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 1934
For the quarterly period ended March 31, 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 Number)
One Penn Plaza, Suite 1531, New York, New York 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 May 1, 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
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
1996 1995
ASSETS
Cash and Cash Equivalents $ 488,377 $ 736,897
Investment Securities 856,125 891,096
Interest Receivable on
Cash and Cash
Equivalents, Mortgages and
Investment Securities 9,483 7,916
Mortgage Loans, Receivable 620,936 371,723
Prepaid Insurance 1,562 ---
Other Assets 4,096 10,343
---------- ----------
Total Assets $ 1,980,579 $ 2,017,975
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Liabilities
Accounts Payable and
Accrued Expense $ 90,244 $ 82,910
============ ============
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 (85,544,269) (85,534,593)
Unrealized Losses on
Investment Securities (35,054) ---
Treasury Stock, At Cost,
for 32,757 Shares of
Common Stock ( 8,189) (8,189)
------------ ------------
Total Stockholders'
Equity $ 1,890,335 $ 1,935,065
------------ ------------
2
<PAGE>
BANYAN HOTEL INVESTMENT FUND
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995 (CONTINUED)
(UNAUDITED)
1996 1995
Total Liabilities and
Stockholders' Equity $ 1,980,579 $ 2,017,975
=========== ===========
Book Value Per Share of
12,403,565 $ 0.16 $ 0.16
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
BANYAN HOTEL INVESTMENT FUND
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
FOR THE THREE MONTHS ENDED
MARCH 31,1996 AND 1995
1996 1995
INCOME
Interest Income on Cash
and Cash Equivalents $ 6,342 $ 3,858
Interest Income on
Investment Securities 16,396 21,096
Interest Income on
Mortgages Receivable 13,820 ---
-------- --------
Total Income $ 36,558 $ 24,954
-------- --------
EXPENSES
Stockholder Expenses 5,749 46,647
Directors' Fees, Expenses
and Insurance --- 59,976
Other Professional Fees 2,547 53,724
General and Administrative 37,938 212,678
Recovery of Losses on
Mortgage Loans, Notes,
Interest Receivable and
Class Action Settlement
Costs and Expenses --- (29,582)
-------- --------
TOTAL EXPENSES $ 46,234 $ 343,443
-------- --------
Net Loss $ (9,676) $(318,489)
======== ========
Net Loss Per Share of
Common Stock (Based
on Weighted Average
Number of Shares Out-
standing of 12,403,565
and 11,346,925
respectively) $ 0.00 $ (0.03)
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
BANYAN HOTEL INVESTMENT FUND
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH, 31, 1996
(UNAUDITED)
Unrealized
Losses on
Investment
Shares of Common Stock Securities
Shares Amount
Stockholders'
Equity (Deficit)
December 31, 1995 12,403,565 $87,477,847 $ ---
Net Loss --- --- ---
Market Adjustment
March 31, 1996 --- --- (35,054)
---------- ----------- ---------
Stockholders'
Equity (Deficit)
March 31, 1996 12,403,565 $87,477,847 $(35,054)
========== =========== ========
5
<PAGE>
BANYAN HOTEL INVESTMENT FUND
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996 (CONTINUED)
(UNAUDITED)
Accumulated Treasury
Deficit Stock Total
Stockholders'
Equity (Deficit)
December 31, 1995 $(85,534,593) $ (8,189) $1,935,065
Net Loss (9,676) --- (9,676)
Market Adjustment --- ---
March 31, 1996 (35,054)
------------- --------- ----------
Stockholders'
Equity (Deficit)
March 31, 1996 $(85,544,269) $ (8,189) $1,890,335
============ ======== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
BANYAN HOTEL INVESTMENT FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS $ (9,676) $ (318,489)
Adjustment to
Reconcile Net Loss
to Net Cash (Used in)
Provided by Operating
Activities:
Amortization of Pre-
mium or discount on
Investment Securities (83) 429
Net Change in:
Interest Receivable
on Cash and Cash
Equivalents and
Investment Securities (1,567) 6,432
Prepaid Insurance (1,562) (288,283)
Other Assets 6,247 17,365
Accounts Payable and
Accrued Expenses 7,334 983
---------- -----------
Net Cash (Used in)
Provided by Operating
Activities $ 693 $ (581,563)
---------- -----------
CASH FLOW FROM INVESTMENT ACTIVITIES:
Investment in Mortgages $ 249,213
Proceeds from Sale of
Investment Securities --- 355,539
---------- ----------
Net Cash Provided by
(Used in) Investment
Activities $(249,213) $ 355,539
---------- ----------
7
<PAGE>
BANYAN HOTEL INVESTMENT FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (CONTINUED)
(UNAUDITED)
1996 1995
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from the
Issuance of Common
Stock --- $ 450,509
---------- ---------
Net Increase (Decrease)
in Cash and Cash
Equivalents $(248,520) $ 224,485
Cash and Cash Equivalents
at Beginning of Period 736,897 275,161
---------- ---------
Cash and Cash Equivalents
at End of Period $ 488,377 $ 499,646
========== =========
The accompanying notes are an integral part of the consolidated financial
statements.
