<PAGE>
UNITED STATES 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 1914
For the quarterly period ended September 30, 1996
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 1914
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, 1996: 12,403,565
Transitional Small Business Disclosure Format. Yes. No X.
<PAGE>
PART I FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
BANYAN HOTEL INVESTMENT FUND
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
---- ----
ASSETS
Cash and Cash Equivalents $ 443,350 $ 736,897
Investment Securities 874,293 891,096
Interest Receivable on Cash
and Cash Equivalents and Investment
Securities 9,036 7,916
Mortgage Loans 598,428 371,723
Prepaid Insurance & Expenses 1,776 ---
Other Assets 4,437 10,343
------------ -----------
Total Assets $ 1,931,320 $ 2,017,975
------------ -----------
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts Payable and Accrued
Expenses $ 59,354 $ 82,910
Commitments and Contingencies --- ---
------------ -----------
Stockholders' Equity
Shares of Common Stock. $0.01
Par Value, 20,000,000 shares
Authorized, 12,403,565 shares
Issued $87,477,847 $87,477,847
Accumulated Deficit (85,580,638) (85,534,593)
Treasury Stock, at Cost, for 32,757
Shares of Common Stock (8,189) (8,189)
Unrealized Loss on Investment Sec. (17,054) ---
------------ -----------
Total Stockholders' Equity $ 1,871,966 $ 1,935,065
------------ -----------
------------ -----------
Total Liabilities & Stockholders'
Equity $ 1,931,320 $ 2,017,975
------------ -----------
------------ -----------
Book Value Per Share of Common Stock
12,403,565 shares outstanding $ 0.16 $ 0.16
------------ -----------
------------ -----------
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 30,1996 AND 1995
(UNAUDITED)
1996 1995
---- ----
INCOME
Interest Income on Cash and Cash
Equivalent $ 15,582 $ 13,532
Interest Income on Mortgages Receivable 47,910 ---
Interest Income on Investment
Securities 49,189 52,309
------------ -----------
Total Income $ 112,681 $ 65,841
------------ -----------
------------ -----------
EXPENSES
Stockholders' Expenses $ 15,752 $ 57,191
Directors' Fee, Expenses and
Insurance --- 100,050
Other Professional Fees 14,710 105,293
General and Administrative 130,933 294,230
------------ -----------
Total Other Expenses $ 161,395 $ 556,764
Recovery of Class Action
Settlement Costs and Expenses ( 2,669) (29,582)
Recovery from Mortgage Previously
Written Off --- (75,000)
------------ -----------
Total Expenses $ 158,726 $ 452,182
------------ -----------
Net Income (Loss) $ (46,045) $(386,341)
------------ -----------
------------ -----------
Net Income (Loss) Per Share of
Common Stock based on Shares
Outstanding of 12,403,565 $ 0.00 $(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 30,1996 AND 1995
(UNAUDITED)
1996 1995
---- ----
INCOME
Interest Income on Cash and
Cash Equivalents $ 4,629 $ 4,411
Interest Income on Mortgages Receivable 16,892 ---
Interest Income on Investment
Securities 16,397 6,433
------------ -----------
Total Income $ 37,918 $ 10,844
------------ -----------
------------ -----------
EXPENSES
Expenses from Lending Activities:
Recovery of Losses on Mortgages
Loans, Notes and Interest
Receivable $ --- $ (75,000)
------------ -----------
OTHER EXPENSES:
Stockholder Expenses $ 5,012 $ 7,459
Directors' Fees, Expenses
and Insurance --- 21,082
Other Professional Fees 10,994 32,197
General and Administrative 44,477 37,638
------------ -----------
Total Other Expenses $60,483 $98,376
------------ -----------
Total Expenses $60,483 $23,376
------------ -----------
Net Income (Loss) $ (22,565) $ (12,532)
------------ -----------
------------ -----------
Net Income (loss) Per Share
of Common Stock based on Shares
outstanding of 12,403,565 $ 0.00 $ 0.00
------------ -----------
------------ -----------
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. 30,1996
(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, 1995 12,403,565 $87,477,847 $(85,534,593) $ (8,189) $ - 0 - $ 1,935,065
Net Loss --- --- (46,045) --- --- $ (46,045)
Market Adjustment
September 30, 1996 --- --- --- --- $(17,054) $ (17,054)
-----------------------------------------------------------------------------------------
Stockholders' Equity
(Deficit) Sept. 30, 1996 12,403,565 $87,477,847 $(85,580,638) $(8,189) $(17,054) $1,871,966
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
5
<PAGE>
BANYAN HOTEL INVESTMENT FUND
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,1996 AND 1995
(Unaudited)
1996 1995
---- ----
Cash Flow from Operating Activities:
Net Income (Loss) $ (46,045) $(386,341)
Amortization of Premium or (Discount)
on Investment Securities (251) 1,060
Net Change in:
Interest Receivable (1,120) 6,704
Prepaid Insurance (1,776) (255,700)
Other Assets 5,907 27,268
Accounts Payable and
Accrued Expenses (23,556) (56,003)
------------ -----------
Net Cash Used in Operating Activities $ (66,841) $(663,012)
------------ -----------
------------ -----------
Cash Flow From investing Activities:
Net Proceeds From Sale of and
Principal Payments on Investment
Securities $ --- $ 587,427
Investment in Mortgages - Net of Principal
Payments Received $(226,705) ---
------------ -----------
Net Cash Used in or Provided by
Investment Activities $(226,705) $ 587,427
------------ -----------
Cash Flow From Financing Activities:
Proceeds From Issuance of Common Stock --- $ 450,509
------------ -----------
Net Increase or (Decrease) in cash and
Cash Equivalents $(293,546) $ 374,924
Cash and Cash Equivalents at Beginning
of Period 736,896 275,161
------------ -----------
Cash and Cash Equivalents at End
of Period $ 443,350 $ 650,085
------------ -----------
------------ -----------
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
BANYAN HOTEL INVESTMENT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(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, 1995, which are included in the Fund's 1995 Form 10K, as
certain footnote disclosures which would 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, 1996 and for the three months ended September 30,
1996 and 1995. 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 sufficient 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. TRANSACTION 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 INVESTMENT FUND NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
reimbursement 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 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
During the third quarter of 1995, the Fund assigned its interest in a
previously written off Mortgage Loan on the Omni Park Centre Hotel for $75,000.
Inasmuch as the entire loan had previously been written off, this receipt is
reflected as income on the accompanying Financial Statements.
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.
On February 13, 1996, the Fund made a first mortgage loan in the amount of
$150,000 which is secured by a commercial property in New York City. The loan
represents less than 17% of the appraised value of the property, bears interest
at the rate of 10% per annum and calls for monthly payments on a five year
self-liquidating basis.
On February 29, 1996, the Fund made a first mortgage loan in the
approximate amount of $106,000, which is secured by an industrial property in
Lake Worth, Florida. The property securing the mortgage is controlled by Harvey
Polly, who has personally guaranteed the mortgage. The loan calls for 10%
interest per annum, payable monthly, with a balloon payment of principal after
five years.
The carrying amount of the above three mortgage loans approximates their
fair values.
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.
8
<PAGE>
BANYAN HOTEL INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
5. INVESTMENT IN PARTNERSHIP (CONTINUED)
The Fund did not record losses related to its interest in the Santa Barbara
Biltmore during 1996 and 1995 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 pay the liabilities of, the
partnership.
6. INVESTMENT SECURITIES
The Fund's investment securities portfolio at June 30, 1996 is as follows:
Estimated
Amortized Cost Market Value at
Title of Each Issuer Sept. 30, 1996 Sept. 30, 1996 (2)
and Name of Issuer
Federal National
Mortgage Assn. (1)
7 1/4%, 10/27/95-5/25/22 $891,347 $874,293
--------- ---------
$891,347 $874,293
--------- ---------
--------- ---------
(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 re-
payments of the underlying U.S. Agency sponsored mortgages.
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
third quarter of 1996, is expected to be from February 25, 2005 to May
25, 2022. These expectations may change as interest rates on mortgage
loans change.
(2) The Fund has recorded a market adjustment of $17,054 repre-
senting unrealized losses on its investment securities based
on current market values at September 30, 1996.
7. RECOVERY OF LOSSES ON MORTGAGE LOANS, NOTES, INTEREST RECEIVABLES
AND CLASS ACTION COSTS AND EXPENSES
During the first nine months of 1996 and 1995, the Fund received cash
distributions of $4,270 and $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").
9
<PAGE>
BANYAN HOTEL INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
7. RECOVERY OF LOSSES ON MORTGAGE LOANS, NOTES, INTEREST RECEIVABLES
AND CLASS ACTION COSTS AND EXPENSES (CONTINUED)
For the periods ended September 30, 1996 and 1995, the Fund recorded recoveries
of $2,669 and $29,582 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 $2,669 net recovery recorded in 1996
represents the $4,270 distribution received net of an estimated $1,601 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. 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, 1996, the Fund has a total liability to the Class Action
Settlement of $32,730.
