<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 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 - 1-10084
-------
Resort Income Investors, Inc.
---------------------------------------------
(Exact name of registrant as specified in its
certificate of incorporation)
Delaware 36-3593298
--------------------------- ---------------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
150 South Wacker, Suite 2900, Chicago, Illinois, 60606
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(312) 683-3323
---------------------------------------------------
(Registrant's telephone number, including area code)
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 _______
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of June 30, 1995, the issuer had 4,156,000 outstanding shares of common
stock.
<PAGE> 2
PART I. FINANCIAL INFORMATION
--------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
RESORT INCOME INVESTORS, INC.
STATEMENT OF NET ASSETS (NOTE 1)
JUNE 30, 1995
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30,
1995
<S> <C>
ASSETS:
Interest receivable from related parties, net
of allowance
Demand loans to related parties, net of allowances $ 26,705,000
Cash and cash equivalents 2,741,854
Investment securities at market value 687,500
Prepaid expenses and other 71,967
--------------
30,206,321
--------------
LIABILITIES - Accounts payable and accrued expenses 1,353,169
--------------
COMMITMENTS AND CONTINGENCIES
NET ASSETS IN PROCESS OF LIQUIDATION $ 28,853,152
==============
</TABLE>
See notes to financial statements.
- 2 -
<PAGE> 3
RESORT INCOME INVESTORS, INC.
CONDENSED BALANCE SHEET (HISTORICAL COST BASIS)
DECEMBER 31, 1994
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
1994
(historical
cost basis)
ASSETS:
<S> <C>
Interest receivable from related parties, net
of allowance $ 1,233,074
Demand loans to related parties, net of allowances 39,855,000
Cash and cash equivalents 779,298
Investment securities at market value 560,000
Prepaid expenses and other 68,174
--------------
$ 42,495,546
==============
LIABILITIES:
Accounts payable and accrued expenses $ 54,586
Distributions payable 1,558,500
--------------
1,613,086
--------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; authorized 6,918,000 shares;
issued and outstanding 4,156,000 shares 41,560
Additional paid-in capital:
Issuance of common stock 46,703,781
Distributions in excess of income (5,484,131)
Unrealized loss on investment securities (378,750)
-------------
40,882,460
--------------
$ 42,495,546
==============
</TABLE>
See notes to financial statements.
- 3 -
<PAGE> 4
RESORT INCOME INVESTORS, INC.
CONDENSED STATEMENTS OF OPERATIONS (HISTORICAL COST BASIS)
THREE MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1995 1994
<S> <C> <C>
REVENUES:
Interest and net fee income on mortgage
and demand loans to related parties $ (343,494) $ 1,199,754
Other interest income 59,966 86,734
--------------- -------------
(283,528) 1,286,488
-------------- -------------
EXPENSES:
Allowance for impairment of investment in loans and accrued
interest and provision for collateral protection costs 11,617,903
Operating expenses 466,987 215,782
Loss on investment securities 251,250 673,579
--------------- -------------
12,336,140 889,361
--------------- -------------
NET INCOME (LOSS) $ (12,619,668) $ 397,127
============== =============
NET INCOME (LOSS) PER SHARE $ (3.04) $ 0.10
=============== ==============
</TABLE>
See notes to financial statements.
- 4 -
<PAGE> 5
RESORT INCOME INVESTORS, INC.
CONDENSED STATEMENTS OF OPERATIONS (HISTORICAL COST BASIS)
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1995 1994
<S> <C> <C>
REVENUES:
Interest and net fee income on mortgage and
demand loans to related parties $ 1,543,635 $ 2,143,174
Interest income on cash and cash equivalents 85,983 190,276
--------------- --------------
1,629,618 2,333,450
--------------- --------------
EXPENSES:
Allowance for impairment of investment in loans
and accrued interest and provision for
collateral protection costs 11,617,903
Operating expenses 610,023 435,854
Loss on investment securities 251,250 673,579
--------------- --------------
12,479,176 1,109,433
--------------- --------------
NET INCOME (LOSS) $ (10,849,558) $ 1,224,017
============== ==============
NET INCOME (LOSS) PER SHARE $ (2.61) $ 0.29
============== =============
</TABLE>
See notes to financial statements.
