What changed in this filing

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Item 1. Business

2022-05-27 compared with 2021-06-01 · 411 added, 274 removed, 120 unchanged (85% of the section changed)

Business Overview

Robotic Assistance Devices, LLC was incorporated in the State of Nevada on July 26, 2016, as an LLC and was founded by current President Steve Reinharz.

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.

Robotic Assistance Devices, LLC was incorporated in

the State of Nevada on July 26, 2016, as an LLC and was founded by current President Steve Reinharz.

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.

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.

(“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.

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.

changed its name to Artificial

Intelligence Technology Solutions Inc.

(“AITX”).

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, the Company 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.

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, the Company 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 the Company 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 is treated as the accounting acquirer as its stockholders control the Company after the Acquisition, even though AITX was the legal

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 except for gunshot detection capabilities.

EAGL Technologies supplies RAD with gunshot detection technical features through a dealer agreement.

AITX’s mission is to apply Artificial Intelligence (AI) technology to solve enterprise problems categorized as expensive, repetitive, difficult to staff, and outside of the core competencies of the client organization.

elements of hardware and software design offered by RAD are 100% designed, developed and owned by RAD.

AITX’s mission is to apply Artificial Intelligence

(AI) technology to solve enterprise problems categorized as expensive, repetitive, difficult to staff, and outside of the core competencies

of the client organization.

A short list of basic examples include:

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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.

1 RAD’s current goal is to disrupt and capture a significant portion of both the human security guard market (over $30 billion) 2 and “physical security”

(video surveillance, access control, visitor management, etc.) market (over $20 billion) through its innovative RAD solution ecosystem.

RAD’s first industry focus is the more than

$100 billion global security services market.

1 RAD’s current goal is to disrupt and capture a significant portion of

both the human security guard market (over $30 billion) 2 and “physical security”

(video surveillance, access control,

visitor management, etc.) market (over $20 billion) through its innovative RAD solution ecosystem.

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

10 unchanged sentences

The company 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 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.

8 unchanged sentences

RAD M is focused on the development of autonomous mobile devices, both ground-based and airborne.

RAD M ’

s first solution, the ROAMEO ™

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.

3 unchanged sentences

ROAMEO is manufactured, implemented, and maintained by RAD I.

ROAMEO will begin serial production in RAD’s Michigan facility in June or July 2021.

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.

Background - First Commercial Rugged Outdoor Security Robot

Background - First Commercial Rugged Outdoor

Security Robot

Reinharz started RAD in the summer of 2016.

RAD originally partnered with SMP Robotics Systems Corp.

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’

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’

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.

1 unchanged sentence

RAD has had no contact with SMP Robotics since April

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.

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.

Background –

RAD’s 2 nd Generation Ecosystem

RAD’s primary strategy has always been to use AI technology and modern systems to transform the security industry.

RAD’s 2 nd

Generation Ecosystem

RAD’s primary strategy has always been to use

AI technology and modern systems to transform the security industry.

Mobile robots, indoor and outdoor, are a part of that strategy.

However, to ultimately realize the delivery of these solutions, a set of “stationary robots”

to ultimately realize the delivery of these solutions, a set of “stationary robots”

required development.

These stationary robots launched in April 2018 with the Security Control and Observation Tower (SCOT), development of which began in August 2017.

SCOT performs many of the same functions 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.

s positive reception reinvigorated RAD, which accelerated the development of the software and cloud services that support SCOT.

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.

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 3 , (2) A 2018 Secure Campus Award from Campus Security and Life Safety Magazine, and (3) A ‘Govie’

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.

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 3 , (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.

RAD has not submitted entries for any awards since mid-2018 but expects future awards participation.

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.

Currently Available Hardware Solutions

RAD’s hardware lineup has improved and expanded since initial launch in April 2018.

RAD’s hardware lineup includes:

“SCOT 2.0”

, which replaced SCOT 1.x.

SCOT 1 was upgraded during the first year after its introduction and became SCOT 1.4., which features a mature software platform and a refined hardware platform.

