SafeSpace Global Corp 10-K for FY2024
SafeSpace Global Corp (SSGC)
About this 10-K
SafeSpace Global Corp filed this 10-K on October 29, 2024, covering the fiscal year ended July 31, 2024 (FY2024).
Headline figures
Fiscal year ended July 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $322K
- Net loss
- $702.49K
- compared with a net loss of $1.3M a year earlier
- Diluted EPS
- -$0.01
- compared with -$0.03 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the fiscal year ended
OR
For the transition period from ________ to ________
Commission
file number:
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices)
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
(Title of class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes ☐
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐
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.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☐ | Smaller reporting company | ||
| (Do not check if a smaller reporting company) | Emerging growth company | ||
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The
aggregate market value of the outstanding common stock, other than shares held by persons who may be deemed affiliates of the registrant,
computed by reference to the closing sales price for the registrant’s common stock on January 31, 2024 (the last business day of
the registrant’s most recently completed second quarter), as reported on the OTC Pink market, was approximately $
Documents
Incorporated by Reference:
TABLE OF CONTENTS
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Report”) contains “forward-looking statements” within the meaning of the Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue”, negatives thereof or similar expressions. These forward-looking statements are found at various places throughout this Annual Report and include information concerning: possible or assumed future results of our operations; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future operations, future cash needs, business plans and future financial results; and any other statements that are not historical facts.
From time to time, forward-looking statements are also included in our other periodic reports on Forms 10-Q and 8-K, in our press releases, in our presentations, on our website and in other materials released to the public. Any or all the forward-looking statements included in this Annual Report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Considering these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Annual Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Annual Report.
Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.
For discussion of factors that we believe could cause our actual results to differ materially from expected and historical results see “Item 1A - Risk Factors” below.
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PART I
ITEM 1. BUSINESS.
Overview
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.
Our History
The Company has historically been engaged in three distinct businesses. First, we were incorporated in the state of Nevada on June 25, 2013 as Tomichi Creek Outfitters, aiming to provide professionally guided big game hunts in Sargents, Colorado, which is approximately four hours southwest from Denver. Our secondary business included offering guided scenic tours on the western slopes of the Rocky Mountains. Our Chief Executive Officer (“CEO”) and sole director at that time was Jeremy Gindro. These operations were discontinued in 2015.
Second, on March 2, 2015, the Company entered into a Business Acquisition Agreement and share exchange under which we acquired the business and assets of Grasshopper Staffing, Inc. (“Grasshopper Colorado”), formed in the state of Colorado on January 13, 2015. The exchange for $10,651 was represented by 250,000 shares of the Company’s common stock in exchange for all the outstanding shares of Grasshopper Colorado. The assets purchased include the trademark and website, office supplies and office furniture. On November 2, 2015 we filed a Certificate of Amendment to our Articles of Incorporation changing the name of our Company from Tomichi Creek Outfitters to Grasshopper Staffing, Inc. Grasshopper Colorado was operating as a wholly owned subsidiary of the Company and was the primary operating business of the Company until the acquisition of IndeLiving Holdings Inc., on March 13, 2018. Our management consisted of Melanie Osterman as CEO, and Jeremy Gindro as our sole director. The operations of Grasshopper Colorado were discontinued in February 2019.
Third, we acquired IndeLiving Holdings, Inc. (“IndeLiving”) on March 13, 2018 and changed our name to Healthcare Integrated Technologies, Inc. Our current operations are described in the above “Overview” section. With the acquisition of IndeLiving, we had another change in management, and Scott M. Boruff became our CEO and Chairman of the Board of Directors.
Employees and Human Capital
At July 31, 2024, we had 4 employees.
At July 31, 2023, we had 4 employees.
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None of our employees are represented by a union or covered by a collective bargaining agreement. We have not experienced any work stoppages and we consider our relationship with our employees to be good.
Our objectives surrounding human resources include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants. The principal purpose of our equity incentives are to attract, retain and reward personnel through the granting of stock-based compensation awards, in order to increase stockholder value and promote the success of the Company by motivating such individuals to perform to the best of their abilities.
Available Information
We electronically file certain documents with the Securities and Exchange Commission (the SEC). We file annual reports on Form 10-K; quarterly reports on Form 10-Q; and current reports on Form 8-K (as appropriate); along with any related amendments and supplements thereto. From time to time, we may also file registration statements and related documents in connection with equity or debt offerings. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information regarding the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet website at www.sec.gov that contains reports and other information regarding registrants that file electronically with the SEC.
ITEM 1A. RISK FACTORS.
Risks Related to Economic and Market Conditions
General Economic and Financial Conditions
The success of any investment activity is influenced by general economic and financial conditions, all of which are beyond the control of the Company. These conditions, such as the recent global economic concerns and volatility in the financial markets, may materially adversely affect our operating results, financial condition and ability to implement our business strategy and/or meet our return objectives.
Risks Related to Our Business
The Company’s industry is highly competitive and we have less capital and resources than many of our competitors, which may give them an advantage in developing and marketing products similar to ours or make our products obsolete
We participate in a highly competitive industry where we may compete with numerous other companies who offer alternative methods or approaches, who may have far greater resources, more experience, and personnel more qualified than we do. Such resources may give our competitors an advantage in developing and marketing products similar to ours or products that make our products obsolete. There can be no assurance that we will be able to successfully compete against these other entities.
The Company may be unable to respond to the rapid technological change in its industry and such change may increase costs and competition that may adversely affect its business
Rapidly changing technologies, frequent new product and service introductions and evolving industry standards characterize the Company’s market. The continued growth of the internet and intense competition in the Company’s industry exacerbate these market characteristics. The Company’s future success will depend on its ability to adapt to rapidly changing technologies by continually improving the performance features and reliability of its products and services. The Company may experience difficulties that could delay or prevent the successful development, introduction or marketing of its products and services. In addition, any new enhancements must meet the requirements of its current and prospective users and must achieve significant market acceptance. The Company could also incur substantial costs if it needs to modify its products and services or infrastructures to adapt to these changes.
The Company also expects that new competitors may introduce products, systems or services that are directly or indirectly competitive with the Company. These competitors may succeed in developing products, systems and services that have greater functionality or are less costly than the Company’s products, systems and services, and may be more successful in marketing such products, systems and services. Technological changes have lowered the cost of operating communications and computer systems and purchasing software. These changes reduce the Company’s cost of providing services but also facilitate increased competition by reducing competitors’ costs in providing similar services. This competition could increase price competition and reduce anticipated profit margins.
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The Company’s services are new and its industry is evolving
You should consider the Company’s viability by considering the risks, uncertainties and difficulties frequently encountered by companies in their early stage of development. To be successful in this industry, the Company must, among other things:
| ● | develop and introduce functional and attractive services; | |
| ● | attract and maintain a large base of customers; | |
| ● | increase awareness of the Company brand and develop consumer loyalty; | |
| ● | respond to competitive and technological developments; | |
| ● | build an operations structure to support the Company business; and | |
| ● | attract, retain and motivate qualified personnel. |
The Company cannot guarantee that it will succeed in achieving these goals, and its failure to do so would have a material adverse effect on its business, prospects, financial condition and operating results.
The Company’s products and services are new and are in the initial, preliminary or pilot stages of development. The Company is not certain that these products and services will function as anticipated or be desirable to its intended market. Also, some of the Company’s products and services may have limited functionalities, which may limit their appeal to consumers and put the Company at a competitive disadvantage. If the Company’s current or future products and services fail to function properly or if the Company does not achieve or sustain market acceptance, it could lose customers or could be subject to claims which could have a material adverse effect on the Company’s business, financial condition and operating results.
Risks Related to Our Company
Uncertainty of profitability
Our business strategy may result in increased volatility of future revenues and earnings. As we will only develop a limited number of products and services at a time, our overall success will depend on a limited number of products and services, which may cause variability and unsteady profits and losses depending on the products and services offered.
Our potential revenues and our profitability may be adversely affected by economic conditions and changes in the market. Our business is also subject to general economic risks that could adversely impact the results of operations and financial condition.
Because of the anticipated nature of the products and services that we will attempt to develop, it is difficult to accurately forecast revenues and operating results and these items could fluctuate in the future due to several factors. These factors may include, among other things, the following:
| ● | Our ability to raise sufficient capital to take advantage of opportunities and generate sufficient revenues to cover expenses. | |
| ● | Our ability to source strong opportunities with sufficient risk adjusted returns. | |
| ● | Our ability to manage our capital and liquidity requirements based on changing market conditions. | |
| ● | The acceptance of the terms and conditions of our licenses and/or the acceptance of our royalties and fees. | |
| ● | The amount and timing of operating costs and other costs and expenses. | |
| ● | The nature and extent of competition from other companies that may reduce market share and create pressure on pricing and investment return expectations. | |
| ● | Adverse changes in the national and regional economies in which we will participate, including, but not limited to, changes in our performance, capital availability, and market demand. | |
| ● | Adverse 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. | |
| ● | Our operating results may fluctuate from year to year due to the factors listed above and others not listed. At times, these fluctuations may be significant. |
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Our independent auditors’ report for the fiscal years ended July 31, 2024 and 2023 have expressed doubts about our ability to continue as a going concern
Due to the uncertainty of our ability to meet our current operating and capital expense requirements, in our audited annual financial statements as of and for the years ended July 31, 2024 and 2023, our independent auditors included a going concern qualification in their report regarding concerns about our ability to continue as a going concern. We have incurred recurring losses and have generated limited revenue since inception. These factors and our need for additional financing to effectively execute our business plan raise substantial doubt about our ability to continue as a going concern. The presence of the going concern note to our financial statements may have an adverse impact on the relationships we are developing and plan to develop with third parties as we continue the commercialization of our products and could make it challenging and difficult for us to raise additional financing, all of which could have a material adverse impact on our business and prospects and result in a significant or complete loss of your investment.
Management of growth will be necessary for us to be competitive
Successful expansion of our business will depend on our ability to effectively attract and manage staff, strategic business relationships, and shareholders. Specifically, we will need to hire skilled management and technical personnel as well as manage partnerships to navigate shifts in the general economic environment. Expansion has the potential to place significant strains on financial, management, and operational resources, yet failure to expand will inhibit our profitability goals.
We are entering a highly competitive market
The markets for the healthcare and senior monitoring industries are competitive and evolving. We face intense competition from larger companies that may be in the process of offering comparable products and services to ours. Many of our current and potential competitors have longer operating histories, significantly greater financial, marketing and other resources and larger client bases than we have or expect to have in the near future.
Given the rapid changes affecting the global, national, and regional economies generally, and the healthcare industry specifically, we may not be able to create and maintain a competitive advantage in the marketplace. Our success will depend on our ability to keep pace with any market, legal and regulatory changes as well as competitive pressures. Any failure by us to anticipate or respond adequately to such changes could have a material adverse effect on our financial condition, operating results, liquidity and cash flow.
If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or prevent fraud, and any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the future trading price of our common stock
Effective internal control is necessary for us to provide reliable financial reporting and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a result, our small size and any current internal control deficiencies may adversely affect our financial condition, results of operation and access to capital.
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We currently have insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the United States Securities and Exchange Commission (the “SEC”) disclosure requirements. Additionally, there is a lack of formal process and timeline for closing the books and records at the end of each reporting period and such weaknesses restrict the Company’s ability to timely gather, analyze and report information relative to the financial statements.
Because of the Company’s limited resources, there are limited controls over information processing. There is inadequate segregation of duties consistent with control objectives. Our Company’s management is composed of a small number of individuals resulting in a situation where limitations on segregation of duties exist. In order to remedy this situation, we would need to hire additional qualified staff.
