Certain reclassifications have been made in the 2019 financial statements to conform to the 2020 presentation. These reclassifications have no effect on net loss for 2019.
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:
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
During the nine months ended November 30, 2020, the Company made total additions to revenue earning devices of $72,940. During the nine months ended November 30, 2019, the Company made total additions to revenue earning devices of $132,081 including $106,256 in inventory transfers. During the nine months ended November 30, 2019 the Company disposed of a revenue earning device having a net book value of $3,500 for $11,000 and recorded a gain on disposal of $7,500.
Depreciation expense was $26,589 and $74,050 for the three and nine months ended November 30, 2020, respectively, and $22,107 and $57,662 for the three and nine months ended November 30, 2019, respectively.
6. FIXED ASSETS
Fixed assets consisted of the following:
|
|
|
|
|
|
|
|
|
|
November 30, 2020
|
|
February 29, 2020
|
|
Automobile
|
|
$
|
43,453
|
|
$
|
41,953
|
|
Computer equipment
|
|
|
23,399
|
|
|
20,262
|
|
Office equipment
|
|
|
2,127
|
|
|
5,680
|
|
|
|
|
68,979
|
|
|
67,895
|
|
Less: Accumulated depreciation
|
|
|
(64,212
|
)
|
|
(51,637
|
)
|
|
|
$
|
4,767
|
|
$
|
16,258
|
|
During the three months and nine months ended November 30, 2020 the Company made additions of $0 and $4,638. The Company made additions of $1,000 for both the three and nine months ended November 30, 2019.During the nine months ended November 30 ,2020, the Company disposed of office equipment having an original cost of $3,550 and a net book value of $1,553 for $1,000 in proceeds and recorded a $553 loss on disposal of fixed assets.
Depreciation expense was $3,556 and $14,571 for the three and nine months ended November 30, 2020, respectively, and $5,484 and $16,397 for the three and nine months ended November 30, 2019, respectively.
7. DEFERRED VARIABLE PAYMENT OBLIGATION
On February 1, 2019 the Company entered into an agreement with an investor whereby the investor would pay up to $900,000 (including $192,500 paid in January and February 2019) in exchange for a perpetual 9% rate payment (Payments) on the Company’s reported quarterly revenue from operations excluding any gains or losses from financial instruments (Revenues). If the total investor advances turned out to be less than $900,000, this would not constitute a breach of the agreement, rather the 9% rate would be adjusted on a pro-rata basis. The investor had agreed to pay the remaining balance in minimum $60,000 monthly installments, concluding November 30, 2019. At February 29, 2020 the investor had advanced the full $900,000.
On May 9, 2019 the Company entered into two similar arrangements with two investors:
|
|
|
|
(1)
|
The investor would pay up to $400,000 (including $143,556 paid in May 2019) in exchange for a perpetual 4% rate Payment on the Company’s reported quarterly Revenues. If the total investor advances turned out to be less than $400,000, this would not constitute a breach of the agreement, rather the 4% rate would be adjusted on a pro-rata basis. The investor had agreed to pay the remaining balance in four monthly installments of $64,111 starting July 1, 2019. At February 29, 2020, $400,000 had been paid to the Company.
|
|
|
|
|
(2)
|
The investor would pay up to $50,000 (including $17,444 paid in May 2019) in exchange for a perpetual 1.11% rate Payment on the Company’s reported quarterly Revenues. If the total investor advances turned out to be less than $50,000, this would not constitute a breach of the agreement, rather the 1.11% rate would be adjusted on a pro-rata basis. The investor has agreed to pay the remaining balance in four monthly installments of $8,014 starting July 1, 2019. At February 29, 2020, $50,000 had been paid to the Company.
|
These variable payments (Payments) are to be made either 30 days up to 90 days after the fiscal quarter depending on the agreement. If the Payments would deplete RAD’s available cash by a percentage between 1% and 31% depending on the rate Payment, the Payments may be deferred for up to 12 months after the quarterly report at an interest rate of 6% per annum on the unpaid amount.
- 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 $225,000 in exchange for a perpetual 2.25% rate Payment on the Company’s quarterly Revenues (commencing on quarter ending May 31, 2020). At May 31, 2020 the investor has fully funded this commitment.
On December 30, 2019 the Company entered into another similar arrangement with a new investor whereby the investor would advance up to $100,000 in exchange for a perpetual 1.00% rate Payment on the Company’s quarterly Revenues (commencing quarter ended November 30, 2020). At May 31, 2020 the investor has advanced $50,000 with the remainder to be advanced no later than June 30, 2020. As the investor has only advanced the $50,000 the 1.00% rate Payment has been adjusted on a pro-rata basis to 0.50%.
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 $100,000 in exchange for a perpetual 1.00% rate Payment on the Company’s quarterly Revenues. At May 31, 2020 the investor has fully funded this commitment.
The Company retains total involvement in the generation of cash flows from these revenue streams that form the basis of the payments to be made to the investors under this agreement. Because of this, the Company has determined that the agreements constitute debt agreements. As of August 30, 2020, the Company has not yet completed its assessment of the likely cash flows under these agreements, and thus, has not yet determined the effective interest rate under these agreements. The Company expects to have completed its analysis of the expected cash flows prior to the filing of the year end February 28, 2021 filing.
On July 1, 2020 the Company entered into a similar agreement with the first investor whereby the investor would pay up to $800,000 in exchange for a perpetual 2.75% rate payment (Payment) on the Company’s reported quarterly revenue. These Payments are to be made 90 days after the fiscal quarter with the first payment being due no later than May 31, 2021. If the Payments would deplete RAD’s available cash by more than 20%, the payment may be deferred. The investor had agreed to pay $100,000 per month over an 8 month period with the first payment due July 2020 and the final payment no later than February 28, 2021. As at August 31, 2020 the investor had fully funded the $800,000 commitment
On August 27, 2020 the Company and the first investor referred to above consolidated the three separate agreements of February 1, 2019 for $900,000, November 18, 2019 for $225,000 and July 1, 2020 for $800,000 into a new agreement for a total of $1,925,000. This new agreement is for similar terms as the above agreements save for the following: the rate payment is revised to 14.25% payable on revenues commencing the quarter ended August 31, 2020 and the Payments are secured by the assets of the Company. This interest may be secured by UCC filing but is subordinated to equipment financing on the products the Company leases to its customers.
