Artificial Intelligence Technology Solutions Inc. 10-K

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES Market Information AITX’s common stock began trading on the “Over the Counter” Bulletin Board (“OTC”) under the symbol “AITX” in June 2011 and as AITX on August 24, 2018. The following table sets forth, for the period indicated, the prices of the common stock in the over-the-counter market, as reported and summarized by OTC Markets Group, Inc. On August 24, 2018, the Company undertook a 100:1 reverse stock split and on March 27, 2020 a 10,000:1 reverse split. The share capital has been retrospectively adjusted accordingly to reflect this reverse stock split, except for the conversion price of certain convertible notes as the conversion price is not subject to adjustment from forward and reverse stock splits. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown, or commission and may not represent actual transactions. There is an absence of an established trading market for the Company’s common stock, as the market is limited, sporadic and highly volatile, which may affect the prices listed below. High Low Fiscal Year Ended February 28, 2022: Quarter ended February 28, 2022 $ 0.03 $ 0.02 Quarter ended November 30, 2021 $ 0.05 $ 0.03 Quarter ended August 31, 2021 $ 0.09 $ 0.03 Quarter ended May 31, 2021 $ 0.16 $ 0.05 Fiscal Year Ended February 28, 2021: Quarter ended February 28, 2021 $ 0.29 $ 0.00 Quarter ended November 30, 2020 $ 0.01 $ 0.00 Quarter ended August 31, 2020 $ 0.10 $ 0.00 Quarter ended May 31, 2020 $ 2.00 $ 0.03 On May 12, 2022, the closing price per share of the Company’s common stock as quoted on the OTC was $0.0126. - 10 - Dividends To date, we have not paid dividends on shares of the Company’s common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, AITX’s financial condition, and other factors deemed relevant by its Board of Directors. Holders of Common Stock As of May 12, 2022, there were 13 holders of AITX’s common stock of which 13 were active. The number of foregoing holders does not include beneficial owners of common stock whose shares are held in the names of banks, brokers, nominees or other fiduciaries. Common Stock The Company is authorized to issue 5,000,000,000 shares of common stock, with a par value of $0.00001. The closing price of its common stock on May 12, 2022, as quoted by OTC Markets Group, Inc., was $0.0126. There were 4,833,110,360 shares of common stock issued and outstanding as of May 12, 2022. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non-assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of its assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of the Company’s common are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the Board of Directors from funds legally available. Our Articles of Incorporation, Bylaws, and the applicable statutes of the state of Nevada contain a more complete description of the rights and liabilities of holders of our securities. During the years ended February 28, 2022 and February 28, 2021, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof. On August 24, 2018, the Company undertook a 100:1 reverse stock split and on March 27, 2020 the Company undertook a 10,000:1 reverse stock split. The share capital has been retrospectively adjusted accordingly to reflect this reverse stock split, except for the conversion price of certain convertible notes as the conversion price is not subject to adjustment from forward and reverse stock splits. Non-cumulative voting Holders of shares of the Company’s common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors. Securities Authorized for Issuance under Equity Compensation Plans On April 14, 2021 the Company adopted an Incentive Stock Plan where full details are disclosed in Exhibit 10.1 of the Company’s 8K filing of April 20,2021. Under the plan the Company may grant options to service providers and employees to acquire up to 5,000,000 shares of the Company’s common stock. The options will be under the varying terms and conditions of an agreement but the exercise price cannot be lower than 100% to 110% of the fair value of the stock at date of grant and the term of the grant can be no longer than 5 years. As of the date of this filing , no grants have been issued under this plan. - 11 - The following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance. Plan Category Number of Securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance Equity compensation plans approved by security holders. — — — Equity compensation plans not approved by security holders. — — — Total — — — Preferred Stock The Company is authorized to issue up to 20,000,000 shares of $0.001 par value preferred stock. The board of directors is authorized to designate any series of preferred stock up to the total authorized number of shares. Series E Preferred Stock The Board of Directors has designated 4,350,000 shares of Series E Preferred Stock. As of the date of this report, there are 3,350,000 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 holders of Series E Preferred Stock have 2/3rds of the voting power of all shareholders at any time corporate action requires a vote of shareholders. Series F Convertible Preferred Stock The Board of Directors has designated 4,350 shares of Series F Convertible Preferred Stock with a par value of $1.00 per share. As of the date of this report, there are 2,532 shares of Series F Convertible Preferred Stock outstanding. The Series F Convertible Preferred Stock is non-redeemable, does not have rights upon liquidation of the Company, does not have voting rights and does not receive dividends. Each holder may, at any time and from time to time convert all, but not less than all, of their shares of Series F Convertible Preferred Stock into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the date of conversion by three and 45 100ths (3.45) on a pro rata basis. So long as any shares of Series F Convertible Preferred Stock are outstanding, the Company shall not, without first obtaining the approval of the majority of the holders: (a) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series F convertible preferred stock; (b) create any Senior Securities; (c) create any pari passu Securities; (d) do any act or thing not authorized or contemplated by the Certificate of Designation which would result in any taxation with respect to the Series F Convertible Preferred Stock under Section 305 of the Internal Revenue Code of 1986, as amended, or any comparable provision of the Internal Revenue Code as hereafter from time to time amended, (or otherwise suffer to exist any such taxation as a result thereof). Series G Preferred Stock The board of directors has designated 100,000 shares of Series G Preferred Stock. As of the date of this report, there are no shares of Series G Preferred Stock outstanding. The Series G preferred stock does not have voting rights, does not have rights upon liquidation of the Company and does not receive dividends. Transfer