<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 March 31, 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 Number)
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 May 5, 1999: 12,338,051
Transitional Small Business Disclosure Format Yes No X
<PAGE>
B.H.I.T. Inc.
Formerly BANYAN HOTEL INVESTMENT FUND
QUARTERLY REPORT ON FORM 10-QSB
FOR THE THREE MONTHS ENDED MARCH 31, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
INDEX PAGE
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<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31,
1999 (unaudited) and December 31, 1998................................................3
Consolidated Statements of Income and Expenses
for the three months ended March 31, 1999 and
1998 (unaudited) .....................................................................4
Consolidated Statement of Stockholders' Equity
for the three months ended March 31, 1999
(unaudited)...........................................................................5
Consolidated Statement of Cash Flows for the
three months ended March 31, 1999 and 1998
(unaudited) ..........................................................................7
Notes to Consolidated Financial Statements
(unaudited)...........................................................................8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ...........................................................................11
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.......................................................13
SIGNATURES ........................................................................................14
</TABLE>
<PAGE>
B.H.I.T. Inc.
Formerly BANYAN HOTEL INVESTMENT FUND
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
PART 1 FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
ASSETS 1999 1998
---- ----
(Unaudited)
<S> <C> <C>
Cash and Cash Equivalents ................................................ $ 263,304 $ 193,710
Interest Receivable on Mortgages
And Miscellaneous Receivables ......................................... 3,284 3,147
Mortgage Loans Receivable:
Related Party ........................................................... -- 106,189
Other ................................................................... 300,000 300,000
Investment in Joint Venture .............................................. 856,939 905,283
Prepaid Insurance ........................................................ 7,082 15,593
Other Assets ............................................................. 3,198 7,635
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$ 1,433,807 $ 1,531,557
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LIABILITIES & STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses ................................... $ 19,235 $ 38,279
------------ -----------
Stockholders' Equity
Shares of Common Stock $0.01 Par Value
20,000,000 Shares Authorized
12,338,051 Shares Outstanding ........................................... 87,477,847 87,477,847
Accumulated Deficit ..................................................... (86,055,086) (85,976,380)
Treasury Stock, At Cost
for 32,757 Shares of Common Stock ..................................... (8,189) (8,189)
------------ -----------
Total Stockholders' Equity .............................................. 1,414,572 1,493,278
------------ -----------
Total Liabilities and
Stockholders' Equity .................................................. $ 1,433,807 $1,531,557
----------- ----------
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</TABLE>
See Accompanying Notes
<PAGE>
B.H.I.T. Inc.
Formerly BANYAN HOTEL INVESTMENT FUND
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES
FOR THE THREE MONTHS ENDED MARCH 31, 1999 and 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
INCOME
Interest Income on Cash
and Cash Equivalents ................ $ 1,734 $ 2,038
Interest Income on
Mortgages Receivable ................. 9,000 43,206
Interest Income from
Related Parties ...................... 1,770 1,770
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Total Income .......................... 12,504 47,014
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Equity in Net Loss of Unconsolidated
Joint Venture (48,344) --
-------- --------
EXPENSES
Stockholder Expenses .................. 1,754 2,039
Other Professional Fees ............... -- 30,826
General and Administrative ............ 41,112 53,606
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TOTAL EXPENSES ........................ 42,866 86,471
Net Loss .............................. $(78,706) $(39,457)
-------- --------
-------- --------
Net Loss Per Share of
Common Stock (Based
on Number of Shares Outstanding
of 12,338,051) $ (0.01) $ (0.00)
-------- --------
-------- --------
</TABLE>
See Accompanying Notes
<PAGE>
B.H.I.T. Inc.
Formerly BANYAN HOTEL INVESTMENT FUND
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE
THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
----------------------
SHARES AMOUNT
------ ------
<S> <C> <C>
Stockholders'
Equity (Deficit)
December 31, 1998 ................. 12,338,051 $87,477,847
Net Loss .......................... -- --
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Stockholders'
Equity (Deficit)
March 31, 1999 .................... 12,338,051 $87,477,847
---------- ----------
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</TABLE>
<PAGE>
B.H.I.T. Inc.
Formerly BANYAN HOTEL INVESTMENT FUND
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999 (continued)
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED TREASURE
DEFICIT STOCK TOTAL
----------- -------- -----
<S> <C> <C> <C>
Stockholders' Equity
(Deficit)
December 31, 1998...................................... $(85,976,380) $(8,189) $1,493,278
Net Loss .............................................. (78,706) -- (78,706)
------------ ------- ----------
Stockholders' Equity
(Deficit)
March 31, 1999 ........................................ $(85,976,380) $(8,189) $1,414,572
------------- ------- ----------
------------- ------- ----------
</TABLE>
See Accompanying Notes
<PAGE>
B.H.I.T. Inc.
