##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|(X)   |  | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|     
|      |  | For the quarterly period ended June 30, 2003                                            
|     
|      |  | OR                                                                                      
|     
|(   ) |  | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|      |  | For the transition period from
          to                                             

Commission File Number 1-9043

|                                                                    
|--------------------------------------------------------------------
|B.H.I.T. INC.
(Exact name of Registrant as specified in its charter)

|                                            |  |                    
|------------------------------------------- |  | -------------------
|Delaware                                    |  | 36-3361229         
|                                            |  |                    
|(State or other jurisdiction of             |  | (I.R.S. Employer   
|incorporation or organization)              |  | Identification No.)
|                                           
|6950 South Edgerton Road, Brecksville, Ohio |  | 44141              
|                                            |  |                    
|(Address of principal executive offices)    |  | (Zip Code)         
|
|                                           

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.                                         Yes (X)
NO (   ).

Shares of Common Stock Outstanding as of August 5, 2003: 14,988,051

|                                              |  |                  
|--------------------------------------------- |  | -----------------
|Transitional Small Business Disclosure Format |  | Yes (   ) No (X).





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TABLE OF CONTENTS



|                                              |                                                                                                |  |  |  |  |  |  | 
|--------------------------------------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Part I  FINANCIAL INFORMATION               
|                                              | Balance Sheets                                                                                
|                                              | Statements of Operations For the Three Months Ended June 30, 2003 and 2002 (Unaudited)        
|                                              | Statements of Operations For the Six Months Ended June 30, 2003 and 2002 (Unaudited)          
|                                              | Statement of Stockholders Equity For the Six Months Ended June 30, 2003 (Unaudited)          
|                                              | Statements of Cash Flows For the Six Months Ended June 30, 2003 and 2002 (Unaudited)          
|                                              | NOTES TO FINANCIAL STATEMENTS                                                                 
|                                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
|PART II  OTHER INFORMATION                  
|                                              | ITEM 1. LEGAL PROCEEDINGS                                                                     
|                                              | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                      
|SIGNATURES                                   
|EX-31.1 CERTIFICATION PURSUANT TO SECTION 302
|EX-31.2 CERTIFICATION PURSUANT TO SECTION 302
|EX-32 CERTIFICATION PURSUANT TO SECTION 906  



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##### Table of Contents



B.H.I.T. INC.

QUARTERLY REPORT ON FORM 10-QSB
FOR THE SIX MONTHS ENDED JUNE 30, 2003


TABLE OF CONTENTS

|                                                                                              |  |     
|--------------------------------------------------------------------------------------------- |  | ----
|INDEX                                                                                         |  | PAGE
|PART I FINANCIAL INFORMATION                                                                 
|                                                                                              |  |     
|ITEM 1. Financial Statements                                                                  |  |     
|                                                                                              |  |     
|Balance Sheets as of June 30, 2003 (unaudited)
and December 31, 2002.                         |  | 3   
|                                                                                              |  |     
|Statements of Operations for the
three months ended June 30, 2003 and 2002 (unaudited)        |  | 4   
|                                                                                              |  |     
|Statements of Operations for the
six months ended June 30, 2003 and 2002 (unaudited)          |  | 5   
|                                                                                              |  |     
|Statement of Stockholders Equity for the
six months ended June 30, 2003 (unaudited)          |  | 6   
|                                                                                              |  |     
|Statements of Cash Flows for the
six months ended June 30, 2003 and 2002 (unaudited)          |  | 7   
|                                                                                              |  |     
|Notes to Financial Statements (unaudited)                                                     |  | 8   
|                                                                                              |  |     
|ITEM 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations |  | 9-10
|                                                                                              |  |     
|PART II OTHER INFORMATION                                                                    
|                                                                                              |  |     
|ITEM 1. Legal Proceedings                                                                     |  | 11  
|                                                                                              |  |     
|ITEM 6. Exhibits and Reports on Form 8-K                                                      |  | 11  
|                                                                                              |  |     
|SIGNATURES                                                                                    |  | 12  

2



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B.H.I.T. INC.




