UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10 - QSB/A
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) of
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) of
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number 1-9043
BANYAN HOTEL INVESTMENT FUND
(Exact name of Registrant as specified in its charter)
Delaware 36-3361229
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Penn Plaza, Suite 1531, New York, N.Y. 10119
(address of principal executive offices) (zip code)
Registrant's telephone number, including area code (212) 736-7880
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 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 .
Shares of common stock outstanding as of October 31, 1995: 12,403.565
Transitional Small Business Disclosure Format. Yes . No X.
<PAGE>
Part I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BANYAN HOTEL INVESTMENT FUND
BALANCE SHEETS
September 30, 1995 And December 31, 1994
(Unaudited)
1995 1994
------ ------
ASSETS
Cash and Cash Equivalents $ 650,085 $ 275,161
Investment Securities 1,370,820 1,907,531
Interest Receivable on Cash and
Cash Equivalents and 9,575 16,279
Investments Securities
Mortgage Loans in Substantive --- ---
Foreclosure
Prepaid Insurance & Expenses 295,791 40,091
Net Investment in Liquidating Trust --- ---
Investment in Partnership --- ---
Other Assets 4,139 31,461
------------------------------
Total Assets $2,330,464 $2,270,523
==============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts Payable and Accrued $ 55,194 $ 111,197
Expenses
Commitments and Contingencies --- ---
------------------------------
Stockholders' Equity
Shares of Common Stock. $0.01
Par Value, 20,000,000 shares
Authorized, 12,403,565 shares
Issued 1995, and 10,355,799
shares 1994 87,477,847 87,027,338
Accumulated Deficit (85,181,027) (84,794,685)
Treasury Stock, at Cost, for
32,757 Shares of Common Stock (8,189) (8,189)
Unrealized loss on Investment Sec. (13,361) (65,138)
------------------------------
Total Stockholders' Equity $2,275,270 $2,159,326
------------------------------
Total Liabilities & Stockholders'
Equity $2,330,464 $2,270,523
==============================
Book Value Per Share of Common
Stock (12,403,565 shares
outstanding in 1995 and 10,323,042
in 1994) $ 0.19 $ 0.21
==============================
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
BANYAN HOTEL INVESTMENT FUND
STATEMENTS OF INCOME AND EXPENSES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 and 1994
(UNAUDITED)
INCOME 1995 1994
Interest Income on
Cash and Cash
Equivalents $ 13,532 $ 14,988
Interest Income on
Investment Securities 52,309 95,357
---------- ----------
Total Income $ 65,841 $ 110,345
---------- ----------
EXPENSES
Stockholders' Expenses $ 57,191 $ 80,899
Directors' Fees,
Expenses and Insurance 100,050 202,109
Other Professional Fees 105,293 93,965
General and Adminstrative 294,230 139,741
---------- ----------
Total Other Expenses $ 556,764 $ 516,714
Recovery of Class
Action Settlement Costs
and Expenses (29,582) (90,693)
Recovery from Mortgage Previously
Written Off (75,000) ---
---------- ----------
Total Expenses 452,182 426,021
---------- ----------
Net Income (Loss) $(386,341) $(315,676)
========== ==========
Net Income (Loss) Per
Share of Common Stock
(Based on Shares
Outstanding of 12,403,575
in 1995 and 10,323,042 in
1994) $ (0.03) $ (0.03)
========== ==========
The accompanying notes are an integral part of the Financial Statements.
