UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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DOCUMENTS INCORPORATED BY REFERENCE
Table of Contents
ii
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended February 28, 2025. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
iii
PART I
ITEM 1. BUSINESS
Business Overview
Robotic Assistance Devices, LLC was incorporated in the State of Nevada on July 26, 2016, as an LLC and was founded by current President and CEO, Steve Reinharz. Mr. Reinharz has 30+ years in various leadership/ownership roles in the security industry and was part of a successful exit to a global multinational security company in 2004. Mr. Reinharz started his first security integration company in 1996, which he grew to 30+ employees before closing that company in 2003. In 2017, Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc. (“RAD”), through the issuance of 10,000 common shares to its sole shareholder.
Artificial Intelligence Technology Solutions Inc. (formerly known as On the Move Systems Corp.) (“AITX” or the “Company”) was incorporated in Florida on March 25, 2010, and reincorporated in Nevada on February 17, 2015. On August 24, 2018, On the Move Systems Corp. changed its name to Artificial Intelligence Technology Solutions Inc. (“AITX”).
In 2017, AITX acquired all the ownership and equity interests in RAD (the “Acquisition”). Before the Acquisition, AITX’s business focus had been transportation services, and AITX was exploring the on-demand logistics market by developing a network of logistics partnerships. After the Acquisition, AITX shifted its business focus to align with RAD’s mission. Since that time, AITX has been engaged in pursuing the delivery of artificial intelligence (AI) and robotic solutions for operational, security, and monitoring needs. More specifically, the Company is focused on applying advanced AI-driven technologies, paired with multi-use hardware and supported by custom software and cloud services, to intelligently automate and integrate a variety of high-frequency security, concierge, and operational tasks.
Since substantially all of AITX’s operations were disposed of with the transaction’s consummation, the Acquisition was treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes. AITX recorded no goodwill or other intangible assets as a result of the Acquisition. RAD is treated as the accounting acquirer as its stockholders control the Company after the Acquisition, even though AITX was the legal acquirer. Therefore, the assets, liabilities, and historical operations reflected in these financial statements are those of RAD as if RAD had always been the reporting company.
RAD’s solutions are generally offered as a recurring monthly subscription, typically with a minimum 12-month subscription contract. RAD also sells their units and the client that RAD has had longest opts to do this. RAD’s solutions are expected to earn over 75% gross margin over the life of each deployed asset when under subscription and over 50% gross margin when sold. Specifically, RAD provides workflow automation solutions delivered through a system of hardware, software and cloud services. All elements of hardware and software design offered by RAD are 100% designed, developed and owned by RAD.
Steve Reinharz, founder of RAD and single largest equity owner of AITX, became CEO on March 2, 2021.
The Problems that AITX Solves
The labor model is collapsing.
| · | Security staffing is expensive, hard to fill, and impossible to scale with growing demand. |
Human response is too slow for modern threats.
| · | Incidents happen in seconds. Manual detection and delayed reaction put people, property, and reputations at risk. |
Most security roles were never built for people.
| · | Watching dozens of cameras, identifying anomalies, escalating threats, these tasks are better suited for machines that never fatigue. |
Legacy systems are fragmented and reactive.
| · | Disconnected devices, siloed alerts, and manual workflows prevent true situational awareness or intelligent action. |
There’s no “autonomous layer” in physical security.
Every other industry, logistics, manufacturing, finance, has automated routine operations. Physical security is still lacking automation.
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Executive Summary
AITX is a pioneer in practical AI deployment, offering proven, revenue-generating solutions that address long-standing inefficiencies in the security and facility management industries. While many companies are still conceptualizing how AI and generative AI might apply, AITX is actively delivering results through its suite of intelligent, autonomous devices and platforms.
At the core of these solutions is SARA, the Company’s Agentic AI platform. SARA enables autonomous detection, decision-making, and voice-driven response, setting AITX apart from passive monitoring systems and advancing the capabilities of modern security technology.
AITX represents a compelling opportunity in a high-growth industry driven by rising demand for smarter, more efficient alternatives to traditional security models.
Simply put, AITX is redefining how security and safety is deployed.
“AITX isn’t following trends, it’s setting them, delivering intelligent security where traditional models can’t keep up.”
Steve Reinharz, CEO/CTO, AITX
Market Focus
Targeting the global security and facility management markets as they approach $1 trillion in size according to Steve Reinharz.
Proven Deployment
Multiple revenue-generating products currently deployed across commercial and public sectors.
Tech Advantage
Agentic AI SARA and other AITX solutions enable real-time, autonomous engagement and decision-making.
Real-World Validation
AITX technologies are delivering measurable impact. From reducing incidents and lowering operational costs to improving safety and response times, RAD deployments are earning strong praise from clients across multiple industries. These endorsements highlight more than just satisfaction. They reflect a broader industry shift toward intelligent, automated security solutions that outperform legacy approaches.
Large Southeast Hospital Network
“Our staff feels safer now that they’re protected by RAD Light My Way. There have been no serious incidents since the installation of the system.”
— David Pope, Chief Operating Officer, Scotland Memorial Hospital
Global Logistics Leader
“By combining our logistics expertise with RAD’s innovative robotics, we’ve deployed even more cost-effective solutions that didn’t exist just a few years ago.”
— Thomas Nelson, Senior Director of Security at GXO
Innovated RAD Channel Partner
“With
RAD’s help, we’ve customized an innovative 24-hour solution by decreasing the reliance on manpower and leaning more into
RAD’s available technology.”
— Justin Frazer, Director of Systems, EPIC Security Works
Leading Electronics Distributor
“AVA provides us with what we need for efficient access control. Its ability to effortlessly process deliveries and shipments, along with its video and data records, keep us apprised of what is coming in and going out of our gates in real time.”
— Eddie Cabana, Senior Manager, Safety & Security, Ingram Micro
RAD Authorized Dealer
“RAD solutions are what the security industry needs right now. We expect to save this client close to $300,000 over the next three years with just two ROSAs.”
— Chris Daniels, Director of Sales and Marketing, USA Security
Southern California Car Rental Location
“Thanks
to the ROSA units, we’ve addressed all sorts of issues. Damage to vehicles, graffiti on the exterior of the building, that’s all gone
since we put the ROSAs in.”
— Sean Perez, General Manager, Midway Car Rental
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Products + Solutions
AITX delivers a comprehensive portfolio of AI-powered security technologies, combining intelligent hardware and advanced software to modernize how security is deployed, managed, and experienced. Each solution is designed to operate independently or as part of an integrated system, enabling scalable and cost-effective protection across a wide range of industries.
AITX delivers a comprehensive portfolio of AI-powered security technologies, combining intelligent hardware and advanced software to modernize how security is deployed, managed, and experienced. Each solution is designed to operate independently or as part of an integrated system, enabling scalable and cost-effective protection across a wide range of industries. Powering this ecosystem is SARA, AITX’s Agentic AI platform, which empowers devices to detect, decide, and respond in real time.
Why Our Robots Have Names Like ROAMEO and TOM
At AITX, we believe security technology doesn’t have to feel cold or sci-fi. Thats why many of our solutions have names that sound more like teammates than machines. Whether its ROAMEO patrolling a corporate campus or TOM greeting visitors at the front desk, these names help humanize our devices, making them more approachable and easier to embrace. We’re building robots for the real world, not a movie set.
Mobile Solutions
ROAMEO
RADDOG
HERO
Access and Entry
AVA
TOM
Stationary Solutions
ROSA
RIO
RADCam
RAM
Software and Intelligence
SARA
Agentic AI
ROSS
Firearm Detection
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SARA™
Speaking Autonomous Responsive Agent (Agentic AI)
SARA is AITX’s Agentic AI, intelligent voice and decision-making platform. Powered by large language models, SARA gives RAD devices the ability to speak, listen, interpret, and take action based on real-time situations.
Primary Use Cases
| · | Remote video monitoring replacement |
| · | Command center automation |
| · | AI-powered escalation and deterrence |
| · | Interactive access control and public engagement |
Market Impact
SARA is the brain behind the Company’s next-gen devices, enabling AITX to disrupt the $3 billion remote monitoring industry i , and the entire $50 billion security industry ii . As deployments grow, so does the adoption of SARA-powered autonomy, fueling recurring software revenue and opening up new verticals.
Competitive Advantage
Unlike static analytics or scripted alerts, SARA can adapt, engage dynamically, and respond intelligently to a wide variety of human behavior. No other security solution on the market combines voice AI, situational logic, and autonomous action at this scale.
Industry Recognition
SARA received top honors at ISC West 2025, winning both Judges Choice and Best in Threat Detection and Response Solutions in the prestigious Security Industry Associations New Product Showcase. These accolades underscore the industry’s recognition of SARA as a category-defining solution that reshapes how remote monitoring is delivered.
Market Size
The global market for AI agents is accelerating rapidly, growing from $5.4 billion in 2024 to a projected $50.3 billion by 2030 at a compound annual growth rate of 45.8% iii . In the United States alone, the sector is expected to grow from $1.6 billion to $13.5 billion over the same period iv . This extraordinary expansion reflects a shift toward intelligent, autonomous systems that actively engage, assist, and perform, exactly the kind of functionality delivered today by AITX’s SARA platform.
The Emergence of Agentic AI
The security industry is beginning to experience what the tech world has been forecasting for years: the rise of Agentic AI. Unlike traditional AI tools that offer suggestions or basic automation, Agentic AI systems perceive their environment, make decisions, take action, and adapt over time with minimal human involvement.
At AITX, this is not theoretical. It is happening now.
Agentic AI powers devices that do more than follow a script. They observe, assess, engage, escalate, and interact in real time. Whether it is a security device initiating a voice deterrent or an AI agent managing visitor access, these systems replace manual intervention with autonomous action that is consistent, immediate, and intelligent.
SARA, the Speaking Autonomous Responsive Agent, is a leading example of this approach in practice. Through conversational AI, layered decision making, and integration with both analytics and cloud infrastructure, SARA enables RAD, and other devices to perform as active participants in a security workflow.
As businesses and institutions face growing security challenges, shrinking labor pools, and rising costs, Agentic AI is emerging as the most scalable and sustainable answer. It does not just monitor. It responds.
AITX is at the forefront of this transformation, bringing real-world, field-proven Agentic AI to clients across commercial, public, and residential sectors.
“Agentive AI changes the relationship between humans and machines. AI doesn’t just assist, it now observes, decides, and acts on our behalf - faster, more accurately, and more consistently.”
Steve Reinharz, CEO/CTO, AITX
i Verified Market Reports, “Solar Camera Trailer Market Size, Industry Trends & Forecast 2033,” March 2025
https://www.verifiedmarketreports.com/product/solar-camera-trailer-market/
ii National Equipment Register, “July 4th Heavy Equipment Theft Trends and Security Tips 2023,” June 2023.
https://www.ner.net/wp-content/uploads/2023/06/NER-July-4th-Theft-Trends-and-Security-Tips-2023.pdf
iii Grand View Research, “Access Control Market Size & Share | Industry Report, 2030,” 2024
https://www.grandviewresearch.com/industry-analysis/access-control-market-report
iv Grand View Research, “Visitor Management System Market Size & Share Report, 2030,” 2024
https://www.grandviewresearch.com/industry-analysis/visitor-management-system-market-report
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ROSA™
Responsive Observation Security Agent
ROSA is a compact, self-contained security device that provides autonomous deterrence, detection, and response. It combines visual analytics, audio engagement, and AI-driven escalation in a sleek, visible form factor. SARA, AITX’s Agentic AI platform, is integrated into every ROSA unit, enabling it to interpret activity, make decisions, and respond in real time without human intervention.
Primary Use Cases
| · | Perimeter and property protection |
| · | Firearm detection and response |
| · | Entry point monitoring |
| · | Loitering and trespassing deterrence |
Market Impact
ROSA is AITX’s most deployed solution to date, generating recurring monthly revenue (RMR) with every unit. It serves as the foundation for other devices, including RIO and RAM, and has been credited with stopping crimes before they escalate.
Competitive Advantage
ROSA replaces the cost and complexity of security guards or video monitoring services. With onboard AI, two-way communication, and autonomous actions, it outperforms legacy cameras and passive systems by actively preventing incidents, not just recording them. With SARA embedded, ROSA gains the ability to assess context, escalate appropriately, and respond with precision.
Industry Recognition
ROSA has earned widespread acclaim across the security industry. It was selected as a winner of the CBRE Innovation Challenge, recognizing breakthrough technologies in commercial real estate. At the 2021 ASTORS Awards by American Security Today, ROSA was named Best Robotic Perimeter Protection and Best Motion Detection Solution. It has also been honored as a Security Today New Product of the Year, further validating its role as a transformative security solution for real-world applications.
Market Size
The global video surveillance market was valued at $54.42 billion in 2024 and is projected to reach $88.71 billion by 2030, growing at a compound annual growth rate of 8.5% v . Within that space, AI-driven surveillance is emerging as a key growth segment, estimated at $6.51 billion in 2024 and expected to grow at a CAGR of 28.1% to reach $28.76 billion by 2030 vi . This rapid acceleration underscores the demand for intelligent, real-time monitoring solutions, positioning AITX and devices like ROSA at the center of the industry’s evolution.
Market Drivers
-Rising Security Concerns:
Increasing incidents of theft, vandalism, and other security breaches are prompting businesses to invest in advanced surveillance solutions.
-Technological Advancements:
The integration of Agentic AI and machine learning in surveillance systems enhances real-time monitoring and threat detection capabilities.
v Market Research Future, “Smart Home Security Camera Market Outlook, Size Share & Growth Forecast 2025-2034,” 2025
https://www.marketresearchfuture.com/reports/smart-home-security-camera-market-33370
vi Custom Market Insights, “Global Security Robots Market Size, Share & Trends Analysis Report, 2025–2034.”
https://www.custommarketinsights.com/report/security-robots-market/
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RIO™
ROSA Independent Observatory
RIO is a portable, solar-powered security tower that includes a single or dual ROSA unit mounted atop a solar panel trailer. Designed for rapid outdoor deployment, it delivers high-visibility deterrence and autonomous response in locations where traditional infrastructure is impractical or too costly. With SARA, AITX’s Agentic AI platform, embedded through each ROSA unit, RIO operates with intelligent decision-making, real-time escalation, and autonomous voice intervention.
Primary Use Cases
| · | Retail parking lots |
| · | Construction site security |
| · | Healthcare and hospital perimeters |
| · | Logistics yards and distribution centers |
| · | Public events and temporary high-risk zones |
Market Impact
RIO is one of AITX’s fastest-growing product categories, especially in the retail, construction and healthcare markets. Its rapid deployment model aligns perfectly with temporary or high-turnover environments. Each RIO includes one or two ROSA devices, compounding recurring revenue through bundled subscriptions.
Competitive Advantage
RIO, with its single or double ROSA units, eliminates the need for expensive guard posts or legacy, non-AI trailer systems. With SARA integrated into each unit, RIO delivers autonomous detection, analysis, and engagement, redefining what portable perimeter security should be.
Notable Deployments
Hundreds of RIO units are actively deployed across the United States, protecting a wide range of environments. These include logistics hubs, healthcare campuses, construction sites, solar farms, municipalities, and urban districts such as CIDs and BIDs.
Market Size
The global solar camera trailer market was valued at $1.2 billion in 2024 and is projected to reach $2.5 billion by 2033, growing at a CAGR of 8.9% from 2026 to 2033 vii .
This growth is driven by increasing demand for portable surveillance solutions across sectors like construction, public safety, and infrastructure.
Market Drivers
-Rising Equipment Theft:
The U.S. construction industry reported a 12% year-over-year increase in equipment theft in 2023 viii , accelerating demand for solar-powered surveillance systems.
-Cost Efficiency:
Deploying solar surveillance trailers can reduce guarding costs significantly. For instance, hiring a solar surveillance trailer with live monitoring services costs around $1,000 a month, compared to up to $40,000 a month for traditional security guards.
vii Fact.MR, “Autonomous Patrolling Robot Market Outlook, 2023–2033.”
https://www.factmr.com/report/autonomous-patrolling-robot-market
viii Market Research Intellect, “Robotic Dogs Market Size and Forecast,” 2024
https://www.marketresearchintellect.com/product/robotic-dogs-market-size-and-forecast/
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AVA™
Autonomous Verified Access
AVA is a smart gate security solution that manages vehicle entry using AI-powered license plate recognition, two-way voice interaction, and cloud-based authorization. It replaces or enhances traditional guard shacks by automating entry verification. Integrated with SARA, AITX’s Agentic AI platform, AVA performs real-time analysis, verifies credentials, and engages drivers through intelligent voice interaction.
Primary Use Cases
| · | Distribution centers and logistics hubs |
| · | Gated residential communities (with HOAP) |
| · | Corporate and industrial campuses |
| · | Commercial and multi-tenant properties |
Market Impact
AVA expands AITX’s footprint into both residential and commercial access control, delivering recurring revenue while solving the high costs and labor challenges of manned entry points. AVA’s success has driven adoption of HOAP, the Homeowners Association Platform, a full-featured resident and guest access platform. Through HOAP, HOAs can issue digital passes, receive entry notifications, and manage visitor logs from any device. With SARA integrated, AVA not only verifies access but also delivers voice-driven reporting and automated follow-up to ensure every interaction is documented and addressed.
Together, AVA and HOAP are on a mission to reimagine what residential gate control looks like. They replace outdated call boxes and guards in booths with intelligent, automated engagement. This modern solution enhances both security and convenience, giving communities a premium access experience without the high cost of traditional gate staffing.
Industry Recognition
AVA was recognized by the Security Industry Associations New Product Showcase Awards in the category of Access Control Software, Hardware, Devices and Peripherals. This honor reinforces AVAs position as an innovative solution in the field of automated access management.
Market Size
The global access control market is projected to grow from $10.76 billion in 2024 to $17.30 billion by 2030, reflecting a compound annual growth rate of 8.4%. In the United States, the market is expected to expand from $2.62 billion to $3.68 billion over the same period ix . This sustained growth underscores the shift toward intelligent, autonomous systems for managing vehicle and personnel entry, positioning AVA at the forefront of a rapidly evolving segment of physical security.
Market Drivers
-Labor Shortages:
Organizations are seeking automated solutions to manage vehicle access points, reducing reliance on human guards.
-Security Concerns:
Rising incidents of unauthorized access and the need for real-time monitoring are driving the adoption of advanced access control systems.
ix Fortune Business Insights, Humanoid Robots Market Size, Share & Trends Report, 2032”
https://www.fortunebusinessinsights.com/humanoid-robots-market-110188
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TOM™
The Office Manager
TOM is an AI-powered solution that automates visitor management and front desk functions. It provides consistent engagement, credential verification, and access control without the need for onsite reception or security staff. With SARA, AITX’s Agentic AI platform, supporting every TOM unit, the system can guide interactions, assess visitor behavior, and initiate appropriate response and reporting actions in real time.
Primary Use Cases
| · | Office building entry points |
| · | Corporate campuses |
| · | Multi-tenant commercial facilities |
| · | Government and educational institutions |
Market Impact
TOM is helping modernize how commercial spaces handle entry and access. As organizations seek ways to automate and streamline front-facing operations, TOM offers a professional, scalable, and cost-efficient alternative to staffed desks. Its ability to tie into RAD-I’s broader ecosystem increases its utility and adoption potential.
Competitive Advantage
Unlike static kiosks or basic sign-in systems, TOM combines interactive engagement, ID verification, and real-time escalation options. It enhances both the user experience and security posture, offering a comprehensive solution that adapts to high-traffic or high-security environments.
Notable Deployments
One of the world’s largest third-party logistics providers relies on TOM to manage visitor intake and processing across its North American distribution network. TOM has helped this client streamline facility access, improve accountability and enhance site-level security. This enterprise deployment showcases TOM’s scalability and its ability to meet the rigorous demands of high-volume, high-security environments.
Market Size
The global visitor management system market is projected to grow from $1.87 billion in 2024 to $4.04 billion by 2029, reflecting a 16.6% compound annual growth rate. In the United States, adoption is already strong, with the market estimated at $8.7 billion x , driven by increased demand for secure, automated, and efficient visitor access solutions.
Market Drivers
CLRASN-Shift to Hybrid Work Model:
Organizations are adopting flexible work arrangements, necessitating efficient visitor management solutions to monitor and control access.
-Operational Efficiency:
Automation of check-in processes reduces administrative burdens and improves the visitor experience.
x MarketsandMarkets, “ AI in Video Surveillance Market by Offering, Deployment Type, Application, Vertical & Region – Global Forecast to 2030,” 2024
https://www.marketsandmarkets.com/Market-Reports/ai-in-video-surveillance-market-84216922.html
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RADCam™
The Security Camera That Doesn’t Just Watch, It Responds
RADCam is an AI-powered, voice-enabled security camera designed for homeowners, property managers, and small businesses. RADCam doesn’t just record, it engages, responds, and helps resolve situations in real time.
Primary Use Cases
| · | Residential home security |
| · | Small businesses |
| · | Enterprise clients |
| · | Gated entry points and garages |
Market Impact
RADCam began as a disruptive force in the residential security market through the Company’s residential subsidiary RAD-R, offering real-time AI engagement for homeowners. Now, following strong early demand, AITX has expanded RADCam into the small-to-medium business and enterprise markets through its commercial subsidiary RAD-I. These new versions of RADCam are specifically configured to serve the unique needs of commercial properties, offices, storefronts, and large-scale deployments.
In residential settings, SARA takes the form of an ‘SOS feature’, enabling RADCam to speak, escalate, and notify in real time. In SMB and enterprise deployments, SARA is fully integrated, providing agentic decision-making, continuous interaction, and automated reporting across all monitored environments.
The SMB configuration adds enhanced detection and interaction capabilities, making it ideal for locations needing consistent security presence without adding staff. The enterprise version integrates with RADSoC, RAD-I’s command and control software, allowing centralized management across dozens or even hundreds of RADCam devices. This evolution transforms RADCam into a scalable solution that fits anywhere from the front porch to the corporate campus.
By entering these broader markets, RADCam is positioned to become a foundational element in how businesses approach autonomous security. The expansion opens up new, higher-margin revenue channels while further validating the flexibility and scalability of AITX’s AI technology..
Market Size
The global home security camera market is projected to grow from $10.51 billion in 2024 to $60.99 billion by 2034, reflecting a CAGR of 19.23%. In the U.S., the market is expected to expand from $3.02 billion in 2024 to $17.84 billion by 2034 xi .
Market Drivers
-Rising Crime Rates:
An uptick in property crimes and package thefts has led homeowners and small businesses to invest in security solutions.
-Smart Home Integration:
The proliferation of IoT devices has made it easier to integrate security cameras into existing smart home ecosystems, enhancing user convenience.
Affordability and Accessibility:
The decreasing cost of high-quality cameras has made advanced security solutions more accessible to a broader audience.
xi MarketsandMarkets, AI in Video Surveillance Market by Offering (Hardware, Software, Services), Deployment Type (On-premises, Cloud), Application (Intrusion Management, Facial Recognition, License Plate Recognition), Vertical and Region – Global Forecast to 2030, April 2024
https://www.marketsandmarkets.com/Market-Reports/ai-in-video-surveillance-market-84216922.html
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ROAMEO™
Rugged Observation Assistance Mobile Electronic Officer
ROAMEO is a fully autonomous, mobile security robotic vehicle designed to patrol large outdoor spaces. Equipped with AI analytics, voice engagement, and real-time deterrence capabilities, ROAMEO performs routine security patrols without human intervention. SARA, AITX’s Agentic AI platform, is integrated to enable ROAMEO to assess situations, engage appropriately, and report autonomously as it navigates complex environments.
Primary Use Cases
| · | Corporate and educational campuses |
| · | Distribution centers and logistics yards |
| · | Municipal parks and entertainment venues |
| · | Parking lots and stadium exteriors |
Market Impact
ROAMEO represents AITX’s answer to the high cost and limitations of today’s security personnel. It is about to be deployed across public and private sectors as an alternative to guard teams in vehicles or golf carts. Demand is strong enough that AITX is currently accepting orders with scheduled deliveries expected soon, a clear indicator of market interest and confidence in ROAMEOs capabilities. Each deployment generates long-term recurring revenue and expands the Company’s position in autonomous mobile security.
Competitive Advantage
Unlike traditional security patrols or static surveillance systems, ROAMEO offers round-the-clock coverage with intelligent, autonomous decision making. It detects, speaks, escalates, and alerts, all while on the move. With SARA’s support, ROAMEO delivers contextual awareness, adaptive response, and continuous reporting, providing a modern, scalable approach to security that solves labor shortages and reduces operating costs.
An Eager Market Awaits ROAMEO
Even before its full production launch, ROAMEO has generated substantial interest across multiple sectors. With confirmed pre-sales already in place and a growing sales pipeline of qualified opportunities, the security industry is watching closely.
Market Size
The global security robots’ market is projected to grow from $19.07 billion in 2024 to $76.67 billion by 2034, reflecting a CAGR of 14.93% xii . Specifically, the autonomous patrolling robot segment is expected to expand from $157.4 million in 2023 to $438.3 million by 2033, at a CAGR of 10.8% xiii .
Market Drivers
-Labor Cost Pressures:
Rising wages and labor shortages are prompting organizations to seek automated security solutions.
-24/7 Surveillance Needs:
The demand for continuous monitoring in large facilities and public spaces is increasing.
-Technological Advancements:
Improvements in AI, sensor technology, and mobility are enhancing the capabilities of security robots.
xii DataIntelo, AI Gun Detection System Market Report – Global Forecast 2023–2032, 2024
https://dataintelo.com/report/ai-gun-detection-system-market
xiii Verified Market Research , Commercial Security System Market Size and Forecast, 2024 Edition
https://www.verifiedmarketresearch.com/product/commercial-security-system-market/
| - 10 - |
RADDOG™ LE2
Wheeled Robotic Platform for Tactical Support and Public Safety
RADDOG LE2 is a wheeled, four-legged robotic platform developed for law enforcement and tactical applications. It delivers remote visual and audio interaction, helping agencies operate in situations that may be unsafe or inefficient for human officers. Integrated with SARA, AITX’s Agentic AI platform, RADDOG can autonomously interact, communicate, and assist officers with voice-driven commands, situational updates, and public engagement.
