10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2008

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number: 1-9043

B.H.I.T. Inc.

(Exact name of registrant as specified in its charter)

Delaware	36-3361229
(State of incorporation)	(I.R.S. Employer Identification No.)

7005 Stadium Drive, Suite 100, Brecksville, Ohio 44141

(Address of principal executive offices)

440-746-8600

(Registrant’s telephone number)

Indicate by a 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 þ No ¨

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large Accelerated Filer ¨Accelerated Filer ¨Non-Accelerated Filer ¨

Smaller Reporting Company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes þ No ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 24,988,051 shares of common stock, $0.01 par value per share, as of May 5, 2008.

Table of Contents

Part I — Financial Information			1
	Item 1.	Financial Statements	1
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
	Our History		1
	Forward Looking Statements		2
	Results of Operations		2
	Financial Condition and Liquidity		2
	Off-Balance Sheet Arrangements		3
	How to Learn More About BHIT		3
	Item 4.	Controls and Procedures	3
Part II — Other Information			3
	Item 1.	Legal Proceedings	3
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3
	Item 3.	Defaults Upon Senior Securities	3
	Item 4.	Submission of Matters to a Vote of Security Holders	3
	Item 5.	Other Information	4
	Item 6.	Exhibits	4
Signatures			5

Part I — Financial Information

Item 1.Financial Statements

Our March 31, 2008 unaudited consolidated financial statements follow this quarterly report beginning on page F-1.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

B.H.I.T. Inc. is a shell company without significant operations or sources of revenues other than its investments. Our existing operations relate primarily to servicing our cash investment portfolio and maximizing existing capital with stable interest generating instruments. However, our new management team is aggressively investigating potential operating companies to acquire and additional sources of financing. In June 2007, we sold 10.0 million of our common shares in a private placement for $0.10 a share for a total of $1.0 million. Currently we are focusing our efforts on railroad track repair and maintenance businesses, but we cannot guarantee we will complete an acquisition in this industry. Accordingly, we may explore potential acquisitions in other industries as well.

Our History

The company was originally organized under the laws of the State of Massachusetts in 1985, under the name VMS Hotel Investment Trust, for the purpose of investing in mortgage loans, principally to entities affiliated with VMS Realty Partners. These loans were collateralized by hotel and resort properties. The company was subsequently reorganized as a Delaware corporation in 1987 and changed its name to B.H.I.T. Inc. in 1998.

As the result of a public offering in 1986, the company received gross proceeds of $98,482,751. From 1989 to 1992 we experienced severe losses due primarily to a decline in real estate property values and the resulting default on mortgage loans held by us. The company has recorded losses every year since 1989 resulting in the accumulated deficit totaling $87,319,630 on March 31, 2008.

In September 2000, Summa Holdings, Inc. (“Summa”), formerly known as Arrowhead Holdings Corporation, purchased 5,870,563 shares of our stock, or 39.2% of the outstanding shares. Subsequent purchases of our shares resulted in Summa owning a total of 6,243,563 shares, or 41.7% of the outstanding shares on December 31, 2006.

On January 24, 2007, a group of private investors purchased all of the BHIT shares held by Summa. As a result of the transaction, James Benenson, Jr. and John V. Curci each resigned as directors and officers of the company and Paul S. Dennis, Gary O. Marino, Harvey J. Polly and Andrew H. Scott were appointed to fill vacancies in the board. In April 2008 Mr. Scott resigned from the board to pursue other business interests.

1

Forward Looking Statements

Some of the statements that we make in this report, including statements about our confidence in BHIT’s prospects and strategies are forward-looking statements within the meaning of § 21E of the Securities Exchange Act. Some of these forward-looking statements can be identified by words like “believe,” “expect,” “will,” “should,” “intend,” “plan,” or similar terms; others can be determined by context. Statements contained in this report that are not historical facts are forward-looking statements. These statements are necessarily estimates reflecting our best judgment based upon current information, and involve a number of risks and uncertainties. Many factors could affect the accuracy of these forward-looking statements, causing our actual results to differ significantly from those anticipated in these statements. While it is impossible to identify all applicable risks and uncertainties, they include our ability to:

· execute our business plan by identifying and acquiring an operating company;

· obtain appropriate financing to complete potential acquisitions;

· effectively invest our existing funds and raise additional capital to fund our operations; and

· comply with SEC regulations and filing requirements applicable to us as a public company.

You should not place undue reliance on our forward-looking statements, which reflect our analysis only as of the date of this report. The risks and uncertainties listed above and elsewhere in this report and other documents that we file with the Securities and Exchange Commission, including our annual report on Form 10-KSB, quarterly reports on Form 10-QSB, and any current reports on Form 8-K, must be carefully considered by any investor or potential investor in BHIT.

Results of Operations

Our total revenues for the quarter ended March 31, 2008 were $17,749, compared to $13,810 for the same period in 2007, an increase of $3,939, or 28.5%. Revenues increased as the result of additional interest earned on invested funds which were increased by the proceeds from our June 2007 private placement.