Part I  FINANCIAL INFORMATION




Balance Sheets

ASSETS

|                                               |                                                                                                                   |   |           |               |   |                   |           |             |   | 
|---------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | - | --------- | ------------- | - | ----------------- | --------- | ----------- | - | 
|                                               |                                                                                                                   |   |           | June 30, 2003 |   | December 31, 2002
|                                               |                                                                                                                   |   |           |               |   |                  
|                                               |                                                                                                                   |   |           | (Unaudited)   |   |                   |           |            
|CURRENT ASSETS                                 |                                                                                                                   |   |           |               |   |                   |           |            
|                                              
|                                               | Cash and cash equivalents                                                                                         |   | $         | 1,664,943     |   |                   | $         | 1,712,815   |  
|                                               | Interest receivable                                                                                               |   |           | 1,684         |   |                   |           | 2,142       |  
|                                               | Prepaid insurance                                                                                                 |   |           | 3,000         |   |                   |           | 9,000       |  
|                                               |                                                                                                                   |   |           |               |   |                   |           |            
|Total Current Assets                           |                                                                                                                   | $ | 1,669,627 |               |   | $                 | 1,723,957 |            
|                                               |                                                                                                                   |   |           |               |   |                   |           |            
|                                              
|LIABILITIES AND STOCKHOLDERS EQUITY
(DEFICIT)
|                                              
|CURRENT LIABILITIES                            |                                                                                                                   |   |           |               |   |                   |           |            
|                                              
|                                               | Accounts payable and other accrued expenses                                                                       |   | $         | 33,235        |   |                   | $         | 37,003      |  
|                                              
|STOCKHOLDERS EQUITY (DEFICIT)                 |                                                                                                                   |   |           |               |   |                   |           |            
|                                              
|                                               | Shares of Common Stock, $0.01 par value,
20,000,000 shares authorized, 15,020,808 shares
issued for 2003 and 2002 |   |           | 88,060,847    |   |                   |           | 88,060,847  |  
|                                               | Accumulated deficit                                                                                               |   |           | (86,416,266   | ) |                   |           | (86,365,704 | )
|                                               | Treasury stock, at cost, for 32,757 shares
of Common Stock                                                        |   |           | (8,189        | ) |                   |           | (8,189      | )
|                                               |                                                                                                                   |   |           |               |   |                   |           |            
|Total Stockholders Equity                     |                                                                                                                   |   | 1,636,392 |               |   |                   | 1,686,954 |            
|                                               |                                                                                                                   |   |           |               |   |                   |           |            
|Total Liabilities and Stockholders Equity     |                                                                                                                   | $ | 1,669,627 |               |   | $                 | 1,723,957 |            
|                                               |                                                                                                                   |   |           |               |   |                   |           |            

See accompanying notes to the Financial Statements.

3



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B.H.I.T. INC.




Statements of Operations
For the Three Months Ended June 30, 2003 and 2002
(Unaudited)


