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Item 9A. Controls and Procedures

2022-05-27 compared with 2021-06-01 · 1579 added, 1006 removed, 700 unchanged (79% of the section changed)

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Evaluation of Disclosure Controls and Procedures

As of February 28, 2021, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)).

Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of February 28, 2021, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

As of February 28, 2022, we carried

out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal

financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)).

Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of February 28, 2021, our

disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities

Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated

to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions

regarding required disclosure.

Limitations on Systems of Controls

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.

Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

To address the material weaknesses identified in our evaluation, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles.

Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Our management, including our

principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal

controls will prevent all error or fraud.

A control system, no matter how well conceived and operated, can provide only reasonable, not

absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect the fact that

there are resource constraints and the benefits of controls must be considered relative to their costs.

Due to the inherent limitations

in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any,

have been detected.

To address the material weaknesses identified in our evaluation, we performed additional analysis and other post-closing

procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance

with generally accepted accounting principles.

Accordingly, management believes that the financial statements included in this report

fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

Our management is responsible

for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is defined

in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision

of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management

and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes

those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

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Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Because of its inherent limitations,

internal control over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of effectiveness to future

periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance

with the policies or procedures may deteriorate.

All internal control systems, no matter how well designed, have inherent limitations.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.

However, these inherent limitations are known features of the financial reporting process.

Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

As of February 28, 2021, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission and SEC guidance on conducting such assessments.

Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of U.S.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation

and presentation.

Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented

or detected on a timely basis by internal control over financial reporting.

However, these inherent limitations are known features of

the financial reporting process.

Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this

As of February 28, 2022, management

assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over

financial reporting established in Internal Control-Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations

of the Treadway Commission and SEC guidance on conducting such assessments.

Based on that evaluation, they concluded that, during the

period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of U.S.

GAAP rules as more fully described below.

This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were:

This was due to deficiencies that existed in the design or operation of our internal controls

over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

The matters involving internal controls and procedures that our management

considered to be material weaknesses under the criteria established in Internal Control –

Integrated Framework (2013) by the Committee

of Sponsoring Organizations of the Treadway Commission (COSO) were:

lack of a functioning audit committee;

lack of a majority of independent members and a lack of a majority of outside directors on our board of directors;

inadequate segregation of duties consistent with control objectives;

and, management is dominated by a single individual.

The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of February 28, 2021.

Management believes that the material weaknesses set forth above did not have an effect on our financial results.

However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

lack of a majority of independent

members and a lack of a majority of outside directors on our board of directors;

inadequate segregation of duties consistent with control

management is dominated by a single individual;

use of the inappropriate methodology of allocating proceeds in certain debt

transactions and the expensing timing of the related debt discount;

use of inappropriate fair values in certain preferred stock issuances

and settlements.

The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of

our financial statements as of February 28, 2022.

Management believes that the material

weaknesses set forth above did not have an effect on our financial results.

However, management believes that the lack of a functioning

audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment

and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements

in future periods.

This report does not include an

attestation report of our registered public accounting firm regarding internal control over financial reporting.

Management’s report

was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission

that permit us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

No changes were made to our internal control over financial reporting during the quarter ended February 28, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

No changes were made to our internal

control over financial reporting during the year ended February 28, 2022 that have materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table sets forth the names, positions and ages of our directors and executive officers as of the date of this report.

Our directors serve for one year and until their successors are elected and qualified.

Our officers are elected by the board of directors to a term of one year and serve until their successor is duly elected and qualified, or until they are removed from office.

The board of directors has no nominating, auditing or compensation committees.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE

The following table sets forth

the names, positions and ages of our directors and executive officers as of the date of this report.

Our directors serve for one year

and until their successors are elected and qualified.

Our officers are elected by the board of directors to a term of one year and serve

until their successor is duly elected and qualified, or until they are removed from office.

The board of directors has no nominating,

auditing or compensation committees.

Steven Reinharz (1)

Chief Executive Officer, Chief Financial Officer, Secretary and Director

Garett Parsons

President, Chief Executive Officer, Chief Financial Officer and Director(1)

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

Resigned offices (of) President, chief Executive Officer and Chief Financial Officer on March 2 ,2021

Director only as of March 2, 2021

Appointed on March 2, 2021

Director as of March 2, 2021

Biographical information concerning

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

Steven Reinharz .

RAD was founded by Mr.

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 the capital stock of the Company.

Reinharz has served as a member of the Board of Directors since March 2, 2021 and as Chief Executive Officer, Chief Financial Officer, and Secretary of the Company since March 2, 2021.

As Chief Executive Officer of the Company 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.

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.

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.

Reinharz speaks and contributes to panels at ISC East and West, and ASIS.

Reinharz is a leading member of several industry association committees, mostly through the Security Industry Association.

Reinharz has called Orange County, California home since 1995, having grown up in Montreal and Toronto.

Reinharz has served as a member of the Board of Directors since

March 2, 2021 and as Chief Executive Officer, Chief Financial Officer, and Secretary of the Company since March 2, 2021.

As Chief Executive

Officer of the Company 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.

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.

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.

Reinharz speaks and

contributes to panels at ISC East and West, and ASIS.

Reinharz is a leading member of several industry association committees, mostly

through the Security Industry Association.

Reinharz has called Orange County, California home since 1995, having grown up in Montreal

He earned a dual Bachelor of Science degree in Political Science and Commercial Studies.

Garett Parsons.

Parsons had served as our President, Chief Executive Officer, Chief Financial Officer and member of our board of directors from February 2017 until March 2, 2021.

Parsons now serves as a member of the Board of Directors of the Company.

Parsons has over 10 years of financial consulting for both private and public equity markets.

Parsons has significant experience in the field of asset valuation, funding structures and public release document generation.

His education includes a Bachelor of Arts degree in Political Science/Economics from California State University Sacramento and an Associate of Arts in Liberal Studies/ Business San Joaquin Delta College and West Hills College.

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

There are no family relationships

between any of the executive officers and directors.

During the past 10 years, Mr.

Parsons was not involved in any of the legal proceedings listed in Item 401(f) of Regulation S-K.

Parsons was not involved in any of the legal proceedings

listed in Item 401(f) of Regulation S-K.

There are no arrangements or understandings between Mr.

Parsons and any other person pursuant to which he was or is to be selected as an executive officer or director.

Parsons and any other person pursuant

to which he was or is to be selected as an executive officer or director.

Board Committees and Director Independence

Parsons and Mr.

Reinharz serve as directors, 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 our company and could be considered more form than substance.

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”

Reinharz serves as director,

and we do not have a separately designated audit committee, compensation committee or nominating and corporate governance committee.

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 our company

and could be considered more form than substance.

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 the Company further develops its business, achieves a stronger revenue base and has sufficient working capital to purchase directors and officer’s insurance, the Company does not have any immediate prospects to attract independent directors.

When the Company is able to expand our Board of Directors to include one or more independent directors, the Company intends to establish an Audit Committee of our Board of Directors.

It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert.

Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent, and the Company is not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent”

directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.

As with most small, early stage companies, until

such time that the Company further develops its business, achieves a stronger revenue base and has sufficient working capital to purchase

directors and officer’s insurance, the Company does not have any immediate prospects to attract independent directors.

Company is able to expand our Board of Directors to include one or more independent directors, the Company intends to establish an Audit

Committee of our Board of Directors.

It is our intention that one or more of these independent directors will also qualify as an audit

committee financial expert.

Our securities are not quoted on an exchange that has requirements that a majority of our Board members be

independent, and the Company is not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our

Board of Directors include “independent”

directors, nor are we required to establish or maintain an Audit Committee or other

committee of our Board of Directors.

Procedures for Nominating Directors

There have been no material changes to the procedures by which security holders may recommend nominees to the Board since the most recently completed fiscal quarter.

We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our sole director established a process for identifying and evaluating director nominees.

We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed.

Our sole director has not considered or adopted any of these policies, as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors.

Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future.

While there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration of director nominees.

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.

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

Parsons was appointed to our board in February 2017.

Parsons has significant operational experience in our industry and brings both a practical understanding of the industry and as well as hands-on experience in our business sector to our board and a greater understanding of certain of the challenges we face in executing our growth strategy.

Steve Reinharz is our sole

director and was appointed on March 2, 2021.

