<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 June 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)
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 August 2, 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 JUNE 30, 1999
TABLE OF CONTENTS
INDEX PAGE
PART I FINANCIAL INFORMATION
Item I Financial Statements
Consolidated Balance Sheets as of June 30,
1999 (unaudited)and December 31, 1998..............................3
Consolidated Statements of Operations
for the six months ended June 30, 1999 and
1998 (unaudited).................................................4
Consolidated Statements of Operations
for the three months ended June 30, 1999 and
1998 (unaudited).................................................5
Consolidated Statement of Stockholders' Equity
for the six months ended June 30, 1999
(unaudited)......................................................6
Consolidated Statements of Cash Flows for the
six months ended June 30, 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
<PAGE>
PART I FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
B.H.I.T. Inc.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
(Unaudited)
ASSETS 1999 1998
------------ ------------
<S> <C> <C>
Cash and Cash Equivalents $ 199,359 $ 193,710
Interest Receivable on Cash and Cash Equivalents and Mortgages
3,288 3,147
Mortgages Receivable - Related Party -- 106,189
Other 300,000 300,000
Investment in Joint Venture 847,202 905,283
Prepaid Insurance 8,965 15,593
Other Assets 3,198 7,635
------------ ------------
Total Assets $ 1,362,012 $ 1,531,557
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts Payable and Accrued Expenses $ 5,119 $ 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 Share Outstanding
87,477,847 87,477,847
Accumulated Deficit (86,112,765) (85,976,380)
Treasury Stock, at Cost, for 32,757 shares of Common Stock
(8,189) (8,189)
------------ ------------
Total Stockholders' Equity 1,356,893 1,493,278
------------ ------------
Total Liabilities & Stockholders' Equity
$ 1,362,012 $ 1,531,557
============ ============
</TABLE>
See accompanying notes
3
<PAGE>
B.H.I.T. Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
REVENUES 1999 1998
--------- ---------
<S> <C> <C>
Interest Income on Cash and Cash Equivalents $ 3,584 $ 5,830
Interest Income on Mortgages Receivable 18,000 71,735
Interest Income from Related Parties 1,770 5,310
--------- ---------
Total Revenues 23,354 82,875
--------- ---------
Equity in (Loss) of Unconsolidated
Joint Venture (58,081) --
--------- ---------
EXPENSES
Stockholders' Expenses 3,572 4,080
Other Professional Fees 16,575 32,733
General and Administrative 81,511 103,021
--------- ---------
Total Expenses 101,658 139,834
--------- ---------
Net (Loss) $(136,385) $ (56,959)
========= =========
Net (Loss) Per Share of Common Stock Based on
Shares Outstanding of 12,403,565 $ (0.01) $ (0.00)
========= =========
</TABLE>
See accompanying notes
4
<PAGE>
B.H.I.T. Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
REVENUES 1999 1998
-------- --------
<S> <C> <C>
Interest Income on Cash and Cash Equivalents $ 1,850 $ 3,792
Interest Income on Mortgages Receivable 9,000 29,414
Interest Income from Related Parties -- 2,655
-------- --------
Total Revenues 10,850 35,861
-------- --------
Equity in (Loss) of Unconsolidated Joint Venture (9,737) --
-------- --------
EXPENSES
Stockholders' Expenses 1,818 2,042
Other Professional Fees 16,575 1,907
General and Administrative 40,399 49,414
-------- --------
Total Expenses 58,792 53,363
-------- --------
Net (Loss) $(57,679) $(17,502)
======== ========
Net (Loss) Per Share of Common Stock Based on
Shares Outstanding of 12,403,565 $ (0.00) $ (0.00)
======== ========
</TABLE>
See accompanying notes
5
<PAGE>
B.H.I.T. Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Accumulated Treasury
Shares Amount Deficit Stock Total
---------- ----------- ------------ ------- -----------
<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 -- -- $ (136,385) -- $ (136,385)
---------- ----------- ------------ ------- -----------
Balance June 30, 1999 12,403,565 $87,477,847 $(86,112,765) $(8,189) $ 1,356,893
========== =========== ============ ======= ===========
</TABLE>
See accompanying notes
6
<PAGE>
B.H.I.T. Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET (LOSS) $(136,385) $ (56,959)
Adjustment to Reconcile Net Loss to Net Cash Flows used in
Operating Activities:
Equity in Net Loss of Unconsolidated Joint Venture 58,081 --
Net change in:
Interest Receivable on Cash, Cash Equivalents and Mortgages (141) 7,383
Prepaid Insurance and Expenses 6,628 996
Other Assets 4,437 --
Accounts Payable and Accrued Expenses (33,160) (37,343)
--------- ---------
Net Cash Used in Operating Activities $(100,540) $ (85,923)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Joint Venture -- (655,000)
Principal Collections on Mortgage Loans 106,189 816,421
--------- ---------
Net Cash Provided by Investing Activities $ 106,189 $ 161,421
--------- ---------
Net Increase in Cash and Cash Equivalents $ 5,649 $ 75,498
Cash and Cash Equivalents at Beginning of Period 193,710 238,077
--------- ---------
Cash and Cash Equivalents at End of Period $ 199,359 $ 313,575
========= =========
</TABLE>
See accompanying notes
7
<PAGE>
B.H.I.T. Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 six month period ended June 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 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
8
<PAGE>
MORTGAGE LOANS RECEIVABLE (continued)
10% per annum and calls 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 made 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 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 October 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.
