MAUI LAND & PINEAPPLE CO INC 10-K

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, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for each of the years in the two‑year period ended December 31, 2024 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, 2024 and 2023, and the results of their operations and their cash flows for each of the years in the two‑year period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. 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 Matter The critical audit matter communicated below is a matter 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 matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate. Revenue Recognition for Honokeana Temporary Housing Project Description of the Matter The Company entered into a Memorandum of Agreement with the State of Hawaii, Department of Transportation to lease land and administer the construction of improvements necessary to support temporary homes for individuals and families displaced by the Maui wildfires on August 8, 2023. The Company recognizes the contract revenue over time, as performance obligations are satisfied, using the cost-to-cost method (an input method) based on contract costs incurred to date compared to total estimated contract cost. Revenue recognition under this method is judgmental, as it requires the Company to prepare estimates of total contract revenue and total contract costs, including costs to complete the in-process contract. 20 Table of Contents Management exercised judgment at the inception of the agreement to determine the appropriate accounting treatment of the transaction. This included deciding on the appropriate revenue recognition for this customer agreement, which involved the following considerations: ● Determination of whether the agreement entered into by the Company was a contract with a customer that would be assessed under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers . ● Determination of whether there was a single or multiple, distinct performance obligation for goods or services to be provided. ● Determination of the transaction price for each distinct performance obligation. ● Determination of the allocated transaction price to the performance obligations in the contract. ● Determination of the timing of when the Company satisfies a performance obligation and amount of revenue to recognize. Given the factors, the related audit effort in evaluating management’s judgments in determining the appropriate revenue recognition for this customer contract was extensive and involved subjective judgments. 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 the Honokeana Temporary Housing Project. ● We obtained and reviewed the Honokeana Temporary Housing Project agreement; evaluated management’s considerations used to identify the performance obligations and transaction 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 Topic 606. ● We tested management’s analysis by evaluating the reasonableness of the Company’s estimated project costs, costs incurred to date, and transaction price. /s/ ACCUITY LLP We have served as the Company’s auditor since 2014. Honolulu, Hawaii March 31, 2025 21 Table of Contents MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2024 December 31, 2023 (in thousands except share data) ASSETS CURRENT ASSETS Cash and cash equivalents $ 6,835 $ 5,700 Accounts receivable, net 5,016 1,166 Investments, current portion 2,687 2,671 Prepaid expenses and other assets 507 467 Assets held for sale 82 - Total current assets 15,127 10,004 PROPERTY & EQUIPMENT, NET 17,401 16,059 OTHER ASSETS Investments, noncurrent portion - 464 Investment in unconsolidated joint venture 968 1,608 Deferred development costs 14,410 12,815 Other noncurrent assets 2,233 1,273 Total other assets 17,611 16,160 TOTAL ASSETS $ 50,139 $ 42,223 LIABILITIES & STOCKHOLDERS' EQUITY LIABILITIES CURRENT LIABILITIES Accounts payable $ 2,321 $ 1,154 Payroll and employee benefits 908 502 Accrued retirement benefits, current portion 140 142 Deferred revenue, current portion 833 217 Long-term debt, current portion 85 - Line of credit 3,000 - Other current liabilities 730 465 Contract overbillings 3,180 - Total current liabilities 11,197 2,480 LONG-TERM LIABILITIES Accrued retirement benefits, noncurrent portion 2,368 1,550 Deferred revenue, noncurrent portion 1,233 1,367 Deposits 1,968 2,108 Long-term debt, noncurrent portion 168 - Other noncurrent liabilities 24 14 Total long-term liabilities 5,761 5,039 TOTAL LIABILITIES 16,958 7,519 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock--$ 0.