He is the founder of our operating company, Robotoc Assistance Devices, Inc.

Garett Parsons was appointed

to our board in February 2017 and resigned on June 22, 2021.

Parsons had significant operational experience in our industry and brought

both a practical understanding of the industry as well as hands-on experience in our business sector.

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;

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;

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ensure prompt internal reporting of violations;

and provide accountability for adherence to the provisions of the code of ethics.

and provide accountability for adherence to the provisions

of the code of ethics.

Director Compensation

Parsons did not receive any additional compensation for his services as a director.

We reimburse our directors for all reasonable ordinary and necessary business-related expenses, but we did not pay director’s fees or other cash compensation for services rendered as a director during the years ended February 28, 2021 and February 29, 2020 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.

Apart from a settlement paid upon

Parsons resignation on June 22, 2021 totaling $265,700 no other compensation was paid for his services as a director.

our directors for all reasonable ordinary and necessary business-related expenses, but we did not pay any other director’s fees

or any oher 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.

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

EXECUTIVE COMPENSATION

The following table summarizes all compensation recorded by us in the past two fiscal years for Mr.

Parsons, our President, Chief Executive Officer and Chief Financial Officer.

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.

2022 AND 2021 SUMMARY COMPENSATION TABLE

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Chief Executive Officer,Chief Financial Officer,Secretary(2)

Anthony Brenz, Chief Financial Officer (2)

Garett Parsons,

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Parsons was appointed President, Chief Executive Officer and Chief Financial Officer on February 16, 2017 and resigned on March 2 ,2021.

Mr..Reinharz was appointed Chief Executive Officer, Chief Financial Officer and Secretary on March 2, 2021.

Mr.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 the Company whereby he would provide services for the Company 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.

Parsons entered

into a consulting agreement with the Company whereby he would provide services for the Company 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.

Garett Parsons submitted his resignation as a director of our Company effective as of June 22, 2021 as a result of personal

In connection with the resignation of Mr.

Parsons, the Company 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 the Company 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, the Company will grant stock options to Mr.

entered into an employment agreement with the Company 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, the Company will grant stock options

Reinharz under the following conditions:

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Objective #1 :

the price per share of the Company’s common stock has increased in value to an average of $0.30 for ten (10) days in a thirty-day trading period.

the price per share of the Company’s 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 a Company 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.

Reinharz shall be granted an award of 30,000,000 million shares/options/warrants if Objective #2 is achieved.

Reinharz may elect to exercise Award #1 on a cash

or cashless basis at an exercise price of $0.15 per share/option/warrant.

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 the Company’s common stock has increased in value to an average of $0.50 for ten (10) days in a thirty-day trading period.

per share of the Company’s common stock has increased in value to an average of $0.50 for ten (10) days in a thirty-day trading

For example, pursuant to a 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.

Reinharz may elect to exercise Award #2 on a cash

or cashless basis at an exercise price of $0.25 per share/option/warrant.

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:

Objective #3 :

Sales in any fiscal quarter exceed the total sales in fiscal year 2021 for the first time.

Five hundred (500) shares of Series G preferred stock.

Objective #4 :

One hundred fifty (150) devices are deployed in the marketplace.

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 ($1,000,000).

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.

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.

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.

Five hundred (500) shares of Series G preferred stock.

Objective #9 :

RAD receives an order for fifty (50) units from a single customer.

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 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 the Company’s Chief Financial Officer on June

The base salary was amended to $190,000 on January 1, 2022.

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 Mr.

Parsons, our sole executive officer outstanding as of February 28, 2021:

The following table provides information

concerning unexercised options, stock that has not vested and equity incentive plan awards for Mr.

Reinharz and Mr Brenz, our sole executive

officers outstanding as of February 28, 2022:

OPTION AWARDS

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Steven Reinharz

Garett Parsons

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

At February 28, 2021, AITX had 3,229,426,884 shares of its common stock issued and outstanding.

The following table sets forth information regarding the beneficial ownership of our common stock as of February 28, 2021, and reflects:

Steven Reinharz

Anthony Brenz

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

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 AND RELATED STOCKHOLDER MATTERS

At February 28, 2022, AITX had

3,229,426,884 shares of its common stock issued and outstanding.

The following table sets forth information regarding the beneficial ownership

of our common stock as of February 28, 2022, and reflects:

each of our executive officers;

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each stockholder known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock.

Information on beneficial ownership of securities is based upon a record list of our stockholders and we have determined beneficial ownership in accordance with the rules of the SEC.

We believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws, except as otherwise provided below.

Information on beneficial ownership

of securities is based upon a record list of our stockholders and we have determined beneficial ownership in accordance with the rules

We believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting

and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws,

except as otherwise provided below.

Amount and Nature of Beneficial Ownership (1)

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As a result, the holders 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.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

We do not have a written policy for the review, approval or ratification of transactions with related parties or conflicted transactions.

When such transactions arise, they are referred to our board of directors for its consideration.

For the years ended February 28, 2021 and February 29, 2020, the Company made net repayments of $693,049 and $77,245, respectively, to its loan payable-related party.

At February 28, 2021, the loan payable-related party was $904,806 and $1,310,358 at February 29, 2020.

As of February 28, 2021, included in the balance due to the related party is $883,710 of deferred salary and interest, $642,000 of which bears interest at 12%.

At February 29, 2020 there was $656,334, with $426,000 bearing interest at 12%.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

AND DIRECTOR INDEPENDENCE

We do not have a written policy

for the review, approval or ratification of transactions with related parties or conflicted transactions.

When such transactions arise,

they are referred to our board of directors for its consideration.

For the years ended February 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).

During the years ended February 28, 2021 and February 29, 2020, the Company was charged $121,973 and $95,562, respectively in consulting fees for research and development to a company owned by a principal shareholder.

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

PRINCIPAL ACCOUNTING FEES AND SERVICES

On October 31, 2019, Fruci & Associates II, PLLC (“Fruci PLLC”) resigned (‘Termination”) as the independent registered public accounting firm of Artificial Intelligence Technology Solutions Inc.

(the “Company”).

The Board of Directors of the Company approved and ratified the Termination and the engagement (“Engagement”) of LJ Soldinger & Associates LLC (“LJ Soldinger”) as the Company’s new independent registered public accounting firm.

The Engagement is effective immediately.

On May 13, 2019, the Board of Directors of the Company approved and ratified the engagement of Fruci PLLC as the Company’s independent registered public accounting firm effective immediately, and dismissed Marcum LLP (“Marcum”) as the Company’s independent registered public accounting firm.

On October 18, 2018, the Registrant engaged Marcum as its independent registered public accountants.

This engagement occurred in connection with the Company’s prior independent public accountants, GBH CPA’s resigning, effective July 1, 2018, as a result of combining its practice with Marcum.

The engagement of Marcum has been approved by the Audit Committee of the Company’s Board of Directors.

On September 25, 2017, our Board of Directors approved and ratified the engagement of GBH CPAs, PC (“GBH”) as our independent registered public accounting firm for the Company’s fiscal year ending February 28, 2018, effective immediately, and dismissed Malone Bailey as the Company’s independent registered public accounting firm.

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

On October 31, 2019 the

Board of Directors of the Company approved and ratified the engagement (“Engagement”) of LJ Soldinger & Associates

LLC (“LJ Soldinger”) as the Company’s 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.

Audit-Related Fees

All Other Fees

Audit Fees - This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years.

This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.

Audit-Related Fees - This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.”

The services for the fees disclosed under this category would include consultation regarding correspondence with the SEC, other accounting consulting and other audit services.

Tax Fees - This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice.

The services for the fees disclosed under this category include tax return preparation and technical tax advice.

All Other Fees - This category consists of fees for other miscellaneous items.

As part of its responsibility for oversight of the independent registered public accountants, the Board has established a pre-approval policy for engaging audit and permitted non-audit services provided by our independent registered public accountants.

In accordance with this policy, each type of audit, audit-related, tax and other permitted service to be provided by the independent auditors is specifically described and each such service, together with a fee level or budgeted amount for such service, is pre-approved by the Board.

All of the services provided by LJ Soldinger, Fruci,Marcum, GBH and MaloneBailey described above were approved by our Board.

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

Audit-Related Fees

All Other Fees

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

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.”

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.

