( 436 ) - ( 436 ) Interest expense ( 6 ) - ( 6 ) NET LOSS $ ( 3,080 ) - $ ( 3,080 ) Other comprehensive income - pension, net 1,370 - 1,370 TOTAL COMPREHENSIVE LOSS $ ( 1,710 ) - $ ( 1,710 ) NET LOSS PER COMMON SHARE-BASIC AND DILUTED $ ( 0.15 ) - $ ( 0.15 ) This restatement had no impact on the consolidated statement of balance sheet at December 31, 2023, and on the consolidated statements of changes in stockholders’ equity and on the consolidated statements of cash flows for the year ended December 31, 2023. In addition, the restatement did not have a financial impact on the Company’s net loss, or basic or diluted earnings per share originally reported in the Original Report. In addition to the restated consolidated financial statements, the information contained in Notes 5 and 13 have been restated. 1B. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING AND CONSOLIDATION The accompanying consolidated financial statements of the Company are presented in conformity with generally accepted accounting principles in the United States of America (“GAAP”) as codified by the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include the accounts of Maui Land & Pineapple Company, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand, deposits in banks, and money market funds. RESTRICTED CASH Restricted cash consisted of deposits held in escrow from the prospective buyer of a property held for sale. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES Receivables are recorded net of an allowance for credit losses. The Company estimates future write-offs based on delinquencies, credit ratings, aging trends, and historical experience. The Company believes the allowance for doubtful accounts is adequate to cover anticipated losses; however, significant deterioration in any of the aforementioned factors or in general economic conditions could change these expectations, and accordingly, the Company’s consolidated financial condition and/or its future operating results could be materially impacted. Credit is extended after evaluating creditworthiness and no collateral is generally required from customers. 29 Table of Contents INVESTMENT IN BOND SECURITIES Held-to-maturity debt securities are stated at amortized cost. Investments are reviewed for impairment for each reporting period. If any impairment is considered other-than-temporary, an allowance for credit loss would be established and held-to-maturity debt securities will be presented net of the credit loss allowance. Adjustments to expected credit losses are recorded as a component of other income (expense). ASSETS HELD FOR SALE Assets are classified as held for sale when management approves and commits to a plan to sell the property; the property is available for immediate sale in its present condition, subject only to terms that are usual and customary; an active program to locate a buyer and other actions required to complete the plan to sell have been initiated; the sale of the property is probable and is expected to be completed within one year; the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Assets held for sale are stated at the lower of net book value or estimated fair value less cost to sell. There were no impairments of assets held for sale during the years ended December 31, 2023 or 2022. DEFERRED DEVELOPMENT COSTS Deferred development costs consist primarily of design, entitlement and permitting fees and real estate development costs related to various planned projects. Deferred development costs are written off if management decides that it is no longer probable that the Company will proceed with the related development project. There were no impairments of deferred development costs during the years ended December 31, 2023 or 2022. INVESTMENT IN JOINT VENTURES As the Company does not have controlling interest, the investment in the joint venture is accounted for under the equity method of accounting. The initial capital contribution of assets to the joint venture was recorded at fair value. PROPERTY & EQUIPMENT AND DEPRECIATION Property is stated at cost. Major replacements, renewals and betterments are capitalized while maintenance and repairs that do not improve or extend the life of an asset are charged to expense as incurred. When property is retired or otherwise disposed of, the cost of the property and the related accumulated depreciation are written off and the resulting gains or losses are included in income. Depreciation is provided over the estimated useful lives of the respective assets using the straight-line method generally over three to 40 years. LONG-LIVED ASSETS Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When such events or changes occur, an estimate of the future cash flows expected to result from the use of the assets and their eventual disposition is made. If the sum of such expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized in an amount by which the assets’ net book values exceed their fair value. These asset impairment loss analyses require management to make assumptions and apply considerable judgments regarding, among others, estimates of the timing and amount of future cash flows, expected useful lives of the assets, uncertainty about future events, including changes in economic conditions, changes in operating performance, changes in the use of the assets, and ongoing cost of maintenance and improvements of the assets, and thus, the accounting estimates may change from period to period. If management uses different assumptions or if different conditions occur in future periods, the Company’s consolidated financial condition or its future operating results could be materially impacted. ACCRUED RETIREMENT BENEFITS The Company’s policy is to fund retirement benefit costs at a level at least equal to the minimum funding requirements under federal law, but not more than the maximum amount deductible for federal income tax purposes. The funded status of the Company’s defined benefit pension plan is recorded as an asset or liability in the consolidated balance sheet reflecting the difference between the fair value of plan assets and the projected benefit obligation. Changes in the funded status of the plan are recorded in the year in which the changes occur, through comprehensive income. Deferred compensation plans for certain former management employees provide for specified payments after retirement. A liability has been recognized based on the present value of estimated payments to be made. REVENUE RECOGNITION The Company recognizes revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This requires the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. Operating results pertaining to the Company’s business segments are summarized in Note 13 to the consolidated financial statements. 