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding - - Common stock--$ 0.0001 par value; 43,000,000 shares authorized; 19,663,780 and 19,615,350 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively 85,877 84,680 Additional paid-in-capital 15,202 10,538 Accumulated deficit ( 61,008 ) ( 53,617 ) Accumulated other comprehensive loss ( 6,890 ) ( 6,897 ) Total stockholders' equity 33,181 34,704 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 50,139 $ 42,223 See Notes to Consolidated Financial Statements 22 Table of Contents MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Years Ended December 31, 2024 2023 (in thousands except per share amounts) OPERATING REVENUES Land development and sales $ 520 $ - Leasing 9,621 8,461 Resort amenities and other 1,424 828 Total operating revenues 11,565 9,289 OPERATING COSTS AND EXPENSES Land development and sales 1,104 595 Leasing 5,006 4,420 Resort amenities and other 1,477 1,532 General and administrative 4,297 3,998 Share-based compensation 6,312 2,846 Depreciation 723 869 Total operating costs and expenses 18,919 14,260 OPERATING LOSS ( 7,354 ) ( 4,971 ) Gain from derecognition of nonfinancial asset - 1,626 Gain on assets disposal 48 - Other income 924 707 Pension and other post-retirement expenses ( 948 ) ( 436 ) Interest expense ( 61 ) ( 6 ) NET LOSS $ ( 7,391 ) $ ( 3,080 ) Other comprehensive income - pension, net 7 1,370 TOTAL COMPREHENSIVE LOSS $ ( 7,384 ) $ ( 1,710 ) NET LOSS PER COMMON SHARE-BASIC $ ( 0.38 ) $ ( 0.15 ) NET LOSS PER COMMON SHARE-DILUTED $ ( 0.38 ) $ ( 0.15 ) See Notes to Consolidated Financial Statements 23 Table of Contents MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY For the Years Ended December 31, 2024 and 2023 (in thousands) Accumulated Additional Other Common Stock Paid in Accumulated Comprehensive Shares Amount Capital Deficit Loss Total 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 cancelled 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 Share-based compensation - - 4,930 - - 4,930 Issuance of shares for incentive plan 18 412 - - - 412 Restricted stock and options cancellation - 258 372 - - 630 Vested restricted stock issued 35 638 ( 638 ) - - - Shares cancelled to pay tax liability ( 4 ) ( 111 ) - - - ( 111 ) Other comprehensive income - pension - - - - 7 7 Net loss - - - ( 7,391 ) - ( 7,391 ) Balance, December 31, 2024 19,664 85,877 15,202 ( 61,008 ) ( 6,890 ) 33,181 See Notes to Consolidated Financial Statements 24 Table of Contents MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2024 2023 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers and other receipts $ 9,688 $ 9,846 Cash paid to vendors ( 6,596 ) ( 8,792 ) Cash paid for payroll and taxes ( 2,722 ) ( 2,425 ) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 370 ( 1,371 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of bond securities ( 3,170 ) ( 3,107 ) Maturities of bond securities 3,618 2,955 Distribution from unconsolidated joint venture 1,000 - Purchases of property and equipment ( 1,871 ) ( 618 ) Payments for deferred development ( 1,661 ) - Contribution to unconsolidated joint venture ( 19 ) - Payments for other assets - ( 94 ) NET CASH USED IN INVESTING ACTIVITIES ( 2,103 ) ( 864 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowing under line of credit 3,000 - Principal payments on long term debt ( 21 ) Common stock issuance costs and other ( 111 ) ( 574 ) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 2,868 ( 574 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,135 ( 2,809 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,700 8,509 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,835 $ 5,700 RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITES: Net loss $ ( 7,391 ) $ ( 3,080 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 723 785 Provision for credit losses 227 142 Share-based compensation 5,560 2,596 (Gain) loss on disposal of property 84 ( 1,608 ) Debt financed equipment 274 Revenue from investment in unconsolidated joint venture ( 341 ) Changes in operating assets and liabilities: Accounts receivable ( 4,077 ) ( 416 ) Retirement liabilities 823 308 Accounts payable 873 102 Deferred revenue 1,849 - Contract overbilling 3,180 - Other operating assets and liabilities ( 1,414 ) ( 200 ) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 370 $ ( 1,371 ) SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: • Common stock issued to certain members of the Company’s management totaled $ 0.4 million and $ 0.6 million during the years ended December 31, 2024 and 2023, respectively. • The Company had a $ 0.2 million distribution receivable outstanding from investment in BRE2 LLC joint venture at December 31, 2024. No distribution receivable was outstanding at December 31, 2023. Remaining distributions of approximately $ 1.1 million is expected during 2025 which is comprised of $ 0.6 million in remaining return of equity and approximately $ 0.5 million in net profit. • The Company had $ 0.3 million and $ 0.5 in capital expenditures included in accounts payable and accrued and other liabilities at December 31, 2024 and 2023, respectively. • The Company's financed lease liabilities for equipment were $ 0.3 million and $ 0 at December 31, 2024 and 2023, respectively. See Notes to Consolidated Financial Statements. 25 Table of Contents MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 2024 and 2023 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 247,000 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 : The resort amenities operations include the operations of the Kapalua Club, a private, non-equity club program, providing its members special programs, access, and other privileges at certain amenities at the Kapalua Resort. 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. 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 credit losses 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. 