<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, 2000
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 November 6, 2000: 15,053,565
Transitional Small Business Disclosure Format Yes. No. X.
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B.H.I.T. Inc.
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPT. 30, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
INDEX PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C> <C>
Consolidated Balance Sheets as of September 30,
2000 (unaudited) and December 31, 1999.................................3
Consolidated Statements of Operations
for the three months ended September 30, 2000
and 1999 (unaudited)...................................................4
Consolidated Statements of Operations
for the nine months ended September 30, 2000
and 1999 (unaudited)...................................................5
Consolidated Statement of Stockholders' Equity
for the nine months ended September 30, 2000
(unaudited)............................................................6
Consolidated Statements of Cash Flows for the
nine months ended September 30, 2000 and 1999
(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
</TABLE>
2
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PART I FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
B.H.I.T. Inc.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS September 30, December 31,
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Cash and Cash Equivalents $ 1,564,979 $ 110,992
Interest Receivable on Mortgages
and Miscellaneous Revenue 50,302 4,166
Mortgage Loan Receivable 233,750 300,000
Investment in Joint Venture -- 915,504
Prepaid Insurance 14,688 16,243
Other Assets 3,198 3,198
------------------------------------
Total Assets $ 1,866,917 $ 1,350,103
====================================
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses $ 7,967 $ 35,864
------------------------------------
Stockholders' Equity
Shares of Common Stock $0.01 Par
Value - 20,000,000 Shares Authorized
15,053,565 Outstanding in 2000 and
12,403,565 Outstanding in 1999 88,060,847 87,477,847
Accumulated Deficit (86,193,708) (86,155,419)
Treasury Stock (8,189) (8,189)
-------------------------------------
Total Stockholders' Equity 1,858,950 1,314,239
-------------------------------------
Total Liabilities and
Stockholders' Equity $ 1,866,917 $ 1,350,103
=====================================
</TABLE>
See Accompanying Notes
3
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B.H.I.T. Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months
Ended September 30,
2000 1999
---- ----
(unaudited) (unaudited)
<S> <C> <C>
REVENUES
Interest Income on Cash and Cash Equivalents $ 301 $ 1,861
Interest Income on Mortgage Receivable 7,012 9,000
---------------------------------------------
Total Revenues 7,313 10,861
---------------------------------------------
EXPENSES
Stockholders' Expenses 1,971 1,764
Other Professional Fees 19,197 8,050
General and Administrative Expenses 72,082 41,041
---------------------------------------------
Total Expenses 93,250 50,855
---------------------------------------------
Equity in Income of Unconsolidated
Joint Venture 95,422 5,769
Gain on Sale of Interest in
Partners Liquidating Trust 47,759 -
Loss on Sale of 50% Interest in
Joint Venture (56,799) -
---------------------------------------------
Total Other Income - Net
86,382 5,769
---------------------------------------------
Net Income (Loss) $ 445 $ (34,225)
=============================================
Basic and Diluted Net Income (Loss) Per Share of Common Stock based on
12,518,783 average Shares Outstanding in 2000 and 12,403,565 in 1999
$ 0.00 $ (0.00)
=============================================
</TABLE>
See Accompanying Notes
4
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B.H.I.T. Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
---- ----
(unaudited) (unaudited)
<S> <C> <C>
REVENUES
Interest Income on Cash and Cash Equivalents $ 1,419 $ 5,445
Interest Income on Mortgage Receivable 25,012 28,770
---------------------------------------------
Total Revenues 26,431 34,215
---------------------------------------------
EXPENSES
Stockholders' Expenses 5,160 5,336
Other Professional Fees 35,639 24,625
General and Administrative Expenses 156,176 122,552
---------------------------------------------
Total Expenses 196,975 152,513
Equity in Income (Loss) of Unconsolidated
Joint Venture 141,295 (52,312)
Gain on Sale of Interest in Partners
Liquidating Trust 47,759 -
Loss on Sale of 50% Interest in
Joint Venture (56,799) -
---------------------------------------------
Total Other Income - Net 132,255 (52,312)
---------------------------------------------
Net Loss $ (38,289) $ (170,610)
=============================================
Basic and Diluted Net Loss Per Share of
Common Stock based on 12,442,251 average Shares Outstanding in 2000 and
12,403,565 in 1999 $ (0.00) $ (0.01)
=============================================
</TABLE>
See Accompanying Notes
5
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B.H.I.T. Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Accumulated Treasury
Shares Amount Deficit Stock Total
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Stockholders' Equity
