************UPDATE FROM CAMERON*******************
I just got this by e-mail:
BANYAN CORPORATION
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967 Elkton Drive
Colorado Springs, Colorado 80907
(719) 531-5535 (719) 531-9135 FAX
April 27, 1997
MESSAGE FROM PRESIDENT
Dear Shareholder:
Now that Banyan has concluded the first quarter of 1998, we are
offered the luxury of hindsight to evaluate the quarter and the impact
on Banyan and its shareholders. From a business development
perspective, the first quarter was nothing short of spectacular.
Banyan significantly expanded its role in a major government contract,
the Company is closer to successfully concluding its pending
acquisition of The Patriot Group, Inc., Banyan's share price has
stabilized despite the continued presence of short sellers, and better
shipping and inventory controls have resulted in improved operating
efficiencies.
U.S. AIR FORCE DESKTOP V CONTRACT
The most significant and exciting development of the first quarter was
Dynamic Decisions, Inc. naming Banyan as its supplier of hard-sided
protective carrying cases for its Section 8-A Minority Owned Business
portion of the U.S. Air Force's Desktop V contract.
Dynamic Decisions is now one of four general contractors involved in
Desktop V. Other general contractors include International Data
Products (IDP), another Section 8-A Minority Owned Business, Packard
Bell and Hughes Data Systems. Banyan currently supplies Dynamic
Decisions, IDP and Packard Bell with hard-sided cases for their roles
in the Desktop V contract.
The Desktop V contract, as well as other similar government
acquisition contracts, is broad in scope and substantial in size.
Over the three-year life of Desktop V, which was initiated in 1997,
the Air Force will spend in excess of $2 billion on approximately
360,000 new computer systems, including notebooks, desktops,
workstations and related equipment and services. Dynamic Decisions'
Section 8-A portion is valued at $904,879,280. Banyan estimates it
will generate approximately $3 million in aggregate revenue from its
role in Desktop V; 60% of the shipments are expected to take place
during the contract's final year.
Management is highly encouraged by this development. Not only does
this expanded award demonstrate Banyan's ability to play a significant
role in government business, but Desktop V alone should enable
Banyan's DoubleCase unit to attain profitability later this year.
Banyan is firmly committed to expanding its role in government
business and will continue to aggressively pursue new contracts and
subcontractor relationships.
THE PATRIOT GROUP, INC.
Banyan is aware that many of its shareholders have expressed concern
that the pending acquisition of The Patriot Group, Inc. is quickly
turning into another Echo Marketing Corporation. This is not the
case.
Unlike with Echo Marketing last year, Banyan and The Patriot Group
have already successfully concluded their respective due diligence
processes and determined the proposed acquisition makes good business
sense. Management at each company has caused various delays, but the
two primary delays have been: 1) management at each company pursuing
other business, such as the Desktop V contact expansion; and 2)
Banyan's share price and desire to minimize any possible dilution to
existing shareholders.
The first cause of delay is fairly self explanatory. It is no secret
that Banyan has been pursuing a number of various business
opportunities, including the proposed Patriot Group acquisition, and
is working to bring them all to a successful conclusion.
On the dilution aspect, Banyan and the Patriot Group met in March 1998
and discussed various ways to consummate the acquisition that would
serve both companies' interests. Admittedly, one of the most
significant problems is Banyan's undervalued share price. Banyan does
not wish to issue a significant number of shares at this juncture and
is working with the Patriot Group and their attorney to create an
acquisition scenario that is satisfactory to everyone. Another, and
hopefully final, meeting is being scheduled for mid-May 1998.
SHAREHOLDER VALUE
Banyan has received many inquiries during recent weeks about the total
number of shares outstanding and the subsequent number of shares in
the public float. As of last week Banyan had 7,610,129 shares duly
issued and outstanding with a public float of approximately 3.3
million, 2,392,625 of which are currently in "street name", or held in
safe-keeping by brokerage firms.
Upon further inquiries and investigation, Banyan has learned that the
number of shares held in street name has actually increased in recent
weeks. This is very disconcerting, because Management has every
reason to believe there is still a substantial short position in
Banyan's stock. Some outside estimates put the size of the short
position in excess of one million shares.
Nevertheless, there were some interesting and volatile trading
sessions during the first quarter which pitted the longs against the
shorts. For the first time in Banyan's trading history the short
traders found themselves on the losing end of some of these sessions.
Management is very encouraged by the recent weakness in short traders.
There is clearly an opportunity to put an end to this malignant short
trading practice and I, along with everyone else here at Banyan, ask
you, our shareholders, not to submit your stock certificates to your
stockbrokers. Once in street name any market maker can borrow the
stock and sell it short - ultimately causing your holdings to lose
value. Now is the time to reduce the number of shares in street name
and pressure the short traders out of Banyan's stock. Banyan asks
each and every shareholder to call your stockbroker and have him or
her send you your stock certificates. This is the only way to reduce
the number of shares in street name and put an end to short seller
trading in Banyan's stock.
IMPROVEMENTS IN SHIPPING, INVENTORY AND BACKLOG
During the first quarter Banyan was able to reach accords with some of
its suppliers reducing Banyan's minimum parts ordering requirements
and enabling the Company to move closer to becoming a true "just in
time" manufacturer.
Prior to the first quarter, Banyan was required to purchase raw
inventory (case shells, interior linings, latches, etc.) in minimum
quantities of 1,000 units. Banyan has several different sized cases -
all with different configurations. For the more popular products
buying parts in larger quantities makes sound business sense, but for
some of Banyan's more specialized, slower selling products the higher
quantity requirements resulted in larger-than-necessary parts
inventories and put unnecessary pressure on Banyan's cash flow.
These shipping improvements with Banyan's suppliers have already
resulted in more efficient inventory control and have enabled Banyan
to reduce its outstanding order backlog to $23,437, which represents a
62% decrease from the prior quarter. Banyan will continue working
towards increasing its supply, inventory and operating efficiencies to
maximize cash flow and keep its order backlog at a minimum.
Furthering Banyan's cost containment efforts, the Company will be
moving into new offices this week. Please make a note of Banyan's new
address: 4740 Forge Road, Building 112, Colorado Springs, Colorado
80907. All phone numbers remain unchanged.
In closing I would like to say thank you for your continued support.
Step by step our combined efforts are laying the groundwork to make
Banyan a premiere worldwide supplier of computer accessory products.
For more information about the current direction of Banyan I urge you
to contact our Investor Relations firm by phone at (512) 453-3817 or
by e-mail at bany@sitra.com. You may also obtain the latest
information on Banyan 24-hours a day by visiting our Internet site at
sitra.com.
Very truly yours,
Cameron Yost
President and Chief Executive Officer |