Primary Use Cases
| · | Law enforcement patrols and crowd engagement |
| · | Tactical surveillance in high-risk environments |
| · | Community events and public safety demonstrations |
| · | Campus and municipal security support |
Core Benefits
| · | Provides officers with safe, remote situational awareness |
| · | Enhances public outreach with interactive engagement |
| · | Operates in confined or hazardous spaces |
| · | Adds a modern, high-tech layer to agency visibility |
Market Impact
RADDOG is already active in police departments where it serves both operational and community outreach roles. From delivering situational intel to becoming a crowd favorite at events, RADDOG LE2 bridges the gap between safety technology and public trust. With SARA embedded, RADDOG enhances real-time communication and behavioral intelligence, helping departments project both authority and approachability. Its presence enhances department image while contributing to safer, smarter operations.
Competitive Advantage
RADDOG LE2 is not a novelty robot. It combines utility with approachability, making it ideal for law enforcement agencies looking to modernize and humanize their security and public safety efforts. With growing interest from law enforcement and public safety leaders, RADDOG LE2 is quickly establishing itself as a symbol of forward-thinking policing.
Market Size
The global robotic dog market was valued at $1.2 billion in 2023 and is projected to reach $4.6 billion by 2031, growing at a CAGR of 7.1% from 2024 to 2031 xiv .
Market Drivers
-Public Safety and Law Enforcement:
Law enforcement agencies are exploring robotic dogs for search and rescue missions, enhancing operational efficiency and officer safety.
Advancements in AI and Robotics:
Continuous improvements in artificial intelligence and sensor technologies are enhancing the capabilities of robotic dogs, making them more adaptable and efficient for various applications.
Increased Demand for Security:
The need for reliable and autonomous security solutions in the public sector is driving the adoption of robotic dogs for tasks like perimeter patrol, threat detection, and reconnaissance.
xiv Grand View Research , U.S. Home Security Camera Market Size, Share & Trends Analysis Report, 2024
https://www.grandviewresearch.com/industry-analysis/us-home-security-camera-market/
| - 11 - |
HERO™
Humanoid Enforcement and Response Officer
HERO is a humanoid security robot currently under development by RAD-M. Designed to operate in high-traffic environments, HERO combines autonomous movement, AI-driven engagement, and real-time incident response into a single, commanding presence. HERO will feature full integration with SARA, AITX’s Agentic AI platform, enabling advanced situational awareness, interactive communication, and dynamic escalation in public-facing environments.
Primary Use Cases
| · | Retail centers and shopping malls |
| · | Stadiums, arenas, and entertainment venues |
| · | Airports, transit hubs, and public buildings |
| · | Government and high-visibility corporate campuses |
Core Benefits
| · | Provides highly visible deterrence in sensitive public areas |
| · | Engages with the public using advanced conversational AI |
| · | Integrates with RAD-Is broader security ecosystem |
| · | Designed to monitor, interact, and escalate |
Market Impact
Expected for release in late 2025, HERO has already generated significant buzz among security professionals, law enforcement, and the public. Its presence at trade shows and events signals AITX’s commitment to leading the next evolution in autonomous security. HERO is being engineered to address complex deployment scenarios where appearance, mobility, and communication matter just as much as detection and response.
Competitive Advantage
HERO is more than a concept. it is the embodiment of AITX’s long-term vision. No other security robot on the market offers a humanoid presence with conversational intelligence and autonomous patrol capabilities. When launched, HERO is expected to redefine what physical security looks like in the modern world.
Market Size
The global humanoid robot market was valued at $3.28 billion in 2024, projected to reach $66.0 billion by 2032, growing at a CAGR of 45.5% xv .
Within this sector, humanoid security robots like HERO have emerged as a strong niche segment, addressing the need for interactive, autonomous security solutions in various industries.
Market Drivers
-Labor Shortages and Rising Costs:
Increasing demand for automation in industries facing workforce constraints.
-Advancements in Robotics:
Enhanced capabilities in AI and sensor technologies are propelling humanoid robot development.
-Demand for Interactive Security Solutions:
There’s a growing demand for security robots that can engage with individuals, provide assistance, and respond dynamically to situations.
xv Fortune Business Insights, Humanoid Robots Market Size, Share & Trends Report, 2032”
https://www.fortunebusinessinsights.com/humanoid-robots-market-110188
| - 12 - |
ROSS™
RAD Operations System Software
ROSS is RAD-I’s software platform that revitalizes legacy IP security cameras by integrating them into an intelligent, AI-powered ecosystem. It transforms passive devices into proactive security tools with capabilities like object detection, license plate recognition, loitering alerts, and real-time response automation. With SARA on ROSS’ side, these upgraded devices gain the ability to escalate alerts, communicate autonomously, and support voice-driven response workflows.
Primary Use Cases
| · | Upgrading legacy security camera infrastructure |
| · | Integrating outdated systems with modern analytics |
| · | Enabling intelligent threat detection across large facilities |
| · | Reduces the need for costly hardware replacements |
Core Benefits
| · | Adds RAD-level AI analytics to existing IP security cameras |
| · | Enables real-time alerts via SMS or automated systems |
| · | Supports escalating, customizable response workflows |
| · | Connects to the broader RAD ecosystem for integration |
Market Impact
ROSS allows organizations to maximize their current infrastructure investment while elevating security performance. It extends the life and relevance of installed cameras by equipping them with todays most advanced AI tools. For clients hesitant to replace entire camera networks, ROSS provides a smart, budget-conscious path to modernization.
Competitive Advantage
Where most analytics platforms require proprietary cameras or expensive upgrades, ROSS works with what organizations already have. It empowers traditional hardware with human detection, firearm recognition, vehicle alerts, and more, all managed through RAD-I’s software platform. ROSS brings modern capability to yesterday’s cameras.
Market Size
The global AI in video surveillance market was valued at $3.90 billion in 2024, projected to reach $12.46 billion by 2030, growing at a CAGR of 21.3% xvi .
Market Drivers
-Enhanced Public Safety and Security:
Growing concerns over public safety are leading to increased deployment of intelligent surveillance systems.
-Advancements in AI:
Rapid developments in AI technologies are enhancing the capabilities of video analytics, making them more accurate and efficient.
-Cost-Effective Surveillance Solutions:
AI analytics enable organizations to optimize existing camera infrastructures, reducing the need for additional hardware investments.
xvi MarketsandMarkets, “ AI in Video Surveillance Market by Offering, Deployment Type, Application, Vertical & Region – Global Forecast to 2030,” 2024
https://www.marketsandmarkets.com/Market-Reports/ai-in-video-surveillance-market-84216922.html
| - 13 - |
RAM™
ROSA Accessory Module
RAM is a hardware module that transforms existing IP security cameras into interactive, intelligent devices. It adds voice capability, two-way audio, and real-time AI functionality, similar to a RAD-I ROSA device, allowing legacy cameras to detect, speak, engage, and escalate without the need for full device replacement. Integrated with SARA, AITX’s Agentic AI platform, RAM enables context-aware responses, autonomous escalation, and voice-driven interaction from even the most basic surveillance setups.
Primary Use Cases
| · | Enhancing passive cameras in retail or commercial properties |
| · | Upgrading camera systems in schools, healthcare, or government facilities |
| · | Extending the life of existing infrastructure with minimal installation |
| · | Adding SARA-powered interaction to areas not suitable for RAD-I devices |
Market Impact
RAM opens the door to RAD-I’s advanced capabilities for clients with large investments in traditional surveillance. Instead of ripping out existing hardware, RAM enhances what’s already in place. This dramatically reduces upgrade costs while delivering a serious boost in functionality. With SARA onboard, RAM makes it possible to bring agentic behavior and intelligent engagement to previously passive systems. It provides a low-friction entry point into fully autonomous, interactive security.
Competitive Advantage
No other device offers this combination of plug-and-play simplicity, AI intelligence, and voice engagement. RAM gives existing security cameras the power to act, not just watch. It’s the most direct path to upgrading security infrastructure without overhauling entire systems.
Market Size
The AI in video surveillance market in the U.S. was valued at $3.90 billion in 2024 and is expected to reach $12.46 billion by 2030, with a CAGR of 21.3% xvii .
Market Drivers
-Cost-Effective Upgrades :
Organizations seek to enhance existing surveillance systems without the expense of complete overhauls, making inline devices like RAM appealing.
-Integration with Legacy Systems:
The ability to retrofit current infrastructure with advanced analytics capabilities addresses budget constraints and extends the life of existing equipment.
-Edge Computing:
Processing data closer to the source reduces latency and bandwidth usage, enabling real-time analytics and quicker response times.
xvii MarketsandMarkets, AI in Video Surveillance Market by Offering (Hardware, Software, Services), Deployment Type (On-premises, Cloud), Application (Intrusion Management, Facial Recognition, License Plate Recognition), Vertical and Region – Global Forecast to 2030, April 2024
https://www.marketsandmarkets.com/Market-Reports/ai-in-video-surveillance-market-84216922.html
| - 14 - |
Firearm Detection Analytic
AI-Powered Threat Detection for Visible Firearms
AITX’s Firearm Detection is an AI-based analytic that identifies visible handguns and long guns in real time. Integrated into select RAD-I devices and available via ROSS, it enables immediate response and alert escalation the moment a threat is recognized. With SARA, AITX’s Agentic AI platform, firearm detection becomes more than identification, it becomes action. SARA can escalate alerts, notify local security, contact administrators, and initiate outreach to first responders within moments of detection.
Primary Use Cases
| · | School campuses and educational facilities |
| · | Hospitals and healthcare centers |
| · | Government and municipal buildings |
| · | Retail environments and public gathering spaces |
Market Impact
With growing concern regarding active shooter incidents and visible weapons in public spaces, AITX’s Firearm Detection provides a proactive layer of defense. By turning cameras and devices into intelligent sentries, organizations gain precious seconds that can prevent tragedy or reduce harm. In an unfolding active shooter incident, every second counts. The Company’s Firearm Detection analytic is meant to provide schools, first responders, administrators, educators, employers, students, and other personnel those precious seconds. This technology enhances safety protocols without requiring major infrastructure changes. In recognition of its impact, AITX’s Firearm Detection technology was honored with the American Security Today ASTORS Award for Best Metal/Weapons Detection Solution.
Competitive Advantage
Unlike some systems that rely on concealed weapon prediction or extensive human monitoring, the Company’s Firearm Detection focuses on clear, visible threats and reacts instantly. Integrated across RAD-I’s device lineup and analytics platform, it is a scalable and proven solution that adds meaningful value to modern security strategies. With SARA delivering intelligent escalation and voice-driven guidance, AITX offers a real-time response capability no others can match.
Market Size
The global AI gun detection system market is projected to grow from $1.2 billion in 2023 to $4.6 billion by 2032, reflecting a CAGR of 16.2% over the forecast period xviii .
Market Drivers
-Rising Public Safety Concerns:
An uptick in gun-related incidents globally has heightened the demand for proactive security solutions that can detect firearms before any harm occurs.
-Integration with Existing Infrastructure:
AI gun detection systems can be seamlessly integrated with current surveillance systems.
-Technological Advancements:
Continuous improvements in AI, machine learning, and sensor technologies have enhanced the accuracy and reliability of gun detection systems, making them more effective in various environments.
xviii DataIntelo, AI Gun Detection System Market Report – Global Forecast 2023–2032, 2024
https://dataintelo.com/report/ai-gun-detection-system-market
| - 15 - |
Significant Market Opportunity
The global security industry is undergoing rapid transformation, and AITX is positioned squarely at its center.
According to Verified Market Research, the global commercial security system market is projected to reach $376 billion by 2028 xix , driven by increasing demand for automation, efficiency, and real-time responsiveness. On the residential side, the U.S. home security camera market alone is valued at over $7.8 billion, with millions of households seeking smarter, more proactive protection xx .
What’s fueling this growth is a widespread industry shift. Traditional security models that rely heavily on human guards are being reevaluated. Labor shortages, rising costs, and limitations in response time are pushing organizations to adopt AI-driven, autonomous solutions. Businesses, institutions, and homeowners are no longer satisfied with passive monitoring. They want proactive systems that can detect, communicate, deter, and escalate without delay.
AITX addresses this need with a comprehensive suite of solutions that serve both the commercial and residential markets. From large-scale enterprise deployments to home security, the Company’s devices and platforms offer intelligent response capabilities at a fraction of the cost of manned security.
With the launch of RADCam and the rapid adoption of solutions like ROAMEO, RIO, AVA, and ROSA across verticals including healthcare, education, logistics, and retail, AITX is tapping into multiple high-growth opportunities simultaneously. This diverse positioning ensures that the Company is not only riding the wave of market change but helping to drive it.
$376 Billion
Projected size of the global commercial security system market by 2028
Source: Verified Market Research
$7.8 Billion
Current size of the U.S. home security camera market
Source: Grand View Research
175%+ Revenue Growth
AITX’s fiscal year 2025 growth compared to prior year
Source: AITX, April 2025
Labor Shortages & Costs
Driving organizations toward autonomous, AI-powered solutions
Competitive Landscape
Redefining Security, Not Just Competing
The security industry is saturated with outdated approaches. Legacy guard services depend on costly, inconsistent human labor. Traditional camera manufacturers sell passive hardware with limited intelligence. Many AI startups promise innovation, but most offer software-only solutions without the infrastructure to deploy them effectively.
AITX breaks from these models. The Company delivers a fully integrated ecosystem that combines proprietary hardware, software, AI analytics, and voice engagement into unified, field-ready solutions.
From ROAMEO to RADCam, AITX controls its product lifecycle, enabling unmatched speed to market and deployment scale.
With nearly one thousand devices deployed and recurring revenue on the rise, AITX is executing today what others promise for tomorrow:
xix Verified Market Research , Commercial Security System Market Size and Forecast, 2024 Edition
https://www.verifiedmarketresearch.com/product/commercial-security-system-market/
xx Grand View Research , U.S. Home Security Camera Market Size, Share & Trends Analysis Report, 2024
https://www.grandviewresearch.com/industry-analysis/us-home-security-camera-market/
| - 16 - |
-An Integrated Model
Hardware, software, and AI, all in-house
-Multi-Segment Reach
Serving residential, commercial, and enterprise clients
-Voice Engagement
Real-time deterrence, not just passive recording
-No VC Dependence
Grown without SPACs or institutional capital
-Speed to Market
Weeks, not quarters, from concept to deployment
The AITX Business Model
Recurring Revenue Engine
Subscription-based model that scales with deployment
Multi-Segment Subsidiary Strategy
RAD-I (Enterprise), RAD-M (Mobile), RAD-G (Tech Dev), RAD-R (Residential)
In-House Control = Margin Growth
Manufacturing, software, and deployment fully managed internally
Dealer and Channel Distribution
Expanding reach through trusted networks
Flexible Deployments
Customizable subscriptions for varied security needs
AI-Powered Value
Proactive, intelligent solutions replace outdated systems
Profit Path
Margin efficiency grows with every new deployment
AITX delivers automation-first security solutions through a vertically integrated platform of hardware, software, and AI.
| - 17 - |
AITX’s Technology Advantage
Proven AI, Autonomous Devices, Real-Time Results
AITX’s platform replaces outdated surveillance with real-time intelligence. Its proprietary AI and autonomous devices are already deployed in the field, delivering measurable results.
SARA at the Core
Voice-driven AI engine powering real-time detection, deterrence, engagement, and escalation
Vertically Integrated Stack
Hardware, software, and firmware developed in-house for speed and precision
Autonomous Mobility
ROAMEO, RADDOG and HERO can effectively patrol large areas without human involvement
Deployments at Scale
Used in enterprise, healthcare, logistics, retail, construction and residential environments
AITX is not theorizing what security could be - it is delivering what others have not.
AITX Subsidiaries
AITX owns and operates five (5) wholly-owned subsidiaries.
| 1. | Robotic Assistance Devices, Inc. (RAD-I) |
| ● | AI-driven security solutions |
| ● | Autonomous deterrence and response |
| ● | Delivery of industry-leading Agentic AI, aka SARA |
| ● | Trusted across retail, logistics, education, and more |
| ● | www.radsecurity.com |
| 2. | Robotic Assistance Devices, Group (RAD-G) |
| ● | Agentic AI development and distribution to OEMs |
| ● | OEM and custom AI security technology |
| ● | Licensing AI-driven security solutions |
| ● | RAD Lanka (Sri Lanka development office) |
| ● | www.radgroup.ai |
| 3. | Robotic Assistance Devices, Residential (RAD-R) |
| ● | AI-powered security solutions for residential markets |
| ● | Agentic AI integration through ‘SOS’ features |
| ● | Bringing enterprise-level security automation to residential users |
| ● | Enhancing safety through intelligent monitoring and response |
| ● | www.radresidential.ai |
| 4. | Robotic Assistance Devices, Mobile (RAD-M) |
| ● | Mobile security, delivery, all-purpose solutions |
| ● | Agentic AI driven solutions |
| ● | Solar-powered, 5G-connected deployments |
| ● | No infrastructure required, deployable anywhere |
www.radm.ai
| 5. | Robotic Assistance Devices Lanka (PVT) Ltd. (RAD L ) is a wholly owned subsidiary of RAD G incorporated in Sri Lanka. This Company was setup to take advantage a cost effective, educated workforce and tax savings. |
AITX’ main website is aitx.ai. Company and investor information can be found at this site and it is updated regularly.
| - 18 - |
Manufacturing & Assembly
RAD uses various domestic and overseas machine shops for raw material procurement and machining of the required plastic and metal pieces that build RAD devices. RAD’s sourcing has redundancy through use of multiple machine shops producing the same products for RAD. In addition, all pieces within any RAD device can be procured from a choice of suppliers.
RAD’s margins are based on current small batch production and assembly. The Company expects that economies of scale will drive greater gross margin as quantities and efficiencies increase.
Team and Culture
AITX has built a strong start-up culture based on performance, sacrifice, and rewards. Attracting employees who can thrive in this environment requires a different approach to corporate growth and development. RAD’s governing philosophy centers around the principles of “Emotional Intelligence. Self-awareness, composure, internal motivation, empathy, and social skills are prerequisites for joining the RAD team, and each candidate interview begins with a review of the foundational elements that comprise RAD culture.
Team members are open to multitasking and wearing multiple hats, as situations demand. This allows management to focus on larger goals and long-term strategies. We try to ensure that our entire staff shares the same core beliefs and values as the Company, allowing us to adapt and adjust quickly to changes that might grind other companies to a halt. Members have been no stranger to the difficulties that face a startup, including unexpected setbacks, delays in funding, or a cash crunch, but they have persevered with dedication and enthusiasm for our greater mission. They have met incredibly tight deadlines, volunteered to make financial sacrifices, and assisted wherever and however they can.
We believe that RAD’s high-EQ work culture creates productive, motivated employees that has allowed the Company to weather the difficult period of robot deployments and our transition to 4 th generation solutions.
| - 19 - |
The Company is focused on sequential product development while sales grow in order to get close to positive cash flow.
Market Environment
RAD believes that its experience has shown that the security market is ripe for disruption. It has captured the interest of many Fortune 500 companies. The Company believes that no other company operating in the physical security space has the solutions, distribution channel, reputation, sales or support model to rival RAD in the near term. In addition, the Company expects that the launch of RAD’s mobile solutions will significantly increase the gap between it and would-be competitors. RAD will be a one-stop-shop for proven and comprehensive mobile and stationary workflow improvement devices and systems.
RAD’s technology model includes a “new paradigm” for the security industry: Security in a Box. Every RAD solution features connection to the RAD Software Suite, a platform for AI processing, usage analytics, cloud-sided video, communications interface, audit logs, and much more.
Customer Acceptance of RAD Solutions
RAD end-users include one Fortune Top 10 company and a number of other Fortune 500 companies. RAD is currently deployed in logistics, commercial real estate, healthcare, amusement, manufacturing and retail industries. The Company believes that if RAD is ultimately deployed to only 5% of the facilities within any of these industries, the Company will be profitable.
RAD Industry Leadership Role
Mr. Reinharz has earned a prominent role as a spokesperson for AI and change in the security industry. He has lectured and participated in several panels for some of the security industry’s largest events and organizations. Mr. Reinharz chairs Security Industry Association’s Autonomous Working Group committee, which is dedicated to helping shape the industry and support progressive legislation. Most recently, Mr. Reinharz provided a lecture to NYC’s ASIS CPP group that qualified as a continuing education credit.
In March 2023 Steve Reinharz was elected to a Board seat for Security Industry Association, Inc (SIA). SIA is the foremost security group steering policy, lobbying various governments and promoting education within the security industry.
It is expected that Mr. Reinharz will continue his promotion of the new paradigm for the next few years until adoption is widespread.
| - 20 - |
Employees
As of March 7, 2025, we have a headcount of 116 fully dedicated full-time equivalents including sub-contractors. None of our employees are represented by a union.
We consider our employee relations to be excellent. AITX’ principle shareholder owns a minority interest in the Canadian research and develop company but has not received any compensation of any kind from that company to date.
Accomplishments & Highlights
AITX, and its subsidiaries RAD I, RAD M, RAD G, and RAD R list of accomplishments highlights successes in adding to the strength of its executive leadership team, expanding its sales and distribution channels, launching new products, while growing its presence, visibility and profile within its existing marketplaces. Milestones and accomplishments over the past 12 months include:
Cyber and data protection and compliance
The Company continues it’s focus on delivery of safe and secure software and systems to its clients. As such, this year, February 2025, the Company achieved SOC 2 Type 2 status. This status level required considerable work and continuous best practices by all elements of the company. The SOC 2 Report has become a benchmark standard, and now an often-specified requirement, in the software procurement process. Established by the American Institute of Certified Public Accountants (AICPA), criteria and reporting principles are outlined as a means for organizations to create a documented framework of policies and procedures to prove how they manage and secure data in the cloud and ensure protection of customer privacy and ensure internal communications are suitably handled. This achievement reflects the Company’s stated goals of best-in-class data protection and internal processes.
The Company has subsequently maintained SOC 2 Type 2 status and has achieved other cyber certifications.
Discussion on Sales
The sales funnel continues to grow in both quantity and quality. The sales team has matured and stabilized with a Senior Vice President of Sales with seven full time direct sales reports. Additional sales drivers are RAD’s President as well as AITX’ CEO. Furthermore operations team members are instrumental in encouraging clients to expand existing systems.
In the fiscal year ended February 28, 2025 RAD added hundreds sales opportunities to the sales funnel. Furthermore several end users expanded their RAD systems with commitments to continue expansion. RAD’s dealer network also grew although the Company will note that dealer performance has fallen short of expectations and is being addressed. An opportunity is mostly defined as an account that is exhibiting a pain that can be solved by RAD, has a budget, and has reached the point in the sales process where they have a quote they can sign.
| - 21 - |
Management has identified that conversion of accounts from opportunities to clients is improving and has identified some of the reasons for the low conversion rate as well as new tactics to break through these obstacles. Advanced new technology sales often involve multiple decision-makers and require a skilled and passionate internal champion. The security industry breeds risk-averse personnel. The Company is pressing several initiatives to change the industry to create an environment where trying new things in the norm as opposed to the exception. An example of these efforts are the Security Industry Association’s (SIA) upcoming Town Hall where three Fortune 500 security practitioners that have implemented new technologies will share their tips for successful internal selling. AITX will be putting more emphasis on these efforts this year.
Between a maturing hardware and software line up, an increasing number of deployments/case studies/success stories, management is excited for the next year’s sales. Management feels that ironing out technical and production challenges are well in hand and clearing the way for a greater volume of deployments.
Press Announcements
During the fiscal year, the Company issued over 100 press releases, the vast majority of them being sales announcements and new authorized dealers being signed. Public events, conferences, awards and new product announcements were also publicized via press releases. All Company press releases can be found here: AITX News - AITX - Artificial Intelligence Technology Solutions
Trade Shows and Conferences
As in previous years, RAD attended several large security industry events including ISC West, GSX, plus dozens of regional conferences with the purpose of presenting the Company’s solutions to a buying audience and continually loading the sales pipeline with new opportunities. RAD often utilizes the events for speaking engagements or panel discussions to propel the Company’s ‘thought leadership’ regarding its AI-powered security and safety solutions.
Additional Points of Interest
This fiscal year was significant for stabilization of technology, better understanding of the sales process and related challenges, positioning as a true leader in the industry and the achievement of several high profile deployments. The Company continues its focus on sales, efficiencies with the goal of achieving positive cash flow within 18 months.
Management, based on regular conversations with the Company’s largest debt holder, expects no issues regarding pushing out debt deadlines as it has done so in years past. Management confirms the support of this lender and notes the most recent non-convertible $ 4m loan facility.
Management reiterates that the plan continues to be to grow revenues, achieve positive cash flow, reduce debt and prepare for an uplist to Nasdaq. Management estimates that with continued reasonable performance the company could obtain and maintain profitability while working to pay down in preparation for Nasdaq uplist targeted for 2026.
Legal Proceedings
See Item 3 - Legal Proceedings.
| - 22 - |
ITEM 1A. RISK FACTORS
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), we are not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C. CYBERSECURITY
ITEM 2. PROPERTIES
On March 10, 2021 the Company entered into a ten-year lease of a 29,316 square foot building located at 10800 Galaxie Avenue, Ferndale, Michigan 48220. The lease began on May 1, 2021. These premises are being used for offices, manufacturing and distribution. The annual rental cost for this facility is approximately $190,000, plus a proportionate share of operating expenses of approximately $28,000 annually.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
On September 24, 2024, a prospective lender filed a claim against the Company for an alleged breach of a non-binding term sheet made on June 7, 2024. This claim is an example of predatory lending practices for which the Company has filed a notice of dismissal in the relevant jurisdiction. The Company and its counsel believe the claim is without merit however the courts have mandated mediation, and it appears that the parties may reach a settlement in the near future. The Company has made no accruals.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES
Market Information
AITX’s common stock began trading on the “Over the Counter” Bulletin Board (“OTC”) under the symbol “AITX” in June 2011 and as AITX on August 24, 2018. The following table sets forth, for the period indicated, the prices of the common stock in the over-the-counter market, as reported and summarized by OTC Markets Group, Inc. On August 24, 2018, the Company undertook a 100:1 reverse stock split and on March 27, 2020 a 10,000:1 reverse split. The share capital has been retrospectively adjusted accordingly to reflect this reverse stock split, except for the conversion price of certain convertible notes as the conversion price is not subject to adjustment from forward and reverse stock splits.