30 Table of Contents A customer is distinguished from a noncustomer by the nature of the goods or services that are transferred. Customers are provided with goods or services that are generated by a company’s ordinary output activities, whereas noncustomers are provided with nonfinancial assets that are outside of a company’s ordinary output activities. This distinction may not significantly change the pattern of income recognition but determines whether that income is classified as revenue (contracts with customers) or other gains/losses (contracts with noncustomers) in the Company’s consolidated financial statements. The Company’s revenue streams for the period were generated as ordinary output activities to customers as defined by the guidance and were properly classified as revenues. The Company uses the five -step model to recognize revenue from customer contracts. The five -step model requires the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. For each contract that involves variable consideration, the transaction price of the contract is considered the most likely outcome in estimating possible consideration amounts. The information used to determine the transaction price is similar to the information used in establishing prices of goods or services. The Company is also required to determine if it controls the goods or services prior to the transfer to the customer in order to determine if it should account for the arrangement as a principal or agent. Principal arrangements, where the Company controls the goods or services provided, will result in the recognition of the gross amount of consideration expected in the exchange. Agent arrangements, where the Company simply arranges but does not control the goods or services being transferred to the customer, will result in the recognition of the net amount the Company is entitled to retain in the exchange. Revenues from the Company’s land development and sales segment consist of sales of real estate. Revenues from sales of real estate are recognized in the period in which sufficient cash has been received, collection of the balance is reasonably assured, performance obligations have been performed and risks of ownership have passed to the buyer. Sales of real estate assets that are considered central to the Company’s ongoing major operations are classified as real estate sales revenue, along with any associated cost of sales, in the Company’s consolidated statements of operations and comprehensive income. Sales of real estate assets that are considered peripheral or incidental transactions to the Company’s ongoing major or central operations are reflected as net gains or losses in the Company’s consolidated statements of operations and comprehensive income. Leasing revenues are recognized on a straight-line basis over the terms of the leases. Lease income may include certain percentage rents determined in accordance with the terms of the leases. Lease income arising from rents that are contingent upon the sales of the tenant exceeding a defined threshold are recognized only after the defined sales thresholds are achieved. Reimbursements received for real estate taxes, general excise taxes, insurance and common area maintenance expenses are recognized as revenue as provided in the underlying lease terms. The Company elected the following practical expedients upon adoption of ASC Topic 842 on January 1, 2019: ● Single component practical expedient – requires the Company to account for lease and non-lease components associated with that lease, if certain criteria are met. ● Short-term leases practical expedient – for operating leases with a term of 12 months or less in which the Company is the lessee, this expedient allows the Company to not record on its balance sheets the related lease liabilities, taxes collected from lessees, lessor costs paid directly by lessee to a third party and right-of-use assets. Included in leasing revenues are grants issued by the State of Hawai‘i to subsidize the conservation and preservation efforts of the Pu‘u Kukui Watershed Preserve (“PKW”). The PKW is approximately 9,000 acres of conservation zoned lands that is a primary source of water that originates on the top of the West Maui Mountains. We currently receive government assistance via two grants, the Natural Area Partnership Program (“NAPP”) Grant with the State of Hawai‘i Department of Land and Natural Resources and the State of Hawai‘i Department of Health grant entitled Treatment Train: An Ahupua‘a’s Approach to Watershed Best Practices in West Maui, Hawai‘i (“DOH Grant”). The NAPP Grant was renewed on July 1, 2023 for a six -year period. For the period July 1, 2023 to June 30, 2024 provides $ 510,000 in government funds in support of the conservation efforts by the Company. The DOH Grant for the period from April 1, 2019 to April 30, 2024 will provide $ 1.1 million in total funds, to date, there remains approximately $ 75,000 remaining in available grant funds before having to reapply for the next grant period. Actual funds received for both grants were $ 0.3 million for 2023 and $ 0.4 million in 2022. Revenue from resort amenities consist of annual dues received