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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-KSB
  þ ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the year ended December 31, 2004
  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. 
  Delaware

    
    
    
    36-3361229(State or other jurisdiction of
    
    
    
    (I.R.S. Employerincorporation or organization)
    
    
    
    Identification No.)6950 South Edgerton Road, Brecksville, Ohio
    
    
    
    44141(Address of principal executive offices)
    
    
    
    (Zip Code)(440) 838-4700Registrants telephone number, including area code
 Check 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 o. Check 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 the 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 þ The Registrants Revenue for the preceding twelve months was $22,913. Shares of common stock
outstanding as of March 16, 2005: 14,988,051. Aggregate market value of the Registrants shares
of common stock held by non-affiliates as of such date was approximately $699,559. DOCUMENTS INCORPORATED BY REFERENCE o þ .




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B.H.I.T. INC. ANNUAL REPORT ON FORM 10-KSB
FOR THE YEAR ENDED DECEMBER 31, 2004  
 TABLE OF CONTENTS INDEX
    
    PAGEPART IItem 1. Description of Business
    
    
    1Item 2. Description of Property
    
    
    1Item 3. Legal Proceedings
    
    
    2Item 4. Submission of Matters to a Vote of Security Holders
    
    
    2PART IIItem 5. Market for Common Equity and Related Shareholder Matters
    
    
    3Item 6. Managements Discussion and Analysis or Plan of Operation
    
    
    3-4Item 7. Financial Statements
    
    
    4Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    4Item 8A. Controls and Procedures
    
    
    4PART IIIItem 9. Directors and Executive Officers of the Company
    
    
    5Item 10. Executive Compensation
    
    
    6Item 11. Security Ownership of Certain Beneficial Owners and Management
    
    
    6Item 12. Certain Relationships and Related Transactions
    
    
    7Item 13. Exhibits and Reports on Form 8-K
    
    
    7Item 14. Principal Accountant Fees and Services
    
    
    7SIGNATURES
    
    
    8EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32




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B.H.I.T. INC. 
 PART I 
 ITEM 1. DESCRIPTION OF BUSINESS B.H.I.T. Inc. (the Company) was originally organized under the laws of the State of Massachusetts
pursuant to a Declaration of Trust filed March 19, 1985, under the name VMS Hotel Investment Trust,
for the purpose of investing in mortgage loans. The Company was subsequently reorganized as a
Delaware corporation on March 13, 1987. The Company changed its name from Banyan Hotel Investment
Fund to B.H.I.T. Inc. in 1998. BUSINESS OPERATIONS AND HISTORY The Companys current operations relate primarily to servicing its cash investment portfolio and
seeking profitable investments including mortgage loans for its available funds. The business of the Company is not seasonal and the Company has no foreign or export business.
The Company does not segregate revenue or assets by geographical region because such presentation
would not be material to an understanding of the Companys business taken as a whole. The Company was originally established to invest in mortgage loans principally to entities
affiliated with VMS Realty Partners. These loans were collateralized by hotel and resort
properties. As the result of a public offering that concluded January 13, 1986, the Company received gross
proceeds of $98,482,751. During the years 1989 through 1992 the Company experienced severe
losses due primarily to a decline in real estate property values and the resulting default on
mortgage loans held by the Company. The Company has recorded losses every year since 1989
resulting in the accumulated deficit totaling $86,540,974 on December 31, 2004. In September 2000, Arrowhead Holdings Corporation (Arrowhead) purchased 5,870,563 shares of the
Company stock, or 39.2% of the outstanding shares. Subsequent purchases of the Companys shares
have resulted in Arrowhead owning a total of 6,243,563 shares, or 41.7% of the outstanding shares
on December 31, 2004. 
 ITEM 2. DESCRIPTION OF PROPERTY The Companys principal office is located in Brecksville, Ohio in a leased facility that is
shared with common employees of Arrowhead. 1




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B.H.I.T. INC. 
 ITEM 3. LEGAL PROCEEDINGS The Company is not aware of any pending legal proceedings as of March 1, 2005, nor were any
proceedings terminated during the year ended December 31, 2004. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the quarter ended December
31, 2004. 2




