<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 1934
For the quarterly period ended Sept. 30, 1999
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
B.H.I.T. INC.
(Formerly 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.)
875 Avenue of the Americas, Suite 1808
New York, New York 10001
(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 November 5, 1999 12,403,565
Transitional Small Business Disclosure Format. Yes . No X .
<PAGE>
B.H.I.T., Inc.
QUARTERLY REPORT ON FORM 10-QSB
FOR THE THREE MONTHS ENDED SEPT. 30,1999
TABLE OF CONTENTS
INDEX PAGE
PART I FINANCIAL INFORMATION
Item I Financial Statements
Consolidated Balance Sheets as of Sept. 30,
1999 (unaudited) and December 31, 1998............................ 3
Consolidated Statements of Operations
for the three months ended September 30, 1999
and 1998 (unaudited).............................................. 4
Consolidated Statements of Operations
for the nine months ended Sept. 30, 1999 and
1998 (unaudited).................................................. 5
Consolidated Statement of Stockholder' Equity
for the nine months ended September 30, 1999
(unaudited)....................................................... 6
Consolidated Statement of Cash Flows for the
nine months ended September 30, 1999 and 1988
(unaudited)....................................................... 7
Notes to Consolidated Financial Statements
(unaudited)....................................................... 8
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................................................ 12
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K.................................. 14
SIGNATURES................................................................. 15
2
<PAGE>
PART I FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
B.H.I.T., Inc.
CONSOLIDATED BALANCE SHEETS
September 30, 1999 and December 31, 1998
1999
(Unaudited) 1998
------------ ------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 152,583 $ 193,710
Investment in Joint Venture 852,971 905,283
Interest Receivable on Cash,
Cash Equivalents and Mortgages 3,293 3,147
Mortgage Loans Receivable - Related Party -- 106,189
- Other 300,000 300,000
Prepaid Insurance & Expenses 14,522 15,593
Other Assets 3,198 7,635
------------ ------------
Total Assets $ 1,326,567 $ 1,531,557
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts Payable and Accrued Expenses $ 3,899 $ 38,279
------------ ------------
STOCKHOLDERS' EQUITY:
Shares of Common Stock $0.01
Par Value, 20,000,000 Shares
Authorized, 12,436,322 Shares
Issued and 12,403,565 Shares Outstanding 87,477,847 87,477,847
Accumulated Deficit (86,146,990) (85,976,380)
Treasury Stock, at Cost, for 32,757
shares of Common Stock (8,189) (8,189)
------------ ------------
Total Stockholders' Equity 1,322,668 1,493,278
------------ ------------
Total Liabilities and Stockholders'
Equity $ 1,326,567 $ 1,531,557
============ ============
</TABLE>
See accompanying notes.
3
<PAGE>
B.H.I.T., Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
INCOME
Interest Income on Cash and Cash Equivalents $ 1,861 $ 2,940
Interest Income on Mortgages Receivable 9,000 20,936
------------ ------------
Total Revenues 10,861 23,876
------------ ------------
Equity in Income of Unconsolidated
Joint Venture 5,769 --
------------ ------------
EXPENSES
Stockholders' Expenses 1,764 1,339
Other Professional Fees 8,050 10,403
General and Administrative 41,041 47,253
------------ ------------
Total Expenses 50,855 58,995
------------ ------------
Net (Loss) $ (34,225) $ (35,119)
============ ============
Basic and Diluted Net (Loss) Per Share
of Common Stock based on Shares
Outstanding of 12,403,565 $ (0.00) $ (0.00)
============ ============
</TABLE>
See accompanying notes.
4
<PAGE>
B.H.I.T., Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
INCOME
Interest Income on Cash and Cash Equivalents $ 5,445 $ 8,770
Interest Income on Mortgages Receivable 28,770 97,981
------------ ------------
Total Revenues 34,215 106,751
------------ ------------
Equity in (Loss) of Unconsolidated
Joint Venture (52,312) --
------------ ------------
EXPENSES
Stockholders' Expenses 5,336 5,419
Other Professional Fees 24,625 43,136
General and Administrative 122,552 150,274
------------ ------------
Total Expenses 152,513 198,829
------------ ------------
Net (Loss) $ (170,610) $ (92,078)
============ ============
Basic and Diluted Net (Loss) Per Share of
Common Stock based on Shares
Outstanding of 12,403,565 $ (0.01) $ (0.01)
============ ============
</TABLE>
See accompanying notes.