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.

The Company’s principal

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

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements

The consolidated financial statements and Report of Independent Registered Public Accounting Firm are listed in the Index to Financial Statements and Financial Statement Schedules on page F-1 and included on pages F-2 through F-35.

The consolidated financial statements

and Report of Independent Registered Public Accounting Firm are listed in the Index to Financial Statements and Financial Statement Schedules

on page F-1 and included on pages F-2 through F-35.

(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.

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.

(3) Exhibits.

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List of Subsidiaries .

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Consent of Independent Registered Public Accounting Firm .

Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer .

Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial and accounting officer .

Section 1350 Certification of principal executive officer .

Section 1350 Certification of principal financial and accounting officer .

Insider Trading Policy .

XBRL Instance **

XBRL Taxonomy Extension Schema **

XBRL Taxonomy Extension Calculation **

XBRL Taxonomy Extension Definition **

XBRL Taxonomy Extension Labels **

XBRL Taxonomy Extension Presentation **

(incorporated by reference to Exhibit 99.1 to the registrant’s annual report on Form 10-K filed with the Commission on May 28, 2021).

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.

Inline XBRL Taxonomy Extension Schema Document **

Inline XBRL Taxonomy Extension Calculation Linkbase Document **

Inline XBRL Taxonomy Extension Definition Linkbase Document **

Inline XBRL Taxonomy Extension Label Linkbase Document **

Inline XBRL Taxonomy Extension Presentation Linkbase Document **

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) **

Filed or furnished herewith.

To be submitted by amendment.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of

Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the

undersigned, thereunto duly authorized.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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Steven Reinharz

President, Chief Executive Officer and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

President, Chief Executive Officer

/s/ Anthony Brenz

Anthony Brenz

Chief Financial Officer (principal financial and accounting officer)

Pursuant to the requirements of

the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the

capacities and on the dates indicated.

/s/ Steven Reinharz

President, Chief Executive Officer, Chief Financial Officer, and Director (principal executive officer, principal financial officer and principal accounting officer)

President, Chief Executive Officer and Director (principal executive officer)

Steven Reinharz

/s/ Anthony Brenz

Chief Financial Officer (principal financial and accounting officer)

Anthony Brenz

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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Notes to the Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Board of Directors and

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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, 2021 and 2020, and the related consolidated statements of operations, stockholders’

deficit, and cash flows for each of the years in the two years ended February 28, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two years ended February 28, 2021, in conformity with accounting principles generally accepted in the United States of America.

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 2, which includes management’s plans in regards to this uncertainty, the Company has a negative working capital of $3.2 million and an accumulated deficit of $31.5 million and stockholders’

deficit of $14.5 million as of and for the year ended February 28, 2021, 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.

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.

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

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.

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.

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 communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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 –

Embedded Conversion Feature

The Company has numerous notes payable from prior years which were settled or converted, and two new convertible notes and warrants in the current year with conversions rates that are subjected to full or partial resets.

This and other factors require the embedded conversion feature to be bifurcated and evaluated at issuance, settlement, conversion and at each reporting period.

Calculations and accounting for the notes payable and embedded conversion features require management’s judgments related to initial and subsequent recognition of the debt and related conversions features, use of a valuation model, and determination of the appropriate inputs used in the selected valuation model.

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.

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.

Critical Audit Matter Determination

The embedded conversion features and resulting derivative liability is a highly complex area of accounting with significant impact on the liabilities, additional paid in capital and statement of operations of the Company.

It takes a high degree of training to understand and recognize the accounting implications of the conversion features and to understand the assumptions and impact of the specific assumptions on the valuation model used in the calculation of the derivative liability.

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 convertible note payables with embedded derivatives, warrants issued with the debt, accrued interest and the related derivative liability were as follows:

We read the various instruments, identified the embedded conversion feature, confirmed the amount of the outstanding debt, and recalculated the accrued interest.

We assessed the credentials and reputation of the outside firm retained by the Company who performed the calculation of the derivative liabilities.

We reviewed the assumptions used to calculate the derivative liabilities at the balance sheet date and various conversion and settlement dates and the related accounting entries.

We performed independent calculations on a test basis of specific derivatives to evaluate the model used in calculating the derivatives at various measurement dates.

Critical Audit Matter Relevant Financial Statement Disclosures

We read the Company’s disclosures related to the derivative liabilities and changes during the year as a result of mark to market, conversion of debt and settlement of debt activity to ensure the changes were properly accounted for and fully disclosed in the financial statements.

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

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 2 to the consolidated financial statements and above, the Company has incurred significant losses since inception, and has an accumulated deficit of approximately $31.5 million and a working capital deficit of $3.2 million as of February 28, 2021.

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 negative working capital and lack of liquidity

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 negative working capital and continued losses

We noted subsequent events and proceeds from the ongoing private placement offering proceeds received 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.

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

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.

/s/ L J Soldinger Associates, LLC

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

Deer Park, Illinois

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

PCAOB Auditor ID:

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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Current assets:

Accounts receivable

Device parts inventory

Accounts receivable, net

Device parts inventory, net

Prepaid expenses and deposits

Total current assets

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Security deposit

LIABILITIES AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

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Customer deposits

Operating lease liability

Current operating lease liability

Current portion of deferred variable payment obligation

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Loan payable - related party

Current portion of loans payable, net of discount of $0 and $0, respectively

Incentive compensation plan payable

Current portion of loans payable, net of discount of $14,745 and $0

Vehicle loan - current portion

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Non-current operating lease liability

Convertible notes payable, net of discount of $0 and $30,486 respectively

Loans payable, net of discount of $4,905,076 and $0, respectively

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Commitments and Contingencies

Stockholders’

Stockholders' deficit:

Preferred Stock, undesignated;

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no shares issued and outstanding at February 28, 2022 and February 28, 2021, respectively

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

Series E Preferred Stock, $0.001 par value;

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Accumulated deficit

Total stockholders’

Total liabilities and stockholders’

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

Total stockholders' deficit

Total liabilities and stockholders' deficit

The accompanying notes are an integral part of

these consolidated financial statements.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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General and administrative

Operating lease cost

Depreciation and amortization

Loss on disposal of fixed assets

Operating lease cost and rent

(Gain) loss on disposal of fixed assets

Total operating expenses

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Interest expense

Gain (loss) on settlement of debt

Loss on settlement of debt

Total other income (expense), net

Net income (loss)

Net income (loss) per share - basic

Net income (loss) per share - diluted

Net loss per share - basic

Net loss per share - diluted

Weighted average common share outstanding - basic

4,029,658,082

1,015,115,270

Weighted average common share outstanding - diluted

4,029,658,082

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

1,015,115,270

The accompanying notes are an integral part of

these consolidated financial statements.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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Preferred Stock

Shareholders’

Balance at February 28, 2019

Adjustment to derivative liability

Common stock issued for debt conversion

Common stock issuable on reverse split

Preferred Stock

Shareholders'

Balance at February 29, 2020

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Cancellation of Series F Preferred Shares

Issuance of Series F Preferred Shares as part of Debt Settlement

Issuance of Series F shares as part of debt settlement

Warrants issued as part of debt settlement

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3,229,426,884

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

Preferred Stock

Shareholders'

Balance at February 28, 2021

3,229,426,884

Cancellation of Series E Shares

Series F Preferred Shares issued with amendment agreement

Series F Preferred Shares Warrants issued with amendment agreement

Series F Preferred Shares cancelled in exchange for promissory notes

Series F preferred shares issued on exercise of warrants

Series F Preferred Shares converted to common shares

Redemption of 19 Issuable Series F shares

Exchange of Series F Preferred Shares for debt

Issuance of Series G preferred as equity awards per employment agreement

Redemption of Series G shares as compensation payment

Adjustment to derivative liability

Common stock issued for debt conversion

Exercise of warrants

Exchange of debt for common shares

Stock based compensation on issuable shares

Issuance of shares, net of $253,811 issuance costs

Cashless exercise of 100,000,000 warrants

Relative fair value of warrants issued with debt

Warrants issued as part of debt

Warrants as issuance cost

Warrants as consideration for debt extensions

Stock based compensation

Balance at February 28, 2022

4,735,210,360

The accompanying notes are an integral part of

these consolidated financial statements.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Loss (gain) on (disposal) impairment of fixed assets