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B.H.I.T. INC. 
 PART II 
 ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Companys shares of common stock trade on the NASDAQ Over The Counter Bulletin Board (OTC)
(Symbol  VHTI). The range of high and low closing prices for each of the quarters in the years
ended December 31, 2004 and 2003 are as follows: Calendar
    
    
    
    
    
    Share PriceQuarter
    
    
    
    
    
    2004
    
    
    2003First
    
    High
    
    $
    0.20
    
    
    $
    0.16Quarter
    
    Low
    
    
    0.17
    
    
    
    0.10Second
    
    High
    
    
    0.21
    
    
    
    0.22Quarter
    
    Low
    
    
    0.15
    
    
    
    0.14Third
    
    High
    
    
    0.15
    
    
    
    0.25Quarter
    
    Low
    
    
    0.11
    
    
    
    0.16Fourth
    
    High
    
    
    0.12
    
    
    
    0.32Quarter
    
    Low
    
    
    0.07
    
    
    
    0.19
 The Companys shares began trading on the OTC during the week of October 28, 1996, prior to that
time they traded on the American Stock Exchange. The Company has not made distributions nor
declared dividends in either 2004 or 2003. On December 31, 2004, there were 2,194 record holders
of common stock. 
 ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION RESULTS OF OPERATIONS Total revenue for the years ended December 31, 2004 and 2003 was $22,913 and $20,822, respectively.
The increase of $2,091 in 2004 was the result of higher interest earned on invested funds during
the year. Total expenses for the years ended December 31, 2004 and 2003 were $101,206 and $117,799,
respectively. The decrease of $16,593 was due primarily to a decrease in general insurance. The net loss for 2004 was $78,293 ($0.005 per share) compared to a net loss of $96,977 ($0.006
per share) for 2003. 3




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B.H.I.T. INC. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents consist of cash and short-term investments. The Companys cash and
cash equivalents balance on December 31, 2004 and 2003 was $1,536,596 and $1,612,724
respectively. The decrease of $76,128 in cash and cash equivalents during 2004 is the primarily
the result of the net loss of $78,293. 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. 
 ITEM 7. FINANCIAL STATEMENTS See the index to the Financial Statements on page F-1 of this report for the financial statements
of the Company. 
 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 disclosure. 
 ITEM 8A. CONTROLS AND PROCEDURES Under the direction of our Chief Executive Officer and Chief Financial Officer, we have evaluated
disclosure controls and procedures and internal control over financial reporting and concluded
that (i) our disclosure controls and procedures were effective as of December 31, 2004, and (ii)
no change in internal control over financial reporting occurred during the quarter ended December
31, 2004 that has materially affected, or is reasonably likely to materially affect, such
internal control over financial reporting. 4




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B.H.I.T. INC. 
 PART III 
 ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY The following individuals are Directors and/or Officers of the Company: James Benenson, Jr., age 68, has served as Chairman of the Board of Directors since October
2001, and as President and Chief Executive Officer of the Company since September 2000. Mr.
Benenson is also a Director and the Chief Executive Officer of Vesper Corporation since 1979,
and Chairman and Chief Executive Officer of Arrowhead Holdings Corporation since 1983. John V. Curci, age 60, has served as a Director of the Company since April 1, 2004, and as
the Chief Financial Officer since October 2001, and the Vice President and Treasurer of the
Company since September 2000. Mr. Curci has also been the Vice President, Treasurer, Secretary
and Chief Financial Officer of Vesper Corporation since 1979. In addition, Mr. Curci has been
Vice President, Treasurer and Chief Financial Officer of Arrowhead Holdings Corporation since
1983. George M. Isdale, Jr., age 63, was a Director of the Company from December 2002 to March 31,
2004. Mr. Isdale has been a Senior Vice President of UBS Group, a global financial services
organization, since 1990. Effective March 31, 2004, Mr. Isdale resigned from the Board of
Directors of B.H.I.T. Inc. The resignation was not requested by the Company and was not the
result of any disagreement between Mr. Isdale and the Company. James A. Lash, age 60, was a Director of the Company from September 2000 to February 9, 2004.
Mr. Lash has been Chairman, since 1976, of Manchester Principal LLC, a venture capital firm
and also a Director of Vesper Corporation from 1998 through April 30, 2004. Effective February
9, 2004, Mr. Lash resigned from the Board of Directors of B.H.I.T. Inc. The resignation was
not requested by the Company and was not the result of any disagreement between Mr. Lash and
the Company. No replacement has yet been named to the Board. The Company has adopted a code of ethics that applies to all directors, officers and employees of
the Company. A copy of the Companys code of ethics will be made available, without charge, to
any person who requests a copy by submitting a written request addressed to the Chief Financial
Officer of the Company at 6950 South Edgerton Road, Brecksville, Ohio 44141-3184. The Company believes that all reports required to be filed pursuant to the 1934 Act, with respect
to transactions in the Companys Common Stock through December 31, 2004, were filed on a timely
basis. 5