These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown, or commission and may not represent actual transactions. There is an absence of an established trading market for the Company’s common stock, as the market is limited, sporadic and highly volatile, which may affect the prices listed below.
| - 23 - |
| High | Low | |||||||
| Fiscal Year Ended February 28, 2025: | ||||||||
| Quarter ended February 28, 2025 | $ | 0.02 | $ | 0.01 | ||||
| Quarter ended November 30, 2024 | $ | 0.02 | $ | 0.01 | ||||
| Quarter ended August 31, 2024 | $ | 0.02 | $ | 0.01 | ||||
| Quarter ended May 31, 2024 | $ | 0.01 | $ | 0.01 | ||||
| Fiscal Year Ended February 29, 2024: | ||||||||
| Quarter ended February 29, 2024 | $ | 0.01 | $ | 0.00 | ||||
| Quarter ended November 30, 2023 | $ | 0.00 | $ | 0.00 | ||||
| Quarter ended August 31, 2023 | $ | 0.01 | $ | 0.00 | ||||
| Quarter ended May 31, 2023 | $ | 0.01 | $ | 0.00 | ||||
On May 23, 2025, the closing price per share of the Company’s common stock as quoted on the OTC was $0.0014.
Dividends
To date, we have not paid dividends on shares of the Company’s common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, AITX’s financial condition, and other factors deemed relevant by its Board of Directors.
Holders of Common Stock
As of May 22, 2024, there were 100 holders of AITX’s common stock of which 33 were active. The number of foregoing holders does not include beneficial owners of common stock whose shares are held in the names of banks, brokers, nominees or other fiduciaries.
Common Stock
The Company is authorized to issue 20,000,000,000 shares of common stock, with a par value of $0.00001. The closing price of its common stock on May 23, 2025, as quoted by OTC Markets Group, Inc., was $0.0014. There were 16,747,453,768 shares of common stock issued and outstanding as of May 23, 2024. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non-assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of its assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of the Company’s common are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the Board of Directors from funds legally available.
Our Articles of Incorporation, Bylaws, and the applicable statutes of the state of Nevada contain a more complete description of the rights and liabilities of holders of our securities.
During the years ended February 28, 2025 and February 29, 2024, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.
Non-cumulative voting
Holders of shares of the Company’s common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.
Securities Authorized for Issuance under Equity Compensation Plans
On April 14, 2021 the Company adopted an Incentive Stock Option Plan where full details are disclosed in Exhibit 10.1 of the Company’s 8K filing of April 20,2021. Under the plan the Company may grant options to service providers and employees to acquire up to 5,000,000 shares of the Company’s common stock. The options will be under the varying terms and conditions of an agreement but the exercise price cannot be lower than 100% to 110% of the fair value of the stock at date of grant and the term of the grant can be no longer than 5 years. On August 11, 2022 the Company amended the 2021 Plan increasing the maximum number of shares applicable to the 2021 Plan from 5,000,000 to 100,000,000.
| - 24 - |
During the year ended February 28, 2025 the Company had the following common stock option activity:
| — | On the original 2021 plan, options to purchase 2,475,000 shares were forfeited due to employee terminations. On the 2023 plan (see below) 3,963,404 options to purchase shares were forfeited due to employee terminations. |
During the year ended February 29, 2024 the Company had the following common stock option activity:
| — | On September 1, 2023, the Company as an addition to the afore-mentioned Incentive Stock Option Plan issued 114,217,035 shares to 48 employees. The shares were issued with an exercise price of $0.02, vest after 4 years with a 5 year term having a fair value of $593,929 using the Black-Scholes model with assumptions described below: |
| Strike price | $ | 0.02 | ||
| Fair value of Company’s common stock | $ | 0.0052 | ||
| Dividend yield | 0.00 | % | ||
| Expected volatility | 320.5 | |||
| Risk free interest rate | 4.29 | % | ||
| Expected term (years) | 4.50 |
The Company recorded $74,241 in stock-based compensation on the 2023 plan which represents the current expense over the vesting period. In addition the company recorded $198,357 stock based compensation on the 2022 options , so for the year ended February 29, 2024 the Company recorded a total of $272,599 in stock based compensation with a corresponding increase in paid up capital.
| — | On the original 2021 plan, options to purchase 21,275,000 shares were forfeited due to employee terminations |
The following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance at February 28, 2025.
| Plan Category |
Number of Securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted average exercise price of outstanding options, warrants and rights |
Number of securities remaining available for future issuance |
|||||||||
| Equity compensation plans approved by security holders. | 182,228,131 | $ | 0.02 | — | ||||||||
| Equity compensation plans not approved by security holders. | — | — | — | |||||||||
| Total | 182,228,131 | $ | 0.02 | — | ||||||||
Preferred Stock
The Company is authorized to issue up to 20,000,000 shares of $0.001 par value preferred stock. The board of directors is authorized to designate any series of preferred stock up to the total authorized number of shares.
Series B Convertible, Redeemable Preferred Stock
The board of directors has designated 5,000 shares of Series B Convertible, Redeemable Preferred Stock with a par value of $0.001 per share. As of the date of this report, there are no shares of Series B Preferred Stock outstanding. The Series B Convertible Preferred Stock are redeemable at $1,200 per share, rank in priority to common stock and common stock equivalents upon liquidation of the Company, have voting rights on a converted basis and receives quarterly dividends of 8%. Each holder may, at any time and from time to time convert all, but not less than all, of their shares of Series B Convertible, Redeemable Preferred Stock into a number of fully paid and nonassessable shares of common stock determined by dividing the redemption value by the Conversion Price. The Conversion price is equal to the lower of (1) a fixed price equaling the closing bid price of the Common Stock on the trading day immediately preceding the date of the acquisition of the shares and (2) the lowest traded price of the Common Stock during the ten (10) calendar days immediately preceding, but not including, the Conversion Date. Following an event of default,” as defined in the Purchase Agreement, the Conversion price shall equal the lower of: (a) the then applicable Conversion Price; or (b) a price per share equaling eighty five percent (85%) of the lowest traded price for the Company’s common stock during the fifteen (15) Trading Days immediately preceding, but not including, the Conversion Date. Each share of Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends of eight percent (8%) per annum, payable quarterly, beginning on the Original Issuance Date and ending on the date that such share of Preferred Share has been converted or redeemed. Dividends may be paid in cash or in shares of Preferred Stock at the discretion of the Company. Any dividends that are not paid a shall continue to accrue and shall entail a late fee, which must be paid in cash, at the rate of 14% per annum or the lesser rate permitted by applicable law which shall accrue and compound daily from the dividend payment date through and including the date of actual payment in full. On the thirtieth day following the issue date of this Preferred Stock the Company shall have the obligation to redeem one-third of the Preferred Stock outstanding for a redemption price equal to the redemption value of each such share of Preferred Stock, plus any accrued but unpaid dividends, plus all other amounts due to the Holder including, but not limited to Late Fees, liquidated damages and the legal fees and expenses of the Holder’s counsel. On the sixtieth (60 th ) calendar day following the date Preferred Stock is issued, the Corporation shall have the obligation to redeem one-half of the Preferred Stock then outstanding for the redemption price. On the ninetieth (90 th ) calendar day following the date Preferred Stock is issued, the Corporation shall have the obligation to redeem all of the Preferred Stock then outstanding for the redemption price. From the date of issuance until the date no shares of Series B Preferred Stock are issued and outstanding, unless Holders of at least 75% in Stated Value of the then outstanding shares of Preferred Stock shall have otherwise given prior written consent, the Corporation shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:
| - 25 - |
(a) other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom; (b) other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom; (c) amend its charter documents, including, without limitation, its articles of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder; (d) repay, repurchase or offer to repay, repurchase or otherwise acquire of any shares of its Common Stock, Common Stock Equivalents or Junior Securities, other than as to the Conversion Shares as permitted or required under the Transaction Documents: (e) pay cash dividends or distributions on Junior Securities of the Corporation; f) enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Corporation (even if less than a quorum otherwise required for board approval); or(g) enter into any agreement with respect to any of the foregoing.
Series C Convertible, Redeemable Preferred Stock
The board of directors has designated 1,000 shares of Series B Convertible, Redeemable Preferred Stock with a par value of $0.001 per share. As of the date of this report, there are 306 shares of Series C Preferred Stock outstanding. The Series C Convertible Preferred Stock are redeemable at $1,200 per share, rank in priority to common stock and common stock equivalents upon liquidation of the Company, have voting rights on a converted basis and receives quarterly dividends of 12%. Each holder may, after 180 days after issuance, at any time and from time to time convert all, but not less than all, of their shares of Series C Convertible, Redeemable Preferred Stock into a number of fully paid and nonassessable shares of common stock determined by dividing the redemption value by the Conversion Price. The Conversion price is equal to the lower of (1) a fixed price equaling the closing bid price of the Common Stock on the trading day immediately preceding the date of the acquisition of the shares and (2) the lowest traded price of the Common Stock during the ten (10) calendar days immediately preceding, but not including, the Conversion Date. Following an event of default,” as defined in the Purchase Agreement, the Conversion price shall equal the lower of: (a) the then applicable Conversion Price; or (b) a price per share equaling eighty five percent (90%) of the lowest traded price for the Company’s common stock during the fifteen (10) Trading Days immediately preceding, but not including, the Conversion Date. Each share of Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends of twelve percent (12%) per annum, payable quarterly, beginning on the Original Issuance Date and ending on the date that such share of Preferred Share has been converted or redeemed. Dividends may be paid in cash or in shares of Preferred Stock at the discretion of the Company. Any dividends that are not paid a shall continue to accrue and shall entail a late fee, which must be paid in cash, at the rate of 14% per annum or the lesser rate permitted by applicable law which shall accrue and compound daily from the dividend payment date through and including the date of actual payment in full. On the one hundred eightieth day following the issue date of this Preferred Stock the Company shall have the obligation to redeem all outstanding Series Preferred Shares for one hundred nine and one half percent (109.5%) of the stated value, plus any accrued but unpaid dividends, plus all other amounts due to the Holder pursuant to the Certificate of Designation and/or any Transaction Documents (“Redemption Date”). Prior to the Redemption Date, the Company at its discretion and on three (3) Trading Days’ written notice, may redeem all outstanding Preferred Shares for one hundred nine and one half percent (109.5%) of the stated value, plus any accrued but unpaid dividends, plus all other amounts due to the Holder pursuant to the Certificate of Designation and/or any Transaction Documents.
From the date of issuance until the date no shares of Series C Preferred Stock are issued and outstanding, unless Holders of at least 75% in Stated Value of the then outstanding shares of Preferred Stock shall have otherwise given prior written consent, the Corporation shall not, and shall not permit any of the Subsidiaries to, directly or indirectly: (a) other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom; (b) other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom; (c) amend its charter documents, including, without limitation, its articles of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder; (d) repay, repurchase or offer to repay, repurchase or otherwise acquire of any shares of its Common Stock, Common Stock Equivalents or Junior Securities, other than as to the Conversion Shares as permitted or required under the Transaction Documents: (e) pay cash dividends or distributions on Junior Securities of the Corporation; f) enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Corporation (even if less than a quorum otherwise required for board approval); or(g) enter into any agreement with respect to any of the foregoing.
Series E Preferred Stock
The Board of Directors has designated 4,350,000 shares of Series E Preferred Stock. As of the date of this report, there are 3,350,000 shares of Series E Preferred Stock outstanding. The Series E Preferred Stock ranks subordinate to the Company’s common stock as to distributions of assets upon liquidation, dissolution or winding up of the Corporation. The Series E preferred stock is non-redeemable, does not have rights upon liquidation of the Company and does not receive dividends. The outstanding shares of Series E Preferred Stock have the right to take action by written consent or vote based on the number of votes equal to twice the number of votes of all outstanding shares of equity instruments with voting rights. As a result, the holders of Series E Preferred Stock have 2/3rds of the voting power of all shareholders at any time corporate action requires a vote of shareholders.
Series F Convertible Preferred Stock
The Board of Directors has designated 10,000 shares of Series F Convertible Preferred Stock with a par value of $1.00 per share. As of the date of this report, there are 2,513 shares of Series F Convertible Preferred Stock outstanding. The Series F Convertible Preferred Stock is non-redeemable, does not have rights upon liquidation of the Company, does not have voting rights and does not receive dividends. Each holder may, at any time and from time to time convert all, but not less than all, of their shares of Series F Convertible Preferred Stock into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the date of conversion by three and 45 100ths (3.45) on a pro rata basis. So long as any shares of Series F Convertible Preferred Stock are outstanding, the Company shall not, without first obtaining the approval of the majority of the holders: (a) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series F convertible preferred stock; (b) create any Senior Securities; (c) create any pari passu Securities; (d) do any act or thing not authorized or contemplated by the Certificate of Designation which would result in any taxation with respect to the Series F Convertible Preferred Stock under Section 305 of the Internal Revenue Code of 1986, as amended, or any comparable provision of the Internal Revenue Code as hereafter from time to time amended, (or otherwise suffer to exist any such taxation as a result thereof).
Series G Redeemable Preferred Stock
The board of directors has designated 100,000 shares of Series G Preferred Stock. As of the date of this report, there are no shares of Series G Preferred Stock outstanding. The Series G preferred stock does not have voting rights, rank prior to all of the Corporation’s common stock and subordinate and junior to all shares of Series F Preferred Stock and pari passu with any of the Corporation’s preferred stock hereafter issued as to distributions of assets upon dissolution or winding up of the Corporation, whether voluntary or involuntary, and does not receive dividends. At any time, the Corporation may, at its option, redeem for cash out of funds legally available therefor, any or all of the outstanding Preferred Stock (“Optional Redemption”) at $1,000 per share.
| - 26 - |
Recent Sales of Unregistered Securities
The following is a summary of transactions by AITX involving sales of its securities that were not registered under the Securities Act.
| Date | Transaction (*) | Principal Converted | Interest Converted |
Fees Converted |
Total Amount Converted |
Shares Issued** |
||||||||||||||||
| Number of shares outstanding February 28, 2017 | 18 | |||||||||||||||||||||
| March 7, 2017 | conversion | $ | 1,840 | $ | — | $ | — | $ | 1,840 | 1 | ||||||||||||
| March 22, 2017 | conversion | 1,971 | — | — | 1,971 | 1 | ||||||||||||||||
| March 27, 2017 | cancelation*** | — | — | — | — | (1 | ) | |||||||||||||||
| April 3, 2017 | conversion | 1,487 | 3,397 | — | 4,884 | 1 | ||||||||||||||||
| April 7, 2017 | conversion | 1,000 | — | — | 1,000 | 1 | ||||||||||||||||
| April 20, 2017 | conversion | 920 | — | — | 920 | 1 | ||||||||||||||||
| April 24, 2017 | conversion | 6,876 | — | — | 6,876 | 1 | ||||||||||||||||
| April 26, 2017 | conversion | 1,130 | — | — | 1,130 | 1 | ||||||||||||||||
| May 2, 2017 | conversion | 1,130 | — | — | 1,130 | 1 | ||||||||||||||||
| May 4, 2017 | conversion | 1,240 | — | — | 1,240 | 1 | ||||||||||||||||
| May 4, 2017 | conversion | 8,854 | — | — | 8,854 | 1 | ||||||||||||||||
| May 8, 2017 | conversion | 9,296 | — | — | 9,296 | 1 | ||||||||||||||||
| May 12, 2017 | conversion | 1,432 | — | — | 1,432 | 1 | ||||||||||||||||
| May 15, 2017 | conversion | 11,661 | — | — | 11,661 | 1 | ||||||||||||||||
| May 15, 2017 | conversion | 1,550 | — | — | 1,550 | 2 | ||||||||||||||||
| May 18, 2017 | conversion | 13,629 | — | — | 13,629 | 2 | ||||||||||||||||
| May 23, 2017 | conversion | 9,684 | 3,059 | — | 12,743 | 1 | ||||||||||||||||
| May 24, 2017 | conversion | 1,730 | — | — | 1,730 | 2 | ||||||||||||||||
| May 30, 2017 | conversion | 1,890 | — | — | 1,890 | 2 | ||||||||||||||||
| June 7, 2017 | conversion | 1,985 | — | — | 1,985 | 2 | ||||||||||||||||
| June 9, 2017 | conversion | 2,085 | — | — | 2,085 | 2 | ||||||||||||||||
| June 12, 2017 | conversion | 2,185 | — | — | 2,185 | 2 | ||||||||||||||||
| June 14, 2017 | conversion | 2,295 | — | — | 2,295 | 2 | ||||||||||||||||
| June 19, 2017 | conversion | 2,400 | — | — | 2,400 | 2 | ||||||||||||||||
| June 20, 2017 | conversion | 2,500 | — | — | 2,500 | 3 | ||||||||||||||||
| June 20, 2017 | conversion | 3,000 | 358 | — | 3,358 | — | ||||||||||||||||
| June 22, 2017 | warrant exercise**** | — | — | — | — | 3 | ||||||||||||||||
| June 28, 2017 | conversion | 2,800 | — | — | 2,800 | 3 | ||||||||||||||||
| June 28, 2017 | warrant exercise**** | — | — | — | — | 3 | ||||||||||||||||
| July 5, 2017 | conversion | 3,050 | — | — | 3,050 | 3 | ||||||||||||||||
| July 6, 2017 | warrant exercise**** | — | — | — | — | 3 | ||||||||||||||||
| July 7, 2017 | warrant exercise**** | — | — | — | — | — | ||||||||||||||||
| July 7, 2017 | conversion | 3,400 | — | — | 3,400 | 3 | ||||||||||||||||
| July 26, 2017 | conversion | 3,500 | — | — | 3,500 | 4 | ||||||||||||||||
| July 28, 2017 | conversion | 9,750 | — | — | 9,750 | 1 | ||||||||||||||||
| July 28, 2017 | conversion | 4,000 | — | — | 4,000 | 4 | ||||||||||||||||
| August 2, 2017 | conversion | 75,000 | — | — | 75,000 | 4 | ||||||||||||||||
| August 2, 2017 | conversion | 75,000 | 2,483 | — | 77,483 | 4 | ||||||||||||||||
| August 4, 2017 | conversion | 11,184 | — | — | 11,184 | — | ||||||||||||||||
| August 14, 2017 | conversion | 4,500 | — | — | 4,500 | 5 | ||||||||||||||||
| August 21, 2017 | conversion | 4,700 | — | — | 4,700 | 5 | ||||||||||||||||
| August 29, 2017 | conversion | 4,900 | — | — | 4,900 | 5 | ||||||||||||||||
| September 5, 2017 | conversion | 26,250 | — | — | 26,250 | 5 | ||||||||||||||||
| September 18, 2017 | conversion | 27,250 | — | — | 27,250 | 5 | ||||||||||||||||
| September 27, 2017 | conversion | 29,000 | — | — | 29,000 | 6 | ||||||||||||||||
| October 16, 2017 | conversion | 30,500 | — | — | 30,500 | 6 | ||||||||||||||||
| October 16, 2017 | conversion | 10,000 | — | — | 10,000 | — | ||||||||||||||||
| Number of shares outstanding February 28, 2018 | 124 | |||||||||||||||||||||
| - 27 - |
| Date | Transaction (*) |
Principal Converted |
Interest Converted |
Fees Converted |
Total Amount Converted |
Shares Issued** |
||||||||||||||||
| April 16, 2018 | conversion | 132,160 | — | — | 132,160 | 6 | ||||||||||||||||
| April 26, 2018 | conversion | 14,500 | — | 500 | 15,000 | 1 | ||||||||||||||||
| May 1, 2018 | conversion | 26,250 | — | — | 26,250 | 3 | ||||||||||||||||
| May 3, 2018 | conversion | 5,000 | — | — | 5,000 | — | ||||||||||||||||
| May 7, 2018 | conversion | 27,900 | — | — | 27,900 | 3 | ||||||||||||||||
| May 10, 2018 | conversion | 32,400 | — | — | 32,400 | 4 | ||||||||||||||||
| May 11, 2018 | conversion | 14,500 | — | 500 | 15,000 | 2 | ||||||||||||||||
| May 15, 2018 | conversion | 7,060 | — | 500 | 7,560 | 2 | ||||||||||||||||
| May 15, 2018 | conversion | 8,000 | — | — | 8,000 | 1 | ||||||||||||||||
| May 21, 2018 | conversion | 20,250 | — | — | 20,250 | 3 | ||||||||||||||||
| May 22, 2018 | conversion | 6,075 | — | — | 6,075 | 1 | ||||||||||||||||
| May 24, 2018 | conversion | 13,056 | 3,300 | — | 16,356 | 2 | ||||||||||||||||
| May 30, 2018 | conversion | 8,182 | — | — | 8,182 | 2 | ||||||||||||||||
| May 30, 2018 | conversion | 15,000 | — | — | 15,000 | 3 | ||||||||||||||||
| June 7, 2018 | conversion | 2,922 | — | — | 2,922 | 1 | ||||||||||||||||
| June 18, 2018 | conversion | 17,000 | — | — | 17,000 | 4 | ||||||||||||||||
| June 19, 2018 | conversion | 14,500 | — | 500 | 15,000 | 3 | ||||||||||||||||
| June 28, 2018 | conversion | 18,000 | — | — | 18,000 | 4 | ||||||||||||||||
| June 28, 2018 | cancellation | (7,060 | ) | — | (500 | ) | (7,560 | ) | (2 | ) | ||||||||||||
| July 5, 2018 | conversion | 14,500 | — | 500 | 15,000 | 4 | ||||||||||||||||
| July 5, 2018 | conversion | 8,818 | — | — | 8,818 | 3 | ||||||||||||||||
| July 11, 2018 | conversion | 10,200 | — | — | 10,200 | 4 | ||||||||||||||||
| July 11, 2018 | conversion | 14,500 | — | 500 | 15,000 | 5 | ||||||||||||||||
| July 19, 2018 | conversion | 16,000 | — | 500 | 16,500 | 5 | ||||||||||||||||
| July 19, 2018 | conversion | 11,000 | 1,366 | — | 12,366 | 4 | ||||||||||||||||
| July 23, 2018 | conversion | 14,500 | — | 500 | 15,000 | 7 | ||||||||||||||||
| July 25, 2018 | conversion | 5,000 | — | — | 5,000 | 2 | ||||||||||||||||
| July 31, 2018 | conversion | 11,000 | 1,455 | — | 12,455 | 6 | ||||||||||||||||
| August 24, 2018 | conversion | — | 15,300 | — | 15,300 | 10 | ||||||||||||||||