3
<PAGE>
BANYAN HOTEL INVESTMENT FUND
STATEMENTS OF INCOME AND EXPENSES
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 and 1994
(UNAUDITED)
INCOME 1995 1994
---- ----
Interest Income on
Cash and Cash
Equivalents $ 4,411 $ 3,823
Interest Income on
Investment Securities $ 6,433 $ 31,748
---------- ----------
Total Income $ 10,844 $ 35,571
---------- ----------
EXPENSES
Expenses from Lending Activities:
Recovery of Losses on Mortgages
Loans, Notes and Interest
Receivable $ (75,000) $ ---
---------- ----------
Other Expenses:
Stockholder Expenses $ 7,459 $ 19,596
Directors' Fees, Expenses
and Insurance 21,082 58,497
Other Professional Fees 32,197 35,530
General and Administrative 37,638 25,875
---------- ----------
Total Other Expenses $ 98,376 $139,498
---------- ----------
Total Expenses $ 23,376 $139,498
---------- ----------
Net Income (Loss) $ (12,532) $(103,927)
========== ==========
Net Income (Loss Per
Share of Common
Stock (Based on
Shares Outstanding of
12,338,051 in 1995
and 10,321,042 in 1994 $(0.00) $(0.01)
========== ==========
The accompanying notes are an integral part of the Financial Statements.
4
<PAGE>
BANYAN HOTEL INVESTMENT FUND
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPT. 30, 1995
(UNAUDITED)
<TABLE><CAPTION>
Common Stock Accumulated Treasury Unrealized Total
Shares Amount Deficit Stock Loss
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stockholders' Equity
(Deficit) Dec. 31, 1994 10,355,799 $87,027,338 $(84,794,685) $(8,189) $(65,138) $2,159,326
Proceeds from Issuance
of Common Stock 2,047,766 450,509 --- --- --- 450,509
Net Loss --- --- (386,341) --- --- (386,341)
Market Adjustment --- --- --- --- 51,777 51,777
September 30, 1995
--------------------------------------------------------------------------------
12,403,565 $87,477,847 $(85,181,026) $(8,189) $(13,361) $2,275,271
================================================================================
The accompanying notes are an integral part of the financial statements.
</TABLE>
5
<PAGE>
BANYAN HOTEL INVESTMENT FUND
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 and 1994
(Unaudited)
<TABLE><CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash Flow from Operating Activities:
Net Income (Loss) $(386,341) $(315,676)
Amortization of Premium on Investment 1,060 1,392
Securities
Net Change in:
Interest Receivable 6,704 2,996
Prepaid Insurance (255,700) 25,141
Other Assets 27,268 205,906
Accounts Payable and Accrued Expenses (56,003) (62,363)
---------- ------------
Net Cash Used in Operating Activities $(663,012) $(142,604)
---------- ------------
Cash Flows From Investing Activities:
Net Proceeds from Sale of and
Principal Payments on Investment
Securities $ 587,427 ---
Purchase from Securities of Investment $ --- $(1,974,562)
---------- ------------
Net Cash used in or Provided by
Investment Activities $ 587,427 $(1,974,562)
---------- ------------
Cash Flow From Financing Activities:
Proceeds from Issuance of Common Stock $ 450,509 ---
---------- ------------
Net Increase or (Decrease) in Cash and
Cash Equivalents $ 374,924 $(2,117,166)
Cash and Cash Equivalents at Beginning of 275,161 2,443,797
Period
---------- ------------
Cash and Cash Equivalents at End
of Period $ 650,085 $ 326,631
========== ============
The accompanying notes are an integral part of the Financial Statements
</TABLE>
6
<PAGE>
BANYAN HOTEL INVESTMENT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
Readers of this quarterly report should refer to the Banyan Hotel
Investment Fund's (the "Fund's") audited financial statements for the year
ended December 31, 1994, which are included in the Fund's 1994 Annual
Report, as certain footnote disclosures which would be substantially
duplicate those contained in such audited statements have been omitted from
this report.
1. FINANCIAL STATEMENT PRESENTATION
The accompanying financial statements include the accounts of the Fund
and its wholly owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation. In the opinion of
management, all adjustments necessary for a fair presentation have been
made to the accompanying financial statements as of September 30, 1995 and for
the three months ended September 30, 1995 and 1994. These adjustments made to
the financial statements, as presented, are all of a normal recurring
nature to the Fund unless otherwise indicated.
