# EDGAR Filing Document

**Accession Number:** 0001498148
**File Stem:** 0001161697-23-000205
**Filing Date:** 2023-3
**Character Count:** 681519
**Document Hash:** 81d4914a792d3ca9efdafbfbbae557fc
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001161697-23-000205.hdr.sgml**: 20230331

**ACCESSION NUMBER**: 0001161697-23-000205

**CONFORMED SUBMISSION TYPE**: S-1

**PUBLIC DOCUMENT COUNT**: 118

**FILED AS OF DATE**: 20230331

**DATE AS OF CHANGE**: 20230331

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Artificial Intelligence Technology Solutions Inc.
- **CENTRAL INDEX KEY:** 0001498148
- **STANDARD INDUSTRIAL CLASSIFICATION:** MOTOR VEHICLE PARTS & ACCESSORIES [3714]
- **IRS NUMBER:** 272343603
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 0228

**FILING VALUES:**
- **FORM TYPE:** S-1
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-271031
- **FILM NUMBER:** 23787477

**BUSINESS ADDRESS:**
- **STREET 1:** 10800 GALAXIE AVENUE
- **CITY:** FERNDALE
- **STATE:** MI
- **ZIP:** 48220
- **BUSINESS PHONE:** (877) 787-6268

**MAIL ADDRESS:**
- **STREET 1:** 10800 GALAXIE AVENUE
- **CITY:** FERNDALE
- **STATE:** MI
- **ZIP:** 48220

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** ON THE MOVE SYSTEMS CORP.
- **DATE OF NAME CHANGE:** 20100803

?xml version="1.0" encoding="utf-8"?

As filed with the Securities and Exchange Commission on March 31, 2023

Registration No. 333-_________

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM S-1**

**REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933**

**<u>ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.</u>**

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Nevada** | **3714** | **27-2343603** |
| (State or jurisdiction of incorporation<br> or organization) | (Primary Standard Industrial<br> Classification Code Number) | (IRS Employer<br> Identification Number) |

---

**10800 Galaxie Avenue**

**Ferndale, Michigan 48220**

**(877) 787-6268**

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

**Steven Reinharz**

**Chief Executive Officer**

**10800 Galaxie Avenue**

**Ferndale, Michigan 48220**

**(877) 787-6268**

(Name, address, including zip code, and telephone number, including area code, of agent for service)

**Copies to:**

Frederick M. Lehrer, P. A.

Frederick M. Lehrer, Esquire

2108 Emil Jahna Road

Clermont, Florida 34711

flehrer@securitiesattorney1.com

(561) 706-7646

**Approximate date of commencement of proposed sale to the public: From time to time after the effectiveness of this registration statement.**

If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

**The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant files a further amendment that specifically states that this registration statement will thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement becomes effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.**

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission, of which this prospectus is a part, shall have been declared effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

**SUBJECT TO COMPLETION, DATED MARCH 31, 2023** 

**1,250,000,000 Shares of Common Stock**

This prospectus relates to the sale by the Selling Stockholder, GHS Investments, LLC ("GHS"), of Artificial Intelligence Technology Solutions, Inc. (the "Company") of up to 1,250,000,000 shares of common stock, par value $0.00001 per share. We will not receive proceeds from the sale of the shares by the Selling Stockholder. However, we may receive aggregate gross proceeds of up to $30.0 million from the sale of our common stock registered herein to the Selling Stockholder, pursuant to the March 22, 2023 purchase agreement entered into with GHS (the "Purchase Agreement")

Our common stock is quoted on the OTC Pink under the symbol "AITX." On March 24, 2022, the last reported sales price of our common stock on the OTC Pink was $0.0059 per share.

The Purchase Agreement provides that the Company may discretionarily sell to GHS up to $30,000,000 of shares ("Purchase Shares") of the Company's common stock upon our issuance of Purchase Notices to GHS (<u>See</u> "Purchase Agreement with GHS Investments, LLC" on page 9 of this prospectus for a description of the GHS Purchase Agreement). The Selling Stockholder will sell its Purchase Shares at prevailing market prices or in privately negotiated transactions, other details of the sales which are contained in the section titled "Plan of Distribution" on page 11.

GHS is an underwriter within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. We will bear all costs, expenses and fees in connection with the registration of the common stock. The Selling Stockholder will bear all commissions and discounts, if any, attributable to its sales of our common stock.

**Investing in our securities is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties described under the heading "Risk Factors" beginning on page 2 of this prospectus before making a decision to purchase our securities.**

**NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.**

**We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision.**

**The date of this prospectus is March 31, 2023.**

------

**Table of Contents**

---

| | |
|:---|:---|
|  | **<u>PAGE</u>** |
| [PROSPECTUS SUMMARY](#prospectus_summary) | 1 |
| [ABOUT THE OFFERING](#about_the_offering) | 1 |
| [RISK FACTORS](#risk_factors) | 2 |
| [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](#cautionary_note) | 10 |
| [USE OF PROCEEDS](#use_of_proceeds) | 11 |
| [SELLING STOCKHOLDER](#selling_stockholder) | 11 |
| [PLAN OF DISTRIBUTION](#plan_of_distribution) | 11 |
| [DESCRIPTION OF BUSINESS](#description_of_business) | 12 |
| [MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS](#market_for_common_equity) | 19 |
| [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#md_a) | 19 |
| [MANAGEMENT](#management) | 34 |
| [EXECUTIVE COMPENSATION](#executive_comp) | 36 |
| [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT](#security_ownership) | 38 |
| [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS](#certain_relationships) | 39 |
| [DESCRIPTION OF SECURITIES](#description_of_securities) | 41 |
| [DIVIDEND POLICY](#dividend_policy) | 44 |
| [LEGAL MATTERS](#legal_matters) | 44 |
| [EXPERTS](#experts) | 44 |
| [AVAILABLE INFORMATION](#available_info) | 44 |
| [INDEX TO CONSOLIDATED FINANCIAL STATEMENTS](#index_to_fs) | 45 |

---

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*[**Table of Contents**](#toc)*

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information from that contained in this prospectus. The Selling Stockholder is offering to sell and seeking offers to buy shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy the securities in any circumstances under which the offer or solicitation is unlawful. Neither the delivery of this prospectus nor any distribution of securities in accordance with this prospectus shall, under any circumstances, imply that there has been no change in our affairs since the date of this prospectus.

**PROSPECTUS SUMMARY**

*This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes and the information set forth under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in each case included elsewhere in this prospectus.*

*Unless the context otherwise requires, references to "we," "our," "us," "Artificial Intelligence" or the "Company" in this prospectus mean Artificial Intelligence Technology Solutions, Inc. and its wholly-owned subsidiaries.*

**Company Overview**

We apply AI technology to solve enterprise problems that are expensive, repetitive, difficult to staff, and outside of the core competencies of the client organization. Our main focus is disrupting and capturing a significant portion of the global security services market, specifically the human security guard market and the physical security market. RAD solutions are unique in that they start with an AI-driven autonomous response utilizing cellular optimized communications, while easily connecting to a human operator for a manned response as needed. We use purpose-built hardware and deliver our services through RAD-developed software and cloud services allowing enterprises IT groups to focus on their core competencies.

**About this Offering**

***Equity Financing Agreement with GHS Investments, LLC***

On March 22, 2022, we entered into the Equity Financing Agreement with GHS referred to herein as the "Purchase Agreement".

Pursuant to the Purchase Agreement, we have the right, in our sole discretion, subject to the conditions and limitations contained therein, to direct GHS, by delivery of a purchase notice (a "Purchase Notice") to purchase (each, a "Purchase") over the 24 month term of the Purchase Agreement, a minimum of $10,000 and up to a maximum of $1,500,000. The aggregate value of Purchase Shares sold to GHS may not exceed $30,000,000. Each Purchase Notice will set forth the Purchase Price and number of Purchase Shares in accordance with the terms of the Purchase Agreement. The maximum dollar amount of each Put will not exceed 250% of the average daily trading volume for the common stock during the 10 consecutive trading days preceding the Put Notice Date.

The Purchase Price is defined as 80% of the lowest traded market price during the Pricing Period; but if the average Closing Price for the Common Stock during the 3 trading days preceding a Put Notice is equal to or greater than $0.01 per share the applicable Purchase Price will equal 85% of the lowest traded market price during the Pricing Period. The Pricing Period is the nine consecutive business days immediately preceding, but not including, the date a Purchase Notice is delivered. Should we up-list to NASDAQ or an equivalent national exchange, the Purchase Price will be 90% of the lowest VWAP during the Pricing Period, subject to a floor price of $4.50 per share.

The Purchase Agreement prohibits GHS from purchasing any shares of common stock if those shares, when aggregated with all other shares of our common stock then beneficially owned by GHS would result in GHS having beneficial ownership, at any single point in time, of more than 4.99% of the then total outstanding shares of our common stock. There are no trading volume requirements or restrictions under the Purchase Agreement and we will control the timing and amount of any sales of its common stock to GHS.

We may not deliver a Purchase Notice to GHS and GHS is not obligated to purchase the Purchase Shares unless each of the following conditions are satisfied: there is an effective Registration Statement; the Common Stock is listed or quoted for trading on the Principal Market; we are is not in breach of in default of the Purchase Agreement or Registration Rights Agreement; no injunction has been issued prohibiting the purchase of the or the issuance of the Securities; and the issuance of the Securities does not violate the Principal Market requirements.

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*[**Table of Contents**](#toc)*

The Purchase Agreement is for a term of twenty four months but may terminate earlier on the date that GHS has purchased the aggregate Offering Amount of $30,000,000 of the Purchase Shares that are sold to GHS. We and GHS each have the right to terminate the Purchase Agreement at any time upon thirty days-notice. The Purchase Agreement will be suspended and remain suspended if any of the following events occur: if our Common Stock is suspended by the applicable authority, our Common Stock ceases to be quoted; we breach a representation, warranty, covenant in the Purchase Agreement;, and upon the occurrence of bankruptcy proceedings by or against us.

Subject to the foregoing, actual sales of Purchase Shares to GHS under the Purchase Agreement will depend on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading price of the Common Stock and determinations by us as to the appropriate sources of funding for our operations.

**Prior Issuances with GHS**

From April 6, 2022 to February 28, 2023, we issued 997,841,576 common stock shares to GHS in conjunction with December 2021 and December 2022 Securities Purchase Agreements with GHS. The issuances were made in reliance on an exemption from registration set forth in Section 4(a)(2) of the Securities Act.

**Agreement with Icon Capital Group** 

<u>March 23, 2023 Placement Agent Agreement</u>

We have a March 23, 2023 Placement Agreement with Icon Capital Group ("Icon") to act as our Placement Agent in connection with the sale of 1,250,000,000 shares to various investors for which we are obligated to pay Icon as the Placement Agent a cash fee equal to 2% of the aggregate cash proceeds raised.

**RISK FACTORS**

**Risks Related to Our Business**

***Our business is at an early stage, and we have not yet generated any profits.***

RAD I, our primary operating subsidiary, was formed in 2016 and made its first sale in 2016. Accordingly, we have a limited operating history upon which to evaluate its performance and prospects. Our current and proposed operations are subject to all the business risks associated with young enterprises. These include likely fluctuations in operating results as we make significant investments in research, development and product opportunities, we react to developments in our market, including purchasing patterns of customers, and the entry of competitors into the market. We cannot assure you that we will generate enough revenue to be profitable in the next three years or at all, which could lead to a loss of part or all of an investment.

***Our auditor has expressed substantial doubt about our ability to continue as a going concern.***

Our financial statements of which this prospectus is a part have been prepared on a going concern basis. We may be unable to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and pay liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that we will be able to continue as a going concern. Our financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

***Our financial results will fluctuate in the future, which makes them difficult to predict.***

Our financial results may fluctuate in the future. Additionally, we have a limited operating history with the current scale of our business, which makes it difficult to forecast future results. As a result, you should not rely upon our past financial results as indicators of future performance. In addition, you should take into account the risks and uncertainties frequently encountered by rapidly growing companies in evolving markets. Our financial results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including, but not limited to the following:

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*[**Table of Contents**](#toc)*

● our ability to maintain and grow our client base;

● clients suffering downturns, financial instability or becoming subject to mergers or acquisitions;

● our ability to develop and introduce new products and the ability of our competitors to do the same;

● our ability to maintain gross margins and operating margins;

● increases in marketing, sales, service and other operating expenses incurred in expanding our operations and remaining competitive;

● changes affecting our suppliers and other third-party service providers;

● adverse litigation judgments, settlements, or other litigation-related costs; and

● changes in business or macroeconomic conditions, including regulatory changes.

***We have a limited number of deployments and our success depends on an unproven market.***

The market for advanced physical security technology is relatively new and unproven and is subject to risks and uncertainties. In order to grow our business and extend our market position, we will need to place into service additional robots, expand our service offerings, and expand our presence. Our ability to expand the market for our products depends on a number of factors, including the cost, performance and perceived value associated with our products and services. Furthermore, the public's perception of the use of robots to perform tasks traditionally reserved for humans may negatively affect demand for our products and services. Ultimately, our success will depend largely on our customers' acceptance that security services can be performed more efficiently and cost effectively through the use of our robots and ancillary services, of which there can be no assurance.

***We cannot assure you that we can effectively manage our growth.***

Our business growth and expansion and additional products, which create significant challenges for our management, operational, and financial resources, including managing multiple relationships and interactions with users, distributors, vendors, and other third parties. As we continue to grow, our information technology systems, internal management processes, internal controls and procedures and production processes may be inadequate to support our operations. To ensure success, we must continue to improve our operational, financial, and management processes and systems and to effectively expand, train, and manage our employee base. As we implement more complex organizational and management structures consistent with our growth, we may find it increasingly difficult to maintain the benefits of our corporate culture, including our current team's efficiency and expertise, which could negatively affect our business performance.

***Our costs may grow more quickly than our revenues, harming our business and profitability.***

We expect our expenses to continue to increase in the future as we expand our product offerings, expand production capabilities and hire additional employees. We expect to continue to incur increasing costs, in particular for working capital to purchase inventory, marketing and product deployments as well as costs associated with customer support in the field. Our expenses may be greater than we anticipate which would have a negative impact on our financial position, assets and ability to invest further in the growth and expansion of our business.

***The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business.***

We depend on the continued services and performance of key members of the management team, in particular, founder and Chief Executive Officer, Steven Reinharz, Chief Financial Officer, Anthony Brenz, and RAD I Chief Executive Officer, Mark Folmer. While we currently have employment agreements with Messrs. Reinharz and Brenz, we do not have any employment agreements in place with our other officers. If we cannot call upon Messrs. Reinharz and Mr. Brenz or Mark Folmer or other key management personnel for any reason, our operations and development could be harmed. We have not yet developed a succession plan. Furthermore, as we grow, we will be required to hire and attract additional qualified professionals such as accounting, legal, finance, production, service and engineering experts. We may be unable to locate or attract qualified individuals for such positions, which will affect our ability to grow and expand our business.

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*[**Table of Contents**](#toc)*

***Because our Board of Directors does not currently have an audit committee, compensation committee, nomination committee, or any other form of corporate governance committee, shareholders will have to rely on our only director, who is not independent, to perform these functions.***

We do not have an audit committee, compensation committee, nomination committee, or any form of corporate governance committees that includes any independent members. Instead, the Board of Directors performs these functions as a whole. As a result, we do not receive the independent advice of other persons.

***If we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished and our business may be adversely affected.***

We rely and expect to continue to rely on a combination of confidentiality agreements with its employees, consultants, and third parties with whom it has relationships, as well as trademark, copyright, patent, trade secret, and domain name protection laws, to protect its proprietary rights. As of the date of this report, there are no patents filed on our behalf. We plan to file various applications in the United States for protection of certain aspects of its intellectual property. However, third parties may knowingly or unknowingly infringe our proprietary rights, may challenge proprietary rights held by us, and pending and future trademark and patent applications may not be approved. In addition, effective intellectual property protection may not be available in every country in which we intend to operate in the future. In any or all of these cases, we may be required to expend significant time and expense in order to prevent infringement or to enforce our rights. Although we plan to take measures to protect our proprietary rights, there can be no assurance that others will not offer products or concepts that are substantially similar to those offered through RAD I and compete with our business. If the protection of our proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties, the value of our brand and other intangible assets may be diminished, and competitors may be able to more effectively mimic our service and methods of operations. Any of these events could have a material adverse effect on our business and financial results.

***Economic factors generally may negatively affect our operations.***

We are subject to the general risks of the marketplace where we conduct business. Our results of operations will depend on a number of factors over which we have no control, including changes in general economic or local economic conditions, changes in supply of or demand for similar and/or competing products and services, and changes in tax and governmental regulations that may affect demand for such products and services. Any significant decline in general economic conditions or uncertainties regarding future economic prospects that affect industrial and consumer spending could have a material adverse effect on our business. For these and other reasons, no assurance of profitable operations can be given.

***General political, social and economic conditions can adversely affect our business.***

Demand for our products and services depends, to a significant degree, on general political, social and economic conditions in our markets. Worsening economic and market conditions, downside shocks, or a return to recessionary economic conditions could serve to reduce demand for our products and services and adversely affect our operating results. In addition, an economic downturn could impact the valuation and collectability of certain long-term receivables held by us. Additionally, the global economy and financial markets may be adversely affected by geopolitical events, including the current or anticipated impact of military conflict and related sanctions imposed on Russia by the United States and other countries due to Russia's recent invasion of Ukraine.

***Our businesses may be materially adversely affected by the recent coronavirus (COVID-19) outbreak or the related market decline and volatility.***

On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease ("COVID-19") a "Public Health Emergency of International Concern." On March 11, 2020, the World Health Organization characterized the outbreak as a "pandemic". The significant outbreak of COVID-19 has resulted in a widespread health crisis that adversely affected economies and financial markets worldwide during 2020 and 2021, including the businesses which we operate and own a percentage of. The recent market decline and volatility in connection with the COVID-19 pandemic could also materially and adversely affect any future potential acquisitions. Furthermore, with restrictions on travel, the limited ability to have meetings with personnel, vendors and services providers are expected to have an adverse effect on our businesses. While we expect the effects of the pandemic to negatively impact our results from operations, cash flows and financial position, the current level of uncertainty over the economic and operational impacts of COVID-19 means the related financial impact cannot be reasonably estimated at this time. We have experienced customer delays and extensions for projects, supply chain delays, furloughs of personnel, increased utilization of telework, increased safety protocols to address COVID-19 risks, decreased installations and other impacts from the COVID-19 pandemic. We have experienced workforce shortages in connection with the COVID-19 pandemic. Our ability to attract and retain additional employees may limit its ability to grow across its businesses.

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We are proactively working to adjust our operations to properly reflect the market environment during the immediate pandemic while maintaining sufficient resources for the expected rebound later this year. The extent to which COVID-19 impacts our businesses will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our operations may be materially adversely affected.

***The currently evolving situation related to the COVID-19 pandemic could adversely affect our business, financial condition and results of operations.***

The ongoing COVID-19 pandemic, including the emergence of variants for which vaccines may not be effective, may continue to negatively affect our business by causing or contributing to, among other things:

● Higher shipping costs and longer shipping times, especially for shipments from China and Europe;

● Limited access to parts needed for our products due to the ongoing issues with global chip supply, which may affect our ability to meet our production goals;

● Higher labor costs due to a diminished supply of potential employees and higher employee recruitment and retention costs; and

● Disruptions in production due to employees becoming ill from Covid.

The extent of COVID-19's effect on our operational and financial performance in the future will depend on future developments, including the duration, spread and intensity of the pandemic, our continued ability to manufacture and distribute our products, any future government actions affecting consumers and the economy generally, changing economic conditions and any resulting inflationary impacts, as well as timing and effectiveness of global vaccines, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. Although the potential effects that COVID-19 may continue to have on us are not clear, these effects could materially adversely affect our business, financial condition and results of operations.

***Our business is subject to data security risks, including security breaches.***

Our products employ technologies that are subject to various data security risks including security breaches and hacking, and we cannot guarantee that our products may not be negatively affected by these risks causing them to suffer damages. We use wireless data carrier providers to transmit data and information of all kinds, and those wireless providers may suffer security breaches that release our confidential information. The occurrence of the foregoing may damage our brand and increase our costs. Any of these events or circumstances could materially adversely affect our business, financial condition, and results of operations.

***Our business success depends on large part on the success of our efforts to lease our products through dealerships.***

Although we engage in some direct sales to potential customers, our primary focus is on leasing its robots to end-users through dealers that market to firms providing security guard and integrated security services. We believe our model based on partnerships with these dealers is valuable and currently has such partnerships with over twenty dealers, with plans to sign on additional dealers. However, there can be no assurance that we can successfully secure agreements with dealerships for the use of our products, which could materially impair our sales, financial condition, and business prospects.

***We currently face competition and may face additional competition in the future; if we are unable to compete effectively, our business prospects and operations would be harmed.***

RAD I's re-entry into the mobile security robotics market presents us with two potential competitors. Knightscope, Inc., states that it has available one outdoor security robot called the 'K5' and has another outdoor robotic device under development, the 'K9'. Cobalt Robotics Inc., offers an indoor robotic device that is designed to perform various security functions. Although either or both of these companies may create direct competition to RAD I's products, neither of these companies has a mobile robot that performs the breadth of duties that can be performed by ROAMEO. We are also aware of other companies that are already active in our industry and other companies that are developing physical security technology in the U.S. and abroad that may potentially compete with our technology and services. These, or additional new, competitors may have more resources than we do or may be better capitalized, which may give them a significant advantage because they may be able to offer better pricing, survive an economic downturn or reach profitability compared with us. We cannot guarantee that we will be able to compete successfully against existing or emerging competitors. In addition, existing private security firms may also compete on price by lowering their operating costs, developing new business models or providing other incentives. We cannot give any assurance that we can adequately compete with existing or new competitors, and additional attempts to compete could lead us to expend additional funds toward our marketing efforts and further adversely affect our business operations.

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***Our ability to operate and collect digital information on behalf of our clients is dependent on the privacy laws of jurisdictions in which our machines operate, as well as the corporate policies of our clients, which may limit our ability to fully deploy our technologies in various markets.***

Our robots collect, store, and analyze certain types of personal or identifying information regarding individuals that interact with the machines. While we maintain stringent data security procedures, the regulatory framework for privacy and security issues is rapidly evolving worldwide and is likely to remain uncertain for the foreseeable future. Federal and state government bodies and agencies have in the past adopted, and may in the future adopt, laws and regulations affecting data privacy, which in turn affect the breadth and type of features that we can offer to our clients. In addition, our clients have separate internal policies, procedures and controls regarding privacy and data security with which we may be required to comply. Because the interpretation and application of many privacy and data protection laws are uncertain, it is possible that these laws may be interpreted or applied in a manner that is inconsistent with our current data management practices or the features of our products. If so, in addition to the possibility of fines, lawsuits and other claims and penalties, we could be required to fundamentally change our business activities and practices or modify our products, which could have an adverse effect on our business. Any inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and data security laws, regulations, and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales, and adversely affect our business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our clients may limit the use and adoption of, and reduce the overall demand for, our products. Privacy and data security concerns, whether valid or not valid, may inhibit market adoption of our products, particularly in certain industries and foreign countries. If we are not able to adjust to changing laws and regulations, our business may be harmed.

***Our success depends on the growth of our industry, most specifically on the growing adoption and use of physical security technology in general and the adoption and use of our products.***

The market for our products and for physical security technology in general is relatively new and unproven and is subject to many risks and uncertainties. Our ability to gain growing market acceptance and adoption of our products depends on the market's acceptance of physical security technology in general. If we are unable to increase acceptance of our products, and if the market for physical security technology generally does not develop as we hope, we will not be able to sell our products, which would adversely affect our financial performance.

**Risks Related to our Securities**

***An investment in our securities is extremely speculative, and there can be no assurance of any return on the investment.***

An investment in our securities is extremely speculative, and there is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks, including the risk of losing their entire investment in our securities. For example, the market price of our common stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market and other factors, many of which we have little or no control over. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected performance.

***Our common stock shareholders do not have voting control over us due to the rights granted to holders of our Series E Convertible Preferred Stock.***

Steven Reinharz, our Chief Executive Officer, is currently the holder of all 3,350,000 shares of our Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock holds 2/3rds of the voting power of all shareholders at any time that corporate action requires a vote of shareholders. As a result, holders of common stock do not have voting control over the Company.

***Because we are a "smaller reporting company," we may take advantage of certain scaled disclosures available to us, resulting in holders of our securities receiving less information than they would receive from a public company that is not a smaller reporting company.***

We are a "smaller reporting company" as defined in the Exchange Act. As a smaller reporting company, we may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or(ii) our annual revenue is less than $100 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. To the extent we take advantage of any reduced disclosure obligations, it may make it harder for investors to analyze our results of operations and financial prospectus in comparison with other public companies.

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***To fund our operations, we may conduct further offerings in the future, in which case our common stock may be diluted.***

To fund our business operations, we anticipate continuing to rely on sales of its securities, which may include common stock, preferred stock, convertible debt and/or warrants convertible or exercisable into shares of common stock. Common stock may be issued in return for additional funds or upon conversion or exercise of outstanding convertible debentures or warrants. If additional common stock is issued, the price per share of the common stock could be lower than the price paid by existing holders of common stock, and the percentage interest of those shareholders will be lower. This result is referred to as "dilution," which could result in a reduction in the per share value of your shares of common stock. Our failure or inability to raise capital when needed or on terms acceptable to us and our shareholders could have a material adverse effect on our business, financial condition and results of operations and would also have a negative adverse effect on the price of our common stock.

***We have and may in the future utilize debt financing to fund our operations.***

If we undertake debt financing to fund our operations, the financing may involve significant restrictive covenants. In addition, there can be no assurance that such financing will be available on terms satisfactory to us, if at all. Our failure or inability to obtain financing when needed or on terms acceptable to us and our shareholders could have a material adverse effect on our business, financial condition and results of operations and would also have a negative adverse effect on the price of our common stock.

***The trading price of our common stock may fluctuate significantly.***

Volatility in the trading price of shares of our common stock may prevent shareholders from being able to sell shares of common stock at prices equal to or greater than their purchase price. The trading price of our common stock could fluctuate significantly for various reasons, including:

● our operating and financial performance and prospects;

● our quarterly or annual earning or those of other companies in the same industry;

● sales of our common stock by our management;

● public reaction to our press releases, public announcements and filing with the SEC;

● changes in earnings estimates or recommendations by research analysts who
track common stock or the stock of other companies in the same industry;

● strategic actions by us or our competitors;

● new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

● changes in accounting standards, policies, guidance, interpretations or principles; and

● changes in general economic conditions in the U.S. and in global economies and financial markets, including changes resulting from war or terrorist incidents.

In addition, in recent years, the stock market has experienced significant price and volume fluctuations. This volatility has had a substantial impact on the trading price of securities issued by many companies. The changes frequently occur irrespective of the operating performance of the affected companies. As a result, the trading price of our common stock could fluctuate based upon factors that have little or nothing to do with our business.

***Because we are a small company with a limited operating history, holders of common stock may find it difficult to sell their stock in the public markets.***

The number of persons interested in purchasing our common stock at any given time may be relatively small. This situation is attributable to a number of factors. One factor is that we are a small company that is still relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume. Another factor is that, even if we came to the attention of these persons, they tend to be risk-averse and would likely be reluctant to follow an unproven company such as ours. Furthermore, many brokerage firms may not be willing to effect transactions in our securities, including our common stock. As a consequence, there may be periods when trading activity in our common stock is minimal or even non-existent, as compared to trading activity in the securities of a seasoned issuer with a large and steady volume of trading activity. We cannot give you any assurance that an active public trading market for our common stock or other securities will develop or be sustained, or that, if developed, the trading levels will be sustained.

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***Our shares of common stock are subject to the SEC's "penny stock" rules that limit trading activity in the market, which may make it more difficult for holders of common stock to sell their shares.***

Penny stocks are generally defined as equity securities with a price of less than $5.00. Because our common stock trades at less than $5.00 per share, we are subject to the SEC's penny stock rules that require a broker-dealer to deliver extensive disclosure to its customers before executing trades in penny stocks not otherwise exempt from the rules. The broker-dealer must also provide its customers with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, and provide monthly account statements showing the market value of each penny stock held by the customer. Under the penny stock regulations, unless the broker-dealer is otherwise exempt, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction before the sale. As a general rule, an individual with a net worth over $1,000,000 or an annual income over $200,000 individually or $300,000 together with his or her spouse, is considered an accredited investor. The additional burdens from the penny stock requirements may deter broker-dealers from effecting transactions in our securities, which could limit the liquidity and market price of shares of our common stock. These disclosure requirements may reduce the trading activity of our common stock, which may make it more difficult for shareholders of our common stock to resell their securities.

***FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.***

In addition to the "penny stock" rules described above, FINRA has adopted Rule 2111 that requires a broker-dealer to have reasonable grounds for believing that an investment is suitable for a customer before recommending the investment. Before 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 your ability to buy and sell shares of common stock and may have an adverse effect on the market for our securities.

***We do not anticipate paying dividends in the future.***

We have never declared or paid any cash dividends on our common stock. Our current policy is to retain earnings to reinvest in our business. Therefore, we do not anticipate paying cash dividends in the foreseeable future. Our dividend policy will be reviewed from time to time by our Board of Directors in the context of its earnings, financial condition and other relevant factors. Until we pay dividends, which we may never do, the holders of shares of common stock will not receive a return on those shares unless they are able to sell those shares at the desired price, if at all, of which there can be no assurance. In addition, there is no guarantee that our common stock will appreciate in value or even maintain the price at which holders purchased their common stock.

***We will continue to incur significant costs to ensure compliance with United States corporate governance and accounting requirements.***

We will continue to incur significant costs associated with our public company reporting requirements, including costs associated with applicable corporate governance requirements such as those required by the Sarbanes-Oxley Act of 2002, and with other rules issued or implemented by the SEC. We expect all of these applicable rules and regulations will result in significant legal and financial compliance costs and to make some activities more time consuming and costly. We are currently evaluating and monitoring developments with respect to these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

 

***Our business is at an early stage, and we have not yet generated any profits.***

RAD I, our primary operating subsidiary, was formed and made its first sale in 2016. Accordingly, we have a limited operating history upon which to evaluate its performance and prospects. Our current and proposed operations are subject to all the business risks associated with young enterprises. These include likely fluctuations in operating results as we makes significant investments in research, development and product opportunities, and reacts to developments in its market, including purchasing patterns of customers, and the entry of competitors into the market. We cannot assure you that we will generate enough revenue to be profitable in the next three years or at all, which could lead to a loss of part or all of an investment in us.

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***Our auditor has expressed substantial doubt about our ability to continue as a going concern.***

The financial statements incorporated by reference into the registration statement of which this prospectus is a part have been prepared on a going concern basis. We may not be able to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and pay liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that we will be able to continue as a going concern. Our financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

***Due to his ownership of Series E Preferred Stock, our Chief Executive Officer has voting rights equal to 66-2/3% of the voting rights held by all of our outstanding capital stock, giving him substantial control over our business and affairs and creating actual or potential conflicts of interests between his interests and the interests of the shareholders.***

 ****

Our Chief Executive Officer holds 3,350,000 shares of Series E Preferred Stock. Because the Series E Preferred Stock has voting rights equal to 66-2/3% of the voting rights held by all of our outstanding capital stock, he has voting control over any matter to be voted upon by the shareholders of the Company, allowing him to exercise substantial control over our business and affairs. Moreover, his ownership of the Series E Preferred Stock creates the potential for conflicts of interest between his interests and the interests of the shareholders holding junior shares, including those holding common shares.

***The Chief Executive Officer's ownership of Series F Preferred Stock permits him to convert the Series F Preferred Shares into a multiple of shares of the then-outstanding common stock. Any such conversion of his Series F Preferred Shares would cause substantial dilution of the shares of common stock held by our common stock shareholders.***

The Chief Executive Officer owns 2,450 shares of Series F Preferred Stock. The Series F Preferred Stock is convertible at the option of the holder into a multiple of the then-outstanding shares of common stock. The Chief Executive Officer's conversion of shares of Series F Preferred Stock into common stock would substantially dilute the outstanding shares of common stock held by the common stock shareholders.

**RISKS RELATED TO THE EQUITY FINANCING AGREEMENT LINE WITH GHS**

***GHS' sales of our Shares into the open market may cause material decreases in our stock price.***

The 1,250,000,000 shares of our common stock that are being registered herein and may be sold into the market by GHS could cause our stock price to decline.

***Funding from the Purchase Agreement may be limited or insufficient to fund our operations or to implement our strategy.***

Under our Purchase Agreement with GHS, upon effectiveness of the registration statement of which this prospectus is a part, and subject to other conditions, we may direct GHS to purchase up to 1,250,000,000 shares of our common stock over a 24-month period. Factors may negatively affect the amount of proceeds we receive, including our share price, discount to market, and other factors relating to our common stock.

There can be no assurance that we will be able to receive all or any of the total commitment from GHS because the EFA contains certain limitations, restrictions, requirements, conditions and other provisions that could limit our ability to cause GHS to buy common stock from us. For instance, we are prohibited from issuing a Draw Down Notice if the amount requested in such Draw Down Notice exceeds the Maximum Draw Down Amount, or the sale of Shares pursuant to the Draw Down Notice would cause us to sell or GHS to purchase an aggregate number of shares of our common stock which would result in beneficial ownership by GHS of more than 4.99% of our common stock (as calculated pursuant to Section 13(d) of the Exchange Act and the rules and regulations thereunder). Moreover, there are limitations with respect to the frequency with which we may provide Draw Down Notices to GHS under the EFA. Also, as discussed above, there must be an effective registration statement covering the resale of any Shares to be issued pursuant to any draw down under the EFA, and the registration statement of which this prospectus is a part, which covers the resale of 1,250,000,000 shares that may be issuable pursuant to draw downs under the EFA.

The extent to which we rely on GHS as a source of funding will depend on a number of factors, including the amount of working capital needed, the prevailing market price of our common stock and the extent to which we are able to secure working capital from other sources. If obtaining sufficient funding from GHS were to prove unavailable or prohibitively dilutive, we would need to secure another source of funding. Even if we sell all 1,250,000,000 shares of common stock under the Purchase Agreement with GHS, we will still need additional capital to fully implement our current business, operating plans, and development plans.

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***You may experience future dilution as a result of this offering or future equity offerings.***

We are registering for resale 1,250,000,000 shares that we may sell to GHS under the Purchase Agreement, which GHS may sell in the open market or in private transactions. Sales of our common stock shares under the Purchase Agreement may cause the material declines in the trading price of our common stock.

***The Selling Stockholder will pay less than the then-prevailing market price for our common stock.***

The common stock to be issued to Selling Stockholder GHS pursuant to the Equity Financing Agreement ("EFA") will be purchased at a discount to the closing price of the shares of our common stock during the applicable pricing period. The Selling Stockholder has a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If GHS sells the shares, the price of our common stock could decrease. If our stock price decreases, GHS may have a further incentive to sell the shares of our common stock that it holds. These sales may have a further impact on our stock price.

***We may use the net proceeds from sales of our common stock to GHS pursuant to the EFA in ways with which you may disagree.***

We intend to use the net proceeds from sales of our common stock to GHS pursuant to the EFA for working capital and general corporate purposes. As of the date of this prospectus, we cannot specify with certainty all of the particular uses of the proceeds from sales of common stock to GHS pursuant to the EFA. Accordingly, we will have significant discretion in the use of the net proceeds of sales of common stock to GHS pursuant to the EFA. It is possible that we may allocate the proceeds differently than investors in this offering desire or that we will fail to maximize our return on these proceeds. We may, subsequent to this offering, modify our intended use of the proceeds from sales of common stock to GHS pursuant to the EFA to pursue strategic opportunities that may arise, such as potential acquisition opportunities. You will be relying on the judgment of our management with regard to the use of the net proceeds from the sales of common stock to GHS pursuant to the EFA, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. Any failure to apply the proceeds from sales of common stock to GHS pursuant to the EFA effectively could have a material adverse effect on our business and cause a decline in the market price of our common stock.

**CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS**

This prospectus contains forward-looking statements. Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. These forward-looking statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such statements.

In some cases, you can identify forward-looking statements by terminology, such as "expects", "anticipates", "intends", "estimates", "plans", "potential", "possible", "probable", "believes", "seeks", "may", "will", "should", "could" or the negative of such terms or other similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this prospectus.

You should read this prospectus and the documents that we reference herein and have filed as exhibits to the registration statement, of which this prospectus is part, completely and with the understanding that our actual future results may be materially different from what we expect. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectus only. Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the information presented in this prospectus, and particularly our forward-looking statements, by these cautionary statements.

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**USE OF PROCEEDS**

We will not receive any proceeds from the sale of common stock offered by the Selling Stockholder. However, we will receive proceeds from the sale of our common stock to Selling Stockholder pursuant to the Financing Agreement. The proceeds from our exercise of the Put right pursuant to the Financing Agreement will be used for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for such other corporate purposes as the Board deems to be in our best interests. . As of the date of this prospectus, we cannot specify with certainty all of the particular uses, and the respective amounts we may allocate to those uses, for the proceeds we may receive. Accordingly, we will have broad discretion in the way that we use these proceeds.

**SELLING STOCKHOLDER**

This prospectus relates to the resale from time to time by the selling stockholder identified herein of up to an aggregate of 1,250,000,000 shares of our common stock.

The Purchase Shares are being registered to permit public sales of such securities, and the selling stockholder may offer the Purchase Shares for resale from time to time pursuant to this prospectus. The selling stockholder may also sell, transfer or otherwise dispose of all or a portion of their Purchase Shares in transactions exempt from the registration requirements of the Securities Act or pursuant to another effective registration statement covering the sale of such securities.

The following table sets forth, based on information provided to us by the selling stockholder or known to us, the name of the selling stockholder, and the number of shares of our common stock beneficially owned by the selling stockholder before and after this offering. The number of shares owned are those beneficially owned, as determined under the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares of common stock as to which a person has sole or shared voting power or investment power and any shares of common stock that the person has the right to acquire within 60 days through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement. The selling stockholder is not a broker-dealer or an affiliate of a broker-dealer. The selling stockholder has not had any material relationship with us or any of our predecessors or affiliates within the past three years.

We have assumed all of the Purchase Shares reflected offered hereunder will be sold from time to time in the offering covered by this prospectus. Because the selling stockholder may offer all or any portions of the Purchase Shares listed in the table below, no estimate can be given as to the amount of those Purchase Shares covered by this prospectus that will be held by the selling stockholder upon the termination of the offering.

GHS will be deemed to be an underwriter within the meaning of the Securities Act. Any profits realized by the selling stockholder may be deemed to be underwriting commissions.

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Selling Stockholder** | &nbsp;&nbsp;**Number of Shares Beneficially Owned Prior to Offering** | &nbsp;&nbsp;**Maximum Number of Shares Offered** | &nbsp;&nbsp;**Number of Shares owned After Offering** | &nbsp;&nbsp;**Percentage of Shares Owned After Offering** |
| &nbsp;&nbsp;GHS Investments, LLC | &nbsp;&nbsp;71967409 | &nbsp;&nbsp;1250000000 | &nbsp;&nbsp;0\* | &nbsp;&nbsp;0\* |

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\* Assumes that all of the Purchase Shares held by the selling stockholder covered by this prospectus are sold and that the selling stockholder acquires no additional shares of common stock before the completion of this offering. However, as the selling stockholder can offer all, some, or none of their Purchase Shares, no definitive estimate can be given as to the number of Purchase Shares that the selling stockholders will ultimately offer or sell under this prospectus. Mark Grober is a member of GHS who may be deemed to be a beneficial owner of common stock held by GHS. Mr. Grober disclaims beneficial ownership of the common stock held by GHS. The address of GHS is 420 Jericho Turnpike, Suite 102, Jericho, NY 11753.

**PLAN OF DISTRIBUTION**

The selling stockholder may, from time to time, sell any or all of its shares of our common stock on OTC Pink or any other stock exchange, market officers existing as of the time of such repeal or modification trading facility on which the shares of our common stock are traded, or in private transactions. These sales may be at fixed prices, prevailing market prices at the time of sale, at varying prices, or at negotiated prices. The selling stockholder may use any one or more of the following methods when selling shares:

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● ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

● block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

● purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

● privately negotiated transactions;

● broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; or

● a combination of any such methods of sale.

Additionally, broker-dealers engaged by the selling stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commissions.

GHS is an underwriter within the meaning of the Securities Act, and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. Any commissions received by such broker-dealers or agents, and any profit on the resale of the shares purchased by them, may be deemed to be underwriting commissions or discounts under the Securities Act. GHS has informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute our common stock.

Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the selling stockholder. The selling stockholder may agree to indemnify any agent, dealer, or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act.

We are required to pay certain fees and expenses incurred by us incident to the registration of the shares covered by this prospectus. We will not receive any proceeds from the resale of any of the shares of our common stock by the selling stockholder. We will receive proceeds from the sale of our common stock to GHS under the GHS Purchase Agreement. Neither the GHS Purchase Agreement with GHS nor any rights of the parties under the GHS Purchase Agreement may be assigned or delegated to any other person.

The Purchase Shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the Purchase Shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the Purchase Shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the selling stockholder or any other person. We will make copies of this prospectus available to the selling stockholder.

**DESCRIPTION OF BUSINESS**

***Business and Historical Overview***

Robotic Assistance Devices, LLC was incorporated in the State of Wyoming on July 26, 2016, as an LLC and was founded by current President Steve Reinharz. Mr. Reinharz, has 25+ 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 started his first security integration company in 1996, which he grew to 30+ employees before closing that company in 2003. In 2017, Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc. ("RAD"), through the issuance of 10,000 common shares to its sole shareholder.

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, On the Move Systems Corp. changed its name to Artificial Intelligence Technology Solutions Inc. ("AITX").

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In 2017, AITX acquired all the ownership and equity interests in RAD (the "Acquisition"). Before the Acquisition, AITX's business focus had been transportation services, and AITX was exploring the on-demand logistics market by developing a network of logistics partnerships. After the Acquisition, AITX shifted its business focus to align with RAD's mission. Since that time, AITX has been engaged in pursuing the delivery of artificial intelligence (AI) and robotic solutions for operational, security, and monitoring needs. More specifically, we is focused on applying advanced 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.

Since substantially all of AITX's operations were disposed of with the transaction's consummation, the Acquisition was treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes. AITX recorded no goodwill or other intangible assets as a result of the Acquisition. RAD is treated as the accounting acquirer as its stockholders control over us after the Acquisition, even though AITX was the legal acquirer. Therefore, the assets, liabilities, and historical operations reflected in these financial statements are those of RAD as if RAD had always been the reporting company.

RAD's solutions are offered as a recurring monthly subscription, typically with a minimum 12-month subscription contract. RAD's solutions are expected to earn over 75% gross margin over the life of each deployed asset when under subscription. RAD also sells units which generally limits gross margin to the 50% range. 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.

**Company Strategies**

We apply our Artificial Intelligence (AI) technology to solve enterprise problems categorized as expensive, repetitive, difficult to staff, and outside of the core competencies of our client or prospective client organizations.

A short list of basic examples include:

&nbsp;&nbsp;&nbsp;&nbsp;1. Typical security guard-related functions such as monitoring a parking lot during and after hours and responding appropriately. This scenario applies to perimeters, interior yard areas, and related similar environments.

2. Integrated hardware/software with AI-driven responses, simulating and expanding on what legacy or manned solutions could perform.

3. Automation of common access control functions through technology utilizing facial recognition and machine vision, leapfrogging most legacy solutions in use today.

RAD's first industry focus is the more than $100 billion global security services market.<sup>[1](#footnote_1)</sup> RAD's current goal is to disrupt and capture a significant portion of both the human security guard market (over $30 billion)<sup>[2](#footnote_2)</sup> and "physical security" (video surveillance, access control, visitor management, etc.) market (over $20 billion) through its innovative RAD solution ecosystem.

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<sup>1</sup> https://www.statista.com/statistics/323113/distribution-of-the-security-services-market-worldwide/

<sup>2</sup> https://www.statista.com/statistics/294206/revenue-of-security-services-in-the-us/

RAD solutions are unique because they:

&nbsp;&nbsp;&nbsp;&nbsp;1. Start with an AI-driven autonomous response utilizing cellular-optimized communications, while easily connecting to a human operator for a manned response, as needed.

2. Use unique hardware purpose-built by RAD for delivery of these solutions. Various form factors have been customized to deliver this new functionality.

3. Deliver services through RAD-developed software and cloud services, allowing enterprise IT groups to focus on core competencies instead of maintenance of complex video and security platforms.

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**<u>AITX Subsidiaries</u>**

AITX owns and operates three (3) wholly-owned subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;1. **Robotic Assistance Devices, Inc. (RAD I)** is the primary operating company of AITX. We hold holds the dealer and
end-user contracts, employs all US employees, operates the California and Michigan facilities, and is the primary industry-facing entity
of AITX. RAD I owns all intellectual property related to RADSoC™, RAD Mobile SOC™, RADGuard™, and their core operating
architecture. RAD I owns everything related to AITX's line of stationary devices and their manufacturing. RAD I also implements
and services the devices.

2. **Robotic Assistance Devices Group, Inc. (RAD G)** is RAD G is an AITX subsidiary, separate from RAD I and RAD M, created
for the purposes of expected future sales through a channel that is incompatible and non-competitive with RAD I's existing channel.
RAD G is focused on the development of advanced software and electronics solutions and hopes to have a solution in the marketplace by
the end of 2022. We expect s that this first solution, which will be software-only, will be marketed through RAD I. Additional solutions
under development are likely to have a direct go-to-market strategy that complements RAD I's strategy. Development efforts for these
entities are highly confidential and will remain so until marketable solutions are ready to launch.

3. **Robotic Assistance Devices Mobile, Inc. (RAD M)** is RAD M is an AITX subsidiary, separate from RAD I and RAD G, created
for the purposes of future developments, partnerships, and marketing in which we may engage in the future. RAD M is focused on the development
of autonomous mobile devices, both ground-based and airborne. RAD M's first solution, the ROAMEO™ unmanned ground vehicle,
incorporates RAD M technologies related to the development of custom chassis, drive train, power management, perception, and prediction.
ROAMEO features technology from RAD I to perform its functions. We believe that ROAMEO will bring the first outdoor, rugged, commercial
security and facility robot to market. This mobile solution will complement the stationary systems. ROAMEO is manufactured, implemented,
and maintained by RAD I. ROAMEO began serial production in RAD's Michigan facility in July 2021. RAD M will continue developing
additional mobility solutions that RAD I will bring to market.

**<u>Background - First Commercial Rugged Outdoor Security Robot</u>**

Steven Reinharz started RAD 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 proofs-of-concept 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 start in October 2017 but were delayed until December 2017 due to various supply chain challenges.

By March 2018 it was apparent that S5 platform was not sustainable and RAD began to pull robots out of service.

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. The Company attempted over 40 deployments 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. This convertible debt has largely been converted to long-term debt and warrants as shown in these financial filings.

ROAMEO will deliver on AITX's goal of bringing the first outdoor, rugged, commercial security and facility robot to market. This mobile solution will complement the stationary systems AITX already has operating in physical security applications serving customers in a wide range of environments.

**<u>Background – RAD's 2<sup>nd</sup> Generation Ecosystem</u>**

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 ultimately realize the delivery of these solutions, a set of "stationary robots" required development.

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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 as a stationary human security guard, plus many tasks that human guards cannot, and does so at approximately 15% of the cost. There is no known comparable solution available today that blends technology, usability, unique features, and price. SCOT received an enthusiastic response from the security market and industry accolades. SCOT's positive reception reinvigorated RAD, which accelerated the development of the software and cloud services that support SCOT. SCOT runs on the RAD Software Suite™. This software suite is a cloud and mobile platform at the heart of all RAD security solutions.

A beta version SCOT was first shown to potential customers at the end of February 2018 in an exposition held in Ohio that tested customer reception and elicited voice-of-the-customer input. SCOT and the preliminary RAD Software Suite received a favorable customer response. Customer feedback was incorporated into SCOT, and ideas on SCOT derivatives were added to the hardware development roadmap.

In April 2018, at the ISC West, a large annual physical security event held in the United States, SCOT won three awards: (1) The Security Industry Association's (SIA) New Product Award for Law Enforcement/Guarding<sup>[3](#footnote_3)</sup>, (2) A 2018 Secure Campus Award from Campus Security and Life Safety Magazine, and (3) A 'Govie' award for government security solutions from Security Today Magazine.

__________

<sup>3</sup> 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.

RAD has since won numerous awards for its solutions, including:

RAD Light My Way™, Secure Campus 2022 Awards, in the categories of 'Security & Personal Safety Devices' & 'Artificial Intelligence'

AVA™ 3.0 with STAN™, Security Industry Association NPS Awards, in the category of 'Access Control Software, Hardware, Devices and Peripherals'

ROSA™ with RAD Light My Way, CBRE Innovation Challenge 2021, in the category of 'Best Workplace Experience Solution Award'

ROSA 180™, American Security Today 2021 ASTORS Awards, in the categories of 'Best Robotic Perimeter Protection' & 'Best Motion Detection Solution'

RAD's pivot to SCOT and its future derivatives is complete, and RAD's current facilities can produce a mix of up to 100 units per month with moderate additional investment in equipment and manpower.

**<u>Software Solutions</u>**

RAD has created a variety of front-end and back-end software solutions to power its ecosystem. RADGUARD is customer-facing software (on the touchscreens of RAD's field devices), and management solutions include 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 are within a back-end application called SCOT Manager.

RAD has developed Visitor Management, Access Control, and other applications itself 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 recently introduced its own Video Management System into RADSOC, delivering a fully integrated solution that facilitates robust security and property management capabilities.

We believe that RAD's ability to deliver easy-to-use, easy-to-obtain, and easy-to-support software, combined with custom workflow-automation applications, is key to our success.

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**<u>Manufacturing & Assembly</u>**

RAD uses various 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. In addition, all pieces within any RAD device can be procured from a choice of suppliers.

RAD's margins are based on current small batch production and assembly. We expect that economies of scale will drive greater gross margin as quantities and efficiencies increase.

**<u>Roadmap</u>**

RAD expects to introduce new products and updates to several products during the remainder of 2022 and early 2023, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;1. ROAMEO 3.0. This release will have an updated physical design in line with the general 'RAD 3.0 look' as well as feature several custom components that will significantly improve the robot's long term autonomy.

2. RAD-dogs. Further details to be released throughout the fiscal year.

3. 'RIO', RAD's entry into an existing market that we value between $250 million and $500 million per year.

RAD's hardware and software have benefited from continuous significant improvements and to date has over 1,500,000 paid operating hours.

**<u>Team and Culture</u>**

AITX has built a strong start-up culture based on performance, sacrifice, and rewards. Attracting employees who can thrive in this environment requires a different approach to corporate growth and development. RAD's governing philosophy centers around the principles of "Emotional Intelligence. Self-awareness, composure, internal motivation, empathy, and social skills are prerequisites for joining the RAD team, and each candidate interview begins with a review of the foundational elements that comprise RAD culture.

Team members are open to multitasking and wearing multiple hats, as situations demand. This allows management to focus on larger goals and long-term strategies. We try to ensure that our entire staff shares the same core beliefs and values , allowing us to adapt and adjust quickly to changes that might grind other companies to a halt. Members have been no stranger to the difficulties that face a startup, including unexpected setbacks, delays in funding, or a cash crunch, but they have persevered with dedication and enthusiasm for our greater mission. They have met incredibly tight deadlines, volunteered to make financial sacrifices, and assisted wherever and however they can.

We believe that RAD's high-EQ work culture creates productive, motivated employees that has allowed us to weather the difficult period of robot deployments and our transition to 2<sup>nd</sup> generation solutions.