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B.H.I.T. INC. 
 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 during the years 2004 and 2003. B. EXECUTIVE COMPENSATION No salary or other compensation was paid to the Companys Chief Executive Officer during 2004
or 2003 nor was any other officer paid $100,000 or more during those years. There were no long-term compensation awards, payments or options granted or exercised during
the years 2004 and 2003. There were no options outstanding to acquire stock of the Company as
of December 31, 2004. 
 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT The following table sets forth information, as of March 16, 2005, on each shareholder who is
known by the Company to own beneficially more than 5% of the shares of its Common Stock. There
are no shares beneficially owned by any current director or officer of the Company. Amount andNature ofName of
    
    
    Beneficial
    
    
    PercentTitle of Class
    
    Beneficial Owner
    
    
    Ownership
    
    
    of ClassShares of Common Stock
    
    Arrowhead Holdings
    
    6,243,563 shares
    
    
    41.7%$.01 Par Value
    
    Corporation6950 South Edgerton RoadBrecksville, Ohio, 44141Directors and Officers (1)
    
    
    
    
    
    
    
   (1)
    
    Mr. Benenson is the Chairman and Chief Executive Officer of Arrowhead
and holds the majority of the voting stock in Arrowhead. Mr. Benenson
disclaims any beneficial interest in the Common Stock of B.H.I.T. Inc. held
by Arrowhead. 6




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B.H.I.T. INC. 
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Companys principal offices are located in a facility shared with Arrowhead. During the
years ended 2004 and 2003, the Company reimbursed Arrowhead for expenses totaling $55,407 and
$53,230, respectively, principally for salaries including benefits, and also insurance, rent,
utilities and various other office expenses. 
 ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K A. EXHIBITS EXHIBIT 31.1 Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) of the
Exchange Act EXHIBIT 31.2 Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) of the
Exchange Act EXHIBIT 32 Certification Pursuant to 18 U.S.C. Section 1350 B. REPORTS ON FORM 8-K NONE 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Grant Thornton LLP has served as the Companys Certified Public Accountants since the year 2000.
Audit fees billed during the years ended December 31, 2004 and 2003 were $22,870 and $23,675,
respectively. There were no other services rendered by Grant Thornton, LLP during 2004 or 2003. 7




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B.H.I.T. INC. 
 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 thereunto
duly authorized. /s/ James Benenson, Jr.James Benenson, Jr.
    
    
    
    Date: March 22, 2005Chairman of the Board of Directors,
President and Chief Executive Officer/s/ John V. CurciJohn V. Curci
    
    
    
    Date: March 22, 2005Vice-President, Treasurer & Chief Financial Officer,
Principal Accounting Officer
 8




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B.H.I.T. INC. INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm
    
    F - 2Balance Sheets as of December 31, 2004 and 2003
    
    F - 3Statements of Operations For the Years Ended December 31, 2004 and 2003
    
    F - 4Statements of Stockholders Equity For the Years Ended December 31, 2004 and 2003
    
