Healthcare Integrated Technologies Inc
For the period ended Oct 31, 2024. Filed Dec 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Oct 31, 2024 · Filed Dec 13, 2024
SSGCStored price and day change unavailable
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-04-30; filed 2024-06-20.
0001493152-24-024375
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-10-31; filed 2024-12-13.
0001493152-24-049910
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 102 previous paragraphs and 87 current paragraphs.
61 unchanged; 7 reworded; 19 added; 32 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Our business did not produce revenue during the three months ending October 31, 2024, and 2023, respectively, as we continue to develop, refine and evaluate our products.
Current report
Officers’ Salaries - Officers’ salaries increased $50,370, or 58%, over 2023 and is primarily due to the addition of our new Chief Strategy Officer and our Chief Executive Officer’s increased pay over the previous period, the Company’s officers accepted voluntary pay reductions in the prior comparable period.
Current report
Contract labor – Contract labor increased $36,011 over 2023 and is attributable to the addition of new finance and accounting personnel.
Current report
*Professional Fees -*Professional fees increased $29,813, or 70%. over the same period in the prior year primarily due to increased accounting and legal fees and the addition of a grant writing consultant.
Current report
Software Development – Software development expenses increased $29,806 over 2023 due to an increase in the use of independent contractors for specific development projects.
Current report
*Travel and entertainment –*Travel and entertainment expense increased $23,915, or 2,847%, over the same period in the prior year. The increase is primarily due to increased business travel by the senior management team.
Current report
*Advertising and Marketing -*Advertising and marketing costs increased $15,017, or 563%, over the same period in the prior year primarily due to increased expenses related to conferences and trade show attendance.
Current report
Office expense- Office expense increased $19,909 over 2023 and primarily relates to increases in office rent expense and supplies.
Current report
Other- Other expenses increased $929 over 2023 primarily due to an increase in bank charges.
Current report
*Stock-based Compensation -*Stock-based compensation expense increased $234,440, or 1,068%, from the same period in the prior year. The increase results from the amortization of the grant date fair value of new restricted stock awards.
Current report
Amortization- Amortization expense decreased $1,343, or 2% over 2023. The decrease in amortization expense primarily relates to a reduction of patent cost during the three months ended October 31, 2024.
Current report
Impairment of intangibles- Amortization expense increased $15,678 over 2023. The impairment expense relates to the abandonment of certain patent applications and the establishment of an impairment reserve on active patent applications.
Current report
Interest Expense - Interest expense increased $1,093, or 9%, over the same period in the prior year. Interest expense increased due to an increase in the outstanding debt balance.
Current report
Current assets for the interim period ended October 31, 2024 increased $2,044,100 as compared to the fiscal year ended July 31, 2024. The increase is primarily due to the receipt of $2,452,000 in net proceeds from the sale of our common stock at an average price of $0.10 per share during the three months ending October 31, 2024.
Current report
Current liabilities for the interim period ended October 31, 2024 decreased $78,299 as compared to the fiscal year ended July 31, 2024. The decrease is due to decreases in accounts payable and accrued expenses and a reduction in payroll liabilities.
Current report
Net cash provided by financing activities was $2,216,767 for the three months ended October 31, 2024, which represents a $2,213,998 increase over the same period of 2023. The increase is primarily due to the receipt of $2,452,000 in net proceeds from the sale of our common stock at an average price of $0.10 per share during the three months ending October 31, 2024.
Current report
In accordance with ASC 326,Financial Instruments – Credit Losses, we recognize an allowance for credit losses on acquired financial assets with credit deterioration since origination. The allowance of credit losses is measured based on the Current Expected Credit Loss (CECL) model, which requires an estimate of the expected credit losses over the life of the financial asset. This estimate considers historical loss information, current conditions, and reasonable and supportable forecasts. The allowance for credit losses, if any, is recorded as a reduction to the carrying amount of the financial asset, with a corresponding charge to earnings.
Current report
Related Parties
Current report
The Company follows subtopic ASC 850-10 for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20, the related parties include: (a) affiliates of the Company (“Affiliate” means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
Removed paragraphs (32)
Previous report
Executive Overview
Previous report
During the three months ended April 30, 2024, we recognized $60,283 in revenue from our service agreement that ended April 1, 2024. We have been unable to obtain extensions or additional agreements that would allow us to continue recognizing revenue in subsequent periods. We had no revenue during the three months ended April 30, 2023.
Previous report
Officers’ Salaries - Officers’ salaries decreased $37,264, or 30%, over 2023. The decrease is a result of the Company’s officers accepting voluntary pay reductions to better reflect time commitments and reduce operating cost during the start-up phase.
Previous report
*Professional Fees -*Professional fees decreased $14,223, or 48%, over the same period in the prior year. The decrease from 2023 primarily results from a $16,284 decrease in legal fees and a $5,000 decrease in the expense for outside consultants, which were partially offset by a $2,000 increase in accounting fees and a $4,081 increase in patent related costs. The remaining difference results from a small net increase in transfer agent and SEC filing costs.
