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  **UNITED STATES SECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549****FORM 10-KSB****(Mark One)**   þ **Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934******For the fiscal year ended December 31, 2006****   o **Transition report under Section 13 or 15(d) of the Exchange Act****Commission file number: 1-9043****B.H.I.T. Inc.** (Name of small business issuer 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)**212-895-3526** (Issuer’s telephone number)Securities registered under Section 12(b) of the Exchange Act: **None**Securities registered under Section 12(g) of the Exchange Act: **Common stock, $0.01 par value pershare**Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of theExchange Act. oCheck whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of theExchange Act during the past 12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes þ No oCheck if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-Bcontained in this form, and no disclosure will be contained, to the best of registrant’s knowledge,in definitive proxy or information statements incorporated by reference in Part III of this form10-KSB þIndicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes þ No oState issuer’s revenues for its most recent fiscal year. **$72,289**State the aggregate market value of the voting and non-voting common equity held by non-affiliatescomputed by reference to the price at which the common equity was sold, or the average bid andasked price of such common equity, as of a specified date within the past 60 days. (See definitionof affiliate in Rule 12b-2 of the Exchange Act.) **$2,518,860.60 as of March 23, 2007.**State the number of shares outstanding of each of the issuer’s classes of common equity, as of thelatest practicable date: **14,988,051 shares of common stock, $0.01 par value per share, as of March23, 2007**Transitional Small Business Disclosure Format (check one): Yes o No þ  
 

 
**TABLE OF CONTENTS**     PART I  1 Item 1. Description of Business  1 Our History  1 Recent Events  1 Employees  1 Forward Looking Statements  1 How to Learn More About Us  2 Item 2. Description of Property  2 Item 3. Legal Proceedings  2 Item 4. Submission of Matters to a Vote of Security Holders  2 PART II  3 Item 5. Market For Common Equity, Related Stockholder Matters and Small BusinessIssuer Purchases of Equity Securities  3 Item 6. Management’s Discussion and Analysis or Plan of Operation  3 Results of Operations  3 Financial Condition and Liquidity  3 Off-Balance Sheet Arrangements  4 Critical Accounting Policies  4 Item 7. Financial Statements  4 Item 8. Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure  4 Item 8A. Controls and Procedures  4 Item 8B. Other Information  4 PART III  5 Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliancewith Section 16(a) of the Exchange Act  5 Committees of the Board  6 Code of Ethics  6 Compliance with §16(a) of the Exchange Act  6 Item 10.Executive Compensation  7 Director Compensation  7 Item 11. Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters  8 Item 12.Certain Relationships and Related Transactions  8 Item 13.Exhibits  9 Item 14.Principal Accountant Fees and Services  9 SIGNATURES  10  EX-14 EX-31.1 EX-31.2 EX-32
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**PART I****Item 1. Description of Business.**B.H.I.T. Inc. is a shell company without significant operations or sources of revenues other thanits investments. Our existing operations relate primarily to servicing our cash investmentportfolio and maximizing existing capital with stable interest generating instruments. However, ournew management team is aggressively investigating potential operating companies to acquire andadditional sources of financing.**Our History**The company was originally organized under the laws of the State of Massachusetts in 1985, underthe name VMS Hotel Investment Trust, for the purpose of investing in mortgage loans, principally toentities affiliated with VMS Realty Partners. These loans were collateralized by hotel and resortproperties. The company was subsequently reorganized as a Delaware corporation in 1987. We changedour name from Banyan Hotel Investment Fund 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 propertyvalues and the resulting default on mortgage loans held by us. The company has recorded lossesevery year since 1989 resulting in the accumulated deficit totaling $86,660,325 on December 31,2006.In September 2000, Summa Holdings, Inc. (“Summa”), formerly known as Arrowhead HoldingsCorporation, purchased 5,870,563 shares of our stock, or 39.2% of the outstanding shares.Subsequent purchases of our shares have resulted in Summa owning a total of 6,243,563 shares, or41.7% of the outstanding shares on December 31, 2006.**Recent Events**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 directorsand officers of the company and Paul S. Dennis, Gary O. Marino, Harvey J. Polly and Andrew H. Scottwere appointed to fill vacancies in the board. To learn more about our current management team,please turn to page 5.**Employees**We do not have any full or part-time employees. We plan to add additional personnel as ouroperations infrastructure dictates.**Forward Looking Statements**Some of the statements that we make in this report, including statements about our confidence inBHIT’s prospects and strategies are forward-looking statements within the meaning of § 21E of theSecurities 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