| August 27, 2018 | conversion | 5,500 | — | 500 | 6,000 | 10 | ||||||||||||||||
| August 29, 2018 | conversion | 4,280 | — | 500 | 4,780 | 11 | ||||||||||||||||
| August 30, 2018 | conversion | 6,000 | — | — | 6,000 | 10 | ||||||||||||||||
| August 30, 2018 | rounding shares | — | — | — | — | — | ||||||||||||||||
| August 31, 2018 | conversion | 20,000 | — | — | 20,000 | 11 | ||||||||||||||||
| August 31, 2018 | conversion | 7,500 | — | 500 | 8,000 | 11 | ||||||||||||||||
| September 5, 2018 | conversion | 8,800 | 1,375 | — | 10,175 | 13 | ||||||||||||||||
| September 5, 2018 | conversion | 7,800 | — | — | 7,800 | 13 | ||||||||||||||||
| September 7, 2018 | conversion | 7,000 | — | 500 | 7,500 | 13 | ||||||||||||||||
| September 12, 2018 | conversion | 5,355 | — | — | 5,355 | 15 | ||||||||||||||||
| September 12, 2018 | conversion | 6,500 | — | 500 | 7,000 | 14 | ||||||||||||||||
| September 13, 2018 | conversion | 5,395 | — | — | 5,395 | 13 | ||||||||||||||||
| September 13, 2018 | conversion | 3,436 | — | 500 | 3,936 | 14 | ||||||||||||||||
| September 18, 2018 | conversion | 5,670 | — | — | 5,670 | 19 | ||||||||||||||||
| September 20, 2018 | conversion | 3,448 | — | 500 | 3,948 | 19 | ||||||||||||||||
| September 21, 2018 | conversion | 6,720 | — | — | 6,720 | 19 | ||||||||||||||||
| September 24, 2018 | conversion | 5,250 | — | — | 5,250 | 18 | ||||||||||||||||
| September 26, 2018 | conversion | 6,132 | — | — | 6,132 | 23 | ||||||||||||||||
| September 28, 2018 | conversion | 3,084 | — | 500 | 3,584 | 23 | ||||||||||||||||
| October 1, 2018 | conversion | 3,100 | — | — | 3,100 | 20 | ||||||||||||||||
| October 3, 2018 | conversion | 4,030 | — | — | 4,030 | 26 | ||||||||||||||||
| October 3, 2018 | conversion | 2,202 | — | 500 | 2,702 | 25 | ||||||||||||||||
| October 5, 2018 | conversion | 2,750 | 485 | — | 3,235 | 16 | ||||||||||||||||
| October 5, 2018 | conversion | 4,449 | — | — | 4,449 | 29 | ||||||||||||||||
| October 8, 2018 | conversion | 8,835 | — | — | 8,835 | 105 | ||||||||||||||||
| October 9, 2018 | conversion | 4,158 | — | 500 | 4,658 | 30 | ||||||||||||||||
| - 28 - |
| Date | Transaction (*) |
Principal Converted |
Interest Converted |
Fees Converted |
Total Amount Converted |
Shares Issued** |
||||||||||||||||
| October 10, 2018 | conversion | 4,988 | — | — | 4,988 | 29 | ||||||||||||||||
| October 15, 2018 | conversion | 5,935 | — | — | 5,935 | 33 | ||||||||||||||||
| October 18, 2018 | conversion | 9,000 | — | — | 9,000 | 113 | ||||||||||||||||
| October 19, 2018 | conversion | 4,400 | 713 | — | 5,113 | 33 | ||||||||||||||||
| October 23, 2018 | conversion | 9,840 | — | — | 9,840 | 317 | ||||||||||||||||
| November 1, 2018 | conversion | 9,400 | — | — | 9,400 | 94 | ||||||||||||||||
| November 5, 2018 | conversion | 6,195 | — | — | 6,195 | 52 | ||||||||||||||||
| November 15, 2018 | conversion | 7,980 | — | — | 7,980 | 95 | ||||||||||||||||
| November 27, 2018 | conversion | 3,850 | 724 | — | 4,574 | 123 | ||||||||||||||||
| December 6, 2018 | conversion | 4,056 | 797 | — | 4,853 | 141 | ||||||||||||||||
| December 7, 2018 | conversion | 2,034 | — | — | 2,034 | 66 | ||||||||||||||||
| December 10, 2018 | conversion | 2,367 | — | — | 2,367 | 76 | ||||||||||||||||
| December 10, 2018 | conversion | 2,333 | — | 500 | 2,833 | 91 | ||||||||||||||||
| December 10, 2018 | conversion | 1,475 | — | 500 | 1,975 | 91 | ||||||||||||||||
| December 10, 2018 | conversion | 3,348 | — | — | 3,348 | 90 | ||||||||||||||||
| December 11, 2018 | conversion | 2,489 | — | — | 2,489 | 80 | ||||||||||||||||
| December 11, 2018 | conversion | 4,340 | — | — | 4,340 | 140 | ||||||||||||||||
| December 12, 2018 | conversion | 3,500 | — | — | 3,500 | 94 | ||||||||||||||||
| December 12, 2018 | conversion | 6,600 | 1,306 | — | 7,906 | 213 | ||||||||||||||||
| December 13, 2018 | conversion | 2,408 | — | 500 | 2,908 | 134 | ||||||||||||||||
| December 13, 2018 | conversion | 3,426 | — | — | 3,426 | 111 | ||||||||||||||||
| December 14, 2018 | conversion | 4,154 | — | — | 4,154 | 134 | ||||||||||||||||
| December 18, 2018 | conversion | 4,368 | — | — | 4,368 | 141 | ||||||||||||||||
| December 19, 2018 | conversion | 3,100 | — | 500 | 3,600 | 160 | ||||||||||||||||
| December 19, 2018 | conversion | 1,000 | 3,348 | — | 4,348 | 161 | ||||||||||||||||
| December 20, 2018 | conversion | — | — | — | — | 130 | ||||||||||||||||
| December 20, 2018 | conversion | 2,155 | — | 500 | 2,655 | 169 | ||||||||||||||||
| December 20, 2018 | conversion | 3,636 | — | — | 3,636 | 117 | ||||||||||||||||
| December 20, 2018 | conversion | 7,480 | 1,520 | — | 9,000 | 333 | ||||||||||||||||
| December 24, 2018 | conversion | 2,970 | — | — | 2,970 | 110 | ||||||||||||||||
| December 26, 2018 | conversion | 3,213 | — | — | 3,213 | 143 | ||||||||||||||||
| December 27, 2018 | conversion | 1,870 | 1,381 | — | 3,252 | 120 | ||||||||||||||||
| December 28, 2018 | conversion | 3,700 | — | 500 | 4,200 | 227 | ||||||||||||||||
| December 31, 2018 | conversion | 4,869 | — | — | 4,869 | 216 | ||||||||||||||||
| December 31, 2018 | conversion | 5,365 | — | — | 5,365 | 290 | ||||||||||||||||
| January 2, 2019 | conversion | 7,370 | 1,562 | — | 8,932 | 425 | ||||||||||||||||
| January 7, 2019 | conversion | 3,360 | — | — | 3,360 | 240 | ||||||||||||||||
| January 7, 2019 | conversion | 3,944 | — | — | 3,944 | 290 | ||||||||||||||||
| January 8, 2019 | conversion | 4,080 | — | — | 4,080 | 300 | ||||||||||||||||
| January 9, 2019 | conversion | 3,161 | — | 500 | 3,661 | 317 | ||||||||||||||||
| January 10, 2019 | conversion | 3,380 | — | — | 3,380 | 325 | ||||||||||||||||
| January 11, 2019 | conversion | 5,280 | 1,150 | — | 6,430 | 397 | ||||||||||||||||
| January 11, 2019 | conversion | 3,625 | — | — | 3,625 | 290 | ||||||||||||||||
| January 14, 2019 | conversion | 3,400 | — | — | 3,400 | 340 | ||||||||||||||||
| January 15, 2019 | conversion | 4,100 | — | — | 4,100 | 410 | ||||||||||||||||
| January 15, 2019 | conversion | 4,300 | — | — | 4,300 | 430 | ||||||||||||||||
| January 17, 2019 | conversion | 4,800 | — | — | 4,800 | 480 | ||||||||||||||||
| January 22, 2019 | conversion | 4,435 | — | — | 4,435 | 504 | ||||||||||||||||
| January 22, 2019 | conversion | 4,230 | — | — | 4,230 | 470 | ||||||||||||||||
| January 23, 2019 | conversion | 3,816 | — | — | 3,816 | 530 | ||||||||||||||||
| January 25, 2019 | conversion | 3,781 | — | — | 3,781 | 556 | ||||||||||||||||
| January 28, 2019 | conversion | 3,276 | — | — | 3,276 | 585 | ||||||||||||||||
| January 29, 2019 | conversion | 3,690 | — | — | 3,690 | 615 | ||||||||||||||||
| January 29, 2019 | conversion | 3,870 | — | — | 3,870 | 645 | ||||||||||||||||
| - 29 - |
| Date | Transaction (*) |
Principal Converted |
Interest Converted |
Fees Converted |
Total Amount Converted |
Shares Issued** |
||||||||||||||||
| January 30, 2019 | conversion | 4,080 | — | — | 4,080 | 680 | ||||||||||||||||
| January 31, 2019 | conversion | 4,500 | — | — | 4,500 | 750 | ||||||||||||||||
| January 31, 2019 | conversion | 4,290 | — | — | 4,290 | 715 | ||||||||||||||||
| February 4, 2019 | conversion | 4,740 | — | — | 4,740 | 790 | ||||||||||||||||
| February 5, 2019 | cancellation | (2,658 | ) | — | — | (2,658 | ) | (17 | ) | |||||||||||||
| February 5, 2019 | conversion | 4,980 | — | — | 4,980 | 830 | ||||||||||||||||
| February 12, 2019 | conversion | 5,340 | — | — | 5,340 | 890 | ||||||||||||||||
| February 14, 2019 | conversion | 5,236 | — | — | 5,236 | 935 | ||||||||||||||||
| February 21, 2019 | conversion | 4,956 | — | — | 4,956 | 900 | ||||||||||||||||
| Number of shares outstanding February 28, 2019 | 20,026 | |||||||||||||||||||||
| May 6, 2019 | conversion | 5,768 | — | — | 5,768 | 1,030 | ||||||||||||||||
| May 6, 2019 | conversion | 15,000 | — | — | 15,000 | 882 | ||||||||||||||||
| May 6, 2019 | conversion | 11,900 | — | — | 11,900 | 992 | ||||||||||||||||
| May 7, 2019 | conversion | 6,048 | — | — | 6,048 | 1,080 | ||||||||||||||||
| May 7, 2019 | conversion | 11,900 | — | — | 11,900 | 992 | ||||||||||||||||
| May 8, 2019 | conversion | 6,384 | — | — | 6,384 | 1,140 | ||||||||||||||||
| May 8, 2019 | conversion | 11,800 | — | — | 11,800 | 983 | ||||||||||||||||
| May 8, 2019 | conversion | 7,312 | — | 500 | 7,812 | 1,240 | ||||||||||||||||
| May 9, 2019 | conversion | 12,500 | — | — | 12,500 | 1,136 | ||||||||||||||||
| May 10, 2019 | conversion | 7,200 | — | — | 7,200 | 655 | ||||||||||||||||
| May 8, 2019 | conversion | 4,400 | — | — | 4,400 | 1,000 | ||||||||||||||||
| May 13, 2019 | conversion | 7,493 | — | — | 7,493 | 1,338 | ||||||||||||||||
| May 13, 2019 | conversion | 12,650 | 3,786 | — | 16,436 | 1,957 | ||||||||||||||||
| May 21, 2019 | conversion | 3,281 | — | — | 3,281 | 586 | ||||||||||||||||
| May 22, 2019 | conversion | 11,550 | 3,526 | — | 15,076 | 2,094 | ||||||||||||||||
| July 11, 2019 | conversion | 11,000 | 3,984 | — | 14,984 | 1,921 | ||||||||||||||||
| July 25, 2019 | conversion | 8,584 | — | — | 8,584 | 2,000 | ||||||||||||||||
| July 30, 2019 | conversion | 16,940 | 6,350 | — | 23,290 | 3,882 | ||||||||||||||||
| July 31, 2019 | conversion | 9,872 | — | — | 9,872 | 2,300 | ||||||||||||||||
| August 2, 2019 | conversion | 10,301 | — | — | 10,301 | 2,400 | ||||||||||||||||
| August 8, 2019 | conversion | 21,450 | 8,170 | — | 29,620 | 4,937 | ||||||||||||||||
| August 11, 2019 | conversion | 10,945 | — | — | 10,945 | 2,550 | ||||||||||||||||
| August 11, 2019 | conversion | 5,837 | — | — | 5,837 | 1,360 | ||||||||||||||||
| August 12, 2019 | conversion | 8,800 | — | — | 8,800 | 2,750 | ||||||||||||||||
| August 12, 2019 | conversion | 13,915 | 5,337 | — | 19,252 | 4,011 | ||||||||||||||||
| August 13, 2019 | conversion | 3,528 | — | — | 3,528 | 1,260 | ||||||||||||||||
| August 14, 2019 | conversion | 5,920 | — | — | 5,920 | 2,960 | ||||||||||||||||
| August 15, 2019 | conversion | 12,650 | 4,877 | — | 17,527 | 5,842 | ||||||||||||||||
| August 15, 2019 | conversion | 6,200 | — | — | 6,200 | 3,100 | ||||||||||||||||
| August 16, 2019 | conversion | 8,060 | — | — | 8,060 | 4,030 | ||||||||||||||||
| August 19, 2019 | conversion | 6,784 | — | — | 6,784 | 4,240 | ||||||||||||||||
| August 20, 2019 | conversion | 7,136 | — | — | 7,136 | 4,460 | ||||||||||||||||
| August 20, 2019 | conversion | 12,100 | 4,705 | — | 16,805 | 7,002 | ||||||||||||||||
| August 21, 2019 | conversion | 4,284 | 5,628 | — | 9,912 | 4,690 | ||||||||||||||||
| August 22, 2019 | conversion | — | 6,348 | — | 6,348 | 5,290 | ||||||||||||||||
| August 23, 2019 | conversion | — | 4,400 | — | 4,400 | 5,500 | ||||||||||||||||
| August 26, 2019 | conversion | 7,810 | 3,068 | — | 10,878 | 9,065 | ||||||||||||||||
| August 26, 2019 | conversion | — | 3,416 | — | 3,416 | 4,270 | ||||||||||||||||
| August 27, 2019 | conversion | — | 2,240 | — | 2,240 | 2,800 | ||||||||||||||||
| August 29, 2019 | conversion | — | 5,344 | — | 5,344 | 6,680 | ||||||||||||||||
| September 3, 2019 | conversion | — | 5,616 | — | 5,616 | 7,020 | ||||||||||||||||
| September 3, 2019 | conversion | 6,149 | 2,449 | — | 8,598 | 14,329 | ||||||||||||||||
| - 30 - |
| Date | Transaction (*) |
Principal Converted |
Interest Converted |
Fees Converted |
Total Amount Converted |
Shares Issued** |
||||||||||||||||
| September 4, 2019 | conversion | — | 2,956 | — | 2,956 | 7,390 | ||||||||||||||||
| September 5, 2019 | conversion | — | 3,240 | — | 3,240 | 8,100 | ||||||||||||||||
| September 6, 2019 | conversion | — | 3,560 | — | 3,560 | 8,900 | ||||||||||||||||
| September 9, 2019 | conversion | — | 3,752 | — | 3,752 | 9,380 | ||||||||||||||||
| September 10, 2019 | conversion | — | 3,944 | — | 3,944 | 9,860 | ||||||||||||||||
| September 10, 2019 | conversion | 6,826 | 2,750 | — | 9,575 | 15,959 | ||||||||||||||||
| September 11, 2019 | conversion | — | 4,129 | — | 4,129 | 10,300 | ||||||||||||||||
| September 12, 2019 | conversion | 2,447 | 2,233 | — | 4,680 | 11,700 | ||||||||||||||||
| September 13, 2019 | conversion | 4,920 | — | — | 4,920 | 12,300 | ||||||||||||||||
| September 16, 2019 | conversion | 2,818 | 2,342 | — | 5,160 | 12,900 | ||||||||||||||||
| September 17, 2019 | conversion | — | 2,960 | — | 2,960 | 7,400 | ||||||||||||||||
| September 18, 2019 | conversion | — | 4,760 | — | 4,760 | 11,900 | ||||||||||||||||
| September 19, 2019 | conversion | — | 2,920 | — | 2,920 | 7,300 | ||||||||||||||||
| September 20, 2019 | conversion | 202 | 1,998 | — | 2,200 | 5,500 | ||||||||||||||||
| September 25, 2019 | conversion | 4,506 | 234 | — | 4,740 | 12,600 | ||||||||||||||||
| October 3, 2019 | conversion | 5,651 | 349 | — | 6,000 | 15,000 | ||||||||||||||||
| October 10, 2019 | conversion | 3,760 | 280 | — | 4,040 | 10,100 | ||||||||||||||||
| October 25, 2019 | conversion | 2,584 | 556 | — | 3,140 | 15,700 | ||||||||||||||||
| November 4, 2019 | conversion | 2,926 | 354 | — | 3,280 | 16,400 | ||||||||||||||||
| November 27, 2019 | conversion | 2,970 | 770 | — | 3,740 | 18,700 | ||||||||||||||||
| January 3, 2020 | conversion | — | 2,640 | — | 2,640 | 13,200 | ||||||||||||||||
| January 27, 2020 | conversion | 3,360 | — | — | 3,360 | 16,800 | ||||||||||||||||
| February 1, 2020 | cancellation | (3,360 | ) | — | — | (3,360 | ) | (16,800 | ) | |||||||||||||
| February 5, 2020 | cancellation | — | (640 | ) | — | (640 | ) | (3,200 | ) | |||||||||||||
| February 5, 2020 | conversion | — | 4,060 | — | 4,060 | 20,300 | ||||||||||||||||
| February 29, 2020 | rounding shares issuable | — | — | — | — | 2,946 | ||||||||||||||||
| Number of shares outstanding February 29, 2020 | 418,415 | |||||||||||||||||||||
| March 29, 2020 | Conversion | — | 2,568 | — | 2,568 | 21,400 | ||||||||||||||||
| March 30, 2020 | Conversion | 742 | — | 500 | 1,242 | 20,700 | ||||||||||||||||
| March 31, 2020 | Conversion | — | 1,013 | — | 1,013 | 21,100 | ||||||||||||||||
| April 3, 2020 | Conversion | — | 936 | — | 936 | 19,500 | ||||||||||||||||
| April 6, 2020 | Conversion | 868 | — | 500 | 1,368 | 22,800 | ||||||||||||||||
| April 7, 2020 | Conversion | — | 1,186 | — | 1,186 | 24,700 | ||||||||||||||||
| April 7, 2020 | Conversion | 1,500 | — | 500 | 2,000 | 25,000 | ||||||||||||||||
| April 8, 2020 | Conversion | — | 1,104 | — | 1,104 | 23,000 | ||||||||||||||||
| April 13, 2020 | Conversion | — | 1,474 | — | 1,474 | 30,700 | ||||||||||||||||
| April 14, 2020 | Conversion | — | 1,272 | — | 1,272 | 26,500 | ||||||||||||||||
| April 16, 2020 | Conversion | 1,456 | — | 500 | 1,956 | 32,600 | ||||||||||||||||
| April 17, 2020 | Conversion | — | 1,613 | — | 1,613 | 33,600 | ||||||||||||||||
| April 20, 2020 | Conversion | — | 1,776 | — | 1,776 | 37,000 | ||||||||||||||||
| April 20, 2020 | Conversion | 1,200 | — | 500 | 1,700 | 23,611 | ||||||||||||||||
| April 21, 2020 | Conversion | — | 1,448 | — | 1,448 | 31,000 | ||||||||||||||||
| April 23, 2020 | Conversion | — | 1,773 | — | 1,773 | 38,500 | ||||||||||||||||
| April 24, 2020 | Conversion | — | 1,392 | — | 1,392 | 43,500 | ||||||||||||||||
| April 24, 2020 | Conversion | 1,941 | — | 500 | 2,441 | 42,420 | ||||||||||||||||
| April 27, 2020 | Conversion | — | 1,469 | — | 1,469 | 45,900 | ||||||||||||||||
| April 28, 2020 | Conversion | — | 781 | — | 781 | 24,400 | ||||||||||||||||
| April 28, 2020 | Conversion | — | 1,376 | — | 1,376 | 43,000 | ||||||||||||||||
| April 29, 2020 | Conversion | 2,400 | — | 500 | 2,900 | 48,333 | ||||||||||||||||
| April 30, 2020 | Conversion | — | 1,408 | — | 1,408 | 44,000 | ||||||||||||||||
| April 30, 2020 | Conversion | 2,225 | — | 500 | 2,725 | 54,500 | ||||||||||||||||
| May 1, 2020 | Conversion | — | 1,792 | — | 1,792 | 56,009 | ||||||||||||||||
| May 4, 2020 | Conversion | — | 1,728 | — | 1,728 | 54,000 | ||||||||||||||||
| May 4, 2020 | Conversion | 5,060 | 2,719 | — | 7,779 | 129,643 | ||||||||||||||||
| - 31 - |
| Date | Transaction (*) |
Principal Converted |
Interest Converted |
Fees Converted |
Total Amount Converted |
Shares Issued** |
||||||||||||||||
| May 4, 2020 | Conversion | 2,724 | — | 500 | 3,224 | 71,640 | ||||||||||||||||
| May 5, 2020 | Conversion | — | 2,365 | — | 2,365 | 73,900 | ||||||||||||||||
| May 6, 2020 | Conversion | 3,750 | — | 500 | 4,250 | 78,703 | ||||||||||||||||
| May 7, 2020 | Conversion | — | 2,170 | — | 2,170 | 67,800 | ||||||||||||||||
| May 7, 2020 | Conversion | 2,640 | — | 500 | 3,140 | 78,500 | ||||||||||||||||
| May 8, 2020 | Conversion | — | 1,592 | — | 1,592 | 59,400 | ||||||||||||||||
| May 11, 2020 | Conversion | 1,843 | — | 500 | 2,343 | 90,100 | ||||||||||||||||
| May 12, 2020 | Conversion | — | 2,095 | — | 2,095 | 100,700 | ||||||||||||||||
| May 12, 2020 | Conversion | 1,910 | — | 500 | 2,410 | 95,000 | ||||||||||||||||
| May 12, 2020 | Conversion | 4,070 | 2,208 | — | 6,278 | 201,231 | ||||||||||||||||
| May 13, 2020 | Conversion | — | 2,413 | — | 2,413 | 116,000 | ||||||||||||||||
| May 14, 2020 | Conversion | — | 1,936 | — | 1,936 | 94,000 | ||||||||||||||||
| May 14, 2020 | Conversion | 2,698 | — | 500 | 3,198 | 123,000 | ||||||||||||||||
| May 14, 2020 | Conversion | 3,300 | — | 500 | 3,800 | 121,794 | ||||||||||||||||
| May 15, 2020 | Conversion | — | 1,764 | — | 1,764 | 98,000 | ||||||||||||||||
| May 15, 2020 | Conversion | 4,510 | 2,416 | — | 6,926 | 232,206 | ||||||||||||||||
| May 18, 2020 | Conversion | — | 2,728 | — | 2,728 | 155,000 | ||||||||||||||||
| May 19, 2020 | Conversion | — | 2,546 | — | 2,546 | 148,000 | ||||||||||||||||
| May 19, 2020 | Conversion | 3,108 | — | 500 | 3,608 | 164,000 | ||||||||||||||||
| May 19, 2020 | Conversion | 3,108 | — | 500 | 3,608 | 164,000 | ||||||||||||||||
| May 19, 2020 | Conversion | 2,450 | — | 500 | 2,950 | 121,399 | ||||||||||||||||
| May 20, 2020 | Conversion | — | 2,477 | — | 2,477 | 144,000 | ||||||||||||||||
| May 21, 2020 | Conversion | — | 3,560 | — | 3,560 | 207,000 | ||||||||||||||||
| May 22, 2020 | Conversion | 3,600 | — | 500 | 4,100 | 210,000 | ||||||||||||||||
| May 22, 2020 | Conversion | 5,665 | 3,112 | — | 8,777 | 416,744 | ||||||||||||||||
| May 25, 2020 | Conversion | 3,238 | — | 500 | 3,738 | 230,000 | ||||||||||||||||
| May 26, 2020 | Conversion | — | 3,120 | — | 3,120 | 240,000 | ||||||||||||||||
| May 27, 2020 | Conversion | — | 2,280 | — | 2,280 | 190,000 | ||||||||||||||||
| May 28, 2020 | Conversion | — | 2,148 | — | 2,148 | 179,000 | ||||||||||||||||
| May 28, 2020 | Conversion | 6,050 | 3,347 | — | 9,397 | 522,072 | ||||||||||||||||
| May 28, 2020 | Rounding shares | — | — | — | — | 9 | ||||||||||||||||
| May 29, 2020 | Conversion | 4,000 | — | 500 | 4,500 | 257,731 | ||||||||||||||||
| June 1, 2020 | Conversion | — | 2,367 | — | 2,367 | 202,000 | ||||||||||||||||
| June 1, 2020 | Conversion | 4,380 | — | — | 4,380 | 300,000 | ||||||||||||||||
| June 1, 2020 | Conversion | 8,680 | — | — | 8,680 | 620,000 | ||||||||||||||||
| June 3, 2020 | Conversion | — | 3,427 | — | 3,427 | 357,000 | ||||||||||||||||
| June 4, 2020 | Conversion | 4,372 | — | 500 | 4,872 | 435,000 | ||||||||||||||||
| June 4, 2020 | Conversion | — | 2,554 | — | 2,554 | 285,000 | ||||||||||||||||
| June 3, 2020 | Conversion | 7,095 | 3,954 | — | 11,049 | 754,703 | ||||||||||||||||
| June 4, 2020 | Conversion | 9,744 | — | — | 9,744 | 870,000 | ||||||||||||||||
| June 5, 2020 | Conversion | — | 3,916 | — | 3,916 | 445,000 | ||||||||||||||||
| June 8, 2020 | Conversion | 4,770 | — | — | 4,770 | 530,000 | ||||||||||||||||
| June 8, 2020 | Conversion | — | 2,980 | — | 2,980 | 487,000 | ||||||||||||||||
| June 8, 2020 | Conversion | 6,600 | 3,700 | — | 10,300 | 1,122,004 | ||||||||||||||||
| June 9, 2020 | Conversion | 3,593 | — | 500 | 4,093 | 535,000 | ||||||||||||||||
| June 10, 2020 | Conversion | 4,396 | — | 500 | 4,896 | 640,000 | ||||||||||||||||
| June 10, 2020 | Conversion | — | 2,472 | — | 2,472 | 404,000 | ||||||||||||||||
| June 11, 2020 | Conversion | — | 2,935 | — | 2,935 | 587,000 | ||||||||||||||||
| June 11, 2020 | Conversion | 4,320 | — | — | 4,320 | 720,000 | ||||||||||||||||
| June 12, 2020 | Conversion | 6,600 | 3,718 | — | 10,318 | 1,433,000 | ||||||||||||||||
| June 15, 2020 | Conversion | — | 3,126 | — | 3,126 | 704,000 | ||||||||||||||||
| June 15, 2020 | Conversion | 9,435 | — | — | 9,435 | 1,700,000 | ||||||||||||||||
| June 15, 2020 | Conversion | 4,218 | — | 500 | 4,718 | 850,000 | ||||||||||||||||
| June 17, 2020 | Conversion | — | 3,135 | — | 3,135 | 825,000 | ||||||||||||||||
| - 32 - |
| Date | Transaction (*) |
Principal Converted |
Interest Converted |
Fees Converted |
Total Amount Converted |
Shares Issued** |
||||||||||||||||
| June 17, 2020 | Conversion | 4,750 | — | — | 4,750 | 1,000,000 | ||||||||||||||||
| June 17, 2020 | Conversion | 5,830 | 3,303 | — | 9,133 | 1,902,773 | ||||||||||||||||
| June 18, 2020 | Conversion | — | 2,608 | — | 2,608 | 815,000 | ||||||||||||||||
| June 18, 2020 | Conversion | 4,300 | — | 500 | 4,800 | 1,200,000 | ||||||||||||||||
| June 19, 2020 | Conversion | 3,500 | — | 500 | 4,000 | 1,000,000 | ||||||||||||||||
| June 19, 2020 | Conversion | — | 2,797 | — | 2,797 | 874,000 | ||||||||||||||||
| June 19, 2020 | Conversion | 6,490 | 3,686 | — | 10,176 | 2,119,985 | ||||||||||||||||
| June 22, 2020 | Conversion | — | 4,627 | — | 4,627 | 1,446,000 | ||||||||||||||||
| June 22, 2020 | Conversion | 6,930 | 3,950 | — | 10,880 | 2,266,600 | ||||||||||||||||
| June 23, 2020 | Conversion | — | 5,120 | — | 5,120 | 1,600,000 | ||||||||||||||||
| June 22, 2020 | Conversion | 10,000 | — | — | 10,000 | 2,500,000 | ||||||||||||||||
| June 23, 2020 | Conversion | 6,100 | — | 500 | 6,600 | 1,650,000 | ||||||||||||||||
| June 23, 2020 | Conversion | 10,120 | 5,775 | — | 15,895 | 3,311,362 | ||||||||||||||||
| June 23, 2020 | Conversion | 2,488 | — | 500 | 2,988 | 747,000 | ||||||||||||||||
| June 24, 2020 | Conversion | 8,400 | — | — | 8,400 | 2,100,000 | ||||||||||||||||
| June 24, 2020 | Conversion | 17,200 | — | — | 17,200 | 4,300,000 | ||||||||||||||||
| June 24, 2020 | Conversion | 10,120 | 5,781 | — | 15,901 | 3,312,766 | ||||||||||||||||
| June 24, 2020 | Conversion | 1,150 | — | 500 | 1,650 | 343,750 | ||||||||||||||||
| June 25, 2020 | Conversion | — | 7,040 | — | 7,040 | 2,200,000 | ||||||||||||||||
| June 25, 2020 | Conversion | 10,300 | — | 500 | 10,800 | 2,700,000 | ||||||||||||||||
| June 25, 2020 | Conversion | 11,275 | 6,448 | — | 17,723 | 3,692,421 | ||||||||||||||||
| June 26, 2020 | Conversion | — | 6,400 | — | 6,400 | 2,000,000 | ||||||||||||||||
| June 29, 1930 | Conversion | 12,800 | — | — | 12,800 | 3,200,000 | ||||||||||||||||
| June 29, 2020 | Conversion | 3,355 | 485 | — | 3,840 | 1,200,000 | ||||||||||||||||
| June 30, 2020 | Conversion | 4,841 | 119 | — | 4,960 | 1,550,000 | ||||||||||||||||
| June 29, 2020 | Conversion | 13,000 | 861 | — | 13,861 | 2,887,685 | ||||||||||||||||
| July 1, 2020 | Conversion | 12,980 | — | 500 | 13,480 | 3,370,000 | ||||||||||||||||
| July 1, 2020 | Conversion | 22,800 | — | — | 22,800 | 5,700,000 | ||||||||||||||||
| July 1, 2020 | Conversion | 12,485 | 7,191 | — | 19,676 | 4,099,085 | ||||||||||||||||
| July 1, 2020 | Conversion | 5,222 | 116 | — | 5,338 | 1,668,000 | ||||||||||||||||
| July 2, 2020 | Conversion | 7,248 | 112 | — | 7,360 | 2,300,000 | ||||||||||||||||
| July 6, 2020 | Conversion | 16,088 | — | — | 16,088 | 4,021,875 | ||||||||||||||||
| July 1, 2020 | Conversion | 13,250 | 861 | — | 14,111 | 2,945,058 | ||||||||||||||||
| July 6, 2020 | Conversion | 17,600 | 10,195 | — | 27,795 | 5,790,666 | ||||||||||||||||
| July 7, 2020 | Conversion | 7,462 | 538 | — | 8,000 | 2,500,000 | ||||||||||||||||
| July 8, 2020 | Conversion | 6,297 | 103 | — | 6,400 | 2,000,000 | ||||||||||||||||
| July 9, 2020 | Conversion | 18,150 | 10,550 | — | 28,700 | 5,979,187 | ||||||||||||||||
| July 9, 2020 | Conversion | 20,000 | — | — | 20,000 | 5,000,000 | ||||||||||||||||
