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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31,1999
OR
(X) 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
incorporated or organization) Identification Number)
875 Ave. of the Americas, Suite 1808, New York, N.Y. 10001
Former Address: One Penn Plaza, Ste.1531, New York, N.Y. 10119
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 736 - 7880
Securities registered pursuant to Section 12 (b) of the Act:
Title of each Class Name of each exchange on which registered
Shares of Common Stock None
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB /X/.
The Registrant's Revenue for the preceding twelve months was $44,981. Shares of
common stock outstanding as of March 13, 2000: 12,338,051. Aggregate market
value of the Registrant's shares of common stock held by non-affiliates as of
such date was approximately $5,814,171.
DOCUMENTS INCORPORATED BY REFERENCE
Exhibit index located on Page 14 of sequentially numbered pages. Transitional
Small Business Disclosure Format Yes / / No /X/
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TABLE OF CONTENTS
PART I
Item 1. Description of Business ..............................................1
Item 2. Description of Property ..............................................4
Item 3. Legal Proceedings.....................................................5
Item 4. Submission of matters to a
Vote of Security Holders..........................................5
PART II
Item 5. Market for Common Equity and
Related Shareholder Matters ......................................6
Item 6. Management's Discussion and
Analysis of Plan of Operation ....................................6
Item 7. Financial Statements .................................................7
Item 8. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure .............................................8
PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons of the Registrant ............................9
Item 10. Executive Compensation ..............................................10
Item 11. Security Ownership of Certain
Beneficial Owners and Management ................................10
Item 12. Certain Relationships and Related
Transactions ....................................................11
Item 13. Exhibits, Financial Statement Schedules
and Reports on Form 8--K ........................................12
SIGNATURES....................................................................13
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PART I
ITEM I. DESCRIPTION OF BUSINESS
GENERAL
The Registrant, B.H.I.T. Inc. (the "Company" or the "Fund"), was
originally organized as a Massachusetts business trust pursuant to a Declaration
of Trust filed March 19, 1985, under the name VMS Hotel Investment Trust and
subsequently reorganized as a Delaware corporation on March 13, 1987, at which
time the Company's name was changed to VMS Hotel Investment Fund. The Company
began doing business under the name Banyan Hotel Investment Fund following
shareholder authorization to amend its Certificate of Incorporation to formally
change its name to Banyan Hotel Investment Fund during the second quarter of
1991. During the second quarter of 1998, the Company changed its name to
B.H.I.T. Inc. in accordance with terms of the February 15, 1995 change of
management agreement (see below).
On September 13, 1985, the Company commenced a public offering of up to
10,000,000 units pursuant to a Registration Statement filed on Form S-11 under
the Securities Act of 1933. Each unit consisted of two shares of common stock
("shares") at an offering price of $9.50 per share and one warrant entitling the
holder to purchase one additional share at an initial exercise price of $9.50
per share. The shares and warrants were separated January 14, 1986. The warrants
were exercisable for a five year period ending January 13, 1991, on which date
all outstanding warrants were converted by the Fund into one-tenth of a share.
The public offering was terminated on December 16, 1985 and the final
closing occurred on January 13, 1986, with 4,931,333 units sold. The Company
received gross proceeds of $98,482,751, net of volume discounts, from the sale
of units of which $201,000 represented the sale of 10,050 units purchased by VMS
Realty Partners.
PRESENT BUSINESS OPERATIONS
The Company was originally established to invest in mortgage loans,
principally to entities affiliated with VMS Realty Partners which were
collateralized by hotel and resort properties. Mortgage loans made by the
Company were for initial terms of three, five or seven years, and were
pre--payable in whole at any time without prepayment penalty.
On January 28, 1992, the Board of Directors of the Company authorized
the preparation of a formal plan of liquidation which was subsequently adopted
on April 7, 1992 (the "Plan"). The Plan contemplated the Company liquidating its
assets and distributing the proceeds to its shareholders. The Company estimated
that its liquidation value was between $.15 and $.20 per share. After the
adoption of the Plan, management of the Company completed the workout or
liquidation of certain assets and considered alternatives to the announced plan
of liquidation which could provide greater shareholder value, including a number
of unsolicited proposals from various third parties. Based upon Management's
review of these various proposals, the Board of Directors resolved that one
proposal was in the best interest of the Company and its shareholders because it
allowed every shareholder an opportunity to sell his shares at an amount in
excess of the projected liquidation value. The Board of Directors, by unanimous
written consent dated June 15, 1994, authorized the Company to execute and
deliver a non-binding letter of intent with a Mr. Harvey Polly.
