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, 1997
[ ] 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 October 31, 1997, 8,000,000 shares of Class A Common Stock and
2,000,000 shares of Class B Common Stock of the issuer were outstanding.
<PAGE>
MAUI USA, INC.
INDEX
Page
Number
<TABLE>
PART I - FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Balance Sheets - September 30, 1997
and December 31, 1996 . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statements of Operations for the
Three Months and Nine Months Ended
September 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Cash Flows for the
Nine Months ended September 30, 1997 and 1996 . . . . . . . . . 3
Notes to Consolidated Financial Statements . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . 5
PART II - OTHER INFORMATION
Item 6(b). Reports on Form 8-K . . . . . . . . . . . . . . . . 7
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
<TABLE>
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
ASSETS
Cash (including restricted cash of
$-0- and $1,846,840) $ 8,373 $ 1,916,104
Land under development 30,788,269 22,082,317
Furniture and equipment, net 11,825 12,268
Other assets 46,751 52,475
Total assets $ 30,855,218 $ 24,063,164
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 496,152 $ 1,542,343
Advances from contractor 4,917,588 -
Bonds payable 360,000 -
Notes payable 12,230,363 12,119,459
Accrued interest payable 3,221,137 1,045,479
Payable to affiliates 4,673,223 4,004,828
Total liabilities 25,898,463 18,712,109
Stockholders' equity:
Common Stock
Class A, $.001 par value; authorized - 25,000,000
shares, outstanding - 8,000,000 shares 8,000 8,000
Class B, $.001 par value; authorized - 5,000,000
shares, outstanding - 2,000,000 shares 2,000 2,000
Additional paid-in capital 5,556,149 5,556,149
Accumulated deficit (609,394) (215,094)
Total stockholders' equity 4,956,755 5,351,055
Total liabilities and stockholders' equity $ 30,855,218 $ 24,063,164
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Interest income $ 1,452 $ 12,184 $ 18,568 $ 34,252
Selling, general and
administrative expenses (155,515) (29,932) (372,334) (120,857)
Depreciation & amortization (4,378) (7,326) (13,029) (12,656)
Interest expense (12,357) - (27,505) -
_________ _________ _________ _________
Net loss ($170,798) ($ 25,074) ($394,300) ($ 99,261)
Loss per common share
Primary ($ .017) ($ 0.003) ($ .039) ($ 0.010)
Weighted average number of shares
outstanding 10,000,000 10,000,000 10,000,000 10,000,000
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
Nine Months Ended
September 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (284,300) $ (99,261)
Adjustments to reconcile net loss to net cash
provided by operating activities -
Depreciation and amortization 13,029 12,656
Reserve for investment in Moomin (110,000) -
Changes in assets and liabilities:
Increase in receivable from County of Maui - (790,719)
Increase in land under development (8,705,952) (3,395,072)
Increase in other assets (3,662) (1,637)
Increase in accrued interest payable 2,175,658 440,548
Increase (decrease) in accounts payable (1,046,191) 971,803
Net cash used in operating activities (7,961,418) (2,861,682)
Cash flows used in investing activities:
Purchases of furniture and equipment (3,200) -
Net cash used in investing activities (3,200) -
Cash flows from financing activities:
Advances from contractor 4,917,588 -
Proceeds from borrowings from affiliates 668,395 1,125,567
Proceeds from bonds payable 360,000 -
Proceeds from note payable 110,904 -
Note payable repayments - (3,750,000)
Note payable borrowings - 8,000,000
Net cash provided by financing activities 6,056,887 5,375,567
Net increase (decrease) in cash (1,907,731) 2,513,885
Cash at beginning of period (including restricted cash
of $1,846,840 and $1,142,872) 1,916,104 1,202,656
Cash at end of period (including restricted cash of
$-0- and $3,632,400) $ 8,373 $ 3,716,541
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 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, necessary for a fair presentation of the results of operations
and cash flows for the interim period covered and the financial condition of
the Company at the dates of the balance sheets. The operating results for the
interim period 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 in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1996.
Reclassifications
The Company reclassified the cash outflow related to the land under
development from investing activities to operating activities on the Statement
of Cash Flows for the nine months ended September 30, 1996 in order to conform
to the presentation in the Statement of Cash Flows for the nine months ended
September 30, 1997. In addition, the Company reclassified the cash proceeds
from borrowings from affiliates from operating activities to financing
activities. Such reclassifications increased net cash used by operating
activities by $4,520,639, decreased net cash used in investing activities by
$3,395,072 and increased net cash provided by financing activities of
$1,125,567.
NOTE 2 - MATERIAL COMMITMENTS:
The Company has approximately $272,000 remaining in outstanding commitments
related to an $11.8 million fixed price contract for mass grading and
infrastructure construction (primarily utilities, sewage and roadways) for the
Project. The mass grading and infrastructure is substantially complete, final
subdivision map has been obtained and only landscaping remains. In connection
with this contract, the Company entered into an agreement dated July 25, 1996,
whereby the Company placed $4 million into escrow, all of which was used as of
September 30, 1997.
