UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 10-K
/A
Amendment
No. 1
[X] ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended February 29, 2020
or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 000-55079
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS
INC.
(Exact name of registrant as
specified in its charter)
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Nevada
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27-2343603
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(State or other jurisdiction
of
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(I.R.S. Employer
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incorporation or
organization)
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Identification No.)
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1 East Liberty, 6th
Floor
Reno, NV 89501
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89501
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(Address of principal
executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (702)
990-3271
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
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Title of each class
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Name of each exchange on which
registered
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Common stock, $0.00001 par
value
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OTC PINK
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Indicate by check mark
if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
[ ]
Yes [X] No
Indicate by check mark
if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
[ ]
Yes [X] No
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.
[X]
Yes [ ] No
Indicate by check mark
whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File
required to be submitted and posted 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 and post such files).
[X]
Yes [ ] No
Indicate by check mark
if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant’s knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
[X]
Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, a smaller reporting company, or
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.
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Large accelerated
filer
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[ ]
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Accelerated filer
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[ ]
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Non-accelerated
filer
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[X]
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Smaller reporting
company
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[X]
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Emerging growth company
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[ ]
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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 Act).
[ ]
Yes [X] No
The aggregate market
value of the voting and non-voting common equity held by
non-affiliates of the registrant as of August 31, 2019 based upon
the closing price reported on such date was approximately $409.
Shares of voting stock held by each officer and director and by
each person who, as of August 31, 2019, may be deemed as have
beneficially owned more than 10% of the outstanding voting stock
have been excluded. This determination of affiliate status is not
necessarily a conclusive determination of affiliate status for any
other purpose.
As of July 22, 2020,
there were 195,549,343 shares of the registrant’s common stock
issued and outstanding.
DOCUMENTS INCORPORATED BY
REFERENCE
None.
EXPLANATORY NOTE
The purpose of this
Amendment No. 1 to the Registrant’s Annual Report on Form 10-K for
the year ended February 29, 2020 (“Form 10-K”) is to submit Exhibit
101 to the Form 10-K in accordance with Rule 405 of Regulation S-T.
Exhibit 101 consists of the Interactive Data Files from the
Registrant’s Form 10-K for the year ended February 29, 2020, filed
with the Securities and Exchange Commission on July 28, 2020.
Additionally, we
corrected two typographical errors as follows:
1. On the cover page,
under the heading “Title of each class” the Common stock par value
has been corrected from “$0.001” to “$0.00001”.
2. On page F-1, in the
table, the column heading label “Balance February 29, 2019” has
been corrected to “Balance February 29, 2020”.
Table of Contents
CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING INFORMATION
Certain
statements in this report contain or may contain forward-looking
statements. These statements, identified by words such as “plan”,
“anticipate”, “believe”, “estimate”, “should”, “expect” and similar
expressions include our expectations and objectives regarding our
future financial position, operating results and business strategy.
These statements are subject to known and unknown risks,
uncertainties and other factors, which may cause actual results,
performance, or achievements to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements. These forward-looking statements
were based on various factors and were derived utilizing numerous
assumptions and other factors that could cause our actual results
to differ materially from those in the forward-looking statements.
These factors include, but are not limited to, our ability to
secure suitable financing to continue with our existing business or
change our business and conclude a merger, acquisition or
combination with a business prospect, economic, political and
market conditions and fluctuations, government and industry
regulation, interest rate risk, U.S. and global competition, and
other factors. Most of these factors are difficult to predict
accurately and are generally beyond our control. You should
consider the areas of risk described in connection with any
forward-looking statements that may be made herein. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this report. Readers
should carefully review this report in its entirety, including but
not limited to our financial statements and the notes thereto and
the risks described in our Annual Report on Form 10-K for the
fiscal year ended February 28, 2019. We advise you to carefully
review the reports and documents we file from time to time with the
Securities and Exchange Commission (the “SEC”), particularly our
quarterly reports on Form 10-Q and our current reports on Form 8-K.
Except for our ongoing obligations to disclose material information
under the Federal securities laws, we undertake no obligation to
release publicly any revisions to any forward-looking statements,
to report events or to report the occurrence of unanticipated
events.
PART I
ITEM 1.
BUSINESS
Business
Overview
Artificial Intelligence Technology Solutions Inc. (formerly known
as On the Move Systems Corp.) (“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 (“AITX”).
Robotic Assistance Devices, LLC (“RAD”), was incorporated in the
State of Nevada on July 26, 2016 as a LLC and was founded by
current President Steve Reinharz. On July 25, 2017, Robotic
Assistance Devices LLC converted to a C Corporation, Robotic
Assistance Devices, Inc. through the issuance of 10,000 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 3,350,000 shares of AITX Series E Preferred
Stock and 2,450 shares of Series F Convertible Preferred Stock.
AITX’s prior business focus was transportation services, and AITX
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, in
which AITX purchased all the outstanding shares of capital stock of
RAD. As a result, 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.
AITX’s
prior business focus was transportation services, and we were
previously exploring the on-demand logistics market by seeking to
develop a network of logistics partnerships. On August 28, 2017,
AITX acquired all the outstanding shares of RAD. Following the RAD
acquisition, the Company is focused on applying advanced artificial
intelligence (AI) driven technologies, paired with multi-use
hardware and supported by custom software and cloud services, to
intelligently automate and integrate a variety of high frequency
security, concierge and operational tasks.
RAD’s
solutions are offered as a recurring monthly subscription,
typically with a minimum 12 month subscription contract. RAD’s
solutions earn over 75% gross margin over the life of each deployed
asset. Specifically, RAD provides workflow automation solutions
delivered through a system of hardware, software and cloud
services. All elements of hardware and software design offered by
RAD are 100% designed, developed and owned by RAD.
Mission
AITX’
mission is to apply Artificial Intelligence (AI) technology to
solve enterprise problems that can be categorized as expensive,
repetitive and outside of the core competencies of the prospect
organization.
A
short list of basic examples include:
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1.
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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.
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Integrated
hardware/software with Artificial Intelligence driven responses,
simulating and expanding on what legacy or manned solutions could
perform.
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Automation of common
access control functions through technology utilized facial
recognition and machine vision, leapfrogging most legacy solutions
in use today.
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RAD
solutions are unique in the fact they:
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Start with an AI-driven
response with the easy ability to connect to manned response.
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Use unique hardware
purpose built by RAD for delivery of these solutions.
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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.
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RAD’s
first industry focus is the $ 100B+ global security services
market. (1)
RAD’s
founder, Steve Reinharz, has 20+ years in various
leadership/ownership roles in the security industry and was part of
a successful exit to a global multinational security company in
2004. Mr. Reinharz has built a committed team of employees that
have demonstrated tremendous productivity and self-sacrifice to
advance the stated mission.
RAD’s
current goal is to disrupt and capture a significant portion of
both the human security guard market ($30B +) (2) and
‘physical security’ (cctv, access control, etc.) market ($20B +)
through it’s innovative RAD solution ecosystem.
(1)
https://www.statista.com/statistics/323113/distribution-of-the-security-services-market-worldwide/
(2)
https://www.statista.com/statistics/294206/revenue-of-security-services-in-the-us/
AITX Expected
Acquisitions
It is
expected that AITX will acquire 3 remaining complementary companies
owned by Mr. Reinharz sometime before the end of fiscal year 2021.
These companies will be completely rolled into AITX as-is with no
special compensation to Mr. Reinharz as setout below.
BOLO
Technologies, Inc., wholly owned by Mr. Reinharz, has had its
limited assets of Intellectual Property and software formally
integrated into RAD without necessity of any acquisition by RAD.
BOLO created an innovative security-centric platform that
integrates additional technologies to give security directors and
law enforcement the easiest access to create, manage and track ‘Be
On The Lookout’ (BOLO) alerts. ‘BOLO’ is a security industry term
used to label interesting suspects such as disgruntled former
employees, persons of interest wanted for questioning related to
suspicious events and several other similar types of functions and
services. BOLO Technologies will use advanced AI for data
correlation and pattern matching and is focused on giving customers
the ability to pre-empt, predict and prevent possible incidents.
BOLO uses a service model similar to RAD’s robots-as-a-service
model.
‘RAD
Canada’, wholly owned by Mr. Reinharz, provides most of the
Research & Development for RAD’s solutions. Specifically, all
RAD hardware solutions are designed and developed by this entity as
well as some firmware, software and cloud software elements. All
but two RAD Canada resources have been absorbed into RAD.
‘RAD
Group’, wholly owned by Mr. Reinharz, provides additional sales
channels for AITX. This will be acquired by AITX with no
compensation to Mr. Reinharz.
AITX,
with these acquisitions, will enjoy the benefits of a skilled
R&D group that includes skilled industrial and software
engineers plus a security-focused platform that provides unique
services in high demand. Mr. Reinharz will remain President of all
AITX subsidiaries.
Mr.
Reinharz has not taken any cash salary or earnings from RAD, AITX
or any related entity since inception of the RAD in 2016.
Background - First
Commercial Rugged Outdoor Security Robot
RAD
was started by Mr. Reinharz in the summer of 2016. RAD originally
partnered with SMP Robotics Systems Corp (SMP). and commercialized
the SMP S5 Robot for the security market. RAD’s commercialization
of the platform focused on integrating traditional security
industry manufacturers’ solutions onto the robotics platform. After
two paid Proof of Concepts for large utility companies (under NDA)
and over 18 months of development and testing RAD began deployments
with various Fortune 500 customers. These deployments were
scheduled to begin in October 2017 but were delayed until December
2017 due to various supply chain challenges.
By
March 2018 it was apparent that S5 platform promotion and
development was not sustainable and RAD began to pull robots out of
service.
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The
Robots were rejected by customers due to unsatisfactory reliability
and some technical flaws that could not be solved despite full
efforts by SMP and RAD. RAD now considers this phase of the company
‘Phase 1’ into robotics. Over 40 deployments were attempted during
this period.
RAD
has had no contact with SMP Robotics since April 2018.
Much of RAD’s existing
convertible debt was acquired in support of the RAD/SMP robotics
program.
Background – RAD’s
2nd Generation Ecosystem
RAD’s
primary strategy has always been to use AI technology and modern
systems to transform the security industry. Mobile robots, indoor
and outdoor, are a part of that strategy. However, to completely
realize the delivery of these solutions a set of ‘stationary
robots’ required development.
These
stationary robots launched in April 2018 with the Security Control
and Observation Tower (SCOT, development of which began in August
2017. SCOT performs many of the same functions of a stationary
human security guard, plus many features that human guards cannot
perform, and at approximately 15% of the cost. There is no known
comparable solution available today that blends technology,
usability, special features and cost. This is why SCOT has growing
demand and has received considerable accolades.
SCOT’s
positive market reception reinvigorated RAD and the focus turned to
accelerating the development of the software and cloud services
that support SCOT.
SCOT
runs on the RAD Software Suite™, as all RAD
security solutions do. This software suite is a cloud and mobile
solution that is the heart of RAD’s security
solution.
After
extraordinary efforts by the team, beta SCOT was first shown to
customers in Ohio at the end of February 2018. This beta exposition
was to test customer reception and receive final
voice-of-the-customer input. Security representatives from
Cincinnati Reds, Cincinnati Bengals, Cincinnati Police Departments
and County of Hamilton Sheriff’s Department were shown this early
SCOT and gave SCOT and the preliminary RAD Software Suite a
tremendous endorsement. Feedback was incorporated into SCOT and
ideas on SCOT derivatives were added to the hardware development
roadmap.
At the
ISC West show in April 2018 SCOT won three awards: (1) a SIA New
Product Award for Law Enforcement/Guarding, (2) 2018 Secure Campus
Award from Campus Security and Life Safety and (3) a ‘Govie’ award
for government security solutions from Security Today.
(1) SIA’s New Product Showcase recognizes innovative
products, services and solutions in electronic physical security,
and SCOT™’s award
comes in the Law Enforcement/Guarding Systems category.
Technologies within the program are used in the protection of life
and property in residential, commercial and institutional settings,
displaying SCOT™’s importance
in long-range human detection and acting as a force multiplier for
safety and defense against outside threats.
(2) RAD’s pivot to SCOT and its future
derivatives is complete and current facilities can produce a mix of
up to 100 units per month with moderate additional investment in
equipment and manpower.
RAD
has not submitted for any awards since mid-2018 but expects future
awards participation.
Currently
Available Hardware Solutions
RAD’s
hardware lineup has improved and expanded since initial launch in
April 2018. RAD’s hardware lineup includes:
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’SCOT 2.0’ has replaced
SCOT 1.x. SCOT 1 went through three significant upgrades over the
first 12 months of launch to arrive at SCOT 1.4. SCOT 1.4 features
a mature software platform and a refined hardware platform. SCOT
solutions have operated with over 99% uptime since inception.
’SCOT’ is an acronym for ’Security Control and Observation Tower’.
It embodies and offers the full complement of solutions driven by
the RAD Cloud.
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SCOT 2.0 is a SCOT 1.4
enclosed in an appealing modern enclosure. It also features
additional LCD monitors (like a Wally), curved LED panels to
support visibility and flexible messaging (as opposed to SCOT 1.x
flat LED panels) and an advanced locking system. SCOT 2.0 is the
realization of the concepts pioneered, demonstrated and tested
throughout the 1.x lineup. The SCOT lineup is indoor/outdoor
rated.
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All SCOT1.x units
continue to perform and generate revenue for the company. There are
no immediately plans to replace 1.x units with 2.0 units. SCOT 1.x
units can be supported indefinitely under RAD’s software
architecture. It is expected that in time these 1.x units will be
applied to industrial applications where aesthetics are secondary
to functionality.
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‘WALLY’ was announced in
June 2018 in the Allied Universal Services, Inc., booth at the BOMA
International Show in San Antonio. WALLY is a wall-mounted
derivative of SCOT that is also indoor/outdoor rated. It’s designed
to bring the RAD ecosystem to areas such as main lobbies, elevator
lobbies, dock access areas and more.
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‘FRED’ was announced in
September 2018 and is a complement to the RAD ecosystem by just
focusing on various verified entry methods. Appropriate for office
access and to be mounted on gate stanchions. FRED has since been
dropped.
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‘ROSA’ was announced to
specific dealers and customers in May 2019. Official general market
introduction should happen by August of 2019. ROSA is an acronym
for Responsive Observation Security Agent.
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‘AVA’ was announced by
the company at the beginning of fiscal 2021 and replaces ‘FRED’.
RAD took it’s first AVA order in June 2020 and expects to deliver
it in September. AVA performs FRED tasks and much more.
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Software
Solutions
RAD
has created a variety of front-end and back-end software solutions
to power its ecosystem. Customer facing software includes RADGUARD
(on the touchscreens of RAD’s field devices) and RADSOC (Security
Operations Center) and RADPMC (Property Management Center).
RAD
has developed a variety of utilities that allow automatic
over-the-air updates, most of which is within a back-end
application called SCOT Manager.
RAD
has written world class Visitor Management, Access Control and
other applications instead of seeking to partner with legacy
manufacturers. It is RAD’s opinion that the legacy paradigm in the
physical space underserves the markets in terms of cost,
functionality and integration.
RAD
has recently integrated its own Video Management System into RADSOC
that includes full integration to a variety of features related to
security and properly management functions.
RAD’s
ability to deliver easy to use, easy to obtain, and easy to support
software, combined with custom workflow-automation applications, is
the key to RAD’s value proposition.
Manufacturing
& Assembly
RAD
uses a variety of domestic and overseas machine shops for raw
material procurement and machining of the required plastic and
metal pieces that build RAD devices.
RAD’s
sourcing has redundancy through use of multiple machine shops
producing the same products for RAD.
There
is no piece of any RAD device that can only be procured from one
supplier.
RAD’s
margins are based on current small batch production and assembly.
