Artificial Intelligence Technology Solutions Inc 10-Q for FY2025 Q1
Artificial Intelligence Technology Solutions Inc. (AITX)
About this 10-Q
Artificial Intelligence Technology Solutions Inc filed this 10-Q on July 15, 2024, covering the quarter ended May 31, 2024 (FY2025 Q1).
Headline figures
Quarter ended May 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.18M
- up 207.1% from $385.21K a year earlier
- Net loss
- $4.19M
- compared with a net loss of $4.56M a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
FOR
THE QUARTERLY PERIOD ENDED
OR
FOR THE TRANSITION PERIOD FROM _______________ TO _______________
COMMISSION
FILE NUMBER:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification Number) | |
| (Address of principal executive offices) | (Zip code) |
(Registrant’s telephone number, including area code)
not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| 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. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: shares of common stock were issued and outstanding as of July 12, 2024.
Table of Contents
| - 2 - |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
May 31, 2024 (unaudited) | February 29, 2024* | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| 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 | $ | $ | ||||||
| Advances payable- related party | ||||||||
| Customer deposits | ||||||||
| Current operating lease liability | ||||||||
| Current portion of deferred variable payment obligation | ||||||||
| Loan payable - related party | ||||||||
| Deferred compensation for CEO | ||||||||
| Current portion of loans payable, net of discount of $ | ||||||||
| Vehicle loan - current portion | ||||||||
| Current portion of accrued interest payable | ||||||||
| Total current liabilities | ||||||||
| Non-current operating lease liability | ||||||||
| Loans payable, net of discount of $ | ||||||||
| Deferred variable payment obligation | ||||||||
| Incentive compensation plan payable | ||||||||
| Accrued interest payable | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
Redeemable Preferred Stock (Temporary Equity): | ||||||||
| Series B Convertible, Redeemable Preferred Stock. $ par value; | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred Stock, undesignated; shares authorized; shares issued and outstanding at May 31, 2024 and February 29, 2024, respectively | ||||||||
| Series G Redeemable Preferred Stock. $ par value; shares authorized, shares issued and outstanding at May 31, 2024 and February 29, 2024, respectively | ||||||||
| Series E Preferred Stock, $ par value; shares authorized; and shares issued and outstanding, respectively | ||||||||
| Series F Convertible Preferred Stock, $ par value; shares authorized; and shares issued and outstanding, respectively | ||||||||
| Preferred stock, value | ||||||||
| Common Stock, $ par value; shares authorized and shares issued, issuable and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Preferred stock to be issued | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| - 3 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | |||||||
| Revenues | $ | $ | ||||||
| Cost of Goods Sold | ||||||||
| Gross Profit | ||||||||
| Operating expenses: | ||||||||
| Research and development (including related party charges of $ | ||||||||
| General and administrative | ||||||||
| Depreciation and amortization | ||||||||
| Operating lease cost and rent | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense), net: | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| 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 - |
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 | 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, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||
| Issuance of shares, net of $ | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Relative fair value of Series F warrants issued with debt | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance at May 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Temporary Equity | Shareholder’s Deficit | |||||||||||||||||||||||||||||||||||||||||||
| Series B | 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 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||
| Cumulative Effect Adjustment RFVdiscount per adoption of ASU 2020-06 at March 1, 2024 | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of shares, net of $ | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Issuance of shares, net of issuance costs | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| 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 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| - 5 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss 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 | ||||||||
| Increase in related party accrued payroll and interest | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses and deposits on inventory | ||||||||
| Device parts inventory | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ( | ) | ( | ) | ||||
| Customer deposits | ( | ) | ||||||
| Operating lease liability payments | ( | ) | ( | ) | ||||
| Current portion of deferred variable payment obligations for payments | ||||||||
| Accrued interest payable | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of fixed assets | ( | ) | ( | ) | ||||
| Acquisition of trademarks | ( | ) | ||||||
| Net cash (used in) investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Share proceeds net of issuance costs | ||||||||
| Proceeds on issuance of Series B shares | ||||||||
| Redemption of Series B shares | ( | ) | ||||||
| Proceeds from loans payable | ||||||||
| Repayment of loans payable | ( | ) | ( | ) | ||||
| Net cash provided by (used in) 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 fixed assets | $ | $ | ||||||
| Cumulative Effect Adjustment RFV discount per adoption of ASU 2020-06 at March 1, 2024 | $ | $ | ||||||
| Series B preferred shares issued as dividend | $ | $ | ||||||
| Discount applied to face value of loans | $ | $ | ||||||
| Series F warrants issued as part of debt issuance | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| - 6 - |
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 common shares to its sole shareholder.
On August 28, 2017, AITX completed the acquisition of RAD (the “Acquisition”), whereby AITX acquired all the ownership and equity interest in RAD for shares of AITX Series E Preferred Stock and shares of Series F Convertible Preferred Stock. AITX’s prior business focus was transportation services, and was exploring the on-demand logistics market by developing a network of logistics partnerships. As a result of the closing of the Acquisition, AITX has succeeded to the business of RAD, and AITX’s business going forward will consist of one segment activity, which is the delivery of artificial intelligence and robotic solutions for operational, security and monitoring needs.
The Acquisition was treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes since substantially all of AITX’s operations were disposed of as part of the consummation of the transaction. Therefore, no goodwill or other intangible assets were recorded by AITX as a result of the Acquisition. RAD is treated as the accounting acquirer as its stockholders control the Company after the Acquisition, even though AITX was the legal acquirer. As a result, the assets and liabilities and the historical operations that are reflected in these financial statements are those of RAD as if RAD had always been the reporting company.
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 three months ended May 31, 2024, 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 March 2023, the Company entered into
an equity financing agreement whereby an investor will purchase up to $
| - 7 - |
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, 2024. 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 three months ended May 31, 2024, 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.
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
May 31, 2024 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 May 31, 2024, and February 29, 2024, there was a valuation reserve of $
| - 8 - |
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
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 to
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 May 31, 2024 and February 29, 2024, the Company had
Contingencies
Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.
Sales of Future Revenues
The Company has entered into transactions, as more fully described in footnote 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:
| - 9 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| ● | 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 three months
ended May 31, 2024, two customers 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.
| - 10 - |
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).
| - 11 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC Topic 820 are described as follows:
| ● | Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. | |
| ● | Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |
| ● | Level 3 – Inputs that are unobservable for the asset or liability. |
Measured on a Recurring Basis
The following table presents information about our liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fell:
SCHEDULE OF LIABILITIES MEASURED AT FAIR VALUE
| Amount at | Fair Value Measurement Using | |||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| May 31, 2024 | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Incentive compensation plan payable- revaluation of equity awards payable in Series G shares | $ | $ | $ | $ | ||||||||||||
| February 29, 2024 | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Incentive compensation plan payable- revaluation of equity awards payable in Series G shares | $ | $ | $ | $ | ||||||||||||
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and advances, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.
Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.
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.
| - 12 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Recently Issued Accounting Pronouncements
Recently Issued Accounting Standards Adopted
In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting
for Convertible Instruments and Contracts in an Entity’s Own Equity. Under ASU 2020-06, the embedded conversion features are
no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted
for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible
debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation
and recognition as derivatives. The new guidance also requires the if-converted method to be applied for all convertible instruments.
The amendments in ASU 2020-06 are effective for public entities, excluding smaller reporting companies as defined, for fiscal years beginning
after December 15, 2021. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023. Early
adoption is permitted. A reporting entity is not permitted to adopt the guidance in an interim period, other than the first interim period
of its fiscal year. The Company adopted the standard using a modified retrospective approach. The adjustment to the Company’s accumulated
deficit at March 1, 2024 was $
4. 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:
| Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | |||||||
| Device rental activities | $ | $ | ||||||
| Direct sales of goods and services | ||||||||
| Revenue | $ | $ | ||||||
| - 13 - |
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
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 May 31, 2024 and February 29, 2024.
SCHEDULE OF LEASE ASSETS AND LIABILITIES
| Leases | Classification | May 31, 2024 | February 29, 2024 | |||||||
| Assets | ||||||||||
| Operating | Operating Lease Assets | $ | $ | |||||||
| Liabilities | ||||||||||
| Current | ||||||||||
| Operating | Current Operating Lease Liability | $ | $ | |||||||
| Noncurrent | ||||||||||
| Operating | Noncurrent Operating Lease Liabilities | |||||||||
| Total lease liabilities | $ | $ | ||||||||
Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate of 10% which for the leases noted above was based on the information available at commencement date in determining the present value of lease payments. We compare against loans we obtain to acquire physical assets and not loans we obtain for financing. The loans we obtain for financing are generally at significantly higher rates and we believe that physical space or vehicle rental agreements are in line with physical asset financing agreements. CAM charges were not included in operating lease expense and were expensed in general and administrative expenses as incurred.
Operating
lease cost and rent was $
6. REVENUE EARNING DEVICES
Revenue earning devices consisted of the following:
SCHEDULE OF REVENUE EARNING DEVICES
| May 31, 2024 | February 29, 2024 | |||||||
| Revenue earning devices | $ | $ | ||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
During
the three months ended May 31, 2024, the Company made total additions to revenue earning devices of $
Depreciation
expense was $
| - 14 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
7. FIXED ASSETS
Fixed assets consisted of the following:
SCHEDULE OF FIXED ASSETS
| May 31, 2024 | February 29, 2024 | |||||||
| 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 May 31, 2024, the Company made additions of $
Depreciation
expense was $
8. DEFERRED VARIABLE PAYMENT OBLIGATION
On
February 1, 2019 the Company entered into an agreement with an investor whereby the investor would pay up to $
On May 9, 2019 the Company entered into two similar arrangements with two investors:
| (1) | The investor
would pay up to $ | |
| (2) | The investor would pay
up to $ |
In
the event that at least 10% of the assets of the Company are sold by the Company, the investors would be entitled to the fair market
value (FMV) of all future Payments associated with the assets sold as determined by an independent valuator to be chosen by the investors.
The FMV cannot exceed 30% of the total asset disposition price defined as the total price paid for the assets plus all future Payments
associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect
a change in control, then the investors must be paid
| - 15 - |
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 May 31, 2024, 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 Series F Convertible Preferred Stock and a warrant to purchase
| - 16 - |
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 May 31, 2024, and February 29, 2024, the long-term balances other than Payments already owed is the cash received of $
For
both the three months ended May 31, 2024, and year ended February 29, 2024, the Company has received $
9. RELATED PARTY TRANSACTIONS
For
both the three months ended May 31, 2024 and May 31, 2023 , the Company had no repayments of net advances from its loan payable-related
party. At May 31, 2024, the loan payable-related party was $
Pursuant to the amended Employment Agreement with its Chief Executive Officer, for the three months ended May 31, 2024 the Company accrued $ (three months ended May 31 2023-$) of incentive compensation plan payable with a corresponding recognition of stock based compensation due to the expectation of additional awards being met. This will be payable in Series G Preferred Shares which are redeemable at the Company’s option at $ per share. At May 31, 2024 and February 29, 2024 there was $ and $ of incentive compensation payable.
During
the three months ended May 31, 2024 and 2023, the Company was charged $
10. OTHER DEBT – VEHICLE LOAN
In
December 2016, RAD entered into a vehicle loan for $
| - 17 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
11. LOANS PAYABLE
Loans payable at May 31, 2024 consisted of the following:
SCHEDULE OF LOANS PAYABLE
| Annual | ||||||||||||||||||
| 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 | ) | % | |||||||||||||||
| $ | ||||||||||||||||||
| 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 | $ | |||||||||||||||||
| * |
On
March 1, 2024 the Company adjusted the relative fair value unamortized discount on the above notes by $
| (1) |
| - 18 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| (2) | |
| (3) | |
| (4) | |
| (5) | |
| (6) | |
| (7) | |
| (8) | |
| (9) |
| - 19 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| (10) | |
| (11) | |
| (12) | |
| (13) | |
| (14) | |
| (15) |
| - 20 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| (16) | |
| (17) | |
| (18) | |
| (19) | |
| (20) | |
October
28, 2022, $ |
November
9, 2022, $
November
10, 2022, $
November
15, 2022, $
January
11, 2023, $
February
6, 2023, $
| - 21 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| (20) | April
5, 2023, $
April
20, 2023, $
May
11, 2023, $
October
27 2023, $ |
| (21) | |
| (22) |
| - 22 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
12. STOCKHOLDERS’ EQUITY (DEFICIT)
Summary or Preferred Stock Activity
Series B Convertible, Redeemable Preferred Stock (Temporary Equity)
On
April 27, 2024, in connection with a Share Purchase Agreement the Company created a new class Of Series B Convertible Redeemable
Preferred Shares with authorized shares. The Company received gross proceeds of $
At
May 31, 2024 there remains Series B Convertible Redeemable Preferred Shares having a value of $ $
Summary of Preferred Stock Warrant Activity
SUMMARY OF PREFERRED STOCK WARRANT ACTIVITY
| Number of Series F Preferred Warrants | Weighted Average Exercise Price | Weighted Average Remaining Years | ||||||||||
| Outstanding at March 1, 2024 | $ | |||||||||||
| Issued | — | |||||||||||
| Exercised | — | |||||||||||
| Forfeited and cancelled | — | |||||||||||
| Outstanding at May 31, 2024 | $ | |||||||||||
Summary of Common Stock Activity
For
the three months ended May 31, 2024, the Company issued common shares with gross proceeds of
Summary of Common Stock Warrant Activity
For the three months ended May 31, 2024 and May 31, 2023, the Company recorded a total of $ and $ respectively, to stock-based compensation for options and warrants with a corresponding adjustment to additional paid-in capital.
SUMMARY OF COMMON STOCK WARRANT ACTIVITY
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Years | ||||||||||
| Outstanding at March 1, 2024 | $ | |||||||||||
| Issued | — | |||||||||||
| Exercised | — | |||||||||||
| Forfeited and cancelled | — | |||||||||||
| Outstanding at May 31, 2024 | $ | |||||||||||
| - 23 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SUMMARY OF COMMON STOCK OPTION ACTIVITY
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Years | ||||||||||
| Outstanding at March 1, 2024 | $ | |||||||||||
| Issued | — | |||||||||||
| Exercised | — | |||||||||||
| Forfeited, extinguished and cancelled | ( | ) | $ | ( | ) | |||||||
| Outstanding at May 31, 2024 | $ | |||||||||||
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.
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 | |||
| May 31, 2025 | $ | |||
| 2025 | $ | |||
| May 31, 2026 | ||||
| 2026 | ||||
| May 31, 2027 | ||||
| 2027 | ||||
| May 31, 2028 | ||||
| 2028 | ||||
| May 31, 2029 | ||||
| 2029 | ||||
| May 31, 2030 and after | ||||
| 2030 and after | ||||
| Total lease payments | ||||
| Less: Interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
| - 24 - |
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SCHEDULE OF NET INCOME (LOSS) PER COMMON SHARE
| May 31, 2024 | May 31, 2023 | |||||||
| For the Three Months Ended | ||||||||
| May 31, 2024 | May 31, 2023 | |||||||
| Numerator: | ||||||||
| Net income (loss) available to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Effect of common stock equivalents | ||||||||
| Add: interest expense on convertible debt | ||||||||
| Net income (loss) adjusted for common stock equivalents | ( | ) | ( | ) | ||||
| Denominator: | ||||||||
| Weighted average shares – basic | ||||||||
| Net income (loss) per share – basic | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted average shares – diluted | ||||||||
| Net income (loss) per share – diluted | $ | ( | ) | $ | ( | ) | ||
| May 31, 2024 | May 31, 2023* | |||||||
| For the Three Months Ended | ||||||||
| May 31, 2024 | May 31, 2023* | |||||||
| Convertible Series F Preferred Shares | ||||||||
| Convertible Redeemable Series B Preferred Shares | ||||||||
| Stock options and warrants | ||||||||
| Total | ||||||||
| * |
| May 31, 2024 | May 31, 2023 | |||||||
| For the Three Months Ended | ||||||||
| May 31, 2024 | May 31, 2023 | |||||||
| Convertible Series F Preferred Shares | ||||||||
| Anti-dilutive shares of common stock | ||||||||
15. SUBSEQUENT EVENTS
During June and July 2024, the Company issued common shares pursuant to a share purchase agreement for gross proceeds of $, issuance costs of $ and net proceeds of $.