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ITEM 1. DESCRIPTION OF BUSINESS (continued)
On August 3, 1994 the Company entered into a Purchase Agreement (the
"Purchase Agreement") with Mr. Polly providing, among other things, for an all
cash tender offer, under which Mr. Polly agreed to offer to purchase 100% of the
shares of common stock of the Company for $.35 per share. The Purchase Agreement
was subsequently amended on November 4, 1994, December 19, 1994 and February 15,
1995. The purchase Agreement provided, among other things, for the following
events to occur at or before closing: (i) the resignation of the then current
officers and directors, (ii) the purchase by the Company of "run-off" directors
and officers liability insurance coverage for the current officers and
directors; (iii) the termination of the employment contract of Leonard G. Levine
and payment of the severance compensation associated therewith; (iv) the
termination of the Administrative Services Agreement with Banyan Management
Corp. and payment of the Termination fee associated therewith; and (v) the
assignment by the Company of its ownership interest in Banyan Management Corp.
On February 15, 1995, a change in control of the Company occurred
pursuant to the closing of the sale of shares of common stock in the Company to
Mr. Polly pursuant to the Purchase Agreement. Mr. Polly's tender offer, which
commenced on December 28, 1994, concluded on January 26, 1995, and resulted in
the tender to Mr. Polly of 1,288,217 shares of common stock, or 12.5% of the
Company's then outstanding shares of common stock, for a cash price of $0.35 per
share. Subsequent to the closing of the tender offer, the terms of the Purchase
Agreement also required Mr. Polly to purchase from the Company a number of
shares sufficient to allow Mr. Polly to own, by virtue of the combination of the
tender offer and the share purchase, not less than 3,335,000 and not more than
40% of the shares of common stock after giving effect to the shares issued in
connection with the purchase on February 15, 1995, per the Purchase Agreement.
Mr. Polly purchased 2,047,766 newly issued shares of common stock of the Company
for a cash price of $0.22 per share. Upon the acquisition of the aforesaid
shares from the Company, when combined with the shares of common stock
previously owned and acquired pursuant to the tender offer, Mr. Polly was the
beneficial owner of 3,335,983 shares, or approximately 27% of the Company's
outstanding voting shares of common stock.
Upon the closing of the sale of shares of common stock of the Company
on February 15, 1995, the Purchase Agreement provided for the resignation of the
Company's then current Directors and Officers. Accordingly, all of the then
current Directors and Officers resigned and were replaced with Mr. Polly' s
designees. Subsequent to the resignation of the Directors and Officers of the
Company, no further arrangements or understanding among the Company or its new
Officers and Directors existed. On February 15,1995, Messrs. Leo Yarfitz, Morton
I. Kalb, Willis G. Ryckman and Harvey Polly were appointed as new Directors of
the Company. In addition, the new Directors appointed Mr. Harvey Polly as
President and Chief Executive Officer, Mr. Morton I. Kalb as Vice President and
Chief Financial Officer, Ms. Celia Zisfein as Secretary and Mr. William L. Weiss
as Assistant Secretary.
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ITEM 1. DESCRIPTION OF BUSINESS
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, or its assignee.
Upon closing of the transaction, Vesper Corporation, or its assignee 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, or its assignee, Mr. Polly has agreed to
acquire the Company's 50% interest in Metro Franchising Commissary LLC.
Vesper Corporation's, or its assignee'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, for $1,000,000.
The Company has attempted to reduce the ongoing operating expenses and
increase the revenues of the Company in order to maximize the net cash return to
shareholders. The Company's ultimate return to shareholders is dependent upon
management's ability to make profitable acquisitions and utilize its net
operating loss.
OTHER MORTGAGE LOANS RECEIVABLE
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 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 years. This mortgage 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 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 June 1, 2000.
The carrying amount of the above mortgage loan approximates its fair
value.
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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 Duncan' 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 Duncan' 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
Duncan' 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 Duncan' 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, two in February 1999, two
in April 1999, and one in August 1999. As of December 31, 1999 there were seven
retail locations operating.
TAX STATUS
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.
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.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's principal office is located at 875 Avenue of the Americas
Suite 1808, New York, New York 10001.
OTHER PROPERTY
As of December 31, 1999, the Company owned a 50% limited partnership interest in
the Santa Barbara Biltmore Hotel. The fair value of the interest at December 31,
1999 and 1998 was $0.