In summary of all agreements mentioned above if 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 43.77% of the total asset disposition price defined as the total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect a change in control, then the investors must be paid the FMV of all future Payments in one lump payment. The FMV cannot exceed 43.77% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments.
For the nine months ended November 30, 2020, the Company has received $966,000 related to the deferred payment obligation bringing the balance to $2,525,000 at November 30, 2020. (February 29, 2020 -$1,559,000).
The Payments will first become payable on June 30, 2019 (unless otherwise indicated) based on the quarterly Revenues for the quarter ended May 31, 2019 and will accrue every quarter thereafter. For the three months and nine months ended November 30, 2020 the Company accrued $18,455 and $57,149 in Payments. As of November 30, 2020, the Company has accrued a total of $77,683 in payments (February 29, 2020 -$30,534).
- 16 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
8. CONVERTIBLE NOTES PAYABLE
Convertible notes payable consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
Balance
|
|
|
|
|
|
|
Interest
|
|
Conversion
|
November 30,
|
|
February 29,
|
|
Issued
|
|
Maturity
|
|
|
Rate
|
|
Rate per Share
|
2020
|
|
2020
|
|
January 31, 2013
|
|
February 28, 2017*X
|
|
|
10%
|
|
$0.010
|
(3)
|
$
|
119,091
|
|
$
|
119,091
|
|
May 31, 2013
|
|
November 30, 2016*X
|
|
|
10%
|
|
$0.010
|
(3)
|
|
261,595
|
|
|
261,595
|
|
August 31, 2014
|
|
November 30, 2016*X
|
|
|
10%
|
|
$0.002
|
(3)
|
|
355,652
|
|
|
355,652
|
|
November 30, 2014
|
|
November 30, 2016*X
|
|
|
10%
|
|
$0.002
|
(3)
|
|
103,950
|
|
|
103,950
|
|
February 28, 2015
|
|
February 28, 2017*X
|
|
|
10%
|
|
$0.001
|
(3)
|
|
63,357
|
|
|
63,357
|
|
May 31, 2015
|
|
August 31, 2017*X
|
|
|
10%
|
|
$1.000
|
(3)
|
|
65,383
|
|
|
65,383
|
|
August 31, 2015
|
|
August 31, 2017*X
|
|
|
10%
|
|
$0.300
|
(3)
|
|
91,629
|
|
|
91,629
|
|
November 30, 2015
|
|
November 30, 2018*X
|
|
|
10%
|
|
$0.300
|
(3)
|
|
269,791
|
|
|
269,791
|
|
February 29, 2016
|
|
February 28, 2019*X
|
|
|
10%
|
|
60% discount
|
(2)
|
|
95,245
|
|
|
95,245
|
|
May 31, 2016
|
|
May 31, 2019*X
|
|
|
10%
|
|
$0.003
|
(3)
|
|
35,100
|
|
|
35,100
|
|
July 18, 2016
|
|
July 18, 2017*
|
|
|
10%
|
|
$0.003
|
(3)
|
|
3,500
|
|
|
3,500
|
|
December 31, 2016
|
|
December 31, 2020
|
|
|
8%
|
|
35% discount
|
(2)
|
|
65,000
|
|
|
65,000
|
|
January 15, 2017
|
|
January 15, 2021XXX
|
|
|
8%
|
|
35% discount
|
(2)
|
|
50,000
|
|
|
50,000
|
|
January 15, 2017
|
|
January 15, 2021
|
|
|
8%
|
|
35% discount
|
(2)
|
|
100,000
|
|
|
100,000
|
|
January 16, 2017
|
|
January 16, 2021
|
|
|
8%
|
|
35% discount
|
(2)
|
|
150,000
|
|
|
150,000
|
|
March 8, 2017
|
|
March 8, 2020*
|
|
|
10%
|
|
40% discount
|
(2)
|
|
100,000
|
|
|
100,000
|
|
March 9, 2017
|
|
March 9, 2021XXX
|
|
|
8%
|
|
35% discount
|
(2)
|
|
50,000
|
|
|
50,000
|
|
April 26, 2017
|
|
April 26, 2018*
|
|
|
0%
|
|
$0.001
|
|
|
68
|
|
|
68
|
|
May 1, 2017
|
|
May 1, 2021XXX
|
|
|
8%
|
|
35% discount
|
(2)
|
|
50,000
|
|
|
50,000
|
|
May 4, 2017
|
|
May 4, 2018*
|
|
|
8%
|
|
40% discount
|
(2)
|
|
—
|
|
|
22,610
|
|
May 15, 2017
|
|
May 15, 2018*
|
|
|
0%
|
|
$0.001
|
|
|
1,280
|
|
|
1,280
|
|
May 17, 2017
|
|
May 17, 2020*XXX
|
|
|
10%
|
|
40% discount
|
(1)
|
|
85,000
|
|
|
85,000
|
|
June 7, 2017
|
|
June 7, 2018*
|
|
|
8%
|
|
40% discount
|
(2)
|
|
—
|
|
|
156,764
|
|
June 16, 2017
|
|
June 16, 2018*
|
|
|
0%
|
|
$0.001
|
|
|
750
|
|
|
750
|
|
July 6, 2017
|
|
July 6, 2018
|
|
|
8%
|
|
40% discount
|
(2)
|
|
—
|
|
|
200,000
|
|
August 8, 2017
|
|
August 8, 2018
|
|
|
8%
|
|
40% discount
|
(2)
|
|
—
|
|
|
125,000
|
|
July 28, 2017
|
|
July 28, 2018*XX
|
|
|
15%
|
|
40% discount
|
(2)
|
|
57,495
|
|
|
47,913
|
|
August 29, 2017
|
|
August 29, 2018*XX
|
|
|
15%
|
|
50% discount
|
(2)
|
|
9,705
|
|
|
162,250
|
|
October 4, 2017
|
|
May 4, 2018*
|
|
|
8%
|
|
40% discount
|
(2)
|
|
44,662
|
|
|
150,000
|
|
October 16, 2017
|
|