The Company’s failure to continue to attract, train, or retain highly qualified personnel could harm the Company’s business
The Company’s success also depends on the Company’s ability to attract, train, and retain qualified personnel, specifically those with management and product development skills. In particular, the Company must hire additional skilled personnel to further the Company’s research and development efforts. Competition for such personnel is intense. If the Company fails in attracting new personnel, or retaining and motivating the Company’s current personnel, the Company’s business could be harmed.
Risks Related to Our Common Stock
Because we will likely issue additional shares of our common stock, investment in our Company could be subject to substantial dilution
Investors’ interests in our company will be diluted and investors may suffer dilution in their net book value per share when we issue additional shares. We are currently authorized to issue 200,000,000 shares of common stock, $0.001 par value per share. As of October 27, 2024, there are 102,204,936 shares of our common stock issued and outstanding. We anticipate that all or at least some of our future funding, if any, will be in the form of equity financing from the sale of our common stock. If we do sell more common stock, investors’ investment in our company will likely be diluted. Dilution is the difference between what you pay for your stock and the net tangible book value per share immediately after the additional shares are sold by us. If dilution occurs, any investment in the Company’s common stock could seriously decline in value.
Trading in our common stock on the OTC Pink has been subject to wide fluctuations
Our common stock is currently quoted for public trading on the OTC Pink market. The trading price of our common stock has been subject to wide fluctuations. Trading prices of our common stock may fluctuate in response to several factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our common stock will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management’s attention and resources.
Our Certificate of Incorporation and By-Laws provides for indemnification of officers and directors at our expense and limit their liability, which may result in a major cost to us and hurt the interests of our shareholders due to corporate resources being expended for the benefit of officers and/or directors
Our Certificate of Incorporation and By-Laws include provisions that fully eliminate the personal liability of our directors for monetary damages to the fullest extent possible under the laws of the State of Nevada or other applicable law. These provisions eliminate the liability of our directors and our shareholders for monetary damages arising out of any violation of a director of his fiduciary duty of due care. Under Nevada law, however, such provisions do not eliminate the personal liability of a director for (i) breach of the director’s duty of loyalty, (ii) acts or omissions not in good faith or involving intentional misconduct or knowing violation of law, (iii) payment of dividends or repurchases of stock other than from lawfully available funds, or (iv) any transaction from which the director derived an improper benefit. These provisions do not affect a director’s liabilities under the federal securities laws or the recovery of damages by third parties.
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We do not intend to pay dividends on any investment in the shares of common stock of our Company and any gain on an investment in our Company will need to come through an increase in our stock’s price, which may never happen
We have never paid any cash dividends on our common stock, and currently do not intend to pay any dividends for the near future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the price of our common shares. This may never occur and investors may lose all their investment in our company.
Because our securities are subject to penny stock rules, you may have difficulty reselling your shares
Our shares, as penny stocks, are covered by Section 15(g) of the Securities Exchange Act of 1934 which imposes additional sales practice requirements on broker/dealers who sell our company’s securities, including the delivery of a standardized disclosure document; disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and furnishing monthly account statements. These rules apply to companies whose shares are not traded on a national stock exchange, trade at less than $5.00 per share, or who do not meet certain other financial requirements specified by the Securities and Exchange Commission.
These rules require brokers who sell “penny stocks” to persons other than established customers and “accredited investors” to complete certain documentation, make suitability inquiries of investors, and provide investors with certain information concerning the risks of trading in such penny stocks. These rules may discourage or restrict the ability of brokers to sell our shares of common stock and may affect the secondary market for our shares of common stock. These rules could also hamper our ability to raise funds in the primary market for our shares of common stock.
FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock
In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (known as “FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker dealers to recommend that their customers buy our common shares, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
There could be unidentified risks involved with an investment in our securities
The foregoing risk factors are not a complete list or explanation of the risks involved with an investment in our securities. Additional risks will likely be experienced that are not presently foreseen by the Company. Prospective investors must not construe this information provided herein as constituting investment, legal, tax or other professional advice. Before making any decision to invest in our securities, you should read this entire Annual Report and consult with your own investment, legal, tax and other professional advisors. An investment in our securities is suitable only for investors who can assume the financial risks of an investment in the Company for an indefinite period and who can afford to lose their entire investment. The Company makes no representations or warranties of any kind with respect to the likelihood of the success or the business of the Company, the value of our securities, any financial returns that may be generated or any tax benefits or consequences that may result from an investment in the Company.
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ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2. PROPERTIES.
None.
ITEM 3. LEGAL PROCEEDINGS.
On September 18, 2023, Apex Funding Source, LLC (the “Lender”) filed a lawsuit in the Supreme Court of the State of New York, County of New York (the “Court”), naming Grasshopper Staffing, Inc. and Indeliving Holdings, Inc., both of which are wholly owned subsidiaries of the Company, as defendants in the suit. The action against our wholly owned subsidiaries is due to an alleged guarantee of a loan the Lender made to Blue Earth Resources, Inc. (“BERI”), an entity related to the Company through common management control. The lawsuit is an action for BERI’s breach of a loan agreement and failure to pay $4,705,900 in principal and interest to the Lender when due. The lawsuit also named Scott M. Boruff, the CEO and Chairman of the Company’s Board of Directors, and Platinum Equity Advisors, LLC, the Company’s largest principal shareholder that is controlled by Julie Boruff, spouse of Scott M. Boruff, as defendants for their alleged guaranty of the BERI loan. On April 18, 2024, the Lender filed a motion seeking partial summary judgment on its First Cause of Action against BERI and its Second Cause of Action against Scott M. Boruff in the amount of $4,705,900, plus their actual and reasonable attorneys’ fees. Neither the Company nor its subsidiaries were included in the motion seeking partial summary judgment and there has been no additional activity relating to the Company or its subsidiaries.
In the event the Lender attempts to enforce the alleged guarantees against our subsidiaries, we believe we have valid defenses against such an action. In addition, both subsidiaries previously discontinued their operations and currently have no assets. In the judgement of the Company’s management, if the pending actions were adversely determined they would not have a material adverse effect on the Company.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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PART II
ITEM 5. MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
(a) Market Information
Our common stock is quoted on the OTC Pink market under the symbol “HITC.” The OTC Pink market is a quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter equity securities.
The following table shows, for the periods indicated, the high and low bid prices per share of the Company’s common Stock as reported by the OTC Pink quotation service. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not necessarily represent actual transactions.
| High | Low | |||||||
| Fiscal Year 2023 | ||||||||
| First quarter ended October 31, 2022 | $ | 0.22 | $ | 0.05 | ||||
| Second quarter ended January 31, 2023 | $ | 0.23 | $ | 0.06 | ||||
| Third quarter ended April 30, 2023 | $ | 0.16 | $ | 0.09 | ||||
| Fourth quarter ended July 31, 2023 | $ | 0.12 | $ | 0.06 | ||||
| Fiscal Year 2024 | ||||||||
| First quarter ended October 31, 2023 | $ | 0.14 | $ | 0.05 | ||||
| Second quarter ended January 31, 2024 | $ | 0.11 | $ | 0.05 | ||||
| Third quarter ended April 30, 2024 | $ | 0.11 | $ | 0.04 | ||||
| Fourth quarter ended July 31, 2024 | $ | 0.13 | $ | 0.07 | ||||
(b) Holders
As of October 27, 2024, there were 90 stockholders of record. Because shares of the Company’s common stock are held by depositaries, brokers and other nominees, the number of beneficial holders of the Company’s shares is larger than the number of stockholders of record.
(c) Dividends
We have never declared or paid dividends on our common stock. We do not intend to declare dividends in the near future because we anticipate that we will reinvest any future earnings into the development and growth of our business. Any decision as to the future payment of dividends will depend on our results of operations and financial position and such other factors as our Board of Directors in its discretion deems relevant.
(d) Securities Authorized for Issuance under Equity Compensation Plan
The Company does not have in effect any compensation plans under which the Company’s equity securities are authorized for issuance.
Transfer Agent
Our transfer agent is VStock Transfer, LLC located at 18 Lafayette Place, Woodmere, NY 11598.
Recent Sales of Unregistered Securities
During the years ended July 31, 2024 and 2023 and through October 27, 2024, we have not issued any securities which were not registered under the Securities Act and not previously disclosed in the Company’s Quarterly Reports on Form 10-Q or Current Reports on Form 8-K other than those listed below:
On May 2, 2024, we issued 250,000 shares of our unregistered common stock at a price of $0.10 per share to an accredited investor resulting in net proceeds to the Company of $25,000. We incurred no cost related to the private transaction. The net proceeds were used for working capital. The issuance of the shares was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)2 of that act.
On July 15, 2024, we issued 2,000,000 shares of our unregistered common stock at a price of $0.10 per share to an accredited investor resulting in net proceeds to the Company of $200,000. We incurred no cost related to the private transaction. The net proceeds were used for working capital. The issuance of the shares was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)2 of that act.
On September 20, 2024, we issued 1,000,000 shares of our unregistered common stock at a price of $0.10 per share to an accredited investor resulting in net proceeds to the Company of $100,000. We incurred no cost related to the private transaction. The net proceeds were used for working capital. The issuance of the shares was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)2 of that act.
On September 26, 2024, we issued 1,000,000 shares of our unregistered common stock at a price of $0.10 per share to an accredited investor resulting in net proceeds to the Company of $100,000. We incurred no cost related to the private transaction. The net proceeds were used for working capital. The issuance of the shares was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)2 of that act.
On October 8, 2024, we issued 2,000,000 shares of our unregistered common stock at a price of $0.10 per share in two separate transactions to accredited investors resulting in net proceeds to the Company of $200,000. We incurred no cost related to the private transactions. The net proceeds were used for working capital. The issuance of the shares was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)2 of that act.
On October 10, 2024, we issued 3,500,000 shares of our unregistered common stock at a price of $0.10 per share in three separate transactions to accredited investors resulting in net proceeds to the Company of $350,000. We incurred no cost related to the private transactions. The net proceeds were used for working capital. The issuance of the shares was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)2 of that act.
On October 18, 2024, we issued 1,000,000 shares of our unregistered common stock at a price of $0.10 per share to an accredited investor resulting in net proceeds to the Company of $100,000. We incurred no cost related to the private transaction. The net proceeds were used for working capital. The issuance of the shares was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)2 of that act.
On October 21, 2024, we issued 1,000,000 shares of our unregistered common stock at a price of $0.10 per share to an accredited investor resulting in net proceeds to the Company of $100,000. We incurred no cost related to the private transaction. The net proceeds were used for working capital. The issuance of the shares was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)2 of that act.
On October 24, 2024, we issued 5,320,000 shares of our unregistered common stock at a price of $0.10 per share to an accredited investor resulting in net proceeds to the Company of $532,000. We incurred no cost related to the private transaction. The net proceeds were used for working capital. The issuance of the shares was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)2 of that act.
On October 25, 2024, we issued 3,500,000 shares of our unregistered common stock at a price of $0.10 per share to an accredited investor resulting in net proceeds to the Company of $350,000. We incurred no cost related to the private transaction. The net proceeds were used for working capital. The issuance of the shares was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)2 of that act.
Rule 10B-18 Transactions
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ITEM 6. SELECTED FINANCIAL DATA.
