[10-Q] Artificial Intelligence Technology Solutions Inc. Quarterly Earnings Report
Artificial Intelligence Technology Solutions Inc. (AITX)
Net income for the quarter was $763,064, primarily due to a $4,370,185 gain on settlement of debt, offset by $1,297,962 of interest expense. For the six months, revenue reached $3,743,586 and the net loss was $3,830,953. Cash used in operating activities was $5,400,554, and cash ended at $323,021. Total liabilities were $56,407,557 and stockholders’ deficit was $47,330,891, including accrued interest payable of $14,336,829, loans payable of $25,606,435 (non‑current), and a deferred variable payment obligation of $2,510,325 (current) and $2,525,000 (non‑current). One customer accounted for 47% of six‑month revenue. The company disclosed substantial doubt about its ability to continue as a going concern. As of August 31, 2025, 19,787,834,008 common shares were outstanding; 21,787,834,008 were outstanding as of October 15, 2025. An equity financing agreement allows purchases of up to $30,000,000 over two years, with $29,000,000 remaining.
Artificial Intelligence Technology Solutions Inc. (AITX)) ha riportato risultati per il trimestre conclusosi il 31 agosto 2025. Le entrate sono state di 1.888.749 dollari, in aumento rispetto ai 1.344.183 dell'anno precedente, trainate principalmente dai noleggi di dispositivi pari a 1.695.471. Il margine lordo è stato di 1.344.865, con spese operative di 3.654.024, risultando in una perdita operativa di 2.309.159.
Il reddito netto per il trimestre è stato di 763.064, principalmente a causa di un guadagno di 4.370.185 derivante dall'accordo di settlement dei debiti, compensato da 1.297.962 di oneri da interessi. Nei sei mesi, i ricavi hanno raggiunto 3.743.586 e la perdita netta è stata di 3.830.953. Il flusso di cassa derivante dalle attività operative è stato negativo per 5.400.554 e la cassa al termine era di 323.021. Le passività totali ammontavano a 56.407.557 dollari e lo svantaggio degli azionisti era di 47.330.891, includendo interessi maturati di 14.336.829, prestiti da pagare di 25.606.435 (non correnti) e un obbligo di pagamento differito di 2.510.325 (corrente) e 2.525.000 (non corrente). Un cliente rappresentava il 47% dei ricavi semestrali. Lazienda ha espresso gravi dubbi sulla sua capacità di continuare come going concern. Al 31 agosto 2025 erano in circolazione 19.787.834.008 azioni ordinarie; al 15 ottobre 2025 erano in circolazione 21.787.834.008. Un accordo di finanziamento azionario consente acquisti fino a 30.000.000 di dollari in due anni, rimanenti 29.000.000.
Artificial Intelligence Technology Solutions Inc. (AITX)) comunicó resultados para el trimestre terminado el 31 de agosto de 2025. Los ingresos fueron de 1.888.749 dólares, respecto a 1.344.183 dólares del año anterior, impulsados principalmente por el alquiler de dispositivos de 1.695.471. El beneficio bruto fue de 1.344.865, con gastos operativos de 3.654.024, lo que resultó en una pérdida de operaciones de 2.309.159.
La utilidad neta del trimestre fue de 763.064, principalmente debido a una ganancia de 4.370.185 por liquidación de deudas, compensada por 1.297.962 de gastos por intereses. En los seis meses, los ingresos alcanzaron 3.743.586 y la pérdida neta fue de 3.830.953. El flujo de efectivo de las actividades operativas fue de -5.400.554 y el efectivo al cierre fue de 323.021. Las pasivos totales fueron de 56.407.557 y el déficit de los accionistas fue de 47.330.891, incluyendo intereses acumulados de 14.336.829, préstamos por pagar de 25.606.435 (no corrientes) y una obligación de pago diferido de 2.510.325 (corriente) y 2.525.000 (no corriente). Un cliente representó el 47% de los ingresos de los seis meses. La empresa expresó dudas sustanciales sobre su capacidad para continuar como empresa en marcha. Al 31 de agosto de 2025, había 19.787.834.008 acciones comunes en circulación; 21.787.834.008 estaban en circulación al 15 de octubre de 2025. Un acuerdo de financiamiento de capital permite compras de hasta 30.000.000 de dólares en dos años, quedando 29.000.000 por gastar.
Artificial Intelligence Technology Solutions Inc. (AITX))는 2025년 8월 31일 종료된 분기에 대한 실적을 발표했습니다. 매출은 1,888,749달러로, 전년 동기 1,344,183달러에서 증가했으며 주로 기기 대여에서 1,695,471이 기인했습니다. 총이익은 1,344,865였고 영업비용은 3,654,024로 영업손실은 2,309,159였습니다.
해당 분기의 순이익은 763,064로, 부채 합의로 인한 4,370,185의 이익이 있었고 이자 비용 1,297,962로 상쇄되었습니다. 6개월 동안 매출은 3,743,586이며 순손실은 3,830,953였습니다. 영업활동으로 인한 현금 흐름은 -5,400,554였고 말일 현금은 323,021이었습니다. 총부채는 56,407,557였고 주주자본의 적자는 47,330,891에 달했으며 미지급 이자 14,336,829, 미지급 대출 25,606,435(비유동) 및 기말 차감으로의 지연 지불 의무 2,510,325(유동) 및 2,525,000(비유동)이 포함되었습니다. 한 고객이 6개월 매출의 47%를 차지했습니다. 회사는 계속기업으로서의 존속에 상당한 의문을 제기했습니다. 2025년 8월 31일 기준으로 보통주 발행주식은 19,787,834,008주였고 2025년 10월 15일 기준으로는 21,787,834,008주였습니다. 자본 조달 계약으로 2년간 최대 30,000,000달러를 매입할 수 있으며 남아 있는 금액은 29,000,000입니다.
Artificial Intelligence Technology Solutions Inc. (AITX)) a publié ses résultats pour le trimestre terminé le 31 août 2025. Le chiffre d'affaires s'élève à 1 888 749 dollars, en hausse par rapport à 1 344 183 l'année précédente, principalement tiré par les locations d'appareils de 1 695 471. La marge brute est de 1 344 865, avec des frais d'exploitation de 3 654 024, ce qui entraîne une perte opérationnelle de 2 309 159.
Le résultat net du trimestre est de 763 064, principalement en raison d'un gain de 4 370 185 sur le règlement d'une dette, compensé par 1 297 962 de frais d'intérêts. Sur six mois, le chiffre d'affaires atteint 3 743 586 et la perte nette est de 3 830 953. Le flux de trésorerie provenant des activités opérationnelles est de -5 400 554 et la trésorerie en fin de période est de 323 021. Les passifs totaux s'élèvent à 56 407 557 et le déficit des actionnaires est de 47 330 891, comprenant des intérêts courus de 14 336 829, des prêts à payer de 25 606 435 (non courants) et une obligation de paiement différé de 2 510 325 (courant) et 2 525 000 (non courant). Un client représentait 47% du chiffre d'affaires sur six mois. L'entreprise a exprimé de doutes substantiels quant à sa capacité à poursuivre son activité en tant que going concern. Au 31 août 2025, 19 787 834 008 actions ordinaires were en circulation; 21 787 834 008 étaient en circulation au 15 octobre 2025. Un accord de financement des capitaux permet des achats jusqu'à 30 000 000 de dollars sur deux ans, dont 29 000 000 restent à utiliser.