SCOT solutions have operated with over 99% uptime since inception.

It SCOT 1.4 embodies and offers the full complement of solutions driven by the RAD Cloud.

Scot 2.0 is a SCOT 1.4 enclosed in an appealing modern enclosure.

It also features additional LCD monitors (like those used in the WALLY, described below), curved LED panels to support visibility, flexible messaging (as opposed to the flat LED panels used in SCOT 1.x), and an advanced locking system.

SCOT 2.0 is the realization of the concepts pioneered, demonstrated, and tested throughout the 1.x series.

The SCOT lineup is indoor/outdoor rated.

‘WALLY’

was announced in June 2018 at the BOMA International Show in San Antonio, Texas.

WALLY is a wall-mounted derivative of SCOT that is also indoor/outdoor rated.

It is designed to bring the RAD ecosystem to entryways, elevator lobbies, loading docks, and other areas where wall mounting is preferable.

WALLY has been upgraded several times since inception, with the current version being the “WALLY 2.1 HSO,”

which includes a Health Screening Option.

This feature automates temperature checks of workers and visitors entering a facility and simplifies contact tracing follow-up.

RAD anticipates strong demand for this feature as COVID occupancy restrictions loosen and businesses struggle to efficiently process many more people entering their facilities.

3 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.

“AVA”

was introduced by the Company in March 2020 and replaces “FRED,”

which had been introduced in 2018 as a complement to the RAD ecosystem and focused exclusively on verified entry methods.

AVA performs not only the tasks previously performed by FRED but also additional tasks.

RAD delivered the first AVA unit in September 2020.

[Mounted on gate stanchions and appropriate for office access.]

“ROSA”

(Responsive Observation Security Agent) was introduced in 2019.

In addition to providing surveillance capabilities, the unit has been designed to deter loitering, vandalism, and other criminal behaviors by autonomously responding to trespassers with escalating lights, sirens, and targeted messaging.

Case studies of two successful installations have been shared widely among the security community and have received coverage in the trade press 4 .

‘ROSA180’

was announced in May 2021 and is the successor to ROSA.

“ROSA270”

was announced in May 2021 and complements the existing RAD I stationary lineup.

It offers an expanded 270°

field of view.

RAD has since won numerous awards for its solutions,

RAD Light My Way ™

Secure Campus 2022 Awards, in the categories of ‘Security & Personal Safety Devices’

& ‘Artificial Intelligence’

3.0 with STAN ™

, Security Industry Association NPS Awards, in the

category of ‘Access Control Software, Hardware, Devices and Peripherals’

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.

Introduction of RAD’s 3 rd Generation

On October 13, 2021, RAD presented it’s ‘3 rd

Generation’

of solutions at an investor’s open house event.

The event was held after market close, live streamed and made

available to any interested party.

ROSA 3.0 –

RAD’s best selling device for a variety of intrusion detection, loitering, monitoring and response purposes.

New design, better lighting, communication, audio, uses RAD-G’s hardware.

AVA 3.0 - RAD’s guard-gate replacement device.

New design, better lighting, communication, audio, uses RAD-G’s hardware.

Uses RADGuard 3.x.

3 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.

SCOT 3.0 –

Designs shown.

Additional demand required for full production.

Will continue with 2.x until shells in stock are sold out.

Wally 3.0 - Designs shown.

Additional demand required for full production.

Will continue with 2.x until shells in stock are sold out.

‘Robotic Dogs’

Partnership with Ghost Robotics shown.

Additional details on RAD’s robotic dog solutions are expected to be presented in calendar year 2022.

RAD Light My Way –

RAD’s award winning personal safety software solution that utilizes RAD’s hardware.

Sales to begun March 1, 2022.

ROAMEO 2.1 –

Newest version of ROAMEO, RAD’s rugged outdoor autonomous robot.

Software Solutions

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.

The Company believes 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 the Company’s success.

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.