Our total expenses for the first quarter of 2008 decreased $132,293, or 66.5%, to $66,534, compared to $198,827 for the first quarter of 2007. The decrease was caused by $180,000 in stock based compensation expense recognized in 2007 arising from the issuance of stock options to members of the board of directors, partially offset by higher general and administrative expenses in 2008 as a result of professional fees associated with exploring potential acquisition candidates.

Accordingly, our net loss for the first quarter of 2008 was $48,785 ($0.002 per share), compared to a net loss of $185,017 ($0.012 per share) in 2007, a decrease of $136,232.

Financial Condition and Liquidity

Cash and cash equivalents consist of cash and short-term investments. Our cash and cash equivalents balance at March 31, 2008 was $2,183,950, a decrease of $85,104 from $2,269,054 at December 31, 2007. Cash and cash equivalents decreased in the first quarter primarily as the result of our net loss for the period.

2

At this time, we have no material commitments for capital expenditures, although we are exploring various acquisition opportunities. We believe our cash is sufficient to meet our needs for anticipated operating expenses as a shell company for 2008. However, we are exploring additional sources of financing to fund the possible acquisition of an operating company.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements.

How to Learn More About BHIT

We file annual, quarterly and special reports and other information with the SEC. Our SEC filings are available to the public on the internet at the SEC’s web site at SEC.gov. To learn more about BHIT you can also contact our CEO, Paul S. Dennis, at 440-746-8600.

Item 4.Controls and Procedures

Under the direction of our interim chief executive and chief financial officer management evaluated our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) and concluded that our disclosure controls and procedures were effective as of March 31, 2008, and no change in our internal control over financial reporting occurred during the quarter ended March 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II — Other Information

Item 1.Legal Proceedings

We are not aware of any pending legal proceedings involving BHIT as of May 5, 2008, nor were any proceedings terminated in the first quarter of 2008.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3.Defaults Upon Senior Securities

Not applicable.

Item 4.Submission of Matters to a Vote of Security Holders

Not applicable.

3

Item 5.Other Information

On April 9, 2008, Andrew H. Scott resigned as our interim chief executive officer and as a director to pursue other business interests and Paul S. Dennis was immediately appointed to replace Mr. Scott as interim chief executive officer.

Item 6.Exhibits

31	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive and Financial Officer Pursuant to § 302 of the Sarbanes-Oxley Act of 2002
32	Rule 13a-14(b)/15d-14(b) Certification Pursuant to § 906 of the Sarbanes-Oxley Act of 2002

4

Signatures

In accordance with the requirements of the Securities Exchange Act of 1934, B.H.I.T. Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	B.H.I.T. Inc.
Date: May 14, 2008	/s/ Paul S. Dennis
	By Paul S. Dennis
	Interim Chief Executive and Financial Officer

5

B.H.I.T. Inc.

Balance Sheets

As of March 31, 2008 and December 31, 2007

	March 31, 2008			December 31, 2007
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	2,183,950		$	2,269,054
Interest receivable on cash and cash equivalents		1,018			1,897
Prepaid insurance		9,191			13,786
Total Current Assets	$	2,194,159		$	2,284,737
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and other accrued expenses	$	31,131		$	72,924
Stockholders' Equity
Shares of Common Stock, $0.01 par value, 75,000,000 shares authorized and 25,020,808 shares issued at March 31, 2008 and at December 31, 2007		89,490,847			89,490,847
Accumulated deficit		(87,319,630	)		(87,270,845	)
Treasury stock, at cost, for 32,757 shares of Common Stock		(8,189	)		(8,189	)
Total Stockholders' Equity		2,163,028			2,211,813
Total Liabilities and Stockholders' Equity	$	2,194,159		$	2,284,737

See accompanying notes to the Financial Statements.

F-1

B.H.I.T. Inc.

Statements of Operations

For the Three Months Ended March 31, 2008 and 2007

(Unaudited)

	Three Months
	2008			2007
Revenue
Interest earned on cash and cash equivalents	$	17,749		$	13,810
Expenses
General and Administrative		66,534			18,827
Stock based compensation		—			180,000
Total Expenses		66,534			198,827
Net Loss	$	(48,785	)	$	(185,017	)
Weighted average number of shares outstanding		24,988,051			14,988,051
Basic and diluted net loss per share of Common Stock	$	(0.002	)	$	(0.012	)

See accompanying notes to the Financial Statements.

F-2

B.H.I.T. Inc.

Statements of Cash Flows

For the Three Months Ended March 31, 2008 and 2007

(Unaudited)

	2008			2007
Operating Activities
Net Loss	$	(48,785	)	$	(185,017	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation		—			180,000
Changes in assets and liabilities:
Interest receivable on cash and cash equivalents		879			1,836
Prepaid insurance and miscellaneous expenses		4,595			3,786
Accounts payable and accrued expenses		(41,793	)		(6,189	)
Net cash used in operations		(85,104	)		(5,584	)
Cash and cash equivalents at beginning of period	$	2,269,054		$	1,420,313
Cash and cash equivalents at end of period	$	2,183,950		$	1,414,729

See accompanying notes to the Financial Statements.