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ITEM 3. LEGAL PROCEEDINGS
The Registrant is not aware of any material pending legal proceedings
as of March 20, 2000, nor were any proceedings terminated during the year ended
December 31, 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matter to a vote of its security holders
during the year ended December 31, 1999.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's shares of common stock were traded on the American Stock
Exchange ("AMEX") (Symbol - VHT), through October 25, 1996. Thereafter the
Company's shares have been traded on the NASD market (Symbol - VHTI). The range
of high and low closing prices per share for each of the quarters in the years
ended December 31, 1999 and 1998 are as follows:
Share Price
-----------
Quarter 1999 1998
---- ----
1. High $0.593 $1.813
Low 0.375 0.906
2. High 0.470 1.625
Low 0.437 1.000
3. High 0.531 1.031
Low 0.437 0.750
4. High 0.531 0.781
Low 0.437 0.438
Prior to the acquisition of the Company by Mr. Polly (see Item I.
Description of business), the company had suspended distributions due to
interruption in the Company's cash flow resulting from defaults by borrowers on
the Company's mortgage loans, the modest size of the Company's cash position and
the uncertainty regarding the cash requirements for operating activities. No
distributions were declared by the Company in 1999 and 1998.
On October 14, 1996, the Company was notified by the American Stock
Exchange that its shares would be removed from listing on the Exchange, and that
the last day of trading, on the Exchange, would be October 25, 1996. The reason
for this action was that the company no longer met the requirements for
continued listing, and the Company had discontinued previously announced
negotiations to acquire a portfolio of retail shopping center properties.
During the week of October 28, 1996 the Company's shares began trading
on the NASD market with a ticker symbol of "VHTI:.
At December 31, 1999, there were 2,307 record holders of common stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents consist of cash and short--term investments.
The Company's cash and cash equivalents balance at December 31, 1999 and 1998
was $110,992 and $193,710 respectively. This decrease in cash and cash
equivalents is primarily the result of less revenues generated and payment of
the Company's operating expenses.
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At this time, there are no material commitments for capital
expenditures. The Company's cash is sufficient to meet its needs for anticipated
operating expenses. The Company deems its liquidity to be adequate.
During 1997, the Company invested $1,000,000 in a mortgage. This
mortgage yields 12% and was for a term of 7 1/3 months. This mortgage was due on
April 1, 1998. The due date has been extended by mutual consent, on several
occasions for periods of 90 days and is now due on June 1, 2000. On April 30,
1998, the amount of the loan was paid down by $700,000, resulting in a balance
of $300,000.
During 1998, the Company invested $1,000,000 in a Joint Venture whose
business is to open and operate Duncan' Donuts Quick Service Restaurant
locations in Exxon service stations in the New York, New Jersey and Connecticut
areas.
The Company's ultimate return of cash to its shareholders 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
and investment securities; (iii) the Company's ability to control its operating
expenses; (iv) possible recoveries from the liquidating trust and (v) operations
of the Joint Venture.
RESULTS OF OPERATIONS
Total income for the years ended December 31, 1999 and 1998 was $44,981
and $124,045, respectively. The decrease in total income between 1999 and 1998
is the result of a decrease in interest earned on the company's mortgage
investments, and a decrease in interest earned on cash and cash equivalents.
Total expenses for the years ended December 31, 1999 and 1998 decreased
by $42,722. This decrease in expenses was due primarily to decreases in
professional fees and general and administrative expenses.
The net loss for 1999 was $179,039 ($0.01 per share) and 1998 was
$252,635 ($0.02 per share).
IMPACT OF YEAR 2000
In prior years, the Company discussed that it did not use computers in any of
its business activities. As a result, the Company did not experience any
disruptions in connection with the Year 2000. The Company has also been notified
by its borrowers and joint venture partners that no material problems resulted
from Year 2000 Issues either with their products or services to third parties.
The Company will continue to monitor throughout the year with its borrowers and
joint venture partners that any latent Year 2000 matters that arise are
addressed promptly.
ITEM 7. FINANCIAL STATEMENTS
See index to Consolidated Financial Statements on Page F-1 of this
Report for Financial Statements.
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with the accountants on
any matter of accounting principles, practices or financial statement
disclosure.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
OF THE REGISTRANT
The following individuals are Directors and the Executive Officers of
the Company:
Harvey Polly Director, President and Chief
Executive Officer
Morton I. Kalb Director, Vice President
and Chief Financial Officer
Willis G. Ryckman Director
Leo Yarfitz Director
HARVEY POLLY, age 71, is a Director, President and Chief Executive
Officer of the Company. Mr. Polly also serves as the Chief Executive Officer and
a stockholder of H/R Industries, Inc., H/R Industries, Inc. is essentially a
personal holding company which was formed in 1984 under the name Helena
Rubinstein, Inc., and was engaged from 1984 until 1988 in various aspects of the
cosmetic business. In 1988, the name of the corporation was changed to Elite
Industries, Ltd., and in 1990 the name was changed to H/R industries, Inc. Mr.