Agent and Registrar The Transfer Agent for our capital stock is Transhare with an address at 15500 Roosevelt Boulevard, Suite 302, Clearwater, Florida 33760. Their telephone number is Office phone: 303-662-1112. - 12 - Recent Sales of Unregistered Securities The following is a summary of transactions by AITX involving sales of its securities that were not registered under the Securities Act. Date Transaction (*) Principal Converted Interest Converted Fees Converted Total Amount Converted Shares Issued** Number of shares outstanding February 28, 2017 18 March 7, 2017 conversion $1,840 $— $— $1,840 1 March 22, 2017 conversion 1,971 — — 1,971 1 March 27, 2017 cancelation*** — — — — (1) April 3, 2017 conversion 1,487 3,397 — 4,884 1 April 7, 2017 conversion 1,000 — — 1,000 1 April 20, 2017 conversion 920 — — 920 1 April 24, 2017 conversion 6,876 — — 6,876 1 April 26, 2017 conversion 1,130 — — 1,130 1 May 2, 2017 conversion 1,130 — — 1,130 1 May 4, 2017 conversion 1,240 — — 1,240 1 May 4, 2017 conversion 8,854 — — 8,854 1 May 8, 2017 conversion 9,296 — — 9,296 1 May 12, 2017 conversion 1,432 — — 1,432 1 May 15, 2017 conversion 11,661 — — 11,661 1 May 15, 2017 conversion 1,550 — — 1,550 2 May 18, 2017 conversion 13,629 — — 13,629 2 May 23, 2017 conversion 9,684 3,059 — 12,743 1 May 24, 2017 conversion 1,730 — — 1,730 2 May 30, 2017 conversion 1,890 — — 1,890 2 June 7, 2017 conversion 1,985 — — 1,985 2 June 9, 2017 conversion 2,085 — — 2,085 2 June 12, 2017 conversion 2,185 — — 2,185 2 June 14, 2017 conversion 2,295 — — 2,295 2 June 19, 2017 conversion 2,400 — — 2,400 2 June 20, 2017 conversion 2,500 — — 2,500 3 June 20, 2017 conversion 3,000 358 — 3,358 — June 22, 2017 warrant exercise**** — — — — 3 June 28, 2017 conversion 2,800 — — 2,800 3 June 28, 2017 warrant exercise**** — — — — 3 July 5, 2017 conversion 3,050 — — 3,050 3 July 6, 2017 warrant exercise**** — — — — 3 July 7, 2017 warrant exercise**** — — — — — July 7, 2017 conversion 3,400 — — 3,400 3 July 26, 2017 conversion 3,500 — — 3,500 4 July 28, 2017 conversion 9,750 — — 9,750 1 July 28, 2017 conversion 4,000 — — 4,000 4 August 2, 2017 conversion 75,000 — — 75,000 4 August 2, 2017 conversion 75,000 2,483 — 77,483 4 August 4, 2017 conversion 11,184 — — 11,184 — August 14, 2017 conversion 4,500 — — 4,500 5 August 21, 2017 conversion 4,700 — — 4,700 5 August 29, 2017 conversion 4,900 — — 4,900 5 September 5, 2017 conversion 26,250 — — 26,250 5 September 18, 2017 conversion 27,250 — — 27,250 5 September 27, 2017 conversion 29,000 — — 29,000 6 October 16, 2017 conversion 30,500 — — 30,500 6 October 16, 2017 conversion 10,000 — — 10,000 — Number of shares outstanding February 28, 2018 124 - 13 - (continued) Date Transaction (*) Principal Converted Interest Converted Fees Converted Total Amount Converted Shares Issued** April 16, 2018 conversion 132,160 — — 132,160 6 April 26, 2018 conversion 14,500 — 500 15,000 1 May 1, 2018 conversion 26,250 — — 26,250 3 May 3, 2018 conversion 5,000 — — 5,000 — May 7, 2018 conversion 27,900 — — 27,900 3 May 10, 2018 conversion 32,400 — — 32,400 4 May 11, 2018 conversion 14,500 — 500 15,000 2 May 15, 2018 conversion 7,060 — 500 7,560 2 May 15, 2018 conversion 8,000 — — 8,000 1 May 21, 2018 conversion 20,250 — — 20,250 3 May 22, 2018 conversion 6,075 — — 6,075 1 May 24, 2018 conversion 13,056 3,300 — 16,356 2 May 30, 2018 conversion 8,182 — — 8,182 2 May 30, 2018 conversion 15,000 — — 15,000 3 June 7, 2018 conversion 2,922 — — 2,922 1 June 18, 2018 conversion 17,000 — — 17,000 4 June 19, 2018 conversion 14,500 — 500 15,000 3 June 28, 2018 conversion 18,000 — — 18,000 4 June 28, 2018 cancellation (7,060) — (500) (7,560) (2) July 5, 2018 conversion 14,500 — 500 15,000 4 July 5, 2018 conversion 8,818 — — 8,818 3 July 11, 2018 conversion 10,200 — — 10,200 4 July 11, 2018 conversion 14,500 — 500 15,000 5 July 19, 2018 conversion 16,000 — 500 16,500 5 July 19, 2018 conversion 11,000 1,366 — 12,366 4 July 23, 2018 conversion 14,500 — 500 15,000 7 July 25, 2018 conversion 5,000 — — 5,000 2 July 31, 2018 conversion 11,000 1,455 — 12,455 6 August 24, 2018 conversion — 15,300 — 15,300 10 August 27, 2018 conversion 5,500 — 500 6,000 10 August 29, 2018 conversion 4,280 — 500 4,780 11 August 30, 2018 conversion 6,000 — — 6,000 10 August 30, 2018 rounding shares — — — — — August 31, 2018 conversion 20,000 — — 20,000 11 August 31, 2018 conversion 7,500 — 500 8,000 11 September 5, 2018 conversion 8,800 1,375 — 10,175 13 September 5, 2018 conversion 7,800 — — 7,800 13 September 7, 2018 conversion 7,000 — 500 7,500 13 September 12, 2018 conversion 5,355 — — 5,355 15 September 12, 2018 conversion 6,500 — 500 7,000 14 September 13, 2018 conversion 5,395 — — 5,395 13 September 13, 2018 conversion 3,436 — 500 3,936 14 September 18, 2018 conversion 5,670 — — 5,670 19 September 20, 2018 conversion 3,448 — 500 3,948 19 September 21, 2018 conversion 6,720 — — 6,720 19 September 24, 2018 conversion 5,250 — — 5,250 18 September 26, 2018 conversion 6,132 — — 6,132 23 September 28, 2018 conversion 3,084 — 500 3,584 23 October 1, 2018 conversion 3,100 — — 3,100 20 October 3, 2018 conversion 4,030 — — 4,030 26 October 3, 2018 conversion 2,202 — 500 2,702 25 October 5, 2018 conversion 2,750 485 — 3,235 16 October 5, 2018 conversion 4,449 — — 4,449 29 October 8, 2018 conversion 8,835 — — 8,835 105 October 9, 2018 conversion 4,158 — 500 4,658 30 - 14 - (continued) Date Transaction (*) Principal Converted Interest Converted Fees Converted Total Amount Converted Shares Issued** October 10, 2018 conversion 4,988 — — 4,988 29 October 15, 2018 conversion 5,935 — — 5,935 33 October 18, 2018 conversion 9,000 — — 9,000 113 October 19, 2018 conversion 4,400 713 — 5,113 33 October 23, 2018 conversion 9,840 — — 9,840 317 November 1, 2018 conversion 9,400 — — 9,400 94 November 5, 2018 conversion 6,195 — — 6,195 52 November 15, 2018 conversion 7,980 — — 7,980 95 November 27, 2018 conversion 3,850 724 — 4,574 123 December 6, 2018 conversion 4,056 797 — 4,853 141 December 7, 2018 conversion 2,034 — — 2,034 66 December 10, 2018 conversion 2,367 — — 2,367 76 December 10, 2018 conversion 2,333 — 500 2,833 91 December 10, 2018 conversion 1,475 — 500 1,975 91 December 10, 2018 conversion 3,348 — — 3,348 90 December 11, 2018 conversion 2,489 — — 2,489 80 December 11, 2018 conversion 4,340 — — 4,340 140 December 12, 2018 conversion 3,500 — — 3,500 94 December 12, 2018 conversion 6,600 1,306 — 7,906 213 December 13, 2018 conversion 2,408 — 500 2,908 134 December 13, 2018 conversion 3,426 — — 3,426 111 December 14, 2018 conversion 4,154 — — 4,154 134 December 18, 2018 conversion 4,368 — — 4,368 141 December 19, 2018 conversion 3,100 — 500 3,600 160 December 19, 2018 conversion 1,000 3,348 — 4,348 161 December 20, 2018 conversion — — — — 130 December 20, 2018 conversion 2,155 — 500 2,655 169 December 20, 2018 conversion 3,636 — — 3,636 117 December 20, 2018 conversion 7,480 1,520 — 9,000 333 December 24, 2018 conversion 2,970 — — 2,970 110 December 26, 2018 conversion 3,213 — — 3,213 143 