9
<PAGE>
INVESTMENT IN JOINT VENTURE (continued)
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, bringing the total to six locations. It is anticipated that a seventh
location will commence operations in mid August, and an eighth one will be
opened in September, 1999.
Pursuant to certain provisions in the Venture's operating agreement, the
Company has been allocated all of the Venture's net loss for the six months
ended June 30, 1999.
A summarized statement of operations is as follows for the Venture:
For the six
month period ended
June 30, 1999
-------------
Revenues
Net Sales and Royalties $353,270
Interest Income 2,668
--------
$355,938
Expenses
Total Expenses 414,019
--------
Net Loss (58,081)
--------
Net Loss Allocated to the Company
$(58,081)
========
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 June 30, 1999, the Company owned a 50% partnership interest in the
Santa Barbara Biltmore Hotel. The fair value of the interest at June 30, 1999
and December 31, 1998 is $0.
10
<PAGE>
TRANSACTIONS WITH AFFILIATES
During the first six months of 1998, the Company reimbursed an affiliated
company $10,421 for Health Insurance premiums paid on behalf of the Company.
During the first six months of 1999, this reimbursement amounted to $12,700.
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 June 30, 1999, the Company had a net operating loss carryforward of
approximately $75,407,000 which expires between 2005 and 2018. The utilization
of the net operating losses may be subject to limitations contained in the
Internal Revenue Code.
A summary of the components of deferred taxes is as follows:
Deferred tax Asset - Non Current
June 30, 1999 December 31,1998
------------- ----------------
Net Operating Loss Carry Forward $ 30,162,912 $ 30,092,235
Valuation Allowance (30,162,912) (30,092,235)
------------ ------------
$ 0 $ 0
------------ ------------
LEGAL PROCEEDINGS
The Registrant is not aware of any material pending legal proceedings as
of August 2, 1999 nor were any proceedings terminated during the quarter ended
June 30, 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 June 30, 1999 and December 31,
1998 was $199,359 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 it needs for
anticipated operating expenses. The Company deems its liquidity to be adequate.
As of June 30, 1999, the Company's mortgage loan portfolio consisted of
one loan, as detailed above.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (continued)
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; and (v) operating results of the Joint Venture.
RESULTS OF OPERATIONS
Total income for the six months ended June 30, 1999 and 1998 was $23,354
and $82,875 respectively. The decrease is due primarily to principle prepayments
on the Company's mortgage loans receivable.
Operating expenses for the three months ended June 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 $58,081 as a result of its equity
investment for the six month period ended June 30, 1999.
The above changes for the six months ended June 30, 1999, when compared to
the same period in 1998, resulted in an increase in the net loss to $136,385
($0.01 per share) from $56,959 ($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.
12
<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 June
30, 1999.
13
<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: August 2, 1999
Harvey Polly, Director, President
and chief Executive Officer
By: /s/ Morton I. Kalb Date August 2, 1999
Morton I. Kalb, Director,
Vice President and Chief
Financial Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 199,359
<SECURITIES> 0
<RECEIVABLES> 3,288
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 511,612
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,362,012
<CURRENT-LIABILITIES> 5,119
<BONDS> 0
87,477,847
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,362,012
<SALES> 0
<TOTAL-REVENUES> 23,354
<CGS> 0
<TOTAL-COSTS> 101,658
<OTHER-EXPENSES> 58,081
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (136,385)
<INCOME-TAX> 0
<INCOME-CONTINUING> (136,385)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (136,385)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