Artificial Intelligence Technology Solutions Inc. (AITX)) veröffentlichte Ergebnisse für das Quartal zum 31. August 2025. Der Umsatz betrug 1.888.749 USD, gegenüber 1.344.183 USD im Vorjahr, hauptsächlich getrieben durch Gerätemietverträge in Höhe von 1.695.471. Bruttogewinn betrug 1.344.865, mit Betriebsausgaben von 3.654.024, was zu einem operativen Verlust von 2.309.159 führte.
Der Nettogewinn für das Quartal betrug 763.064, hauptsächlich aufgrund eines Gewinns von 4.370.185 aus der Debt Settlement-Lösung, abgefedert durch 1.297.962 Zinsaufwendungen. Für die sechs Monate belief sich der Umsatz auf 3.743.586 und der Nettoverlust betrug 3.830.953. Der Cashflow aus operativer Tätigkeit betrug -5.400.554, und der Barbestand endete bei 323.021. Die Verbindlichkeiten insgesamt beliefen sich auf 56.407.557 USD, und das Eigenkapitaldefizit betrug 47.330.891, einschließlich aufgelaufener Zinsen von 14.336.829, ausstehender Darlehen von 25.606.435 (langfristig) und einer abgezinsten verwechselten Zahlungsverpflichtung von 2.510.325 (kurzfristig) und 2.525.000 (langfristig). Ein Kunde machte 47% des Umsatzes über sechs Monate aus. Das Unternehmen äußerte erhebliche Zweifel an der Fortführung des Geschäftsbetriebs. Zum 31. August 2025 waren 19.787.834.008 Stammaktien im Umlauf; am 15. Oktober 2025 waren es 21.787.834.008. Eine Eigenkapitalfinanzierungsvereinbarung ermöglicht Käufe von bis zu 30.000.000 USD über zwei Jahre, wovon 29.000.000 verbleiben.
Artificial Intelligence Technology Solutions Inc. (AITX)) أعلت نتائج الربع المنتهي في 31 أغسطس 2025. بلغت الإيرادات 1,888,749 دولاراً، مقارنة بـ1,344,183 دولاراً قبل عام، وهو ما كان مدفوعاً أساساً بتأجير الأجهزة بمقدار 1,695,471. بلغ الربح الإجمالي 1,344,865، مع مصروفات تشغيلية قدرها 3,654,024، مما نتج عنه خسارة تشغيلية قدرها 2,309,159.
كان صافي الدخل للربع 763,064، ويرجع ذلك أساساً إلى مكسب قدره 4,370,185 من تسوية الدين، يعوّضه 1,297,962 من مصاريف الفوائد. على مدى ستة أشهر، بلغ الإيراد 3,743,586 وكانت الخسارة الصافية 3,830,953. وقد بلغ النقد المستخدم في الأنشطة التشغيلية 5,400,554، وانتهى النقد عند 323,021. وإجمالي الخصوم 56,407,557 والدخل المملوك للمساهمين عجز قدره 47,330,891، بما فيها فائدة مستحقة قدرها 14,336,829، وقروض مستحقة تبلغ 25,606,435 (غير جار)، والتزام دفع مؤجل متغير قدره 2,510,325 (جار) و2,525,000 (غير جار). أحد العملاء شكل 47% من إيرادات الستة أشهر. كشفت الشركة عن شكوك كبيرة في قدرتها على الاستمرار كمنشأة قائمة. حتى 31 أغسطس 2025، كانت هناك 19,787,834,008 سهماً عادياً قائمة؛ وكانت 21,787,834,008 قائمة حتى 15 أكتوبر 2025. تسمح اتفاقية تمويل حقوق الملكية بشراء حتى 30,000,000 دولار على مدى عامين، مع وجود 29,000,000 دولار متبقياً.
Artificial Intelligence Technology Solutions Inc. (AITX)) 报告显示截至2025年8月31日的季度业绩。收入为1,888,749美元，较上一年同期的1,344,183美元有所增加，主要由设备租赁收入1,695,471推动。毛利润为1,344,865美元，经营费用为3,654,024美元，经营亏损为2,309,159美元。
本季度净收入为763,064美元，主要由于债务和解带来4,370,185美元的收益，被1,297,962美元的利息支出所抵消。六个月内，收入为3,743,586美元，净亏损为3,830,953美元。运营活动现金流为-5,400,554美元，期末现金为323,021美元。总负债为56,407,557美元，股东权益缺口为47,330,891美元，其中未付利息为14,336,829美元，未偿付贷款为25,606,435美元（非流动），以及递延可变支付义务2,510,325美元（流动）和2,525,000美元（非流动）。一名客户占六个月收入的47%。公司对能否继续作为持续经营实体存在重大不确定性。截至2025年8月31日，流通普通股为19,787,834,008股；截至2025年10月15日，为21,787,834,008股。股本融资协议允许在两年内购买最多30,000,000美元，尚余29,000,000美元。
- None.
- Going concern: Management disclosed substantial doubt about continuing as a going concern.
- Liquidity strain: Six‑month operating cash outflow of
$5,400,554 with cash at$323,021 . - High leverage: Total liabilities
$56,407,557 , accrued interest payable$14,336,829 , and significant loans payable. - Earnings quality: Quarterly net income driven by a
$4,370,185 debt‑settlement gain rather than operations.
Insights
Going concern risk persists amid heavy liabilities and weak cash.
AITX shows rising revenue but remains reliant on external financing. For the quarter ended
Interest expense of
Net income of
Artificial Intelligence Technology Solutions Inc. (AITX)) ha riportato risultati per il trimestre conclusosi il 31 agosto 2025. Le entrate sono state di 1.888.749 dollari, in aumento rispetto ai 1.344.183 dell'anno precedente, trainate principalmente dai noleggi di dispositivi pari a 1.695.471. Il margine lordo è stato di 1.344.865, con spese operative di 3.654.024, risultando in una perdita operativa di 2.309.159.
Il reddito netto per il trimestre è stato di 763.064, principalmente a causa di un guadagno di 4.370.185 derivante dall'accordo di settlement dei debiti, compensato da 1.297.962 di oneri da interessi. Nei sei mesi, i ricavi hanno raggiunto 3.743.586 e la perdita netta è stata di 3.830.953. Il flusso di cassa derivante dalle attività operative è stato negativo per 5.400.554 e la cassa al termine era di 323.021. Le passività totali ammontavano a 56.407.557 dollari e lo svantaggio degli azionisti era di 47.330.891, includendo interessi maturati di 14.336.829, prestiti da pagare di 25.606.435 (non correnti) e un obbligo di pagamento differito di 2.510.325 (corrente) e 2.525.000 (non corrente). Un cliente rappresentava il 47% dei ricavi semestrali. Lazienda ha espresso gravi dubbi sulla sua capacità di continuare come going concern. Al 31 agosto 2025 erano in circolazione 19.787.834.008 azioni ordinarie; al 15 ottobre 2025 erano in circolazione 21.787.834.008. Un accordo di finanziamento azionario consente acquisti fino a 30.000.000 di dollari in due anni, rimanenti 29.000.000.