5
<PAGE>
<TABLE>
<CAPTION>
B.H.I.T., Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
Common Stock Accumulated Treasury Total
Shares Amount Deficit Stock
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Stockholders' Equity
(Deficit) Dec. 31,1998 12,403,565 $87,477,847 $(85,976,380) $(8,189) $ 1,493,278
Net Loss -- -- (170,610) -- (170,610)
-----------------------------------------------------------------------------
Stockholders' Equity
(Deficit) Sept.30,1999 12,403,565 $87,477,847 $(86,146,990) $(8,189) $ 1,322,668
=============================================================================
</TABLE>
See accompanying notes.
6
<PAGE>
<TABLE>
<CAPTION>
B.H.I.T., Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $(170,610) $ (92,078)
Adjustment to Reconcile Net Loss to Net Cash Flows
Used in Operating Activities:
Equity in Net Loss of Unconsolidated Joint
Venture 52,312 --
Net Change in:
Interest Receivable (146) 7,740
Prepaid Insurance 1,071 (8,587)
Other Assets 4,437 (3,198)
Accounts Payable and Accrued Expenses (34,380) (33,103)
--------- ---------
Net Cash Used in Operating Activities (147,316) (129,226)
========= =========
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Joint Venture -- (655,000)
Principal Collections on Mortgage Loans 106,189 823,214
--------- ---------
Net Cash Provided by Investing Activities 106,189 168,214
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents (41,127) 38,988
Cash and Cash Equivalents at Beginning
of Period 193,710 238,077
--------- ---------
Cash and Cash Equivalents at End of Period $ 152,583 $ 277,065
========= =========
</TABLE>
See accompanying notes.
7
<PAGE>
B.H.I.T. Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310 of Regulation
S-B. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the nine month period ended September 30, 1999
are not indicative of the results that may be expected for the year ended
December 31, 1999.
The balance sheet at December 31, 1998 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
For further information refer to the financial statements and footnotes
thereto included in B.H.I.T. Inc.'s (the "Company") annual report on Form 10-KSB
for the year ended December 31, 1998.
The business of the Company is not seasonal and the Company does no
foreign or export business. The Company does not segregate revenue or assets by
geographical region, and such presentation is not applicable and would not be
material to an understanding of the Company's business taken as a whole.
Harvey Polly, the President and Chief Executive Officer of the Company and
Sheltering Palms Foundation, a not-for-profit charitable entity controlled by
Mr. Polly and his wife, have entered into an agreement under and pursuant to
which Mr. Polly will sell 2,720,563 shares of the Company's common stock,
2,650,000 shares of the Company's common stock which Mr. Polly will acquire
under and pursuant to his original agreement with the Company dated August 4,
1994, as amended, and Sheltering Palms Foundation will sell 500,000 shares of
the Company's common stock held by it to Vesper Corporation. Upon closing of the
transaction, Vesper Corporation will own a total of 5,870,563 shares or 39% of
the total of the then outstanding shares of common stock of the Company and will
be in a position to control the Company. In connection with the consummation of
the transactions contemplated by the agreement with Vesper Corporation, Mr.
Polly has agreed to acquire the Company's 50% interest in Metro Franchising
Commissary LLC.
Vesper Corporation's obligation to conclude its arrangements is conditioned
upon, among other things, approval by the stockholders of the Company of an
amendment to the certificate of incorporation of the Company and approval by the
stockholders of the sale of the Company's 50% interest in Metro Franchising
Commissary LLC to Mr. Polly.
8
<PAGE>
MORTGAGE LOANS RECEIVABLE
On October 10, 1995, the Company made a first mortgage loan in the
amount of $375,000 which was 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 called 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 loan was sold to a company controlled by Mr. Polly during
the third quarter of 1998 for its then principal balance.
On February 13, 1996, the Company made a first mortgage loan in the
amount of $150,000 which was secured by a commercial property in New York City.
The loan represented less than 17% of the appraised value of the property, bore
interest at the rate of 10% per annum and called for monthly payments on a five
year self-liquidating basis. This loan was prepaid in full during the second
quarter of 1998.
On February 29, 1996, the Company had a first mortgage loan in the
approximate amount of $106,000 which was secured by an industrial property in
Lake Worth, Florida. The property securing the mortgage was controlled by Mr.
Harvey Polly, who has personally guaranteed the mortgage. The loan called for
10% interest per annum, payable monthly, with a balloon payment of principal
after five (5) years. This loan was fully paid on March 1, 1999.