**<u>Market Environment</u>**

RAD believes that its experience has shown that the security market is ripe for disruption. It has captured the interest of many Fortune 500 companies. We belief that no other company operating in the physical security space has the solutions, distribution channel, reputation, sales or support model to rival RAD in the near term. In addition, we expect that the launch of RAD's mobile solutions will significantly increase the gap between it and would-be competitors. RAD will be a one-stop-shop for proven and comprehensive mobile and stationary workflow improvement devices and systems.

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, a platform for AI processing, usage analytics, cloud-sided video, communications interface, audit logs, and much more.

**Prospective ROAMEO Impact**

Our release of ROAMEO positions it as a near-competitor to Knightscope, a Palo Alto based robotics company in business since 2012. RAD's approach is different from Knightscope's on many elements of technology.

RAD expects that a small number of expected ROAMEO orders will make a substantial impact on RAD's financial performance and create momentum for significant adoption of the entire RAD lineup.

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**<u>Customer Acceptance of RAD Solutions</u>**

RAD end-users include one Fortune Top 10 company and a number of other Fortune 500 companies. RAD is currently deployed in logistics, commercial real estate, healthcare, amusement, manufacturing and retail industries. We believe that if RAD is ultimately deployed to only 5% of the facilities within any of these industries, we will be profitable.

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 steady demand, to reduce delivery time to 15 days.

**<u>RAD Industry Leadership Role</u>**

Steven 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 industry's 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 a lecture to NYC's ASIS CPP group that qualified as a continuing education credit.

It is expected that Steven Reinharz will continue his promotion of the new paradigm for the next few years until adoption is widespread.

**<u>Go To Market Strategy</u>**

RAD's strategy continues to focus on the creation and support of a strong dealer channel. This approach affords multiple benefits to RAD with few downsides. RAD has successfully integrated through the largest U.S. guarding company and recently signed another top-three guarding company as a RAD dealer. Furthermore, RAD has been signing up and developing mid-sized and smaller dealers. RAD is on track to establish a focused group of dealers, most of whom will exclusively represent RAD solutions.

Supplemental to nurturing a solid dealer channel, 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.

**<u>Competition</u>**

We may be subject to competition by competitors that have greater operating histories, cash and operational resources than we do.

**Employees**

As of March 23, 2023, we have a headcount of 90 fully dedicated full-time equivalents, including 42 RAD Inc. employees, 18 overseas contractors, and 30 employees of a Canadian research and development company. None of our employees are represented by a union. We consider our employee relations to be excellent. AITX' principle shareholder owns a minority interest in the Canadian research and develop company but has not received any compensation of any kind from that company to date.

**Accomplishments & Highlights**

AITX, and its subsidiaries RAD I, RAD M, and RAD G, list of accomplishments highlights successes in adding to the strength of its executive leadership team, expanding its sales and distribution channels, launching new products, while growing its presence, visibility and profile within its existing marketplaces. Milestones and accomplishments over the past 12 months include:

**SOC 2 Compliance**

The SOC 2 Report has become a benchmark standard, and now an often-specified requirement, in the software procurement process. Established by the American Institute of Certified Public Accountants (AICPA), criteria and reporting principles are outlined as a means for organizations to create a documented framework of policies and procedures to prove how they manage and secure data in the cloud and ensure protection of customer privacy and ensure internal communications are suitably handled. This achievement reflects our stated goals of best-in-class data protection and internal processes.

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● **Implementation of ERP (enterprise resource planning) System** 

During the fiscal year the Company made a strategic investment in state-of-the-art ERP software to optimize its business process management, production capabilities and to better serve customers. We expect to have greater visibility on sales activities, trends, lead management and sales forecasting utilizing the new ERP.

● **Announced Strategic Alliances and Partnerships** 

We took steps to integrate its technology portfolio with other tech companies, working to bring solutions to market in a faster, more financially efficient manner. Announced alliances include:

March 24, 2021 - RAD to Integrate EAGL Gunshot Detection Technology into All Security Devices

https://radsecurity.com/robotic-assistance-devices-to-integrate-eagl-gunshot-detection-technology-into-all-security-devices/

August 19, 2021 - AITX Announces Details of Strategic Relationship with Ghost Robotics Corporation

https://radsecurity.com/aitx-announces-details-of-strategic-relationship-with-ghost-robotics-corporation/

● **Authorized Dealers Added to Dealer Network** 

RAD has more than 40 authorized dealers across the United States, Canada, and the EU, with plans for continued expansion. Dealers include the largest security companies in the world, including Allied Universal and Securitas. The ongoing addition of authorized dealers introduces and delivers RAD products to new markets. Dealer announcement and highlights include:

● **Discussion on Sales** 

The sales funnel has grown significantly over the course of this fiscal year. During the second half of the year the sales group increased substantially to five full time sales people lead by a Senior VP of sales. The first few months of any new employee are focused on training and results sometimes take 6 months from date of hire.

In the fiscal year ended February 29, 2022 RAD added 311 sales opportunities to the sales funnel. An opportunity is mostly defined as an account that is exhibiting a pain that can be solved by RAD, has a budget, and has reached the point in the sales process where they have a quote they can sign. Management has identified that conversion of accounts from opportunities to clients is low and has identified some of the reasons for the low conversion rate:

● Buyer fear of deploying new technology and the perceived risks associated with trying something new

● Compliance questionnaires can take up 18 months, slowing down final approvals

● Slow adoption of structural changes to Dealers sales processes and internal compensation programs

Despite this the sales funnel continues to grow in size and quality. Management continues to 'chip away' at these change-related obstacles to sales by taking a high profile approach to existing client success, continuously improving the hardware and software to continue to increase the value of our solutions to end users.

Management expects device count deployments may be between 250 and 1250 devices this fiscal year. As of March 1, 2023 total devices deployed is approximately 301.

Uniformly end users and dealers report significant problems with recruiting and retaining manned labor. This fact is the primary driver of clients' and dealers interest in RAD solutions. Management feels that the labor problem is going to increase in severity as inflationary pressures continue to drive up employee wages (making guard services more expensive) and reduce economic activity (presumably forcing companies to search out lower cost solutions to existing problems).

Management, based on daily conversations with clients, dealers and prospects, feels very strongly that there will be continued increasing demand for our solutions.

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● **Additional Points of Interest** 

Management expects that as volume production grows, starting with ROSA, the company can achieve significant improvements in cost of goods sold. Part of these savings will be passed to the market in the form of reduced costs. Timing is dependent on parts costs reduction and timing of improvement of production efficiencies.

Management has registered a portfolio of Trademarks. Management may, depending on budget and finance, seek to acquire utility patents for a few innovations that the Company feels desire patent protection and are easily defensible.

Management suggests that revenue from device monitoring from RAD partners could, over time, become up to 15% of company revenues. There is little to no cost associated with this revenue stream.

**MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**

**Market for Common Stock**

Our common stock trades on the OTC Pink under the symbol "AITX".

**Holders**

As of March 29, 2023, there were approximately 21 holders of our common stock, not including shares held in "street name" in brokerage accounts, which are unknown.

**Dividends**

We have not declared or paid any cash dividends on its common stock and does not anticipate paying dividends for the foreseeable future.

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

***Forward-Looking Statements***

The following discussion of our financial condition and results of operations for the three and nine months ended November 30, 2022 and November 30, 2021 should be read in conjunction with our unaudited consolidated financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth herein and under Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended February 28, 2022, as filed on May 27, 2022 with the SEC. We use words such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "believe," "intend," "may," "will," "should," "could," and similar expressions to identify forward-looking statements.

***Overview***

We were incorporated in Florida on March 25, 2010 as On the Move Systems Inc. and was quoted on OTC Pinks as 'OMVS'. We reincorporated in Nevada on February 17, 2015. Our fiscal year end is February 28 (February 29 during leap year). We are located at 10800 Galaxie Ave., Ferndale, Michigan 48220, and our telephone number is 877-767-6268. We completed a stock ticker change to AITX in 2018. Steve Reinharz became our Chief Executive Officer in March 2021 and is the founder of our primary wholly owned subsidiary, Robotic Assistance Devices, Inc. (RAD). We have a 3-year executive compensation agreement with our CEO.

Our mission is to apply artificial intelligence (AI) technology to solve enterprise security-related problems categorized as expensive, repetitive, difficult to staff, dangerous, and outside of the core competencies of the client organization.

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For example:

&nbsp;&nbsp;&nbsp;&nbsp;1. Typical security guard-related functions such as monitoring a parking lot during and after hours and responding appropriately. This scenario applies to perimeters, interior yard areas, and related similar environments.

2. Integrated hardware/software with AI-driven responses, simulating and expanding on what legacy or manned solutions could perform.

3. Automation of common access control functions through technology utilizing facial recognition and machine vision, leapfrogging most legacy solutions in use today.

RAD's first industry focus is the more than $100 billion global security services market.[<sup>1</sup>](https://www.sec.gov/Archives/edgar/data/1498148/000116169722000270/form_10-k.htm#fn_001) RAD's current goal is to disrupt and capture a significant portion of both the human security guard market (over $30 billion)[<sup>2</sup>](https://www.sec.gov/Archives/edgar/data/1498148/000116169722000270/form_10-k.htm#fn_002) and "physical security" (video surveillance, access control, visitor management, etc.) market (over $20 billion) through its innovative RAD solution ecosystem.

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<sup>1</sup> https://www.statista.com/statistics/323113/distribution-of-the-security-services-market-worldwide/

<sup>2</sup> https://www.statista.com/statistics/294206/revenue-of-security-services-in-the-us/

RAD solutions are unique because they:

&nbsp;&nbsp;&nbsp;&nbsp;1. Start with an AI-driven autonomous response utilizing cellular-optimized communications, while easily connecting to a human operator for a manned response, as needed.

2. Use unique hardware purpose-built by RAD for delivery of these solutions. Various form factors have been customized to deliver this new functionality.

3. Deliver services through RAD-developed software and cloud services, allowing enterprise IT groups to focus on core competencies instead of maintenance of complex video and security platforms.

Through our subsidiary, Robotic Assistance Devices, Inc. (RAD), AITX is redefining the $25 billion (US) security and guarding services industry through its broad lineup of innovative, AI-driven Solutions-as-a-Service business model. RAD solutions are specifically designed to provide a cost savings to businesses of between 35% and 80% when compared to the industry's existing and costly manned security guarding and monitoring model. RAD delivers this costs savings via a suite of stationary and mobile robotic security solutions that complement, and at times, directly replace the need for human personnel in environments better suited for machines.

At the beginning of the prior fiscal year ended February 28, 2022, AITX began its 10-year lease at its 29,316 sq ft manufacturing facility outside of Detroit, Michigan, hired the employees, and acquired the infra-structure to support it. This facility, referred to by RAD as 'the REX' positions AITX to achieve its growth objectives and meet future sales demands.

Our employees constitute our workforce that supports the necessary infrastructure (Engineering, Production, Business Development, Marketing, Administration) built to achieve our growth objectives and meet future sales demands. We strive for rapid growth and creation/expansion of our departments and teams; however, this creates significant challenges that if unsuccessful will negatively impact our results of operations.

We and our subsidiaries have launched several new solutions during the 3<sup>rd</sup> quarter of the current fiscal year (FY2023), including:

● RIO™, a portable, solar-powered, wide-area security device. RIO was formally introduced to the security industry at one of its premier trade shows, GSX 2022 in Atlanta in September 2022.

● ROSA-P, a switched-powered security and safety solution that powers RAD's best-selling ROSA 3.x where power does not currently exist in the industry at night.

● RADDOG™, the security industry's purpose-built mobile robot dog.

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● ROSS™, a software solution which enables millions of IP security cameras presently deployed with the ability to connect with the RAD ecosystem (RADSoC). ROSS empowers these non-RAD cameras to run the same AI analytic capabilities as other RAD hardware solutions.

● Wholly owned subsidiary Robotic Assistance Devices Group, Inc. (RAD-G) announced the launch of a sales initiative targeting OEM markets. This market development endeavor marks our first of its kind and involves the placement of hardware and software solutions developed across all subsidiaries for use in other vertical markets through OEM suppliers.

● Wholly owned subsidiary Robotic Assistance Devices Mobile, Inc., is expected to make a new solution announcement sometime in FY2024.

These solutions utilize the comprehensive RAD platform to offer unparalleled, all-in-one, security and safety solutions that can be implemented within a half hour. These solutions include cutting-edge features such as the detection of firearms, deterrents for trespassing, peripheral surveillance, management of visitors, and more.

RAD's sales funnel has experienced substantial growth in both volume and value.

RAD is working towards adding the following deployments to be in place by the end of the current fiscal year end, February 29, 2024:

● 25 ROAMEOs, the robust mobile-patrolling security robot. The current schedule, subject to engineering development timelines, parts availability and manufacturing, has these ROAMEO units available to ship to clients and start billing as soon as August 2023. We expect to deploy 5-10 a month beginning in August. Pre-selling has begun with the goal of exceeding 25 units for FY2024.

● 150 RIOs, portable solar-powered, wide-area security devices. RAD's largest dealer is expected to add this to their line card by May 2023 which we can reasonably expect will drive significant volume. Management expects RIO revenue to begin significance towards the end of Q2 FY2024.

● 350 ROSAs / ROSA-Ps, stationary security and safety solutions. This number of ROSA & ROSA P units is roughly at the same run rate as the last few months of calendar year 2022 and is considered by management to be easily achievable. Management expects a minimum of 30 units being added monthly to recurring monthly revenue beginning March 1, 2023.

● 100 AVAs, an autonomous access control / vehicle access device. AVA 3.0 units hit 10 deployed units by mid-January. Early indications of market reception are positive and it's expected that dealers will begin ordering in greater quantities as management gathers more case studies and references.

● 15 RADDOG™, the security industry's purpose-built robot dog.
RADDOG version 1.0 was first publicly displayed on December 7, 2022 at our Investor Open House and Technology Reveal. As was stated at
that time all of our tests were successful and we are moving forward with a larger, stronger version to commercialize. This version will
be shown at the ISC West trade show in Las Vegas at the end of March and will be available to ship to clients in the May time frame. The
projected number of 15 is considered conservative by management for FY2024.

● 5000 IP camera integrations via ROSS. These are expected to be 'take-over' or 'side-by-side' type deployments featuring pre-existing LAN connected IP security cameras. 'Take-over' deployments would replace the pre-existing Video Management System and 'side-by-side' deployments would leave the existing systems in place and use secondary camera feeds through ROSS.

● 35 TOM autonomous visitor management devices. TOM, an acronym for 'The Office Manager' is the evolution and replacement for Wally™. 'TOM+' is scheduled for development and release in FY2024. Currently RAD's largest single client has deployed TOM units throughout the US and at two European locations. Given monthly sales orders it is expected that this 35 unit target could be met entirely by this one client. We are discussing rolling the product out to its dealer channel as at the moment it is only available to this single client.

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The realization of the deployments, if successful and if within a 10% range of standard RAD dealer pricing, will result in our recurring monthly revenues reaching approximately $800,000, and if achieved and barring other factors outside of our control, would enable us to attain positive cash flow. As such, we will continue to focus on improving existing team members' efficiency and productivity with a focus on retention. Achievement of the sales goals listed herein will require approximately 5% to 10% headcount growth in the production and deployment teams which could push back the goals of positive cash flow.

Several significant new clients are expected to receive their deployments in FY2024 and are expected to be public. Security is generally a private corporate function and we note that prior clients that have been publicized have been inundated with shareholder phone calls looking for further verification. It is for these reasons that we will continue to rarely pursue publicization of end users.

FY2024 will feature balancing efforts on cost savings with accelerated growth in order to increase probability of achieving targeted positive cash flow targets.

***Management Discussion and Analysis – November 30, 2022 and 2021***

***Results of Operations for the Three Months Ended November 30, 2022 and 2021***

The following table shows our results of operations for the three months ended November 30, 2022 and 2021. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Period** | **Period** | | |
|  | | | **Change** | **Change** |
|  | **Three Months<br> Ended**<br>**November 30, 2022** | **Three Months<br> Ended**<br>**November 30, 2021** | **Dollars** | **Percentage** |
| Revenues | $402399 | $373897 | $28502 | 8% |
| Gross profit | 276439 | 230473 | 45966 | 20% |
| Operating expenses | 3090941 | 5118000 | (2027059) | (40%) |
| Loss from operations | (2814502) | (4887527) | 2073025 | 42% |
| Other income (expense), net | (1271158) | (2206915) | 935757 | 42% |
| Net income (loss) | $(4085660) | $(7094442) | $3008782 | 42% |

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*Revenue*

The following table presents revenues from contracts with customers disaggregated by product/service:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | | **Change** | **Change** |
|  | **Three Months<br> Ended**<br>**November 30, 2022** | **Three Months<br> Ended**<br>**November 30, 2021** | **Dollars** | **Percentage** |
| Device rental activities | $154628 | $165353 | $(10725) | (6%) |
| Direct sales of goods and services | 247771 | 208544 | 39227 | 19% |
|  | $402399 | $373897 | $28502 | 8% |

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Total revenue for the three-month period ended November 30, 2022 was $402,399 which represented an increase of $28,502 compared to total revenue of $373,897 for the three months ended November 30, 2021. This increase is a result of higher direct sales in the current year's quarter.

*Gross profit*

Total gross profit for the three-month period ended November 30, 2022 was $276,439, which represented an increase of $45,966 compared to gross profit of $230,473 for the three months ended November 30, 2021. The gross profit increased due to the higher sales and variations in product mix sales. The gross profit % of 69% for the three-month period ended November 30, 2022 was higher than the gross profit % of 62% for the prior year's corresponding period.

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*Operating Expenses*

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Period** | **Period** | | |
|  | | | **Change** | **Change** |
|  | **Three Months<br> Ended**<br>**November 30, 2022** | **Three Months<br> Ended**<br>**November 30, 2021** | **Dollars** | **Percentage** |
| Research and development | $813313 | $982446 | $(169133) | (17%) |
| General and administrative | 2123768 | 3964512 | (1840744) | (46%) |
| Depreciation and amortization | 92855 | 67927 | 24928 | 37% |
| Operating lease cost and rent | 61005 | 103115 | (42110) | (41%) |
| Operating expenses | $3090941 | $5118000 | $(2027059) | (40%) |

---

Our operating expenses were comprised of general and administrative expenses, research and development, and depreciation. General and administrative expenses consisted primarily of professional services, automobile expenses, advertising, salaries and wages, travel expenses and consultants. Our operating expenses during the three-month period ended November 30, 2022 and November 30, 2021, were $3,090,941 and $5,118,000, respectively. The overall decrease of $2,027,059 was primarily attributable to the following changes in operating expenses of:

● General and administrative expenses decreased by $1,840,744. In comparing the three months ended November 30, 2022 and November 30, 2021 this decrease was primarily due to the following decreases: stock based compensation of $819,500 for higher prior year charges based on the CEO incentive plan, wages and salaries for prior year bonuses paid, bad debts expense of $25,785 and professional fees of $126,435. These decreases were offset by the following increases: insurance of $51,485 due to health plan for new employees and increased liability and property insurance due to new manufacturing facility, advertising , sales and marketing of $82,893, subcontractor fees of $13,802, travel of $18,004, duty and freight of $36,230 and bad debts expense due to a general provision of $40,000 on slow payers due to present economic factors.

● Research and development decreased by $169,133 due to higher activity in the prior year in R&D design and equipment for the development of new products such as ROAMEO and AVA, as well as upgrades of existing products. That decrease was partially offset by an increase in research and development paid to a related party of $146,995.

● Depreciation and amortization increased by $24,928 due to the acquisition of computer equipment and new revenue earning devices.

● Operating lease cost and rent decreased by $42,110 due to one less office lease for the three months ended November 30, 2022 comparing to the three months ended November 30, 2021.

*Other Income (Expense)*

Other income (expense) consisted of the change of fair value of derivative instruments, loss on settlement of debt and interest. Other income (expense) during the three months ended November 30, 2022 and November 30, 2021, was ($1,271,158) and ($2,206,915), respectively. The $935,757 decrease in other expense, net was primarily attributable to reduced interest expense.

● Interest expense decreased by $779,096 due to a decrease in debt amortization expense. The three months ended November 30, 2021 had higher amortization due to debt settlements.

● Loss on settlement of debt was $0 the quarter ended November 30, 2022 and $156,661 in the quarter ended November 30, 2022.

*Net loss*

We had a net loss of $4,085,660 for the three months ended November 30, 2022, compared to a net loss of $7,094,442 for the three months ended November 30, 2021. The decrease in net loss of $3,008,782 is due to a number of factors: higher gross profit and lower general and administrative and other expense in the three months ended November 30, 2022.

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***Results of Operations for the Nine Months Ended November 30, 2022 and 2021***

The following table shows our results of operations for the nine months ended November 30, 2022 and 2021. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

*Revenue*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Period** | **Period** | | |
|  | | | **Change** | **Change** |
|  | **Nine Months<br> Ended**<br>**November 30, 2022** | **Nine Months<br> Ended**<br>**November 30, 2021** | **Dollars** | **Percentage** |
| Revenues | $1055040 | $1075803 | $(20763) | (2%) |
| Gross profit | 601142 | 779499 | (178357) | (23%) |
| Operating expenses | 10090732 | 11102944 | (1012212) | (9%) |
| Loss from operations | (9489590) | (10323445) | 833855 | (8%) |
| Other income (expense), net | (3440621) | (37508288) | 34067667 | 91% |
| Net loss | $(12930211) | $(47831733) | $34901522 | 73% |

---

The following table presents revenues from contracts with customers disaggregated by product/service:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | | **Change** | **Change** |
|  | **Nine Months<br> Ended**<br>**November 30, 2022** | **Nine Months<br> Ended**<br>**November 30, 2021** | **Dollars** | **Percentage** |
| Device rental activities | $622647 | $383434 | $239213 | 62% |
| Direct sales of goods and services | 432393 | 692369 | (259976) | (38%) |
|  | $1055040 | $1075803 | $(20763) | (2%) |

---

Total revenue for the nine-month period ended November 30, 2022 was $1,055,040 which represented a decrease of $20,763 compared to total revenue of $1,075,803 for the nine months ended November 30, 2021. The small decrease was a result of unusually large unit sales which includes sales of new units totaling $692,369 which occurred in the nine months ended November 30, 2021. This was partially offset by a 62% increase in rental activities increased as we continue to grow our rental business.

*Gross profit*

Total gross profit for the nine-month period ended November 30, 2022 was $601,142 which represented a decrease of $178,357, compared to gross profit of $779,449 for the nine months ended November 30, 2021. The decrease resulted both from lower revenues noted above as well as cost of sales increases in 2022 due to inventory changes. The gross profit percentage of 57% for the nine-month period ended November 30, 2022 was lower than the margin of 72% for the prior year's corresponding period was primarily due to inventory adjustments due to shrinkage and obsolescence totaling $123,309, which occurred in the first quarter. Before these adjustments the gross profit % for the nine months ended November 30, 2022 would have been a comparable 69%.

*Operating Expenses*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Period** | **Period** | | |
|  | | | **Change** | **Change** |
|  | **Nine Months<br> Ended**<br>**November 30, 2022** | **Nine Months<br> Ended**<br>**November 30, 2021** | **Dollars** | **Percentage** |
| Research and development | $2800834 | 2316383 | $484451 | 21% |
| General and administrative | 6762602 | 8455224 | (1692622) | (20%) |
| Depreciation and amortization | 332643 | 153261 | 179382 | 117% |
| Operating lease cost and rent | 194653 | 207201 | (12548) | (6%) |
| (Gain) loss on disposal of fixed assets |  | (29125) | 29125 | 100% |
| Operating expenses | $10090732 | $11102944 | $(1012212) | (9%) |

---

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Our operating expenses were comprised of general and administrative expenses, research and development, and depreciation. General and administrative expenses consisted primarily of professional services, automobile expenses, advertising, salaries and wages, travel expenses and consultants. Our operating expenses during the nine-month period ended November 30, 2022 and November 30, 2021, were $10,090,732 and $11,102,944, respectively. The overall decrease of $1,012,212 was primarily attributable to the following changes in operating expenses of:

● General and administrative expenses decreased by $1,692,622. In comparing the nine-months ended November 30, 2022 and November 30, 2021 may be partially explained by the following decreases: wages and salaries by $144,439, professional fees by $535,117, subcontractor fees $89,492 and stock-based compensation $1,677,050. These were partially offset by increases in the following accounts: sales and marketing by $314,098, travel by $115,122, insurance by $229,562, duty and freight by $66,067,bad debts expense $117,193, and office expense by $73,922.

● Research and development increased by $484,451 due to funding development of new products as well as upgrades of existing products that mostly took place in the first two quarters of 2022. Included in that increase is the increase in research and development paid to a related party of $1,064,636. This increase was partially offset by the higher development costs incurred in equipment and design on new products for the nine-month period ended November 30, 2021.

● Depreciation and amortization increased by $179,382 due to the acquisition of ERP computer software, computer equipment tooling, and 54 new revenue earning devices.

● Operating lease cost and rent decreased by $12,548 due to the expiration of one lease in early fiscal 2022.

● (Gain) loss on disposal of fixed assets increase by $29,125 due to a vehicle sold in the prior year.

*Other Income (Expense)*

Other income (expense) during the nine months ended November 30, 2022 and November 30, 2021, was ($3,440,621) and ($37,508,288), respectively. The $34,067,677 increase in other income was primarily attributable to the change in the fair value of derivatives, interest expense, and loss on settlement of debt.

● In comparing the nine months ended November 30, 2022 and the nine months
ended November 30, 2021, the change in fair value of derivative liabilities decreased by $368,907 due to the re-valuation of derivative
liability on convertible notes based on the change in the market price of our common stock as well as reductions in derivative liability
as a result of settlements on the underlying debt.

● Interest expense decreased by $1,364,269 due to the decrease in debt amortization expense. The three months ended November 30, 2021 had higher amortization due to debt settlements.

● Gain (loss) on settlement of debt was $3,992 the nine months ended November
30, 2022 and ($33,068,313) in the nine months ended November 30, 2021. This current period the gain was a result of the reduction of the
derivative liability , the prior year's period has an amendment of the deferred variable payment obligation that led to a $33,015,215
loss which was partially offset by gains from accrued liabilities settlements and the debt exchange for common shares. This loss on settlement
of debt was non-cash and has no effect on our cash flows.

*Net loss*

We had a net loss of $12,930,211 for the nine months ended November 30, 2022, compared to a net loss of $47,831,733 for the nine months ended November 30, 2021. The change is primarily the result of the loss on settlement in the nine months ended November 30, 2021 as well as the lower general and administrative expenses and other items discussed above.

**Liquidity, Capital Resources and Cash Flows**

Management believes that we will continue to incur losses for the immediate future. Therefore, we will need additional equity or debt financing until we can achieve profitability and positive cash flows from operating activities, if ever. These conditions raise substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial statements do not include and adjustments relating to the recovery of assets or the classification of liabilities that may be necessary should we be unable to continue as a going concern.

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As of November 30, 2022, we had a cash balance of $713,493, net accounts receivable of $464,044, net device parts inventory of $1,573,380 and $4,470,418 in current liabilities. At the current cash consumption rate, we will need to consider additional funding sources going forward. We are taking proactive measures to reduce operating expenses and drive growth in revenue.

The successful outcome of future activities cannot be determined at this time and there is no assurance that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results.

*Capital Resources*

The following table summarizes total current assets, liabilities and working capital (deficit) for the periods indicated:

---

| | | |
|:---|:---|:---|
|  | **November 30, 2022** | **February 28, 2022** |
| Current assets | $3423711 | $7050436 |
| Current liabilities | 4470418 | 4547718 |
| Working capital | $(1046707) | $2502718 |

---

As of November 30, 2022 and February 28, 2022, we had a cash balance of $713,493 and $4,648,146, respectively.

*Summary of Cash Flows*

---

| | | |
|:---|:---|:---|
| *Summary of Cash Flows* | **Nine Months<br> Ended<br> November 30, 2022** | **Nine Months<br> Ended<br> November 30, 2021** |
| Net cash used in operating activities | $(9883272) | $(10434762) |
| Net cash used in investing activities | $(217601) | $(46741) |
| Net cash provided by financing activities | $6166220 | $13540949 |

---

***Net cash used in operating activities.***

Net cash used in operating activities for the nine months ended November 30, 2022 was $9,883,272, which included a net loss of $12,930,211, non-cash activity such as the bad debts expense of $224,215, inventory provision $90,000, reduction of right of use asset of $84,298, accretion of lease liability $107,187, stock based compensation of $481,000, change in value of derivative liabilities of ($3,595), gain on settlement of debt of ($3,992), amortization of debt discount of $1,094,388, increase in related party accrued payroll and interest of $9,720, depreciation and amortization of $332,643 and change in operating assets of $631,074, to derive the uses of cash in operations.

***Net cash used in investing activities.***

Net cash used in investing activities for the nine months ended November 30, 2022 was $217,601, which was the purchase of fixed assets.

***Net cash provided by financing activities.***

Net cash provided by financing activities was $6,166,220 for the nine months ended November 30, 2022. This consisted of share proceeds net of issuance costs of $4,657,979, proceeds from convertible notes payable of $619,250, proceeds from loans payable of $2,600,000, reduced by repayments on loans payable of $1,711,009.

***Off-Balance Sheet Arrangements***

None.

***Critical Accounting Policies and Estimates***

Critical accounting policies and estimates are further discussed in our Annual Report on Form 10-K for the year ended February 28, 2022, as filed on May 27, 2022.

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***Related Party Transactions***

For the nine months ended November 30, 2022, we had no repayments of net advances from its loan payable-related party. For the nine months ended November 30, 2021, we repaid net advances of $812,234. At November 30, 2022, the loan payable-related party was $203,276 and $193,556 at February 28, 2022. Included in the balance due to the related party at November 30, 2022 is $126,744 of deferred salary and interest, $108,000 of which bears interest at 12%. At February 28, 2022, included in the balance due to the related party is $110,700 of deferred salary and interest, $90,000 of which bears interest at 12%. The accrued interest included in loan at November 30, 2022 and November 30, 2021 was $12,420 and $540 respectively.

Pursuant to the amended Employment Agreement with its Chief Executive Officer, for the three months and nine months ended November 30, 2022, we accrued $138,000 and $362,500 of incentive compensation plan payable with a corresponding recognition of stock based compensation due to the expectation of additional awards being met. This will be payable in Series G Preferred Shares which are redeemable at our option at $1,000 per share. At November 30, 2022 and February 28, 2022 there was $842,000 and $479,500 of incentive compensation payable.

During the three months ended November 30, 2022 and 2021, we were charged $794,460 and $647.465, respectively for fees for research and development from a company partially owned by a principal shareholder.

During the nine months ended November 30, 2022 and 2021, we were charged $2,735,589 and $1,689,253, respectively for fees for research and development from a company partially owned by a principal shareholder.

***Management Discussion and Analysis for Fiscal Years Ended February 28, 2022 and 2021***

**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 10800 Galaxie Ave ,Ferndale Michigan , 48220, and our telephone number is 877-767-6268.

**Results of Operations**

The following table shows our results of operations for the years ended February 28, 2022 and February 28, 2021. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Period** | **Period** | | |
|  | | | **Change** | **Change** |
|  | **Year Ended**<br>**February 28, 2022** | **Year Ended**<br>**February 28, 2021** | **Dollars** | **Percentage** |
| Revenues | $1447109 | $360888 | $1086221 | 301% |
| Gross profit | 974183 | 262721 | 711462 | 271% |
| Operating expenses | 14346069 | 3257590 | 11088479 | 340% |
| Loss from operations | (13371886) | (2994869) | (10377017) | 346% |
| Other income (expense), net | (48825598) | (2904042) | (45921556) | (1,581%) |
| Net loss | $(62197484) | $(5898911) | $(56298573) | (954%) |

---

The following table presents revenues from contracts with customers disaggregated by product/service:

 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | | **Change** | **Change** |
|  | **Year Ended**<br>**February 28, 2022** | **Year Ended**<br>**February 28, 2021** | **Dollars** | **Percentage** |
| Device rental activities | $592401 | $304294 | $288107 | 95% |
| Direct sales of goods and services | 854708 | 56594 | 798114 | 1,410% |
|  | $1447109 | $360888 | $1086221 | 301% |

---

 

*Revenue*

Total revenue for the year ended February 28, 2022 was $1.447,109, which represented an increase of $1,086,221 compared to total revenue of $360,888 for the year ended February 28, 2021. This large increase in direct sales totaling $798,114 is a result of unit sales which includes sales of new units totaling $688,180 with the remaining increase a result in higher training revenue. Rental activities increased by 95% as we continue to grow its product line and customer base.

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*Gross profit*

Total gross profit for the year ended February 28, 2022 was $974,183, which represented an increase of $711,462 compared to total gross profit of $262,721 for the year ended February 28, 2021. The increase is a result of the increase in revenues above, partially offset by the increase in the relatively lower margin direct sales.

*Operating expenses*

Operating expenses for the years ended February 28, 2022 and February 28, 2021 comprised of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Period** | **Period** | | |
|  | | | **Change** | **Change** |
|  | **Year Ended**<br>**February 28, 2022** | **Year Ended**<br>**February 28, 2021** | **Dollars** | **Percentage** |
| Research and development | $2961394 | $378236 | $2583158 | 683% |
| General and administrative | 10905129 | 2748494 | 8156635 | 297% |
| Depreciation and amortization | 232886 | 120846 | 112040 | 93% |
| Operating lease cost and rent | 275785 | 9461 | 266324 | 2,815% |
| (Gain) loss on disposal of fixed assets | (29125) | 553 | (29678) | (5,367%) |
| Operating expenses | $14346069 | $3257590 | $11088479 | 340% |

---

Our operating expenses were comprised of general and administrative expenses, research and development, depreciation and amortization, and a (gain) loss on disposal 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 28, 2022 and February 28, 2021 were $14,346,069 and $3,257,590, respectively. The overall $11,088,479 increase in operating expenses was primarily attributable to the following increases in operating expenses of:

● Research and development expenses increased by $2,583,158 which was due funding development of new products,(such as the ROAMEO, AVA , and TOM) as well as upgrades of existing products.

General and administrative expenses increased by $8,156,635 primarily due to the following increases:

● Stock based compensation to CEO in equity awards was $2,048,850 fees with $109,200 paid to consultants all totaling $2,158,050 for the year ended February 28, 2022, compared with stock based compensation paid to lenders and consultants $362,084 for the prior year. This represents an increase of $1,795,966 in stock based compensation.

● Professional fees increased by $757,466 due to increases in financial reporting of $171,384, increase in legal of $200,993 with the remaining increase due increases in regulatory, investor relations and consulting costs.

● Wages, salaries and payroll levies increased by $2,578,216 as a result of the hiring of more staff to operate the new manufacturing facility. This is partially offset by a decrease in subcontractors of $200,381 due to employees now performing many of those tasks. Additionally, base compensation (including payroll levies) to the CEO increased by $33,620 with an addition bonus paid of $1,429,328.

● Advertising and marketing costs increased by $131,157 as we began efforts
to promote its products.

● Supplies increased by approximately $104,953 through their use in new prototypes and designs.

● Trade shows and travel increased by $325,937 as a result of promotional and business travel in fiscal 2022. In fiscal 2021 there were travel restrictions due to the Covid-19 pandemic, so the charges that year were minimal.

● The remaining increases were distributed amongst other general and administrative accounts such a software costs, freight, office expenses, insurance , repairs and maintenance, and utilities amongst others. In general, these large increases in general and administrative expenses may be explained due to the large ramp up in costs this fiscal year to operate the new manufacturing facility and the hiring of 18 additional full-time employees. In addition, the expenses of the prior year's corresponding period were also much lower due to the Covid 19 pandemic and the limited cash that was available at that time.

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● Operating lease cost and rent increased by $266,324 due to the new operating lease for the new manufacturing facility.

● Depreciation and amortization increased by $112,040 due to the increase in revenue earning devices and the new vehicle in fixed assets.

● (Gain) loss on disposal of fixed assets increased by $29,678 due to a vehicle disposal in 2022 that yielded a gain.

*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 28, 2022 and February 28, 2021, was ($48,825,598) and ($2,904,042), respectively.

The change in other income (expense) was due to the following:

● Change in fair value of derivative liabilities decreased by $391,811 due
to the re-valuation of derivative liability on convertible notes based on the change in the market price of our common stock and the
decrease in convertible notes payable through debt conversions to common stock and settlements.

● Interest expense increased by $12,749,666 due to an aggregate increase in short and long term debt of approximately
$13 million in fiscal 2022. For the year ended February 28, 2022, interest expense related to the issuance of warrants for debt extensions
was $5,415,000 (2021-$0) and amortization of debt discounts was $7,597,242 (2021-$201,567).

● Loss on settlement of debt increased by $32,780,079 due to the fiscal 2022 valuation of Series F shares and warrants given in exchange for an amendment to a deferred variable payment obligation disclosed in Note 7 that resulted in a loss of $33,015,215. The difference can be attributed to smaller gains and losses on other debt settlements.

Our loss from operations for the year ended February 28, 2022 was $13,371,886, which represented an increase in loss of $10,377,017 compared to a loss of $2,994,869 for the year ended February 28, 2021. The higher revenues in 2022 were offset by significantly higher operating expenses for the reasons set out above. Note that we had a net loss of $62,197,484 for the year ended February 28, 2022 as compared to net loss of $5,898,911 for the year ended February 28, 2021. This change is mostly attributable to the loss on settlement of debt, increase in interest expense and an increase in general and administrative costs.

 

*Going Concern*

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

For the year ended February 28, 2022, we had negative cash flow from operating activities of $14,825,442. As of February 28, 2022, we had an accumulated deficit of $94,144,254 and working capital of $2,502,718. Management does not anticipate having positive cash flow from operations in the near future. These factors raise a substantial doubt about our ability to continue as a going concern for the twelve months following the issuance of these financial statements.

We do not have the resources at this time to repay all its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.

Management has plans to address our financial situation as follows:

We began raising money through its S-3 this year and made improvements in paying off debt, investing in inventory and at February 28, 2022 had $4.6 million of cash on hard. Management is committed to raise either non-dilutive funds or minimally dilutive funds. There is no assurance that these funds will be able to be raised nor can we provide assurance that these possible raises may not have dilutive effects. The Company through to February 28, 2022 has raised approximately $12.5 million net of issuance costs through the sale of its common shares and $9.4 in proceeds from debt issuances.

We plan to improve the trading market our its shares by uplisting the shares to the OTCQB during the next fiscal year.

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*Capital Resources*

The following table summarizes total current assets, liabilities and working capital for the period indicated:

---

| | | |
|:---|:---|:---|
|  | **February 28, 2022** | **February 28, 2021** |
| Current assets | $7050436 | $1207033 |
| Current liabilities<sup>(1)</sup> | 4547718 | 4410710 |
| Working capital | $2502718 | $(3203677) |

---

__________

(1) As February 28, 2022 and February 28, 2021, current liabilities included
approximately $7,587 and $444,666, respectively, of derivative liabilities that are expected to be settled in our shares in accordance
with the various conversion terms.

As of February 28, 2022 and February 28, 2021, we had a cash balance of $4,648,146 and $1,044,418, respectively.

*Summary of Cash Flows*

---

| | | |
|:---|:---|:---|
|  | **Year Ended<br> February 28, 2022** | **Year Ended<br> February 28, 2021** |
| Net cash used in operating activities | $(14825442) | $(3073325) |
| Net cash used in investing activities | $(129200) | $(40623) |
| Net cash provided by financing activities | $18558370 | $4145059 |

---

Net cash used in operating activities for the year ended February 28, 2021 was $14,825,442, which included a net loss of $62,197,484, non-cash activity such as the change in fair value of derivative liabilities of ($372,214), gain on settlement of debt of $33,068,313, interest expense related to the issuance of warrants for debt extensions of $5,415,000, amortization of debt discount of $7,597,242, stock based payments of $2,158,050, gain on disposal of fixed assets ($29,125),revenue earning device sold and expensed in cost of sales $3,410,reduction in right of use asset $110,148, accretion of lease liability $122,930, increase in related party accrued payroll and interest $264,331, inventory provision of $65,000, bad debts expense $9,022, depreciation and amortization of $232,886 and change in operating assets and liabilities of ($1,272,951).

***Net cash used in investing activities.***

Net cash used in investing activities for the year ended February 28, 2022 was $129,200. This consisted primarily of the purchase of fixed assets and trademarks of $115,493 and $26,327, respectively, and cash paid for security deposit of $17,380 offset by proceeds of disposal of fixed assets of $30,000.

***Net cash provided by financing activities.***

Net cash provided by financing activities was $18,558,370 for the year ended February 28, 2022. This consisted of share proceeds net of issuance costs of $12,521,932,and proceeds from loans payable $9,426,146 offset by settlements of convertible notes of $65,000, dividend upon redemption of Series F preferred shares of $500,000, redemption of Series G preferred shares as payment for incentive plan $1,500,000, net repayments to loan payable – related party of $808,394 and repayments of loan payable $516,314.

***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 principles generally accepted in the United States, management must make estimates, judgements and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any , are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value derivative liabilities.

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***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 |
| Warehouse equipment | 5 years |
| Demo Devices | 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 28, 2022 and February 28, 2021, the Company had no deferred development costs.

***Sales of Future Revenues***

The Company has entered into transactions, as more fully described in footnote 11, 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.

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***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 3 – 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.

Our CEO and Chairman holds sufficient shares of the Company's voting stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO and Chairman can at any time unilaterally vote to increase the number of authorized shares of common stock of the Company without the need to call a general meeting of common shareholders of the Company

*Initial Measurement*

The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received.

*Subsequent Measurement – Financial Instruments Classified as Liabilities*

The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other income (expenses).

***Fair Value of Financial Instruments***

ASC Topic 820, *Fair Value Measurements and Disclosures* ("ASC Topic 820") provides a framework for measuring fair value in accordance with generally accepted accounting principles.

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

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:

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● 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:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Fair Value Measurement Using** | **Fair Value Measurement Using** | **Fair Value Measurement Using** |
|  |<br>**Amount at<br> Fair Value** | **Level 1** | **Level 2** | **Level 3** |
| **February 28, 2022** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Incentive compensation plan payable- revaluation of equity awards payable in Series G shares | $479500 | $— | $— | $479500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative liability – conversion features pursuant to convertible notes payable | $7587 | $— | $— | $7587 |
| **February 28, 2021** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Incentive compensation plan payable- revaluation of equity awards payable in Series G shares | $— | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative liability – conversion features pursuant to convertible notes payable | $444466 | $— | $— | $444466 |

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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.

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 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 standard did not materially impact our consolidated net loss, accumulated deficit, and had no impact on cash flows. The Company has adopted this on March 1, 2020.

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**MANAGEMENT**

**Directors and Executive Officers**

Our business and affairs are managed under the direction of our Board and committees of the Board. Directors serve until the next annual meeting and until their successors are elected and qualified. Officers are appointed to serve until serve at the pleasure of the Board, subject to all rights, if any, of such officer under any contract of employment. The following table presents information regarding our executive officers and directors as of the date of this prospectus<sup>(1)</sup>:

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position** |
| Steven Reinharz (1) | 48 | Chief Executive Officer, Secretary and Director (2) |
| Anthony Brenz | 62 | Chief Financial Officer |

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__________

(1) Director as of March 2, 2021

(2) All directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified.

There are no agreements with respect to electing directors. Except as set forth below, none of the directors held any directorships during the past five years in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such act, or of any company registered as an investment company under the Investment Company Act of 1940.

***Executive Officers***

Biographical information concerning our director and executive officers listed above is set forth below.

***Steven Reinharz*.** RAD was founded by Mr. Reinharz in July of 2016, and he has been continuously employed by RAD and its affiliated companies since that time. He is the holder of a majority of our capital stock. Mr. Reinharz has served as a member of the Board of Directors since March 2, 2021 and as our Chief Executive Officer, Chief Financial Officer, and Secretary of the Company since March 2, 2021 and resigned as our Chief Financial Officer as of April 26, 2021 upon Anthony Brenz's appointment as our Chief Financial Officer. As our Chief Executive Officer and President of RAD, Mr. Reinharz leverages his extensive knowledge and interest in robotics and artificial intelligence to design and develop robotic solutions that increase business efficiency and deliver immediate and impressive cost savings. Mr. Reinharz is an active voice in both the security and artificial intelligence industries. He started and ran his own security integration company from the age of 24 to 31, becoming one of California's leading system integrators. Mr. Reinharz later was part of a team that successfully sold an integrator to a global security firm for $42 million and has held various other security industry roles. Mr. Reinharz speaks and contributes to panels at ISC East and West, and ASIS. Mr. Reinharz is a leading member of several industry association committees, mostly through the Security Industry Association. Mr. Reinharz has called Orange County, California home since 1995, having grown up in Montreal and Toronto. He earned a dual Bachelor of Science degree in Political Science and Commercial Studies.

***Anthony Brenz*** was appointed as our Chief Financial Officer on April 26, 2021. He is an accomplished senior financial and operational executive for over 20 years of experience in finance and operations, including corporate strategy, procurement and supply chain, human resources, and customer service. From April 2018 to December 2020, Anthony Brenz was the Vice President/Director Finance of AirBoss Flexible Products Company. From September 2014 to April 2018, he was the Chief Financial Officer/Vice President of Finance of Thomson Aerospace and Defense (a Parker Meggitt Company). From August 2012 to September 2014, he was the Vice President/Director of Finance of M B Aeospace US Holdings, Inc. Anthony Brenz received a Bachelor of Accountancy from Walsh College in Troy Michigan in 1989 and has been licensed as a Certified Public Accountant in Michigan since 1989.

There are no family relationships between any of the executive officers and directors.

**Board Committees and Director Independence**

Mr. Reinharz serves as director, and 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 directors. Since we do not have any independent directors and have only two directors, our directors believes that the establishment of committees of the Board would not provide any benefits to us and could be considered more form than substance.

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We currently have an employee director, Mr. Reinharz, but no 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 directors are not "audit committee financial experts" within the meaning of Item 401(e) of Regulation S-K. As with most small, early stage companies, until such time that we further develop our 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 we are s able to expand our Board of Directors to include one or more independent directors, we intend 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**

Steven Reinharz is our sole director and was appointed on March 2, 2021. He is the founder of our operating company, Robotic Assistance Devices, Inc. (see Steven Reinharz' biography on page 34).

**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.

**Director Compensation**

Apart from a settlement paid upon Garett Parsons resignation on June 22, 2021 totaling $265,700 no other compensation was paid for his services as a director. We reimburse our directors for all reasonable ordinary and necessary business-related expenses, but we did not pay any other director's fees or any other cash compensation for services rendered as a director during the years ended February 28, 2022 and February 28, 2021 to any of the individuals serving on our Board during that period.

**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.

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**EXECUTIVE COMPENSATION**

The following table summarizes all compensation recorded by us in the past two fiscal years for Mr. Reinharz , our President and Chief Executive Officer , Anthony Brenz, our Chief Financial Officer and Garret Parsons our former President, Chief Executive Officer and Chief Financial Officer.

**2023 AND 2022 SUMMARY COMPENSATION TABLE**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Year** | **Salary<br> or<br> Fees<br> ($)** | **Bonus<br> ($)** | **Stock<br> Awards<br> ($)** | **Option<br> Awards<br> ($)** | **Non-Equity<br> Incentive Plan<br> Compensation<br> ($)** | **Non-Qualified<br> Deferred<br> Compensation<br> Earnings<br> ($)** | **All Other<br> Compensation<br> ($)** | **Total<br> ($)** |
| Steven Reinharz | 2023 | 300000 | 280908 | 499500 |  |  |  |  | 1080408 |
| Chief Executive Officer, Chief Financial Officer, Secretary (1) | 2022 | 240000 | 1429328 | 1979500 | 69350 |  |  |  | 3718178 |
| Anthony Brenz | 2023 | 190000 | 1500 |  |  |  |  |  | 191500 |
| Chief Financial Officer (1) | 2022 | 155928 | 6000 |  |  |  |  |  | 161928 |

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__________

(1) Steven Reinharz was appointed Chief Executive Officer, Chief Financial Officer and Secretary on March 2, 2021.Mr.Reinharz ceased being Chief Financial Officer on June 24, 2021 and on that date appointed Anthony Brenz as Chief Financial Officer

**Employment Agreements**

On March 1, 2021 Mr. Parsons entered into a consulting agreement with us whereby he would provide services for a three-year term. The consulting agreement sets his annual compensation as $96,000 for the first year, $108,000 for the second year, and $120,000 for the third year. On June 22, 2021, Mr. Garett Parsons submitted his resignation as our director effective as of June 22, 2021 as a result of personal reasons. In connection with the resignation of Mr. Parsons, we and Mr. Parsons entered into a resignation letter agreement which cancels the previous consulting agreement. Pursuant to the terms of this letter, Mr. Parsons will receive, among other things, a lump sum payment equal to $265,700 which was paid in June 2021.This payment was a settlement as director of the company and not included as executive compensation above.

On April 9, 2021 Mr. Reinharz entered into an employment agreement with us in connection with his service as Chief Executive Officer. The agreement began on April 9, 2021 and has a three-year term, renewable thereafter on an annual basis if neither party files a notice of termination 90 days prior to the term renewal date. The agreement provides for compensation of $240,000 base salary (to be reviewed annually by the Board of Directors) and bonuses to be granted at the discretion of the Board of Directors. In addition, we will grant stock options to Mr. Reinharz under the following conditions:

<u>Award #1</u> Mr. Reinharz shall be granted an award of 10,000,000 million shares/options/warrants if *Objective #1* is achieved. *Objective #1*: the price per share of our common stock has increased in value to an average of $0.30 for ten (10) days in a thirty-day trading period. For example, pursuant to our Stock Plan, if one is adopted, Mr. Reinharz may elect to exercise Award #1 on a cash or cashless basis at an exercise price of $0.15 per share/option/warrant.

<u>Award #2</u> Mr. Reinharz shall be granted an award of 30,000,000 million shares/options/warrants if *Objective #2* is achieved. *Objective #2*: the price per share of our Company's common stock has increased in value to an average of $0.50 for ten (10) days in a thirty-day trading period. For example, pursuant to our Company Stock Plan, if one is adopted, Mr. Reinharz may elect to exercise Award #2 on a cash or cashless basis at an exercise price of $0.25 per share/option/warrant.

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On July 12, 2021 the Company and CEO amended the April 9, 2021 Employment Agreement effective July 1, 2021 whereby the following objectives and awards were added to the two existing ones:

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| | |
|:---|:---|
| **Objective #3:** | Sales in any fiscal quarter exceed the total sales in fiscal year 2021 for the first time. |
| **Award #3:** | Five hundred (500) shares of Series G preferred stock |
| **Objective #4:** | One hundred fifty (150) devices are deployed in the marketplace. |
| **Award #4:** | Two hundred fifty (250) shares of Series G preferred stock. |
| **Objective #5:** | Year-to-date sales at any point in fiscal year 2022 exceed One Million Dollars ($1000000). |
| **Award #5:** | Two hundred fifty (250) shares of Series G preferred stock. |
| **Objective #6:** | The price per share of common stock has increased to and maintains a price of Ten Cents ($0.10) or more for ten (10) days in a thirty (30) day period. |
| **Award #6:** | Two hundred fifty (250) shares of Series G preferred stock. |
| **Objective #7:** | The price per share of common stock has increased to and maintains a price of Twenty Cents ($0.20) or more for ten (10) days in a thirty(30) day period. |
| **Award #7:** | Five hundred (500) shares of Series G preferred stock. |
| **Objective #8:** | The RAD 3.0 products are launched into the marketplace by November 30, 2022 |
| **Award #8:** | Five hundred (500) shares of Series G preferred stock |
| **Objective #9** | RAD receives an order for fifty (50) units from a single customer. |
| **Award #9:** | Five hundred (500) shares of Series G preferred stock. |

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The fair value of the first two awards was obtained through the use of the Monte Carlo method was $69,350 with a charge to stock- based compensation and a corresponding charge to paid in capital. The fair value of the remaining rewards was determined by calculating the vesting amounts of each reward and then determining for each reporting period the requisite service rendered and applying that against the cash redemption value of the number of shares of Series G issuable for each tier in the agreement. For the period ended January 31, 2022 that amount totaled $1,979,500 with a charge to stock-based compensation and a corresponding charge to incentive compensation plan payable. With the achievement of objectives 3,4,5 and 8 of the equity awards described above the CEO was granted 1,500 Series G Preferred shares which were redeemed in the reporting period for $1,500,000 in cash. As part of the grant, we are responsible for grossing up the award value and has accrued additional compensation for the estimated taxes to be paid by the executive.

