SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________ to ___________.
Commission file number: 33-55254-34.
MAUI USA, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 87-0485322
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
505 FRONT STREET, SUITE 233, LAHAINA, MAUI, HAWAII 96761
(Address of principal executive offices) (Zip Code)
(808) 667-0647
(Issuer's telephone number)
(Former name, former address and former
fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
As of November 12, 1996, 8,000,000 shares of Class A Common Stock and
2,000,000 shares of Class B Common Stock of the issuer were outstanding.
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MAUI USA, INC.
INDEX
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Number
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - September 30, 1996
and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statement of Operations - For the
nine months ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . .
Statement of Operations - For the
three months ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . .
Statement of Cash Flows - For the
nine months ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . .
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security-Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS - SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
Maui USA Inc.
Consolidated Balance Sheet
September 30, 1996 December 31, 1995
ASSETS (unaudited)
Cash (including restricted
cash of $3,632,400
and $1,142,872) $ 3,716,541 $ 1,202,656
Receivable from County of
Maui 790,719 --
Land under development 18,673,327 15,278,255
Furniture and equipment, 13,357 16,626
net
Other 66,643 74,393
Total Assets $ 23,260,587 $ 16,571,930
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable $ 1,587,729 $ 615,926
Note payable 11,750,000 7,500,000
Interest payable 440,548 -
Payable to affiliates 4,116,412 2,990,845
Total liabilities 17,894,689 11,106,771
Stockholders' equity
Common Stock
Class A, $.001 par value; 8,000 8,000
authorized - 25,000,000
shares, outstanding -
8,000,000 shares
Class B, $.001 par value; 2,000 2,000
authorized - 5,000,000
shares, outstanding -
2,000,000 shares
Additional paid-in capital 5,556,149 5,556,149
Accumulated deficit (200,251) (100,990)
Total stockholders' equity 5,365,898 5,465,159
Total liabilities and
stockholders' equity $ 23,260,587 $ 16,571,930
See accompanying notes to consolidated financial statements.
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STATEMENT OF OPERATIONS - FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 AND 1995
Maui USA Inc.
Consolidated Statement of Operations
(unaudited)
Nine Months Ended September 30,
1996 1995
Interest income $ 34,252 $ 23,060
General and administrative
expenses (133,513) (81,550)
Net loss $ (99,261) $ (58,490)
Loss per common share
Primary $ (0.010) $ (0.006)
See accompanying notes to consolidated financial statements.
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STATEMENT OF OPERATIONS - FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1996 AND 1995
Maui USA Inc.
Consolidated Statement of Operations
(unaudited)
Three Months Ended September 30,
1996 1995
Interest income $ 12,184 $ 744
General and administrative
expenses (37,258) (25,130)
Net loss $ (25,074) $ (24,386)
Loss per common share
Primary $ (0.003) $ (0.002)
See accompanying notes to consolidated financial statements.
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STATEMENT OF CASH FLOWS - FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 AND 1995
Maui USA Inc.
Consolidated Statement of Cash Flows
(unaudited)
Nine Months Ended September 30,
1996 1995
Cash flows from operating
activities $ (99,261) $ (58,490)
Net loss
Adjustments to reconcile
net loss to net cash
provided by operating
activities
Depreciation and
amortization 12,656 -
Changes in assets and
liabilities
Increase in receivable
from County of Maui (790,719) -
Decrease in
other assets (1,637) (25,658)
Increase in accounts
payable 971,803 104,628
Increase in interest payable 440,548 -
Net increase in payable
to affiliates 1,125,567 1,762,249
Net cash provided by
operating activities 1,658,957 1,782,729
Cash flows used in
investing activities
Costs of land under
development (3,395,072) (2,190,376)
Net purchases of
furniture and
equipment - (2,359)
Net cash used in
investing activities (3,395,072) (2,192,735)
Cash flows provided by
financing activities
Note payable repayments (3,750,000) -
Note payable borrowings 8,000,000 -
Net cash provided by
financing activities 4,250,000 -
Net increase (decrease) in cash (2,513,885) (410,006)
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Cash at beginning of
period
(including restricted
cash of $1,142,872 and
$1,209,368) 1,202,656 1,569,797
Cash at end of period
(including restricted
cash of $3,632,400 and
$1,137,568) $ 3,716,541 $ 1,159,791
See accompanying notes to consolidated financial statements.
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NOTES TO FINANCIAL STATEMENTS
MAUI USA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1996
1. BASIS OF PRESENTATION
In the opinion of management, the unaudited financial information
included in this report contains all adjustments, consisting of normal
recurring adjustments only, necessary for a fair presentation of the
results of operations and cash flows for the interim periods covered
and the financial condition of the Company at the dates of the balance
sheets. The operating results for the interim periods are not
necessarily indicative of the results to be expected for the full
fiscal year. The accounting policies followed by the Company are set
forth in Note 2 to the financial statements included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1995.
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121 (FAS 121), "Accounting for the Impairment
of Long-Lived Assets and for Assets to be Disposed Of." FAS 121
requires that long-lived assets and certain identifiable intangibles
held and used by an entity be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Additionally, FAS 121 generally requires
that the long-lived assets and certain identifiable intangibles to be
disposed of be reported at the lower of the carrying amount or fair
value less cost to sell. The adoption of FAS 121 by the Company did
not have a material effect on the unaudited financial information
included in this report.
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123 (FAS 123), "Accounting for Stock-Based
Compensation," which establishes financial accounting and reporting
standards for stock-based employee compensation plans. The adoption of
FAS 123 by the Company did not have a material effect on the unaudited
financial information included in this report.