Polly has been involved in the railroad business for approximately twenty years.
In 1973, he founded and became a major stockholder in Emons Industries, Inc.,
which was formed on the basis of the acquisition of the Maryland and
Pennsylvania Railroad Company. Since the founding of Emons Industries, Inc., Mr.
Polly has been involved in the railroad freight car business, Mr. Polly has
been, since 1975, Chief Executive Officer and a stockholder of Railway Freight
Car Service, Inc., which is involved in the railroad boxcar leasing business. In
1994 and 1995, Mr. Polly was Chairman of CAGY Industries, Inc., the publicly
held holding company for the Columbus and Greenville Railway, the Chattooga and
Chicamauga Railway and the Red-mont Railway and was the largest stockholder with
approximately 40% of the outstanding shares of common stock. Mr. Polly sold his
shares and resigned from the Board effective February' 16, 1995. Since 1998, he
has served on the Board of Directors of the Delaware Otsego Corp., which is a
publicly held corporation that operates the New York Susquehanna and Western
Railroad. In prior years, Mr. Polly was also a stockholder and heavily involved
in the operations of the Louisiana Midland Railroad. He is also presently a
stockholder and Officer of SLF of Martin County, Inc., a real estate development
company. From 1987 to 1990 he was a principal shareholder, Chief Executive
Officer and Director of Hanover Bank of Florida, a publicly held corporation.
MORTON I. KALB, age 66, is a Director, Vice President and Chief
Financial Officer of the Company. Mr. Kalb has served as Vice President and
Chief Financial Officer of the Company since 1995. Mr. Kalb served as Vice
President of H/R Industries, Inc., since July 1984. Mr. Kalb is also a Certified
Public Accountant.
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ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
OF THE REGISTRANT (continued)
WILLIS G. RYCKNAN, age 54, is a Director of the Company. Mr. Ryckman
has served as Chairman of the Board of Directors of Tri--Tech Labs since August
1990. From December 1966 through August 1990, Mr. Ryckman was Senior Vice
President of Manufacturers Hanover Trust Company.
LEO YARFITZ, age 83, is a Director of the Company, Mr. Yarfitz has been
a financial consultant with Sterling Management of Florida since June 1990. From
October 1987 until October 1989, Mr. Yarfitz served as Chief Financial Officer
of Hanover Bank of Florida. From October 1989 until December 1989, Mr. Yarfitz
served as President of Hanover Bank of Florida.
ITEM 10. EXECUTIVE COMPENSATION
A. DIRECTOR COMPENSATION
No arrangements currently exist with respect to payments to the
Directors for their service on the Company's Board of Directors, and no fees
have been paid in 1999 or 1998.
B. EXECUTIVE COMPENSATION
Compensation paid to Executive Officers for the years ended December
31, 1999 and 1998 is as follows:
Annual Compensation
-------------------
Other
Year Salary Bonus Compensation
---- ------ ----- ------------
Morton I. Kalb 1999 $55,600 N/A N/A
Vice President & Chief 1998 $55,600 N/A N/A
Financial Officer
Celia Zisfein 1999 $28,600 N/A N/A
Secretary 1998 $28,600 N/A N/A
There were no long term compensation awards or payouts during the years 1999 or
1998.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 13, 2000, the following persons or entities were known by
the Company to be the beneficial owners of more than five percent (5%) of the
outstanding shares of common stock of the Company.
Name of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- ---------------- -------------------- --------
Shares of Common
Stock $.01 Par Value Mr. Harvey Polly 2,745,983 22%
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(continued)
The following table sets forth the ownership of shares owned directly
or indirectly by the Directors and Principal Officers of the Company as of March
13, 2000.