Economies of scale will drive greater gross margin as quantities
and efficiencies increase.
RAD’s
primary assembly and configuration location is in Southern
California. It is anticipated that as RAD outgrows its existing
facility these functions will be moved out of state, most likely to
mid-west location. RAD’s California location would remain as the
West Coast Sales & Service Center.
Anticipated location for a comprehensive assembly location is
Michigan. This location provides central access to RAD’s largest
markets as well as easy access from RAD’s R&D center outside of
Toronto, Canada.
Tariff
Impact
Anticipated tariffs of 25% across all imported items, not yet in
effect, would impact US production costs by an additional 10%. If
this happens RAD anticipates absorbing this cost for US units but
supplying Canadian demand from local Canadian production (instead
of from the US).
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Covid Impact
The
company issued a Covid Impact notice on March 24, 2020 that can be
found here:
https://secureservercdn.net/198.71.233.11/48b.407.myftpupload.com/wp-content/uploads/2020/03/covidUpdate.pdf.
In summary, Covid accelerated some sales and prospects and stunted
others. Overall the company believes that the Covid pandemic will
spur the use of innovative cost saving technology such as created
by RAD. Indeed, at the time of this writing RAD is engaged in
several large and high level discussions with companies actively
looking to reduce cost due to the pandemic. RAD expects this to be
a general activity of all companies due to the long-term impact of
Covid and regardless of if a vaccine is discovered in the short
term.
Roadmap
RAD
announced three major hardware solutions in fiscal 2020,
specifically ROAMEO, AVA and ROSA.
1) RAD
announced a return to the mobile unmanned ground vehicle market at
the end of July 2019. This ground drone will benefit from
significant innovations during the first 12 months following
launch. It’s expected these advanced applications will spawn
several ‘killer apps’ that will put this unit, and the RAD
Ecosystem, in high demand. Expect release in September 2021.
2) RAD
announced the AVA solution as a replacement to FRED.
3) RAD
released ROSA, which has subsequently become the highest volume in
shortest amount of time RAD solution to date.
In fiscal 2021 RAD
released one significant hardware solution and one significant
software solution.
RAD
released Wally 2.0 with or without the ‘Health Services Option’.
Wally 2.0 adds functionality in the way of advanced notification
and improved response panel. The Health Services Option includes
the ability to record people’s temperature and perform appropriate
action based on the person’s skin temperature. This solution has
garnered significant interest to date.
RAD
released it’s ‘Face Mask Detection & Alert’ software upgrade.
This software now runs on all RAD units and can be activated by
customers as they see fit. It’s part of RAD’s commitment to provide
advanced analytics on a continuous basis.
RAD’s
hardware and software have benefited from continuous significant
improvements and to date has over 400,000 paid operating hours.
Team and
Culture
AITX
has built a strong start-up culture based on performance, sacrifice
and rewards. RAD begins every interview with a review of the eight
elements that comprise RAD Culture and candidates are encouraged to
understand that this is not a traditional company. As a startup RAD
faces challenges of limited resources and time and as such, the
team members are open to multitasking and wearing multiple hats, as
the situation demands, thus allowing the management team to focus
on the larger goals and steer the company in the right direction.
Our solid RAD team, all share in the same beliefs and core values
of the Company; so we easily adjust to changes thus giving RAD an
edge in the market. The core team really determines the fate of a
company and RAD is no stranger to the difficulties that face a
startup, such as unexpected setbacks, delays in funding or a cash
crunch. At RAD the whole team has pitched in, doing whatever they
can, from working to meet tight deadlines; or willing partaking in
financial sacrifices; to assisting where and whenever needed,
creating a core team willing to standby the company through the
testing times.
RAD’s
culture has provided strength throughout the difficult period of
robot deployments and the transition to 2nd generation
solutions.
Market
Environment
RAD
experience has proved that the security market is ripe for
disruption. Having captured the interest of many Fortune 500
companies (names generally protected under NDA) including
Microsoft, Verizon, Boeing, Lockheed Martin, among many others, no
other known company has the solutions, distribution channel,
reputation, sales or support model to rival RAD in the near
term.
Furthermore, the launch of RAD’s mobile solutions will create
additional significant distance between any would-be competitors.
RAD will be a one-stop shop for proven and comprehensive mobile and
stationary workflow improvement devices and systems.
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RAD’s
technology model includes a ‘new paradigm’ for the security
industry: Security in a box. Every RAD solution features connection
to the RAD Software Suite which is a platform for AI processing,
usage analytics, cloud served video, communications interface,
audit logs and much more.
Positive market reception for RAD solutions are due to the
following existing conditions:
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The security guard
industry is characterized by poor customer satisfaction and
industry consolidation. It’s self-described to be a ‘race to the
bottom’ to provide the lowest cost services to end users because
generally speaking end users require some security for
general crime deterrent and insurance purposes. There are 1.1M
security guards in the United States and the security guard
industry represents over $20B in annual sales and the average
security guard bill rate is $20/hour.
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Enterprise
organizations’ security divisions/groups are continuously
challenged to reduce cost. For example, Universal Parcel Service
(UPS) spends over $120M/year in security guard services, Lockheed
Martin over $60M/year and NBC Universal over $25M/year. The
security guard industry has not had any significant disruption or
innovation since inception.
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Guarding companies
struggle to offer quality service at a reasonable price. Security
organizations are eagerly receptive to solutions that improve
performance and reduce cost.
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4.
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RAD’s device rental
model allows clients to immediately save significant operating
costs. With RAD’s current stationary solutions retailing from under
$1/hour to $5/hour we can immediately provide substantial savings
and significant additional security.
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5.
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RAD’s services options
allow end users to incorporate or fully replace their existing
Security Operation Centers with RAD solutions. This integrated with
RAD’s “Solutions-As-A-Service” Rental Program offers customized
options to help organizations achieve operational and security
goals.
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The
above conditions speak to the historical lack of innovation in the
guarding market largely driven by the lack of development of truly
revolutionary systems. This market is now positioned for major
disruption with the application of AI based solutions, as lead by
RAD. As such, the interest in RAD solutions has been overwhelming.
Major companies, including the U.S. largest guarding company Allied
Universal Services, are aligning with RAD to offer these services
to their customer base.
Prospective ROAMEO
Impact
The
Company’s release of ROAMEO bring it into comparison with
Knightscope, a Palo Alto based robotics company in business since
2012. RAD’s approach is very different than Knightscope’s on all
elements of technology. RAD believes that it’s pricing is up to 45%
less expensive than the K5.
RAD
expects that a small amount of ROAMEO orders, which RAD believes it
has ‘queued up’ will make a significant impact on RAD’s financial
performance and create momentum for significant adoption of the
entire RAD lineup.
RAD Solutions
Customer Acceptance
RAD
end users include one Top 10 company and many Fortune 500
companies. RAD is currently deployed in logistics, commercial real
estate, healthcare and retail industries. If RAD deployed to only
5% of any one of these industries facilities the company would
enjoy tremendous profitability.
Due to
the nature of existing non-disclosure agreements RAD does not
normally share customer lists or specific deployment details.
RAD’s
batch production of SCOTs & WALLYS have all been committed
prior to the completion of the production cycle, with an average
delivery time of 45 days. RAD has set a goal, predicated on regular
demand, to reduce delivery time to 15 days.
RAD Industry
Leadership Role
Mr.
Reinharz has earned a prominent role as a spokesperson for AI and
change in the security industry. He has lectured and participated
in several panels for some of the security industries largest
events and organizations. Mr. Reinharz sits on the SIA’s Autonomous
Working Group committee which is dedicated to helping shape the
industry and support progressive legislation. Most recently Mr.
Reinharz provided NY City’s ASIS CPP group a lecture that qualified
as a continuing education credit.
- 6 -
RAD
gets exposure to prospects, customers and investors through Mr.
Reinharz’s efforts to educate the security market. Blogs and
industry published articles can be found in the news section of
www.roboticassistancedevices.com
It is
expected that Mr. Reinharz continues his promotion of the new
paradigm for the next few years until adoption is widespread.
Financing
RAD
has entered into three royalty revenue agreements and taken on
limited additional direct debt to sustain operations and research
and development as the company drives towards positive cash flow.
Furthermore Steve Reinharz has provided over an additional $250,000
plus 100% deferred earnings during this rebuilding period. Steve
Reinharz has received no cash salary and has pledged to receive no
salary payouts until RAD has positive cash flow. All RAD employees
have also made financial contributions and sacrifices during this
period of focus on profitability.
However, positive cash flow cannot fund the pace of expected
deployments. As such RAD has been working on alternative funding
options. The expected success and durability of RAD’s solutions,
and depth and breadth of the sales funnel has attracted the
attention of various asset funding companies.
RAD is
engaged in supplemental financing efforts based on existing and
future streams of revenue that will provide additional non-dilutive
funding to the company. As these efforts mature updates will be
issued or shared in the relevant filings.
Go To Market
Strategy
RAD’s
strategy continues to focus on creation and support of a strong
dealer channel. This affords multiple benefits to RAD with few
downsides. RAD has successfully integrated through the largest US
guarding company and recently signed another top 3 guarding company
as a RAD dealer. Furthermore, RAD has been signing up and
developing mid-sized and smaller dealers. RAD is on track to
develop a focused group of dealers of which most will exclusively
represent RAD solutions.
Supplemental to that RAD will, under certain circumstances, accept
subscriptions directly from end users. These situations are largely
characterized by the end user not having a guarding company, having
a guarding company that RAD does not want as a dealer or other
extenuating circumstances. RAD has no desired ratio of dealer vs
direct subscriptions. Dealer subscriptions remain the primary
focus.
Competition
RAD
has no direct competition save for one immediate competitor and one
potential competitor..
RAD is
considered part of the ‘drones’ category of the security industry
although at RAD we consider ourselves to be in the workflow
automation industry.
RAD
deliberately restricts information that is public for three main
reasons:
|
|
|
|
1.
|
Usually activities are
covered by mutual non-disclosure agreements and RAD generally will
not ask for permission to publicize customer activities.
|
|
|
|
|
2.
|
These are generally
security applications and most companies prefer to not advertise
the details of their security systems.
|
|
|
|
|
3.
|
Until RAD hits the
‘tipping point’ we prefer to keep our solutions stealthy to some
extent so as not to give our would-be competitors tips to copy
us.
|
It is
anticipated that at some point some competition may enter the
market. RAD seeks to maintain a 2+ year competitive advantage
through a broad line of hardware solutions, the fastest and
smoothest user interface and the strongest feature set with the
most mature back-end. Furthermore RAD seeks to expand its sales
staff and become the dominant incumbent in this new market that it
has created.
Employees
As of June 17, 2020 we have
1 employee, 17 full time contract employees and 4 part time
contract employees. None of our employees are represented by a
union. We consider our employee relations to be excellent.
- 7 -
Legal
Proceedings
See Item 3 - Legal
Proceedings.
ITEM 1A. RISK
FACTORS
Pursuant to Item 305(e)
of Regulation S-K (§ 229.305(e)), we are not required to provide
the information required by this Item as it is a “smaller reporting
company,” as defined by Rule 229.10(f)(1).
ITEM 1B. UNRESOLVED
STAFF COMMENTS
Not
applicable.
ITEM 2.
PROPERTIES
We maintain our corporate
offices at 701 North Green Valley Parkway, Suite 200,Henderson,
Nevada, 89704 pursuant to a month-to-month lease. Our annual rental
cost for this facility is approximately $936 annually. RAD
currently maintains an office at 1218-1222 Magnolia Ave, Suite 106
Bldg. H, Corona, California 92881 pursuant to a month to month
lease commencing March 1, 2019. RAD’s annual rent is $12,000 per
year. RAD maintains a mailing address for 31103 Ranch Viejo Road,
Suite d2114 for a nominal fee of $ 264/yr. RAD previously had its
offices at 23121 La Cadena Suite B/C Laguna Hills, California
92675, pursuant to a five-year term ending March 31, 2022. Its
annual rental cost for this facility was approximately $65,000,
plus a proportionate share of operating expenses of approximately
$35,000 annually. The Company also leased premises in northern
California. The lease was for three years, beginning in August
2017, and would expire in August 2020. The Company shared these
premises with a former supplier who was the co-lessee. Through
agreement with the supplier, the Company was to pay 75% of the
lease costs and the supplier was to pay 25%. The Company’s share of
rent costs was approximately $43,000 annually. On February 1, 2018
the Company entered into an additional lease for premises for a
robotic control center. The lease ran from February 1, 2018 to
January 31, 2021 for $6,600 annually. At the end of fiscal 2019 the
Company terminated all three preceding leases through verbal
arrangement with the landlord. Regarding the lease at La Cadena,
the Company agreed to a settlement amount to cover unpaid rent,
commissions and leasehold improvements paid by the landlord
totaling $62,039 to be paid by the Company in 4 monthly
installments of $5,000 commencing August 1, 2019 with the remaining
balance to be paid in $10,000 monthly installments thereafter. The
Company recorded the $62,039 as a loss on settlement. No further
liability was recorded for both the northern California and robotic
control center leases.
ITEM 3. LEGAL
PROCEEDINGS
From
time to time, we may become involved in various lawsuits and legal
proceedings which arise in the ordinary course of business.
Litigation is subject to inherent uncertainties, and an adverse
result in these or other matters may arise from time to time that
may harm our business. There are no legal proceedings pending at
this time.
In
April 2019 the principals of WeSecure filed lawsuit in California
Superior Court seeking damages for non-payment balance of sale of
WeSecure assets totaling $25,000, unpaid consulting fees payable to
the two principals through to 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
|
|
As of June 17, 2020 the
Company has paid $17,500. As of this filing the September 2019
through May 2020 instalments are in arrears.
ITEM 4. MINE SAFETY
DISCLOSURES
Not
applicable.
- 8 -
PART II
ITEM 5. MARKET FOR
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE
OF EQUITY SECURITIES
Market
Information
AITX’s
common stock began trading on the “Over the Counter” Bulletin Board
(“OTC”) under the symbol “AITX” in June 2011 and as AITX on August
24, 2018. The following table sets forth, for the period indicated,
the prices of the common stock in the over-the-counter market, as
reported and summarized by OTC Markets Group, Inc. On August 24,
2018, the Company undertook a 100:1 reverse stock split and on
March 27, 2020 a 10,000:1 reverse 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.
These
quotations represent inter-dealer quotations, without adjustment
for retail markup, markdown, or commission and may not represent
actual transactions. There is an absence of an established trading
market for the Company’s common stock, as the market is limited,
sporadic and highly volatile, which may affect the prices listed
below.
|
|
|
|
|
|
|
|
|
High
|
|
Low
|
Fiscal Year Ended February 29,
2020:
|
|
|
|
|
|
|
Quarter ended February
29, 2020
|
|
$
|
0.00
|
|
$
|
0.00
|
Quarter ended November
30, 2019
|
|
$
|
0.00
|
|
$
|
0.00
|
Quarter ended August
31, 2019
|
|
$
|
0.01
|
|
$
|
0.00
|
Quarter ended May 31,
2019
|
|
$
|
0.02
|
|
$
|
0.00
|
|
|
|
|
|
|
|
Fiscal Year Ended February 28,
2019:
|
|
|
|
|
|
|
Quarter ended February
28, 2019
|
|
$
|
0.02
|
|
$
|
0.00
|
Quarter ended November
30, 2018
|
|
$
|
0.31
|
|
$
|
0.00
|
Quarter ended August
31, 2018
|
|
$
|
1.56
|
|
$
|
0.12
|
Quarter ended May 31,
2018
|
|
$
|
7.57
|
|
$
|
0.90
|
On June 15, 2020, the closing price per share
of the Company’s common stock as quoted on the OTC was $0.01.