2. CHANGE IN CONTROL
On February 15, 1995, a change in control of the Fund occurred
pursuant to the closing of the sale of shares of common stock in the Fund
to Mr. Harvey Polly per the terms of a purchase agreement. A tender offer
conducted by Mr. Polly, which commenced on December 28, 1994, concluded on
January 26, 1995, and resulted in the tender to Mr. Polly of 1,288,217
shares of common stock, or 12.5% of the Fund's then outstanding shares of
common stock, for a cash price of $0.35 per share. Subsequent to the
closing of the tender offer, the terms of the purchase agreement also
required Mr. Polly to purchase from the Fund a number of shares sufficent
to allow Mr. Polly to own, by virtue of the combination of the shares
acquired through the tender offer and the shares purchased directly from
the Fund, not less than 3,335,000 and not more than 40% of the shares of
common stock after giving effect to the shares issued in connection with
the purchase. On February 15, 1995, per the purchase agreement, Mr. Polly
purchased 2,047,766 newly issued shares of common stock of the Fund for a
cash price of $0.22 per share. Upon the acquisition of the aforesaid shares
from the Fund, when combined with the shares of common stock previously
owned and acquired pursuant to the tender offer, Mr. Polly is the
beneficial owner of 3,335,983 shares, or approximately 27% of the Fund's
outstanding voting shares of common stock.
3. TRANSACTIONS WITH AFFILIATES
Prior to the February 15, 1995 acquisition of the Fund by Mr. Polly,
administrative costs, primarily salaries and general and administrative
expenses, were reimbursed by the Fund to Banyan Management Corp. ("BMC").
These costs were charged to the Fund and certain other entities for which
BMC provides administrative services based upon the actual number of hours
spent by BMC personnel on matters related to those entities. The Fund's
7
<PAGE>
BANYAN HOTEL INVESTMENTS FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
reimbursements to BMC for the expenses during the three months ended March
31, 1995 totaled $83,674, representing the Fund's portion of BMC costs from
January 1, 1995 through February 15, 1995, which included a one-time
termination fee of $46,354 paid pursuant to the terms of an Administrative
Services Agreement between the Fund and BMC. During the first three months
of 1994, the Fund's portion of BMC costs was $25,416. During the second
quarter, the Fund paid $181 to BMC and $4,647 to Oak Realty Group, Inc., for
administrative costs during the management transition. During the third
quarter, Oak Realty Group, Inc. performed its final services for the Fund,
for which the Oak Realty Group was paid $4,958.
4. MORTGAGE LOANS RECEIVABLE
OMNI PARK CENTRE
On June 17, 1987, the Fund issued a $5,154,600 third mortgage loan to
Park Centre Associates (the "Borrower") which was collateralized by the
Omni Park Hotel (the "Property") located in New York, New York. On July 19,
1991 the Fund was served with a summons in a mortgage foreclosure action
filed by Sheraton Holding Inc. ("Sheraton") in the Superior Court of New
York, New York. Sheraton sought to foreclose on its $54,000,000 first
mortgage collateralized by the Property. The Sheraton foreclosure action
was based on monetary defaults by the Borrower. On September 30, 1991 the
Fund filed a counterclaim to the Sheraton foreclosure action. In addition,
the second mortgage on the property in the amount of approximately
$5,600,000 is also in default and the holder of the mortgage has filed a
counterclaim to the foreclosure with the court. On June 12, 1992, the
Borrower filed for protection under the U.S. Bankruptcy Code. On June 30,
1992, an order was entered in the Bankruptcy Court between the Fund,
Sheraton, the second mortgage holder and the Borrower authorizing and
restricting the use of cash collateral by the Borrower. During 1992, the
Fund recorded a provision for losses for the remaining carrying balance of
the loan.