Name of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- ---------------- -------------------- --------
Shares of Common Stock, Mr. Harvey Polly (1) 2,745,983 shares 22%
$.01 Par Value Director, President
and Chief executive
Officer
Shares of Common Stock, Mr. Morton I. Kalb 75,000 shares 1%
$.01 Par Value Director
Vice President and
Chief Financial
Officer
Shares of Common Stock, Mr. Leo Yarfitz 100,000 shares 1%
$.01 Par Value Director
Shares of Common Stock, All Directors and 2,920,983 shares 24%
$.01 Par Value Officers of the
Fund as a group
(6 persons)
(1) During 1998, Mr. Polly transferred 500,000 shares to a Charitable
trust of which he is President and a Director and 100,000 shares to
his wife. These shares are not included in the above figure. Mr. Polly
also transferred 35,000 shares to unrelated parties which are also not
included above.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 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 years. This mortgage was paid in full on March 1, 1999.
During 1999 and 1998, the company reimbursed an affiliated company
$21,794 and $17,958 respectively, for health insurance premiums paid on behalf
of the Company. Included in this reimbursement is $7,146 and $6,496 which is
prepaid as of December 1999 and 1998 respectively.
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ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report.
(1) (2) The Financial Statements indicated in Part II Item 7,
Financial Statements.
(3) Exhibit (2) Plan of Organization, Reorganization, Management,
Liquidation or Succession; Exhibit (21) Subsidiaries of the
Company.
The following exhibits are incorporated by reference from the Registrant's
Registration Statement on Form S-11 (File number 2-96565), referencing the
exhibit number used in such Registration Statement.
Exhibit Number Description
-------------- -----------
(3) (a) Certificate of Incorporation
(3) (b) By-Laws
(b) No reports on Form 8-K were filed during the year ending December 31,
1998.
(c) See Item 13 (a) (3) above.
(d) None
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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.
.H.I.T. Inc. F/K/A BANYAN HOTEL INVESMENT FUND
By: /s/ Harvey Polly Date: March 13, 2000
Harvey Polly, Director, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
By: /s/ Morton I. Kalb Date: March 13, 2000
Morton I. Kalb
Vice President and
Chief Financial Officer
/s/ Willis Ryckman Date: March 13, 2000
Willis Ryckman, Director
/s/ Leo Yarfitz Date: March 13, 2000
Leo Yarfitz, Director
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B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
ITEM 13(a) (1) and (2)
Pages
Report of Independent Auditors...............................................F-2
Consolidated Balance Sheets as of
December 31, 1999 and 1998..............................................F-3
Consolidated Statements of Operations
For the Years Ended December 31, 1999 and 1998..........................F-4
Consolidated Statements of Stockholders' Equity
For the Years Ended December 31, 1999 and 1998 .........................F-5
Consolidated Statements of Cash Flow for the
Years Ended December 31, 1999 and 1998..................................F-6
Notes to Consolidated Financial Statements...........................F-7 to F-14
F-1
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Report of Independent Auditors
The Stockholders
B.H.I.T. Inc.
We have audited the accompanying consolidated balance sheets of B.H.I.T. Inc.
(formerly Banyan Hotel Investment Fund) as of December 31, 1999 and 1998, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of B.H.I.T. Inc. at
December 31 1999 and 1998, and the consolidated results of its operations and
its cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
March 20, 2000
F-2
<PAGE>
B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
Consolidated Balance Sheets
December 31, 1999 and 1998
1999 1998
------------ ------------
ASSETS
Cash and Cash Equivalents $ 110,992 $ 193,710
Interest Receivable on Mortgages
Receivable and Miscellaneous
Receivables 4,166 3,147
Mortgage Loans Receivable
Related Party -- 106,189
Other 300,000 300,000
Investment in Joint Venture 915,504 905,283
Prepaid Insurance 16,243 15,593
Other Assets 3,198 7,635
------------ ------------
Total Assets $ 1,350,103 $ 1,531,557
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable, Accrued Expenses
and Deferred Income $ 35,864 $ 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 (86,155,419) (85,976,380)
Treasury Stock, at Cost, for
32,757 Shares of Common Stock (8,189) (8,189)
------------ ------------
Total Stockholders' Equity 1,314,239 1,493,278
------------ ------------
Total Liabilities and Stockholders'
Equity $ 1,350,103 $ 1,531,557
============ ============
See accompanying Notes
F-3
<PAGE>
B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
Consolidated Statements of Operations
For the Years Ended December 31,1999 and 1998
1999 1998
--------- ---------
INCOME
Interest Income on Cash and Cash Equivalents $ 7,211 $ 11,214