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determined by context. Statements contained in this report that are not historical facts areforward-looking statements. These statements are necessarily estimates reflecting our best judgmentbased upon current information, and involve a number of risks and uncertainties. Many factors couldaffect the accuracy of these forward-looking statements, causing our actual results to differsignificantly from those anticipated in these statements. While it is impossible to identify allapplicable risks and uncertainties, they include:**•** our ability to execute our business plan by identifying andacquiring an operating company;**•** our ability to effectively invest our existing funds and raiseadditional capital to fund our operations; and**•** our ability to comply with SEC regulations and filing requirementsapplicable to us as a public company.You should not place undue reliance on our forward-looking statements, which reflect our analysisonly as of the date of this report. The risks and uncertainties listed above and elsewhere in thisreport and other documents that we file with the Securities and Exchange Commission, including ourannual report on Form 10-KSB, quarterly reports on Form 10-QSB, and any current reports on Form8-K, must be carefully considered by any investor or potential investor in BHIT.**How to Learn More About Us**We file annual, quarterly and special reports and other information with the SEC. Our SEC filingsare available to the public on the internet at the SEC’s web site at SEC.gov. To learn more aboutBHIT you can also contact our CEO, Andrew Scott, at 212-895-3526.**Item 2. Description of Property.**We do not own any real property. During 2006, our offices were located in Brecksville, Ohio in aleased facility that was shared with employees of Summa. For additional information regarding thisarrangement, please turn to “Certain Relationships and Related Transactions” on page 8.**Item 3. Legal Proceedings.**We are not aware of any pending legal proceedings involving BHIT as of March 23, 2007, nor were anyproceedings terminated in 2006.**Item 4. Submission of Matters to a Vote of Security Holders.**Not applicable.
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**PART II****Item 5. Market For Common Equity and Related Stockholder Matters.**Shares of our common stock are traded over-the-counter and sales are reported on the OTC BulletinBoard® under the symbol “VHTI.OB.” The last reported sale price on March 23, 2007 was$0.20 per share. The following table lists the high and low closing sale prices of our stock during2006 as reported on OTCBB. These sale prices reflect inter-dealer prices, without retail mark-up,mark-down or commission, and may not represent actual transactions.           **High** **Low**Fourth Quarter $0.19  $0.10 Third Quarter $0.16  $0.08 Second Quarter $0.15  $0.08 First Quarter $0.12  $0.09 There were approximately 2,208 stockholders of record of BHIT’s common stock as of March 23, 2007.There are additional stockholders who own stock in their accounts at brokerage firms and otherfinancial institutions.We intend to reinvest our earnings, if any, in the business, and have never declared or paid, anddo not intend to declare or pay, any cash dividends on our stock.At December 31, 2006, we did not have any equity compensation plans that provided for the issuanceof our shares.**Item 6. Management’s Discussion and Analysis or Plan of Operation.**BHIT is currently a shell company without significant operations or sources of revenues other thanits investments. However, we are aggressively investigating potential acquisition candidates.**Results of Operations**Our total revenue for 2006 was $72,289, compared to $48,809 in 2005, an increase of $23,480, or48.1%. Revenues increased as the result of higher interest earned on invested funds.Our total expenses for 2006 remained relatively flat at $120,816, compared to $119,633 in 2005.Accordingly, our net loss for 2006 was $48,527 ($0.003 per share), compared to $70,824 ($0.005 pershare) in 2005, a decrease of $22,297, or 31.5%**Financial Condition and Liquidity**Cash and cash equivalents consist of cash and short-term investments. Our cash and cash equivalentsbalance at December 31, 2006 was $1,420,313, a decrease of $46,040, or 3.1%, from
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$1,466,353 at December 31, 2005. Cash and cash equivalents decreased in 2006 primarily as theresult of our net loss of $48,527.At this time, we have no material commitments for capital expenditures, although we are exploringvarious acquisition opportunities. We believe our cash is sufficient to meet our needs foranticipated operating expenses as a shell company for 2007. However, we are exploring additionalsources 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.**Critical Accounting Policies**For a discussion of significant accounting policies that impact our financial reporting, pleaseturn to Note 1 of our financial statements beginning on page F-7.**Item 7. Financial Statements.**Our 2006 and 2005 consolidated financial statements audited by Grant Thornton LLP follow thisannual report beginning on page F-1.**Item 8. Changes in and Disagreements with Accountants on Accounting andFinancial Disclosure.**Not applicable.**Item 8A. Controls and Procedures.**Under the direction of our interim chief executive and chief financial officers, we have evaluateddisclosure controls and procedures and internal control over financial reporting and concluded thatour disclosure controls and procedures were effective as of December 31, 2006, and no change ininternal control over financial reporting occurred during the quarter ended December 31, 2006 thathas materially affected, or is reasonably likely to materially affect, such internal control overfinancial reporting. Our interim CEO and CFO did not hold those offices on December 31, 2006 anddid not join the company until 2007.**Item 8B. Other Information**Not applicable.