In May, 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144, Accounting by
Creditors for Impairment of a Loan ("FAS 114"). Effective January 1, 1995,
in accordance with FAS 114, the Fund has reclassified Mortgage Loans in
Substantive Foreclosure to Mortgage Loans Receivable with an appropriate
allowance for the loan losses determined based on consideration of the fair
value of the collateral or discounted future cash flows to be received.
During the third quarter of 1995, the Fund assigned its interest in this
loan for $75,000. In as much as the entire loan had previously been written
off, this receipt is reflected as income on the accompanying Financial
Statements.
8
<PAGE>
4. MORTGAGE LOANS RECEIVABLE (CONTINUED)
On October 10, 1995, the Fund made a first mortgage loan in the amount
of $375,000 which is secured by a commercial property in New York City, as well
as by a personal guaranty of one of the principals of the borrower. The loan
calls for interest at 12% per annum with monthly payments based on a ten
(10) year amortization schedule and a balloon payment of the total balance
in five (5) years.
5. INVESTMENT IN PARTNERSHIP
In 1991, in connection with a release from liability related to a loan
made by the Fund, the Fund acquired a 50% limited partnership interest in
the partnership which owns the Santa Barbara Biltmore Resort. The Fund did
not record losses related to its interest in the Santa Barbara Biltmore
during 1995 and 1994 since the carrying value of the partnership interest
was reduced to zero as of December 1992, and the Fund has no obligation to
make additional capital contributions to, or to pay the liabilities of, the
partnership.
6. INVESTMENT SECURITIES
The Fund's investment securities portfolio at June 30, 1995 is as follows:
<TABLE><CAPTION>
Title of Each Issue and Amortized Cost Estimated
Name of Insurer Net of Principal Market
Paydowns Received Value
September 30, 1995 September 30, 1995 (2)
<S> <C> <C>
Federal National Mortgage Assn. (1)(4) $493,169 $483,939
8.00%, 1/20/94 - 2/25/2005
Federal National Mortgage Assn. (1)(3)
7 1/4%, 10/27/95 - 5/25/22 882,012 888,750
------------ ------------
$1,375,181 $1,372,689
============ ============
</TABLE>
(1) The Guaranteed Remic Pass-Through Certificates are guaranteed as to
timely payment of principal and interest by the Federal National
Mortgage Association. The maturity of the principal of the above
investment securities is dependent upon the repayments of the underlying
U.S. Agency sponsored mortgages.
9
<PAGE>
6. INVESTMENT SECURITIES (CONTINUED)
(1) The rate of repayment is dependent upon the current market level of
interest rates on mortgage loans as it relates to the interest rates of
the mortgages underlying each REMIC security. The stated maturity of these
investment securities, under the market conditions of the second quarter of
1995, is expected to be from February 25, 2005 to May 25, 2022. These
Expectation may change as interest rates on mortgage loans change.
(2) The Fund has recorded a market adjustment of 13,361 representing
unrealized losses on its investment securities based on current
market values at September 30, 1995.
(3) On June 11, 1995 the Fund sold these securities for $884,250 resulting
in a realized loss of approximately $20,200. On the same day the
Fund purchased $900,000 of FNMA 7 1/4% certificates for $891,000. This
transaction will increase the Fund's annual income from investment
securities by $20,200.
(4) On September 25, 1995, the Fund received $217,207 of principal on the
8% certificates which is reflected in the accompanying Financial
Statements. On October 25, 1995, the Fund received an additional
$433,950 of principal on these 8% certificates which will be reflected
on the fourth quarter Financial Statements. On October 27, 1995, the
Fund purchased $600,000 in U.S. Treasury bills which will mature on
December 21, 1995.