Interest Income on Mortgage Receivables 36,000 102,064
Interest Income from Related Parties 1,770 10,619
Interest Income-- Other -- 148
--------- ---------
TOTAL INCOME 44,981 124,045
--------- ---------
Equity in Net (Income) or Loss of
Unconsolidated Joint Venture (10,221) 99,717
--------- ---------
EXPENSES
Stockholder Expenses 7,160 8,095
Professional Fees 59,788 74,031
General and Administrative 167,293 194,837
--------- ---------
TOTAL EXPENSES 234,241 276,963
--------- ---------
Net Loss $(179,039) $(252,635)
========= =========
Basic and diluted Net Loss Per Share of
Common Stock (Based on Weighted Average
Number of Shares Outstanding of
12,338,051 in 1999 and 1998) $ (0.01) $ (0.02)
========= =========
See accompanying Notes
F-4
<PAGE>
B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
Consolidated Statements of Stockholders' Equity
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Shares of Common Stock
----------------------------- Accumulated Treasury
Shares Amount Deficit Stock Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Stockholders' Equity (Deficit)
December 31, 1997 12,338,051 $ 87,477,847 $(85,723,745) $ (8,189) $ 1,745,913
Net Loss for the Year Ended
December 31, 1998 -- -- (252,635) -- (252,635)
------------ ------------ ------------ ------------ ------------
Stockholders' Equity
(Deficit) December 31, 1998 12,338,051 87,477,847 (85,976,380) (8,189) 1,493,278
Net Loss for the Year Ended
December 31, 1999
-- -- (179,039) -- (179,039)
------------ ------------ ------------ ------------ ------------
Stockholders' Equity
(Deficit) December 31, 1999 12,338,051 $ 87,477,847 $(86,155,419) $ (8,189) $ 1,314,239
============ ============ ============ ============ ============
</TABLE>
See accompanying Notes
F-5
<PAGE>
B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Operating Activities:
Net Loss $ (179,039) $ (252,635)
Adjustments to Reconcile Net Loss
to Net Cash Flows Used in Operating
Activities:
Equity in Net (Income) or Loss of
Unconsolidated Joint Venture (10,221) 99,717
Net Change in:
Interest Receivable on mortgages (1,019) 11,041
Prepaid Insurance (650) (8,513)
Other Assets 4,437 (3,198)
Accounts Payable, Accrued Expenses and Deferred Income
(2,415) (16,079)
----------- -----------
Net Cash Used in Operating Activities (188,907) (169,667)
----------- -----------
Investing Activities:
Principal Collections on Mortgage Loans 106,189 827,855
Proceeds From Sale of Mortgage Receivable -- 302,445
Investment in Joint Venture -- (1,005,000)
----------- -----------
Cash Provided by Investing Activities 106,189 125,300
----------- -----------
Net Decrease in Cash and
Cash Equivalents (82,718) (44,367)
Cash and Cash Equivalents at
Beginning of Year 193,710 238,077
----------- -----------
Cash and Cash Equivalents at
End of Year $ 110,992 $ 193,710
=========== ===========
</TABLE>
See accompanying Notes
F-6
<PAGE>
B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1999 and 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF PRESENTATION
B.H.I.T. Inc. formerly Banyan Hotel Investment Fund ("the Company") was
organized under the laws of the State of Massachusetts, pursuant to a
declaration of Trust filed March 19, 1985, and subsequently reorganized as a
Delaware Corporation on March 13, 1987. The Company's primary purpose is to
invest in mortgage loans.
The accompanying consolidated financial statements include the accounts of
the Company and its wholly--owned subsidiaries which are inactive. All
intercompany balances and transactions have been eliminated.
The Company accounts for its investment in a joint venture using the
equity method, as the Company does not have control over the operations of the
joint venture.
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, or its assignee.
Upon closing of the transaction, Vesper Corporation, or its assignee 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, or its assignee, Mr. Polly has agreed to
acquire the Company's 50% interest in Metro Franchising Commissary LLC.
Vesper Corporation's, or its assignee' 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, for $1,000,000.
F-7
<PAGE>
B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
B. INCOME TAXES
Prior to 1995, the Company was treated as a Real Estate Investment Trust
("REIT") under Internal Revenue Code Sections 856--860. In order to qualify, the
Company was required to distribute at least 95% of its taxable income to
stockholders and meet asset and income tests as well as certain other
requirements. During 1995, the Company elected to discontinue its "REIT" status
effective for the year ended December 31,1995. As a result of this election, the
Company is being taxed as a C-Corp., for federal and state tax purposes and
could be subject to a corporate level federal and state tax.
The deferred tax assets and liabilities of the Company are determined
based on the difference between the financial statement carrying amounts and tax
bases of assets and liabilities and are measured using the enacted tax rates and
laws that would be in effect when the differences are expected to reverse.