from the Kapalua Club membership program. Member services include access, special programs, and other privileges at certain of the amenities at the Kapalua Resort. Annual membership dues are recognized on a straight-line basis over one year. Performance obligations for services are satisfied by relying on information received from the Company’s employees and vendors who have rendered services in accordance with the terms and conditions of the membership program. The Company estimates credit losses on accounts receivable from customers by considering relevant information (past, current, and future) in assessing the collectability of cash flows. The expected credit losses of the Company’s accounts receivable are summarized in Note 14 to the consolidated financial statements. Economic factors affecting the nature, amount, timing, and uncertainty of the Company’s revenue and cash flows are identified as Risks and Uncertainties in this Note 1. OPERATING COSTS AND EXPENSES Real estate, leasing, resort amenities, and general and administrative costs and expenses are reflected exclusive of depreciation and pension and other post-retirement expenses. 31 Table of Contents SHARE-BASED COMPENSATION PLANS The Company accounts for share-based compensation, including grants of restricted shares of common stock and options to purchase common shares, as compensation expense over the respective vesting periods in the consolidated financial statements based on their fair values on the grant dates. The impact of forfeitures that may occur prior to vesting is estimated and considered in the expense recognized. INCOME TAXES The Company accounts for uncertain tax positions using a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company’s provision for income taxes is calculated using the liability method. Deferred income taxes are provided for all temporary differences between the financial statement and income tax bases of assets and liabilities using tax rates enacted by law or regulation. A valuation allowance is established for deferred income tax assets if management believes that it is more likely than not that some portion or all of the asset will not be realized through future taxable income. The Company recognizes accrued interest related to unrecognized tax benefits as interest expense and penalties in general and administrative expenses in its consolidated statements of operations and comprehensive income (loss) and such amounts are included in income taxes payable on the Company’s consolidated balance sheets. COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) includes all changes in stockholders’ equity, except those resulting from capital stock transactions. Comprehensive income also includes adjustments to the Company’s defined benefit pension plan obligations. INCOME (LOSS) PER COMMON SHARE Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted-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 dilutive potential common shares from share-based compensation arrangements had been issued. Potentially dilutive shares from stock option grants to purchase common shares and non-vested restricted stock are determined using the treasury stock method. Basic weighted-average common shares outstanding at December 31, 2023 and 2022 were 19.6 million and 19.4 million, respectively. Diluted weighted-average common shares outstanding at December 31, 2023 and 2022 were 19.7 million and 19.4 million, respectively. 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 consolidated 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 cash and cash equivalents to be unrestricted for purposes of the consolidated balance sheets and 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. USE OF ESTIMATES The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Future actual amounts could differ from these estimates. 32 Table of Contents CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per institution. The Company had deposits in excess of the FDIC limit at December 31, 2023 and 2022. No losses have been recognized in 2023 or 2022. RISKS AND UNCERTAINTIES Factors that could adversely impact the Company’s future operations or financial results include, but are not limited to the following: periods of economic weakness and uncertainty in Hawai‘i and the mainland United States; high unemployment rates and low consumer confidence; uncertainties and changes in U.S. social, political, regulatory and economic conditions or laws and policies and concerns surrounding ongoing developments in the European Union, Middle East, and Asia; the general availability of mortgage financing, including the effect of more stringent lending standards for mortgages and perceived or actual changes in interest rates; risks related to the Company’s investments in real property, the value and salability of which could be impacted by the economic factors discussed above or other factors; the popularity of Maui in particular and Hawai‘i in general as a vacation destination or second -home market; increased energy costs, including fuel costs, which affect tourism on Maui and Hawai‘i generally; untimely completion of land development projects within forecasted time and budget expectations; inability to obtain land use entitlements at a reasonable cost or in a timely manner; unfavorable legislative decisions by state and local governmental agencies; impact of governmental fines and assessments; the cyclical market demand for luxury real estate on Maui and in Hawai‘i generally; increased competition from other luxury real estate developers on Maui and in Hawai‘i generally; failure of future joint venture partners to perform in accordance with their contractual agreements; environmental regulations; acts of God, such as tsunamis, hurricanes, earthquakes and other natural disasters, such as the recent Maui wildfires; the spread of contagious diseases, such as the Coronavirus; the Company’s location apart from the mainland United States, which results in the