<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, 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 Identification No.)
incorporation or organization)
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 11, 2000 12,338,051
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 Three Months Ended June 30, 2000
Table of Contents
<TABLE>
<CAPTION>
Index Page
<S> <C> <C>
Part I Financial Information
Item I Financial Statements
Consolidated Balance Sheets as of June 30, 2000 (unaudited) and
December 31, 1999......................................................................... 3
Consolidated Statements of Operations for the
three months ended June 30, 2000 and 1999 (unaudited)..................................... 4
Consolidated Statements of Operations for the
six months ended June 30, 2000 and 1999 (unaudited)....................................... 5
Consolidated Statement of Stockholders' Equity for the six months ended
June 30, 2000(unaudited).................................................................. 6
Consolidated Statement of Cash Flows for the six months ended
June 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................................................................. 13
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K.......................................................... 14
Signatures .......................................................................................... 15
</TABLE>
<PAGE>
Part I Financial Information
Item I. Financial Statements
B.H.I.T., Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
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(UNAUDITED)
<S> <C> <C>
Cash and cash equivalents $ 68,245 $ 110,992
Investment in joint venture 961,377 915,504
Interest receivable on mortgages and miscellaneous revenue 3,004 4,166
Mortgage loan receivable 233,750 300,000
Prepaid insurance 11,741 16,243
Other assets 3,198 3,198
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Total assets $ 1,281,315 $ 1,350,103
======================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 5,810 $ 35,864
Stockholders' equity:
Shares of common stock $0.01 par value, 20,000,000 shares authorized,
12,338,051 shares issued and outstanding 87,477,847 87,477,847
Accumulated deficit (86,194,153) (86,155,419)
Treasury Stock, at cost, for 32,757 shares of common stock (8,189) (8,189)
--------------------------------------
Total stockholders' equity 1,275,505 1,314,239
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Total liabilities and stockholders' equity $ 1,281,315 $ 1,350,103
======================================
</TABLE>
SEE ACCOMPANYING NOTES.
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B.H.I.T., Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
2000 1999
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(UNAUDITED)
<S> <C> <C>
REVENUES
Interest income on cash and cash equivalents $ 216 $ 1,850
Interest income on mortgages receivable 9,000 9,000
-----------------------------------
Total revenues 9,216 10,850
-----------------------------------
EXPENSES
Stockholders' expenses 856 1,818
Other professional fees 13,171 16,575
General and administrative 41,763 40,399
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Total expenses 55,790 58,792
-----------------------------------
Equity in profit (loss) of unconsolidated joint venture 30,870 (9,737)
-----------------------------------
Net loss $ (15,704) $ (57,679)
===================================
Basic and diluted net loss per share of common stock (based on shares
outstanding of 12,338,051) $ (0.00) $ (0.00)
===================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
B.H.I.T., Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
2000 1999
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(UNAUDITED)
<S> <C> <C>
REVENUES
Interest income on cash and cash equivalents $ 1,118 $ 3,584
Interest income on mortgages receivable 18,000 19,770
------------------ -----------------
Total revenues 19,118 23,354
------------------ -----------------
EXPENSES
Stockholder expenses 3,189 3,572
Other professional fees 16,442 16,575
General and administrative 84,094 81,511
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Total expenses 103,725 101,658
------------------ -----------------
Equity in profit or (loss) of unconsolidated joint venture 45,873 (58,081)
------------------ -----------------
Net loss $ (38,734) $ (136,385)
================== =================
Basic and diluted net loss per share of common stock (based on shares
outstanding of 12,338,051) $ (0.00) $ (0.01)
================== =================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
B.H.I.T., Inc.
Consolidated Statement of Stockholders' Equity
Six Months ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED TREASURY
SHARES AMOUNT DEFICIT STOCK TOTAL
-------------- ------------------ ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Stockholders' equity (deficit), December 31, 1999 12,338,051 $87,477,847 $(86,155,419) $(8,189) $1,314,239
Net loss - - (38,734) - (38,734)
-------------- ------------------ ----------------- -------------- --------------
Stockholders' equity (deficit) June 30, 2000 12,338,051 $87,477,847 $(86,194,153) $(8,189) $1,275,505
============== ================== ================= ============== ==============
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
B.H.I.T., Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
2000 1999
-----------------------------------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (38,734) $ (136,385)
Adjustments to reconcile net loss to net cash flows used in operating
activities:
Equity in profit or loss of unconsolidated
joint venture (45,873) 58,081
Net change in:
Interest receivable on mortgage and miscellaneous
receivables 1,162 (141)
Prepaid insurance 4,502 6,628
Other assets - 4,437
Accounts payable and accrued expenses (30,054) (33,160)
-----------------------------------
Net cash used in operating activities (108,997) (100,540)
-----------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
Principal collections on mortgage loans 25,000 106,189
Sale of mortgage interest 41,250 -
-----------------------------------
Net cash provided by investing activities 66,250 106,189
-----------------------------------
Net (decrease) increase in cash and cash equivalents (42,747) 5,649
Cash and cash equivalents at beginning of period 110,992 193,710
-----------------------------------
Cash and cash equivalents at end of period $ 68,245 $ 199,359
===================================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
B.H.I.T. Inc.