Not applicable
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
THE FOLLOWING DISCUSSION OF OUR PLAN OF OPERATIONS AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND RELATED NOTES TO THE FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS REPORT. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL PERFORMANCE. THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. THESE RISKS AND OTHER FACTORS INCLUDE, AMONG OTHERS, THOSE LISTED UNDER “FORWARD-LOOKING STATEMENTS” AND “RISK FACTORS” AND THOSE INCLUDED ELSEWHERE IN THIS REPORT.
This discussion summarizes the significant factors affecting the consolidated financial statements, financial condition, liquidity, and cash flows of Healthcare Integrated Technologies, Inc, for the fiscal years ended July 31, 2024 and 2023 and the interim periods included herein. The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes included elsewhere in this Form 10-K.
Executive Overview
Healthcare Integrated Technologies, Inc. and its subsidiaries 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.
Strategy
Our mission is to grow a profitable healthcare technology company by focusing on our core product, continuing the development of our proprietary software, and developing new uses and product lines for our technology. Our management team is focused on maintaining financial flexibility and assembling the right complement of personnel and outside consultants required to successfully execute our mission.
Financial and Operating Results
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 fiscal year ended July 31, 2024 include:
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| ● | We continue to evaluate our two new 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. | |
| ● | On August 8, 2023, we announced a strategic alliance with Signature HealthCARE (“Signature”). The alliance aims to implement a series of pilot programs during the coming fiscal year. The collaboration will involve several new proprietary, fully ambient AI-based solutions to be pilot tested and deployed across multiple Signature senior living facilities. Signature is a family-based healthcare company that offers integrated services in 10 states across the continuum of care, including skilled nursing, rehabilitation, assisted living, memory care, home health, cognitive care, and telemedicine. | |
| ● | On December 1, 2023 we entered into a contract with Signature to install our SafeFace AI-based proprietary software to automatically track and trace every individual who enters a facility, photographing the individual as they enter the facility, and providing notifications to the facility staff when that individual enters and exits the facility. The $322,000 contract covers 23 Signature facilities ($14,000 per facility) and is part of an infection control program funded by a grant Signature received from the State of Tennessee. The contract expired on April 1, 2024 and the net revenue was recognized over the contract period.
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| ● | On December 1, 2023 we entered into a contract with Signature to install our SafeFace AI-based proprietary software to automatically track and trace employees and agency staff as they enter and exit a facility. The data is used to track and compare billings to employee and agency staff time input. Utilizing custom designed reports, Signature can identify discrepancies in employee reports and agency staff invoices as part of a control process to prevent over and under billings. We entered into this contract under a contingent fee arrangement whereby we receive 50% of any cost savings identified by the system. We did not recognize any revenue under this contract during the fiscal year ended July 31, 2024. Due to the contingent nature of our fee arrangement, we cannot accurately predict future revenue from this contract. The contract expires on November 30, 2024.
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| ● | We received $550,000 in net proceeds from the sale of our common stock at an average price of $0.10 per share. The net proceeds were used to pay off existing debt and provide working capital. |
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Results of Operations
Revenues
During the year ended July 31, 2024, we recognized $322,000 in Contract revenue from our service agreement that ended April 1, 2024. We have been unable to obtain an extension to the service agreement, or enter into any additional agreements, that would allow us to continue recognizing revenue in subsequent periods. Approximately $184,000 of our current period Contract revenue and Cost of contracts includes equipment and equipment installation costs, which may or may not be relevant to any future contracts or agreements. Approximately $64,400 of our current period Contract revenue and Cost of contracts includes sales commissions, which most likely will be included in any future contracts or agreements. We had no Contract revenue or Cost of contracts during the year ended July 31, 2023.
Operating Expenses
The table below presents a comparison of our operating expenses for the years ended July 31, 2024 and 2023:
| For the Years Ended July 31, | ||||||||||||||||
| 2024 | 2023 | $ Variance | %Variance | |||||||||||||
| Officers’ salaries | $ | 359,942 | $ | 496,543 | $ | (136,601 | ) | (28 | )% | |||||||
| Professional fees | 69,521 | 145,017 | (75,496 | ) | (52 | )% | ||||||||||
| Software development | 40,805 | - | 40,805 | - | ||||||||||||
| Travel and entertainment | 25,709 | 2,197 | 23,512 | 1,070 | % | |||||||||||
| Advertising and marketing | 9,919 | 6,184 | 3,735 | 60 | % | |||||||||||
| Other | 10,384 | 7,726 | 2,658 | 34 | % | |||||||||||
| Total Selling, general & administrative | 516,280 | 657,667 | (141,387 | ) | (21 | )% | ||||||||||
| Stock-based compensation | 186,643 | 287,016 | (100,373 | ) | (35 | )% | ||||||||||
| Amortization | 221,919 | 16,885 | 205,034 | 1,214 | % | |||||||||||
| Impairment of intangibles | 140,770 | - | 140,770 | - | ||||||||||||
| Total Operating Expenses | $ | 1,065,612 | $ | 961,568 | $ | 104,044 | 11 | % | ||||||||
Officers’ Salaries - Officers’ salaries decreased $136,601, or 28%, from 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.
Professional Fees - Professional fees decreased $75,496, or 52%, from the prior year. The decrease from 2023 primarily results from a $62,000 decrease in the expense for outside consultants, $17,274 decrease in legal fees and a $1,389 decrease in accounting fees, which were partially offset by a $4,128 increase in patent related costs and a $1,039 increase in transfer agent and SEC filing costs.
Software Development - Software development expenses increased $40,805 over 2023. Prior to this period, our internally developed software had not been placed in service and software development cost were being capitalized.
Travel and Entertainment - Travel and entertainment expenses increased $23,512 over 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.
Advertising and Marketing - Advertising and marketing expenses increased $3,735, or 60%, over 2023. The increase results from $5,494 in additional expense for conferences and conventions in 2024 that was partially offset by a net decrease in other advertising and marketing related costs.
Other - Other expenses increased $2,658, or 34%, over the prior year. The decrease from 2023 primarily results from a $2,503 increase in penalties associated with the deferral of payroll tax liabilities in 2020.
Stock-based Compensation - Stock-based compensation expense decreased $100,373, or 35%, from 2023. 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 was partially offset by the additional expense related to the issuance of stock grants, restricted stock awards and warrants to outside consultants.
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Amortization - Amortization expense increased $205,034 over 2023. The increase in amortization expense primarily relates to the amortization of capitalized software development cost during the year ended July 31, 2024 that had not yet been placed in service during the prior year.
Impairment of Intangibles - Impairment of intangibles increased $140,770 over the same period in the prior year. The impairment expense relates to the abandonment of certain patent applications and the establishment of an impairment reserve on active patent applications.
Other Income (Expense)
The table below presents a comparison of our other income (expense) for the nine months ended April 30, 2024 and 2023:
For the Years Ended July 31, | ||||||||||||||||
| 2024 | 2023 | $ Variance | %Variance | |||||||||||||
| Interest expense | $ | (55,079 | ) | $ | (417,341 | ) | $ | 362,262 | 87 | % | ||||||
| Extinguishment of liabilities | 279,903 | - | 279,903 | - | ||||||||||||
| Gain on settlements | 56,250 | - | 56,250 | - | ||||||||||||
| Change in fair value of derivative liability | - | 76,451 | (76,451 | ) | - | |||||||||||
| Total Other Income (Expense) | $ | 281,074 | $ | (340,890 | ) | $ | 621,964 | 182 | % | |||||||
Interest Expense - Interest expense decreased $362,262, or 87%, over 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.
Extinguishment of Liabilities - We recorded income from the extinguishment of liabilities of $279,903 in 2024. Management determined it was more likely than not that the Company would not be required to settle the obligations, which were recorded on the books of a non-operating subsidiary. We had no income from the extinguishment of liabilities in 2023.
Gain on Settlements - We recorded a gain on settlements of $56,250 in 2024 upon the settlement amounts owed to a consultant that were expensed in a prior year. We had no gain on settlements in 2023.
Change in Fair Value of Derivative Liability – We had no derivative liability during 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.
Liquidity and Capital Resources
Working Capital
The following table summarizes our working capital for the fiscal years ending July 31, 2024 and 2023:
| July 31, 2024 | July 31, 2023 | |||||||
| Current assets | $ | 222,584 | $ | 34,503 | ||||
| Current liabilities | (1,022,522 | ) | (1,569,803 | ) | ||||
| Working capital deficiency | $ | (799,938 | ) | $ | (1,535,300 | ) | ||
Current assets for the year ended July 31, 2024 increased $188,081 as compared to the fiscal year ended July 31, 2023. The increase is due to an increase in cash and cash equivalents and accounts receivable that was partially offset by small decrease in prepaid expenses. The increase in cash primarily results from sales of our common stock and collection of amounts owed under the Signature contract.
Current liabilities for the year ended July 31, 2024 decreased $547,281 as compared to the fiscal year ended July 31, 2023. The decrease is primarily due to the reduction in amounts owed to related parties of $370,989, a $138,506 reduction in accrued compensation related to executive compensation agreements being wholly or partially paid in common stock, and a $75,924 decrease in accounts payable and accrued expenses. The decreases were partially offset by a $38,138 increase in related party notes payable.
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Net Cash Used by Operating Activities
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 $267,729 and $106,203 for the years ended July 31, 2024 and 2023, respectively. The $161,526 increase in net cash used by operating activities during 2024 is attributable to a $212,556 decrease in the adjusted net loss from operations that is offset by a $374,082 decrease in changes in operating assets and liabilities from the 2023 amounts. The $212,556 decrease in the adjusted net loss from operations primarily results from a $82,052 increase in revenues and a $136,601 decrease in officer’s compensation. The $374,082 decrease in changes in operating assets and liabilities primarily results from $363,421 in payments to related parties that significantly reduced short-term related party loans and accrued expenses.
Net Cash Used by Investing Activities
Net cash used by investing activities was $-0- and $27,560 for the years ended July 31, 2024 and 2023, respectively. The amount is comprised of cash paid for the filing of patent applications and for the development of software for our internal use.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $442,880 for the year ended July 31, 2024, which represents a $309,757 increase over the 2023 amount. The 2024 increase primarily resulted from a $250,000 increase in proceeds received from the issuance of stock and a net decrease in the repayment of related party loans and short term debt.
At this time, we cannot provide investors with any assurance that we will be able to obtain sufficient funding from debt financings and/or the sale of our equity securities to meet our obligations over the next twelve months. We are likely to continue using short-term loans from management to meet our short-term funding needs. We have no material commitments for capital expenditures as of July 31, 2024.
Going Concern Qualification
We have a history of losses, an accumulated deficit, negative working capital and have not generated cash from operations to support a meaningful and ongoing business plan. Our Independent Registered Public Accounting Firm has included a “Going Concern Qualification” in their report for the years ended July 31, 2024 and 2023. The foregoing raises substantial doubt about the Company’s ability to continue as a going concern. We intend on financing our future activities and working capital needs largely from the sale of private and/or public equity securities with additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. There is no guarantee that additional capital or debt financing will be available when and to the extent required, or that if available, it will be on terms acceptable to us. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The “Going Concern Qualification” might make it substantially more difficult to raise capital.
Critical Accounting Policies and Estimates
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.
Our significant accounting policies are summarized in Note 1 of our consolidated financial statements.
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We believe the following critical policies impact our more significant judgments and estimates used in the preparation of our consolidated financial statements.
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, 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.
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 could 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.
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.
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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 over their expected useful life on a straight-line basis. We evaluate the useful lives of these assets on an annual basis and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. If the estimate of an intangible asset’s remaining life is changed, the remaining carrying value of the intangible asset is amortized prospectively over the revised remaining useful life.