December 27, 2018 conversion 1,870 1,381 — 3,252 120 December 28, 2018 conversion 3,700 — 500 4,200 227 December 31, 2018 conversion 4,869 — — 4,869 216 December 31, 2018 conversion 5,365 — — 5,365 290 January 2, 2019 conversion 7,370 1,562 — 8,932 425 January 7, 2019 conversion 3,360 — — 3,360 240 January 7, 2019 conversion 3,944 — — 3,944 290 January 8, 2019 conversion 4,080 — — 4,080 300 January 9, 2019 conversion 3,161 — 500 3,661 317 January 10, 2019 conversion 3,380 — — 3,380 325 January 11, 2019 conversion 5,280 1,150 — 6,430 397 January 11, 2019 conversion 3,625 — — 3,625 290 January 14, 2019 conversion 3,400 — — 3,400 340 January 15, 2019 conversion 4,100 — — 4,100 410 January 15, 2019 conversion 4,300 — — 4,300 430 January 17, 2019 conversion 4,800 — — 4,800 480 January 22, 2019 conversion 4,435 — — 4,435 504 January 22, 2019 conversion 4,230 — — 4,230 470 January 23, 2019 conversion 3,816 — — 3,816 530 January 25, 2019 conversion 3,781 — — 3,781 556 January 28, 2019 conversion 3,276 — — 3,276 585 January 29, 2019 conversion 3,690 — — 3,690 615 January 29, 2019 conversion 3,870 — — 3,870 645 - 15 - (continued) Date Transaction (*) Principal Converted Interest Converted Fees Converted Total Amount Converted Shares Issued** January 30, 2019 conversion 4,080 — — 4,080 680 January 31, 2019 conversion 4,500 — — 4,500 750 January 31, 2019 conversion 4,290 — — 4,290 715 February 4, 2019 conversion 4,740 — — 4,740 790 February 5, 2019 cancellation (2,658) — — (2,658) (17) February 5, 2019 conversion 4,980 — — 4,980 830 February 12, 2019 conversion 5,340 — — 5,340 890 February 14, 2019 conversion 5,236 — — 5,236 935 February 21, 2019 conversion 4,956 — — 4,956 900 Number of shares outstanding February 28, 2019 20,026 May 6, 2019 conversion 5,768 — — 5,768 1,030 May 6, 2019 conversion 15,000 — — 15,000 882 May 6, 2019 conversion 11,900 — — 11,900 992 May 7, 2019 conversion 6,048 — — 6,048 1,080 May 7, 2019 conversion 11,900 — — 11,900 992 May 8, 2019 conversion 6,384 — — 6,384 1,140 May 8, 2019 conversion 11,800 — — 11,800 983 May 8, 2019 conversion 7,312 — 500 7,812 1,240 May 9, 2019 conversion 12,500 — — 12,500 1,136 May 10, 2019 conversion 7,200 — — 7,200 655 May 8, 2019 conversion 4,400 — — 4,400 1,000 May 13, 2019 conversion 7,493 — — 7,493 1,338 May 13, 2019 conversion 12,650 3,786 — 16,436 1,957 May 21, 2019 conversion 3,281 — — 3,281 586 May 22, 2019 conversion 11,550 3,526 — 15,076 2,094 July 11, 2019 conversion 11,000 3,984 — 14,984 1,921 July 25, 2019 conversion 8,584 — — 8,584 2,000 July 30, 2019 conversion 16,940 6,350 — 23,290 3,882 July 31, 2019 conversion 9,872 — — 9,872 2,300 August 2, 2019 conversion 10,301 — — 10,301 2,400 August 8, 2019 conversion 21,450 8,170 — 29,620 4,937 August 11, 2019 conversion 10,945 — — 10,945 2,550 August 11, 2019 conversion 5,837 — — 5,837 1,360 August 12, 2019 conversion 8,800 — — 8,800 2,750 August 12, 2019 conversion 13,915 5,337 — 19,252 4,011 August 13, 2019 conversion 3,528 — — 3,528 1,260 August 14, 2019 conversion 5,920 — — 5,920 2,960 August 15, 2019 conversion 12,650 4,877 — 17,527 5,842 August 15, 2019 conversion 6,200 — — 6,200 3,100 August 16, 2019 conversion 8,060 — — 8,060 4,030 August 19, 2019 conversion 6,784 — — 6,784 4,240 August 20, 2019 conversion 7,136 — — 7,136 4,460 August 20, 2019 conversion 12,100 4,705 — 16,805 7,002 August 21, 2019 conversion 4,284 5,628 — 9,912 4,690 August 22, 2019 conversion — 6,348 — 6,348 5,290 August 23, 2019 conversion — 4,400 — 4,400 5,500 August 26, 2019 conversion 7,810 3,068 — 10,878 9,065 August 26, 2019 conversion — 3,416 — 3,416 4,270 August 27, 2019 conversion — 2,240 — 2,240 2,800 August 29, 2019 conversion — 5,344 — 5,344 6,680 September 3, 2019 conversion — 5,616 — 5,616 7,020 September 3, 2019 conversion 6,149 2,449 — 8,598 14,329 - 16 - (continued) Date Transaction (*) Principal Converted Interest Converted Fees Converted Total Amount Converted Shares Issued** September 4, 2019 conversion — 2,956 — 2,956 7,390 September 5, 2019 conversion — 3,240 — 3,240 8,100 September 6, 2019 conversion — 3,560 — 3,560 8,900 September 9, 2019 conversion — 3,752 — 3,752 9,380 September 10, 2019 conversion — 3,944 — 3,944 9,860 September 10, 2019 conversion 6,826 2,750 — 9,575 15,959 September 11, 2019 conversion — 4,129 — 4,129 10,300 September 12, 2019 conversion 2,447 2,233 — 4,680 11,700 September 13, 2019 conversion 4,920 — — 4,920 12,300 September 16, 2019 conversion 2,818 2,342 — 5,160 12,900 September 17, 2019 conversion — 2,960 — 2,960 7,400 September 18, 2019 conversion — 4,760 — 4,760 11,900 September 19, 2019 conversion — 2,920 — 2,920 7,300 September 20, 2019 conversion 202 1,998 — 2,200 5,500 September 25, 2019 conversion 4,506 234 — 4,740 12,600 October 3, 2019 conversion 5,651 349 — 6,000 15,000 October 10, 2019 conversion 3,760 280 — 4,040 10,100 October 25, 2019 conversion 2,584 556 — 3,140 15,700 November 4, 2019 conversion 2,926 354 — 3,280 16,400 November 27, 2019 conversion 2,970 770 — 3,740 18,700 January 3, 2020 conversion — 2,640 — 2,640 13,200 January 27, 2020 conversion 3,360 — — 3,360 16,800 February 1, 2020 cancellation (3,360) — — (3,360) (16,800) February 5, 2020 cancellation — (640) — (640) (3,200) February 5, 2020 conversion — 4,060 — 4,060 20,300 February 29, 2020 rounding shares issuable — — — — 2,946 Number of shares outstanding February 29, 2020 418,415 March 29, 2020 Conversion — 2,568 — 2,568 21,400 March 30, 2020 Conversion 742 — 500 1,242 20,700 March 31, 2020 Conversion — 1,013 — 1,013 21,100 April 3, 2020 Conversion — 936 — 936 19,500 April 6, 2020 Conversion 868 — 500 1,368 22,800 April 7, 2020 Conversion — 1,186 — 1,186 24,700 April 7, 2020 Conversion 1,500 — 500 2,000 25,000 April 8, 2020 Conversion — 1,104 — 1,104 23,000 April 13, 2020 Conversion — 1,474 — 1,474 30,700 April 14, 2020 Conversion — 1,272 — 1,272 26,500 April 16, 2020 Conversion 1,456 — 500 1,956 32,600 April 17, 2020 Conversion — 1,613 — 1,613 33,600 April 20, 2020 Conversion — 1,776 — 1,776 37,000 April 20, 2020 Conversion 1,200 — 500 1,700 23,611 April 21, 2020 Conversion — 1,448 — 1,448 31,000 April 23, 2020 Conversion — 1,773 — 1,773 38,500 April 24, 2020 Conversion — 1,392 — 1,392 43,500 April 24, 2020 Conversion 1,941 — 500 2,441 42,420 April 27, 2020 Conversion — 1,469 — 1,469 45,900 April 28, 2020 Conversion — 781 — 781 24,400 April 28, 2020 Conversion — 1,376 — 1,376 43,000 April 29, 2020 Conversion 2,400 — 500 2,900 48,333 April 30, 2020 Conversion — 1,408 — 1,408 44,000 April 30, 2020 Conversion 2,225 — 500 2,725 54,500 May 1, 2020 Conversion — 1,792 — 1,792 56,009 May 4, 2020 Conversion — 1,728 — 1,728 54,000 May 4, 2020 Conversion 5,060 2,719 — 7,779 129,643 - 17 - (continued) Date Transaction (*) Principal Converted Interest Converted Fees Converted Total Amount Converted Shares Issued** May 4, 2020 Conversion 2,724 — 500 3,224 71,640 May 5, 2020 Conversion — 2,365 — 2,365 73,900 May 6, 2020 Conversion 3,750 — 500 4,250 78,703 May 7, 2020 Conversion — 2,170 — 2,170 67,800 May 7, 2020 Conversion 