On April 20, 2021 an offer letter was agreed with Anthony Brenz for a base salary of $180,000, a discretionary quarterly bonus and future participation in the Employee Stock Option Plan. Employment commenced on April 26, 2021 and Mr. Brenz was appointed as our Chief Financial Officer on June 24, 2021. The base salary was amended to $190,000 on January 1, 2022.

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O**utstanding Equity Awards at 2022 Fiscal Year-End**

The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for Steven and Anthony Brenz, our sole executive officers outstanding as of February 28, 2023:

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **OPTION AWARDS** | **OPTION AWARDS** | **OPTION AWARDS** | **OPTION AWARDS** | **OPTION AWARDS** | **OPTION AWARDS** | **STOCK AWARDS** | **STOCK AWARDS** | **STOCK 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 <br> (#)** | **Option Exercise Price<br> ($)** | **Option Expiration Date** | **Number of Shares or Units of Stock That Have Not Vested (#)** | **Market Value of Shares or Units of Stock That Have Not Vested ($)** | **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 ($)** |
| Steven Reinharz | 0 | 10000000 | 10000000 | $0.15 | April 9, 2024 | 0 | 0 | 770.5 | $770500 |
| Steven Reinharz | 0 | 30000000 | 30000000 | $0.25 | April 9, 2024 |  |  |  |  |
| Anthony Brenz | 0 | 0 | 4500000 | $0.02 | Sept. 1, 2027 | 4500000 | $26550 | 0 | 0 |

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On April 14, 2021, the Shareholders of Series E Preferred Stock and the Board of Directors ("Board") approved and adopted the 2021 Incentive Stock Plan (the "2021 Plan").

The purpose of the 2021 Plan is to promote our success by authorizing incentive awards to retain Directors, executives, selected Employees and Consultants, and reward participants for making major contributions to our success. The 2021 Plan authorizes the granting of stock options, restricted stock, restricted stock units, stock appreciation rights and stock awards. A total of five million (5,000,000) shares of common stock may be issued under the 2021 Plan. All awards under the 2021 Plan, whether vested or unvested, are subject to the terms of any recoupment, clawback or similar policy of the Company in effect from time to time, as well as any similar provisions of applicable law, which could in certain circumstances require repayment or forfeiture of awards or any shares of stock or other cash or property received with respect to the awards, including any value received from a disposition of the shares acquired upon payment of the awards. The 2021 Plan will be administered by the Board or any Committee authorized by the Board, if applicable, which will have the sole authority to, among other things: construe and interpret the 2021 Plan; make rules and regulations relating to the administration of the 2021 Plan; select participants; and establish the terms and conditions of awards, all in accordance with the terms of the 2021 Plan. The 2021 Plan will remain in effect until April 14, 2031, unless sooner terminated by the Board. Termination will not affect awards then outstanding.

**SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

At March 24, 2023, we had 5,894,174,263 shares of Common Stock issued and outstanding. The following table sets forth information regarding the beneficial ownership of our Common Stock as of March 24, 2023, and reflects:

● each of our executive officers;

● each of our directors;

● all of our directors and executive officers as a group; and

● each shareholder 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 shareholders. Beneficial ownership has been determined in accordance with Rule 13d-3(d)(1) under the Exchange Act. Based on the information furnished to us, the Company believes that each of the persons and entities named in the table below has sole voting and investment power with respect to all shares of Common Stock that he beneficially owns, subject to applicable community property laws, except as otherwise provided below.

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| | | |
|:---|:---|:---|
| <br>**Name** | **Amount and Nature of**<br>**Beneficial Ownership (1)** | **Percent of**<br>**Common Stock (2)** |
| **Named Executive Officers and Directors:** |  |  |
| Steven Reinharz (3) | 19668577954 | 74.99% |
| Anthony Brenz | 0 | 0 |
| Mark Folmer | 0 | 0 |
| All executive officers and directors as a group (3 persons) | 19668577954 | 74.99% |
| **5% Shareholders:** |  |  |
| Steven Reinharz | 19668577954 | 74.99% |

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__________

(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 proxy statement, (a) the numerator is the number of shares of Common Stock beneficially
owned by the person, 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 March 24, 2023, 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 the shares.

(2) Based on 5,894,174,263 shares of Common Stock outstanding as of March 24, 2023.

(3) Mr. Reinharz holds (a) 2,450 shares of Series F Convertible Preferred Stock and (b) 3,350,000 shares of Series E
Preferred Stock. If Mr. Reinharz converted the 2,450 shares of the Series F Convertible Preferred Stock, he would receive 19,668,577,954
shares of Common Stock, which is reported in the table as if the conversion has occurred. In addition, the outstanding 3,350,000 shares
of Series E Preferred Stock held by Mr. Reinharz have a vote equal to twice the number of votes of all outstanding shares of Common Stock.
As a result, Mr. Reinharz holds 2/3rds of the voting power of all shareholders at any time a corporate action requires a shareholder vote.

**CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

**Transactions with Related Persons**

Except as set out below, since the beginning of our last two fiscal years, there have been no transactions, or currently proposed transactions, in which we was or is to be a participant and the amount involved exceeds $120,000, and in which any of the following people had or will have a direct or indirect material interest:

● Any of our directors or executive officers;

● Any immediate family member of our directors or executive officers; and

● Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock;

For the nine months ended November 30, 2022, we had no repayments of net advances from its loan payable-related party. For the nine months ended November 30, 2021, we repaid net advances of $812,234. At November 30, 2022, the loan payable-related party was $203,276 and $193,556 at February 28, 2022. Included in the balance due to the related party at November 30, 2022 is $126,744 of deferred salary and interest, $108,000 of which bears interest at 12%. At February 28, 2022, included in the balance due to the related party is $110,700 of deferred salary and interest, $90,000 of which bears interest at 12%. The accrued interest included in loan at November 30, 2022 and November 30, 2021 was $12,420 and $540 respectively.

Pursuant to the amended Employment Agreement with its Chief Executive Officer, for the three months and nine months ended November 30, 2022, we accrued $138,000 and $362,500 of incentive compensation plan payable with a corresponding recognition of stock based compensation due to the expectation of additional awards being met. This will be payable in Series G Preferred Shares which are redeemable at our option at $1,000 per share. At November 30, 2022 and February 28, 2022 there was $842,000 and $479,500 of incentive compensation payable.

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During the three months ended November 30, 2022 and 2021, we charged $794,460 and $647,465, respectively for fees for research and development from a company partially owned by a principal shareholder. The principal shareholder received no compensation from this partially owned research and development company and the fees were spent on core development projects.

During the nine months ended November 30, 2022 and 2021, we were charged $2,735,589 and $1,689,253, respectively for fees for research and development from a company partially owned by a principal shareholder. The principal shareholder received no compensation from this partially owned research and development company and the fees were spent on core development projects.

**PRINCIPAL ACCOUNTING FEES AND SERVICES**

On October 31, 2019, our Board of Directors approved and ratified the engagement ("Engagement") of LJ Soldinger & Associates LLC ("LJ Soldinger") as our new independent registered public accounting firm..

The following table shows the fees that were billed for the audit and other services provided by LJ Soldinger for the fiscal years ended February 28, 2022 and 2021.

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| | |
|:---|:---|
|  | **2022** |
| Audit Fees | $275000 |
| Audit-Related Fees | 15000 |
| Tax Fees |  |
| All Other Fees |  |
| Total | $290000 |

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|:---|:---|
|  | **2021** |
| Audit Fees | $187000 |
| Audit-Related Fees |  |
| Tax Fees |  |
| All Other Fees |  |
| Total | $187000 |

---

*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 described above were approved by our Board.

Our principal accountant did not engage any other persons or firms other than the principal accountant's full-time, permanent employees.

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*[**Table of Contents**](#toc)*

**Indemnification and Limitation on Liability of Directors**

Our Articles of Incorporation limit the liability of our directors to the fullest extent permitted by Nevada law. Nothing contained in the provisions will be construed to deprive any director of his right to all defenses ordinarily available to the director nor will anything herein be construed to deprive any director of any right he may have for contribution from any other director or other person.

At present, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents where indemnification will be required or permitted. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

**Committees of the Board**

We do not currently have a standing audit, nominating, or compensation committee of the Board of Directors, or any committee performing similar functions. Our Board of Directors performs the functions of nominating and compensation committees

**Meetings of the Board**

During its fiscal year ended December 31, 2022, the Board met six times and acted by written consent on numerous occasions.

**Code of Business Conduct and Ethics**

We have adopted a written code of business conduct and ethics (the "Code of Ethics"). The Code of Ethics is intended to document the principles of conduct and ethics to be followed by all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. Its purpose is to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest.

**Indemnification and Limitation on Liability of Directors**

Our Articles of Incorporation limit the liability of our directors to the fullest extent permitted by Nevada law. Nothing contained in the provisions will be construed to deprive any director of his right to all defenses ordinarily available to the director nor will anything herein be construed to deprive any director of any right he may have for contribution from any other director or other person.

At present, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents where indemnification will be required or permitted. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

**DESCRIPTION OF OUR CAPITAL STOCK**

Our Articles of Incorporation, as amended, authorizes us to issue up to 5,000,000,000 shares of common stock, $0.00001 par value per share, and 20,000,000 shares of preferred stock, $0.001 par value per share. There is only one class of common stock. There are three classes of preferred stock. See "—Preferred Stock," below. Our board of directors may establish the rights and preferences of additional series of preferred stock from time to time.

**Transfer Agent and Registrar**

The transfer agent and registrar for our common stock is Transhare, Bayside Center 1, 17755 North US Highway 19, Suite 140, Clearwater, Florida 33764, Phone: (303) 662-1112.

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*[**Table of Contents**](#toc)*

**Common Stock**

*Rights of Shareholders*

 

All shares of our common stock that we offer will be fully paid and nonassessable upon issuance. Holders of our common stock are entitled to one vote per share of common stock on all matters submitted to a vote of shareholders. They do not have cumulative voting rights. Electing a director requires a plurality of the votes cast by shareholders that are entitled to vote in the election. However, it should be noted that the Series E Convertible Preferred Stock has voting rights equal to twice the number of votes of all outstanding shares of capital stock; that is, the holders of Series E Convertible Preferred Stock will always have 2/3rds of our voting power. Holders of common stock are entitled to receive proportionately any dividends that may be declared by our Board of Directors, subject to any preferential dividend rights of any series of preferred stock that we may designate and issue in the future.

If we are liquidated or dissolved, the holders of common stock are entitled to receive a proportionate share of our net assets that are available for distribution to shareholders after the payment of all our debts and other liabilities and subject to the senior rights of the holders of Series F Convertible Preferred Stock and Series G Preferred Stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. There are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of holders of common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future. See "—Preferred Stock" below.

*Nevada Law*

Nevada law contains provisions that govern an "acquisition of controlling interest" in a Nevada corporation. The control share provisions generally provide that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly held Nevada corporation in the secondary public or private market may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested shareholders of the corporation elects to restore those voting rights in whole or in part. However, our securities are not subject to these control share provisions because our articles of incorporation, as permitted by Nevada law, specifically exempt us from the control share provisions.

In addition, Nevada law contains a provision that prevents an " "interested stockholder" and a resident domestic Nevada corporation from entering into a business "combination," unless certain conditions are met. Nevertheless, our articles of incorporation, as permitted by Nevada law, specifically exempt us from these "interested stockholder" provisions.

**Preferred Stock**

We have three series of preferred stock, none of which have voting rights on any matters other than those directly affecting the respective series:

*Series E Convertible Preferred Stock*: There are 3,350,000 shares of Series E Convertible Preferred Stock ("Series E Preferred Shares") authorized, issued and outstanding. Despite its title, the Series E Preferred Shares have no conversion rights. Moreover, they have no dividend rights, no preemptive rights, no redemption rights, and no liquidation rights. As noted above, the Series E Preferred Shares hold voting rights equal to twice the number of votes of all outstanding shares of capital stock; that is, the holders of Series E Preferred Shares will always have 2/3rds of our voting power. The Series E Preferred Shares vote together with the common stock and not as a separate class. All of the Series E Preferred Shares are held by Steven Reinharz.

The Series E Preferred Shares must unanimously approve any changes to increase the authorized number of shares or the rights, preferences, and privileges of the Series E Preferred Shares. In addition, the Series E Preferred Shares must unanimously approve the following actions :

● alteration of or change to the rights, preferences or privileges of any of our capital stock that would adversely affect the Series E Preferred Shares;

● create or designate any series or class of shares;

● issue any shares of any series of preferred stock;

● increase the authorized number of shares of any series or class of our stock;

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*[**Table of Contents**](#toc)*

● amend, repeal or modify our bylaws

● sell or otherwise dispose of any of our assets not in the ordinary course of business;

● elect members of the Board of Directors;

● incur debt not in the ordinary course of business; or

● effect or undergo any change of our control .

*Series F Convertible Preferred Stock*: There are 4,350 shares of Series F Convertible Preferred Stock ("Series F Preferred Shares") authorized, of which 2,532 Shares are issued and outstanding. The Series F Preferred Shares have no dividend rights, no preemptive rights, and, unless and until they are converted into common stock, no voting rights (other than as to changes to any class or series of our capital stock that could adversely affect the Series F Preferred Shares or as required by Nevada law). The Series F Preferred Shares have liquidation rights senior to those of the common stock, the Series E Preferred Shares and Series G Preferred Shares. Steven Reinharz owns 2,450 Series F Preferred Shares, and the remaining 82 Series F Preferred Shares are held by two other persons who are not employed by us We have also issued a "Warrant to Purchase Stock," which gave the holder of the Warrant the right to purchase 367 Series F Preferred Shares at any time. After prior exercises, the holder currently holds the right to purchase 329 Series F Preferred Shares.

After August 23, 2023, each holder of Series F Preferred Shares has the right to convert all, but not less than all, of the holder's Series F Preferred Shares into shares of common stock that would be a multiple of the number of then-outstanding shares of common stock. At that time, there would be a substantial dilution of our common stock.

*Series G Preferred Stock*: There are 100,000 shares of Series G Preferred Stock ("Series G Preferred Shares") authorized but no shares have been issued. The Series G Preferred Shares have no dividend rights, no voting rights, and no preemptive rights. The Series G shares have liquidation rights senior to those of the common stock but junior to those of the Series F Preferred Shares. At any time, we may at our option, redeem any or all of the outstanding Series G Preferred Shares at $1,000 per share.

**DESCRIPTION OF WARRANTS**

We may issue warrants to purchase common stock. We may offer warrants separately or together with one or more additional warrants or common stock, as described in the related prospectus supplement. If we issue warrants as part of a unit, the accompanying prospectus supplement will specify whether those warrants may be separated from the common stock in the unit before the expiration date of the warrants. The terms of any warrants offered under a prospectus supplement may differ from the terms described below. We urge you to read the related prospectus supplement and any related free writing prospectus as well as the complete warrant agreements and warranty certificates that contain the terms of the warrants. Each related prospectus supplement will describe the terms of any warrants being offered, including but not limited to the following:

● the specific designation and total number of warrants and the offering price at which the warrants will be issued;

● the date on which the right to exercise the warrants will begin and will end, or if the warrants are not continuously exercisable, the specific dates or periods in which you may exercise the warrants;

● whether the warrants will be sold separately or with common stock as parts of units;

● if the warrants are issued as part of a unit, the date, if any, on which the common stock will be separately transferable;

● a description of the common stock purchasable upon exercise of the warrants;

● the number of shares of common stock purchasable upon exercise of a warrant and the price at which those shares may be purchased;

● if applicable, the minimum or maximum amount of warrants that may be exercised at any one time;

● any redemption or call provisions of the warrants;

● if any, the anti-dilution provisions of, and other provisions for changes to or adjustment in the exercise price of, the warrants;

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*[**Table of Contents**](#toc)*

● information with respect to book-entry procedures, if any;

● the identity of the warrant agent for the warrants;

● any additional terms of the warrants, including terms, procedures and limitations relating to the exchange or exercise of the warrants; and

● any applicable material U.S. federal income tax consequences.

It should be noted that holders of warrants will not be entitled to:

● vote, consent or receive dividends;

● receive notice of shareholders with respect to any meeting of shareholders on any matter; and

● exercise any rights as shareholders of the Company.

**Dividend Policy**

To date we have never declared a dividend for our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business and for general corporate purposes. We cannot assure you that we will distribute any cash in the future. Our cash distribution policy is within the discretion of our Board and will depend upon various factors, including our results of operations, financial condition, capital requirements and investment opportunities.

**LEGAL MATTERS**

Certain legal matters with respect to the validity of the securities being offered by this prospectus will be passed upon Frederick M. Lehrer, P. A.

**EXPERTS**

The audited consolidated financial statements for AITX, as of February 28, 2022 and 2021 and for the years then ended included in this prospectus and elsewhere in the registration statement have been so included in reliance upon the report, which contains an explanatory paragraph describing the conditions which raise substantial doubt about the ability of the Company to continue as a going concern, of L J Soldinger Associates, LLC, independent registered public accounting firm, upon the authority of said firm as experts in accounting and auditing.

**AVAILABLE INFORMATION**

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete.

We file reports, proxy statements and other information with the SEC. The SEC maintains a website that contains reports, proxy and information statements and other information about issuers, such as us, who file electronically with the SEC. The address of that website is http://www.sec.gov. You may also request a copy of those filings, excluding exhibits, from us at no cost. These requests should be addressed to us at: 10800 Galaxie Avenue, Ferndale, Michigan 48220. Our website address is www.aitx.ai The information on, or accessible through, our website is not part of, and is not incorporated into, this prospectus supplement or the accompanying prospectus and should not be considered part of this prospectus.

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*[**Table of Contents**](#toc)*

**Disclosure of Commission Position of Indemnification for Securities Act Liabilities**

Nevada Revised Statutes ("NRS") Sections 78.7502 and 78.751 provide us with the power to indemnify any of our directors and officers. The director or officer must have conducted himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed to, our best interests. In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe his/her conduct was unlawful. Under NRS Section 78.751, advances for expenses may be made by agreement if the director or officer affirms in writing that he/she believes he/she has met the standards and will personally repay the expenses if it is determined such officer or director did not meet the standards.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Our Amended Bylaws provides that the Company shall indemnify its directors and officers from and against any liability arising out of their service as a director or officer of the Corporation or any subsidiary or affiliate of which they serve as an officer or director at the request of the Corporation to the fullest extent not prohibited by NRS Chapter 78.

**INDEX TO FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | **PAGE** |
| [Condensed Consolidated Balance Sheets as of November 30, 2022 and February 28, 2022 (Unaudited)](#Balance_Sheets) | F-1 |
| [Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended November 30, 2022 and 2021 (Unaudited)](#Income_Statement) | F-2 |
| [Condensed Consolidated Statements of Stockholders' Deficit for the Nine Months Ended November 30, 2022 and 2021 (Unaudited)](#Equity_Statement) | F-3-4 |
| [Condensed Consolidated Statements of Cash Flows for the Nine Months Ended November 30, 2022 and 2021 (Unaudited)](#Cash_Flow) | F-5 |
| [Notes to the Consolidated Financial Statements (Unaudited)](#Notes) | F-6 |
| [Report of Independent Registered Public Accounting Firm](#a_022) | F-28-30 |
| [Consolidated Balance Sheets as of February 28, 2022 and 2021](#a_023) | F-31 |
| [Consolidated Statements of Operations for the years ended February 28, 2022 and 2021](#a_024) | F-32 |
| [Consolidated Statement of Stockholders' Deficit for the years ended February 28, 2022 and 2021](#a_025) | F-33-34 |
| [Consolidated Statements of Cash Flows for the years ended February 28, 2022 and 2021](#a_026) | F-35 |
| [Notes to the Consolidated Financial Statements for the years ended February 28, 2022 and 2021](#a_027) | F-36 |

---

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  |<br>**November 30, 2022<br> (Unaudited)** | <sup>\*</sup><br>**February 28, 2022<sup>\*</sup>** |
| **ASSETS** |  |  |
| **Current assets:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash | $713493 | $4648146 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 464044 | 429469 |
| &nbsp;&nbsp;&nbsp;&nbsp;Device parts inventory, net | 1573380 | 1530657 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and deposits | 672794 | 442164 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 3423711 | 7050436 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease asset | 1241152 | 1331605 |
| &nbsp;&nbsp;&nbsp;&nbsp;Revenue earning devices, net of accumulated depreciation of $676,615 and $434,661, respectively | 1092203 | 709063 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fixed assets, net of accumulated depreciation of $139,751 and $49,065, respectively | 312307 | 137952 |
| &nbsp;&nbsp;&nbsp;&nbsp;Trademarks | 28723 | 28723 |
| &nbsp;&nbsp;&nbsp;&nbsp;Security deposit | 21239 | 21239 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $6119335 | $9279018 |
| **LIABILITIES AND STOCKHOLDERS' DEFICIT** |  |  |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | $1166171 | $968853 |
| &nbsp;&nbsp;&nbsp;&nbsp;Advances payable | 1594 | 1594 |
| &nbsp;&nbsp;&nbsp;&nbsp;Customer deposits | 2383 | 10000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current operating lease liability | 111985 | 254027 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current portion of deferred variable payment obligation | 497150 | 325600 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current portion of convertible notes payable, net of discount of $433,932 and $0, respectively | 316068 | 3500 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loan payable - related party | 203276 | 193556 |
| &nbsp;&nbsp;&nbsp;&nbsp;Incentive compensation plan payable | 842000 | 479500 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current portion of loans payable, net of discount of $158,194 and $14,745, respectively | 1240306 | 1004708 |
| &nbsp;&nbsp;&nbsp;&nbsp;Vehicle loan - current portion | 38522 | 38522 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current portion of accrued interest payable | 50963 | 1260271 |
| &nbsp;&nbsp;&nbsp;&nbsp;Derivative liability |  | 7587 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 4470418 | 4547718 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-current operating lease liability | 1115323 | 1057579 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans payable, net of discount of $5,378,890 and $4,905,076, respectively | 23728956 | 20309069 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred variable payment obligation | 2525000 | 2525000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest payable | 4775150 | 1816009 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 36614847 | 30255375 |
| Commitments and Contingencies |  |  |
| **Stockholders' deficit:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred Stock, undesignated; 15,545,650 shares authorized; no shares issued and outstanding at November 30, 2022 and February 28, 2022, respectively |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Series E Preferred Stock, $0.001 par value; 4,350,000 shares authorized; 3,350,000 and 3,350,000 shares issued and outstanding, respectively | 3350 | 3350 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series F Convertible Preferred Stock, $1.00par value; 4,350 shares authorized; 2,533 and 2,532 shares issued and outstanding, respectively | 2533 | 2532 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series G Preferred Stock, $0.001 par value; 100,000 shares authorized, no shares issued and outstanding at November 30, 2022 and February 28, 2022, respectively |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common Stock, $0.00001 par value; 6,000,000,000 and 5,000,000,000 shares authorized 5,260,515,892 and 4,735,210,360 shares issued, issuable and outstanding at November 30, 2022 and February 28, 2022, respectively | 52607 | 47353 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 76421377 | 73015576 |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock to be issued | 99086 | 99086 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | (107074465) | (94144254) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' deficit | (30495512) | (20976357) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' deficit | $6119335 | $9279018 |

---

\* Derived from audited information

***The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.***

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

**(UNAUDITED)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months<br> Ended<br> November 30, 2022** | **Three Months<br> Ended<br> November 30, 2021** | **Nine Months<br> Ended<br> November 30, 2022** | **Nine Months<br> Ended<br> November 30, 2021** |
| **Revenues** | $402399 | $373897 | $1055040 | $1075803 |
| **Cost of Goods Sold** | 125960 | 143424 | 453898 | 296304 |
| **Gross Profit** | 276439 | 230473 | 601142 | 779499 |
| **Operating expenses:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Research and development (Note 10) | 813313 | 982446 | 2800834 | 2316383 |
| &nbsp;&nbsp;&nbsp;General and administrative | 2123768 | 3964512 | 6762602 | 8455224 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 92855 | 67927 | 332643 | 153261 |
| &nbsp;&nbsp;&nbsp;Operating lease cost and rent | 61005 | 103115 | 194653 | 207201 |
| &nbsp;&nbsp;&nbsp;(Gain) loss on disposal of fixed assets |  |  |  | (29125) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 3090941 | 5118000 | 10090732 | 11102944 |
| Loss from operations | (2814502) | (4887527) | (9489590) | (10323445) |
| **Other income (expense), net:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of derivative liabilities |  |  | 3595 | 372502 |
| &nbsp;&nbsp;&nbsp;Interest expense | (1271158) | (2050254) | (3448208) | (4812477) |
| &nbsp;&nbsp;&nbsp;Gain (loss) on settlement of debt |  | (156661) | 3992 | (33068313) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income (expense), net | (1271158) | (2206915) | (3440621) | (37508288) |
| **Net Loss** | $(4085660) | $(7094442) | $(12930211) | $(47831733) |
| Net income (loss) per share - basic | $(0.00) | $(0.00) | $(0.00) | $(0.01) |
| Net income (loss) per share - diluted | $(0.00) | $(0.00) | $(0.00) | $(0.01) |
| Weighted average common share outstanding - basic | 5140405652 | 4183357145 | 4969080716 | 4162382783 |
| Weighted average common share outstanding - diluted | 5140405652 | 4183357145 | 4969080716 | 4162382783 |

---

***The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.***

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S DEFICIT**

**(Unaudited)**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Series E** | **Series E** | **Series F** | **Series F** | **Series G** | **Series G** | | | | | |
|  | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Additional**<br>**Paid-In**<br>**Capital** |<br>**Accumulated**<br>**Deficit** | **Total**<br>**Shareholders'**<br>**Deficit** |
| **Balance at February 28, 2021** | 4350000 | 4350 | 2799 | 176869 |  | $— | 3229426884 | $32294 | $16764554 | $(31521754) | $(14543687) |
| &nbsp;&nbsp;&nbsp;Series F Preferred Shares issued with amendment agreement |  |  | 40 | 40 |  |  |  |  | 3244700 |  | 3244740 |
| &nbsp;&nbsp;&nbsp;Series F Preferred Shares Warrants issued with amendment agreement |  |  |  |  |  |  |  |  | 29770474 |  | 29770474 |
| &nbsp;&nbsp;&nbsp;Series F Preferred Shares cancelled in exchange for promissory notes |  |  | (83) | (83) |  |  |  |  | (6732752) |  | (6732835) |
| &nbsp;&nbsp;&nbsp;Series F preferred shares issued on exercise of warrants |  |  | 38 | 38 |  |  |  |  | (38) |  |  |
| &nbsp;&nbsp;&nbsp;Series F Preferred Shares converted to common shares |  |  | (78) | (78) |  |  | 316345998 | 3164 | (3086) |  |  |
| &nbsp;&nbsp;&nbsp;Relative fair value of warrants issued with debt |  |  |  |  |  |  |  |  | 4749006 |  | 4749006 |
| &nbsp;&nbsp;&nbsp;Stock based compensation |  |  |  |  |  |  |  |  | 69350 |  | 69350 |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  |  |  |  |  | (35904918) | (35904918) |
| **Balance at May 31, 2021** | 4350000 | $4350 | 2716 | $176786 |  | $— | 3545772882 | $35458 | $47862208 | $(67426672) | $(19347870) |
| &nbsp;&nbsp;&nbsp;Adjustment to derivative liability |  |  |  |  |  |  |  |  | 422272 |  | 422272 |
| &nbsp;&nbsp;&nbsp;Common stock issued for debt conversion |  |  |  |  |  |  | 31042436 | 310 | 898395 |  | 898705 |
| &nbsp;&nbsp;&nbsp;Exercise of warrants |  |  |  |  |  |  | 300251561 | 3003 | (3003) |  |  |
| &nbsp;&nbsp;&nbsp;Relative fair value of warrants issued with debt |  |  |  |  |  |  |  |  | 2035033 |  | 2035033 |
| &nbsp;&nbsp;&nbsp;Cancellation of Series E Shares | (1000000) | (1000) |  |  |  |  |  |  | 1000 |  |  |
| &nbsp;&nbsp;&nbsp;Exchange of debt for common shares |  |  |  |  |  |  | 116104232 | 1161 | 6454235 |  | 6455396 |
| &nbsp;&nbsp;&nbsp;Stock based compensation on issuable shares |  |  |  |  |  |  | 2100000 | 21 | 109179 |  | 109200 |
| &nbsp;&nbsp;&nbsp;Exchange of Series F Preferred Shares for debt |  |  | (184) | (184) |  |  |  |  | (3999976) |  | (4000160) |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  |  |  |  |  | (4832373) | (4832373) |
| **Balance at August 31, 2021** | 3350000 | $3350 | 2532 | $176602 |  | $— | 3995271111 | $39953 | $53779343 | $(72259045) | $(18259797) |
| &nbsp;&nbsp;&nbsp;Issuance of shares, net of $253,811 issuance costs |  |  |  |  |  |  | 345168473 | 3452 | 8466551 |  | 8470003 |
| &nbsp;&nbsp;&nbsp;Cashless exercise of 100,000,000 warrants |  |  |  |  |  |  | 94770776 | 948 | (948) |  |  |
| &nbsp;&nbsp;&nbsp;Relative fair value of warrants issued with debt |  |  |  |  |  |  |  |  | 1284783 |  | 1284783 |
| &nbsp;&nbsp;&nbsp;Redemption of 19 Issuable Series F shares |  |  |  | (74984) |  |  |  |  |  | (425016) | (500000) |
| &nbsp;&nbsp;&nbsp;Issuance of Series G preferred as equity awards per employment agreement |  |  |  |  | 1500 | 1500000 |  |  |  |  | 1500000 |
| &nbsp;&nbsp;&nbsp;Redemption of Series G shares as compensation payment |  |  |  |  | (1500) | (1500000) |  |  |  |  | (1500000) |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  |  |  |  |  | (7094442) | (7094442) |
| **Balance at November 30, 2021** | 3350000 | $3350 | 2532 | $101618 |  | $— | 4435210360 | $44353 | $63529729 | $(79778503) | $(16099453) |

---

***The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.***

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S DEFICIT**

**(Unaudited)**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Series E** | **Series E** | **Series F** | **Series F** | | | | | |
|  | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Additional**<br>**Paid-In**<br>**Capital** |<br>**Accumulated**<br>**Deficit** | **Total**<br>**Stockholders'**<br>**Deficit** |
| **Balance at February 28, 2022** | 3350000 | $3350 | 2532 | $101618 | 4735210360 | $47353 | $73015576 | $(94144254) | $(20976357) |
| &nbsp;&nbsp;&nbsp;Issuance of shares, net of $117,157 issuance costs |  |  |  |  | 133881576 | 1339 | 1643883 |  | 1645222 |
| &nbsp;&nbsp;&nbsp;Rounding |  |  |  |  |  |  | (1) |  | (1) |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  |  |  | (4671686) | (4671686) |
| **Balance at May 31, 2022** | 3350000 | $3350 | 2532 | $101618 | 4869091936 | $48692 | $74659458 | $(98815940) | $(24002822) |
| &nbsp;&nbsp;&nbsp;Issuance of shares, net of $95,293 issuance costs |  |  |  |  | 191691135 | 1917 | 1889350 |  | 1891267 |
| &nbsp;&nbsp;&nbsp;Cashless exercise of warrants |  |  |  |  | 9688179 | 97 | (97) |  |  |
| &nbsp;&nbsp;&nbsp;Relative fair value of warrants issued with debt |  |  |  |  |  |  | 404374 |  | 404374 |
| &nbsp;&nbsp;&nbsp;Cancelled shares |  |  |  |  | (17116894) | (171) | 171 |  |  |
| &nbsp;&nbsp;&nbsp;Exchange of 955,000,000 warrants for debt |  |  |  |  |  |  | (2960500) |  | (2960500) |
| &nbsp;&nbsp;&nbsp;Shares as payment for services |  |  |  |  | 10000000 | 100 | 118400 |  | 118500 |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  |  |  | (4172865) | (4172865) |
| **Balance at August 31, 2022** | 3350000 | $3350 | 2532 | $101618 | 5063354356 | $50635 | $74111156 | $(102988805) | $(28722046) |
| &nbsp;&nbsp;&nbsp;Issuance of shares, net of $68,732 issuance costs |  |  |  |  | 197161536 | 1972 | 1119518 |  | 1121490 |
| &nbsp;&nbsp;&nbsp;Relative fair value of Series F warrants issued with debt |  |  | 1 | 1 |  |  | 1201127 |  | 1201128 |
| &nbsp;&nbsp;&nbsp;Relative fair value of warrants issued with debt |  |  |  |  |  |  | (10424) |  | (10424) |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  |  |  | (4085660) | (4085660) |
| **Balance at November 30, 2022** | 3350000 | $3350 | 2533 | $101619 | 5260515892 | $52607 | $76421377 | $(107074465) | $(30495512) |

---

***The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.***

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended<br> November 30, 2022** | **Nine Months Ended<br> November 30, 2021** |
| **CASH FLOWS USED IN OPERATING ACTIVITIES:** |  |  |
| Net loss | $(12930211) | $(47831733) |
| Adjustments to reconcile net income to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 332643 | 153261 |
| &nbsp;&nbsp;&nbsp;Revenue earning device sold and expensed in cost of sales |  | 3410 |
| &nbsp;&nbsp;&nbsp;Bad debts expense | 224215 | 107022 |
| &nbsp;&nbsp;&nbsp;Inventory provision | 90000 |  |
| &nbsp;&nbsp;&nbsp;Reduction of right of use asset | 84298 | 75609 |
| &nbsp;&nbsp;&nbsp;Accretion of lease liability | 107187 | 86350 |
| &nbsp;&nbsp;&nbsp;(Gain) loss on disposal of fixed assets |  | (29125) |
| &nbsp;&nbsp;&nbsp;Stock based compensation | 481000 | 2158050 |
| &nbsp;&nbsp;&nbsp;Change in fair value of derivative liabilities | (3595) | (372502) |
| &nbsp;&nbsp;&nbsp;Interest expense related to penalties from debt defaults |  |  |
| &nbsp;&nbsp;&nbsp;Amortization of debt discounts | 1094388 | 2700233 |
| &nbsp;&nbsp;&nbsp;(Gain) loss on settlement of debt | (3992) | 33068313 |
| &nbsp;&nbsp;&nbsp;Increase in related party accrued payroll and interest | 9720 | 220140 |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (258790) | (289485) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | (224476) | (392811) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deposits on right of use asset |  | (18462) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Device parts inventory | (805257) | (1864340) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 197317 | 177240 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expense - related party |  | (178478) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer deposits | (7617) | (500) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | (191485) | (161959) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of deferred variable payment obligation for payments | 171550 | 173640 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Balance owed WeSecure |  | (122000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest payable | 1749833 | 1903365 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (9883272) | (10434762) |
| **CASH FLOWS USED IN INVESTING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of fixed assets | (217601) | (34534) |
| &nbsp;&nbsp;&nbsp;Acquisition of trademarks |  | (26327) |
| &nbsp;&nbsp;&nbsp;Proceeds on disposal of fixed assets |  | 30000 |
| &nbsp;&nbsp;&nbsp;Cash paid for security deposit |  | (15880) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (217601) | (46741) |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Share proceeds net of issuance costs | 4657979 | 7463654 |
| &nbsp;&nbsp;&nbsp;Proceeds from loans payable | 2600000 | 9426146 |
| &nbsp;&nbsp;&nbsp;Repayment of loans payable | (1711009) | (471617) |
| &nbsp;&nbsp;&nbsp;Proceeds from convertible debt and warrants issued | 619250 |  |
| &nbsp;&nbsp;&nbsp;Repayment of convertible debt |  | (65000) |
| &nbsp;&nbsp;&nbsp;Series G preferred shares redeemed as payment on incentive plan payable |  | (1500000) |
| &nbsp;&nbsp;&nbsp;Dividend and redemption of cancelled issuable Series F preferred shares |  | (500000) |
| &nbsp;&nbsp;&nbsp;Net borrowings (repayments) on loan payable - related party |  | (812234) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 6166220 | 13540949 |
| Net change in cash | (3934653) | 3059446 |
| Cash, beginning of period | 4648146 | 1044418 |
| Cash, end of period | $713493 | $4103864 |
| Supplemental disclosure of cash and non-cash transactions: |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for interest | $405117 | $165163 |
| &nbsp;&nbsp;&nbsp;Cash paid for income taxes | $— | $— |
| &nbsp;&nbsp;&nbsp;Noncash investing and financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Right of use asset for operating lease liability | $— | $1341506 |
| &nbsp;&nbsp;&nbsp;Transfer from device parts inventory to revenue earning devices | $672534 | $592346 |
| &nbsp;&nbsp;&nbsp;Conversion of convertible notes and interest to shares of common stock | $— | $898705 |
| &nbsp;&nbsp;&nbsp;Release of derivative liability on conversion of convertible notes payable | $— | $422272 |
| &nbsp;&nbsp;&nbsp;Derivative debt discount on re-valuation on loan amendment | $— | $438835 |
| &nbsp;&nbsp;&nbsp;Exchange of notes payable for Series F preferred shares | $— | $6732835 |
| &nbsp;&nbsp;&nbsp;Exchange of warrants for debt | $3000000 | $— |
| &nbsp;&nbsp;&nbsp;Discount applied to face value of loans | $434500 | $6162945 |
| &nbsp;&nbsp;&nbsp;Warrants issued as part of debt | $— | $8068822 |
| &nbsp;&nbsp;&nbsp;Exercise of warrants | $97 | $3951 |
| &nbsp;&nbsp;&nbsp;Series F preferred shares and warrants issued for debt | $1240628 | $4000160 |
| &nbsp;&nbsp;&nbsp;Issuance of Series G preferred shares as payment of incentive plan payable | $— | $1500000 |
| &nbsp;&nbsp;&nbsp;Cancellation of Series E preferred shares and common shares | $171 | $1000 |
| &nbsp;&nbsp;&nbsp;Series F preferred shares converted to common shares | $— | $3086 |
| &nbsp;&nbsp;&nbsp;Series F preferred shares issued on exercise of warrants | $— | $38 |

---

***The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.***

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**1. GENERAL INFORMATION**

Artificial Intelligence Technology Solutions Inc. ("AITX" or the "Company") was incorporated in Florida on March 25, 2010 and reincorporated in Nevada on February 17, 2015. On August 24, 2018, Artificial Intelligence Technology Solutions Inc., changed its name from On the Move Systems Corp ("OMVS").

Robotic Assistance Devices, LLC ("RAD"), was incorporated in the State of Nevada on July 26, 2016 as a Limited Liability Company. On July 25, 2017, Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc., through the issuance of 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 was exploring the on-demand logistics market by developing a network of logistics partnerships. As a result of the closing of the Acquisition, AITX has succeeded to the business of RAD, and AITX's business going forward will consist of one segment activity, which is the delivery of artificial intelligence and robotic solutions for operational, security and monitoring needs.

The Acquisition was treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes since substantially all of AITX's operations were disposed of as part of the consummation of the transaction. Therefore, no goodwill or other intangible assets were recorded by AITX as a result of the Acquisition. RAD is treated as the accounting acquirer as its stockholders control the Company after the Acquisition, even though AITX was the legal acquirer. As a result, the assets and liabilities and the historical operations that are reflected in these financial statements are those of RAD as if RAD had always been the reporting company.

**2. GOING CONCERN**

The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

For the nine months ended November 30, 2022, the Company had negative cash flow from operating activities of $9,883,272. As of November 30, 2022, the Company has an accumulated deficit of $107,074,465, and negative working capital of $1,046,707. 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 potentially raise an additional $1 million to $3 million before the end of the fiscal year. Management is committed to raise either non-dilutive funds or minimally dilutive funds. There is no assurance that these funds will be able to be raised nor can we provide assurance that these possible raises may not have dilutive effects.

The Company began raising money through its S-3 Registration Statement this year and made improvements in paying off debt, investing in inventory and at November 30, 2022 had $713,493 of cash on hand. Management is committed to raise either non-dilutive funds or minimally dilutive funds. There is no assurance that these funds will be able to be raised nor can we provide assurance that these possible raises may not have dilutive effects. For the fiscal period through to November 30, 2022, the Company has raised an additional $4.7 million net of issuance costs through the sale of its common shares and raised approximately $3.2 million in current debt.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**3. ACCOUNTING POLICIES**

***Basis of Presentation and Consolidation***

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and in conformity with the condensing instructions on Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited financial statements and notes thereto in the Company's latest Annual Report filed with the SEC on Form 10-K as filed on May 27, 2022. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Robotic Assistance Devices, Inc., Robotic Assistance Devices Group , Inc, Robotic Assistance Devices Mobile, Inc., On the Move Experience, LLC and On the OMV Transports, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the six months ended November 30, 2022 are not necessarily indicative of the results that may be expected for the entire year.

***Use of Estimates***

In order to prepare financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgements and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any, are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value preferred stock and derivative liabilities.

***Concentrations***

*Loans payable* 

At November 30, 2022 there were $30,506,346 of loans payable, $26,090,506 or 85% of these loans to companies controlled by one individual. At February 28, 2022 there were $26,233,598 of loans payable $21,709,459 or 83% of these loans to companies controlled by the same individual.

***Cash***

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market instruments. The Company places its cash and cash equivalents with high-quality, U.S. financial institutions and, to date has not experienced losses on any of its balances.

***Accounts Receivable***

Accounts receivable are comprised of balances due from customers, net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. There was an allowance of $109,890 and $33,890 provided as of November 30, 2022 and February 28, 2022, respectively.

***Device Parts Inventory***

Device parts inventory is stated at the lower of cost or net realizable value using the weighted average cost method. The Company records a valuation reserve for obsolete and slow-moving inventory, relying principally on specific identification of such inventory. The Company uses these device parts in the assembly of revenue earning devices (and demo devices) as well as research and development. Depending on use, the Company will transfer the parts to the corresponding asset or expense if used in research and development. A charge to income is taken when factors that would result in a need for an increase in the valuation, such as excess or obsolete inventory, are noted. As of November 30, 2022 and February 28, 2022 there was a valuation reserve of $155,000 and $65,000, respectively.

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

***Revenue Earning Devices***

Revenue earning devices are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of 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 two 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 and software | 2 or 3 years |
| Office equipment | 4 years |
| Manufacturing equipment | 7 years |
| Warehouse equipment | 5 years |
| Tooling | 2 years |
| Demo Devices | 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 November 30, 2022 and February 28, 2022, the Company had no deferred development costs.

***Contingencies***

Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company's consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

***Sales of Future Revenues***

The Company has entered into transactions, as more fully described in footnote 8, in which it has received funding from investors in exchange for which it will make payments to those investors based on the level of sales of certain revenue categories, generally based on a percentage of sales for those certain revenues. The Company determines whether these agreements constitute sales of future revenues or are in substance debt based on the facts and circumstances of each agreement, with the following primary criteria determinative of whether the agreement constitutes a sale of future revenues or debt:

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

● Does the agreement purport, in substance, to be a sale

● Does the Company have continuing involvement in the generation of cash flows due the investor

● Is the transaction cancellable by either party through payment of a lump sum or other transfer of assets

● Is the investors rate of return is implicitly limited by the terms of the agreement

● Does the Company's revenue for a reporting period underlying the agreement have only a minimal impact on the investor's rate of return

● Does the investor have recourse relating to payments due

In the event a transaction is determined to be a sale of future revenues, it is recorded as deferred revenue and amortized using the sum-of-the-revenue method. In the event a transaction is determined to be debt, it is recorded as debt and amortized using the effective interest method. As of the date of these financial statements, the Company has determined that all such agreements are debt.

***Revenue Recognition***

ASU 2014-09, *"Revenue from Contracts with Customers (Topic 606)"*, supersedes the revenue recognition requirements and industry specific guidance under *Revenue Recognition (Topic 605)*. Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. Topic 606 defines a five-step process that must be evaluated and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing accounting principles generally accepted in the United States of America ("U.S. GAAP") including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company adopted Topic 606 on March 1, 2018, using the modified retrospective method. Under the modified retrospective method, prior period financial positions and results will not be adjusted. There was no cumulative effect adjustment recognized as a result of this adoption. Refer to Note 4 – Revenue from Contracts with Customers for additional information. For the nine months ended November 30, 2022 , two customers accounted for 41% of total revenue (2021- 60%).

***Income Taxes***

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Act") was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company's gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company's net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company's financial results, including disclosures, for the Company's fiscal year ending February 28, 2023, but the Company does not expect the Tax Act to have a material impact on the Company's consolidated financial statements

***Leases***

Lease agreements are evaluated to determine if they are sales/finance leases meeting any of the following criteria at inception: (a) transfer of ownership of the underlying asset; (b) purchase option that is reasonably certain of being exercised; (c) the lease term is greater than a major part of the remaining estimated economic life of the underlying asset; or (d) if the present value of the sum of lease payments and any residual value guaranteed by the lessee that has not already been included in lease payments in accordance with ASC 842-10-30-5(f) equals or exceeds substantially all of the fair value of the underlying asset.

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

If at its inception, a lease meets any of the four lease criteria above, the lease is classified by the Company as a sales/finance; and if none of the four criteria are met, the lease is classified by the Company as an operating lease.

Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term, whereby an equal amount of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in the later years. The difference between rent expense recognized and actual rental payments is recorded as deferred rent and included in liabilities.

***Distinguishing Liabilities from Equity***

The Company relies on the guidance provided by ASC Topic 480, *Distinguishing Liabilities from Equity*, to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.

Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet ("temporary equity"). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.

Our Chief Executive Officer/ Chairman holds sufficient shares of the Company's voting preferred stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO/ Chairman can at any time unilaterally vote to increase the number of authorized shares of common stock of the Company, without the need to call a general meeting of common shareholders of the Company.

*Initial Measurement*

The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received.

*Subsequent Measurement – Financial Instruments Classified as Liabilities*

The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other income (expenses).

***Fair Value of Financial Instruments***

ASC Topic 820, *Fair Value Measurements and Disclosures* ("ASC Topic 820") provides a framework for measuring fair value in accordance with generally accepted accounting principles.

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

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:

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

● 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** | **Fair Value Measurement Using** | **Fair Value Measurement Using** |
|  | **Amount at**<br>**Fair Value** | **Level 1** | **Level 2** | **Level 3** |
| **November 30, 2022** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Incentive compensation plan payable- revaluation of equity awards payable in Series G shares | $842000 | $— | $— | $842000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative liability – conversion features pursuant to convertible notes payable | $— | $— | $— | $— |
| **February 28, 2022** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Incentive compensation plan payable- revaluation of equity awards payable in Series G shares | $479500 | $— | $— | $479500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative liability – conversion features pursuant to convertible notes payable | $7587 | $— | $— | $7587 |

---

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.

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.

------

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**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

***Recently Issued Accounting Pronouncements***

*Recently Adopted Accounting Standards* 

 

 In December 2019, the Financial Accounting Standards Board (FASB) issued amended guidance on the accounting and reporting of income taxes. The guidance is intended to simplify the accounting for income taxes by removing exceptions related to certain intraperiod tax allocations and deferred tax liabilities; clarifying guidance primarily related to evaluating the step-up tax basis for goodwill in a business combination; and reflecting enacted changes in tax laws or rates in the annual effective tax rate. The Company adopted the new guidance effective February 1, 2021. There was no impact to the Company's consolidated financial statements upon adoption.

In January 2020, the FASB issued new guidance intended to clarify certain interactions between accounting standards related to equity securities, equity method investments and certain derivatives. The guidance addresses accounting for the transition into and out of the equity method of accounting and measuring certain purchased options and forward contracts to acquire investments. The Company adopted the new guidance effective February 1, 2021. There was no impact to the Company's consolidated financial statements upon adoption.

In August 2020, the FASB issued amended guidance on the accounting for convertible instruments and contracts in an entity's own equity. The guidance removes the separation model for convertible debt instruments and preferred stock, amends requirements for conversion options to be classified in equity as well as amends diluted earnings per share (EPS) calculations for certain convertible debt instruments. The amended guidance is effective for interim and annual periods in 2022. The application of the amendments in the new guidance are to be applied either on a modified retrospective or a retrospective basis. We are currently assessing the effect that the adoption of this standard will have on the Company's consolidated financial statements upon adoption.

*Recently Issued Accounting Standards Not Yet Adopted*

In March 2020, the FASB issued optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting and subsequently issued clarifying amendments. The guidance provides optional expedients and exceptions for accounting for contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The optional guidance is effective upon issuance and can be applied on a prospective basis at any time between January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact of adoption on its consolidated financial statements.

In October 2021, the FASB issued amended guidance that requires acquiring entities to recognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The amended guidance is effective for interim and annual periods in 2023 and is to be applied prospectively. Early adoption is permitted on a retrospective basis to the beginning of the fiscal year of adoption. The adoption of this guidance will not have a material impact on the Company's consolidated financial statements for prior acquisitions; however, the impact in future periods will be dependent upon the contract assets and contract liabilities acquired in future business combinations.

In November 2021, the FASB issued new guidance to increase the transparency of transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The guidance requires annual disclosures of such transactions to include the nature of the transactions and the significant terms and conditions, the accounting treatment and the impact to the company's financial statements. The guidance is effective for annual periods beginning in 2022 and is to be applied on either a prospective or retrospective basis. The Company is currently evaluating the impact of adoption on its consolidated financial statements.

**4. REVENUE FROM CONTRACTS WITH CUSTOMERS**

Revenue is earned primarily from two sources: 1) direct sales of goods or services and 2) short-term rentals. Direct sales of goods or services are accounted for under Topic 606, and short-term rentals are accounted for under Topic 842 (which addresses lease accounting and was adopted on March 1, 2019).

------

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**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

As disclosed in the revenue recognition section of Note 3 – Accounting Polices, the Company adopted Topic 606 in accordance with the effective date on March 1, 2018. Note 3 includes disclosures regarding the Company's method of adoption and the impact on the Company's financial statements. Revenue is recognized on direct sales of goods or services when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.

After adopting Topic 842, also referred to above in Note 3, the Company is accounting for revenue earned from rental activities where an identified asset is transferred to the customer and the customer has the ability to control that asset. The Company recognizes revenue from its device rental activities when persuasive evidence of a contract exists, the performance obligations have been satisfied, the transaction price is fixed or determinable and collection is reasonably assured. Performance obligations associated with device rental transactions are satisfied over the rental period. Rental periods are short-term in nature. Therefore, the Company has elected to apply the practical expedient which eliminates the requirement to disclose information about remaining performance obligations. Payments are due from customers at the completion of the rental, except for customers with negotiated payment terms, generally net 30 days or less, which are invoiced and remain as accounts receivable until collected.

The following table presents revenues from contracts with customers disaggregated by product/service:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months<br> Ended<br> November 30, 2022** | **Three Months<br> Ended<br> November 30, 2021** | **Nine Months<br> Ended<br> November 30, 2022** | **Nine Months<br> Ended<br> November 30, 2021** |
| Device rental activities | $154628 | $165353 | $622647 | $383434 |
| Direct sales of goods and services | 247771 | 208544 | 432393 | 692369 |
|  | $402399 | $373897 | $1055040 | 1075803 |

---

**5. LEASES**

We lease certain warehouses, and office space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, we did not combine lease and non-lease components.