Artificial Intelligence Technology Solutions Inc. (AITX)) comunicó resultados para el trimestre terminado el 31 de agosto de 2025. Los ingresos fueron de 1.888.749 dólares, respecto a 1.344.183 dólares del año anterior, impulsados principalmente por el alquiler de dispositivos de 1.695.471. El beneficio bruto fue de 1.344.865, con gastos operativos de 3.654.024, lo que resultó en una pérdida de operaciones de 2.309.159.
La utilidad neta del trimestre fue de 763.064, principalmente debido a una ganancia de 4.370.185 por liquidación de deudas, compensada por 1.297.962 de gastos por intereses. En los seis meses, los ingresos alcanzaron 3.743.586 y la pérdida neta fue de 3.830.953. El flujo de efectivo de las actividades operativas fue de -5.400.554 y el efectivo al cierre fue de 323.021. Las pasivos totales fueron de 56.407.557 y el déficit de los accionistas fue de 47.330.891, incluyendo intereses acumulados de 14.336.829, préstamos por pagar de 25.606.435 (no corrientes) y una obligación de pago diferido de 2.510.325 (corriente) y 2.525.000 (no corriente). Un cliente representó el 47% de los ingresos de los seis meses. La empresa expresó dudas sustanciales sobre su capacidad para continuar como empresa en marcha. Al 31 de agosto de 2025, había 19.787.834.008 acciones comunes en circulación; 21.787.834.008 estaban en circulación al 15 de octubre de 2025. Un acuerdo de financiamiento de capital permite compras de hasta 30.000.000 de dólares en dos años, quedando 29.000.000 por gastar.
Artificial Intelligence Technology Solutions Inc. (AITX))는 2025년 8월 31일 종료된 분기에 대한 실적을 발표했습니다. 매출은 1,888,749달러로, 전년 동기 1,344,183달러에서 증가했으며 주로 기기 대여에서 1,695,471이 기인했습니다. 총이익은 1,344,865였고 영업비용은 3,654,024로 영업손실은 2,309,159였습니다.
해당 분기의 순이익은 763,064로, 부채 합의로 인한 4,370,185의 이익이 있었고 이자 비용 1,297,962로 상쇄되었습니다. 6개월 동안 매출은 3,743,586이며 순손실은 3,830,953였습니다. 영업활동으로 인한 현금 흐름은 -5,400,554였고 말일 현금은 323,021이었습니다. 총부채는 56,407,557였고 주주자본의 적자는 47,330,891에 달했으며 미지급 이자 14,336,829, 미지급 대출 25,606,435(비유동) 및 기말 차감으로의 지연 지불 의무 2,510,325(유동) 및 2,525,000(비유동)이 포함되었습니다. 한 고객이 6개월 매출의 47%를 차지했습니다. 회사는 계속기업으로서의 존속에 상당한 의문을 제기했습니다. 2025년 8월 31일 기준으로 보통주 발행주식은 19,787,834,008주였고 2025년 10월 15일 기준으로는 21,787,834,008주였습니다. 자본 조달 계약으로 2년간 최대 30,000,000달러를 매입할 수 있으며 남아 있는 금액은 29,000,000입니다.
Artificial Intelligence Technology Solutions Inc. (AITX)) a publié ses résultats pour le trimestre terminé le 31 août 2025. Le chiffre d'affaires s'élève à 1 888 749 dollars, en hausse par rapport à 1 344 183 l'année précédente, principalement tiré par les locations d'appareils de 1 695 471. La marge brute est de 1 344 865, avec des frais d'exploitation de 3 654 024, ce qui entraîne une perte opérationnelle de 2 309 159.
Le résultat net du trimestre est de 763 064, principalement en raison d'un gain de 4 370 185 sur le règlement d'une dette, compensé par 1 297 962 de frais d'intérêts. Sur six mois, le chiffre d'affaires atteint 3 743 586 et la perte nette est de 3 830 953. Le flux de trésorerie provenant des activités opérationnelles est de -5 400 554 et la trésorerie en fin de période est de 323 021. Les passifs totaux s'élèvent à 56 407 557 et le déficit des actionnaires est de 47 330 891, comprenant des intérêts courus de 14 336 829, des prêts à payer de 25 606 435 (non courants) et une obligation de paiement différé de 2 510 325 (courant) et 2 525 000 (non courant). Un client représentait 47% du chiffre d'affaires sur six mois. L'entreprise a exprimé de doutes substantiels quant à sa capacité à poursuivre son activité en tant que going concern. Au 31 août 2025, 19 787 834 008 actions ordinaires were en circulation; 21 787 834 008 étaient en circulation au 15 octobre 2025. Un accord de financement des capitaux permet des achats jusqu'à 30 000 000 de dollars sur deux ans, dont 29 000 000 restent à utiliser.
Artificial Intelligence Technology Solutions Inc. (AITX)) veröffentlichte Ergebnisse für das Quartal zum 31. August 2025. Der Umsatz betrug 1.888.749 USD, gegenüber 1.344.183 USD im Vorjahr, hauptsächlich getrieben durch Gerätemietverträge in Höhe von 1.695.471. Bruttogewinn betrug 1.344.865, mit Betriebsausgaben von 3.654.024, was zu einem operativen Verlust von 2.309.159 führte.
Der Nettogewinn für das Quartal betrug 763.064, hauptsächlich aufgrund eines Gewinns von 4.370.185 aus der Debt Settlement-Lösung, abgefedert durch 1.297.962 Zinsaufwendungen. Für die sechs Monate belief sich der Umsatz auf 3.743.586 und der Nettoverlust betrug 3.830.953. Der Cashflow aus operativer Tätigkeit betrug -5.400.554, und der Barbestand endete bei 323.021. Die Verbindlichkeiten insgesamt beliefen sich auf 56.407.557 USD, und das Eigenkapitaldefizit betrug 47.330.891, einschließlich aufgelaufener Zinsen von 14.336.829, ausstehender Darlehen von 25.606.435 (langfristig) und einer abgezinsten verwechselten Zahlungsverpflichtung von 2.510.325 (kurzfristig) und 2.525.000 (langfristig). Ein Kunde machte 47% des Umsatzes über sechs Monate aus. Das Unternehmen äußerte erhebliche Zweifel an der Fortführung des Geschäftsbetriebs. Zum 31. August 2025 waren 19.787.834.008 Stammaktien im Umlauf; am 15. Oktober 2025 waren es 21.787.834.008. Eine Eigenkapitalfinanzierungsvereinbarung ermöglicht Käufe von bis zu 30.000.000 USD über zwei Jahre, wovon 29.000.000 verbleiben.