Dividends
To
date, we have not paid dividends on shares of the Company’s common
stock and we do not expect to declare or pay dividends on shares of
our common stock in the foreseeable future. The payment of any
dividends will depend upon our future earnings, if any, AITX’s
financial condition, and other factors deemed relevant by its Board
of Directors.
Holders of Common
Stock
As of
June 18, 2020, there were 65 holders of AITX’s common stock of
which 15 were active. The number of foregoing holders does not
include beneficial owners of common stock whose shares are held in
the names of banks, brokers, nominees or other fiduciaries.
Common Stock
The
Company is authorized to issue 5,000,000,000 shares of common
stock, with a par value of $0.00001. The closing price of its
common stock on July 22, 2020, as quoted by OTC Markets Group,
Inc., was $0.0157. There were 195,549.343 shares of common stock
issued and outstanding as of July 22, 2020. All shares of common
stock have one vote per share on all matters including election of
directors, without provision for cumulative voting. The common
stock is not redeemable and has no conversion or preemptive rights.
The common stock currently outstanding is validly issued, fully
paid and non-assessable. In the event of liquidation of the
Company, the holders of common stock will share equally in any
balance of its assets available for distribution to them after
satisfaction of creditors and preferred shareholders, if any. The
holders of the Company’s common are entitled to equal dividends and
distributions per share with respect to the common stock when, as
and if, declared by the Board of Directors from funds legally
available.
- 9 -
Our
Articles of Incorporation, Bylaws, and the applicable statutes of
the state of Nevada contain a more complete description of the
rights and liabilities of holders of our securities.
During
the year ended February 28, 2020 and 2019, there was no
modification of any instruments defining the rights of holders of
the Company’s common stock and no limitation or qualification of
the rights evidenced by the Company’s common stock as a result of
the issuance of any other class of securities or the modification
thereof.
On
March 5, 2015, AITX effected a 500-for-1 reverse split, upon its
reincorporation in Nevada. Each common shareholder received one
common share in the Nevada company for every 500 common shares they
held in the Florida company. Fractional shares were rounded up, and
each share shareholder received at least 5 shares.
On
August 24, 2018, the Company undertook a 100:1 reverse stock split
and on March 27, 2020 the Company undertook a 10,000:1 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.
Non-cumulative voting
Holders of shares of the Company’s common stock do not have
cumulative voting rights, which means that the holders of more than
50% of the outstanding shares, voting for the election of
directors, can elect all of the directors to be elected, if they so
choose, and, in that event, the holders of the remaining shares
will not be able to elect any of our directors.
Securities Authorized for Issuance under
Equity Compensation Plans
The
following table shows the number of shares of common stock that
could be issued upon exercise of outstanding options and warrants,
the weighted average exercise price of the outstanding options and
warrants, and the remaining shares available for future
issuance.
|
|
|
|
|
|
|
Plan Category
|
|
Number of Securities
to
be issued upon
exercise
of outstanding
options,
warrants and rights
|
|
Weighted average
exercise price of
outstanding
options,
warrants and rights
|
|
Number of
securities
remaining available
for
future issuance
|
Equity compensation plans approved by
security holders.
|
|
—
|
|
—
|
|
1
|
|
|
|
|
|
|
|
Equity compensation plans not approved by
security holders.
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
Total
|
|
—
|
|
—
|
|
1
|
Preferred Stock
The
Company is authorized to issue up to 20,000,000 shares of $0.001
par value preferred stock. The board of directors is authorized to
designate any series of preferred stock up to the total authorized
number of shares.
Series E Preferred Stock
The
board of directors has designated 4,350,000 shares of Series E
Preferred Stock. As of the date of this report, there are 4,350,000
shares of Series E Preferred Stock outstanding. The Series E
Preferred Stock ranks subordinate to the Company’s common stock as
to distributions of assets upon liquidation, dissolution or winding
up of the Corporation. The Series E preferred stock is
non-redeemable, does not have rights upon liquidation of the
Company and does not receive dividends. The outstanding shares of
Series E Preferred Stock have the right to take action by written
consent or vote based on the number of votes equal to twice the
number of votes of all outstanding shares of equity instruments
with voting rights. As a result, the holder of Series E Preferred
Stock has 2/3rds of the voting power of all shareholders at any
time corporate action requires a vote of shareholders.
- 10 -
Series F Convertible Preferred
Stock
The
board of directors has designated 4,350 shares of Series F
Convertible Preferred Stock with a par value of $1.00 per share. As
of the date of this report, there are 4,350 shares of Series F
Convertible Preferred Stock outstanding. The Series F Convertible
Preferred Stock is non-redeemable, does not have rights upon
liquidation of the Company, does not have voting rights and does
not receive dividends. Each holder may, at any time and from time
to time convert all, but not less than all, of their shares of
Series F Convertible Preferred Stock into a number of fully paid
and nonassessable shares of common stock determined by multiplying
the number of issued and outstanding shares of common stock of the
Company on the date of conversion by three and 45 100ths (3.45) on
a pro rata basis. So long as any shares of Series F Convertible
Preferred Stock are outstanding, the Company shall not, without
first obtaining the approval of the majority of the holders: (a)
alter or change the rights, preferences or privileges of any
capital stock of the Company so as to affect adversely the
Series F convertible preferred stock; (b) create any Senior
Securities; (c) create any pari passu Securities; (d) do any act or
thing not authorized or contemplated by the Certificate of
Designation which would result in any taxation with respect to
the Series F Convertible Preferred Stock under Section 305 of the
Internal Revenue Code of 1986, as amended, or any comparable
provision of the Internal Revenue Code as hereafter from time to
time amended, (or otherwise suffer to exist any such taxation
as a result thereof).
Series G Preferred Stock
The
board of directors has designated 1,000 shares of Series G
Preferred Stock. As of the date of this report, there are no shares
of Series G Preferred Stock outstanding. The Series G preferred
stock does not have voting rights, does not have rights upon
liquidation of the Company and does not receive dividends.
Transfer Agent and Registrar
The
Transfer Agent for our capital stock is Transhare with an address
at 15500 Roosevelt Boulevard, Suite 302, Clearwater, Florida 33760.
Their telephone number is Office phone: 303-662-1112.
Recent Sales of
Unregistered Securities
The
following is a summary of transactions by AITX involving sales of
its securities that were not registered under the Securities
Act.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Transaction (1)
|
|
Principal
Converted
|
|
Interest
Converted
|
|
Fees
Converted
|
|
Total
Amount Converted
|
|
Shares
Issued**
|
Number of shares
outstanding February 28, 2017
|
|
|
|
|
|
|
|
|
|
|
|
18
|
March 7, 2017
|
|
conversion
|
|
$1,840
|
|
$—
|
|
$—
|
|
$1,840
|
|
1
|
March 22, 2017
|
|
conversion
|
|
1,971
|
|
—
|
|
—
|
|
1,971
|
|
1
|
March 27, 2017
|
|
cancelation ***
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1)
|
April 3, 2017
|
|
conversion
|
|
1,487
|
|
3,397
|
|
—
|
|
4,884
|
|
1
|
April 7, 2017
|
|
conversion
|
|
1,000
|
|
—
|
|
—
|
|
1,000
|
|
1
|
April 20, 2017
|
|
conversion
|
|
920
|
|
—
|
|
—
|
|
920
|
|
1
|
April 24, 2017
|
|
conversion
|
|
6,876
|
|
—
|
|
—
|
|
6,876
|
|
1
|
April 26, 2017
|
|
conversion
|
|
1,130
|
|
—
|
|
—
|
|
1,130
|
|
1
|
May 2, 2017
|
|
conversion
|
|
1,130
|
|
—
|
|
—
|
|
1,130
|
|
1
|
May 4, 2017
|
|
conversion
|
|
1,240
|
|
—
|
|
—
|
|
1,240
|
|
1
|
May 4, 2017
|
|
conversion
|
|
8,854
|
|
—
|
|
—
|
|
8,854
|
|
1
|
May 8, 2017
|
|
conversion
|
|
9,296
|
|
—
|
|
—
|
|
9,296
|
|
1
|
May 12, 2017
|
|
conversion
|
|
1,432
|
|
—
|
|
—
|
|
1,432
|
|
1
|
May 15, 2017
|
|
conversion
|
|
11,661
|
|
—
|
|
—
|
|
11,661
|
|
1
|
May 15, 2017
|
|
conversion
|
|
1,550
|
|
—
|
|
—
|
|
1,550
|
|
2
|
May 18, 2017
|
|
conversion
|
|
13,629
|
|
—
|
|
—
|
|
13,629
|
|
2
|
May 23, 2017
|
|
conversion
|
|
9,684
|
|
3,059
|
|
—
|
|
12,743
|
|
1
|
May 24, 2017
|
|
conversion
|
|
1,730
|
|
—
|
|
—
|
|
1,730
|
|
2
|
May 30, 2017
|
|
conversion
|
|
1,890
|
|
—
|
|
—
|
|
1,890
|
|
2
|
June 7, 2017
|
|
conversion
|
|
1,985
|
|
—
|
|
—
|
|
1,985
|
|
2
|
June 9, 2017
|
|
conversion
|
|
2,085
|
|
—
|
|
—
|
|
2,085
|
|
2
|
June 12, 2017
|
|
conversion
|
|
2,185
|
|
—
|
|
—
|
|
2,185
|
|
2
|
- 11 -
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Transaction (1)
|
|
Principal
Converted
|
|
Interest
Converted
|
|
Fees
Converted
|
|
Total
Amount Converted
|
|
Shares
Issued**
|
June 14, 2017
|
|
conversion
|
|
2,295
|
|
—
|
|
—
|
|
2,295
|
|
2
|
June 19, 2017
|
|
conversion
|
|
2,400
|
|
—
|
|
—
|
|
2,400
|
|
2
|
June 20, 2017
|
|
conversion
|
|
2,500
|
|
—
|
|
—
|
|
2,500
|
|
3
|
June 20, 2017
|
|
conversion
|
|
3,000
|
|
358
|
|
—
|
|
3,358
|
|
—
|
June 22, 2017
|
|
warrant exercise****
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
June 28, 2017
|
|
conversion
|
|
2,800
|
|
—
|
|
—
|
|
2,800
|
|
3
|
June 28, 2017
|
|
warrant exercise****
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
July 5, 2017
|
|
conversion
|
|
3,050
|
|
—
|
|
—
|
|
3,050
|
|
3
|
July 6, 2017
|
|
warrant exercise****
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3
|
July 7, 2017
|
|
warrant exercise****
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
July 7, 2017
|
|
conversion
|
|
3,400
|
|
—
|
|
—
|
|
3,400
|
|
3
|
July 26, 2017
|
|
conversion
|
|
3,500
|
|
—
|
|
—
|
|
3,500
|
|
4
|
July 28, 2017
|
|
conversion
|
|
9,750
|
|
—
|
|
—
|
|
9,750
|
|
1
|
July 28, 2017
|
|
conversion
|
|
4,000
|
|
—
|
|
—
|
|
4,000
|
|
4
|
August 2, 2017
|
|
conversion
|
|
75,000
|
|
—
|
|
—
|
|
75,000
|
|
4
|
August 2, 2017
|
|
conversion
|
|
75,000
|
|
2,483
|
|
—
|
|
77,483
|
|
4
|
August 4, 2017
|
|
conversion
|
|
11,184
|
|
—
|
|
—
|
|
11,184
|
|
—
|
August 14, 2017
|
|
conversion
|
|
4,500
|
|
—
|
|
—
|
|
4,500
|
|
5
|
August 21, 2017
|
|
conversion
|
|
4,700
|
|
—
|
|
—
|
|
4,700
|
|
5
|
August 29, 2017
|
|
conversion
|
|
4,900
|
|
—
|
|
—
|
|
4,900
|
|
5
|
September 5, 2017
|
|
conversion
|
|
26,250
|
|
—
|
|
—
|
|
26,250
|
|
5
|
September 18, 2017
|
|
conversion
|
|
27,250
|
|
—
|
|
—
|
|
27,250
|
|
5
|
September 27, 2017
|
|
conversion
|
|
29,000
|
|
—
|
|
—
|
|
29,000
|
|
6
|
October 16, 2017
|
|
conversion
|
|
30,500
|
|
—
|
|
—
|
|
30,500
|
|
6
|
October 16, 2017
|
|
conversion
|
|
10,000
|
|
—
|
|
—
|
|
10,000
|
|
—
|
Number of shares
outstanding February 28, 2018
|
|
|
|
|
|
|
|
|
|
|
|
124
|
April 16, 2018
|
|
conversion
|
|
132,160
|
|
—
|
|
—
|
|
132,160
|
|
6
|
April 26, 2018
|
|
conversion
|
|
14,500
|
|
—
|
|
500
|
|
15,000
|
|
1
|
May 1, 2018
|
|
conversion
|
|
26,250
|
|
—
|
|
—
|
|
26,250
|
|
3
|
May 3, 2018
|
|
conversion
|
|
5,000
|
|
—
|
|
—
|
|
5,000
|
|
—
|
May 7, 2018
|
|
conversion
|
|
27,900
|
|
—
|
|
—
|
|
27,900
|
|
3
|
May 10, 2018
|
|
conversion
|
|
32,400
|
|
—
|
|
—
|
|
32,400
|
|
4
|
May 11, 2018
|
|
conversion
|
|
14,500
|
|
—
|
|
500
|
|
15,000
|
|
2
|
May 15, 2018
|
|
conversion
|
|
7,060
|
|
—
|
|
500
|
|
7,560
|
|
2
|
May 15, 2018
|
|
conversion
|
|
8,000
|
|
—
|
|
—
|
|
8,000
|
|
1
|
May 21, 2018
|
|
conversion
|
|
20,250
|
|
—
|
|
—