- 5 -
<PAGE> 6
RESORT INCOME INVESTORS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (HISTORICAL COST BASIS)
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1995 1994
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING
ACTIVITIES:
Net income (loss) $ (10,849,558) $ 1,224,017
Allowance for impairment of investment in loans and
accrued interest and provision for collateral
protection costs 11,617,903
Loss on investment securities 251,250 673,579
Changes in operating assets and liabilities:
Interest receivable from related parties 765,171 272,921
Prepaid expenses and other (3,793) 94,158
Accounts payable and accrued expenses 48,583 (136,313)
Due to investment manager (34,120)
--------------- --------------
Net cash provided by operating
activities 1,829,556 2,094,242
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds of loan sale 6,250,000
Demand loans funded (3,000,000) (20,150,000)
Purchase of investment securities (6,434,283)
Sale of investment securities 4,738,287
--------------- ---------------
Net cash provided by (used in)
investing activities 3,250,000 (21,845,996)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid to stockholders (3,117,000) (3,117,000)
--------------- ---------------
Net cash used in financing activities (3,117,000) (3,117,000)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 1,962,556 (22,868,754)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 779,298 25,581,904
--------------- ---------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 2,741,854 $ 2,713,150
=============== ===============
</TABLE>
See notes to financial statements.
- 6 -
<PAGE> 7
RESORT INCOME INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1995
(UNAUDITED)
--------------------------------------------------------------------------------
1. OPERATIONS OF THE COMPANY
The Company announced on June 29, 1995, that it would commence an
orderly self-liquidation of the Company's assets over a 24- to 36-
month period. In late June 1995, Christopher B. Hemmeter (CBH), then
a director and officer of the Company, informed the Company that
interest and principal would not be paid when due on demand loans made
by the Company to him personally or to entities affiliated with him
(the Affiliated Borrowers) (See Note 4). Further, he informed the
Company that he would not be able to make timely payment of such
interest and principal on behalf of the Affiliated Borrowers pursuant
to guarantees he had made in connection with the Affiliated Borrowers'
loans, thereby creating an event of default for each of the loans.
The affected loans constitute all of the demand loans to related
parties held by the Company, aggregating $36,605,000, of which CBH is
personally the borrower of $15,000,000, and Affiliated Borrowers are
the borrowers of $21,605,000.
The Company also announced a charge to income would be made in an
amount that, in management's judgment, is adequate to absorb estimated
losses related to the loan portfolio. The charge, which includes
allowances for losses and the reversal of certain accrued interest,
was taken in the second quarter. The amount of the charge has been
based on management's judgments regarding the ability of CBH and the
Affiliated Borrowers to repay such loans, and also reflects
management's judgments concerning to the extent that the estimated
realizable value of the Company's collateral would not provide for the
recovery of the Company's investment in the loans and accrued
interest, in light of CBH's inability to perform on his guarantees in
a timely manner. The Company announced that the independent directors
would assume responsibility for negotiations with CBH and the
Affiliated Borrowers to maximize the Company's recovery of its
investment in loans and accrued interest. Based on information
provided to the independent directors by CBH and the Affiliated
Borrowers, the independent directors reviewed CBH's financial
condition, the financial condition of the Affiliated Borrowers, the
terms of the Company's loans, the collateral for certain of the loans
(including the existence of senior liens on certain of the
collateral), appraisals of certain of such collateral and other
information concerning the value of the other collateral, and other
factors, to determine the amount of the charge and in reaching a
decision to proceed with the liquidation of the Company's assets. See
Note 3.
On August 8, 1995, Christopher B. Hemmeter and Mark M. Hemmeter (MMH)
resigned their positions as executive officers and directors of the
Company (see Note 6). As of August 18, 1995, the Company's remaining
directors, both of whom are independent, are continuing to negotiate
with CBH and the Affiliated Borrowers regarding plans to recover the
Company's investment in loans and accrued interest. There is no
assurance that the outcome of the negotiations will result in a plan
of liquidation consistent with the estimated liquidation value of the
Company's assets, which values are based on an orderly - as opposed to
"quick sale" - approach to liquidation.