7. RECOVERY OF LOSSES ON MORTGAGE LOANS, NOTES, INTEREST RECEIVABLES
AND CLASS ACTION COSTS AND EXPENSES
On February 9, 1995, the Fund received a cash distribution of $47,331
related to its interest in a liquidating trust established for the benefit
of the previously unsecured creditors of VMS Realty Partners and its
affiliates ("VMS"). For the quarter ended March 31, 1995, the Fund has
recorded a $29,582 recovery of losses on mortgage loans, notes and
interest receivable on its consolidated statement of income and expenses
related to the distribution received from the liquidating trust. The
$29,582 net recovery recorded in 1995 represents the $47,331 distribution
received net of an estimated $17,749 due to the Class Action Settlement
Fund for the Fund's share of amounts due per the terms of the previously
settled VMS securities litigation. At June 30, 1995, the Fund has a total
liability to the Class Action Settlement of $30,786.
10
<PAGE>
7. RECOVERY OF LOSSES ON MORTGAGE LOANS, NOTES, INTEREST RECEIVABLES
AND CLASS ACTION COSTS AND EXPENSES (CONTINUED)
On January 25, 1994, the Fund received net proceeds of $90,693
relating to a recovery of payments previously made into an escrow
established as part of the 1992 class action settlement of the VMS
securities litigation. The escrow was established to provide the directors
of the Fund with monies to fund the cost of any litigation in which they
may be named as defendants following settlement of the class action.
Subsequently, the directors released the proceeds from the escrow, and the
Fund purchased an insurance policy to cover the directors.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL
Banyan Hotel Investment Fund ("The Fund"), was formed to make mortgage
loans to affiliates of VMS Realty Partners, ("VMS"), secured by hotel and
resort properties. The Fund has been adversely affected as a result of the
non-payment of amounts due from these borrowers on mortgage loans and notes
receivable.
In early 1990, the Fund implemented a business plan focused on
preservation of its assets and managing its properties acquired through
foreclosure until they could be disposed of in an orderly manner (the
"Principal Recovery Plan").
On January 28, 1992, the Board of Directors of the Fund authorized the
preparation of a formal plan of liquidation which was subsequently adopted
on April 7, 1992 (the "Plan"). The Plan contemplated the Fund liquidating
its assets and distributing the proceeds to its stockholders. The Fund
estimated that its liquidation value was between $.15 and $.20 per share.
After the adoption of the Plan, Management of the Fund completed the
workout or liquidation of certain assets and considered alternatives to
the announced plan of liquidation which could provide greater stockholder
value, including a number of unsolicited proposals from various third
parties. Based upon Management's review of these various proposals, the
Board of Directors resolved that one proposal was in the best interest of
the Fund and its stockholders because it allowed every stockholder an
opportunity to sell his shares at an amount in excess of the projected
liquidation value. The Board of Directors, by unanimous written consent
dated June 15, 1994, authorized the Fund to execute and deliver a non-
binding letter of intent with Mr. Harvey Polly.
On August 3, 1994 the Fund entered into Purchase Agreement (the
"Purchase Agreement") with Mr. Polly providing, among other things, for
an all cash tender offer, under which Mr. Polly agreed to offer to
purchase 100% of the shares of common stock of the Fund for $0.35 per
share. The Purchase Agreement was subsequently amended on November 4, 1994,
December 19, 1994 and February 15, 1995. The Purchase Agreement provided,
among other things, for the following events to occur at or before closing:
(i) the resignation of the current officers and directors; (ii) the purchase
by the Fund of "run-off" directors' and officers' liability insurance coverage
for the current officers and directors; (iii) the termination of the
employment contract of Leonard G. Levine and payment of the severance
compensation associated therewith; (iv) the termination of the
Administrative Services Agreement with Banyan Management Corp.
and payment of the termination fee associated therewith; and (v) the
assignment by the Fund of its ownership interest in Banyan Management Corp.