The Company believes 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 the Company’s

Manufacturing & Assembly

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.

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.

The Company expects that economies of scale will drive greater gross margin as quantities and efficiencies increase.

RAD expects to introduce new products and updates to several products during the remainder of 2021 and early 2022, including the following:

1) ROAMEO 2.0 in June 2021.

This release will significantly improve the robot’s perception, prediction, battery, speed, and autonomous charging.

2) ROSA270 to be announced June 2021.

This is a new solution.

3) ROSA180, the successor to last year’s ROSA.

4) Other hardware and software solutions, currently being developed, one of which is expected to be introduced in June 2021.

4 https://roboticassistancedevices.com/case-study-citrus-construction/ and https://roboticassistancedevices.com/case-study-midway-car-rental/

RAD’s hardware and software have benefited from continuous significant improvements and to date has over 600,000 paid operating hours.

RAD expects to introduce new products and updates

to several products during the remainder of 2022 and early 2023, including the following:

1) ROAMEO 3.0.

This release will

have an updated physical design inline with the general ‘RAD 3.0 look’

as well as feature several custom components that will

significantly improve the robot’s long term autonomy.

Further details

to be released throughout the fiscal year.

3) ‘ROI’, RAD’s

entry into an existing market that we value between $ 250 million and $ 500million per year.

The unit is in stealth mode and will be debuted

at our before the GSX trade show in Atlanta in September 2022.

RAD’s hardware and software have benefited from

continuous significant improvements and to date has over 1,500,000 paid operating hours.

Team and Culture

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.

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.

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 as the Company, 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 the Company to weather the difficult period of robot deployments and our transition to 2 nd generation solutions.

We try to ensure that our

entire staff shares the same core beliefs and values as the Company, 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 the Company to weather the difficult period of robot deployments and our transition to

2 nd generation solutions.

Market Environment

RAD believes that its experience has shown that the security market is ripe for disruption.

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.

The Company believes 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, the Company expects 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”

The Company believes 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, the Company expects 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.

Positive market reception for RAD solutions is due to the following conditions:

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.

Positive market reception for RAD solutions is due

to the following conditions:

The security guard industry is characterized by poor customer satisfaction and industry consolidation.

22 unchanged sentences

Rental Program offers customized options to help organizations achieve operational and security goals.

The above conditions speak to the historical lack of innovation in the guarding market.

The above conditions speak to the historical lack

of innovation in the guarding market.

RAD upends this tradition by approaching security challenges through a truly revolutionary approach.

The market is now positioned for major disruption with the application of AI-based solutions, as lead by RAD.

As such, the interest in RAD solutions has been overwhelming.

As such, the interest in

RAD solutions has been overwhelming.

Major companies, including the largest U.S.

guarding company, are aligning with RAD to offer these services to their customer base.

guarding company, are aligning with RAD to offer these

services to their customer base.

Prospective ROAMEO Impact

The Company’s 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.

The Company’s 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

Customer Acceptance of RAD Solutions

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, and retail industries.

The Company believes that if RAD is ultimately deployed to only 5% of the facilities within any of these industries, the Company 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.

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.

The Company believes that if RAD is ultimately deployed to only 5% of the facilities within any of these industries,

the Company 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.

RAD Industry Leadership Role

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.

Reinharz sits on the SIA’s Autonomous Working Group committee, which is dedicated to helping shape the industry and support progressive legislation.

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.

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.

Reinharz provided a lecture to NYC’s ASIS CPP group that

qualified as a continuing education credit.

It is expected that Mr.

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

Reinharz will continue his

promotion of the new paradigm for the next few years until adoption is widespread.

Go To Market Strategy

RAD’s strategy continues to focus on the creation and support of a strong dealer channel.

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.

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.

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.

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Dealer subscriptions remain the primary focus.

RAD has no direct competition save for one immediate competitor and one potential competitor.

RAD has no direct competition save for one immediate

competitor and one potential competitor.

RAD is considered part of the “drones”

category of the security industry, although at RAD we consider ourselves to be in the workflow automation industry.

