******************NEWS*********************
BANYAN CORPORATION
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4740 Forge Road, Building 112
Colorado Springs, Colorado 80907
(719) 531-5535 (719) 531-9135 FAX
July 21, 1997
MESSAGE FROM PRESIDENT
Dear Shareholder:
With Summer officially here and the second quarter of fiscal 1998 now
behind us, it pleases me greatly to report to you that all of our hard
work and dedication is beginning to pay off. Banyan is in the best
fundamental shape of its entire corporate history. During the second
quarter, Banyan significantly expanded its worldwide distribution
capabilities through a non-exclusive distribution agreement with
Ingram Micro, Inc. (NYSE: IM), the world's leading wholesale
distributor of technology products and services; increased its
Internet presence through agreements with Anything, Inc. and ACI
Microsystems, Inc.; added computer giant and runaway success story
Dell Computer Corporation (NASDAQ: DELL) to its list of authorized
resellers; and introduced four new DoubleCase products.
INGRAM MICRO, INC.
One of the most significant developments during the second quarter -
from a long-term perspective - is the signing of a non-exclusive
worldwide distribution agreement with Ingram Micro. With over $16.5
billion in annual sales, Ingram Micro is the world's leading
distributor of technology products and services. Ingram Micro
distributes over 145,000 products to more than 100,000 resellers
located throughout 120 countries worldwide. Ingram Micro's Internet
site may be found at www.ingrammicro.com.
By partnering with a distributor the caliber of Ingram Micro, Banyan
should be able to meet any and all future distribution challenges it
may face - whether to a small, single site reseller or to a
multi-national computer behemoth. Because limited distribution
capabilities are no longer a factor, Banyan can now begin to make
headway towards its goal of having its products sold through all of
the top 20 U.S. computer retailers and all of the major personal
computer manufacturers. Banyan looks forward to a long and mutually
beneficial relationship with Ingram Micro.
INTERNET EXPANSION
An area that is rapidly growing in importance to Banyan is the
Internet. Although direct Internet sales remain insignificant
compared to Banyan's larger contract sales, in the opinion of
Management the Internet's rising popularity as a place to purchase
goods and services is vital to the Company's long-term sales strategy.
Banyan's business plan calls for Banyan's products to be sold through
an increasing number of Internet "storefronts", each with numerous
"links" to the storefront as well as to information about Banyan's
products.
To this end Banyan entered into an agreement with Internet reseller
Anything, Inc. during the second quarter. Anything, Inc. currently
has Internet storefronts at www.anythingpc.com, www.anythingmac.com,
and www.anythingunix.com. Anything, Inc. is experiencing tremendous
sales growth, which should eventually lead to significantly increased
Internet sales of Banyan's products. Banyan is working closely with
Anything, Inc. to address some of the obstacles to Internet "add on"
sales of computer accessory products.
Continuing with this new area of growth, shortly after the close of
the second quarter Banyan entered into an agreement with ACI
Microsystems, Inc., a wholly-owned subsidiary of American General
Ventures, Inc. (OTC Bulletin Board: AMGV). ACI Microsystems designs
and manufactures desktop and notebook personal computers under the
Availr brand name. ACI Microsystems markets its Availr PCs primarily
through a number of Internet storefronts, including its own
www.availpc.com. ACI Microsystems is forecasting substantial growth
over the next year and will be actively promoting Banyan's DoubleCase
line of hard-sided protective carrying cases as an option on new
Availr notebook computer purchases.
Additionally, Banyan has been updating its own wholly-owned DoubleCase
Corporation Internet site at www.doublecase.com. We encourage all
shareholders to visit the site and welcome all comments and
suggestions.
DELL COMPUTER CORPORATION
The second quarter also witnessed Banyan enter into a reseller
agreement with Dell Computer Corporation, the third largest U.S.
manufacturer of notebook computers and the fastest growing notebook
computer manufacturer in the world. Dell is the world's leading
direct computer systems company with revenues of $13.6 billion over
the past four quarters. Dell also has one of the most active Internet
storefronts at www.dell.com.
Dell is currently offering Banyan's DoubleCase product line through
its Federal Group (government sales), and will eventually offer
DoubleCase products through its corporate and consumer sales channels.
Over the coming weeks and months Banyan's Management and sales staff
will be making visits to Dell's Round Rock, Texas headquarters to
educate and train Dell's own salespeople on the DoubleCase line. This
should lead to higher sales of DoubleCase products for both companies.
Banyan also introduced four new DoubleCase models built especially for
the Dell Inspironr and Latituder lines of notebook computers. The new
DoubleCase models are the NB-3000DL and the NB-3020DL, based on the
DoubleCase 3000-series; the NB-4000DL, based on the 4000-series; and
the NB-5060DL, based on the 5000-series. Banyan is excited to be
working with a company of Dell's caliber and vision and plans to
continue offering Dell-specific products tailored to future Dell
offerings.
FINANCIAL STATEMENTS/SEC REPORTING STATUS
One item that Banyan had hoped would be completed and released during
the second quarter is still being compiled: the 1996 and 1997
financial audits. There are numerous reasons for the delays, some of
them Banyan's fault, some of them not.