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Table of Contents
| PAGE | ||
| PART I | FINANCIAL INFORMATION | |
| ITEM 1. | Financial Statements | 3 |
| Condensed Consolidated Balance Sheets as of August 31, 2025 and February 28, 2025 (Unaudited) | 3 | |
| Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended August 31, 2025 and 2024 (Unaudited) | 4 | |
| Condensed Consolidated Statements of Stockholders’ Deficit for the Six Months Ended August 31, 2025 and 2024 (Unaudited) | 5-6 | |
| Condensed Consolidated Statements of Cash Flows for the Six Months Ended August 31, 2025 and 2024 (Unaudited) | 7 | |
| Notes to the Consolidated Financial Statements (Unaudited) | 8-27 | |
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28 |
| ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | 33 |
| ITEM 4. | Controls and Procedures | 33 |
| PART II | OTHER INFORMATION | |
| ITEM 1. | Legal Proceedings | 34 |
| ITEM 1A. | Risk Factors | 34 |
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 34 |
| ITEM 3. | Defaults Upon Senior Securities | 34 |
| ITEM 4. | Mine Safety Disclosures | 34 |
| ITEM 5. | Other Information | 34 |
| ITEM 6. | Exhibits | 35 |
| SIGNATURES | 36 | |
| - 2 - |
| Table of Contents |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
August 31, (unaudited) | February 28, 2025* | |||||||
| 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 $ | ||||||||
| 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. $ | — | — | ||||||
| Series C Convertible, Redeemable Preferred Stock . $ | ||||||||
| Convertible, Redeemable Preferred Stock, value | ||||||||
| Commitments and Contingencies | - | - | ||||||
| Stockholders’ deficit: | ||||||||
| Preferred Stock, undesignated; | — | — | ||||||
| Series G Redeemable Preferred Stock. $ | — | — | ||||||
| Series E Preferred Stock, $ | ||||||||
| Series F Convertible Preferred Stock, $ | ||||||||
| Preferred Stock, value | ||||||||
| Common Stock, $ | ||||||||
| 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 unaudited condensed consolidated financial statements.
| - 3 - |
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ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| August 31, 2025 | August 31, 2024 | August 31, 2025 | August 31, 2024 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Purchases and overhead | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Cost of Goods Sold | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development (Note 10) | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Operating lease cost and rent | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense), net: | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain (loss) on settlement of debt | ( | ) | ( | ) | ||||||||||||
| Total other income (expense) net | ( | ) | ( | ) | ||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net income (loss) per share - basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net income (loss) per share - diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common share outstanding - basic | ||||||||||||||||
| Weighted average common share outstanding - diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| - 4 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ DEFICIT
(Unaudited)
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | 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 $ | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| 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 | ( | ) | ( | ) | — | — | — | — | — | — | ( | ) | — | |||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance at May 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Issuance of shares, net of $ | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Debt exchanged for common stock | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Series F Preferred Shares exchanged for debt | — | — | — | — | ( | ) | ( | ) | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Series B Preferred shares issued as dividend | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||
| Redemption of Series B Preferred shares | ( | ) | ( | ) | — | — | — | — | — | — | ( | ) | — | |||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance at August 31,2024 | — | $ | — | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| - 5 - |
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ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ DEFICIT
(Unaudited)
| 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 28, 2025 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Issuance of shares, net of $ | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Debt exchanged for common shares | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Series C Preferred shares issued as dividend | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance at May 31, 2025 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, value | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Issuance of shares, net of $ | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Issuance of shares, net of issuance costs | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Debt exchanged for common shares | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Series C Preferred shares issued as dividend | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||
| Series C penalty shares | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||
| Redemption of Series C shares | ( | ) | ( | ) | — | — | — | — | — | — | ( | ) | — | |||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Balance at August 31, 2025 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, value | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| - 6 - |
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ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Six Months Ended August 31, 2025 | Six Months Ended August 31, 2024 | |||||||
| CASH FLOWS USED IN OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Bad debts expense | ||||||||
| Inventory provision | — | |||||||
| Reduction of right of use asset | ||||||||
| Accretion of lease liability | ||||||||
| Stock based compensation | ||||||||
| Amortization of debt discounts | ||||||||
| (Gain) loss on settlement of debt | ( | ) | ||||||
| Increase in related party accrued payroll and interest | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ||||||||
| Deposit on right of use asset | ( | ) | — | |||||
| Device parts inventory | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Customer deposits | ( | ) | ||||||
| Deferred compensation for CEO | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Current portion of deferred variable payment obligation for payments | ||||||||
| Accrued interest payable | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS USED IN INVESTING ACTIVITIES: | ||||||||
| Purchase of fixed assets | ( | ) | ( | ) | ||||
| Acquisition of trademarks | ( | ) | ( | ) | ||||
| Convertible note receivable | — | ( | ) | |||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Share proceeds net of issuance costs | ||||||||
| Proceeds from loans payable | ||||||||
| Repayment of loans payable | ( | ) | ( | ) | ||||
| Proceeds on issuance of Series B shares | — | |||||||
| Redemption of Series B or Series C shares | ( | ) | ( | ) | ||||
| 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: | ||||||||
| Transfer from device parts inventory to revenue earning devices | $ | $ | ||||||
| Cumulative Effect Adjustment RFV discount per adoption of ASU 2020-06 at March 1, 2024 | $ | — | $ | |||||
| Exchange of Series F preferred stock for note payable | $ | — | $ | |||||
| Exchange of note payable for common stock | $ | $ | ||||||
| Right of use asset for lease liability | $ | $ | — | |||||
| Series B or Series C preferred shares issued as dividend | $ | $ | ||||||
| Discount applied to face value of the loan | $ | $ | — | |||||
| Series C penalty shares issued | $ | $ | — | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| - 7 - |
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ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL INFORMATION
Artificial Intelligence Technology Solutions Inc. (“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 Limited Liability Company.
On July 25, 2017, Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc., through the issuance
of
On
August 28, 2017, AITX completed the acquisition of RAD (the “Acquisition”), whereby AITX acquired all the ownership and equity
interest in RAD for
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.
2. GOING CONCERN
The accompanying unaudited 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 six months ended August 31, 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 June 2025, the Company entered into
an equity financing agreement whereby an investor will purchase up to $
| - 8 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and in conformity with the condensing instructions on Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto in the Company’s latest Annual Report filed with the SEC on Form 10-K/A as filed on May 29, 2025. The unaudited condensed 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., and Robotic Assistance Devices Residential, Inc.. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the six months ended August 31, 2025, are not necessarily indicative of the results that may be expected for the entire year.
Use of Estimates
In order to prepare financial statements in conformity with accounting principles 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 preferred stock and derivative liabilities.
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
Loans payable
At
August 31, 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 and, to date has not experienced losses on any of its balances.
Accounts Receivable
Accounts
receivable are comprised of balances due from customers, net of estimated allowances for uncollectible accounts. 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.
As of August 31, 2025 and February 28, 2025 there was a valuation reserve of $
| - 9 - |
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ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 two 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.
SCHEDULE OF FIXED ASSETS STATED AT COST
| Computer equipment and software | ||||
| Office equipment | ||||
| Manufacturing equipment | ||||
| Warehouse equipment | ||||
| Tooling | ||||
| 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.
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 August 31, 2025 and February 28, 2025, the Company had no deferred development costs.
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.
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ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Sales of Future Revenues
The Company has entered into transactions, as more fully described in footnote 8, 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 is 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.