F-3

B.H.I.T. Inc.

Notes to Financial Statements

Quarters Ended March 31, 2008 and 2007

(Unaudited)

Nature of Operations

B.H.I.T. Inc. (“BHIT,” “we,” “our” or the “company”) was originally organized under the laws of the State of Massachusetts in 1985, under the name VMS Hotel Investment Trust, for the purpose of investing in mortgage loans, principally to entities affiliated with VMS Realty Partners. The company was subsequently reorganized as a Delaware corporation in 1987. We changed our name from Banyan Hotel Investment Fund to B.H.I.T. Inc. in 1998.

Currently BHIT is a shell company without significant operations or sources of revenues other than its investments. However, our management team is aggressively investigating potential operating companies to acquire and additional sources of financing. Currently we are focusing our efforts on railroad track repair and maintenance businesses, but we cannot guarantee we will complete an acquisition in this industry and we may explore potential acquisitions in other industries as well.

Basis of Presentation

We have prepared the accompanying financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, these financial statements give effect to all normal recurring adjustments necessary to present fairly the financial position of the company as of March 31, 2008 and December 31, 2007, and the results of operations and cash flows for the three months ended March 31, 2008 and 2007. The financial information for the three months ended March 31, 2008 and 2007 is unaudited.

Although we believe that the disclosures included in our financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. Accordingly, the accompanying financial statements should be read in conjunction with BHIT’s latest annual report on Form 10-KSB for the year ended December 31, 2007.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

The results of operations for the three months ended March 31, 2008 are not necessarily indicative of the results to be expected for the full 2008 year.

Stock-Based Compensation

The company has stock option agreements with its directors that provide for the issuance of a total of 2.0 million shares of common stock. We entered into stock option agreements for the purchase of a total of 1.0 million shares with our directors on March 2, 2007, with an exercise price of $0.15 a share, as compensation for serving on the board in 2007. We entered into stock option agreements for the purchase of an additional 1.0 million shares on October 23, 2007, with an exercise price of $0.35 a share, as compensation for serving on the board in 2008. The number of options issued and the grant dates were determined at the discretion of the company’s board. Grantees vested in the options immediately. Options granted under the plan are exercisable for a period not to exceed three years. No options were exercised during 2007 or during the quarter ended March 31, 2008.

F-4

B.H.I.T. Inc.

Notes to Financial Statements

Quarters Ended March 31, 2008 and 2007

(Unaudited)

The fair values of the stock options issued during 2007 have been estimated using the Black-Scholes method, whereby the valuation model takes into account variables such as volatility, dividend yield, and the risk free interest rate. Management has determined that the March 2, 2007 options have a value of $0.18 per share ($180,000 in total) and the October 23, 2007 options have a value of $0.25 per share ($250,000 in total) resulting in total compensation expense for the year ended December 31, 2007 of $430,000.

Expected volatility rate was estimated using the average volatility rates of fourteen public companies in the financial and business services industry. The weighted average assumptions used in the option-pricing models during 2007 were as follows:

Discount interest rate	4.28	%
Expected life (years)	3
Expected volatility	69.67	%
Dividend yield	0

The stock options are not considered in calculating diluted earnings per share because they are anti-dilutive.

New Accounting Pronouncements

In February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities-including an amendment of FASB Statement No. 115.” SFAS 159 allows companies to choose to elect measuring eligible financial instruments and certain other items at fair value that are not required to be measured at fair value. SFAS 159 requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings at each reporting date. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company was not impacted by the adoption of SFAS 159.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, provides a framework for measuring fair value, and expands the disclosures required for fair value measurements. SFAS 157 applies to other accounting pronouncements that require fair value measurements; it does not require any new fair value measurements. SFAS 157 was to be effective for BHIT on January 1, 2008. However, in February 2008, the FASB released a FASB Staff Position (FSP FAS 157-2 — Effective Date of FASB Statement No. 157) which delayed the effective date of SFAS No. 157 for BHIT to January 1, 2009. We are currently evaluating the impact of the adoption of SFAS 157 on the company’s financial condition and operating results.

F-5

EX-31

Exhibit 31

Certification Pursuant to Section 302

of the Sarbanes-Oxley Act of 2002

I, Paul S. Dennis, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of B.H.I.T, Inc.;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4.     I am the issuer’s sole certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: May 14, 2008

/s/ Paul S. Dennis

Paul S. Dennis

Interim Chief Executive Officer

and Interim Chief Financial Officer

EX-32

Exhibit 32

Certification Pursuant to 18. U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the annual report of B.H.I.T., Inc. (the “Company”) on Form 10-Q for the quarter ending March 31, 2008 (the “Report”) filed with the Securities and Exchange Commission on the date hereof, the undersigned, being the Interim Chief Executive Officer and Interim Chief Financial Officer of the Company, certifes, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of § 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Paul S. Dennis

Paul S. Dennis

Interim Chief Executive Officer

and Interim Chief Financial Officer

Date: May 14, 2008