2. NOTES PAYABLE
On July 25, 1996, the Company entered into an agreement with an
investor whereby the Company received $8 million in financing in the
form of a mortgage loan. In connection with this agreement the Company
repaid half of the $7.5 million loan from the Bank of Bermuda, and the
Bank approved the transfer of the remaining $3.75 million note payable
from 3521 Corp. (an affiliate) to the Company. The remaining Bank of
Bermuda loan is subordinate to the $8 million mortgage loan and fixed
price contract with a construction company. The Company also used $4
million of the proceeds to fund the general contractor's escrow account
for construction of the Kahana Ridge Project. The remaining proceeds
were used to pay professional and administrative fees in connection
with the financing and to provide additional working capital to the
Company.
Pursuant to the terms of the financing agreement, as and when the
individual lots are sold, $100,000 from the sale of each lot is to be
paid directly to the investor until the $8 million advance is paid in
full together with the specified internal rate of return on the
advance.
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3. MATERIAL COMMITMENTS
Maui USA, Inc. (the "Company") is continuing with its development of
three adjoining parcels of land, totaling approximately sixty acres,
located on the Kahana Ridge in West Maui (the "Project"). The expected
completion date for development of the Project is June 1997. The
Company has approximately $8.6 million in outstanding commitments
related to a $11,456,000 fixed-price contract with a construction
company for mass grading and infrastructure construction for the Kahana
Ridge Project. In connection with this contract, the Company placed
into escrow $4 million on July 26, 1996 of which approximately $3.6
million remained in escrow as of September 30, 1996. As and when the
individual lots are sold, $50,000 from the sale of each lot is to be
repaid directly to the general contractor of the Project.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
MATERIAL CHANGES IN FINANCIAL CONDITION
Maui USA, Inc. (the "Company") is continuing with its development
of three adjoining parcels of land, totalling approximately sixty acres,
located on the Kahana Ridge in West Maui (the "Project"). The expected
completion date for development of the Project is June 1997. Costs
incurred during the nine month period ended September 30, 1996 relate to
development of the infrastructure of the Project and resulted in a
significant increase (approximately $3.4 million) in Land Under Development
(as set forth on the Company's unaudited consolidated balance sheet). The
increase in cash and notes payable represents the net financing proceeds
received from an investor during the third quarter (see discussion at Notes
Payable). The increase in accounts payable and payable to affiliates from
December 31, 1995 is due principally to the land development costs incurred
in connection with the Project.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Increased general and administrative expenses for the nine month
period ended September 30, 1996 compared to the respective corresponding
1995 period relate primarily to non-capitalizable media advertising
expenses for the Project.
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PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
A Deferred Annual Meeting of shareholders of the Company was held
on October 1, 1996 at the offices of the Company, at which the following
matters were submitted to shareholder vote:
1. A resolution to elect the following persons as Directors of
the Company:
Maurice M. Joyal
Jacob Elkin
Myron O. Kirkeby
David Williams
Harvey Elman
2. A resolution to ratify and approve all actions taken by the
Company's Board of Directors and Officers since the reorganization of the
Company on August 1, 1994, changing its name from Ethical Corporation to
Maui USA Inc.
3. The approval of the Company's 1995 Audited Financial
Statements prepared by Price Waterhouse LLP.
4. A resolution to amend the by-laws of the Company, changing
the date of the Annual General Meeting of shareholders of the Company from
February 15 of each year to a date in April of each year, with the day to
be determined by the Board of Directors.
5. A resolution to ratify and approve the engagement of Price
Waterhouse LLP as the Company's auditors for 1996, and to appoint Price
Waterhouse LLP as the auditors of the Company until the next Annual General
Meeting of the Company's shareholders at a remuneration fee to be
determined by the Board of Directors.
No proxies were solicited in connection with the Deferred Annual Meeting.
Each of the matters set forth above was approved by unanimous vote of all
shareholders present at the meeting, which shareholders represented in the
aggregate 7,000,000 Class A Shares (of a total of 8,000,000 of such shares
outstanding) and 2,000,000 Class B Shares (of a total of 2,000,000 of such
shares outstanding).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 Financial Data Schedule
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SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 14, 1996 MAUI USA, INC.
By: /s/ Myron O. Kirkeby
Myron O. Kirkeby
President and Chief
Executive Officer
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Exhibit Number Description Sequentially
Numbered Pages
Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-1-1996 JAN-1-1995
<PERIOD-END> SEP-30-1996 DEC-31-1995
<CASH> 3,716,541 1,202,656
<SECURITIES> 0 0
<RECEIVABLES> 790,719 8,000
<ALLOWANCES> 0 0
<INVENTORY> 18,673,327 15,278,255
<CURRENT-ASSETS> 0 0
<PP&E> 21,794 21,794
<DEPRECIATION> 8,437 5,168
<TOTAL-ASSETS> 28,260,587 16,571,930
<CURRENT-LIABILITIES> 2,028,277 615,926
<BONDS> 15,866,412 10,490,845
0 0
0 0
<COMMON> 10,000 10,000
<OTHER-SE> 5,355,898 5,455,159
<TOTAL-LIABILITY-AND-EQUITY> 5,365,898 5,465,159
<SALES> 0 0
<TOTAL-REVENUES> 34,252 23,060
<CGS> 0 0
<TOTAL-COSTS> (133,513) (81,350)
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (99,261) (58,490)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (99,261) (58,490)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (99,261) (58,490)
<EPS-PRIMARY> (.010) (.006)
<EPS-DILUTED> 0 0
</TABLE>