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. The Company adopted Topic 606 on March 1, 2018, using the modified retrospective method. Under the modified retrospective
method, prior period financial positions and results will not be adjusted. There was no cumulative effect adjustment recognized as a
result of this adoption. Refer to Note 4 – Revenue from Contracts with Customers for additional information. For the six months
ended August 31, 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.
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.
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ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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.
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 Chief Executive Officer/ Chairman holds sufficient shares of the Company’s voting preferred stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO/ 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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ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| ● | 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:
SCHEDULE OF LIABILITIES MEASURED AT FAIR VALUE
| Amount at | Fair Value Measurement Using | |||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| August 31, 2025 | ||||||||||||||||
| Assets | ||||||||||||||||
| Investment at cost | $ | $ | $ | — | $ | |||||||||||
| Liabilities | ||||||||||||||||
| Incentive compensation plan payable – revaluation of equity awards payable in Series G shares | $ | $ | — | $ | — | $ | ||||||||||
| February 28, 2025 | ||||||||||||||||
| Assets | ||||||||||||||||
| Investment at cost | $ | $ | $ | — | $ | |||||||||||
| Liabilities | ||||||||||||||||
| Incentive compensation plan payable – revaluation of equity awards payable in Series G shares | $ | $ | — | $ | — | $ | ||||||||||
For
the incentive compensation plan referred to above , the Company recorded stock based compensation of $
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.
| - 13 - |
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ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. 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 3 – Accounting Polices, the Company adopted Topic 606 in accordance with the effective date on March 1, 2018. Note 3 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.
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:
SCHEDULE OF REVENUES FROM CONTRACTS WITH CUSTOMERS
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| August 31, 2025 | August 31, 2024 | August 31, 2025 | August 31, 2024 | |||||||||||||
| Device rental activities | $ | $ | $ | $ | ||||||||||||
| Direct sales of goods and services | ||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
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ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. 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 August 31, 2025 and February 28, 2025.
SCHEDULE OF LEASE ASSETS AND LIABILITIES
| Leases | Classification | August 31, 2025 | February 28, 2025 | |||||||
| 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
Rent
expense and operating lease cost was $
6. INVESTMENT
On
December 23, 2022 the Company entered into a Simple Agreement for Future Equity (SAFE) contract to invest $
7. REVENUE EARNING DEVICES
Revenue earning devices consisted of the following:
SCHEDULE OF REVENUE EARNING DEVICES
| August 31, 2025 | February 28, 2025 | |||||||
| Revenue earning devices | $ | $ | ||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
During
the three and six months ended August 31, 2025 the Company made total additions to revenue earning devices of $
Depreciation and amortization for the six months ended August 31, 2025, and August 31, 2024, are as follows:
SCHEDULE OF DEPRECIATION AND AMORTIZATION
| Depreciation and Amortization | Three Months Ended August 31, 2025 | Three Months Ended August 31 2024 | Six Months August 31, | Six Months August 31 | ||||||||||||
| Cost of Goods Sold | $ | $ | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||||
| Total Depreciation and Amortization of Revenue Earning Devices | $ | $ | $ | $ | ||||||||||||
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ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
8. FIXED ASSETS
Fixed assets consisted of the following:
SCHEDULE OF FIXED ASSETS
| August 31, 2025 | February 28, 2025 | |||||||
| Automobile | $ | $ | ||||||
| Demo devices | ||||||||
| Tooling | ||||||||
| Machinery and equipment | ||||||||
| Computer equipment | ||||||||
| Office equipment | ||||||||
| Furniture and fixtures | ||||||||
| Warehouse equipment | ||||||||
| Leasehold improvements | ||||||||
| Fixed assets gross | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Fixed assets, net of accumulated depreciation | $ | $ | ||||||
During
the three months ended August 31, 2025, the Company made additions of $
Depreciation and amortization for the six months ended August 31, 2025, and August 31, 2024, are as follows:
SCHEDULE OF DEPRECIATION AND AMORTIZATION IN OPERATING EXPENSES
| Depreciation and Amortization | Three
August
31, |
Three
August
31 |
Six
Months August
31, |
Six
Months August
31 |
||||||||||||
| Fixed Assets | $ | $ | $ | $ | ||||||||||||
| Revenue earning devices | ||||||||||||||||
Total Depreciation and Amortization Included in operating expenses |
$ | $ | $ | $ | ||||||||||||
9. 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
| - 16 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 $
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 first become payable on June 30, 2019 (unless otherwise indicated) based on the quarterly Revenues for the quarter ended May
31, 2019 and accrue every quarter thereafter. As of August 31, 2025, the Company has accrued $
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
| - 17 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 August 31, 2025, and February 28, 2025, the long-term balances other than Payments already owed is the cash received of $
For
both the three months and six months ended August 31, 2025 and year ended February 28, 2025, the Company has received $
10. RELATED PARTY TRANSACTIONS
For
both the three months and six months ended August 31, 2025 and August 31, 2024 , the Company had no repayments of net advances from its
loan payable-related party. At August 31, 2025 the loan payable-related party was $
During
the six months ended August 31, 2025, the Company paid out gross payments to the CEO of $
For
the three and six months ended August 31, 2025, the Company accrued $
During
the three months ended August 31, 2025 and 2024, the Company was charged $
During
the six months ended August 31, 2025 and 2024, the Company was charged $
| - 18 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
11. LOANS PAYABLE
Loans payable at August 31, 2025 consisted of the following:
SCHEDULE OF LOANS PAYABLE
| 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)* | % | |||||||||||||
| Promissory note | (23) | % | |||||||||||||
| Promissory note | (24) | % | |||||||||||||
| Promissory note | (25) | % | |||||||||||||
| Future Receivables Purchase and Sale Agreement | (26) | % | |||||||||||||
| $ | |||||||||||||||
| 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 | $ | ||||||||||||||
| * |
| - 19 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| (1) | |
| (2) | |
| (3) | |
| (4) | |
| (5) | |
| (6) | |
| (7) | |
| (8) |
| - 20 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| (9) | |
| (10) | |
| (11) | |
| (12) | |
| (13) |
| - 21 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| (14) | |
| (15) | |
| (16) | |
| (17) | |
| (18) | |
| (19) | |
| (20) | |
| October 28, 2022, $ |
| - 22 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| (20) |
November
10, 2022, $
November
15, 2022, $
January
11, 2023, $
February
6, 2023, $
April
5, 2023, $
April
20, 2023, $
May
11, 2023, $
October
27 2023, $
| - 23 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| (21) | |
| (22) | |
| (23) | |
| (24) | |
| (25) | |
| (26) |
12. STOCKHOLDERS’ EQUITY (DEFICIT)
Summary or Preferred Stock Activity
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
In
exchange for
Series F Convertible Preferred Shares
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.