RAD deliberately restricts information that is public for three main reasons:

RAD deliberately restricts information that is public

for three main reasons:

Usually, activities are covered by mutual non-disclosure agreements and RAD generally will not ask for permission to publicize customer activities.

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we prefer to keep our solutions somewhat stealth so as not to give our would-be competitors ideas to copy.

We anticipate that, eventually, some competition may enter the market.

RAD seeks to maintain a 2+ year competitive advantage through a broad line of hardware solutions, the fastest and smoothest user interface, and the strongest feature set with the most mature back-end.

Furthermore, RAD seeks to expand its sales staff and become the dominant incumbent in this new market that it has created.

The company issued a Covid Impact notice on March 24, 2020 that can be found here:

https://secureservercdn.net/198.71.233.11/48b.407.myftpupload.com/wp-content/uploads/2020/03/covidUpdate.pdf.

In summary, Covid accelerated some opportunities and sales while stunting others.

Overall, the Company believes that the Covid pandemic will spur the use of innovative cost-saving technology like that created by RAD.

Indeed, at the time of this writing, RAD is engaged in several large and high-level discussions with companies actively looking to reduce cost due to the pandemic.

RAD expects this to remain a priority, even in light of vaccination availability and a reopening economy.

Furthermore, the elimination of millions of low-wage jobs at the start of the pandemic and the current widespread competition to now replace those workers has exacerbated the already difficult challenge of attracting candidates for security guard positions.

With the security industry facing a severe security guard shortage, RAD’s technology-based solutions are a desirable, affordable, and readily available alternative.

As of May 9, 2021, we have 50 employees, including full-time contract employees in California and Canada.

We anticipate that, eventually, some competition may

enter the market.

RAD seeks to maintain a 2+ year competitive advantage through a broad line of hardware solutions, the fastest and smoothest

user interface, and the strongest feature set with the most mature back-end.

Furthermore, RAD seeks to expand its sales staff and become

the dominant incumbent in this new market that it has created.

COVID-19 Impact

The Company had little COVID-19 impact until the release

of the 3.0 line.

The little COVID-19 impact was due to early purchasing and inventory build up in anticipation of the supply chain disruptions.

The 3.0 lineup uses a variety of new equipment that

we could not accumulate.

The Company is presently experiencing issues caused by the ongoing supply chain constraints on these new components

and pieces of equipment.

Furthermore, shipping delays have impacted the timeliness of parts deliveries.

Additionally shipping and component

costs have been increasing.

These facts put negative pressure on our gross margins

and add delays between the time an order is received and the time that order can be implemented and start generating revenue.

The greatest impact of COVID-19 remains it’s

affect on labor.

Namely the reduction of available workers for both the security industry –

which is spurring demand for RAD solutions

and the increasing costs and reduction in availability of RAD staff in the software development and assembly areas.

pandemic’s long term impact will be generally positive as customers gravitate towards our solutions.

Additionally the higher wages

we are paying our team members help assure continuation of our high employee retention rate.

As of May 25, 2022, we have 83 employees, including

full-time global contract employees.

None of our employees are represented by a union.

We consider our employee relations to be excellent.

AITX is rolling out its approved (April 2021 8-K) ESOP to all employees during the 2 nd and 3 rd quarters.

AITX is rolling out its approved (April 2021 8-K) ESOP to all employees during the summer of 2022.

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:

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 the Company’s stated goals of best-in-class data protection and internal processes.

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.

The Company expects to have greater visibility on sales activities, trends, lead management and sales forecasting utilizing the new ERP.

Announced Strategic Alliances and Partnerships

The Company 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

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 25 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.

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:

5/18/2020 - Artificial Intelligence Technology Solutions Increases Dealer Network

9/14/2020 - Robotic Assistance Devices Announces Hawaiian Expansion with Titan Security Services

9/21/2020 - Robotic Assistance Devices Announces a Strengthened Southern California Presence with GMI Integrated Facility Solutions Inc.