Impairment of Long-Lived Assets
Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment at least annually or whenever facts and circumstances indicate that the carrying value may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset.
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,” (paragraph 815-10-05-4 and Section 815-40-25). The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. The change in fair value is recorded in the consolidated statements of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise, or cancellation and then the related fair value is reclassified to equity.
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 or not 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”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two- step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.
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 at each balance sheet date. We record the change in the fair value of the derivative as other income or expense in the consolidated statements of operations.
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.
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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 expects to recognize all outstanding contract liabilities over the next 12 months.
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
Revenue is recognized under ASC 606, “Revenue from Contracts with Customers” using the modified retrospective method. Under this method, the Company follows the five-step model provided by ASC Topic 606 in order to recognize revenue in the following manner: 1) Identify the contract; 2) Identify the performance obligations of the contract; 3) Determine the transaction price of the contract; 4) Allocate the transaction price to the performance obligations; and 5) Recognize revenue. An entity recognizes revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services.
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.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”) which establishes financial accounting and reporting standards for stock-based employee compensation. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. The Company accounts for compensation cost for stock option plans, if any, in accordance with ASC 718.
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 expenses are 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.
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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 ultimately expected to vest.
Capital Resources
We had no material commitments for capital expenditures as of July 31, 2024.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements as of July 31, 2024 or 2023.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We do not hold any market risk sensitive instruments. We consider our interest rate risk exposure to be minimal as a result of fixing interest rates on 100% of our debt. At July 31, 2024, there was no floating rate debt that would expose us to market fluctuations in interest rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary financial information required to be filed under this Item 8 are presented in Part IV, Item 15 of this Form 10-K and are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended, at the end of the period covered by this report (the “Evaluation Date”). In conducting its evaluation, management considered the material weaknesses described below in Management’s Report on Internal Control over Financial Reporting.
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of the Evaluation Date we did not maintain disclosure controls and procedures that were effective in providing reasonable assurances that information required to be disclosed in our reports filed under the Securities Exchange act of 1934 was recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information was accumulated and communicated to our management to allow timely decisions regarding required disclosure.
Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
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Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management assessed the effectiveness of our internal control over financial reporting as of July 31, 2024. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of July 31, 2024, our internal controls over financial reporting were not effective.
In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Our management has concluded that, as of July 31, 2024, our internal control over financial reporting is not effective based on these criteria. Material weaknesses noted by our management include:
| ● | Lack of a functioning audit committee; | |
| ● | Lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; | |
| ● | Inadequate segregation of duties consistent with control objectives and affecting the functions of authorization, recordkeeping, custody of assets, and reconciliation; | |
| ● | Management dominated by a single individual/small group without adequate compensating controls. |
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table sets forth information concerning our officers and directors as of the dates indicated. The directors of the Company serve until their successors are elected and shall qualify. Executive officers are elected by the Board of Directors and serve at the discretion of the directors.
| Name | Age | Title | ||
| Scott M. Boruff | 61 | Chief Executive Officer, Director | ||
| Timothy R. Brady | 62 |
Chief Financial Officer | ||
| Dustin M. Hillis | 42 | Chief Strategy Officer | ||
| Kenneth M. Greenwood | 66 | Chief Technology Officer | ||
| Susan A. Reyes | 61 | Chief Medical Officer | ||
| G. Shayne Bench | 51 | Director | ||
| Ryan E. Holland | 35 | Director | ||
| Micheal J. Burt | 48 | Director |
Set forth below is a brief description of the background and business experience of each of our current executive officers and directors.
Scott M. Boruff, Chief Executive Officer, Director, Age 61
Mr. Boruff has served as our Chief Executive Officer and Sole Director since March 13, 2018. Since May 1, 2021, he has served in that capacity as an outsourced, contracted Chief Executive Officer and Director. He has been the sole officer and director of IndeLiving Holdings, Inc. since the company’s formation in 2016. He has also served as the Manager of Platinum Equity Advisors, LLC (“Platinum Equity”) since its formation in 2016. In addition to providing consulting and advisory services, Platinum Equity has interests in a real estate brokerage firm and a luxury real estate auction firm. Mr. Boruff is a proven executive with a diverse business background in investment banking and real estate development. He currently serves as Manager of Own Shares, LLC, a privately held holding company with interests in various entertainment ventures, and Managing Member of Stonewalk Companies, privately held real estate development company. As a professional in investment banking, he specialized in consulting services and strategic planning with an emphasis on companies in the oil and gas field. Mr. Boruff served as a member of the Board of Directors of Miller Energy Resources, Inc., a publicly traded company, from August 2008 until March 2016, serving as Executive Chairman of the Board of Directors from September 2014 until March 2016 and Chief Executive Officer from August 2008 to September 2014. In October 2015, when it was being led by a successor management team, Miller Energy Resources, Inc. filed a voluntary petition for reorganization under chapter 11 of title 11 of the U.S. Code in a pre-packaged bankruptcy. It remained a debtor in possession and emerged from bankruptcy in March 2016. Mr. Boruff was a director and 49% owner of Dimirak Securities Corporation, a broker-dealer and member of FINRA, from April 2009 until July 2012. In July 2012, Mr. Boruff sold his interest in Dimirak. He has more than 30 years of experience in developing commercial real estate projects and from 2006 to 2007 Mr. Boruff successfully led transactions averaging $150 to $200 million in size while serving as a director of Cresta Capital Strategies, LLC. Mr. Boruff received a Bachelor of Science degree in Business Administration from East Tennessee State University.
Timothy R. Brady, Chief Financial Officer, Age 62
Timothy Brady has served as our Chief Financial Officer (“CFO”) since October 1, 2024. He is serving in that capacity as an outsourced, fractional CFO. Mr. Brady currently serves the Company, and other companies, on a fractional CFO basis with a focus on several industries, including oil and gas, financial services, hospitality, retail and manufacturing. Mr. Brady previously served as CFO and Treasurer of Northern Industrial Sands, LLC, a privately held supplier of northern white frac sand, from July 2016 to August 2020. In addition, he previously served as CFO and Treasurer of Dakota Plains Holdings, Inc., a publicly traded midstream energy company, from September 2011 to April 2016. Mr. Brady was instrumental in uplisting the Company from the OTC Pink Sheets to the NYSE. Before joining Dakota Plains, Mr. Brady served as one of three founders and CFO of Encore Energy, a privately held independent operator of oil and natural gas properties, from May 2011 through September 2011. Prior to that position, Mr. Brady served as the CFO from April 2010 through May 2011 of Allied Energy, a publicly traded oil and natural gas company, and served on its board of directors, where Mr. Brady was able to upgrade the firm to the highest grading level on the OTC Market tier. Prior to that position, Mr. Brady was an independent consultant for eight years. Mr. Brady has over 35 years of financial experience within the energy, financial services, and manufacturing industry. Mr. Brady has experience with SEC reporting, balance sheet management, investor relations, treasury, mergers and acquisitions, audit, internal controls implementation, and compliance. Mr. Brady holds a Bachelor of Science degree in Finance from Indiana University and an MBA from Loyola University of Chicago.
Dustin M. Hillis, Chief Strategy Officer, Age 42
Dustin M. Hillis has served as our Chief Strategy Officer since June 15, 2024. Mr. Hillis brings a wealth of experience and a proven history of success to the Company. Prior to joining our executive team, Mr. Hillis has most recently served a four year tenure as the CEO of a global conglomerate, managing and expanding 20 diverse international businesses with a workforce of over 2,000 individuals worldwide. His career spanned two decades within the family of companies. Mr. Hillis’ multifaceted expertise in leadership, strategic growth, and operational excellence has been recognized through numerous accolades, including being named a “Top 10 CEO” by Industry Era and one of the “Top 50 Consulting CEOs” by the Consulting Report. In addition to his corporate accomplishments, Mr. Hillis is an Amazon ‘Best Selling Author,’ an international real estate investor, as well as a sought-after keynote speaker who has delivered addresses across the globe. His broad influence and insights across various industries have been pivotal to his career success. Mr. Hillis currently resides in Ashland City, Tennessee.
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Kenneth M. Greenwood, Chief Technology Officer, Age 66
Kenneth M. Greenwood has served as our Chief Technology Officer since June 15, 2020. Mr. Greenwood has over 30 years of experience with large-scale systems programming and implementations to our executive management team. He has provided instruction and consulting, primarily for SAP products, in the areas of architecture, design and implementation of ABAP, big-data warehousing, business intelligence analytics, object-orientation, cloud and systems integration, interfaces, HANA in-memory databases, data security, workflow, and archiving to a variety of companies including Intel, World Bank, HP, Amtrak, IBM, Accenture, Wal-Mart, Home Depot, Nike and Kimberly-Clark. While at Random House implementing a Rights Management module following two previous failed attempts by other contractors, Mr. Greenwood led the 30-developer team to design, code and implement rights management for Random House in an SAP system using a novel approach of OO design, which became the world’s largest SAP module at that time. Mr. Greenwood authored the best-selling Sams Teach Yourself ABAP in 21 Days, published by Macmillan.
Susan A. Reyes, M.D., Chief Medical Officer, Age 61
Susan A. Reyes, M.D. has served as our Chief Medical Officer since September 1, 2020. Dr. Reyes brings experience as a practicing Internal Medicine physician in the home care environment. She earned her Doctor of Medicine degree in just six years and was board certified in Internal Medicine in 1994. Since then, Dr. Reyes has enjoyed expanding her skill set by collaborating with several ground-breaking companies. In 1997, she worked for Hospital Inpatient Management Systems, which was the first hospitalist group that transformed the efficiencies of “length of stay” of patients in the hospital and in skilled nursing facility settings. In 2000, she was the lead physician for MD to You in Tampa, Florida - the first organization that developed house calls for homebound geriatric patients. In 2009, Dr. Reyes became the first physician to bring house call services to Knoxville, Tennessee and has grown her company to be the largest mobile medical primary care practice covering East Tennessee. She has been an advisor and served as Medical Director to several home health and hospice agencies and assisted living facilities in each community where she has resided.
G. Shayne Bench, Director, Age 51
G. Shayne Bench has served as a Director since September 8, 2022 and is co-founder and Chief Financial Officer of Trillium Healthcare Consulting. Mr. Bench began his professional career in 1994 with Beverly Enterprises where he held various leadership roles, including Vice President of Finance for all 53 Skilled Nursing Facilities in the state of Florida. In 2001, Mr. Bench joined an executive team to start up Genoa Healthcare Group. As Senior Vice President and Treasurer, he successfully managed the cash flow while the organization grew to 135 Skilled Nursing Facilities in 17 states with nearly one billion dollars in revenue. He managed all aspects of strategic capitalization, established creditor and banking relationships, and managed financial reporting to investors. Mr. Bench is originally from Louisiana and received his Bachelor of Science in Business Administration with a major in accounting from Northeastern State University. He currently resides in Sarasota, Florida where he enjoys golfing, boating, and Saints football.
Ryan E. Holland, Age 35
Ryan E. Holland has served as a Director since May 1, 2024. Mr. Holland is a business development professional with over 10 years of experience scaling startups and driving small businesses into the midmarket through vertical integration, government contracting and strategic acquisitions. He is an Investment Advisor Representative holding a Series 65 license, Investment Advisor Representative and acts as a fiduciary advising alternative investment managers and emerging company employee benefits plans. Over the last 4 years, he has served as the Managing Director and head of M&A at a bespoke healthcare and post-commercial life sciences investment fund, which has grown a small $2 million debt investment into a portfolio of companies that has over $35 million in annual profits while sticking to one investment thesis. Mr. Holland currently services on the Board of Directors of UrgentFlex Holdings, Southern Aeromedical Institute, and Brevard Regional Hyperbaric Center. He currently resides in Central Florida.
Micheal J. Burt, Age 48
Micheal J. Burt has served as a Director since August 23, 2024. Micheal “Coach” Burt is recognized as the unparalleled authority in awakening the Prey Drive within individuals and guiding them to unparalleled accomplishments. With a career spanning over three decades, Coach Burt has solidified his reputation for transformative coaching excellence across a spectrum of industries. As the Founder of The Greatness Factory in Nashville, Tennessee, Coach Burt has elevated his coaching philosophy to an art form. His approach goes beyond conventional motivation, delving deep into the intricacies of activating the Prey Drive - an insatiable pursuit of excellence that propels individuals to achieve their goals with unwavering determination. With a storied history of cultivating top performers, Coach Burt empowers individuals to not only tap into their unique brilliance but also to translate it into thriving ventures. His methodologies offer a proven blueprint for turning ideas into tangible success. Coach Burt is the author of “Flip the Switch,” which is a must-read for anyone looking to take their personal and professional growth to the next level. Mr. Burt currently resides in Nashville, Tennessee.
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Family Relationships
There are no family relationships among any of our directors or executive officers.
Involvement in Certain Legal Proceedings
To the best of the Company’s knowledge, none of the Company’s directors or executive officers has, during the past ten years, except as set forth below:
| ● | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | |
| ● | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
| ● | been the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; | |
| ● | been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment in such civil action has not been reversed, suspended, or vacated; | |
| ● | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to (i) an alleged violation of any federal or state securities or commodities law or regulation, (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or | |
| ● | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Mr. Boruff served as a member of the Board of Directors, as Chief Executive Officer, and as Executive Chairman of Miller Energy Resources, Inc. during the two years preceding Miller Energy Resources, Inc.’s filing of a bankruptcy petition in August 2015.
Except as set forth in the Company’s discussion below in “Certain Relationships and Related Transactions, and Director Independence”, none of the Company’s directors or executive officers has been involved in any transactions with the Company or any of the Company’s directors, executive officers, affiliates, or associates which are required to be disclosed pursuant to the rules and regulations of the Commission.
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Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).
Based solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock during the fiscal year ended July 31, 2024 and 2023, were timely filed.
Term of Office
The Company’s directors are elected by the Company’s stockholders for one to three year terms until the next annual general meeting of the Company’s stockholders, or until removed by the stockholders in accordance with the Company’s bylaws. The Company’s officers are appointed by the Board and hold office until removed by the Board.
Code of Ethics
The Company does not currently have a code of ethics, and because the Company has only limited business operations and only five officers and four directors, the Company believes that a code of ethics would have limited utility. The Company intends to adopt such a code of ethics as the Company’s business operations expand and the Company has more employees.
Board Committees
We only have four board members and given our limited operations, we do not have separate or independent audit or compensation committees. Our Board of Directors has determined that it does not have an “audit committee financial expert,” as that term is defined in Item 407(d)(5) of Regulation S-K. In addition, we have not adopted any procedures by which our shareholders may recommend nominees to our Board of Directors.
ITEM 11. EXECUTIVE COMPENSATION.
The following table summarizes all compensation recorded by us in the past two years for:
| ● | our principal executive officer or other individual serving in a similar capacity, | |
| ● | our three most highly compensated executive officers, other than our principal executive officer, who were serving as executive officers at July 31, 2024 and 2023 as that term is defined under Rule B-7 of the Securities Exchange Act of 1934. |
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Summary Compensation Table (in dollars)
| Name and Principal | Fiscal | Stock | Non-Equity Incentive Plan | Non-Qualified Deferred Compensation | All Other | |||||||||||||||||||||||||||
| Position | Year | Salary | Bonus | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||||
| Scott B. Boruff | 2024 | - | - | - | - | - | 102,000 | 102,000 | ||||||||||||||||||||||||
| Chief Executive Officer and Director (1) | 2023 | - | - | - | - | - | 323,400 | 323,400 | ||||||||||||||||||||||||
| Dustin M. Hillis | 2024 | - | - | 54,500 | - | - | 12,500 | 67,000 | ||||||||||||||||||||||||
| Chief Strategy Officer (2) | 2023 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
| Kenneth M. Greenwood | 2024 | 102,000 | - | - | - | - | - | 102,000 | ||||||||||||||||||||||||
| Chief Technology Officer (3) | 2023 | 102,800 | - | 145,917 | - | - | - | 248,717 | ||||||||||||||||||||||||
| Susan A. Reyes MD | 2024 | 24,000 | - | 6,706 | - | - | - | 30,706 | ||||||||||||||||||||||||
| Chief Medical Officer (4) | 2023 | 52,000 | - | 80,478 | - | - | - | 132,478 | ||||||||||||||||||||||||
| Charles B. Lobetti, III | 2024 | 102,000 | - | - | - | - | - | 102,000 | ||||||||||||||||||||||||
| Chief Financial Officer (5) | 2023 | 104,000 | - | 15,620 | - | - | 4,800 | 124,420 | ||||||||||||||||||||||||
| (1) | Mr. Boruff has served as our Chief Executive Officer and as a Director since March 13, 2018. | |
| (2) | Mr. Hillis has served as our Chief Strategy Officer since June 15, 2024. | |
| (3) | Mr. Greenwood has served as our Chief Technology Officer since June 15, 2020. | |
| (4) | Ms. Reyes has served as our Chief Medical Officer since September 1, 2020 | |
| (5) | Mr. Lobetti served as our Chief Financial Officer from October 8, 2019 until his resignation effective July 31, 2024. |
Director Compensation
Director compensation is determined on a case by case basis.
On September 8, 2022, G. Shayne Bench was appointed to our board of directors for a term of one (1) year. As compensation for Mr. Bench’s service, he received a one (1) year restricted stock award of 846,093 shares of the Company’s common stock. The restricted stock award shall vest ratably, on a monthly basis, at the end of each month of completed service, and any vested shares shall be issued quarterly in conjunction with the ending of the Company’s normal quarterly reporting periods. Mr. Bench’s appointment to our Board of Directors was reaffirmed on September 8, 2023 and September 8, 2024.
On May 1, 2024, Ryan E. Holland was appointed to our board of directors for a term of three (3) years and shall continue until canceled by the Company with 30 days written notice. As compensation for Mr. Hollands’s service, he received a three (3) year restricted stock award of 1,500,000 shares of the Company’s common stock. The restricted stock award shall vest ratably over a three (3) year period on the first, second and third anniversary of his appointment to the board of directors.
On August 23, 2024, Micheal J. Burt was appointed to our board of directors for a term of three (3) years and shall continue until canceled by the Company. Either party has the right to cancel the remaining term of the appointment on each yearly anniversary date by providing written notice to the other party at least 30 days prior to the anniversary date the cancelation is to become effective. As compensation for Mr. Burt’s service, he received a three (3) year restricted stock award of 2,000,000 shares of the Company’s common stock. The restricted stock award shall vest 1,000,000 shares on August 25, 2024, 333,334 shares on August 25, 2025, 333,333 shares on August 25, 2026 and 333,333 shares on August 25, 2027.
We do not currently pay any cash fees to our directors, nor do we pay director’s expenses to attend board meetings.
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Executive Compensation Agreements
Scott M. Boruff, CEO
On January 31, 2024, we entered into a Non-Employee Chief Executive Officer Engagement Agreement (the “Contract CEO Agreement”) with Platinum Equity Advisors, LLC (“Platinum”) to provide the services of Scott M. Boruff as Chief Executive Officer and Chairman of the Board of Directors of the Company for a term of three (3) years. Effective as of August 1, 2023, the Company shall pay Platinum an annual base fee of $102,000. The initial base fee is intended to compensate Platinum for a time commitment of up to 1/3 of the CEO’s time, attention, skill and best efforts to the Company. At the discretion of the Board of Directors, the base fee may be increased to a maximum annual amount of $306,000 to better reflect the value of any future increases in the CEO’s time commitment to the Company. In addition to the base fee, Platinum is entitled to a discretionary bonus fee, equity awards and other benefits as may be awarded by our Board of Directors. During the term of the Contract CEO Agreement, Mr. Boruff is entitled to participate in any employee benefit plans, programs or arrangements of the Company in effect during the engagement period which are generally available to other senior executives of the Company.
If the Contract CEO Agreement is terminated by us without cause or by Platinum for good reason, we are obligated to pay Platinum severance equal to three (3) months base fee and any other earned but unpaid compensation. In addition, if at any time during the term of the Contract CEO Agreement Platinum is terminated by us without cause within two years after a Change in Control of our company, or in the 90 days prior the Change in Control at the request of the acquiror, we are obligated to pay Platinum an amount equal to 2.99 times the annual base fee. “Change in Control” is defined in the Contract CEO Agreement to mean the acquisition by any person of beneficial ownership of our securities representing greater than 50% of the combined voting power of our then outstanding voting securities.
Dustin M. Hillis, CSO
Effective June 15, 2024, we entered into a Non-Employee Chief Strategy Officer Engagement Agreement (the “Contract CSO Agreement”) with Dustin M. Hillis to provide the services of Chief Strategy Officer for a term of three (3) years. Under the terms of the Contract CSO Agreement, the Company shall pay Mr. Hillis an annual base fee of $100,000. In addition to the base fee, Mr. Hillis is entitled to a discretionary bonus fee, equity incentive awards and other benefits as may be awarded by our Board of Directors. Upon collection from the customer, the Contract CSO Agreement provides for a new business sales commission equal to 15% of the gross amount of any new software licensing fees and/or support and maintenance fees earned by the Company on sales occurring after the effective date, and shall also be entitles to an 8% recurring business sales commission on any recurring software support and maintenance fees collected by the Company. Upon execution of the Contract CSO Agreement, Mr. Hillis received a stock grant of 1,000,000 shares of the Company’s common stock.
If the Contract CSO Agreement is terminated by us without cause, or by Mr. Hillis for good reason, we are obligated to pay Mr. Hillis a severance equal to one (1) month base fee, any earned and unpaid new sales business commissions, and any recurring business sales commissions with respect to customers of the Company as of the termination date and applicable to all products and services sold or provided to such customers on or before the one year anniversary of the termination date. If Mr. Hillis terminates the Contract CSO Agreement without good reason, he shall receive any unpaid portion of the base fee earned through the termination date and any new business sales commissions earned through the termination date. If the Company terminates the Contract CSO Agreement for cause, Mr. Hillis shall receive any unpaid portion or the base fee earned through the termination date.
Kenneth M. Greenwood, CTO
On January 31, 2024, in connection with the appointment of Kenneth M. Greenwood as Chief Technology Officer of the Company, the Company and Mr. Greenwood entered into an employment agreement (the “Greenwood Employment Agreement”) with an initial term of three (3) years. Effective as of August 1, 2023, the Company shall pay Mr. Greenwood a base salary at the rate of $102,000 per annum. The initial base salary is intended to compensate Mr. Greenwood for a devotion of up to forty percent (40%) of his time, attention, skill and best efforts to the Company. At the discretion of the Chief Executive Officer, the base salary may be increased to a maximum annual amount of $255,000 to better reflect the value of any future increases in Mr. Greenwood’s time commitment to the Company. Mr. Greenwood is also entitled to paid vacation and sick leave, and participation in any employee benefit plans or programs we may offer. In addition, Mr. Greenwood is eligible for equity awards and other benefits as approved by the Board of Directors. The initial term of the Employment Agreement will automatically be renewed for an additional one-year term unless either party provides notice of non-renewal.