|                                                                                                                                             |                                              |               |        |        |         |      |        |        |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------- | ------ | ------ | ------- | ---- | ------ | ------ | ------- | -
|                                                                                                                                             |                                              |               |        | 2003   |         | 2002
|                                                                                                                                             |                                              |               |        |        |         |     
|REVENUE                                                                                                                                      |                                              |               |        |        |         |      |        |       
|                                                                                                                                             | Interest earned on cash and cash equivalents |               | $      | 5,494  |         |      | $      | 7,300  |        
|                                                                                                                                             | Interest earned on mortgage receivable       |               |        |       |         |      |        | 8,250  |        
|                                                                                                                                             |                                              |               |        |        |         |      |        |       
|                                                                                                                                             |                                              | Total revenue |        |        | 5,494   |      |        |        | 15,550  |  
|                                                                                                                                             |                                              |               |        |        |         |      |        |       
|EXPENSES                                                                                                                                     |                                              |               |        |        |         |      |        |       
|                                                                                                                                             | General and administrative                   |               |        | 29,581 |         |      |        | 26,176 |        
|                                                                                                                                             |                                              |               |        |        |         |      |        |       
|                                                                                                                                             |                                              | NET LOSS      |        | $      | (24,087 | )    |        | $      | (10,626 | )
|                                                                                                                                             |                                              |               |        |        |         |      |        |       
|Basic and diluted net loss per share of Common
Stock (based on weighted average number of
shares outstanding of 14,988,051 in 2003 and 2002) |                                              | $             | (0.002 | )      |         | $    | (0.001 | )     
|                                                                                                                                             |                                              |               |        |        |         |      |        |       

See accompanying notes to the Financial Statements.

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B.H.I.T. INC.




Statements of Operations
For the Six Months Ended June 30, 2003 and 2002
(Unaudited)


|                                                                                                                                             |                                              |               |        |        |         |      |        |        |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------- | ------ | ------ | ------- | ---- | ------ | ------ | ------- | -
|                                                                                                                                             |                                              |               |        | 2003   |         | 2002
|                                                                                                                                             |                                              |               |        |        |         |     
|REVENUE                                                                                                                                      |                                              |               |        |        |         |      |        |       
|                                                                                                                                             | Interest earned on cash and cash equivalents |               | $      | 11,146 |         |      | $      | 15,230 |        
|                                                                                                                                             | Interest earned on mortgage receivable       |               |        |       |         |      |        | 16,500 |        
|                                                                                                                                             |                                              |               |        |        |         |      |        |       
|                                                                                                                                             |                                              | Total revenue |        |        | 11,146  |      |        |        | 31,730  |  
|                                                                                                                                             |                                              |               |        |        |         |      |        |       
|EXPENSES                                                                                                                                     |                                              |               |        |        |         |      |        |       
|                                                                                                                                             | General and administrative                   |               |        | 61,708 |         |      |        | 45,495 |        
|                                                                                                                                             |                                              |               |        |        |         |      |        |       
|                                                                                                                                             |                                              | NET LOSS      |        | $      | (50,562 | )    |        | $      | (13,765 | )
|                                                                                                                                             |                                              |               |        |        |         |      |        |       
|Basic and diluted net loss per share of Common
Stock (based on weighted average number of
shares outstanding of 14,988,051 in 2003 and 2002) |                                              | $             | (0.003 | )      |         | $    | (0.001 | )     
|                                                                                                                                             |                                              |               |        |        |         |      |        |       

See accompanying notes to the Financial Statements.

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B.H.I.T. INC.




Statement of Stockholders Equity
For the Six Months Ended June 30, 2003
(Unaudited)


|                                                 |  |              |            |        |  |         |            |                |  |        |             |       |  |  |        |  |  |   |        |   |  |   |           |  
|------------------------------------------------ |  | ------------ | ---------- | ------ |  | ------- | ---------- | -------------- |  | ------ | ----------- | ----- |  |  | ------ |  |  | - | ------ | - |  | - | --------- | -
|                                                 |  | Common Stock |            |        |  |         |            |                |  |        |             |       |  |  |        |  |  |  
|                                                 |  |              |            |        |  |         |            | Treasury Stock |  |        |             |      
|                                                 |  | Shares       |            |        |  |         |            | Accumulated    |  |        |             |       |  | 
|                                                 |  | Issued       |            | Amount |  | Deficit |            | Shares         |  | Amount |             | Total
|                                                 |  |              |            |        |  |         |            |                |  |        |             |      
|Stockholders equity (deficit)
December 31, 2002 |  |              | 15,020,808 |        |  | $       | 88,060,847 |                |  | $      | (86,365,704 | )     |  |  | 32,757 |  |  | $ | (8,189 | ) |  | $ | 1,686,954 |  
|                                                
|Net loss for the six months ended
June 30, 2003  |  |              |           |        |  |         |           |                |  |        | (50,562     | )     |  |  |       |  |  |   |       |   |  |   | (50,562   | )
|                                                 |  |              |            |        |  |         |            |                |  |        |             |       |  |  |        |  |  |   |        |   |  |   |           |  
|Stockholders equity (deficit)
June 30, 2003     |  |              | 15,020,808 |        |  | $       | 88,060,847 |                |  | $      | (86,416,266 | )     |  |  | 32,757 |  |  | $ | (8,189 | ) |  | $ | 1,636,392 |  
|                                                 |  |              |            |        |  |         |            |                |  |        |             |       |  |  |        |  |  |   |        |   |  |   |           |  