Inventory provision

(Gain) loss on disposal of fixed assets

Bad debts expense

Revenue earning device sold and expensed in cost of sales

Reduction of right of use asset

Accretion of lease liability

Stock based compensation

Provision for inventory

Change in fair value of derivative liabilities

Interest expense related to derivative liability in excess of face value of debt

Interest expense related to the issuance of warrants for debt extensions

Interest expense related to penalties from debt defaults

Change in fair value of derivative liabilities

Amortization of debt discounts

(Gain) loss on settlement of debt

Increase in related party accrued payroll and interest

Increase (decrease) in related party accrued payroll and interest

Changes in operating assets and liabilities:

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Prepaid expenses

Deposit on right of use asset

Device parts inventory

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Customer deposits

Operating lease liability payments

Balance owed WeSecure

Current portion of deferred variable payment obligations for Payments

Accrued interest payable

Advances payable

Net cash used in operating activities

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Purchase of fixed assets

Proceeds of disposal of fixed assets

Acquisition of trademarks

Cash paid for security deposit

Proceeds on disposal of fixed assets

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from convertible notes payable, net

Share proceeds net of issuance costs

Proceeds from convertible notes payable

Repayment of convertible debt

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Repayment of loans payable

Cash on consolidation of RAD G

Series G preferred shares redeemed as payment on incentive plan payable

Dividend upon redemption of cancelled issuable Series F shares

Cash acquired on consolidation of RAD G

Net borrowings(repayments) on loan payable - related party

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Noncash investing and financing activities:

Debt discount from derivative liabilities

Operating lease asset for lease liability

Right of use asset for lease liability

Transfer from device parts inventory to fixed assets

Net assets on consolidation of RAD G

Conversion of convertible notes and interest to shares of common stock

Release of derivative liability on conversion of convertible notes payable

Debt discount from derivative liabilities

Derivative debt discount on revaluation of loan amendment

Settlement and exchange of convertible notes payable

Discount added to face value of loans

Exchange of notes payable for Series F preferred shares

Discount applied to face value of loans

Warrants issued as part of debt issuance

Exercise of warrants

Capitalization of accrued interest to convertible notes payable and loans payable

Proceeds of disposal offset against vehicle loan

Series F preferred shares issued for debt

Cancellation of Series E preferred shares

Issuance of Series G preferred shares as payment on incentive plan payable

Series F preferred shares converted to common shares

Series F preferred shares issued on exercise of warrants

Opening balance sheet RAD G

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

The accompanying notes are an integral part of

these consolidated financial statements.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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(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.

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.

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 $3,073,325.

As of February 28, 2021 the Company has an accumulated deficit of $31,521,754 and negative working

capital of $3,203,677.

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 its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan.

The Company is in default on many of its loans and obligations.

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

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 raise an additional $ 15 million

to $ 50 million before the end of the fiscal year.

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 currently projects that next fiscal year’s revenues will

be between 5 and 15 times greater than this fiscal year’s revenues.

This projection is based on the following factors:

an anticipated

significant increase in the orders expected to be received after this fiscal year;

an expected significant improvement in the Company’s

ability to make timely deliveries;

an anticipated significant improvement in the Company’s ability to support many more devices

than this it could support during this fiscal year.

However, there can be no assurance that the revenues will increase to the extent projected

or that the anticipated improvements will actually occur.

This expansion plan will require the Company to expend significant resources,

including the hiring of additional staffing, which the Company expects to finish the next fiscal year with between 75 –

125 employees.

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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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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.

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”).

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,

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 derivative liabilities.

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.

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

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

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.

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.

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 a $24,868 allowance provided for the year ended February 28, 2021 and nil for the year ended February 29, 2020.

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, 2021 there was no valuation reserve.

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.

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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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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.

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

Computer equipment

Office equipment

Warehouse equipment

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.

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, 2021 and February 29, 2020, the Company had no deferred development costs.

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.

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:

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.

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

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

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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 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.

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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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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 2021 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.

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, 2021, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements.

We adopted ASU No.

2016—02—

Leases (topic 842) , as amended as of March 1, 2019 using the modified retrospective approach.

The modified retrospective approach provided a method for recording the existing leases at adoption and in comparative periods.

In addition, we elected the package of practical expedient permitted under the transition guidance within the new standard.

In addition, we elected the hindsight practical expedient to determine the lease term for existing leases.

Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of $56,396 and $56,396 respectively, as of December 18, 2020.

The standard did not materially impact our consolidated net loss, accumulated deficit, and had no impact on cash flows.

Lease agreements are evaluated to determine if they are sales/finance leases meeting any of the following criteria at inception:

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.

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 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.

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

The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from

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.

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;

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.

option that is reasonably certain of being exercised;

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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of $56,396 and $56,396 respectively, as of December 18, 2020.

The standard did not materially impact our consolidated net earnings, retained earnings and had no impact on cash flows

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.

The Company relies on the guidance provided by ASC

Topic 480, Distinguishing Liabilities from Equity , to classify certain redeemable and/or convertible instruments.

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.

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.

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).

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).

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

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:

12 unchanged sentences

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:

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

Fair Value Measurement Using

February 28, 2022

Incentive compensation plan payable- revaluation of equity awards payable in Series G shares

Derivative liability –

1 unchanged sentence

February 28, 2021

Incentive compensation plan payable- revaluation of equity awards payable in Series G shares

Derivative liability –

conversion features pursuant to convertible notes payable

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.

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.

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.

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.

Adopted Accounting Standards

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

There was no impact to the Company’s consolidated financial statements upon adoption.

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.

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.

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

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.

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.

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.

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 84 2accountiong and instead has accounted for these leases under ASC 606.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As disclosed in the revenue recognition section of Note 4 –

Accounting Polices, the Company adopted Topic 606 in accordance with the effective date on March 1, 2018.

Note 4 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 4, 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.

The Company recognizes revenue from its rental operations on a straight line basis over the term for each individual robotic device, as the Company has determined that to date, its leases for these devices are classified as operating leases.

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

The following table presents revenues from contracts

with customers disaggregated by product/service:

February 28, 2022

4 unchanged sentences

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.

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, 2021 and February 29, 2020.

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.

Classification

5 unchanged sentences

Total lease liabilities

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 $9,461 and $10,000 for both the twelve months ended February 28, 2021 and February 29, 2020, respectively.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

REVENUE EARNING ROBOTS

4 unchanged sentences

Accumulated depreciation

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 29, 2020, the Company made total

additions to revenue earning devices of $132,301 including $106,476 in inventory transfers.

The company disposed of a revenue

earning device having a net book value of $3,500 for $9,500 and recorded a gain on disposal of $6,000 in the year ended February 29,

Depreciation expense for these devices was $103,371 and $80,305 for the years ended February 28, 2021 and February 29, 2020, respectively.

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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Fixed assets consisted of the following:

3 unchanged sentences

Office equipment

Warehouse equipment

Leasehold improvements

Accumulated depreciation

During the year ended February 29, 2021, the Company made additions to fixed assets of $37,764.

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.

During the year ended February 29, 2020, the Company made additions to fixed assets of $1,000.

Depreciation expense was $17,475 and $21,936 for the years ended February 28, 2021 and February 29, 2020, respectively.

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.

DEFERRED VARIABLE PAYMENT OBLIGATION

On February 1, 2019 the Company entered into an agreement with an investor whereby the investor would pay up to $900,000 (including $192,500 paid in January and February 2019) in exchange for a perpetual 9% rate payment (Payments) on the Company’s reported quarterly revenue from operations excluding any gains or losses from financial instruments (Revenues).

If the total investor advances turns out to be less than $900,000, this would not constitute a breach of the agreement, rather the 9% rate would be adjusted on a pro-rata basis.

The investor has agreed to pay the remaining balance in minimum $60,000 monthly installments, concluding November 30, 2019.

At February 29, 2020 the investor has advanced the full $900,000.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

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:

The investor would pay up to $400,000 in exchange for a perpetual 4% rate Payment on the Company’s reported quarterly Revenues.

If the total investor advances turns out to be less than $400,000, this would not constitute a breach of the agreement, rather the 4% rate would be adjusted on a pro-rata basis.

The investor has agreed to pay the remaining balance in four monthly installments of $64,111 starting July 1, 2019.