| July 10, 2020 | Conversion | 9,403 | 197 | — | 9,600 | 3,000,000 | ||||||||||||||||
| July 14, 2020 | Conversion | — | 10,240 | — | 10,240 | 3,200,000 | ||||||||||||||||
| July 14, 2020 | Conversion | 12,000 | — | — | 12,000 | 3,000,000 | ||||||||||||||||
| July 14, 2020 | Conversion | 9,230 | 370 | — | 9,600 | 3,000,000 | ||||||||||||||||
| July 14, 2020 | Conversion | 12,114 | 7,082 | — | 19,196 | 3,999,234 | ||||||||||||||||
| July 14, 2020 | Conversion | 24,000 | — | — | 24,000 | 6,000,000 | ||||||||||||||||
| July 14, 2020 | Conversion | — | 12,800 | — | 12,800 | 4,000,000 | ||||||||||||||||
| July 16, 2020 | Conversion | 22,611 | 13,782 | — | 36,392 | 7,581,749 | ||||||||||||||||
| July 17, 2020 | Conversion | 33,000 | 18,736 | — | 51,736 | 10,645,130 | ||||||||||||||||
| July 20, 2020 | Conversion | — | 1,600 | — | 1,600 | 500,000 | ||||||||||||||||
| July 20, 2020 | Conversion | 32,000 | — | — | 32,000 | 8,000,000 | ||||||||||||||||
| July 20, 2020 | Conversion | 28,600 | 16,249 | — | 44,849 | 9,237,550 | ||||||||||||||||
| July 20, 2020 | Conversion | — | 10,560 | — | 10,560 | 3,300,000 | ||||||||||||||||
| July 21, 2020 | Conversion | — | 6,400 | — | 6,400 | 2,000,000 | ||||||||||||||||
| July 22, 2020 | Conversion | — | 6,400 | — | 6,400 | 2,000,000 | ||||||||||||||||
| July 22, 2020 | Conversion | — | 24,000 | — | 24,000 | 7,500,000 | ||||||||||||||||
| - 33 - |
| Date | Transaction (*) |
Principal Converted |
Interest Converted |
Fees Converted |
Total Amount Converted |
Shares Issued** |
||||||||||||||||
| July 23, 2020 | Conversion | — | 6,400 | — | 6,400 | 2,000,000 | ||||||||||||||||
| July 24, 2020 | Conversion | — | 6,400 | — | 6,400 | 2,000,000 | ||||||||||||||||
| July 24, 2020 | Conversion | 9,000 | — | — | 9,000 | 2,000,000 | ||||||||||||||||
| July 24, 2020 | Conversion | 27,500 | 15,741 | — | 43,241 | 6,863,668 | ||||||||||||||||
| July 27, 2020 | Conversion | 16,018 | 182 | — | 16,200 | 5,000,000 | ||||||||||||||||
| July 27, 2020 | Conversion | — | 22,680 | — | 22,680 | 7,000,000 | ||||||||||||||||
| July 28, 2020 | Conversion | 9,150 | 50 | — | 9,200 | 2,500,000 | ||||||||||||||||
| July 29, 2020 | Conversion | 50,032 | 7,700 | — | 57,732 | 9,785,085 | ||||||||||||||||
| July 29, 2020 | Conversion | 10,456 | 44 | — | 10,500 | 2,500,000 | ||||||||||||||||
| July 29, 2020 | Conversion | — | 29,400 | — | 29,400 | 7,000,000 | ||||||||||||||||
| July 29, 2020 | Conversion | 27,500 | 15,833 | — | 43,333 | 6,878,219 | ||||||||||||||||
| July 30, 2020 | Conversion | 10,463 | 37 | — | 10,500 | 2,500,000 | ||||||||||||||||
| July 30, 2020 | Conversion | — | 29,400 | — | 29,400 | 7,000,000 | ||||||||||||||||
| July 30, 2020 | Conversion | 57,750 | — | — | 57,750 | 11,000,000 | ||||||||||||||||
| July 30, 2020 | Conversion | 12,570 | 30 | — | 12,600 | 3,000,000 | ||||||||||||||||
| July 31, 2020 | Conversion | — | 29,400 | — | 29,400 | 7,000,000 | ||||||||||||||||
| July 31, 2020 | Conversion | 23,100 | 13,330 | — | 36,430 | 7,019,333 | ||||||||||||||||
| July 31, 2020 | Conversion | 6,734 | 66 | — | 6,800 | 2,000,000 | ||||||||||||||||
| August 3, 2020 | Conversion | 43,500 | — | — | 43,500 | 10,000,000 | ||||||||||||||||
| August 3, 2020 | Conversion | — | 29,400 | — | 29,400 | 7,000,000 | ||||||||||||||||
| August 3, 2020 | Conversion | — | 8,500 | — | 8,500 | 2,500,000 | ||||||||||||||||
| August 4, 2020 | Conversion | 17,985 | 10,427 | — | 28,412 | 5,474,293 | ||||||||||||||||
| August 4, 2020 | Conversion | 5,800 | — | 5,800 | 2,500,000 | |||||||||||||||||
| August 5, 2020 | Conversion | 27,500 | 13,979 | — | 41,479 | 8,837,286 | ||||||||||||||||
| August 6, 2020 | Conversion | 33,741 | 18,759 | — | 52,500 | 12,500,000 | ||||||||||||||||
| August 6, 2020 | Conversion | — | 17,000 | — | 17,000 | 5,000,000 | ||||||||||||||||
| August 10, 2020 | Conversion | 43,294 | 953 | — | 44,247 | 15,000,000 | ||||||||||||||||
| August 11, 2020 | Conversion | 25,850 | 15,107 | — | 40,957 | 17,065,350 | ||||||||||||||||
| August 11, 2020 | Conversion | 12,533 | 10,000 | — | 22,533 | 11,268,750 | ||||||||||||||||
| August 12, 2020 | Conversion | 8,965 | 5,245 | — | 14,210 | 5,920,900 | ||||||||||||||||
| August 14, 2020 | Conversion | 27,500 | 15,510 | — | 43,010 | 17,920,835 | ||||||||||||||||
| August 14, 2020 | Conversion | 16,000 | — | — | 16,000 | 8,000,000 | ||||||||||||||||
| August 17, 2020 | Conversion | — | 12,000 | — | 12,000 | 6,000,000 | ||||||||||||||||
| August 19, 2020 | Conversion | — | 12,000 | — | 12,000 | 6,000,000 | ||||||||||||||||
| August 19, 2020 | Conversion | 26,510 | 15,040 | — | 41,550 | 17,312,501 | ||||||||||||||||
| August 27, 2020 | Conversion | 25,441 | 10,000 | 500 | 35,941 | 17,970,625 | ||||||||||||||||
| August 28, 2020 | Conversion | 41,000 | — | — | 41,000 | 20,000,000 | ||||||||||||||||
| August 28, 2020 | Conversion | 38,500 | 21,894 | — | 60,394 | 25,164,027 | ||||||||||||||||
| August 31, 2020 | Conversion | 39,500 | — | 500 | 40,000 | 20,000,000 | ||||||||||||||||
| September 3, 2020 | Conversion | 44,990 | 25,974 | — | 70,964 | 29,568,429 | ||||||||||||||||
| September 4, 2020 | Conversion | 48,100 | — | 500 | 48,600 | 27,000,000 | ||||||||||||||||
| September 10, 2020 | Conversion | 44,000 | 19,046 | — | 63,046 | 29,188,067 | ||||||||||||||||
| September 14, 2020 | Conversion | 36,000 | — | — | 36,000 | 20,000,000 | ||||||||||||||||
| September 16, 2020 | Conversion | 36,300 | 15,858 | — | 52,158 | 28,976,854 | ||||||||||||||||
| September 17, 2020 | Conversion | 30,000 | — | — | 30,000 | 20,000,000 | ||||||||||||||||
| September 21, 2020 | Conversion | 29,700 | 13,074 | — | 42,774 | 35,645,000 | ||||||||||||||||
| September 22, 2020 | Conversion | 33,500 | — | 500 | 34,000 | 34,000,000 | ||||||||||||||||
| September 22, 2020 | Conversion | 20,000 | — | — | 20,000 | 20,000,000 | ||||||||||||||||
| September 25, 2020 | Conversion | 27,500 | 12,179 | — | 39,679 | 38,900,867 | ||||||||||||||||
| September 28, 2020 | Conversion | 21,000 | — | — | 21,000 | 30,000,000 | ||||||||||||||||
| September 28, 2020 | Conversion | 6,850 | — | 500 | 7,350 | 15,000,000 | ||||||||||||||||
| September 29, 2020 | Conversion | 23,300 | — | 500 | 23,800 | 34,000,000 | ||||||||||||||||
| September 30, 2020 | Conversion | 27,500 | 12,410 | — | 39,910 | 47,511,901 | ||||||||||||||||
| October 5, 2020 | Conversion | 27,500 | 11,991 | — | 39,491 | 50,630,340 | ||||||||||||||||
| - 34 - |
| Date | Transaction (*) |
Principal Converted |
Interest Converted |
Fees Converted |
Total Amount Converted |
Shares Issued** |
||||||||||||||||
| October 5, 2020 | Conversion | 17,500 | — | — | 17,500 | 25,925,926 | ||||||||||||||||
| October 6, 2020 | Conversion | 5,881 | 9,360 | 500 | 15,741 | 24,217,169 | ||||||||||||||||
| October 6, 2020 | Conversion | 6,780 | — | 500 | 7,280 | 16,000,000 | ||||||||||||||||
| October 8, 2020 | Conversion | 33,000 | 14,762 | — | 47,762 | 61,233,329 | ||||||||||||||||
| October 12, 2020 | Conversion | 27,500 | 12,375 | — | 39,875 | 66,458,333 | ||||||||||||||||
| October 15, 2020 | Conversion | 41,800 | 26,711 | — | 68,511 | 114,185,778 | ||||||||||||||||
| October 15, 2020 | Conversion | 6,500 | — | 500 | 7,000 | 20,000,000 | ||||||||||||||||
| October 21, 2020 | Conversion | 22,000 | 10,032 | — | 32,032 | 53,386,667 | ||||||||||||||||
| October 26, 2020 | Conversion | 10,000 | 5,000 | — | 15,000 | 25,000,000 | ||||||||||||||||
| October 29, 2020 | Conversion | 44,000 | 20,298 | — | 64,298 | 107,164,443 | ||||||||||||||||
| October 29, 2020 | Conversion | 27,500 | 14,000 | — | 41,500 | 69,166,666 | ||||||||||||||||
| November 2, 2020 | Conversion | 2,500 | 142 | — | 2,642 | 4,403,700 | ||||||||||||||||
| November 9, 2020 | Conversion | 38,500 | 18,044 | — | 56,544 | 94,239,448 | ||||||||||||||||
| November 17, 2020 | Conversion | 38,500 | 25,450 | — | 63,950 | 106,582,783 | ||||||||||||||||
| November 24, 2020 | Conversion | 40,040 | 26,655 | — | 66,695 | 111,157,519 | ||||||||||||||||
| December 1, 2020 | Conversion | 44,660 | 29,938 | — | 74,598 | 124,330,726 | ||||||||||||||||
| December 3, 2020 | Conversion | 38,170 | 22,938 | — | 61,108 | 101,847,067 | ||||||||||||||||
| December 10, 2020 | Conversion | 78,650 | 47,584 | — | 126,234 | 210,390,074 | ||||||||||||||||
| December 28, 2020 | Warrants | — | — | — | 1,190 | 119,000,000 | ||||||||||||||||
| January 1, 2021 | Warrants | — | — | — | 1,250 | 125,000,000 | ||||||||||||||||
| January 21, 2021 | Warrants | — | — | — | 736 | 73,650,793 | ||||||||||||||||
| January 14, 2021 | Warrants | — | — | — | 1,300 | 130,000,000 | ||||||||||||||||
| January 20, 2021 | Warrants | — | — | — | 323 | 32,338,030 | ||||||||||||||||
| January 20, 2021 | Warrants | — | — | — | 1,280 | 127,992,278 | ||||||||||||||||
| February 3, 2021 | Fees | — | — | — | — | 5,000,000 | ||||||||||||||||
| February 10, 2021 | Warrants | — | — | — | — | 75,000,000 | ||||||||||||||||
| February 16, 2021 | Warrants | — | — | — | — | 14,268,324 | ||||||||||||||||
| February 16, 2021 | Warrants | — | — | — | — | 130,000,000 | ||||||||||||||||
| February 19, 2021 | Conversion | 82,500 | 27,530 | — | 110,030 | 4,075,191 | ||||||||||||||||
| February 23, 2021 | Warrants | — | — | — | — | 42,189,696 | ||||||||||||||||
| February 26, 2021 | Warrants | — | — | — | — | 24,771,271 | ||||||||||||||||
| Number of shares outstanding February 28, 2021 | 3,229,426,884 | |||||||||||||||||||||
| - 35 - |
| Date | Transaction | Consideration | Shares Issued | |||||
| March 3, 2021 | Conversion of Series F Preferred Shares | 40 Series F shares converted | 156,978,130 | |||||
| March 23, 2021 | Conversion of Series F Preferred Shares | 18 Series F shares converted | 74,652,380 | |||||
| April 8, 2021 | Conversion of Series F Preferred Shares | 20 Series F shares converted | 84,715,488 | |||||
| June 3, 2021 | Exercise of warrants | Cashless exercise of 188,000,000 warrants | 182,000,000 | |||||
| June 15, 2021 | Exercise of warrants | Cashless exercise of 11,000,000 warrants | 9,975,508 | |||||
| June 15, 2021 | Debt exchange | $2,545,900 in debt exchanged for common shares | 39,167,693 | |||||
| June 15, 2021 | Debt Exchange | $5,000,875 in debt exchanged for common shares | 76,936,539 | |||||
| July 21, 2021 | Exercise of warrants | Cashless exercise of 112,000,000 warrants | 108,276,053 | |||||
| July 26, 2021 | Common stock issued at previous day bid price per note conversion agreement | Convert a note payable including $275,000 of principal, $16,955 of interest, and $1,750 of fees | 10,859,436 | |||||
| August 5, 2021 | Common stock issued at previous day bid price per note conversion agreement | Convert a note payable including $550,000 of principal, and $55,000 of interest | 20,183,000 | |||||
| October 19, 2021 | Exercise of warrants | Cashless exercise of 52,985,075 warrants | 50,000,000 | |||||
| October 27, 2021 | Exercise of warrants | Cashless exercise of 47,014,925 warrants | 44,770,776 | |||||
| March 1, 2021-February 28, 2022 | Other registered sales | Various prices | 645,168,473 | |||||
| Number of shares outstanding February 28, 2022***** | 4,733,110,360 | |||||||
| Date | Transaction | Consideration | Shares Issued | |||||
| July 11, 2022 | Exercise of warrants | Cashless exercise of 8,250,000 warrants | 1,688,178 | |||||
| July 21, 2022 | Exercise of warrants | Cashless exercise of 53,128,210 warrants | 8,000,001 | |||||
| August 31, 2022 | Cancellation of common stock | Pursuant to an SEC enforcement action against a lender | (17,116,894 | ) | ||||
| February 10, 2023 | Exercise of warrants | Cashless exercise of 47,000,000 warrants | 35,618,378 | |||||
| February 28, 2023 | Common stock issued as penalty pursuant to share purchase agreement | Corresponding adjustment to paid in capital | 17,500,000 | |||||
| March 1, 2022-February 28, 2023 | Other registered sales | Various prices | 1,057,841,576 | |||||
| Number of shares outstanding February 28, 2023***** | 5,836,641,599 | |||||||
| - 36 - |
| Date | Transaction | Consideration | Shares Issued | |||||
| June 2, 2023 | Common stock issued for services | Shares having a fair value of $109,200 | 2,100,000 | |||||
| July 24, 2023 | Common stock issued for services | Shares having a fair value of $118,400 | 10,000,000 | |||||
| July 24, 2023 | Common stock issued for services | Shares having a fair value of $44,460 | 6,500,000 | |||||
| March 1, 2023-February 29, 2024 | Other registered sales | Various prices | 3,383,509,359 | |||||
| Number of shares outstanding February 29, 2024 | 9,238,750,958 | |||||||
| Date | Transaction | Consideration | Shares Issued | |||||
| August 8, 2024 | Debt exchange | $200,000 in debt exchanged for common shares | 57,142,857 | |||||
| December 16, 2024 | Debt exchange | $200,000 in debt exchanged for common shares | 79,923,076 | |||||
| February 11, 2025 | Debt exchange | $162,000 in debt exchanged for common shares | 60,000,000 | |||||
| March 1, 2024-February 28, 2025 | Other registered sales | Various prices | 4,979,636,877 | |||||
| Number of shares outstanding February 28, 2025 | 14,412,453,768 | |||||||
* Conversions occur at discounts ranging from 40-50% of average market price
** Shares adjusted for reverse stock splits: 100: 1 on August 24, 2018 and 10,000:1 on March 27, 2020
*** Total proceeds $600
**** Total proceeds $8,922
***** At February 28, 2022 there were 2,100,000 issuable shares
****** At February 28, 2023 there were 12,100,000 issuable shares
In connection with the foregoing, the Registrant relied upon the exemption from registration under the Securities Act of 1933, as amended and the rules and regulations of the Securities and Exchange Commission thereunder, in reliance upon Section 4(a)(2) thereof and Regulation D thereunder.
Penny Stock Regulations
The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share. Our Common Stock falls within the definition of penny stock and therefore is subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 individually, or $300,000, together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. In addition, the broker-dealer must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell our Common Stock and may affect the ability of investors to sell their Common Stock in the secondary market.
| - 37 - |
In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority (“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. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the investors’ ability to buy and sell our stock.
Purchases of Equity Securities by the Registrant and Affiliated Purchasers
We have not repurchased any shares of our common stock during the fiscal years ended February 28, 2025 or February 29, 2024.
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 financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes to those financial statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Forward-Looking Statements and Business sections in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
Overview
AITX was incorporated in Florida on March 25, 2010. AITX reincorporated into Nevada on February 17, 2015. AITX’ fiscal year end is February 28 (February 29 during leap year). AITX is located at 10800 Galaxie Ave, Ferndale Michigan, 48220, and our telephone number is 877-767-6268.
| - 38 - |
Results of Operations
The following table shows our results of operations for the years ended February 28, 2025 and February 29, 2024. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.
| Period | ||||||||||||||||
| Year Ended | Year Ended | Change | ||||||||||||||
| February 28, 2025 | February 29, 2024 | Dollars | Percentage | |||||||||||||
| Revenues | $ | 6,130,886 | $ | 2,227,559 | $ | 3,903,327 | 175 | % | ||||||||
| Gross profit | 3,744,564 | 565,817 | 3,178,747 | 562 | % | |||||||||||
| Operating expenses | 17,691,437 | 14,555,229 | 3,136,208 | 22 | % | |||||||||||
| Loss from operations | (13,946,873 | ) | (13,989,412 | ) | 42,539 | 0 | % | |||||||||
| Other income (expense), net | (4,988,719 | ) | (6,719,304 | ) | (1,300,527 | ) | (26 | %) | ||||||||
| Net loss | $ | (18,935,592 | ) | $ | (20,708,716 | ) | $ | (2,599,259 | ) | 9 | % | |||||
The following table presents revenues from contracts with customers disaggregated by product/service:
| Year Ended | Year Ended | Change | ||||||||||||||
| February 28, 2025 | February 29, 2024 | Dollars | Percentage | |||||||||||||
| Device rental activities | $ | 5,050,255 | $ | 1,626,207 | $ | 3,424,048 | 211 | % | ||||||||
| Direct sales of goods and services | 1,080,631 | 601,352 | 479,279 | 80 | % | |||||||||||
| $ | 6,130,886 | $ | 2,227,559 | $ | 3,903,327 | 175 | % | |||||||||
Revenue
Total revenue for the year ended February 28, 2025, was $6,130,886, which represented an increase of $3,903,327 or 175% compared to total revenue of $2,227,559 for the year ended February 29, 2024. Rental activities increased by $3,424,048 or 211%, as the Company continues to grow its product line and customer base. Direct sales grew by $479,279 or 80% driven by higher monitoring (RMC) revenue on new installations for the year ended February 28, 2025.
Gross profit
Total gross profit for the year ended February 28, 2025 was $3,744,564, which represented an increase of $3,178,747, compared to total gross profit of $1,096,457 for the year ended February 29, 2024. The increase is a result of the increase in revenues above, and gross profit % which was 61% for the year ended February 28, 2025 was also 25% for the prior year. The gross profit % increased as the increase in higher margin rental activities in the product mix, and overhead being allocated over a higher sales base. Also, in the prior year there was a higher inventory provision for the permanent impairment in value of two products that the Company discontinued in their current form. This resulted in an unusually low gross profit % for the year ended February 29, 2024.
Operating expenses
Operating expenses for the years ended February 28, 2025 and February 29, 2024 comprised of the following:
| Period | Change | |||||||||||||||
|
Year Ended February 28, 2025 |
Year Ended February 29, 2024 |
Dollars | Percentage | |||||||||||||
| Research and development | $ | 3,462,558 | $ | 3,446,285 | $ | 16,273 | 0 | % | ||||||||
| General and administrative | 13,599,009 | 9,957,380 | 3,601,629 | 36 | % | |||||||||||
| Depreciation and amortization | 429,137 | 323,407 | 105,732 | 33 | % | |||||||||||
| Impairment on revenue earning devices | - | 584,177 | (548,177 | ) | (100 | %) | ||||||||||
| Operating lease cost and rent | 240,731 | 260,406 | (19,675 | ) | (8 | %) | ||||||||||
| (Gain) loss on disposal of fixed assets | - | (16,426 | ) | 16,426 | (100 | %) | ||||||||||
| Operating expenses | $ | 17,691,437 | $ | 14,555,229 | $ | 3,126,208 | 22 | % | ||||||||
| - 39 - |
Our operating expenses were comprised of general and administrative expenses, research and development, depreciation and amortization, operating lease and rent and a (gain) loss on disposal of fixed assets. General and administrative expenses consisted primarily of professional services, automobile expenses, advertising, salaries and wages, travel expenses and rent. Our operating expenses during the years ended February 28, 2025 and February 29, 2024 were $17,691,437and $14,555,229, respectively. The overall $3,126,208 increase in operating expenses was primarily attributable to the following changes in operating expenses:
| ● | Research and development expenses increased by $16,273 as the Company continued to focus on current product development and improvements. The Company moved | |
| ● | General and administrative expenses increased by $3,601,629 primarily due to the following changes: |
| — | For the year ended February 28, 2025 stock based compensation to CEO in equity awards was $1,500,000 with a charge of $331,685 for the Employee Stock Option Plan (ESOP) all totaling $1,831,685 compared with stock based compensation to CEO in equity awards was $1,521,000 and a charge of $272,599 for the ESOP all totaling $1,793,599 for the year ended February 29, 2024. This represents an increase of $38,086 in stock based compensation. The stock based compensation for the CEO is payable in Series G and has been deferred until after a year. | |
| — | Wages, salaries and payroll levies for the CEO increased by $1,500,000 in discretionary bonus charged, all of which is deferred compensation and will not be paid out this year. Base salary increased by $20,000. | |
| — | Wages, salaries and payroll levies for the staff increased by $732,953 due to staff increases (6). | |
| — | Commissions increased by $274,208 due to increased revenues. | |
| — | Office expense increased by $45,157. | |
| — | Insurance costs increased by $117,181 due to more employees and higher health insurance costs. | |
| — | Repairs and maintenance increased by $137,901 due to repair of more active revenue earning devices in the field. | |
| — | The remaining increases and offsetting decreases were distributed amongst other general and administrative accounts such as installation expense, dues and subscriptions, marketing, travel, and production supplies amongst others. |
| ● | Operating lease cost and rent decreased by $19,675. There was a vehicle lease that expired during the current fiscal year. | |
| ● | Depreciation and amortization increased by $105,732 due to the increase in demo devices, computer equipment, warehouse equipment in fixed assets. | |
| ● | (Gain) loss on disposal of fixed assets decreased by $16,426 due to a vehicle disposal in 2024 that yielded a gain. | |
| ● | There was no impairment on revenue earning devices for the year ended February 28, 2025. Impairment on revenue earning devices was $584,177 for the year ending February 29,2024 due to the discontinuance of two products in their present form. |
Other income (expense)
Other income (expense) consisted of interest expense and gain on settlement of debt. Other income (expense) during the years ended February 28, 2025 and February 29, 2024, was ($4,988,719) and ($6,719,304), respectively.
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The change in other income (expense) was due to the following:
| ● | Interest expense decreased by $1,301,063. Amortization of debt discounts decreased by $2,112,829, and for the year ended February 28, 2025 was $271,234 compared with $2,384,163 for the year ended February 29, 2024. This decrease was due to many notes maturing in the prior year and being fully amortized. Interest expense was $4,188,866 for the year ended February 28, 2025, compared with $4,011,681 for the year ended February 28, 2024. This $177,195 increase was due to $350,000 of new notes this year and a full years interest on the prior year’s $1,750,000 new notes, many of which were issued in the last two quarters. Deferred variable payment obligation (DVPO) expense was $996,881 for the year ended February 28, 2025, compared with $362,200 for the year ended February 29, 2024. This $634,881 increase was a result of the large increase in revenues. | |
| ● | Gain on settlement of debt increased by $429,522 due to a write-off of accounts payable and vehicle loans that were greater than six years old during the current fiscal year. |
The Company’s loss from operations for the year ended February 28, 2025 was $13,946,873 which represented an decrease in loss of $42,539 compared to a loss of $13,989,412 for the year ended February 29, 2024. The higher revenues and gross profit in 2024 were partially offset by higher operating expenses for the reasons set out above. Note that the Company had a net loss of $18,935,592 for the year ended February 28, 2025, as compared to net loss of $20,708,716 for the year ended February 29, 2024. This $1,773,124 change is mostly attributable to a decrease in amortization expense.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.