Company’s financial performance being more sensitive to the aforementioned economic risks; failure to comply with restrictive financial covenants in the Company’s credit arrangements; and an inability to achieve the Company’s short and long-term goals and cash flow requirements. LEGAL CONTINGENCIES The Company is party to claims and lawsuits as well as threatened or potential actions or claims concerning matters arising from the conduct of its business activities. The outcome of claims or litigation and the timing of ultimate resolution are inherently difficult to predict and significant judgment may be required in the determination of both the probability of loss and whether the amount of the loss is reasonably estimable. The Company’s estimates are subjective and are based on the status of legal and regulatory proceedings, the merit of the Company’s defenses and consultation with external legal counsel. An accrual for a potential litigation loss is established when information related to the loss contingency indicates both that a loss is probable and that the amount of loss can be reasonably estimated. Refer to Note 9 to the consolidated financial statements for further information regarding the Company’s legal proceedings. NEW ACCOUNTING STANDARD ADOPTED In June 2016, the FASB issued ASU 2016 - 13 to update the methodology used to measure current expected credit losses (“CECL”). This ASU applies 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 was adopted on January 1, 2023 using a modified retrospective transition method applied to receivable balances in the Company’s non-leasing segments. There was no cumulative-effect adjustment to retained earnings/(deficit) upon adoption of the ASU. 33 Table of Contents 2. INVESTMENTS IN BOND SECURITIES Amortized cost and fair value of debt securities at December 31, 2023 and 2022 consisted of the following: 2023 2022 (in thousands) Amortized cost $ 3,135 $ 2,983 Unrealized gains 4 9 Fair value $ 3,139 $ 2,992 Maturities of debt securities at December 31, 2023 and 2022 were as follows: 2023 2022 Amortized Cost Fair Value Amortized Cost Fair Value (in thousands) One year or less $ 2,671 $ 2,671 $ 2,432 $ 2,440 Greater than one year through five years 464 468 551 552 $ 3,135 $ 3,139 $ 2,983 $ 2,992 The fair value of debt securities were measured using Level 1 inputs which are based on quotes for trades occurring in active markets for identical assets. 3. ASSETS HELD FOR SALE Assets held for sale consisted of the 46 -acre Central Resort project located in Kapalua. In December 2021, the Company entered into an agreement to sell the Kapalua Central Resort project for $ 40.0 million. Terms of the agreement were subsequently amended to include a closing condition requiring the Maui Planning Commission to approve a five -year extension of a Special Management Area (“SMA”) permit issued by the County of Maui. The Company allowed the agreement with the buyer to expire on April 11, 2023. The application for the extension of the SMA permit is being managed by the Company. In 2023, Management reclassified the accumulated costs to deferred development while the project is being developed. 4. PROPERTY & EQUIPMENT Land Most of the Company’s 22,300 acres of land were acquired between 1911 and 1932 and is carried in its balance sheets at cost. More than 20,000 acres of land are located in West Maui and comprise a largely contiguous parcel that extends from the sea to an elevation of approximately 5,700 feet. This parcel includes approximately 900 acres within the Kapalua Resort, a master-planned, destination resort and residential community located in West Maui encompassing approximately 3,000 acres. The Company’s remaining 1,500 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. Majority of the Company’s land improvements were constructed and placed in service in the mid-to-late 1970s or conveyed in 2017. Depreciation expense would be considerably higher if these assets were stated at current replacement cost. 34 Table of Contents 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. Most of the Company’s buildings were constructed and placed in service in the mid-to-late 1970s. 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. 5. INVESTMENT IN JOINT VENTURE In December 2023, the Company entered into a joint venture agreement with a local developer to form a Hawai‘i limited liability company ( "BRE2 LLC"). The Company's initial capital contribution to BRE2 LLC consisted approximately 30 acres of former pineapple lands in Hali‘imaile valued at $ 1.6 million. Net proceeds from the sales of improved agricultural lots will be distributed according to terms of the joint venture agreement. There were no proceeds from the transaction as the land was an equity contribution to the joint venture and was originally recognized as land development and sales operating revenues. However, after review, it was determined that the $ 1.6 million should have been presented as a gain on the derecognition of the land asset rather than operating revenues. This restatement in the treatment of the $ 1.6 million gain has been made in this Amended Report. 6. LONG-TERM DEBT The Company has available a $ 15.0 million revolving line of credit facility with First Hawaiian Bank (“Credit Facility”). On December 23, 2021, the Company executed a Fourth Loan Modification Agreement and Second Amended and Restated Credit Agreement (“Agreements”) extending the maturity date of the Credit Facility to December 31, 2025. The Agreements provide revolving or term loan borrowing options. Interest on revolving 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. 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 Credit Facility also contains covenants restricting the payment of cash dividends without the lender’s prior approval. The Company was in compliance with the covenants under the Credit Facility as of December 31, 2023. 