Maui General Store will begin selling the Cyclone disposable cell phone in Hawaii.

Maui General Store
bets on eclectic mix

The online and catalog firm hawks
disposable cell phones, pearls and clothes

By Dave Segal

They're hardly the types of products one might expect to find together under the same roof.

But combine a surf board, children's sleepwear, Tahitian pearls and a disposable cell phone and what you get is Maui entrepreneur Richard Miller's plan to bring island fever to consumers worldwide.

Miller, who brought Maui General Store Inc. public five months ago, thinks his company has found a niche as an Internet and mail-order catalog retailer that offers island- and exotic-themed goods and services. He plans to open for business in the fourth quarter of this year.

In the interim, he has been ramping up the company's product lines over the past several months. Miller's latest deal, which he announced today, gives his company a foothold in the fledgling disposable cell-phone business. Maui General Store said it has signed an international distribution agreement with New Horizons Technologies International Inc., a privately held company based in Orlando, Fla. The price was not disclosed.

Last October, Miller signed an exclusive licensing agreement with Baby Buddha Inc., a designer and manufacturer of children's clothing, books and toys with an Asian/Eastern influence; and acquired Hana Pearl Inc., which sells Tahitian black pearls and South Seas golden pearls ranging between $400 and $30,000.

"The possibilities of what this can do for us in regards to sales in different countries ... the numbers are staggering," Miller said of the cell-phone transaction. "We're talking in the hundreds of millions of dollars in one or two years."

The disposable cell phone, which doesn't require a user's contract like most cell phones, is slightly larger than a credit card at 3 1/2 inches high by 2 1/2 inches wide, initially will retail at $39.95 and works essentially like a prepaid phone card. The phone will be loaded with 30 minutes of talking time, with the user having the option of refreshing the cell phone's minutes in one of two ways. The user can either buy a phone card with minutes on it and punch a code into the phone, or can call a toll-free number with a credit card and receive a special code that way. Miller said additional time after the initial 30 minutes will cost no more than 25 to 30 cents a minute.

Miller said Maui General Store's target audience in Hawaii will be tourists who come to the state and don't have travel calling plans, or those who want to stay connected with their family members -- both in state and abroad -- while they're here on vacation. He said other prospective customers are those who don't qualify for credit, and tourists in other countries. Miller said there are even plans to brand the cell phone for children. The only area that Maui General Store doesn't have distribution rights to is the U.S. mainland because New Horizons wanted to retain that territory.

"This disposable phone is a perfect complement to Maui General Store," said Seattle-based retail consultant J'Amy Owens, a Punahou graduate who is an investor in the company and has a background in branding companies such as Nike Inc. and Starbucks Corp. "We'll be placing it at the airport, car rental companies, convenience stores and hotels. Tourists will be able to give it to their teenage kids as they go out sightseeing or surfing, and (the tourists) will be able to stay in touch with their families at home."

Miller said Verizon, AT&T, Cingular, Nextel and VoiceStream will be among the wireless carriers that the company will use. The phone, which initially will be called by its present name, Cyclone, will be changed to a more appropriate name for the islands later on, Miller said. Maui General Store, which already has begun writing orders for the phone, will profit both by selling the phones and by the margin it receives after purchasing and then reselling the air time.

Maui General Store, which went public in August on the Pink Sheets, plans to have a brick-and-mortar flagship outlet in Kahului near the Maui airport in the next 36 months, Owens said. In the meantime, the startup will be concentrating on its catalog and Internet units. Miller said the company initially will produce a catalog every six months, with the ultimate goal being one a quarter. Miller said the inaugural catalog, whose appearance will resemble a Sundance catalog, will be geared toward surfing. He said it will offer surfboards, surfing clothes and woodies for sale as well as offering information on different places to surf. Miller said the company will purchase mailing lists that target people who have come to Hawaii and those who are on surfing-related mailing lists. Plans for the Internet site,, include providing reservation services for hotels.

"When we started out Maui General Store, it was basically going to be a catalog and Internet company," Miller said. "We're still on course, but we've expanded beyond that to reach a larger audience. With the clothing line, which we want to do with Baby Buddha, we really took a different approach. We received a tremendous reception from New York (during Miller's three-month visit there last year with manufacturers). It's a beautiful line of children's clothing. Some of the designs can go to adults, too."

Maui General Store, which trades under the ticker symbol MAUG, closed Friday at 2 cents a share. Miller said the company will file financial reports with the Securities and Exchange Commission and move to the Over the Counter Bulletin Board within the next 60 to 90 days. The company was formed in October 2001 when it completed a transaction with a public shell.

"When we bought the shell we chose to be on the Pink Sheets because it offers me two things I want to achieve -- raising capital and having (more public shares available)," Miller said. "When we achieve that, we'll refile to be on the OTC Bulletin Board because we'll be stronger and more brokers will be more adept to make a market in the stock."

Currently, the company has fewer than 500,000 free-trading shares, with an additional 100 million shares that are restricted and can't be sold on the market.

"Being on the Pink Sheets allows me to do the financial raise without doing a full registration (with the SEC)," said Miller, who plans to have a $1 million offering in the next three months. Down the road, he's planning to have another offering of at least $5 million.

Miller conducted a private placement of shares in August 2000 to raise $300,000, which he has used for working capital and acquisitions.

Miller said wholly owned subsidiary Hana Pearl already is profitable with $100,000 in annual revenue. The pearls are available at the Ritz-Carlton Maui or through appointment.

Baby Buddha, meanwhile, has taken on a life of its own with a line of Baby Buddha books and stuffed animals besides the clothing.

"It's just a very beautiful clothes line for toddlers," said Miller, who said he has lined up manufacturers in China. "We're using prime colors, very positive colors. We'll have infant wear sleepsuits, pants and shorts, skirts, jackets and socks. We'll have clothes for toddlers right up to the teenagers, with matching clothes for the mothers."

Miller said the company also will offer books and tapes dealing with self-discovery, such as meditation and yoga, as well as suggestions of places to go for retreats.

"The catalog will have an island feel to it because of the products from different islands," Miller said.

Besides Hawaii, the catalog also will feature products from Bali, Tahiti, the Caribbean and other exotic locales.

"I've been involved with taking five companies public," said Miller, who's lived in Maui for more than three years. "That's helped a little bit with knowing what not to do. I know how to do acquisitions and to bring in the right people to provide expertise that might be helpful."

Miller's last venture was with publicly traded Art Cards Inc., which he founded and served as president and chairman from 1988 to 1999 until the business was acquired by Umember Inc. Art Cards owned the rights to reproduce on greeting cards and other ancillary products music and drawings by John Lennon and other contemporary artists.

Among the key members of Miller's Maui General Store brain trust are board member Rowland Hanson, a Maui resident who created the branding for Microsoft's Windows and did marketing for Neutragena, and Owens, president of The Retail Group Inc.

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