    F - 5Statements of Cash Flows For the Years Ended December 31, 2004 and 2003
    
    F - 6Notes to Financial Statements
    
    F - 7 to F - 9
 F-1




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Report of Independent Registered Public Accounting Firm The Stockholders
B.H.I.T. Inc. We have audited the accompanying balance sheets of B.H.I.T. Inc. as of December 31, 2004 and
2003, and the related 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 the standards of the Public Company Accounting
Oversight Board (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. The Company is not required to have, nor were we engaged to perform an audit of
its internal control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Companys internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, 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 financial position of B.H.I.T. Inc. on December 31, 2004 and 2003 and the results
of its operations and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America. /s/ Grant Thornton LLP Cleveland, Ohio
February 3, 2005 F-2




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B.H.I.T. INC. 
 Balance Sheets December 31,2004
    
    
    2003ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    1,536,596
    
    
    $
    1,612,724Interest receivable on cash and cash equivalents
    
    
    3,168
    
    
    
    1,624Prepaid insurance
    
    
    5,082
    
    
    
    14,250Total Current Assets
    
    $
    1,544,846
    
    
    $
    1,628,598LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)CURRENT LIABILITIESAccounts payable and other accrued expenses
    
    $
    33,162
    
    
    $
    38,621STOCKHOLDERS EQUITY (DEFICIT)Shares of Common Stock, $0.01 par value,
20,000,000 shares authorized, 15,020,808 shares
issued as of December 31, 2004 and 2003
    
    
    88,060,847
    
    
    
    88,060,847Accumulated deficit
    
    
    (86,540,974
    )
    
    
    (86,462,681
    )Treasury stock, at cost, for 32,757 shares
of Common Stock
    
    
    (8,189
    )
    
    
    (8,189
    )Total Stockholders Equity
    
    
    1,511,684
    
    
    
    1,589,977Total Liabilities and Stockholders Equity
    
    $
    1,544,846
    
    
    $
    1,628,598
 See accompanying notes to the Financial Statements. F-3




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B.H.I.T. INC. 
 Statements of Operations Years Ended December 31,2004
    
    
    2003REVENUEInterest earned on cash and cash equivalents
    
    $
    22,913
    
    
    $
    20,822EXPENSESGeneral and administrative
    
    
    101,206
    
    
    
    117,799Net loss
    
    $
    (78,293
    )
    
    $
    (96,977
    )Basic and diluted net loss per share of Common
Stock (based on weighted average number of
shares outstanding of 14,988,051 in 2004 and 2003)
    
    $
    (0.005
    )
    
    $
    (0.006
    )
 See accompanying notes to the Financial Statements. F-4




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B.H.I.T. INC. 
 Statements of Stockholders Equity
Years Ended December 31, 2004 and 2003 Common StockShares
    
    
    
    
    
    
    Accumulated
    
    
    Treasury StockIssued
    
    
    Amount
    
    
    Deficit
    
    
    Shares
    
    
    Amount
    
    
    TotalStockholders equity (deficit)
December 31, 2002
    
    
    15,020,808
    
    
    $
    88,060,847
    
    
    $
    (86,365,704
    )
    
    
    32,757
    
    
    $
    (8,189
    )
    
    $
    1,686,954Net loss for the year ended
December 31, 2003
    
    
    
    
    
    
    
    
    
    
    (96,977
    )
    
    
    
    
    
    
    
    
    
    
    (96,977
    )Stockholders equity (deficit)
December 31, 2003
    
    
    15,020,808
    
    
    $
    88,060,847
    
    
    $
    (86,462,681
    )
    
    
    32,757
    
    
    $
    (8,189
    )
    
    $
    1,589,977Net loss for the year ended
December 31, 2004
    
    
    
    
    
    
    
    
    
    
    (78,293
    )
    
    
    
    
    
    
    
    
    
    
    (78,293
    )Stockholders equity (deficit)
December 31, 2004
    
    
    15,020,808
    
    
    $
    88,060,847
    
    
    $
    (86,540,974
    )
    
    
    32,757
    
    
    $
    (8,189
    )
    
    $
    1,511,684
 See accompanying notes to the Financial Statements. F-5




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B.H.I.T. INC. 
 Statements of Cash Flows Years Ended December 31,2004
    