7. ACCRUED RETIREMENT BENEFITS Accrued retirement benefits at December 31, 2023 and 2022 consisted of the following: 2023 2022 (in thousands) Defined benefit pension plan $ ( 33 ) $ 1,023 Non-qualified retirement plan 1,725 1,731 Total 1,692 2,754 Less current portion ( 142 ) ( 142 ) Non-current portion of accrued retirement benefits $ 1,550 $ 2,612 The Company had two defined benefit pension plans which covered substantially all former bargaining and non-bargaining full-time, part-time and intermittent employees. In 2011, pension benefits under both plans were frozen. The Company merged the two defined benefit pension plans to streamline the administration of the frozen plan in 2018. The Company also has an unfunded non-qualified retirement plan covering nine of its former employees. The non-qualified retirement plan was frozen in 2009, and future vesting of additional benefits was discontinued. In November 2022, the Company signed a purchase agreement with an insurer to annuitize the scheduled pension payments of 167 participants currently receiving benefits. Approximately $ 14.5 million was paid to the insurer from plan assets for the group annuity contract. 35 Table of Contents The measurement date for the Company’s benefit plan disclosures is December 31 of each year. The changes in benefit obligations and plan assets for the years ended December 31, 2023, and 2022, and the funded status of the plans and assumptions used to determine benefit information at December 31, 2023 and 2022 were as follows: 2023 2022 (in thousands) Change in benefit obligations: Benefit obligations at beginning of year $ 16,537 $ 40,182 Interest cost 783 1,034 Actuarial gain ( 580 ) ( 7,772 ) Benefits paid ( 1,188 ) ( 16,907 ) Benefit obligations at end of year 15,552 16,537 Change in plan assets: Fair value of plan assets at beginning of year 13,783 32,103 Actual return on plan assets 1,137 ( 7,241 ) Employer contributions 128 5,828 Benefits paid ( 1,188 ) ( 16,907 ) Fair value of plan assets at end of year 13,860 13,783 Funded status $ ( 1,692 ) $ ( 2,754 ) Accumulated benefit obligations $ ( 15,552 ) $ 16,537 Weighted average assumptions to determine benefit obligations: Discount rate 4.90 - 4.95 % 5.11 - 5.14 % Expected long-term return on plan assets 5.25 % 5.00 % Rate of compensation increase n/a n/a Accumulated other comprehensive loss of $ 6.9 million and $ 8.3 million at December 31, 2023 and 2022, respectively, represent the net actuarial loss which have not yet been recognized as a component of pension and other post-retirement expense. Components of net periodic benefit cost and other amounts recognized in comprehensive income were as follows: 2023 2022 (in thousands) Pension and other benefits: Interest cost $ 783 $ 1,034 Expected return on plan assets ( 657 ) ( 1,226 ) Recognized net actuarial loss 310 585 Settlement expense - 7,492 Pension expense $ 436 $ 7,885 Other changes in plan assets and benefit obligations recognized in comprehensive income: Net loss (gain) $ ( 1,060 ) $ 696 Amortization of recognized loss ( 310 ) ( 8,077 ) Total recognized gain in comprehensive income $ ( 1,370 ) ( 7,381 ) Weighted average assumptions used to determine net periodic benefit cost: 2023 2022 Discount rate 5.11 - 5.14 % 2.69 - 2.74 % Expected long-term return on plan assets 5.00 % 4.00 % Rate of compensation increase n/a n/a The expected long-term rate of return on plan assets was based on a building-block approach. Historical markets are studied and long-term historical relationships between equities and fixed income are presumed consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors, such as inflation and interest rates, are evaluated before long-term capital markets are determined. Diversification and rebalancing of plan assets are properly considered as part of establishing long-term portfolio returns. 36 Table of Contents At December 31, 2023 and 2022, the plan held shares of various Aon Collective Investment Trust (“ACIT”) funds. The fair value of the Company’s pension plan assets by category were as follows: 2023 Fair Value Measurements (in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Measured at NAV as a practical expedient Total ACIT equity funds $ - $ 760 $ - $ 760 ACIT fixed income funds - 12,002 70 12,072 Cash management funds - 1,028 - 1,028 $ - $ 13,790 $ 70 $ 13,860 2022 Fair Value Measurements (in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Measured at NAV as a practical expedient Total ACIT equity funds $ - $ 631 $ 828 $ 1,459 ACIT fixed income funds - 10,666 261 10,927 Cash management funds - 1,397 - 1,397 $ - $ 12,694 $ 1,089 $ 13,783 Level 1 assets are priced using quotes for trades occurring in active markets for the identical asset. Level 2 assets are priced using observable inputs for the asset (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs). Net asset values (“NAV”) of ACIT funds included in Level 2 are readily determinable, measured daily and based on the fair value of each fund’s underlying investments. For certain ACIT funds, NAV is used as a practical expedient to estimate fair value and is not categorized in the fair value hierarchy. These funds determine NAV based on the fair value of its underlying investments on a monthly or quarterly basis and have redemption restrictions. Redemptions may be requested at the fund’s quarter-end NAV under the notification requirements of each fund, including a 105 -day notice. An administrative committee consisting of certain senior management employees administers the Company’s defined benefit pension plan. The pension plan assets are allocated among approved asset types based on the plan’s current funded status and other characteristics set by the administrative committee, subject to liquidity requirements of the plan. Estimated future benefit payments are as follows (in thousands): Years ending December 31, 2023 $ 1,394 2024 $ 1,373 2025 $ 1,346 2026 $ 1,316 2027 $ 1,277 2028-2032 $ 5,851 The Company made a voluntary contribution of $ 5.7 million to its defined benefit pension plan in August 2022. No minimum contributions were required in 2023. 