On February 15, 1995, a change in control of the Fund occurred
pursuant to the closing of the sale of shares of common stock in the Fund
to Mr. Polly per the terms of the Purchase Agreement. Mr. Polly's tender
offer, which commenced on December 28, 1994, concluded on
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED)
January 26, 1995, and resulted in the tender to Mr. Polly of 1,288,217
shares of common stock, or 12.5% of the Fund's then outstanding shares of
common stock, for a cash price of $0.35 per share. Subsequent to the closing
of the tender offer, the terms of the Purchase Agreement also required
Mr. Polly to purchase from the Fund a number of shares sufficient to allow
Mr. Polly to own, by virtue of the combination of the shares acquired pursuant
to the tender offer and the shares purchased directly from the Fund, not less
than 3,335,000 and not more than 40% of the shares of common stock of the Fund
after giving effect to the shares issued in connection with the purchase. On
February 15, 1995, per the Purchase Agreement, Mr. Polly purchased 2,047,766
newly issued shares of common stock of the Fund for a cash price of $0.22 per
share. Upon the acquisition of the aforesaid shares from the Fund when
combined with the shares of common stock previously owned and acquired
pursuant to the tender offer, Mr. Polly is the beneficial owner of
3,335,983 shares, or approximately 27% of the Fund's outstanding voting
shares of common stock.
Upon the closing of the sale of shares of common stock of the Fund on
February 15, 1995, the Purchase Agreement provided for the resignation of
the Fund's then current directors and officers. Accordingly, all of the
then current directors and officers resigned and were replaced with Mr.
Polly's designees. Subsequent to the resignation of the directors and
officers of the Fund, no further arrangements or understandings existed
among the Fund and its officers and directors. On February 15, 1995,
Messrs. Leo Yarfitz, Morton I. Kalb, Willis Ryckman and Harvey Polly were
appointed as new Directors of the Fund. In addition, the new Directors
appointed Harvey Polly as President and Chief Executive Officer, Mr. Morton I.
Kalb as Vice President and Mr. William L. Weiss as Assistant Secretary.
Effective February 15, 1995, the address of the Fund's principal executive
office is One Penn Plaza, Suite 1531, New York, New York 10119.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents consist of cash and short-term investments.
The Fund's cash and cash equivalents balance at September 30, 1995 and December
31, 1994 was $650,085 and $275,161, respectively. This increase in cash and
cash equivalents is due primarily to the receipt of approximately $450,000
from the February 15, 1995 purchase by Mr. Polly, as discussed above, of
2,047,766 shares of common stock from the Fund as well as the receipt of
$47,331 related to the Fund's interest in a VMS liquidating trust (see
discussion below), and the $75,00 related to the assignment of the Omni Park
Centre mortgage(as discussed above). These receipts were partially offset by
the payment of the Fund's operating expenses and costs associated with the
change in control discussed above. At September 30, 1995 and December 31, 1994,
the Fund also held investment securities during the quarter with a carrying
value of $1,370,820 and $1,907,531, respectively. The decrease in investment
securities is due to the sale of approximately $350,000 of securities held
by the Fund, as well as principal payments received on the FNMA 8% notes. The
proceeds from this sale were used primarily for costs associated with the
change in control and reinvestments.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED)
At this time, there are no material commitments for capital
expenditures. The Fund's cash and cash equivalents are sufficient to meet
its need for anticipated operating expenses. The Fund deems its liquidity
to be adequate.
As of December 31, 1994, the Fund's mortgage loan portfolio consisted of
one loan, for which the Fund has recorded a provision for losses on the loan
representing its full carrying balance. As of September 30, 1995 the Fund had
not material loans in its portfolio.
On February 9, 1995, the Fund received a cash distribution of $47,331
related to its interest in a liquidating trust established for the benefit
of the previously unsecured creditors of VMS. For the quarter ended March
31, 1995, the Fund recorded a $29,582 recovery of the provision for loan
losses on mortgage loans, notes and interest receivable on its consolidated
statement of income and expenses related to the distribution received from
the liquidating trust. The $29,582 net recovery recorded in 1995 represents
the $47,331 distribution received net of an estimated $17,749 due to the
Class Action Settlement Fund for the Fund's share of amounts due per the terms
of the previously settled VMS securities litigation.