Previous report
Software Development - Software development expenses increased $7,006 over 2023. Prior to this period, our internally developed software had not been placed in service and software development cost were being capitalized.
Previous report
Travel and Entertainment - Travel and entertainment expenses increased $13,243 over the same period in the prior year. The increase in travel and entertainment expenses is directly attributable to focused capital raising effort and actively evaluating acquisition opportunities during the period.
Previous report
Advertising and Marketing - Advertising and marketing expenses increased $1,571 over 2023. The increase is primarily attributable to a $1,497 increase in expenses related to conferences and conventions during 2024.
Previous report
*Other -*Other expenses decreased $3,412, or 62%, over the same period in the prior year. The decrease from 2023 primarily results from a $2,954 decrease in office expenses.
Previous report
*Stock-based Compensation -*Stock-based compensation expense decreased $14,482, or 16%, from the same period in the prior year. The decrease results from a 2024 reduction in the amortization of the grant date fair value of employee stock options and restricted stock awards granted to our CEO, CFO, CTO and CMO. The decreases were partially offset by the additional expense related to the issuance of restricted stock awards and warrants to outside consultants.
Previous report
Amortization- Amortization expense increased $54,087 over 2023. The increase in amortization expense primarily relates to the amortization of capitalized software development cost during the three months ended April 30, 2024 that had not yet been placed in service during the prior period.
Previous report
Interest Expense - Interest expense decreased $105,569, or 89%, over the same period in the prior year. Interest expense decreased due to a paydown and refinance of debt in June of 2023. The prior loan, which was in place during 2023, had a larger principal balance and associated fees that were initially recorded as debt discount and were being amortized as a component of interest expense.
Previous report
Change in Fair Value of Derivative Liability – We had no derivative liability during the third quarter of fiscal 2024 and, accordingly, no change in the fair value of derivative liability. The change in the fair value of derivative liability in 2023 was associated with debt that was retired in June of 2023.
Previous report
Nine Months Ended April 30, 2024 Compared to the Nine Months Ended April 30, 2023
Previous report
Revenues
Previous report
During the nine months ended April 30, 2024, we recognized $82,052 in revenue from our service agreement that ended April 1, 2024. We have been unable to obtain extensions or additional agreements that would allow us to continue recognizing revenue in subsequent periods. We had no revenue during the nine months ended April 30, 2023.
Previous report
Operating Expenses
Previous report
Officers’ Salaries - Officers’ salaries decreased $111,836, or 30%, over 2023. The decrease is a result of the Company’s officers accepting voluntary pay reductions to better reflect time commitments and reduce operating cost during the start-up phase.
Previous report
*Professional Fees -*Professional fees decreased $32,412, or 32%, over the same period in the prior year. The decrease from 2023 primarily results from a $18,750 decrease in the expense for outside consultants, $17,151 decrease in legal fees and a $3,016 decrease in accounting fees, which were partially offset by a $6,878 increase in patent related costs. The remaining difference results from a small net decrease in transfer agent and SEC filing costs.
Previous report
Software Development - Software development expenses increased $15,287 over 2023. Prior to this period, our internally developed software had not been placed in service and software development cost were being capitalized.
Previous report
Travel and Entertainment - Travel and entertainment expenses increased $13,759 over the same period in the prior year. The increase in travel and entertainment expenses is directly attributable to focused capital raising effort and actively evaluating acquisition opportunities during the period.
Previous report
*Other -*Other expenses decreased $2,784, or 41%, over the same period in the prior year. The decrease from 2023 primarily results from a $2,443 decrease in office expenses.
Previous report
*Stock-based Compensation -*Stock-based compensation expense decreased $138,809, or 57%, from the same period in the prior year. The decrease results from a 2024 reduction in the amortization of the grant date fair value of employee stock options and restricted stock awards granted to our CEO, CFO, CTO and CMO. The decreases were partially offset by the additional expense related to the issuance of restricted stock awards and warrants to outside consultants.
Previous report
Amortization- Amortization expense increased $153,616 over 2023. The increase in amortization expense primarily relates to the amortization of capitalized software development cost during the nine months ended April 30, 2024 that had not yet been placed in service during the prior period.
Previous report
Other Income (Expense)
Previous report
Interest Expense - Interest expense decreased $312,238, or 89%, over the same period in the prior year. Interest expense decreased due to a paydown and refinance of debt in June of 2023. The prior loan, which was in place during 2023, had a larger principal balance and associated fees that were initially recorded as debt discount and were being amortized as a component of interest expense.
Previous report
Change in Fair Value of Derivative Liability – We had no derivative liability during the first quarter of fiscal 2024 and, accordingly, no change in the fair value of derivative liability. The change in the fair value of the derivative liability in 2023 was associated with debt that was retired in June of 2023.
Previous report
Current assets for the interim period ended April 30, 2024 increased $12,549 as compared to the fiscal year ended July 31, 2023. The increase is primarily due to an increase in accounts receivable related to the new Signature contract.