12/17/2020 - Robotic Assistance Devices Announces Dealer Agreement with Civitas Group

1/6/2021 - Robotic Assistance Devices Announces Dealer Agreement with Protos Security

2/12/2021 –

NexGen Security Solutions and Servexo Protective Services Sign with Robotic Assistance Devices - Indicates that Momentum for Products Accelerates

3/5/2021 - Robotic Assistance Devices Announces Dealer Agreement with St.

Moritz Security Services

3/11/2021 - Robotic Assistance Devices Announces Dealer Agreement with DSI

RAD Took an Active Part in the War Against COVID-19

The years 2020 and 2021 thus far have been framed by the global impact of COVID-19.

Since the early days of the pandemic, RAD has been active in offering businesses of all sizes all-in-one solutions to maintaining a safe and health work environment.

Wally HSO (Health Screening Option) and ROSA (with Face Covering Detection) have been integral in helping businesses open their facilities in a safe and secure manner.

COVID-19 related product announcements and orders include:

4/6/2020 - Artificial Intelligence Technology Solutions Conducts Coronavirus Type Pandemic First Response

5/8/2020 - Artificial Intelligence Technology Solutions Announces Health Screening Product Enhancement

7/1/2020 - Robotic Assistance Devices Deploys Artificial Intelligence-Powered Face Mask Detection Reporting Analytic

7/22/2020 - Robotic Assistance Devices Announces Face Mask Detection Orders

7/29/2020 - Robotic Assistance Devices Announces First Health Screening Device Order

8/13/2020 - Robotic Assistance Devices Receives Multi Unit Order for Face Mask Detection Enabled ROSAs

8/28/2020 - Robotic Assistance Devices Announces Second “Wally”

Order from Fortune 500 Company

11/24/2020 - Artificial Intelligence Technology Solutions Receives Wally HSO Order from Top 20 Largest Medical Devices Company in the World

2/23/2021 - Robotic Assistance Devices Announces Large Expansion Order Received from Fortune 50 Client

3/30/2021 - Robotic Assistance Devices Receives 2-Unit Wally HSO Order from New Dealer DSI

RAD I and RAD M Continued to Expand Their Product Offerings

Throughout all of fiscal year 2021, RAD released new products and made important updates to existing solutions.

Notably, AVA and ROAMEO formally joined the RAD product lineup, with deployments immediately following their announcements.

As fiscal year 2022 got underway, ROSA180 and ROSA270 will be poised to take their places in this expanding product lineup.

RAD Sales Continue to Surge

Throughout FY 2021, RAD made great strides in increasing sales and recurring monthly revenue.

Through the addition of several new authorized dealers, an expanded product offering, new sales / business development team members and expanded client communications campaigns, the Company has experienced a measurable increase in demand and unit orders.

RAD often publicly announces orders that are significant in volume, market penetration, or use case application.

Order highlights from FY 2021 include:

Throughout fiscal year 2021, RAD made great strides in increasing sales and recurring monthly revenue.

Through the addition of several new authorized dealers, an expanded product offering, new sales/ usiness development team members and expanded client communications campaigns, the Company has experienced a measurable increase in demand and unit orders.

RAD often publicly announces orders that are significant in volume, market penetration, or use case application.

Order highlights from FY 2021 include:

3/31/2020 - Artificial Intelligence Technology Solutions Secures Seven-Unit Order From Transit Agency

5/12/2020 - Artificial Intelligence Technology Solutions Secures Nine Unit Order From Real Estate Company

6/4/2020 - Artificial Intelligence Technology Solutions Receives first AVA Order

6/24/2020 - Artificial Intelligence Technology Solutions Signs Agreement With Fortune 500 Client

7/9/2020 - Robotic Assistance Devices Announces Orders

11/10/2020 - Artificial Intelligence Technology Solutions Receives First Auto Dealership Order

11/17/2020 - Artificial Intelligence Technology Solutions Receives ROSA Order from Large Construction Company