    
    2003Operating Activities:Net Loss
    
    $
    (78,293
    )
    
    $
    (96,977
    )Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:Changes in certain assets and liabilities:Interest and miscellaneous receivables
    
    
    (1,544
    )
    
    
    518Prepaid insurance
    
    
    9,168
    
    
    
    (5,250
    )Accounts payable and accrued expenses
    
    
    (5,459
    )
    
    
    1,618Net cash provided by (used in) operating activities
    
    
    (76,128
    )
    
    
    (100,091
    )Cash and cash equivalents at beginning of period
    
    
    1,612,724
    
    
    
    1,712,815Cash and cash equivalents at end of period
    
    $
    1,536,596
    
    
    $
    1,612,724
 See accompanying notes to the Financial Statements. F-6




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B.H.I.T. INC. 
 NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2004 and 2003
 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation B.H.I.T. Inc. (the Company) was organized under the laws of the State of Massachusetts
pursuant to a Declaration of Trust filed March 19, 1985, for the purpose of investing in
mortgage loans. The Company was subsequently reorganized as a Delaware corporation on March 13,
1987. The business of the Company is not seasonal and the Company has no foreign or export business.
The Company does not segregate revenue or assets by geographical region because such
presentation would not be material to an understanding of the Companys business taken as a
whole. Nature of Operations The Companys current operations relate primarily to servicing its cash investment portfolio
and seeking profitable investments including mortgage loans for its available funds. Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this
method, deferred tax assets and liabilities are recognized by applying enacted statutory tax
rates, applicable to future years, to temporary differences between the tax bases and financial
statement carrying values of the Companys assets and liabilities. A valuation allowance is
provided where it is more likely than not that deferred tax assets will not be realized. Loss Per Share Basic and diluted loss per share was calculated in 2004 and 2003 using 14,988,051 shares, the
shares outstanding each year. There were no dilutive securities outstanding during 2004 and
2003. Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with maturity of three months or
less to be cash and cash equivalents. F-7




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B.H.I.T. INC NOTES TO FINANCIAL STATEMENTS (continued)
Years Ended December 31, 2004 and 2003 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue Recognition Interest income from the mortgage portfolio and cash equivalents is recorded on an accrual
basis. Use of Estimates 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. NOTE 2. TRANSACTIONS WITH AFFILIATES The Companys principal offices are located in a facility shared with Arrowhead Holdings
Corporation (Arrowhead). During the years ended 2004 and 2003, the Company reimbursed
Arrowhead $55,407 and $53,230, respectively, principally for salaries including benefits, and
also insurance, rent, utilities and various other office expenses. NOTE 3. LEASE COMMITMENTS Since October 1, 2001, office space is shared with Arrowhead in Brecksville, Ohio. Rent expense
for the years ended December 31, 2004 and 2003 was $4,441 and $3,919, respectively. The Company
is not a party to the Ohio office lease, accordingly, there are no future lease commitments. F-8




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B.H.I.T. INC. NOTES TO FINANCIAL STATEMENTS (continued)
Years Ended December 31, 2004 and 2003 NOTE 4. INCOME TAXES The Company reported no income tax expense or benefit for the years ended December 31, 2004 and
2003 due to the net operating losses incurred during both years. The following deferred tax assets were offset by a valuation allowance due to the uncertainty
of realizing the income tax benefit associated with the deferred assets. 2004
    
    
    2003Tax effect of net operating
loss carryforward
    
    $
    29,679,039
    
    
    $
    29,648,364Valuation allowance
    
    
    (29,679,039
    )
    
    
    (29,648,364
    )Net deferred tax asset
    
    $
    
    
    
    $
    
 The net change in the tax-effected net operating loss and the total valuation allowance is the
result of the loss in 2004. The net change in the valuation allowance
for 2004 and 2003 was $30,675 and $37,996, respectively. The net operating loss carryforwards are scheduled to expire between 2005 and 2024. Net
operating loss utilization may be subject to any applicable limitation contained in the
Internal Revenue Code. F-9