Summary of Preferred Stock Warrant Activity
SUMMARY OF PREFERRED STOCK WARRANT ACTIVITY
| Number of Series F Preferred Warrants | Weighted Average | Weighted Average | ||||||||||
| Outstanding at February 28, 2025 | $ | |||||||||||
| Issued | — | — | — | |||||||||
| Exercised | — | — | — | |||||||||
| Forfeited and cancelled | — | — | — | |||||||||
| Outstanding at August 31, 2025 | $ | |||||||||||
| - 24 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Summary of Common Stock Activity
The
Company’s board of directors voted to increase authorized common shares from
For the six months ended August 31, 2025:
-
the Company issued
-
the Company issued
Summary of Common Stock Warrant Activity
For
the three months and six months ended August 31, 2025 and August 31, 2024, the Company recorded a total of $
SUMMARY OF COMMON STOCK WARRANT ACTIVITY
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Years | ||||||||||
| Outstanding at February 28, 2025 | $ | |||||||||||
| Issued | — | — | — | |||||||||
| Exercised | — | — | — | |||||||||
| Forfeited and cancelled | — | — | — | |||||||||
| Outstanding at August 31, 2025 | $ | |||||||||||
Summary of Common Stock Option Activity -Employee Stock Options
SUMMARY OF COMMON STOCK OPTION ACTIVITY
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Years | ||||||||||
| Outstanding at March 1, 2025 | $ | |||||||||||
| Issued | — | — | — | |||||||||
| Exercised | — | — | — | |||||||||
| Forfeited, extinguished and cancelled | ( | ) | $ | ( | ) | |||||||
| Outstanding at August 31, 2025 | $ | |||||||||||
| - 25 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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. The Company and its counsel believe the claim is without merit however the courts have mandated mediation. After consideration
of business factors the parties executed a settlement agreement in June 2025 with the Company agreeing to pay $
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 $
SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES
| Maturity of Lease Liabilities | Operating Leases | |||
| August 31, 2026 | $ | |||
| August 31, 2027 | ||||
| August 31, 2028 | ||||
| August 31, 2029 | ||||
| August 31, 2030 | ||||
| August 31, 2031 and after | ||||
| Total lease payments | ||||
| Less: Interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
| - 26 - |
| Table of Contents |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
14. EARNINGS (LOSS) PER SHARE
The net income (loss) per common share amounts were determined as follows:
SCHEDULE OF NET INCOME (LOSS) PER COMMON SHARE
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| August 31, | August 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Deduct : Dividend on Series B or Series C shares | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Deduct: Deemed dividend on redemption of Series F shares | — | ( | ) | — | ( | ) | ||||||||||
| Net income (loss )available to common shareholders | ( | ) | ( | ) | ( | ) | ||||||||||
| Denominator: | ||||||||||||||||
| Weighted average shares – basic | ||||||||||||||||
| Net income (loss) per share – basic | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Dilutive effect of common stock equivalents: | ||||||||||||||||
| Convertible notes and accrued interest | — | — | — | — | ||||||||||||
| Convertible Series F Preferred Shares | — | — | — | — | ||||||||||||
| Stock options and warrants | — | — | — | — | ||||||||||||
| Total | — | — | — | — | ||||||||||||
| Denominator: | ||||||||||||||||
| Weighted average shares – diluted | ||||||||||||||||
| Net income (loss) per share – diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
The anti-dilutive shares of common stock equivalents for the three and six months ended August 31, 2025 and 2024 were as follows:
SCHEDULE OF ANTI-DILUTIVE SHARES OF COMMON STOCK EQUIVALENTS
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| August 31, | August 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Convertible Series C Preferred Shares | — | — | ||||||||||||||
| Convertible Series F Preferred Shares | ||||||||||||||||
| Stock options and warrants | ||||||||||||||||
| Total | ||||||||||||||||
15. SUBSEQUENT EVENTS
Subsequent to August 31, 2025:
—
The Company issued
—
The Company issued
—
The Board of Directors approved to increase authorized common shares from
—
On September 25, 2025 the Company issued a promissory note to a lender for $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The following discussion of our financial condition and results of operations for the three and six months ended August 31, 2025 and August 31, 2024 should be read in conjunction with our unaudited consolidated financial statements and the notes to those 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 Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended February 28, 2025, as filed on May 29, 2025 with the SEC. 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.
Unless expressly indicated or the context requires otherwise, the terms “AITX”, the “Company”, “we”, “us”, and “our” refer to Artificial Intelligence Technology Solutions Inc.
Overview
AITX was incorporated in Florida on March 25, 2010. AITX reincorporated into Nevada on February 17, 2015. AITX’s 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.
AITX’s mission is to apply Artificial Intelligence (AI) technology to solve enterprise problems categorized as expensive, repetitive, difficult to staff, and outside of the core competencies of the client organization.
A short list of basic examples include:
| 1. | Typical security guard-related functions such as monitoring a parking lot during and after hours and responding appropriately. This scenario applies to perimeters, interior yard areas, and related similar environments. | |
| 2. | Integrated hardware/software with AI-driven responses, simulating and expanding on what legacy or manned solutions could perform. | |
| 3. | Automation of common access control functions through technology utilizing facial recognition and machine vision, leapfrogging most legacy solutions in use today. |
RAD solutions are unique because they:
| 1. | Start with an AI-driven autonomous response utilizing cellular-optimized communications, while easily connecting to a human operator for a manned response, as needed. | |
| 2. | Use unique hardware purpose-built by RAD for delivery of these solutions. Various form factors have been customized to deliver this new functionality. | |
| 3. | Deliver services through RAD-developed software and cloud services, allowing enterprise IT groups to focus on core competencies instead of maintenance of complex video and security platforms. |
We encourage everyone to ensure they have the most up to date news by visiting AITX at AITX News - AITX - Artificial Intelligence Technology Solutions.
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Management Discussion and Analysis
Results of Operations for the Three Months Ended August 31, 2025 and 2024
The following table shows our results of operations for the three months ended August 31, 2025 and 2024. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.
| Period | ||||||||||||||||
| Three Months Ended | Three Months Ended | Change | ||||||||||||||
| August 31, 2025 | August 31, 2024 | Dollars | Percentage | |||||||||||||
| Revenues | $ | 1,888,749 | $ | 1,344,183 | $ | 544,566 | 41 | % | ||||||||
| Gross profit | 1,344,865 | 1,001,091 | 343,774 | 34 | % | |||||||||||
| Operating expenses | 3,654,024 | 3,614,964 | 39,060 | 1 | % | |||||||||||
| Loss from operations | (2,309,159 | ) | (2,613,874 | ) | 304,715 | 12 | % | |||||||||
| Other income (expense), net | 3,072,223 | (1,316,449 | ) | 4,388,672 | 333 | % | ||||||||||
| Net Income (Loss) | $ | 763,064 | $ | (3,930,323 | ) | $ | 4,693,387 | 119 | % | |||||||
Revenue
The following table presents revenues from contracts with customers disaggregated by product/service:
| Three Months Ended | Three Months Ended | Change | ||||||||||||||
| August 31, 2025 | August 31, 2024 | Dollars | Percentage | |||||||||||||
| Device rental activities | $ | 1,695,471 | $ | 1,065,898 | $ | 629,573 | 59 | % | ||||||||
| Direct sales of goods and services | 193,278 | 278,285 | (85,007 | ) | (31 | )% | ||||||||||
| $ | 1,888,749 | $ | 1,344,183 | $ | 544,566 | 41 | % | |||||||||
Total revenue for the three-month period ended August 31, 2025 was $1,888,749 which represented an increase of $544,566 compared to total revenue of $1,344,183 for the three months ended August 31, 2024. Rental activities increased by 59% over the prior year’s quarter and direct sales decreased by 31% as the Company continues to grow its core business of rental activities.