2,640 — 500 3,140 78,500 May 8, 2020 Conversion — 1,592 — 1,592 59,400 May 11, 2020 Conversion 1,843 — 500 2,343 90,100 May 12, 2020 Conversion — 2,095 — 2,095 100,700 May 12, 2020 Conversion 1,910 — 500 2,410 95,000 May 12, 2020 Conversion 4,070 2,208 — 6,278 201,231 May 13, 2020 Conversion — 2,413 — 2,413 116,000 May 14, 2020 Conversion — 1,936 — 1,936 94,000 May 14, 2020 Conversion 2,698 — 500 3,198 123,000 May 14, 2020 Conversion 3,300 — 500 3,800 121,794 May 15, 2020 Conversion — 1,764 — 1,764 98,000 May 15, 2020 Conversion 4,510 2,416 — 6,926 232,206 May 18, 2020 Conversion — 2,728 — 2,728 155,000 May 19, 2020 Conversion — 2,546 — 2,546 148,000 May 19, 2020 Conversion 3,108 — 500 3,608 164,000 May 19, 2020 Conversion 3,108 — 500 3,608 164,000 May 19, 2020 Conversion 2,450 — 500 2,950 121,399 May 20, 2020 Conversion — 2,477 — 2,477 144,000 May 21, 2020 Conversion — 3,560 — 3,560 207,000 May 22, 2020 Conversion 3,600 — 500 4,100 210,000 May 22, 2020 Conversion 5,665 3,112 — 8,777 416,744 May 25, 2020 Conversion 3,238 — 500 3,738 230,000 May 26, 2020 Conversion — 3,120 — 3,120 240,000 May 27, 2020 Conversion — 2,280 — 2,280 190,000 May 28, 2020 Conversion — 2,148 — 2,148 179,000 May 28, 2020 Conversion 6,050 3,347 — 9,397 522,072 May 28, 2020 Rounding shares — — — — 9 May 29, 2020 Conversion 4,000 — 500 4,500 257,731 June 1, 2020 Conversion — 2,367 — 2,367 202,000 June 1, 2020 Conversion 4,380 — — 4,380 300,000 June 1, 2020 Conversion 8,680 — — 8,680 620,000 June 3, 2020 Conversion — 3,427 — 3,427 357,000 June 4, 2020 Conversion 4,372 — 500 4,872 435,000 June 4, 2020 Conversion — 2,554 — 2,554 285,000 June 3, 2020 Conversion 7,095 3,954 — 11,049 754,703 June 4, 2020 Conversion 9,744 — — 9,744 870,000 June 5, 2020 Conversion — 3,916 — 3,916 445,000 June 8, 2020 Conversion 4,770 — — 4,770 530,000 June 8, 2020 Conversion — 2,980 — 2,980 487,000 June 8, 2020 Conversion 6,600 3,700 — 10,300 1,122,004 June 9, 2020 Conversion 3,593 — 500 4,093 535,000 June 10, 2020 Conversion 4,396 — 500 4,896 640,000 June 10, 2020 Conversion — 2,472 — 2,472 404,000 June 11, 2020 Conversion — 2,935 — 2,935 587,000 June 11, 2020 Conversion 4,320 — — 4,320 720,000 June 12, 2020 Conversion 6,600 3,718 — 10,318 1,433,000 June 15, 2020 Conversion — 3,126 — 3,126 704,000 June 15, 2020 Conversion 9,435 — — 9,435 1,700,000 June 15, 2020 Conversion 4,218 — 500 4,718 850,000 June 17, 2020 Conversion — 3,135 — 3,135 825,000 - 18 - (continued) Date Transaction (*) Principal Converted Interest Converted Fees Converted Total Amount Converted Shares Issued** June 17, 2020 Conversion 4,750 — — 4,750 1,000,000 June 17, 2020 Conversion 5,830 3,303 — 9,133 1,902,773 June 18, 2020 Conversion — 2,608 — 2,608 815,000 June 18, 2020 Conversion 4,300 — 500 4,800 1,200,000 June 19, 2020 Conversion 3,500 — 500 4,000 1,000,000 June 19, 2020 Conversion — 2,797 — 2,797 874,000 June 19, 2020 Conversion 6,490 3,686 — 10,176 2,119,985 June 22, 2020 Conversion — 4,627 — 4,627 1,446,000 June 22, 2020 Conversion 6,930 3,950 — 10,880 2,266,600 June 23, 2020 Conversion — 5,120 — 5,120 1,600,000 June 22, 2020 Conversion 10,000 — — 10,000 2,500,000 June 23, 2020 Conversion 6,100 — 500 6,600 1,650,000 June 23, 2020 Conversion 10,120 5,775 — 15,895 3,311,362 June 23, 2020 Conversion 2,488 — 500 2,988 747,000 June 24, 2020 Conversion 8,400 — — 8,400 2,100,000 June 24, 2020 Conversion 17,200 — — 17,200 4,300,000 June 24, 2020 Conversion 10,120 5,781 — 15,901 3,312,766 June 24, 2020 Conversion 1,150 — 500 1,650 343,750 June 25, 2020 Conversion — 7,040 — 7,040 2,200,000 June 25, 2020 Conversion 10,300 — 500 10,800 2,700,000 June 25, 2020 Conversion 11,275 6,448 — 17,723 3,692,421 June 26, 2020 Conversion — 6,400 — 6,400 2,000,000 June 29, 1930 Conversion 12,800 — — 12,800 3,200,000 June 29, 2020 Conversion 3,355 485 — 3,840 1,200,000 June 30, 2020 Conversion 4,841 119 — 4,960 1,550,000 June 29, 2020 Conversion 13,000 861 — 13,861 2,887,685 July 1, 2020 Conversion 12,980 — 500 13,480 3,370,000 July 1, 2020 Conversion 22,800 — — 22,800 5,700,000 July 1, 2020 Conversion 12,485 7,191 — 19,676 4,099,085 July 1, 2020 Conversion 5,222 116 — 5,338 1,668,000 July 2, 2020 Conversion 7,248 112 — 7,360 2,300,000 July 6, 2020 Conversion 16,088 — — 16,088 4,021,875 July 1, 2020 Conversion 13,250 861 — 14,111 2,945,058 July 6, 2020 Conversion 17,600 10,195 — 27,795 5,790,666 July 7, 2020 Conversion 7,462 538 — 8,000 2,500,000 July 8, 2020 Conversion 6,297 103 — 6,400 2,000,000 July 9, 2020 Conversion 18,150 10,550 — 28,700 5,979,187 July 9, 2020 Conversion 20,000 — — 20,000 5,000,000 July 10, 2020 Conversion 9,403 197 — 9,600 3,000,000 July 14, 2020 Conversion — 10,240 — 10,240 3,200,000 July 14, 2020 Conversion 12,000 — — 12,000 3,000,000 July 14, 2020 Conversion 9,230 370 — 9,600 3,000,000 July 14, 2020 Conversion 12,114 7,082 — 19,196 3,999,234 July 14, 2020 Conversion 24,000 — — 24,000 6,000,000 July 14, 2020 Conversion — 12,800 — 12,800 4,000,000 July 16, 2020 Conversion 22,611 13,782 — 36,392 7,581,749 July 17, 2020 Conversion 33,000 18,736 — 51,736 10,645,130 July 20, 2020 Conversion — 1,600 — 1,600 500,000 July 20, 2020 Conversion 32,000 — — 32,000 8,000,000 July 20, 2020 Conversion 28,600 16,249 — 44,849 9,237,550 July 20, 2020 Conversion — 10,560 — 10,560 3,300,000 July 21, 2020 Conversion — 6,400 — 6,400 2,000,000 July 22, 2020 Conversion — 6,400 — 6,400 2,000,000 July 22, 2020 Conversion — 24,000 — 24,000 7,500,000 - 19 - (continued) Date Transaction (*) Principal Converted Interest Converted Fees Converted Total Amount Converted Shares Issued** July 23, 2020 Conversion — 6,400 — 6,400 2,000,000 July 24, 2020 Conversion — 6,400 — 6,400 2,000,000 July 24, 2020 Conversion 9,000 — — 9,000 2,000,000 July 24, 2020 Conversion 27,500 15,741 — 43,241 6,863,668 July 27, 2020 Conversion 16,018 182 — 16,200 5,000,000 July 27, 2020 Conversion — 22,680 — 22,680 7,000,000 July 28, 2020 Conversion 9,150 50 — 9,200 2,500,000 July 29, 2020 Conversion 50,032 7,700 — 57,732 9,785,085 July 29, 2020 Conversion 10,456 44 — 10,500 2,500,000 July 29, 2020 Conversion — 29,400 — 29,400 7,000,000 July 29, 2020 Conversion 27,500 15,833 — 43,333 6,878,219 July 30, 2020 Conversion 10,463 37 — 10,500 2,500,000 July 30, 2020 Conversion — 29,400 — 29,400 7,000,000 July 30, 2020 Conversion 57,750 — — 57,750 11,000,000 July 30, 2020 Conversion 12,570 30 — 12,600 3,000,000 July 31, 2020 Conversion — 29,400 — 29,400 7,000,000 July 31, 2020 Conversion 23,100 13,330 — 36,430 7,019,333 July 31, 2020 Conversion 6,734 66 — 6,800 2,000,000 August 3, 2020 Conversion 43,500 — — 43,500 10,000,000 August 3, 2020 Conversion — 29,400 — 29,400 7,000,000 August 3, 2020 Conversion — 8,500 — 8,500 2,500,000 August 4, 2020 Conversion 17,985 10,427 — 28,412 5,474,293 August 4, 2020 Conversion 5,800 — 5,800 2,500,000 August 5, 2020 Conversion 27,500 13,979 — 41,479 8,837,286 August 6, 2020 Conversion 33,741 18,759 — 52,500 12,500,000 August 6, 2020 Conversion — 17,000 — 17,000 5,000,000 August 10, 2020 Conversion 43,294 953 — 44,247 15,000,000 August 11, 2020 Conversion 25,850 15,107 — 40,957 17,065,350 August 11, 2020 Conversion 12,533 10,000 — 22,533 11,268,750 August 12, 2020 Conversion 8,965 5,245 — 14,210 5,920,900 August 14, 2020 Conversion 27,500 15,510 — 43,010 17,920,835 August 14, 2020 Conversion 16,000 — — 16,000 8,000,000 August 17, 2020 Conversion — 12,000 — 12,000 6,000,000 August 19, 2020 Conversion — 12,000 — 12,000 6,000,000 August 19, 2020 Conversion 26,510 15,040 — 41,550 17,312,501 August 27, 2020 Conversion 25,441 10,000 500 35,941 17,970,625 August 28, 2020 Conversion 41,000 — — 41,000 20,000,000 August 28, 2020 Conversion 38,500 21,894 — 60,394 25,164,027 August 31, 2020 Conversion 39,500 — 500 40,000 20,000,000 September 3, 2020 Conversion 44,990 25,974 — 70,964 29,568,429 September 4, 2020 Conversion 48,100 — 500 48,600 27,000,000 September 10, 2020 Conversion 44,000 19,046 — 63,046 29,188,067 September 14, 2020 Conversion 36,000 — — 36,000 20,000,000 September 16, 2020 Conversion 36,300 15,858 — 52,158 28,976,854 September 17, 2020 Conversion 30,000 — — 30,000 20,000,000 September 21, 2020 Conversion 29,700 13,074 — 42,774 35,645,000 September 22, 2020 Conversion 33,500 — 500 34,000 34,000,000 September 22, 2020 Conversion 20,000 — — 20,000 20,000,000 September 25, 2020 Conversion 27,500 12,179 — 39,679 38,900,867 September 28, 2020 Conversion 21,000 — — 21,000 30,000,000 September 28, 2020 Conversion 6,850 — 500 7,350 15,000,000 September 29, 2020 Conversion 23,300 — 500 23,800 34,000,000 September 30, 2020 Conversion 27,500 12,410 — 39,910 47,511,901 October 5, 2020 Conversion 27,500 11,991 — 39,491 50,630,340 - 20 - (continued) Date Transaction (*) Principal Converted Interest Converted Fees Converted Total Amount Converted Shares Issued** October 5, 2020 Conversion 17,500 — — 17,500 25,925,926 October 6, 2020 Conversion 5,881 9,360 500 15,741 24,217,169 October 6, 2020 Conversion 6,780 — 500 7,280 16,000,000 October 8, 2020 Conversion 33,000 14,762 — 47,762 61,233,329 October 12, 2020 Conversion 27,500 12,375 — 39,875 66,458,333 October 15, 2020 Conversion 41,800 26,711 — 68,511 114,185,778 October 15, 2020 Conversion 6,500 — 500 7,000 20,000,000 October 21, 2020 Conversion 22,000 10,032 — 32,032 53,386,667 October 26, 2020 Conversion 10,000 5,000 — 15,000 25,000,000 October 29, 2020 Conversion 44,000 20,298 — 64,298 107,164,443 October 29, 2020 Conversion 27,500 14,000 — 41,500 69,166,666 November 2, 2020 Conversion 2,500 142 — 2,642 4,403,700 November 9, 2020 Conversion 38,500 18,044 — 56,544 94,239,448 November 17, 2020 Conversion 38,500 25,450 — 63,950 106,582,783 November 24, 2020 Conversion 40,040 26,655 — 66,695 111,157,519 December 1, 2020 Conversion 44,660 29,938 — 74,598 124,330,726 December 3, 2020 Conversion 38,170 22,938 — 61,108 101,847,067 December 10, 2020 Conversion 78,650 47,584 — 126,234 210,390,074 December 28, 2020 Warrants — — — 1,190 119,000,000 January 1, 2021 Warrants — — — 1,250 125,000,000 January 21, 2021 Warrants — — — 736 73,650,793 January 14, 2021 Warrants — — — 1,300 130,000,000 January 20, 2021 Warrants — — — 323 32,338,030 January 20, 2021 Warrants — — — 1,280 127,992,278 February 3, 2021 Fees — — — — 5,000,000 February 10, 2021 Warrants — — — — 75,000,000 February 16, 2021 Warrants — — — — 14,268,324 February 16, 2021 Warrants — — — — 130,000,000 February 19, 2021 Conversion 82,500 27,530 — 110,030 4,075,191 February 23, 2021 Warrants — — — — 42,189,696 February 26, 2021 Warrants — — — — 24,771,271 Number of shares outstanding February 28, 2021 3,229,426,884 - 21 - Date Transaction Consideration Shares Issued March 3, 2021 Conversion of Series F Preferred Shares 40 Series F shares converted 156,978,130 March 23, 2021 Conversion of Series F Preferred Shares 18 Series F shares converted 74,652,380 April 8, 2021 Conversion of Series F Preferred Shares 20 Series F shares converted 84,715,488 June 3, 2021 Exercise of warrants Cashless exercise of 188,000,000 warrants 182,000,000 June 15, 2021 Exercise of warrants Cashless exercise of 11,000,000 warrants 9,975,508 June 15, 2021 Debt exchange $2,545,900 in debt exchanged for common shares 39,167,693 June 15, 2021 Debt Exchange $5,000,875 in debt exchanged for common shares 76,936,539 July 21, 2021 Exercise of warrants Cashless exercise of 112,000,000 warrants 108,276,053 July 26, 2021 Common stock issued at previous day bid price per note conversion agreement Convert a note payable including $275,000 of principal, $16,955 of interest, and $1,750 of fees 10,859,436 August 5, 2021 Common stock issued at previous day bid price per note conversion agreement Convert a note payable including $550,000 of principal, and $55,000 of interest 20,183,000 September 16, 2021 Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 5 day period $0.03 per share for gross proceeds of $601,499 and net proceeds (after issuance costs) of $563,849 19,943,616 September 24, 2021 Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 5 day period $0.03 per share for gross proceeds of $770,141 and net proceeds (after issuance costs) of $691,336 24,289,716 October 7, 2021 Common stock issued pursuant to share purchase agreement at 92% VWAP over previous 3 day period $0.02 per share for gross proceeds of $1,182,004 and net proceeds (after issuance costs) of $1,170,788 49,000,000 October 14, 2021 Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 5 day period $0.02 per share for gross proceeds of $1,155,997 and net proceeds (after issuance costs) of $1,090,557 55,166,929 October 19, 2021 Exercise of warrants Cashless exercise of 52,985,075 warrants 50,000,000 October 25, 2021 Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 5 day period $0.03 per share for gross proceeds of $2,708,457 and net proceeds (after issuance costs) of $2,600,119 95,368,212 October 27, 2021 Exercise of warrants Cashless exercise of 47,014,925 warrants 44,770,776 November 11, 2021 Common stock issued pursuant to share purchase agreement at 92% VWAP over previous 3 day period $0.03 per share for gross proceeds of $1,358,600 and net proceeds (after issuance costs) of $1,345,014 50,000,000 November 24, 2021 Common stock issued pursuant to share purchase agreement at 92% VWAP over previous 3 day period $0.03 per share for gross proceeds of $1,016,515 and net proceeds (after issuance costs) of $1,006,349 51,400,000 January 3, 2022 Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period $0.01 per share for gross proceeds of $1,275,000 and net proceeds (after issuance costs) of $1,183,725 100,000,000 January 19, 2022 Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period $0.02 per share for gross proceeds of $1,697,110 and net proceeds (after issuance costs) of $1,577,312 100,000,000 February 8, 2022 Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period $0.01 per share for gross proceeds of $1,412,700 and net proceeds (after issuance costs) of $1,312,811 100,000,000 Number of shares outstanding February 28, 2022 4,733,110,360 __________ * Conversions occur at discounts ranging from 40-50% of average market price ** Shares adjusted for reverse stock splits: 100: 1 on August 24, 2018 and 10,000:1 on March 27, 2020 *** Total proceeds $600 **** Total proceeds $8,922 ***** At February 28, 2022 there were 2,100,000 issuable shares In connection with the foregoing, the Registrant relied upon the exemption from registration under the Securities Act of 1933, as amended and the rules and regulations of the Securities and Exchange Commission thereunder, in reliance upon Section 4(a)(2) thereof and Regulation D thereunder. - 22 - Penny Stock Regulations The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share. Our Common Stock falls within the definition of penny stock and therefore is subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 individually, or $300,000, together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. In addition, the broker-dealer must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell our Common Stock and may affect the ability of investors to sell their Common Stock in the secondary market. In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the investors’ ability to buy and sell our stock. Purchases of Equity Securities by the Registrant and Affiliated Purchasers We have not repurchased any shares of our common stock during the fiscal years ended February 28, 2022 or 2021. ITEM 6. SELECTED FINANCIAL DATA Not applicable. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes to those financial statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Forward-Looking Statements and Business sections in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. Overview AITX was incorporated in Florida on March 25, 2010. AITX reincorporated into Nevada on February 17, 2015. AITX’ fiscal year end is February 28 (February 29 during leap year). AITX is located at 10800 Galaxie Ave ,Ferndale Michigan , 48220, and our telephone number is 877-767-6268. - 23 - Results of Operations The following table shows our results of operations for the years ended February 28, 2022 and February 28, 2021. The historical results presented below are not necessarily indicative of the results that may be expected for any future period. Period Year Ended Year Ended Change February 28, 2022 February 28, 2021 Dollars Percentage Revenues $ 1,447,109 $ 360,888 $ 1,086,221 301% Gross profit 974,183 262,721 711,462 271% Operating expenses 14,346,069 3,257,590 11,088,479 340% Loss from operations (13,371,886 ) (2,994,869 ) (10,377,017 ) 346% Other income (expense), net (48,825,598 ) (2,904,042 ) (45,921,556 ) (1,581% ) Net loss $ (62,197,484 ) $ (5,898,911 ) $ (56,298,573 ) (954% ) The following table presents revenues from contracts with customers disaggregated by product/service: Year Ended Year Ended Change February 28, 2022 February 28, 2021 Dollars Percentage Device rental activities $ 592,401 $ 304,294 $ 288,107 95% Direct sales of goods and services 854,708 56,594 798,114 1,410% $ 1,447,109 $ 360,888 $ 1,086,221 301% Revenue Total revenue for the year ended February 28, 2022 was $1.447,109, which represented an increase of $1,086,221 compared to total revenue of $360,888 for the year ended February 28, 2021. This large increase in direct sales totaling $798,114 is a result of unit sales which includes sales of new units totaling $688,180 with the remaining increase a result in higher training revenue. Rental activities increased by 95% as the Company continues to grow its product line and customer base. Gross profit Total gross profit for the year ended February 28, 2022 was $974,183, which represented an increase of $711,462 compared to total gross profit of $262,721 for the year ended February 28, 2021. The increase is a result of the increase in revenues above , partially offset by the increase in the relatively lower margin direct sales. Operating expenses Operating expenses for the years ended February 28, 2022 and February 28, 2021 comprised of the following: Period Year Ended Year Ended Change February 28, 2022 February 28, 2021 Dollars Percentage Research and development $ 2,961,394 $ 378,236 $ 2,583,158 683% General and administrative 10,905,129 2,748,494 8,156,635 297% Depreciation and amortization 232,886 120,846 112,040 93% Operating lease cost and rent 275,785 9,461 266,324 2,815% (Gain) loss on disposal of fixed assets (29,125 ) 553 (29,678 ) (5,367% ) Operating expenses $ 14,346,069 $ 3,257,590 $ 11,088,479 340% Our operating expenses were comprised of general and administrative expenses, research and development, depreciation and amortization, and a (gain) loss on disposal of fixed assets. General and administrative expenses consisted primarily of professional services, automobile expenses, advertising, salaries and wages, travel expenses and rent. Our operating expenses during the years ended February 28, 2022 and February 28, 2021 were $14,346,069 and $3,257,590, respectively. The overall $11,088,479 increase in operating expenses was primarily attributable to the following increases in operating expenses of: - 24 - ● Research and development expenses increased by $2,583,158 which was due funding development of new products,(such as the ROAMEO, AVA , and TOM ) as well as upgrades of existing products. ● General and administrative expenses increased by $8,156,635 primarily due to the following increases: — Stock based compensation to CEO in equity awards was $2,048,850 fees with $109,200 paid to consultants all totaling $2,158,050 for the year ended February 28, 2022, compared with stock based compensation paid to lenders and consultants $362,084 for the prior year. This represents an increase of $1,795,966 in stock based compensation. — Professional fees increased by $757,466 due to increases in financial reporting of $171,384, increase in legal of $200,993 with the remaining increase due increases in regulatory, investor relations and consulting costs. — Wages, salaries and payroll levies increased by $2,578,216 as a result of the hiring of more staff to operate the new manufacturing facility. This is partially offset by a decrease in subcontractors of $200,381 due to employees now performing many of those tasks. Additionally, base compensation (including payroll levies) to the CEO increased by $33,620 with an addition bonus paid of $1,429,328. — Advertising and marketing costs increased by $131,157 as the Company began efforts to promote its products. — Supplies increased by approximately $104,953 through their use in new prototypes and designs. — Trade shows and travel increased by $325,937 as a result of promotional and business travel in fiscal 2022. In fiscal 2021 there were travel restrictions due to the Covid-19 pandemic, so the charges that year were minimal. — The remaining increases were distributed amongst other general and administrative accounts such a software costs, freight, office expenses, insurance , repairs and maintenance, and utilities amongst others. In general, these large increases in general and administrative expenses may be explained