At February 29, 2020, $400,000 has been paid to the Company.

The investor would pay up to $50,000 in exchange for a perpetual 1.11% rate Payment on the Company’s reported quarterly Revenues.

If the total investor advances turns out to be less than $50,000, this would not constitute a breach of the agreement, rather the 1.11% rate would be adjusted on a pro-rata basis.

The investor has agreed to pay the remaining balance in four monthly installments of $8,014 starting July 1, 2019.

At February 29, 2020, $50,000 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.

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.

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.

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.

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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

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.

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 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, 2021, the Company has not yet completed its assessment of the likely cash flows under these agreements, and thus, has not yet determined the effective interest rate under these agreements.

The Company expects to have completed its analysis of the expected cash flows prior to the filing of the year end February 28, 2022 filing.

As of February 28, 2021, and February 29, 2020, the balances under these agreements were $2,525,000 and $1,559,000, respectively.

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.

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.

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:

On March 1, 2021 the first investor referred to above whose aggregate investment

is $1,925,000 revised his agreements as follows:

The rate payment was reduced from 14.25 % to 9.65 %

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

In consideration for the above changes, the investor will receive 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.Subsequent to year end the warrant holder exercised warrants to acquire 38 shares of Series F Convertible Preferred Stock.

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.

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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONVERTIBLE NOTES PAYABLE

1 unchanged sentence

Rate per Share

January 31, 2013

February 28, 2017 X

November 30, 2016 X

August 31, 2014

November 30, 2016 X

November 30, 2014

November 30, 2016 X

February 28, 2015

February 28, 2017 X

August 31, 2017 X

August 31, 2015

August 31, 2017 X

November 30, 2015

November 30, 2018 X

February 29, 2016

February 28, 2019 X

May 31, 2019* X

July 18, 2016

3 unchanged sentences

January 19, 2021

January 15, 2021 XXX

January 19, 2022

January 15, 2021YY

January 27,2021

January 16, 2021 Y

March 8, 2017

March 8, 2020 W

March 9, 2017

March 9, 2021 XXX

April 26, 2017

April 26, 2018*

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Rate per Share

May 1, 2021 XXX

May 17, 2020 XXX

June 16, 2017

June 16, 2018

August 8, 2017

August 8, 2018

July 28, 2017

July 28, 2018 XX

August 29, 2017

August 29, 2018 XX

October 4, 2017

May 4, 2018 Z

October 16, 2017

October 16, 2018 XX

November 22, 2017

November 22, 2018 XX

December 28, 2017

December 29, 2017

December 29, 2018 XX

January 27, 2022

January 9, 2019 ZZ

January 30, 2018

January 30, 2019 XX

February 21, 2018

February 21, 2019 XX

March 14, 2018

March 14, 2019*

June 9, 2019 ZZZ

April 9, 2018

April 9, 2019 XX

March 21, 2017

March 21, 2018

April 20, 2018

April 20, 2019 ZZ

December 2, 2018*

May 4, 2019 ZZ

December 14, 2018*

June 6, 2019 XX

June 19, 2018

March 19, 2019

August 1, 2018

August 1, 2019 XX

August 23, 2018

August 23, 2019 YYY

September 13, 2018

June 30, 2019 WWW

September 17, 2018

March 17, 2019*

September 20, 2018

September 20, 2019 XX

September 24, 2018

June 24, 2019*

August 8, 2017

November 8, 2018

August 15, 2019 WW

November 26, 2018

May 26, 2019*

August 29, 2019

August 29, 2020 ZZZ

January 19, 2021

January 19, 2022

January 27,2021

January 27, 2022

current portion of convertible notes payable

4 unchanged sentences

Current portion of convertible notes payable, net of discount

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The indicated notes were in default as of February 28, 2021.

The indicated note was in default as of February 28, 2022.

Default interest rate 22%

On December 10, 2020 the Company settled the above notes indicated totaling $1,460,794 and associated accrued interest of $1,593,544 totaling $3,054,338 and derivative liabilities with a fair value of $153,707 in exchange for promissory notes dated December 10, 2020 totaling $3,054,338, maturing December 10, 2023 and bearing interest at 12% per annum and a warrant to purchase 250,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $550,000.

A loss on settlement of $396,297 was recorded.

This note is secured by a general security interest against all of the Company’s present and after-acquired property.

On December 10, 2020 the Company settled the above notes indicated totaling $2,683,357 and associated accrued interest of $1,237,811 totaling $3,921,168 and derivative liabilities with a fair market value of $1,787,235 in exchange for a promissory note dated December 10, 2020 of $3,921,168, maturing December 10, 2023 and bearing interest at 12% per annum and a warrant to purchase 450,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $990,000.

Again on settlement of $797,235 was recorded.

This note is secured by a general security interest against all of the Company’s present and after-acquired property.

On December 14, 2020 the Company settled the above notes indicated totaling $235,000 and associated accrued interest of $75,375 totaling $310,375 and derivative liabilities with a fair market value of $161,854 in exchange for a promissory note dated December 14, 2020 of $310,375, maturing December 10, 2023 and bearing interest at 12% per annum, a warrant to purchase 25,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $182,500 and 55 shares of Series F Preferred Shares having a fair value of $1,151,166.

A loss on settlement of $171,812 was recorded.

On December 14, 2020 the Company settled the above note of $100,000 and associated accrued interest of $37,589 totaling $137,589 and derivative liabilities with a fair market value of $88,749 in exchange for a promissory note dated December 14, 2020 of $192,625, maturing December 14, 2023 and bearing interest at 12% per annum.

A gain on settlement of $33,713 was recorded.

On January 1 ,2021 the Company settled the above note of $79,500 and associated accrued interest of $28,925 totaling $108,425 and derivative liabilities with a fair market value of $97,560 in exchange for a promissory note dated January 1, 2021 of $145,000, maturing January 1, 2024 and bearing interest at 12% per annum.

A gain on settlement of $60,985 was recorded.

This note is secured by a general security interest against all of the Company’s present and after-acquired property.

On January 1 ,2021 the Company settled the above note of $9,200 and associated accrued interest of $6,944 totaling $16,144 and derivative liabilities with a fair market value of $12,555 in exchange for a promissory note dated January 1, 2021 of $25,000, maturing January 1, 2024 and bearing interest at 12% per annum.

A gain on settlement of $3,699 was recorded.

This note is secured by a general security interest against all of the Company’s present and after-acquired property.

On February 25, 2021 the Company settled the above note of $150,000 and $48,493 in accrued interest totaling $198,493 and derivative liabilities with a fair market value of $118,273 for a cash payment of $198,493.

A gain on settlement of $118,273 was recorded.

On February 25, 2021 the Company settled the above note of $100,000 and $32,526 in accrued interest totaling $132,526 and derivative liabilities with a fair market value of $78,962 for a cash payment of $132,526.

A gain on settlement of $78,962 was recorded.

On November 30, 2020 the Company entered into a settlement agreement for the above note of $ $42,584 and accrued interest of $32,416 totaling $75,000 for cash payment of $75,000.

The Company paid the settlement on December 4 , 2020.

On February 19, 2021 the Company settled the above note of $45,663 and $32,416 in accrued interest totaling $64,794 and derivative liabilities of $22,266 for a cash payment of $64,794.

A gain on settlement of $22,266 was recorded.

On February 25, 2021 the Company settled the above notes totaling $218,477 and $127,948 in accrued interest totaling $346,365 and derivative liabilities with a fair market value of $362,943 for a cash payment of $300,000.

A gain on settlement of $409,308 was recorded.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

On December 10, 2020 the Company settled the above notes indicated totaling $103,180 and associated accrued interest of $62,425 totaling $165,605 and derivative liabilities of $130,348 in exchange for a promissory note dated December 10, 2020 of $165,605, maturing December 10, 2023 and bearing interest at 12% per annum 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 $45,652.

A loss on settlement of $176,000 was recorded.

The note is convertible beginning six months after the date of issuance.

The notes are convertible at a discount (as indicated) to the average market price and are accounted for and evaluated under ASC 480 as discussed in Note 3.

3 unchanged sentences

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”);

During the years ended February 28, 2021 and February 29, 2020, the Company incurred original issue discounts of $77,500 and $1,250, respectively, and debt discounts from derivative liabilities of $143,133 and $26,250, respectively, related to new 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, 2021 and February 29, 2020, the Company recognized interest expense related to the amortization of debt discount of $190,197 and $874,187, respectively.