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**PART III****Item 9. Directors, Executive Officers, Promoters, Control Persons and Corporate Governance;Compliance with Section 16(a) of the Exchange Act.**During 2006 James Benenson, Jr. and John V. Curci served as our directors and officers. Ourcurrent directors and executive officers are:**Harvey J. Polly**, age 78, joined our board as chairman in January 2007. Mr. Polly previously servedas the company’s CEO from 1995 to 2000 before selling his interest in the company to Summa. He hasbeen a principal shareholder, director and COO of various short line railroads and The Hanover Bankof Florida, and a principal and the president of Helena Rubinstein, an international cosmeticscompany. Mr. Polly is a graduate of Keystone College and Columbia University’s Graduate School ofBusiness.**Andrew H. Scott**, age 39, joined our board and was appointed interim chief executive officer inJanuary 2007. Mr. Scott is currently a managing director of Maxim Group, LLC specializing instructured finance focusing on the healthcare, financial services and technology industries. Mr.Scott has over fifteen years of experience in the financial services industry. He is a graduate ofPace University with a B.B.A. in accounting and a minor in mathematics.**Paul S. Dennis**, age 69, joined the board in January 2007 and was appointed interim chief financialofficer in February 2007. Mr. Dennis has served as president and CEO of Associated Health CareManagement Company, Inc. since 1977. Health Care Management is a Cleveland, Ohio based company thatmanaged eight nursing care facilities and four congregate living facilities. The company has soldall but one of its facilities. Mr. Dennis has also been a director and officer with variouscompanies and business ventures in the hardware distribution, pharmaceuticals distribution andsteel fabrication industries and a real estate developer, general contractor, owner and investor.Mr. Dennis is a director of Gaming Partners International Corporation, a publicly-held manufacturerand supplier of casino table game equipment located in Las Vegas, Nevada.**Gary O. Marino**, age 62, joined our board in January 2007. Mr. Marino serves as chairman, presidentand CEO of Patriot Rail Corp., an owner and operator of regional short-line railroads, and formerlyheld the same positions at RailAmerica, Inc. (NYSE:RRA), a company he founded in 1985, until hisretirement in 2004. From 1984 until 1993, Mr. Marino served as chairman, president and CEO of BocaRaton Capital Corporation, a publicly owned venture capital investment company. Prior to that hespent more than fifteen years in commercial banking in New York as a senior loan officer and wasalso president and CEO of two small business investment companies (SBIC’s), as well as president ofa Florida-based commercial bank. Mr. Marino received his B.A. degree from Colgate University andhis M.B.A. from Fordham University. From 1966 to 1969, he served as an officer of the United StatesArmy Ordnance Corps. He has also served on the board of directors of the American Association ofRailroads.