In June 2024,
the Company issued an
| - 25 - |
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 months ended May 31, 2024 and May 31, 2023 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/A for the year ended February 29, 2024, as filed on May 29, 2024 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.
| - 26 - |
Management Discussion and Analysis
Results of Operations for the Three Months Ended May 31, 2024 and 2023
The following table shows our results of operations for the three months ended May 31, 2024 and 2023. 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 | ||||||||||||||
| May 31, 2024 | May 31, 2023 | Dollars | Percentage | |||||||||||||
| Revenues | $ | 1,182,800 | $ | 385,208 | $ | 797,592 | 207 | % | ||||||||
| Gross profit | 887,207 | 373,866 | 513,341 | 137 | % | |||||||||||
| Operating expenses | 3,720,463 | 3,322,843 | 397,620 | 12 | % | |||||||||||
| Loss from operations | (2,833,256 | ) | (2,948,977 | ) | 115,721 | 4 | % | |||||||||
| Other income (expense), net | (1,361,103 | ) | (1,606,216 | ) | (245,113 | ) | 15 | % | ||||||||
| Net loss | $ | (4,194,359 | ) | $ | (4,555,193 | ) | $ | (360,834 | ) | (8 | %) | |||||
Revenue
The following table presents revenues from contracts with customers disaggregated by product/service:
| Three Months Ended | Three Months Ended | Change | ||||||||||||||
| May 31, 2024 | May 31, 2023 | Dollars | Percentage | |||||||||||||
| Device rental activities | $ | 980,536 | $ | 238,149 | $ | 742,387 | 312 | % | ||||||||
| Direct sales of goods and services | 202,264 | 147,059 | 55,205 | 38 | % | |||||||||||
| $ | 1,182,800 | $ | 385,208 | $ | 797,592 | 207 | % | |||||||||
Total revenue for the three-month period ended May 31, 2024 was $1,182,800 which represented an increase of $797,592 compared to total revenue of $385,208 for the three months ended May 31, 2023. Rental activities increased by $742,387 or 312%, as the Company continues to grow its product line and customer base. Direct sales grew by 38% driven by higher training revenue for the three months ended May 31, 2024.
Gross profit
Total gross profit for the three-month period ended May 31, 2024 was $887,207 which represented an increase of $513,341 compared to gross profit of $373,866 for the three months ended May 31, 2023. The increase is consistent with the increase in revenues as well as changes in product mix. And inventory adjustments. The gross profit % of 75% for the three-month period ended May 31, 2024 compares with the gross profit % of 97% for the three month period ended May 31, 2023. The prior period gross margin % is higher due to inventory adjustments.
Operating Expenses
| Period | Change | |||||||||||||||
Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | Dollars | Percentage | |||||||||||||
| Research and development | $ | 640,710 | $ | 891,757 | $ | (251,047 | ) | (28 | )% | |||||||
| General and administrative | 2,720,191 | 2,200,602 | 519,589 | 24 | % | |||||||||||
| Depreciation and amortization | 297,549 | 167,942 | 129,607 | 77 | % | |||||||||||
| Operating lease cost and rent | 62,013 | 62,542 | (529 | ) | (1 | )% | ||||||||||
| Operating expenses | $ | 3,720,463 | $ | 3,322,843 | $ | 397,620 | 12 | % | ||||||||
| - 27 - |
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 May 31, 2024 and May 31, 2023, were $3,720,463 and $3,322,463, respectively. The overall increase of $397,620 was primarily attributable to the following changes in operating expenses of:
| ● | General and administrative expenses increased by $519,589. In comparing the three months ended May 31, 2024 and May 31, 2023 this increase was primarily due to the following increases: wages and salaries by $129,516, freight and duties by $125,886, installation $30,754, RMC costs by $72,603, commissions by $63,883, travel by $12,646, professional fees by $70,954, subcontractors by $47,924, insurance by $13,585 and other G& A increases. | |
| ● | Research and development decreased by $251,047 due to a reduction in funding on development of future products. | |
| ● | Depreciation and amortization increased by $129,607 due to large increases in revenue earning devices, demo devices, as well as some fixed assets. | |
| ● | Operating lease cost and rent decreased by $529. |
Other Income (Expense)
Other income (expense) during the three months ended May 31, 2024 and May 31, 2023, was ($1,361,103) and ($1,606,216), respectively. The $245,113 decrease in other expense was primarily attributable to the amortization of debt discount decreasing because of the elimination of the unamortized relative fair value discount in the current quarter as a result of our implementation of ASU 2020-06.
Net loss
We had a net loss of $4,194,359 for the three months ended May 31, 2024, compared to a net loss of $4,555,193 for the three months ended May 31, 2023. The decrease in net loss of $360,834 is due to a number of factors: higher gross profit is reduced by higher general and administrative and depreciation in the three months ended May 31, 2024.
| - 28 - |
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 May 31, 2024, we had a cash balance of $193,103, accounts receivable(net) of $616,464, device parts inventory(net) of $1,830,467 and $28,749,738 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:
| May 31, 2024 | February 29, 2024 | |||||||
| Current assets | $ | 3,094,192 | $ | 3,616,566 | ||||
| Current liabilities | 28,749,738 | 21,715,651 | ||||||
| Working capital | $ | (25,655,546 | ) | $ | (18,099,085 | ) | ||
As of May 31, 2024 and February 29, 2024, we had a cash balance of $193,103 and $105,926, respectively.
Summary of Cash Flows
| Three Months Ended May 31, 2024 | Three Months Ended May 31, 2023 | |||||||
| Net cash used in operating activities | $ | (3,045,831 | ) | $ | (2,991,003 | ) | ||
| Net cash used in investing activities | $ | (21,728 | ) | $ | (3,463 | ) | ||
| Net cash (used in) provided by financing activities | $ | 3,154,736 | $ | 2,341,909 | ||||
Net cash used in operating activities.
Net cash used in operating activities for the three months ended May 31, 2024 was $3,045,831 which included a net loss of $4,194,359, non-cash activity such as inventory provision $210,000 ,bad debts expense of $13,000, reduction of right of use asset of $31,425, accretion of lease liability $31,065, stock based compensation of $83,323, change in operating assets and liabilities of $436,966, amortization of debt discount of $27,625, increase in related party accrued payroll and interest of $17,575 and depreciation and amortization of $297,549 to derive the uses of cash in operations.
Net cash used in investing activities.
Net cash used in investing activities for the three months ended May 31, 2024 was $21,728 which was the purchase of fixed assets of $19,132 and an acquisition of trademark of $2,596.
Net cash provided by financing activities.
Net cash provided by financing activities for the three months ended May 31, 2024 was $3,154,736. This consisted of share proceeds net of issuance costs of 2,682,592, proceeds from loans payable of $350,000, reduced by repayments on loans payable of $27,000. We also had proceeds on issuance of Series B Convertible Redeemable Preferred Shares of $278,000 reduced by a redemption on those shares of $128,856.
Off-Balance Sheet Arrangements
None.
| - 29 - |
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, 2023, as filed on June 14, 2023.