2. BASIS OF PRESENTATION
Effective with the announcement of an intention to liquidate the
Company, the accounting basis used by the Company in preparing its
financial statements changed from historical cost to the liquidation
basis of accounting. Therefore, the June 30, 1995 statement of net
assets has been presented on the liquidation basis. The June 30, 1995
statement of net assets reflects the Company's estimates of amounts
expected to be realized by its efforts to collect its investment in
- 7 -
<PAGE> 8
loans and accrued interest, as well as other estimates about the
recovery of assets and the amounts of liabilities. While the
estimates of the realizable amount of the loans and accrued interest
were based on an analysis of each loan, including valuations by
independent appraisers of certain of the collateral, there generally
are few directly comparable real estate properties that have been sold
that can be considered in preparing such estimates. The amounts the
Company will ultimately realize from liquidation of its assets could
differ materially from the amounts assumed in arriving at the
estimates reflected in the June 30, 1995 statement of net assets.
The amount ultimately available for distribution to stockholders will
depend on a variety of factors in addition to the amounts realized
from the liquidation of assets, including the timing of the
liquidation process and the resolution of contingent liabilities. The
amount distributed will likely differ from the amount of net assets in
liquidation presented in the June 30, 1995 statement of net assets,
and the difference could be material.
The financial statements of the Company as of December 31, 1994, and
for the periods ended June 30, 1995 and June 30, 1994 were prepared on
the historical cost (going concern) basis as described in the notes to
the Company's December 31, 1994 financial statements as presented in
Form 10-K. (June 30, 1995 is used as the adoption date for
liquidation-basis accounting due to there being no material activity
that affected either the historical cost or liquidation basis
financial statements from June 29, 1995 to June 30, 1995 -- the
impairment and other charges discussed in Note 3 were recorded
pursuant to historical cost accounting).
3. IMPAIRMENT OF LOANS AND ACCRUED INTEREST
The June 30, 1995 statements of operations include an allowance of
$10,367,903, consisting of $9,900,000 for the loan to CBH and $467,903
for uncollectibility of interest accrued as of December 31, 1994 but
unpaid as of June 30, 1995. Further, interest of $2,043,017 accrued
during 1995 but unpaid as of June 30, 1995 was reversed by a charge
against interest income. Additionally, $1,250,000 has been provided
for amounts that the Company may need to advance to first-lien holders
and others to protect the Company's collateral position while the plan
of liquidation is accomplished, which includes negotiations with CBH
and the Affiliated Borrowers.
4. DEMAND LOANS TO RELATED PARTIES
Demand loans to related parties include the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
1994
JUNE 30, 1995 BALANCE AND
CARRYING CARRYING
BORROWER BALANCE AMOUNT AMOUNT
<S> <C> <C> <C>
CPLP $ 2,600 $ 2,600 $ 2,600
Outlaws 2,205 2,205 2,205
MCTC 1,900 1,900 1,900
RCH Investments 12,900 12,900 12,900
CBH 15,000 5,100 14,000
Hemmeter Enterprises 2,000 2,000
GPCI 6,250
--------- --------- ---------
Total $ 36,605 $ 26,705 $ 39,855
========= ========= =========
</TABLE>
In the second quarter of 1995, the Company sold the GPCI loan to an
unrelated party for $6,250,000, made a $2,000,000 unsecured loan to
Hemmeter Enterprises, Inc. (HEI), and
- 8 -
<PAGE> 9
advanced an additional $1,000,000 to CBH on May 2, 1995, thereby
increasing the principal balance of the loan to CBH to $15,000,000.
The interest rate on the additional $1,000,000 is 23% per annum, 10%
per annum of which is to be payable upon maturity or earlier
prepayment of the additional $1,000,000 loan. The loan to HEI bears
interest at the rate of 12% per annum and is secured by interest in
and liens upon certain real and personal property owned by HEI and the
personal guaranty of CBH. The Company believes the loan to HEI will
be recoverable in 1995, however, there is no assurance of such
recovery. See Note 3 to the Company's financial statements, included
in the Company's Form 10-K for the year ended December 31, 1994, for
additional information on the loans outstanding at both December 31,
1994 and June 30, 1994. See Notes 1 and 2 to these unaudited
financial statements for information on the factors considered by the
Company in determining carrying value of the loans as of June 30,
1995, and the uncertainties associated therewith.
5. LITIGATION
On July 3, 1995, a complaint was filed against the Company, CBH, MMH
and Deloitte & Touche LLP, the Company's independent auditors, in U.S.
District Court for the District of Colorado alleging violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1994 and
other provisions of Federal law and the rules promulgated by the
Securities and Exchange Commission, Sarnoff v. Resort Income
Investors, Inc., et al., Doc. No. 95 B 1665. The plaintiffs are
seeking to certify their complaint as a class action. The complaint
seeks an unspecified amount of actual damages, and reimbursement of
costs and expenses.