37 Table of Contents 8. CONTRACT ASSETS AND LIABILITIES Receivables from contracts with customers were $ 0.4 million, $ 0.3 million, and $ 0.3 million at December 31, 2023, 2022 and 2021, respectively. 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 payment royalty of $ 2.0 million in March 2020. Revenue recognized on a straight-line basis over its estimated economic useful life was $ 0.1 million for each of the years ended December 31, 2023, and 2022, respectively. 9. COMMITMENTS AND CONTINGENCIES On December 31, 2018, the State of Hawai‘i 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 1960s 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 improvements to the current 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 as we continue to work to resolve and remediate the facility’s wastewater effluent issues through an approved corrective action plan. The construction of additional leach fields and installations of a surface aerator, sludge removal system, and natural pond cover using water plants were completed. Test results from wastewater monitoring indicate effluent concentration amounts within allowable ranges. A feasibility study was prepared and submitted identifying various technical solutions that could be implemented to resolve the Order. The Company submitted a plan and proposed solution to resolve the Order. The plan included the installation of an additional pond that will be lined and installed with aerators. One of the existing ponds will be lined and renovated as necessary and the other pond will be taken offline and used as a backup pond if needed. The Company is awaiting comments, feedback and approval from the DOH at the time of filing the Form 10 -K. Pursuant to a 1999 settlement agreement with the County of Maui, the Company and several chemical manufacturers have agreed to pay for 90% of capital costs to install filtration systems in any future water wells if the presence of a nematicide, commonly known as DBCP, exceeds specified levels, and for the ongoing maintenance and operating cost for filtration systems on existing and future wells. The Company paid approximately $ 22,000 and $ 21,000 for the reimbursement of filtration and maintenance costs during the years ending December 31, 2023, and 2022, respectively. The Company is presently not aware of any plans by the County of Maui to install other filtration systems or to drill any water wells in areas affected by agricultural chemicals. Accordingly, no reserve for costs relating to any future wells has been recorded as the Company is unable to estimate the amount, or range of amounts, of any probable liability, if any. In addition, from time to time, the Company is the subject of various other claims, complaints and other legal actions which arise in the normal course of the Company’s business activities. The Company believes the resolution of these other matters, in the aggregate, is not likely to have a material adverse effect on the Company’s consolidated financial position or operations. 10. 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, 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 lease agreement. There are no agreements allowing a lessee an option to purchase the underlying asset. Total leasing income subject to ASC Topic 842 for the years ended December 31, 2023, and 2022 were as follows: 2023 2022 (in thousands) Minimum rentals $ 3,409 $ 3,272 Percentage rentals 1,391 1,937 Licensing fees 827 1,001 Other 1,336 1,296 $ 6,963 $ 7,506 Leased property, net of accumulated depreciation, was $ 10.3 million and $ 10.1 million at December 31, 2023 and 2022, respectively. 38 Table of Contents Future minimum rental income for the next five years and thereafter are as follows (in thousands): Years ending December 31, 2024 $ 2,460 2025 $ 2,361 2026 $ 2,338 2027 $ 2,268 2028 $ 1,675 Thereafter $ 8,685 The Company recognized rent expense from operating leases of $ 34,000 and $ 49,000 for the years ended December 31, 2023, and 2022, respectively. A right-of-use asset was recorded in Other current assets and the related lease liability in Other current liabilities. The present value of remaining contractual payments related to operating leases were $ 23,000 and $ 53,000 at December 31, 2023 and 2022, respectively. 11. SHARE-BASED COMPENSATION The Company’s directors and certain members of management receive a portion of their compensation in shares of the Company’s common stock granted under the Company’s 2017 Equity and Incentive Award Plan (“Equity Plan”). Share-based compensation is awarded annually to certain members of the Company’s management based on their achievement of 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 of common stock vesting quarterly over a period of three years. 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 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. Directors receive both cash and equity compensation under the Equity Plan. Share-based compensation is comprised of restricted shares of common stock vesting quarterly over the directors’ annual period of service which are 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 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 from the Company. Options to purchase shares of the Company’s common stock under the Equity Plan were granted to directors during the quarter ended June 30, 2023. The number of common shares subject to option for annual board service, board committee service, and continued service of the Chairman of the Board are 0.3 million shares, 0.1 million shares, and 0.4 million shares, respectively. Stock option grants are valued at the commitment date, based on the fair value of the equity instruments, and recognized as share-based compensation expense on a straight-line basis over its respective vesting periods. The option agreements provide for accelerated vesting if there is a change in control in ownership. For annual board service and board committee service, stock