There is no lease renewal. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Below is a summary of our lease assets and liabilities at November 30, 2022 and February 28, 2022.

---

| | | | |
|:---|:---|:---|:---|
| **Leases** | **Classification** | **November 30, 2022** | **February 28, 2022** |
| **Assets** |  |  |  |
| Operating | Operating Lease Assets | $1241152 | $1331605 |
| **Liabilities** |  |  |  |
| Current |  |  |  |
| Operating | Current Operating Lease Liability | $111985 | $254027 |
| Noncurrent |  |  |  |
| Operating | Noncurrent Operating Lease Liabilities | 1115323 | 1057579 |
| Total lease liabilities |  | $1227308 | $1311606 |

---

Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate of 10% which for the leases noted above was based on the information available at commencement date in determining the present value of lease payments. We compare against loans we obtain to acquire physical assets and not loans we obtain for financing. The loans we obtain for financing are generally at significantly higher rates and we believe that physical space or vehicle rental agreements are in line with physical asset financing agreements. CAM charges were not included in operating lease expense and were expensed in general and administrative expenses as incurred.

Rent expense and operating lease cost was $61,005 and $194,653 for the three and nine months ended November 30, 2022, respectively, and $103,115 and $207,201 for the three and nine months ended November 30, 2021, respectively.

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**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**6. REVENUE EARNING DEVICES**

Revenue earning devices consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **November 30, 2022** | **February 28, 2022** |
| Revenue earning devices | $1768818 | $1143724 |
| Less: Accumulated depreciation | (676615) | (434661) |
|  | $1092203 | $709063 |

---

During the three and nine months ended November 30, 2022 the Company made total additions to revenue earning devices of $199,047 and $625,094, respectively, which were transfers from inventory. During the three and nine months ended November 30, 2021, the Company made total additions to revenue earning devices of $310,009 and $592,346, respectively, which were transfers from inventory. During the nine months ended November 30, 2021 the Company sold a revenue earning device having a net book value of $3,255 for revenues of $30,600 and included the $3,255 in cost of goods sold.

Depreciation expense was $54,418 and $241,957 for the three and nine months ended November 30, 2022, respectively, and $61,976 and $138,815 for the three and nine months ended November 30, 2021, respectively.

**7. FIXED ASSETS**

Fixed assets consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **November 30, 2022** | **February 28, 2022** |
| Automobile | $84880 | $84880 |
| Manufacturing equipment | 25625 | 16800 |
| Demo devices | 63979 | 16539 |
| Computer equipment and software | 133959 | 36742 |
| Office equipment | 15312 | 15312 |
| Warehouse equipment | 11415 | 11415 |
| Tooling | 101320 |  |
| Leasehold improvements | 15568 | 5329 |
|  | 452058 | 187017 |
| Less: Accumulated depreciation | (139751) | (49065) |
|  | $312307 | $137952 |

---

During the three months ended November 30, 2022, the Company made additions of $31,365 of which $19,961 were transfers from inventory with remaining additions of $11,404. During the nine months ended November 30, 2022, the Company made additions of $265,041 of which $47,440 were transfers from inventory with remaining additions of $217,601. During the three months and nine months ended November 30, 2021, the Company made additions of $2,372 and $34,534, respectively. During the nine months ended November 30, 2021, the Company sold a vehicle having a net book value of $875 for fair value proceeds of $30,000 and recorded a gain on disposal of fixed assets of $29,125.

Depreciation expense was $38,437 and $90,686 for the three and nine months ended November 30, 2022, respectively, and $5,951 and $14,446 for the three and nine months ended November 30, 2021, respectively.

**8. DEFERRED VARIABLE PAYMENT OBLIGATION**

On February 1, 2019 the Company entered into an agreement with an investor whereby the investor would pay up to $900,000 in exchange for a perpetual 9% rate payment (Payments) on the Company's reported quarterly revenue from operations excluding any gains or losses from financial instruments (Revenues). At February 29, 2020 the investor has advanced the full $900,000.

On May 9, 2019 the Company entered into two similar arrangements with two investors:

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**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

&nbsp;&nbsp;&nbsp;&nbsp;(1) The investor would pay up to $400,000 in exchange for a perpetual 4 % rate Payment on the Company's reported quarterly Revenues. At February 29, 2020, $400,000 has been paid to the Company.

(2) The investor would pay up to $50,000 in exchange for a perpetual 1.11 % rate Payment on the Company's reported quarterly Revenues. At February 29, 2020, $50,000 has been paid to the Company.

These variable payments (Payments) are to be made 30 days after the end of each fiscal quarter. If the Payments would deplete RAD's available cash by more than 30%, the Payments may be deferred for up to 12 months after the quarterly report at an interest rate of 6% per annum on the unpaid amount.

In the event that at least 10% of the assets of the Company are sold by the Company, the investors would be entitled to the fair market value (FMV) of all future Payments associated with the assets sold as determined by an independent valuator to be chosen by the investors. The FMV cannot exceed 30% of the total asset disposition price defined as the total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect a change in control, then the investors must be paid the FMV of all future Payments in one lump payment. The FMV cannot exceed 30% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments.

On November 18, 2019, the Company entered into another similar arrangement with the (February 1, 2019) investor above whereby the investor would advance up to $225,000 in exchange for a perpetual 2.25% rate Payment on the Company's quarterly Revenues (commencing on quarter ending May 31, 2020). At February 29, 2020, the investor has advanced $109,000 and the investor advanced the $116,000 remainder as of May 2020.

On December 30, 2019, the Company entered into another similar arrangement with a new investor whereby the investor would advance up to $100,000 in exchange for a perpetual 1.00% rate Payment on the Company's quarterly Revenues (commencing quarter ended November 30, 2020). At February 29, 2020, the investor has advanced $50,000 with the remainder to be advanced no later than June 30, 2020. If the total investor advances turns out to be less than $100,000, this would not constitute a breach of the agreement, rather the 1.00% rate would be adjusted on a pro-rata basis.

On April 22, 2020, the Company entered into another similar arrangement with the (first May 9, 2019) investor above whereby the investor would advance up to $100,000 in exchange for a perpetual 1.00% rate Payment on the Company's quarterly Revenues. At May 31, 2020, the investor has fully funded this commitment.

On July 1, 2020, the Company entered into a similar agreement with the first investor whereby the investor would pay up to $800,000 in exchange for a perpetual 2.75% rate payment (Payment) on the Company's reported quarterly revenue. These Payments are to be made 90 days after the fiscal quarter with the first payment being due no later than May 31, 2021. If the Payments would deplete RAD's available cash by more than 20%, the payment may be deferred. The investor had agreed to pay $100,000 per month over an 8 month period with the first payment due July 2020 and the final payment no later than February 28, 2021. As at November 30, 2020 the investor had fully funded the $800,000 commitment

On August 27, 2020, the Company and the first investor referred to above consolidated the three separate agreements of February 1, 2019 for $900,000, November 18, 2019 for $225,000 and July 1, 2020 for $800,000 into a new agreement for a total of $1,925,000. This new agreement is for similar terms as the above agreements save for the following: the rate payment is revised to 14.25% payable on revenues commencing the quarter ended November 30, 2020. Upon an event of default that we are unable to cure in the time allotted under the agreements, these Payments may be secured with a priority lien by UCC filing against all of our assets, but is subordinated to equipment financing or leasing agreements on the products the Company leases to its customers.

In summary of all agreements mentioned above if in the event that at least 10% of the assets of the Company are sold by the Company, the investors would be entitled to the fair market value (FMV) of all future Payments associated with the assets sold as determined by an independent valuator to be chosen by the investors. The FMV cannot exceed 43.77% of the total asset disposition price defined as the total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect a change in control, then the investors must be paid the FMV of all future Payments in one lump payment. The FMV cannot exceed 43.77% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments. As of March 1, 2021 as a result of the amendment with the first investor noted below. This aggregate asset disposition % was reduced from 43.77 % to 33.77%

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**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

The Payments will first become payable on June 30, 2019 (unless otherwise indicated) based on the quarterly Revenues for the quarter ended May 31, 2019 and will accrue every quarter thereafter. As of February 28, 2022, the Company has accrued approximately $325,600 in Payments (February 28, 2021 -$91,587).

On March 1, 2021, the first investor referred to above whose aggregate investment is $1,925,000 revised his agreements as follows:

1) The rate payment was reduced from 14.25 % to 9.65 %

2) The asset disposition % (see below) was reduced from 31 % to 21%

In consideration for the above changes, the investor received 40 Series F Convertible Preferred Stock and a warrant to purchase 367 shares of its Series F Convertible Preferred Stock with a five-year term and an exercise price of $1.00. During the three months ended May 31, 2021, the warrant holder exercised warrants to acquire 38 shares of Series F Convertible Preferred Stock. The Company attributed a fair value based on recent transactions for the Series F Preferred stock and warrants of $33,015,214 and recorded a loss on settlement of debt with a corresponding adjustment to paid in capital.

The Company retains total involvement in the generation of cash flows from these revenue streams that form the basis of the payments to be made to the investors under this agreement. Because of this, the Company has determined that the agreements constitute debt agreements. As of November 30, 2022, and February 28, 2022, the long-term balances other than Payments already owed is the cash received of $2,525,000 and $2,525,000, respectively.

For both the three months and nine months ended November 30, 2022 and year ended February 28, 2022, the Company has received $0 related to the deferred payment obligation since there were no new agreements during this period. The balance remains $2,525,000 at both November 30, 2022 and February 28, 2022.

The Payments first become payable on June 30, 2019 (unless otherwise indicated) based on the quarterly Revenues for the quarter ended May 31, 2019 and accrue every quarter thereafter. As of November 30, 2022, the Company has accrued $497,150 in Payments (February 28, 2022 -$325,600). At November 30, 2022, and February 28, 2022 the Company was in default on $265,226 and $90,300 of those Payments. No notices have been sent to the Company.

**9. CONVERTIBLE NOTES PAYABLE**

Convertible notes payable consisted of the following:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <br>**Issued** | <br>**Maturity** | <br>**Interest**<br>**Rate** | <br>**Conversion**<br>**Rate per Share** | **Balance**<br>**November 30,**<br>**2022** | **Balance**<br>**February 28,**<br>**2022** |
| July 18, 2016 | July 18, 2017<sup>\*</sup> | 8% | $0.003<sup>(1)</sup> | $— | $3500 |
| August 9, 2022 | August 9, 2023 | 12% | $0.009<sup>(2)</sup> | 750000 |  |
|  |  |  |  | $750000 | $3500 |
| (Less): current portion of convertible notes payable | (Less): current portion of convertible notes payable | (Less): current portion of convertible notes payable | (Less): current portion of convertible notes payable | (750000) | (3500) |
| (Less): discount on noncurrent convertible notes payable | (Less): discount on noncurrent convertible notes payable | (Less): discount on noncurrent convertible notes payable | (Less): discount on noncurrent convertible notes payable |  |  |
| Noncurrent convertible notes payable, net of discount | Noncurrent convertible notes payable, net of discount | Noncurrent convertible notes payable, net of discount | Noncurrent convertible notes payable, net of discount | $— | $— |
| Current portion of convertible notes payable | Current portion of convertible notes payable | Current portion of convertible notes payable | Current portion of convertible notes payable | $750000 | $3500 |
| (Less): discount on current portion of convertible notes payable | (Less): discount on current portion of convertible notes payable | (Less): discount on current portion of convertible notes payable | (Less): discount on current portion of convertible notes payable | (433932) |  |
| Current portion of convertible notes payable, net of discount | Current portion of convertible notes payable, net of discount | Current portion of convertible notes payable, net of discount | Current portion of convertible notes payable, net of discount | $316068 | $3500 |

---

__________

\* This note was in default as of February 28, 2022. Default interest rate 22%

(1) The conversion price was not subject to adjustment from forward or reverse stock splits. Effective in August 2022 this note (and accrued interest) was no longer convertible.

(2) Subject to adjustment for dilutive issuances

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**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

During both the three and nine months ended November 30, 2022, the Company incurred original issue discounts of $75,000, and relative fair value discounts debt discounts from derivative liabilities of $393,949 and fees of $55,750 related to new convertible notes payable. During both the three and nine months ended November 30, 2021 the Company recognized debt discounts from derivative liabilities of $438,835. During the three and nine months ended November 30, 2022, the Company recognized interest expense related to the amortization of debt discount of $78,149 and $90,767. During the three and nine months ended November 30, 2021, the Company recognized interest expense related to the amortization of debt discount of $694,855 and $775,986, respectively.

The note above is unsecured. As of November 30, 2022 and February 28, 2022, the Company had total accrued interest payable of $51,458 and $28,104, respectively, all of which is classified as current.

During the nine months ended November 30, 2022, the Company also had the following convertible note activity:

● The Company transferred the above July 18, 2016 $3,500 note to loans payable as the note was no longer convertible. This was a result of an SEC action against the debt holder who was also a common stockholder .

● On August 9, 2022 the Company entered into a new convertible note for $750,000 with a one year maturity, interest rate of 12%, with a warrant (Warrant 1) to purchase 47,000,000 common shares with a five year maturity and an exercise price of $0.01, and an additional warrant (Warrant 2) to purchase 47,000,000 common shares with a five year maturity and an exercise price of $0.008 to be cancelled and extinguished if the note balance is $375,000 or less by February 9. 2023. The Company received $619,250 in cash proceeds, recorded an original issue discount of $75,000, recognized $393,949 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the attached warrants, and transaction fees of $55,750. The discount is amortized over the term of the loan. This Note shall have priority over all unsecured indebtedness of the Company. The note has certain default provisions such as failure to pay any principal or interest when due and failure to maintain a minimum market capitalization of $30 million. In the event of these or any other default provisions, the note becomes due and payable at 125% .

During the nine months ended November 30, 2021, the Company had the following convertible note activity:

● The Company amended the January 27, 2021 agreement with the lender whereby the conversion rate was changed from $0.10 to $0.03 as a result of a dilutive issuance; this resulted a derivative discount of $438,835 and a loss on extinguishment of $360,125 .

● Holders of certain convertible notes payable elected
 to convert a total of $825,000 of principal and $71,955 accrued interest, and $1,750 of fees into 31,042,436 shares of common stock; no
 gain or loss was recognized on conversions as these conversions occurred within the terms of the agreement that provided for conversion .

● The conversion rate of the January 19, 2021 note included above was reduced to $0.027 due to the dilutive issuance provision in the January 19, 2021 agreement .

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**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**10. RELATED PARTY TRANSACTIONS**

For the nine months ended November 30, 2022, the Company had no repayments of net advances from its loan payable-related party. For the nine months ended November 30, 2021 the Company repaid net advances of $812,234. At November 30, 2022, the loan payable-related party was $203,276 and $193,556 at February 28, 2022. Included in the balance due to the related party at November 30, 2022 is $126,744 of deferred salary and interest, $108,000 of which bears interest at 12%. At February 28, 2022, included in the balance due to the related party is $110,700 of deferred salary and interest, $90,000 of which bears interest at 12%. The accrued interest included in loan at November 30, 2022 and November 30, 2021 was $12,420 and $540 respectively.

Pursuant to the amended Employment Agreement with its Chief Executive Officer, for the three months and nine months ended November 30, 2022, the Company accrued $138,000 and $362,500 of incentive compensation plan payable with a corresponding recognition of stock based compensation due to the expectation of additional awards being met. This will be payable in Series G Preferred Shares which are redeemable at the Company's option at $1,000 per share. At November 30, 2022 and February 28, 2022 there was $842,000 and $479,500 of incentive compensation payable.

During the three months ended November 30, 2022 and 2021, the Company was charged $794,460 and $647,465, respectively for fees for research and development from a company partially owned by a principal shareholder.

During the nine months ended November 30, 2022 and 2021, the Company was charged $2,735,589 and $1,689,253, respectively for fees for research and development from a company partially owned by a principal shareholder.

**11. OTHER DEBT – VEHICLE LOAN**

In December 2016, RAD entered into a vehicle loan for $47,704 secured by the vehicle. The loan is repayable over 5 years maturing November 9, 2021, and repayable $1,019 per month including interest and principal. In November 2017, RAD entered into another vehicle loan secured by the vehicle for $47,661. The loan is repayable over 5 years, maturing October 24, 2022 and repayable at $923 per month including interest and principal. The principal repayments made were $0 for both the year ended February 28, 2022 and February 28, 2021. Regarding the second vehicle loan, the vehicle was returned at the end of fiscal 2019 and the car was subsequently sold by the lender for proceeds of $21,907 which went to reduce the outstanding balance of the loan. A loss of $3,257 was recorded as well. A balance of $21,578 remains on this vehicle loan at both February 28, 2021 and February 29, 2020. For the first vehicle loan, the vehicle was retired in 2020, the proceeds of the disposal of $18,766 was applied against the balance of the loan with a $5,515 gain on the remaining asset value of $13,251. A balance of $16,944 remains on this vehicle loan at both February 28, 2022 and February 28, 2021. The remaining total balances of the amounts owed on the vehicle loans were $38,522 and $38,522 as of November 30, 2022 and February 28, 2022, respectively, of which all were classified as current.

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**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**12. LOANS PAYABLE**

Loans payable at November 30, 2022 consisted of the following:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <br>**Date** | <br>**Maturity** | <br>**Description** |  |<br>**Principal** | **Annual**<br>**Interest Rate** |
| July 18, 2016 | July 18, 2017 | Promissory note | (35) \* | $3500 | 22% |
| June 11, 2018 | June 11, 2019 | Promissory note | (2) (#) |  | 25% |
| January 31, 2019 | June 30, 2019 | Promissory note | (1) (#) |  | 15% |
| May 9, 2019 | June 30, 2019 | Promissory note | (3) (#) |  | 15% |
| May 31, 2019 | June 30, 2019 | Promissory note | (4) (#) |  | 15% |
| June 26, 2019 | June 26, 2020 | Promissory note | (5) (#) |  | 15% |
| September 24, 2019 | June 24, 2020 | Promissory note | (6) (#) |  | 15% |
| January 30, 2020 | January 30, 2021 | Promissory note | (7) (#) |  | 15% |
| February 27, 2020 | February 27, 2021 | Promissory note | (8) (#) |  | 15% |
| April 16, 2020 | April 16, 2021 | Promissory note | (9) (#) |  | 15% |
| May 12, 2020 | May 12, 2021 | Promissory note | (11) (#) |  | 15% |
| May 22, 2020 | May 22, 2021 | Promissory note | (12) (#) |  | 15% |
| June 2, 2020 | June 2, 2021 | Promissory note | (13) (#) |  | 15% |
| June 9, 2020 | June 9, 2021 | Promissory note | (14) (#) |  | 15% |
| June 12, 2020 | June 12, 2021 | Promissory note | (15) (#) |  | 15% |
| June 16, 2020 | June 16, 2021 | Promissory note | (16) (#) |  | 15% |
| September 15, 2020 | September 15, 2022 | Promissory note | (17) (#) |  | 10% |
| October 6, 2020 | March 6, 2023 | Promissory note | (18) (#) |  | 12% |
| November 12, 2020 | November 12, 2023 | Promissory note | (19) (#) |  | 12% |
| November 23, 2020 | October 23, 2022 | Promissory note | (20) (#) |  | 15.5% |
| November 23, 2020 | November 23, 2023 | Promissory note | (21) (#) |  | 15% |
| December 10, 2020 | December 10, 2023 | Promissory note | (22) (#) |  | 12% |
| December 10, 2020 | December 10, 2023 | Promissory note | (23) | 3921168 | 12% |
| December 10, 2020 | December 10, 2023 | Promissory note | (24) | 3054338 | 12% |
| December 10, 2020 | December 10, 2023 | Promissory note | (25) | 165605 | 12% |
| December 14, 2020 | December 14, 2023 | Promissory note | (26) | 310375 | 12% |
| December 30, 2020 | December 30, 2023 | Promissory note | (27) | 350000 | 12% |
| December 31, 2021 | December 31, 2024 | Promissory note | (28) | 25000 | 12% |
| December 31, 2021 | December 31, 2024 | Promissory note | (29) | 145000 | 12% |
| January 14, 2021 | January 14, 2024 | Promissory note | (30) | 550000 | 12% |
| February 22, 2021 | February 22, 2024 | Promissory note | (31) | 1650000 | 12% |
| March 1, 2021 | March 1, 2024 | Promissory note | (10) | 6000000 | 12% |
| June 8, 2021 | June 8, 2024 | Promissory note | (32) | 2750000 | 12% |
| July 12, 2021 | July 26, 2026 | Promissory note | (33) | 3936360 | 7% |
| September 14, 2021 | September 14, 2024 | Promissory note | (34) | 1650000 | 12% |
| July 28, 2022 | July 28, 2023 | Promissory note | (36) | 170000 | 15% |
| August 30, 2022 | August 30, 2024 | Promissory note | (38) | 3000000 | 15% |
| September 7, 2022 | September 7, 2023 | Promissory note | (37) | 400000 | 15% |
| September 8, 2022 | September 8, 2023 | Promissory note | (39) | 475000 | 15% |
| October 13, 2022 | October 13, 2023 | Promissory note | (40) | 350000 | 15% |
| October 28, 2022 | October 31, 2026 | Promissory note | (41) | 400000 | 15% |
| November 9, 2022 | October 31, 2026 | Promissory note | (41) | 400000 | 15% |
| November 10, 2022 | October 31, 2026 | Promissory note | (41) | 400000 | 15% |
| November 15, 2022 | October 31, 2026 | Promissory note | (41) | 400000 | 15% |
|  |  |  |  | $30506346 |  |
| Less: current portion of loans payable | Less: current portion of loans payable | Less: current portion of loans payable |  | (1398500) |  |
| Less: discount on non-current loans payable | Less: discount on non-current loans payable | Less: discount on non-current loans payable |  | (5378890) |  |
| Non-current loans payable, net of discount | Non-current loans payable, net of discount | Non-current loans payable, net of discount |  | $23728956 |  |
| Current portion of loans payable | Current portion of loans payable | Current portion of loans payable |  | $1398500 |  |
| Less: discount on current portion of loans payable | Less: discount on current portion of loans payable | Less: discount on current portion of loans payable |  | (158194) |  |
| Current portion of loans payable, net of discount | Current portion of loans payable, net of discount | Current portion of loans payable, net of discount |  | $1240306 |  |

---

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

---

| | |
|:---|:---|
| \* | In default. Default interest rate 22% |
| (#) | Loans with a principal balance of $1,661,953 along with associated accrued interest of $342,138 totaling $2,004,091 were paid in March 2022, with a remaining accrued liability of $62,979. |
| (1) | Original $78,432 note may be pre-payable at any time. The note balance includes 33% original issue discount of $25,882 at issuance. The loan and accrued interest were fully paid in March 2022. |
| (2) | Repayable in 12 monthly instalments of $4,562 commencing August 11, 2018 and secured by revenue earning devices having a net book value of at least $48,000. The loan and accrued interest were fully paid in March 2022. |
| (3) | Original $7,850 note may be pre-payable at any time. The note balance includes 33% original issue discount of $2,590 at issuance. The loan and accrued interest were fully paid in March 2022. |
| (4) | Original $86,567 note may be pre-payable at any time. The note balance includes 33% original issue discount of $28,567 at issuance. The loan and accrued interest were fully paid in March 2022. |
| (5) | Original $79,104 note may be pre-payable at any time. The note balance includes 33% original issue discount of $26,104 at issuance. The loan and accrued interest were fully paid in March 2022. |
| (6) | Original $12,000 note may be pre-payable at any time. The note balance includes an original issue discount of $3,000 at issuance. The loan and accrued interest were fully paid in March 2022. |
| (7) | Original $11,000 note may be pre-payable at any time. The note balance includes an original issue discount of $2,450 at issuance. The loan and accrued interest were fully paid in March 2022. |
| (8) | Original $5,000 note may be pre-payable at any time. The note balance includes an original issue discount of $1,200 at issuance. The loan and accrued interest were fully paid in March 2022. |
| (9) | Original $13,000 note may be pre-payable at any time. The note balance includes an original issue discount of $3,850 at issuance. The loan and accrued interest were paid in March 2022. |
| (10) | The unsecured note may be pre-payable at any time. Cash proceeds of $5,400,000 were received. The note balance of $6,000,000 includes an original issue discount of $600,000 and was issued with a warrant to purchase 300,000,000 shares at an exercise price of $0.135 per share with a 3-year term and having a relative fair value of $4,749,005 using Black-Scholes with assumptions described in note 13. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $4,749,005 with a corresponding adjustment to paid in capital for the relative value of the warrant. For both the three and six months ended November 30, 2022, the Company recorded amortization expense of $0 with an unamortized discount of $0 at November 30, 2022. The maturity was extended from March 1, 2022 to March 1, 2024 on February 28, 2022 in exchange for warrants to purchase 150,000,000 shares of common stock at an exercise price of $.0164 and a 3 year term. These warrants have a fair value of $2,850,000 recorded as interest expense with a corresponding adjustment to paid in capital recorded in the year ended February 28, 2022. |
| (11) | Original $43,500 note may be pre-payable at any time. The note balance includes an original issue discount of $8,000 at issuance. The loan and accrued interest were fully paid in March 2022. |
| (12) | Original $85,000 note may be pre-payable at any time. The note balance includes an original issue discount of $15,000 at issuance. The loan and accrued interest were fully paid in March 2022. |
| (13) | Original $62,000 note may be pre-payable at any time. The note balance includes an original issue discount of $12,000 at issuance. The loan and accrued interest were fully paid in March 2022. |
| (14) | Original $31,000 note may be pre-payable at any time. The note balance includes an original issue discount of $6,000 at issuance. The loan and accrued interest were fully paid in March 2022. |

---

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

(15) Original $50,000 note may be pre-payable at any time. The note balance includes an original issue discount of $10,000 at issuance. The loan and accrued interest were fully paid in March 2022.

(16) Original $42,000 note may be pre-payable at any time. The note balance includes an original issue discount of $7,000 at issuance. The loan and accrued interest were fully paid in March 2022.

(17) Original $300,000 note may be pre-payable at any time. The note balance includes an original issue discount of $50,000 . Interest payable monthly, principal due at maturity. Secured by a general security charging all of RAD's present and after-acquired property. The loan and accrued interest were fully paid in March 2022.

(18) Original principal of $150,000 and interest repayable in 28 monthly instalments commencing December 6, 2020, the first 6 months at $2,000 per month, the remaining 22 payments at $8,500 per month. Secured by revenue earning devices. The loan and accrued interest were fully paid in March 2022.

(19) Original $110,000 note may be pre-payable at any time. The note balance includes an original issue discount of $10,000 and was issued with a warrant to purchase 70,000,000 shares at an exercise price of $0.00165 per share, with a 3 -year term and having a relative fair value of $41,176. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $41,176 with a corresponding adjustment to paid in capital. The loan and accrued interest were fully paid in March 2022.

(20) Original principal of $65,000 and interest repayable in 21 monthly instalments of $4,060 commencing February 23, 2021. Secured by revenue earning devices. The loan and accrued interest were fully paid in March 2022.

(21) Original $300,000 note may be pre-payable at any time. The note balance includes an original issue discount of $25,000 and was issued with a warrant to purchase 230,000,000 shares at an exercise price of $0.00165 per share with a 3 -year term and having a relative fair value of $125,814. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $125,814 with a corresponding adjustment to paid in capital for the relative value of the warrant. The loan and accrued interest were fully paid in March 2022.

(22) Original $82,500 note may be pre-payable at any time. The note balance includes an original issue discount of 7,500 and was issued with a warrant to purchase 100,000,000 shares at an exercise price of $0.002 per share with a 3 -year term and having a relative fair value of $54,545. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $54,545 with a corresponding adjustment to paid in capital for the relative value of the warrant. The loan and accrued interest were fully paid in March 2022.

(23) This promissory note was issued as part of a debt settlement whereby $2,683,357 in convertible notes and associated accrued interest of $1,237,811 totaling $3,921,168 was exchanged for this promissory note of $3,921,168 , and a warrant to purchase 450,000,000 shares at an exercise price of $.002 per share and a three-year maturity having a relative fair value of $990,000 . This note is secured by a general security charging all of the Company's present and after-acquired property.

(24) This promissory note was issued as part of a debt settlement whereby $1,460,794 in convertible notes and associated accrued interest of $1,593,544 totaling $3,054,338 was exchanged for this promissory note of $3,054,338 , and a warrant to purchase 250,000,000 shares at an exercise price of $.002 per share and a three-year maturity having a relative fair value of $550,000 . This note is secured by a general security charging all of the Company's present and after-acquired property.

(25) This promissory note was issued as part of a debt settlement whereby $103,180 in convertible notes and associated accrued interest of $62,425 totaling $165,605 was exchanged for this promissory note of $165,605 , and a warrant to purchase 80,000,000 shares at an exercise price of $. 002 per share and a three-year maturity having a fair value of $176,000 .

(26) This promissory note was issued as part of a debt settlement whereby $235,000 in convertible notes and associated accrued interest of $75,375 totaling $310,375 was exchanged for this promissory note of $310,375 , and a warrant to purchase 25,000,000 shares at an exercise price of $. 002 per share and a three-year maturity having a fair value of $182,500 .

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

(27) The note, with an original principal amount of $350,000 , may be pre-payable at any time. The note balance includes an original issue discount of $35,000 and was issued with a warrant to purchase 50,000,000 shares at an exercise price of $0.025 per share with a 3 -year term and having a relative fair value of $271,250. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $271,250 with a corresponding adjustment to paid in capital for the relative fair value of the warrant. For the three and nine months ended November 30, 2022, the Company recorded amortization expense of $22,829 and $53,156 , respectively, with an unamortized discount of $223,697 at November 30, 2022.

(28) This promissory note was issued as part of a debt settlement whereby $9,200 in convertible notes and associated accrued interest of $6,944 totaling $16,144 was exchanged for this promissory note of $25,000 . This note is secured by a general security charging all of the Company's present and after-acquired property.

(29) This promissory note was issued as part of a debt settlement whereby $79,500 in convertible notes and associated accrued interest of $28,925 totaling $108,425 was exchanged for this promissory note of $145,000 . This note is secured by a general security charging all of the Company's present and after-acquired property.

(30) The note, with an original principal amount of $550,000 , may be pre-payable at any time. The note balance includes an original issue discount of $250,000 and was issued with a warrant to purchase 50,000,000 shares at an exercise price of $0.025 per share with a 3 -year term and having a relative fair value of $380,174. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $380,174 with a corresponding adjustment to paid in capital. For the three and nine months ended November 30, 2022, the Company recorded amortization expense of $34,441 and $85,968 , respectively, with an unamortized discount of $281,264 at November 30, 2022.

(31) The note, with an original principal balance of $1,650,000 , may be pre-payable at any time. The note balance includes an original issue discount of $150,000 and was issued with a warrant to purchase 100,000,000 shares at an exercise price of $0.135 per share with a 3 -year term and having a relative fair value of $1,342,857. The discount and warrant are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $1,342,857 with a corresponding adjustment to paid in capital for the relative fair value of the warrant. For the three and nine months ended November 30, 2022, the Company recorded amortization expense of $82,582 and $184,959 , respectively, with an unamortized discount of $1,309,454 at November 30, 2022. The maturity date was extended from February 22, 2022 to February 22, 2024 on February 28, 2022 in exchange for warrants to purchase 50,000,000 at an exercise price of $.0164 and a 3 year term. These warrants have a fair value of $950,000 recorded as interest expense with a corresponding adjustment to paid in capital recorded in the year ended February 28, 2022.

(32) The note, with an original principal balance of $2,750,000 , may be pre-payable at any time. The note balance includes an original issue discount of $50,000 and was issued with a warrant to purchase 170,000,000 shares at an exercise price of $0.064 per share with a 3 -year term and having a relative fair value of $2,035,033. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $2,035,033 with a corresponding adjustment to paid in capital. For the three and nine months ended November 30, 2022, the Company recorded amortization expense of $120,297 and $319,016 , respectively, with an unamortized discount of $930,729 at November 30, 2022. The maturity date was extended from June 8, 2022 to June 8, 2024 on February 28, 2022 in exchange for warrants to purchase 85,000,000 at an exercise price of $.0164 and a 3 year term. These warrants have a fair value of $1,615,000 recorded as interest expense with a corresponding adjustment to paid in capital recorded in the year ended February 28, 2022.

(33) This loan, with an original principal balance of $4,000,160 , was in exchange for 184 Series F preferred shares from a former director. The interest and principal are payable at maturity. The loan is unsecured. For the quarter and nine months ended November 30, 2022 there was repayments $27,800 and $63,800 , respectively on the note.

(34) The note, with an original principal balance of $1,650,000 , may be pre-payable at any time. The note balance includes an original issue discount of $150,000 and was issued with a warrant to purchase 250,000,000 shares at an exercise price of $0.037 per share with a 3 -year term and having a relative fair value of $1,284,783, The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $1,284,783 with a corresponding adjustment to paid in capital. For the three and nine months ended November 30, 2022, the Company recorded amortization expense of $59,646 and $122,486 respectively. with an unamortized discount of $1,279,947 at November 30, 2022.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

(35) This note was transferred from convertible notes payable because in August 2022 it was no longer convertible due to restrictions placed on the lender.

(36) Original $170,000 note may be pre-payable at any time. The note balance includes an original issue discount of $20,000 . Principal and interest due at maturity. Secured by a general security charging all of RAD's present and after-acquired property. For the three and nine months ended November 30, 2022, the Company recorded amortization expense of $4,589 and $6,048 with an unamortized discount of $13,952 at November 30, 2022.

(37) Original $400,000 note may be pre-payable at any time. The note balance includes an original issue discount of $50,000 . Principal and interest due at maturity. Secured by a general security charging all of RAD's present and after-acquired property. For both the three and nine months ended November 30, 2022, the Company recorded amortization expense of $10,691 with an unamortized discount of $39,309 at November 30, 2022.

(38) A warrant holder exchanged 955,000,000 warrants for a promissory note of $3,000,000, bearing interest at 15% with a two year maturity. The fair value of the warrants was determined to be $2,960,500 with a corresponding adjustment to paid-in capital and a debt discount of $39,500 which will be amortized over the term of the loan. Principal and interest due at maturity. For both the three and nine months ended November 30, 2022, the Company recorded amortization expense of $4,248 , with an unamortized discount of $35,252 at November 30, 2022

(39) Original $475,000 note may be pre-payable at any time.
 The note balance includes an original issue discount of $75,000 . Principal and interest due at maturity. Secured by a general
 security charging all of RAD's present and after-acquired property. For both the three and nine months ended November 30, 2022,
 the Company recorded amortization expense of $16,473 with an unamortized discount of $58,527 at November 30, 2022.

(40) Original $350,000 note may be pre-payable at any time. The note balance includes an original issue
 discount of $50,000 . Principal and interest due at maturity. Secured by a general security charging all of the Company's s
 present and after-acquired property. For both the three and nine months ended November 30, 2022, the Company recorded amortization
 expense of $3,593 with an unamortized discount of $46,407 at November 30, 2022.

(41) On October 28, 2022 the Company entered into an loan
 facility with a lender for up to $4,000,000 including an original issue discount of $500,000. In exchange the Company will issue one series
 F Preferred Share, extended 329 series F warrants with a March 1, 2026 maturity to a new October 31, 2033 maturity, and issue up to 10
 tranches with each trance of $400,000, with cash proceeds of $350,000 an original issue discount of $50,000, October 31, 2026 maturity,
 and 61 Series F warrants with a October 31, 2033 maturity. Secured by a general security charging all of the Company's present and
 after-acquired property. At November 30, 2022 the Company has issued 4 tranches as follows: October 28, 2022, $400,000 loan, original issue discount
 of $50,000 , 61 Series F Preferred Share warrants and 1 Series F Preferred Share having a relative fair value of $299,399. For both the
 three and nine months ended November 30, 2022, the Company recorded amortization expense of $0 with an unamortized discount of $349,399 at November 30, 2022. November 9, 2022, $400,000 loan, original issue discount
 of $50,000 , 61 Series F Preferred Share warrants e having a relative fair value of $299,750. For both the three and nine months ended
 November 30, 2022, the Company recorded amortization expense of $0 with an unamortized discount of $349,750 at November 30, 2022. November 10, 2022, $400,000 loan, original issue discount
 of $50,000 , 61 Series F Preferred Share warrants e having a relative fair value of $302,020. For both the three and nine months ended
 November 30, 2022, the Company recorded amortization expense of $0 with an unamortized discount of $352,020 at November 30, 2022. November 15, 2022, $400,000 loan, original issue discount
 of $50,000 , 61 Series F Preferred Share warrants e having a relative fair value of $299,959. For both the three and nine months ended
 November 30, 2022, the Company recorded amortization expense of $0 with an unamortized discount of $349,959 at November 30, 2022.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

**13. DERIVATIVE LIABILITIES**

As of November 30, 2022, and February 28, 2022, the Company revalued the fair value of all of the Company's derivative liabilities associated with the conversion features on the convertible notes payable and determined that it had a total derivative liability of $0, and $7,587, respectively. For the three and nine months ended November 30, 2022, the Company recorded a change in fair value of derivative liabilities of $0 and $3,595, respectively and a gain on settlement of debt (with a corresponding adjustment to derivative liabilities) of $0 and $3,992, respectively.

**14. STOCKHOLDERS' EQUITY (DEFICIT)**

**Series F Preferred Shares**

Each holder of Series E Convertible Preferred Shares may, at any time and from time to time convert all, but not less than all, of their shares 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.

On August 23, 2021, the Company filed amended Series F preferred shares such that Series F preferred shares are not convertible into common stock by a holder until (A) August 23, 2023 or (B) the date on which such a conversion may be required for the purpose of (i) uplisting the Company to a new stock exchange, or (ii) selling more than 50% of the Company's assets.

***Summary or Preferred Stock Activity***

There was 1 Series F Preferred Share issued along with debt to a lender.

***Summary of Preferred Stock Warrant Activity***

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of Series C Preferred Warrants** | **Weighted Average Exercise Price** | **Weighted Average Remaining Years** |
| Outstanding at March 1, 2022 | 329 | $1.00 | 11.50 |
| Issued | 244 | $1.00 | 10.00 |
| Exercised |  |  |  |
| Forfeited and cancelled |  |  |  |
| Outstanding at November 30, 2022 | 573 | $1.00 | 10.00 |

---

***Summary of Common Stock Activity***

The Company increased authorized common shares from 5,000,000,000 to 6,000,000,000 on July 8, 2022.

During the nine months ended, November 30, 2022, the Company issued 522,734,247 common shares with gross proceeds of $4,939,161 and net proceeds of $4,657,979 after issuance costs of $282,182, issued 9,688,179 shares through the cashless exercise of 61,378,210 warrants, cancelled 17,116,894 shares as a result of an SEC enforcement action against a lender and issued 10,000,000 shares for $118,500 as payment for services.

The table below represent the common shares issued, issuable and outstanding at November 30, 2022 and February 28, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
| Common shares | **November 30, 2022** | **November 30, 2022** | **February 28, 2022** | **February 28, 2022** |
| Issued |  | 5248415892 |  | 4733110360 |
| Issuable | | 12,100,000 | | 2,100,000 |
| Issued, issuable and outstanding | | 5,260,515,892 | | 4,735,210,360 |

---

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

***Summary of Common Stock Warrant Activity***

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of Warrants** | **Weighted Average Exercise Price** | **Weighted Average Remaining Years** |
| Outstanding at March 1, 2022 | 1216845661 | $0.07 | 2.38 |
| Issued | 94000000 | $0.009 | 4.94 |
| Adjusted<sup>(1)</sup> | 66750000 | $0.011 | 1.41 |
| Exercised | (61378210) | $0.011 | (1.41) |
| Forfeited, extinguished and cancelled | (955000000) | $0.008 | (1.61) |
| Outstanding at November 30, 2022 | 361217451 | $0.03 | 2.52 |

---

(1) Required dilution adjustment per warrant agreement

For the three months and nine months ended November 30, 2022 and November 30, 2021, the Company recorded a total of $0 and $0, respectively, to stock-based compensation for options and warrants with a corresponding adjustment to additional paid-in capital.

On August 30, 2022 a warrant holder exchanged 955,000,000 warrants for a promissory note of $3,000,000, bearing interest at 15% with a two year maturity. The fair value of the warrants was determined to be 2,960,500 with a corresponding adjustment to paid-in capital and a debt discount of $39,500 which will be amortized over the term of the loan.

***Summary of Common Stock Option Activity***

On August 11, 2022 the Company amended its 2021 Incentive Stock Option Plan increasing the maximum number of shares applicable to the Plan from 5,000,000 to 100,000,000.

**15. COMMITMENTS AND CONTINGENCIES**

***Litigation***

Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company's condensed consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

The related legal costs are expensed as incurred.

***Operating Lease***

On December 18, 2020, the Company entered into a 15-month lease agreement for office space at 18009 Sky Park Circle Suite E, Irvine CA, 92614, commencing on December 18, 2020 through to March 31, 2022 with a minimum base rent of $3,859 per month. The Company paid a security deposit of $3,859.

On March 10, 2021, the Company entered into a 10 year lease agreement for q manufacturing facility at 10800 Galaxie Avenue, Ferndale, Michigan, 48220, commencing on May 1, 2021 through to April 30, 2031 with a minimum base rent of $15,880 per month. The base rent increase by 3% per annum commencing May 1, 2024. The Company paid a security deposit of $15,880.

On September 30, 2021, the Company entered into a 3-year lease agreement for a vehicle commencing September 30, 2021 through to April 30, 2031 with a minimum base rent of $1,538 per month. The Company paid a down payment of $18,462.

On January 28, 2022, the Company entered into a 2-year lease agreement for office space at 1516 E Edinger, Santa Ana, California, 92705, commencing on February 1, 2022 through to January 31, 2024 with a minimum base rent of $1,500 per month. The Company paid a security deposit of $1,500.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

The Company's leases are accounted for as operating leases. Rent expense and operating lease cost are recorded over the lease terms on a straight-line basis. Rent expense and operating lease cost was $61,005 and $194,653for the three and nine months ended November 30, 2022, respectively, and $103,115 and $207,201 for the three and nine months ended November 30, 2021, respectively.

---

| | |
|:---|:---|
| **Maturity of Lease Liabilities** | **Operating<br> Leases** |
| November 30, 2023 | $250169 |
| November 30, 2024 | 229016 |
| November 30, 2025 | 207558 |
| November 30, 2026 | 207558 |
| November 30, 2027 | 207558 |
| November 30, 2028 and after | 709156 |
| Total lease payments | 1811015 |
| Less: Interest | (583707) |
| Present value of lease liabilities | $1227308 |

---

**16. EARNINGS (LOSS) PER SHARE**

The net income (loss) per common share amounts were determined as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **November 30,** | **November 30,** | **November 30,** | **November 30,** |
|  | **2022** | **2021** | **2022** | **2021** |
| Numerator: |  |  |  |  |
| Net income (loss) available to common shareholders | $(4085660) | $(7094442) | $(12930211) | $(47831733) |
| Effect of common stock equivalents |  |  |  |  |
| Add: interest expense on convertible debt | 22438 | 38345 | 27863 | 63299 |
| Add: amortization of debt discount | 78149 | 694855 | 90767 | 775986 |
| Add (less) loss (gain) on settlement of debt |  |  | (3992) |  |
| Add (less) loss (gain) on change of derivative liabilities |  |  | (3595) | 372502 |
| Net income (loss) adjusted for common stock equivalents | (3985073) | (6361242) | (12819168) | (46619946) |
| Denominator: |  |  |  |  |
| Weighted average shares – basic | 5140405652 | 4183357145 | 4969080716 | 4162382723 |
| Net income (loss) per share – basic | $(0.00) | $(0.00) | $(0.00) | $(0.01) |
| Dilutive effect of common stock equivalents: |  |  |  |  |
| Convertible Debt |  |  |  |  |
| Preferred shares |  |  |  |  |
| Warrants |  |  |  |  |
| Denominator: |  |  |  |  |
| Weighted average shares – diluted | 5140405652 | 4183357145 | 4969080716 | 4162382723 |
| Net income (loss) per share – diluted | $(0.00) | $(0.00) | $(0.00) | $(0.01) |

---

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

The anti-dilutive shares of common stock equivalents for the three and six months ended November 30, 2022 and 2021 were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** | **For the Nine Months Ended** | **For the Nine Months Ended** |
|  | **November 30,** | **November 30,** | **November 30,** | **November 30,** |
|  | **2022** | **2021** | **2022** | **2021** |
| Convertible notes and accrued interest | 836425685 | 3432063 | 836425685 | 3432063 |
| Convertible Series F Preferred Shares<sup>\*</sup> |  |  |  |  |
| Stock options and warrants | 401217451 | 968523386 | 401217451 | 968523386 |
| Total | 1237643136 | 971955449 | 1237643136 | 971955449 |

---

\* On August 23, 2021, the Company filed amended Series F preferred shares such that Series F preferred shares are not convertible into common stock by a holder until (A) August 23, 2023 or (B) the date on which such a conversion may be required for the purpose of (i) uplisting the Company to a new stock exchange, or (ii) selling more than 50% of the Company's assets. Had these Series F preferred shares been convertible at November 30, 2022 and 2021 the dilutive effects would be as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Three and Nine Months Ended** | **For the Three and Nine Months Ended** |
|  | **November 30** | **November 30** |
|  | **2022** | **2021** |
| Convertible Series F Preferred Shares | 18148779827 | 15294230742 |

---

**17. SUBSEQUENT EVENTS**

Subsequent to November 30, 2022 through to January 9, 2023:

— The Company issued 117,488,819 common shares pursuant to a share purchase agreement for gross proceeds of $713,811, issuance costs of $30,174 and net proceeds of $683,638.

— On December 23, 2022 the Company entered into a Simple Agreement for Future Equity (SAFE) contract to invest $50,000 to acquire shares of a company's capital stock at a discount.

------

[*Index to Financial Statements*](#index_to_fs)

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and

Stockholders 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, 2022 and 2021, and the related consolidated statements of operations, stockholders' deficit, and cash flows for each of the years in the two years ended February 28, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two years ended February 28, 2022, 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 explained in Note 1, which includes management's plans in regards to this uncertainty, the Company had a net loss of approximately $62 million, an accumulated deficit of approximately $94 million and stockholders' deficit of approximately $21 million as of and for the year ended February 28, 2022, and therefore there is substantial doubt about the ability of the Company to continue as a going concern. 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 audits. 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 audits 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 audits, 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 audits 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 audits 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 audits provide a reasonable basis for our opinion.

**Critical Audit Matters**

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the Audit Committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by F-2 communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

*Critical Audit Matter Description – Debt Settlements, Amendments and Extensions*

In the year ended February 28, 2022, the Company entered into a number of agreements to settle outstanding notes payable and convertible notes payable and to amend debt provisions associated with the sale of future revenues through the issuance of shares of its common stock and different classes of preferred stock. In addition, at year end, the Company entered into three separate agreements to extend the maturity dates of several of its high dollar value notes payable that were then near maturity.

------

[*Index to Financial Statements*](#index_to_fs)

*Critical Audit Matter Determination*

Debt settlements, amendments to the debt provisions associated with the sales of future revenues and the extension of maturity dates can encompass significantly complex accounting issues. It takes a high degree of training to understand and recognize the accounting implications of the various terms of the settlement agreements in regards to notes payable and convertible notes, amendments to debt provisions associated with the sales of future revenues and the agreements to extend the maturity dates of notes payables.

*Critical Audit Matter Audit Procedures*

Our audit procedures related to evaluating the Company's accounting for the settlements of convertible note payables and notes payable, the amendments to the debt associated with the sale of future revenues and for the maturity extensions of the notes payable were as follows:

---

| |
|:---|
| We read the various instruments, identified the features that impact the accounting for the settlements and extensions, including the grant of warrants as inducements to enter into the extension agreements. |
| We reviewed the assumptions, methods and models used to calculate the allocation of fair value of the instruments at time of settlement, amendment or extension. |
| We performed independent calculations on a test basis of specific instruments to evaluate the model used in calculating the settlement loss associated with the note payable and convertible note payable settlements, the amendments to debt provisions associated with the sales of future revenues and the interest expense associated with maturity extensions. |

---

 

*Critical Audit Matter Relevant Financial Statement Disclosures*

— We read the Company's disclosures related to the settlements, amendments and maturity extensions to ensure the changes were properly accounted for and fully disclosed in the financial statements.

*Critical Audit Matter Description – Going Concern*

As discussed in both Note 1 to the consolidated financial statements and above, the Company has incurred significant losses since inception, and has an accumulated deficit of approximately $94 million and a stockholders' deficit of $21 million as of February 28, 2022.

*Critical Audit Matter Determination*

The following items were considered in determining that a going concern was a critical audit matter.

---

| |
|:---|
| Significant losses and significant cash used in operations in the year end February 28, 2022 |
| We also took into consideration the Company's need to raise additional debt and equity financing over the next twelve months and the amounts raised as of the time of filing of its financial statements |

---

 

*Critical Audit Matter Audit Procedures*

We reviewed the Company's negative cash flows from operations

We noted the limited working capital resources

We noted subsequent events and proceeds received from the ongoing private placement offering as of the date of our opinion

We compared subsequent funding from the private placements of notes completed as of the filing of these financial statements to the estimated cash flows required to continue operations for the year subsequent to the date of our report.

 

*Critical Audit Matter Relevant Financial Statement Disclosures*

We reviewed the completeness of the Company's Going Concern footnote and the details of the Company's plans to continue operations for the next twelve months and management's disclosure as noted above that there is substantial doubt about the Company's ability to continue as a going concern.

------

[*Index to Financial Statements*](#index_to_fs)

/s/ L J Soldinger Associates, LLC

Deer Park, Illinois

May 27, 2022

We have served as the Company's auditor since 2019.