No assessment of the likelihood of any loss can be made at this time,
because the complaint has only been recently filed, and the defendants
have not yet prepared their answers, nor has any discovery commenced.
The Company intends to defend against the charges. Pursuant to the
Company's by-laws and Delaware law, the Company will advance CBH's and
MMH's costs of defense in this matter. No estimates can reasonably be
made at this time of the costs of defense of the Company, CBH and MMH.
In June 1995, two derivative actions were filed in the Court of
Chancery of the State of Delaware in and for New Castle County, Alpert
v. Hemmeter et al., Doc. No. 14389 and Frank et al. v. Hemmeter et
al., Doc. No. 14413. The Company is a nominal defendant in each of
these cases. The defendants in both cases are: CBH, MMH, John R.
Young and Daniel D. Lane. The complaints purport to allege that the
officers and directors breached their fiduciary duties to the Company,
wasted Company assets and that CBH stood in a conflict of interest
position. Pursuant to the Company's by-laws and Delaware law, the
Company will advance to individual defendants the costs of defense. No
estimate can reasonably be made at this time of the costs of defense.
Both complaints pray for unspecified damages.
6. SUBSEQUENT EVENTS
On August 8, 1995, Messrs. Christopher B. Hemmeter and Mark Hemmeter
resigned their positions as Chairman of the Board, President and Chief
Executive Officer and Executive Vice President, Secretary, Treasurer
and Director, respectively of the Company. On the same date, Mr. John
Rippey Young was appointed Chairman of the Board, President and Chief
Executive Officer of the Company. Mr. Young has been a Director of
the Company and chairman of its Audit Committee since the Company's
inception in 1988. The Company also terminated its advisory agreement
with RII Advisors, Inc. and retained the consulting services of Mr.
Neil D. Hansen to work with the Company's directors in connection with
the Company's orderly self-liquidation of its assets. From the
inception of the Company through 1990, Mr. Hansen was the Company's
Executive Vice President, Secretary and Treasurer. In addition, Mr.
Mark Hemmeter was appointed a consultant to the Company to provide
transition services during the third quarter of 1995. The Company
also relocated its headquarters from Denver to Chicago.
- 9 -
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------
GENERAL
The Company was organized in 1988 as a 12-year, self-liquidating real estate
investment trust (REIT). The Company was organized primarily to make loans to
affiliates of the Company. As a REIT, the Company is required to maintain a
certain level of its assets in REIT-qualifying assets, including loans secured
by real estate. The Company must also meet other requirements related to the
source of its income and distributions with stockholders. The Company believes
that it has been and is in compliance with all provisions necessary for it to
maintain its REIT status.
LIQUIDITY AND CAPITAL RESOURCES
As discussed in Note 1 to the accompanying unaudited financial statements, the
Company has commenced an orderly liquidation of assets, which consist
principally of loans collateralized by real estate. The directors of the
Company will oversee the liquidation. The plan to liquidate was adopted by the
independent directors in order to maximize the value of the Company's assets.
The decision to liquidate was made after Christopher B. Hemmeter (CBH), then a
director and officer of the Company, informed the Company that interest and
principal would not be paid when due on loans made by the Company to him
personally or to entities affiliated with him (the Affiliated Borrowers).
Further, he announced that he would not be able to make timely payment of such
interest and principal on behalf of the Affiliated Borrowers pursuant to
guarantees he had made, thereby creating an event of default for each of the
loans. The affected loans constitute all of the demand loans to related
parties held by the Company, aggregating $36,605,000, of which CBH is
personally the borrower of $15,000,000, and Affiliated Borrowers are the
borrowers of $21,605,000. Accrued interest related to these loans was
approximately $2,500,000 at June 30, 1995.
As of June 30, 1995, investment in loans is carried at $26,705,000, which is
net of a $9,900,000 allowance for impairment of the loan to CBH. All accrued
interest relating to December 31, 1994 has been reserved and accrued interest
related to 1995 has been reversed. Based on information provided to the
independent directors by CBH and the Affiliated Borrowers, the independent
directors reviewed CBH's financial condition, the financial condition of the
Affiliated Borrowers, the terms of the Company's loans, the collateral for
certain of the loans (including the existence of senior liens on certain of the
collateral), appraisals of certain of such collateral and other information
concerning the value of the collateral, and other factors, to determine the
amount of the allowance and in reaching a decision to proceed with the
liquidation of the Company's assets over a 24- to 36-month period.