8
<PAGE>
BANYAN HOTEL INVESTMENT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 Annual Report, 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 March 31, 1996 and for the three months ended March 31, 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. 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
9
<PAGE>
BANYAN HOTEL INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
reimbursement to BMC for the expenses during the three months ended March 31,
1995 totalled $83,855, 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. Subsequent to February 15, 1995, some administrative
services were performed by Oak Realty Group, Inc., for which they were paid
$20,741. Oak Realty Group, Inc. is an Illinois Corporation owned by the Fund's
former president.
Effective February 15, 1995 the Fund began renting space from an affiliated
company. Rent paid to the affiliate amounted to $21,500 during 1995 and $7,027
during the first quarter of 1996. The lease expires July 31, 1996.
During 1995, the Fund reimbursed an affiliated company $19,330 for Health
insurance premiums paid on behalf of the Fund. During the first quarter of 1996
this reimbursement amounted to $4,685.
During 1995 in connection with the change in control the Fund purchased for
the prior Directors a Directors and Officers Liability Insurance Policy. The
policy cost approximately $305,000 was charged to expense in 1995.
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
10, 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.
During the third quarter of 1995 the Fund assigned its interest in the loan for
$75,000. Inasmuch as the entire loan had previously been written off this
receipt was reflected as income when received.
10
<PAGE>
BANYAN HOTEL INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
4. MORTGAGE LOANS RECEIVABLE (CONTINUED)
In May, 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 114, 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 loan losses determined based
on consideration of the fair value of the collateral or discounted future cash
flows to be received.
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. The carrying amount of the mortgage loan approximates the fair value.
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 property is controlled by Mr. 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 (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 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 to pay the liabilities of, the partnership.
11
<PAGE>
BANYAN HOTEL INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
6. INVESTMENT SECURITIES
The Fund's investment securities portfolio at March 31, 1996 is as
follows:
Amortized Cost
Net of
Principal Estimated
Paydowns Market Value
Title of Each Issue Received at Mar. 31,
and Name of Issuer Mar. 31, 1996 1996 (2)
Federal National
Mortgage Assn. (1)
7.25%, 3/1/93 -
5/25/22 $ 891,179 $ 856,125
--------- ---------
$ 891,179 $ 856,125
========= =========
(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 repayment 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 as of the first quarter of 1995, is expected to be from
February 25, 2005 to February 25, 2011. These expectations may change as
interest rates on mortgage loans change.
(2) The Fund has recorded a market adjustment of $35,054 representing
unrealized losses on its investment securities based on current market
values at March 31, 1996.
