Exhibit
99.1
AITX
Defines Four Internal Breakeven Milestones
First
Milestone, Monthly Operating Cash Breakeven, Remains an Internal Target for January 2027; CEO Video Update Walks Through the Numbers
Detroit,
Michigan, October 26, 2026 – Artificial Intelligence Technology Solutions, Inc. (the “Company”) (OTCID:AITX),
a developer and operator of AI-driven security and productivity solutions for enterprise clients, today described four operating milestones
it intends to use to measure progress toward breakeven. CEO/CTO and founder Steve Reinharz discusses the milestones in a video update
available at www.youtu.be/NSPCFNvr4jk.
Each
milestone applies a stricter test than the one before it. All four are internal management measures, not measures under generally accepted
accounting principles (“GAAP”); see “Important Information Regarding Management Measures” below.
| Milestone |
|
Test |
|
Exclusions
include
these
and other items |
|
Internal
target (not a projection or guarantee) |
| 1.
Monthly operating cash breakeven |
|
Monthly
revenue, as recognized, exceeds operating cash paid to operate the Company |
|
Debt
service; inventory purchases for device builds |
|
January
2027 (as announced October 21, 2026; previously December 2026 |
| |
|
|
|
|
|
|
| 2.
Monthly accrual operating breakeven |
|
Monthly
revenue exceeds operating expenses as incurred |
|
Depreciation
and other non-cash items; deferrals; debt service; inventory purchases |
|
March–April
2027 |
| |
|
|
|
|
|
|
| 3.
Operating breakeven after cash debt service |
|
Milestone
2, plus debt service paid in cash |
|
Inventory
purchases; debt not serviced in cash |
|
Not
yet set |
| |
|
|
|
|
|
|
| 4.
Full accrual-basis breakeven |
|
Monthly
revenue exceeds all expenses as incurred, including debt service and inventory purchases |
|
Depreciation
and other non-cash items |
|
Not
yet set |
“Milestone
one is the narrowest of the four measures, reaching it will be a huge step forward,” said Reinharz. “It would show more self-sustainability
than this Company has ever had. We are focused on milestones one and two, and as time goes on, I expect to be able to forecast three
and four.”
Starting
Point
For
its fiscal second quarter ended August 31, 2026, the Company reported revenue of $1,985,604, up 8% sequentially and 5% year over
year. Revenue from customers other than its largest grew 61% year over year, and that customer’s share of revenue fell to 18% from
46% a year earlier. Recurring device rental revenue represented 89% of total revenue.
Two
Levers: Revenue and Cost
The
Company’s projection for Milestone 1 assumes revenue growth of approximately 2.7% per month, the pace implied by its second-quarter
sequential growth of 8%. “We have two basic levers: increase revenue and decrease cost,” said Reinharz. “Our revenue
assumption is based on what the business actually did last quarter.”
On
cost, the Company expanded its August target of approximately $200,000 in monthly cash spend reductions to more than $350,000 per month
from February 2027, measured against its August 2026 run-rate, as announced October 20, 2026. The program includes a reduction in force
of approximately 7 positions in August 2026, as previously announced, and 17 positions in October 2026. It also includes reductions in
marketing, promotion, cloud and other operating costs. The Company’s sales force was not affected.
The
program also includes salary deferrals, which reduce cash spend faster than they reduce total expenses. Deferred amounts remain obligations
of the Company. This is why Milestone 1 measures cash spend and Milestone 2 measures expenses as incurred.
“These
were hard decisions, and we don’t take them lightly,” added Reinharz. “We tried to cut costs without significantly
affecting our major initiatives or our existing revenue streams.”
In
August, the Company expected to reach Milestone 1 in December 2026. As announced October 20, 2026, the expanded program phases
in through year-end, and the Company now expects to reach it around January 2027.
Gross
Margin
Second-quarter
gross margin was 67% excluding a one-time, non-cash inventory write-down of $270,987 related to the discontinued residential camera line,
and 54% as reported. Management’s objective is to return gross margin to the 75%–85% range, a level the Company has reached
before: gross margin was approximately 83% in its fiscal fourth quarter ended February 28, 2026, as derived from its annual and nine-month
results. The hardware price increases effective September 22, 2026 further support that objective.