Related Party Transactions
For both the three months ended May 31, 2024 and May 31, 2023 , the Company had no repayments of net advances from its loan payable-related party. At May 31, 2024, the loan payable-related party was $275,013 and $257,438 at February 29, 2024. Included in the balance due to the related party at May 31, 2024 is $198,481 of deferred salary and interest, $152,513 of which bears interest at 12%. As of February 29, 2024, included in the balance due to the related party is $140,013 of deferred salary all of which bears interest at 12%. The accrued interest included in loan at May 31, 2024 and February 29, 2024 was $36,974 and $32,468, respectively.
Pursuant to the amended Employment Agreement with its Chief Executive Officer, for the three months ended May 31, 2024 the Company accrued $0 (three months ended May 31 2023-$63,000) of incentive compensation plan payable with a corresponding recognition of stock based compensation due to the expectation of additional awards being met. This will be payable in Series G Preferred Shares which are redeemable at the Company’s option at $1,000 per share. At May 31, 2024 and February 29, 2024 there was $2,500,000 and $2,500,000 of incentive compensation payable.
During the three months ended May 31, 2024 and 2023, the Company was charged $631,584 and $882,015, respectively for fees for research and development from a company partially owned by a principal shareholder.
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 May 31, 2024. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of May 31, 2024, 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 May 31, 2024, 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 May 31, 2024, 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.
| - 30 - |
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.
| - 31 - |
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. |
| - 32 - |
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: July 15, 2024 | BY: | /s/ Steven Reinharz |
| Steven Reinharz | ||
| President, Chief Executive Officer (principal executive officer) | ||
| Date: July 15, 2024 | BY: | /s/ Anthony Brenz |
| Anthony Brenz | ||
| Chief Financial Officer (principal financial officer) | ||
| - 33 - |
Exhibit 21.1
Artificial Intelligence Technology Solutions Inc.
Subsidiaries
| Name | Jurisdiction of Incorporation | |
| Robotic Assistance Devices, Inc. | Nevada | |
| Robotic Assistance Devices Group, Inc. | Nevada | |
| Robotic Assistance Devices Mobile, Inc. | Nevada | |
| Robotic Assistance Devices Residential, Inc. | Nevada |
Exhibit 31.1
RULE 13A-14(A)/15D-14(A) CERTIFICATION
I, Steven Reinharz, certify that:
1. I have reviewed this Form 10-Q for the period ended May 31, 2024 of Artificial Intelligence Technology Solutions Inc.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: July 15, 2024 | BY: | /s/ Steven Reinharz |
| Steven Reinharz | ||
| President, Chief Executive Officer (principal executive officer) |
Exhibit 31.2
RULE 13A-14(A)/15D-14(A) CERTIFICATION
I, Anthony Brenz, certify that:
1. I have reviewed this Form 10-Q for the period ended May 31, 2024 of Artificial Intelligence Technology Solutions Inc.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: July 15, 2024 | BY: | /s/ Anthony Brenz |
| Anthony Brenz | ||
| Chief Financial Officer (principal financial officer) |
Exhibit 32.1
SECTION 1350 CERTIFICATION
In connection with the quarterly report of Artificial Intelligence Technology Solutions Inc. (the “Company”) on Form 10-Q for the period ended May 31, 2024 as filed with the Securities and Exchange Commission (the “Report”), I, Steven Reinharz, President of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: July 15, 2024 | BY: | /s/ Steven Reinharz |
| Steven Reinharz | ||
| President, Chief Executive Officer (principal executive officer) |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
SECTION 1350 CERTIFICATION
In connection with the quarterly report of Artificial Intelligence Technology Solutions Inc. (the “Company”) on Form 10-Q for the period ended May 31, 2024 as filed with the Securities and Exchange Commission (the “Report”), I, Anthony Brenz, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: July 15, 2024 | BY: | /s/ Anthony Brenz |
| Anthony Brenz | ||
| Chief Financial Officer (principal financial officer) |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.