The Company recorded penalty interest of $939,705 during the year February 28, 2021 (February 29, 2020-$313,347) that is payable upon maturity if not already converted or settled prior to maturity.

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, 2021, the Company had total accrued interest payable of $49,764, all of which is classified as current.

As of February 29, 2020, the Company had total accrued interest payable of $2,922,894, of which $2,778,583 is classified as current and $144,311 is classified as noncurrent.

See description below for description of the convertible notes issued during the years ended February 28, 2021 and February 292, 2020.

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, 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.

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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

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

11,000,000 shares at an exercise price of $0.045per share with a 3 year term and having a fair value of $594,0000 using Black-Scholes

with assumptions described in note 13.

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.

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.

See details on preceding page.

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.

Please see details on page F-17.

During the year ended February 29, 2020, the Company had the following convertible note activity:

On September 5, 2019, the Company received $25,000 of proceeds from an investor for a promissory note with a principal amount of $26,250, including an original issue discounts of $1,250 and maturing August 29, 2020.

The promissory note is convertible into common shares of the Company at a conversion price equal to 60% of the lowest trading price of the Company ’

s common stock for the last 20 trading days prior to conversion, and has an 8% per annum interest rate.

The Company wrote off a note payable for $32,600 and related interest of $97,139.

The note has matured in February 2013, the company cannot contact the lender and the note is legally prescribed.

A gain on settlement of debt of $129,739 was recorded The Company determined that certain Texas state legal requirements were met that allow the Company to treat the liability as no longer enforceable against the Company.

The company recorded default penalties totaling $314,347 as increases to various notes, with a corresponding charge to interest.

During the year ended February 29, 2020, holders of certain convertible notes payable elected to convert a total of $254,118 of principal, $244,050 accrued interest, and $500 of fees into 395,443 shares of common stock.

No gain or loss was recognized on conversions as they occurred within the terms of the agreement that provided for conversion.

Immediately prior to the conversion, the Company performed a valuation of the derivative liability attached to the notes and accrued interest converted and determined that the final derivative liability was $440,294.

Upon conversion this amount was transferred from derivative liabilities to additional paid-in capital.

RELATED PARTY TRANSACTIONS

For the years ended February 28, 2021 and February 29, 2020, the Company made net repayments of $693,049 and $77,245, respectively, to its loan payable-related party.

At February 28, 2021, the loan payable-related party was $904,806 and $1,310,358 at February 29, 2020.

As of February 28, 2021, included in the balance due to the related party is $883,710 of deferred salary and interest, $642,000 of which bears interest at 12%.

At February 29, 2020 there was $656,334, with $426,000 bearing interest at 12%.

The accrued interest included at February 28, 2021 was $118,098 (2020- $50,730).

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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

During the years ended February 28, 2021 and February 28, 2020, the Company was charged $121,973 and $95,562, respectively in consulting fees for research and development to a company owned by a principal shareholder.

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.

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 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, 2021 and February 29, 2020.

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.

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

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

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, 2021 and February 29, 2020.

The remaining total balances of the amounts owed on the vehicle loans were $38,522 and $38,522 as of February 28, 2021 and February 29, 2020, respectively, of which all were classified as current.

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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

LOANS PAYABLE

Loans payable at February 28, 2021 consisted of the following:

Loans payable at February 28, 2022 consisted of the

Interest Rate

11 unchanged sentences

Promissory note

August 23, 2018

October 20, 2018

Promissory note

October 11, 2018

October 11, 2019

Promissory note

August 5, 2019

March 11, 2020

Factoring Agreement

November 12, 2019

August 11, 2020

Factoring Agreement

December 20, 2019

March 5, 2020

Factoring Agreement

October 17,2019

April 29, 2020

Factoring Agreement

September 27, 2019

April 4, 2020

Factoring Agreement

January 31, 2019

11 unchanged sentences

September 24, 2019

June 24, 2020

Promissory note

42 unchanged sentences

Promissory note

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Interest Rate

December 10, 2020

31 unchanged sentences

Promissory note

March 1, 2021

March 1, 2024

Promissory note

March 23, 2021

March 23, 2022

Promissory note

March 23, 2021

March 23, 2022

Promissory note

July 12, 2021

July 26, 2026

Promissory note

September 14, 2021

September 14, 2024

Promissory note

Less current portion of loans payable

4 unchanged sentences

Current portion of loans payable, net of discount

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note is in default.

No notice has been given by the note holder.

Repayable in 12 monthly instalments of $2,376 commencing September 16 ,2018

and secured by revenue earning devices having a net book value of at least $25,000.

Only $12,376 has been repaid by the Company and no

notices have been received.

Accrued interest of approximately $4,500 has been recorded as of February 28, 2021.

No notice has been given by the note holder to the Company at the time of issuance of these financial statements.

$12,624 loan repaid during year ended February 28, 2022.

The note may be pre-payable at any time.

The note balance includes 33% original issue discount of $25,882.

The note balance includes 33% original issue discount of $25,882 at issuance.

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.

Total loan $79,750, repayable $475 per business day including fees and interest of $25,170.

Original cash proceeds of $31,353 and $23,227 carried from previous loan less repayment of $58,500, including payments of $21,275 made during the year ended February 28, 2021.

The Company settled loan in full and recorded a gain on settlement of $5,750.

The Company has pledged a security interest on all accounts receivable and bank accounts of the Company.

Obligation under personal guaranty of the controlling shareholder of the Company.

$20,000 loan repaid during the year ended February 28, 2022.

The note may be pre-payable at any time.

The note balance includes 33% original issue discount of $2,590.

The note balance includes 33% original issue discount of $2,590 at issuance.

The note may be pre-payable at any time.

The note balance includes 33% original issue discount of $28,567.

$6,000 repaid during the year ended February 29,2020

The note balance includes 33% original issue discount of $28,567 at issuance.

$257,000 Canadian loan.

Interest payable every calendar quarter commencing

June30, 2019, if unpaid accrued interest to be paid at maturity.

An additional interest amount calculated as 4% of RAD revenues from SCOT

rentals for the fiscal years 2020 and 2021 shall be payable March 31, 2020 and March 31, 2021, respectively.

Secured by a general security

charging all of RAD’s present and after-acquired property in favor of the lender on a first priority basis subject to the following:

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.

The note may be pre-payable at any time.

The note balance includes 33% original issue discount of $26,104.

The note balance includes 33% original issue discount of $26,104 at issuance.

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.

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.

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.

The note may be pre-payable at any time.

The note balance includes an original issue discount of $3,000 at issuance.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Total loan of $243,639, repayable $1,509 per week including fees and interest

Original cash proceeds of $7,877, repayment of loans totaling $15,732, partial repayment of fees of $5,566 all totaling $29,175,

additional advances of $88,772 with remaining $65,551 to be advanced to the company over the remaining 18 weeks.

The total advances

were later amended to $202,030 including A fees reduction of $25,877.

The Company has repaid a total of $202,030, the loan

has been fully repaid.

The Company has pledged a security interest on all accounts receivable and bank accounts of the Company.

under personal guaranty of the controlling shareholder of the Company.

Total loan of $71,000, repayable $710 per business day including fees and interest of $21,000.

Original proceeds of $50,000.

Loan fully repaid at August 31, 2020.

Total loan of $59,960, repayable $590 per business day including fees and interest of $19,960.

Original proceeds of $40,000 less repayments of $59,960, the loan has been fully repaid.

The Company has pledged a security interest on all accounts receivable and bank accounts of the Company.

Obligation under personal guaranty of the controlling shareholder of the Company.

The note may be pre-payable at any time.

The note balance includes an original

issue discount of $3,000.

Total loan of $12,400, repayable $1,240 per week including fees and interest of $2,400.

Original cash proceeds of $10,000, repayments of $12,400, the loan has been fully repaid.

The Company has pledged a security interest on all accounts receivable and bank accounts of the Company.

Obligation under personal guaranty of the controlling shareholder of the Company.

The note may be pre-payable at any time.

The note balance includes an original issue discount of $2,450.

The note balance includes an original issue discount of $2,450 at issuance.

The note may be pre-payable at any time.

The note balance includes an original issue discount of $1,200.