On January 25, 1994, the Fund received net proceeds of $90,693
relating to a recovery of payments previously made into an escrow
establishment as part of the 1992 Class Action settlement of the VMS
securities litigation. The escrow was established to provide the directors
of the Fund with monies to fund the cost of any litigation in which they
may be named as defendants following settlement of the Class Action.
Subsequently, the directors released the proceeds from the escrow, and the
Fund purchased an insurance policy to cover the Directors.
During the third quarter of 1995 the Fund received $75,000 for assignment
of its mortgage on the Omni Park Centre Hotel, which loan had been written off.
The Fund's ultimate return of cash to its stockholders is dependent
upon, among other things: (i) the activities undertaken by the Fund; (ii)
interest earned from the investment of cash and cash equivalents and
investment securities; (iii) the Fund's ability to control its operating
expenses; and (iv) possible recoveries from the Santa Barbara Biltmore
Hotel and the liquidating trust, if any.
RESULTS OF OPERATIONS
Total income for the nine months ended September 30, 1995 and 1994 was
$65,841 and $110,345, respectively. The decrease in total income for the six
months ended Setember 30, 1995 when compared to the same period in 1994 is due
primarily to an approximately $28,500 realized loss on the sale of a portion
of the Fund's investment securities which partially offset the interest income
income earned on investment securities. In addition, interest income on
cash and cash equivalents and investment securities decreased due to the
Fund having approximately $200,000 less cash available for investment
during the first nine months of 1995 when compared to the same period in
1994.
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(CONTINUED)
Operating expenses for the nine months ended September 30, 1995 increased
when compared to the same period in 1994 as a result of an increase in
stockholder expenses, other professional fees and general and
administrative expenses. These increases are primarily attributable to
costs associated with the tender offer which resulted in a change in
control of the Fund as discussed above, including stock listing fees, legal
and other professional expenses and required termination payments to the
Fund's former President and Banyan Management Corp. Partially offsetting
the increases, Directors' fees expenses and insurance decreased for the six
months ended September 30, 1995 when compared to the same period in 1994 due to
the February 15, 1995 resignation of the former directors as a result of
the change in control.
As discussed above, during the first quarter of 1995, the Fund
recorded a net recovery of losses on loans, notes and interest receivable
of $29,582 as a result of cash received related to its interest in a
liquidating trust established for the benefit of unsecured creditors of VMS
Realty Partners. For 1994, the Fund recorded a $90,693 recovery of Class
Action settlement costs and expenses representing the recovery of payments
previously made into an escrow established as part of the 1992 Class Action
settlement of the VMS Securities litigation.
During the third quarter of 1995, the Fund recorded the receipt of $75,000
for full assignment of the Omni Park Centre mortgage, which had previously
been written off.
The above changes for the nine months ended September 30, 1995, when
compared to the same period in 1994, resulted in an increase in the net
loss to $452,182 ($0.03 per share) from $426,021 ($0.03 per share).
15
<PAGE>
Part II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits are included with this Report.
(b) On January 17, 1995, a current report on Form 8-K was filed under Item
5. Other information reporting the terms of a Tender Offer of the
Registrant's shares of common stock by Mr. Harvey Polly.
On February 22, 1995, a current report on Form 8-K was filed under
Item 6. Registration of the Registrant's Directors reporting the
Resignation of the Registrant's Directors on February 15, 1995
pursuant to a change in control of the Registrant.
On February 28, 1995, a current report on Form 8-K was filed under
Item 1. Change in Control of the Registrant reporting a change in
control of the Registrant on February 15, 1995 pursuant to the
closing of the sale of shares of stock in the Registrant to Mr. Harvey
Polly.
<PAGE>
SIGNATURES
PURSUANT to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
BANYAN HOTEL INVESTMENT FUND
By: /s/ Harvey Polly Date: November 8, 1995
Harvey Polly, Director, President
and Chief Executive Officer
/s/ Morton I. Kalb Date: November 8, 1995
Morton I. Kalb, Director, Vice Pres.
and Chief Financial Officer
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