26 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 losses would be established and held-to-maturity debt securities would be presented net of the allowance for credit losses. 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, 2024 or 2023. 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, 2024 or 2023. INVESTMENT IN JOINT VENTURES Investments in joint ventures in which we have less than a controlling financial interest are accounted for under the equity method of accounting. The initial capital contribution of assets to a joint venture is 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 undiscounted 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. There was no impairment of long-lived assets during the years ended December 31, 2024 or 2023. 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. 27 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 (loss). 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 (loss). The construction contract for the Honokeana Homes Temporary Housing Project follows the cost to cost accounting method. Contracting revenues and expenses are proportionately recognized based on actual costs incurred in relation to reliable and updated estimates of the cost to complete the project. Project billings in excess of recognized revenues are recognized as Billings in Excess of Revenues (a deferred revenue account) and where project costs are recognized in excess of project billings, this is recognized as Costs in Excess of Billings (a deferred expense account). 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, 2024 to June 30, 2025, the NAPP Grant provided $ 340,000 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 provided $ 1.1 million in total funds, in 2024, the final $ 60,000 of remaining funds were received and the grant was terminated. Actual funds received for both grants were $ 0.3 million for 2024 and $ 0.3 million in 2023. 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 expected 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 Land development and sales, leasing, resort amenities, and general and administrative costs and expenses are reflected exclusive of depreciation and pension and other post-retirement expenses. 28 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 (loss) 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 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, 2024 and 2023 were 19.6 million. 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. 29 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, 2024 and 2023. No losses have been recognized in 2024 or 2023. 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 November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ) , which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. ASU 2023 - 07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. We have adopted this guidance, which resulted in modifications to our reportable segment disclosures, which can be found in Note 13 to our consolidated financial statements. NEW ACCOUNTING STANDARDS ISSUED In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ) , which requires public entities to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction on an annual basis. ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023 - 09. In November 2024, the FASB issued ASU 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220 ) , which requires public entities to disclose information about purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion for each income statement line item that contains those expenses. ASU 2024 - 03 is effective for fiscal years beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024 - 03. 30 Table of Contents 2. INVESTMENTS IN BOND SECURITIES Amortized cost and fair value of debt securities at December 31, 2024 and 2023 consisted of the following: December 31, December 31, 2024 2023 (in thousands) Amortized cost $ 2,687 $ 3,135 Unrealized gains 5 4 Fair value $ 2,692 $ 3,139 Maturities of debt securities at December 31, 2024 and 2023 were as follows: December 31, 2024 December 31, 2023 (in thousands) Amortized Cost Fair Value Amortized Cost Fair Value One year or less $ 2,687 $ 2,692 $ 2,671 $ 2,671 Greater than one year through five years - - 464 468 $ 2,687 $ 2,692 $ 3,135 $ 3,139 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 consist of non-strategic land parcels identified for sale at December 31, 2024. There are twelve parcels that total in excess of 373 acres, and carry a historical cost basis of approximately $ 82,000 . Three parcels are actively listed for sale with a combined acreage of 16.4 acres and aggregate listing price amount to $ 10,900,000 . 4. PROPERTY & EQUIPMENT Property and equipment at December 31, 2024 and 2023 consist of the following: December 31, December 31, 2024 2023 (in thousands) Land $ 7,715 $ 5,052 Land improvements 13,158 13,853 Buildings 22,976 22,869 Machinery and equipment 9,124 10,500 Construction in progress 1,367 - Total property and equipment 54,340 52,274 Less accumulated depreciation ( 36,939 ) ( 36,215 ) Property and equipment, net $ 17,401 $ 16,059 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 that extends from the sea to an elevation of approximately 5,700 feet. This area includes approximately 900 acres entitled for mixed-use development within the Kapalua Resort, a master-planned, destination resort and residential community located in West Maui. The Company’s remaining approximate 1,500 acres of land are located in Upcountry Maui in an area commonly known as Hali‘imaile and are mainly comprised of agricultural fields, ranch lands and industrial and retail properties. 