On August 20, 1997, the Company made a first mortgage loan in the
amount of $1,000,000 which was secured by one commercial and one residential
property located in the Dallas, Texas area. The loan bears interest at the rate
of 12% and calls for monthly payments of interest only. The loan was originally
due on April 1, 1998. The principals of the Corporate owners of both properties
have personally guaranteed the loan. In April of 1998, this loan was paid down
by $700,000 to $300,000 and the residential property was released from the lien.
The mortgage is now due on January 1, 2000.
The carrying amount of the above mortgage loan approximate its fair
values.
INVESTMENT IN JOINT VENTURE
On May 28, 1998, the Company made an investment of $1,005,000 in Metro
Franchising Commissary, LLC (the "Venture") , resulting in a 50% interest in the
Venture by paying $655,000 in cash upon closing, and issuing a non-interest
bearing note in the amount of $350,000. The note was due on the date which was
earlier of (i) September 30,1998 or (ii) 10 days after the date on which demand
was made by the holder of the note. This due date was subsequently extended to
November 2, 1998, at which time the note was paid, by the Company.
The business of the Venture is to open Dunkin' Donuts Quick Service
Restaurant locations in Exxon Service Stations in the New York, New Jersey and
Connecticut areas. The Venture has leased property in Long Island City, New
York, where Dunkin' Donuts products are baked for delivery to various locations.
It is expected that this facility will have the capacity to service
approximately 20 retail locations.
9
<PAGE>
INVESTMENT IN JOINT VENTURE (continued)
The individual retail locations are selected by the Venture with
Dunkin' Donuts and Exxon's approval. Each site is renovated and equipped by the
Venture and operated by the station operator. All baked products are purchased
from the Venture and the station operator also pays the Venture a royalty fee
based on sales, a portion of which is remitted to Dunkin' Donuts.
In December of 1998, the Venture's baking facility was fully
operational. The first retail location commenced operations in December, 1998.
One additional retail location opened in January, 1999 and two additional retail
locations opened in February, 1999. In April, 1999 two additional locations were
opened and in August one additional location was opened, bringing the total to
seven locations. It is anticipated that an eighth location will commence
operations in December, 1999. Management believes it will be opening additional
locations at the rate of one per month commencing in January, 2000.
Pursuant to certain provisions in the Venture's operating agreement
whereby all the losses are to be allocated to the member with positive capital.
As a result, the Company has been allocated all of the Venture's net loss for
the nine months ended September 30, 1999.
A summarized balance sheet is as follows for the Venture:
<TABLE>
<CAPTION>
As of
Sept. 30, 1999
--------------
<S> <C>
Assets:
Fixed Assets $ 568,601
Other Assets 294,801
---------
$ 863,402
=========
Liabilities and Members' Capital
Current Liabilities $ 10,431
---------
Members' Capital (Company investment in Venture) 852,971
---------
$ 863,402
=========
</TABLE>
A summarized statement of operations is as follows for the Venture:
<TABLE>
<CAPTION>
For the nine month
period ended
Sept. 30, 1999
------------------
<S> <C>
Revenues
Net Sales and Royalties $ 619,135
Interest Income 2,904
---------
622,039
Expenses
Total Expenses 674,351
=========
Net Loss (52,312)
=========
Net Loss Allocated to the Company $ (52,312)
=========
</TABLE>
10
<PAGE>
INVESTMENT IN LIQUIDATING TRUST
The Company has an interest in a liquidating Trust which was received
as final settlement of guarantees of VMS Realty Partners of loans made by the
Company in prior years. No funds have been received by the Company, from the
Trust in 1999 or 1998.
OTHER INVESTMENTS
As of September 30, 1999, the Company owned a 50% limited liability
partnership member interest in the Santa Barbara Biltmore Hotel. The fair value
of the interest at September 30, 1999 and December 31, 1998 is $0.
TRANSACTIONS WITH AFFILIATES
During the first nine months of 1998, the Company reimbursed an affiliated
company $10,421 for Health Insurance premiums paid on behalf of the Company.
During the first nine months of 1999, this reimbursement amounted to $10,427.
INCOME TAXES
Prior to January 1, 1995, the Company elected to be treated as a Real
Estate Investment Trust (REIT) under sections 856-860 of the Internal Revenue
Code of 1986, However, management of the Company discontinued its REIT status
effective January 1, 1995. Accordingly, the Company has subsequently been
treated as a C-Corporation in accordance with the Internal Revenue Code.
As of September 30, 1999, the Company had a net operating loss
carryforward of approximately $75,520,000 which expires between 2005 and 2019.
The utilization of the net operating losses may be subject to limitations
contained in the Internal Revenue Code.