(Deficit) Dec. 31,1999 12,403,565 $ 87,477,847 $ (86,155,419) $ (8,189) $ 1,314,239
Proceeds from Sale of Common
Stock 2,650,000 583,000 - - 583,000
Net Loss -- -- (38,289) - (38,289)
-------------------------------------------------------------------------------------------
Stockholders' Equity
(Deficit) Sept, 30, 2000 15,053,565 $ 88,060,847 $ (86,193,708) $ (8,189) $ 1,858,950
===========================================================================================
</TABLE>
See Accompanying Notes
6
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B.H.I.T. Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
---- ----
(unaudited) (unaudited)
<S> <C> <C>
Cash Flow from Operating Activities:
Net (Loss) $ (38,289) $ (170,610)
Adjustments to Reconcile Net Loss to Net
Cash Flows Used in Operating Activities
Equity in Net (Income) or Loss of Unconsolidated Joint Venture
(141,295) 52,312
Loss on Sale of 50% Interest in Joint Venture 56,799 -
Gain on Sale of Interest in Partners Liquidating Trust (47,759) -
Net Change in:
Interest & Miscellaneous Receivables 1,623 (145)
Prepaid Insurance 1,555 1,071
Other Assets - 4,437
Accounts Payable & Accrued Expenses (27,897) (34,381)
---------------------------------------------
Net Cash Used in Operating Activities (195,263) (147,316)
---------------------------------------------
Cash Flows from Investing Activities:
Principal Collections on Mortgage Loans 25,000 106,189
Sale of 15% Participation in Mortgage Loan 41,250 -
Proceeds from Sale of Interest in Joint Venture 1,000,000 -
---------------------------------------------
Net Cash Provided by Investment Activities 1,066,250 106,189
---------------------------------------------
Cash Flow from Financing Activities:
Proceeds from Sale of 2,650,000
Shares of Common Stock 583,000 -
---------------------------------------------
Net Cash Provided by Financing Activities 583,000 -
---------------------------------------------
Net Increase (Decrease) in 1,453,987 (41,127)
Cash and Cash Equivalents
Cash & Cash Equivalents at Beginning
of Period 110,992 193,710
---------------------------------------------
Cash & Cash Equivalents at End of Period $ 1,564,979 $ 152,583
=============================================
</TABLE>
See Accompanying Notes
7
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B.H.I.T. Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(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 30,2000
are not indicative of the results that may be expected for the year ended
December 31, 2000. The balance sheet at December 31, 1999 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," or "BHIT") annual report on Form 1O-KSB for the year ended December
31, 1999.
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.
In July of 1999, Harvey Polly, the President and Chief Executive
Officer of the Company, entered into an agreement for the sale by Mr. Polly of
his stock in the Company.
In September of 2000, this transaction was closed, after the necessary
approval of stockholders was received at the Company's Annual Meeting. In
connection with this transaction, Mr. Polly acquired 2,650,000 shares of the
Company's stock under his original agreement with the Company dated August 4,
1994. The Company received $583,000 for these shares. Mr. Polly then sold
5,370,563 shares, constituting his entire holdings, to Arrowhead Holdings Corp.,
("Arrowhead")the nominee of Vesper Corp. At the same time, Sheltering Palms
Foundation, a not-for-profit charitable entity, controlled by Mr. Polly and his
wife, sold 500,000 shares of the Company to Arrowhead Holdings Corp. Upon
closing of this transaction, Arrowhead held 5,870,563 shares of the Company or
39% of the outstanding shares of the Company, and will be in a position to
control the Company.
As required by the Stock Purchase Agreement, Mr. Polly purchased
B.H.I.T.'s 50% interest in Metro Franchising Commissary, LLC. for $1,000,000. As
a result, the company recognized a loss on the sale of $56,799 which is included
in the accompanying statement of operations.
8
<PAGE>
BASIS OF PRESENTATION (continued)
Upon completion of the stock sale discussed above, Mr. Leo Yarfitz and
Mr. Willis Ryckman resigned their position as Directors, and were replaced by
Mr. James Benenson and Mr. James Lash, as designees of Arrowhead Holdings Corp.
MORTGAGE LOANS RECEIVABLE
On February 29, 1996, the Company invested in 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.
During June of 2000 the loan was paid down by an additional $25,000 and a 15%
interest in the remaining loan of $275,000 was sold to an unrelated company for
$41,250 leaving the Company with an outstanding loan balance of $233,750 at
September 30, 2000. The mortgage is now due on December 1, 2000. During October
2000, the Company re-purchased the 15% participation in this mortgage for
$41,250.
As of September 30, 2000, the carrying amount of the above mortgage
loan approximates its fair value.
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.
In September of 2000, in connection with the Arrowhead transaction
discussed above, the Company sold its interest in the Joint Venture to Mr.
Harvey Polly for $1,000,000, and recognized a loss of $56,799.