Previous report
Current liabilities for the interim period ended April 30, 2024 increased $15,142 as compared to the fiscal year ended July 31, 2023. The increase is due to a $28,471 increase in accounts payable and accrued expenses, a $184,082 increase in payroll related liabilities as we continue to accrue officer compensation, and a $18,604 increase in notes payable to related parties, which were offset by a $216,015 reduction in short-term loans and accrued expenses owed to related parties.
Previous report
Net Cash Used by Investing Activities
Previous report
Net cash used by investing activities was $-0- and $22,388 for the nine months ended April 30, 2024 and 2023, respectively. The amount is generally comprised of cash paid for the filing of patent applications and for the development of software for our internal use.
Previous report
Net cash provided by financing activities was $197,971 for the nine months ended April 30, 2024, which represents a $16,731 increase over the same period of 2023. The 2024 increase primarily resulted from a $150,000 decrease in principal reduction payments on short term debt, that was partially offset by a $135,898 increase in payments to related parties for amounts owed for short-term loans and accrued expenses.
Previous report
There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our July 31, 2023 Annual Report.
Reworded paragraphs (7)
Previous wording
This following discussion summarizes the significant factors affecting the interim consolidated financial statements, financial condition, liquidity, and cash flows of Healthcare Integrated Technologies, Inc, for the nine months ended April 30, 2024 and 2023. The discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent Annual Report on Form 10-K for the year ended July 31, 2023 as filed with the SEC on November 13, 2023.
Current wording
This following discussion summarizes the significant factors affecting the interim consolidated financial statements, financial condition, liquidity, and cash flows of Healthcare Integrated Technologies, Inc, for the three months ended October 31, 2024, and 2023. The discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent Annual Report on Form 10-K for the year ended July 31, 2024, filed with the SEC on October 29, 2024.
Previous wording
We continue to utilize funds raised from the private sales of our common stock, issuance of debt, and short-term advances from related parties to provide cash for our operations, which has allowed us to continue refining our initial product and readying it for pilot testing, developing future product offerings and adding talented individuals to our management team and on a contract basis. Highlighted achievements for the nine months ended April 30, 2024 include:
Current wording
We continue to utilize funds raised from the private sales of our common stock, issuance of debt, and short-term advances from related parties to provide cash for our operations, which has allowed us to continue refining our initial product and readying it for pilot testing, developing future product offerings and adding talented individuals to our management team and on a contract basis. Highlighted achievements for the three months ended October 31, 2024 include:
Previous wording
We currently do not have a recurring revenue source and will continue to have negative cash flow from operations for the near future. The factors in determining operating cash flows are largely the same as those that affect net earnings, except for non-cash expenses such as depreciation and amortization, stock-based compensation, and cash received from deferred revenue, which affect earnings but do not affect operating cash flow. Net cash used by operating activities was $198,352 and $77,565 for the nine months ended April 30, 2024 and 2023, respectively. as compared to net cash used by operating activities of $77,565 for the nine months ended April 30, 2023. The $120,787 increase in net cash used by operating activities during 2024 is attributable to a $202,436 decrease in the adjusted net loss from operations that is offset by a $323,223 decrease in changes in operating assets and liabilities from the 2023 amounts. The $202,436 decrease in the adjusted net loss from operations primarily results from a $82,052 increase in revenues and a $111,836 decrease in officer’s compensation. The $323,223 decrease in changes in operating assets and liabilities primarily results from $302,643 in payments to related parties that significantly reduced short-term related party loans and accrued expenses.
Current wording
We currently do not have a revenue source and will continue to have negative cash flow from operations for the near future. The factors in determining operating cash flows are largely the same as those that affect net earnings, except for non-cash expenses such as depreciation and amortization, stock-based compensation, and impairment of intangibles, which affect earnings but do not affect operating cash flow. Net cash used by operating activities was $378,667 for the three months ended October 31, 2024 as compared to net cash provided by operating activities of $3,049 for the three months ended October 31, 2023. The increase in cash used by operating activities is primarily attributable to an increase in operating costs and the payment of accounts payable and accrued expenses, including related party items.
Previous wording
Our interim consolidated financial statements and related public financial information are based on the application of U.S. GAAP. U.S. GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to U.S. GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Current wording
Our consolidated financial statements and related public financial information are based on the application of U.S. GAAP. U.S. GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to U.S. GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Previous wording
Our significant accounting policies are summarized in Note 1 of our interim consolidated financial statements.
Current wording
Our significant accounting policies are summarized in Note 1 of our consolidated financial statements.
Previous wording
We believe the following critical policies impact our more significant judgments and estimates used in preparation of our interim consolidated financial statements.
Current wording
We believe the following critical policies impact our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Previous wording
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.
Current wording
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The table below presents a comparison of our operating expenses for the nine months ended April 30, 2024 and 2023:
Previous report — wording carried elsewhere
The table below presents a comparison of our other income (expense) for the nine months ended April 30, 2024 and 2023: