Artificial Intelligence Technology Solutions Inc 8-K, filed Dec 6, 2022
Artificial Intelligence Technology Solutions Inc. (AITX)
About this 8-K
Artificial Intelligence Technology Solutions Inc filed this 8-K on December 6, 2022.
Items reported
- Item 1.01: Entered into a material agreement
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
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| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Emerging
growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
When used in this Current Report on Form 8-K, unless otherwise indicated, the terms the “Company,” “our,” or “we” refer to Artificial Intelligence Technology Solutions Inc. and its subsidiaries.
| Item 1.01 | Entry into a Material Definitive Agreement. |
Stock Purchase Agreement with GHS Investments LLC
On December 5, 2022, we entered into a stock purchase agreement with GHS Investments LLC (“GHS”). Under the stock purchase agreement with GHS (the “GHS Purchase Agreement”), the Company may require GHS to purchase up to ten million dollars ($10,000,000) of shares of common stock (“GHS Purchase Shares”) over a two-year term that ends on December 5, 2024.
The GHS Purchase Agreement provides that, upon the terms and subject to the conditions and limitations set forth in the agreement, the Company has the right from time to time during the term of the agreement, in its sole discretion, to deliver to GHS on a specified day (the “Purchase Date”) a purchase notice (a “Purchase Notice”) directing GHS to purchase (each, a “GHS Purchase”) a specified number of GHS Purchase Shares (a “Purchase Amount”) at the applicable purchase price (the “GHS Purchase Price”). A GHS Purchase will be made in a minimum amount of Ten Thousand Dollars ($10,000) and up to a maximum of (a) one hundred percent (100%) of the average daily traded volume for the common stock during the ten (10) trading days preceding the Purchase Date if the lowest traded price for the common stock during the Valuation Period is below $0.01001 per share; (b) one hundred and fifty percent (150%) of the average daily traded volume for the common stock during the ten (10) trading days preceding the Purchase Date if the lowest traded price for the common stock during the Valuation Period is equal to or above $0.01001 per share; and (c) three million dollars ($3,000,000).
The GHS Purchase Price per share of common stock will be set at ninety percent (90%) of the lowest volume weighted average price for the common stock during the five (5) consecutive trading days immediately before the date of a Purchase Notice (the “Valuation Period’). On the first trading day after the last day of the relevant Valuation Period, the Company will cause to be delivered to GHS that number of shares of common stock that equal one hundred twelve and one-half percent (112.5%) of the aggregate Purchase Amount specified in the Purchase Notice divided by the GHS Purchase Price per share.
If the issuance of the GHS Purchase Shares as the result of a Purchase Notice would cause the number of the Company’s authorized shares of common stock to exceed six billion (6,000,000,000) shares, the issuance of those shares would be delayed to allow the Company to amend its Articles of Incorporation, increasing the number of authorized shares. The GHS Purchase Shares would be immediately issued following the effective date of any such amendment.
The GHS Purchase Agreement prohibits the Company from directing GHS to purchase any shares of common stock if those shares, when aggregated with all other shares of our common stock then beneficially owned by GHS and its affiliates, would result in GHS and its affiliates having beneficial ownership, at any single point in time, of more than 4.99% of the then total outstanding shares of our common stock.
There are no trading volume requirements or restrictions under the GHS Purchase Agreement. We will control the timing and amount of any sales of our common stock to GHS.
Events of default under the GHS Purchase Agreement include the following:
| ● | the effectiveness of the registration statement registering the resale of the GHS Purchase Shares lapses for any reason; |
| ● | the common stock is suspended from trading on the OTC Pink for a period of two consecutive trading days, during which time the Company may not direct GHS to purchase any shares during that time;
| |
| ● | the common stock is delisted from the OTC Pink provided, however, that the commons stock is not immediately thereafter trading on The NASDAQ Capital Market, The NASDAQ Global Market, The NASDAQ Global Select Market, the New York Stock Exchange, the NYSE American, or the OTCQB or the OTCQX operated by the OTC Markets Group, Inc. (or any nationally recognized successor to any of the foregoing); |
| ● | the failure for any reason by the transfer agent to issue GHS Purchase Shares to GHS within three (3) business days after the date on which GHS was entitled to receive the shares; |
| ● | the Company breaches any representation, warranty, covenant or other term or condition under the GHS Purchase Agreement, its Schedules, or any related document if the breach could have a material adverse effect and except, in the case of a breach of a covenant that is reasonably curable, only if the breach continues for a period of at least five (5) Business Days; |
| ● | a proceeding against the Company is commenced by any person or entity pursuant to or within the meaning of any bankruptcy law; |
| ● | the Company, pursuant to or within the meaning of any bankruptcy law, (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (iv) makes a general assignment for the benefit of its creditors or is generally unable to pay its debts as they become due; |
| ● | a court of competent jurisdiction enters an order or decree under any bankruptcy law that (i) is for relief against the Company in an involuntary case, (ii) appoints a custodian of the Company or for all or substantially all of its property, or (iii) orders the liquidation of the Company; or |
| ● | if at any time the Company is not eligible to transfer its common stock electronically as DWAC Eligible. |
So long as an Event of Default has occurred and is continuing, the Company shall not deliver to the Investor any Purchase Notice.
The preceding summary of the GHS Purchase Agreement is not intended to be complete and is qualified in its entirety by reference to the full text of the GHS Purchase Agreement, a copy of which is filed herewith as Exhibit 10.1, which is incorporated by reference into this Form 8-K.
Previous Stock Purchase Agreements with GHS Investments LLC
The GHS Purchase Agreement is the third stock purchase agreement entered into between the Company and GHS. As part of the initial stock purchase transaction between the Company and GHS, dated September 15, 2021 (the “Initial GHS Purchase Agreement”), the parties entered into a Registration Rights Agreement pursuant to which the Company will register the Purchase Shares for resale by GHS. A copy of the Initial GHS Purchase Agreement was filed on September 30, 2021 as Exhibit 10.1 to Post-Effective Amendment No. 1 to the Company’s Form S-3. A copy of the second GHS Purchase Agreement entered into between the Company and GHS dated December 26, 2021 was filed on December 30, 2021 as Exhibit 10.1 to the Company’s Form 8-K.
| Item 9.01. | Financial Statements and Exhibits. |
| Exhibit Number | Item | |
| 5.1* | Opinion of Weinstein Law Group, PC. | |
| 10.1* | Amended Purchase Agreement between the Company and GHS Investments LLC, dated December 5, 2022. | |
| 23.1* | Consent of Weinstein Law Group, PC (included in Exhibit 5.1) | |
| 99.1* | AITX Announces Filing of Prospectus Supplement and Updates Guidance | |
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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 hereunto duly authorized.
| Dated: December 6, 2022 | ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. | |
| By: | /s/ Steven Reinharz | |
| Name: | Steven Reinharz | |
| Title: | Chief Executive Officer | |
Exhibit 5.1
Exhibit 10.1
Exhibit 99.1
AITX Announces Filing of Prospectus Supplement
and Updates Guidance
Company Files Prospectus Supplement and Forecasts Significant Growth with Updated Guidance
Detroit, Michigan, December 6, 2022 — Artificial Intelligence Technology Solutions, Inc., (the “Company”) (OTCPK:AITX), a global leader in AI-driven security and productivity solutions for enterprise clients, today announced that today it has filed with the SEC a Prospectus Supplement (the “Prospectus Supplement”) to the Prospectus included in the Company’s Form S-3 registration statement that was declared effective by the SEC on September 10, 2021. The Prospectus Supplement discloses the terms of an Amended Purchase Agreement with GHS Investment, LLC (“GHS”), dated December 5, 2022, whereby GHS has agreed to purchase up to $10 million of the Company’s common stock over the next two years on certain conditions. The additional shares of common stock will be issued pursuant to the Prospectus Supplement. A copy of the Amended Purchase Agreement is attached to the Form 8-K being filed with the SEC today.
“There is significant growth in our funnel that we are finally able to share through this SEC filing,” said Steve Reinharz, CEO of AITX. “Drawing upon the S-3 is one financing method we’re using to ensure AITX has the resources needed to execute our current operating plans given our proven ability to achieve continued sales growth,” said Mr. Reinharz.
The Company is also providing here a current business update as it closed its fiscal Q3 on November 30, 2022.
The Company noted that as of December 5, 2022, Robotic Assistance Devices, Inc. (RAD), AITX’s primary operating subsidiary, has approximately 280 units deployed and approximately 250 units on backorder. In addition, RAD forecasts a high probability that it will receive additional unit orders totaling approximately between 250 and 500 units over the next six months. RAD further projects that it will receive orders for between 350 and 800 devices over the next twelve months.
“The entire Company is running at full speed as we continue our drive to be the dominant player in the security services and #proptech industries,” Reinharz added. “We intend to continue to fuel the Company’s growth and expansion. This Prospectus Supplement to the S-3 is certainly the most efficient method available to us.”
Today, RAD has over 80 paying customers. Over 65% of RAD’s paying customers have either expanded their systems with at least one reorder or are expected to expand their systems with at least one reorder within the next 12 months. At least five of RAD’s clients are top 25 ranked global corporations by revenue. One of these companies has completed several reorders with one recent reorder that has yet to be fulfilled. Moreover, in support of the direct sales efforts, RAD has over 50 dealers that present RAD solutions to their end-user customers.
Although RAD’s sales cycle currently averages from 6 to 18 months, the Company is employing a variety of innovative methods to shorten the sales cycle. RAD successfully introduced its ‘3.x’ device lineup in October 2021, with many 3.x solutions now shipping. This development is helping shorten sales cycles, allowing for quicker conversion to sales and revenue.
The Company has more than 25 trademarks, product names and slogans either approved by or under review at the United States Patent and Trademark Office (USPTO) and anticipates making over 50 provisional patent and design trademark applications by the end of December 2022.
AITX and its three subsidiaries collectively have 85 employees spread across 7 departments (sales, marketing, hardware development, software development, production, client services, and administration) and has authorized hiring up to a total of 100 employees. Any headcount expansion will be exclusively in research and development and will be added to the Company’s current 50 software developers and degreed engineers.
Other Recent Company Highlights Include:
| ● | Strengthening and maximizing the efficiencies of the Company’s functional teams; | |
| ● | Significant speed improvements in backend and AI analytics processing; | |
| ● | Development and launch of RIO™, RAD’s first solar-powered portable security trailer; | |
| ● | Announcement and development of RADDOG™, the security industry’s first purpose-built quadruped robot dog; | |
| ● | Completion and formal release of RAD’s multiple awarding-winning ROSA™ 3.1, plus the receipt of over 500 device shells produced via injection molding, part of the 1000+ shell and shipping packaging order for production and inventory; | |
| ● | The introduction of AITX’s subsidiary RAD-G’s launch into OEM markets; | |
| ● | Completion of AVA™ 3.0 and receipt of over 40 device shells via cast production method; | |
| ● | Achievement of SOC2 compliance and significant improvements in cyber and electrical systems security and safety; | |
| ● | Deployment of SSO (Single Sign-On), streamlining the process for logging into RAD’s software suite; | |
| ● | Significant expansion of RAD’s dealer channel to over 50 dealers, covering North America, Europe and the United Kingdom; | |
| ● | Significant strengthening of relationships with key dealers and corporate end-users; | |
| ● | Identification of multiple patent applications; | |
| ● | Other significant improvements that strengthen the Company’s technology and ability to produce and deliver units at scale. |
The Company encourages interested parties to review the recording of AITX’s ‘Investor Open House & RAD Technology Reveal’ that will be video recorded and shared beginning at 4:30pm ET on December 7, 2022. It will be accessible through AITX’s YouTube channel at www.youtube.com/aitxrad/.
AITX through its subsidiary, Robotic Assistance Devices, Inc. (RAD), is redefining the $25 billion (US) security and guarding services industry through its broad lineup of innovative, AI-driven Solutions-as-a-Service business model. RAD solutions are specifically designed to provide a cost savings to businesses of between 35%-80% when compared to the industry’s existing and costly manned security guarding and monitoring model. RAD delivers this tremendous costs savings via a suite of stationary and mobile robotic solutions that complement, and at times, directly replace the need for human personnel in environments better suited for machines. All RAD technologies, AI-based analytics and software platforms are developed in-house.
RAD has a prospective sales pipeline of over 35 Fortune 500 companies and numerous other client opportunities. RAD expects to continue to attract new business as it converts its existing sales opportunities into deployed clients generating a recurring revenue stream. Each Fortune 500 client has the potential of making numerous reorders over time.
CAUTIONARY DISCLOSURE ABOUT FORWARD-LOOKING STATEMENTS
This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements in this news release other than statements of historical fact are “forward-looking statements” that are based on current expectations and assumptions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the statements, including, but not limited to, the following: the ability of Artificial Intelligence Technology Solutions to provide for its obligations, to provide working capital needs from operating revenues, to obtain additional financing needed for any future acquisitions, to meet competitive challenges and technological changes, to meet business and financial goals including projections and forecasts, and other risks. No information contained in this news release should be construed as any indication whatsoever of the Company’s future stock price, revenues, or results of operations. Additionally, any industry data provided herein is of no predictive value regarding the future sale of the Company’s products. Artificial Intelligence Technology Solutions undertakes no duty to update any forward-looking statement(s) and/or to confirm the statement(s) to actual results or changes in Artificial Intelligence Technology Solutions expectations.
About Artificial Intelligence Technology Solutions (AITX)
AITX is an innovator in the delivery of artificial intelligence-based solutions that empower organizations to gain new insight, solve complex challenges and fuel new business ideas. Through its next-generation robotic product offerings, AITX’s RAD, RAD-M and RAD-G companies help organizations streamline operations, increase ROI, and strengthen business. AITX technology improves the simplicity and economics of patrolling and guard services and allows experienced personnel to focus on more strategic tasks. Customers augment the capabilities of existing staffs and gain higher levels of situational awareness, all at drastically reduced cost. AITX solutions are well suited for use in multiple industries such as enterprises, government, transportation, critical infrastructure, education, and healthcare. To learn more, visit www.aitx.ai, www.stevereinharz.com, www.radsecurity.com, www.radgroup.ai, and www.radlightmyway.com, or follow Steve Reinharz on Twitter @SteveReinharz.
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Steve Reinharz
949-636-7060
@SteveReinharz