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**Committees of the Board**We are still in the early stages of our business plan and our new board has only four members.Because of the small size of our board, our directors have not yet designated audit, nominating orother committees. Instead, these responsibilities are handled by the entire board. Without an auditcommittee, we have not designated a director as an “audit committee financial expert” as defined bySEC rules. Although we are pleased with the diverse skills and level of expertise that ourdirectors possess, we intend to add additional directors when we acquire an operating company. Ourboard plans to form appropriate committees at that time.**Code of Ethics**In the wake of the recent corporate scandals, the SEC has adopted rules encouraging companies toadopt written ethical guidelines for their officers and employees. We believe strongly in theimportance of ethical conduct in our business endeavors, and in March 2004, our board of directorsunanimously adopted a code of conduct and ethics that applies to all of our officers, directors andemployees, including our principal executive officer and principal financial and principalaccounting officer. Our code of ethics is attached to this report as Exhibit 14.**Compliance with § 16(a) of the Exchange Act**Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers,and persons who own more than 10% of our common stock, to make filings with the SEC reporting theirownership of our common stock and to furnish us with copies of these filings. Based solely on ourreview of copies of reports furnished to us, we believe that all § 16(a) filing requirements weremet in 2006. Copies of these filings are available on the SEC’s website at SEC.gov.**Director Nominations**Our board of directors does not have a nominating committee. Instead, the board believes it is inthe best interests of the company to rely on the insight and expertise of all directors in thenominating process.Our directors will recommend qualified candidates for director to the full board and nominees aresubject to approval by a majority of our board members. Nominees are not required to possessspecific skills or qualifications; however, nominees are recommended and approved based on variouscriteria including relevant skills and experience, personal integrity and ability and willingnessto devote their time and efforts to BHIT. Qualified nominees are considered without regard to age,race, color, sex, religion, disability or national origin. We do not use a third party to locate orevaluate potential candidates for director.The board of directors considers nominees recommended by stockholders according to the samecriteria. A stockholder desiring to nominate a director for election must deliver a notice to ourpresident at our principal executive office. The notice must include as to each person whom thestockholder proposes to nominate for election or re-election as director:**•** the name, age, business address and residence address of the person,
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**•** the principal occupation or employment of the person,**•** the written consent of the person to being named in the proxy as a nominee and to serving as a director,**•** the class and number of our shares of stock beneficially owned by the person, and**•** any other information relating to the person that is required to be disclosed in solicitations for proxies for electionof director pursuant to Rule 14a under the Exchange Act;and as to the stockholder giving the notice**•** the name and record address of the stockholder, and**•** the class and number of our shares beneficially owned by the stockholder.We may require any proposed nominee to furnish additional information reasonably required by us todetermine the eligibility of the proposed nominee to serve as our director.**Item 10. Executive Compensation.**We did not pay our CEO or CFO in 2006 or 2005 nor did we pay any other officer $100,000 or moreduring those years. There were no long-term compensation awards, payments or options granted orexercised in 2006 and 2005. There were no options outstanding to acquire our stock as of December31, 2006.**Director Compensation**During 2006, our directors did not receive any cash or equity compensation for serving on our boardand we had no formal equity compensation plan for our board members.
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**Item 11. Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters.**The following table lists the stock ownership of our directors and executive officers as of March23, 2007.             **Significant Stockholders** **Shares** **Options** **Percentage (1)****Harvey J. Polly**  1,086,250      (2)  250,000   8.8%2901 South Ocean Blvd.,Penthouse 5Highland Beach, Florida 33487                         **Andrew H. Scott**  390,833   250,000   4.2%Maxim Group, LLC405 Lexington Ave.New York, New York 10174                         **Paul S. Dennis**  721,250   250,000   6.4%Associated Health Care Management7005 Stadium Drive, Suite 100Brecksville, Ohio 44141                         **Gary O. Marino**  195,417      (3)  250,000   2.9%Patriot Equity, LLC2255 Glades Road, Suite 342-WBoca Raton, Florida 33431                         **Total**  2,393,750   1,000,000   21.2% 1. There were 14,988,051 shares outstanding on March 23, 2007. Assumes the exercise of optionsheld by that director, but no others. 2. Includes 100,000 shares beneficially owned by Mr. Polly’s wife. 3. Shares held by Patriot Equity, LLC, a limited liability company of which Mr. Marino is the solemember.**Item 12. Certain Relationships and Related Transactions, and Director Independence.**Prior to the purchase of Summa’s shares, our principal offices were located in a facility sharedwith Summa. We reimbursed Summa for expenses totaling $66,280 in 2006 and $61,669 in 2005,principally for salaries including benefits, and also for insurance, rent, utilities and variousother office expenses.
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**Item 13. Exhibits.**   14 Code of Ethics   31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer Pursuant to Section 302of the Sarbanes-Oxley Act of 2002   31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer Pursuant to Section 302of the Sarbanes-Oxley Act of 2002   32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of theSarbanes-Oxley Act of 2002**Item 14. Principal Accountant Fees and Services.**Grant Thornton LLP has served as BHIT’s certified public accountants since 2000. Grant Thorntonbilled us $26,496 in 2006 and $24,055 in 2005 for audit fees. Grant Thornton did not render anyother services to BHIT during 2006 or 2005.Because of the small size of our board, the directors have not designated an audit committee.Instead, these responsibilities are handled by the entire board, which considers and pre-approvesany audit or non-audit services to be performed by Grant Thornton. Our board believes the servicesprovided by Grant Thornton are compatible with maintaining our auditor’s independence.
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**SIGNATURES**In accordance with Section 13 or 15(d) of the Exchange Act, B.H.I.T. Inc. caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.      B.H.I.T. Inc.