Formerly BANYAN HOTEL INVESTMENT FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 and 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Loss .................................................................... $ (78,706) $ (39,457)
Adjustments to Reconcile Net Loss to Net
Cash Flows Used in Operating Activities
Equity in Net Loss of Unconsolidated
Joint Venture .............................................................. 48,344 --
Net Change in:
Interest Receivable on Cash
and Cash Equivalents ...................................................... (137) (138)
Prepaid Insurance ........................................................... 8,511 5,319
Other Assets ................................................................ 4,437 --
Accounts Payable and
Accrued Expenses ........................................................ (19,044) (502)
--------- ---------
Net Cash Used in
Operating Activities ...................................................... (36,595) (34,778)
--------- ---------
CASH FLOW FROM
INVESTMENT ACTIVITIES:
Principal collections on Mortgage Loans .................................... 106,189 13,261
--------- ---------
Net Cash Provided by
Investment Activities ...................................................... 106,189 13,261
--------- ---------
Net Increase (Decrease)
in Cash and Cash Equivalents .............................................. 69,594 (21,517)
Cash and Cash Equivalents
at Beginning of Period ................................................... 193,710 238,077
--------- ---------
Cash and Cash Equivalents
at End of Period ......................................................... $ 263,304 $ 216,560
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</TABLE>
See Accompanying Notes
<PAGE>
B.H.I.T. Inc.
Formerly BANYAN HOTEL INVESTMENT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 three month period
ended March 31, 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 the Company's 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.
MORTGAGE LOANS RECEIVABLE
On October 10, 1995, the Company 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 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 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-liquidation basis. This loan was prepaid in full
during the second quarter of 1998.
<PAGE>
On February 29, 1996, the Company had 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 mortgage is controlled
MORTGAGE LOANS RECEIVABLE 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. 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 July 1, 1999.
The carrying amount of the above mortgage loans approximate their 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.
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 20 to 25 retail locations.
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.
As of December 31, 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, bringing the total to six locations.
<PAGE>
INVESTMENT IN JOINT VENTURE (continued)
A summarized statement of operations is as follows for the Venture:
<TABLE>
<CAPTION>
FOR THE THRE MONTH
PERIOD ENDED
MARCH 31, 1999
------------------
<S> <C>
INCOME
Net Sales and Royalties ............................. $ 124,851
Interest Income ..................................... 2,045
---------
126,896
EXPENSES
Total Expenses ...................................... 175,240
---------
Net Loss ............................................ (48,344)
Net Loss Allocated to the Company ................... $ (48,344)
---------
---------
</TABLE>
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 INVESTMENT
As of March 31, 1999, the Company owned a 50% partnership interest in
the Santa Barbara Biltmore Hotel. The fair value of the interest at March 31,
1999 and December 31, 1998 is $0.
TRANSACTIONS WITH AFFILIATES
During the first quarter 1998, the Company reimbursed an affiliated
company $5,319 for Health Insurance premiums paid on behalf of the Company.
During the first quarter of 1999, this reimbursement amounted to $5,051.
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 March 31, 1999, the Company had a net operating loss carry
forward of approximately $75,300,000 which expires between 2005 and 2018. The
utilization of the net operating losses may be subject to limitations
contained in the Internal Revenue Code.
<PAGE>
INCOME TAXES (continued)
A summary of the components of deferred taxes is as follows:
<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
<S> <C> <C>
Deferred Tax Asset - Non Current .............................. $ 30,129,464 $ 30,092,235
Net Operating Loss Carry Forward .............................. (30,129,464) (30,092,235)
------------ ------------
Valuation Allowance ........................................... $ -0- $ -0-
------------ ------------
------------ ------------
</TABLE>
LEGAL PROCEEDINGS
The Registrant is not aware of any material pending legal proceedings
as of May 5, 1999 nor were any proceedings terminated during the quarter
ended March 31, 1999.
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 March 31, 1999 and
December 31, 1998 was $263,304 and $193,710 respectively.
At this time, there are no material commitments for capital
expenditures. The Company's cash and cash equivalents are sufficient to meet
its needs for anticipated operating expenses. The Company deems its liquidity
to be adequate.
As of March 31, 1999, the Company's mortgage loan portfolio consisted
of one loan, as detailed above.
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 investment 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; and (v) operating results of the Joint Venture.
RESULTS OF OPERATIONS
Total income for the three months ended March 31, 1999 and 1998 was
$12,504 and $47,014 respectively. The decrease is due primarily to principle
prepayments on the Company's mortgage loans receivable.
Operating expenses for the three months ended March 31, 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 $48,344 as a result of its equity
investment for the three month period
<PAGE>
RESULTS OF OPERATIONS (continued)
ended March 31, 1999.
The above changes for the three months ended March 31, 1999, when
compared to the same period in 1998, resulted in an increase in the net loss
to $78,706 ($(0.01) per share) from $39,457 ($0.00 per share).
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.
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No exhibits are included with this Report.
<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.
BANYAN HOTEL INVESTMENT FUND
<TABLE>
<CAPTION>
<S> <C> <C>
By: /s/ Harvey Polly
---------------- Date: May 5, 1999
Harvey Polly, Director, President
and Chief Executive Officer
By: /s/ Morton I. Kalb
------------------ Date: May 5, 1999
Morton I. Kalb, Director, Vice Pres.
and Chief Financial Officer
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 263,304
<SECURITIES> 0
<RECEIVABLES> 3,284
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 573,670
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,433,807
<CURRENT-LIABILITIES> 19,235
<BONDS> 0
87,477,847
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,433,807
<SALES> 0
<TOTAL-REVENUES> 12,504
<CGS> 0
<TOTAL-COSTS> 42,866
<OTHER-EXPENSES> 48,344
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (78,706)
<INCOME-TAX> 0
<INCOME-CONTINUING> (78,706)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (78,706)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.00)
</TABLE>