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 1970’s or conveyed in 2017. Depreciation expense would be considerably higher if these assets were stated at current replacement cost. 31 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 UNCONSOLIDATED 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 31 acres of former pineapple lands in Hali‘imaile valued at $ 1.6 million. The first lot sold for $ 1.8 million in December 2024 and the second lot sold for $ 2.4 million in February of 2025. The Company received a distribution from BRE2 LLC in the amount of $ 1.0 million during the year ended December 31, 2024, the remaining distributions of approximately $ 1.1 million is expected to be received in 2025 which is comprised of $ 0.6 million in remaining return of equity and approximately $ 0.5 million in net profit. 6. LONG-TERM DEBT 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 $ 15.0 million revolving line of credit facility with First Hawaiian Bank (“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. At December 31, 2024, $ 12.0 million was available from our Credit Facility, as the Company borrowed $ 3,000,000 during the year ended December 31, 2024 . 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, 2024. In July 2024 the Company took out a loan to finance equipment purchases. The loan carried a principal amount of $ 338,720 , 0 % interest rate and a monthly payment of $ 7,057 . The loan matures in July of 2028. At December 31, 2024, long-term debt principal payments and imputed interest on this 0% loan for the next four years to maturity are as follows: Years ending December 31, 2025 $ 85 2026 85 2027 85 2028 49 7. ACCRUED RETIREMENT BENEFITS Accrued retirement benefits at December 31, 2024 and 2023 consisted of the following: December 31, December 31, 2024 2023 (in thousands) Defined benefit pension plan $ 912 $ ( 33 ) Non-qualified retirement plans 1,596 1,725 Total 2,508 1,692 Less current portion ( 140 ) ( 142 ) Non-current portion of accrued retirement benefits $ 2,368 $ 1,550 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. 32 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, 2024 and 2023, and the funded status of the plans and assumptions used to determine benefit information at December 31, 2024 and 2023 were as follows: Years Ended December 31, 2024 2023 (in thousands) Change in benefit obligations: Benefit obligations at beginning of year $ 15,552 $ 16,537 Interest cost 738 783 Actuarial gain ( 27 ) ( 580 ) Benefits paid ( 2,314 ) ( 1,188 ) Benefit obligations at end of year 13,949 15,552 Change in plan assets: 13,860 13,783 Fair value of plan assets at beginning of year ( 231 ) 1,137 Actual return on plan assets 126 128 Employer contributions ( 2,314 ) ( 1,188 ) Benefits paid Fair value of plan assets at end of year 11,441 13,860 Funded status $ ( 2,508 ) $ ( 1,692 ) Accumulated benefit obligations $ ( 13,949 ) $ ( 15,552 ) Weighted average assumptions to determine benefit obligations: Discount rate 5.40 - 5.52 % 4.90 - 4.95 % Expected long-term return on plan assets 5.40 % 5.25 % Rate of compensation increase n/a n/a Accumulated other comprehensive loss of $ 6.9 million at December 31, 2024 and 2023, 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: Years Ended December 31, 2024 2023 (in thousands) Pensions and other benefits: Interest cost $ 735 $ 783 Expected return on plan assets ( 695 ) ( 657 ) Amortization of net loss 273 310 Settlement expense 635 Pension and other postretirement expenses $ 948 $ 436 Other changes in plan assets and benefits obligations recognized in comprehensive income: Net loss (gain) 900 $ ( 1,060 ) Amortization of recognized loss ( 907 ) ( 310 ) Total recognized gain in comprehensive income $ ( 7 ) $ ( 1,370 ) Weighted average assumptions used to determine net periodic benefit cost: 2024 2023 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 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. 33 Table of Contents At December 31, 2024 and 2023, 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: 2024 Fair Value Measurements ( in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Measured at NAC as a practical expedient Total ACIT equity funds $ - $ 94 $ - $ 94 ACIT fixed income funds - 10,362 - 10,362 Cash management funds - 985 - 985 $ - $ 11,441 $ - $ 11,441 2023 Fair Value Measurements ( in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Measured at NAC 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 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, 2024 $ 12,540 2025 138 2026 137 2027 135 2028 132 2029-2033 614 No minimum contributions were required in 2024 or 2023. The termination notification of the Qualified Plan originally made on August 31, 2023, was amended to November 30, 2023. The change in timing provided for the Company to issue lump sum distributions in the fourth quarter of 2024 amounting to approximately $ 1.1 million and final annuitization of plan participants to take place in the first and second quarters of 2025. The cost of the final annuitization for the participants amounted to approximately $ 11.7 million, paid from the pension assets. An estimated settlement charge (non-cash GAAP expense) between $ 7.0 million to $ 8.0 million will be recognized at the time of final annuitization and plan termination. 