|
|
20,250
|
|
3
|
May 22, 2018
|
|
conversion
|
|
6,075
|
|
—
|
|
—
|
|
6,075
|
|
1
|
May 24, 2018
|
|
conversion
|
|
13,056
|
|
3,300
|
|
—
|
|
16,356
|
|
2
|
May 30, 2018
|
|
conversion
|
|
8,182
|
|
—
|
|
—
|
|
8,182
|
|
2
|
May 30, 2018
|
|
conversion
|
|
15,000
|
|
—
|
|
—
|
|
15,000
|
|
3
|
June 7, 2018
|
|
conversion
|
|
2,922
|
|
—
|
|
—
|
|
2,922
|
|
1
|
June 18, 2018
|
|
conversion
|
|
17,000
|
|
—
|
|
—
|
|
17,000
|
|
4
|
June 19, 2018
|
|
conversion
|
|
14,500
|
|
—
|
|
500
|
|
15,000
|
|
3
|
June 28, 2018
|
|
conversion
|
|
18,000
|
|
—
|
|
—
|
|
18,000
|
|
4
|
June 28, 2018
|
|
cancellation
|
|
(7,060)
|
|
—
|
|
(500)
|
|
(7,560)
|
|
(2)
|
July 5, 2018
|
|
conversion
|
|
14,500
|
|
—
|
|
500
|
|
15,000
|
|
4
|
July 5, 2018
|
|
conversion
|
|
8,818
|
|
—
|
|
—
|
|
8,818
|
|
3
|
July 11, 2018
|
|
conversion
|
|
10,200
|
|
—
|
|
—
|
|
10,200
|
|
4
|
July 11, 2018
|
|
conversion
|
|
14,500
|
|
—
|
|
500
|
|
15,000
|
|
5
|
July 19, 2018
|
|
conversion
|
|
16,000
|
|
—
|
|
500
|
|
16,500
|
|
5
|
July 19, 2018
|
|
conversion
|
|
11,000
|
|
1,366
|
|
—
|
|
12,366
|
|
4
|
July 23, 2018
|
|
conversion
|
|
14,500
|
|
—
|
|
500
|
|
15,000
|
|
7
|
July 25, 2018
|
|
conversion
|
|
5,000
|
|
—
|
|
—
|
|
5,000
|
|
2
|
July 31, 2018
|
|
conversion
|
|
11,000
|
|
1,455
|
|
—
|
|
12,455
|
|
6
|
August 24, 2018
|
|
conversion
|
|
—
|
|
15,300
|
|
—
|
|
15,300
|
|
10
|
August 27, 2018
|
|
conversion
|
|
5,500
|
|
—
|
|
500
|
|
6,000
|
|
10
|
- 12 -
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Transaction (1)
|
|
Principal
Converted
|
|
Interest
Converted
|
|
Fees
Converted
|
|
Total
Amount Converted
|
|
Shares
Issued**
|
August 29, 2018
|
|
conversion
|
|
4,280
|
|
—
|
|
500
|
|
4,780
|
|
11
|
August 30, 2018
|
|
conversion
|
|
6,000
|
|
—
|
|
—
|
|
6,000
|
|
10
|
August 30, 2018
|
|
rounding shares
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
August 31, 2018
|
|
conversion
|
|
20,000
|
|
—
|
|
—
|
|
20,000
|
|
11
|
August 31, 2018
|
|
conversion
|
|
7,500
|
|
—
|
|
500
|
|
8,000
|
|
11
|
September 5, 2018
|
|
conversion
|
|
8,800
|
|
1,375
|
|
—
|
|
10,175
|
|
13
|
September 5, 2018
|
|
conversion
|
|
7,800
|
|
—
|
|
—
|
|
7,800
|
|
13
|
September 7, 2018
|
|
conversion
|
|
7,000
|
|
—
|
|
500
|
|
7,500
|
|
13
|
September 12, 2018
|
|
conversion
|
|
5,355
|
|
—
|
|
—
|
|
5,355
|
|
15
|
September 12, 2018
|
|
conversion
|
|
6,500
|
|
—
|
|
500
|
|
7,000
|
|
14
|
September 13, 2018
|
|
conversion
|
|
5,395
|
|
—
|
|
—
|
|
5,395
|
|
13
|
September 13, 2018
|
|
conversion
|
|
3,436
|
|
—
|
|
500
|
|
3,936
|
|
14
|
September 18, 2018
|
|
conversion
|
|
5,670
|
|
—
|
|
—
|
|
5,670
|
|
19
|
September 20, 2018
|
|
conversion
|
|
3,448
|
|
—
|
|
500
|
|
3,948
|
|
19
|
September 21, 2018
|
|
conversion
|
|
6,720
|
|
—
|
|
—
|
|
6,720
|
|
19
|
September 24, 2018
|
|
conversion
|
|
5,250
|
|
—
|
|
—
|
|
5,250
|
|
18
|
September 26, 2018
|
|
conversion
|
|
6,132
|
|
—
|
|
—
|
|
6,132
|
|
23
|
September 28, 2018
|
|
conversion
|
|
3,084
|
|
—
|
|
500
|
|
3,584
|
|
23
|
October 1, 2018
|
|
conversion
|
|
3,100
|
|
—
|
|
—
|
|
3,100
|
|
20
|
October 3, 2018
|
|
conversion
|
|
4,030
|
|
—
|
|
—
|
|
4,030
|
|
26
|
October 3, 2018
|
|
conversion
|
|
2,202
|
|
—
|
|
500
|
|
2,702
|
|
25
|
October 5, 2018
|
|
conversion
|
|
2,750
|
|
485
|
|
—
|
|
3,235
|
|
16
|
October 5, 2018
|
|
conversion
|
|
4,449
|
|
—
|
|
—
|
|
4,449
|
|
29
|
October 8, 2018
|
|
conversion
|
|
8,835
|
|
—
|
|
—
|
|
8,835
|
|
105
|
October 9, 2018
|
|
conversion
|
|
4,158
|
|
—
|
|
500
|
|
4,658
|
|
30
|
October 10, 2018
|
|
conversion
|
|
4,988
|
|
—
|
|
—
|
|
4,988
|
|
29
|
October 15, 2018
|
|
conversion
|
|
5,935
|
|
—
|
|
—
|
|
5,935
|
|
33
|
October 18, 2018
|
|
conversion
|
|
9,000
|
|
—
|
|
—
|
|
9,000
|
|
113
|
October 19, 2018
|
|
conversion
|
|
4,400
|
|
713
|
|
—
|
|
5,113
|
|
33
|
October 23, 2018
|
|
conversion
|
|
9,840
|
|
—
|
|
—
|
|
9,840
|
|
317
|
November 1, 2018
|
|
conversion
|
|
9,400
|
|
—
|
|
—
|
|
9,400
|
|
94
|
November 5, 2018
|
|
conversion
|
|
6,195
|
|
—
|
|
—
|
|
6,195
|
|
52
|
November 15, 2018
|
|
conversion
|
|
7,980
|
|
—
|
|
—
|
|
7,980
|
|
95
|
November 27, 2018
|
|
conversion
|
|
3,850
|
|
724
|
|
—
|
|
4,574
|
|
123
|
December 6, 2018
|
|
conversion
|
|
4,056
|
|
797
|
|
—
|
|
4,853
|
|
141
|
December 7, 2018
|
|
conversion
|
|
2,034
|
|
—
|
|
—
|
|
2,034
|
|
66
|
December 10, 2018
|
|
conversion
|
|
2,367
|
|
—
|
|
—
|
|
2,367
|
|
76
|
December 10, 2018
|
|
conversion
|
|
2,333
|
|
—
|
|
500
|
|
2,833
|
|
91
|
December 10, 2018
|
|
conversion
|
|
1,475
|
|
—
|
|
500
|
|
1,975
|
|
91
|
December 10, 2018
|
|
conversion
|
|
3,348
|
|
—
|
|
—
|
|
3,348
|
|
90
|
December 11, 2018
|
|
conversion
|
|
2,489
|
|
—
|
|
—
|
|
2,489
|
|
80
|
December 11, 2018
|
|
conversion
|
|
4,340
|
|
—
|
|
—
|
|
4,340
|
|
140
|
December 12, 2018
|
|
conversion
|
|
3,500
|
|
—
|
|
—
|
|
3,500
|
|
94
|
December 12, 2018
|
|
conversion
|
|
6,600
|
|
1,306
|
|
—
|
|
7,906
|
|
213
|
December 13, 2018
|
|
conversion
|
|
2,408
|
|
—
|
|
500
|
|
2,908
|
|
134
|
December 13, 2018
|
|
conversion
|
|
3,426
|
|
—
|
|
—
|
|
3,426
|
|
111
|
December 14, 2018
|
|
conversion
|
|
4,154
|
|
—
|
|
—
|
|
4,154
|
|
134
|
December 18, 2018
|
|
conversion
|
|
4,368
|
|
—
|
|
—
|
|
4,368
|
|
141
|
December 19, 2018
|
|
conversion
|
|
3,100
|
|
—
|
|
500
|
|
3,600
|
|
160
|
December 19, 2018
|
|
conversion
|
|
1,000
|
|
3,348
|
|
—
|
|
4,348
|
|
161
|
December 20, 2018
|
|
conversion
|
|
—
|
|
—
|
|
—
|
|
—
|
|
130
|
December 20, 2018
|
|
conversion
|
|
2,155
|
|
—
|
|
500
|
|
2,655
|
|
169
|
December 20, 2018
|
|
conversion
|
|
3,636
|
|
—
|
|
—
|
|
3,636
|
|
117
|
December 20, 2018
|
|
conversion
|
|
7,480
|
|
1,520
|
|
—
|
|
9,000
|
|
333
|
December 24, 2018
|
|
conversion
|
|
2,970
|
|
—
|
|
—
|
|
2,970
|
|
110
|
December 26, 2018
|
|
conversion
|
|
3,213
|
|
—
|
|
—
|
|
3,213
|
|
143
|
December 27, 2018
|
|
conversion
|
|
1,870
|
|
1,381
|
|
—
|
|
3,252
|
|
120
|
- 13 -
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Transaction (1)
|
|
Principal
Converted
|
|
Interest
Converted
|
|
Fees
Converted
|
|
Total
Amount Converted
|
|
Shares
Issued**
|
December 28, 2018
|
|
conversion
|
|
3,700
|
|
—
|
|
500
|
|
4,200
|
|
227
|
December 31, 2018
|
|
conversion
|
|
4,869
|
|
—
|
|
—
|
|
4,869
|
|
216
|
December 31, 2018
|
|
conversion
|
|
5,365
|
|
—
|
|
—
|
|
5,365
|
|
290
|
January 2, 2019
|
|
conversion
|
|
7,370
|
|
1,562
|
|
—
|
|
8,932
|
|
425
|
January 7, 2019
|
|
conversion
|
|
3,360
|
|
—
|
|
—
|
|
3,360
|
|
240
|
January 7, 2019
|
|
conversion
|
|
3,944
|
|
—
|
|
—
|
|
3,944
|
|
290
|
January 8, 2019
|
|
conversion
|
|
4,080
|
|
—
|
|
—
|
|
4,080
|
|
300
|
January 9, 2019
|
|
conversion
|
|
3,161
|
|
—
|
|
500
|
|
3,661
|
|
317
|
January 10, 2019
|
|
conversion
|
|
3,380
|
|
—
|
|
—
|
|
3,380
|
|
325
|
January 11, 2019
|
|
conversion
|
|
5,280
|
|
1,150
|
|
—
|
|
6,430
|
|
397
|
January 11, 2019
|
|
conversion
|
|
3,625
|
|
—
|
|
—
|
|
3,625
|
|
290
|
January 14, 2019
|
|
conversion
|
|
3,400
|
|
—
|
|
—
|
|
3,400
|
|
340
|
January 15, 2019
|
|
conversion
|
|
4,100
|
|
—
|
|
—
|
|
4,100
|
|
410
|
January 15, 2019
|
|
conversion
|
|
4,300
|
|
—
|
|
—
|
|
4,300
|
|
430
|
January 17, 2019
|
|
conversion
|
|
4,800
|
|
—
|
|
—
|
|
4,800
|
|
480
|
January 22, 2019
|
|
conversion
|
|
4,435
|
|
—
|
|
—
|
|
4,435
|
|
504
|
January 22, 2019
|
|
conversion
|
|
4,230
|
|
—
|
|
—
|
|
4,230
|
|
470
|
January 23, 2019
|
|
conversion
|
|
3,816
|
|
—
|
|
—
|
|
3,816
|
|
530
|
January 25, 2019
|
|
conversion
|
|
3,781
|
|
—
|
|
—
|
|
3,781
|
|
556
|
January 28, 2019
|
|
conversion
|
|
3,276
|
|
—
|
|
—
|
|
3,276
|
|
585
|
January 29, 2019
|
|
conversion
|
|
3,690
|
|
—
|
|
—
|
|
3,690
|
|
615
|
January 29, 2019
|
|
conversion
|
|
3,870
|
|
—
|
|
—
|
|
3,870
|
|
645
|
January 30, 2019
|
|
conversion
|
|
4,080
|
|
—
|
|
—
|
|
4,080
|
|
680
|
January 31, 2019
|
|
conversion
|
|
4,500
|
|
—
|
|
—
|
|
4,500
|
|
750
|
January 31, 2019
|
|
conversion
|
|
4,290
|
|
—
|
|
—
|
|
4,290
|
|
715
|
February 4, 2019
|
|
conversion
|
|
4,740
|
|
—
|
|
—
|
|
4,740
|
|
790
|
February 5, 2019
|
|
cancellation
|
|
(2,658)
|
|
—
|
|
—
|
|
(2,658)
|
|
(17)
|
February 5, 2019
|
|
conversion
|
|
4,980
|
|
—
|
|
—
|
|
4,980
|
|
830
|
February 12, 2019
|
|
conversion
|
|
5,340
|
|
—
|
|
—
|
|
5,340
|
|
890
|
February 14, 2019
|
|
conversion
|
|
5,236
|
|
—
|
|
—
|
|
5,236
|
|
935
|
February 21, 2019
|
|
conversion
|
|
4,956
|
|
—
|
|
—
|
|
4,956
|
|
900
|
Number of shares
outstanding February 28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
20,026
|
May 6, 2019
|
|
conversion
|
|
5,768
|
|
—
|
|
—
|
|
5,768
|
|
1,030
|
May 6, 2019
|
|
conversion
|
|
15,000
|
|
—
|
|
—
|
|
15,000
|
|
882
|
May 6, 2019
|
|
conversion
|
|
11,900
|
|
—
|
|
—
|
|
11,900
|
|
992
|
May 7, 2019
|
|
conversion
|
|
6,048
|
|
—
|
|
—
|
|
6,048
|
|
1,080
|
May 7, 2019
|
|
conversion
|
|
11,900
|
|
—
|
|
—
|
|
11,900
|
|
992
|
May 8, 2019
|
|
conversion
|
|
6,384
|
|
—
|
|
—
|
|
6,384
|
|
1,140
|
May 8, 2019
|
|
conversion
|
|
11,800
|
|
—
|
|
—
|
|
11,800
|
|
983
|
May 8, 2019
|
|
conversion
|
|
7,312
|
|
—
|
|
500
|
|
7,812
|
|
1,240
|
May 9, 2019
|
|
conversion
|
|
12,500
|
|
—
|
|
—
|
|
12,500
|
|
1,136
|
May 10, 2019
|
|
conversion
|
|
7,200
|
|
—
|
|
—
|
|
7,200
|
|
655
|
May 8, 2019
|
|
conversion
|
|
4,400
|
|
—
|
|
—
|
|
4,400
|
|
1,000
|
May 13, 2019
|
|
conversion
|
|
7,493
|
|
—
|
|
—
|
|
7,493
|
|
1,338
|
May 13, 2019
|
|
conversion
|
|
12,650
|
|
3,786
|
|
—
|
|
16,436
|
|
1,957
|
May 21, 2019
|
|
conversion
|
|
3,281
|
|
—
|
|
—
|
|
3,281
|
|
586
|
May 22, 2019
|
|
conversion
|
|
11,550
|
|
3,526
|
|
—
|
|
15,076
|
|
2,094
|
July 11, 2019
|
|
conversion
|
|
11,000
|
|
3,984
|
|
—
|
|
14,984
|
|
1,921
|
July 25, 2019
|
|
conversion
|
|
8,584
|
|
—
|
|
—
|
|
8,584
|
|
2,000
|
July 30, 2019
|
|
conversion
|
|
16,940
|
|
6,350
|
|
—
|
|
23,290
|
|
3,882
|
July 31, 2019
|
|
conversion
|
|
9,872
|
|
—
|
|
—
|
|
9,872
|
|
2,300
|
August 2, 2019
|
|
conversion
|
|
10,301
|
|
—
|
|
—
|
|
10,301
|
|
2,400
|
August 8, 2019
|
|
conversion
|
|
21,450
|
|
8,170
|
|
—
|
|
29,620
|
|
4,937
|
August 11, 2019
|
|
conversion
|
|
10,945
|
|
—
|
|
—
|
|
10,945
|
|
2,550
|
August 11, 2019
|
|
conversion
|
|
5,837
|
|
—
|
|
—
|
|
5,837
|
|
1,360
|
August 12, 2019
|
|
conversion
|
|
8,800
|
|
—
|
|
—
|
|
8,800
|
|
2,750
|
- 14 -
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Transaction (1)
|
|
Principal
Converted
|
|
Interest
Converted
|
|
Fees
Converted
|
|
Total
Amount Converted
|
|
Shares
Issued**
|
August 12, 2019
|
|
conversion
|
|
13,915
|
|
5,337
|
|
—
|
|
19,252
|
|
4,011
|
August 13, 2019
|
|
conversion
|
|
3,528
|
|
—
|
|
—
|
|
3,528
|
|
1,260
|
August 14, 2019
|
|
conversion
|
|
5,920
|
|
—
|
|
—
|
|
5,920
|
|
2,960
|
August 15, 2019
|
|
conversion
|
|
12,650
|
|
4,877
|
|
—
|
|
17,527
|
|
5,842
|
August 15, 2019
|
|
conversion
|
|
6,200
|
|
—
|
|
—
|
|
6,200
|
|
3,100
|
August 16, 2019
|
|
conversion
|
|
8,060
|
|
—
|
|
—
|
|
8,060
|
|
4,030
|
August 19, 2019
|
|
conversion
|
|
6,784
|
|
—
|
|
—
|
|
6,784
|
|
4,240
|
August 20, 2019
|
|
conversion
|
|
7,136
|
|
—
|
|
—
|
|
7,136
|
|
4,460
|
August 20, 2019
|
|
conversion
|
|
12,100
|
|
4,705
|
|
—
|
|
16,805
|
|
7,002
|
August 21, 2019
|
|
conversion
|
|
4,284
|
|
5,628
|
|
—
|
|
9,912
|
|
4,690
|
August 22, 2019
|
|
conversion
|
|
—
|
|
6,348
|
|
—
|
|
6,348
|
|
5,290
|
August 23, 2019
|
|
conversion
|
|
—
|
|
4,400
|
|
—
|
|
4,400
|
|
5,500
|
August 26, 2019
|
|
conversion
|
|
7,810
|
|
3,068
|
|
—
|
|
10,878
|
|
9,065
|
August 26, 2019
|
|
conversion
|
|
—
|
|
3,416
|
|
—
|
|
3,416
|
|
4,270
|
August 27, 2019
|
|
conversion
|
|
—
|
|
2,240
|
|
—
|
|
2,240
|
|
2,800
|
August 29, 2019
|
|
conversion
|
|
—
|
|
5,344
|
|
—
|
|
5,344
|
|
6,680
|
September 3, 2019
|
|
conversion
|
|
—
|
|
5,616
|
|
—
|
|
5,616
|
|
7,020
|
September 3, 2019
|
|
conversion
|
|
6,149
|
|
2,449
|
|
—
|
|
8,598
|
|
14,329
|
September 4, 2019
|
|
conversion
|
|
—
|
|
2,956
|
|
—
|
|
2,956
|
|
7,390
|
September 5, 2019
|
|
conversion
|
|
—
|
|
3,240
|
|
—
|
|
3,240
|
|
8,100
|
September 6, 2019
|
|
conversion
|
|
—
|
|
3,560
|
|
—
|
|
3,560
|
|
8,900
|