October 16, 2018*XX
|
|
|
15%
|
|
50% discount
|
(2)
|
|
394,244
|
|
|
328,537
|
|
November 22, 2017
|
|
November 22, 2018*XX
|
|
|
15%
|
|
50% discount
|
(2)
|
|
660,330
|
|
|
550,275
|
|
December 28, 2017
|
|
December 28, 2017
|
|
|
10%
|
|
40% discount
|
(2)
|
|
—
|
|
|
57,008
|
|
December 29, 2017
|
|
December 29, 2018*XX
|
|
|
15%
|
|
50% discount
|
(2)
|
|
435,600
|
|
|
363,000
|
|
January 9, 2018
|
|
January 9, 2019*
|
|
|
8%
|
|
40% discount
|
(2)(1)
|
|
79,508
|
|
|
79,508
|
|
January 30, 2018
|
|
January 30, 2019*XX
|
|
|
15%
|
|
50% discount
|
(2)(1)
|
|
396,000
|
|
|
330,000
|
|
February 21, 2018
|
|
February 21, 2019*XX
|
|
|
15%
|
|
50% discount
|
(2)(1)
|
|
279,591
|
|
|
330,000
|
|
March 14, 2018
|
|
March 14, 2019*
|
|
|
10%
|
|
40% discount
|
(2)
|
|
—
|
|
|
50,000
|
|
June 7, 2017
|
|
June 9, 2019
|
|
|
8%
|
|
40% discount
|
(2)
|
|
200,000
|
|
|
200,000
|
|
April 9, 2018
|
|
April 9, 2019*XX
|
|
|
15%
|
|
50% discount
|
(2)
|
|
72,600
|
|
|
60,500
|
|
March 21, 2017
|
|
March 21, 2018
|
|
|
8%
|
|
40% discount
|
(2)
|
|
—
|
|
|
40,000
|
|
April 20, 2018
|
|
April 20, 2019*
|
|
|
8%
|
|
40% discount
|
(2)
|
|
97,659
|
|
|
97,659
|
|
May 2, 2018
|
|
December 2, 2018*
|
|
|
10%
|
|
40% discount
|
(2)
|
|
—
|
|
|
70,682
|
|
May 4, 2018
|
|
May 4, 2019*
|
|
|
12%
|
|
50% discount
|
(2)
|
|
123,750
|
|
|
123,750
|
|
May 14, 2018
|
|
December 14, 2018*
|
|
|
10%
|
|
50% discount
|
(2)
|
|
—
|
|
|
33,542
|
|
May 23, 2018
|
|
May 23, 2019
|
|
|
10%
|
|
50% discount
|
(2)
|
|
—
|
|
|
110,000
|
|
June 6, 2018
|
|
June 6, 2019*
|
|
|
15%
|
|
50% discount
|
(2)
|
|
282,949
|
|
|
282,949
|
|
June 19, 2018
|
|
March 19, 2019
|
|
|
15%
|
|
50% discount
|
(2)
|
|
—
|
|
|
43,125
|
|
July 6, 2017
|
|
June 9, 2019
|
|
|
8%
|
|
40% discount
|
(2)
|
|
—
|
|
|
200,000
|
|
August 1, 2018
|
|
August 1, 2019*XX
|
|
|
15%
|
|
50% discount
|
(2)
|
|
42,900
|
|
|
35,750
|
|
August 23, 2018
|
|
August 23, 2019*
|
|
|
8%
|
|
45% discount
|
(2)
|
|
—
|
|
|
70,123
|
|
September 13, 2018
|
|
June 30, 2019*
|
|
|
12%
|
|
45% discount
|
(2)
|
|
9,200
|
|
|
9,200
|
|
September 17, 2018
|
|
March 17, 2019*
|
|
|
10%
|
|
50% discount
|
(2)
|
|
—
|
|
|
4,945
|
|
September 20, 2018
|
|
September 20, 2019*XX
|
|
|
15%
|
|
50% discount
|
(2)
|
|
51,942
|
|
|
43,285
|
|
September 24, 2018
|
|
June 24, 2019*
|
|
|
8%
|
|
40% discount
|
(2)
|
|
45,663
|
|
|
63,913
|
|
August 8, 2017
|
|
June 9, 2019
|
|
|
8%
|
|
40% discount
|
(2)
|
|
—
|
|
|
125,000
|
|
November 8, 2018
|
|
August 15, 2019*
|
|
|
12%
|
|
45% discount
|
(2)
|
|
79,500
|
|
|
79,500
|
|
November 26, 2018
|
|
May 26, 2019*
|
|
|
10%
|
|
50% discount
|
(2)
|
|
—
|
|
|
44,799
|
|
August 29, 2019
|
|
August 29, 2020*
|
|
|
8%
|
|
40% discount
|
(2)
|
|
28,875
|
|
|
26,250
|
|
|
|
|
|
|
|
|
|
|
|
5,508,564
|
|
|
6,834,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: current portion of convertible notes payable
|
|
|
(5,508,564
|
)
|
|
(6,734,227
|
)
|
Less: discount on noncurrent convertible notes payable
|
|
|
—
|
|
|
(30,486
|
)
|
Noncurrent convertible notes payable, net of discount
|
|
$
|
—
|
|
$
|
69,515
|
|
|
|
|
|
|
|
|
|
Current portion of convertible notes payable
|
|
$
|
5,508,564
|
|
$
|
6,734,227
|
|
Less: discount on current portion of convertible notes payable
|
|
|
(22,488
|
)
|
|
(120,602
|
)
|
Current portion of convertible notes payable, net of discount
|
|
$
|
5,486,076
|
|
$
|
6,613,625
|
|
- 17 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
*
|
The indicated notes were in default as of November 30, 2020. Default interest rate 24%
|
|
|
X
|
On December 10, 2020 (subsequent to quarter end) the Company settled the above notes indicated totaling $1,460,794 and associated accrued interest of $1,593,544 totaling $3,054,338 in exchange for promissory notes dated December 10, 2020 totaling $3,054,338, maturing December 10, 2023 and bearing interest at 12% per annum and a warrant to purchase 250,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $550,000. These notes are secured by a general security charging all of RAD’s present and after-acquired property.
|
|
|
XX
|
On December 10, 2020 (subsequent to quarter end) the Company settled the above notes indicated totaling $2,683,357 and associated accrued interest of $1,237,811 totaling $3,921,1688 in exchange for a promissory note dated December 10, 2020 of $3,921,1688, maturing December 10, 2023 and bearing interest at 12% per annum and a warrant to purchase 450,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $990,000.
|
|
|
XXX
|
On December 14, 2020 (subsequent to quarter end) the Company settled the above notes indicated totaling $235,000 and associated accrued interest of $75,375 totaling $310,375 in exchange for a promissory note dated December 14, 2020 of $310,375, maturing December 10, 2023 and bearing interest at 12% per annum, a warrant to purchase 25,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $182,500 and 55 shares of Series F Preferred Shares having a fair value of $1,151,166.
|
|
|
(1)
|
The note is convertible beginning six months after the date of issuance.
|
|
|
(2)
|
The notes are convertible at a discount (as indicated) to the average market price and are accounted for and evaluated under ASC 480 as discussed in Note 3.
|
|
|
(3)
|
The conversion price is not subject to adjustment from forward or reverse stock splits.
|
During the three months ended November 30, 2020 and 2019, the Company incurred original issue discounts of $0 and $1,250 respectively, and debt discounts from derivative liabilities of $0 and $ 25,000, respectively, related to new convertible notes payable. During the three months ended November 30, 2020 and 2019, the Company recognized interest expense related to the amortization of debt discount of $0 and $56,171, respectively. The Company recorded penalty interest of $494,428 and $175,463 during the three months ended November 30, 2020 and November 30, 2019, respectively.
During the nine months ended November 30, 2020 and 2019, the Company incurred original issue discounts of $0 and $1,250, respectively and derivative discounts of $0 and $26,250, respectively, related to new convertible notes payable. During the nine months ended November 30, 2020 and 2019, the Company recognized interest expense related to the amortization of debt discount of $23,957 and $739,334, respectively. The Company recorded penalty interest of $939,705 and $207,116 during the nine months ended November 30, 2020 and November 30, 2019, respectively.
All the notes above are unsecured. As of November 30, 2020, the Company had total accrued interest payable of $3,486,043 all of which is classified as current.
The Company determined that the embedded conversion features in the convertibles notes described below should be accounted for as derivative liabilities as a result of their variable conversion rates.
During the nine months ended November 30, 2020, the Company also had the following convertible note activity:
|
|
●
|
The company recorded $939,705 in penalties as increases on various notes, with a corresponding charge to interest.
|
|
|
●
|
holders of certain convertible notes payable elected to convert a total of $2,094,934 of principal and $1,083,982 accrued interest, and $20,500 of fees into 1,889,155,010 shares of common stock. No gain or loss was recognized on conversions as these conversions occurred within the terms of the agreement that provided for conversion.
|
- 18 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
9. RELATED PARTY TRANSACTIONS
For the nine months ended November 30, 2019, the Company had net repayments of $74,938 from its loan payable-related party. For the nine months ended November 30, 2020 the Company repaid net advances of $344,618. At November 30, 2020, the loan payable-related party was $1,189,155 and $1,310,358 at February 29, 2020. Included in the balance due to the related party at November 30, 2020 is $874,374 of deferred salary and interest, $594,000 of which bears interest at 12%. At February 29, 2020, included in the balance due to the related party is $656,334 of deferred salary and interest, $426,000 of which bears interest at 12%. The accrued interest included in loan at November 30, 2020 and November 30, 2019 was $84,418 and $34,917, respectively.
During the three and nine months ended November 30, 2020 and 2019, the Company was charged $10,157 and $121,973, respectively for consulting fees for research and development to a company owned by a principal shareholder. During the three and nine months ended November 30, 2019 the Company was charged $90,090 and $47,238, respectively in consulting fees for research and development to a company owned by a principal shareholder. The company received a credit in the quarter ended May 31, 2019 that were a result of billing corrections of ($106,444) and after adjusting for this, would bring total charges in the nine months ended November 30, 2019 to $153,682.
10. OTHER DEBT – VEHICLE LOAN
In December 2016, RAD entered into a vehicle loan for $47,704 secured by the vehicle. The loan is repayable over 5 years maturing November 9, 2021, and repayable $1,019 per month including interest and principal. In November 2017, RAD entered into another vehicle loan secured by the vehicle for $47,661. The loan is repayable over 5 years, maturing October 24, 2022 and repayable at $923 per month including interest and principal. The principal repayments made were $0 and $5,746 for the years ended February 29, 2020 and February 28, 2019, respectively. Regarding the second vehicle loan, the vehicle was returned at the end of fiscal 2019 and the car was subsequently sold by the lender for proceeds of $21,907 which went to reduce the outstanding balance of the loan. A loss of $3,257 was recorded as well. A balance of $21,578 remains on this vehicle loan at both November 30, 2020 and February 29, 2020. For the first vehicle loan, the vehicle was retired in 2020, the proceeds of the disposal of $18,766 was applied against the balance of the loan with a $5,515 gain on the remaining asset value of $13,251. A balance of $16,944 remains on this vehicle loan at both November 30, 2020 and February 29, 2020 The remaining total balances of the amounts owed on the vehicle loans were $38,522 and $38,522 as of November 30, 2020 and February 28, 2020, respectively, of which all were classified as current. The Company ceased making payments of principal and interest in fiscal 2019 and the company has returned the remaining vehicles to the financing company for disposal.