option grants have a contractual period of ten years and vest quarterly over 12 months. The exercise price per share is based on the average of the high and low share price on the date of grant, or $ 12.11 per share. The fair value of these grants using the Black-Scholes option-pricing model was $ 3.88 per share based on an expected term of 5.25 years, expected volatility of 28 %, and a risk-free rate of 4.16 %. During the year ended December 31, 2023, 0.3 million of stock options vested and none were exercised or forfeited. There were 0.1 million of unvested share options, or $ 0.3 million of unrecognized compensation cost, related to annual board services and board committee services at December 31, 2023. For continued service of the Board's Chairman, the stock option grant has a contractual period of ten years and vests annually as follows: 0.1 million shares on June 1, 2024, 0.1 million shares on June 1, 2025, and 0.1 million shares on June 1, 2026. The exercise price per share is based on the average of the high and low share price on the date of grant, or $ 9.08 per share. The fair value of the grant using the Black-Scholes option-pricing model was $ 3.94 per share based on an expected term of 6.12 years, expected volatility of 37 %, and a risk-free rate of 3.49 %. There were 0.4 million of unvested share options, or $ 1.2 million or unrecognized compensation cost, related to the continued service of the Board's Chairman at December 31, 2023. The simplified method described in Staff Accounting Bulletin No. 107 was used by management due to the lack of historical option exercise behavior, Management does not anticipate future forfeitures to be material. The Company does not currently issue dividends. Share-based compensation expense totaled $2.8 million and $1.3 million for the years ended December 31, 2023, and 2022, respectively. Included in these amounts were $1.2 million and $0.9 million of restricted common stock vested during the years ended December 31, 2023, and 2022, respectively, and $ 1.4 million of stock options vested during the year ended December 31, 2023. In January 2024, an option to purchase 0.4 million shares of the Company’s common stock under the Equity Plan was granted to the Company's CEO. The stock option grant has a contractual period of ten years and vests annually as follows: 0.1 million shares on January 1, 2025, 0.1 million shares on January 1, 2026, and 0.1 million shares on January 1, 2027. The exercise price per share is based on the average of the high and low share price on the date of grant, or $ 15.75 per share. The stock option grant is valued at the commitment date, based on the fair value, and recognized as share-based compensation expense on a straight-line basis over its vesting period beginning in January 2024. The fair value of the grant using the Black-Scholes option-pricing model was $ 6.02 per share at January 1, 2024, based on an expected term of 6.00 years, expected volatility of 31 %, and a risk-free rate of 3.82 %. 39 Table of Contents 12. INCOME TAXES GAAP prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company’s provision for income taxes is calculated using the liability method. Deferred income taxes are provided for all temporary differences between the financial statement and income tax bases of assets and liabilities using tax rates enacted by law or regulation. Reconciliations between the total income tax expense (benefit) and the amount computed using the statutory federal rate of 21 % for the years ended December 31, 2023, and 2022 were as follows: 2023 2022 (in thousands) Federal income tax expense (benefit) at statutory rate $ ( 647 ) $ 375 Adjusted for: Permanent differences 99 86 Valuation allowance 548 ( 461 ) Income tax expense (benefit) $ - $ - Deferred tax assets were comprised of the following temporary differences as of December 31, 2023, and 2022: 2023 2022 (in thousands) Net operating loss and tax credit carryforwards $ 24,648 $ 23,980 Joint venture and other investments ( 446 ) ( 27 ) Accrued retirement benefits and other compensation 1,233 1,149 Property net book value 3,002 2,960 Deferred revenue 962 1,016 Reserves and other 37 ( 50 ) Total deferred tax assets 29,436 29,028 Valuation allowance ( 29,436 ) ( 29,028 ) Net deferred tax assets $ - $ - Valuation allowances at December 31, 2023, and 2022 have been established to reduce future tax benefits not expected to be realized. Net Operating Loss (NOL) carryforwards created in tax years beginning after December 31, 2017, are limited by the TCJA but do not expire. At December 31, 2023, the Company had approximately $ 67.5 million in federal NOL carryforwards and approximately $ 81.4 million in state NOL carryforwards expiring from 2030 through 2034. The Company also had approximately $ 8.3 million in federal and state NOL carryforwards at December 31, 2023, that do not expire. 13. SEGMENT INFORMATION 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, and the Board of Directors in assessing performance and determining the allocation of resources. Reportable operating segments in 2023 were as follows: • Land development and sales includes development activities, such as land planning and entitlement, and the sale of real estate inventory. • Leasing primarily 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 potable and non-potable 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 were measured based on operating income, exclusive of interest, pension and other postretirement expenses. 