For the year ended February 28, 2025, the Company had negative cash flow from operating activities of $12,196,388. As of February 28, 2025 the Company has an accumulated deficit of $156,496,930 and negative working capital of $2,548,138. Management does not anticipate having positive cash flow from operations in the near future. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements.
The Company does not have the resources at this time to repay all its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business. At the same time management points to its successful history with maintaining Company operations and reminds all with reasonable confidence this will continue. Management has plans to address the Company’s financial situation as follows:
Management is committed to raise either non-dilutive funds or minimally dilutive funds. There is no assurance that these funds will be able to be raised nor can we provide assurance that these possible raises may not have dilutive effects. In September 2024, the Company entered into an equity financing agreement whereby an investor will purchase up to $30,000,000 of the Company’s common stock at a discount over a two-year period. There remains approximately $24 million left to issue under this arrangement. Management believes that it has the necessary support to continue operations by continuing its funding methods in the following ways : growing revenues, through equity proceeds, and issuing non-convertible debt.
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Capital Resources
The following table summarizes total current assets, liabilities and working capital for the period indicated:
| February 28, 2025 | February 29, 2024 | |||||||
| Current assets | $ | 5,028,543 | $ | 3,616,566 | ||||
| Current liabilities | 7,576,681 | 21,715,651 | ||||||
| Working capital | $ | (2,548,138 | ) | $ | (18,099,085 | ) | ||
As of February 28, 2025 and February 29, 2024, we had a cash balance of $865,975 and $$105,926, respectively.
Summary of Cash Flows
|
Year Ended February 28, 2025 |
Year Ended February 29, 2024 |
|||||||
| Net cash used in operating activities | $ | (12,196,388 | ) | $ | (12,951,743 | ) | ||
| Net cash provided by (used in) investing activities | $ | (79,965 | ) | $ | 4,194 | |||
| Net cash provided by financing activities | $ | 13,036,402 | $ | 12,113,716 | ||||
Net cash used in operating activities for the year ended February 28, 2025 was $12,196,388, which included a net loss of $18,935,592, non-cash activity such as the gain on settlement of debt of $468,262, amortization of debt discount of $271,234, stock based compensation of $1,831,685, reduction in right of use asset $119,151, accretion of lease liability $118,502, increase in related party accrued payroll and interest $71,927, inventory provision of ($494,000), bad debts expense $83,682, depreciation and amortization of $1,480,636 and change in operating assets and liabilities of $3,724,649.
Net cash provided by (used in) investing activities.
Net cash used in investing activities for the year ended February 28, 2025 was $79,965. This consisted of the purchase of fixed assets of ($23,724), purchase of trademarks of ($6,241) and purchase of investment of ($50,000).
Net cash provided by (used in) financing activities.
Net cash provided by financing activities was $13,036,402 for the year ended February 28, 2025. This consisted of share proceeds net of issuance costs of $12,702,010, proceeds from the issuance of Series B Preferred Shares of $278,000, proceeds from the issuance of Series C Preferred Shares of $278,580 and proceeds from loans payable $350,000 offset by repayments of loans payable of $183,000 and redemption of Series B Preferred Shares of ($389,188).
Off-Balance Sheet Arrangements
We do not have any outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us.
Significant Accounting Policies
Use of Estimates
In order to prepare financial statements in conformity with accounting principals generally accepted in the United States, management must make estimates, judgements and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any, are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value equity instruments used in debt settlements,amendments and extensions.
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Revenue Earning Devices
Revenue earning devices are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of 48 months. The Company continually evaluates revenue earning devices to determine whether events or changes in circumstances have occurred that may warrant revision of the estimated useful life or whether the devices should be evaluated for possible impairment. The Company uses a combination of the undiscounted cash flows and market approaches in assessing whether an asset has been impaired. The Company measures impairment losses based upon the amount by which the carrying amount of the asset exceeds the fair value.
Fixed Assets
Fixed assets are stated at cost. Depreciation is provided on the straight-line method based on the estimated useful lives of the respective assets which range from three to five years. Major repairs or improvements are capitalized. Minor replacements and maintenance and repairs which do not improve or extend asset lives are expensed currently.
| Computer equipment | 3 years | |||
| Furniture and fixtures | 3 years | |||
| Office equipment | 4 years | |||
| Warehouse equipment | 5 years | |||
| Demo Devices | 4 years | |||
| Vehicles | 3 years | |||
| Leasehold improvements | 5 years, the life of the lease |
The Company periodically evaluates the fair value of fixed assets whenever events or changes in circumstances indicate that its carrying amounts may not be recoverable. Upon retirement or other disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is recognized in income.
Research and Development
Research and development costs are expensed in the period they are incurred in accordance with ASC 730, Research and Development unless they meet specific criteria related to technical, market and financial feasibility, as determined by Management, including but not limited to the establishment of a clearly defined future market for the product, and the availability of adequate resources to complete the project. If all criteria are met, the costs are deferred and amortized over the expected useful life or written off if a product is abandoned. At February 28, 2025 and February 29, 2024, the Company had no deferred development costs.
Sales of Future Revenues
The Company has entered into transactions, as more fully described in footnote 11, in which it has received funding from investors in exchange for which it will make payments to those investors based on the level of sales of certain revenue categories, generally based on a percentage of sales for those certain revenues. The Company determines whether these agreements constitute sales of future revenues or are in substance debt based on the facts and circumstances of each agreement, with the following primary criteria determinative of whether the agreement constitutes a sale of future revenues or debt:
| ● | Does the agreement purport, in substance, to be a sale | |
| ● | Does the Company have continuing involvement in the generation of cash flows due the investor | |
| ● | Is the transaction cancellable by either party through payment of a lump sum or other transfer of assets | |
| ● | Is the investors rate of return implicitly limited by the terms of the agreement | |
| ● | Does the Company’s revenue for a reporting period underlying the agreement have only a minimal impact on the investor’s rate of return | |
| ● | Does the investor have recourse relating to payments due |
In the event a transaction is determined to be a sale of future revenues, it is recorded as deferred revenue and amortized using the sum-of-the-revenue method. In the event a transaction is determined to be debt, it is recorded as debt and amortized using the effective interest method. As of the date of these financial statements, the Company has determined that all such agreements are debt.
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Revenue Recognition
ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” , supersedes the revenue recognition requirements and industry specific guidance under Revenue Recognition (Topic 605) . Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. Topic 606 defines a five-step process that must be evaluated and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing accounting principles generally accepted in the United States of America (“U.S. GAAP”) including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.
Distinguishing Liabilities from Equity
The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity , to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.
Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.
Our CEO and Chairman holds sufficient shares of the Company’s voting stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO and Chairman can at any time unilaterally vote to increase the number of authorized shares of common stock of the Company without the need to call a general meeting of common shareholders of the Company
Initial Measurement
The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received.
Subsequent Measurement – Financial Instruments Classified as Liabilities
The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other income (expenses).
Fair Value of Financial Instruments
ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides a framework for measuring fair value in accordance with generally accepted accounting principles.
ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).
The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC Topic 820 are described as follows:
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| ● | Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. | |
| ● | Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs 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; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |
| ● | Level 3 – Inputs that are unobservable for the asset or liability. |
Measured on a Recurring Basis
The following table presents information about our liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fell:
| Amount at | Fair Value Measurement Using | |||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| February 28, 2025 | ||||||||||||||||
| Assets | ||||||||||||||||
| Investment at cost | $ | 100,000 | $ | 50,000 | $ | — | $ | 50,000 | ||||||||
| Liabilities | ||||||||||||||||
| Incentive compensation plan payable – revaluation of equity awards payable in Series G shares | $ | 4,000,000 | $ | — | $ | — | $ | 4,000,000 | ||||||||
| February 29, 2024 | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Incentive compensation plan payable – revaluation of equity awards payable in Series G shares | $ | 2,500,000 | $ | — | $ | — | $ | 2,500,000 | ||||||||
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and advances, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.
Earnings (Loss) per Share
Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.
Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share.
Recently Issued Accounting Pronouncements
Recently Issued Accounting Standards During the Year
In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) : Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The new guidance also requires the if-converted method to be applied for all convertible instruments. The amendments in ASU 2020-06 are effective for public entities, excluding smaller reporting companies as defined, for fiscal years beginning after December 15, 2021. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. A reporting entity is not permitted to adopt the guidance in an interim period, other than the first interim period of its fiscal year. The Company adopted the standard using a modified retrospective approach. The adjustment to the Company’s accumulated deficit at March 1, 2024 was $4,175,535 with a corresponding adjustment to loans payable.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not have any financial instruments that are exposed to significant market risk. We maintain our cash and cash equivalents in bank deposits and short-term, highly liquid money market investments. A hypothetical 100-basis point increase or decrease in market interest rates would not have a material impact on the fair value of our cash equivalents securities, or our earnings on such cash equivalents.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Financial Statement Schedules appearing on pages F-1 through F-36 of this annual report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
From October 31, 2019 through May 29, 2025, there were (i) no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and LJ Soldinger & Associates LLC (“LJ Soldinger”) on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of February 28, 2025, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of February 28, 2025, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Limitations on Systems of Controls
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are 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. Due to 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. To address the material weaknesses identified in our evaluation, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:
| ● | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
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| ● | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and | |
| ● | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
As of February 28, 2025, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of U.S. GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the criteria established in Internal Control – Integrated Framework (2013) by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) were: lack of a functioning audit committee; lack of a majority of independent members and a lack of a majority of outside directors on our board of directors; inadequate segregation of duties consistent with control objectives; management is dominated by a single individual; use of the inappropriate methodology of allocating proceeds in certain debt transactions and the expensing timing of the related debt discount; use of inappropriate fair values in certain preferred stock issuances and settlements. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of February 28, 2025.
Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
This 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 the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
No changes were made to our internal control over financial reporting during the year ended February 28, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the names, positions and ages of our directors and executive officers as of the date of this report. Our directors serve for one year and until their successors are elected and qualified. Our officers are elected by the board of directors to a term of one year and serve until their successor is duly elected and qualified, or until they are removed from office. The board of directors has no nominating, auditing or compensation committees.
| Name | Age | Position | ||
| Steven Reinharz (1) | 49 | Chief Executive Officer, Secretary and Director (2) | ||
| Anthony Brenz | 63 | Chief Financial Officer |
| (1) | Director as of March 2, 2021 |
| (2) | All directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified. |
Biographical information concerning our director and executive officers listed above is set forth below.
Steven Reinharz . RAD was founded by Mr. Reinharz in July of 2016, and he has been continuously employed by RAD and its affiliated companies since that time. He is the holder of a majority of our capital stock. Mr. Reinharz has served as a member of the Board of Directors since March 2, 2021 and as our Chief Executive Officer, Chief Financial Officer, and Secretary of the Company since March 2, 2021 and resigned as our Chief Financial Officer as of April 26, 2021 upon Anthony Brenz’s appointment as our Chief Financial Officer. As our Chief Executive Officer and President of RAD, Mr. Reinharz leverages his extensive knowledge and interest in robotics and artificial intelligence to design and develop robotic solutions that increase business efficiency and deliver immediate and impressive cost savings. Mr. Reinharz is an active voice in both the security and artificial intelligence industries. He started and ran his own security integration company from the age of 24 to 31, becoming one of California’s leading system integrators. Mr. Reinharz later was part of a team that successfully sold an integrator to a global security firm for $42 million and has held various other security industry roles. Mr. Reinharz speaks and contributes to panels at ISC East and West, and ASIS. Mr. Reinharz is a leading member of several industry association committees, mostly through the Security Industry Association. Mr. Reinharz has called Orange County, California home since 1995, having grown up in Montreal and Toronto. He earned a dual Bachelor of Science degree in Political Science and Commercial Studies.
Anthony Brenz was appointed as our Chief Financial Officer on April 26, 2021. He is an accomplished senior financial and operational executive for over 20 years of experience in finance and operations, including corporate strategy, procurement and supply chain, human resources, and customer service. From April 2018 to December 2020, Anthony Brenz was the Vice President/Director Finance of AirBoss Flexible Products Company. From September 2014 to April 2018, he was the Chief Financial Officer/Vice President of Finance of Thomson Aerospace and Defense (a Parker Meggitt Company). From August 2012 to September 2014, he was the Vice President/Director of Finance of M B Aeospace US Holdings, Inc. Anthony Brenz received a Bachelor of Accountancy from Walsh College in Troy Michigan in 1989 and has been licensed as a Certified Public Accountant in Michigan since 1989.
There are no family relationships between any of the executive officers and directors.
Board Committees and Director Independence
Mr. Reinharz serves as director, and we do not have a separately designated audit committee, compensation committee or nominating and corporate governance committee. The functions of those committees are being undertaken by our directors. Since we do not have any independent directors and have only two directors, our directors believes that the establishment of committees of the Board would not provide any benefits to our company and could be considered more form than substance.
We currently have an employee director, Mr. Reinharz, but no independent directors, as such term is defined in the listing standards of The NASDAQ Stock Market, and we do not anticipate appointing additional directors in the near future.
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Our directors are not “audit committee financial experts” within the meaning of Item 401(e) of Regulation S-K. As with most small, early stage companies, until such time that the Company further develops its business, achieves a stronger revenue base and has sufficient working capital to purchase directors and officer’s insurance, the Company does not have any immediate prospects to attract independent directors. When the Company is able to expand our Board of Directors to include one or more independent directors, the Company intends to establish an Audit Committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent, and the Company is not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.
Procedures for Nominating Directors
There have been no material changes to the procedures by which security holders may recommend nominees to the Board since the most recently completed fiscal quarter. We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our sole director established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our sole director has not considered or adopted any of these policies, as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future.
While there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration of director nominees.
Director Qualifications
Mr. Steve Reinharz is our sole director and was appointed on March 2, 2021. He is the founder of our operating company, Robotoc Assistance Devices, Inc. (see bio on page 33).
Code of Ethics and Business Conduct
We have adopted a code of ethics meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely, and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of violations; and provide accountability for adherence to the provisions of the code of ethics.
Director Compensation
We reimburse our directors for all reasonable ordinary and necessary business-related expenses, but we did not pay any other director’s fees or any other cash compensation for services rendered as a director during the years ended February 28, 2025 and February 29, 2024 to any of the individuals serving on our Board during that period.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% stockholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, or written representations that no other reports were required, and to the best of our knowledge, we believe that all of our officers, directors, and owners of 10% or more of our common stock filed all required Forms 3, 4, and 5.
| - 49 - |
ITEM 11. EXECUTIVE COMPENSATION
The following table summarizes all compensation recorded by us in the past two fiscal years for Mr. Reinharz , our President and Chief Executive Officer , Anthony Brenz, our Chief Financial Officer and Garret Parsons our former President, Chief Executive Officer and Chief Financial Officer.
2025 AND 2024 SUMMARY COMPENSATION TABLE
| Name and Principal Position |
Fiscal Year |
Salary
or Fees ($) |
Bonus
($) |
Stock
Awards(2) ($) |
Option
Awards ($) |
Non-Equity
Incentive Plan Compensation ($) |
Non-Qualified
Deferred Compensation Earnings ($) |
All Other
Compensation ($) |
Total
($) |
|||||||||||||||||||||||||
| Steven Reinharz | 2025 | 320,000 | 836,167 | 1,500,000 | — | — | 1,663,833 | — | 4,320,000 | |||||||||||||||||||||||||
| Chief Executive Officer, Chief Financial Officer, Secretary (1) | 2024 | 300,000 | 461,233 | 1,521,000 | — | — | 538,767 | — | 2,821,000 | |||||||||||||||||||||||||
| Anthony Brenz | 2025 | 200,408 | — | — | — | — | — | — | 200,408 | |||||||||||||||||||||||||
| Chief Financial Officer (1) | 2024 | 188,813 | 1,000 | — | 17,975 | — | — | 1,200 | 208,988 | |||||||||||||||||||||||||
| (1) | Steven Reinharz was appointed Chief Executive Officer, Chief Financial Officer and Secretary on March 2, 2021.Mr.Reinharz ceased being Chief Financial Officer on June 24, 2021 and on that date appointed Anthony Brenz as Chief Financial Officer |
| (2) | Stock awards are payable in Series G and are included in long term liabilities as they will not be paid out in the current year. |
Employment Agreements
On April 9, 2021 Mr. Reinharz entered into an employment agreement with the Company in connection with his service as Chief Executive Officer. The agreement began on April 9, 2021 and has a three-year term, renewable thereafter on an annual basis if neither party files a notice of termination 90 days prior to the term renewal date. The agreement provides for compensation of $240,000 base salary (to be reviewed annually by the Board of Directors) and bonuses to be granted at the discretion of the Board of Directors. The salary for the fiscal year ended February 28, 2025 was $320,000.
On July 12, 2021 the Company and CEO amended the April 9, 2021 Employment Agreement effective July 1, 2021 whereby the following objectives and awards were added to the two existing ones:
| Objective #3 : | Sales in any fiscal quarter exceed the total sales in fiscal year 2021 for the first time. | |
| Award #3 : | Five hundred (500) shares of Series G preferred stock. | |
| Objective #4 : | One hundred fifty (150) devices are deployed in the marketplace. | |
| Award #4 : | Two hundred fifty (250) shares of Series G preferred stock. |
| - 50 - |
| Objective #5 : | Year-to-date sales at any point in fiscal year 2022 exceed One Million Dollars ($1,000,000). | |
| Award #5 : | Two hundred fifty (250) shares of Series G preferred stock. | |
| Objective #6 : | The price per share of common stock has increased to and maintains a price of Ten Cents ($0.10) or more for ten (10) days in a thirty (30) day period. | |
| Award #6 : | Two hundred fifty (250) shares of Series G preferred stock. | |
| Objective #7 : | The price per share of common stock has increased to and maintains a price of Twenty Cents ($0.20) or more for ten (10) days in a thirty(30) day period. | |
| Award #7 : | Five hundred (500) shares of Series G preferred stock. | |
| Objective #8 : | The RAD 3.0 products are launched into the marketplace by November 30, 2022. | |
| Award #8 : | Five hundred (500) shares of Series G preferred stock. | |
| Objective #9 : | RAD receives an order for fifty (50) units from a single customer. | |
| Award #9 : | Five hundred (500) shares of Series G preferred stock. |
On January 31, 2024 the Company added the following Objective effective March 1, 2022:
Objective # 10 In any fiscal quarter, attrition , measured by loss of recurring monthly revenue does not exceed 10%
Award #10 Two h undred fifty (250) shares of Series G preferred stock.
The fair value of the first two awards was obtained through the use of the Monte Carlo method was $69,350 with a charge to stock- based compensation and a corresponding charge to paid in capital. The fair value of the remaining rewards was determined by calculating the vesting amounts of each reward and then determining for each reporting period the requisite service rendered and applying that against the cash redemption value of the number of shares of Series G issuable for each tier in the agreement. For the period ended February 28, 2025 that amount totaled $0. For the period ended February 29, 2024 that amount totaled $1,521,000 with a charge to stock-based compensation and a corresponding charge to incentive compensation plan payable. For the period ended February 28, 2023 that amount totaled $499,500 with a charge to stock-based compensation and a corresponding charge to incentive compensation plan payable.
O utstanding Equity Awards at 2025 Fiscal Year-End
The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for Mr Brenz, our sole executive officers outstanding as of February 28, 2025:
| OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#) |
Option Exercise Price
($) |
Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||
| Anthony Brenz | 0 | 0 | 4,500,000 | $ | 0.02 | Sept. 1, 2027 | 4,500,000 | $ | 12,825 | 0 | 0 | |||||||||||||||||||||||
| Anthony Brenz | 0 | 0 | 10,000,000 | $ | 0.02 | Sept. 1, 2028 | 10,000,000 | $ | 28,500 | 0 | 0 | |||||||||||||||||||||||
| - 51 - |
On April 14, 2021, the Shareholders of Series E Preferred Stock and the Board of Directors of our Company (“Board”) approved and adopted the 2021 Incentive Stock Plan (the “2021 Plan”). On August 11, 2022 the Company amended the 2021 Plan increasing the maximum number of shares applicable to the 2021 Plan from 5,000,000 to 100,000,000. On August 14,2023 the Company further amended the plan increasing the maximum shares to 200,000,000.
The purpose of the 2021 Plan is to promote the success of the Company by authorizing incentive awards to retain Directors, executives, selected Employees and Consultants, and reward participants for making major contributions to the success of the Company. The 2021 Plan authorizes the granting of stock options, restricted stock, restricted stock units, stock appreciation rights and stock awards. A total of two hundred million (200,000,000) shares of common stock may be issued under the 2021 Plan. All awards under the 2021 Plan, whether vested or unvested, are subject to the terms of any recoupment, clawback or similar policy of the Company in effect from time to time, as well as any similar provisions of applicable law, which could in certain circumstances require repayment or forfeiture of awards or any shares of stock or other cash or property received with respect to the awards, including any value received from a disposition of the shares acquired upon payment of the awards. The 2021 Plan will be administered by the Board or any Committee authorized by the Board, if applicable, which will have the sole authority to, among other things: construe and interpret the 2021 Plan; make rules and regulations relating to the administration of the 2021 Plan; select participants; and establish the terms and conditions of awards, all in accordance with the terms of the 2021 Plan. The 2021 Plan will remain in effect until April 14, 2031, unless sooner terminated by the Board. Termination will not affect awards then outstanding.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
At May 23, 2025, we had 16,747,453,768 shares of Common Stock issued and outstanding. The following table sets forth information regarding the beneficial ownership of our Common Stock as of May 20, 2025, and reflects:
| ● | each of our executive officers; | |
| ● | each of our directors; | |
| ● | all of our directors and executive officers as a group; and | |
| ● | each stockholder known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock. |
Information on beneficial ownership of securities is based upon a record list of our stockholders and we have determined beneficial ownership in accordance with the rules of the SEC. We believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws, except as otherwise provided below.
|
Amount and
Nature of |
Percent of | |||||||
| Name |
Beneficial
Ownership (1) |
Common Stock
(2) |
||||||
| Named Executive Officers and Directors: | ||||||||
| Steven Reinharz (3) | 56,330,224,025 | 75.58 | % | |||||
| Anthony Brenz | 0 | 0 | ||||||
| Mark Folmer | 0 | 0 | ||||||
| All executive officers and directors as a group (3 persons) | 56,330,224,025 | 75.58 | % | |||||
| 5% Shareholders: | ||||||||
| Steven Reinharz | 56,330,224,025 | 75.58 | % | |||||
| (1) | Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Beneficial ownership also includes shares of stock subject to options and warrants currently exercisable or exercisable within 60 days of the date of this table. In determining the percent of common stock owned by a person or entity as of the date of this Report, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days on exercise of warrants or options and conversion of convertible securities, and (b) the denominator is the sum of (i) the total shares of common stock outstanding on as of May 23, 2025 16,747,453,768 shares, and (ii) the total number of shares that the beneficial owner may acquire upon exercise of the derivative securities. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares. |
| (2) | Based on 16,747,453,768 shares of the Company’s common stock issued and outstanding as of May 23, 2025. |
| - 52 - |
| (3) | Steve Reinharz is a director and the Company’s Chief Executive Officer, Chief Financial Officer and Secretary as well as the CEO of RAD and is the holder of (i) 3,350,000 shares of our Series E Preferred Stock and, (ii) 2,450 shares of our Series F Convertible Preferred Stock. If Mr. Reinharz converted the 2,450 shares of the Company’s Series F Convertible Preferred Stock, he would receive 56,330,224,025 shares of the Company’s common stock, which is included in the chart above as if such conversion has occurred. Further, the outstanding shares of Series E preferred stock have the right to take action by written consent or vote based on the number of votes equal to twice the number of votes of all outstanding shares of common stock. As a result, the holders of Series E preferred stock has 2/3rds of the voting power of all shareholders at any time corporate action requires a vote of shareholders. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
We do not have a written policy for the review, approval or ratification of transactions with related parties or conflicted transactions. When such transactions arise, they are referred to our board of directors for its consideration.
For the years ended February 28, 2025, and February 29, 2024, the Company had net (advances) repayments of ($71,927) and $54,179, respectively, to its loan payable-related party. At February 28, 2025, the loan payable-related party was $329,365 and $257,438 at February 29, 2024. As of February 28, 2025, included in the balance due to the related party is $190,013 of deferred salary all of which bears interest at 12%. As of February 29, 2024, included in the balance due to the related party is $140,013 of deferred salary all of which bears interest at 12%. The accrued interest included at February 28, 2025, was $51,575 (February 29, 2024 - $32,468).
During the year ended February 28, 2025, the Company a net accrual of $1,663,833 in deferred compensation for the CEO. This would bring his annual bonus for the year ended February 28, 2025, to $2.5 million. For the fiscal year ended February 28, 2025, the Company paid out $836,167 to the CEO. During the year ended February 29, 2024, the Company accrued $538,767 in deferred compensation for the CEO. The Company had already recorded $461,233 in bonus compensation This was all in accordance with a December 2023 board action allowing for $1 million of discretionary compensation.
During the years ended February 28, 2025, and February 29, 2024, the Company accrued 1,500 Series G shares to be issued totaling $1,500,000 and 2,000 Series G preferred shares to be issued totaling $2,000,000, respectively, both per Company resolution. The Series G preferred shares are redeemable at $1,000 per share and will be issued by the Company at the appropriate time. The balance of Incentive Compensation Plan Payable at February 28, 2025, was $4,000,000 and the balance February 29, 2024, was $2,500,000.
During the years ended February 28, 2025, and February 29, 2024, the Company was charged $2,541,180 and $2,810,839, respectively in consulting fees for research and development to a company partially owned by a principal shareholder included in research and development expenses. The principal shareholder received no compensation from this partially owned research and development company and the fees were spent on core development projects. As at both February 28, 2025, and February 29, 2024, the balance due to this company was $76,532.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
On October 31, 2019 the Board of Directors of the Company approved and ratified the engagement (“Engagement”) of LJ Soldinger & Associates LLC (“LJ Soldinger”) as the Company’s new independent registered public accounting firm..
