| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Healthcare
Integrated Technologies, Inc. and its subsidiaries (collectively the “Company,” “we,” “our” or “us”)
is a healthcare technology company based in Knoxville, Tennessee. We are creating a diversified spectrum of healthcare technology solutions
to integrate and automate the continuing care, home care and professional healthcare spaces. Our
initial product, SafeSpace™ with AI Vision™, is an ambient fall detection solution designed for continuing care communities
and at home use. SafeSpace includes hardware devices utilizing RGB, radar and other sensor technology coupled with our internally developed
software to effectively monitor a person remotely. In continuing care communities, SafeSpace detects resident falls and generates alerts
to a centralized, intelligent dashboard without the use of wearable devices or any action by the resident. In the home, SafeSpace detects
falls and sends alerts directly to designated individuals. We
recently introduced and are currently pilot testing two additional products - SafeFace™ and SafeGuard™. SafeFace provides
fully automated and ambient time and attendance reporting for facility staff, and an integrated and automatic agency invoice reconciliation
feature. SafeGuard is a novel fully ambient elopement detection and alerting system based on our facial recognition technology. In
addition to our current product offerings, we are developing a home concierge healthcare service application to provide a virtual assisted
living experience for seniors, recently released postoperative patients and others. The concierge application will enable the consumer
to obtain home healthcare services and health and safety monitoring equipment to improve quality of life. We are also working to develop
a fully integrated solution for the professional healthcare community that integrates electronic health records, remote patient monitoring,
telehealth, and other items where integration is beneficial. Basis
of Presentation The
accompanying consolidated financial statements include those of Healthcare Integrated Technologies, Inc. and its subsidiaries, after
elimination of all intercompany accounts and transactions. We have prepared the accompanying consolidated financial statements in accordance
with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and
regulations of the United States Securities and Exchange Commission (the “SEC”). Consolidation
Policy Our
consolidated financial statements are consolidated in accordance with U.S. GAAP and include our accounts and the accounts of our wholly
owned subsidiaries. We eliminate all intercompany transactions from our financial results. Business
Combinations We
account for business combinations under the acquisition method of accounting. The acquisition method requires that the acquired assets
and liabilities, including contingencies, be recorded at fair value determined on the acquisition date and that changes thereafter be
reflected in income (loss). The estimation of fair values of the assets and liabilities assumed involves several estimates and assumptions
that could differ materially from the actual amounts recorded. The results of the acquired businesses are included in our results from
operations beginning from the day of acquisition. In accordance with
ASC 326, Financial Instruments – Credit Losses Risk
and Uncertainties Factors
that could affect our future operating results and cause actual results to vary materially from management’s expectation include,
but are not limited to: our ability to maintain and secure adequate capital to fund our operations and fully develop our product(s);
our ability to source strong opportunities with sufficient risk adjusted returns; acceptance of the terms and conditions of our licenses
and/or the acceptance of our royalties and fees; the nature and extent of competition from other companies that may reduce market share
and create pressure on pricing and investment return expectations; changes in the projects in which we plan to invest which result from
factors beyond our control, including, but not limited to, a change in circumstances, capacity and economic impacts; changes in laws,
regulations, accounting, taxation, and other requirements affecting our operations and business. Negative developments in these or other
risk factors could have a significant adverse effect on our financial position, results of operations and cash flows. Use
of Estimates The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those
estimates. We base our estimates on experience and various other assumptions that are believed to be reasonable under the circumstances.
We evaluate our estimates and assumptions on a regular basis and actual results may differ from those estimates. Reclassifications Certain
prior period amounts may be reclassified to conform to current period presentation with no changes to previously reported net loss or
stockholders’ deficit. Cash
and Cash Equivalents We
consider all highly liquid short-term investments with a maturity of three months or less at the time of purchase to be cash equivalents.
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution.
