HEALTHCARE INTEGRATED TECHNOLOGIES INC. MANAGEMENT REPORT ON FINANCIAL POSITION AND RESULTS OF OPERATIONS. (Form 10-K)

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,
2022 and 2021 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.

In addition to SafeSpace, we are creating 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 the financial flexibility and assembling the right
complement of personnel and outside consultants required to successfully execute
our mission.

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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 allowed us to continue refining our initial product
and readying it for pilot testing, developing our future product offerings and
adding talented individuals to our management team. Highlighted achievements for
the fiscal year ended July 31, 2022 include:

? On August 9, 2021we exercised our option to extend the maturity date

AJB Capital Investments, LLC (“AJB-Capital“) Promissory note of August 2nd,

2021 (AJB Note 1) until February 2, 2022. Following the extension of the

maturity date, the interest rate of the note has changed from ten percent (10%)

per year to twelve percent (12%) per year during the extension period. We

did not incur any costs related to the extension. On February 9, 2022we refunded the

AJB Note 1 with proceeds of issuance of new promissory note to AJB

Capital.

? On August 10, 2021we issued 1,250,000 common shares pursuant to

a Securities Purchase Agreement (“SPA”) dated April 30, 2021. Under the

initial terms of the SPA, the investor agreed to purchase 2,000,000 shares of

our ordinary shares for $200,000 at a price of $0.10 per share through a series

of payments. After receipt of $125,000 of the investor, both the Company and

the investor has mutually accepted the settlement of the SPA for the amounts received

and the issuance of shares at the agreed price per share. We engaged

no costs related to the private placement.

? On September 14, 2021we have entered into a Settlement and Variation Agreement

(the “Agreement”) with AJB-Capital for a potential Event of Default under the

Promissory note dated February 2, 2021 (the “AJB Note”) and securities

Purchase Agreement (the “PSA”) for Subsequent Equity Transactions. As

part of the settlement under the agreement, we have agreed to issue AJB-Capital a

666,666 additional shares of our common stock for payment of his $200,000

origination fee due under the terms of the original note and SPA.

? On February 9, 2022we entered into a securities purchase agreement with AJB

Capital, under which AJB-Capital purchased a promissory note (the “AJB

Note 2″) in the principal amount of $600,000 for a global purchase price

of $534,000. The AJB Note 2 bears interest at the rate of ten percent (10%)

per year and expires on February 9, 2023.


Results of Operations

Revenues

We had no revenues in fiscal 2022 or 2021. Our healthcare technology business is
not currently producing revenue as we continue to develop, refine and evaluate
our products.

Selling, general and administrative expenses

The table below provides a comparison of our selling, general and administrative expenses for the years ended July 31, 2022 and 2021:

                                  For the Years Ended July 31,
                                     2022                2021          $ Variance        %Variance

Officers' salaries              $       506,443       $   531,342     $    (24,899 )              (5 )%
Stock-based compensation                473,511           621,776         (148,265 )             (24 )%
Professional fees                        94,051            97,500           (3,449 )              (4 )%
Advertising and marketing                36,535             5,297           31,238               590 %
Depreciation and amortization            11,215             8,571          
 2,644                31 %
Other                                    16,310            10,148            6,162                61 %
Total                           $     1,138,065       $ 1,274,634     $   (136,569 )             (11 )%



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Officers' Salaries - Officers' salaries, net of capitalized amounts, decreased
$24,899 in 2022, or 5%. The decrease resulted from a bonus being paid to our CEO
in 2021 and a decrease in payroll tax expense in 2022 due to our CEO
compensation changing from employee to contract status.

Stock-based Compensation - Stock-based compensation expense decreased $148,265,
or 24%, from the prior year. The decrease results from a 2022 reduction in the
amortization of the grant date fair value of employee stock options granted to
our CEO and a reduction in the expense related to a restricted stock grant to
our CFO.

Professional Fees - Professional fees decreased $3,449, or 4%, over the 2021
amount. In 2022, legal fees decreased $11,594 and transfer agent and filing fees
decreased $1,797. The decrease in legal fees, transfer agent and filing fees was
partially offset by a $7,174 increase in fees paid to outside consultants,
primarily relating to marketing and branding matters, and a $3,827 increase in
accounting fees over 2021.

Advertising and marketing – Advertising and marketing expenditure increased $31,238
compared to 2021. The increase is due to the addition of a new contract of sales and marketing representatives in 2022.

Depreciation and Amortization - Depreciation and amortization expense increased
$2,644, or 31%, over the prior year. The increase results from amortization
expense related to new intangible assets placed in service in 2022, which was
partially offset by declining depreciation expense as older assets become fully
depreciated and/or disposed of.

Other – Other expenses increased $6,162or 61%, compared to 2021. The increase is mainly related to higher travel and office expenses in 2022.