September 9, 2019
|
|
conversion
|
|
—
|
|
3,752
|
|
—
|
|
3,752
|
|
9,380
|
September 10, 2019
|
|
conversion
|
|
—
|
|
3,944
|
|
—
|
|
3,944
|
|
9,860
|
September 10, 2019
|
|
conversion
|
|
6,826
|
|
2,750
|
|
—
|
|
9,575
|
|
15,959
|
September 11, 2019
|
|
conversion
|
|
—
|
|
4,129
|
|
—
|
|
4,129
|
|
10,300
|
September 12, 2019
|
|
conversion
|
|
2,447
|
|
2,233
|
|
—
|
|
4,680
|
|
11,700
|
September 13, 2019
|
|
conversion
|
|
4,920
|
|
—
|
|
—
|
|
4,920
|
|
12,300
|
September 16, 2019
|
|
conversion
|
|
2,818
|
|
2,342
|
|
—
|
|
5,160
|
|
12,900
|
September 17, 2019
|
|
conversion
|
|
—
|
|
2,960
|
|
—
|
|
2,960
|
|
7,400
|
September 18, 2019
|
|
conversion
|
|
—
|
|
4,760
|
|
—
|
|
4,760
|
|
11,900
|
September 19, 2019
|
|
conversion
|
|
—
|
|
2,920
|
|
—
|
|
2,920
|
|
7,300
|
September 20, 2019
|
|
conversion
|
|
202
|
|
1,998
|
|
—
|
|
2,200
|
|
5,500
|
September 25, 2019
|
|
conversion
|
|
4,506
|
|
234
|
|
—
|
|
4,740
|
|
12,600
|
October 3, 2019
|
|
conversion
|
|
5,651
|
|
349
|
|
—
|
|
6,000
|
|
15,000
|
October 10, 2019
|
|
conversion
|
|
3,760
|
|
280
|
|
—
|
|
4,040
|
|
10,100
|
October 25, 2019
|
|
conversion
|
|
2,584
|
|
556
|
|
—
|
|
3,140
|
|
15,700
|
November 4, 2019
|
|
conversion
|
|
2,926
|
|
354
|
|
—
|
|
3,280
|
|
16,400
|
November 27, 2019
|
|
conversion
|
|
2,970
|
|
770
|
|
—
|
|
3,740
|
|
18,700
|
January 3, 2020
|
|
conversion
|
|
—
|
|
2,640
|
|
—
|
|
2,640
|
|
13,200
|
January 27, 2020
|
|
conversion
|
|
3,360
|
|
—
|
|
—
|
|
3,360
|
|
16,800
|
February 1, 2020
|
|
cancellation
|
|
(3,360)
|
|
—
|
|
—
|
|
(3,360)
|
|
(16,800)
|
February 5, 2020
|
|
cancellation
|
|
—
|
|
(640)
|
|
—
|
|
(640)
|
|
(3,200)
|
February 5, 2020
|
|
conversion
|
|
—
|
|
4,060
|
|
—
|
|
4,060
|
|
20,300
|
February 29, 2020
|
|
rounding shares issuable
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,946
|
Number of shares
outstanding February 29, 2020
|
|
|
|
|
|
|
|
|
|
|
|
418,415
|
__________
* Conversions occur at discounts ranging from
40-50% of average market price
** Shares adjusted for reverse stock splits:
100: 1 on August 24, 2018 and 10,000:1 on March 27, 2020
*** Total proceeds $600
**** Total proceeds $8,922
- 15 -
On
August 28, 2017, AITX entered into a Stock Purchase Agreement with
RAD and Steve Reinharz, as sole stockholder of RAD. Pursuant to the
terms of the Stock Purchase Agreement, AITX acquired, on August 28,
2017, 10,000 shares of RAD’s common stock, representing all of
RAD’s issued and outstanding capital stock, from Mr. Reinharz in
exchange for the issuance by AITX of (i) 3,350,000 shares of our
Series E Preferred Stock and, (ii) 2,450 shares of our Series F
Convertible Preferred Stock. In connection with the foregoing, the
Registrant relied upon the exemption from registration under the
Securities Act of 1933, as amended and the rules and regulations of
the Securities and Exchange Commission thereunder, in reliance upon
Section 4(a)(2) thereof and Regulation D thereunder.
During
the period from June 1, 2017 through July 25, 2017, AITX issued
8,922,279 shares of common stock upon cashless exercise of warrants
held by one of the Company’s lenders who also converted $3,358 in
interest and principal for 395,667 shares for a total of 9,317,946
shares issued.
On
July 8, 2017, AITX issued a convertible note payable for $200,000
which bears interest at 8% per annum and is due July 6, 2018. The
note is convertible into common stock of the Company at a 40%
discount to the lowest trading price in during the 20 trading days
prior to conversion.
In
connection with the foregoing, the Registrant relied upon the
exemption from registration under the Securities Act of 1933, as
amended and the rules and regulations of the Securities and
Exchange Commission thereunder, in reliance upon Section 4(a)(2)
thereof and Regulation D thereunder.
On
February 16, 2017, AITX closed on a Share Purchase Agreement with
Capital Venture Holdings LLC (“Capital Venture”), a Wyoming Limited
Liability Company, whereby AITX issued Capital Venture 1,000 shares
of Series F Convertible Preferred Stock, representing all of the
issued and outstanding shares of Series F Convertible Preferred
Stock to Capital Venture in consideration for $5,000. Mr. Garett
Parsons is the sole and managing member of Capital Venture.
In
connection with the foregoing, AITX relied upon the exemption from
registration under the Securities Act of 1933, as amended and the
rules and regulations of the Securities and Exchange Commission
thereunder, in reliance upon Section 4(a)(2) thereof and Regulation
D thereunder.
Penny Stock Regulations
The
Securities and Exchange Commission has adopted regulations which
generally define “penny stock” to be an equity security that has a
market price of less than $5.00 per share. Our Common Stock falls
within the definition of penny stock and therefore is subject to
rules that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally those
with assets in excess of $1,000,000, or annual incomes exceeding
$200,000 individually, or $300,000, together with their spouse).
For transactions covered by these rules, the broker-dealer must
make a special suitability determination for the purchase of such
securities and have received the purchaser’s prior written consent
to the transaction. Additionally, for any transaction, other than
exempt transactions, involving a penny stock, the rules require the
delivery, prior to the transaction, of a risk disclosure document
mandated by the Securities and Exchange Commission relating to the
penny stock market. The broker-dealer must also make a special
written determination that the penny stock is a suitable investment
for the purchaser and receive the purchaser’s written agreement to
the transaction. In addition, the broker-dealer must disclose the
commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the
broker-dealer is the sole market-maker, the broker-dealer must
disclose this fact and the broker-dealer’s presumed control over
the market. Finally, monthly statements must be sent disclosing
recent price information for the penny stock held in the account
and information on the limited market in penny stocks.
Consequently, the “penny stock” rules may restrict the ability of
broker-dealers to sell our Common Stock and may affect the ability
of investors to sell their Common Stock in the secondary market. In
addition to the “penny stock” rules promulgated by the Securities
and Exchange Commission, the Financial Industry Regulatory
Authority (“FINRA”) has adopted rules that require that in
recommending an investment to a customer, a broker-dealer must have
reasonable grounds for believing that the investment is suitable
for that customer. Prior to recommending speculative low-priced
securities to their non-institutional customers, broker-dealers
must make reasonable efforts to obtain information about the
customer’s financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative
low-priced securities will not be suitable for at least some
customers. The FINRA requirements make it more difficult for
broker-dealers to recommend that their customers buy our common
stock, which may limit the investors’ ability to buy and sell our
stock.
Purchases of Equity
Securities by the Registrant and Affiliated Purchasers
We have not repurchased any
shares of our common stock during the fiscal year ended February
29, 2020.
- 16 -
ITEM 6. SELECTED
FINANCIAL DATA
Not
applicable.
ITEM 7. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
following discussion of our financial condition and results of
operations should be read in conjunction with the consolidated
financial statements and the notes to those financial 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 the Risk Factors, Forward-Looking
Statements and Business sections in this report. 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.
Overview
AITX was incorporated in
Florida on March 25, 2010. AITX reincorporated into Nevada on
February 17, 2015. AITX’ fiscal year end is February 28 (February
29 during leap year). AITX is located at 701 North Green Valley
Parkway, Suite 200 Henderson, Nevada, 89074, and our telephone
number is 702-990-3271.
On
August 28, 2017, AITX entered into a Stock Purchase Agreement (the
“Stock Purchase Agreement”) with RAD and Steve Reinharz, as sole
stockholder of RAD. Pursuant to the terms of the Stock Purchase
Agreement, AITX acquired, on August 28, 2017, 10,000 shares of
RAD’s common stock, representing all of RAD’s issued and
outstanding capital stock, from Mr. Reinharz in exchange for the
issuance by AITX of (i) 3,350,000 shares of its Series E Preferred
Stock and, (ii) 2,450 shares of its Series F Convertible Preferred
Stock. As a result of the RAD acquisition, RAD is a wholly owned
subsidiary of AITX. As a result of the closing of the RAD
acquisition, AITX has succeeded to the business of RAD, in which it
purchased all of the outstanding shares of capital stock of RAD. As
a result, AITX’ 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
RAD acquisition is being treated as a reverse recapitalization
effected by a share exchange for financial accounting and reporting
purposes since substantially all of our prior operations were
disposed of as part of the consummation of the transaction and
therefore no goodwill or other intangible assets were recorded. RAD
is treated as the accounting acquirer as its stockholders control
the Company after the RAD Acquisition, even though the Company 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.
AITX’s
prior business focus was transportation services, and we were
previously exploring the on-demand logistics market by seeking to
develop a network of logistics partnerships. Following the RAD
acquisition described above, the Company took on RAD’s business of
applying advanced artificial intelligence (AI) driven technologies,
paired with multi-use hardware and supported by custom software and
cloud services, to intelligently automate and integrate a variety
of high frequency security, concierge and operational tasks.
RAD’s
solutions are offered as a recurring monthly subscription,
typically with a minimum 12 month subscription contract. RAD’s
solutions earn over 75% gross margin over the life of each deployed
asset. Specifically, RAD provides workflow automation solutions
delivered through a system of hardware, software and cloud
services. All elements of hardware and software design offered by
RAD are 100% designed, developed and owned by RAD.
- 17 -
Results of
Operations
The
following table shows our results of operations for the years ended
February 29, 2020 and February 28, 2019. The historical results
presented below are not necessarily indicative of the results that
may be expected for any future period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Change
|
|
|
Year Ended
February 29, 2020
|
|
Year Ended
February 28, 2019
|
|
Dollars
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
260,768
|
|
$
|
114,671
|
|
$
|
146,097
|
|
127%
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
177,008
|
|
|
110,149
|
|
|
66,859
|
|
61%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
1,959,814
|
|
|
3,524,545
|
|
|
(1,564,731
|
)
|
(44%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(1,782,806
|
)
|
|
(3,414,396
|
)
|
|
1,631,590
|
|
(48%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
|
|
(4,430,843
|
)
|
|
19,509,231
|
|
|
(23,940,074
|
)
|
(123%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss)
|
|
$
|
(6,213,649
|
)
|
$
|
16,094,835
|
|
$
|
(22,308,484
|
)
|
(139%)
|
Revenue
Total
revenue for the year ended February 29, 2020 was $260,768, which
represented an increase of $146,097 compared to total revenue of
$114,671 for the year ended February 28, 2019. Although limited by
resources the Company continues its efforts to grow its
business.
Gross profit
Total
gross profit for the year ended February 29, 2020 was $177,008,
which represented an increase of $66,859 compared to total gross
profit of $110,149 for the year ended February 28, 2019. The
increase is a result of the increase in revenues above.
Operating
expenses
Operating expenses for the years ended February 29, 2020 and
February 28, 2019 comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Change
|
|
|
Year Ended
February 29, 2020
|
|
Year Ended
February 28, 2019
|
|
Dollars
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
332,520
|
|
$
|
540,971
|
|
$
|
(208,451
|
)
|
(39%)
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
1,536,568
|
|
|
2,795,790
|
|
|
(1,259,222
|
)
|
(45%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
102,241
|
|
|
114,612
|
|
|
(12,371
|
)
|
(11%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on impairment of fixed assets
|
|
|
(11,515
|
)
|
|
73,172
|
|
|
(84,687
|
)
|
(116%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
$1,959,814
|
|
$
|
3,524,545
|
|
$
|
(1,564,731
|
)
|
(44%)
|
Our
operating expenses were comprised of general and administrative
expenses, research and development, depreciation and amortization,
and a loss on impairment of fixed assets. General and
administrative expenses consisted primarily of professional
services, automobile expenses, advertising, salaries and wages,
travel expenses and rent. Our operating expenses during the years
ended February 29, 2020 and February 28, 2019 were $1,959,814 and
$3,524,545, respectively. The overall $1,564,731 decrease in
operating expenses was primarily attributable to the following
increases in operating expenses of:
- 18 -
|
|
●
|
Research and development
expenses decreased by $208,451 which resulted from a decrease in
R&D Consultation fees from RAD Canada of $388,289 because of
higher initial development costs in 2019 on the new products Scott,
Wally and Rosa. This decrease is partially offset by other fees due
to the elimination of employees in 2020 whose work is being now
carried out by subcontractors.
|
|
|
●
|
General and
administrative expenses decreased by $1,259,222 primarily due to
the following decreases:
|
|
|
|
|
-
|
Professional fees
decreased by $178,102 due to higher reporting costing 2019 as a
result of multiple auditor changes and amendments.
|
|
|
|
|
-
|
Wages, salaries and
payroll levies decreased by $861,472 as a result of eliminating
employees and shifting work to subcontractors.
|
|
|
|
|
-
|
Rent decreased by
$124,940 as a result of terminating three leases in 2019.
|
|
|
|
|
-
|
Trade shows and travel
decreased by $153,657 as a result of larger marketing push in 2019
on the release of the new products.
|
|
|
|
|
-
|
In general , due to
limited resources the Company had to reduce expenditures in all
areas of the business. These reductions as well as those mentioned
above were partially offset by increase in subcontractor fees of
$343,080 that were a result replacing the employees as mentioned
above.
|
|
|
●
|
Depreciation and
amortization decreased by $12,371 due to lower fixed assets.
|
|
|
●
|
Gain loss on disposal
/impairment of fixed assets increased by $84,687 sue to 2019 write
downs and disposals in 2020 that generated small gains.
|
Other income (expense)
Other
income (expense) consisted of the change of fair value of
derivative instruments interest expense and gain on settlement of
debt. Other income (expense) during the years ended February 29,
2020 and February 28, 2019, was ($4,430,843) and $19,509,231,
respectively. The $23,940,074 decrease in other income was
primarily attributable to the change in the fair value of
derivatives and interest expense, including interest expense
related to derivative liability in excess of the face value of debt
and gain on settlement of debt. Fair value of derivatives was
largely affected by the decrease in the market price of the
Company’s common stock during the current period.
|
|
●
|
Change in fair value of
derivative liabilities decreased by $27,166,158 due to the
re-valuation of derivative liability on convertible notes based on
the change in the market price of the Company’s common
stock.
|
|
|
●
|
Interest expense
decreased by $3,281,927 due to a decrease in interest expense
related to the derivative liability in excess of debt and the
amortization of discounts , partially offset by an increase in
interest expense on debt.
|
|
|
●
|
Gain on settlement of
debt decreased by $55,843 due to a decrease in the number and
amount of debt settlements this year over last year.
|
The
Company’s loss from operations for the year ended February 29, 2020
was $1,782,806, which represented a reduction in loss of $1,631,590
compared to $3,414,386 for the year ended February 28, 2019. The
reduction is due to higher revenues and lower in expense in fiscal
2020 as explained above. Note that the Company had a net loss
of 6,213,649 for the year ended February 29, 2020 as compared to
net income of $16,094,835 for the year ended February 28, 2019.
This change is mostly attributable to the change in fair value of
derivatives described in other income above.
Going Concern
The
accompanying 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.
- 19 -
For
the year ended February 29, 2020, the Company had negative cash
flow from operating activities of $1,757,023. As of February 29,
2020 the Company has an accumulated deficit of $25,622,843 and
negative working capital of $19,589,008. Management does not
anticipate having positive cash flow from operations in the near
future. These factors raise a substantial doubt about the Company’s
ability to continue as a going concern for the twelve months
following the issuance of these financial statements.
The
Company does not have the resources at this time to repay 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.
Management has plans to address the Company’s financial situation
as follows:
In the
near term, management plans to continue to focus on raising the
funds necessary to implement the Company’s business plan.
Management will continue to seek out debt financing to obtain the
capital required to meet the Company’s financial obligations. There
is no assurance, however, that lenders will continue to advance
capital to the Company or that the new business operations will be
profitable. The possibility of failure in obtaining additional
funding and the potential inability to achieve profitability raises
doubts about the Company’s ability to continue as a going
concern.
Capital
Resources
The following table summarizes total current assets, liabilities
and working capital for the period indicated:
|
|
|
|
|
|
|
|
|
|
February 29, 2020
|
|
February 28, 2019
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
88,213
|
|
$
|
366,681
|
|
Current liabilities(1)
|
|
|
19,677,221
|
|
|
15,743,601
|
|
Working capital
|
|
$
|
(19,589,008
|
)
|
$
|
(15,376,920
|
)
|
__________
|
|
(1)
|
As February 29,
2020 and February 28, 2019, current liabilities included
approximately $6.9 million and $6.2 million, respectively, of
derivative liabilities that are expected to be settled in shares of
the Company in accordance with the various conversion terms.
|
As of
February 29, 2020 and February 28, 2019, we had a cash balance of
$13,307 and $21,192, respectively.
Summary of Cash
Flows
|
|
|
|
|
|
|
|
|
|
Year Ended
February 29, 2020
|
|
Year Ended
February 28, 2019
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
$
|
(1,732,023
|
)
|
$
|
(1,804,261
|
)
|
Net cash used in investing activities
|
|
$
|
(17,325
|
)
|
$
|
(202,717
|
)
|
Net cash provided by financing activities
|
|
$
|
1,766,463
|
|
$
|
2,003,397
|
|
Net
cash used in operating activities for the year ended February 29,
2020 was $1,757,023, which included a net loss of $6,213,649,
non-cash activity such as the change in fair value of derivative
liabilities of $1,127,119, (gain) on settlement of debt of
($159,370), interest expense related to penalties from debt
defaults of $314,347, interest expense related to derivative
liabilities in excess of face value of debt of $198,492,
amortization of debt discount of $874,187, (gain) on impairment of
fixed assets ($11,515), provision for inventory of $54,702,
depreciation and amortization of $102,241 and change in operating
assets and liabilities of $1,956,423.
Net cash used in
investing activities.
Net
cash used in investing activities for the year ended February 29,
2020 was $17,325. This consisted primarily of the purchase of fixed
assets of $26,825 offset by proceeds of disposal of fixed assets of
$9,500.
- 20 -
Net cash provided
by financing activities.
Net
cash provided by financing activities was $1,766,463 for the year
ended February 29, 2020. This consisted of proceeds from
convertible notes payable of $25,000, proceeds from loans payable
$768,563, proceeds from deferred variable payment obligation of
$1,366,500, and net borrowings from loan payable – related party of
$141,290, offset by repayments of loan payable $534,890.
Off-Balance Sheet
Arrangements
We do
not have any outstanding off-balance sheet guarantees, interest
rate swap transactions or foreign currency forward contracts.
Furthermore, we do not have any retained or contingent interest in
assets transferred to an unconsolidated entity that serves as
credit, liquidity or market risk support to such entity. We do not
have any variable interest in an unconsolidated entity that
provides financing, liquidity, market risk or credit support to us
or that engages in leasing, hedging or research and development
services with us.
Significant Accounting
Policies
Use of
Estimates
In
order to prepare financial statements in conformity with accounting
principals 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 derivative
liabilities.
Revenue Earning
Devices
Revenue earning devices are stated at cost. Depreciation is
provided on a straight-line basis over the estimated useful life of
48 months. The Company continually evaluates revenue earning
devices to determine whether events or changes in circumstances
have occurred that may warrant revision of the estimated useful
life or whether the devices should be evaluated for possible
impairment. The Company uses a combination of the undiscounted cash
flows and market approaches in assessing whether an asset has been
impaired. The Company measures impairment losses based upon the
amount by which the carrying amount of the asset exceeds the fair
value.
Fixed
Assets
Fixed
assets are stated at cost. Depreciation is provided on the
straight-line method based on the estimated useful lives of the
respective assets which range from three to five years. Major
repairs or improvements are capitalized. Minor replacements and
maintenance and repairs which do not improve or extend asset lives
are expensed currently.
|
|
|
Computer equipment
|
|
3 years
|
Office equipment
|
|
4 years
|
Vehicles
|
|
3 years
|
Leasehold improvements
|
|
5 years, the life of the
lease
|
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 February 29, 2020
and February 28, 2019, the Company had no deferred development
costs.
- 21 -
Sales of Future
Revenues
The
Company has entered into transactions, as more fully described in
footnote 10, in which it has received funding from investors in
exchange for which it will make payments to those investors based
on the level of sales of certain revenue categories, generally
based on a percentage of sales for those certain revenues. The
Company determines whether these agreements constitute sales of
future revenues or are in substance debt based on the facts and
circumstances of each agreement, with the following primary
criteria determinative of whether the agreement constitutes a sale
of future revenues or debt:
|
|
|
|
●
|
Does the agreement
purport, in substance, to be a sale
|
|
●
|
Does the Company have
continuing involvement in the generation of cash flows due the
investor
|
|
●
|
Is the transaction cancellable by either
party through payment of a lump sum or other transfer of assets
|
|
●
|
Is the investors rate of return 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. While the Company does not expect fiscal year 2020 net
earnings to be materially impacted by revenue recognition timing
changes, Topic 606 requires certain changes to the presentation of
revenues and related expenses beginning March 1, 2018. Refer to
Note 5 – Revenue from Contracts with Customers for additional
information.
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.
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).
- 22 -
Fair Value of
Financial Instruments
ASC
Topic 820, Fair Value Measurements and
Disclosures (“ASC Topic 820”) provides a framework for
measuring fair value in accordance with generally accepted
accounting principles.
ASC
Topic 820 defines fair value as the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
ASC Topic 820 establishes a fair value hierarchy that distinguishes
between (1) market participant assumptions developed based on
market data obtained from independent sources (observable inputs)
and (2) an entity’s own assumptions about market participant
assumptions developed based on the best information available in
the circumstances (unobservable inputs).
The
fair value hierarchy consists of three broad levels, which gives
the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1) and the lowest
priority to unobservable inputs (Level 3). The three levels of the
fair value hierarchy under ASC Topic 820 are described as
follows:
|
|
|
|
●
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement
Using
|
|
|
|
Amount at
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
February 29, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability – conversion features pursuant to convertible
notes payable
|
|
$
|
6,890,688
|
|
$
|
—
|
|
$
|
—
|
|
$
|
6,890,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability – conversion features pursuant to convertible
notes payable
|
|
$
|
6,170,139
|
|
$
|
—
|
|
$
|
—
|
|
$
|
6,170,139
|
|
See Note 12 for specific
inputs used in determining fair value.
The
carrying amounts of the Company’s financial assets and liabilities,
such as cash, accounts receivable, prepaid expenses and advances,
accounts payable and accrued expenses, approximate their fair
values because of the short maturity of these instruments.
Earnings (Loss)
per Share
Basic
earnings (loss) per share (“EPS”) is computed by dividing net
income (loss) available to common shareholders (numerator) by the
weighted average number of shares outstanding (denominator) during
the period. Diluted EPS give effect to all dilutive potential
common shares outstanding during the period using the treasury
stock method and convertible preferred stock using the if-converted
method. In computing diluted EPS, the average stock price for the
period is used to determine the number of shares assumed to be
purchased from the exercise of stock options and/or warrants.
Diluted EPS excluded all dilutive potential shares if their effect
is anti-dilutive.
- 23 -
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.
Recently Adopted
Accounting Pronouncements
See discussion of the
adoption of ASU 2014-09, “Revenue from Contracts with Customers
(Topic 606)”, above.
In May
2017, the FASB issued ASU 2017-09, Modification Accounting
for Share-Based Payment Arrangements. The standard amends the
scope of modification accounting for share-based payment
arrangements and provides guidance on the types of changes to the
terms or conditions of share-based payment awards to which an
entity would be required to apply modification accounting under ASC
718. The new standard is effective for fiscal years beginning after
December 15, 2017. There was no impact on the financial statements
of adopting this new standard on March 1, 2018.
On
March 1, 2019 the Company adopted ASU No. 2016-02, Leases (Topic
842), which is effective for public entities for annual
reporting periods beginning after December 15, 2018. Under ASU
2016-02, lessees will be required to recognize the following for
all leases (with the exception of short-term leases) at the
commencement date: 1) a lease liability, which is a lessee’s
obligation to make lease payments arising from a lease, measured on
a discounted basis, and 2) a right-of-use asset, which is an asset
that represents the lessee’s right to use, or control the use of, a
specified asset for the lease term. The Company adopted ASU 2016-02
but does not expect any material impact on the financial statements
because the leases commencing March 1, 2019 are month to month.
Recently Issued
Accounting Pronouncements
In
September 2016, the FASB issued ASU 2016-13, Financial
Instruments-Credit Losses. ASU 2016-13 was issued to provide
more decision-useful information about the expected credit losses
on financial instruments and changes the loss impairment
methodology. ASU 2016-13 is effective for reporting periods
beginning after December 15, 2019 using a modified retrospective
adoption method. A prospective transition approach is required for
debt securities for which an other-than-temporary impairment had
been recognized before the effective date. The Company is currently
assessing the impact this accounting standard will have on its
financial statements and related disclosures. The Company will
adopt this March 1, 2020.
ITEM 7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do
not have any financial instruments that are exposed to significant
market risk. We maintain our cash and cash equivalents in bank
deposits and short-term, highly liquid money market investments. A
hypothetical 100-basis point increase or decrease in market
interest rates would not have a material impact on the fair value
of our cash equivalents securities, or our earnings on such cash
equivalents.
ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
See
Index to Financial Statements and Financial Statement Schedules
appearing on pages F-1 through F-31 of this annual report on Form
10-K.
ITEM 9. CHANGES IN
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
On
October 31, 2019, Fruci & Associates II, PLLC (“Fruci PLLC”)
resigned (‘Termination”) as the independent registered public
accounting firm of Artificial Intelligence Technology Solutions
Inc. (the “Company”). The Board of Directors of the Company
approved and ratified the Termination and the engagement
(“Engagement”) of LJ Soldinger & Associates LLC (“LJ
Soldinger”) as the Company’s new independent registered public
accounting firm. The Engagement is effective immediately.
From
May 13, 2019 through October 31, 2019, there were (i) no
disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K
and the related instructions) between the Company and Fruci PLLC on
any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
- 24 -
On May
13, 2019, the Board of Directors of the Company approved and
ratified the engagement of Fruci PLLC as the Company’s independent
registered public accounting firm effective immediately, and
dismissed Marcum LLP (“Marcum LLP”) as the Company’s independent
registered public accounting firm.
From
October 18, 2018 through May13, 2019, there were (i) no
disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K
and the related instructions) between the Company and Marcum LLP on
any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
On
October 18, 2018, the Company engaged Marcum LLP (“Marcum”) as its
independent registered public accountants. This engagement occurred
in connection with the Company’s prior independent public
accountants, GBH CPAs, PC (“GBH”) resigning, effective July 1,
2018, as a result of combining its practice with Marcum. The
engagement of Marcum has been approved by the Audit Committee of
the Company’s Board of Directors.
ITEM 9A. CONTROLS AND
PROCEDURES
Evaluation of Disclosure Controls and
Procedures
As of
February 29, 2020, 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)). Based upon
that evaluation, our principal executive officer and principal
financial officer concluded that, as of February 28, 2019, our
disclosure controls and procedures were not effective to ensure
that information required to be disclosed in reports filed 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.
Limitations on Systems of
Controls
Our
management, including our principal executive officer and principal
financial officer, does 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. To address the material weaknesses identified
in our evaluation, we performed additional analysis and other
post-closing procedures in an effort to ensure our consolidated
financial statements included in this annual report have been
prepared in accordance with generally accepted accounting
principles. Accordingly, management believes that the financial
statements included in this report fairly present in all material
respects our financial condition, results of operations and cash
flows for the periods presented.
Management’s Report on Internal Control
over Financial Reporting
Our
management is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over
financial reporting is defined in Rule 13a-15(f) or 15d-15(f)
promulgated under the Securities Exchange Act of 1934 as a process
designed by, or under the supervision of, the Company’s principal
executive and principal financial officers and effected by the
Company’s board of directors, management and other personnel, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally
accepted in the United States of America and includes those
policies and procedures that:
|
|
•
|
Pertain to the
maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of
the Company;
|
|
|
•
|
Provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America and
that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of
the company; and
|
|
|
•
|
Provide reasonable
assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could
have a material effect on the financial statements.
|
- 25 -
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control
systems, no matter how well designed, have inherent limitations.
Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial
statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by
internal control over financial reporting. However, these inherent
limitations are known features of the financial reporting process.
Therefore, it is possible to design into the process safeguards to
reduce, though not eliminate, this risk.
As of
February 29, 2020, management assessed the effectiveness of our
internal control over financial reporting based on the criteria for
effective internal control over financial reporting established in
Internal Control-Integrated Framework (2013 framework) issued by
the Committee of Sponsoring Organizations of the Treadway
Commission and SEC guidance on conducting such assessments. Based
on that evaluation, they concluded that, during the period covered
by this report, such internal controls and procedures were not
effective to detect the inappropriate application of U.S. GAAP
rules as more fully described below. This was due to deficiencies
that existed in the design or operation of our internal controls
over financial reporting that adversely affected our internal
controls and that may be considered to be material weaknesses.
The
matters involving internal controls and procedures that our
management considered to be material weaknesses under the standards
of the Public Company Accounting Oversight Board were: lack of a
functioning audit committee; lack of a majority of independent
members and a lack of a majority of outside directors on our board
of directors; inadequate segregation of duties consistent with
control objectives; and, management is dominated by a single
individual. The aforementioned material weaknesses were identified
by our Chief Executive Officer in connection with the review of our
financial statements as of February 29, 2020.
Management believes that the material weaknesses set forth above
did not have an effect on our financial results. However,
management believes that the lack of a functioning audit committee
and the lack of a majority of outside directors on our board of
directors results in ineffective oversight in the establishment and
monitoring of required internal controls and procedures, which
could result in a material misstatement in our financial statements
in future periods.
This
report does not include an attestation report of our registered
public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by
our registered public accounting firm pursuant to the rules of the
Securities and Exchange Commission that permit us to provide only
management’s report in this annual report.
Changes in
Internal Control over Financial Reporting
No
changes were made to our internal control over financial reporting
during the quarter ended February 28, 2019 that have materially
affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
ITEM 9B. OTHER
INFORMATION
None.
PART III
ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The
following table sets forth the names, positions and ages of our
directors and executive officers as of the date of this report. Our
directors serve for one year and until their successors are elected
and qualified. Our officers are elected by the board of directors
to a term of one year and serve until their successor is duly
elected and qualified, or until they are removed from office. The
board of directors has no nominating, auditing or compensation
committees.
|
|
|
|
|
Name
|
|
Age
|
|
Position(s)
|
Garett Parsons
|
|
36
|
|
President, Chief
Executive Officer, Chief Financial Officer and Director
|
Biographical information concerning our director and executive
officer listed above is set forth below.
- 26 -
Garett Parsons. Mr. Parsons has served as our
President, Chief Executive Officer, Chief Financial Officer and
member of our board of directors since February 2017. Mr. Parsons
has over 10 years of financial consulting for both private and
public equity markets. Mr. Parsons has extensive experience in the
field of asset valuation, funding structures and public release
document generation. His education includes a Bachelor of Arts in
Political Science/Economics from California State University
Sacramento and an Associate of Arts in Liberal Studies/ Business
San Joaquin Delta College and West Hills College.
There
are no family relationships between any of the executive officers
and directors. During the past 10 years, Mr. Parsons was involved
in any of the legal proceedings listed in Item 401(f) of Regulation
S-K. There are no arrangements or understandings between Mr.
Parsons and any other person pursuant to which he was or is to be
selected as an executive officer or director.
Board Committees and
Director Independence
As Mr.
Parsons serves as our sole director, we do not have a separately
designated audit committee, compensation committee or nominating
and corporate governance committee. The functions of those
committees are being undertaken by our sole director. Because we do
not have any independent directors and have only one director, our
sole director believes that the establishment of committees of the
Board would not provide any benefits to our company and could be
considered more form than substance.
We
currently do not have any non-employee or independent directors, as
such term is defined in the listing standards of The NASDAQ Stock
Market, and we do not anticipate appointing additional directors in
the near future.
Our
sole director is not an “audit committee financial expert” within
the meaning of Item 401(e) of Regulation S-K. As with most small,
early stage companies until such time our company further develops
its business, achieves a stronger revenue base and has sufficient
working capital to purchase directors and officer’s insurance, the
Company does not have any immediate prospects to attract
independent directors. When the Company is able to expand our Board
of Directors to include one or more independent directors, the
Company intends to establish an Audit Committee of our Board of
Directors. It is our intention that one or more of these
independent directors will also qualify as an audit committee
financial expert. Our securities are not quoted on an exchange that
has requirements that a majority of our Board members be
independent, and the Company is not currently otherwise subject to
any law, rule or regulation requiring that all or any portion of
our Board of Directors include “independent” directors, nor are we
required to establish or maintain an Audit Committee or other
committee of our Board of Directors.
Procedures for Nominating
Directors
There
have been no material changes to the procedures by which security
holders may recommend nominees to the Board since the most recently
completed fiscal quarter. We do not have a policy regarding the
consideration of any director candidates that may be recommended by
our stockholders, including the minimum qualifications for director
candidates, nor has our sole director established a process for
identifying and evaluating director nominees. We have not adopted a
policy regarding the handling of any potential recommendation of
director candidates by our stockholders, including the procedures
to be followed. Our sole director has not considered or adopted any
of these policies, as we have never received a recommendation from
any stockholder for any candidate to serve on our Board of
Directors. Given our relative size and lack of directors and
officers insurance coverage, we do not anticipate that any of our
stockholders will make such a recommendation in the near
future.
While
there have been no nominations of additional directors proposed, in
the event such a proposal is made, all current members of our Board
will participate in the consideration of director nominees.
Director
Qualifications
Mr.
Parsons was appointed to our board in February 2017. Mr. Parsons
has significant operational experience in our industry and brings
both a practical understanding of the industry and as well as
hands-on experience in our business sector to our board and a
greater understanding of certain of the challenges we face in
executing our growth strategy.
Code of Ethics and
Business Conduct
We
have adopted a code of ethics meeting the requirements of Section
406 of the Sarbanes-Oxley Act of 2002. We believe our code of
ethics is reasonably designed to deter wrongdoing and promote
honest and ethical conduct; provide full, fair, accurate, timely,
and understandable disclosure in public reports; comply with
applicable laws; ensure prompt internal reporting of violations;
and provide accountability for adherence to the provisions of the
code of ethics.
- 27 -
Director
Compensation
Mr.
Parsons, our sole director, does not receive any additional
compensation for his services as a director. We reimburse our
directors for all reasonable ordinary and necessary
business-related expenses, but we did not pay director’s fees or
other cash compensation for services rendered as a director during
the years ended February 28, 2019 and February 29, 2018 to any of
the individuals serving on our Board during that period. We have no
standard arrangement pursuant to which our directors are
compensated for their services in their capacity as directors. We
may pay fees for services rendered as a director when and if
additional directors are appointed to the Board of Directors.
Compliance with
Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires our executive officers
and directors, and persons who beneficially own more than 10% of a
registered class of our equity securities to file with the SEC
initial statements of beneficial ownership, reports of changes in
ownership and annual reports concerning their ownership of our
common shares and other equity securities, on Forms 3, 4 and 5
respectively. Executive officers, directors and greater than 10%
stockholders are required by the SEC regulations to furnish us with
copies of all Section 16(a) reports they file. Based on our review
of the copies of such forms received by us, or written
representations that no other reports were required, and to the
best of our knowledge, we believe that all of our officers,
directors, and owners of 10% or more of our common stock filed all
required Forms 3, 4, and 5.
ITEM 11. EXECUTIVE
COMPENSATION
The
following table summarizes all compensation recorded by us in the
past two fiscal years for Mr. Parsons, our President, Chief
Executive Officer and Chief Financial Officer.
2019 SUMMARY COMPENSATION
TABLE
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal
Position
|
|
Year
|
|
Salary
or
Fees
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
|
All
Other
Compensation
($)
|
|
Total
($)
|
Garett Parsons,
|
|
2020
|
|
132,690
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
132,690
|
President, Chief Executive
Officer and Chief Financial Officer (1)
|
|
2019
|
|
101,410
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
101,410
|
__________
|
|
(1)
|
Mr. Parsons was
appointed President, Chief Executive Officer and Chief Financial
Officer on February 16, 2017.
|
Employment
Agreements
We are
not currently a party to an employment agreement with Mr. Parsons,
our sole executive officer. We may enter into an employment
agreement with Mr. Parsons in the future, however. We have no plans
providing for the payment of any retirement benefits.
- 28 -
Outstanding Equity
Awards at 2020 Fiscal Year-End
The
following table provides information concerning unexercised
options, stock that has not vested and equity incentive plan awards
for Mr. Parsons, our sole executive officer outstanding as of
February 29, 2020:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPTION
AWARDS
|
|
STOCK
AWARDS
|
|
Name
|
|
Number of
Securities Underlying Unexercised Options (#) Exercisable
|
|
Number of
Securities Underlying Unexercised Options (#) Unexercisable
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
|
|
Option
Exercise Price
($)
|
|
Option
Expiration Date
|
|
Number of
Shares or Units of Stock That Have Not Vested (#)
|
|
Market
Value of Shares or Units of Stock That Have Not Vested ($)
|
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other
Rights That Have Not Vested (#)
|
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares,
Units or Other Rights That Have Not Vested (#)
|
|
Garett Parsons
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
At
February 29, 2020, AITX had 418,415 shares of its common stock
issued and outstanding. The following table sets forth information
regarding the beneficial ownership of our common stock as of
February 29, 2020, and reflects:
|
|
●
|
each of our executive
officers;
|
|
|
●
|
each of our
directors;
|
|
|
●
|
all of our directors and
executive officers as a group; and
|
|
|
●
|
each stockholder known
by us to be the beneficial owner of more than 5% of our outstanding
shares of common stock.
|
Information on beneficial ownership of securities is based upon a
record list of our stockholders and we have determined beneficial
ownership in accordance with the rules of the SEC. We believe,
based on the information furnished to us, that the persons and
entities named in the table below have sole voting and investment
power with respect to all shares of common stock that they
beneficially own, subject to applicable community property laws,
except as otherwise provided below.
|
|
|
|
|
Name
|
|
Amount and Nature of
Beneficial Ownership (1)
|
|
Percent of
Class (2)
|
Named Executive Officers and
Directors:
|
|
|
|
|
Garett Parsons (3)
|
|
195,549,343
|
|
22.47%
|
All executive officers and directors as a
group (1 persons)
|
|
195,549,343
|
|
22.47%
|
|
|
|
|
|
5% Stockholders:
|
|
|
|
|
Steve Reinharz (4)
|
|
479,095,890
|
|
55.06%
|
c/o Robotic Assistance Devices
|
|
|
|
|
|
|
(1)
|
Beneficial ownership is
determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment
power with respect to securities. Beneficial ownership also
includes shares of stock subject to options and warrants currently
exercisable or exercisable within 60 days of the date of this
table. In determining the percent of common stock owned by a person
or entity as of the date of this Report, (a) the numerator is the
number of shares of the class beneficially owned by such person or
entity, including shares which may be acquired within 60 days on
exercise of warrants or options and conversion of convertible
securities, and (b) the denominator is the sum of (i) the total
shares of common stock outstanding on as of July 22, 2020
195,549,3435 shares, and (ii) the total number of shares that the
beneficial owner may acquire upon exercise of the derivative
securities. Unless otherwise stated, each beneficial owner has sole
power to vote and dispose of its shares.
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- 29 -
|
|
(2)
|
Based on 195,549,343
shares of the Company’s common stock issued and outstanding as of
July 22, 2020.
|
|
|
(3)
|
Mr. Parsons is the
Company’s President, Chief Executive Officer and Chief Financial
Officer and owns 1,000,000 shares of our Series E Preferred Stock
and 1,000 shares of our Series F Preferred Stock. If Mr. Parsons
converted the 1,000 shares of the Company’s Series F Preferred
stock, he would receive 195,549,343 shares of the Company’s common
stock, which is included in the chart above as if such conversion
has occurred. Further, the outstanding shares of Series E preferred
stock have the right to take action by written consent or vote
based on the number of votes equal to twice the number of votes of
all outstanding shares of common stock. As a result, the holder of
Series E preferred stock has 2/3rds of the voting power of all
shareholders at any time corporate action requires a vote of
shareholders.
|
|
|
(4)
|
Steve Reinharz is the
CEO of RAD and is the holder of (i) 3,350,000 shares of our Series
E Preferred Stock and, (ii) 2,450 shares of our Series F
Convertible Preferred Stock. If Mr. Reinharz converted the 2,450
shares of the Company’s Series F Convertible Preferred Stock, he
would receive 479,095,890 shares of the Company’s common stock,
which is included in the chart above as if such conversion has
occurred. Further, the outstanding shares of Series E preferred
stock have the right to take action by written consent or vote
based on the number of votes equal to twice the number of votes of
all outstanding shares of common stock. As a result, the holder of
Series E preferred stock has 2/3rds of the voting power of all
shareholders at any time corporate action requires a vote of
shareholders.
|
ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
We do
not have a written policy for the review, approval or ratification
of transactions with related parties or conflicted transactions.
When such transactions arise, they are referred to our board of
directors for its consideration.
For
the years ended February 29, 2020 and February 28, 2019, the
Company received net advances of $141,290 and $218,890,
respectively, from its loan payable-related party. At February 29,
2020, the loan payable-related party was $1,310,358 and $782,844 at
February 28, 2019. 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%. At February 28,2018 there was $352,392, with
$210,000 bearing interest at 12%. The accrued interest included at
February 29, 2020 was $50,730 (2018- $13,650).
During
the years ended February 29, 2020 and February 28, 2019, the
Company was charged $484,251 and $484,251, respectively in
consulting fees for research and development to a company owned by
a principal shareholder.
ITEM 14. PRINCIPAL
ACCOUNTING FEES AND SERVICES
On
October 31, 2019, Fruci & Associates II, PLLC (“Fruci PLLC”)
resigned (‘Termination”) as the independent registered public
accounting firm of Artificial Intelligence Technology Solutions
Inc. (the “Company”). The Board of Directors of the Company
approved and ratified the Termination and the engagement
(“Engagement”) of LJ Soldinger & Associates LLC (“LJ
Soldinger”) as the Company’s new independent registered public
accounting firm. The Engagement is effective immediately.
On May
13, 2019, the Board of Directors of the Company approved and
ratified the engagement of Fruci PLLC as the Company’s independent
registered public accounting firm effective immediately, and
dismissed Marcum LLP (“Marcum”) as the Company’s independent
registered public accounting firm.
On
October 18, 2018, the Registrant engaged Marcum as its independent
registered public accountants. This engagement occurred in
connection with the Company’s prior independent public accountants,
GBH CPA’s resigning, effective July 1, 2018, as a result of
combining its practice with Marcum. The engagement of Marcum has
been approved by the Audit Committee of the Company’s Board of
Directors.
On
September 25, 2017, our Board of Directors approved and ratified
the engagement of GBH CPAs, PC (“GBH”) as our independent
registered public accounting firm for the Company’s fiscal year
ending February 28, 2018, effective immediately, and dismissed
Malone Bailey as the Company’s independent registered public
accounting firm.
- 30 -
The
following table shows the fees that were billed for the audit and
other services provided by LJ Soldinger for the fiscal year ended
February 29, 2020.
|
|
|
|
|
|
|
2020
|
|
Audit Fees
|
|
$
|
72,500
|
|
Audit-Related Fees
|
|
|
—
|
|
Tax Fees
|
|
|
—
|
|
All Other Fees
|
|
|
—
|
|
Total
|
|
$
|
72,500
|
|
Audit Fees - This category includes the audit of our annual
financial statements, review of financial statements included in
our Quarterly Reports on Form 10-Q and services that are normally
provided by the independent registered public accounting firm in
connection with engagements for those fiscal years. This category
also includes advice on audit and accounting matters that arose
during, or as a result of, the audit or the review of interim
financial statements.