The note balance includes an original issue discount of $1,200 at issuance.

The note may be pre-payable at any time.

The note balance includes an original issue discount of $3,850.

The note balance includes an original issue discount of $3,850 at issuance.

The note may be pre-payable at any time.

The note balance includes an original issue discount of $8,000.

The note balance includes an original issue discount of $8,000 at issuance.

The note may be pre-payable at any time.

The note balance includes an original issue discount of $15,000.

The note balance includes an original issue discount of $15,000 at issuance.

$ 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.

Principal repayable in one year.

Interest repayable in 10 monthly instalments

of $460 commencing January 11 ,2019 and secured by revenue earning devices having a net book value of at least $186,000.

repaid during the year.

Repaid in full.

Total loan of $40,000 CDN and accrued interest repaid at February 28, 2022.

$ 60,000 CDN loan, principal is due at maturity, interest is payable commencing the third month after the loan over the remaining 10 months.

1 unchanged sentence

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.

The note may be pre-payable at any time.

The note balance includes an original issue discount of $12,000.

The note balance includes an original issue discount of $12,000 at issuance.

The note may be pre-payable at any time.

The note balance includes an original issue discount of $6,000.

The note balance includes an original issue discount of $6,000 at issuance.

The note may be pre-payable at any time.

The note balance includes an original issue discount of $10,000.

The note balance includes an original issue discount of $10,000 at issuance.

The note may be pre-payable at any time.

The note balance includes an original issue discount of $7,000.

The note balance includes an original issue discount of $7,000 at issuance.

$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.

1 unchanged sentence

By consent of all parties, lender may convert balance into Class F shares at $6,739 USD per share.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Total loan of $7,381 (in $USD) and related accrued interest paid during the quarter ended May 31, 2021.

The note may be pre-payable at any time.

2 unchanged sentences

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.

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.

1 unchanged sentence

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 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 $41,176 with a corresponding adjustment to paid in capital.

For the year ended February 28, 2021, the Company recorded

amortization expense of $2,511 with an unamortized discount of $38,665 at February 28 ,2021.

Principal and interest repayable in 21 monthly instalments commencing December

6, 2020 of $4,060 commencing February 21, 2021.

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.

Principal and interest repayable in 21 monthly instalments commencing December 6, 2020 of $4,060 commencing February 21, 2021.

Secured by revenue earning devices.

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 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 $125,814 with a corresponding adjustment to paid in capital for the relative value of the warrant.

year ended February 28, 2021, the Company recorded amortization expense of $6,437 with an unamortized discount of $119,377 at February

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 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 $54,545 with a corresponding adjustment to paid in capital for the relative value of the warrant.

For the year ended February

28, 2021, the Company recorded amortization expense of $1,694 with an unamortized discount of $52,851 at February 28, 2021.

This promissory note was issued as part of a debt settlement as disclosed

in Note 8 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 using Black-Scholes with assumptions described in Note 13.

This note is secured by

a general security charging all of the Company’s present and after-acquired property.

This promissory note was issued as part of a debt settlement as disclosed

in Note 8 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 using Black-Scholes with assumptions described in Note 13.

This note is secured by a

general security charging all of the Company’s present and after-acquired property.

This promissory note was issued as part of a debt settlement as disclosed

in Note 8 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 using Black-Scholes with assumptions described in Note 13.

This promissory note was issued as part of a debt settlement as disclosed

in Note 8 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 using Black-Scholes with assumptions described in Note 13.

This promissory note was issued as part of a debt settlement as disclosed

in Note 8 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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

1 unchanged sentence

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 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 $271,250 with a corresponding adjustment to paid in capital for the relative fair value of the warrant.

the year ended February 28, 2021, the Company recorded amortization expense of $4,003 and with an unamortized discount of $67,517

at February 28 ,2021.

This promissory note was issued as part of a debt settlement as disclosed

in Note 8 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..

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.

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.

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.

This promissory note was issued as part of a debt settlement as disclosed

in Note 8 whereby $79,500 in convertible notes and associated accrued interest of $28,925 totaling $108,425was exchanged for this promissory

note of $145,000.

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.

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.

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.

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.

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 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 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 $380,174 with a corresponding adjustment to paid in capital.

For the year ended February 28, 2021, the Company

recorded amortization expense of $5,887 with an unamortized discount of $37,287 at February 28, 2021.

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.

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.

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.

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 using Black-Scholes with assumptions described in note 13.

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, 2021, the Company recorded amortization expense of $1,260 and with an unamortized discount

of $341,597 at February 28, 2021.

DERIVATIVE LIABILITES

As of February 28, 2021, and February 29, 2020 the Company revalued the fair value of all of the Company’s derivative liabilities associated with the conversion features on the convertible notes payable and determined that it had a total derivative liability of $444,466 and $6,890,688, 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:

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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

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.

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.

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:

$0.04 - $0.026

7 unchanged sentences

Expected term (years)

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 29, 2020:

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:

$0.2899 - $0.0013

9 unchanged sentences

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

During the years ended February 28, 2021, and February 29, 2020 the Company released $2,387,687 and $440,294, 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, 2021 were as follows:

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

Derivative discount on loan amendment

Adjustment to derivative liability due to debt extinguishment

Release of derivative liability on conversion of convertible notes payable

Debt discount due to derivative liabilities

Adjustment to derivative liability due to debt settlement

Change in fair value of derivative liabilities

Balance as of February 28, 2022

The changes in the derivative liabilities (Level 3 financial instruments) measured at fair value on a recurring basis for the year ended February 29, 2020 were as follows:

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

1 unchanged sentence

Debt discount due to derivative liabilities

Derivative liability in excess of face value upon issuance of debt recorded to interest expense

Adjustment to derivative liability due to debt settlement

3 unchanged sentences

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.

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.

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.

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.

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 2,799 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;

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;

any Senior 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).

(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).

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

STOCKHOLDERS’

Summary of Preferred Stock Activity

During the year ended February 28, 2021 the Company had the following 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.

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

Forfeited and cancelled

Outstanding at February 28 2022

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.

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.

1 unchanged sentence

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.

During the year ended February 29, 2020 there was no preferred stock activity.

During the year ended February 28, 2019, the Company received $174,070 for the sale of 65 Series F preferred shares.

As of the reporting date, these shares have not been issued and are included in preferred stock to be issued on the balance sheet.

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

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.

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.

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:

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

During the year ended February 29, 2020 the Company had the following common stock activity:

On April 23, 2019 the Board of Directors approved an increase in authorized share capital to 5,000,000,000 shares of common stock and to change the par value of the common stock to $0.00001 per share.

This became effective on June 20, 2019.

The share capital has been retrospectively adjusted accordingly to reflect this change in par value.

The Company has 2,946 shares issuable due to partial shares as a result of the March 27,2020 reverse split that will be issued in April 2020.

The Company issued 395,443 shares of its common stock for the conversion of debt and related interest and fees totaling $498,668 including $254,118 for of principal, $245,050 interest, $500 in fees in connection with debt converted during the period, as well as the release of the related derivative liability.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Summary of Warrant Activity

3 unchanged sentences

Remaining Years

Outstanding at March 1, 2019*

Outstanding at February 29, 2020

1,424,521,449

(947,857,000)

Forfeited and cancelled

4 unchanged sentences

Outstanding at February 28, 2022

* Included in this amount were warrants issued on March 15, 2018 to a lender (as part of a loan agreement) to purchase 333,333 shares at a share price of $0.15 with a three-year term.

These were the original transaction amounts before any reverse splits.

After the 100:

1 reverse split on August 24,2019 and 10,000:1 reverse split on March 27, 2020 the Company reported these warrants after adjusting for the split as warrants to purchase 0.33 shares at $150,000 which is their value shown at February 209, 2020.

This was an error as there was an anti-dilution provision in the warrant agreement whereby the exercise price and warrants get reset to their original value based on the lowest trading price.

We therefor adjusted these warrants in the current period to their value of warrants to purchase 142,857,000 at $0.00035.

For the years ended February 28, 2021 and February 29, 2020, the Company recorded a total of $362,084 and $0, respectively on stock-based payments for warrants with a corresponding adjustment to additional paid-in capital.