Debt
Service
Certain
of the Company’s monthly-repayment loans, including merchant cash advances, are scheduled to be fully repaid beginning in April
2027, which would reduce monthly cash debt service and support progress toward Milestones 3 and 4. This is one data point. The Company’s
other debt obligations, including those described in its Quarterly Report on Form 10-Q for the period ended August 31, 2026, could change
the timing of those milestones.
Inventory
Financing
The
Company currently pays cash for the inventory it uses to build devices because it has not obtained inventory financing on acceptable
terms. The Company expects inventory needs to grow with ROAMEO™, RAIA™ and its existing product lineup. As it reaches
Milestones 1 and 2, the Company hopes to become eligible for non-dilutive financing, such as secured, lower-cost inventory financing,
rather than the financing it relies on today.
“What
we’re hoping happens as we hit milestones one and two is that new, non-dilutive ways to finance inventory become options for us,”
concluded Reinharz. “That’s a milestone I can’t wait to get to.”
The
Company intends to report progress against these milestones in future updates.
Important
Information Regarding Management Measures
The
four milestones are management estimates and internal measures, not results achieved, guarantees of future performance or projections
of profitability under GAAP. They differ from GAAP net income (loss) and from net cash provided by or used in operating activities, and
should not be considered substitutes for those measures. The Company cannot provide a quantitative reconciliation of these forward-looking
measures to the most directly comparable GAAP measures without unreasonable effort, because it cannot reliably estimate future working
capital changes, non-cash items and other reconciling items.
Revenue
recognized in a month does not necessarily equal cash collected in that month. Milestone 1 compares recognized revenue with cash operating
expenditures. Salary deferrals and deferred compensation reduce cash expenditures but remain obligations of the Company, and Milestones
1 and 2 exclude them. Milestones 2 through 4 exclude depreciation and other non-cash items. Collection timing, deferred obligations,
debt service, inventory purchases and other cash requirements may require financing even if a milestone is reached. Reaching any milestone
would not, by itself, establish GAAP profitability, positive net cash provided by operating activities, sufficient liquidity to meet
the Company’s obligations or an end to its need for outside financing.
The
milestones are not defined under GAAP or any other accounting standard. Management calculates them from internal records, and they have
not been audited or reviewed by the Company’s independent registered public accounting firm. Other companies may calculate similarly
titled measures differently.
About
Artificial Intelligence Technology Solutions, Inc. (AITX)
AITX
is a developer and provider of artificial intelligence-based solutions that empower organizations to gain new insight, solve complex
challenges and drive operational efficiency. Through its family of companies, including PURSUON, Inc. (formerly RAD-M), Robotic Assistance
Devices, Inc. (RAD-I), Robotic Assistance Devices Residential (RAD-R), Robotic Assistance Devices Group (RAD-G), and Robotic Assistance
Devices Lanka (Private) Limited (RAD Lanka), AITX develops and delivers a broad range of AI-driven technologies and services designed
to transform security, automation, and operational workflows across multiple industries.
Through
its primary subsidiary, RAD-I, AITX is redefining the nearly $50 billion U.S. security and guarding services industryi with
its AI-driven Solutions-as-a-Service model. RAD solutions are specifically designed to deliver cost savings of between 35% and 80% compared
to traditional manned security and monitoring, utilizing a suite of stationary and mobile autonomous systems that complement, and in
many cases replace, human personnel in environments better suited for machines. All RAD technologies, AI-based analytics and software
platforms are primarily developed in-house.
All
of RAD’s solutions are designed to integrate with leading industry platforms and workflows, including an integration with Immix®,
a provider of central station and remote monitoring software. The Company’s operations and internal controls have been validated
through successful completion of its SOC 2 Type 2 audit, reinforcing its credibility with enterprise and government clients that require
rigorous data protection and compliance standards.
AITX
is led by Steve Reinharz, CEO/CTO and founder of the Company and all subsidiaries, who brings decades of experience in the security services
industry. The Company’s solutions are deployed across a wide range of industries including enterprises, government, transportation,
critical infrastructure, education, and healthcare.
To
learn more, visit www.aitx.ai, www.radsecurity.com, www.pursuon.com, www.radgroup.ai, www.saramonitoring.ai,
www.radlightmyway.com, and www.stevereinharz.com, or follow Steve Reinharz on X @SteveReinharz. Information contained
on, or accessible through, the foregoing websites and social media accounts is not incorporated by reference into, and does not form
a part of, this press release or any of the Company’s filings with the Securities and Exchange Commission.