12/22/2020 - Robotic Assistance Devices Large Opportunity on the Immediate Horizon

1/8/2021 - Robotic Assistance Devices Announces That Previously Anticipated Order Is In Hand

1/13/2021 - Robotic Assistance Devices Receives Opening Order From Civitas Group, RAD’s Recently Signed Dealer in Romania

1/28/2021 - Robotic Assistance Devices Announces that 2021 is off to a Great Start

3/1/2021 - Artificial Intelligence Technology Solutions Announces Accelerated Order Activity - New Orders from Fortune Ranked Clients

4/14/2021 - Robotic Assistance Devices Receives 10-Unit Order from Titan Security Technologies

4/19/2021 - Major US Airport Poised to Deploy RAD Solutions

4/21/2021 - Robotic Assistance Devices Receives Opening Order from Recently Signed Dealer St.

announcement and highlights include:

March 5, 2021 - RAD Announces Dealer Agreement with

Moritz Security Services

4/28/2021 - Robotic Assistance Devices Receives 3-Unit ROSA Order

5/10/2021 - Robotic Assistance Devices Receives 17 Unit Order

The AITX and RAD Teams Continue to Grow

The Company and its subsidiaries have been able to attract highly qualified and experienced individuals to help in research and development, procurement, manufacturing, shipping and customer support.

Staffing at RAD I, RAD M, and RAD G increased from 18 full time and 4 part-time employees and contract employees at the end of February 2020 to 50 as of May 9, 2021.

Notable Additions to the AITX and RAD Executive Teams:

7/13/2020 - Robotic Assistance Devices Announces Team Expansion

10/5/2020 - Artificial Intelligence Technology Solutions Announces Board of Advisors

3/2/2021 - Artificial Intelligence Technology Solutions Announces Executive Team Expansion

4/12/2021 - Robotic Assistance Devices Welcomes Christopher Almonrode, CPP, as Vice President Security & Industry

4/26/2021 - Robotic Assistance Devices Appoints New Chief Financial Officer

AITX and RAD Develop Working Relationships with Industry Partners

Continually expanding its marketability, RAD has formed several symbiotic relationships, meant to enhance the company’s and products’

performance and reach.

Notable announced partnerships include:

9/29/2020 - Artificial Intelligence Technology Solutions Partners With Centralized Vision to Expand Premium Service Offerings

11/5/2020 - Artificial Intelligence Technology Solutions and Swan Island Networks Announce Strategic Alliance

3/24/2021 - Robotic Assistance Devices to Integrate EAGL Gunshot Detection Technology into All Security Devices

RAD Expands Its Production Capacity to Keep Up With Demand

In fiscal year 2021, RAD undertook two major production investments.

First, it initially expanded its facilities in southern California, and it then announced a major expansion to a 30,000 square foot facility near Detroit, Michigan.

The new Michigan facility, dubbed REX (RAD Excellence Center) is expected to be fully operational by the end of June 2021, staffed with up to 75 employees.

Manufacturing announcements include:

12/30/2020 –

Robotic Assistance Devices Announces Growth, Upgrades Two Locations

3/9/2021 - Robotic Assistance Devices Announces That Its ‘QuickShip’

Turnaround Time in Full Operation

3/18/2021 - Robotic Assistance Devices Signs Lease for New Production Facility in Greater Detroit Area

5/5/2021 - Robotic Assistance Devices Experiences Great Advances Through April

RAD Client Satisfaction –

Documented via Case Studies

RAD has issued 2 formal case studies, published in their related industry trade publications.

These document the verifiable contributions that the clients’

RAD units have made to enhance their property’s security profile, while reducing overall costs.

Excerpts from the case studies include:

“Damage to vehicles, graffiti on the exterior of the building, the homeless tampering with our electrical outlets to charge their phones, trash left around the property –

that’s all gone since we put the ROSAs in.”

“We’re paying a fraction of what we were paying before and more importantly, we’ve seen a drop in crime.