34 Table of Contents 8. CONTRACT ASSETS AND LIABILITIES Receivables from contracts with customers were $ 4.3 million, $ 0.4 million, and $ 0.3 million at December 31, 2024, 2023 and 2022, respectively. In 2024, $ 3.5 million of contract receivable is due to the outstanding progress billing from the temporary homes construction project and the remaining $ 0.8 million is due from Kapalua Club receivable, utility fees receivable and conservation grants receivable from the State of Hawaii. 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, 2024 and 2023, 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 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 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 $ 23,000 for the reimbursement of filtration and maintenance costs during the years ended December 31, 2024 and 2023. 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, 2024 and 2023 were as follows: 2024 2023 (in thousands) Minimum rentals $ 4,315 $ 3,409 Percentage rentals 2,166 1,391 Licensing fees 169 827 Other 1,082 1,336 Total $ 7,732 $ 6,963 Leased property, net of accumulated depreciation, was $ 9.6 million and $ 10.3 million at December 31, 2024 and 2023, respectively. Future minimum rental income for the next five years and thereafter are as follows (in thousands): Years ending December 31, 2025 $ 4,017 2026 4,065 2027 3,954 2028 3,606 2029 3,269 Thereafter 16,246 35 Table of Contents 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, as amended (the “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. Their 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 share-based compensation under the Equity Plan. Their 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 or employment from the Company. Options to purchase shares of the Company’s common stock under the Equity Plan were granted to directors and the Chief Executive Officer in 2024 and 2023 . 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. The number of common shares subject to options granted in 2023 for annual board service, board committee service, and continued service of the Chairperson of the Board are 250,000 shares, 78,000 shares, and 400,000 , respectively. For annual board service and board committee service, the stock options granted have a contractual period of ten years and vest quarterly over one year. The exercise price per share was 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, 2024 , 215,334 shares underlying the stock options granted to directors in 2023 for annual board and committee service vested. No shares underlying the 2023 stock option grants to directors remain unvested. For continued board service of the Chairperson, the stock option grant has a contractual period of ten years which vests as follows: 133,334 shares on June 1, 2024 , 133,333 shares on June 1, 2025 , and 133,333 shares on June 1, 2026 . The exercise price per share was 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 these grants 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 266,666 of unvested share options, or $ 0.7 million of unrecognized compensation cost, at December 31, 2024 . An option to purchase 400,000 shares of the Company’s common stock under the Equity Plan was granted to the Chief Executive Officer in January 2024 .  The stock option grant has a contractual period of ten years and vests annually as follows: 133,334 shares on January 1, 2025 , 133,333 shares on January 1, 2026 , and 133,333 shares on January 1, 2027 . The exercise price per share was 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 %. There were 400,000 shares of unvested share options, or $ 1.6 million of unrecognized compensation cost at December 31, 2024. The number of common shares subject to options granted in 2024 for annual board service and board committee service were 312,500 and 87,000 , respectively. These option grants have a contractual period of ten years and vest quarterly over one year. The exercise price per share was based on the average of the high and low share price on the date of grant, or $ 22.25 per share. The fair value of these grants using the Black-Scholes option-pricing model was $ 8.87 per share based on an expected term of 5.25 years, expected volatility of 32.1 %, and a risk-free rate of 4.40 %. During the year ended December 31, 2024 , 303,125 shares of stock options granted to directors in 2024 for annual board and committee service vested. There were 96,375 shares of unvested share options, or $ 0.9 million of unrecognized compensation cost at December 31, 2024 . The simplified method described in Staff Accounting Bulletin No. 107 was used by management due to the lack of historical option exercise behavior. The Company does not currently issue dividends. There were no forfeitures of stock option grants as of December 31, 2024. Management does not anticipate future forfeitures to be material. Share-based compensation expenses totaled $ 6.3 million