**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
                1934For
                the quarterly period ended **June 30,
                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 July 31,
      2008.**














**Table
      of Contents**





Part
                I — Financial InformationItem
                1.
            Financial
                Statements
            1Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            1Our
                History
            1Forward
                Looking Statements
            2Results
                of Operations
            3Comparison
                of Three Months Ended June 30, 2008 and 2007
            3Comparison
                of Six Months Ended June 30, 2008 and 2007
            3Financial
                Condition and Liquidity
            3Off-Balance
                Sheet Arrangements
            3How
                to Learn More About BHIT
            4Item
                4.
            Controls
                and Procedures
            4Part
                II — Other Information
            4Item
                1.
            Legal
                Proceedings
            4Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            4Item
                3.
            Defaults
                Upon Senior Securities
            4Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            4Item
                5.
            Other
                Information
            4Item
                6.
            Exhibits
            5Signatures
            6





**Part
      I — Financial Information**




**Item
      1.**  **Financial
      Statements**





Our
      June
      30, 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.





On
      July
      24, 2008 we entered into an asset purchase agreement with L.A. Colo, LLC
      (“Colo”) and Iron Rail Group, LLC, the current owner of Colo, pursuant to which
      we agreed to purchase substantially all of the assets of Colo for $15.0 million,
      subject to adjustment. Colo has provided railroad maintenance and construction
      services to short line railroads and industrial customers for 25 years. Colo’s
      services include: construction of new spurs, sidings, loop tracks, rail-yards
      and intermodal facilities, maintenance for mechanized rail and tie change-out
      production, panel turnout construction and installation, crossing installation
      and maintenance, production surfacing, track inspection and reporting, planned
      and scheduled maintenance and track pick-up and removal. Completing the
      acquisition is contingent on the satisfaction of standard conditions, including
      our being satisfied with due diligence and finalizing our financing
      arrangements. There can be no assurances that the transaction will be completed
      on the proposed terms, or at all. For more information regarding the proposed
      acquisition, please see our Current Report on Form 8-K filed with the SEC on
      July 28, 2008.





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 $87,357,623 on June 30,
      2008.


1


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.





**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;




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




·
            successfully
                acquire and operate Colo.





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.


2


**Results
      of Operations**




*Comparison
      of Three Months Ended June 30, 2008 and 2007*




Our
      total
      revenues for the quarter ended June 30, 2008 were $11,406, compared to $16,837
      for the same period in 2007, a decrease of $5,431, or 32.3%. Revenues decreased
      as the result of lower interest rates earned on invested funds.





Our
      total
      expenses for the second quarter of 2008 increased $16,362, or 49.5%, to $49,400,
      compared to $33,038 for the second quarter of 2007. The increase was caused
      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 second quarter of 2008 was $37,994 ($0.002 per share),
      compared to a net loss of $16,201 ($0.001 per share) in 2007, an increase of
      $21,793.





*Comparison
      of Six Months Ended June 30, 2008 and 2007*




Our
      total
      revenues for the six months ended June 30, 2008 were $29,156, compared to
      $30,648 for the same period in 2007, a decrease of $1,492, or 4.9%. Revenues
      decreased as the result of lower interest earned on invested funds. Lower
      interest rates were partially offset by an increase in funds from the proceeds
      of our June 2007 private placement.





Our
      total
      expenses for the first half of 2008 decreased $115,931, or 50.0%, to $115,934,
      compared to $231,865 for the first half 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 half of 2008 was $86,778 ($0.003 per share), compared
      to a net loss of $201,217 ($0.012 per share) in 2007, a decrease of
      $114,439.





**Financial
      Condition and Liquidity**




Cash
      and
      cash equivalents consist of cash and short-term investments. Our cash and cash
      equivalents balance at June 30, 2008 was $2,029,053, a decrease of $240,001
      from
      $2,269,054 at December 31, 2007. Cash and cash equivalents decreased in the
      first half of 2008 primarily as the result of our net loss for the period and
      deferred acquisition and financing costs incurred in connection with exploring
      potential acquisition candidates.





At
      this
      time, we have no material commitments for capital expenditures, other than
      our
      purchase of Colo. In addition, we are reviewing various other 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
      Colo and other operating companies.





**Off-Balance
      Sheet Arrangements**




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


3


**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 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 June 30, 2008, and no change in our internal
      control over financial reporting occurred during the quarter ended June 30,
      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 July 31, 2008,
      nor were any proceedings terminated in the second 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.




**Item
      5.**  **Other
      Information**





Not
      applicable.


4


**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
                200232
            Rule
                13a-14(b)/15d-14(b) Certification Pursuant to § 906 of the Sarbanes-Oxley
                Act of 2002


5


**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:
                August 8, 2008
            /s/
                Paul S. DennisBy
                Paul S. DennisInterim
                Chief Executive and Financial
                Officer





6





**B.H.I.T.
        Inc.**
 
 **Balance
        Sheets**
 **As
        of June 30, 2008 and December 31, 2007**
 **June 30, 2008**
                
                **December 31, 2007****ASSETS**
                
                (Unaudited)**Current
                    Assets**Cash
                    and cash equivalents
                
                $
                2,029,053
                
                $
                2,269,054Interest
                    receivable on cash and cash equivalents
                
                
                -
                
                
                1,897Prepaid
                    insurance
                
                
                4,596
                
                
                13,786Total
                    Current Assets
                
                
                2,033,649
                
                
                2,284,737Deferred
                    acquisition and financing costs
                
                
                124,837
                
                
                -Total
                    Assets
                
                $
                2,158,486
                
                $
                2,284,737**LIABILITIES
                    AND STOCKHOLDERS' EQUITY****Current
                    Liabilities**Accounts
                    payable and other accrued expenses
                