PCAOB Auditor ID: 00318

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **February 28, 2022** | **February 28, 2021** |
| **ASSETS** |  |  |
| **Current assets:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $4648146 | $1044418 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 429469 | 98544 |
| &nbsp;&nbsp;&nbsp;Device parts inventory, net | 1530657 | 64071 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and deposits | 442164 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 7050436 | 1207033 |
| &nbsp;&nbsp;&nbsp;Operating lease asset | 1331605 | 47753 |
| &nbsp;&nbsp;&nbsp;Revenue earning devices, net of accumulated depreciation of $434,661 and $229,459, respectively | 709063 | 273714 |
| &nbsp;&nbsp;&nbsp;Fixed assets, net of accumulated depreciation of $49,065 and $67,113, respectively | 137952 | 34994 |
| &nbsp;&nbsp;&nbsp;Trademarks | 28723 |  |
| &nbsp;&nbsp;&nbsp;Security deposit | 21239 | 3859 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $9279018 | $1567353 |
| **LIABILITIES AND STOCKHOLDERS' DEFICIT** |  |  |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | $968853 | $1373838 |
| &nbsp;&nbsp;&nbsp;Advances payable | 1594 | 1594 |
| &nbsp;&nbsp;&nbsp;Balance owed WeSecure |  | 122000 |
| &nbsp;&nbsp;&nbsp;Customer deposits | 10000 | 10500 |
| &nbsp;&nbsp;&nbsp;Current operating lease liability | 254027 | 43894 |
| &nbsp;&nbsp;&nbsp;Current portion of deferred variable payment obligation | 325600 | 91587 |
| &nbsp;&nbsp;&nbsp;Current portion of convertible notes payable, net of discount of $0 and $697,276 respectively | 3500 | 196224 |
| &nbsp;&nbsp;&nbsp;Loan payable - related party | 193556 | 904806 |
| &nbsp;&nbsp;&nbsp;Incentive compensation plan payable | 479500 |  |
| &nbsp;&nbsp;&nbsp;Current portion of loans payable, net of discount of $14,745 and $0 | 1004708 | 944614 |
| &nbsp;&nbsp;&nbsp;Vehicle loan - current portion | 38522 | 38522 |
| &nbsp;&nbsp;&nbsp;Current portion of accrued interest payable | 1260271 | 238665 |
| &nbsp;&nbsp;&nbsp;Derivative liability | 7587 | 444466 |
| &nbsp;&nbsp;&nbsp;Total current liabilities | 4547718 | 4410710 |
| &nbsp;&nbsp;&nbsp;Non-current operating lease liability | 1057579 | 3859 |
| &nbsp;&nbsp;&nbsp;Loans payable, net of discount of $4,905,076 and $0, respectively | 20309069 | 8867998 |
| &nbsp;&nbsp;&nbsp;Deferred variable payment obligation | 2525000 | 2525000 |
| &nbsp;&nbsp;&nbsp;Accrued interest payable | 1816009 | 303473 |
| &nbsp;&nbsp;&nbsp;Vehicle loan |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 30255375 | 16111040 |
| Commitments and Contingencies |  |  |
| **Stockholders' deficit:** |  |  |
| &nbsp;&nbsp;&nbsp;Preferred Stock, undesignated; 15,545,650 shares authorized; no shares issued and outstanding at February 28, 2022 and February 28, 2021, respectively |  |  |
| &nbsp;&nbsp;&nbsp;Series G Convertible Preferred Stock. $0.001 par value; 100,000 shares authorized, no shares issued and outstanding at February 28, 2022 and February 28, 2021, respectively |  |  |
| &nbsp;&nbsp;&nbsp;Series E Preferred Stock, $0.001 par value; 4,350,000 shares authorized; 3,350,000 and 4,350,000 shares issued and outstanding, respectively | 3350 | 4350 |
| &nbsp;&nbsp;&nbsp;Series F Convertible Preferred Stock, $1.00 par value; 4,350 shares authorized; 2,532 and 2,799 shares issued and outstanding, respectively | 2532 | 2799 |
| &nbsp;&nbsp;&nbsp;Common Stock, $0.00001 par value; 5,000,000,000 shares authorized 4,735,210,360 and 3,229,426,884 shares issued and outstanding, respectively | 47353 | 32294 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 73015576 | 16764554 |
| &nbsp;&nbsp;&nbsp;Preferred stock to be issued | 99086 | 174070 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (94144254) | (31521754) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' deficit | (20976357) | (14543687) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' deficit | $9279018 | $1567353 |

---

***The accompanying notes are an integral part of these consolidated financial statements.***

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

---

| | | |
|:---|:---|:---|
|  | **Year Ended<br> February 28, 2022** | **Year Ended<br> February 28, 2021** |
| **Revenues** | $1447109 | $360888 |
| **Cost of Goods Sold** | 472926 | 98167 |
| **Gross Profit** | 974183 | 262721 |
| **Operating expenses:** |  |  |
| &nbsp;&nbsp;&nbsp;Research and development | 2961394 | 378236 |
| &nbsp;&nbsp;&nbsp;General and administrative | 10905129 | 2748494 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 232886 | 120846 |
| &nbsp;&nbsp;&nbsp;Operating lease cost and rent | 275785 | 9461 |
| &nbsp;&nbsp;&nbsp;(Gain) loss on disposal of fixed assets | (29125) | 553 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 14346069 | 3257590 |
| Loss from operations | (13371886) | (2994869) |
| **Other income (expense), net:** |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of derivative liabilities | 372214 | 764025 |
| &nbsp;&nbsp;&nbsp;Interest expense | (16129499) | (3379833) |
| &nbsp;&nbsp;&nbsp;Loss on settlement of debt | (33068313) | (288234) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income (expense), net | (48825598) | (2904042) |
| **Net Loss** | $(62197484) | $(5898911) |
| Net loss per share - basic | $(0.02) | $(0.01) |
| Net loss per share - diluted | $(0.02) | $(0.01) |
| Weighted average common share outstanding - basic | 4029658082 | 1015115270 |
| Weighted average common share outstanding - diluted | 4029658082 | 1015115270 |

---

***The accompanying notes are an integral part of these consolidated financial statements.***

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT**

**FOR THE YEARS ENDED FEBRUARY 28, 2022 AND FEBRUARY 28, 2021**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Series E** | **Series E** | **Series F** | **Series F** | **Series G** | **Series G** | | | | | |
|  | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Additional**<br>**Paid-In**<br>**Capital** |<br>**Accumulated**<br>**Deficit** | **Total**<br>**Shareholders'**<br>**Deficit** |
| **Balance at February 29, 2020** | 4350000 | $4350 | 3450 | $177520 | **—** | $**—** | 418415 | $4 | $4334564 | $(25622843) | $(21106405) |
| &nbsp;&nbsp;&nbsp;Contributed capital |  |  |  |  |  |  |  |  | (8809) |  | (8809) |
| &nbsp;&nbsp;&nbsp;Adjustment to derivative liability |  |  |  |  |  |  |  |  | 2837687 |  | 2837687 |
| &nbsp;&nbsp;&nbsp;Common stock issued for debt conversion |  |  |  |  |  |  | 2329798068 | 23298 | 3545388 |  | 3568686 |
| &nbsp;&nbsp;&nbsp;Exercise of warrants |  |  |  |  |  |  | 894210392 | 8942 | (8942) |  |  |
| &nbsp;&nbsp;&nbsp;Common shares and warrants issued with promissory notes |  |  |  |  |  |  | 5000000 | 50 | 2652265 |  | 2652315 |
| &nbsp;&nbsp;&nbsp;Class F shares issued for services |  |  | 110 | 110 |  |  |  |  | 361974 |  | 362084 |
| &nbsp;&nbsp;&nbsp;Cancellation of Series F Preferred Shares |  |  | (816) | (816) |  |  |  |  | 816 |  |  |
| &nbsp;&nbsp;&nbsp;Issuance of Series F shares as part of debt settlement |  |  | 55 | 55 |  |  |  |  | 1151111 |  | 1151166 |
| &nbsp;&nbsp;&nbsp;Warrants issued as part of debt settlement |  |  |  |  |  |  |  |  | 1898500 |  | 1898500 |
| &nbsp;&nbsp;&nbsp;Rounding shares |  |  |  |  |  |  | 9 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  |  |  |  |  | (5898911) | (5898911) |
| **Balance at February 28, 2021** | 4350000 | $4350 | 2799 | $176869 | **—** | $**—** | 3229426884 | $32294 | $16764554 | $(31521754) | $(14543687) |

---

------

[*Index to Financial Statements*](#index_to_fs)

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Series E** | **Series E** | **Series F** | **Series F** | **Series G** | **Series G** | | | | | |
|  | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Shares** | **Amount** | **Additional**<br>**Paid-In**<br>**Capital** |<br>**Accumulated**<br>**Deficit** | **Total**<br>**Shareholders'**<br>**Deficit** |
| **Balance at February 28, 2021** | 4350000 | 4350 | 2799 | 176869 |  | $— | 3229426884 | $32294 | $16764554 | $(31521754) | $(14543687) |
| &nbsp;&nbsp;&nbsp;Cancellation of Series E Shares | (1000000) | (1000) |  |  |  |  |  |  | 1000 |  |  |
| &nbsp;&nbsp;&nbsp;Series F Preferred Shares issued with amendment agreement |  |  | 40 | 40 |  |  |  |  | 3244700 |  | 3244740 |
| &nbsp;&nbsp;&nbsp;Series F Preferred Shares Warrants issued with amendment agreement |  |  |  |  |  |  |  |  | 29770474 |  | 29770474 |
| &nbsp;&nbsp;&nbsp;Series F Preferred Shares cancelled in exchange for promissory notes |  |  | (83) | (83) |  |  |  |  | (6732752) |  | (6732835) |
| &nbsp;&nbsp;&nbsp;Series F preferred shares issued on exercise of warrants |  |  | 38 | 38 |  |  |  |  | (38) |  |  |
| &nbsp;&nbsp;&nbsp;Series F Preferred Shares converted to common shares |  |  | (78) | (78) |  |  | 316345998 | 3164 | (3086) |  |  |
| &nbsp;&nbsp;&nbsp;Redemption of 19 Issuable Series F shares |  |  |  | (74984) |  |  |  |  |  | (425016) | (500000) |
| &nbsp;&nbsp;&nbsp;Exchange of Series F Preferred Shares for debt |  |  | (184) | (184) |  |  |  |  | (3999976) |  | (4000160) |
| &nbsp;&nbsp;&nbsp;Issuance of Series G preferred as equity awards per employment agreement |  |  |  |  | 1500 | 1500000 |  |  |  |  | 1500000 |
| &nbsp;&nbsp;&nbsp;Redemption of Series G shares as compensation payment |  |  |  |  | (1500) | (1500000) |  |  |  |  | (1500000) |
| &nbsp;&nbsp;&nbsp;Adjustment to derivative liability |  |  |  |  |  |  |  |  | 422272 |  | 422272 |
| &nbsp;&nbsp;&nbsp;Common stock issued for debt conversion |  |  |  |  |  |  | 31042436 | 310 | 898395 |  | 898705 |
| &nbsp;&nbsp;&nbsp;Exercise of warrants |  |  |  |  |  |  | 300251561 | 3003 | (3003) |  |  |
| &nbsp;&nbsp;&nbsp;Exchange of debt for common shares |  |  |  |  |  |  | 116104232 | 1161 | 6454235 |  | 6455396 |
| &nbsp;&nbsp;&nbsp;Stock based compensation on issuable shares |  |  |  |  |  |  | 2100000 | 21 | 109179 |  | 109200 |
| &nbsp;&nbsp;&nbsp;Issuance of shares, net of $253,811 issuance costs |  |  |  |  |  |  | 645168473 | 6452 | 12515480 |  | 12521932 |
| &nbsp;&nbsp;&nbsp;Cashless exercise of 100,000,000 warrants |  |  |  |  |  |  | 94770776 | 948 | (948) |  |  |
| &nbsp;&nbsp;&nbsp;Relative fair value of warrants issued with debt |  |  |  |  |  |  |  |  | 3319816 |  | 3319816 |
| &nbsp;&nbsp;&nbsp;Warrants issued as part of debt |  |  |  |  |  |  |  |  | 4749006 |  | 4749006 |
| &nbsp;&nbsp;&nbsp;Warrants as issuance cost |  |  |  |  |  |  |  |  | 21918 |  | 21918 |
| &nbsp;&nbsp;&nbsp;Warrants as consideration for debt extensions |  |  |  |  |  |  |  |  | 5415000 |  | 5415000 |
| &nbsp;&nbsp;&nbsp;Stock based compensation |  |  |  |  |  |  |  |  | 69350 |  | 69350 |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  |  |  |  |  | (62197484) | (62197484) |
| **Balance at February 28, 2022** | 3350000 | $3350 | 2532 | $101618 |  | $— | 4735210360 | $47353 | $73015576 | $(94144254) | $(20976357) |

---

***The accompanying notes are an integral part of these consolidated financial statements.***

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **Year Ended<br> February 28, 2022** | **Year Ended<br> February 28, 2021** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |
| Net loss | $(62197484) | $(5898911) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 232886 | 120846 |
| &nbsp;&nbsp;&nbsp;Inventory provision | 65000 |  |
| &nbsp;&nbsp;&nbsp;(Gain) loss on disposal of fixed assets | (29125) | 553 |
| &nbsp;&nbsp;&nbsp;Bad debts expense | 9022 | 24868 |
| &nbsp;&nbsp;&nbsp;Revenue earning device sold and expensed in cost of sales | 3410 |  |
| &nbsp;&nbsp;&nbsp;Reduction of right of use asset | 110148 |  |
| &nbsp;&nbsp;&nbsp;Accretion of lease liability | 122930 |  |
| &nbsp;&nbsp;&nbsp;Stock based compensation | 2158050 | 362084 |
| &nbsp;&nbsp;&nbsp;Interest expense related to the issuance of warrants for debt extensions | 5415000 |  |
| &nbsp;&nbsp;&nbsp;Interest expense related to penalties from debt defaults |  | 939705 |
| &nbsp;&nbsp;&nbsp;Change in fair value of derivative liabilities | (372214) | (764025) |
| &nbsp;&nbsp;&nbsp;Amortization of debt discounts | 7597242 | 201567 |
| &nbsp;&nbsp;&nbsp;(Gain) loss on settlement of debt | 33068313 | 288234 |
| &nbsp;&nbsp;&nbsp;Increase (decrease) in related party accrued payroll and interest | 264331 | 294744 |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (339947) | (73295) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | (442164) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deposit on right of use asset | (19999) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Device parts inventory | (2191571) | (177196) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | (596615) | 89229 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expense, related party | (167187) | (7247) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer deposits | (500) | 500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liability payments | (233078) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Balance owed WeSecure | (122000) | (40500) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of deferred variable payment obligations for Payments | 234013 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest payable | 2606097 | 1565519 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (14825442) | (3073325) |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of fixed assets | (115493) | (37764) |
| &nbsp;&nbsp;&nbsp;Acquisition of trademarks | (26327) |  |
| &nbsp;&nbsp;&nbsp;Cash paid for security deposit | (17380) | (3859) |
| &nbsp;&nbsp;&nbsp;Proceeds on disposal of fixed assets | 30000 | 1000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (129200) | (40623) |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |
| &nbsp;&nbsp;&nbsp;Share proceeds net of issuance costs | 12521932 |  |
| &nbsp;&nbsp;&nbsp;Proceeds from convertible notes payable |  | 692650 |
| &nbsp;&nbsp;&nbsp;Repayment of convertible debt | (65000) | (250000) |
| &nbsp;&nbsp;&nbsp;Proceeds from deferred variable payment obligation |  | 966000 |
| &nbsp;&nbsp;&nbsp;Proceeds from loans payable | 9426146 | 3603623 |
| &nbsp;&nbsp;&nbsp;Repayment of loans payable | (516314) | (173881) |
| &nbsp;&nbsp;&nbsp;Series G preferred shares redeemed as payment on incentive plan payable | (1500000) |  |
| &nbsp;&nbsp;&nbsp;Dividend upon redemption of cancelled issuable Series F shares | (500000) |  |
| &nbsp;&nbsp;&nbsp;Cash acquired on consolidation of RAD G |  | (284) |
| &nbsp;&nbsp;&nbsp;Net borrowings(repayments) on loan payable - related party | (808394) | (693049) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 18558370 | 4145059 |
| Net change in cash | 3603728 | 1031111 |
| Cash, beginning of period | 1044418 | 13307 |
| Cash, end of period | $4648146 | $1044418 |
| Supplemental disclosure of cash and non-cash transactions: |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for interest | $225003 | $321553 |
| &nbsp;&nbsp;&nbsp;Cash paid for income taxes | $— | $— |
| Noncash investing and financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Right of use asset for lease liability | $1374002 | $56396 |
| &nbsp;&nbsp;&nbsp;Transfer from device parts inventory to fixed assets | $659985 | $— |
| &nbsp;&nbsp;&nbsp;Net assets on consolidation of RAD G | $— | $106256 |
| &nbsp;&nbsp;&nbsp;Conversion of convertible notes and interest to shares of common stock | $898705 | $3568686 |
| &nbsp;&nbsp;&nbsp;Release of derivative liability on conversion of convertible notes payable | $422272 | $2837687 |
| &nbsp;&nbsp;&nbsp;Debt discount from derivative liabilities | $— | $143133 |
| &nbsp;&nbsp;&nbsp;Derivative debt discount on revaluation of loan amendment | $438835 | $— |
| &nbsp;&nbsp;&nbsp;Settlement and exchange of convertible notes payable | $— | $7091576 |
| &nbsp;&nbsp;&nbsp;Exchange of notes payable for Series F preferred shares | $6732835 | $— |
| &nbsp;&nbsp;&nbsp;Discount applied to face value of loans | $6162945 | $521700 |
| &nbsp;&nbsp;&nbsp;Warrants issued as part of debt issuance | $8068822 | $— |
| &nbsp;&nbsp;&nbsp;Exercise of warrants | $3951 | $8942 |
| &nbsp;&nbsp;&nbsp;Series F preferred shares issued for debt | $4000160 | $— |
| &nbsp;&nbsp;&nbsp;Cancellation of Series E preferred shares | $1000 | $— |
| &nbsp;&nbsp;&nbsp;Issuance of Series G preferred shares as payment on incentive plan payable | $1500000 | $— |
| &nbsp;&nbsp;&nbsp;Series F preferred shares converted to common shares | $3086 | $— |
| &nbsp;&nbsp;&nbsp;Series F preferred shares issued on exercise of warrants | $38 | $— |
| &nbsp;&nbsp;&nbsp;Opening balance sheet RAD G | $— | $8809 |

---

***The accompanying notes are an integral part of these consolidated financial statements.***

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**1. GENERAL INFORMATION AND GOING CONCERN**

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 ("OMVS").

Robotic Assistance Devices, LLC ("RAD"), was incorporated in the State of Nevada on July 26, 2016 as a LLC. 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 of 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.

**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.

For the year ended February 28, 2021, the Company had negative cash flow from operating activities of $14,825,442. As of February 28, 2022 the Company has an accumulated deficit of $94,144,254 and working capital of $2,502,718. 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 all its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.

Management has plans to address the Company's financial situation as follows:

The company began raising money through it's S-3 this year and made improvements in paying off debt, investing in inventory and at February 28, 2022 had $4.6 million of cash on hard. Management is committed to raise either non-dilutive funds or minimally dilutive funds. There is no assurance that these funds will be able to be raised nor can we provide assurance that these possible raises may not have dilutive effects. The Company through to February 28, 2022 has raised approximately $12.5 million net of issuance costs through the sale of its common shares and approximately $9.4 million in proceeds from debt issuances.

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**2. ACCOUNTING POLICIES**

***Basis of Presentation and Consolidation***

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and in conformity with the instructions on Form 10-K of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission ("SEC"). The audited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Robotic Assistance Devices, Inc., Robotic Assistance Devices Group , Inc, Robotic Assistance Devices Mobile , Inc. , On the Move Experience, LLC and OMV Transports, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.

***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 equity instruments used in debt settlements, amendments and extensions.

***Reclassifications***

Certain amounts in the Company's consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods.

***Cash***

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market instruments. The Company places its cash and cash equivalents with high-quality, U.S. financial institutions and, to date has not experienced losses on any of its balances.

***Accounts Receivable***

Accounts receivable are comprised of balances due from customers, net of estimated allowances for credit losses. In determining collectability, historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. There was an allowance of $33,890 and $24,868 provided as of February 28, 2022 and February 28, 2021, respectively. For the year ended February 28, 2022 , three customers account for 63% of total accounts receivable (2021- 68%).

***Device Parts Inventory***

Device parts inventory is stated at the lower of cost or net realizable value using the weighted average cost method. The Company records a valuation reserve for obsolete and slow-moving inventory, relying principally on specific identification of such inventory. The Company uses these device parts in the assembly of revenue earning devices (and demo devices) as well as research and development. Depending on use, the Company will transfer the parts to the corresponding asset or expense if used in research and development. A charge to income is taken when factors that would result in a need for an increase in the valuation, such as excess or obsolete inventory, are noted. At February 28, 2022 and at February 28, 2021 there was a valuation reserve of $65,000 and $0, respectively.

***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.

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

***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 |
| Warehouse equipment | 5 years |
| Demo Devices | 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 28, 2022 and February 28, 2021, the Company had no deferred development costs.

***Contingencies***

Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company's consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

***Sales of Future Revenues***

The Company has entered into transactions, as more fully described in footnote 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.

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

***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.. For the year ended February 28, 2022 , two customers accounted for 43% of total revenue (2021- 49%).

***Income Taxes***

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Act") was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company's gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company's net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company's financial results, including disclosures, for the Company's fiscal year ending February 28, 2022, but the Company does not expect the Tax Act to have a material impact on the Company's consolidated financial statements.

***Leases***

Lease agreements are evaluated to determine if they are sales/finance leases meeting any of the following criteria at inception: (a) transfer of ownership of the underlying asset; (b) purchase option that is reasonably certain of being exercised; (c) the lease term is greater than a major part of the remaining estimated economic life of the underlying asset; or (d) if the present value of the sum of lease payments and any residual value guaranteed by the lessee that has not already been included in lease payments in accordance with ASC 842-10-30-5(f) equals or exceeds substantially all of the fair value of the underlying asset.

If at its inception, a lease meets any of the four lease criteria above, the lease is classified by the Company as a sales/finance; and if none of the four criteria are met, the lease is classified by the Company as an operating lease.

Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term, whereby an equal amount of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in the later years. The difference between rent expense recognized and actual rental payments is recorded as deferred rent and included in liabilities.

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

***Distinguishing Liabilities from Equity***

The Company relies on the guidance provided by ASC Topic 480, *Distinguishing Liabilities from Equity*, to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.

Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet ("temporary equity"). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.

Our CEO and Chairman holds sufficient shares of the Company's voting stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO and Chairman can at any time unilaterally vote to increase the number of authorized shares of common stock of the Company without the need to call a general meeting of common shareholders of the Company.

*Initial Measurement*

The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received.

*Subsequent Measurement – Financial Instruments Classified as Liabilities*

The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other income (expenses).

***Fair Value of Financial Instruments***

ASC Topic 820, *Fair Value Measurements and Disclosures* ("ASC Topic 820") provides a framework for measuring fair value in accordance with generally accepted accounting principles.

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

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.

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

*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** | **Fair Value Measurement Using** | **Fair Value Measurement Using** |
|  |<br>**Amount at<br> Fair Value** | **Level 1** | **Level 2** | **Level 3** |
| **February 28, 2022** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Incentive compensation plan payable- revaluation of equity awards payable in Series G shares | $479500 | $— | $— | $479500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative liability – conversion features pursuant to convertible notes payable | $7587 | $— | $— | $7587 |
| **February 28, 2021** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Liabilities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Incentive compensation plan payable- revaluation of equity awards payable in Series G shares | $— | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative liability – conversion features pursuant to convertible notes payable | $444466 | $— | $— | $444466 |

---

See Note 12 for specific inputs used in determining fair value for derivative liability.

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.

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 Issued Accounting Pronouncements***

*Recently Adopted Accounting Standards* 

 

In December 2019, the Financial Accounting Standards Board (FASB) issued amended guidance on the accounting and reporting of income taxes. The guidance is intended to simplify the accounting for income taxes by removing exceptions related to certain intraperiod tax allocations and deferred tax liabilities; clarifying guidance primarily related to evaluating the step-up tax basis for goodwill in a business combination; and reflecting enacted changes in tax laws or rates in the annual effective tax rate. The Company adopted the new guidance effective February 1, 2021. There was no impact to the Company's consolidated financial statements upon adoption.

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

In January 2020, the FASB issued new guidance intended to clarify certain interactions between accounting standards related to equity securities, equity method investments and certain derivatives. The guidance addresses accounting for the transition into and out of the equity method of accounting and measuring certain purchased options and forward contracts to acquire investments. The Company adopted the new guidance effective February 1, 2021. There was no impact to the Company's consolidated financial statements upon adoption.

In August 2020, the FASB issued amended guidance on the accounting for convertible instruments and contracts in an entity's own equity. The guidance removes the separation model for convertible debt instruments and preferred stock, amends requirements for conversion options to be classified in equity as well as amends diluted earnings per share (EPS) calculations for certain convertible debt instruments. The amended guidance is effective for interim and annual periods in 2022. The application of the amendments in the new guidance are to be applied either on a modified retrospective or a retrospective basis. We are currently assessing the effect that the adoption of this standard will have on the Company's consolidated financial statements upon adoption.

*Recently Issued Accounting Standards Not Yet Adopted* 

 

In March 2020, the FASB issued optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting and subsequently issued clarifying amendments. The guidance provides optional expedients and exceptions for accounting for contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The optional guidance is effective upon issuance and can be applied on a prospective basis at any time between January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact of adoption on its consolidated financial statements.

In October 2021, the FASB issued amended guidance that requires acquiring entities to recognize and measure contract assets and liabilities in a business combination in accordance with existing revenue recognition guidance. The amended guidance is effective for interim and annual periods in 2023 and is to be applied prospectively. Early adoption is permitted on a retrospective basis to the beginning of the fiscal year of adoption. The adoption of this guidance will not have a material impact on the Company's consolidated financial statements for prior acquisitions; however, the impact in future periods will be dependent upon the contract assets and contract liabilities acquired in future business combinations.

In November 2021, the FASB issued new guidance to increase the transparency of transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The guidance requires annual disclosures of such transactions to include the nature of the transactions and the significant terms and conditions, the accounting treatment and the impact to the company's financial statements. The guidance is effective for annual periods beginning in 2022 and is to be applied on either a prospective or retrospective basis. The Company is currently evaluating the impact of adoption on its consolidated financial statements.

**3. REVENUE FROM CONTRACTS WITH CUSTOMERS**

Revenue is earned primarily from two sources: 1) direct sales of goods or services and 2) short-term rentals. Direct sales of goods or services are accounted for under Topic 606, and short-term rentals are accounted for under Topic 842 which was adopted. On March 1, 2019.

As disclosed in the revenue recognition section of Note 2 – Accounting Polices, the Company adopted Topic 606 in accordance with the effective date on March 1, 2018. Note 2 includes disclosures regarding the Company's method of adoption and the impact on the Company's financial statements. Revenue is recognized on direct sales of goods or services when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.

Upon adoption of Topic 842, also referred to above in Note 2, the Company accounts for revenue earned from rental activities where an identified asset is transferred to the customer and the customer has the ability to control that asset for periods greater than one year. To date none of the lease agreements entered into have been for periods longer than one year or greater, and the Company has availed itself of the practical expedient to exclude such leases from ASC 842 accounting and instead has accounted for these leases under ASC 606.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

The following table presents revenues from contracts with customers disaggregated by product/service:

---

| | | |
|:---|:---|:---|
|  | **Year Ended<br> February 28, 2022** | **Year Ended<br> February 28, 2021** |
| Device rental activities | $592401 | $304294 |
| Direct sales of goods and services | 854708 | 56594 |
| Revenues | $1447109 | $360888 |

---

**<u>NOTE 4 – LEASES</u>**

We lease certain warehouses, and office space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, we did not combine lease and non-lease components.

There is no lease renewal. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Below is a summary of our lease assets and liabilities at February 28, 2022 and February 28, 2021.

---

| | | | |
|:---|:---|:---|:---|
| **Leases** | **Classification** | **February 28, 2022** | **February 28, 2021** |
| **Assets** |  |  |  |
| Operating | Operating Lease Assets | $1331605 | $47753 |
| **Liabilities** |  |  |  |
| Current |  |  |  |
| Operating | Current Operating Lease Liability | $254027 | $43894 |
| Noncurrent |  |  |  |
| Operating | Noncurrent Operating Lease Liabilities | 1057579 | 3859 |
| Total lease liabilities |  | $1311606 | $47753 |

---

Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate of 10% which for the leases noted above was based on the information available at commencement date in determining the present value of lease payments. We compare against loans we obtain to acquire physical assets and not loans we obtain for financing. The loans we obtain for financing are generally at significantly higher rates and we believe that physical space or vehicle rental agreements are in line with physical asset financing agreements. CAM charges were not included in operating lease expense and were expensed in general and administrative expenses as incurred.

Operating lease cost and rent was $275,785 and $9,461 for both the twelve months ended February 28, 2022 and February 28, 2021, respectively.

**5. REVENUE EARNING ROBOTS**

Revenue earning robots consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **February 28, 2022** | **February 28, 2021** |
| Revenue earning devices | $1143724 | $500173 |
| Less: Accumulated depreciation | (434661) | (226459) |
|  | $709063 | $273714 |

---

During the year ended February 28, 2022, the Company made total additions to revenue earning devices of $647,116 including $647,116 in inventory transfers During the year ended February 28, 2021, the Company made total additions to revenue earning devices of $137,914 which were transfers from inventory. During the year ended February 28, 2022, the company disposed of a revenue earning device having a net book value of $3,255 for revenues of $30,600 and included the $3,255 in cost of goods sold.

Depreciation expense for these devices was $208,510 and $103,371 for the years ended February 28, 2022 and February 28, 2021, respectively.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**6. FIXED ASSETS**

Fixed assets consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **February 28, 2022** | **February 28, 2021** |
| Automobile | $101680 | $70896 |
| Demo devices | 16539 | 3670 |
| Computer equipment | 36742 | 23399 |
| Office equipment | 15312 | 4142 |
| Warehouse equipment | 11415 |  |
| Leasehold improvements | 5329 |  |
|  | 187017 | 102107 |
| Less: Accumulated depreciation | (49065) | (67113) |
|  | $137952 | $34994 |

---

During the year ended February 28, 2021, the Company made additions to fixed assets of $115,493, additions through inventory transfers of $12,868 and the Company sold a vehicle having a net book value of $875 for fair value proceeds of $30,000 and recorded a gain on disposal of fixed assets of $29,125.

During the year ended February 28, 2021, the Company made additions to fixed assets of $37,764 and the Company disposed of office equipment having a net book value of $1,553 for proceeds of $1,000 and recorded a loss on disposal of $553.

Depreciation expense was $24,376 and $17,475 for the years ended February 28, 2022 and February 28, 2021, respectively.

**7. DEFERRED VARIABLE PAYMENT OBLIGATION**

On February 1, 2019 the Company entered into an agreement with an investor whereby the investor would pay up to $900,000 in exchange for a perpetual 9% rate payment (Payments) on the Company's reported quarterly revenue from operations excluding any gains or losses from financial instruments (Revenues). At February 29, 2020 the investor has advanced the full $900,000.

On May 9, 2019 the Company entered into two similar arrangements with two investors:

&nbsp;&nbsp;&nbsp;&nbsp;(1) The investor would pay up to $400,000 in exchange for a perpetual 4 % rate Payment on the Company's reported quarterly Revenues. At February 29, 2020, $400,000 has been paid to the Company.

(2) The investor would pay up to $50,000 in exchange for a perpetual 1.11% rate Payment on the Company's reported quarterly Revenues. At February 29, 2020, $50,000 has been paid to the Company.

These variable payments (Payments) are to be made 30 days after the end of each fiscal quarter. If the Payments would deplete RAD's available cash by more than 30%, the Payments may be deferred for up to 12 months after the quarterly report at an interest rate of 6% per annum on the unpaid amount.

In the event that at least 10% of the assets of the Company are sold by the Company, the investors would be entitled to the fair market value (FMV) of all future Payments associated with the assets sold as determined by an independent valuator to be chosen by the investors. The FMV cannot exceed 30% of the total asset disposition price defined as the total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect a change in control, then the investors must be paid the FMV of all future Payments in one lump payment. The FMV cannot exceed 30% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments.

On November 18, 2019 the Company entered into another similar arrangement with the (February 1, 2019) investor above whereby the investor would advance up to $225,000 in exchange for a perpetual 2.25% rate Payment on the Company's quarterly Revenues (commencing on quarter ending May 31, 2020). At February 29, 2020 the investor has advanced $109,000 and the investor advanced the $116,000 remainder as of May 2020.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

On December 30, 2019 the Company entered into another similar arrangement with a new investor whereby the investor would advance up to $100,000 in exchange for a perpetual 1.00% rate Payment on the Company's quarterly Revenues (commencing quarter ended November 30, 2020). At February 29, 2020 the investor has advanced $50,000 with the remainder to be advanced no later than June 30, 2020. If the total investor advances turns out to be less than $100,000, this would not constitute a breach of the agreement, rather the 1.00% rate would be adjusted on a pro-rata basis.

On April 22, 2020 the Company entered into another similar arrangement with the (first May 9, 2019) investor above whereby the investor would advance up to $100,000 in exchange for a perpetual 1.00% rate Payment on the Company's quarterly Revenues. At May 31, 2020 the investor has fully funded this commitment.

On July 1, 2020 the Company entered into a similar agreement with the first investor whereby the investor would pay up to $800,000 in exchange for a perpetual 2.75% rate payment (Payment) on the Company's reported quarterly revenue. These Payments are to be made 90 days after the fiscal quarter with the first payment being due no later than May 31, 2021. If the Payments would deplete RAD's available cash by more than 20%, the payment may be deferred. The investor had agreed to pay $100,000 per month over an 8 month period with the first payment due July 2020 and the final payment no later than February 28, 2021. As at August 31, 2020 the investor had fully funded the $800,000 commitment

On August 27, 2020 the Company and the first investor referred to above consolidated the three separate agreements of February 1, 2019 for $900,000, November 18, 2019 for $225,000 and July 1, 2020 for $800,000 into a new agreement for a total of $1,925,000. This new agreement is for similar terms as the above agreements save for the following: the rate payment is revised to 14.25% payable on revenues commencing the quarter ended August 31, 2020 and the Payments are secured by the assets of the Company. This interest may be secured by UCC filing but is subordinated to equipment financing on the products the Company leases to its customers.

In summary of all agreements mentioned above if in the event that at least 10% of the assets of the Company are sold by the Company, the investors would be entitled to the fair market value (FMV) of all future Payments associated with the assets sold as determined by an independent valuator to be chosen by the investors. The FMV cannot exceed 43.77% of the total asset disposition price defined as the total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect a change in control, then the investors must be paid the FMV of all future Payments in one lump payment. The FMV cannot exceed 43.77% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments. As of March 1, 2021 as a result of the amendment with the first investor noted below. This aggregate asset disposition % was reduced from 43.77 % to 33.77%

The Payments will first become payable on June 30, 2019 (unless otherwise indicated) based on the quarterly Revenues for the quarter ended May 31, 2019 and will accrue every quarter thereafter. As of February 28, 2022, the Company has accrued approximately $325,600 in Payments (February 28, 2021 -$91,587).

On March 1, 2021 the first investor referred to above whose aggregate investment is $1,925,000 revised his agreements as follows:

1) The rate payment was reduced from 14.25 % to 9.65 %

2) The asset disposition % (see below) was reduced from 31 % to 21%

In consideration for the above changes, the investor received 40 Series F Convertible Preferred Stock and a warrant to purchase 367 shares of its Series F Convertible Preferred Stock with a five-year term and an exercise price of $1.00. During the three months ended May 31, 2021 the warrant holder exercised warrants to acquire 38 shares of Series F Convertible Preferred Stock. The company attributed a fair value based on recent transactions for the Series F Preferred stock and warrants of $33,015,214 and recorded a loss on settlement of debt with a corresponding adjustment to paid in capital.

The Company retains total involvement in the generation of cash flows from these revenue streams that form the basis of the payments to be made to the investors under this agreement. Because of this, the Company has determined that the agreements constitute debt agreements. As of February 28, 2022, and February 28, 2021, the long-term balances other than Payments already owed is the cash received of $2,525,000 and $2,525,000, respectively.

For the year ended February 28, 2022, the Company has received $0 related to the deferred payment obligation as the balance remains $2,525,000 at February 28, 2022. For the year ended February 28, 2021, $966,000 has been paid to the Company bringing the balance to $2,525,000 at February 28, 2021.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**8. CONVERTIBLE NOTES PAYABLE**

Convertible notes payable consisted of the following:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <br>**Issued** | <br>**Maturity** | <br>**Interest**<br>**Rate** | <br>**Conversion**<br>**Rate per Share** | **Balance**<br>**February 28,**<br>**2022** | **Balance**<br>**February 28,**<br>**2021** |
| July 18, 2016 | July 18, 2017<sup>\*</sup> | 10% | $0.003<sup>(2)</sup> | 3500 | 3500 |
| December 31, 2016 | December 31, 2020 | 8% | 35% discount<sup>(1)</sup> |  | 65000 |
| January 19, 2021 | January 19, 2022 | 12% | $0.04 |  | 275000 |
| January 27, 2021 | January 27, 2022 | 10% | $0.10<sup>(3)</sup> |  | 550000 |
|  |  |  |  | 3500 | 893500 |
| Less: current portion of convertible notes payable | Less: current portion of convertible notes payable | Less: current portion of convertible notes payable | Less: current portion of convertible notes payable | (3500) | (893500) |
| Less: discount on noncurrent convertible notes payable | Less: discount on noncurrent convertible notes payable | Less: discount on noncurrent convertible notes payable | Less: discount on noncurrent convertible notes payable |  |  |
| Noncurrent convertible notes payable, net of discount | Noncurrent convertible notes payable, net of discount | Noncurrent convertible notes payable, net of discount | Noncurrent convertible notes payable, net of discount | $— | $— |
| Current portion of convertible notes payable | Current portion of convertible notes payable | Current portion of convertible notes payable | Current portion of convertible notes payable | $3500 | $893500 |
| Less: discount on current portion of convertible notes payable | Less: discount on current portion of convertible notes payable | Less: discount on current portion of convertible notes payable | Less: discount on current portion of convertible notes payable |  | (697276) |
| Current portion of convertible notes payable, net of discount | Current portion of convertible notes payable, net of discount | Current portion of convertible notes payable, net of discount | Current portion of convertible notes payable, net of discount | $3500 | $196224 |

---

__________

\* The indicated note was in default as of February 28, 2022. Default interest rate 22%

(1) The notes are convertible at a discount (as indicated) to the average market price and are accounted for and evaluated under ASC 480 as discussed in Note 3.

(2) The conversion price is not subject to adjustment from forward or reverse stock splits.

(3) The per share conversion price into which Principal Amount and interest (including any Default Interest) under this Note shall be convertible into shares of Common Stock hereunder (the "Conversion Price") shall be equal to $0.10 per share (the "Fixed Conversion Price"); *provided, however,* that if, the lowest traded price on the date six (6) months from the issue date hereof is below the Fixed Conversion Price, and no default exists, the conversion shall be $0.05 (the "Alternative Fixed Conversion Price") *provided, further*, that upon any Event of Default (as defined herein) after the Issue Date, the Conversion Price shall equal the lower of (i) $0.03 (the "Default Fixed Conversion Price"); or (ii) seventy percent (70%) multiplied by the lowest closing price of the Common Stock during the fifteen (15) consecutive Trading Day period immediately preceding the date of the respective event of default (the "Default Conversion Price"); the Company amended this agreement with the lender whereby the conversion rate was changed from $0.10 to $0.03 as a result of a dilutive issuance. This resulted an additional derivative discount of $438,835 and a loss on extinguishment of $360,125.

During the years ended February 28, 2022 and February 28, 2021, the Company incurred original issue discounts of $0 and $77,500, respectively, and debt discounts from derivative liabilities of $438,835 and $143,133, respectively, related to both new and re-valued convertible notes payable. These amounts are included in discounts on convertible notes payable and are being amortized to interest expense over the life of the convertible notes payable. During the years ended February 28, 2022 and February 28, 2021, the Company recognized interest expense related to the amortization of debt discount of $$775,986 and $190,197, respectively. The Company recorded penalty interest of $0 during the year ended February 28, 2022 and $939,705 during the year ended February 28, 2021 that is payable upon maturity if not already converted or settled prior to maturity.

All the notes above are unsecured. As of February 28, 2022, the Company had total accrued interest payable of $28,104, all of which is classified as current. As of February 28, 2021, the Company had total accrued interest payable of $49,764, all of which is classified as current. See description below for details of the convertible notes issued during the years ended February 28, 2022 and February 28, 2021.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

***Convertible notes issued***

The Company determined that the embedded conversion features which result in a variable conversion rate, in the convertibles notes described below should be accounted for as derivative liabilities as a result of their variable conversion rates.

During the year ended February 28, 2022, the Company had the following convertible note activity:

● the Company amended the January 27, 2021 agreement with the lender whereby the conversion rate was changed from $0.10 to $0.03 as a result of a dilutive issuance. This resulted a derivative discount of $438,835 and a loss on extinguishment of $360,125.

● holders of certain convertible notes payable elected to convert a total of $825,000 of principal and $71,955 accrued interest, and $1,750 of fees into 31,042,436 shares of common stock. No gain or loss was recognized on conversions as these conversions occurred within the terms of the agreement that provided for conversion.

● the conversion rate of the January 19, 2021 note included above was reduced to $0.027 due to the dilutive issuance provision in the January 19, 2021 agreement.

During the year ended February 28, 2021, the Company had the following convertible note activity:

● The Company entered into a convertible note agreement with a lender on January 27, 2021 with a principal amount of $550,000 received cash proceeds of $463,500 with an original issue discount of $50,000 and issuance fees of $36,500. The note has a one year maturity and bears interest at 10%. The note was issued with a warrant to purchase 8,250,000 shares at an exercise price of $0.10 per share with a 3 year term and having a fair value of $1,149,225 using Black-Scholes with assumptions described in note 13 and 5,000,000 common shares having a fair value of 697,000. After allocating these charges to debt and equity according to their respective values , the initial debt balance net of a debt discount was $70,377 and the adjustment to paid in capital was $310,961.The discounts are being amortized over the term of the loan. In addition for the year ended February 28, 2021, the Company recorded a derivative discount on the embedded conversion feature of $82,162, , amortization expense of $12,401 with an unamortized discount of $467,222 at February 28, 2021 .

● The Company entered into a convertible note agreement with a lender on January 19, 2021 with a principal amount of $275,000 received cash proceeds of $229,150 with an original issue discount of $27,500, and issuance fees of $18,350. The note has a one year maturity and bears interest at 12%. The note was issued with a warrant to purchase 11,000,000 shares at an exercise price of $0.045per share with a 3 year term and having a fair value of $594,000 using Black-Scholes with assumptions described in note 13. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values , the initial debt balance net of a debt discount was $40,191 and the adjustment to paid in capital of $127,988. Also, for the year ended February 28, 2021, the Company recorded a derivative discount on the embedded conversion feature of $60,971, amortization expense of $8,255 with an unamortized discount of $226,554 at February 28, 2021.

● The Company recorded $939,705 in penalties as increases on various notes, with a corresponding charge to interest.

● Holders of certain convertible notes payable elected to convert a total of $2,420,559 of principal and $1,148,127 accrued interest, into 2,329,798,068 shares of common stock. No gain or loss was recognized on conversions as these conversions occurred within the terms of the agreement that provided for conversion.

● The Company entered into various debt settlement during the year where they settled principal of $556,664 and interest of $260,514 totaling $817,718 for cash payments totaling $770,813.

● The Company entered into various debt settlement during the year where they exchanged principal of $4,671,030 and interest of $3,042,613 totaling $7,713,643 in exchange for new promissory notes totaling $7,713 ,643 bearing interest at 12% and with three year maturities. In addition as part of the debt exchange the Company issued 805,000,000 warrants with a 3 year term and an exercise price of $0.002 having a fair value using black-scholes of $1,898,500 and 55 Series F Preferred Stock having a fair value of $1,151,166.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**9. RELATED PARTY TRANSACTIONS**

For the years ended February 28, 2022 and February 28, 2021, the Company made net repayments of $803,394 and $693,049, respectively, to its loan payable-related party. At February 28, 2022, the loan payable-related party was $193,556 and $904,806 at February 29, 2020. As of February 28, 2022, included in the balance due to the related party is $108,000 of deferred salary and interest, $90,000 of which bears interest at 12%. At February 28, 2021 there was $883,710, with $642,000 bearing interest at 12%. The accrued interest included at February 28, 2022 was $2,700 (2021- $118,098).

Pursuant to the amended Employment Agreement with its Chief Executive Officer, the Company issued 1,500 shares of Series G Preferred Shares which are redeemable at the Company's option at $1,000 per share and recorded $1,500,000 of stock based compensation. During the year ended February 28, 2022, the Company redeemed these shares for $1,500,000 and accrued $479,500 as incentive compensation plan payable with a corresponding recognition of stock based compensation due to the expectation of additional awards being met.

During the years ended February 28, 2022 and February 28, 2021, the Company was charged $2,258,819 and $121,973, respectively in consulting fees for research and development to a company partially owned by a principal shareholder.

**10. OTHER DEBT – VEHICLE LOANS**

In December 2016, RAD entered into a vehicle loan for $47,704 secured by the vehicle. The loan is repayable over 5 years maturing November 9, 2021, and repayable $1,019 per month including interest and principal. In November 2017, RAD entered into another vehicle loan secured by the vehicle for $47,661. The loan is repayable over 5 years, maturing October 24, 2022 and repayable at $923 per month including interest and principal. The principal repayments made were $0 for both the year ended February 28, 2022 and February 28, 2021. Regarding the second vehicle loan, the vehicle was returned at the end of fiscal 2019 and the car was subsequently sold by the lender for proceeds of $21,907 which went to reduce the outstanding balance of the loan. A loss of $3,257 was recorded as well. A balance of $21,578 remains on this vehicle loan at both February 28, 2021 and February 29, 2020. For the first vehicle loan, the vehicle was retired in 2020, the proceeds of the disposal of $18,766 was applied against the balance of the loan with a $5,515 gain on the remaining asset value of $13,251. A balance of $16,944 remains on this vehicle loan at both February 28, 2022 and February 28, 2021. The remaining total balances of the amounts owed on the vehicle loans were $38,522 and $38,522 as of February 28, 2022 and February 28, 2021, respectively, of which all were classified as current.

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**11. LOANS PAYABLE**

Loans payable at February 28, 2022 consisted of the following:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <br>**Date** | <br>**Maturity** | <br>**Description** |  |<br>**Principal** | **Annual**<br>**Interest Rate** |
| June 11, 2018 | June 11, 2019 | Promissory note | (3) | $48000 | 25% \* |
| August 10, 2018 | September 1, 2018 | Promissory note | (4) |  | 25% |
| August 16, 2018 | August 16, 2019 | Promissory note | (1) |  | 25% |
| August 16, 2018 | October 1, 2018 | Promissory note | (4) |  | 25% |
| January 31, 2019 | June 30, 2019 | Promissory note | (2) | 78432 | 15% \* |
| January 24, 2019 | January 24, 2021 | Loan | (8) |  | 11% |
| May 9, 2019 | June 30, 2019 | Promissory note | (5) | 7850 | 15% \* |
| May 31, 2019 | June 30, 2019 | Promissory note | (6) | 86566 | 15% \* |
| June 26, 2019 | June 26, 2020 | Promissory note | (9) | 79104 | 15% \* |
| September 24, 2019 | June 24, 2020 | Promissory note | (13) | 12000 | 15% \* |
| January 30, 2020 | January 30, 2021 | Promissory note | (15) | 11000 | 15% \* |
| February 27, 2020 | February 27, 2021 | Promissory note | (16) | 5000 | 15% \* |
| April 16, 2020 | April 16, 2021 | Promissory note | (17) | 13000 | 15% \* |
| May 12, 2020 | May 12, 2021 | Promissory note | (18) | 43500 | 15% \* |
| May 22, 2020 | May 22, 2021 | Promissory note | (19) | 85000 | 15% \* |
| June 2, 2020 | June 2, 2021 | Promissory note | (23) | 62000 | 15% \* |
| June 9, 2020 | June 9, 2021 | Promissory note | (24) | 31000 | 15% \* |
| June 12, 2020 | June 12, 2021 | Promissory note | (25) | 50000 | 15% \* |
| June 16, 2020 | June 16, 2021 | Promissory note | (26) | 42000 | 15% \* |
| April 3, 2020 | April 3, 2021 | Promissory note | (20) |  | 20% |
| August 13, 2020 | August 13, 2021 | Promissory note | (22) |  | 20% |
| September 8, 2020 | September 8, 2021 | Promissory note | (27) |  | 20% |
| September 15, 2020 | September 15, 2022 | Promissory note | (28) | 300000 | 10% |
| October 6, 2020 | March 6, 2023 | Promissory note | (29) | 150000 | 12% |
| November 12, 2020 | November 12, 2023 | Promissory note | (30) | 110000 | 12% |
| November 23, 2020 | October 23, 2022 | Promissory note | (31) | 65000 | 15.5% |
| November 23, 2020 | November 23, 2023 | Promissory note | (32) | 300000 | 15% |
| December 10, 2020 | December 10, 2023 | Promissory note | (33) | 82500 | 12% |
| December 10, 2020 | December 10, 2023 | Promissory note | (34) | 3921168 | 12% |
| December 10, 2020 | December 10, 2023 | Promissory note | (35) | 3054338 | 12% |
| December 10, 2020 | December 10, 2023 | Promissory note | (36) | 165605 | 12% |
| December 14, 2020 | December 14, 2023 | Promissory note | (37) | 310375 | 12% |
| December 14, 2020 | December 14, 2023 | Promissory note | (38) |  | 12% |
| December 30, 2020 | December 30, 2023 | Promissory note | (39) | 350000 | 12% |
| December 31, 2021 | December 31, 2024 | Promissory note | (40) | 25000 | 12% |
| December 31, 2021 | December 31, 2024 | Promissory note | (41) | 145000 | 12% |
| January 14, 2021 | January 14, 2024 | Promissory note | (42) | 550000 | 12% |
| February 22, 2021 | February 22, 2024 | Promissory note | (43) | 1650000 | 12% |
| March 1, 2021 | March 1, 2024 | Promissory note | (10) | 6000000 | 12% |
| March 23, 2021 | March 23, 2022 | Promissory note | (11) |  | 0% |
| March 23, 2021 | March 23, 2022 | Promissory note | (12) |  | 0% |
| June 8, 2021 | June 8, 2024 | Promissory note | (44) | 2750000 | 12% |
| July 12, 2021 | July 26, 2026 | Promissory note | (45) | 4000160 | 7% |
| September 14, 2021 | September 14, 2024 | Promissory note | (46) | 1650000 | 12% |
|  |  |  |  | $26233598 |  |
| Less current portion of loans payable | Less current portion of loans payable |  |  | (1019453) |  |
| Less discount on loans payable | Less discount on loans payable |  |  | (4905076) |  |
| Loans payable | Loans payable |  |  | $20309069 |  |
| Current portion of loans payable | Current portion of loans payable |  |  | $1019453 |  |
| Less discount on loans payable | Less discount on loans payable |  |  | (14745) |  |
| Current portion of loans payable, net of discount | Current portion of loans payable, net of discount |  |  | $1004708 |  |

---

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

\* Note is in default. No notice has been given by the note holder to the Company at the time of issuance of these financial statements.

(1) $12,624 loan repaid during year ended February 28, 2022.

(2) The note may be pre-payable at any time. The note balance includes 33% original issue discount of $25,882 at issuance.

(3) Repayable in 12 monthly instalments of $4,562 commencing August 11, 2018 and secured by revenue earning devices having a net book value of at least $48,000. No repayments have been made by the Company and no notices have been received.

(4) $20,000 loan repaid during the year ended February 28, 2022.

(5) The note may be pre-payable at any time. The note balance includes 33% original issue discount of $2,590 at issuance.

(6) The note may be pre-payable at any time. The note balance includes 33% original issue discount of $28,567 at issuance.

(8) $257,000 Canadian loan. Interest payable every calendar quarter commencing June 30, 2019, if unpaid accrued interest to be paid at maturity. An additional interest amount calculated as 4% of RAD revenues from SCOT rentals for the fiscal years 2020 and 2021 shall be payable March 31, 2020 and March 31, 2021, respectively. Secured by a general security charging all of RAD's present and after-acquired property in favor of the lender on a first priority basis subject to the following: the lender's security in this respect shall be postponeable to security in favor of institutional financing obtained by RAD. Additional funding of $26,146 during the quarter ended May 31, 2021. This loan and accrued interest was fully repaid on November 15, 2021 for a cash payment of $443,978. The payment includes $194,804 of loan repayment $55,299 in accrued interest, $18,135 in interest expense, $18,492 in foreign exchange loss and $157,249 in loss on settlement of debt.

(9) The note may be pre-payable at any time. The note balance includes 33% original issue discount of $26,104 at issuance.

(10) The unsecured note may be pre-payable at any time. Cash proceeds of $5,400,000 were received. The note balance of $6,000,000 includes an original issue discount of $600,000 and was issued with a warrant to purchase 300,000,000 shares at an exercise price of $0.135 per share with a 3-year term and having a relative fair value of $4,749,005 using Black-Scholes with assumptions described in note 13. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $4,749.005 with a corresponding adjustment to paid in capital for the relative value of the warrant. For the year ended February 28, 2022, the Company recorded amortization expense of $5,349,005 with an unamortized discount of $0 at February 28, 2022. The maturity was extended from March 1, 2022 to March 1, 2024 on February 28, 2022 in exchange for warrants to purchase 150,000,000 shares of common stock at an exercise price of $.0164 and a 3 year term. These warrants have a fair value of $2,850,000 recorded as interest expense with a corresponding adjustment to paid in capital.