The balance at times may exceed federally insured limits. No loss has been experienced and management does not believe we are exposed
to any significant credit risk. Accounts
Receivable Accounts
receivable are stated at the amount management expects to collect from outstanding customer balances. Credit is extended to customers
based on an evaluation of their financial condition and other factors. Interest is not accrued on overdue accounts receivable. The Company
does not require collateral. Management
periodically assesses the Company’s accounts receivable and, if necessary, establishes an allowance for estimated uncollectible
amounts. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical
collection information and existing economic conditions. Accounts determined to be uncollectible are charged to operations when that
determination is made. At
July 31, 2024, accounts receivable was $ 14,000 no no Concentration
of Credit Risk Financial
instruments that potentially expose the Company to credit risk consist of demand deposits with a financial institution. The Company is
exposed to credit risk on its cash and cash equivalents in the event of default by the financial institution to the extent account balances
exceed the amount insured by the FDIC, which is $ 250,000 100 100 Fair
Value of Financial Instruments Fair
value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between
market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices
in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as
follows: Level
1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can access
at the measurement date. Level
2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability
(such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated
by market data by correlation or other means. Level
3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions
about the assumptions that market participants would use in pricing the assets or liabilities. Financial
instruments consist of cash and cash equivalents, accounts receivable, accounts payable and borrowings. The fair value of current financial
assets and current financial liabilities approximates their carrying value because of the short-term maturity of these financial instruments. Property
and Equipment Property
and equipment are stated at cost, net of accumulated depreciation. Expenditures for major additions and improvements are capitalized
while minor replacements and maintenance and repairs, which do not improve or extend the life of such assets, are charged to operations
as incurred. Disposals are removed at cost less accumulated depreciation, and any resulting gain or loss is reflected in the consolidated
statements of operations. Depreciation is calculated using the straight-line method which depreciates the assets over the estimated useful
lives of the depreciable assets ranging from five seven years Intangible
Assets Intangible
assets consist of patents, our website and the costs of software developed for internal use. Certain payroll and stock-based compensation
costs incurred are allocated to the intangible assets. We determine the amount of costs to be capitalized based on the time spent by
employees or outside contractors on the projects. Intangible assets are amortized on a straight-line basis over their expected useful
lives, which approximate 20 3 2 140,770 no Note 3 - Intangibles, Net Intangibles,
net was $ 506,743 869,432 Derivative
Liability Options,
warrants, convertible notes, or other contracts, if any, are evaluated to determine if those contracts, or embedded components of those
contracts, qualify as derivatives to be separately accounted for in accordance with Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 815, “Derivatives and Hedging,” In
circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated, and there are also other
embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments
are accounted for as a single, compound derivative instrument. 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 net-cash settlement of the derivative instrument is expected
within 12 months of the balance sheet date. The
Company adopted Section 815-40-15 of the FASB ASC (“Section 815-40-15”) We
utilize a binomial option pricing model to compute the fair value of the derivative liability and to mark to market the fair value of
the derivative liability at each balance sheet date. We record the change in the fair value of the derivative liability as other income
or expense in the consolidated statements of operations. We
had no Related
Parties 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. Contract
Liabilities The
Company receives payments from customers based upon contractual billing schedules. Contract liabilities include payments received in
advance of performance under the contract. Contract assets include amounts related to the Company’s contractual right to consideration
for completed performance obligations not yet invoiced. Our contract assets and liabilities are reported on an individual contract basis
at the end of each reporting period. Contract liabilities are classified as current or noncurrent based on the timing of when we expect
to recognize revenue. The Company had no Contract
Combination The
Company may execute more than one contract or agreement with a single customer. The Company evaluates whether the agreements were negotiated
as a package with a single objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance
of another agreement, or whether the goods or services promised in the agreements represent a single performance obligation. The conclusions
reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related
to those arrangements. The Company applied the revenue model to a portfolio of contracts with similar characteristics where we expected
that the financial statements would not differ materially from applying it to the individual contracts within that portfolio. Revenue
Recognition The
Company’s revenue recognition policy is to recognize revenue in accordance with ASC 606, “ Revenue from Contracts with
Customers. Often
contracts contain more than one performance obligation. Performance obligations are the unit of accounting for revenue recognition and
generally represent the distinct goods or services that are promised to the customer. Revenue is recognized net of any taxes collected
and subsequently remitted to governmental authorities. If we determine that we have not satisfied a performance obligation, we defer
recognition of the revenue until the performance obligation is satisfied. The agreements are generally non-cancellable or contain significant
penalties for early cancellation, although customers typically have the right to terminate their contracts for cause if we fail to perform
material obligations. However, if non-standard acceptance periods, non-standard performance criteria, or cancellation or right of refund
terms are required, revenue is recognized upon the satisfaction of such criteria. Advertising
and Marketing Advertising
and marketing costs are expensed as incurred in accordance with ASC 720-35, “ Advertising Costs 9,919 6,184 Stock-Based
Compensation The
Company accounts for stock-based compensation in accordance with ASC Topic 718, “ Compensation – Stock Compensation”
Stock-based
payments, excluding restricted stock, are valued using a Black-Scholes option pricing model. Grants of stock-based payment awards issued
to non-employees for services rendered have been recorded at the fair value of the stock-based payment, which is the more readily determinable
value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If
an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the
termination of service. Stock-based compensation expense is included in cost of goods sold or selling, general and administrative expenses,
depending on the nature of the services provided, in the consolidated statements of operations. Stock-based payments issued to placement
agents are classified as a direct cost of a stock offering and are recorded as a reduction in additional paid-in capital. The
Company recognizes all forms of stock-based payments, including stock option grants, warrants and restricted stock grants, at their fair
value on the grant date, which are based on the estimated number of awards that are expected to vest. See Note 10 - Stock-Based Compensation Income
Taxes We
use the asset and liability method of accounting for income taxes in accordance with Topic 740, “Income Taxes”. ASC
Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and
prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting
periods presented. Net
Loss Per Common Share We
determine basic loss per share and diluted loss per share in accordance with the provisions of ASC 260, “ Earnings Per Share Recently
Adopted Accounting Standards On
August 1, 2023, the Company adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and
Vintage Disclosures (“ASU 2022-02”). ASU 2022-02 eliminates the existing troubled debt restructuring recognition and
measurement guidance, and instead aligns the accounting treatment to that of other loan modifications. The amendments enhance
existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers
experiencing financial difficulty. ASU 2022-02 also requires that entities disclose current-period gross write-offs by year of
origination for financing receivables and net investments in leases. The Company utilized the modified retroactive method of
adoption and the adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial
statements. Recent
Accounting Standards Management
has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”)
through the date these consolidated financial statements were available to be issued and found no recent accounting pronouncements issued,
but not yet effective, that when adopted, will have a material impact on the consolidated financial statements of the Company. |