The fixed price contract provides that the general contractor will not suspend
work or terminate the contract on account of nonpayment and will look solely
to the $4 million initially deposited into escrow and the sales proceeds from
future contracts of $50,000 per lot for payment of the contract. During the
third quarter, the general contractor funded $1,682,710 toward the land
development project reflected as advances from contractor. Interest accrues
on all unpaid amounts at the First Hawaiian Bank prime rate in effect at the
time payment became due.
<PAGE>
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, totaling approximately sixty acres, located at
Kahana Ridge in West Maui (the "Project"). The expected completion date for
the development of the Project is September 1997. Costs incurred during the
nine month period ended September 30, 1997 relate to development of the
infrastructure of the Project and capitalization of approximately $2.1 million
of interest related to notes payable and advances from affiliates. This
resulted in a significant increase (approximately $8,684,228) in Land Under
Development (as set forth on the Company's unaudited consolidated balance
sheet). The decrease in accounts payable from December 31, 1996 is primarily
due to the paydown of accounts using the escrow funds and proceeds from
advances from affiliates.
Material Changes in Results of Operations
The Company's selling, general and administrative expenses amounted to
$372,334 for the nine month period ended September 30, 1997, compared to
$120,857 for the corresponding 1996 period. The Company's selling, general
and administrative expenses amounted to $155,515 for the three months ended
September 30, 1997, compared to $29,932 for the corresponding 1996 period.
The increase in expenses results from increased selling activities related to
the Company's Kahana Ridge project and for expenses incurred to pursue other
potential business opportunities. In addition, during the three months ended
September 30, 1997, the Company fully reserved for its $110,000 investment in
Moomin Valley Corporation as the Company's right to purchase shares in this
company has expired. Interest expense relates to the convertible bonds issued
and certain unallocated interest on promissory notes.
Financing, Working Capital and Liquidity
In connection with obtaining the final subdivision map, the Company can begin
closing lot sales in early December and currently has twelve lots in escrow.
The first $100,000 of proceeds from each lot sale will be paid to the
investor; the next $50,000 of proceeds will be paid to the general contractor;
and the remainder will be paid to the investor until the mortgage loan is
repaid in full. Management expects working capital shortfalls for the
Company's general and administrative and debt service payments required on
their loan from a bank will continue to be funded by advances from affiliates.
On March 20, 1997, the Company issued $60,000 of convertible bonds at 6%, due
March 31, 2002 to a single investor. On April 22, 1997, another investor
purchased $300,000 of convertible bonds from the Company with a five-year
term, at 6%. In addition, the bonds sold have warrants attached for the
purchase of 60,000 shares of the Company's Class A common stock for $4.00 per
share which expires on April 30, 1999.
On November 1, 1997, the Company issued an additional $300,000 of convertible
bonds at 12% which are due November 1, 2000. The bonds have warrants attached
for the purchase of 150,000 shares of the Company's Class A common stock for
$2.00 per share which expires on October 31, 2000.
<PAGE>
PART II - OTHER INFORMATION
Item 6(b). Reports on Form 8-K
Report on Form 8-K/A filed July 10, 1997, reporting Item 7 (Exhibit 16.1 -
Letter re Change of Accountant).
Report on Form 8-K/A filed July 18, 1997, reporting Item 4 (Change in
Registrant's Certifying Accountant) and Item 7 (Exhibit 16.1 - Letter re
Change in Accountant).
<PAGE>
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, 1997 MAUI USA, INC.
By: /s/ Myron O. Kirkeby
---------------------------
Myron O. Kirkeby
President, Chief Executive
Officer and Secretary
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000894549
<NAME> Maui USA, Inc.
<S> <C> <C>
<PERIOD-TYPE> 9-Mos Year
<FISCAL-YEAR-END> Dec-31-1996 Dec-31-1996
<PERIOD-START> Jan-01-1997 Jan-01-1996
<PERIOD-END> Sep-30-1997 Dec-31-1996
<CASH> 8,373 1,916,104
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 30,788,269 22,082,317
<CURRENT-ASSETS> 0 0
<PP&E> 24,994 21,794
<DEPRECIATION> (13,169) (9,526)
<TOTAL-ASSETS> 30,855,218 24,063,164
<CURRENT-LIABILITIES> 496,152 1,542,343
<BONDS> 12,590,363 12,119,459
0 0
0 0
<COMMON> 10,000 10,000
<OTHER-SE> 5,556,149 5,556,149
<TOTAL-LIABILITY-AND-EQUITY> 30,855,218 24,063,164
<SALES> 0 0
<TOTAL-REVENUES> 18,568 11,573
<CGS> 0 0
<TOTAL-COSTS> (412,868) (45,676)
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (394,300) (34,103)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (394,300) (34,103)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (394,300) (34,103)
<EPS-PRIMARY> (0.039) (0.003)
<EPS-DILUTED> 0 0
</TABLE>