Audit-Related Fees - This category consists of assurance and
related services by the independent registered public accounting
firm that are reasonably related to the performance of the audit or
review of our financial statements and are not reported above under
“Audit Fees.” The services for the fees disclosed under this
category would include consultation regarding correspondence with
the SEC, other accounting consulting and other audit services.
Tax
Fees - This category consists of professional services rendered
by our independent registered public accounting firm for tax
compliance and tax advice. The services for the fees disclosed
under this category include tax return preparation and technical
tax advice.
All
Other Fees - This category consists of fees for other
miscellaneous items.
As
part of its responsibility for oversight of the independent
registered public accountants, the Board has established a
pre-approval policy for engaging audit and permitted non-audit
services provided by our independent registered public accountants.
In accordance with this policy, each type of audit, audit-related,
tax and other permitted service to be provided by the independent
auditors is specifically described and each such service, together
with a fee level or budgeted amount for such service, is
pre-approved by the Board. All of the services provided by LJ
Soldinger, Fruci,,Marcum, GBH and MaloneBailey described above were
approved by our Board.
The
Company’s principal accountant did not engage any other persons or
firms other than the principal accountant’s full-time, permanent
employees.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES
(a)(1) Financial Statements
The
consolidated financial statements and Report of Independent
Registered Public Accounting Firm are listed in the Index to
Financial Statements and Financial Statement Schedules on page F-1
and included on pages F-2 through F-31.
(2) Financial Statement Schedules
All
schedules for which provision is made in the applicable accounting
regulations of the SEC are either not required under the related
instructions, are not applicable (and therefore have been omitted),
or the required disclosures are contained in the financial
statements included herein.
- 31 -
(3) Exhibits.
|
|
|
Exhibit No.
|
|
Description of Document
|
2.1
|
|
Stock Purchase Agreement, dated August 28, 2017, by and among the
registrant, Steve Reinharz and Robotic Assistance Devices Inc.
(incorporated by reference to Exhibit 10.1 to the registrant’s
current report on Form 8-K filed with the Commission on August 31,
2017).
|
|
|
|
3.1
|
|
Articles of Incorporation of the registrant filed with the Nevada
Secretary of State on September 8, 2014. (incorporated by
reference to Exhibit 3.1 to the registrant’s transition report on
Form 10-KT filed with the Commission on March 12, 2018).
|
|
|
|
3.2
|
|
Plan and Agreement of Merger of Artificial Intelligence Technology
Solutions Inc. (a Florida corporation) and Artificial Intelligence
Technology Solutions Inc. (a Nevada corporation). (incorporated
by reference to Exhibit 3.2 to the registrant’s transition report
on Form 10-KT filed with the Commission on March 12, 2018).
|
|
|
|
3.3
|
|
Bylaws of the registrant (incorporated by reference to Exhibit
3.2 to the registrant’s registration statement on Form S-1 (File
No. 333-168530), filed with the Commission on August 4, 2010).
|
|
|
|
3.4
|
|
Certificate of Designations filed with the Nevada Secretary of
State on February 8, 2017. (incorporated by reference to
Exhibit 3.4 to the registrant’s transition report on Form 10-KT
filed with the Commission on March 12, 2018).
|
|
|
|
3.5
|
|
Certificate of Designations filed with the Nevada Secretary of
State on May 3, 2017. (incorporated by reference to Exhibit 3.5
to the registrant’s transition report on Form 10-KT filed with the
Commission on March 12, 2018).
|
|
|
|
3.6
|
|
Amendment to Certificate of Designations filed with the Nevada
Secretary of State on May 3, 2017 (incorporated by reference to
Exhibit 3.1 to the registrant’s current report on Form 8-K filed
with the Commission on May 12, 2017).
|
|
|
|
10.1
|
|
Preferred Stock Purchase Agreement dated January 31, 2017 and
entered into between the Company and Capital Venture Holdings
LLC. (incorporated by reference to Exhibit 10.1 to the
registrant’s transition report on Form 10-KT filed with the
Commission on March 12, 2018).
|
|
|
|
14.1
|
|
Code of Ethics (incorporated by reference to Exhibit 14.1 to
the registrant’s registrant statement on Form S-1 (File No.
333-168530), filed with the Commission on August 4, 2010).
|
|
|
|
21.1
|
|
List of Subsidiaries. *
|
|
|
|
31.1
|
|
Certification of the Chief Executive Officer and
Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. *
|
|
|
|
32.1
|
|
Certification of the Chief Executive Officer and
Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. *
|
|
|
|
101.INS
|
|
XBRL Instance **
|
101.SCH
|
|
XBRL Taxonomy Extension
Schema **
|
101.CAL
|
|
XBRL Taxonomy Extension
Calculation **
|
101.DEF
|
|
XBRL Taxonomy Extension
Definition **
|
101.LAB
|
|
XBRL Taxonomy Extension
Labels **
|
101.PRE
|
|
XBRL Taxonomy Extension
Presentation **
|
__________
|
|
*
|
Filed or furnished herewith.
|
**
|
In accordance with Regulation S-T, the
Interactive Data Files in Exhibit 101 to the Annual Report on Form
10-K shall be deemed “furnished” and not “filed.”
|
- 32 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 31, 2020
|
By:
|
/s/ Garett Parsons
|
|
|
Garett Parsons
|
|
|
President, Chief Executive Officer and Chief
Financial Officer
|
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
/s/ Garett Parsons
|
|
President, Chief Executive Officer, Chief
Financial Officer, and Director (principal executive officer,
principal financial officer and principal accounting officer)
|
|
July 31, 2020
|
Garett Parsons
|
|
|
|
|
- 33 -
ARTIFICIAL INTELLIGENCE
TECHNOLOGY SOLUTIONS INC.
(FORMERLY ON THE MOVE
SYSTEMS CORP.)
INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS
|
|
Report of Independent Registered Public
Accounting Firm
|
F-2
|
|
|
Report of Independent Registered Public
Accounting Firm
|
F-3
|
|
|
Consolidated Balance Sheets
|
F-4
|
|
|
Consolidated Statements of Operations
|
F-5
|
|
|
Consolidated Statement of Stockholders’
Deficit
|
F-6
|
|
|
Consolidated Statements of Cash Flows
|
F-7
|
|
|
Notes to the Consolidated Financial
Statements
|
F-8
|
F-1
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRMS
To the Shareholders and
Board of Directors of
Artificial Intelligence
Technology Solutions, Inc.
Opinion on the
Financial Statements
We have audited the
accompanying consolidated balance sheet of Artificial Intelligence
Technology Solutions, Inc. and Subsidiaries (the “Company”) as of
February 29, 2020, the related consolidated statement of
operations, stockholders’ deficit and cash flows for the year ended
February 29, 2020, and the related notes (collectively referred to
as the “financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial
position of the Company as of February 29, 2020, and the results of
its operations and its cash flows for the year ended February 29,
2020, in conformity with accounting principles generally accepted
in the United States of America.
Explanatory Paragraph
– Going Concern
The accompanying
consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As more fully
described in Note 2, the Company has a significant working capital
deficiency, incurred significant operating and cash flow losses and
needs to raise additional capital to sustain operations. These
conditions raise substantial doubt about the Company’s ability to
continue as a going concern. Management’s plans in regard to these
matters are also described in Note 2. The consolidated financial
statements do not include any adjustments that might become
necessary should the Company be unable to continue as a going
concern.
Change in Accounting Principle
As discussed in Note 3 to the consolidated
financial statements, the Company changed the manner in which it
accounts for revenue recognition in accordance with the adoption of
new lease accounting standards within ASC 842.
Basis for
Opinion
These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s financial
statements based on our audit. We are a public accounting firm
registered with the Public Company Accounting Oversight Board
(United States) (“PCAOB”) and are required to be independent with
respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit
in accordance with the standards of the PCAOB. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. As part of our
audit we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express
no such opinion.
Our audit included
performing procedures to assess the risks of material misstatement
of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audit also
included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audit
provides a reasonable basis for our opinion.
/s/ LJ Soldinger
Associates, LLC
Deer Park, IL
July 28, 2020
We have served as the
Company’s auditor since 2019.
F-2

REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Artificial Intelligence Technology Solutions Inc.
Opinion on the
Financial Statements
We have audited the
accompanying consolidated balance sheets of Artificial Intelligence
Technology Solutions Inc. (“the Company”) as of February 28, 2019,
and the related consolidated statements of operations,
stockholders’ deficit, and cash flows the year ended February 28,
2019, and the related notes (collectively referred to as the
financial statements). In our opinion, the financial statements
present fairly, in all material respects, the financial position of
the Company as of February 28, 2019, and the results of its
operations and its cash flows for the year ended February 28, 2019,
in conformity with accounting principles generally accepted in the
United States of America.
Going Concern
The accompanying
financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has an accumulated deficit,
negative working capital, and management does not anticipate
positive cash flows in the near future. These factors raise
substantial doubt about the Company’s ability to continue as a
going concern. Management’s plans in regard to these matters are
also described in Note 2 to the financial statements. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
Basis for
Opinion
These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s financial
statements based on our audit. We are a public accounting firm
registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit
in accordance with the standards of the PCAOB. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. As part of our
audit, we are required to obtain an understanding of internal
control over financial reporting, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express
no such opinion.
Our audit included
performing procedures to assess the risks of material misstatement
of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audit also
included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audit
provides a reasonable basis for our opinion.
/s/ Fruci &
Associates II, PLLC
We have served as the Company’s auditor
during 2019 and resigned on October 31, 2019.
Spokane, Washington
October 30, 2019, except as to the 10,000 to
1 reverse stock split disclosed under “Stockholders’ Deficit” in
Note 13 to the consolidated financial statements, of which the date
is July 28, 2020.
F-3
ARTIFICIAL INTELLIGENCE
TECHNOLOGY SOLUTIONS INC.
CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
|
February
29, 2020
|
|
February
28, 2019
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
13,307
|
|
$
|
21,192
|
|
Accounts receivable
|
|
|
50,117
|
|
|
39,964
|
|
Device parts inventory
|
|
|
24,789
|
|
|
273,496
|
|
Prepaid expenses and deposit
|
|
|
—
|
|
|
18,778
|
|
Vehicles for disposal
|
|
|
—
|
|
|
13,251
|
|
Total current assets
|
|
|
88,213
|
|
|
366,681
|
|
Revenue earning devices, net of accumulated depreciation of
$123,088 and $42,784 respectively
|
|
|
239,171
|
|
|
187,174
|
|
Fixed assets, net of accumulated depreciation of $51,637 and
$29,701, respectively
|
|
|
16,258
|
|
|
37,194
|
|
Total assets
|
|
$
|
343,642
|
|
$
|
591,049
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
1,144,660
|
|
$
|
1,486,488
|
|
Advances payable
|
|
|
1,597
|
|
|
12,637
|
|
Balance owed WeSecure
|
|
|
162,500
|
|
|
25,000
|
|
Customer deposits
|
|
|
10,000
|
|
|
10,000
|
|
Current portion of deferred variable payment obligation
|
|
|
30,534
|
|
|
2,108
|
|
Current portion of convertible notes payable, net of discount of
$120,602 and $718,015, respectively
|
|
|
6,613,625
|
|
|
5,484,446
|
|
Loan payable - related party
|
|
|
1,310,358
|
|
|
782,844
|
|
Current portion of loans payable
|
|
|
696,154
|
|
|
321,946
|
|
Vehicle loan - current portion
|
|
|
38,522
|
|
|
57,287
|
|
Current portion of accrued interest payable
|
|
|
2,778,583
|
|
|
1,390,706
|
|
Derivative liability
|
|
|
6,890,688
|
|
|
6,170,139
|
|
Total
current liabilities
|
|
|
19,677,221
|
|
|
15,743,601
|
|
Convertible notes payable, net of discount of $30,486 and $302,105
respectively
|
|
|
69,515
|
|
|
262,895
|
|
Loans payable
|
|
|
—
|
|
|
140,535
|
|
Deferred variable payment obligation
|
|
|
1,559,000
|
|
|
190,392
|
|
Accrued interest payable
|
|
|
144,311
|
|
|
85,344
|
|
Customer deposits
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
21,450,047
|
|
|
16,422,767
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
Stockholders’
deficit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, undesignated; 15,645,650 shares authorized; no
shares issued and outstanding at May 31, 2018 and February 28,
2018, respectively
|
|
|
—
|
|
|
—
|
|
Series E Preferred Stock, $0.001 par value; 4,350,000 shares
authorized; 4,350,000 and 4,350,000 shares issued and outstanding
,respectively
|
|
|
4,350
|
|
|
4,350
|
|
Series F Convertible Preferred Stock, $1.00 par value; 4,350 shares
authorized; 3,450 and 3,450 shares issued and outstanding,
respectively
|
|
|
3,450
|
|
|
3,450
|
|
Common Stock, $0.00001 par value; 5.000,000,000 shares authorized
418,415 and 20,026 shares issued and outstanding, respectively
|
|
|
4
|
|
|
—
|
|
Additional paid-in capital
|
|
|
4,334,564
|
|
|
3,395,606
|
|
Preferred stock to be issued
|
|
|
174,070
|
|
|
174,070
|
|
Accumulated deficit
|
|
|
(25,622,843
|
)
|
|
(19,409,194
|
)
|
Total stockholders’ deficit
|
|
|
(21,106,405
|
)
|
|
(15,831,718
|
)
|
Total liabilities and stockholders’ deficit
|
|
$
|
343,642
|
|
$
|
591,049
|
|
The accompanying notes
are an integral part of these consolidated financial
statements.
F-4
ARTIFICIAL INTELLIGENCE
TECHNOLOGY SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
|
|
|
|
|
|
Year Ended
February 29, 2020
|
|
Year Ended
February 28, 2019
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
260,768
|
|
$
|
114,671
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
83,760
|
|
|
4,522
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
177,008
|
|
|
110,149
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Research and
development
|
|
|
332,520
|
|
|
540,971
|
|
General and
administrative
|
|
|
1,536,568
|
|
|
2,795,790
|
|
Depreciation and
amortization
|
|
|
102,241
|
|
|
114,612
|
|
Loss (gain) on
(disposal) impairment of fixed assets
|
|
|
(11,515
|
)
|
|
73,172
|
|
Total operating
expenses
|
|
|
1,959,814
|
|
|
3,524,545
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(1,782,806
|
)
|
|
(3,414,396
|
)
|
|
|
|
|
|
|
|
|
Other income (expense), net:
|
|
|
|
|
|
|
|
Change in fair value of
derivative liabilities
|
|
|
(1,127,119
|
)
|
|
26,039,039
|
|
Interest expense
|
|
|
(3,465,098
|
)
|
|
(6,747,025
|
)
|
Gain (loss) on
settlement of debt
|
|
|
161,374
|
|
|
217,217
|
|
Total other income
(expense), net
|
|
|
(4,430,843
|
)
|
|
19,509,231
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(6,213,649
|
)
|
$
|
16,094,835
|
|
|
|
|
|
|
|
|
|
Net income ( loss) per share - basic
|
|
$
|
(21.06
|
)
|
$
|
5,804.57
|
|
Net income (loss) per share - diluted
|
|
$
|
(31.46
|
)
|
$
|
(46.82
|
)
|
|
|
|
|
|
|
|
|
Weighted average common share outstanding -
basic
|
|
|
197,539
|
|
|
2,773
|
|
|
|
|
|
|
|
|
|
Weighted average common share outstanding -
diluted
|
|
|
197,539
|
|
|
195,618
|
|
The accompanying notes
are an integral part of these consolidated financial
statements.
F-5