9
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INVESTMENT IN JOINT VENTURE (continued)
A summarized statement of operations is as follows for the Venture:
<TABLE>
<CAPTION>
For the For the Three
Nine Month Period Month Period Ended
Ended Sept. 30, Sept. 30,
2000 1999
---- ----
<S> <C> <C>
Revenues:
Net Sales and Royalties $ 1,162,457 $ 619,135
Interest Income 1,318 2,904
-----------------------------------------
1,163,775 622,039
Expenses:
Total Expenses 1,022,480 674,351
Net Income (Loss) 141,295 (52,312)
=========================================
Net Income (Loss) allocated
to the Company $ 141,295 $ (52,312)
=========================================
</TABLE>
10
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INVESTMENT IN LIQUIDATING TRUST
The Company owned 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 were received by the Company, from the Trust
since 1997. During the third quarter of 2000, the Company accepted an offer of
$47,759 for its 0.61% interest in the Trust, and sold its interest. As a result,
the company recognized a gain on sale of $47,759, which is included in the
accompanying statement of operations.
OTHER INVESTMENTS
As of September 30, 2000, 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, 2000 and December 31,1999 is $0.
TRANSACTIONS WITH AFFILIATES
During the first nine months of 2000, the Company reimbursed an affiliated
company $12,004 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, 2000, the Company had a net operating loss carryforward of
approximately $75,460,000 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
<TABLE>
<CAPTION>
Sept. 30, 2000 December 31, 1999
--------------------- -----------------------
<S> <C> <C>
Net Operating Loss Carryforward $ 30,184,055 $ 30,220,173
Valuation Allowance (30,184,055) (30,220,173)
===================== =======================
$ -0- $ -0-
===================== =======================
</TABLE>
LEGAL PROCEEDINGS
The Registrant is not aware of any material pending legal proceedings as of
November 9, 2000 nor were any proceedings terminated during the quarter ended
September 30, 2000.
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 of a period
of 90 days or less. The Company's cash and cash equivalents balance at September
30, 2000 and December 31, 1999 was $1,564,979 and $110,992 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, 2000, 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 mortgage; (iii)
the Company's ability to control its operating expenses.
RESULTS OF OPERATIONS
Total income for the three months ended September 30, 2000 and 1999 was $7,313
and $10,861 respectively. The decrease is due primarily to a lower average cash
balance and principle repayment on the Company's mortgage loan receivable.
Operating expenses for the three months ended September 30, 2000 were higher
than those for the same period in 1999. The increase is due primarily to an
increase in professional fees, as well as costs incurred in connection with the
stockholders' meeting and proxy statement.
During the three month period ended September 30, 2000, the Company's share of
Joint Venture profits was $95,422 as compared to $5,769 for the same period in
1999. The three month statements for 2000 also reflect a profit of $47,759 from
the sale of the Company's interest in the Partners Liquidating Trust and a loss
of $56,799 on the sale of its interest in the Joint Venture.
The above changes for the three months ended September 30, 2000, when compared
to the same period in 1999 resulted in a net income of $445 in the 2000 period
as compared to a net loss of $34,225 in the 1999 period.
Total income for the nine months ended September 30, 2000 and 1999 was $26,431
and $34,215 respectively. The decrease is due primarily to a lower average cash
balance and principle repayment on the Company's mortgage loan receivable.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS (continued)
Operating expenses for the nine months ended September 30, 2000 were
higher than those for the same period in 1999. The increase is due primarily to
an increase in professional fees and costs incurred in connection with the
stockholders' meeting and proxy statement.
During the nine month period ended September 30, 2000 the Company's
share of joint Venture net income was $141,295 as compared to a net loss of
$52,312 for the same period in 1999. The nine month statements for 2000 also
reflect a profit of $47,759 from the sale of the Company's interest in the
Partners Liquidating Trust and a loss of $56,799 on the sale of its interest in
the Joint Venture.
The above changes for the nine months ended September 30, 2000, when
compared to the same period in 1999, resulted in a decrease in the net loss to
$38,289 ($0.00 per share) from $170,610 ($0.01 per share).
13
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No exhibits are included with this Report.
On September 27, 2000, the Company filed Form 8-K announcing the
sale of 5,370,563 shares of common stock from Mr. Harvey Polly to
Arrowhead. An additional 500,000 shares were sold to Arrowhead by
Sheltering Palms Foundation. The company also sold its 50%
interest in Metro Franchising Commissary to Mr. Polly for
$1,000.000.
14
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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 6, 2000
Harvey Polly, Director, President
and Chief Executive Officer
By: /s/ Morton I. Kalb Date: November 6, 2000
Morton I. Kalb, Director, Vice President
and Chief Financial Officer
15