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The Employment Agreement terminates upon the death or disability of Mr. Greenwood, and may be terminated by us for cause, or by Mr. Greenwood for any reason. If the Employment Agreement is terminated by us for cause, upon his death or disability, at non-renewal or by Mr. Greenwood, he is only entitled to receive base salary accrued but not paid through the date of termination, and in the case of termination due to death or disability, a pro rata payment of the annual incentive earned for the year of termination. If the Employment Agreement is terminated by us without cause or by Mr. Greenwood for good reason, we are obligated to pay him severance equal to one year’s base salary and any unpaid incentive compensation. In addition, if at any time during the term of the Employment Agreement Mr. Greenwood’s employment is terminated by us without cause within two years after a Change in Control of our company, or in the 90 days prior the Change in Control at the request of the acquiror, we are obligated to pay him an amount equal to 2.99 times his annualized compensation. “Change in Control” is defined in the Employment Agreement to mean the acquisition by any person of beneficial ownership of our securities representing greater than 50% of the combined voting power of our then outstanding voting securities. The Employment Agreement contains customary invention assignment, non-compete and non-solicitation provisions.
Susan A. Reyes, M.D., CMO
On January 31, 2024, in connection with the appointment of Susan A. Reyes, MD as Chief Medical Officer of the Company, the Company and Dr. Reyes entered into an employment agreement (the “Reyes Employment Agreement”) with an initial term of three (3) years. Effective as of August 1, 2023, the Company shall pay Dr. Reyes a base salary at the rate of $24,000 per annum. The initial base salary is intended to compensate Dr. Reyes for a fractional devotion of her time, attention, skill and best efforts to the Company. At the discretion of the Chief Executive Officer, the base salary may be increased to a maximum annual amount of $92,000 to better reflect the value of any future increases in Dr. Reyes’ time commitment to the Company. Dr. Reyes is also entitled to paid vacation and sick leave, and participation in any employee benefit plans or programs we may offer. In addition, Dr. Reyes is eligible for equity awards and other benefits as approved by the Board of Directors. The initial term of the Employment Agreement will automatically be renewed for an additional one-year term unless either party provides notice of non-renewal.
The Employment Agreement terminates upon the death or disability of Dr. Reyes, and may be terminated by us for cause, or by Dr. Reyes for any reason. If the Employment Agreement is terminated by us for cause, upon her death or disability, at non-renewal or by Dr. Reyes, she is only entitled to receive base salary accrued but not paid through the date of termination, and in the case of termination due to death or disability, a pro rata payment of the annual incentive earned for the year of termination. If the Employment Agreement is terminated by us without cause or by Dr. Reyes for good reason, we are obligated to pay her severance equal to one year’s base salary and any unpaid incentive compensation. In addition, if at any time during the term of the Employment Agreement Dr. Reyes’ employment is terminated by us without cause within two years after a Change in Control of our company, or in the 90 days prior the Change in Control at the request of the acquiror, we are obligated to pay her an amount equal to 2.99 times her annualized compensation. “Change in Control” is defined in the Employment Agreement to mean the acquisition by any person of beneficial ownership of our securities representing greater than 50% of the combined voting power of our then outstanding voting securities. The Employment Agreement contains customary invention assignment, non-compete and non-solicitation provisions.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information as of October 27, 2024 regarding the number and percentage of our Common Stock (being our only voting securities) beneficially owned by each officer, director, each person (including any “group” as that term is used in Section 13(d)(3) of the Exchange Act) known by us to own 5% or more of our Common Stock, and all officers and directors as a group.
| Title of Class | Name, Title and Address of Beneficial Owner of Shares | Amount of Beneficial Ownership (11) | Percent of Class (12) | |||||||
| Common | Scott M. Boruff, CEO, Director (1) 1462 Rudder Lane Knoxville, TN 37919 | 23,367,697 | 22.86 | % | ||||||
| Common | Dustin M. Hillis, CSO (2) 4978 Toney Carroll Rd Ashland City, TN 37015 | 4,020,000 | 3.82 | % | ||||||
| Common | Kenneth M. Greenwood, CTO (3) 404 Citrus Ridge Drive Davenport, FL 33837 | 8,146,781 | 7.82 | % | ||||||
| Common | Susan A. Reyes, MD, CMO (4) 9901 Sierra Vista Lane Knoxville, TN 37922 | 2,775,026 | 2.69 | % | ||||||
| Common | G. Shayne Bench, Director (5) 309 Ringling Point Dr Sarasota, FL 32114 | 2,346,093 | 2.30 | % | ||||||
| Common | Ryan E. Holland, Director (6) 457 S Ridgewood Ave, Suite D Daytona Beach, FL 32114 | 207,991 | 0.20 | % | ||||||
| Common | Micheal J. Burt, Director 1847 Sanctuary Place Murfreesboro, TN 37128 | 1,000,000 | 0.98 | % | ||||||
| All Officers and Directors as a Group | 41,863,588 | 38.68 | % | |||||||
Principal Shareholders: | ||||||||||
| Common | Julie Boruff (7) 1462 Rudder Lane Knoxville, TN 37919 | 23,367,697 | 22.86 | % | ||||||
| Common | Platinum Equity Advisors, LLC (8) 1462 Rudder Lane Knoxville, TN 37919 | 23,367,697 | 22.86 | % | ||||||
| Common | Jeremy Gindro (9) 310 Tanner Avenue Florence, CO 81226 | 7,770,000 | 7.60 | % | ||||||
| All Principal Shareholders as a Group (10) | 7,770,000 | 7.60 | % | |||||||
| 29 |
| 1) | The common shares owned by Mr. Boruff include 23,367,697 shares beneficially owned by Julie Boruff, who is the spouse of Mr. Boruff. |
| 2) | Dustin M. Hillis directly owned 1,000,000 common shares at July 31, 2024. Mr. Hillis’ beneficial ownership is derived from common shares directly owned by All Things New Ventures, LLC – an entity controlled by Mr. Hillis. |
3)
|
Mr. Greenwood directly owned 6,146,781 and 5,002,751 common shares at July 31, 2024 and 2023, respectively. Including stock options awarded under a prior employment agreement, the shares beneficially owned at July 31, 2024 include options to purchase 2,000,000 shares of our common stock which are vested and exercisable at $0.30 per share and expire in 2025. |
| 4) | Susan Reyes, MD directly owned 1,775,026 and 1,516,666 common shares at July 31, 2024 and 2023, respectively. Including stock options awarded under a prior employment agreement, the shares beneficially owned at July 31, 2024 include options to purchase 1,000,000 shares of our common stock which are vested and exercisable at $0.40 per share and expire in 2025. |
| 5) | G. Shayne Bench beneficially owned 2,346,093 and 2,064,062 common shares at July 31, 2024 and 2023, respectively. Mr. Bench’s beneficial ownership is derived from common shares directly owned by Bucuti Investments, LLC - an entity controlled by Mr. Bench. |
| 6) | Ryan E. Holland beneficially owned 207,991 common shares at July 31, 2024. Mr. Holland’s beneficial ownership is derived from common shares directly owned by the Holland Allocators Spendthrift Trust - and entity controlled by Mr. Hollard. |
| 7) | Includes shares owned by Platinum Equity Advisors, LLC, which is owned 100% and controlled by Julie Boruff. |
| 8) | Owned 100% and controlled by Julie Boruff. |
| 9) | The total includes 100,000 shares owned by James Gindro, the father of Jeremy Gindro. |
| 10) | Only includes those shares not included in officers and directors as a group. |
| 11) | As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or share investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of a security). The inclusion of any shares as deemed beneficially owned does not constitute an admission of beneficial ownership by the named stockholder. |
| 12) | Unless otherwise indicated, we have been advised that all individuals or entities listed have the sole power to vote and dispose of the number of shares set forth opposite their names. For purposes of computing the number and percentage of shares beneficially owned by a security holder, any shares which such person has the right to acquire within 60 days of October 27, 2024 are deemed to be outstanding, but those shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other security holder. We currently do not maintain any equity compensation plans. As of October 27, 2024, there were 108,224,936 shares beneficially owned. |
| 30 |
Changes in Control
We are not aware of any arrangements that may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Other than compensation arrangements, the following is a description of transactions to which we were a participant or will be a participant to, in which:
| ● | the amounts involved exceeded or will exceed the lesser of 1% of our total assets or $120,000; and | |
| ● | any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest. |
To continue operations and meet operating cash requirements, we have periodically relied on advances from related parties, primarily shareholders, until such time as our cash flow from operations meets our cash requirements or we are able to obtain adequate financing through sales of our equity securities and/or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts advanced primarily relate to amounts paid to vendors. The advances are considered temporary in nature and have not been formalized by any written agreement. As of July 31, 2024 and 2023, related parties were owed $30,925 and $328,819, respectively. The amounts owed are payable on demand and carry no interest. The amounts and terms of the related party advances may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.
On January 31, 2024, we entered into a Non-Employee Chief Executive Officer Engagement Agreement (the “Contract CEO Agreement”) with Platinum Equity Advisors, LLC, a related party, to provide the services of our CEO and Chairman of the Board of Directors. Under the terms of the Contract CEO Agreement, Platinum Equity Advisors, LLC was owed $151,386 and $225,000 at July 31, 2024 and 2023, respectively.
On June 12, 2024, we issued a Promissory Note to Platinum Equity Advisors, LLC in the principal amount of $410,207. The note, plus accrued interest, is due on December 12, 2024. At July 31, 2024, the principal amount of the note remained $410,207 and accrued but unpaid interest was $5,583. The amount and terms of the related party note may not necessarily be indicative of the amount and terms that would have been incurred had comparable transactions been entered into with independent third parties.
Director Independence
We currently have no independent directors. Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship that, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in fulfilling the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:
| ● | the director is, or at any time during the past three years was, an employee of the Company; |
| 31 |
| ● | the director or a family member of the director accepted any compensation from the Company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service); |
| ● | a family member of the director is, or at any time during the past three years was, an executive officer of the Company; | |
| ● | the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the Company made, or from which the Company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions); | |
| ● | the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the Company served on the compensation committee of such other entity; or | |
| ● | The director or a family member of the director is a current partner of the Company’s outside auditor, or at any time during the past three years was a partner or employee of the Company’s outside auditor, and who worked on the Company’s audit. |
The Company does not currently have a separately designated audit, nominating, or compensation committee.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The following table sets forth the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s quarterly reports or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
| July 31, 2024 | July 31, 2023 | |||||||
| Audit Fees | $ | 42,500 | $ | 43,999 | ||||
| All Other Fees | - | - | ||||||
| Total | $ | 42,500 | $ | 43,999 | ||||
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
Given the small size of our Board as well as the limited activities of our Company, our Board of Directors acts as our Audit Committee. Our Board pre-approves all audit and permissible non-audit services. These services may include audit services, audit-related services, tax services, and other services. Our Board approves these services on a case-by-case basis.
| 32 |
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
| 32.1* | Chief Executive Officer and Chief Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002* | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed Herewith
¥ Executive Compensation Agreement
| 33 |
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Healthcare Integrated Technologies, Inc. | ||
| Date: October 29, 2024 | ||
| By: | /s/ Scott M. Boruff | |
| Scott M. Boruff | ||
| President, Chief Executive Officer (Principal Executive Officer) | ||
| Healthcare Integrated Technologies, Inc. | ||
| Date: October 29, 2024 | ||
| By: | /s/ Timothy R. Brady | |
| Chief Financial Officer (Principal Financial Officer) | ||
In accordance with the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Date: October 29, 2024 | By: | /s/ Scott M. Boruff |
Scott M. Boruff President, Chief Executive Officer, Director (Principal Executive Officer) |
| Date: October 29, 2024 | By: | /s/ Timothy R. Brady |
| Chief Financial Officer (Principal Financial Officer) |
| 34 |
INDEX TO FINANCIAL STATEMENTS
| Page | |
| Fiscal Years Ended July 31, 2024 and 2023 | |
| Report of Independent Registered Public Accounting Firm (PCAOB ID: |
F-2 |
| Consolidated Balance Sheets | F-3 |
| Consolidated Statements of Operations | F-4 |
| Consolidated Statements of Changes in Stockholders’ Deficit | F-5 |
| Consolidated Statements of Cash Flows | F-6 |
| Notes to Consolidated Financial Statements | F-7 - F-20 |
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Healthcare Integrated Technologies, Inc.