See accompanying notes to the Financial Statements.

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B.H.I.T. INC.




Statements of Cash Flows
For the Six Months Ended June 30, 2003 and 2002
(Unaudited)


|                                                 |                                                                             |          |                                       |                                       |         |         |           |      |         |         |         |  
|------------------------------------------------ | --------------------------------------------------------------------------- | -------- | ------------------------------------- | ------------------------------------- | ------- | ------- | --------- | ---- | ------- | ------- | ------- | -
|                                                 |                                                                             |          |                                       |                                       |         | 2003    |           | 2002
|                                                 |                                                                             |          |                                       |                                       |         |         |           |     
|Operating Activities:                            |                                                                             |          |                                       |                                       |         |         |           |     
|                                                 |                                                                             | Net Loss |                                       | $                                     | (50,562 | )       |           | $    | (13,765 | )      
|                                                
|                                                 | Adjustments to reconcile net loss to net cash
used in operating activities: |          |                                       |                                       |         |         |           |      |        
|                                                
|                                                 |                                                                             |          | Changes in assets and liabilities:    |                                       |         |         |           |      |         |         |        
|                                                 |                                                                             |          |                                       | Interest receivable                   |         |         | 458       |      |         |         | 3,381   |  
|                                                 |                                                                             |          |                                       | Prepaid insurance                     |         |         | 6,000     |      |         |         | (15,000 | )
|                                                 |                                                                             |          |                                       | Accounts payable and accrued expenses |         |         | (3,768    | )    |         |         | (8,978  | )
|                                                 |                                                                             |          |                                       |                                       |         |         |           |     
|                                                 |                                                                             |          | Net cash used in operating activities |                                       |         | (47,872 | )         |      |         | (34,362 | )      
|                                                
|Cash and cash equivalents at beginning of period |                                                                             |          | 1,712,815                             |                                       |         |         | 1,471,139 |     
|                                                 |                                                                             |          |                                       |                                       |         |         |           |     
|Cash and cash equivalents at end of period       |                                                                             | $        | 1,664,943                             |                                       |         | $       | 1,436,777 |     
|                                                 |                                                                             |          |                                       |                                       |         |         |           |     

See accompanying notes to the Financial Statements.

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B.H.I.T. INC.




NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1.   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 accompanying financial statements have been prepared by the Company 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, 2003 and December 31, 2002, and the results of its
operations for the three months and six months ended June 30, 2003 and 2002; and
cash flows for the six months ended June 30, 2003 and 2002.

The financial information included herein for the three months and six months
ended June 30, 2003 and June 30, 2002 is unaudited.

Although the Company believes that the disclosures included herein are adequate
to make the information 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 the
Companys latest annual report on Form 10-KSB for the year ended December 31,
2002.

The results of operations for the six months ended June 30, 2003 presented are
not necessarily indicative of the results to be expected for the full 2003 year.

NOTE 2.   MORTGAGE LOANS

During 1997, the Company invested $1,000,000 in a loan secured by a mortgage on
a related commercial property located in Dallas, Texas. Principal payments were
made in April 1998 and June 2000, totaling $725,000. On June 30, 2002, the
principal balance due was $275,000, with a due date of April 1, 2003, with a
yield of 12% per annum and requiring monthly interest payments. On December 18,
2002, the Company received repayment of the outstanding principal balance of
$275,000 plus accrued interest.

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B.H.I.T. INC.




ITEM 2. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

GENERAL

B.H.I.T. Inc. (the Company) was originally organized as a Massachusetts
business trust 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.

Certain statements in this quarterly report, included within this Managements
Discussion and Analysis of Financial Conditions and Results of Operations, which
are not historical in nature, are intended to be, and hereby identified as
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company cautions readers that forward-looking
statements, including without limitation, those relating to the Companys future
business prospects, revenues, working capital, liquidity, capital needs,
interest costs and income, are subject to certain risks and uncertainties that
could cause actual results to differ materially from those indicated in such
forward-looking statements due to several important factors hereafter
identified, among others, as well as other risks and uncertainties identified
from time-to-time in the Companys reports filed with the United States
Securities and Exchange Commission. Readers of this report are cautioned not to
place undue reliance upon these forward-looking statements, which speak only as
of the date hereof. The Company undertakes no obligation to publicly release any
revisions to these forward-looking statements or reflect events or circumstances
after the date hereof.

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.

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 $86,416,266 on June 30, 2003.

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B.H.I.T. INC.

BUSINESS OPERATIONS AND HISTORY (Continued)

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 June 30, 2003.

RESULTS OF OPERATIONS

Total revenue for the three months and six months ended June 30, 2003, compared
to the same periods in 2002, decreased by $10,056 and $20,584, respectively, due
primarily to reduced interest earned resulting from lower interest rates. The
lower interest rate resulted primarily from the repayment of a high yield
mortgage note, referred to in Note 2.

Total expenses for the three months and six months ended June 30, 2003, compared
to the same periods in 2002, increased by $3,405 and $16,213, respectively, due
primarily to increases in various taxes, insurance, and professional service
fees, such as outside audit fees and stock transfer agency fees.

The net loss for the three months and six months ended June 30, 2003, compared
to the same periods in 2002, increased by $13,461 and $36,797, respectively. The
increase in net loss results primarily from a decrease in mortgage interest
revenue and increases in various general and administrative expenses for the
three months and six months ended June 30, 2003.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents consist of cash and short-term investments. The
Companys cash and cash equivalents balance at June 30, 2003 and December 31,
2002 was $1,664,943 and $1,712,815, respectively. Cash and cash equivalents
decreased in the first six months of 2003 by $47,872 primarily as the result of
the Companys net loss of $50,562.

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.

10



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B.H.I.T. INC.




PART II  OTHER INFORMATION




ITEM 1.   LEGAL PROCEEDINGS

The Registrant is not aware of any material legal proceedings to which the
Company is a party or to which any of its property is subject.




ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

|    |  |                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------
|(a) |  | EXHIBITS                                                                                                                         
|    |  |                                                                                                                                  
|    |  | EXHIBIT 31.1 Certification of the Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002              
|    |  |                                                                                                                                  
|    |  | EXHIBIT 31.2 Certification of the Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002              
|    |  |                                                                                                                                  
|    |  | EXHIBIT 32 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|    |  |                                                                                                                                  
|(b) |  | REPORTS ON FORM 8-K                                                                                                              
|    |  |                                                                                                                                  
|    |  | NONE                                                                                                                             

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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.

B.H.I.T. Inc.

|    |  |                                                                                                                |  |                     
|--- |  | -------------------------------------------------------------------------------------------------------------- |  | --------------------
|   
|   
|By: |  | /s/ John V. CurciJohn V. Curci
Vice-President, Treasurer & Chief Financial Officer
Principal Accounting Office |  | Date: August 8, 2003

12