40 Table of Contents Condensed consolidated financial information for each of the Company’s reportable segments for the years ended December 31, 2023 and 2022 (in thousands) were as follows: Land Development & Sales Leasing Resort Amenities Other Consolidated 2023 (As Restated) Operating revenues $ - $ 8,461 $ 828 $ - $ 9,289 Operating costs and expenses ( 595 ) ( 4,420 ) ( 1,532 ) - ( 6,547 ) Depreciation expense - ( 861 ) - ( 8 ) ( 869 ) General and administrative expenses ( 908 ) ( 456 ) ( 393 ) ( 5,087 ) ( 6,844 ) Operating income (loss) ( 1,503 ) 2,724 ( 1,097 ) ( 5,095 ) ( 4,971 ) Pension and other postretirement expenses ( 436 ) Interest expense ( 6 ) Gain from dercognition of nonfinancial asset 1,626 Other income 707 Income from continuing operations ( 3,080 ) Capital expenditures $ 200 $ 619 - - $ 819 Assets (3)(4) $ 17,102 $ 14,489 $ 1,018 $ 9,614 $ 42,223 Land Development and Resort Sales Leasing Amenities Other Consolidated 2022 Operating revenues (1) $ 11,600 $ 8,513 $ 847 $ - $ 20,960 Operating costs and expenses ( 1,026 ) ( 3,598 ) ( 1,547 ) - ( 6,171 ) Depreciation expense - ( 1,101 ) - ( 8 ) ( 1,109 ) General and administrative expenses ( 1,068 ) ( 1,141 ) ( 496 ) ( 1,368 ) ( 4,073 ) Operating income (loss) 9,506 2,673 ( 1,196 ) ( 1,376 ) 9,607 Pension and other post-retirement expenses ( 7,885 ) Interest expense ( 6 ) Other income 71 Income from continuing operations $ 1,787 Capital expenditures (2) $ 33 $ - $ - $ - $ 33 Assets (3) $ 15,274 $ 13,586 $ 815 $ 12,731 $ 42,406 ( 1 ) Amounts are principally revenues from external customers and exclude equity in earnings of affiliates. ( 2 ) Includes expenditures for property and deferred costs. ( 3 ) Segment assets are located in the United States ( 4 ) The Land Development and Sales segment includes a $ 1.6 million equity method investment 14. RESERVES Allowance for credit losses for 2023 and 2022 were as follows: Description Balance at Beginning of Year Increase (Decrease) Balance at End of Year (in thousands) Allowance for Credit Losses 2023 $ 177 $ 341 $ 518 2022 $ 154 $ 23 $ 177 41 Table of Contents 15. SUBSEQUENT EVENTS On August 5, 2024, R. Scot Sellers, a director and Chairman of the Board, Stephen M. Case, a director, and Race A. Randle, Chief Executive Officer, voluntarily executed agreements to cancel previously granted stock options and common stock grants. The Equity Plan was amended in February 2023 to increase the limit on the number of shares to be awarded during a plan year to 400,000 shares. In 2023, Mr. Sellers received options to purchase 63,500 shares and 18,804 shares of common stock that exceeded the 400,000 share limit. In February 2024, Mr. Randle received 28,511 shares of common stock that exceeded the 400,000 share limit. In addition, although grants to Mr. Case did not exceed the Equity Plan limit, he voluntarily opted to cancel the common stock grants and options issued to him in 2023 amounting to 6,659 shares and 56,000 shares, respectively, and options and restricted shares issued in 2024 amounting to 3,124 shares and 56,000 shares, respectively. The cancellation of the options and common stock grants resulted in recognizing the remaining unvested awards of options and common stock grants immediately. In the third quarter of 2024, $ 631,000 was recognized as expense due to the cancellations, $ 402,000 due to the cancellation of Mr. Case’s options and common stock grants and $ 229,000 due to the cancellation of Mr. Randle’s common stock grants. On August 14, 2024 ( the “Effective Date”), the Company entered into a Purchase Sales Agreement (the “Purchase Agreement”) for the sale and purchase of land with Shawn Sims and/or his permitted assignees (the “Purchaser”), pursuant to which MLP agreed to sell to Purchaser and Purchaser agreed to purchase from MLP an 11.883 -acre parcel of land, including the associated easements and infrastructure improvements, located in Piiholo, Maui, Hawaii (the “Property”). The purchase price for the Property was $ 7,000,000 (the “Purchase Price”). Pursuant to the terms of the Purchase Agreement, within three business days from the Effective Date, Purchaser made an initial cash deposit in the amount of $ 300,000 (the “Initial Deposit”) to escrow. The Purchaser was permitted a 30 -day inspection period (the “Inspection Period”), which the Purchaser had the option to extend by an additional 30 -days upon written notice to the Company. Purchaser, in his sole discretion, had the right to cancel the Purchase Agreement at any time up until 5:00 pm Hawaii Standard Time on the last day of the Inspection Period. On September 25, 2024, the Company was notified in writing that the Purchaser elected to cancel the Purchase Agreement. Accordingly, the Company refunded the Initial Deposit, currently being held in escrow, to the Purchaser. The 11.883 -acre Piiholo parcel will be marketed for sale as this aligns with the Company’s operational plan to sell non-strategic land parcels. On October 22, 2024 the Company entered into a Memorandum of Agreement (the “Honokeana Agreement”) with the State of Hawai‘i Department of Transportation (“State”) to lease land and administer and manage the construction of improvements necessary to support temporary homes for individuals and families displaced by the Maui wildfires on August 8, 2023. In furtherance of the Company’s stated mission to productively use its assets to meet the community’s critical needs, MLP agreed to lease approximately 50 acres of vacant land to the State in an area known as Honokeana, near Napili in Lahaina, Maui. The land will be leased to the State at no cost for five years, plus the duration of time necessary to construct the temporary homes. The land is a portion of a larger, 1,377 -acre parcel owned by the Company. The Honokeana Agreement provides the State will fund all costs to complete the project, including approximately $ 35,500,000 to complete the necessary horizontal improvements. The Company has agreed to administer and manage the construction of the horizontal improvements and, at the State’s election, the subsequent vertical improvements, at cost of which have yet to be estimated. The Company will provide its administration services to the State at its cost and will not directly profit from these services. After the end of the lease, the State will remove any vertical improvements unless MLP requests that specific improvements remain. 42 Table of Contents Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.