The following table shows the fees that were billed for the audit and other services provided by LJ Soldinger for the fiscal years ended February 28, 2025 and February 29, 2024.
| 2025 | ||||
| Audit Fees | $ | 240,100 | ||
| Audit-Related Fees | — | |||
| Tax Fees | — | |||
| All Other Fees | — | |||
| Total | $ | 240,100 | ||
| 2024 | ||||
| Audit Fees | $ | 422,540 | ||
| Audit-Related Fees | — | |||
| Tax Fees | — | |||
| All Other Fees | — | |||
| Total | $ | 422,540 | ||
| - 53 - |
Audit Fees - This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.
Audit-Related Fees - This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category would include consultation regarding correspondence with the SEC, other accounting consulting and other audit services.
Tax Fees - This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
All Other Fees - This category consists of fees for other miscellaneous items.
As part of its responsibility for oversight of the independent registered public accountants, the Board has established a pre-approval policy for engaging audit and permitted non-audit services provided by our independent registered public accountants. In accordance with this policy, each type of audit, audit-related, tax and other permitted service to be provided by the independent auditors is specifically described and each such service, together with a fee level or budgeted amount for such service, is pre-approved by the Board. All of the services provided by LJ Soldinger described above were approved by our Board.
The Company’s principal accountant did not engage any other persons or firms other than the principal accountant’s full-time, permanent employees.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements
The consolidated financial statements and Report of Independent Registered Public Accounting Firm are listed in the Index to Financial Statements and Financial Statement Schedules on page F-1 and included on pages F-2 through F-36.
(2) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting regulations of the SEC are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included herein.
| - 54 - |
(3) Exhibits.
| * | Filed or furnished herewith. |
| - 55 - |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. | ||
| Date: May 29, 2025 | By: | /s/ Steven Reinharz |
| Steven Reinharz | ||
| President, Chief Executive Officer | ||
| Date: May 29, 2025 | By: | /s/ Anthony Brenz |
| Anthony Brenz | ||
| Chief Financial Officer (principal financial and accounting officer) | ||
Pursuant to the requirements of the Securities 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.
| Signature | Title | Date | ||
| /s/ Steven Reinharz | President, Chief Executive Officer and Director (principal executive officer) | May 29, 2025 | ||
| Steven Reinharz | ||||
| /s/ Anthony Brenz | Chief Financial Officer (principal financial and accounting officer) | May 29, 2025 | ||
| Anthony Brenz |
| - 56 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
(FORMERLY ON THE MOVE SYSTEMS CORP.)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| F- 1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Artificial Intelligence Technology Solutions, Inc.
Opinion on the Financial Statements
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company had negative cash flow from operating activities of approximately $12.2 million, an accumulated deficit of approximately $156.5 million and negative working capital of approximately $2.5 million as of and for the year ended February 28, 2025, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
/s/
We have served as the Company’s auditor since 2019.
PCAOB ID:
May 29, 2025
| F- 2 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONSOLIDATED BALANCE SHEETS
| February 28, 2025 | February 29, 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ |
|
$ |
|
||||
| Accounts receivable, net |
|
|
||||||
| Share proceeds receivable |
|
|||||||
| Device parts inventory, net |
|
|
||||||
| Prepaid expenses and deposits |
|
|
||||||
| Total current assets |
|
|
||||||
| Operating lease asset |
|
|
||||||
|
Revenue earning devices, net of accumulated depreciation of $
|
|
|
||||||
|
Fixed assets, net of accumulated depreciation of $
|
|
|
||||||
| Trademarks |
|
|
||||||
| Investment at cost |
|
|
||||||
| Security deposit |
|
|
||||||
| Total assets | $ |
|
$ |
|
||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ |
|
$ |
|
||||
| Customer deposits |
|
|
||||||
| Current operating lease liability |
|
|
||||||
| Current portion of deferred variable payment obligation |
|
|
||||||
| Loan payable - related party |
|
|
||||||
| Deferred compensation for CEO |
|
|
||||||
|
Current portion of loans payable, net of discount of $
|
|
|
||||||
| Vehicle loan - current portion |
|
|||||||
| Current portion of accrued interest payable |
|
|
||||||
| Total current liabilities |
|
|
||||||
| Non-current operating lease liability |
|
|
||||||
|
Loans payable, net of discount of $
|
|
|
||||||
| Deferred variable payment obligation |
|
|
||||||
| Incentive compensation plan payable |
|
|
||||||
| Accrued interest payable |
|
|
||||||
| Total liabilities |
|
|
||||||
|
Series B Convertible, Redeemable Preferred Stock. $
par value;
|
||||||||
|
Series C Convertible, Redeemable Preferred Stock . $
par value; $
|
|
|||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred Stock, undesignated; shares authorized; shares issued and outstanding at February 28, 2025 and February 29, 2024, respectively | ||||||||
| Series G Redeemable Preferred Stock. $ par value; shares authorized, shares issued and outstanding at February 28, 2025 and February 29, 2024, respectively | ||||||||
| Series E Preferred Stock, $ par value; shares authorized; and shares issued and outstanding, respectively |
|
|
||||||
| Series F Convertible Preferred Stock, $ par value; shares authorized; and shares issued and outstanding, respectively |
|
|
||||||
| Common Stock, $ par value; shares authorized and shares issued, issuable and outstanding, respectively |
|
|
||||||
| Additional paid-in capital |
|
|
||||||
| Preferred stock to be issued |
|
|
||||||
| Accumulated deficit |
(
|
) |
(
|
) | ||||
| Total stockholders’ deficit |
(
|
) |
(
|
) | ||||
| Total liabilities and stockholders’ deficit | $ |
|
$ |
|
||||
The accompanying notes are an integral part of these consolidated financial statements.
| F- 3 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
Year Ended
February 28, 2025 |
Year Ended
February 29, 2024 |
|||||||
| Revenues | $ |
|
$ |
|
||||
| Cost of goods sold |
|
|
||||||
| Depreciation and Amortization |
|
|
||||||
| Total Cost of Goods Sold |
|
|
||||||
| Gross Profit |
|
|
||||||
| Operating expenses: | ||||||||
| Research and development (note 9) |
|
|
||||||
| General and administrative |
|
|
||||||
| Depreciation and amortization |
|
|
||||||
| Impairment on revenue earning devices |
|
|||||||
| Operating lease cost and rent |
|
|
||||||
| Gain loss on disposal of fixed assets |
(
|
) | ||||||
| Total operating expenses |
|
|
||||||
| Loss from operations |
(
|
) |
(
|
) | ||||
| Other income (expense), net: | ||||||||
| Interest expense |
(
|
) |
(
|
) | ||||
| Gain on settlement of debt |
|
|
||||||
| Total other income (expense), net |
(
|
) |
(
|
) | ||||
| Net Loss | $ |
(
|
) | $ |
(
|
) | ||
| Net loss per share - basic | $ |
(
|
) | $ |
(
|
) | ||
| Net loss per share - diluted | $ |
(
|
) | $ |
(
|
) | ||
| Weighted average common share outstanding – basic and diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F- 4 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED FEBRUARY 28, 2025 AND FEBRUARY 29, 2024
|
Series E |
Series F |
Series G |
Additional |
Total |
||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||||||||
| Balance at February 28, 2023 |
|
|
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | ||||||||||||||||||||||||||||
|
Issuance of shares net of $
|
— | — | — |
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Relative fair value of Series F warrants issued with debt | — | — | — | — |
|
|
||||||||||||||||||||||||||||||||||||||
| Shares issued for services | — | — | — |
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Stock based compensation - employee stock option plan | — | — | — | — |
|
|
||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — |
(
|
) |
(
|
) | ||||||||||||||||||||||||||||||||||||
| Balance at February 29, 2024 |
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | ||||||||||||||||||||||||||
| F- 5 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ DEFICIT
| Temporary Equity | Shareholder’s Deficit | |||||||||||||||||||||||||||||||||||||||||||
| Series B & C | Series E | Series F | Additional | Total | ||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||||||||
| Balance at February 29, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | |||||||||||||||||||||||||||
| Cumulative Effect Adjustment RFV discount per adoption of ASU 2020-06 at March 1, 2024 | — | — | — | — |
(
|
) |
(
|
) | ||||||||||||||||||||||||||||||||||||
|
Issuance of shares, net of $
|
— | — | — |
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Debt exchanged for common stock | — | — | — |
|
|
|
|
|||||||||||||||||||||||||||||||||||||
| Series F Preferred Shares exchanged for debt | — | — |
(
|
) |
(
|
) | — |
(
|
) |
(
|
) |
(
|
) | |||||||||||||||||||||||||||||||
| Issuance of Series B Preferred Shares |
|
|
— | — | — |
(
|
) |
(
|
) | |||||||||||||||||||||||||||||||||||
| Series B Preferred Shares issued as commitment fee |
|
|
— | — | — |
(
|
) |
(
|
) | |||||||||||||||||||||||||||||||||||
| Series B Preferred shares issued as dividend |
|
|
— | — | — |
(
|
) |
(
|
) | |||||||||||||||||||||||||||||||||||
| Redemption of Series B Preferred shares |
(
|
) |
(
|
) | — | — | — |
|
(
|
) | ||||||||||||||||||||||||||||||||||
| Issuance of Series C Preferred Shares |
|
|
— | — | — |
(
|
) |
(
|
) | |||||||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | — |
|
|
||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — |
(
|
) |
(
|
) | ||||||||||||||||||||||||||||||||||||
| Balance at February 28, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | ||||||||||||||||||||||||
| F- 6 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Year Ended
February 28, 2025 |
Year Ended
February 29, 2024 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization |
|
|
||||||
| Impairment on revenue earning devices |
|
|||||||
| Inventory provision (recovery) |
(
|
) |
|
|||||
| Gain on disposal of fixed assets |
(
|
) | ||||||
| Bad debts expense |
|
|
||||||
| Reduction of right of use asset |
|
|
||||||
| Accretion of lease liability |
|
|
||||||
| Stock based compensation |
|
|
||||||
| Amortization of debt discounts |
|
|
||||||
| Gain on settlement of debt |
(
|
) |
(
|
) | ||||
| Increase in related party accrued payroll and interest |
|
|
||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable |
(
|
) |
(
|
) | ||||
| Prepaid expenses |
(
|
) |
(
|
) | ||||
| Device parts inventory |
(
|
) |
(
|
) | ||||
| Accounts payable and accrued expenses |
|
|
||||||
| Deferred compensation for CFO |
|
|||||||
| Customer deposits |
|
|
||||||
| Operating lease liability payments |
(
|
) |
(
|
) | ||||
| Current portion of deferred variable payment obligations for Payments |
|
|
||||||
| Accrued interest payable |
|
|
||||||
| Net cash used in operating activities |
(
|
) |
(
|
) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of fixed assets |
(
|
) |
(
|
) | ||||
| Purchase of trademarks |
(
|
) | ||||||
| Purchase of investment (convertible note receivable) |
(
|
) | ||||||
| Reimbursement of security deposit |
|
|||||||
| Proceeds on disposal of fixed assets |
|
|||||||
| Net cash used in investing activities |
(
|
) |
|
|||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Share proceeds net of issuance costs |
|
|
||||||
| Proceeds on issuance of Series B Preferred Shares |
|
|||||||
| Redemption of Series B Preferred Shares |
(
|
) | ||||||
| Proceeds on issuance of Series C Preferred Shares |
|
|||||||
| Net borrowings loan payable-related party |
(
|
) | ||||||
| Proceeds from loans payable |
|
|
||||||
| Repayment of loans payable |
(
|
) |
(
|
) | ||||
| Net cash provided by financing activities |
|
|
||||||
| Net change in cash |
|
(
|
) | |||||
| Cash, beginning of period |
|
|
||||||
| Cash, end of period | $ |
|
$ |
|
||||
| Supplemental disclosure of cash and non-cash transactions: | ||||||||
| Cash paid for interest | $ |
|
$ |
|
||||
| Cash paid for income taxes | $ | $ | ||||||
| Noncash investing and financing activities: | ||||||||
| Cumulative Effect Adjustment RFV discount per adoption of ASU 2020-06 at March 1, 2024 | $ |
|
$ | |||||
| Right of use asset for lease liability | $ | $ |
|
|||||
| Transfer from device parts inventory to fixed assets | $ |
|
$ |
|
||||
| Proceeds of fixed asset disposition to loan payable, related party | $ | $ |
|
|||||
| Shares issued for services | $ | $ |
|
|||||
| Deferred compensation | $ | $ |
|
|||||
| Discount applied to face value of loans | $ | $ |
|
|||||
| Series F warrants issued along with debt | $ | $ |
|
|||||
| Exchange of Series F Preferred Shares for loans payable | $ |
|
$ | |||||
| Exchange of loans payable for common shares | $ |
|
$ | |||||
| Convertible note receivable exchanged for investment at cost | $ |
|
$ | |||||
| Dividend on Series B Preferred Shares paid in Series B Preferred Shares | $ |
|
$ | |||||
The accompanying notes are an integral part of these consolidated financial statements.
| F- 7 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND GOING CONCERN
Artificial Intelligence Technology Solutions Inc. (formerly known as On the Move Systems Corp.) (“AITX” or the “Company”) was incorporated in Florida on March 25, 2010 and reincorporated in Nevada on February 17, 2015. On August 24, 2018, Artificial Intelligence Technology Solutions Inc., changed its name from On the Move Systems Corp (“OMVS”).
Robotic Assistance Devices, LLC (“RAD”), was incorporated in the State of Nevada on July 26, 2016 as a LLC. On July 25, 2017, Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc. through the issuance of common shares to its sole shareholder.
On August 28, 2017, AITX completed the acquisition of RAD (the “Acquisition”), whereby AITX acquired all the ownership and equity interest in RAD for shares of AITX Series E Preferred Stock and shares of Series F Convertible Preferred Stock. AITX’s prior business focus was transportation services, and AITX was exploring the on-demand logistics market by developing a network of logistics partnerships. As a result of the closing of the Acquisition, AITX has succeeded to the business of RAD, in which AITX purchased all of the outstanding shares of capital stock of RAD. As a result, AITX’s business going forward will consist of one segment activity which is the delivery of artificial intelligence and robotic solutions for operational, security and monitoring needs.
The Acquisition was treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes since substantially all of AITX’s operations were disposed of as part of the consummation of the transaction. Therefore, no goodwill or other intangible assets were recorded by AITX as a result of the Acquisition. RAD is treated as the accounting acquirer as its stockholders control the Company after the Acquisition, even though AITX was the legal acquirer. As a result, the assets and liabilities and the historical operations that are reflected in these financial statements are those of RAD as if RAD had always been the reporting company.
GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.
For the year ended February 28, 2025, the Company
had negative cash flow from operating activities of $
The Company does not have the resources at this time to repay all its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business. At the same time management points to its successful history with maintaining Company operations and reminds all with reasonable confidence this will continue. Management has plans to address the Company’s financial situation as follows:
Management is committed to raise either
non-dilutive funds or minimally dilutive funds. There is no assurance that these funds will be able to be raised nor can we provide
assurance that these possible raises may not have dilutive effects. In September 2024, the Company entered into an equity financing
agreement whereby an investor will purchase up to $
| F- 8 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and in conformity with the instructions on Form 10-K of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). The audited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Robotic Assistance Devices, Inc., Robotic Assistance Devices Group, Inc, Robotic Assistance Devices Mobile, Inc., Robotic Assistance Devices Residential, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
In order to prepare financial statements in conformity with accounting principals generally accepted in the United States, management must make estimates, judgements and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any, are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value equity instruments used in debt settlements, amendments and extensions.
Reclassifications
Certain amounts in the Company’s consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods.
Concentrations of Loans Payable
At February 28, 2025 there were $
Cash
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market instruments. The Company places its cash and cash equivalents with high-quality, U.S. financial institutions which, at times, may exceed federally insured limits, and, to date has not experienced losses on any of its balances.
| F- 9 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Accounts Receivable
Accounts receivable are comprised of balances
due from customers, net of estimated allowances for credit losses. In determining collectability, historical trends are evaluated, and
specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. There was an allowance of $
Device Parts Inventory
Device parts inventory is stated at the lower
of cost or net realizable value using the weighted average cost method. The Company records a valuation reserve for obsolete and slow-moving
inventory, relying principally on specific identification of such inventory. The Company uses these device parts in the assembly of revenue
earning devices (and demo devices) as well as research and development. Depending on use, the Company will transfer the parts to the corresponding
asset or expense if used in research and development. A charge to income is taken when factors that would result in a need for an increase
in the valuation, such as excess or obsolete inventory, are noted. At February 28, 2025 and at February 29, 2024 there was a valuation
reserve of $
Revenue Earning Devices
Revenue earning devices are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of 48 months. The Company continually evaluates revenue earning devices to determine whether events or changes in circumstances have occurred that may warrant revision of the estimated useful life or whether the devices should be evaluated for possible impairment. The Company uses a combination of the undiscounted cash flows and market approaches in assessing whether an asset has been impaired. The Company measures impairment losses based upon the amount by which the carrying amount of the asset exceeds the fair value.
Fixed Assets
Fixed assets are stated at cost. Depreciation is provided on the straight-line method based on the estimated useful lives of the respective assets which range from three to five years. Major repairs or improvements are capitalized. Minor replacements and maintenance and repairs which do not improve or extend asset lives are expensed currently.
| Computer equipment |
|
|
| Furniture and fixtures |
|
|
| Office equipment |
|
|
| Warehouse equipment |
|
|
| Demo Devices |
|
|
| Vehicles |
|
|
| Leasehold improvements |
|
The Company periodically evaluates the fair value of fixed assets whenever events or changes in circumstances indicate that its carrying amounts may not be recoverable. Upon retirement or other disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is recognized in income.
| F- 10 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Research and Development
Research and development costs are expensed in
the period they are incurred in accordance with ASC 730,
Research and Development
unless they meet specific criteria related to
technical, market and financial feasibility, as determined by Management, including but not limited to the establishment of a clearly
defined future market for the product, and the availability of adequate resources to complete the project. If all criteria are met, the
costs are deferred and amortized over the expected useful life or written off if a product is abandoned. At February 28, 2025 and February
29, 2024, the Company had
Contingencies
Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.
Sales of Future Revenues
The Company has entered into transactions, as more fully described in footnote 10, in which it has received funding from investors in exchange for which it will make payments to those investors based on the level of sales of certain revenue categories, generally based on a percentage of sales for those certain revenues. The Company determines whether these agreements constitute sales of future revenues or are in substance debt based on the facts and circumstances of each agreement, with the following primary criteria determinative of whether the agreement constitutes a sale of future revenues or debt:
| ● | Does the agreement purport, in substance, to be a sale | |
| ● | Does the Company have continuing involvement in the generation of cash flows due the investor | |
| ● | Is the transaction cancellable by either party through payment of a lump sum or other transfer of assets | |
| ● | Is the investors rate of return implicitly limited by the terms of the agreement | |
| ● | Does the Company’s revenue for a reporting period underlying the agreement have only a minimal impact on the investor’s rate of return | |
| ● | Does the investor have recourse relating to payments due |
In the event a transaction is determined to be a sale of future revenues, it is recorded as deferred revenue and amortized using the sum-of-the-revenue method. In the event a transaction is determined to be debt, it is recorded as debt and amortized using the effective interest method. As of the date of these financial statements, the Company has determined that all such agreements are debt.
| F- 11 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revenue Recognition
ASU 2014-09,
“Revenue from Contracts
with Customers (Topic 606)”
, supersedes the revenue recognition requirements and industry specific guidance under
Revenue
Recognition (Topic 605)
. Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers
in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. Topic 606 defines
a five-step process that must be evaluated and, in doing so, it is possible more judgment and estimates may be required within the revenue
recognition process than required under existing accounting principles generally accepted in the United States of America (“U.S.
GAAP”) including identifying performance obligations in the contract, estimating the amount of variable consideration to include
in the transaction price and allocating the transaction price to each separate performance obligation.. For the year ended February 28,
2025, one customer accounted for
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. 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 income in the period that includes the enactment date.
On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending February 28, 2025, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements.
Leases
Lease agreements are evaluated to determine if they are sales/finance leases meeting any of the following criteria at inception: (a) transfer of ownership of the underlying asset; (b) purchase option that is reasonably certain of being exercised; (c) the lease term is greater than a major part of the remaining estimated economic life of the underlying asset; or (d) if the present value of the sum of lease payments and any residual value guaranteed by the lessee that has not already been included in lease payments in accordance with ASC 842-10-30-5(f) equals or exceeds substantially all of the fair value of the underlying asset.
If at its inception, a lease meets any of the four lease criteria above, the lease is classified by the Company as a sales/finance; and if none of the four criteria are met, the lease is classified by the Company as an operating lease.
| F- 12 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term, whereby an equal amount of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in the later years. The difference between rent expense recognized and actual rental payments is recorded as deferred rent and included in liabilities.
Distinguishing Liabilities from Equity
The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity , to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.
Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.
Our CEO and Chairman holds sufficient shares of the Company’s voting stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO and Chairman can at any time unilaterally vote to increase the number of authorized shares of common stock of the Company without the need to call a general meeting of common shareholders of the Company.
Initial Measurement
The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received.
Subsequent Measurement – Financial Instruments Classified as Liabilities
The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other income (expenses).
Fair Value of Financial Instruments
ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides a framework for measuring fair value in accordance with generally accepted accounting principles.
ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).
| F- 13 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC Topic 820 are described as follows:
| ● | Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. | |
| ● | Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs 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; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |
| ● | Level 3 – Inputs that are unobservable for the asset or liability. |
Measured on a Recurring Basis
The following table presents information about our liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fell:
| Amount at | Fair Value Measurement Using | |||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| February 28, 2025 | ||||||||||||||||
| Assets | ||||||||||||||||
| Investment at cost | $ |
|
$ |
|
$ | $ |
|
|||||||||
| Liabilities | ||||||||||||||||
| Incentive compensation plan payable – revaluation of equity awards payable in Series G shares | $ |
|
$ | $ | $ |
|
||||||||||
| February 29, 2024 | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Incentive compensation plan payable – revaluation of equity awards payable in Series G shares | $ |
|
$ | $ | $ |
|
||||||||||
For the incentive compensation plan , the Company recorded stock based compensation of $ and $ for the years ended February 28, 2025 and February 29, 2024 with corresponding adjustments to incentive compensation plan payable.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and advances, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.
Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.
| F- 14 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share.
Recently Issued Accounting Pronouncements
Recently Issued Accounting Standards During the Year
In August 2020, the FASB issued ASU 2020-06,
Debt
— Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic
815-40)
:
Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
. Under ASU 2020-06, the embedded
conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required
to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently,
a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features
require bifurcation and recognition as derivatives. The new guidance also requires the if-converted method to be applied for all convertible
instruments. The amendments in ASU 2020-06 are effective for public entities, excluding smaller reporting companies as defined, for fiscal
years beginning after December 15, 2021. For all other entities, the amendments are effective for fiscal years beginning after December
15, 2023. Early adoption is permitted. A reporting entity is not permitted to adopt the guidance in an interim period, other than the
first interim period of its fiscal year. The Company adopted the standard using a modified retrospective approach. The adjustment to the
Company’s accumulated deficit at March 1, 2024 was $
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue is earned primarily from two sources: 1) direct sales of goods or services and 2) short-term rentals. Direct sales of goods or services are accounted for under Topic 606, , and short-term rentals are accounted for under Topic 842 (which addresses lease accounting and was adopted on March 1, 2019).
As disclosed in the revenue recognition section of Note 2 – Accounting Polices, the Company adopted Topic 606 in accordance with the effective date on March 1, 2018. Note 2 includes disclosures regarding the Company’s method of adoption and the impact on the Company’s financial statements. Revenue is recognized on direct sales of goods or services when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.
| F- 15 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
After adopting Topic 842, also referred to above in Note 3, the Company is accounting for revenue earned from rental activities where an identified asset is transferred to the customer and the customer has the ability to control that asset. The Company recognizes revenue from its device rental activities when persuasive evidence of a contract exists, the performance obligations have been satisfied, the transaction price is fixed or determinable and collection is reasonably assured. Performance obligations associated with device rental transactions are satisfied over the rental period. Rental periods are short-term in nature. Therefore, the Company has elected to apply the practical expedient which eliminates the requirement to disclose information about remaining performance obligations. Payments are due from customers at the completion of the rental, except for customers with negotiated payment terms, generally net 30 days or less, which are invoiced and remain as accounts receivable until collected.
The following table presents revenues from contracts with customers disaggregated by product/service:
|
Year Ended
February 28, 2025 |
Year Ended
February 29, 2024 |
|||||||
| Device rental activities | $ |
|
$ |
|
||||
| Direct sales of goods and services |
|
|
||||||
| $ |
|
$ |
|
|||||
4. LEASES
We lease certain warehouses, and office space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, we did not combine lease and non-lease components.
There is no lease renewal. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.