7. RECOVERY OF LOSSES ON MORTGAGE LOANS, NOTES, INTEREST RECEIVABLE
AND CLASS ACTION COSTS AND EXPENSES
On November 18, 1993, in final settlement of guarantees of VMS Realty
partners of loans made by the Fund in prior years, the Fund received a cash
distribution of $27,831 and an interest in a liquidating trust established for
the benefit of the unsecured creditors of VMS. As of December 31, 1993, the Fund
valued its interest at $4,939 representing its pro rata portion of the cash
assets of the trust. During 1995, the Fund recorded $30,154 on its Statement of
Income and Expenses as a recovery of the Provision for losses on Mortgage Loans,
Notes and Interest Receivable related to the distributions received from the
liquidating trust. The $30,154 net recovery recorded in 1995 includes the
$48,246 distribution received net of an estimated $18,092 due to the Class
Action Settlement Fund representing the Fund's share of amounts due per the
terms of the previously settled VMS Securities litigation.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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. As a
result of these defaults, the Fund suspended the making of new loans (except for
advances of additional funds under circumstances which it is deemed necessary to
preserve the value of existing collateral) and suspended distributions to
shareholders.
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 to Mr. Harvey Polly.
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 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.
13
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)
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 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 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.
The Fund does not, at present, satisfy certain American Stock Exchange
("AMEX") criteria for continued listing of its stock on the Exchange. On
February 7, 1996 the Fund was notified by the AMEX that its stock would be
delisted in March 1996, unless it completes a "satisfactory acquisition" by that
date. On April 1, 1996, the Fund notified the AMEX that it would appeal the
delisting. Management hopes to maintain the listing by either prevailing in the
appeal, or completing a "satisfactory acquisition" prior to the determination of
the appeal. There can be no assurances, however, that listing will be continued.
Mr. Polly has indicated that he has no present intention of taking the Fund
private, but a one for five reverse stock split, subject to shareholder
approval, is being considered.
14
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS ON PLAN OF OPERATION (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 March 31,1996 and December 31, 1995
was $488,377 and $736,897 respectively. This decrease in cash and cash
equivalents is due primarily to the investment of approximately $256,000 in
mortgages. At March 31, 1996 and December 31, 1995, the Fund also held
investment securities during the quarter with a carrying value of $856,125 and
$891,096, respectively.
At this time, there are no material commitments for capital expenditures.
The Fund's cash and cash equivalents are sufficient to meet its needs for
anticipated operating expenses. The Fund deems its liquidity to be adequate.
As of March 31, 1996, the Fund's mortgage loan portfolio consisted of three
loans, as detailed in Note 4.
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 has 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.
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, investment securities
and mortgages; (iii)the Fund's ability to control its operating expenses; and
(iv) possible recoveries from the Santa Barbara Biltmore Hotel, the Omni Park
loan and the liquidating trust, if any.
RESULTS OF OPERATIONS
Total income for the three months ended March 31, 1996 and 1995 was $36,558
and $24,954 respectively. The increase in total income for the quarter ended
March 31, 1996 when compared to the same period in 1995 is due primarily to
approximately $13,820 interest earned on mortgage investments.
Operating expenses for the three months ended March 31, 1996 decreased
substantially when compared to the same period in 1995 as a result of
substantial decreases in all expense categories. It should be noted that the
1995 period included costs associated with the change in control.
15
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OR OPERATION (CONTINUED)
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.
The above changes for the three months ended March 31, 1996, when compared
to the same period in 1995, resulted in a decrease in the net loss to $9,676
($0.00 per share) from $318,489 ($0.03 per share).
16
<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.
17
<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: May 3 , 1996
Harvey Polly, Director, President
and Chief Executive Officer
By: /s/Morton I. Kalb Date: May 3 , 1996
Morton I. Kalb, Director, Vice Pres.
and Chief Financial Officer
18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 488,377
<SECURITIES> 856,125
<RECEIVABLES> 9,483
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,355,547
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,980,579
<CURRENT-LIABILITIES> 90,244
<BONDS> 0
87,477,847
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,980,579
<SALES> 0
<TOTAL-REVENUES> 36,558
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 46,234
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9,676)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,676)
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