311 S. Weisgarber Road
Knoxville, TN 37919
Opinion on the Financial Statements
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has a history of losses, an accumulated deficit, has negative working capital and has not generated cash from operations to support a meaningful and ongoing business plan. Management’s evaluation of the events and conditions and management’s plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.
| /s/
|
| We have served as the Company’s auditor since 2019 | |
| October 29, 2024 |
| F-2 |
HEALTHCARE INTEGRATED TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
| July 31, 2024 | July 31, 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| OTHER ASSETS: | ||||||||
| Intangibles | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable and accrued expenses, related party | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Payroll related liabilities | ||||||||
| Notes payable, related party | ||||||||
| Notes payable | ||||||||
| Notes payable | ||||||||
| Total current and total liabilities | ||||||||
| STOCKHOLDERS’ DEFICIT: | ||||||||
| Common stock par value $; shares authorized; and shares issued and outstanding as of July 31, 2024 and 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
See accompanying notes to the consolidated financial statements.
| F-3 |
HEALTHCARE INTEGRATED TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| 2024 | 2023 | |||||||
| For the Years Ended July 31, | ||||||||
| 2024 | 2023 | |||||||
| REVENUE: | ||||||||
Contract revenue | $ | $ | ||||||
Cost of contracts | ( | ) | ||||||
Gross profit | ||||||||
| OPERATING EXPENSES: | ||||||||
| Selling, general & administrative | ||||||||
| Stock-based compensation | ||||||||
| Amortization of intangibles | ||||||||
| Impairment of intangibles | ||||||||
| Total operating expenses | ||||||||
| OPERATING LOSS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE): | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Extinguishment of liabilities | ||||||||
| Gain on settlements | ||||||||
| Change in fair value of derivative liability | ||||||||
| Total other income (expense) | ( | ) | ||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| NET LOSS PER COMMON SHARE | ||||||||
| Basic and diluted | $ | ) | $ | ) | ||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | ||||||||
| Basic and diluted | ||||||||
See accompanying notes to the consolidated financial statements.
| F-4 |
HEALTHCARE INTEGRATED TECHNOLOGIES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED JULY 31, 2024 AND 2023
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balances at July 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||
| Shares issued for cash | ||||||||||||||||||||
| Shares issued for payment of accrued expenses | ||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||
| Shares issued for conversion of debt and related accrued interest | ||||||||||||||||||||
| Shares issued for loan modification | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Balances at July 31, 2023 | ( | ) | ( | ) | ||||||||||||||||
| Balance | ( | ) | ( | ) | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||
| Shares issued for cash | ||||||||||||||||||||
| Shares issued for payment of accrued expenses | ||||||||||||||||||||
| Shares issued for services | ( | ) | ||||||||||||||||||
| Shares issued for loan modification | ( | ) | ||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Balances at July 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
See accompanying notes to the consolidated financial statements.
| F-5 |
HEALTHCARE INTEGRATED TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| 2024 | 2023 | |||||||
| For the Years Ended July 31, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile loss to net cash used in operating activities: | ||||||||
| Amortization | ||||||||
| Stock-based compensation | ||||||||
| Impairment of intangibles | ||||||||
| Extinguishment of liabilities | ( | ) | ||||||
| Gain on settlements | ( | ) | ||||||
| Shares issued for services | ||||||||
| Shares issued for note amendment fees | ||||||||
| Amortization of debt discount | ||||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | ( | ) | ||||||
| Prepaid expenses and other current assets | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Accounts payable and accrued expenses, related party | ( | ) | ||||||
| Payroll related liabilities | ||||||||
| NET CASH USED BY OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Cash paid for development of intangible assets | ( | ) | ||||||
| NET CASH USED BY INVESTING ACTIVITIES | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from sale of common stock | ||||||||
| Proceeds from related party loans | ||||||||
| Payments of amounts owed to related parties | ( | ) | ( | ) | ||||
| Principal payments on short-term debt | ( | ) | ||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
| Cash paid for interest | $ | $ | ||||||
| SIGNIFICANT NON-CASH INVESTING AND FINACING ACTIVITIES | ||||||||
| Shares issued for payment of payroll related liabilities | $ | $ | ||||||
| Shares issued for payment of items included in accounts payable and accrued expenses, related party | $ | |||||||
| Shares issued for payment of convertible debt | $ | |||||||
| Capital expenditures included in payroll related liabilities | $ | |||||||
| Capital expenditures from stock-based compensation | $ | |||||||
| Shares issued for payment of items included in accounts payable and accrued expenses | $ | |||||||
See accompanying notes to the consolidated financial statements.
| F-6 |
HEALTHCARE INTEGRATED TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024 and 2023
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, 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.
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.
| F-7 |
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 $
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 $
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.
| F-8 |
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 to
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
Intangibles,
net was $
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,” (paragraph 815-10-05-4 and Section 815-40-25). The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. The change in fair value is recorded in the consolidated statements of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise, or cancellation and then the related fair value is reclassified to equity.
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.
| F-9 |
The Company adopted Section 815-40-15 of the FASB ASC (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.
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
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
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.” The Company follows the five-step model provided by ASC Topic 606 in order to recognize revenue in the following manner: 1) Identify the contract; 2) Identify the performance obligations of the contract; 3) Determine the transaction price of the contract; 4) Allocate the transaction price to the performance obligations; and 5) Recognize revenue. An entity recognizes revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services.
| F-10 |
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.” We incurred advertising
and marketing costs of $
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”) which establishes financial accounting and reporting standards for stock-based employee compensation. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. The Company accounts for compensation cost for stock option plans, if any, in accordance with ASC 718.
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”. Under this method, income tax expense is recognized for the amount of: (1) taxes payable or refundable for the current year and (2) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
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.
| F-11 |
We determine basic loss per share and diluted loss per share in accordance with the provisions of ASC 260, “Earnings Per Share.” Basic loss per share excludes dilution and is computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding for the period. The calculation of diluted income loss per share is similar to that of basic earnings per share, except the denominator is increased, if the earnings are positive, to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares had been exercised.
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.
NOTE 2 - GOING CONCERN
The
accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the
Company as a going concern. The Company had a net loss of $
In view of these matters, our ability to continue as a going concern is dependent upon the continuing development, marketing and sales of a viable product to achieve a level of profitability. We intend to finance our future development activities and our working capital needs from the sale of private and public equity securities with additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. Although the Company believes in the viability of management’s strategy to generate sufficient revenue, control costs and the ability to raise additional capital, there can be no assurances to that effect. Therefore, the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should we be unable to continue as a going concern.
| F-12 |
NOTE 3 - INTANGIBLES
Intangibles consisted of the following at July 31, 2024 and 2023:
SCHEDULE OF INTANGIBLES ASSET
| As of July 31, 2024 | ||||||||||||||||
| Accumulated | Reserve for | |||||||||||||||
| Cost | Amortization | Impairment | Net | |||||||||||||
| Software | $ | $ | ( | ) | $ | $ | ||||||||||
| Patents | ( | ) | ( | ) | ||||||||||||
| Website | ( | ) | ||||||||||||||
| Total intangibles | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
As of July 31, 2023 | ||||||||||||||||
| Accumulated | Reserve for | |||||||||||||||
| Cost | Amortization | Impairment | Net | |||||||||||||
| Software | $ | $ | $ | $ | ||||||||||||
| Patents | ( | ) | ||||||||||||||
| Website | ( | ) | ||||||||||||||
| Total intangibles | $ | $ | ( | ) | $ | $ | ||||||||||
Impairment
During
the year ended July 31, 2024, the Company reassessed the existence of impairment indicators on its internally developed
definite-lived intangible assets. The Company determined that indicators of impairment existed and, as a result, a quantitative
impairment analysis was required. Management elected to abandon certain patent applications during the year. In addition, Management
analyzed certain patents that were in an office action status at year end for feasibility and probability of the success of
continuing the office action process. Based on the patent abandonments and the results of the analysis, Management concluded that
the carrying amount of the patents exceeding their fair value, which resulted in an impairment charge of $
Amortization
expense for the years ended July 31, 2024 and 2023 was $
Intangibles
are amortized over their estimated useful lives of
SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total expected amortization expense | $ |
| F-13 |
NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following at July 31, 2024 and 2023:
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES
| July 31, 2024 | July 31, 2023 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued interest expense | ||||||||
| Total accounts payable and accrued expenses | $ | $ | ||||||
NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES, RELATED PARTY
Accounts payable and accrued expenses, related party consisted of the following at July 31, 2024 and 2023:
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES RELATED PARTY
| July 31, 2024 | July 31, 2023 | |||||||
| Accounts payable, related party | $ | $ | ||||||
| Accrued expenses, related party | ||||||||
| Total accounts payable and accrued expenses, related party | $ | $ | ||||||
NOTE 6 - PAYROLL RELATED LIABILITIES
Payroll related liabilities consisted of the following at July 31, 2024 and 2023:
SCHEDULE OF PAYROLL RELATED LIABILITIES
| July 31, 2024 | July 31, 2023 | |||||||
| Accrued officers’ payroll | $ | $ | ||||||
| Payroll taxes payable | ||||||||
| Total payroll related liabilities | $ | $ | ||||||
NOTE 7 - NOTE PAYABLE, RELATED PARTY
On
June 12, 2024, we issued a Promissory Note to Platinum Equity Advisors, LLC, a related party (the “Platinum Note”), in the
principal amount of $
NOTE 8 – NOTES PAYABLE
We had the following debt obligations reflected at their respective carrying values on our consolidated balance sheets as of July 31, 2024 and 2023:
SCHEDULE OF DEBT OBLIGATIONS
| July 31, 2024 | July 31, 2023 | |||||||
| 5% Convertible promissory notes | $ | $ | ||||||
| Note payable to Acorn Management Partners, LLC | ||||||||
| Notes payable | $ | $ | ||||||
5% Convertible Promissory Notes
On
various dates during the month of March 2018, we issued a series of 5% Convertible Promissory Notes (collectively, the “5% Notes”)
totaling $
| F-14 |
| ● | At the option of the holder, the outstanding principal amount of the note, and any accrued but unpaid interest due, may be converted into the Company’s common stock at any time prior to the maturity date of the note. | |
| ● |
There
were no
Note Payable to Acorn Management Partners, LLC
On
August 11, 2020 we agreed to repurchase shares of our common stock from Acorn Management Partners, LLC (“AMP”).