Below is a summary of our lease assets and liabilities at February 28, 2025 and February 29, 2024.
| Leases | Classification | February 28, 2025 | February 29, 2024 | |||||||
| Assets | ||||||||||
| Operating | Operating Lease Assets | $ |
|
$ |
|
|||||
| Liabilities | ||||||||||
| Current | ||||||||||
| Operating | Current Operating Lease Liability | $ |
|
$ |
|
|||||
| Noncurrent | ||||||||||
| Operating | Noncurrent Operating Lease Liabilities |
|
|
|||||||
| Total lease liabilities | $ |
|
$ |
|
||||||
Note: As most of our leases do not provide
an implicit rate, we use our incremental borrowing rate of
| F- 16 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Operating lease cost and rent was $
5. INVESTMENT
On December 23, 2022 the Company entered into a Simple Agreement for
Future Equity (SAFE) contract to invest $
6. REVENUE EARNING DEVICES
Revenue earning devices (RED) consisted of the following:
| February 28, 2025 | February 29, 2024 | |||||||
| Revenue earning devices | $ |
|
$ |
|
||||
| Less: Accumulated depreciation |
(
|
) |
(
|
) | ||||
| $ |
|
$ |
|
|||||
During the year ended February 28, 2025, the Company
made total additions to revenue earning devices of $
Depreciation and amortization for the years ended February 28, 2025, and February 29, 2024, are as follows:
| Depreciation and Amortization RED | Year Ended February 28, 2025 |
Year Ended
February 29, 2024 |
||||||
| Cost of Goods Sold | $ |
|
$ |
|
||||
| Operating expenses |
|
|
||||||
| Total Depreciation and Amortization RED | $ |
|
$ |
|
||||
| F- 17 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7. FIXED ASSETS
Fixed assets consisted of the following:
| February 28, 2025 | February 29, 2024 | |||||||
| Automobile | $ |
|
$ |
|
||||
| Demo devices |
|
|
||||||
| Tooling |
|
|
||||||
| Machinery and equipment |
|
|
||||||
| Computer equipment |
|
|
||||||
| Office equipment |
|
|
||||||
| Furniture and fixtures |
|
|
||||||
| Warehouse equipment |
|
|
||||||
| Leasehold improvements |
|
|
||||||
|
|
|
|||||||
| Less: Accumulated depreciation |
(
|
) |
(
|
) | ||||
| $ |
|
$ |
|
|||||
During the year ended February 28, 2025, the Company
made additions to fixed assets of $
During the year ended February 29, 2024, the Company
made additions to fixed assets of $
Depreciation and amortization for the years ended February 28, 2025, and February 29, 2024, are as follows:
| Depreciation and Amortization |
Year Ended February 28, 2025 |
Year Ended February 29, 2024 |
||||||
| Fixed assets | $ |
|
$ |
|
||||
| Revenue earning devices |
|
|
||||||
| Total Depreciation and Amortization included in operating expenses | $ |
|
$ |
|
||||
| F- 18 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8. DEFERRED VARIABLE PAYMENT OBLIGATION
On February 1, 2019 the Company entered into an
agreement with an investor whereby the investor would pay up to $
On May 9, 2019 the Company entered into two similar arrangements with two investors:
| (1) |
The investor would pay up to $
|
|
| (2) |
The investor would pay up to $
|
In the event that at least 10% of the assets of the Company are sold by the Company, the investors would be entitled to the fair market value (FMV) of all future Payments associated with the assets sold as determined by an independent valuator to be chosen by the investors. The FMV cannot exceed 30% of the total asset disposition price defined as the total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect a change in control, then the investors must be paid the FMV of all future Payments in one lump payment. The FMV cannot exceed 30% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments.
On November 18, 2019 the Company entered into
another similar arrangement with the (February 1, 2019) investor above whereby the investor would advance up to $
On December 30, 2019 the Company entered into
another similar arrangement with a new investor whereby the investor would advance up to $
On April 22, 2020 the Company entered into another
similar arrangement with the (first May 9, 2019) investor above whereby the investor would advance up to $
On July 1, 2020 the Company entered into a similar
agreement with the first investor whereby the investor would pay up to $
| F- 19 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
On August 27, 2020 the Company and the first investor
referred to above consolidated the three separate agreements of February 1, 2019 for $
In summary of all agreements mentioned above if
in the event that at least
The Payments will first become payable on June
30, 2019 (unless otherwise indicated) based on the quarterly Revenues for the quarter ended May 31, 2019 and will accrue every quarter
thereafter. As of February 28, 2025, the Company has accrued approximately $
On March 1, 2021 the first investor referred to
above whose aggregate investment is $
| 1) |
The rate payment was reduced from
|
|
| 2) |
The asset disposition % (see below) was reduced from
|
In consideration for the above changes, the investor
received
Series F Convertible Preferred Stock and a warrant to purchase
The Company retains total involvement in the generation
of cash flows from these revenue streams that form the basis of the payments to be made to the investors under this agreement. Because
of this, the Company has determined that the agreements constitute debt agreements. As of February 28, 2025, and February 29, 2024, the
long-term balances other than Payments already owed is the cash received of $
For both the years ended February 28, 2025 and
February 29, 2024, the Company has received $
| F- 20 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9. RELATED PARTY TRANSACTIONS
For the years ended February 28, 2025, and February
29, 2024, the Company had net (advances) repayments of ($
During the year ended February 28, 2025, the Company
a net accrual of $
During the years ended February 28, 2025, and
February 29, 2024, the Company accrued
Series G shares to be issued totaling $
During the years ended February 28, 2025, and
February 29, 2024, the Company was charged $
10. OTHER DEBT – VEHICLE LOANS
In December 2016, RAD entered into a vehicle
loan for $
| F- 21 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. LOANS PAYABLE
Loans payable at February 28, 2025 consisted of the following:
| Date | Maturity | Description | Principal | Interest Rate | |||||||||
|
|
|
Promissory note | (1)* | $ |
|
|
% | ||||||
|
|
|
Promissory note | (2) |
|
|
% | |||||||
|
|
|
Promissory note | (3) |
|
|
% | |||||||
|
|
|
Promissory note | (4)* |
|
|
% | |||||||
|
|
|
Promissory note | (5) |
|
|
% | |||||||
|
|
|
Promissory note | (6) |
|
|
% | |||||||
|
|
|
Promissory note | (7) |
|
|
% | |||||||
|
|
|
Promissory note | (8) |
|
|
% | |||||||
|
|
|
Promissory note | (9) |
|
|
% | |||||||
|
|
|
Promissory note | (10) |
|
|
% | |||||||
|
|
|
Promissory note | (11) |
|
|
% | |||||||
|
|
|
Promissory note | (12) |
|
|
% | |||||||
|
|
|
Promissory note | (13) |
|
|
% | |||||||
|
|
|
Promissory note | (14) |
|
|
% | |||||||
|
|
|
Promissory note | (15) |
|
|
% | |||||||
|
|
|
Promissory note | (16) |
|
|
% | |||||||
|
|
|
Promissory note | (17) |
|
|
% | |||||||
|
|
|
Promissory note | (18) |
|
|
% | |||||||
|
|
|
Promissory note | (19) |
|
|
% | |||||||
|
|
|
Promissory note | (20) |
|
|
% | |||||||
|
|
|
Promissory note | (20) |
|
|
% | |||||||
|
|
|
Promissory note | (20) |
|
|
% | |||||||
|
|
|
Promissory note | (20) |
|
|
% | |||||||
|
|
|
Promissory note | (20) |
|
|
% | |||||||
|
|
|
Promissory note | (20) |
|
|
% | |||||||
|
|
|
Promissory note | (20) |
|
|
% | |||||||
|
|
|
Promissory note | (20) |
|
|
% | |||||||
|
|
|
Promissory note | (20) |
|
|
% | |||||||
|
|
|
Promissory note | (20) |
|
|
% | |||||||
|
|
|
Purchase Agreement | (21) |
|
|
% | |||||||
|
|
|
Purchase Agreement | (22) |
|
|
% | |||||||
|
|
|
Exchange Agreement | (23) |
|
% | ||||||||
| $ |
|
||||||||||||
| Less: current portion of loans payable |
(
|
) | |||||||||||
| Less: discount on non-current loans payable |
(
|
) | |||||||||||
| Non-current loans payable, net of discount | $ |
|
|||||||||||
| Current portion of loans payable | $ |
|
|||||||||||
| Less: discount on current portion of loans payable | |||||||||||||
| Current portion of loans payable, net of discount | $ |
|
|||||||||||
| * |
|
| F- 22 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| (1) |
|
| (2) |
|
| (3) |
|
| (4) |
|
| (5) |
|
| (6) |
|
| (7) |
|
| F- 23 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| (8) |
|
| (9) |
|
| (10) |
|
| (11) |
|
| F- 24 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| (12) |
|
| (13) |
|
| (14) |
|
| (15) |
|
| (16) |
|
| (17) |
|
| (18) |
|
| F- 25 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| (19) |
|
| (20) |
|
|
October
28, 2022, $
|
| (20) |
|
November
10, 2022, $
November
15, 2022, $
January
11, 2023, $
February
6, 2023, $
| F- 26 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April
5, 2023, $
April
20, 2023, $
May
11, 2023, $
October
27 2023, $
| (21) |
|
| (22) |
|
| (23) |
|
| F- 27 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. STOCKHOLDERS’ DEFICIT
Preferred Stock: The Company is authorized to issue up to shares of $ par value preferred stock. The board of directors is authorized to designate any series of preferred stock up to the total authorized number of shares.
Series B Convertible, Redeemable Preferred Stock
The
board of directors has designated
shares of Series B Convertible, Redeemable Preferred Stock with a par value of $
per share.
As of the date of this report, there are no shares of Series B Preferred Stock outstanding. The Series B Convertible Preferred Stock
are redeemable at $
| F- 28 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Series C Convertible, Redeemable Preferred Stock
The
board of directors has designated
shares of Series C Convertible, Redeemable Preferred Stock with a par value of $
per share.
As of the date of this report, there are
shares of Series C Preferred Stock outstanding. The Series C Convertible Preferred Stock
are redeemable at $
From the date of issuance until the date no shares of Series C Preferred Stock are issued and outstanding, unless Holders of at least 75% in Stated Value of the then outstanding shares of Preferred Stock shall have otherwise given prior written consent, the Corporation shall not, and shall not permit any of the Subsidiaries to, directly or indirectly: (a) other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom; (b) other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom; (c) amend its charter documents, including, without limitation, its articles of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder; (d) repay, repurchase or offer to repay, repurchase or otherwise acquire of any shares of its Common Stock, Common Stock Equivalents or Junior Securities, other than as to the Conversion Shares as permitted or required under the Transaction Documents: (e) pay cash dividends or distributions on Junior Securities of the Corporation; f) enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Corporation (even if less than a quorum otherwise required for board approval); or(g) enter into any agreement with respect to any of the foregoing.
| F- 29 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Series E Preferred Stock
The board of directors has designated shares of Series E Preferred Stock. As of the date of this report, there are shares of Series E Preferred Stock outstanding. The Series E Preferred Stock ranks subordinate to the Company’s common stock as to distributions of assets upon liquidation, dissolution or winding up of the Corporation. The Series E preferred stock is non-redeemable, does not have rights upon liquidation of the Company and does not receive dividends. The outstanding shares of Series E Preferred Stock have the right to take action by written consent or vote based on the number of votes equal to twice the number of votes of all outstanding shares of equity instruments with voting rights. As a result, the holder of Series E Preferred Stock has 2/3rds of the voting power of all shareholders at any time corporate action requires a vote of shareholders.
Series F Convertible Preferred Stock
The board of directors has designated shares of Series F Convertible Preferred Stock with a par value of $ per share. As of the date of this report, there are shares of Series F Convertible Preferred Stock outstanding. The Series F Convertible Preferred Stock is non-redeemable, does not have rights upon liquidation of the Company, does not have voting rights and does not receive dividends. Each holder may, at any time and from time to time convert all, but not less than all, of their shares of Series F Convertible Preferred Stock into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the date of conversion by three and 45 100ths (3.45) on a pro rata basis. So long as any shares of Series F Convertible Preferred Stock are outstanding, the Company shall not, without first obtaining the approval of the majority of the holders: (a) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series F convertible preferred stock; (b) create any Senior Securities; (c) create any pari passu Securities; (d) do any act or thing not authorized or contemplated by the Certificate of Designation which would result in any taxation with respect to the Series F Convertible Preferred Stock under Section 305 of the Internal Revenue Code of 1986, as amended, or any comparable provision of the Internal Revenue Code as hereafter from time to time amended, (or otherwise suffer to exist any such taxation as a result thereof).
Series G Preferred Stock
The board of directors has designated shares of Series G Preferred Stock. As of the date of this report, there are shares of Series G Preferred Stock outstanding. The series G shares are redeemable at $ per share The Series G preferred stock does not have voting rights, does not have rights upon liquidation of the Company and does not receive dividends.
Summary of Preferred Stock Activity
Series B Convertible, Redeemable Preferred Stock (Temporary Equity)
On April 27, 2024, in connection with a Share Purchase Agreement the Company created a new class of Series B Convertible Redeemable Preferred Shares with authorized shares.
In
exchange for
Series B Convertible Redeemable Preferred Shares , the Company received gross proceeds of $
| F- 30 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Series C Convertible, Redeemable Preferred Stock (Temporary Equity)
On February 10, 2025, in connection with a Share Purchase Agreement the Company created a new class of Series C Convertible Redeemable with authorized shares.
In
exchange for
Series C Convertible Redeemable Preferred Shares , the Company received gross proceeds of $
Series F Convertible Preferred Stock
Each holder of Series F Convertible Preferred Shares may, at any time and from time to time convert all, but not less than all, of their shares into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the date of conversion by three and 45 100ths (3.45) on a pro rata basis.
On April 30, 2024 the Company increased authorized shares to Series F Preferred Shares.
Series F Preferred Stock Activity:
During the year ended February 28, 2025 Series F shareholders had the following activity:
| — |
A Series F preferred shareholder exchanged Series F preferred shares for a $ note payable. (see Note 11). The Company record an adjustment to the par value of the shares of $ , paid -in capital for the carrying value of the shares of $ with the remaining amount of $ a deemed dividend.
|
During the year ended February 29, 2024 Series F shareholders had the following activity:
| — | A total of Series F Preferred Stock Warrants issued along with debt to a lender. |
Unissued Series F Preferred Stock
At
both February 28, 2025 and February 29, 2024 there remains
issuable Series F preferred stock at a value of $
Summary of Preferred Stock Warrant Activity
| Number of Series F Preferred Warrants |
Weighted Average Exercise Price |
Weighted Average Remaining Years |
||||||||||
| Outstanding at March 1, 2024 |
|
$ |
|
|
||||||||
| Issued | — | |||||||||||
| Exercised | — | |||||||||||
| Forfeited and cancelled | — | |||||||||||
| Outstanding at February 28, 2025 |
|
$ |
|
|
||||||||
| F- 31 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Summary of Common Stock Activity
The Company increased authorized common shares from to on July 8, 2022, from to on March 19, 2023 from to on August 30, 2023, from to on March 22, 2024., from to on October 4, 2024 and from to on February 21, 2025.
Summary of Common Stock Activity
During the year ended, February 28, 2025, common shareholders had the following activity:
| — |
the
Company issued
common shares with gross proceeds of $
|
|
| — |
the
Company issued
common shares to repay $
|
During the year ended, February 29, 2024, common shareholders had the following activity:
| — |
the
Company issued
common shares with gross proceeds of $
|
|
| — |
the
Company issued
common shares for services with a fair value of $
|
Summary of Warrant and Stock Option Activity
|
Number of
Warrants |
Weighted Average
Exercise Price |
Weighted Average
Remaining Years |
||||||||||
| Outstanding at February 29, 2023 |
|
$ |
|
|||||||||
| Issued | — | |||||||||||
| Exercised | — | |||||||||||
| Forfeited and cancelled |
(
|
) |
(
|
) | — | |||||||
| Outstanding at February 29, 2024 |
|
$ |
|
|||||||||
| Issued | — | |||||||||||
| Exercised | — | |||||||||||
| Forfeited and cancelled |
(
|
) |
(
|
) | — | |||||||
| Outstanding at February 28, 2025 |
|
$ |
|
|||||||||
During the year ended February 28, 2025 warrant holders had the following activity:
| — | During the year warrants to acquire shares expired. |
During the year ended February 29, 2024 warrant holders had the following activity:
| — | On January 27, 2024 warrants to acquire shares expired. |
| F- 32 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended February 28, 2025 and February 29, 2024, the Company recorded a total of $ and $ , respectively on stock-based payments for warrants with a corresponding adjustment to additional paid-in capital.
For the years ended February 28, 2025 and February 29, 2024 the Company recorded a total of $ and $ respectively, to stock-based compensation for options and shares with a corresponding adjustment to additional paid-in capital. In addition the Company recorded other stock based compensation of $ and , respectively with a corresponding adjustment to incentive compensation plan payable, payable in Series G Preferred shares which have not yet been issued.
Summary of Common Stock Option Activity
Summary of CEO Compensation Grant
On April 9, 2021 the Company entered into a renewable Employment Agreement with Chief Executive Officer, Steven Reinharz with a three- year term under the following terms whereby stock awards will be granted if certain conditions are met:
| Objective #3 : | Sales in any fiscal quarter exceed the total sales in fiscal year 2021 for the first time. | |
| Award #3 : | Five hundred (500) shares of Series G preferred stock. | |
| Objective #4 : | One hundred fifty (150) devices are deployed in the marketplace. | |
| Award #4 : | Two hundred fifty (250) shares of Series G preferred stock. | |
| Objective #5 : | Year-to-date sales at any point in fiscal year 2022 exceed One Million Dollars ($1,000,000). | |
| Award #5 : | Two hundred fifty (250) shares of Series G preferred stock. | |
| Objective #6 : | The price per share of common stock has increased to and maintains a price of Ten Cents ($0.10) or more for ten (10) days in a thirty (30) day period. | |
| Award #6 : | Two hundred fifty (250) shares of Series G preferred stock. | |
| Objective #7 : | The price per share of common stock has increased to and maintains a price of Twenty Cents ($0.20) or more for ten (10) days in a thirty (30) day period. | |
| Award #7 : | Five hundred (500) shares of Series G preferred stock. | |
| Objective #8 : | The RAD 3.0 products are launched into the marketplace by November 30, 2021. | |
| Award #8 : | Five hundred (500) shares of Series G preferred stock. | |
| Objective #9 : | RAD receives an order for fifty (50) units from a single customer. | |
| Award #9 : | Five hundred (500) shares of Series G preferred stock. |
| F- 33 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
On January 31, 2024 the Company added the following Objective effective March 1, 2022:
| Objective # 10 | In any fiscal quarter, attrition , measured by loss of recurring monthly revenue does not exceed 10% | |
| Award #10 | Two h undred fifty (250) shares of Series G preferred stock. |
The fair value of the first two awards was obtained through the use of the Monte Carlo method was $ with a charge to stock- based compensation and a corresponding charge to paid in capital. The fair value of the remaining rewards was determined by calculating the vesting amounts of each reward and then determining for each reporting period the requisite service rendered and applying that against the cash redemption value of the number of shares of Series G issuable for each tier in the agreement. For the period ended February 28, 2025 that amount totaled $ . For the period ended February 29, 2024 that amount totaled $ with a charge to stock-based compensation and a corresponding charge to incentive compensation plan payable. For the period ended February 28, 2023 that amount totaled $ with a charge to stock-based compensation and a corresponding charge to incentive compensation plan payable.
On April 14, 2021, the Shareholders of Series E Preferred Stock and the Board of Directors of our Company (“Board”) approved and adopted the 2021 Incentive Stock Plan (the “2021 Plan”). On August 11, 2022
The purpose of the 2021 Plan is to promote the success of the Company by authorizing incentive awards to retain Directors, executives, selected Employees and Consultants, and reward participants for making major contributions to the success of the Company. The 2021 Plan authorizes the granting of stock options, restricted stock, restricted stock units, stock appreciation rights and stock awards. A total of two hundred million ( ) shares of common stock may be issued under the 2021 Plan. All awards under the 2021 Plan, whether vested or unvested, are subject to the terms of any recoupment, clawback or similar policy of the Company in effect from time to time, as well as any similar provisions of applicable law, which could in certain circumstances require repayment or forfeiture of awards or any shares of stock or other cash or property received with respect to the awards, including any value received from a disposition of the shares acquired upon payment of the awards. The 2021 Plan will be administered by the Board or any Committee authorized by the Board, if applicable, which will have the sole authority to, among other things: construe and interpret the 2021 Plan; make rules and regulations relating to the administration of the 2021 Plan; select participants; and establish the terms and conditions of awards, all in accordance with the terms of the 2021 Plan. The 2021 Plan will remain in effect until April 14, 2031, unless sooner terminated by the Board. Termination will not affect awards then outstanding.
During the year ended February 28, 2025 the Company had the following common stock option activity:
| — | On the original 2021 plan, options to purchase shares were forfeited due to employee terminations. On the 2023 plan (see below) options to purchase shares were forfeited due to employee terminations. |
| F- 34 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
During the year ended February 29, 2024 the Company had the following common stock option activity:
| — | On September 1, 2023, using the Black-Scholes model with assumptions described below: |
| Strike price | $ | |||
| Fair value of Company’s common stock | $ | |||
| Dividend yield | % | |||
| Expected volatility | ||||
| Risk free interest rate | % | |||
| Expected term (years) |
The Company recorded $ in stock-based compensation on the 2023 plan which represents the current expense over the vesting period. In addition the company recorded $ stock based compensation on the 2022 options , so for the year ended February 29, 2024 the Company recorded a total of $ in stock based compensation with a corresponding increase in paid up capital.
| — | On the original 2021 plan, options to purchase shares were forfeited due to employee terminations |
Summary of Common Stock Option Activity
| Number of Options |
Weighted Average Exercise Price |
Weighted Average Remaining Years | ||||||||||
| Outstanding at March 1, 2023 |
|
$ |
|
|||||||||
| Issued |
|
$ |
|
|||||||||
| Exercised | — | |||||||||||
| Forfeited, extinguished and cancelled |
(
|
) | $ |
|
( | ) | ||||||
| Outstanding at February 29, 2024 |
|
$ |
|
|||||||||
| Number of Options |
Weighted Average Exercise Price |
Weighted Average Remaining Years | ||||||||||
| Outstanding at March 1, 2024 |
|
$ |
|
|||||||||
| Issued | — | |||||||||||
| Exercised | — | |||||||||||
| Forfeited, extinguished and cancelled |
(
|
) | $ |
|
( | ) | ||||||
| Outstanding at February 28, 2025 |
|
$ |
|
|||||||||
| F- 35 |
13. COMMITMENTS AND CONTINGENCIES
Litigation
Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s condensed consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.
The related legal costs are expensed as incurred.
On September 24, 2024, a prospective lender filed a claim against the Company for an alleged breach of a non-binding term sheet made on June 7, 2024. This claim is an example of predatory lending practices for which the Company has filed a notice of dismissal in the relevant jurisdiction. The Company and its counsel believe the claim is without merit however the courts have mandated mediation, and it appears that the parties may reach a settlement in the near future. The Company has made no accruals.
Operating Lease
On
March 10, 2021,
The
Company’s leases are accounted for as operating leases. Rent expense and operating lease cost are recorded over the lease terms
on a straight-line basis. Rent expense and operating lease cost was $
| Maturity of Lease Liabilities |
Operating
Leases |
|||
| February 28, 2026 | $ |
|
||
| February 28, 2027 |
|
|||
| February 29, 2028 |
|
|||
| February 28, 2029 |
|
|||
| February 28, 2030 |
|
|||
| February 28, 2031 and after |
|
|||
| Total lease payments |
|
|||
| Less: Interest |
(
|
) | ||
| Present value of lease liabilities | $ |
|
||
| F- 36 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| For the Year Ended | ||||||||
| February 28, | February 29, | |||||||
| 2025 | 2024 | |||||||
| Numerator: | ||||||||
| Net loss available to common shareholders | $ |
(
|
) | $ |
(
|
) | ||
| Effect of common stock equivalents | ||||||||
| Less redemption dividend to Series F and Series B preferred shareholders |
(
|
) | ||||||
| Net loss adjusted for common stock equivalents |
(
|
) |
(
|
) | ||||
| Denominator: | ||||||||
| Weighted average shares - basic |
|
|
||||||
| Net loss per share – basic | $ |
(
|
) | $ |
(
|
) | ||
| Denominator: | ||||||||
| Weighted average shares – diluted |
|
|
||||||
| Net loss per share – diluted | $ |
(
|
) | $ |
(
|
) | ||
| For the Year Ended | ||||||||
| February 28, | February 29, | |||||||
| 2025 | 2024 | |||||||
| Convertible Class F Preferred Shares |
|
|
||||||
| Stock options and warrants |
|
|
||||||
| Total |
|
|
||||||
| F- 37 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15. INCOME TAXES
The Company has adopted ASC 740-10, “ Income Taxes” , which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The income tax expense (benefit) consisted of the following for the fiscal years ended February 28, 2025 and ended February 29, 2024:
| February 28, 2025 | February 29, 2024 | |||||||
| Total current | $ | $ | ||||||
| Total deferred | ||||||||
| Total | $ | $ |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
The following is a reconciliation of the expected statutory federal income tax provision to the actual income tax benefit for the fiscal years ended February 28, 2025 and February 29, 2024:
| February 28, 2025 | ||||
| Federal statutory rate | $ |
(
|
) | |
| State income tax benefit, net of federal benefit |
(
|
) | ||
| Non deductible interest |
|
|||
| Non deductible stock based compensation |
|
|||
| Change in valuation allowance |
|
|||
| Total | $ | |||
| February 29, 2024 | ||||
| Federal statutory rate | $ |
(
|
) | |
| State income tax benefit, net of federal benefit |
(
|
) | ||
| Non deductible interest |
|
|||
| Non deductible stock based compensation |
|
|||
| Change in valuation allowance |
|
|||
| Total | $ | |||
For
the years ended February 28, 2025 and February 29, 2024, the expected tax benefit, temporary timing differences and long-term timing
differences are calculated at the
| F- 38 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Significant components of the Company’s deferred tax assets and liabilities were as follows for the fiscal years February 28, 2025 and February 29, 2024:
| February 28, 2025 | February 29, 2024 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | $ |
|
$ |
|
||||
| Deferred tax liabilities: | ||||||||
| Depreciation | ||||||||
| Deferred revenue | ||||||||
| Total deferred tax liabilities | ||||||||
| Net deferred tax assets: | ||||||||
| Less valuation allowance |
(
|
) |
(
|
) | ||||
| Net deferred tax assets (liabilities) | $ | $ | ||||||
The
Company has incurred losses since inception, therefore, the Company has no federal tax liability. Additionally there are limitations
imposed by certain transactions which are deemed to be ownership changes which occurred in the Company on August 28, 2017. The net deferred
tax asset generated by the loss carryforward has been fully reserved. The cumulative net operating loss carryforward was approximately
$
Although the Company has tax loss carry-forwards, there is uncertainty as to utilization prior to their expiration. Accordingly, the future income tax asset amounts have been fully reserved by a valuation allowance.
The Company has maintained a full valuation allowance against its deferred tax assets at February 28, 2025 and February 29, 2024. A valuation allowance is required to be recorded when it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Since the Company cannot be assured of realizing the net deferred tax asset, a full valuation allowance has been provided.
The Company does not have any uncertain tax positions at February 28, 2025 and February 29, 2024 that would affect its effective tax rate. The Company does not anticipate a significant change in the amount of unrecognized tax benefits over the next twelve months. Because the Company is in a loss carryforward position, the Company is generally subject to US federal and state income tax examinations by tax authorities for all years for which a loss carryforward is available. If and when applicable, the Company will recognize interest and penalties as part of income tax expense.
The Company’s tax returns for the years ended February 29, 2024, and February 28, 2023, and February 28, 2022 are open for examination under Federal statute of limitations.
| F- 39 |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16. SUBSEQUENT EVENTS
Subsequent to February 28, 2025 through to filing date,
— the Company issued common shares pursuant to a share purchase agreement for gross proceeds of $ , issuance costs of $ and cash proceeds of $ .
—
The Company issued
shares to a lender to settle $
—
on May 27, 2025
| F- 40 |