Other income (expenses)

The table below presents a comparison of our other income (expenses) for the years ended July 31, 2022 and 2021:

                                  For the Years Ended July 31,
                                    2022                 2021          $ 

Deviation %Deviation

Interest expense               $      (447,623 )     $   (227,900 )   $   (219,723 )              96 %
Change in fair value of
derivative liability                   224,667             89,669          134,998               151 %
Derivative expense                           -            (97,201 )         97,201               100 %
Debt forgiveness                             -             41,931          (41,931 )             100 %
Lawsuit settlement                           -             13,110         
(13,110 )             100 %
Total                          $      (222,956 )     $   (180,391 )   $    (42,565 )              24 %



Interest Expense - Interest expense increased $219,723, or 96%, over the 2021
amount. The increase is primarily due to the amortization of debt discount and
related interest payments on the AJB Note 2 which was issued and outstanding for
six months in 2022.

Change in Fair Value of Derivative Liability - The change in the fair value of
the derivative liabilities associated with our AJB Capital notes reflects a
current year gain of $224,667 as compared to a gain of $89,669 in 2021. The
current period gain resulted from a $116,435 decrease in the fair value of the
derivative liability on the new AJB Note 2 and a $108,232 decrease in the far
value of the derivative liability of the old AJB note 1 that was retired during
the period.

Derivative Expense - Derivative expense decreased $97,201 from the same period
in the prior year. 2021 derivative expense was associated with the issuance of
the old AJB Note 1. The new AJB Note 2, issued in 2022, had no associated
derivative expense.

Debt Forgiveness - Income from debt forgiveness was $41,931 for the year ended
July 31, 2021. The income results from the forgiveness of our Small Business
Administration Paycheck Protection Program loan, plus related accrued interest,
on December 14, 2021. We had no debt forgiveness income in the year ended July
31, 2022.

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Lawsuit Settlement - Income from lawsuit settlements was $13,110 for the year
ended July 31, 2021. The income results from the settlement of a lawsuit with
RBSM on May 27, 2021. We had no income from lawsuit settlements in the year
ended July 31, 2022.

Cash and capital resources

Working capital

The following table summarizes our working capital for the fiscal years ending
July 31, 2022 and 2021:

                              July 31, 2022       July 31, 2021
Current assets               $        37,667     $        49,018
Current liabilities               (3,153,778 )        (2,259,432 )

Working capital deficit ($3,116,111) ($2,210,414)



Current assets for the year ended July 31, 2022 decreased $11,351 as compared to
the year ended July 31, 2021. The decrease is due to a decrease in cash and cash
equivalents and the amortization of prepaid legal fees.

Current liabilities for the year ended July 31, 2022 increased $894,346 as
compared to the fiscal year ended July 31, 2021. The increase is primarily due
to related party accrued expenses for services under our Contract CEO Agreement,
the continuing accrual of officer's compensation and new proceeds from the AJB
Note 2.

Net cash used by operating activities

We currently do not have a revenue source and will continue to have negative
cash flow from operations for the near future. The factors in determining
operating cash flows are largely the same as those that affect net earnings,
except for non-cash expenses such as depreciation and amortization, stock-based
compensation, amortization of debt discount and changes in fair value of assets
and liabilities, which affect earnings but do not affect operating cash flow.
Net cash used by operating activities was $212,177 for the year ended July 31,
2022 as compared to $592,192 for the year ended July 31, 2021. The $380,015
decrease in cash used during 2022 is primarily attributable to a decrease in
cash payments for officer's compensation.

Net cash used by investment activities

Net cash used by investing activities was $32,690 and $60,608 for the years
ended July 31, 2022 and 2021, 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 $234,475 for the year ended July
31, 2022, which represents a $351,696 decrease from the 2021 amount. The
decrease from 2021 is attributable to a $330,000 decrease in proceeds from the
sale of common stock and stock subscriptions and a $156,700 decrease in net
proceeds from the issuance of debt, which were offset by a net cash increase of
$135,004 from related party loan and repayment transactions.

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, 2022.

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, 2022
and 2021. 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.

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Significant 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 to our consolidated financial statements.

We believe that the following critical policies affect our most significant judgments and estimates used in the preparation of our financial statements.

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.

Impairment of long-lived assets

Long-lived assets such as property, equipment and identifiable intangibles are
reviewed for impairment 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 from its undiscounted
cash flows, an impairment loss is recognized for the difference between the
carrying amount and fair value of the asset. When fair values are not available,
we estimate fair value using the expected future cash flows discounted at a rate
commensurate with the risk associated with the recovery of the assets. We did
not recognize any impairment losses for any periods presented.

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. We did not recognize any impairment losses during
any of the periods presented.

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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.

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 re-assessed at the end of
each reporting period. Equity instruments that are initially classified as
equity that become subject to reclassification are reclassified to liability at
the fair value of the instrument on the reclassification date. Derivative
instrument liabilities will be classified in the balance sheet as current or
non-current based on whether or not net-cash settlement of the derivative
instrument is expected within 12 months of the balance sheet date.

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 use a binomial option pricing model to calculate the fair value of the derivative liability and to mark-to-market the fair value of the derivative at each reporting date. We recognize the change in the fair value of the derivative as other income or expense in the consolidated statements of earnings.

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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.
The Company's revenue recognition policies remained unchanged as a result of the
adoption of ASC 606, and there were no significant changes in business processes
or systems.

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.

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.

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 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.

Capital resources

We had no significant commitments for capital expenditures at July 31, 2022.

Off-balance sheet arrangements

We had no off-balance sheet arrangements July 31, 2022 or 2021.

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