Cautionary
Disclosure About Forward-Looking Statements
This
press release contains forward-looking statements, including statements regarding the definition, expected timing and achievement of
the four milestones; the Company’s previously announced cash breakeven objectives; anticipated monthly revenue growth; anticipated
cash spend reductions and the effects of workforce, vendor and operating reductions and salary deferrals; the Company’s gross margin
objective; the scheduled repayment of certain loans and its effect on debt service; anticipated inventory requirements for ROAMEO, RAIA
and other products; the potential availability of inventory or other non-dilutive financing; the relationship of the milestones to the
Company’s previously announced all-in cash breakeven target; negotiations to extend the maturities of the Company’s related-party
debt; the proposed increase in the Company’s authorized common stock; and future progress updates.
These
statements reflect management’s current expectations and assumptions and are subject to significant risks and uncertainties. Actual
results may differ materially. Risks include revenue growth below the assumed rate, which exceeds the Company’s growth over the
preceding twelve months; customer attrition, cancellations or deployment delays; delays in billing or collections; cost reductions that
are delayed, smaller than anticipated or offset by separation and other costs; deferred compensation and other obligations becoming payable;
staffing reductions adversely affecting sales, execution, customer support or retention; gross margin below management’s objective;
changes in, or the acceleration, extension or refinancing of, the Company’s debt obligations; debt service, inventory or other
cash requirements exceeding expectations; the unavailability of inventory or other financing on acceptable terms or at all; product launch
or commercialization delays, including for RAIA and ROAMEO; regulatory restrictions affecting ROAMEO, and substantial dilution from equity
or equity-linked financing, from the conversion or exchange of debt and accrued interest, and from any issuance of the additional authorized
shares described in the Company’s preliminary information statement filed October 23, 2026.
The
Company did not meet its target of positive cash flow by November 2025, has moved its December 2026 breakeven objective to January 2027,
and may not reach any milestone within the targeted period, or sustain it once reached.
Other
material risks include the Company’s history of losses, negative working capital, stockholders’ deficit, substantial doubt
about its ability to continue as a going concern, and the risks described in its most recent Annual Report on Form 10-K and subsequent
filings with the Securities and Exchange Commission. Because the Company’s common stock is a “penny stock,” the safe
harbor for forward-looking statements under the Private Securities Litigation Reform Act of 1995 is not available to the Company. Readers
should not place undue reliance on these statements, which speak only as of the date of this release. Except as required by law, the
Company undertakes no obligation to update them. Although the Company intends to report progress against the milestones, it undertakes
no obligation to do so at any particular time or in any particular form, except as required by law. This release does not constitute
an offer to sell or the solicitation of an offer to buy securities.
The
CEO video update referred to in this release is subject to this cautionary disclosure. The video does not supplement, update or modify
this release, and if anything in the video differs from this release, this release controls. Investors should rely only on this release
and the Company’s filings with the SEC.
Certain
Information Regarding the Company’s Financial Condition
The
Company has not been profitable in any fiscal year of its operating history and has reported significant operating losses, negative working
capital and a stockholders’ deficit. Its independent auditor’s report includes an explanatory paragraph expressing substantial
doubt about the Company’s ability to continue as a going concern. The Company’s cash on hand is insufficient to fund operations
for an extended period without additional financing, which may not be available on acceptable terms or at all and may substantially dilute
existing stockholders. Investors should review the Company’s Annual Report on Form 10-K for the fiscal year ended February 28,
2026, its Quarterly Report on Form 10-Q for the period ended August 31, 2026, its preliminary information statement on Schedule 14C filed
October 23, 2026, and its other SEC filings.
At
August 31, 2026, the Company had cash of $220,275, a working capital deficit of $55,894,870, a stockholders’ deficit of $61,690,773
and an accumulated deficit of $184,084,880. Net cash used in operating activities was $4,820,842 for the six months ended August 31,
2026, an average of approximately $803,000 per month, and the Company’s net loss for that period was $12,554,310. In its Quarterly
Report on Form 10-Q for that period, management also concluded that substantial doubt exists about the Company’s ability to continue
as a going concern.
###
Doug
Clemons, Chief Marketing Officer
248-270-8273
doug.c@radsecurity.com
i
https://www.ibisworld.com/united-states/market-research-reports/security-services-industry/