Notes to Consolidated Financial Statements
June 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 six month period ended June 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") annual report
on Form 10-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.
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 5,370,563 shares of the Company's common stock, of
which 2,650,000 shares 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, for $1,000,000.
<PAGE>
B.H.I.T. Inc.
Notes to Consolidated Financial Statements (continued)
BASIS OF PRESENTATION (CONTINUED)
Vesper Corporation's obligation to conclude its arrangement 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.
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 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 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 June
30, 2000. The mortgage is now due on September 1, 2000.
As of June 30, 2000, the carrying amount of the above mortgage loan approximate
their fair value.
<PAGE>
B.H.I.T. Inc.
Notes to Consolidated Financial Statements (continued)
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.
The business of the Venture is to open Dunkin' Donuts Quick Service Restaurant
locations in Exxon Service Stations in the New York, New Jersey and Connecticut
areas. The Venture has leased property in Long Island City, New York, where
Dunkin' Donuts products are baked for delivery to various locations. it is
expected that this facility will have the capacity to service 20 to 25 retail
locations.
The individual retail locations are selected by the Venture with Dunkin' Donuts
and Exxon's approval. Each site is renovated and equipped by the Venture and
operated by the station operator. All baked products are purchased from the
Venture and the station operator also pays the Venture a royalty fee based on
sales, a portion of which is remitted to Dunkin' Donuts.
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. Two additional locations were opened in April 1999,
one location in August, 1999, and one location in May of 2000. As of June 30,
2000 there were eight operating locations.
Pursuant to certain provisions in the Venture's operating agreement, the Company
has been allocated all of the Venture's net income and net loss for the six
months ended June 30, 2000 and 1999, respectively.
<PAGE>
B.H.I.T. Inc.
Notes to Consolidated Financial Statements (continued)
INVESTMENT IN JOINT VENTURE (CONTINUED)
A summarized statement of operations is as follows for the Venture:
<TABLE>
<CAPTION>
SIX MONTH PERIOD ENDED JUNE 30,
2000 1999
---------------------------------------------
<S> <C> <C>
Revenue:
Net sales and royalties $ 692,150 $ 353,270
Interest income 565 2,668
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692,715 355,938
Expenses:
Total expenses 646,842 414,019
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Net income (loss) 45,873 (58,081)
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Net income (loss) allocated to the Company $ 45,873 $ (58,081)
=============================================
</TABLE>
INVESTMENT IN LIQUIDATING TRUST
The Company has an interest in a liquidating Trust which was received as final
settlement of guarantees of VMS Realty Partners of loans made by the Company in
prior years. No funds have been received by the Company from the Trust in 2000
or 1999.
OTHER INVESTMENTS
As of June 30, 2000, the Company owned a 50% partnership interest in the Santa
Barbara Biltmore Hotel. The fair value of the interest at June 30, 2000 and
December 31, 1999 is $0.
TRANSACTIONS WITH AFFILIATES
During the first six months of 2000, the Company reimbursed an affiliated
company $12,004 for Health Insurance premiums paid on behalf of the Company.
During the first six months of 1999, this reimbursement amounted to $10,421.
<PAGE>
B.H.I.T. Inc.
Notes to Consolidated Financial Statements (continued)
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, 2000, the Company had a net operating loss carry-forward of
approximately $75,510,983, 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:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
--------------------- --------------------
<S> <C> <C>
Deferred tax asset--noncurrent
Net operating loss carryforward $ 30,204,393 $ 30,220,173
Valuation allowance (30,204,393) (30,220,173)
--------------------- --------------------
$ - $ -
===================== ====================
</TABLE>
LEGAL PROCEEDINGS
The Registrant is not aware of any material pending legal proceedings as of
August 11, 2000 nor were any proceedings terminated during the quarter ended
June 30, 2000.
<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 ninety days or less. The Company's cash and cash equivalents balance at June
30, 2000 and December 31, 1999 was $68,245 and $110,992 respectively.
At this time, there are no material commitments for capital expenditures. The
Company's cash and cash equivalents are sufficient to meet its needs for
anticipated operating expenses. The Company deems its liquidity to be adequate.
As of June 30, 2000, the Company's mortgage loan portfolio consisted of one
loan, as detailed above.
The Company's ultimate return of cash to its stockholders is dependent upon,
among other things: (i) the activities undertaken by the Company; (ii) interest
earned from the 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, 2000 and 1999 was $19,118 and
$23,354 respectively. The decrease is due primarily to principle prepayment on
the Company's mortgage loans receivable.
Operating expenses for the three months ended June 30, 2000 were about the same
as those for the same period in 1999.
For the six months ended June 30, 2000 the Company recorded profit of $45,873
from its ownership in the Joint Venture. For the same period in 1999, the
Company incurred a loss of $58,081 on its Joint Venture Investment. The increase
is primarily due to the additional retail locations opened in 1999.
The above changes for the six months ended June 30, 2000, when compared to the
same period in 1999, resulted in a net loss to $38,734 ($0.00 per share) and of
$136,385 ($0.01 per share), respectively.
<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, 2000 to June 30, 2000.
<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 11, 2000
Harvey Polly, Director, President
and Chief Executive Officer
By: /s/ Morton I. Kalb Date: August 11, 2000
Morton I. Kalb, Director, Vice President
and Chief Financial Officer