- 19 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
11. LOANS PAYABLE
Loans payable consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
Date
|
|
Maturity
|
|
Description
|
|
Principal
|
|
Interest Rate
|
|
June 11, 2018
|
|
June 11, 2019
|
|
Promissory note
|
(3)
|
$
|
$48,000
|
|
25%
|
*
|
August 10, 2018
|
|
September 1, 2018
|
|
Promissory note
|
|
|
10,000
|
|
25%
|
*
|
August 16, 2018
|
|
August 16, 2019
|
|
Promissory note
|
(1)
|
|
12,624
|
|
25%
|
*
|
August 16, 2018
|
|
October 1, 2018
|
|
Promissory note
|
|
|
10,000
|
|
25%
|
*
|
August 23, 2018
|
|
October 20, 2018
|
|
Promissory note
|
(21)
|
|
15,000
|
|
20%
|
*
|
October 11, 2018
|
|
October 11, 2019
|
|
Promissory note
|
(7)
|
|
17,000
|
|
20%
|
*
|
August 5, 2019
|
|
March 11, 2020
|
|
Factoring Agreement
|
(4)
|
|
18,750
|
(4)
|
|
*
|
November 12, 2019
|
|
August 11, 2020
|
|
Factoring Agreement
|
(10)
|
|
53,465
|
(10)
|
|
*
|
December 20, 2019
|
|
March 5, 2020
|
|
Factoring Agreement
|
(14)
|
|
7,480
|
|
|
*
|
October 17,2019
|
|
April 29, 2020
|
|
Factoring Agreement
|
(11)
|
|
—
|
(11)
|
|
|
September 27, 2019
|
|
April 4, 2020
|
|
Factoring Agreement
|
(12)
|
|
8,857
|
(12)
|
|
*
|
January 31, 2019
|
|
June 30, 2019
|
|
Promissory note
|
(2)
|
|
78,432
|
|
15%
|
*
|
January 24, 2019
|
|
January 24, 2021
|
|
Loan
|
(8)
|
|
168,658
|
|
11%
|
|
May 9, 2019
|
|
June 30, 2019
|
|
Promissory note
|
(5)
|
|
7,850
|
|
15%
|
*
|
May 31, 2019
|
|
June 30, 2019
|
|
Promissory note
|
(6)
|
|
86,567
|
|
15%
|
*
|
June 26, 2019
|
|
June 26, 2020
|
|
Promissory note
|
(9)
|
|
79,104
|
|
15%
|
*
|
September 24, 2019
|
|
June 24 2020
|
|
Promissory note
|
(13)
|
|
12,000
|
|
15%
|
*
|
January 30, 2020
|
|
January 30, 2021
|
|
Promissory note
|
(15)
|
|
11,000
|
|
15%
|
|
February 27, 2020
|
|
February 27, 2021
|
|
Promissory note
|
(16)
|
|
5,000
|
|
15%
|
|
April 16, 2020
|
|
April 16, 2021
|
|
Promissory note
|
(17)
|
|
13,000
|
|
15%
|
|
May 12, 2020
|
|
May 12, 2021
|
|
Promissory note
|
(18)
|
|
43,500
|
|
15%
|
|
May 22, 2020
|
|
May 22, 2021
|
|
Promissory note
|
(19)
|
|
85,000
|
|
15%
|
|
June 2, 2020
|
|
June 2, 2021
|
|
Promissory note
|
(23)
|
|
62,000
|
|
15%
|
|
June 9, 2020
|
|
June 9, 2021
|
|
Promissory note
|
(24)
|
|
31,000
|
|
15%
|
|
June 12, 2020
|
|
June 12, 2021
|
|
Promissory note
|
(25)
|
|
50,000
|
|
15%
|
|
June 16, 2020
|
|
June 16, 2021
|
|
Promissory note
|
(26)
|
|
42,000
|
|
15%
|
|
April 3, 2020
|
|
April 3, 2021
|
|
Promissory note
|
(20)
|
|
27,697
|
|
20%
|
|
August 31, 2020
|
|
August 31, 2021
|
|
Promissory note
|
(22)
|
|
44,183
|
|
20%
|
|
September 8, 2020
|
|
September 8, 2021
|
|
Promissory note
|
(27)
|
|
7,380
|
|
20%
|
|
September 15, 2020
|
|
September 15, 2022
|
|
Promissory note
|
(28)
|
|
300,000
|
|
10%
|
|
October 6, 2020
|
|
March 6, 2023
|
|
Promissory note
|
(29)
|
|
150,000
|
|
12%
|
|
November 12, 2020
|
|
November 12, 2023
|
|
Promissory note
|
(30)
|
|
110,000
|
|
12%
|
|
November 23, 2020
|
|
October 22, 2023
|
|
Promissory note
|
(31)
|
|
65,000
|
|
15.5%
|
|
November 23, 2020
|
|
November 23, 2023
|
|
Promissory note
|
(32)
|
|
300,000
|
|
15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,980,547
|
|
|
|
Less current portion of loans payable
|
|
|
|
|
(1,130,997
|
)
|
|
|
Less discount on loans payable
|
|
|
|
|
(200,300
|
)
|
|
|
Loans payable
|
|
|
|
$
|
649,250
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of loans payable
|
|
|
|
$
|
1,130,997
|
|
|
|
Less discount on current portion of loans payable
|
|
|
|
|
(207,500
|
)
|
|
|
Loans payable net of discount
|
|
|
|
$
|
923,497
|
|
|
|
- 20 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
*
|
Note is in default. No notice has been given by the note holder.
|
|
|
(1)
|
Repayable in 12 monthly instalments of $2,376 commencing September 16 ,2018 and secured by revenue earning devices having a net book value of at least $25,000. Only $12,376 has been repaid by the Company and no notices have been received. Accrued interest of $1,511 has been recorded.
|
|
|
(2)
|
The note may be pre-payable at any time. The note balance includes 33% original issue discount of $25,882.
|
|
|
(3)
|
Repayable in 12 monthly instalments of $4,562 commencing August 11 ,2018 and secured by revenue earning devices having a net book value of at least $48,000. No repayments have been made by the Company and no notices have been received.
|
|
|
(4)
|
Total loan $79,750, repayable $475 per business day including fees and interest of $25,170. Original cash proceeds of $31,353 and $23,227 carried from previous loan less repayment of $58,500, including payments of $8,275 made during the nine months ended November 30, 2020. The Company has pledged a security interest on all accounts receivable and bank accounts of the Company. Obligation under personal guaranty of the controlling shareholder of the Company.
|
|
|
(5)
|
The note may be pre-payable at any time. The note balance includes 33% original issue discount of $2,590.
|
|
|
(6)
|
The note may be pre-payable at any time. The note balance includes 33% original issue discount of $28,567.
|
|
|
(7)
|
$6,000 repaid during the year ended February 29,2020
|
|
|
(8)
|
$200,000 Canadian loan. Interest payable every calendar quarter commencing June30, 2019, if unpaid accrued interest to be paid at maturity. An additional interest amount calculated as 4% of RAD revenues from SCOT rentals for the fiscal years 2020 and 2021 shall be payable March 31, 2020 and March 31, 2021, respectively. Secured by a general security charging all of RAD’s present and after-acquired property in favor of the lender on a first priority basis subject to the following: the lender’s security in this respect shall be postponeable to security in favor of institutional financing obtained by RAD. Bonus interest of 10,304 has been accrued payable March 31, 2020.
|
|
|
(9)
|
The note may be pre-payable at any time. The note balance includes 33% original issue discount of $26,104.
|
|
|
(10)
|
Total loan of $243,639, repayable $1,509 per week including fees and interest of $60,042. Original cash proceeds of $7,877, repayment of loans (5) and (13) totaling $15,732, partial repayment of fees of $5,566 all totaling $29,175, additional advances of $88,772 with remaining $65,551 to be advanced to the company over the remaining 18 weeks. The Company has repaid a total of $98,616, including payments of $20,827 made during the nine months ended November 30, 2020. The Company has pledged a security interest on all accounts receivable and bank accounts of the Company. Obligation under personal guaranty of the controlling shareholder of the Company.
|
|
|
(11)
|
Total loan of $71,000, repayable $710 per business day including fees and interest of $21,000. Original proceeds of $50,000. Loan fully repaid at August 31, 2020.
|
|
|
(12)
|
Total loan of $59,960, repayable $590 per business day including fees and interest of $19,960. Original proceeds of $40,000 less repayment of $51,103, including payments of $6,036 made during the quarter ended August 31, 2020. The Company has pledged a security interest on all accounts receivable and bank accounts of the Company. Obligation under personal guaranty of the controlling shareholder of the Company.
|
|
|
(13)
|
The note may be pre-payable at any time. The note balance includes 33% original issue discount of $3,000.
|
|
|
(14)
|
Total loan of $12,400, repayable $1,240 per week including fees and interest of $2,400. Original cash proceeds of $10,000, repayments of $4,920. The Company has pledged a security interest on all accounts receivable and bank accounts of the Company. Obligation under personal guaranty of the controlling shareholder of the Company.
|
|
|
(15)
|
The note may be pre-payable at any time. The note balance includes 22% original issue discount of $2,450.
|
- 21 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
(16)
|
The note may be pre-payable at any time. The note balance includes 24% original issue discount of $1,200.
|
|
|
(17)
|
The note may be pre-payable at any time. The note balance includes an original issue discount of $3,850.
|
|
|
(18)
|
The note may be pre-payable at any time. The note balance includes an original issue discount of $8,000.
|
|
|
(19)
|
The note may be pre-payable at any time. The note balance includes an original issue discount of $15,000.
|
|
|
(20)
|
$ 40,000 CDN loan, both principal and interest are due at maturity, if unpaid there is a 10% penalty on unpaid balance. By consent of all parties, lender may convert balance into Class F shares at $6,739 USD per share.
|
|
|
(21)
|
Principal repayable in one year. Interest repayable in 10 monthly instalments of $460 commencing January 11 ,2019 and secured by revenue earning devices having a net book value of at least $186,000. 25,000 repaid.
|
|
|
(22)
|
$ 60,000 CDN loan, principal is due at maturity, interest is payable commencing the third month after the loan over the remaining 10 months. If principal or interest unpaid there is a 10% penalty on unpaid balance. By consent of all parties, lender may convert balance into Class F shares at $6,739 USD per share.
|
|
|
(23)
|
The note may be pre-payable at any time. The note balance includes an original issue discount of $12,000.
|
|
|
(24)
|
The note may be pre-payable at any time. The note balance includes an original issue discount of $6,000.
|
|
|
(25)
|
The note may be pre-payable at any time. The note balance includes an original issue discount of $10,000.
|
|
|
(26)
|
The note may be pre-payable at any time. The note balance includes an original issue discount of $7,000.
|
|
|
(27)
|
$ 10,000 CDN loan, principal is due at maturity, interest is payable monthly commencing the third month after the loan over the remaining 10 months. If principal or interest unpaid there is a 10% penalty on unpaid balance. By consent of all parties, lender may convert balance into Class F shares at $6,739 USD per share.
|
|
|
(28)
|
The note may be pre-payable at any time. The note balance includes an original issue discount of $50,000. Interest payable monthly, principal due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property.
|
|
|
(29)
|
Principal and interest repayable in 28 monthly instalments commencing December 6, 2020, the first 6 months at $2,000 per month, the remaining 22 payments at $ 8,500 per month. Secured by revenue earning devices.
|
|
|
(30)
|
The note may be pre-payable at any time. The note balance includes an original issue discount of $10,000 and was issued with warrant to purchase 70,000,000 shares at an exercise price of $0.00165 per share, with a 3 year term and having a fair value of $77,000 using Black-Scholes with assumptions described in Note 13. The discount and warrant are being amortized over the term of the loan.
|
|
|
(31)
|
Principal and interest repayable in 28 monthly instalments commencing December 6, 2020, the first 6 months at $2,000 per month, the remaining 22 payments at $ 8,500 per month. Secured by revenue earning devices.
|
|
|
(32)
|
The note may be pre-payable at any time. The note balance includes an original issue discount of $25,000 and was issued with warrant to purchase 230,000,000 shares at an exercise price of $0.00165 per share with a 3 year term and having a fair value of $253,000 using Black-Scholes with assumptions described in note 13. The discount and warrant are being amortized over the term of the loan.
|
12. DERIVATIVE LIABILITIES
As of November 30, 2020, the Company revalued the fair value of all of the Company’s derivative liabilities associated with the conversion features on the convertible notes payable and determined that it had a total derivative liability of $3,261,457.