C. LOSS PER SHARE
For 1999 and 1998, basic and diluted loss per share was calculated using
12,338,051 weighted average shares which were outstanding during each year.
There were no dilutive securities outstanding for the years ended December 31,
1999 and 1998.
D. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid instruments purchased with a
maturity of three months or less to be cash and cash equivalents.
E. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect amounts reported in the financial
statements and accompanying notes. Actual results could differ from these
estimates.
F. REVENUE RECOGNITION
Interest income from mortgages receivable is recorded on an accrual basis.
G. SEGMENT INFORMATION
The Company's current operations primarily relate to servicing its
mortgage loans and monitoring its investment in a joint venture. Management
allocates its resources proportionately to the respective amounts invested in
each area.
F-8
<PAGE>
B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
H. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1999, the Financial Accounting Standards Board ("FASB") issued
Statement No. 137, amending Statement No. 133 "Accounting for Derivative
Instruments and Hedging Activities", which extended the required date of
adoption to fiscal years beginning after June 15, 2000. The Company does not
anticipate that the adoption of this statement will have any effect on its
results of operations or financial position.
2. 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
provides for interest at 12% per annum with monthly payments based on a ten (10)
year amortized schedule and a balloon payment of the total balance in five (5)
years. This loan was sold to a company controlled by Mr. Polly during the third
quarter of 1998 for its then principal balance of $342,445.
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-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 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 years. This loan was paid in full 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 1998, the loan was paid down by
$700,000 and the residential property was released from the lien. The mortgage
of the remaining $300,000 is now due on June 1, 2000. A summarized balance sheet
and statement of income and expenses are as follows for 2849 East Ledbetter
Drive, the property which collateralizes the remaining $300,000 mortgage loan as
of December 31, 1999 and 1998:
F-9
<PAGE>
B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
Notes to Consolidated Financial Statements (continued)
RGS Inc.
Balance Sheets
December 31,
1999 1998
--------- ---------
ASSETS
Real estate $ 503,587 $ 503,587
Accumulated depreciation (108,942) (100,770)
--------- ---------
Total Real Estate 394,645 402,817
Other assets -- 960
--------- ---------
Total assets $ 394,645 $ 403,777
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $ 300,000 $ 300,000
--------- ---------
Total liabilities 300,000 300,000
Stockholders' equity 94,645 103,777
--------- ---------
Total liabilities and stockholders' equity $ 394,645 $ 403,777
========= =========
Income Statements
For the twelve months
ended December 31,
1999 1998
--------- ---------
INCOME:
Rental income $ 41,720 $ 41,720
Other income 13,193 12,274
--------- ---------
54,913 53,994
EXPENSES:
Operating expenses 14,009 14,396
Other expenses 44,172 44,172
--------- ---------
Net loss $ (3,268) $ (4,574)
========= =========
2849 East Ledbetter Drive is located in Dallas, Texas and is net leased to a
single retail tenant. The lease is due to expire January 31, 2005.
As of December 31, 1999, the Company's mortgage note receivable has an estimated
fair value which approximates its carrying value. The fair value is determined
by calculating the present value of the future principal and interest payments
at a market discount rate and review of the underlying collateral.
F-10
<PAGE>
B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
Notes to Consolidated Financial Statements (continued)
3. 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
the, earlier of (i) September 30,1998 or (ii) the date which was 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 Duncan' 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 Duncan' 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 Duncan'
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 Duncan' 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, two in February 1999,
two in April 1999, and one in August 1999. As of December 31, 1999 there were a
total of 7 retail locations open.