As consideration for the share repurchase, we issued a $
NOTE 9 - INCOME TAXES
A
reconciliation of the provision for income taxes as reported, and the amount computed by multiplying net loss by the federal statutory
rate of
SCHEDULE OF RECONCILIATION OF PROVISION FOR INCOME TAXES
| July 31, 2024 | July 31, 2023 | |||||||
| Federal income tax benefit computed at the statutory rate | $ | ( | ) | $ | ( | ) | ||
| Increase (decrease) resulting from: | ||||||||
| Stock-based compensation | ||||||||
| Derivatives | ||||||||
| Valuation allowance | ||||||||
| Other | ||||||||
| Income tax benefit, as reported | $ | $ | ||||||
The components of the net deferred tax asset as of July 31, 2024 and 2023 are as follows:
SCHEDULE OF COMPONENTS OF NET DEFERRED TAX ASSET
| July 31, 2024 | July 31, 2023 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryovers | $ | $ | ||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax asset, as reported | $ | $ | ||||||
In
assessing the realizable value of deferred tax assets, management considers whether it is more likely than not that some portion or all
the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future
taxable income during the periods in which these temporary differences become tax deductible. Based on management’s assessment
of objective and subjective evidence, we have concluded at this time it is more likely than not that all of our deferred tax asset will
not be realized and we have provided a valuation allowance for the entire amount of the deferred tax asset. At July 31, 2024, we have
approximately $
| F-15 |
We conduct business solely in the United States and file income tax returns in the United States federal jurisdiction as well as in the states of Tennessee and Colorado. The taxable years ended July 31, 2024 through 2018 remain open to examination by the taxing jurisdictions to which we are subject.
The Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the Company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740.
If applicable, interest costs related to the unrecognized tax benefits are required to be calculated and would be classified as Other expenses – Interest expense in the consolidated statements of operations. Penalties would be recognized as a component of “General and administrative.”
Our stock-based compensation programs are long-term retention awards that are intended to attract, retain, and provide incentives for employees, officers and directors, and to align stockholder and employee interest. We utilize grants of both stock options and warrants and restricted stock to achieve those goals.
Summary of Stock Options and Warrants
During the year ended July 31, 2024, we recorded $ of compensation expense related to stock options and warrants. During the year ended July 31, 2023, we recorded $ of compensation expense, net of capitalized expense of $, related to stock options and warrants. The grant date fair value of stock options and warrants during the year ended July 31, 2024 was $. We granted stock options or warrants during the year ended July 31, 2023.
SCHEDULE OF OPTIONS AND WARRANTS ACTIVITY
| July 31, 2024 | July 31, 2023 | |||||||||||||||
| Number of | Weighted | Number of | Weighted | |||||||||||||
| Options and | Average | Options and | Average | |||||||||||||
| Warrants | Exercise Price | Warrants | Exercise Price | |||||||||||||
| Balance at beginning of year | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Canceled | ( | ) |
| |||||||||||||
| Expired | ( | ) | ||||||||||||||
| Balance at end of period | $ | $ | ||||||||||||||
| Options and warrants exercisable | $ | $ | ||||||||||||||
| F-16 |
Summary of Restricted Stock Grants
During the years ended July 31, 2024 and 2023, we recorded compensation expense related to restricted stock grants of $ and $, respectively.
SCHEDULE OF RESTRICTED STOCK ACTIVITY
| July 31, 2024 | July 31, 2023 | |||||||
| Balance at beginning of period | ||||||||
| Granted | ||||||||
| Released | ( | ) | ( | ) | ||||
| Balance at end of period | ||||||||
The grant date fair value of restricted stock awards during the years ended July 31, 2024 and 2023 was $ and $, respectively.
NOTE 11 - COMMON STOCK
At July 31, 2024 and 2023, we had and shares of common stock outstanding, respectively. During the year ended July 31, 2024, we issued unregistered shares of our common stock, of which shares were issued for cash, shares were issued for the payment of accrued expenses, were issued for compensation, shares were issued for services, and shares were issued for a loan modification fee. During the year ended July 31, 2023, we issued unregistered shares of our common stock, of which were issued for the payment of accrued expenses, shares were issued for cash, shares were issued for payment of note extension fees, shares were issued for compensation, shares were issued for services, and shares were issued for the conversion of debt and related accrued interest.
On August 1, 2023, we issued unregistered shares of our common stock to a member of our Board of Directors as compensation for serving on the Board and for providing certain other business advisory services. The shares were issued upon the vesting of shares from a restricted stock award dated August 26, 2022 at an estimated grant date fair value of $per share on such date.
On October 19, 2023, we issued unregistered shares of our common stock to a consultant pursuant to the terms of a consulting agreement. The shares were issued upon the vesting of shares from a restricted stock award dated October 19, 2022 at an estimated grant date fair value of $ per share on such date.
On October 19, 2023, we issued unregistered shares of our common stock to a consultant pursuant to the terms of a consulting agreement. The shares were issued upon the vesting of shares from a restricted stock award dated October 19, 2022 at an estimated grant date fair value of $ per share on such date.
On November 1, 2023, we issued unregistered shares of our common stock to a member of our Board of Directors as compensation for serving on the Board and for providing certain other business advisory services. The shares were issued upon the vesting of shares from a restricted stock award dated August 26, 2022 at an estimated grant date fair value of $ per share on such date.
On November 1, 2023, we issued unregistered shares of our common stock to a consultant pursuant to the terms of a consulting agreement. The shares were issued upon the vesting of shares from a restricted stock award dated September 1, 2023 at an estimated grant date fair value of $ per share on such date.
On December 8, 2023, we issued unregistered shares of our common stock to a previous lender pursuant to a make whole provision included as part of a loan modification fee. The shares were issued at an estimated value of $ per share.
On
January 31, 2024, we completed a private placement of
unregistered shares of our common stock at a price of $
per share resulting in net proceeds to the Company of $
| F-17 |
On
February 9, 2024, we completed a private placement of
unregistered shares of our common stock at a price of $
per share resulting in net proceeds to the Company of $
On
March 7, 2024, we completed a private placement of
unregistered shares of our common stock at a price of $
per share resulting in net proceeds to the Company of $
On
March 22, 2024, we completed a private placement of
unregistered shares of our common stock at a price of $
per share resulting in net proceeds to the Company of $
On April 16, 2024, we issued unregistered shares of our common stock to a previous lender pursuant to a make whole provision included as part of a loan modification fee. The shares were issued at an estimated value of $ per share.
On
May 2, 2024, we completed a private placement of
unregistered shares of our common stock at a price of $per
share resulting in net proceeds to the Company of $
On June 15, 2024, we issued unregistered shares of our common stock to a newly appointed officer of the Company pursuant to a Non-Employee Chief Strategy Officer Engagement Agreement entered into on the same date. The shares were issued to the officer at an estimated grant date fair value of $ per share.
On
July 15, 2024, we completed a private placement of
unregistered shares of our common stock at a price of $
per share resulting in net proceeds to the Company of $
On July 31, 2024, we issued unregistered shares of our common stock for payment of accrued compensation due to officers of the company pursuant to their employment agreements. The shares were issued at an agreed upon value of approximately $ per share.
NOTE 12 - RELATED PARTY TRANSACTIONS
To
continue operations and meet operating cash requirements, we have periodically relied on short term loans from related parties, primarily
shareholders, until such time as our cash flow from operations meets our cash requirements, or we are able to obtain adequate financing
through sales of our equity securities and/or traditional debt financing. There is no formal written commitment for continued support
by shareholders or others. Amounts loaned primarily relate to amounts paid to vendors. The loans are considered temporary in nature and
have not been formalized by any written agreement. As of July 31, 2024 and 2023, related parties were owed $
For
compensation after August 1, 2023, we entered into a Non-Employee Chief Executive Officer Engagement Agreement (the “Contract CEO
Agreement”) with Platinum Equity Advisors, LLC (“Platinum Equity”), a related party, to provide the services of our
CEO and Chairman of the Board of Directors. Platinum Equity Advisors, LLC is a related party, is our largest shareholder, and is owned
On
June 12, 2024, we issued a Promissory Note to Platinum Equity Advisors, LLC in the principal amount of $
| F-18 |
NOTE 13 - COMMITMENTS AND CONTINGENCIES
Litigation
On
September 18, 2023, Apex Funding Source, LLC (the “Lender”) filed a lawsuit in the Supreme Court of the State of New York,
County of New York, naming Grasshopper Staffing, Inc. and Indeliving Holdings, Inc., both of which are wholly owned subsidiaries of the
Company, as defendants in the suit. The action against our wholly owned subsidiaries is due to an alleged guarantee of a loan the Lender
made to Blue Earth Resources, Inc. (“BERI”), an entity related to the Company through common management control. The lawsuit
is an action for BERI’s breach of a loan agreement and failure to pay $
On
April 18, 2024, the Lender filed a motion seeking partial summary judgment on its First Cause of Action against BERI and its Second Cause
of Action against Scott M. Boruff in the amount of $
In the event the Lender attempts to enforce the alleged guarantees against our subsidiaries, we believe we have valid defenses against such an action. In addition, both subsidiaries previously discontinued their operations and currently have no assets. In the judgement of the Company’s management, if the pending actions were adversely determined they would not have a material adverse effect on the Company.
Employment and Consulting Agreements
On
January 31, 2024,
| F-19 |
On
January 31, 2024,
On
January 31, 2024,
On
June 15, 2024,
NOTE 14 - SUBSEQUENT EVENTS
Beginning
August 1, 2024 and through the issuance date of the financial statements, we completed multiple private placement transactions
resulting in the issuance of
unregistered shares of our common stock at a price of $
per share. The share issuances resulted in net proceeds to the Company of $
On August 23, 2024, Micheal J. Burt was appointed to our board of directors for a term of three () years and shall continue until canceled by the Company. Either party has the right to cancel the remaining term of the appointment on each yearly anniversary date by providing written notice to the other party at least 30 days prior to the anniversary date the cancelation is to become effective. As compensation for Mr. Burt’s service, he received a three () year restricted stock award of shares of the Company’s common stock. The restricted stock award shall vest shares on August 25, 2024, shares on August 25, 2025, shares on August 25, 2026 and shares on August 25, 2027.
We evaluate subsequent events and transactions that occur after the balance sheet date for the period presented and up to the issuance date of the financial statements. Based on our review, we did not identify any subsequent events other than those listed above that would require adjustment to or disclosure in the consolidated financial statements.
| F-20 |
Exhibit 10.5
Exhibit 10.7
Exhibit 10.8
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Scott M. Boruff, certify that:
| 1. | I have reviewed this annual report on Form 10-K of Healthcare Integrated Technologies, Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
| Date: October 29, 2024 | By: | /s/ Scott M. Boruff |
| Scott M. Boruff | ||
| Chief Executive Officer (Principal Executive Officer) |
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Charles B. Lobetti, III, certify that:
| 1. | I have reviewed this annual report on Form 10-K of Healthcare Integrated Technologies, Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
| Date: October 29, 2024 | By: | /s/ Timothy R. Brady |
| Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Healthcare Integrated Technologies, Inc., (the “Company”) on Form 10-K for the years ended July 31, 2024 and July 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Scott M. Boruff, Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: October 29, 2024 | By: | /s/ Scott M. Boruff |
| Scott M. Boruff | ||
| Chief Executive Officer (Principal Executive Officer) |
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Healthcare Integrated Technologies, Inc., (the “Company”) on Form 10-K for the years ended July 31, 2024 and July 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Charles B. Lobetti, III, Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: October 29, 2024 | By: | /s/ Timothy R. Brady |
| Chief Financial Officer (Principal Financial Officer) |