ROSA is doing the same or better than having a security guard in place.”

The future implementation of such case studies will advance RAD’s reach into new vertical markets.

Published case studies include:

3/15/2021 - Robotic Assistance Devices Published Case Study Regarding Security and Cost Savings at Client Citrus Construction

4/6/2021 - Robotic Assistance Devices’

ROSA Proves Its Value in Automotive Applications

https://radsecurity.com/robotic-assistance-devices-announces-dealer-agreement-with-st-moritz-security-services/

March 11, 2021 - RAD Announces Dealer Agreement with

https://radsecurity.com/rad-announces-dealer-agreement-with-dsi/

May 24, 2021 - RAD Secures New Orders, Signs Two New

Dealers, Pro Security Group and a Canadian Dealer

https://radsecurity.com/robotic-assistance-devices-secures-new-orders-signs-two-new-dealers/

June 17, 2021 - RAD Signs L&P Global Security

as a New Dealer with Initial Unit Commitment

https://radsecurity.com/robotic-assistance-devices-signs-lp-global-security-as-a-new-dealer-with-initial-unit-commitment/

August 4, 2021 - RAD Announces Dealer Agreement with

BSN Security, LLC

https://radsecurity.com/rad-announces-dealer-agreement-with-bsn-security-llc/

December 2, 2021 - RAD Signs EPIC Security Works as

New Dealer and Receives 4 Unit ROSA Order

https://radsecurity.com/rad-signs-epic-security-works-as-new-dealer-and-receives-4-unit-rosa-order/

December 17, 2021 - RAD Receives Order for 10 ROSA

Stationary Security Robots from Recently Signed Dealer Vista Security Group

https://radsecurity.com/rad-receives-order-for-10-rosa-stationary-security-robots-from-recently-signed-dealer-vista-security-group/

February 1, 2022 - RAD Signs SekurCorp as New Dealer

and Receives AVA Order

https://radsecurity.com/rad-signs-sekurcorp-as-new-dealer-and-receives-ava-order/

February 18, 2022 - RAD Signs New Dealer and Receives

ROSA Order with Additional Units Expected

https://radsecurity.com/rad-signs-new-dealer-and-receives-rosa-order-with-additional-units-expected/

February 22, 2022 - RAD Receives 5 Unit ROSA Order

from Recently Signed Dealer Cancom Security Services

https://radsecurity.com/rad-receives-5-unit-rosa-order-from-recently-signed-dealer-cancom-security-services/

February 24, 2022 - RAD Signs Apex3 Systems as New

Dealer and Receives ROSA Order with Additional Units Expected

https://radsecurity.com/rad-signs-apex3-systems-as-new-dealer-and-receives-rosa-order-with-additional-units-expected/

Return to Industry Conferences and Trade Shows

During the period, as COVID-19 concerns retreated,

RAD returned to attending and exhibiting at several regional conferences and national trade shows.

At these conferences, it is common

for several from RAD’s sales team attend and conduct meeting with dealers, prospective clients and existing clients.

RAD's participation

during FY 2022 included:

ISC West 2021, the security industry’s premier trade show and conference, Las Vegas, NV, July 2021

NCS⁴, The National Center for Spectator Sports Safety and Security, Phoenix, AZ, November 2021

IAAPA (International Association of Amusement Parks and Attractions) 2021, the amusement and attractions industry’s leading show, Orlando, FL, November 2021

RAD will continue to attend conferences in FY 2023

within the security industry as well as targeted vertical markets where RAD solutions are in demand.

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 sr VP of sales.

The first few months of any new employee are focused on training and results sometimes take 6 months from date

In the fiscal year 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 May 2022 total devices deployed is approximately 250.

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 the Company’s solutions.

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.

Legal Proceedings

See Item 3 - Legal Proceedings.

Pursuant to Item 305(e) of Regulation S-K (§

Pursuant to Item 305(e) of Regulation

229.305(e)), we are not required to provide the information required by this Item as it is a “smaller reporting company,”

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business