F-11
<PAGE>
B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
Notes to Consolidated Financial Statements (continued)
Summarized balance sheets and statements of operations are as follows for
the Venture:
December 31,
1999 1998
--------- ---------
ASSETS
Equipment, net of accumulated depreciation
of $127,909 in 1999 and $6,945 in 1998 $ 555,202 $ 409,702
Franchise and license fees, net of accumulated
amortization of $10,590 in 1999, and
$370 in 1998
187,301 191,021
Other assets 216,722 337,179
--------- ---------
Total assets $ 959,225 $ 937,902
========= =========
LIABILITIES AND MEMBERS' EQUITY
Accounts payable and accrued expenses $ 30,204 $ 32,619
Loans Payable-- Auto 13,517 --
--------- ---------
Total liabilities 43,721 32,619
--------- ---------
Members' equity
B.H.I.T. Inc. 915,504 905,283
Subex LLC 2,575 2,575
Metro Franchising Bakery LLC 2,425 2,425
Less: Equity subscription receivable (5,000) (5,000)
--------- ---------
Total members' equity 915,504 905,283
--------- ---------
Total liabilities & members' equity $ 959,225 $ 937,902
========= =========
For the For the Period
Year Ended May 28, 1998 to
Dec. 31, 1999 Dec. 31, 1998
------------- -------------
INCOME:
Net Sales $ 305,421 $ 3,659
Operating fees and interest income 328,223 7,151
--------- ---------
633,644 10,810
EXPENSES:
Total other Expenses 623,424 110,527
--------- ---------
Net income (loss) $ 10,220 $ (99,717)
========= =========
Net income (loss) allocated to the Company $ 10,220 $ (99,717)
========= =========
F-12
<PAGE>
B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
Notes to Consolidated Financial Statements (continued)
3. INVESTMENT IN JOINT VENTURE (continued)
ORGANIZATION AND RELATED MATTERS OF THE VENTURE
The Venture's operating agreement (the "Agreement") provides, among other
matters, the allocation of profits and losses of the Venture (as defined in the
Agreement), the allocation of net cash flow of the Venture (as defined in the
Agreement) and the priority of payments to be made to each of the Venture's
members (the "Members") upon dissolution of the Venture. The Members, along with
their respective percentage interests in the Venture, are as follows:
Metro Franchising Bakery LLC 24.25%
Subex LLC 25.75%
B.H.I.T. Inc. 50.00%
Franchises were purchased from an affiliate, at cost, and are being
amortized as follows for the retail locations and baking facility, respectively:
(i) over the life of the respective retail locations (ten years), beginning when
each retail location opens for business, and (ii) over ten years, commencing in
December, 1998, the date when the first retail location opened for business.
4. TRANSACTIONS WITH AFFILIATES
During 1999 and 1998, the Company reimbursed an affiliated company $21,794
and $17,958 for health insurance premiums paid on behalf of the Company.
Included in this reimbursement is $7,146 and $6,496 which is prepaid as of
December 31, 1999 and 1998 respectively. As noted in Note 2, the Company (i)
sold its first mortgage receivable to a company controlled by Mr. Polly in the
third quarter of 1998 for its then principal balance of $302,445, and (ii) made
a first mortgage loan for $106,000 for a property controlled by Mr. Harvey
Polly. The loan was repaid on March 1, 1999.
5. OTHER INVESTMENTS
As of December 31, 1999, the Company owned a 50% limited partnership
interest in the Santa Barbara Biltmore Hotel. The fair value of the interest at
December 31, 1999 and 1998 was $0.
6. LEASE COMMITMENTS
The Company leases its office space. Future minimum annual rental
commitments as of December 31, 1999, applicable to their office space is as
follows:
Year Ending December 31:
2000 $19,188
2001 14,391
-------
$33,579
=======
F-13
<PAGE>
B.H.I.T. Inc. Formerly
BANYAN HOTEL INVESTMENT FUND
Notes to Consolidated Financial Statements (continued)
6. LEASE COMMITMENTS (continued)
At any time subsequent to September 30, 2000, the Company has the right to
terminate this lease without incurring a penalty. Rental expenses for the year
ended December 31, 1999 and 1998 was $17,088 and $28,973, respectively.
7. INCOME TAXES
As of December 31, 1999, the Company had a net operative loss carry
forward of approximately $75,550,431 which expires between 2005 and 2020. 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:
1999 1998
------------ ------------
Deferred Tax Asset - Non Current $ 30,220,173 $ 30,151,600
Net Operating Loss Carry Forward (30,220,173) (30,151,600)
------------ ------------
Valuation Allowance $ -- $ --
============ ============
F-14
<PAGE>
Exhibit 21
SUBSIDIARY OF B.H.I.T. Inc.
Formerly BANYAN HOTEL INVESTMENT FUND
Name of Subsidiary State of Organization
- ------------------ ---------------------
BHF Merger Corp. Illinois
BNC Santa Barbara Corp. Illinois
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 110,992
<SECURITIES> 0
<RECEIVABLES> 4,166
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 134,599
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,350,103
<CURRENT-LIABILITIES> 35,864
<BONDS> 0
87,477,847
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,350,103
<SALES> 0
<TOTAL-REVENUES> 44,981
<CGS> 0
<TOTAL-COSTS> 234,241
<OTHER-EXPENSES> (10,221)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (179,039)
<INCOME-TAX> 0
<INCOME-CONTINUING> (179,039)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (179,039)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