A summary of the components of deferred taxes is as follows:
Deferred Tax Asset -- Non Current
Sept. 30, 1999 December 31, 1998
-------------- -----------------
Net Operating Loss Carry Forward $ 30,208,132 $ 30,092,235
Valuation Allowance (30,208,132) (30,092,235)
-------------- -----------------
$ --0-- $ --0--
-------------- -----------------
LEGAL PROCEEDINGS
The Registrant is not aware of any material pending legal proceedings
as of November 5, 1999 nor were any proceedings terminated during the quarter
ended September 30, 1999.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents consist of cash and short--term investments.
The Company's cash and cash equivalents balance at September 30, 1999 and
December 31, 1998 was $152,583 and $193,710 respectively.
There are no material commitments for capital expenditures. The
Company's cash and cash equivalents are sufficient to meet its anticipated
operating expenses. The Company deems its liquidity to be adequate.
As of September 30, 1999, the Company's mortgage loan portfolio
consisted of one loan.
The Company's ultimate return of cash to its stockholders is dependent upon,
among other things: (i) the activities undertaken by the Company; (ii) interest
earned from the investments of cash and cash equivalents, and mortgages; (iii)
the Company's ability to control its operating expenses; (iv) possible
recoveries from the Santa Barbara Biltmore Hotel and the liquidating trust, if
any should such investments generate cash to the Company; and (v) operating
results of the Joint Venture.
RESULTS OF OPERATIONS
Total income for the three months ended September 30, 1999 and 1998 was
$10,861 and $23,876 respectively. The decrease is due primarily to principal
prepayments on the Company's mortgage loan receivable.
Operating expenses for the three months ended September 30, 1999 were
lower than those for the same period in 1998. The decrease is due primarily to
reductions in professional fees and general and administrative expenses. In
addition, the Company equity in earnings of $5,769 as a result of its equity
investment for the three month period ended September 30, 1999.
The above changes for the three months ended September 30, 1999, when
compared to the same period in 1998, resulted in an decrease in the net loss to
$34,225 from $35,119.
Total income for the nine months ended September 30, 1999 and 1998 was
$34,215 and $106,751 respectively. The decrease is due primarily to principal
prepayments on the Company's mortgage loan receivable.
Operating expenses for the nine months ended September 30, 1999 were
lower than those for the same period in 1998. The decrease is due primarily to
reductions in professional fees and general and administrative expenses. In
addition, the Company incurred a loss of $52,312 as a result of its equity
investment for the nine month period ended September 30, 1999.
The above changes for the nine months ended September 30, 1999, when compared to
the same period in 1998, resulted in an increase in the net loss to $170,610
($0.01 per share) from $92,078 ($0.01 per share).
12
<PAGE>
IMPACT OF YEAR 2000
The year 2000 issue is the result of computer programs being written
using two digits rather than four to identify the applicable year. Any computer
programs that have time-sensitive software may recognize "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage,
in similar normal business activities.
The Company does not use a computer for any of its business activities.
Based on a recent assessment, the Company determined that none of its operations
will be impacted by the Year 2000 Issue except to the extent that its
significant borrowers and its Joint Venture partners are unable to remediate
their own Year 2000 Issues. Discussions with these borrowers, and with the
managing member of the Joint Venture in which the Company has a 50% interest has
convinced Management that alternative procedures would enable these borrowers,
and the Joint Venture to continue normal operations should they encounter Year
2000 problems In a "worst case scenario" the borrowers and managing member of
the Joint Venture would operate using manual records until the problem is
resolved.
13
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No exhibits are included with this Report.
No form 8-K was filed with the Securities and Exchange
Commission during the period January 1, 1999 to September 30,
1999.
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 there-unto duly authorized.
B.H.I.T. Inc.
BY: /s/ Harvey Polly Date: November 5, 1999
Harvey Polly, Director, President
and Chief Executive Officer
BY: /s/ Morton I. Kalb Date: November 5, 1999
Morton I. Kalb, Director,
Vice President and Chief
Financial Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 152,583
<SECURITIES> 0
<RECEIVABLES> 3,293
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 470,398
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,326,567
<CURRENT-LIABILITIES> 3,899
<BONDS> 0
87,477,847
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,326,567
<SALES> 0
<TOTAL-REVENUES> 34,215
<CGS> 0
<TOTAL-COSTS> 152,513
<OTHER-EXPENSES> 52,312
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (170,610)
<INCOME-TAX> 0
<INCOME-CONTINUING> (170,610)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (170,610)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