Gross profit
Total gross profit for the three-month period ended August 31, 2025 was $1,344,865, which represented an increase of $343,444 compared to gross profit of $1,001,091 for the three months ended August 31, 2024. The gross profit increased due to the higher sales. The gross profit % of 71% for the three-month period ended August 31, 2024 was slightly lower than the gross profit % of 74% for the prior year’s corresponding period..
Operating Expenses
| Period | ||||||||||||||||
| Three Months Ended | Three Months Ended | Change | ||||||||||||||
| August 31, 2025 | August 31, 2024 | Dollars | Percentage | |||||||||||||
| Research and development | $ | 919,714 | $ | 677,410 | $ | 242,304 | 36 | % | ||||||||
| General and administrative | 2,634,832 | 2,766,826 | (131,994 | ) | (5 | )% | ||||||||||
| Depreciation and amortization | 36,900 | 107,762 | (70,862 | ) | (66 | )% | ||||||||||
| Operating lease cost and rent | 62,578 | 62,967 | (389 | ) | (1 | )% | ||||||||||
| Operating expenses | $ | 3,654,024 | $ | 3,614,965 | $ | 39,059 | 1 | % | ||||||||
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Our operating expenses were comprised of general and administrative expenses, research and development, and depreciation. General and administrative expenses consisted primarily of professional services, automobile expenses, advertising, salaries and wages, travel expenses and consultants. Our operating expenses during the three-month period ended August 31, 2025 and August 31, 2024, were $3,654,024 and $3,614,965, respectively. The overall increase of $39,059 was primarily attributable to the following changes in operating expenses of:
| ● | General and administrative expenses decreased by $131,995. In comparing the three months ended August 31, 2025 and August 31, 2024 the decrease in G&A was primarily due to decreases in freight of $210,259 and installation costs of $110,074. These increases were partially offset by an increase in wages and salaries of $177,744. | |
| ● | Research and development increased by $242,304 due to an increase in software development. | |
| ● | Depreciation and amortization decreased by $70,862 due to changes in estimates for the allocation of revenue earning devices not in use. | |
| ● | Operating lease cost and rent decreased by $389. |
Other Income (Expense)
Other income (expense) consisted of interest and gain on settlement of debt . . Other income (expense) during the three months ended August 31, 2025 and August 31, 2024, was $3,072,223 and ($1,316,449), respectively. The $4,388,672 increase in other income was primarily attributable to the gain on settlement of debt of $4,370,185 in the current year and the corresponding lower interest charges on the reduced debt.
Net loss
We had net income of $763,064 for the three months ended August 31, 2025, compared to a net loss of $3,930,323 for the three months ended August 31, 2024. The increase in net income of $4,693,388 is a result of higher gross profit and higher other income (expense) from the gain on settlement of debt.
Results of Operations for the Six Months Ended August 31, 2025 and 2024
The following table shows our results of operations for the six months ended August 31, 2025 and 2024 The historical results presented below are not necessarily indicative of the results that may be expected for any future period.
Revenue
| Period | ||||||||||||||||
| Six Months Ended | Six Months Ended | Change | ||||||||||||||
| August 31, 2025 | August 31, 2024 | Dollars | Percentage | |||||||||||||
| Revenues | $ | 3,743,586 | $ | 2,526,983 | $ | 1,216,603 | 48 | % | ||||||||
| Gross profit | 2,578,366 | 1,686,425 | 891,941 | 53 | % | |||||||||||
| Operating expenses | 8,066,193 | 7,133,555 | 932,638 | 13 | % | |||||||||||
| Loss from operations | (5,487,827 | ) | (5,447,130 | ) | (40,697 | ) | (1 | )% | ||||||||
| Other income (expense), net | 1,656,874 | (2,677,552 | ) | 4,334,426 | 162 | % | ||||||||||
| Net loss | $ | (3,830,953 | ) | $ | (8,124,682 | ) | $ | 4,293,729 | 53 | % | ||||||
The following table presents revenues from contracts with customers disaggregated by product/service:
| Six Months Ended | Six Months Ended | Change | ||||||||||||||
| August 31, 2025 | August 31, 2024 | Dollars | Percentage | |||||||||||||
| Device rental activities | $ | 3,322,757 | $ | 2,046,434 | $ | 1,276,323 | 62 | % | ||||||||
| Direct sales of goods and services | 420,829 | 480,549 | (59,720 | ) | (12 | )% | ||||||||||
| $ | 3,743,586 | $ | 2,526,983 | $ | 1,216,603 | 48 | % | |||||||||
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Total revenue for the six-month period ended August 31, 2025 was $3,743,586 which represented an increase of $891,941 compared to total revenue of $2,526,983 for the six months ended August 31, 2024. This increase is a result of an increase in rental sales of $1,276,323 which was reduced slightly by a decrease in direct sales of $50,720. The Company’s focus is on higher margin rental activities.
Gross profit
Total gross profit for the six-month period ended August 31, 2025 was $2,578,366 which represented an increase of $891,941, compared to gross profit of $1,686,425 for the six months ended August 31, 2024. The gross profit increased due to the higher sales. The gross profit % was 69% for the six month period ended August 31, 2025 and 67% for the six month period ended August 31, 2024.
Operating Expenses
| Period | ||||||||||||||||
| Six Months Ended | Six Months Ended | Change | ||||||||||||||
| August 31, 2025 | August 31, 2024 | Dollars | Percentage | |||||||||||||
| Research and development | $ | 2,007,333 | $ | 1,318,120 | $ | 689,213 | 52 | % | ||||||||
| General and administrative | 5,867,042 | 5,487,017 | 380,025 | 7 | % | |||||||||||
| Depreciation and amortization | 71,021 | 203,438 | (132,417 | ) | (65 | )% | ||||||||||
| Operating lease cost and rent | 120,797 | 124,980 | (4,183 | ) | (3 | )% | ||||||||||
| Operating expenses | $ | 8,066,193 | $ | 7,133,555 | $ | 932,638 | 13 | % | ||||||||
General and administrative expenses consisted primarily of professional services, automobile expenses, advertising, salaries and wages, travel expenses and consultants. Our operating expenses during the six-month period ended August 31, 2025 and August 31, 2024, were $8,066,193 and $7,133,555, respectively. The overall increase of $932,638 was primarily attributable to the following changes in operating expenses of:
| ● | General and administrative expenses increased by $380,025. In comparing the six months ended August 31, 2025 and August 31, 2024 the increase may be partially explained by the following increases: wages and salaries by $307,260, commissions by $135,559 and marketing by $103,785.44. These were partially offset by decreases in the following accounts: installation costs by $79,310 and freight by $84,373. | |
| ● | Research and development increased by $689,213 due to an increase in software development and new products such as the ROAMEO. | |
| ● | Depreciation and amortization decreased by $132,417 due to due to changes in estimates for the allocation of revenue earning devices not in use. | |
| ● | Operating lease cost and rent decreased by $4,183 due to one less lease. |
Other Income (Expense)
Other income (expense) during the six months ended August 31, 2025 and August 31, 2024, was $1,656,874 and ($2,677,552), respectively. The $4,334,426 increase in other income was primarily to the gain on settlement of debt of $4,370,185 in the current year and the corresponding lower interest charges on the reduced debt.