(11) In exchange for 28 Series F preferred shares, the Company issued a noninterest bearing unsecured loan for $2,545,900. A fair value of the loan of $2,267,768 was determined with a debt discount off $278,132. For the year ended February 28, 2022, the Company recorded amortization expense $54,102. On June 2, 2021 the Company exchanged the $2,545,900 debt having a net book value of $2,321,870 for 39,167,693 common shares having a fair value of $2,177,724. The Company recorded a gain on settlement of debt of $144,146.

(12) In exchange for 55 Series F preferred shares, the Company issued a noninterest bearing unsecured loan for $5,000,875. A fair value of the loan of $4,465,067 was determined with a debt discount off $535,808. For the year ended February 28, 2022, the Company recorded amortization expense of $107,162. On June 2, 2021 the Company exchanged the $5,000,875 debt having a net book value $4,572,229 for 76,936,539 common shares having a fair value of $4,277,672. The Company recorded a gain on settlement of debt of $294,557.

(13) The note may be pre-payable at any time. The note balance includes an original issue discount of $3,000 at issuance.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(15) The note may be pre-payable at any time. The note balance includes an original issue discount of $2,450 at issuance.

(16) The note may be pre-payable at any time. The note balance includes an original issue discount of $1,200 at issuance.

(17) The note may be pre-payable at any time. The note balance includes an original issue discount of $3,850 at issuance.

(18) The note may be pre-payable at any time. The note balance includes an original issue discount of $8,000 at issuance.

(19) The note may be pre-payable at any time. The note balance includes an original issue discount of $15,000 at issuance.

(20) $40,000 CDN loan, both principal and interest are due at maturity, if unpaid there is a 10 % penalty on unpaid balance. By consent of all parties, lender may convert balance into Class F shares at $6,739 USD per share. Total loan of $40,000 CDN and accrued interest repaid at February 28, 2022.

(22) $60,000 CDN loan, principal is due at maturity, interest is payable commencing the third month after the loan over the remaining 10 months. If principal or interest unpaid there is a 10 % penalty on unpaid balance. By consent of all parties, lender may convert balance into Class F shares at $6,739 USD per share. Total loan of $44,183 (in $USD) and related accrued interest paid during the quarter ended May 31, 2021.

(23) The note may be pre-payable at any time. The note balance includes an original issue discount of $12,000 at issuance.

(24) The note may be pre-payable at any time. The note balance includes an original issue discount of $6,000 at issuance.

(25) The note may be pre-payable at any time. The note balance includes an original issue discount of $10,000 at issuance.

(26) The note may be pre-payable at any time. The note balance includes an original issue discount of $7,000 at issuance.

(27) $10,000 CDN loan, principal is due at maturity, interest is payable monthly commencing the third month after the loan over the remaining 10 months. If principal or interest unpaid there is a 10 % penalty on unpaid balance. By consent of all parties, lender may convert balance into Class F shares at $6,739 USD per share. Total loan of $7,381 (in $USD) and related accrued interest paid during the quarter ended May 31, 2021.

(28) The note may be pre-payable at any time. The note balance includes an original issue discount of $50,000. Interest payable monthly, principal due at maturity. Secured by a general security charging all of RAD's present and after-acquired property. . For the year ended February 28, 2022, the Company recorded amortization expense of $23,885 with an unamortized discount of $14,745 at February 28, 2022.

(29) Principal and interest repayable in 28 monthly instalments commencing December 6, 2020, the first 6 months at $2,000 per month, the remaining 22 payments at $8,500 per month. Secured by revenue earning devices.

(30) The note may be pre-payable at any time. The note balance includes an original issue discount of $10,000 and was issued with a warrant to purchase 70,000,000 shares at an exercise price of $0.00165 per share, with a 3 -year term and having a relative fair value of $41,176. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $41,176 with a corresponding adjustment to paid in capital. For the year ended February 28, 2022, the Company recorded amortization expense of $12,039 with an unamortized discount of $36,290 at February 28, 2022.

(31) Principal and interest repayable in 21 monthly instalments commencing December 6, 2020 of $4,060 commencing February 21, 2021. Secured by revenue earning devices .

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(32) The note may be pre-payable at any time. The note balance includes an original issue discount of $25,000 and was issued with a warrant to purchase 230,000,000 shares at an exercise price of $0.00165 per share with a 3 -year term and having a relative fair value of $125,814. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $125,814 with a corresponding adjustment to paid in capital for the relative value of the warrant. For the year ended February 28, 2022, the Company recorded amortization expense of $33,823 with an unamortized discount of $109,977 at February 28, 2022.

(33) The note may be pre-payable at any time. The note balance includes an original issue discount of 7,500 and was issued with a warrant to purchase 100,000,000 shares at an exercise price of $0.002 per share with a 3 -year term and having a relative fair value of $54,545. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $54,545 with a corresponding adjustment to paid in capital for the relative value of the warrant. For the year ended February 28, 2022, the Company recorded amortization expense of $9,856 with an unamortized discount of $50,714 at February 28, 2022.

(34) This promissory note was issued as part of a debt settlement whereby $2,683,357 in convertible notes and associated accrued interest of $1,237,811 totaling $3,921,168 was exchanged for this promissory note of $3,921,168 , and a warrant to purchase 450,000,000 shares at an exercise price of $.002 per share and a three-year maturity having a relative fair value of $990,000 . This note is secured by a general security charging all of the Company's present and after-acquired property.

(35) This promissory note was issued as part of a debt settlement whereby $1,460,794 in convertible notes and associated accrued interest of $1,593,544 totaling $3,054,338 was exchanged for this promissory note of $3,054,338 , and a warrant to purchase 250,000,000 shares at an exercise price of $.002 per share and a three-year maturity having a relative fair value of $550,000 . This note is secured by a general security charging all of the Company's present and after-acquired property.

(36) This promissory note was issued as part of a debt settlement whereby $103,180 in convertible notes and associated accrued interest of $62,425 totaling $165,605 was exchanged for this promissory note of $165,605 , and a warrant to purchase 80,000,000 shares at an exercise price of $.002 per share and a three-year maturity having a fair value of $176,000 .

(37) This promissory note was issued as part of a debt settlement whereby $235,000 in convertible notes and associated accrued interest of $75,375 totaling $310,375 was exchanged for this promissory note of $310,375 , and a warrant to purchase 25,000,000 shares at an exercise price of $.002 per share and a three-year maturity having a fair value of $182,500 .

(38) This promissory note was issued as part of a debt settlement whereby $100,000 in convertible notes and associated accrued interest of $37,589 totaling $137,589 was exchanged for this promissory note of $192,625 . Loan fully repaid at May 31, 2021.

(39) The note may be pre-payable at any time. The note balance includes an original issue discount of $35,000 and was issued with a warrant to purchase 50,000,000 shares at an exercise price of $0.025 per share with a 3 -year term and having a relative fair value of $271,250 . The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $271,250 with a corresponding adjustment to paid in capital for the relative fair value of the warrant. For the year ended February 28, 2022, the Company recorded amortization expense of $27,277 with an unamortized discount of $276,853 at February 28, 2022.

(40) This promissory note was issued as part of a debt settlement whereby $9,200 in convertible notes and associated accrued interest of $6,944 totaling $16,144 was exchanged for this promissory note of $25,000 . This note is secured by a general security charging all of the Company's present and after-acquired property.

(41) This promissory note was issued as part of a debt settlement whereby $79,500 in convertible notes and associated accrued interest of $28,925 totaling $108,425 was exchanged for this promissory note of $145,000 . This note is secured by a general security charging all of the Company's present and after-acquired property.

(42) The note may be pre-payable at any time. The note balance includes an original issue discount of $250,000 and was issued with a warrant to purchase 50,000,000 shares at an exercise price of $0.025 per share with a 3 -year term and having a relative fair value of $380,174 . The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $380,174 with a corresponding adjustment to paid in capital. For the year ended February 28, 2022, the Company recorded amortization expense of $58,224 with an unamortized discount of $367,232 at February 28, 2022.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

(43) The note may be pre-payable at any time. The note balance includes an original issue discount of $150,000 and was issued with a warrant to purchase 100,000,000 shares at an exercise price of $0.135 per share with a 3 -year term and having a relative fair value of $1,342,857 . The discount and warrant are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $1,342,857 with a corresponding adjustment to paid in capital for the relative fair value of the warrant. For the year ended February 28, 2022, the Company recorded amortization expense of $80,746 with an unamortized discount of $1,411,832 at February 28, 2022. The maturity date was extended from February 22, 2022 to February 22, 2024 on February 28, 2022 in exchange for warrants to purchase 50,000,000 at an exercise price of $.0164 and a 3 year term. These warrants have a fair value of $950,000 recorded as interest expense with a corresponding adjustment to paid in capital.

(44) The note may be pre-payable at any time. The note balance includes an original issue discount of $50,000 and was issued with a warrant to purchase 170,000,000 shares at an exercise price of $0.064 per share with a 3 -year term and having a relative fair value of $2,035,033 . The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $2,035,033 with a corresponding adjustment to paid in capital. For the year ended February 28, 2022, the Company recorded amortization expense of $1,035,288 with an unamortized discount of $1,249,745 at February 28, 2022. The maturity date was extended from June 8, 2022 to June 8, 2024 on February 28, 2022 in exchange for warrants to purchase 85,000,000 at an exercise price of $.0164 and a 3 year term. These warrants have a fair value of $1,615,000 recorded as interest expense with a corresponding adjustment to paid in capital.

(45) This loan was in exchange for 184 Series F preferred shares from a former director. The interest and principal are payable at maturity. The loan is unsecured.

(46) The note may be pre-payable at any time. The note balance includes an original issue discount of $150,000 and was issued with a warrant to purchase 250,000,000 shares at an exercise price of $0.037 per share with a 3 -year term and having a relative fair value of $1,284,783 using Black-Scholes with assumptions described in note 14. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $1,284,783 with a corresponding adjustment to paid in capital. For the year ended February 28, 2022, the Company recorded amortization expense of $32,349 with an unamortized discount of $1,402,433at February 28, 2022.

**12. DERIVATIVE LIABILITIES**

As of February 28, 2022, and February 28, 2021 the Company revalued the fair value of all of the Company's derivative liabilities associated with the conversion features on the convertible notes payable and determined that it had a total derivative liability of $7,587 and $444,466, respectively.

The Company estimated the fair value of the derivative liabilities using the multinomial lattice model using the following key assumptions during the year ended February 28, 2021:

---

| | |
|:---|:---|
| Strike price | $0.04 - $0.026 |
| Fair value of Company common stock | $0.0632 - $0.0145 |
| Dividend yield | 0.00% |
| Expected volatility | 125.3% - 107.7% |
| Risk free interest rate | 0.15% - 0.13% |
| Expected term (years) | 0.5 - 0.25 |

---

The Company estimated the fair value of the derivative liabilities using the multinomial lattice model using the following key assumptions during the year ended February 28, 2021:

---

| | |
|:---|:---|
| Strike price | $0.2899 - $0.0013 |
| Fair value of Company common stock | $0.138 - $0.0013 |
| Dividend yield | 0.00% |
| Expected volatility | 355.10% - 196.50% |
| Risk free interest rate | 0.09% - 0.15% |
| Expected term (years) | 0.25 - 1.00 |

---

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

During the years ended February 28, 2022, and February 28, 2021 the Company released $422,272 and $2,387,687, respectively, of the Company's derivative liability to equity due to the conversions of principal and interest on the associated notes.

The changes in the derivative liabilities (Level 3 financial instruments) measured at fair value on a recurring basis for the year ended February 28, 2022 were as follows:

---

| | |
|:---|:---|
| Balance as of February 28, 2021 | $444466 |
| Derivative discount on loan amendment | 438835 |
| Adjustment to derivative liability due to debt extinguishment | (81228) |
| Release of derivative liability on conversion of convertible notes payable | (422272) |
| Change in fair value of derivative liabilities | (372214) |
| Balance as of February 28, 2022 | $7587 |

---

The changes in the derivative liabilities (Level 3 financial instruments) measured at fair value on a recurring basis for the year ended February 28, 2021 were as follows:

---

| | |
|:---|:---|
| Balance as of February 29, 2020 | $6890688 |
| Release of derivative liability on conversion of convertible notes payable | (2837687) |
| Debt discount due to derivative liabilities | 143133 |
| Adjustment to derivative liability due to debt settlement | (2987643) |
| Change in fair value of derivative liabilities | (764025) |
| Balance as of February 28, 2021 | $444466 |

---

**13. STOCKHOLDERS' DEFICIT**

**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.

***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 2,532 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).

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[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

***Summary of Preferred Stock Activity***

 

***Series G Preferred Stock***

The board of directors has designated 100,000 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 shares are redeemable at $1,000 per share The Series G preferred stock does not have voting rights, does not have rights upon liquidation of the Company and does not receive dividends.

***Series E Preferred Stock***

During the year ended February 28, 2022 Series E shareholders had the following activity:

— A shareholder cancelled 1,000,000 Class E shares. The company recorded an adjustment to paid in capital.

***Series F Preferred Stock***

During the year ended February 28, 2022 Series F shareholders had the following activity:

---

| |
|:---|
| 40 Series F Preferred Shares and a warrant to purchase 367 Series F Preferred Shares with a five-year term and an exercise price of $1.00 were issued to an investor in exchange for amending their deferred variable payment obligation agreement. The company attributed a fair value based on recent transactions for the Series F Preferred stock and warrants of $33,015,214 and recorded a loss on settlement of debt with a corresponding adjustment to paid in capital. |
| The warrant holder exercised the warrant in part to acquire 38 Series F Preferred Shares. |
| The shareholder above converted 78 Series F Preferred Shares into 316,345,908 common shares. |
| Two Series F Preferred shareholders exchanged 83 Series F Preferred Shares for two promissory notes on March 23, 2021. The notes are non-interest bearing, have a one-year maturity and total $7,546,775. These notes were subsequently exchanged on June 2, 2021 for a total of 116,104.232 common shares. |
| On July 12, 2021, the former director agreed to surrender his remaining 184 Series F preferred shares in exchange for a note payable from the Company of $4,000,160 bearing interest at 7% per annum with a 5 year term, maturing July 12, 2026. |
| On August 24, 2021the Series F preferred warrant holder agreed to not exercise his warrant privileges on his remaining 329 warrant shares before September 1, 2023. |

---

***Summary of Preferred Stock Warrant Activity***

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of Series F Preferred Warrants** | **Weighted Average Exercise Price** | **Weighted Average Remaining Years** |
| Outstanding at March 1, 2021 |  |  |  |
| Issued | 367 | $1.00 | 5.00 |
| Exercised | (38) | $1.00 | 5.00 |
| Forfeited and cancelled |  |  |  |
| Outstanding at February 28 2022 | 329 | $1.00 | 4.50 |

---

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

On August 23, 2021, the Company filed amended Series F preferred shares such that Series F preferred shares are not convertible into common stock by a holder until (A) August 23, 2023 or (B) the date on which such a conversion may be required for the purpose of (i) uplisting the Company to a new stock exchange, or (ii) selling more than 50% of the Company's assets.

On July 22, 2020 the board of directors passed a resolution whereby the sole director agreed to return for cancellation, 816 of his 1000 Series F preferred shares to the Company.

On December 1, 2020 the company issued 110 Series F shares having a fair value of $362,084 to a consultant for services previously rendered which was recorded as professional fees with a corresponding adjustment to accrued liabilities.

***Unissued Series F Preferred Stock***

During the year ending February 28, 2022 the Company redeemed (through cancellation) 19 shares of issuable Series F preferred stock having a value of $74,984 for $500,000, with the difference of $425,016 recorded as a dividend. At November 30, 2021 there remains 46 issuable Series F preferred stock at a value of $99,086. At February 28, 2021 there was 65 issuable Series F preferred stock at a value of $174,070.

During the year ended February 28, 2021 the Company had the following preferred stock activity:

---

| |
|:---|
| On July 22, 2020 the board of directors passed a resolution whereby the sole director agreed to return for cancellation, 816 of his 1000 Series F preferred shares to the Company. |
| On December 1, 2020 the company issued 110 Series F shares having a fair value of $362,084 to a consultant for services previously rendered which was recorded as professional fees with a corresponding adjustment to accrued liabilities. |
| On December 14, 2020, as part of a debt settlement described in Note 8 , the company issued 55 Series F preferred shares to a lender at a fair value of $1,151,166. |

---

***Series G Preferred Stock***

During the year ending February 28, 2022 Series G shareholders had the following activity:

---

| |
|:---|
| On achievement of objectives 3,4,5 and 8 of the equity awards described below the CEO was granted 1500 Series G Preferred shares which were redeemed immediately for $1,500,000 |
| The Company has accrued $1,979,500 of the equity awards and incentive compensation plan payable with the balance of $479,500 at February 28, 2022 after the $1,500,000 payment above. |

---

***Summary of Common Stock Activity***

During the year ending February 28, 2022 common shareholders had the following activity:

---

| |
|:---|
| A Series F Preferred shareholder converted 78 Series F Preferred Shares for 316,345,998 common shares. |
| holders of certain convertible notes payable elected to convert a total of $825,000 of principal and $71,955 accrued interest, and $1,750 of fees into 31,042,436 shares of common stock. |
| in June 2021, lenders exchanged debt having a face value of $7,546,775 and a net book value of $6,894,099 for 116,104,232 common shares having a fair value of $6,455,396. A gain on settlement of debt of $438,703 was recorded. |
| the Company entered into an investor relations contract whereby 2,100,000 shares are issuable as of February 28, 2022. Stock based compensation of $109,200 was recorded in the period ended February 28, 2022. |
| the Company issued 645,168,473 common shares with gross proceeds of $13,108,624 and cash proceeds of $12,521,932 after issuance costs of $586,692 |
| warrant holders exercised warrants to acquire 411,000,000 shares on a cashless basis for 395,022,447 common shares with a corresponding adjustment to paid in capital. |

---

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

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 (see Note 13). Certain instruments issued prior to the reverse split that exercise into shares of our common stock are now shown in fractional units due to the effect of the reverse split. If exercised, the Company is required to issue whole shares under its articles of incorporation.

During the year ended February 28, 2021 the Company had the following common stock activity:

---

| |
|:---|
| The Company issued 2,329,798,068 shares of its common stock for the conversion of debt and related interest and fees totaling $3,568,686 including $2,420,559 of principal and $1,148,127 of interest, and additionally $20,500 in fees in connection with debt converted during the period, as well as the release of the related derivative liability. |
| In connection with a note issuance in January 2021, the Company issued 5,000,000 shares of common stock |

---

***Summary of Warrant Activity***

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of<br> Warrants** | **Weighted Average<br> Exercise Price** | **Weighted Average<br> Remaining Years** |
| Outstanding at February 29, 2020 | 142859043 | $0.003 | 1.81 |
| Issued | 1424521449 | 0.002 | 3.00 |
| Exercised | (947857000) | 0.002 | 3.00 |
| Forfeited and cancelled |  |  |  |
| Outstanding at February 28, 2021 | 619523492 | $0.03 | 2.81 |
| Issued | 1008324212 | 0.06 | 2.47 |
| Exercised | (411000000) | 0.06 | 1.75 |
| Forfeited and cancelled | (2043) |  |  |
| Outstanding at February 28, 2022 | 1216845661 | $0.06 | 2.38 |

---

For the years ended February 28, 2022 and February 28, 2021, the Company recorded a total of $0 and $362,084, respectively on stock-based payments for warrants with a corresponding adjustment to additional paid-in capital.

For both the years ended February 28, 2022 and February 28, 2021 the Company recorded a total of $2,158,050 and $0 respectively, to stock-based compensation for options, and shares with a corresponding adjustment to additional paid-in capital.

During the year ended February 28, 2022 warrant holders had the following activity:

---

| |
|:---|
| warrant holders exercised warrants to acquire 411,000,000 shares on a cashless basis for 395,022,447 common shares with a corresponding adjustment to paid in capital. |
| in conjunction with debt disclosed in Note 11 (44), the Company issued warrants to a lender to purchase 170,000,000 shares at an exercise price of $0.064 per share with a 3-year term and having a relative fair value of $2,035,033, in conjunction with debt disclosed in Note 11 (10), the Company issued warrants to a lender to purchase 300,000,000 shares at an exercise price of $0.135 per share with a 3-year term and having a relative fair value of $4,749,005,andin conjunction with debt disclosed in Note 11 (46), the Company issued warrants to a lender to purchase 250,000,000 shares at an exercise price of $0.037 per share with a 3-year term and having a relative fair value of $1,284,783 all using the Black-Scholes model with assumptions described below: |

---

---

| | |
|:---|:---|
| Strike price | $0.135 - $0.037 |
| Fair value of Company's common stock | $0.146 - $0.0071 |
| Dividend yield | 0.00% |
| Expected volatility | 411.0% - 403.33% |
| Risk free interest rate | 0.43% - 0.27% |
| Expected term (years) | 3.00 |

---

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

in conjunction with debt extensions on notes payable disclosed in Note 12 (10, 43, 44), the Company issued warrants to a lender to purchase a total 285,000,000 shares at an exercise price of $0.164 per share with a 3-year term and having an aggregate fair value of $5,415,000, recorded as interest with a corresponding adjustment to paid in capital all using the Black-Scholes model with assumptions described below:

---

| | |
|:---|:---|
| Strike price | $0.0164 |
| Fair value of Company's common stock | $0.019 |
| Dividend yield | 0.00% |
| Expected volatility | 385.60% |
| Risk free interest rate | 1.62% |
| Expected term (years) | 3.00 |

---

As share issuance costs to a broker the company issued warrants to acquire a total of 3,324,212 shares with a fair value of $21,929 recorded against share proceeds with a corresponding adjustment to paid in capital all using the Black-Scholes model with assumptions described below:

---

| | |
|:---|:---|
| Strike price | $0.041-$0.029 |
| Fair value of Company's common stock | $0.039-$0.028 |
| Dividend yield | 0.00% |
| Expected volatility | 35.30-35.90% |
| Risk free interest rate | 0.46-0.95% |
| Expected term (years) | 3.00 |

---

***Summary of CEO Compensation Grant***

On April 9, 2021 the Company entered into an Employment Agreement with Chief Executive Officer, Steven Reinharz with a three- year term under the following terms whereby stock option awards will be granted if certain conditions are met:

---

| |
|:---|
| A stock option award (option 1) will be granted to the employee to purchase 10,000,000 shares at an exercise price of $$0.15 per share if the trading share price of the Company reaches an average of $0.30 per share for ten days over a 30 day trading period. |
| A stock option award (option 2) will be granted to the employee to purchase 30,000,000 shares at an exercise price of $$0.25 per share if the trading share price of the Company reaches an average of $0.50 per share for ten days over a 30 day trading period. |

---

---

| | |
|:---|:---|
| **Objective #3**: | Sales in any fiscal quarter exceed the total sales in fiscal year 2021 for the first time. |
| **Award #3**: | Five hundred (500) shares of Series G preferred stock. |
| **Objective #4**: | One hundred fifty (150) devices are deployed in the marketplace. |
| **Award #4**: | Two hundred fifty (250) shares of Series G preferred stock. |
| **Objective #5**: | Year-to-date sales at any point in fiscal year 2022 exceed One Million Dollars ($1000000). |
| **Award #5**: | Two hundred fifty (250) shares of Series G preferred stock. |
| **Objective #6**: | The price per share of common stock has increased to and maintains a price of Ten Cents ($0.10) or more for ten (10) days in a thirty (30) day period. |
| **Award #6**: | Two hundred fifty (250) shares of Series G preferred stock. |
| **Objective #7**: | The price per share of common stock has increased to and maintains a price of Twenty Cents ($0.20) or more for ten (10) days in a thirty (30) day period. |
| **Award #7**: | Five hundred (500) shares of Series G preferred stock. |

---

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
| **Objective #8**: | The RAD 3.0 products are launched into the marketplace by November 30, 2021. |
| **Award #8**: | Five hundred (500) shares of Series G preferred stock. |
| **Objective #9**: | RAD receives an order for fifty (50) units from a single customer. |
| **Award #9**: | Five hundred (500) shares of Series G preferred stock. |

---

The fair value of the first two awards was obtained through the use of the Monte Carlo method was $69,350 with a charge to stock- based compensation and a corresponding charge to paid in capital. The fair value of the remaining rewards was determined by calculating the vesting amounts of each reward and then determining for each reporting period the requisite service rendered and applying that against the cash redemption value of the number of shares of Series G issuable for each tier in the agreement. For the period ended January 31 2022 that amount totaled $1,979,500 with a charge to stock-based compensation and a corresponding charge to incentive compensation plan payable. With the achievement of objectives 3,4,5 and 8 of the equity awards described above the CEO was granted 1,500 Series G Preferred shares which were redeemed in the reporting period for $1,500,000 in cash. As part of the grant, the Company is responsible for grossing up the award value and has accrued additional compensation for the estimated taxes to be paid by the executive.

On April 14, 2021, the Shareholders of Series E Preferred Stock and the Board of Directors of our Company ("Board") approved and adopted the 2021 Incentive Stock Plan (the "2021 Plan").

The purpose of the 2021 Plan is to promote the success of the Company by authorizing incentive awards to retain Directors, executives, selected Employees and Consultants, and reward participants for making major contributions to the success of the Company. The 2021 Plan authorizes the granting of stock options, restricted stock, restricted stock units, stock appreciation rights and stock awards. A total of five million (5,000,000) shares of common stock may be issued under the 2021 Plan. All awards under the 2021 Plan, whether vested or unvested, are subject to the terms of any recoupment, clawback or similar policy of the Company in effect from time to time, as well as any similar provisions of applicable law, which could in certain circumstances require repayment or forfeiture of awards or any shares of stock or other cash or property received with respect to the awards, including any value received from a disposition of the shares acquired upon payment of the awards. The 2021 Plan will be administered by the Board or any Committee authorized by the Board, if applicable, which will have the sole authority to, among other things: construe and interpret the 2021 Plan; make rules and regulations relating to the administration of the 2021 Plan; select participants; and establish the terms and conditions of awards, all in accordance with the terms of the 2021 Plan. The 2021 Plan will remain in effect until April 14, 2031, unless sooner terminated by the Board. Termination will not affect awards then outstanding.

**14. COMMITMENTS AND CONTINGENCIES**

***Litigation***

Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company's condensed consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

In March 2021, the Company settled with former landlords for $30,000. The Company had accrued $62,552 at February 28, 2021. A gain on settlement of debt of $32,552 was recorded.

In April 2019 the principals of WeSecure filed a lawsuit against the Company in California Superior Court seeking a total of $199,358 plus attorney's fees and damages. The total included claims for the non-payment of a balance from the sale of WeSecure assets to the Company, unpaid consulting fees payable to the two principals of WeSecure, and labor code violations. In June 2019, the parties settled all claims for $180,000, payable in 14 monthly installments, and a full release. The $122,000 balance owing at February 28, 2021 was paid in full on March 17, 2021.

The related legal costs are expensed as incurred.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

***Purchase Commitment***

On August 15 ,2021 the Company entered into a memorandum of understanding with Ghost Robotics whereby the Company will modify and resell a Ghost Robotics ("Ghost") product ("V50") in development in exchange for the following:

---

| |
|:---|
| the Company will pay Ghost a non refundable marketing fee of $500,000 with $100,000 payable September 1, 2021 with the remaining $400,000 to be paid in instalments of $40,000 per month over the following 10 months commencing October 1, 2021. |
| the Company will purchase $85,000 of other Ghost products for research and development purposes. This amount will be credited against future purchases of 6 V50's that the Company will modify and resell. |
| Ghost agrees not to sell its V50 to three specific customers for a three-year period commencing after the first commercial sales of the V50. |
| the Company will re-brand their modified version of the V50 and be responsible for its testing and support. |

---

***Operating Lease***

On December 10, 2020, the Company entered into a 15-month lease agreement for office space at 18009 Sky Park Circle Suite E, Irvine CA, 92614, commencing on December 18, 2020 through to March 31, 2022 with a minimum base rent of $3,859 per month. The Company paid a security deposit of $3,859.

On March 10, 2021, the Company entered into a 10-year lease agreement for a manufacturing facility at 10800 Galaxie Avenue, Ferndale, Michigan, 48220, commencing on May 1, 2021 through to April 30, 2031 with a minimum base rent of $15,880 per month. The base rent increase by 3% per annum commencing May 1, 2024. The Company paid a security deposit of $15,880.

On September 30, 2021, the Company entered into a 3-year lease agreement for a vehicle commencing September 30, 2021 through to April 30, 2031 with a minimum base rent of $1,538 per month. The Company paid a down payment of $18,462.

On January 28, 2022, the Company entered into a 2-year lease agreement for office space at 1516 E Edinger, Santa Ana, California, 92705, commencing on February 1, 2022 through to January 31, 2024 with a minimum base rent of $1,500 per month. The Company paid a security deposit of $1,500.

---

| | |
|:---|:---|
| **Maturity of Lease Liabilities** | **Operating<br> Leases** |
| February 28, 2023 | $236028 |
| February 28, 2024 | 232169 |
| February 28, 2025 | 219863 |
| February 28, 2026 | 207558 |
| February 28, 2027 | 207558 |
| February 28, 2028 and after | 864825 |
| Total lease payments | 1968001 |
| Less: Interest | (656395) |
| Present value of lease liabilities | $1311606 |

---

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**15. EARNINGS (LOSS) PER SHARE**

The net income (loss) per common share amounts were determined as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Year Ended** | **For the Year Ended** |
|  | **February 28,**<br>**2022** | **February 28,**<br>**2021** |
| Numerator: |  |  |
| Net income (loss) available to common shareholders | $(62197484) | $(5898911) |
| Effect of common stock equivalents |  |  |
| Add: interest expense on convertible debt | 24954 | 1647935 |
| Add: penalty interest on convertible debt |  | 939705 |
| Add (less) loss (gain) on change of derivative liabilities | (372214) | (764025) |
| Net income (loss) adjusted for common stock equivalents | (62544744) | (4075296) |
| Denominator: |  |  |
| Weighted average shares - basic | 4029658082 | 1015115270 |
| Net income (loss) per share – basic | $(0.02) | $(0.01) |
| Denominator: |  |  |
| Weighted average shares – diluted | 4029658082 | 1015115270 |
| Net income (loss) per share – diluted | $(0.02) | $(0.01) |

---

The anti-dilutive shares of common stock equivalents for the years ended February 28, 2022 and February 28, 2021 were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Year Ended** | **For the Year Ended** |
|  | **February 28,**<br>**2022** | **February 28,**<br>**2021** |
| Convertible notes and accrued interest | 4927561 | 4842500 |
| Convertible Class F Preferred Shares | 16336475742 | 11141522749 |
| Stock options and warrants | 1256845661 | 619523492 |
| Total | 17598248964 | 11765888741 |

---

**16. INCOME TAXES**

The Company has adopted ASC 740-10, "*Income Taxes"*, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The income tax expense (benefit) consisted of the following for the fiscal years ended February 28, 2022 and February 28, 2021:

---

| | | |
|:---|:---|:---|
|  | **February 28, 2022** | **February 28, 2021** |
| Total current | $— | $— |
| Total deferred |  |  |
| Total | $— | $— |

---

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

The following is a reconciliation of the expected statutory federal income tax provision to the actual income tax benefit for the fiscal years ended February 28, 2022 and February 28, 2021:

---

| | |
|:---|:---|
|  | **February 28, 2022** |
| Federal statutory rate | $(13061500) |
| State income tax benefit, net of federal benefit | (2954400) |
| Non deductible interest | 4027800 |
| Non deductible settlement losses | 8515100 |
| Non deductible stock based compensation | 169400 |
| Non deductible changes in fair value of instruments | (95800) |
| Other non deductible expenses | 600 |
| Change in valuation allowance | 3398800 |
| Total | $— |

---

---

| | |
|:---|:---|
|  | **February 28, 2021** |
| Federal statutory rate | $(1239000) |
| Non deductible stock based compensation | 77000 |
| Non deductible (non-includable gains) changes in fair value of instruments | (467000) |
| Warrant values within debt discount | (114000) |
| Change in valuation allowance | 1743000 |
| Total | $— |

---

For the year ended February 28, 2022 and February 28, 2021, the expected tax benefit, temporary timing differences and long-term timing differences are calculated at the 21% statutory rate.

Significant components of the Company's deferred tax assets and liabilities were as follows for the fiscal years February 28, 2022 and February 28, 2021:

---

| | | |
|:---|:---|:---|
|  | **February 28, 2022** | **February 28, 2021** |
| Deferred tax assets: |  |  |
| Net operating loss carryforwards | $8445915 | $5047115 |
| Debt discount | 114000 | 114000 |
| Total deferred tax assets | 8559915 | 5161115 |
| Deferred tax liabilities: |  |  |
| Depreciation |  |  |
| Deferred revenue |  |  |
| Total deferred tax liabilities |  |  |
| Net deferred tax assets: |  |  |
| Less valuation allowance | (8559915) | (5161115) |
| Net deferred tax assets (liabilities) | $— | $— |

---

The Company has incurred losses since inception, therefore, the Company has no federal tax liability. Additionally there are limitations imposed by certain transactions which are deemed to be ownership changes which occurred in the Company on August 28, 2017. The net deferred tax asset generated by the loss carryforward has been fully reserved. The cumulative net operating loss carryforward was approximately $28,200,000 at February 28, 2022 and $14,994,000 at February 28, 2021, that is available for carryforward for federal income tax purposes and begin to expire in 2030.

Although the Company has tax loss carry-forwards, there is uncertainty as to utilization prior to their expiration. Accordingly, the future income tax asset amounts have been fully reserved by a valuation allowance.

------

[*Index to Financial Statements*](#index_to_fs)

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

The Company has maintained a full valuation allowance against its deferred tax assets at February 28, 2022 and February 28, 2021. A valuation allowance is required to be recorded when it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Since the Company cannot be assured of realizing the net deferred tax asset, a full valuation allowance has been provided.

The Company does not have any uncertain tax positions at February 28, 2022 and February 28, 2021 that would affect its effective tax rate. The Company does not anticipate a significant change in the amount of unrecognized tax benefits over the next twelve months. Because the Company is in a loss carryforward position, the Company is generally subject to US federal and state income tax examinations by tax authorities for all years for which a loss carryforward is available. If and when applicable, the Company will recognize interest and penalties as part of income tax expense.

The Company's tax returns for the years ended February 28, 2022, and February 28, 2021, and February 29, 2020 are open for examination under Federal statute of limitations.

**17. SUBSEQUENT EVENTS**

Subsequent to February 28, 2022 through to May 27 2022,

— in May 2022, the Company issued 100,000,000 common shares pursuant to a share purchase agreement for gross proceeds of $1,350,650, issuance costs of $95,545 and cash proceeds of $1,255,105.

— in March 2022 the Company repaid debt totaling $1,613,953 and related accrued interest of $349,879 to a lender.

------

**PROSPECTUS**

**Up to 1,250,000,000 Shares of Common Stock**

________________________**, 2023**

- Prospectus Cover Page -

------

*[**Table of Contents**](#toc)*

**PART II**

**INFORMATION NOT REQUIRED IN THE PROSPECTUS**

**Item 13. Other Expenses of Issuance and Distribution**

The following table sets forth the estimated costs and expenses to be incurred in connection with the issuance and distribution of the securities registered under this Registration Statement. All amounts are estimates except the SEC registration fee.

---

| | |
|:---|:---|
| Securities and Exchange Commission registration fee | $3306 |
| Accounting fees and expenses | $15000 |
| Legal fees and expenses | $16000 |
| Total | $34306 |

---

We are paying all expenses of the offering listed above. No portion of these expenses will be borne by the Selling Stockholder. The Selling Stockholder, however, will pay any other expenses incurred in selling their common stock, including any brokerage commissions or costs of sale.

**Item 14. Indemnification of Directors and Officers**

Our Bylaws provide that the Company shall indemnify its directors and officers from and against any liability arising out of their service as a director or officer of the Corporation or any subsidiary or affiliate of which they serve as an officer or director at the request of the Corporation to the fullest extent not prohibited by NRS Chapter 78. The effect of this provision of our bylaws is to eliminate our right and our stockholders (through stockholders' derivative suits on behalf of our company) to recover damages against a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except under certain situations defined by statute. We believe that the indemnification provisions in our bylaws are necessary to attract and retain qualified persons as directors and officers.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

**Item 15. Recent Sales of Unregistered Securities**

None.

**Item 16. Exhibits and Financial Statements**

(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 44 and included on pages F-1 through F-63.

(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.

------

*[**Table of Contents**](#toc)*

---

| | |
|:---|:---|
| **Exhibit #** | **Description** |
| 3.1 | [Articles of Incorporation filed with Nevada Secretary of State on 9/8/2014](http://www.sec.gov/Archives/edgar/data/1498148/000116169718000118/ex_3-1.htm) (previously filed as Exhibit 3.1 to the Registrant's Transition Report on Form 10-KT filed on 3/12/2018. |
| 3.2 | [Amended Bylaws](http://www.sec.gov/Archives/edgar/data/1498148/000149315221021868/ex4-1.htm) (previously filed as Exhibit 4.1 on Form S-3 on 9/2/2021 and incorporated by reference) |
| 4.3 | [Amendment to Certificate of Designation of Series E Convertible Preferred Stock](http://www.sec.gov/Archives/edgar/data/1498148/000116169718000118/ex_3-5.htm) (previously filed as Exhibit 3.5 to Registrant's Transition Report on Form 10-KT filed on 3/12/2018 and incorporated by reference) |
| 4.4 | [Certificate of Designation of Series F Convertible Preferred Stock](http://www.sec.gov/Archives/edgar/data/1498148/000116169718000118/ex_3-4.htm) (previously filed as exhibit 3.4 to the Registrant's Transition Report on Form 10-KT filed on 3/12/2018 and incorporated by reference) |
| 4.5 | [Amendment No. 2 to Certificate of Designation of Series F Convertible Preferred Stock](http://www.sec.gov/Archives/edgar/data/1498148/000149315221021109/ex10-1.htm) (previously filed as Exhibit 10.1 of Registrant's Form 8-K filed on 8/24/2021 and incorporated by reference) |
| 4.6 | [Certificate of Designation of Series G Preferred Stock](http://www.sec.gov/Archives/edgar/data/1498148/000116169718000118/ex_3-4.htm) (previously filed as Exhibit 3.4 to the Registrant's Transition Report on Form 10-KT on 3/12/2018 and incorporated by reference) |
| 5.1 | [Opinion of Frederick M. Lehrer, P. A.](ex_5-1.htm) \* |
| 10.1 | [Equity Financing Agreement](ex_10-1.htm) \* |
| 10.2 | [Registration Rights Agreement](ex_10-2.htm) \* |
| 10.3 | [Placement Agent Agreement with Icon Capital Group](ex_10-3.htm) \* |
| 23.1 | [Consent of Frederick M. Lehrer, P. A.](ex_5-1.htm) (included in Exhibit 5.1) \* |
| 23.2 | [Consent of L J Soldinger Associates, LLC, Independent Registered Public Accounting Firm](ex_23-2.htm) \* |
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. \* |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document \* |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document \* |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document \* |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document \* |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document \* |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) \* |
| 107 | [Filing Fee Table](ex_107.htm) \* |

---

__________

\* Filed or furnished herewith

------

*[**Table of Contents**](#toc)*

**Item 16.** **Undertakings.**

The undersigned registrant hereby undertakes

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

&nbsp;&nbsp;&nbsp;&nbsp;i. To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;

iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;i. Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

ii. Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

iii. The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

iv. Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: Each Prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than Prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or Prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or Prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or Prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

------

*[**Table of Contents**](#toc)*

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, the registrant has been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act, and will be governed by the final adjudication of such issue.

**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in Ferndale, Michigan on March 31, 2023.

---

| | |
|:---|:---|
| **Artificial Intelligence Technology Solutions, Inc.** | **Artificial Intelligence Technology Solutions, Inc.** |
| By: | */s/ Steven Reinharz* |
|  | Steven Reinharz |
|  | Chief Executive Officer, Director (Principal Executive Officer) |

---

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates stated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| */s/ Steven Reinharz* | Chief Executive Officer/Director | March 31, 2023 |
| **Steven Reinharz** |  |  |
| */s/ Anthony Brenz* | Chief Financial Officer | March 31, 2023 |
| **Anthony Brenz** |  |  |

---

------

## Ex-5

**EXHIBIT 5.1**

Frederick M. Lehrer, P. A.

2108 Emil Jahna Road

Clermont, Florida 34711

(561) 706-7646

flehrer@securitiesattorney1.com

March 31, 2023

Artificial Intelligence Technology Solutions, Inc.

Attn: Board of Directors

Re: Artificial Intelligence Technology Solutions, Inc.<br> Registration Statement on Form S-1

Board of Directors:

You have requested my opinion, as counsel, with respect to certain matters in connection with the filing by Artificial Intelligence Technology Solutions, Inc. , a Nevada corporation (the "Registrant"), of a Registration Statement on Form S-1 (the "Registration Statement") with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act"), including a related prospectus filed with the Registration Statement (the "Prospectus"), covering the resale by Selling Stockholder GHS Investments LLC ("GHS") of 1,250,000,000 Common Stock Shares, par value $0.00001 (the "Shares") to be sold by the Selling Stockholder GHS.

For the purpose of rendering my opinion herein, I have reviewed: (i) the revised statutes of the State of Nevada to the extent I deem relevant to the matters opined upon herein; (ii) copies of the Company's Articles of Incorporation and amendments thereto; (iii) the Company's Bylaws, as currently in effect as of the date hereof; (iv) selected proceedings of the Company's Board of Directors and certificates of the Company's officers; and (v) such other documents as I have deemed necessary and relevant to the matter opined upon herein.

I have assumed the genuineness of all signatures, the conformity to authentic original documents of the copies of all such documents submitted to me as certified, conformed, and photocopied, including the quoted, extracted, excerpted, and reprocessed text of such documents. I have not been engaged to examine, nor have I examined, the Registration Statement for the purpose of determining the accuracy or completeness of the information included therein or the compliance and conformity thereof with the rules and regulations of the SEC or the requirements of Form S-1, and I express no opinion with respect thereto.

My opinion is limited to matters of the Nevada Revised Statutes and I do not express an opinion on the federal law of the United States of America or the law of any state or jurisdiction therein other than the State of Nevada, as specified herein.

On the basis of the foregoing, and in reliance thereon, I am of the opinion that the Shares being offered pursuant to the Registration Statement will be, when issued and in the manner described in the Registration Statement, validly issued, fully paid and non-assessable Shares.

I consent to the use of my opinion as an exhibit to the registration statement and to the reference thereto under the heading "Interests of Named Experts and Counsel" in the prospectus contained in the registration statement.

In giving the foregoing consents, I do not thereby admit that my firm comes within the category of persons or entities whose consent is required under Section 7 of the Act or the rules and regulations of the SEC promulgated thereunder.

Sincerely,

Frederick M. Lehrer, P. A.

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| By: | /s/ Frederick M. Lehrer, Esq. |
|  | Frederick M. Lehrer, Esq. |

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## Ex-10

**EXHIBIT 10.1**

**EQUITY FINANCING AGREEMENT**

This EQUITY FINANCING AGREEMENT (the "Agreement"), dated as of March 22, 2023 (the "Execution Date"), is entered into by and between Artificial Intelligence Technology Solutions, Inc, a Nevada corporation with its principal executive office at 10800 Galaxie Blvd, Ferndale, MI 48220 (the "**Company**"), and GHS Investments LLC, a Nevada limited liability company, with offices at 420 Jericho Turnpike, Suite 102, Jericho, NY 11753 (the **"Investor"**).

**RECITALS:**

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Investor shall invest up to Twelve Million Five Hundred Thousand Dollars ($12,500,000) (the "Commitment Amount"), over the course of twenty four (24) months immediately following the Effective Date (the "Contract Period") to purchase the Company's common stock, par value $0.00001 per share (the "**Common Stock**");

WHEREAS, such investments will be made in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the "**1933 Act**"), Rule 506 of Regulation D promulgated by the SEC under the 1933 Act, and/or upon such other exemption from the registration requirements of the 1933 Act as may be available with respect to any or all of the investments in Common Stock to be made hereunder; and

WHEREAS, contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement substantially in the form attached hereto as <u>Exhibit A</u> (the "**Registration Rights Agreement**") pursuant to which the Company has agreed to provide certain registration rights under the 1933 Act, and the rules and regulations promulgated thereunder, and applicable state securities laws.

NOW THEREFORE, in consideration of the foregoing recitals, which shall be considered an integral part of this Agreement, the covenants and agreements set forth hereafter, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Investor hereby agree as follows:

**SECTION I.**

**DEFINITIONS**

For all purposes of and under this Agreement, the following terms shall have the respective meanings below, and such meanings shall be equally applicable to the singular and plural forms of such defined terms.

"**1933 Act**" shall have the meaning set forth in the recitals.

"**1934 Act**" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same will then be in effect.

"**Affiliate**" shall have the meaning set forth in <u>Section 5.7</u>.

"**Agreement**" shall have the meaning set forth in the preamble.

"**Articles of Incorporation**" shall have the meaning set forth in <u>Section 4.3</u>.

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"**By-laws**" shall have the meaning set forth in <u>Section 4.3</u>.

"**Closing**" shall have the meaning set forth in <u>Section 2.4</u>.

"**Closing Date**" shall have the meaning set forth in <u>Section 2.4</u>.

"**Common Stock**" shall have the meaning set forth in the recitals.

"**Control**" or "**Controls**" shall have the meaning set forth in <u>Section 5.7</u>.

"**Effective Date**" shall mean the date the SEC declares effective under the 1933 Act the Registration Statement covering the Securities.

"**Environmental Laws**" shall have the meaning set forth in <u>Section 4.13</u>.

"**Execution Date**" shall have the meaning set forth in the preamble.

"**Indemnified Liabilities**" shall have the meaning set forth in <u>Section 10</u>.

"**Indemnitees**" shall have the meaning set forth in <u>Section 10</u>.

"**Indemnitor**" shall have the meaning set forth in <u>Section 10</u>.

"**Ineffective Period**" shall mean any period of time that the Registration Statement or any supplemental registration statement becomes ineffective or unavailable for use for the sale or resale, as applicable, of any or all of the Registrable Securities (as defined in the Registration Rights Agreement) for any reason (or in the event the prospectus under either of the above is not current and deliverable) during any time period required under the Registration Rights Agreement.

"**Investor**" shall have the meaning set forth in the preamble.

**"Market Price"** shall mean the lowest traded price of the Common Stock during the Pricing Period.

"**Material Adverse Effect**" shall have the meaning set forth in <u>Section 4.1</u>.

"**Maximum Common Stock Issuance**" shall have the meaning set forth in <u>Section 2.5</u>.

"**Open Period**" shall mean the period beginning on and including the Trading Day immediately following the Effective Date and ending on the termination of the Agreement in accordance with <u>Section 8</u>.

"**Pricing Period**" shall mean the nine (9) consecutive Trading Days preceding the relevant Put Notice Date.

"**Principal Market**" shall mean the New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the OTC Markets, whichever is the principal market on which the Common Stock is listed.

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"**Prospectus**" shall mean the prospectus, preliminary prospectus and supplemental prospectus used in connection with the Registration Statement.

"**Purchase Amount**" shall mean the total amount being paid by the Investor on a particular Closing Date to purchase the Securities.

"**Purchase Price**" shall mean eighty percent (80%) of the Market Price. If the average Closing Price for the Common Stock during the three (3) trading days preceding a Put Notice is equal to or greater than one cent ($.01) per share, the applicable Purchase Price shall equal eighty five percent (85%) of the Market Price. Following an up-list to the NASDAQ or an equivalent national exchange by the Company, the Purchase price shall equal ninety percent (90%) of the lowest Volume Weighted Average Price ("VWAP") for the Common Stock during the Pricing Period, subject to a floor of $4.50 per share, below which the Company shall not deliver a Put.

"**Put**" shall mean the Company is entitled to request equity investments (the "Put" or "Puts") by the Investor, pursuant to which the Company will issue Common Stock to the Investor with an aggregate Purchase Price equal to the value of the Put.

"**Put Amount**" shall mean the total dollar amount requested by the Company pursuant to an applicable Put. The timing and amounts of each Put shall be at the discretion of the Company. The maximum dollar amount of each Put will not exceed two hundred and fifty percent (250%) of the average daily trading dollar volume for the Common Stock during the ten (10) consecutive Trading Days preceding the Put Notice Date. No Put will be made in an amount equaling less than ten thousand dollars ($10,000) or greater than one million and five hundred thousand dollars ($1,500,000). Puts are further limited to the Investor owning no more than 4.99% of the outstanding stock of the Company at any given time.

"**Put Notice**" shall mean a written notice sent to the Investor by the Company stating the Put Amount in U.S. dollars that the Company intends to sell to the Investor pursuant to the terms of the Agreement and stating the current number of Shares issued and outstanding on such date.

"**Put Notice Date**" shall mean the Trading Day on which the Investor receives a Put Notice.

"**Put Restriction**" shall mean a minimum of ten (10) Trading Days following a Closing Date. During this time, the Company shall not be entitled to deliver another Put Notice.

"**Put Shares**" shall have the meaning set forth in <u>Section 2.4</u>.

"**Registered Offering Transaction Documents**" shall mean this Agreement and the Registration Rights Agreement between the Company and the Investor as of the date herewith.

"**Registration Rights Agreement**" shall have the meaning set forth in the recitals.

"**Registration Statement**" means the registration statement of the Company filed under the 1933 Act covering the Securities issuable hereunder.

"**Related Party**" shall have the meaning set forth in <u>Section 5.7</u>.

"**Resolution**" shall have the meaning set forth in <u>Section 7.5</u>.

"**SEC**" shall mean the U.S. Securities and Exchange Commission.

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"**SEC Documents**" shall have the meaning set forth in <u>Section 4.6</u>.

"**Securities**" shall mean the shares of Common Stock issued pursuant to the terms of this Agreement.

**"Settlement Date"** shall have the meaning set forth in <u>Section 2.4</u>.

"**Shares**" shall mean the shares of the Common Stock.

"**Subsidiaries**" shall have the meaning set forth in <u>Section 4.1</u>.

"**Trading Day**" shall mean any day on which the Principal Market for the Common Stock is open for trading, from the hours of 9:30 am until 4:00 pm.

"**Transaction Costs"** the Company shall bear the costs of the Registration Statement. At the Closing of the first Put, the Company shall deposit eight thousand dollars ($8,000) with the Investor's designated legal counsel to offset legal costs.