The lack of current audited financial data has prevented Banyan from
filing with the SEC to become a fully reporting company. Banyan will
make a voluntary filing with the SEC to become a fully reporting
company shortly after its audit is completed. Admittedly, in the past
this was not a priority issue to Banyan as a company - getting new
business and surviving with limited resources took top priority - but
with Banyan's increasing level of business and ever brightening future
becoming a fully reporting company has moved up in priority.
Banyan acknowledges that as a rapidly developing public company it is
important to share with shareholders the news of new developments and
show, over time, how those developments translate into sales and
earnings growth via quarterly reports. Banyan anticipates the
developments it has experienced year-to-date should add to sales and
earnings growth in the second-half of fiscal 1998 and substantially in
fiscal 1999 and beyond.
In regards to the status of the audit, the accounting is, for the most
part, completed. Our CPA has been and still is working on getting
confirmations of accounts payable, accounts receivable, and so forth.
This step requires the cooperation of everyone Banyan had active
accounts with - vendors, resellers, distributors, etc. - during the
time periods being audited. Because of the depth and scope of the
audit this has been the most time consuming aspect. Banyan is hoping
to have enough confirmations returned within the next few weeks to
satisfy our CPA and conclude the audit, thereby enabling Banyan to
begin reporting its quarterly results to shareholders and the SEC.
SHAREHOLDER VALUE
Over the last few weeks Banyan has witnessed its share price nearly
double in value giving Banyan a current market capitalization of just
over $2 million. Management recognizes that this is a "paltry"
valuation considering the potential market Banyan sells its products
into, the size and potential of current and future government
contracts, and recent developments including Ingram Micro, Anything,
Inc., ACI Microsystems and Dell Computer - any one of which is
arguably worth millions to Banyan and its shareholders.
Management firmly believes that Banyan's stock is trading at a steep
discount to the true value of its rapidly expanding business. Why?
The first and most obvious reason, which has been well addressed in
the past, is the blatant short selling that drove Banyan's share price
as low as 15-cents a share. Banyan has investigated the situation in
depth and discovered that, yes, there has been abusive short selling
practices in its stock. Since identifying the practices and some of
the parties responsible, Banyan has begun to take preventative
measures to avert such future abuses. These measures appear to be
working, as the market for Banyan's stock seems to be more organized
and less volatile.
When short selling and volatility plague a stock such as Banyan's for
such a long period it drives away potential investors. Recent
developments, increases in growth, and better stability in share price
set the stage for these and other investors to return and rethink
Banyan as an investment vehicle. Continued exposure through news
announcements, media reviews, and newsletter and analyst reports will
bring additional positive attention to Banyan. When coupled with
becoming a reporting company later this year, Management anticipates
most of the past concerns and doubts will dissipate into distant
memories, resulting in Banyan's share price rising to more true fair
market valuations.
ORDER BACKLOG, IMPROVEMENTS IN EFFICIENCIES, AND FUTURE PROSPECTS
Banyan achieved further improvements in manufacturing efficiencies at
its new facility during the second quarter. Banyan is now able to
"same day" ship orders under $1,000 received prior to 1:00p.m. MDT.
Orders exceeding $1,000 are usually shipped within two business days.
Large bulk orders may require up to a two week lead time. These
manufacturing improvements enabled Banyan to fulfill the remainder of
its order backlog during the quarter.
In addition to the improvements in manufacturing efficiencies, as
Banyan continues to grow it will begin sharing a larger portion of the
burden of warehousing increased inventory demands with its wholesale
distributors such as Ingram Micro. Management believes these and
future improvements in manufacturing and operational efficiencies will
help keep future order backlogs and inventory requirements to a
minimum. The final result: lower overhead costs and improved
availability of products to customers.
Throughout the second quarter, and even early into the current third
quarter, Banyan has been extremely successful at laying the groundwork
for substantial increases in both sales and earnings. Clearly, some
of these developments took longer than others to finalize. However,
there are many other potential developments Banyan is currently
negotiating, each ranging in size, scope and potential, including the
long-delayed Patriot Group, Inc. acquisition. With each successive
new development it becomes easier for Banyan to execute its business
plan and add value to the Company.
In closing I would like to say thank you for your continued support in
these exciting times. Each day that passes brings Banyan closer to
achieving its goal of becoming the premiere worldwide supplier of
computer accessory products. For more information about 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
* * *
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included
in this communiqu‚ (as well as information included in oral statements
or other written statements made or to be made by Banyan Corporation)
contains statements that are forward-looking, such as statements
relating to the future anticipated direction of the high technology
industry, plans for future expansion, various business development
activities, planed capital expenditures, future funding sources,
anticipated sales growth and potential contracts. Such
forward-looking information involves important risks and uncertainties
that could significantly affect anticipated results in the future and,
accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of Banyan Corporation.
These risks and uncertainties include, but are not limited to, those
relating to development and expansion activities, dependence on
existing management, financing activities, domestic and global
economic conditions, changes in federal or state tax laws, and market
competition factors.
* * *
Please contact: Sitra Enterprises, Inc. |