Additionally, the Company has provided $1,250,000 for the estimated costs of
protecting its collateral position in certain loans. The June 30, 1995
statement of net assets reflects the Company's best estimates of amounts
expected to be realized by its efforts to collect its investment in loans and
accrued interest, as well as other estimates about the recovery of assets and
the amounts of liabilities. While the estimates of the realizable amount of
the loans and accrued interest are based on an analysis of each loan, including
valuations by independent appraisers of certain of the collateral, there
generally are few directly comparable real estate properties that have been
sold that can be considered in preparing such estimates. The amounts the
Company will ultimately realize could differ materially from the amounts
assumed in arriving at the estimates reflected in the June 30, 1995 statement
of net assets.
The Company will not make any new loans, however, the Company may advance funds
to the Affiliated Borrowers to the extent deemed necessary to protect the
Company's position in the underlying collateral. The Company will consider
making distributions to stockholders during the course of the liquidation
process, although the amount and timing of such distributions are not
predictable. As a result of the uncertainty caused by the lawsuits described
in Part II, Item 1, the Company has determined that no periodic liquidating
distributions will be made to the stockholders of the Company at this time.
The
- 10 -
<PAGE> 11
Company will reevaluate this position on an ongoing basis. The Company
believes that it will not need to make distributions in the near term to
maintain its status as a REIT.
The Company's near term capital requirements will be for ongoing operating
costs during the period of self-liquidation. The Company believes that its
existing cash, cash equivalents and short-term investment balances will be
adequate to fund near-term capital requirements.
As of June 30, 1995, the Company had cash and cash equivalents and investments
at market value of $3,429,354 compared with $779,298 at December 31, 1994. The
primary source of the increase in these funds was the sale of one of its demand
loans in April 1995 in the amount of $6,250,000, which was partially offset by
new loan advances of $3,000,000. In addition, $1,829,556 of cash was provided
by operations and $3,117,000 of distributions were paid to stockholders.
RESULTS OF OPERATIONS
The Company had a net loss of $12,619,668, or ($3.04) per share, for the
quarter ended June 30, 1995 compared with income of $397,127, or $.10 per
share, for the quarter ended June 30, 1994. The decrease is due to the
allowance for impairment of loans and accrued interest, the reversal of 1995
accrued income and the provision for collateral protection costs, all amounting
to $11,617,903.
Total revenues for the second quarter of 1995 were a negative $343,494 as
compared to $1,199,754 for the second quarter of 1994. The decrease is due to
the reversal of 1995 accrued interest through June 29, 1995 in the amount of
$2,043,017.
Operating expenses for the quarter ended June 30, 1995 were $466,987 as
compared to $215,782 for the quarter ended June 30, 1994. This increase was
due to an increase in professional fees related to the April 1995 sale of a
demand loan and to increased legal fees related to the announcement of the
Company's self-liquidation.
The factors that affected results of operations for the six months ended June
30, 1995 compared to 1994 are principally the same as described above for the
quarter ended June 30, 1995 compared to 1994.
- 11 -
<PAGE> 12
PART II. OTHER INFORMATION
--------------------------------------------------------------------------------
ITEM 1. LITIGATION
On July 3, 1995, a complaint was filed against the Company, CBH,
MMH and Deloitte & Touche LLP, the Company's independent auditors,
in U.S. District Court for the District of Colorado alleging
violations of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1994 and other provisions of Federal law and the rules
promulgated by the Securities and Exchange Commission, Sarnoff v.
Resort Income Investors, Inc., et al., Doc. No. 95 B 1665. The
plaintiffs are seeking to certify their complaint as a class
action. The complaint seeks an unspecified amount of actual
damages, and reimbursement of costs and expenses.
No assessment of the likelihood of any loss can be made at this
time, because the complaint has only been recently filed, and the
defendants have not yet prepared their answers, nor has any
discovery commenced. The Company intends to defend against the
charges. Pursuant to the Company's by-laws and Delaware law, the
Company will advance CBH's and MMH's costs of defense in this
matter. No estimates can reasonably be made at this time of the
costs of defense of the Company, CBH and MMH.