1,216,845,661

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:

$0.135 - $0.037

Fair value of Company’s common stock

$0.146 - $0.0071

Dividend yield

Expected volatility

411.0% - 403.33%

Risk free interest rate

0.43% - 0.27%

Expected term (years)

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:

Fair value of Company’s common stock

Dividend yield

Expected volatility

Risk free interest rate

Expected term (years)

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:

$0.041-$0.029

Fair value of Company’s common stock

$0.039-$0.028

Dividend yield

Expected volatility

Risk free interest rate

Expected term (years)

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.

Five hundred (500) shares of Series G preferred stock.

Objective #4 :

One hundred fifty (150) devices are deployed in the marketplace.

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 ($1,000,000).

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.

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.

Five hundred (500) shares of Series G preferred stock.

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.

Five hundred (500) shares of Series G preferred stock.

Objective #9 :

RAD receives an order for fifty (50) units from a single customer.

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

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:

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.

COMMITMENTS AND 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 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.

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

The Company had accrued $62,552 at February 28, 2021.

In April 2019 the principals of WeSecure (see Note 9) filed lawsuit in California Superior Court seeking damages for non-payment balance of sale of WeSecure assets totaling $25,000, unpaid consulting fees payable to the two principals through to September 2019 totaling $ $125,924, and labor code violations of $ $48,434 all totaling $199,358 plus attorney’s fees and damages.

The parties finally settled all claims with a full release for $180,000 in June 2019 payable in 14 monthly instalments as follows:

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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of February 28, 2021 the Company has paid $58,000.

The Company repaid $40,500 towards these arrears in the year ended February 28, 2021 included in the total payments above.

The $122,000 balance owing at February 28, 2021 was paid on March 17, 2021 , therefore as of the date of these financial statements, the settlement has been repaid in full.

The related legal costs are expensed as incurred.

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

RAD maintains a mailing address for 31103 Ranch Viejo Road, Suite d2114 for a nominal fee of $ 264/yr.

The Company maintained an office at 1218-1222 Magnolia Ave, Suite 106 Bldg.

H ,Corona, California 92881 pursuant to a month to month lease commencing March 1,2019.

The Company’s annual rent was $12,000 per year.

The company terminated this lease December 31, 2020.

On December 18, 20206, 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.

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.

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 $22,033 for the year ended February 28, 2021 and $10,000 for the year ended February 29, 2020.

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.

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

1 unchanged sentence

February 28, 2024

February 28, 2025

February 28, 2026

February 28, 2027

February 28, 2028 and after

Total lease payments

Present value of lease liabilities

Convertible Notes Payable

Certain convertible notes payable carry conditions whereby in the event of ant default of any condition the Company would be subject to certain financial penalties.

Penalties earned through February 28, 2021 have been recorded in these financial statements.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

1 unchanged sentence

EARNINGS (LOSS) PER SHARE

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

The net income (loss) per common share amounts were

determined as follows:

For the Year Ended

2 unchanged sentences

interest expense on convertible debt

Add Penalty interest on convertible debt

penalty interest on convertible debt

Add (less) loss (gain) on change of derivative liabilities

Net income (loss) adjusted for common stock equivalents

Weighted average shares –

Weighted average shares - basic

4,029,658,082

1,015,115,270

Net income (loss) per share –

Dilutive effect of common stock equivalents:

Convertible Debt

Preferred shares

Weighted average shares –

4,029,658,082

1,015,115,270

Net income (loss) per share –

The anti-dilutive shares of common stock equivalents for the years ended February 28, 2021 and February 29, 2020 were as follows:

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

February 28, 2021

February 29, 2020

Convertible notes and accrued interest

62,692,265,100

Convertible Class F Preferred Shares

1 unchanged sentence

11,141,522,749

Stock options and warrants

1,256,845,661

17,598,248,964

11,765,888,741

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, 2021 and February 29, 2020:

, 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

2 unchanged sentences

Total deferred

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.

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.

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, 2021 and February 29, 2020 (in thousands):

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,

February 28, 2022

Federal statutory rate

State income tax benefit, net of federal benefit

Non deductible interest

Non deductible settlement losses

Non deductible stock based compensation

Non deductible (non-includable gains) changes in fair value of instruments

Warrant values within debt discount

Non deductible changes in fair value of instruments

Other non deductible expenses

Change in valuation allowance

1 unchanged sentence

Federal statutory rate

Non deductible interest

Non deductible changes in fair value of instruments

Other non deductible expenses

Non deductible stock based compensation

Non deductible (non-includable gains) changes in fair value of instruments

Warrant values within debt discount

Change in valuation allowance

For the year ended February 28, 2021, the expected tax benefit is calculated at the 2019 statutory rate of 21%.

The effect for temporary timing differences are also calculated at the 25% statutory rate effective for fiscal year ended February 28, 2019.

For the year ended 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, 2021 and February 29, 2020:

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

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

10 unchanged sentences

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 $14,994,000 at February 28, 2021 and $6,694,000 at February 29, 2020, 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.

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.

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 29, 2020 and February 28, 2019.

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 29, 2020 and February 28, 2019 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.

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

If and when applicable, the Company will recognize interest and penalties as part of income tax expense.

During the fiscal years ended February 29, 2020 and February 28, 2019, the Company recognized no amounts related to tax interest or penalties related to uncertain tax positions.

The Company is subject to taxation in the United States and various state jurisdictions.

The Company currently has no years under examination by any jurisdiction.

On August 28, 2017, the Company consummated a share exchange agreement whereby there was a change of control and any net operating losses up to the date of the transaction were forfeited.

The Company’s tax returns for the years ended February 28, 2021,and February 29, 2020, and February 28, 2019 are open for examination under Federal statute of limitations.

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.

SUBSEQUENT EVENTS

Subsequent to February 28, 2021 through to May 25, 2021, a Series F Convertible Preferred Stock holder received 316,345,998 shares of common stock through the conversion of 78 Series F Convertible Preferred Shares.

On March 2, 2021, Garrett Parsons tendered his resignation as Chief Executive Officer, Chief Financial Officer and Secretary of our Company, effective immediately.

Parsons will continue to serve as a member of the Board of Directors of our Company (the “

Board ”).

Parsons will continue to serve as a consultant to the Company for a three-year term.

On March 2, 2021, the Board identified and retained Mr.

Steven Reinharz as the Chief Executive Officer, Chief Financial Officer and Secretary of our Company.

On March 2, 2021, Mr.

Reinharz was elected to the Board.

In connection with Garett Parsons’

resignation, the Company entered into a consulting agreement with Mr.

Parsons effective March 2, 2021.

The Consulting Agreement, which was approved by our Board, provides for, among other things, Mr.

Parsons to receive compensation over a term of thirty-six (36) months according to the following compensation schedule:

$8,000 per month for the first twelve (12) months;

$9,000 per month for the subsequent twelve (12) months;

and $10,000 per month for the final twelve (12) months.

On April 9, 2021 entered into an Employment Agreement with Chief Executive Officer, Steven Reinharz with three year term under the following terms:

Base monthly salary of $20,000 which the employee elects to defer payment .

Effective June 1, 2021 the employee elects to defer $18,000 per month and receive payment of $2,000 per month.

Incentives and bonuses to be paid out at the discretion of the Board of Directors.

A stock option award (option 1) was 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) was 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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

On March 1 2021 the Company entered into a promissory note for $6,000,000 with cash proceeds of $5,400,000 and an original issue discount of $600,000.

The loan bears interest at 12% per annum and matures on March 1, 2022.

Along with the note the lender received a warrant to purchase 300,000,000 shares of common stock at an exercise price of $0.135 per share and a three year term.

On March 1, 2021 the first investor referred to in Note 7 whose aggregate investment is $1,925,000 revised his agreement as follows:

The rate payment was reduced from 14,25 % to 9.65 %

The asset disposition % was reduced from 31 % to 21%

On March 23, 2021 the Company entered into an exchange agreement with a Series F preferred stockholder whereby the stockholder agreed to exchange 28 Series F Convertible Preferred Stock for a non-interest bearing promissory note for $2,545,900 payable.

On March 23, 2021 the Company entered into another exchange agreement with a Series F preferred stockholder whereby the stockholder agreed to exchange 55 Series F Convertible Preferred Stock for a non-interest bearing promissory note for $5,000,875 payable.

Subsequent to February 28, 2022 through to May 27

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.

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 9A. Controls and Procedures