and $ 2.8 million for the years ended December 31, 2024 and 2023 , respectively. Included in these amounts were $ 0.6 million of restricted common stock vested during the years ended December 31, 2024 and 2023, and $ 4.3 million and $ 1.4 million of stock options vested during the years ended December 31, 2024 and 2023 , respectively. On August 5, 2024, R. Scot Sellers, a director and Chairperson of the Board, Steve 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 restricted common stock that exceeded the 400,000 share limit. In February 2024, Mr. Randle received 28,511 shares of restricted 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 of restricted common stock and options to purchase 56,000 shares, and options and restricted common stock issued in 2024 amounting to 3,124 shares of restricted common stock and options to purchase 56,000 shares. The cancellation of the options and restricted common stock grants resulted in recognizing the remaining unvested awards of options and restricted 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 restricted common stock grants and $ 229,000 due to the cancellation of Mr. Randle’s restricted common stock grants. 36 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, 2024 and 2023 were as follows: Year Ended December 31, 2024 2023 (in thousands) Federal income tax expense/(benefit) at statutory rate ( 1,595 ) ( 647 ) Adjusted for: Permanent Differences 6 99 True-Ups ( 372 ) - Valuation Allowance 1,961 548 Income Tax expense/(benefit) - - Deferred tax assets were comprised of the following temporary differences as of December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Net operating loss and tax credit carryforwards $ 24,770 $ 24,648 Joint Venture and other investments ( 279 ) ( 446 ) Accrued retirement benefits and other compensation 2,728 1,233 Property net book value 3,042 3,002 Deferred Revenue 1,051 962 Reserves and other 29 37 Total Deferred Tax Assets 31,341 29,436 Valuation Allowance ( 31,341 ) ( 29,436 ) Net deferred tax asset - - Valuation allowances at December 31, 2024 and 2023 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, 2024, the Company had approximately $ 76.5 million in federal NOL carryforwards and approximately $ 81.4 million in state NOL carryforwards expiring from 2030 through 2034. The Company also had approximately $ 8.9 million in federal and state NOL carryforwards at December 31, 2024 that do not expire. The Company is subject to U.S. federal income tax as well as income tax in Hawaii. The Company is currently open to examination by taxing authorities for tax years ended after 2020. The Company recognizes and reports interest and penalties related to unrecognized tax benefits if applicable, within the provision for income tax expense. The Company had no unrecognized tax benefits for the years ended December 31, 2024 and 2023, and therefore did not recognize any interest expense or penalties on unrecognized tax benefits. 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 operating decision maker, and the Board of Directors in assessing performance and determining the allocation of resources. Reportable operating segments in 2024 were as follows: • Land development and sales operations consist of land planning and entitlement, development, development related construction, and sales of land assets. • 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. 37 Table of Contents Condensed consolidated financial information for each of the Company’s reportable segments for the years ended December 31, 2024 and 2023 (in thousands) were as follows: Land Development & Sales Leasing Resort Amenities Other Consolidated 2024 Operating revenues (1) $ 520 $ 9,621 $ 1,424 $ - $ 11,565 Operating costs and expenses ( 1,104 ) ( 5,006 ) ( 1,477 ) - ( 7,587 ) Depreciation expense - ( 668 ) - ( 55 ) ( 723 ) General and administrative expenses ( 645 ) ( 859 ) ( 215 ) ( 8,890 ) ( 10,609 ) Operating loss ( 1,229 ) 3,088 ( 268 ) ( 8,945 ) ( 7,354 ) Pension and other postretirement expenses ( 948 ) Interest expense ( 61 ) Loss on asset disposal 48 Other income 924 Income from continuing operations ( 7,391 ) Capital expenditures (2) $ 1,661 $ 1,871 $ - $ - $ 3,532 Assets (3) $ 21,695 (4) $ 16,672 $ 1,323 $ 10,449 $ 50,139 ( 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 $ 1.0 million equity method investment as of December 31, 2024. Land Development & Sales Leasing Resort Amenities Other Consolidated 2023 Operating revenues (1) $ - $ 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 loss ( 1,503 ) 2,724 ( 1,097 ) ( 5,095 ) ( 4,971 ) Pension and other postretirement expenses ( 436 ) Interest expense ( 6 ) Gain from derecognition of nonfinancial asset 1,626 Other income 707 Income from continuing operations ( 3,080 ) Capital expenditures (2) $ 200 $ 619 $ - $ - $ 819 Assets (3) $ 17,102 (4) $ 14,489 $ 1,018 $ 9,614 $ 42,223 ( 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 as of December 31, 2023. 14. RESERVES Allowance for credit losses for 2024 and 2023 were as follows: Description Balance at Beginning of Year Increase (Decrease) Balance at End of Year (in thousands) Allowance for Credit Losses 2024 $ 518 $ ( 13 ) $ 505 2023 $ 177 $ 341 $ 518 38 Table of Contents Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.