                $
                33,451
                
                $
                72,924**Stockholders'
                    Equity**Common
                    Stock, $0.01 par value, 75,000,000 shares authorized and 25,020,808
                    shares
                    issued at June 30, 2008 and at December 31, 2007
                
                
                89,490,847
                
                
                89,490,847Accumulated
                    deficit
                
                
                (87,357,623
                )
                
                (87,270,845
                )Treasury
                    stock, at cost, for 32,757 shares of Common Stock
                
                
                (8,189
                )
                
                (8,189
                )Total
                    Stockholders' Equity
                
                
                2,125,035
                
                
                2,211,813Total
                    Liabilities and Stockholders' Equity
                
                $
                2,158,486
                
                $
                2,284,737
  F-1
  **B.H.I.T.
        Inc.**
 
 **Statements
        of Operations**
 **For
        the Three and Six Months Ended June 30, 2008 and 2007**
 (Unaudited)
 
 **Three
                  Months**
              
              **Six
                  Months****2008**
              
              **2007**
              
              **2008**
              
              **2007****Revenue**Interest
                  earned on cash and cash equivalents
              
              $
              11,406
              
              $
              16,837
              
              $
              29,156
              
              $
              30,648**Expenses**General
                  and Administrative
              
              
              49,400
              
              
              33,038
              
              
              115,934
              
              
              51,865Stock
                  based compensation
              
              
              -
              
              
              -
              
              
              -
              
              
              180,000Total
                  Expenses
              
              
              49,400
              
              
              33,038
              
              
              115,934
              
              
              231,865**Net
                  Loss**
              
              $
              (37,994
              )
              $
              (16,201
              )
              $
              (86,778
              )
              $
              (201,217
              )Weighted
                  average number of shares outstanding
              
              
              24,988,051
              
              
              17,515,524
              
              
              24,988,051
              
              
              16,258,769Basic
                  and diluted net loss per share of Common Stock
              
              $
              (0.002
              )
              $
              (0.001
              )
              $
              (0.003
              )
              $
              (0.012
              )
  F-2
  **B.H.I.T.
        Inc.**
 
 **Statements
        of Cash Flows**
 **For
        the Six Months Ended June 30, 2008 and 2007**
 (Unaudited)
 
 **2008**
              
              **2007****Operating
                  Activities**Net
                  Loss
              
              $
              (86,778
              )
              $
              (201,217
              )****Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Stock
                  based compensation
              
              
              -
              
              
              180,000Changes
                  in assets and liabilities:****Interest
                  receivable on cash and cash equivalents
              
              
              1,897
              
              
              4,444Prepaid
                  insurance and miscellaneous expenses
              
              
              9,190
              
              
              8,906Accounts
                  payable and accrued expenses
              
              
              (39,473
              )
              
              (16,037
              )Net
                  cash used in operations
              
              
              (115,164
              )
              
              (23,904
              )**Investing
                  Activities**Deferred
                  acquisition costs
              
              
              (99,837
              )
              
              -Net
                  cash used in investing
              
              
              (99,837
              )
              
              -**Financing
                  Activities**Deferred
                  Financing Costs
              
              
              (25,000
              )
              
              -Issuance
                  of Common Stock
              
              
              -
              
              
              1,000,000Net
                  cash used in financing
              
              
              (25,000
              )
              
              1,000,000Net
                  increase (decrease) in cash
              
              
              (240,001
              )
              
              976,096Cash
                  and cash equivalents at beginning of period
              
              
              2,269,054
              
              
              1,420,313Cash
                  and cash equivalents at end of period
              
              $
              2,029,053
              
              $
              2,396,409
  F-3
 **B.H.I.T.
          Inc.**
  **Notes
          to Financial Statements**
 **Three
          and Six Months Ended June 30, 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 June 30, 2008 and December 31, 2007, and the results of operations and
          cash
          flows for the three and six months ended June 30, 2008 and 2007. The financial
          information for the three and six months ended June 30, 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 and six months ended June 30, 2008
          are not
          necessarily indicative of the results to be expected for the full 2008
          year.
  **Stock
          Offering**
 On
          June
          8, 2007, the company sold an aggregate of 10.0 million shares of its common
          stock in a private placement to a total of 36 accredited investors, primarily
          existing stockholders of the company. The shares were sold at a price of
          $0.10 a
          share for a total of $1.0 million.
  F-4
  **B.H.I.T.
          Inc.**
  **Notes
          to Financial Statements**
 **Three
          and Six Months Ended June 30, 2008 and 2007**
 (Unaudited)
  **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
          six months ended June 30, 2008.
 
 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:
 
 Risk
                    free interest rate
                
                
                4.28
                %Expected
                    life (years)
                
                
                3Expected
                    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 did not elect to measure eligible items at fair
          value.
  F-5
  **B.H.I.T.
          Inc.**
  **Notes
          to Financial Statements**
 **Three
          and Six Months Ended June 30, 2008 and 2007**
 (Unaudited)
 
 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.
  **Subsequent
          Events**
 On
          July
          24, 2008 we entered into an asset purchase agreement with L.A. Colo, LLC
          (“Colo”) and Iron Rail Group, LLC, the current owner of Colo, pursuant to which
          we agreed to purchase substantially all of the assets of Colo for $15.0
          million,
          subject to adjustment. Colo has provided railroad maintenance and construction
          services to short line railroads and industrial customers for 25 years.
          Completing the acquisition is contingent on the satisfaction of standard
          conditions, including our being satisfied with due diligence and finalizing
          our
          financing arrangements. There can be no assurances that the transaction
          will be
          completed on the proposed terms, or at all. In connection with this acquisition,
          the company has incurred certain acquisition and financing costs totaling
          $124,837 as of June 30, 2008.
  F-6