**SECTION II**

**PURCHASE AND SALE OF COMMON STOCK**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <u>PURCHASE AND SALE OF COMMON STOCK</u>. Subject to the terms and conditions set forth herein, the Company shall issue and sell to the Investor, and the Investor shall purchase from the Company, up to that number of Shares having an aggregate Purchase Price of Twelve Million Five Hundred Thousand Dollars ($12,500,000).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <u>DELIVERY OF PUT NOTICES</u>. Subject to the terms and conditions herein, and from time to time during the Open Period, the Company may, in its sole discretion, deliver a Put Notice to the Investor which states the dollar amount (designated in U.S. Dollars), which the Company intends to sell to the Investor on a Closing Date (the "**Put**"). The Put Notice shall be in the form attached hereto as <u>Exhibit C</u> and incorporated herein by reference. The Purchase Price of the Put shall be eighty percent (80%) percent of the Market Price. If the average Closing Price for the Common Stock during the three (3) trading days preceding a Put Notice is equal to or greater than one cent ($.01) per share, the applicable Purchase Price shall equal eighty five percent (85%) of the Market Price. Following an up-list to the NASDAQ or equivalent national exchange, the Purchase Price shall be ninety percent (90%) of the lowest VWAP during the Pricing Period, subject to a floor price of $4.50 per share, below which the Company shall not deliver a Put. During the Open Period, the Company shall not be entitled to submit a Put Notice until after the previous Closing has been completed. There will be a minimum of ten (10) trading days between Closings. No Put will be made in an amount equaling less than ten thousand dollars ($10,000) or greater than one million and five hundred thousand dollars ($1,500,000).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 <u>CONDITIONS TO INVESTOR'S OBLIGATION TO PURCHASE SHARES</u>. Notwithstanding anything to the contrary in this Agreement, the Company shall not be entitled to deliver a Put Notice and the Investor shall not be obligated to purchase any Shares at a Closing unless each of the following conditions are satisfied:

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i. a Registration Statement shall have been declared effective and shall remain effective and available for the resale of all the Registrable Securities (as defined in the Registration Rights Agreement) at all times until the Closing with respect to the subject Put Notice;

ii. at all times during the period beginning on the related Put Notice Date and ending on and including the related Closing Date, the Common Stock shall have been listed or quoted for trading on the Principal Market and shall not have been suspended from trading thereon for a period of two (2) consecutive Trading Days during the Open Period and the Company shall not have been notified of any pending or threatened proceeding or other action to suspend the trading of the Common Stock;

iii. the Company has complied with its obligations and is otherwise not in breach of or in default under, this Agreement, the Registration Rights Agreement or any other agreement executed between the parties, which has not been cured prior to delivery of the Put Notice;

iv. no injunction shall have been issued and remain in force, or action commenced by a governmental authority which has not been stayed or abandoned, prohibiting the purchase or the issuance of the Securities; and

v. the issuance of the Securities will not violate any requirements of the Principal Market.

If any of the events described in clauses (i) through (v) above occurs during a Pricing Period, then the Investor shall have no obligation to purchase the Put Amount of Common Stock set forth in the applicable Put Notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 <u>MECHANICS OF PURCHASE OF SHARES BY INVESTOR.</u> Subject to the satisfaction of the conditions set forth in Sections 2.5, 7 and 8 of this Agreement, at the end of the Pricing Period, the Purchase Price shall be established and an amount of Shares equaling one hundred percent (100%) of the Put Amount (the "**Put Shares**") shall be delivered to the Investor's broker for a particular Put.

The Closing of a Put shall occur upon the first Trading Day following the confirmation of receipt and approval for trading by Investor's broker of the Put Shares, whereby the Company shall have caused the Transfer Agent to electronically transmit, prior to the applicable Closing Date, the applicable Put Shares by crediting the account of the Investor's broker with DTC through its Deposit Withdrawal Agent Commission ("**DWAC**") system. The Investor shall deliver the Purchase Amount specified in the Put Notice (less deposit and clearing fees) by wire transfer of immediately available funds to an account designated by the Company if the aforementioned receipt and approval are confirmed before 9:30 AM ET or on the following Trading Day if receipt and approval by the Investor's broker is made after 9:30 AM ET("**Closing Date**" or "**Closing**"). On or prior to such Closing Date, each of the Company and Investor shall deliver to each other all documents, instruments and writings required to be delivered or reasonably requested by either of them pursuant to this Agreement in order to implement and effect the transactions contemplated herein.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 <u>OVERALL LIMIT ON COMMON STOCK ISSUABLE</u>. Notwithstanding anything contained herein to the contrary, if during the Open Period the Company becomes listed on an exchange which limits the number of shares of Common Stock that may be issued without shareholder approval, then the number of Shares issuable by the Company and purchasable by the Investor, shall not exceed that number of the shares of Common Stock that may be issuable without shareholder approval (the "**Maximum Common Stock Issuance**"). If such issuance of shares of Common Stock could cause a delisting on the Principal Market then the Maximum Common Stock Issuance shall first be approved by the Company's shareholders in accordance with applicable law and the By-laws and the Articles of Incorporation of the Company. The parties understand and agree that the Company's failure to seek or obtain such shareholder approval shall in no way adversely affect the validity and due authorization of the issuance and sale of Securities or the Investor's obligation in accordance with the terms and conditions hereof to purchase a number of Shares in the aggregate up to the Maximum Common Stock Issuance, and that such approval pertains only to the applicability of the Maximum Common Stock Issuance limitation provided in this <u>Section 2.5</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6 <u>LIMITATION ON AMOUNT OF OWNERSHIP</u>. Notwithstanding anything to the contrary in this Agreement, in no event shall the Investor be entitled to purchase that number of Shares, which when added to the sum of the number of shares of Common Stock beneficially owned (as such term is defined under Section 13(d) and Rule 13d-3 of the 1934 Act), by the Investor, would exceed 4.99% of the number of shares of Common Stock outstanding on the Closing Date, as determined in accordance with Rule 13d-1(j) of the 1934 Act.

**SECTION III**

**INVESTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS**

The Investor represents and warrants to the Company, and covenants, that to the best of the Investor's knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 <u>SOPHISTICATED INVESTOR</u>. The Investor has, by reason of its business and financial experience, such knowledge, sophistication and experience in financial and business matters and in making investment decisions of this type that it is capable of (I) evaluating the merits and risks of an investment in the Securities and making an informed investment decision; (II) protecting its own interest; and (III) bearing the economic risk of such investment for an indefinite period of time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 <u>AUTHORIZATION; ENFORCEMENT</u>. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Investor and is a valid and binding agreement of the Investor enforceable against the Investor in accordance with its terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 <u>SECTION 9 OF THE 1934 ACT</u>. During the term of this Agreement, the Investor will comply with the provisions of Section 9 of the 1934 Act, and the rules promulgated thereunder, with respect to transactions involving the Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 <u>ACCREDITED INVESTOR</u>. Investor is an "Accredited Investor" as that term is defined in Rule 501(a) of Regulation D of the 1933 Act.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5 <u>NO CONFLICTS</u>. The execution, delivery and performance of the Documents by the Investor and the consummation by the Investor of the transactions contemplated hereby and thereby will not result in a violation of Partnership Agreement or other organizational documents of the Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6 <u>OPPORTUNITY TO DISCUSS</u>. The Investor has received all materials relating to the Company's business, finance and operations which it has requested. The Investor has had an opportunity to discuss the business, management and financial affairs of the Company with the Company's management.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7 <u>INVESTMENT PURPOSES</u>. The Investor is purchasing the Securities for its own account for investment purposes and agrees to resell or otherwise dispose of the Securities solely in accordance with the registration provisions of the 1933 Act (or pursuant to an exemption from such registration provisions).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.8 <u>GOOD STANDING</u>. The Investor is a limited liability company, duly organized, validly existing and in good standing in the State of Nevada.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9 <u>TAX LIABILITIES</u>. The Investor understands that it is liable for its own tax liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.10 <u>REGULATION M</u>. The Investor will comply with Regulation M under the 1934 Act, if applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.11 <u>PROHIBITED TRADING</u>. No short sales shall be permitted by the Investor or its affiliates during the period commencing on the Execution Date and continuing through the termination of this Agreement.

**SECTION IV**

**REPRESENTATIONS AND WARRANTIES OF THE COMPANY**

Except as set forth in the Schedules attached hereto, or as disclosed on the Company's SEC Documents, the Company represents and warrants to the Investor that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <u>ORGANIZATION AND QUALIFICATION</u>. The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Nevada, and has the requisite corporate power and authorization to own its properties and to carry on its business as now being conducted. Both the Company and the companies it owns or controls ("**Subsidiaries**") are duly qualified to do business and are in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, "**Material Adverse Effect**" means a change, event, circumstance, effect or state of facts that has had or is reasonably likely to have, a material adverse effect on the business, properties, assets, operations, results of operations, financial condition or prospects of the Company and its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements and instruments to be entered into in connection herewith, or on the authority or ability of the Company to perform its obligations under the Registered offering Transaction Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <u>AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS</u>.

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i. The Company has the requisite corporate power and authority to enter into and perform this Agreement and the Registration Rights Agreement (collectively, the "**Registered Offering Transaction Documents** "), and to issue the Securities in accordance with the terms hereof and thereof.

ii. The execution and delivery of the Registered Offering Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby, including without limitation the issuance of the Securities pursuant to this Agreement, have been duly and validly authorized by the Company's Board of Directors and no further consent or authorization is required by the Company, its Board of Directors, or its shareholders.

iii. The Registered Offering Transaction Documents have been duly and validly executed and delivered by the Company.

iv. The Registered Offering Transaction Documents constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 <u>CAPITALIZATION</u>. As of the date hereof, the authorized capital stock of the Company consists of: (i)7.225,000 shares of the Common Stock, par value $0.00001 per share, of which as of the date hereof 5,866,380,263 shares are issued and outstanding; and, (ii) 4,350,000 shares of Series E Preferred Stock, par value $0.001 of which as of the date hereof 3,350,000 Series E Preferred Stock are issued and outstanding (iii) 4,350 shares of Series F Preferred Stock, par value $1.00 of which as of the date hereof 2.533 Series F Preferred Stock are issued and outstanding (iv) 100,000 shares of Series G Preferred Stock, par value $0.001 of which as of the date hereof 0 Series G Preferred Stock are issued and outstanding (v) 15,545,650 shares of undesignated Preferred Stock, no par value of which as of the date hereof 0 undesignated Preferred Stock are issued and outstanding. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable.

Except as disclosed in the Company's publicly available filings with the SEC and as will be disclosed in the Registration Statement, and based on the best information available and efforts of the Company's management, or as otherwise set forth on Schedule 4.3:

i. no shares of the Company's capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company;

ii. there are no outstanding debt securities;

iii. there are no outstanding shares of capital stock, options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries;

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iv. there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except the Registration Rights Agreement);

v. there are no outstanding securities of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries;

vi. there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement;

vii. the Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement; and

viii. there is no dispute as to the classification of any shares of the Company's capital stock.

The Company has furnished to the Investor, or the Investor has had access through EDGAR to, true and correct copies of the Company's Articles of Incorporation and all amendments thereto, as in effect on the date hereof (the "**Articles of Incorporation**"), and the Company's By-laws and all amendments thereto, as in effect on the date hereof (the "**By-laws**"), and the terms of all securities convertible into or exercisable for Common Stock and the material rights of the holders thereof in respect thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 <u>ISSUANCE OF SHARES</u>. As of the filing of the Registration Statement the Company will have reserved the amount of Shares included in the Registration Statement for issuance pursuant to the Registered Offering Transaction Documents, which have been duly authorized and reserved (subject to adjustment pursuant to the Company's covenant set forth in <u>Section 5.5</u> below) pursuant to this Agreement. Upon issuance in accordance with this Agreement, the Securities will be validly issued, fully paid for and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof. In the event the Company cannot register a sufficient number of Shares for issuance pursuant to this Agreement, the Company will use its best efforts to authorize and reserve for issuance the number of Shares required for the Company to perform its obligations hereunder as soon as reasonably practicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5 <u>NO CONFLICTS</u>. The execution, delivery and performance of the Registered Offering Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Articles of Incorporation, any Certificate of Designations, Preferences and Rights of any outstanding series of preferred stock of the Company or the By-laws; or (ii) conflict with, or constitute a material default (or an event which with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, contract, indenture mortgage, indebtedness or instrument to which the Company or any of its Subsidiaries is a party, or to the Company's knowledge result in a violation of any law, rule, regulation, order, judgment or decree (including United States federal and state securities laws and regulations and the rules and regulations of the Principal Market or principal securities exchange or trading market on which the Common Stock is traded or listed) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected. Neither the Company nor its Subsidiaries is in violation of any term of, or in default under, the Articles of Incorporation, any Certificate of Designations, Preferences and Rights of any outstanding series of preferred stock of the Company or the By-laws or their organizational charter or by-laws, respectively, or any contract, agreement, mortgage,

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indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or its Subsidiaries, except for possible conflicts, defaults, terminations, amendments, accelerations, cancellations and violations that would not individually or in the aggregate have or constitute a Material Adverse Effect. The business of the Company and its Subsidiaries is not being conducted, and shall not be conducted, in violation of any law, statute, ordinance, rule, order or regulation of any governmental authority or agency, regulatory or self-regulatory agency, or court, except for possible violations the sanctions for which either individually or in the aggregate would not have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the 1933 Act or any securities laws of any states, to the Company's knowledge, the Company is not required to obtain any consent, authorization, permit or order of, or make any filing or registration (except the filing of a registration statement as outlined in the Registration Rights Agreement between the parties) with, any court, governmental authority or agency, regulatory or self-regulatory agency or other third party in order for it to execute, deliver or perform any of its obligations under, or contemplated by, the Registered Offering Transaction Documents in accordance with the terms hereof or thereof. All consents, authorizations, permits, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof and are in full force and effect as of the date hereof. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company is not, and will not be, in violation of the listing requirements of the Principal Market as in effect on the date hereof and on each of the Closing Dates and is not aware of any facts which would reasonably lead to delisting of the Common Stock by the Principal Market in the foreseeable future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6 <u>SEC DOCUMENTS; FINANCIAL STATEMENTS</u>. As of the date hereof, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, and amendments thereto, being hereinafter referred to as the "**SEC Documents**"). The Company has delivered to the Investor or its representatives, or they have had access through EDGAR to, true and complete copies of the SEC Documents. As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC or the time they were amended, if amended, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, by a firm that is a member of the Public Companies Accounting Oversight Board ("**PCAOB**") consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other written information provided by or on behalf of the Company to the Investor which is not included in the SEC Documents, including, without limitation, information referred to in <u>Section 4.3</u> of this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstance under which they are or were made, not misleading. Neither the Company nor any of its Subsidiaries or any of their officers, directors, employees or agents have provided the Investor with any material, nonpublic information which was not publicly disclosed prior to the date hereof and any material, nonpublic information provided to the Investor by the Company or its

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Subsidiaries or any of their officers, directors, employees or agents prior to any Closing Date shall be publicly disclosed by the Company prior to such Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7 <u>ABSENCE OF CERTAIN CHANGES</u>. Except as otherwise set forth in the SEC Documents, the Company does not intend to change the business operations of the Company in any material way. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company or its Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.8 <u>ABSENCE OF LITIGATION AND/OR REGULATORY PROCEEDINGS</u>. Except as set forth in the SEC Documents, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of Company or any of its Subsidiaries, threatened against or affecting the Company, the Common Stock or any of the Company's Subsidiaries or any of the Company's or the Company's Subsidiaries' officers or directors in their capacities as such, in which an adverse decision could have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9 <u>ACKNOWLEDGMENT REGARDING INVESTOR'S PURCHASE OF SHARES</u>. The Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm's length investor with respect to the Registered Offering Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Registered Offering Transaction Documents and the transactions contemplated hereby and thereby and any advice given by the Investor or any of its respective representatives or agents in connection with the Registered Offering Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Investor's purchase of the Securities, and is not being relied on by the Company. The Company further represents to the Investor that the Company's decision to enter into the Registered Offering Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.10 <u>NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES</u>. Except as set forth in the SEC Documents, as of the date hereof, no event, liability, development or circumstance has occurred or exists, or to the Company's knowledge is contemplated to occur, with respect to the Company or its Subsidiaries or their respective business, properties, assets, prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.11 <u>EMPLOYEE RELATIONS</u>. Neither the Company nor any of its Subsidiaries is involved in any union labor dispute nor, to the knowledge of the Company or any of its Subsidiaries, is any such dispute threatened. Neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that relations with their employees are good. No executive officer (as defined in Rule 501(f) of the 1933 Act) has notified the Company that such officer intends to leave the Company's employ or otherwise terminate such officer's employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.12 <u>INTELLECTUAL PROPERTY RIGHTS</u>. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark

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registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted. Except as set forth in the SEC Documents, none of the Company's trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or other intellectual property rights necessary to conduct its business as now or as proposed to be conducted have expired or terminated, or are expected to expire or terminate within three (3) years from the date of this Agreement. The Company and its Subsidiaries do not have any knowledge of any infringement by the Company or its Subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other similar rights of others, or of any such development of similar or identical trade secrets or technical information by others and, except as set forth in the SEC Documents, there is no claim, action or proceeding being made or brought against, or to the Company's knowledge, being threatened against, the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement; and the Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and its Subsidiaries have taken commercially reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.13 <u>ENVIRONMENTAL LAWS</u>. The Company and its Subsidiaries (i) are, to the knowledge of the management and directors of the Company and its Subsidiaries, in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("**Environmental Laws**"); (ii) have, to the knowledge of the management and directors of the Company, received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in compliance, to the knowledge of the management and directors of the Company, with all terms and conditions of any such permit, license or approval where, in each of the three (3) foregoing cases, the failure to so comply would have, individually or in the aggregate, a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.14 <u>TITLE</u>. The Company and its Subsidiaries have good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in the SEC Documents or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or any of its Subsidiaries. Any real property and facilities held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.15 <u>INSURANCE</u>. Each of the Company's Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company reasonably believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has been refused any insurance coverage sought or applied for and neither the Company nor its Subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.16 <u>REGULATORY PERMITS</u>. The Company and its Subsidiaries have in full force and effect all certificates, approvals, authorizations and permits from the appropriate federal, state, local or foreign regulatory authorities and comparable foreign regulatory agencies, necessary to own, lease or operate their respective properties and assets and conduct their respective businesses, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, approval, authorization or permit, except for such certificates, approvals, authorizations or permits which if not obtained, or such revocations or modifications which, would not have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.17 <u>INTERNAL ACCOUNTING CONTROLS</u>. Except as otherwise set forth in the SEC Documents, the Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles by a firm with membership to the PCAOB and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company's management has determined that the Company's internal accounting controls were not effective as of the date of this Agreement as further described in the SEC Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.18 <u>NO MATERIALLY ADVERSE CONTRACTS, ETC</u>. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company's officers has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement which in the judgment of the Company's officers has or is expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.19 <u>TAX STATUS</u>. The Company and each of its Subsidiaries has made or filed all United States federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.20 <u>CERTAIN TRANSACTIONS</u>. Except as set forth in the SEC Documents filed at least ten (10) days prior to the date hereof and except for arm's length transactions pursuant to which the Company makes payments in the ordinary course of business upon terms no less favorable than the Company could obtain from disinterested third parties, none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer,

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director, or any such employee has a substantial interest or is an officer, director, trustee or partner, such that disclosure would be required in the SEC Documents..

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.21 <u>DILUTIVE EFFECT</u>. The Company understands and acknowledges that the number of shares of Common Stock issuable upon purchases pursuant to this Agreement will increase in certain circumstances including, but not necessarily limited to, the circumstance wherein the trading price of the Common Stock declines during the period between the Effective Date and the end of the Open Period. The Company's executive officers and directors have studied and fully understand the nature of the transactions contemplated by this Agreement and recognize that they have a potential dilutive effect on the shareholders of the Company. The Board of Directors of the Company has concluded, in its good faith business judgment, and with full understanding of the implications, that such issuance is in the best interests of the Company. The Company specifically acknowledges that, subject to such limitations as are expressly set forth in the Registered Offering Transaction Documents, its obligation to issue shares of Common Stock upon purchases pursuant to this Agreement is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.22 <u>NO GENERAL SOLICITATION</u>. Neither the Company, nor any of its affiliates, nor any person acting on its behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Common Stock to be offered as set forth in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.23 <u>NO BROKERS, FINDERS OR FINANCIAL ADVISORY FEES OR COMMISSIONS</u>. No brokers, finders or financial advisory fees or commissions will be payable by the Company, its agents or Subsidiaries, with respect to the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.24 <u>EXCLUSIVITY</u>. The Company shall not pursue a similar equity financing transaction as envisioned hereunder (the "Equity Financing") with any other party unless and until good faith negotiations have terminated between the Investor and the Company or until such time as the Registration Statement has been declared effective by the SEC.

**SECTION V**

**COVENANTS OF THE COMPANY**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <u>BEST EFFORTS</u>. The Company shall use all commercially reasonable efforts to timely satisfy each of the conditions set forth in <u>Section 7</u> of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <u>REPORTING STATUS</u>. Until one of the following occurs, the Company shall file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status, or take an action or fail to take any action, which would terminate its status as a reporting company under the 1934 Act: (i) this Agreement terminates pursuant to <u>Section 8</u> and the Investor has the right to sell all of the Securities without restrictions pursuant to Rule 144 promulgated under the 1933 Act, or such other exemption, or (ii) the date on which the Investor has sold all the Securities and this Agreement has been terminated pursuant to <u>Section 8</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <u>USE OF PROCEEDS</u>. The Company will use the proceeds from the sale of the Put Shares (excluding amounts paid by the Company for fees as set forth in the Registered Offering Transaction Documents) for general corporate and working capital purposes and acquisitions or assets,

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businesses or operations or for other purposes that the Board of Directors, in good faith, deem to be in the best interest of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4 <u>FINANCIAL INFORMATION</u>. During the Open Period, the Company agrees to make available to the Investor via EDGAR or other electronic means the following documents and information on the forms set forth: (i) within five (5) Trading Days after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any Registration Statements or amendments filed pursuant to the 1933 Act; (ii) copies of any notices and other information made available or given to the shareholders of the Company generally, contemporaneously with the making available or giving thereof to the shareholders; and (iii) within two (2) calendar days of filing or delivery thereof, copies of all documents filed with, and all correspondence sent to, the Principal Market, any securities exchange or market, or the Financial Industry Regulatory Association, unless such information is material nonpublic information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5 <u>RESERVATION OF SHARES</u>. The Company shall take all action necessary to at all times have authorized, and reserved the amount of Shares included in the Company's registration statement for issuance pursuant to the Registered Offering Transaction Documents. In the event that the Company determines that it does not have a sufficient number of authorized shares of Common Stock to reserve and keep available for issuance as described in this <u>Section 5.5</u>, the Company shall use all commercially reasonable efforts to increase the number of authorized shares of Common Stock by seeking shareholder approval for the authorization of such additional shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6 <u>LISTING</u>. The Company shall promptly secure and maintain the listing of all of the Registrable Securities (as defined in the Registration Rights Agreement) on the Principal Market and each other national securities exchange and automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, such listing of all Registrable Securities from time to time issuable under the terms of the Registered Offering Transaction Documents. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market (excluding suspensions of not more than one (1) Trading Day resulting from business announcements by the Company). The Company shall promptly provide to the Investor copies of any notices it receives from the Principal Market regarding the continued eligibility of the Common Stock for listing on such automated quotation system or securities exchange. The Company shall pay all fees and expenses in connection with satisfying its obligations under this <u>Section 5.6</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.7 <u>TRANSACTIONS WITH AFFILIATES</u>. The Company shall not, and shall cause each of its Subsidiaries not to, enter into, amend, modify or supplement, or permit any Subsidiary to enter into, amend, modify or supplement, any agreement, transaction, commitment or arrangement with any of its or any Subsidiary's officers, directors, persons who were officers or directors at any time during the previous two (2) years, shareholders who beneficially own 5% or more of the Common Stock, or Affiliates or with any individual related by blood, marriage or adoption to any such individual or with any entity in which any such entity or individual owns a 5% or more beneficial interest (each a "**Related Party**"), except for (i) customary employment arrangements and benefit programs on reasonable terms, (ii) any agreement, transaction, commitment or arrangement on an arms-length basis on terms no less favorable than terms which would have been obtainable from a disinterested third party other than such Related Party, or (iii) any agreement, transaction, commitment or arrangement which is approved by a majority of the disinterested directors of the Company. For purposes hereof, any director who is also an officer of the Company or any Subsidiary of the Company shall not be a disinterested director with respect to any such agreement, transaction, commitment or arrangement. "**Affiliate**" for purposes hereof

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means, with respect to any person or entity, another person or entity that, directly or indirectly, (i) has a 5% or more equity interest in that person or entity, (ii) has 5% or more common ownership with that person or entity, (iii) controls that person or entity, or (iv) is under common control with that person or entity. "**Control**" or "**Controls**" for purposes hereof means that a person or entity has the power, directly or indirectly, to conduct or govern the policies of another person or entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.8 <u>FILING OF FORM 8-K</u>. On or before the date which is four (4) Trading Days after the Execution Date, the Company shall file a Current Report on Form 8-K with the SEC describing the terms of the transaction contemplated by the Registered Offering Transaction Documents in the form required by the 1934 Act, if such filing is required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.9 <u>CORPORATE EXISTENCE</u>. The Company shall use all commercially reasonable efforts to preserve and continue the corporate existence of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10 <u>NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKE A PUT</u>. The Company shall promptly notify the Investor upon the occurrence of any of the following events in respect of a Registration Statement or related prospectus in respect of an offering of the Securities: (i) receipt of any request for additional information by the SEC or any other federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or related prospectus; (ii) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Securities for sale in any jurisdiction or the initiation or notice of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related prospectus or documents so that, in the case of a Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) the Company's reasonable determination that a post-effective amendment or supplement to the Registration Statement would be appropriate, and the Company shall promptly make available to Investor any such supplement or amendment to the related prospectus. The Company shall not deliver to Investor any Put Notice during the continuation of any of the foregoing events in this <u>Section 5.10</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.11 <u>TRANSFER AGENT</u>. The Company shall deliver instructions to its transfer agent to issue Shares to the Investor that are issued to the Investor pursuant to the Equity Financing and transactions contemplated herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.12 <u>ACKNOWLEDGEMENT OF TERMS</u>. The Company hereby represents and warrants to the Investor that: (i) it is voluntarily entering into this Agreement of its own free will, (ii) it is not entering this Agreement under economic duress, (iii) the terms of this Agreement are reasonable and fair to the Company, and (iv) the Company has had independent legal counsel of its own choosing review this Agreement, advise the Company with respect to this Agreement, and represent the Company in connection with this Agreement.

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**SECTION VI**

**CONDITIONS OF THE COMPANY'S OBLIGATION TO SELL**

The obligation hereunder of the Company to issue and sell the Securities to the Investor is further subject to the satisfaction, at or before each Closing Date, of each of the following conditions set forth below. These conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 The Investor shall have executed this Agreement and the Registration Rights Agreement and delivered the same to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 The Investor shall have delivered to the Company the Purchase Price for the Securities being purchased by the Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

**SECTION VII**

**FURTHER CONDITIONS OF THE INVESTOR'S OBLIGATION TO PURCHASE**

The obligation of the Investor hereunder to purchase Securities is subject to the satisfaction, on or before each Closing Date, of each of the following conditions set forth below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 The Company shall have executed the Registered Offering Transaction Documents and delivered the same to the Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 The representations and warranties of the Company shall be true and correct as of the date when made and as of the applicable Closing Date as though made at that time and the Company shall have performed, satisfied and complied with the covenants, agreements and conditions required by the Registered Offering Transaction Documents to be performed, satisfied or complied with by the Company on or before such Closing Date. The Investor may request an update as of such Closing Date regarding the representation contained in <u>Section 4.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 The Company shall have executed and delivered to the Investor via DWAC the Securities (in such denominations as the Investor shall request) being purchased by the Investor at such Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4 The Board of Directors of the Company shall have adopted resolutions consistent with <u>Section 4.2(ii)</u> (the "**Resolutions**") and such Resolutions shall not have been amended or rescinded prior to such Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.5 No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.6 Within thirty (30) calendar days after the Agreement is executed, the Company agrees to use its best efforts to file with the SEC the Registration Statement covering the shares of stock underlying the Equity Financing contemplated herein. Such Registration Statement shall conform to the requirements of the rules and regulations of the SEC, and be subject to the reasonable approval of the Investor. The Company will take any and all steps necessary to have its Registration Statement declared

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effective by the SEC within 30 calendar days but no more than 90 calendar days after the Company has filed its Registration Statement. The Registration Statement shall be effective on each Closing Date and no stop order suspending the effectiveness of the Registration statement shall be in effect or to the Company's knowledge shall be pending or threatened. Furthermore, on each Closing Date (I) neither the Company nor the Investor shall have received notice that the SEC has issued or intends to issue a stop order with respect to such Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of such Registration Statement, either temporarily or permanently, or intends or has threatened to do so (unless the SEC's concerns have been addressed), and (II) no other suspension of the use or withdrawal of the effectiveness of such Registration Statement or related prospectus shall exist.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.7 At the time of each Closing, the Registration Statement (including information or documents incorporated by reference therein) and any amendments or supplements thereto shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or which would require public disclosure or an update supplement to the prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.8 If applicable, the shareholders of the Company shall have approved the issuance of any Shares in excess of the Maximum Common Stock Issuance in accordance with <u>Section 2.5</u> or the Company shall have obtained appropriate approval pursuant to the requirements of applicable state and federal laws and the Company's Articles of Incorporation and By-laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.9 The conditions to such Closing set forth in <u>Section 2.3</u> shall have been satisfied on or before such Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.10 The Company shall have certified to the Investor the number of Shares of Common Stock outstanding when a Put Notice is given to the Investor. The Company's delivery of a Put Notice to the Investor constitutes the Company's certification of the existence of the necessary number of shares of Common Stock reserved for issuance.

**SECTION VIII**

**TERMINATION**

This Agreement shall terminate upon any of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 when the Investor has purchased an aggregate of Thirty Million Dollars ($30,000,000) in the Common Stock of the Company pursuant to this Agreement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 twenty four (24) months from the date of this Agreement's execution have elapsed.

Any and all shares, or penalties, if any, due under this Agreement shall be immediately payable and due upon termination of this Agreement.

**SECTION IX**

**SUSPENSION**

This Agreement shall be suspended upon any of the following events, and shall remain suspended until such event is rectified:

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i. The trading of the Common Stock is suspended by the SEC, the Principal Market or FINRA for a period of two (2) consecutive Trading Days during the Open Period;

ii. The Common Stock ceases to be quoted, listed or traded on the Principal Market or the Registration Statement is no longer effective (except as permitted hereunder);

iii. The Company breaches representation, warranty, covenant or other such term;

iv. The Company files, threatens or is compelled into Bankruptcy or insolvency; or

v. The Common Stock is no longer DWAC eligible.

vi. Immediately upon the occurrence of one of the above-described events, the Company shall send written notice of such event to the Investor.

**SECTION X**

**INDEMNIFICATION**

In consideration of the parties mutual obligations set forth in the Transaction Documents, the Company (the "**Indemnitor**") shall defend, protect, indemnify and hold harmless the Investor and all of the investor's shareholders, officers, directors, employees, counsel, and direct or indirect investors and any of the foregoing person's agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "**Indemnitees**") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and reasonable expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "**Indemnified Liabilities**"), incurred by any Indemnitee as a result of, or arising out of, or relating to (I) any misrepresentation or breach of any representation or warranty made by the Indemnitor or any other certificate, instrument or document contemplated hereby or thereby; (II) any breach of any covenant, agreement or obligation of the Indemnitor contained in the Registered Offering Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby; or (III) any cause of action, suit or claim brought or made against such Indemnitee by a third party and arising out of or resulting from the execution, delivery, performance or enforcement of the Registered Offering Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, except insofar as any such misrepresentation, breach or any untrue statement, alleged untrue statement, omission or alleged omission is made in reliance upon and in conformity with information furnished to Indemnitor which is specifically intended for use in the preparation of any such Registration Statement, preliminary prospectus, prospectus or amendments to the prospectus. To the extent that the foregoing undertaking by the Indemnitor may be unenforceable for any reason, the Indemnitor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The indemnity provisions contained herein shall be in addition to any cause of action or similar rights Indemnitor may have, and any liabilities the Indemnitor or the Indemnitees may be subject to.

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**SECTION XI**

**GOVERNING LAW; DISPUTES SUBMITTED TO ARBITRATION.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 <u>Law Governing this Agreement</u>. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state or federal courts located in New York City, New York State. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon <u>forum non conveniens</u>. **The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury.** The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Documents by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2 <u>LEGAL FEES; AND MISCELLANEOUS FEES</u>. At the Closing of the first Put, the Company shall deposit eight thousand dollars ($8,000) with the Investor's designated legal counsel to offset legal costs. Except as otherwise set forth in the Registered Offering Transaction Documents (including but not limited to Section V of the Registration Rights Agreement), each party shall pay the fees and expenses of its advisers, counsel, the accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. Any attorneys' fees and expenses incurred by either the Company or the Investor in connection with the preparation, negotiation, execution and delivery of any amendments to this Agreement or relating to the enforcement of the rights of any party, after the occurrence of any breach of the terms of this Agreement by another party or any default by another party in respect of the transactions contemplated hereunder, shall be paid on demand by the party which breached the Agreement and/or defaulted, as the case may be. The Company shall pay all stamp and other taxes and duties levied in connection with the issuance of any Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3 <u>COUNTERPARTS</u>. This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. This Agreement may be executed by facsimile transmission, PDF, electronic signature or other similar electronic means with the same force and effect as if such signature page were an original thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4 <u>HEADINGS; SINGULAR/PLURAL</u>. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Whenever required by the context of this Agreement, the singular shall include the plural and masculine shall include the feminine.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.5 <u>SEVERABILITY</u>. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.6 <u>ENTIRE AGREEMENT; AMENDMENTS</u>. This Agreement is the FINAL AGREEMENT between the Company and the Investor with respect to the terms and conditions set forth herein, and, the terms of this Agreement may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the Parties. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Investor, and no provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. The execution and delivery of the Registered Offering Transaction Documents shall not alter the force and effect of any other agreements between the Parties, and the obligations under those agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.7 <u>NOTICES</u>. Any notices or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (I) upon receipt, when delivered personally; (II) upon receipt, when sent by email; or (III) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such communications shall be:

If to the Company:

Artificial Intelligence Technology Solutions Inc.

10800 Galaxie Avenue

Ferndale, Michigan 48220

Telephone: 877-787-6268

E-mail: steve.reinharz@radsecurity.com

Attention: Steve Reinharz

With a copy to (which shall not constitute notice or service of process):

Frederick M. Lehrer, P.A.

Securities Counsel

2108 Emil Jahna Road

Clermont, FL 34711

Telephone: (561) 706-7646

E-mail: flehrer@securitiesattorney1.com

Attention: Frederick M. Lehrer

If to the Investor:

GHS Investments, LLC

420 Jericho Turnpike,

Suite 102

Jericho, NY 11753

Each party shall provide five (5) days prior written notice to the other party of any change in address.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.8 <u>NO ASSIGNMENT</u>. This Agreement may not be assigned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.9 <u>NO THIRD PARTY BENEFICIARIES</u>. This Agreement is intended for the benefit of the parties hereto and is not for the benefit of, nor may any provision hereof be enforced by, any other person, except that the Company acknowledges that the rights of the Investor may be enforced by its general partner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.10 <u>SURVIVAL</u>. The representations and warranties of the Company and the Investor contained in Sections 3 and 4, the agreements and covenants set forth in Sections 5 and 6, and the indemnification provisions set forth in <u>Section 10</u>, shall survive each of the Closings and the termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.11 <u>PUBLICITY</u>. The Investor acknowledges that this Agreement and all or part of the Registered Offering Transaction Documents may be deemed to be "material contracts" as that term is defined by Item 601(b)(10) of Regulation S-K, and that the Company may therefore be required to file such documents as exhibits to reports or registration statements filed under the 1933 Act or the 1934 Act. The Investor further agrees that the status of such documents and materials as material contracts shall be determined solely by the Company, in consultation with its counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.12 <u>FURTHER ASSURANCES</u>. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.13 <u>PLACEMENT AGENT</u>. If so required, the Company agrees to pay a registered broker dealer, to act as placement agent. The Investor shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other persons or entities for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Registered Offering Transaction Documents. The Company shall indemnify and hold harmless the Investor, their employees, officers, directors, agents, and partners, and their respective affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorney's fees) and expenses incurred in respect of any such claimed or existing fees, as such fees and expenses are incurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.14 <u>NO STRICT CONSTRUCTION</u>. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party, as the parties mutually agree that each has had a full and fair opportunity to review this Agreement and seek the advice of counsel on it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.15 <u>REMEDIES</u>. The Investor shall have all rights and remedies set forth in this Agreement and the Registration Rights Agreement and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which the Investor has by law. Any person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any default or breach of any provision of this Agreement, including the recovery of reasonable attorneys fees and costs, and to exercise all other rights granted by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.16 <u>PAYMENT SET ASIDE</u>. To the extent that the Company makes a payment or payments to the Investor hereunder or under the Registration Rights Agreement or the Investor enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set

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aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.17 <u>PRICING OF COMMON STOCK</u>. For purposes of this Agreement, the price of the Common Stock shall be as reported by Quotestream Media.

**SECTION XII**

**NON-DISCLOSURE OF NON-PUBLIC INFORMATION**

The Company shall not disclose non-public information to the Investor, its advisors, or its representatives.

Nothing herein shall require the Company to disclose non-public information to the Investor or its advisors or representatives, and the Company represents that it does not disseminate non-public information to any investors who purchase stock in the Company in a public offering, to money managers or to securities analysts, provided, however, that notwithstanding anything herein to the contrary, the Company will, as hereinabove provided, immediately notify the advisors and representatives of the Investor and, if any, underwriters, of any event or the existence of any circumstance (without any obligation to disclose the specific event or circumstance) of which it becomes aware, constituting non-public information (whether or not requested of the Company specifically or generally during the course of due diligence by such persons or entities), which, if not disclosed in the prospectus included in the Registration Statement would cause such prospectus to include a material misstatement or to omit a material fact required to be stated therein in order to make the statements, therein, in light of the circumstances in which they were made, not misleading. Nothing contained in this <u>Section 12</u> shall be construed to mean that such persons or entities other than the Investor (without the written consent of the Investor prior to disclosure of such information) may not obtain non-public information in the course of conducting due diligence in accordance with the terms of this Agreement and nothing herein shall prevent any such persons or entities from notifying the Company of their opinion that based on such due diligence by such persons or entities, that the Registration Statement contains an untrue statement of material fact or omits a material fact required to be stated in the Registration Statement or necessary to make the statements contained therein, in light of the circumstances in which they were made, not misleading.

**SECTION XIII**

**ACKNOWLEDGEMENTS OF THE PARTIES**

Notwithstanding anything in this Agreement to the contrary, the parties hereto hereby acknowledge and agree to the following: (i) the Investor makes no representations or covenants that it will not engage in trading in the securities of the Company, other than as provided in Section 3.12 of this Agreement; (ii) the Company shall, by 8:30 a.m. EST on the fourth Trading Day following the date hereof, file a current report on Form 8-K disclosing the material terms of the transactions contemplated hereby and in the other Registered Offering Transaction Documents; (iii) the Company has not and shall not provide material non-public information to the Investor unless prior thereto the Investor shall have executed a written agreement regarding the confidentiality and use of such information; and (iv) the Company understands and confirms that the Investor will be relying on the acknowledgements set forth in clauses (i) through (iii) above if the Investor effects any transactions in the securities of the Company.

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**[Signature page follows]**

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Your signature on this Signature Page evidences your agreement to be bound by the terms and conditions of the Investment Agreement as of the date first written above. The undersigned signatory hereby certifies that he has read and understands the Investment Agreement, and the representations made by the undersigned in this Investment Agreement are true and accurate, and agrees to be bound by its terms.

**GHS INVESTMENTS, LLC**

By: <u>/s/ Mark Grober</u>

Name: <u>Mark Grober</u>

Title: Member

**ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS, INC.**

By: <u>/s/ Steven Reinharz</u>

Name: <u>Steven Reinharz</u>

Title: <u>CEO</u>

[SIGNATURE PAGE OF EQUITY FINANCING AGREEMENT]

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**<u>LIST OF EXHIBITS</u>**

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| | |
|:---|:---|
| EXHIBIT A | Registration Rights Agreement |
| EXHIBIT B | Notice of Effectiveness |
| EXHIBIT C | Put Notice |
| EXHIBIT D | Put Settlement Sheet |

---

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**EXHIBIT A**

**REGISTRATION RIGHTS AGREEMENT**

See attached.

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**EXHIBIT B**

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

Date: __________

[TRANSFER AGENT]

Re: Artificial Intelligence Technology Solutions, Inc.

Ladies and Gentlemen:

We are counsel to Artificial Intelligence Technology Solutions, Inc., a Nevada corporation (the "Company"), and have represented the Company in connection with that certain Equity Financing Agreement (the "Investment Agreement") entered into by and among the Company and GHS Investments, LLC(the "Investor") pursuant to which the Company has agreed to issue to the Investor shares of the Company's common stock, $_____ par value per share (the "Common Stock") on the terms and conditions set forth in the Investment Agreement. Pursuant to the Investment Agreement, the Company also has entered into a Registration Rights Agreement with the Investor (the "Registration Rights Agreement") pursuant to which the Company agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights Agreement), including the shares of Common Stock issued or issuable under the Investment Agreement under the Securities Act of 1933, as amended (the "1933 Act"). In connection with the Company's obligations under the Registration Rights Agreement, on ____________ ___, 20__, the Company filed a Registration Statement on Form S-1 (File No. __-________) (the "Registration Statement") with the Securities and Exchange Commission (the "SEC") relating to the Registrable Securities which names the Investor as a selling shareholder thereunder.

In connection with the foregoing, we advise you that a member of the SEC's staff has advised us by telephone that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at ______ on __________, 20__ and we have no knowledge, after telephonic inquiry of a member of the SEC's staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for sale under the 1933 Act pursuant to the Registration Statement

Very truly yours,

[Company Counsel]

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**EXHIBIT C**

**FORM OF PUT NOTICE**

Date:

RE: Put Notice Number __

Dear Mr./Ms.__________,

This is to inform you that as of today, Artificial Intelligence Technology Solutions, Inc., a Nevada corporation (the "Company"), hereby elects to exercise its right pursuant to the Equity Financing Agreement to require GHS Investments LLC to purchase shares of its common stock. The Company hereby certifies that:

The amount of this put is $__________.

The Pricing Period runs from _______________ until _______________.

The Purchase Price is: $_______________

The number of Put Shares due:___________________.

The current number of shares of common stock issued and outstanding is: _________________.

The number of shares currently available for issuance on the S-1 is: ________________________.

Regards,

Artificial Intelligence Technology Solutions, Inc.

By: __________________________________

Name:

Title:

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**EXHIBIT D**

**PUT SETTLEMENT SHEET**

Date: ________________

Dear Mr. ________,

Pursuant to the Put given by Artificial Intelligence Technology Solutions, Inc., to GHS Investments LLC ("GHS") on _________________ 202_, we are now submitting the amount of common shares for you to issue to GHS.

Please have a certificate bearing no restrictive legend totaling __________ shares issued to GHS immediately and send via DWAC to the following account:

**[INSERT]**

If not DWAC eligible, please send FedEx Priority Overnight to:

**[INSERT ADDRESS]**

Once these shares are received by us, we will have the funds wired to the Company.

Regards,

**GHS INVESTMENTS LLC**

By: _________________________________

Name:

Title:

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## Ex-10

**EXHIBIT 10.2**

**REGISTRATION RIGHTS AGREEMENT**

This Registration Rights AGREEMENT (the "**Agreement**"), dated as of March 22, 2023 (the "**Execution Date**"), is entered into by and between **Artificial Intelligence Technology Solutions, Inc**., a Nevada corporation with its principal executive office at

10800 Galaxie Blvd, Ferndale, MI 48220 (the "**Company**"), and **GHS Investments LLC**, a Nevada limited liability company, with offices at 420 Jericho Turnpike, Suite 102 Jericho, NY 11753 (the **"Investor"**).

**RECITALS:**

Whereas, pursuant to the Equity Financing Agreement entered into by and between the Company and the Investor of even date (the "**Equity Financing Agreement**"), the Company has agreed to issue and sell to the Investor an indeterminate number of shares of the Company's common stock, par value $0.00001 per share (the "**Common Stock**"), up to an aggregate purchase price of Twelve Million Five Hundred Thousand Dollars ($12,500,000);

Whereas, as an inducement to the Investor to execute and deliver the Equity Financing Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "**1933 Act**"), and applicable state securities laws, with respect to the shares of Common Stock issuable pursuant to the Equity Financing Agreement.

Now therefore, in consideration of the foregoing promises and the mutual covenants contained hereinafter and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

**SECTION I**

**DEFINITIONS**

As used in this Agreement, the following terms shall have the following meanings:

"**Execution Date**" shall have the meaning set forth in the preambles.

"**Investor**" shall have the meaning set forth in the preambles.

"**Person**" means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.

"**Register**," "**Registered**," and "**Registration**" refer to the Registration effected by preparing and filing one (1) or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis ("**Rule 415**"), and the declaration or ordering of effectiveness of such Registration Statement(s) by the United States Securities and Exchange Commission (the "SEC").

"**Registrable Securities**" means (i) the shares of Common Stock issued or issuable pursuant to the Equity Financing Agreement, (ii) any shares of capital stock issued or issuable with respect to such shares of Common Stock, if any, as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, which have not been (x) included in the Registration Statement that has been declared effective by the SEC, or (y) sold under

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circumstances meeting all of the applicable conditions of Rule 144 (or any similar provision then in force) under the 1933 Act

"**Registration Statement**" means the registration statement of the Company filed under the 1933 Act covering the Registrable Securities, and (iii) the shares of Common Stock issued or issuable Pursuant to the Equity Financing Agreement Dated March 22. 2023.

"**Registered Offering Transaction Documents**" shall mean this Agreement and the Equity Financing Agreement between the Company and the Investor as of the date hereof.

All capitalized terms used in this Agreement and not otherwise defined herein shall have the same meaning ascribed to them as in the Equity Financing Agreement.

**SECTION II**

**REGISTRATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 The Company shall, within thirty (30) calendar days upon the date of execution of this Agreement, use its best efforts to file with the SEC a Registration Statement or Registration Statements (as is necessary) on Form S-1 (or, if such form is unavailable for such a registration, on such other form as is available for such registration), covering the resale of all of the Registrable Securities, which Registration Statement(s) shall state that, in accordance with Rule 416 promulgated under the 1933 Act, such Registration Statement also covers such indeterminate number of additional shares of Common Stock as may become issuable upon stock splits, stock dividends or similar transactions. The Company shall initially register for resale all of the Registrable Securities which would be issuable on the date preceding the filing of the Registration Statement based on the closing bid price of the Company's Common Stock on such date and the amount reasonably calculated that represents Common Stock issuable to other parties as set forth in the Equity Financing Agreement except to the extent that the SEC requires the share amount to be reduced as a condition of effectiveness.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 The Company shall use all commercially reasonable efforts to have the Registration Statement(s) declared effective by the SEC within thirty (30) calendar days, but no more than ninety (90) calendar days after the Company has filed the Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 The Company agrees not to include any other securities in the Registration Statement covering the Registrable Securities without Investor's prior written consent which Investor may withhold in its sole discretion. Furthermore, the Company agrees that it will not file any other Registration Statement for other securities, until thirty (30) calendar days after the Registration Statement for the Registrable Securities is declared effective by the SEC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 Notwithstanding the registration obligations set forth in Section 2.1, if the staff of the SEC (the "**Staff**") or the SEC informs the Company that all of the unregistered Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single Registration Statement, the Company agrees to promptly (i) inform the Investor and use its commercially reasonable efforts to file amendments to the Registration Statement as required by the SEC and/or (ii) withdraw the Registration Statement and file a new registration statement (the "**New Registration Statement**"), in either case covering the maximum number of Registrable Securities permitted to be registered by the SEC, on Form S-1 to register for resale the Registrable Securities as a secondary offering. If the Company amends the Registration Statement or files a New Registration Statement, as the case may be, under clauses (i) or (ii) above, the Company will use its commercially reasonable efforts to file with the SEC, as promptly as allowed by the Staff or SEC, one or more registration statements on Form S-1 to register for resale those Registrable Securities that were not

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registered for resale on the Registration Statement, as amended, or the New Registration Statement (each, an "**Additional Registration Statement**").

**SECTION III**

**RELATED OBLIGATIONS**

At such time as the Company is obligated to prepare and file the Registration Statement with the SEC pursuant to Section 2.1, the Company will affect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, with respect thereto, the Company shall have the following obligations:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 The Company shall use all commercially reasonable efforts to cause such Registration Statement relating to the Registrable Securities to become effective and shall keep such Registration Statement effective until the earlier to occur of the date on which (A) the Investor shall have sold all the Registrable Securities; or (B) the Investor has no right to acquire any additional shares of Common Stock under the Equity Financing Agreement (the "**Registration Period**"). The Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. The Company shall use all commercially reasonable efforts to respond to all SEC comments within ten (10) business days from receipt of such comments by the Company. The Company shall use all commercially reasonable efforts to cause the Registration Statement relating to the Registrable Securities to become effective no later than three (3) business days after notice from the SEC that the Registration Statement may be declared effective. The Investor agrees to provide all information which is required by law to provide to the Company, including the intended method of disposition of the Registrable Securities, and the Company's obligations set forth above shall be conditioned on the receipt of such information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the Investor thereof as set forth in such Registration Statement. In the event the number of shares of Common Stock covered by the Registration Statement filed pursuant to this Agreement is at any time insufficient to cover all of the Registrable Securities, the Company shall amend such Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover all of the Registrable Securities, in each case, as soon as practicable, but in any event within thirty (30) calendar days after the necessity therefor arises (based on the then Purchase Price of the Common Stock and other relevant factors on which the Company reasonably elects to rely), assuming the Company has sufficient authorized shares at that time, and if it does not, within thirty (30) calendar days after such shares are authorized. The Company shall use commercially reasonable efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 The Company shall make available to the Investor and its legal counsel without charge (i) promptly after the same is prepared and filed with the SEC at least one (1) copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits, the prospectus included in such Registration Statement

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(including each preliminary prospectus) and, with regards to such Registration Statement(s), any correspondence by or on behalf of the Company to the SEC or the staff of the SEC and any correspondence from the SEC or the staff of the SEC to the Company or its representatives; (ii) upon the effectiveness of any Registration Statement, the Company shall make available copies of the prospectus, via EDGAR, included in such Registration Statement and all amendments and supplements thereto; and (iii) such other documents, including copies of any preliminary or final prospectus, as the Investor may reasonably request from time to time to facilitate the disposition of the Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 The Company shall use commercially reasonable efforts to (i) register and qualify the Registrable Securities covered by the Registration Statement under such other securities or "blue sky" laws of such states in the United States as the Investor reasonably requests; (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period; (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3.4, or (y) subject itself to general taxation in any such jurisdiction. The Company shall promptly notify the Investor of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5 As promptly as practicable after becoming aware of such event, the Company shall notify Investor in writing of the happening of any event as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading ("**Registration Default**") and use all diligent efforts to promptly prepare a supplement or amendment to such Registration Statement and take any other necessary steps to cure the Registration Default (which, if such Registration Statement is on Form S-3, may consist of a document to be filed by the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act (as defined below) and to be incorporated by reference in the prospectus) to correct such untrue statement or omission, and make available copies of such supplement or amendment to the Investor. The Company shall also promptly notify the Investor (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when the Registration Statement or any post-effective amendment has become effective (the Company will prepare notification of such effectiveness which shall be delivered to the Investor on the same day of such effectiveness and by overnight mail), additionally, the Company will promptly provide to the Investor, a copy of the effectiveness order prepared by the SEC once it is received by the Company; (ii) of any request by the SEC for amendments or supplements to the Registration Statement or related prospectus or related information, (iii) of the Company's reasonable determination that a post-effective amendment to the Registration Statement would be appropriate, (iv) in the event the Registration Statement is no longer effective, or (v) if the Registration Statement is stale as a result of the Company's failure to timely file its financials or otherwise

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6 The Company shall use all commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of the Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor holding Registrable Securities being sold of the issuance of such order and the

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resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding concerning the effectiveness of the registration statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7 The Company shall permit the Investor and legal counsel, designated by the Investor, to review and comment upon the Registration Statement and all amendments and supplements thereto at least one (1) calendar day prior to their filing with the SEC. However, any postponement of a filing of a Registration Statement or any postponement of a request for acceleration or any postponement of the effective date or effectiveness of a Registration Statement by written request of the Investor (collectively, the "**Investor's Delay**") shall not act to trigger any penalty of any kind, or any cash amount due or any in-kind amount due the Investor from the Company under any and all agreements of any nature or kind between the Company and the Investor. The event(s) of an Investor's Delay shall act to suspend all obligations of any kind or nature of the Company under any and all agreements of any nature or kind between the Company and the Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.8 At the request of the Investor, the Company's counsel shall furnish to the Investor, within two (2) business days, an opinion letter confirming the effectiveness of the registration statement. Such opinion letter shall be issued as of the date of the effectiveness of the registration statement, in a form suitable to the Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9 The Company shall hold in confidence and not make any disclosure of information concerning the Investor unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, or (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction. The Company agrees that it shall, upon learning that disclosure of such information concerning the Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Investor and allow the Investor, at the Investor's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order covering such information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.10 The Company shall use all commercially reasonable efforts to maintain designation and quotation of all the Registrable Securities covered by any Registration Statement on the Principal Market. If, despite the Company's commercially reasonable efforts, the Company is unsuccessful in satisfying the preceding sentence, it shall use commercially reasonable efforts to cause all the Registrable Securities covered by any Registration Statement to be listed on each other national securities exchange and automated quotation system, if any, on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange or system. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3.10.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.11 The Company shall cooperate with the Investor to facilitate the prompt preparation and delivery of the Registrable Securities to be offered pursuant to the Registration Statement and enable such Registrable Securities to be in such denominations or amounts, as the case may be, as the Investor may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.12 The Company shall provide a transfer agent for all the Registrable Securities not later than the effective date of the first Registration Statement filed pursuant hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.13 If requested by the Investor, the Company shall (i) as soon as reasonably practical incorporate in a prospectus supplement or post-effective amendment such information as the Investor reasonably determines should be included therein relating to the sale and distribution of Registrable

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Securities, including, without limitation, information with respect to the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment as soon as reasonably possible after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement if reasonably requested by the Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.14 The Company shall use all commercially reasonable efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to facilitate the disposition of such Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.15 The Company shall otherwise use all commercially reasonable efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.16 Within three (3) business day after the Registration Statement is declared effective by the SEC, the Company shall deliver to the transfer agent for such Registrable Securities, with copies to the Investor, confirmation that such Registration Statement has been declared effective by the SEC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.17 The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities pursuant to the Registration Statement.