In June 1995, two derivative actions were filed in the Court of
Chancery of the State of Delaware in and for New Castle County,
Alpert v. Hemmeter et al., Doc. No. 14389 and Frank et al. v.
Hemmeter et al., Doc. No. 14413. The Company is a nominal
defendant in each of these cases. The defendants in both cases
are: CBH, MMH, John R. Young and Daniel D. Lane. The complaints
purport to allege that the officers and directors breached their
fiduciary duties to the Company, wasted Company assets and that
CBH stood in a conflict of interest position. Pursuant to the
Company's by-laws and Delaware law, the Company will advance to
individual defendants the costs of defense. No estimate can
reasonably be made at this time of the costs of defense. Both
complaints pray for unspecified damages.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The regular annual meeting of stockholders was held on
June 29, 1995.
(b) At the annual meeting, the following persons were elected to
continue in office as Directors of the Company: CBH, MMH,
John R. Young and Daniel D. Lane.
(c) In addition to the election of Directors, the Stockholders
approved Deloitte & Touche LLP as the Company's independent
auditors for 1995. Of the 4,156,000 shares of the Company's
common stock outstanding, 3,849,883 shares were represented in
person or by proxy at the annual meeting, which represented a
quorum. In voting to elect CBH, 3,810,628 shares were cast in
favor of electing CBH, no shares were cast against electing
CBH and 39,255 shares abstained from voting. In voting to
elect MMH, 3,815,559 shares were cast in favor of electing
MMH, no shares were cast against electing MMH and 34,324
shares abstained from voting. In voting to elect John R.
Young, 3,823,703 shares were cast in favor of Mr. Young, no
shares were cast against electing Mr. Young and 26,180 shares
abstained from voting. In voting to elect Daniel D. Lane,
3,823,560 shares were cast in favor of electing Mr. Lane, no
shares were cast against electing Mr. Lane and 26,323 shares
abstained from voting. In voting to approve the appointment
of Deloitte & Touche LLP as the Company's independent public
accountants, 3,812,167 shares were cast in favor of the
proposal, 14,298 shares were cast against the proposal and
23,418 shares abstained from voting.
(d) Not applicable.
- 12 -
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are incorporated by reference from the
Company's Registration Statement on Form S-11 (File No. 33-
23521), referencing the exhibit numbers used in such
Registration Statement.
EXHIBIT NUMBER DESCRIPTION
3.(a) Restated Certificate on Incorporation
3.(b) Amended and Restated By-Laws
(b) Reports on Form 8-K. The Company filed the following report
on Form 8-K during the second quarter of 1995:
DATE ITEMS REPORT
April 21, 1995 5
Items 2, 3 and 5 of Part II are omitted because of the absence of
conditions under which they are required.
- 13 -
<PAGE> 14
SIGNATURES
Pursuant to the requirements 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.
RESORT INCOME INVESTORS, INC.
(Registrant)
DATE: August 21, 1995 By: /s/ John R. Young
-------------------------------
Name: John R. Young
Title: Chairman of the Board of Directors,
Chief Executive Officer,
President and Chief Financial Officer
By: /s/ Daniel D. Lane
-------------------------------
Name: Daniel D. Lane
Title: Director, Secretary, Treasurer
and Chief Accounting Offices
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RESORT INCOME
INVESTORS, INC.'S JUNE 30, 1995 INTERIM FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,741,854
<SECURITIES> 687,500
<RECEIVABLES> 37,072,903
<ALLOWANCES> 10,367,903
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 30,206,321
<CURRENT-LIABILITIES> 1,353,169
<BONDS> 0
<COMMON> 41,560
0
0
<OTHER-SE> 28,811,592
<TOTAL-LIABILITY-AND-EQUITY> 28,853,152
<SALES> 0
<TOTAL-REVENUES> (283,528)
<CGS> 0
<TOTAL-COSTS> 12,336,140
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10,367,903
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (12,619,668)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,619,668)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,619,668)
<EPS-PRIMARY> (3.04)
<EPS-DILUTED> 0
NOTE: The above captions are as specified in Exhibit 27, and contemplate that
the entity is a going concern. As discussed in Note 1 to the Company's
unaudited financial statements, the Company is in the process of
liquidation as of June 30, 1995. The amounts above are presented with
the caption that, in management's judgment, most closely correlates to
respective financial statement captions used in the Company's
unaudited financial statements.
</TABLE>