Net loss
We had a net loss of $3,830,953 for the six months ended August 31, 2025, compared to a net loss of $8,124,682 for the six months ended August 31, 2024. The decrease in net loss of $1,190,237 is a result of higher gross profit and higher other income (expense) from the gain on settlement of debt.
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Liquidity, Capital Resources and Cash Flows
Management believes that we will continue to incur losses for the immediate future. Therefore, we will need additional equity or debt financing until we can achieve profitability and positive cash flows from operating activities, if ever. These conditions raise substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial statements do not include and adjustments relating to the recovery of assets or the classification of liabilities that may be necessary should we be unable to continue as a going concern.
As of August 31, 2025, we had a cash balance of $323,021, accounts receivable of $931,219, device parts inventory of $1,075,239 and $9,191,674 in current liabilities. At the current cash consumption rate, we will need to consider additional funding sources going forward. We are taking proactive measures to reduce operating expenses and drive growth in revenue.
The successful outcome of future activities cannot be determined at this time and there is no assurance that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results.
Capital Resources
The following table summarizes total current assets, liabilities and working capital (deficit) for the periods indicated:
| August 31, 2025 | February 28, 2025 | |||||||
| Current assets | $ | 2,782,306 | $ | 5,028,543 | ||||
| Current liabilities | 9,191,674 | 7,576,681 | ||||||
| Working capital | $ | (6,409,368 | ) | $ | (2,548,138 | ) | ||
As of August 31, 2025 and February 28, 2025, we had a cash balance of $323,021 and $865,975, respectively.
Summary of Cash Flows
| Summary of Cash Flows | Six Months Ended August 31, 2025 | Six Months Ended August 31, 2024 | ||||||
| Net cash used in operating activities | $ | (5,400,554 | ) | $ | (6,433,906 | ) | ||
| Net cash used in investing activities | $ | (10,420 | ) | $ | (77,868 | ) | ||
| Net cash provided by financing activities | $ | 4,868,020 | $ | 6,948,981 | ||||
Net cash used in operating activities.
Net cash used in operating activities for the six months ended August 31, 2025 was $5,400,554 which included a net loss of $3,830,953 non-cash activity such as the bad debts expense of $71,482, reduction of right of use asset of $68,809, accretion of lease liability $53,778, stock based compensation of $160,710, gain on settlement of debt of $4,370,185, change in operating assets and liabilities of $1,222,817, amortization of debt discount of $143,217, increase in related party accrued payroll and interest of $67,575 and depreciation and amortization of $1,012,196 to derive the uses of cash in operations.
Net cash used in investing activities.
Net cash used in investing activities for the six months ended August 31, 2025 was $10,420, $8,422 for the purchase of fixed assets, and $1,998 for acquisition of trademarks.
Net cash provided by financing activities.
Net cash provided by financing activities was $4,868,020 for the six months ended August 31, 2025. This consisted of share proceeds net of issuance costs of 4,362,349, proceeds from loans payable of $1,050,671, reduced by repayments on loans payable of $420,000 and redemption of Series C redeemable convertible preferred shares of $125,000.
Off-Balance Sheet Arrangements
None.
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Critical Accounting Policies and Estimates
Critical accounting policies and estimates are further discussed in our Annual Report on Form 10-K for the year ended February 28, 2025, as filed on May 29, 2025.
Related Party Transactions
For both the three months and six months ended August 31, 2025 and August 31, 2024, the Company had no repayments of net advances from its loan payable-related party. At August 31, 2025 the loan payable-related party was $396,940 and $329,635 at February 28, 2025. Included in the balance due to the related party at August 31, 2025 is $320,408 of deferred salary and interest, $225,013 of which bears interest at 12%. As of February 28, 2025, included in the balance due to the related party is $252,833 of deferred salary and interest, $190,013 of which bears interest at 12%. The accrued interest included in the loan at August 31, 2025, and February 28, 2025, was $63,501, and $51,575, respectively.
During the six months ended August 31, 2025, the Company paid out gross payments to the CEO of $1,504,917 offset by a bonus accrual of $500,000, which yields a net change of $1,004,917 relating to deferred compensation for CEO. This was all in accordance with a December 2023 board action allowing for $1 million of annual discretionary compensation as well as a February 28, 2025. The balance of deferred compensation for CEO was $1,197,683 and $2,202,600 at August 31, 2025, and February 28, 2025, respectively
For the three and six months ended August 31, 2025, the Company accrued $0 (three and six months ended August 31 2024-$0) of incentive compensation plan payable to the CEO . This will be payable in Series G Preferred Shares which are redeemable at the Company’s option at $1,000 per share. At August 31, 2025, and February 28, 2025, there was $4,000,000 and $4,000,000 of incentive compensation payable.
During the three months ended August 31, 2025 and 2024, the Company was charged $598,277 and $777,260, respectively for fees for research and development from a company partially owned by a principal shareholder.
During the six months ended August 31, 2025 and 2024, the Company was charged $1,335,152 and $1,289,830, respectively for fees for research and development from a company partially owned by a principal shareholder. 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 August 31, 2025, and February 28, 2025, the balance due to this company was $160,557 and $76,532, respectively.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable for a smaller reporting company.
ITEM 4. CONTROLS AND PROCEDURES
Management’s Report on Internal Control over Financial Reporting
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)) as of August 31, 2025. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of August 31, 2025, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us 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.
| 1. | As of August 31, 2025, we did not maintain effective controls over our control environment. Specifically, we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness. | |
| 2. | As of August 31, 2025, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness. |
Our management, including our principal executive officer and principal financial officer, do 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.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
This item is not applicable to smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Each issuance of securities was issued without registration in reliance of the exemption from registration Section 3(a)9 of the Securities Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company has not defaulted upon senior securities.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to the Company.
ITEM 5. OTHER INFORMATION
None.
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| Table of Contents |
ITEM 6. EXHIBITS
| Exhibit No. | Description of Document | |
| 3.1 | Articles of Incorporation (1) | |
| 3.2 | Bylaws (2) | |
| 14 | Code of Ethics (2) | |
| 21 | Subsidiaries of the Registrant (3) | |
| 31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer. (3) | |
| 31.2 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial and accounting officer. (3) | |
| 32.1 | Section 1350 Certification of principal executive officer. (3) | |
| 32.2 | Section 1350 Certification of principal financial accounting officer. (3) | |
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. (3) | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document (3) | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (3) | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (3) | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (3) | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (3) | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) (3) |
| (1) | Incorporated by reference to our Form 10-KT file with the Securities and Exchange Commission on March 12, 2018. |
| (2) | Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on August 4, 2010. |
| (3) | Filed or furnished herewith. |
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SIGNATURES
Pursuant to the requirements 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: October 15, 2025 | BY: | /s/ Steven Reinharz |
| Steven Reinharz | ||
| President, Chief Executive Officer (principal executive officer) | ||
| Date: October 15, 2025 | BY: | /s/ Anthony Brenz |
| Anthony Brenz | ||
| Chief Financial Officer (principal financial officer) | ||
| - 36 - |
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