**SECTION IV**

**OBLIGATIONS OF THE INVESTOR**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 At least five (5) calendar days prior to the first anticipated filing date of the Registration Statement, the Company shall notify the Investor in writing of the information the Company requires from the Investor for the Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities and the Investor agrees to furnish to the Company that information regarding itself, the Registrable Securities and the intended method of disposition of the Registrable Securities as shall reasonably be required to effect the registration of such Registrable Securities and the Investor shall execute such documents in connection with such registration as the Company may reasonably request. The Investor covenants and agrees that, in connection with any sale of Registrable Securities by it pursuant to the Registration Statement, it shall comply with the "Plan of Distribution" section of the then current prospectus relating to such Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 The Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless the Investor has notified the Company in writing of an election to exclude all of the Investor's Registrable Securities from such Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 The Investor agrees that, upon receipt of written notice from the Company of the happening of any event of the kind described in Section 3.6 or the first sentence of 3.5, the Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until the Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3.6 or the first sentence of 3.5.

**SECTION V**

**EXPENSES OF REGISTRATION**

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All legal expenses, other than underwriting discounts and commissions and other than as set forth in the Equity Financing Agreement, incurred in connection with registrations including comments, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, and printing fees shall be paid by the Company.

**SECTION VI**

**INDEMNIFICATION**

In the event any Registrable Securities are included in the Registration Statement under this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 To the fullest extent permitted by law, the Company, under this Agreement, will, and hereby does, indemnify, hold harmless and defend the Investor who holds Registrable Securities, the directors, officers, partners, employees, counsel, agents, representatives of, and each Person, if any, who controls, any Investor within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "**1934 Act**") (each, an "**Indemnified Person**"), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint or several (collectively, "**Claims**"), incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("**Indemnified Damages**"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which the Investor has requested in writing that the Company register or qualify the Shares ("**Blue Sky Filing**"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which the statements therein were made, not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, "**Violations**"). Subject to the restrictions set forth in Section 6.3 the Company shall reimburse the Investor and each such controlling person, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6.1: (i) shall not apply to a Claim arising out of or based upon a Violation which is due to the inclusion in the Registration Statement of the information furnished to the Company by any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (ii) shall not be available to the extent such Claim is based on (a) a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company or (b) the Indemnified Person's use of an incorrect prospectus despite being promptly advised in advance by the Company in writing not to use such incorrect prospectus; (iii) reserved; (iv) any omission of the Investor to notify the Company of any material fact that should be stated in the Registration Statement or prospectus relating to the Investor or the manner of sale; and (v) any amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent

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shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the resale of the Registrable Securities by the Investor pursuant to the Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 In connection with any Registration Statement in which Investor is participating, the Investor agrees to severally and jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6.1, the Company, each of its directors, each of its officers who signs the Registration Statement, each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act and the Company's agents (collectively and together with an Indemnified Person, an "**Indemnified Party**"), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation is due to the inclusion in the Registration Statement of the written information furnished to the Company by the Investor expressly for use in connection with such Registration Statement; and, subject to Section 6.3, the Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; *provided, however*, that the indemnity agreement contained in this Section 6.2 and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor shall only be liable under this Section 6.2 for that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the resale of the Registrable Securities by the Investor pursuant to the Registration Statement. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6.2 with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus were corrected on a timely basis in the prospectus, as then amended or supplemented. This indemnification provision shall apply separately to each Investor and liability hereunder shall not be joint and several.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the Indemnified Person or Indemnified Party, the representation by counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The indemnifying party shall pay for only one (1) separate legal counsel for the Indemnified Persons or the Indemnified Parties, as applicable, and such counsel shall be selected by the Investor, if the Investor is entitled to indemnification hereunder, or the Company, if the Company is entitled to indemnification hereunder, as applicable. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such

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action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding affected without its written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such Claim. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4 The indemnity agreements contained herein shall be in addition to (I) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

**SECTION VII**

**CONTRIBUTION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

**SECTION VIII**

**REPORTS UNDER THE 1934 ACT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 With a view to making available to the Investor the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration ("**Rule 144**"), provided that the Investor holds any Registrable Securities are eligible for resale under Rule 144, the Company agrees to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. make and keep adequate current public information available, as those terms are understood and defined in Rule 144;

b. file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit the Company's

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| | |
|:---|:---|
|  | obligations under Section 5(c) of the Equity Financing Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and |
| c. | furnish to the Investor, promptly upon request, (I) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration. |

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**SECTION X**

**MISCELLANEOUS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 <u>NOTICES.</u> Any notices or other communications required or permitted to be given under the terms of this Agreement that must be in writing will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by email; or (iii) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such communications shall be:

If to the Company:

Artificial Intelligence Technology Solutions Inc.

10800 Galaxie Avenue

Ferndale, Michigan 48220

Telephone: 877-787-6268

E-mail: steve.reinharz@radsecurity.com

Attention: Steve Reinharz

With a copy to (which shall not constitute notice or service of process):

Frederick M. Lehrer, P.A.

Securities Counsel

2108 Emil Jahna Road

Clermont, FL 34711

Telephone: (561) 706-7646

E-mail: flehrer@securitiesattorney1.com

Attention: Frederick M. Lehrer

If to the Investor:

GHS Investments, LLC

420 Jericho Turnpike, Suite 102

Jericho, NY 11753

Each party shall provide five (5) business days prior notice to the other party of any change in address, phone number or facsimile number.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 <u>NO WAIVERS</u>. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3 <u>NO ASSIGNMENTS</u>. The rights and obligations under this Agreement shall not be assignable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4 <u>ENTIRE AGREEMENT/AMENDMENT</u>. This Agreement and the Registered Offering Transaction Documents constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement and the Registered Offering Transaction Documents supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof. The provisions of this Agreement may be amended only with the written consent of the Company and Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5 <u>HEADINGS</u>. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Whenever required by the context of this Agreement, the singular shall include the plural and masculine shall include the feminine. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if all the parties had prepared the same.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.6 <u>COUNTERPARTS</u>. This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. This Agreement may be executed by facsimile transmission, PDF, electronic signature or other similar electronic means with the same force and effect as if such signature page were an original thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.7 <u>FURTHER ASSURANCES</u>. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.8 <u>SEVERABILITY</u>. In case any provision of this Agreement is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Agreement will not in any way be affected or impaired thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.9 <u>Law Governing this Agreement</u>. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state or federal courts located in New York City, New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon <u>forum non conveniens</u>. **The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury.** The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law

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shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Registered Offering Transaction Documents by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.10 <u>NO THIRD PARTY BENEFICIARIES</u>. This Agreement is intended for the benefit of the parties hereto and is not for the benefit of, nor may any provision hereof be enforced by, any other person, except that the Company acknowledges that the rights of the Investor may be enforced by its general partner.

**[Signature page follows]**

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Your signature on this Signature Page evidences your agreement to be bound by the terms and conditions of the Registration Rights Agreement as of the date first written above. The undersigned signatory hereby certifies that he has read and understands the Registration Rights Agreement, and the representations made by the undersigned in this Registration Rights Agreement are true and accurate, and agrees to be bound by its terms.

**GHS INVESTMENTS, LLC.**

By: <u>/s/ Mark Grober</u>

Name: <u>Mark Grober</u>

Title: Member

**artificial intelligence technology solutions, INC.**

By: <u>/s/ Steven Reinharz</u>

Name: <u>Steven Reinharz</u>

Title: <u>CEO</u>

[SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT]

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## Ex-10

**EXHIBIT 10.3**

![](icon_cap-logo.jpg)

**MEMBER FINRA/SIPC**

895 Dove Street Suite 300

Newport Beach, CA 92660

949-851-4700

www.iconcapg.com

March 23, 2023

Artificial Intelligence Technology Solutions, Inc.

701 North Green valley Parkway Suite 200

Henderson, NV 89704

ATTN: Steven Reinharz – President

Dear Mr. Reinharz:

This letter (the "**Agreement**") constitutes the agreement between Icon Capital Group, LLC, a Texas limited liability company ("**ICG**" or the "**Placement Agent**") and Artificial Intelligence Technology Solutions, Inc. a Nevada corporation (the "**Company**" or "**AITX**"), who hereby agrees to sell up to an aggregate of one billion and two hundred and fifty million (1.25 billion) shares of securities of the Company, including, (the "**Shares**") of the Company's common stock, $.00001 par value per share (the "**Common Stock**" or the "**Securities**") directly to various investors (each, an "Investor" and, collectively, the "Investors") through the Placement Agent, on a "reasonable best efforts" basis, in connection with the proposed placement (the "**Placement**") of the Securities. The terms of the Placement and the Securities shall be mutually agreed upon by the Company and the purchasers (each, a "**Purchaser**" and collectively, the "**Purchasers**") and nothing herein constitutes that the Placement Agent would have the power or authority to bind the Company or any Purchaser or an obligation for the Company to issue any Securities or complete the Placement. This Agreement and the documents executed and delivered by the Company and the Purchasers in connection with the Placement, including but not limited to the Purchase Agreement (as defined below), shall be collectively referred to herein as the "**Transaction Documents**." The date of the closing of the Placement shall be referred to herein as the "**Closing Date**." The Company expressly acknowledges and agrees that the Placement Agent's obligations hereunder are on a reasonable best-efforts basis only and that the execution of this Agreement does not constitute a commitment by the Placement Agent to purchase the Securities and does not ensure the successful placement of the Securities or any portion thereof or the success of the Placement Agent with respect to securing any other financing on behalf of the Company. Following the prior written consent of the Company, the Placement Agent may retain other brokers or dealers to act as sub-agents or selected-dealers on its behalf in connection with the Placement. The sale of the Securities to any Purchaser will be evidenced by a purchase agreement (the "**Purchase Agreement**") between the Company

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and such Purchaser in a form mutually agreed upon by the Company and the Placement Agent. Capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement. Prior to the signing of any Purchase Agreement, executive officers of the Company will be available upon reasonable notice and during normal business hours to answer inquiries from prospective Purchasers.

<u>SECTION 1.</u> <u>REPRESENTATIONS AND WARRANTIES OF THE COMPANY; COVENANTS OF THE COMPANY.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. <u>Representations of the Company</u>. Each of the representations and warranties (together with any related disclosure schedules thereto) and covenants made by the Company to the Purchasers in the Purchase Agreement in connection with the Placement is hereby incorporated herein by reference into this Agreement (as though fully restated herein) and is, as of the date of this Agreement and as of the Closing Date, hereby made to, and in favor of, the Placement Agent. In addition to the foregoing, the Company represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Within thirty (30) days of the execution of this document, the Company will prepare and file with the Commission a registration statement on Form S-1 (Registration No. ________), and amendments thereto, and related preliminary prospectuses, for the registration under the Securities Act of 1933, as amended (the "**Securities Act**"), of the applicable Securities, which registration statement, as so amended (including post-effective amendments, if any) became effective on February 3, 2021. At the time of such filing, the Company met the requirements of Form S-1 under the Securities Act. Such registration statement meets the requirements set forth in Rule 415(a)(1)(x) under the Securities Act and complies with said Rule. The Company will file with the Commission pursuant to Rule 424(b) under the Securities Act, and the rules and regulations (the "**Rules and Regulations**") of the Commission promulgated thereunder, a supplement to the form of prospectus included in such registration statement relating to the placement of the Shares and the plan of distribution thereof and has advised the Placement Agent of all further information (financial and other) with respect to the Company required to be set forth therein. Such registration statement, including the exhibits thereto, as amended at the date of this Agreement, is hereinafter called the "**Registration Statement**"; such prospectus in the form in which it appears in the Registration Statement is hereinafter called the "**Base Prospectus**"; and the supplemented form of prospectus, in the form in which it will be filed with the Commission pursuant to Rule 424(b) (including the Base Prospectus as so supplemented) is hereinafter called the "**Prospectus Supplement**." Any reference in this Agreement to the Registration Statement, the Base Prospectus or the Prospectus Supplement shall be deemed to refer to and include the documents incorporated by reference therein (the "**Incorporated Documents**") pursuant to Item 12 of Form S-1 which were filed under the Securities Exchange Act of 1934, as amended (the "**Exchange Act**"), on or before the date of this Agreement, or the issue date of the Base Prospectus or the Prospectus Supplement, as the case may be; and any reference in this Agreement to the terms "amend," "amendment" or "supplement" with respect to the Registration Statement, the Base Prospectus or the Prospectus Supplement shall be deemed to refer to and include the filing of any document under the Exchange Act after the date of this Agreement, or the issue date of the Base Prospectus or the Prospectus Supplement, as the case may be, deemed to be incorporated therein by reference. All references in this Agreement to financial statements and schedules and other information which is "contained," "included," "described," "referenced," "set forth" or

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"stated" in the Registration Statement, the Base Prospectus or the Prospectus Supplement (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is or is deemed to be incorporated by reference in the Registration Statement, the Base Prospectus or the Prospectus Supplement, as the case may be. No stop order suspending the effectiveness of the Registration Statement or the use of the Base Prospectus or the Prospectus Supplement has been issued, and no proceeding for any such purpose is pending or has been initiated or, to the Company's knowledge, is threatened by the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Registration Statement (and any further documents to be filed with the Commission) contains all exhibits and schedules as required by the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the Securities Act and the Exchange Act and the applicable Rules and Regulations and did not and, as amended or supplemented, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Base Prospectus and the Prospectus Supplement, each as of its respective date, comply in all material respects with the Securities Act and the Exchange Act and the applicable Rules and Regulations. Each of the Base Prospectus and the Prospectus Supplement, as amended or supplemented, did not and will not contain as of the date thereof any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Incorporated Documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the applicable Rules and Regulations, and none of such documents, when they were filed with the Commission, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein (with respect to Incorporated Documents incorporated by reference in the Base Prospectus or Prospectus Supplement), in the light of the circumstances under which they were made not misleading; and any further documents so filed and incorporated by reference in the Base Prospectus or Prospectus Supplement, when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act and the applicable Rules and Regulations, as applicable, and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. No post-effective amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent, individually or in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission. Except for this Agreement, there are no documents required to be filed with the Commission in connection with the transaction contemplated hereby that (x) have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period. Except for this Agreement, there are no contracts or other documents required to be described in the Base Prospectus or Prospectus Supplement, or to be filed as exhibits or schedules to the Registration Statement, which (x) have not been described or filed as required or (y) will not be filed within the requisite time period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The Company is eligible to use Free Writing Prospectuses in connection with the Placement pursuant to Rules 164 and 433 under the Securities Act. Any Free Writing Prospectus that the Company is required to file pursuant to Rule 433(d) under the

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Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Each Free Writing Prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or behalf of or used by the Company complies or will comply in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. The Company will not, without the prior consent of the Placement Agent, prepare, use or refer to, any Free Writing Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. There are no affiliations with any FINRA member firm among the Company's officers, directors or, to the knowledge of the Company, any five percent (5.0%) or greater stockholder of the Company, except as set forth in the Registration Statement and SEC Reports.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby and under the Base Prospectus have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Company's Board of Directors (the "Board of Directors") or the Company's stockholders in connection therewith. This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. The execution, delivery and performance by the Company of this Agreement and the transactions contemplated pursuant to the Time of Sale Disclosure Prospectus, the issuance and sale of the Shares and the consummation by it of the transactions contemplated hereby and thereby to which it is a party do not and will not (i) conflict with or violate any provision of the Company's or any subsidiary's certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien upon any of the properties or assets of the Company or any subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or subsidiary debt or otherwise) or other understanding to which the Company or any subsidiary is a party or by which any property or asset of the Company or any subsidiary is bound or affected, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a material adverse effect.

ICON Capital Group: <u>JC</u> Company: <u>SR</u> 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Any certificate signed by an officer of the Company and delivered to the Placement Agent or to counsel for the Placement Agent shall be deemed to be a representation and warranty by the Company to the Placement Agent as to the matters set forth therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. The Company acknowledges that the Placement Agent will rely upon the accuracy and truthfulness of the foregoing representations and warranties and hereby consents to such reliance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. No forward-looking statements (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Base Prospectus and the Prospectus Supplement has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. Each of the representations and warranties (together with any related disclosure schedules thereto) made to the Investors in the Purchase Agreements is hereby incorporated herein by reference (as though fully restated herein) and is hereby made to, and in favor of, the Placement Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. <u>Covenants and Agreements of the Company</u>. The Company further covenants and agrees with the Placement Agent as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Registration Statement Matters</u>. The Company will advise the Placement Agent promptly after it receives notice thereof of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Base Prospectus or the Final Prospectus has been filed and will furnish the Placement Agent with copies thereof. The Company will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 14 or 15(d) of the Exchange Act subsequent to the date of any Prospectus and for so long as the delivery of a prospectus is required in connection with the Offering. The Company will advise the Placement Agent, promptly after it receives notice thereof (i) of any request by the Commission to amend the Registration Statement or to amend or supplement any Prospectus or for additional information, and (ii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or any order directed at any Incorporated Document, if any, or any amendment or supplement thereto or any order preventing or suspending the use of the Base Prospectus or the Final Prospectus or any prospectus supplement or any amendment or supplement thereto or any post-effective amendment to the Registration Statement, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the institution or threatened institution of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or a Prospectus or for additional information. The Company shall use its reasonable best efforts to prevent the issuance of any such stop order or prevention or suspension of such use. If the Commission

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shall enter any such stop order or order or notice of prevention or suspension at any time, the Company will use its reasonable best efforts to obtain the lifting of such order at the earliest possible moment, or will file a new registration statement and use its reasonable best efforts to have such new registration statement declared effective as soon as practicable. Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b), 430A, 430B and 430C, as applicable, under the Securities Act, including with respect to the timely filing of documents thereunder, and will use its reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) are received in a timely manner by the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Blue Sky Compliance</u>. The Company will cooperate with the Placement Agent and the Investors in endeavoring to qualify the Shares for sale under the securities laws of such jurisdictions (United States and foreign) as the Placement Agent and the Investors may reasonably request and will make such applications, file such documents, and furnish such information as may be reasonably required for that purpose, provided the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction where it is not now so qualified or required to file such a consent, and provided further that the Company shall not be required to produce any new disclosure document. The Company will, from time to time, prepare and file such statements, reports and other documents as are or may be required to continue such qualifications in effect for so long a period as the Placement Agent may reasonably request for distribution of the Shares. The Company will advise the Placement Agent promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use its best efforts to obtain the withdrawal thereof at the earliest possible moment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Amendments and Supplements to a Prospectus and Other Matters</u>. The Company will comply with the Securities Act and the Exchange Act, and the rules and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Shares as contemplated in this Agreement, the Incorporated Documents and any Prospectus. If during the period in which a prospectus is required by law to be delivered in connection with the distribution of Shares contemplated by the Incorporated Documents or any Prospectus (the "Prospectus Delivery Period"), any event shall occur as a result of which, in the judgment of the Company or in the opinion of the Placement Agent or counsel for the Placement Agent, it becomes necessary to amend or supplement the Incorporated Documents or any Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, as the case may be, not misleading, or if it is necessary at any time to amend or supplement the Incorporated Documents or any Prospectus or

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to file under the Exchange Act any Incorporated Document to comply with any law, the Company will promptly prepare and file with the Commission, and furnish at its own expense to the Placement Agent and to dealers, an appropriate amendment to the Registration Statement or supplement to the Registration Statement, the Incorporated Documents or any Prospectus that is necessary in order to make the statements in the Incorporated Documents and any Prospectus as so amended or supplemented, in the light of the circumstances under which they were made, as the case may be, not misleading, or so that the Registration Statement, the Incorporated Documents or any Prospectus, as so amended or supplemented, will comply with law. Before amending the Registration Statement or supplementing the Incorporated Documents or any Prospectus in connection with the Offering, the Company will furnish the Placement Agent with a copy of such proposed amendment or supplement and will not file any such amendment or supplement to which the Placement Agent reasonably objects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Copies of any Amendments and Supplements to a Prospectus</u>. The Company will furnish the Placement Agent, without charge, during the period beginning on the date hereof and ending on the later of the last Closing Date of the Offering, as many copies of any Prospectus or prospectus supplement and any amendments and supplements thereto, as the Placement Agent may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Transfer Agent</u>. The Company will maintain, at its expense, a registrar and transfer agent for the Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Periodic Reporting Obligations</u>. During the Prospectus Delivery Period, the Company will duly file, on a timely basis, with the Commission and the Trading Market all reports and documents required to be filed under the Exchange Act within the time periods and in the manner required by the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Additional Documents</u>. The Company will enter into any subscription, purchase or other customary agreements as the Placement Agent or the Investors deem necessary or appropriate to consummate the Offering, all of which will be in form and substance reasonably acceptable to the Placement Agent and the Investors. The Company agrees that the Placement Agent may rely upon, and each is a third-party beneficiary of, the representations and warranties, and applicable covenants, set forth in any such purchase, subscription or other agreement with Investors in the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>No Manipulation of Price</u>. The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Acknowledgment</u>. The Company acknowledges that any advice given by the Placement Agent to the Company is solely for the benefit and use of the Board of Directors of the Company and may not be used, reproduced, disseminated, quoted or referred to, without the Placement Agent's prior written consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Announcement of Offering</u>. The Company acknowledges and agrees that the Placement Agent may, subsequent to the Closing, make public its involvement with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>Reliance on Others</u>. The Company confirms that it will rely on its own counsel and accountants for legal and accounting advice.

<u>SECTION 2</u>. <u>REPRESENTATIONS OF THE PLACEMENT AGENT</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The Placement Agent represents and warrants that it (i) is a member in good standing of FINRA, (ii) is registered as a broker/dealer under the Exchange Act, (iii) is licensed as a broker/dealer under the laws of the States applicable to the offers and sales of the Securities by the Placement Agent, (iv) is and will be a corporate entity validly existing under the laws of its place of incorporation or formation, and (v) has full power and authority to enter into and perform its obligations under this Agreement. The Placement Agent will immediately notify the Company in writing of any change in its status as such. The Placement Agent covenants that it will use its reasonable best efforts to conduct the Placement hereunder in compliance with the provisions of this Agreement and the requirements of applicable law.

B. <u>Placement Agent as Finder</u>: Notwithstanding anything to the contrary herein, (i) Placement Agent may identify or pre-identify a single/sole qualified investor in respect of the securities contemplated herein. Further, (ii) Placement Agent's sole role may be the introduction of the Company to such investor, and any and all obligations concerning due diligence (other than as may not be waived by the Placement Agent), will devolve to the investor, and all blue sky, registration, reporting, and other legal obligations concerning the securities and the placement of the securities will become the responsibility of the Company, and the investor will be notified of same. In such case, the investor will be an "institutional investor" as defined pursuant to the definition of "Institutional Account" in FINRA Rule 4512(c). By the checked box below, Placement Agent represents that it is acting solely as indicated in this section, that is, it is acting solely as indicated in (i) and (ii), above. The Company acknowledges that the Placement Agent's responsibilities and activities are limited to those discussed in this section. Nothing in this section shall modify the commissions, fees and/or reimbursable expenses due to be paid to the Placement Agent, as discussed in this Agreement. Placement Agent will obtain a signed confirmation of "Institutional Account" status, pursuant to FINRA Rule 2111, which will be provided to the Company upon request. As an institutional investor, as defined, the investor has the knowledge, sophistication, and professional judgment to perform an informed and

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independent analysis of the benefits and suitability of the referenced investment and is not relying on the Placement Agent's recommendation or analyses to do so.

<u>SECTION 3</u>. <u>COMPENSATION</u>. In consideration of the services to be provided for hereunder, the Company shall pay to the Placement Agent or its respective designees the following compensation with respect to the Securities which they are placing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. A cash fee (the "Cash Fee") equal to an aggregate of two percent (2%) of the aggregate gross proceeds raised in the Placement as the proceeds are received by AITX.

B. Payment shall accrue and be paid monthly in arrears of the execution of the securities purchase agreement by the 10<sup>th</sup> day of the month or be paid directly from GHS to ICON in GHS disbursement process.

C. Subject to compliance with FINRA Rule 5110(f)(2)(D), the Company also agrees to reimburse the Placement Agent for (i) all travel and other out-of-pocket expenses, as well as (ii) the reasonable fees and expenses of (zero dollars) to its legal counsel, which shall be reimbursed from the initial proceeds received by the Company. The Company will reimburse Placement Agent directly out of the Closing of the Placement. In the event this Agreement shall terminate prior to the consummation of the Placement, the Placement Agent shall be entitled to reimbursement for actual expenses upon providing reasonable documentation relating to the incurrence of such expenses; provided, however, such expenses shall not be paid by AITX.

D. The Placement Agent will receive no compensation if the SEC determines that this S-1 cannot be accepted within four (4) months of its filing date or the SEC has not declared it effective within 4 months of its filing date or FINRA determines that the compensation violates FINRA rules or determines the compensation is excessive or is otherwise illegal.

<u>SECTION 4</u>. <u>INDEMNIFICATION</u>. The Company agrees to the indemnification and other agreements set forth in the Indemnification Provisions (the "**Indemnification**") attached hereto as <u>Addendum A</u>, the provisions of which are incorporated herein by reference and shall survive the termination or expiration of this Agreement.

<u>SECTION 5</u>. <u>ENGAGEMENT TERM</u>. The Placement Agent's engagement hereunder shall be until the earlier of (i) the final closing date of the Placement and (ii) the date a party terminates the engagement according to the terms of the next sentence (such date, the "**Termination Date**" and the period of time during which this Agreement remains in effect is referred to herein as the "**Term**"). The engagement may be terminated at any time by either party upon five (5) days written notice to the other party, effective upon receipt of written notice to that effect by the other party. If the Company elects to terminate this Agreement for any reason even though the Placement Agent was prepared to proceed with the Placement reasonably within the intent of this Agreement, and if within forty-five (45) days following such termination, the Company completes any financing of equity, equity-linked or debt or other capital raising activity of the Company (other than the exercise by any person or entity of any options, warrants or other convertible securities) with any of the investors first introduced to the Company by Placement

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Agent during the term of this Agreement, then the Company will pay the Placement Agent upon the closing of such financing the compensation set forth in Section 3 herein. Notwithstanding anything to the contrary contained herein, the provisions concerning the Company's obligation to pay any fees actually earned pursuant to Section 3 hereof and the provisions concerning confidentiality, indemnification and contribution contained herein and the Company's obligations contained in the Indemnification Provisions will survive any expiration or termination of this Agreement. If this Agreement is terminated prior to the completion of the Placement, all fees due to the Placement Agent shall be paid by the Company to the Placement Agent on or before the Termination Date (in the event such fees are earned or owed as of the Termination Date). The Placement Agent agrees not to use any confidential information concerning the Company provided to the Placement Agent by the Company for any purposes other than those contemplated under this Agreement.

<u>SECTION 6</u>. <u>PLACEMENT AGENT INFORMATION</u>. The Company agrees that any information or advice rendered by the Placement Agent in connection with this engagement is for the confidential use of the Company only in their evaluation of the Placement and, except as otherwise required by law, the Company will not disclose or otherwise refer to the advice or information in any manner without the Placement Agent's prior written consent.

<u>SECTION 7</u>. <u>NO FIDUCIARY RELATIONSHIP</u>. This Agreement does not create and shall not be construed as creating rights enforceable by any person or entity not a party hereto, except those entitled hereto by virtue of the indemnification Provisions hereof. The Company acknowledges and agrees that the Placement Agent is not and shall not be construed as a fiduciary of the Company and shall have no duties or liabilities to the equity holders or the creditors of the Company or any other person by virtue of this Agreement or the retention of the Placement Agent hereunder, all of which are hereby expressly waived.

<u>SECTION 8</u>. <u>CLOSING</u>. The obligations of the Placement Agent, and the closing of the sale of the Securities hereunder are subject to the accuracy, when made and on the Closing Date, of the representations and warranties on the part of the Company contained herein and in the Purchase Agreement, to the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, to the performance by the Company of their obligations hereunder, and to each of the following additional terms and conditions, except as otherwise disclosed to and acknowledged and waived by the Placement Agent by the Company:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the Commission, and any request for additional information on the part of the Commission (to be included in the Registration Statement, the Base Prospectus, the Prospectus Supplement or otherwise) shall have been complied with to the reasonable satisfaction of the Placement Agent. Any filings required to be made by the Company in connection with the Placement shall have been timely filed with the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Placement Agent shall not have discovered and disclosed to the Company on or prior to the Closing Date that the Registration Statement, the Base Prospectus, the Prospectus Supplement or any amendment or supplement thereto contains an untrue statement of a fact which,

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in the opinion of counsel for the Placement Agent, is material or omits to state any fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. All corporate proceedings and other legal matters incident to the authorization, form, execution, delivery and validity of each of this Agreement, the Securities, the Registration Statement, the Base Prospectus and the Prospectus Supplement and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for ICG, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. The Placement Agent shall have received from outside counsels to the Company such counsels' written opinions, addressed to the Placement Agent and the Purchasers and dated as of the Closing Date, in form and substance reasonably satisfactory to ICG, including but not limited to: (i) an opinion of issuers counsel to the Company with respect to certain corporate and securities matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. On the Closing Date, Placement Agent shall have received a certificate of the chief executive officer of the Company, dated, as applicable, as of the date of such Closing, to the effect that, as of the date of this Agreement and as of the applicable date, the representations and warranties of the Company contained herein and in the Purchase Agreement were and are accurate in all material respects, except for such changes as are contemplated by this Agreement and except as to representations and warranties that were expressly limited to a state of facts existing at a time prior to the applicable Closing Date, and that, as of the applicable date, the obligations to be performed by the Company hereunder on or prior thereto have been fully performed in all material respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. On the Closing Date, Placement Agent shall have received a certificate of the Secretary of the Company, dated, as applicable, as of the date of such Closing, certifying to the organizational documents, good standing in the state of incorporation of the Company and board resolutions relating to the Placement of the Securities from the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. The Company (i) shall not have sustained since the date of the latest audited financial statements included or incorporated by reference in the Registration Statement, the Base Prospectus and the Prospectus Supplement, any loss or interference with its business from fire, explosion, flood, terrorist act or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in or contemplated by the Registration Statement, the Base Prospectus and the Prospectus Supplement, and (ii) since the date of the latest audited financial statements included or incorporated by reference in the Registration Statement, the Base Prospectus and the Prospectus Supplement there shall not have been any change in the capital stock or long-term debt of the Company or any change, or any development involving a prospective change, in or affecting the business, general affairs, management, financial position, stockholders' equity, results of operations or prospects of the Company, otherwise than as set forth in or contemplated by the Registration Statement, the

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Base Prospectus and the Prospectus Supplement, the effect of which, in any such case described in clause (i) or (ii), is, in the judgment of the Placement Agent, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Shares on the terms and in the manner contemplated by the Base Prospectus and Prospectus Supplement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H. The Common Stock is registered under the Exchange Act and, as of the Closing Date, the Shares shall be listed for trading on the Trading Market or other applicable U.S. national exchange and reasonable evidence of such action, if available, shall have been provided to the Placement Agent upon its request. The Company shall have taken no action designed to, or likely to have the effect of terminating the registration of the Common Stock under the Exchange Act or delisting or suspending from trading the Common Stock from the Trading Market or other applicable U.S. national exchange, nor has the Company received any information suggesting that the Commission or the Trading Market or other U.S. applicable national exchange is contemplating terminating such registration or listing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency or body which would, as of the Closing Date, prevent the issuance or sale of the Securities or materially and adversely affect or potentially and adversely affect the business or operations of the Company; and no injunction, restraining order or order of any other nature by any federal or state court of competent jurisdiction shall have been issued as of the Closing Date which would prevent the issuance or sale of the Securities or materially and adversely affect or potentially and adversely affect the business or operations of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;J. The Company shall have prepared and filed with the Commission a Current Report on Form 8-K with respect to the Placement, including as an exhibit thereto this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;K. The Company shall have entered into a Purchase Agreement with each of the Purchasers and such agreements shall be in full force and effect and shall contain representations, warranties and covenants of the Company as agreed between the Company and the Purchasers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;L. FINRA shall have raised no objection to the fairness and reasonableness of the terms and arrangements of this Agreement. In addition, the Company shall, if requested by the Placement Agent, make or authorize Placement Agent's counsel to make on the Company's behalf, any filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110 with respect to the Placement and pay all filing fees required in connection therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;M. The Placement Agent shall have received on each Closing Date a certificate of the Company, dated as of such Closing Date, signed by the Chief Executive Officer and Chief Financial Officer of the Company, to the effect that, and the Placement Agent shall be satisfied that, the signers of such certificate have reviewed the Registration Statement, the Incorporated Documents, any Prospectus Supplement, and this Agreement and to the further effect that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The representations and warranties of the Company in this Agreement are true and correct, as if made on and as of such Closing Date, and the Company has complied in all

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material respects with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to such Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) No stop order suspending the effectiveness of the Registration Statement or the use of any Prospectus has been issued and no proceedings for that purpose have been instituted or are pending or, to the Company's knowledge, threatened under the Securities Act; no order having the effect of ceasing or suspending the distribution of the Shares or any other securities of the Company has been issued by any securities commission, securities regulatory authority or stock exchange in the United States and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange in the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) When the Registration Statement became effective, at the time of sale, and at all times subsequent thereto up to the delivery of such certificate, the Registration Statement and the Incorporated Documents, if any, when such documents became effective or were filed with the Commission, and any Prospectus, contained all material information required to be included therein by the Securities Act and the Exchange Act and the applicable rules and regulations of the Commission thereunder, as the case may be, and in all material respects conformed to the requirements of the Securities Act and the Exchange Act and the applicable rules and regulations of the Commission thereunder, as the case may be, and the Registration Statement and the Incorporated Documents, if any, and any Prospectus, did not and do not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided, however, that the preceding representations and warranties contained in this paragraph (iii) shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by the Placement Agent expressly for use therein) and, since the effective date of the Registration Statement, there has occurred no event required by the Securities Act and the rules and regulations of the Commission thereunder to be set forth in the Incorporated Documents which has not been so set forth; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Subsequent to the respective dates as of which information is given in the Registration Statement, the Incorporated Documents and any Prospectus, there has not been: (a) any Material Adverse Change; (b) any transaction that is material to the Company and the subsidiaries taken as a whole, except transactions entered into in the ordinary course of business; (c) any obligation, direct or contingent, that is material to the Company and the subsidiaries taken as a whole, incurred by the Company or any subsidiary, except obligations incurred in the ordinary course of business; (d) any material change in the capital stock (except changes thereto resulting from the exercise of outstanding stock options or warrants) or outstanding indebtedness of the Company or any subsidiary; (e) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company; or (f) any loss or damage (whether or not insured) to the property of the Company or any subsidiary which has been sustained or will have been sustained which has a material adverse effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;O. Subsequent to the execution and delivery of this Agreement and prior to each Closing Date, in the Placement Agent's sole judgment after consultation with the Company, there shall not have occurred any Material Adverse Effect or any material adverse change or

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development involving a prospective material adverse change in the condition or the business activities, financial or otherwise, of the Company from the latest dates as of which such condition is set forth in the Registration Statement and Prospectus ("Material Adverse Change").

If any of the conditions specified in this Section 8 shall not have been fulfilled when and as required by this Agreement, or if any of the certificates, opinions, written statements or letters furnished to the Placement Agent or to Placement Agent's counsel pursuant to this Section 8 shall not be reasonably satisfactory in form and substance to the Placement Agent and to Placement Agent's counsel, all obligations of the Placement Agent hereunder may be cancelled by the Placement Agent at, or at any time prior to, the consummation of the Closing. Notice of such cancellation shall be given to the Company in writing or orally. Any such oral notice shall be confirmed promptly thereafter in writing.

<u>SECTION 9</u>. Intentionally Omitted

<u>SECTION 10</u>. <u>GOVERNING LAW</u>. This Agreement shall be deemed to have been made and delivered in Nevada and both this engagement letter and the transactions contemplated hereby shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of Nevada without regard to the conflict of laws principles thereof. Each of the Placement Agent and the Company: (i) agrees that any legal suit, action or proceeding arising out of or relating to this engagement letter and/or the transactions contemplated hereby shall be instituted exclusively in Nevada Supreme Court, County of Clark, or in the United States District Court for the District of Nevada, (ii) waives any objection which it may have or hereafter to the venue of any such suit, action or proceeding, and (iii) irrevocably consents to the jurisdiction of the Nevada Supreme Court, County of Clark, and the United States District Court for the District of Nevada in any such suit, action or proceeding. Each of the Placement Agent and the Company further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the Nevada Supreme Court, County of Clark or in the United States District Court for the District of Nevada and agrees that service of process upon the Company mailed by certified mail to the Company's address shall be deemed in every respect effective service of process upon the Company, in any such suit, action or proceeding, and service of process upon the Placement Agent mailed by certified mail to the Placement Agent's address shall be deemed in every respect effective service process upon the Placement Agent, in any such suit, action or proceeding. Notwithstanding any provision of this engagement letter to the contrary, the Company agrees that neither the Placement Agent nor its affiliates, and the respective officers, directors, employees, agents and representatives of the Placement Agent, its affiliates and each other person, if any, controlling the Placement Agent or any of its affiliates, shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement and transaction described herein except for any such liability for losses, claims, damages or liabilities incurred by us that are finally judicially determined to have resulted from the willful misconduct or gross negligence of such individuals or entities. If either party shall commence an action or proceeding to enforce any provision of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorney's fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

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<u>SECTION 11</u>. <u>ENTIRE AGREEMENT/MISC</u>. This Agreement (including the attached Indemnification Provisions) embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings, relating to the subject matter hereof. If any provision of this Agreement is determined to be invalid or unenforceable in any respect, such determination will not affect such provision in any other respect or any other provision of this Agreement, which will remain in full force and effect. This Agreement may not be amended or otherwise modified or waived except by an instrument in writing signed by the Placement Agent and the Company. The representations, warranties, agreements and covenants contained herein shall survive the closing of the Placement and delivery of the Securities. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or a .pdf format file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or .pdf signature page were an original thereof.

<u>SECTION 12</u>. <u>CONFIDENTIALITY</u>. The Placement Agent (i) will keep the Confidential Information (as such term is defined below) confidential and will not (except as required by applicable law or stock exchange requirement, regulation or legal process ("**Legal Requirement**"), without the Company's prior written consent, disclose to any person any Confidential Information, and (ii) will not use any Confidential Information other than in connection with the Placement. The Placement Agent further agree, severally and not jointly, to disclose the Confidential Information only to its Representatives (as such term is defined below) who need to know the Confidential Information for the purpose of the Placement, and who are informed by the Placement Agent of the confidential nature of the Confidential Information. The term "<u>Confidential Information</u>" shall mean, all confidential, proprietary and non-public information (whether written, oral or electronic communications) furnished by the Company to the Placement Agent or its Representatives in connection with the Placement Agent's evaluation of the Placement. The term "<u>Confidential Information</u>" will not, however, include information which (i) is or becomes publicly available other than as a result of a disclosure by the Placement Agent or its Representatives in violation of this Agreement, (ii) is or becomes available to the Placement Agent or any of its Representatives on a non-confidential basis from a third-party, (iii) is known to the Placement Agent or any of its Representatives prior to disclosure by the Company or any of its Representatives, or (iv) is or has been independently developed by the Placement Agent and/or the Representatives without use of any Confidential Information furnished to it by the Company. The term "Representatives" shall mean the Placement Agent's directors, board committees, officers, employees, financial advisors, attorneys and accountants. This provision shall be in full force until the earlier of (a) the date that the Confidential Information ceases to be confidential and (b) two years from the date hereof. Notwithstanding any of the foregoing, in the event that the Placement Agent or any of its Representatives are required by Legal Requirement to disclose any of the Confidential Information, such Placement Agent and its Representatives will furnish only that portion of the Confidential Information which such Placement Agent or its Representative, as applicable, is required to disclose by Legal Requirement as advised by counsel, and will use reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Confidential Information so disclosed.

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<u>SECTION 13</u>. <u>NOTICES</u>. All communications hereunder shall be in writing and shall be mailed, hand delivered or e-mailed and confirmed to the parties hereto as follows:

**If to the Placement Agent:**

to the address set forth herein, attention:

John Calicchio - email: jc@iconcapg.com

**With a copy to:**

Foley Shechter Ablovatskiy LLP

1180 Avenue of the Americas, 8th Floor

New York, New York 10036

E-mail: js@foleyshechter.com

Attention: Jonathan Shechter, Esq.

**If to the Company:**

Artificial Intelligence Technology Solutions, Inc. 10800 Galaxie Ave, Ferndale, MI 48220

**With a copy to:**

Frederick M. Lehrer, P. A.

Frederick M. Lehrer, Esquire

2108 Emil Jahna Road

Clermont, Florida 34711

flehrer@securitiesattorney1.com

(561) 706-7646

Any party hereto may change the address for receipt of communications by giving written notice to the others.

<u>SECTION 14</u>. <u>PRESS ANNOUNCEMENTS</u>. The Company agrees that the Placement Agent shall, from and after any Closing, have the right to reference the Placement and the Placement Agent's role in connection therewith in the Placement Agent's marketing materials and on its website and to place advertisements in financial and other newspapers and journals, in each case at its own expense.

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Please confirm that the foregoing correctly sets forth our agreement by signing and returning to ICG the enclosed copy of this Agreement.

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| | | |
|:---|:---|:---|
| Very truly yours, | Very truly yours, | Very truly yours, |
| **ICON CAPITAL GROUP, LLC** | **ICON CAPITAL GROUP, LLC** | **ICON CAPITAL GROUP, LLC** |
| By: | /s/ John Calicchio | /s/ John Calicchio |
|  | Name: | John Calicchio |
|  | Title: | President/CEO |
|  | <u>Address for notice</u>: | <u>Address for notice</u>: |
|  | 895 Dove Street, Suite 300 | 895 Dove Street, Suite 300 |
|  | Newport Beach, CA 92660 | Newport Beach, CA 92660 |
|  | Attention: John Calicchio | Attention: John Calicchio |
|  | Email: jc@iconcapg.com | Email: jc@iconcapg.com |

---

Accepted and agreed to as of

the date first written above:

---

| | | |
|:---|:---|:---|
| By: | /s/ Steven Reinharz | /s/ Steven Reinharz |
|  | Name: | Steven Reinharz |
|  | Title: | President |

---

<u>Address for notice</u>: <br>Artificial Intelligence Technology Solutions, Inc. 10800 Galaxie Avenue Ferndale, Michigan 48220

ICON Capital Group: <u>JC</u> Company: <u>SR</u> 

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[*Signature Page to Placement Agency Agreement Between*

*Artificial Intelligence Technology Solutions, Inc., and Icon Capital Group, LLC]*

ICON Capital Group: <u>JC</u> Company: <u>SR</u> 

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**ADDENDUM A**

**<u>INDEMNIFICATION PROVISIONS</u>**

In connection with the engagement of Icon Capital Group, LLC (the "Lead Manager") by Artificial Intelligence Technology Solutions, Inc, a Nevada corporation located at 701 North Green Valley Parkway Suite 200, Henderson, NV 89074 (the "Company" or "AITX") pursuant to a placement agency agreement dated as of the date hereof, between the Company and the Lead Manager, as it may be amended from time to time in writing (the "Agreement"), the Company hereby agrees as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. To the extent permitted by law, the Company will indemnify the Lead Manager and each of their respective affiliates, directors, officers, employees and controlling persons (within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934) against all losses, claims, damages, expenses and liabilities, as the same are incurred (including the reasonable fees and expenses of counsel), relating to or arising out of its activities hereunder or pursuant to the Agreement, except, with regard to the Lead Manager, to the extent that any losses, claims, damages, expenses or liabilities (or actions in respect thereof) are found in a final judgment (not subject to appeal) by a court of law to have resulted primarily and directly from the Lead Manager's willful misconduct or gross negligence in performing the services described herein, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Promptly after receipt by the Lead Manager of notice of any claim or the commencement of any action or proceeding with respect to which the Lead Manager are entitled to indemnity hereunder, the Lead Manager will notify the Company in writing of such claim or of the commencement of such action or proceeding, and the Company will assume the defense of such action or proceeding and will employ counsel reasonably satisfactory to the Lead Manager and will pay the fees and expenses of such counsel. Notwithstanding the preceding sentence, the Lead Manager will be entitled to employ counsel separate from counsel for the Company and from any other party in such action if counsel for the Lead Manager reasonably determines that it would be inappropriate under the applicable rules of professional responsibility for the same counsel to represent both the Company and the Lead Manager. In such event, the reasonable fees and disbursements of no more than one such separate counsel will be paid by the Company. The Company will have the exclusive right to settle the claim or proceeding provided that the Company will not settle any such claim, action or proceeding without the prior written consent of the Lead Manager, which will not be unreasonably withheld.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The Company agrees to notify the Lead Manager promptly of the assertion against it or any other person of any claim or the commencement of any action or proceeding relating to a transaction contemplated by the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. If for any reason the foregoing indemnity is unavailable to the Lead Manager or insufficient to hold the Lead Manager harmless, then the Company shall contribute to the amount paid or payable by the Lead Manager, as the case may be, as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect not only the relative benefits received by the Company on the one hand, and the Lead Manager on the other, but also the relative

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fault of the Company on the one hand and the Lead Manager on the other that resulted in such losses, claims, damages or liabilities, as well as any relevant equitable considerations. The amounts paid or payable by a party in respect of losses, claims, damages and liabilities referred to above shall be deemed to include any legal or other fees and expenses incurred in defending any litigation, proceeding or other action or claim. Notwithstanding the provisions hereof, the Lead Manager's share of the liability hereunder shall not be in excess of the amount of fees actually received, or to be received, by the Lead Manager under the Agreement (excluding any amounts received as reimbursement of expenses incurred by the Lead Manager).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. These Indemnification Provisions shall remain in full force and effect whether or not the transaction contemplated by the Agreement is completed and shall survive the termination of the Agreement, and shall be in addition to any liability that the Company might otherwise have to any indemnified party under the Agreement or otherwise.

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| | | |
|:---|:---|:---|
| Very truly yours, | Very truly yours, | Very truly yours, |
| **ICON CAPITAL GROUP, LLC** | **ICON CAPITAL GROUP, LLC** | **ICON CAPITAL GROUP, LLC** |
| By: | /s/ John Calicchio | /s/ John Calicchio |
|  | Name: | John Calicchio |
|  | Title: | President, CEO |
|  | <u>Address for notice</u>: | <u>Address for notice</u>: |
|  | 895 Dove Street Suite 300 | 895 Dove Street Suite 300 |
|  | Newport Beach, CA 92660 | Newport Beach, CA 92660 |
|  | Attention: John Calicchio | Attention: John Calicchio |
|  | Email: jc@iconcapg.com | Email: jc@iconcapg.com |

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Accepted and agreed to as of

the date first written above:

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| | | |
|:---|:---|:---|
| **COMPANY** | **COMPANY** | **COMPANY** |
| By: | /s/ Steven Reinharz | /s/ Steven Reinharz |
|  | Name: | Steven Reinharz |
|  | Title: | President |

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<u>Address for notice</u>: <br>Artificial Intelligence Technology Solutions, Inc. 701 North Green Valley Parkway Suite 200 Henderson, NV 89704

*[Signature Page to Indemnification Provisions Pursuant to Placement Agency Agreement]*

*Artificial Intelligence Technology Solutions, Inc.and Icon Capital Group, LLC]*

ICON Capital Group: <u>JC</u> Company: <u>SR</u> 

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## Ex-23

**EXHIBIT 23.2**

Independent Registered Public Accounting Firm's Consent

We consent to the inclusion in this Registration Statement on this Form S-1 of our report, which includes an explanatory paragraph as to the Company's ability to continue as a going concern, dated May 27, 2022, with respect to our audit of the consolidated financial statements of Artificial Intelligence Technology Solutions, Inc. and Subsidiaries as of February 28, 2022 and 2021 and for the years then ended, which appears in the Registration Statement of Artificial Intelligence Technology Solutions, Inc. in this Form S-1. We also consent to the reference to our Firm under the heading "Experts" in such Prospectus.

*/s/ L J Soldinger Associates, LLC*

Deer Park, Illinois

United States of America

March 31, 2023

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## Ex-Filing

**EXHIBIT 107**

**Filing Fee Table**

**<u>Form S-1</u>**

(Form Type)

**<u>ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.</u>**

(Exact Name of Registrant as Specified in its Charter)

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Title of Class of Securities to be Registered** | &nbsp;&nbsp;**Amount to Be Registered** | &nbsp;&nbsp;**Proposed Maximum Aggregate Price Per Share(2)** | &nbsp;&nbsp;**Proposed Maximum Aggregate Offering Price** | &nbsp;&nbsp;**Amount of Registration Fee** |
| &nbsp;&nbsp;Common Stock, $0.0001 par value(1) | &nbsp;&nbsp;1250000000 | &nbsp;&nbsp;$0.01 | &nbsp;&nbsp;$12500000 | &nbsp;&nbsp;$1377.50 |
| &nbsp;&nbsp;Total Number of Securities to be Registered | &nbsp;&nbsp;1250000000 | &nbsp;&nbsp;$0.01 | &nbsp;&nbsp;$12500000 | &nbsp;&nbsp;$1377.50 |

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(1) Represents shares issuable to the selling stockholder pursuant to a purchase agreement.
 Pursuant to Rule 416(a) of the Securities Act of 1933, as amended, this Registration Statement also covers any additional shares of
 common stock which may become issuable to prevent dilution from stock splits, stock dividends and similar events.

(2) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) under the
 Securities Act of 1933, as amended, using the average of the high and low prices as reported on the OTC Pink on March 24, 2023.

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