due to the large ramp up in costs this fiscal year to operate the new manufacturing facility and the hiring of 18 additional full-time employees. In addition, the expenses of the prior year’s corresponding period were also much lower due to the Covid 19 pandemic and the limited cash that was available at that time. ● Operating lease cost and rent increased by $266,324 due to the new operating lease for the new manufacturing facility. ● Depreciation and amortization increased by $112,040 due to the increase in revenue earning devices and the new vehicle in fixed assets. ● (Gain) loss on disposal of fixed assets increased by $29,678 due to a vehicle disposal in 2022 that yielded a gain. Other income (expense) Other income (expense) consisted of the change of fair value of derivative instruments interest expense and gain on settlement of debt. Other income (expense) during the years ended February 28, 2022 and February 28, 2021, was ($48,825,598) and ($2,904,042), respectively. The change in other income (expense) was due to the following: ● Change in fair value of derivative liabilities decreased by $391,811 due to the re-valuation of derivative liability on convertible notes based on the change in the market price of the Company’s common stock and the decrease in convertible notes payable through debt conversions to common stock and settlements. ● Interest expense increased by $12,749,666 due to an aggregate increase in short and long term debt of approximately $13 million in fiscal 2022. For the year ended February 28, 2022, interest expense related to the issuance of warrants for debt extensions was $5,415,000 (2021-$0) and amortization of debt discounts was $7,597,242 (2021-$201,567). ● Loss on settlement of debt increased by $32,780,079 due to the fiscal 2022 valuation of Series F shares and warrants given in exchange for an amendment to a deferred variable payment obligation disclosed in Note 7 that resulted in a loss of $33,015,215. The difference can be attributed to smaller gains and losses on other debt settlements. - 25 - The Company’s loss from operations for the year ended February 28, 2022 was $13,371,886, which represented an increase in loss of $10,377,017 compared to a loss of $2,994,869 for the year ended February 28, 2021. The higher revenues in 2022 were offset by significantly higher operating expenses for the reasons set out above. Note that the Company had a net loss of $62,197,484 for the year ended February 28, 2022 as compared to net loss of $5,898,911 for the year ended February 28, 2021. This change is mostly attributable to the loss on settlement of debt, increase in interest expense and an increase in general and administrative costs. Going Concern The accompanying consolidated financial statements have been prepared assuming that 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, 2022, the Company had negative cash flow from operating activities of $14,825,442. As of February 28, 2022 the Company has an accumulated deficit of $94,144,254 and working capital of $2,502,718. Management does not anticipate having positive cash flow from operations in the near future. These factors raise a substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements. The Company does not have the resources at this time to repay all its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business. Management has plans to address the Company’s financial situation as follows: The company began raising money through it’s S-3 this year and made improvements in paying off debt, investing in inventory and at February 28, 2022 had $4.6 million of cash on hard. Management is committed to raise either non-dilutive funds or minimally dilutive funds. There is no assurance that these funds will be able to be raised nor can we provide assurance that these possible raises may not have dilutive effects. The Company through to February 28, 2022 has raised approximately $12.5 million net of issuance costs through the sale of its common shares and $9.4 in proceeds from debt issuances. The Company plans to improve the trading market for its shares by uplisting the shares to the OTCQB during the next fiscal year. Capital Resources The following table summarizes total current assets, liabilities and working capital for the period indicated: February 28, 2022 February 28, 2021 Current assets $ 7,050,436 $ 1,207,033 Current liabilities (1) 4,547,718 4,410,710 Working capital $ 2,502,718 $ (3,203,677 ) __________ (1) As February 28, 2022 and February 28, 2021, current liabilities included approximately $7,587 and $444,666, respectively, of derivative liabilities that are expected to be settled in shares of the Company in accordance with the various conversion terms. As of February 28, 2022 and February 28, 2021, we had a cash balance of $4,648,146 and $1,044,418, respectively. - 26 - Summary of Cash Flows Year Ended February 28, 2022 Year Ended February 28, 2021 Net cash used in operating activities $ (14,825,442 ) $ (3,073,325 ) Net cash used in investing activities $ (129,200 ) $ (40,623 ) Net cash provided by financing activities $ 18,558,370 $ 4,145,059 Net cash used in operating activities for the year ended February 28, 2021 was $14,825,442, which included a net loss of $62,197,484, non-cash activity such as the change in fair value of derivative liabilities of ($372,214), gain on settlement of debt of $33,068,313, interest expense related to the issuance of warrants for debt extensions of $5,415,000, amortization of debt discount of $7,597,242, stock based payments of $2,158,050, gain on disposal of fixed assets ($29,125),revenue earning device sold and expensed in cost of sales $3,410,reduction in right of use asset $110,148, accretion of lease liability $122,930, increase in related party accrued payroll and interest $264,331, inventory provision of $65,000, bad debts expense $9,022, depreciation and amortization of $232,886 and change in operating assets and liabilities of ($1,272,951). Net cash used in investing activities. Net cash used in investing activities for the year ended February 28, 2022 was $129,200. This consisted primarily of the purchase of fixed assets and trademarks of $115,493 and $26,327, respectively, and cash paid for security deposit of $17,380 offset by proceeds of disposal of fixed assets of $30,000. Net cash provided by financing activities. Net cash provided by financing activities was $18,558,370 for the year ended February 28, 2022. This consisted of share proceeds net of issuance costs of $12,521,932,and proceeds from loans payable $9,426,146 offset by settlements of convertible notes of $65,000, dividend upon redemption of Series F preferred shares of $500,000, redemption of Series G preferred shares as payment for incentive plan $1,500,000, net repayments to loan payable – related party of $808,394 and repayments of loan payable $516,314. Off-Balance Sheet Arrangements We do not have any outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us. Significant Accounting Policies