- 22 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Company estimated the fair value of the derivative liabilities using the multinomial lattice model using the following key assumptions during the three months ended November 30, 2020:
|
|
Strike price
|
$0.002 - $0.0006
|
Fair value of Company common stock
|
$0.004 - $0.0011
|
Dividend yield
|
0.00%
|
Expected volatility
|
383.4% - 167.5%
|
Risk free interest rate
|
0.09% - 0.07%
|
Expected term (years)
|
0.50 - 0.13
|
During the three months ended November 30, 2020, and 2019, the Company released $873,673 and $109,987, respectively, of the Company’s derivative liability to equity due to the conversions of principal and interest on the associated notes. During the nine months ended November 30, 2020, and 2019, the Company released $2,601,903 and $493,405, respectively, of the Company’s derivative liability to equity due to the conversions of principal and interest on the associated notes.
The changes in the derivative liabilities (Level 3 financial instruments) measured at fair value on a recurring basis for the nine months ended November 30, 2020 were as follows:
|
|
|
|
Balance as of February 29, 2020
|
$
|
6,890,688
|
|
Release of derivative liability on conversion of convertible notes payable
|
|
(2,601,903
|
)
|
Change in fair value of derivative liabilities
|
|
(1,027,328
|
)
|
Balance as of November 30, 2020
|
$
|
3,261,457
|
|
13. STOCKHOLDERS’ EQUITY (DEFICIT)
Summary of Common Stock Activity
On March 27, 2020, the Company undertook a 10,000:1 reverse stock split and on August 24, 2018, the Company undertook a 100:1 reverse stock split. The share capital has been retrospectively adjusted accordingly to reflect this reverse stock split, except for the conversion price of certain convertible notes as the conversion price is not subject to adjustment from forward and reverse stock splits (see Note 8).
During the nine months ended November 30, 2020, the Company issued 1,889,155,010 shares of its common stock for the conversion of debt and related interest and fees totaling $3,199,416 including $2,094,934 of principal, $1,083,982 interest, $20,500 in fees in connection with debt converted during the period, as well as the release of the related derivative liability (see Note 12).
Summary of Preferred Stock Activity
On July 22, 2020 the board of directors passed a resolution whereby the sole director agreed to return for cancellation, 816 of his 1000 Series F preferred shares to the Company.
On December 1, 2020 the company issued 110 Series F shares having a fair value of $362,084 to a consultant for services previously rendered which was recorded as professional fees with a corresponding adjustment to accrued liabilities.
Summary of Warrant Activity
|
|
|
|
|
|
|
|
|
Number of Warrants
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Years
|
|
|
|
|
|
|
|
Outstanding at March 1, 2020
|
|
2,043
|
|
$106.00
|
|
1.81
|
Issued
|
|
300,000,000
|
|
$0.0016
|
|
2.98
|
Exercised
|
|
—
|
|
—
|
|
—
|
Forfeited and cancelled
|
|
—
|
|
—
|
|
—
|
Outstanding at November 30, 2020
|
|
300,002,043
|
|
$0.0024
|
|
2.98
|
- 23 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
For the nine months ended November 30, 2020 and November 30, 2019, the Company recorded a total of $0 and $0, respectively, to stock-based compensation for options and warrants with a corresponding adjustment to additional paid-in capital.
During the nine months ended November 30, 2020 the Company issued warrants to purchase a total 300,000,000 common shares along with promissory notes (see Note 11) recorded as a discount and amortized over the respective loan term with a corresponding adjustment to paid in capital. These warrants (a) have an aggregate grant date fair value of $300,000 based on the Black-Scholes Option Pricing model with the following assumptions:
|
|
Strike price
|
$.00165
|
Fair value of Company’s common stock
|
$0.0011
|
Dividend yield
|
0.00%
|
Expected volatility
|
404.8%
|
Risk free interest rate
|
0.39% - 0.41%
|
Expected term (years)
|
3.00
|
14. 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.
In April 2019 the principals of WeSecure (see Note 9) filed lawsuit in California Superior Court seeking damages for this non-payment of this balance of WeSecure assets sold totaling $25,000, unpaid consulting fees payable to the two principals through September 2019 totaling $125,924, and labor code violations of $48,434, all totaling $199,358 plus attorney’s fees and damages. The parties finally settled all claims with a full release for $180,000 in June 2019 payable in 14 monthly instalments as follows:
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2020
|
|
Total
|
|
6/30/19
|
$
|
5,000
|
|
1/26/2020
|
$
|
15,000
|
|
|
|
|
7/30/19
|
$
|
5,000
|
|
2/25/2020
|
$
|
15,000
|
|
|
|
|
8/29/19
|
$
|
7,500
|
|
3/26/2020
|
$
|
15,000
|
|
|
|
|
9/28/19
|
$
|
7,500
|
|
4/25/2020
|
$
|
15,000
|
|
|
|
|
10/28/19
|
$
|
10,000
|
|
5/25/2020
|
$
|
20,000
|
|
|
|
|
11/27/19
|
$
|
10,000
|
|
6/25/2020
|
$
|
20,000
|
|
|
|
|
12/27/19
|
$
|
15,000
|
|
7/24/2020
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
60,000
|
|
|
$
|
120,000
|
|
$
|
180,000
|
|
The company has fully accrued the above $180,000 at February 28, 2019. At November 30, 2020 an outstanding balance of $139,500 remains.
As of November 30, 2020 the Company paid $40,500. As of this filing the November 2019 through July 2020 instalments are in arrears. The Company repaid $10,000 towards these arrears in the three months ended November 30, 2020 included in the total payments above.
The related legal costs are expensed as incurred.
- 24 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Operating Lease
The Company currently maintains an office at 1218-1222 Magnolia Ave, Suite 106 Bldg. H, Corona, California 92881 pursuant to a month to month lease which commenced March 1, 2019. The Company’s annual rent is $12,000 per year. RAD maintains a mailing address for 31103 Ranch Viejo Road, Suite d2114, San Juan Capistrano, California, for a nominal fee of $264/yr.