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 of
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.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL (CONTINUED)
On August 3, 1994 the Fund entered into a 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 severence compensation associated therewith; (iv) the
termination of the Administrative Services Agreement with Banyan Management
Corp., and payment of the termination fee associated therewith; (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 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 understanding 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 Mr. Harvey Polly as President and Chief
Executive Officer. Mr. Morton I. Kalb as Vice President and Chief Financial
Officer, Ms. Celia Zisfein as Secretary 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.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
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, 1996 and December 31,
1995 was $443,350 and $736,897, respectively. This reduction in cash and cash
equivalents is due primarily to the mortgage investments made by the Fund. At
September 30, 1995 and December 31, 1995, the Fund also held investment
securities during the quarter with a carrying value of $874,293 and $891,096
respectively.
As of December 31, 1995, 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. During the third quarter of 1995, the
Fund received $75,000 for assignment of its interest in this mortgage.
As of September 30, 1996, the Fund had an investment of $598,428 (net of
principal payments received) in three mortgages. These mortgage loans are more
fully described in Item 4 on Page 8 of this report.
On June 26, 1996, the Fund received a cash distribution of $4,270 related
to its interest in a liquidating trust established for the benefit of the
previously unsecured creditors of VMS. For the quarter ended June 30, 1996, the
Fund recorded a $2,669 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
$2,669 net recovery recorded in 1996 represents the $4,270 distribution received
net of an estimated $1,601 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 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 expense 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.
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.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS PLAN OF OPERATION
(CONTINUED)
RESULTS OF OPERATIONS
Total income for the nine months ended September 30, 1996 and 1995 was
$112,681 and $65,841 respectively. The increase in total income for the nine
months ended September 30, 1996 when compared to the same period in 1995 is due
primarily to the higher rate of return on the Fund's mortgage investments.
Operating expenses for the nine months ended September 30, 1996 decreased
substantially when compared to the same period in 1995. This substantial
decrease is the result of reductions in all areas of operating expenses, and the
elimination of all Directors' fees and expenses. It should be noted that the
1995 period included costs attributable to 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.
During the periods ended September 30, 1996 and September 30, 1995, The
Fund recorded net recoveries of $2,669 and $29,582 respectively from the
liquidating trust established for the benefit of unsecured creditors of VMS
Realty Partners.
The above changes for the nine months ended September 30, 1996, when
compared to the same period in 1995, resulted in a decrease in the net loss to
$46,045 ($0.00 per share) from $386,341 ($0.03 per share). In addition to the
expense reductions, discussed above, an increase of approximately $46,000 in
interest income helped to reduce the net loss; while a reduction of
approximately $27,000 in recoveries from the VMS Liquidating Trust, discussed
above, increased the net loss.
On October 14, 1996, the Fund was notified by the American Stock Exchange
that its shares would be removed from listing on the Exchange, and that the last
day of trading, on the Exchange, would be October 25, 1996. The reason for this
action was that the Fund no longer meets the requirements for continued listing,
and Banyan had discontinued previously announced negotiations to acquire a
portfolio of retail shopping center properties.
Also, on October 14, 1996, the Fund issued a press release stating the
above facts, as well as that it had resumed negotiations to acquire, for cash
and stock valued at approximately $80,000,000 a privately held domestic and
international manufacturer and distributor of toys, hobby and leisure products
with annual sales of approximately $80,000,000. Banyan noted that the
acquisition of the toy, hobby and leisure products company was subject to
negotiation and execution of definitive agreements and subject to obtaining
commitments for financing required to consummate the acquisition. Banyan also
noted that certain aspects of the acquisition program would require stockholder
approval and that the matter would be submitted to stockholders at a meeting on
a date to be announced.
During the week of October 28, 1996, the Fund's shares began trading on the
NASD market with a ticker symbol of "VHTI".
13
<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.
14
<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: October 31, 1996
Harvey Polly, Director, President
and Chief Executive Officer
/s/ Morton I. Kalb Date: October 31, 1996
Morton I. Kalb, Director, Vice Pres.
and Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 443,350
<SECURITIES> 874,293
<RECEIVABLES> 607,464
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,328,455
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,931,320
<CURRENT-LIABILITIES> 59,354
<BONDS> 0
87,477,847
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,931,320
<SALES> 0
<TOTAL-REVENUES> 112,681
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 158,726
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