The Company’s leases are accounted for as operating leases. Rent expense is recorded over the lease terms on a straight-line basis. Rent expense was $3,000 and $14,800 for the three and nine months ended November 30, 2020, respectively and $2,000 and $6,000 for the three and nine months ended November 30, 2019, respectively.
At November 30, 2020 the Company had no future minimum payments.
Convertible Notes Payable
Certain convertible notes payable carry conditions whereby in the event of ant default of any condition the Company would be subject to certain financial penalties.
15. EARNINGS (LOSS) PER SHARE
The net income (loss) per common share amounts were determined as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
|
|
November 30
|
|
November 30
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common shareholders
|
|
$
|
3,408,305
|
|
$
|
(3,396,031
|
)
|
$
|
(3,634,660
|
)
|
$
|
(3,080,659
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of common stock equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: interest expense on convertible debt
|
|
|
479,387
|
|
|
225,109
|
|
|
1,503,148
|
|
|
608,965
|
|
Add Penalty interest on convertible debt
|
|
|
494,428
|
|
|
—
|
|
|
939,705
|
|
|
—
|
|
Add (less) loss (gain) on change of derivative liabilities
|
|
|
(5,354,622
|
)
|
|
2,108,596
|
|
|
(1,027,328
|
)
|
|
(367,971
|
)
|
Net income (loss) adjusted for common stock equivalents
|
|
|
(972,502
|
)
|
|
(1,062,326
|
)
|
|
(2,219,135
|
)
|
|
(2,839,665
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares - basic
|
|
|
679,536,441
|
|
|
312,730
|
|
|
470,273,731
|
|
|
185,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share – basic
|
|
$
|
0.00
|
|
$
|
(3.40
|
)
|
$
|
0.00
|
|
$
|
(15.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of common stock equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Debt
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Preferred shares
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Warrants
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares – diluted
|
|
|
679,536,441
|
|
|
312,730
|
|
|
470,273,731
|
|
|
185,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share – diluted
|
|
$
|
0.00
|
|
$
|
(3.40
|
)
|
$
|
0.00
|
|
$
|
(15.30
|
)
|
- 25 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The anti-dilutive shares of common stock equivalents for the three and nine months ended November 30, 2020 and November 30, 2019 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
|
|
November 30,
|
|
November 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Convertible notes and accrued interest
|
|
13,732,671,277
|
|
13,852,676
|
|
13,732,671,277
|
|
13,852,676
|
|
Convertible Class F Preferred shares
|
|
6,519,028,347
|
|
1,328,832
|
|
6,519,028,347
|
|
1,328,832
|
|
Warrants
|
|
300,002,043
|
|
2,043
|
|
300,002,043
|
|
2,043
|
|
Total
|
|
20,551,701,667
|
|
15,183,551
|
|
20,551,701,667
|
|
15,183,551
|
|
16. ROBOTIC ASSISTANCE DEVICES GROUP, INC. CONSOLIDATION
In the quarter ended August 31, 2020, one of Robotics Assistance Devices, Inc.’s (“RAD”) lenders entered receivership under the US Bankruptcy Courts supervision. The trustee assigned to the bankruptcy estate used powers granted under the loan agreement with RAD to take over and control RAD’s bank accounts which allowed the trustee to transfer all funds available to the bankruptcy estate in partial repayment of the loan, which amounted to approximately
$50,200. Because the trustee of the bankruptcy estate maintained effective control of RAD’s bank accounts, one member of Management transferred control of an entity under his control to the Company in order to transfer the conduct of RAD business to the new entity, Robotics Assistance Devices Group, Inc. (“RAD G”) Because of this, the Company has consolidated RAD G beginning on June 1, 2020. The table below shows the assets and liabilities consolidated on June 1, 2020 that were contributed:
|
|
|
|
Cash
|
$
|
(283
|
)
|
Accounts receivable
|
|
450
|
|
Other liabilities
|
|
(11,675
|
)
|
Net liabilities contributed
|
$
|
(11,508
|
)
|
17. SUBSEQUENT EVENTS
Subsequent to November 30, 2020 through to January 12, 2021:
Convertible note holders converted $161,480 of principal and $100,471 interest into 436,567,860 shares of the Company’s common stock.
On December 1, 2020 the Company issued 110 Series F Preferred Shares to a consultant for services rendered at a fair value of $362,084. The company recorded this as payment for accrued liabilities with a corresponding adjustment to paid in capital.
On December 10, 2020 the Company settled convertible notes (see Note 8) totaling $1,460,794 and associated accrued interest of $1,593,544 totaling $3,054,338 in exchange for promissory notes dated December 10, 2020 totaling $3,054,338, maturing December 10, 2023 and bearing interest at 12% per annum and a warrant to purchase 250,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $550,000.These notes are secured by a general security charging all of RAD’s present and after-acquired property.
On December 10, 2020 the Company settled additional convertible notes (see Note 8) totaling $2,683,357 and associated accrued interest of $1,237,811 totaling $3,921,1688 in exchange for a promissory note dated December 10, 2020 of $3,921,168, maturing December 10, 2023 and bearing interest at 12% per annum and a warrant to purchase 450,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $990,000.
On December 10, 2020 RAD Inc. entered into a 15 month lease commencing December 18, 2020 and ending March 31, 2022. The monthly lease payments are $3,859 with a$3,859 security deposit. The Company will account for this according to ASC 842.
- 26 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On December 14, 2020 the Company settled additional convertible notes (see Note 8) totaling $235,000 and associated accrued interest of $75,375 totaling $310,375 in exchange for a promissory note dated December 14, 2020 of $310,375, maturing December 10, 2023 and bearing interest at 12% per annum , a warrant to purchase 25,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $182,500 and 55 shares of Series F Preferred Shares having a fair value of $ 1,151,166.
On December 28, 2020 and January 1, 2021 a warrant holder exercised 145,741.573 and 131,345,178 warrant shares through cashless exercise and received 119,000,000 and 125,000,000 shares, respectively.
- 27 -