Use of Estimates In order to prepare financial statements in conformity with accounting principals generally accepted in the United States, management must make estimates , judgements and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any , are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value derivative liabilities. Revenue Earning Devices Revenue earning devices are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of 48 months. The Company continually evaluates revenue earning devices to determine whether events or changes in circumstances have occurred that may warrant revision of the estimated useful life or whether the devices should be evaluated for possible impairment. The Company uses a combination of the undiscounted cash flows and market approaches in assessing whether an asset has been impaired. The Company measures impairment losses based upon the amount by which the carrying amount of the asset exceeds the fair value. - 27 - Fixed Assets Fixed assets are stated at cost. Depreciation is provided on the straight-line method based on the estimated useful lives of the respective assets which range from three to five years. Major repairs or improvements are capitalized. Minor replacements and maintenance and repairs which do not improve or extend asset lives are expensed currently. Computer equipment 3 years Office equipment 4 years Warehouse equipment 5 years Demo Devices 4 years Vehicles 3 years Leasehold improvements 5 years, the life of the lease The Company periodically evaluates the fair value of fixed assets whenever events or changes in circumstances indicate that its carrying amounts may not be recoverable. Upon retirement or other disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is recognized in income. Research and Development Research and development costs are expensed in the period they are incurred in accordance with ASC 730, Research and Development unless they meet specific criteria related to technical, market and financial feasibility, as determined by Management, including but not limited to the establishment of a clearly defined future market for the product, and the availability of adequate resources to complete the project. If all criteria are met, the costs are deferred and amortized over the expected useful life or written off if a product is abandoned. At February 28, 2022 and February 28, 2021, the Company had no deferred development costs. Sales of Future Revenues The Company has entered into transactions, as more fully described in footnote 11, in which it has received funding from investors in exchange for which it will make payments to those investors based on the level of sales of certain revenue categories, generally based on a percentage of sales for those certain revenues. The Company determines whether these agreements constitute sales of future revenues or are in substance debt based on the facts and circumstances of each agreement, with the following primary criteria determinative of whether the agreement constitutes a sale of future revenues or debt: ● Does the agreement purport, in substance, to be a sale ● Does the Company have continuing involvement in the generation of cash flows due the investor ● Is the transaction cancellable by either party through payment of a lump sum or other transfer of assets ● Is the investors rate of return implicitly limited by the terms of the agreement ● Does the Company’s revenue for a reporting period underlying the agreement have only a minimal impact on the investor’s rate of return ● Does the investor have recourse relating to payments due In the event a transaction is determined to be a sale of future revenues, it is recorded as deferred revenue and amortized using the sum-of-the-revenue method. In the event a transaction is determined to be debt, it is recorded as debt and amortized using the effective interest method. As of the date of these financial statements, the Company has determined that all such agreements are debt. Revenue Recognition ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” , supersedes the revenue recognition requirements and industry specific guidance under Revenue Recognition (Topic 605) . Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. Topic 606 defines a five-step process that must be evaluated and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing accounting principles generally accepted in the United States of America (“U.S. GAAP”) including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company adopted Topic 606 on March 1, 2018, using the modified retrospective method. Under the modified retrospective method, prior period financial positions and results will not be adjusted. There was no cumulative effect adjustment recognized as a result of this adoption. While the Company does not expect fiscal year 2020 net earnings to be materially impacted by revenue recognition timing changes, Topic 606 requires certain changes to the presentation of revenues and related expenses beginning March 1, 2018. Refer to Note 3 – Revenue from Contracts with Customers for additional information. - 28 - Distinguishing Liabilities from Equity The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity , to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares. Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity. Our CEO and Chairman holds sufficient shares of the Company’s voting stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO and Chairman can at any time unilaterally vote to increase the number of authorized shares of common stock of the Company without the need to call a general meeting of common shareholders of the Company Initial Measurement The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received. Subsequent Measurement – Financial Instruments Classified as Liabilities The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other income (expenses). Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides a framework for measuring fair value in accordance with generally accepted accounting principles. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC Topic 820 are described as follows: ● Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. ● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3 – Inputs that are unobservable for the asset or liability. - 29 - Measured on a Recurring Basis The following table presents information about our liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fell: Fair Value Measurement Using Amount at Fair Value Level 1 Level 2 Level 3 February 28, 2022 Liabilities Incentive compensation plan payable- revaluation of equity awards payable in Series G shares $ 479,500 $ — $ — $ 479,500 Derivative liability – conversion features pursuant to convertible notes payable $ 7,587 $ — $ — $ 7,587 February 28, 2021 Liabilities Incentive compensation plan payable- revaluation of equity awards payable in Series G shares $ — $ — $ — $ — Derivative liability – conversion features pursuant to convertible notes payable $ 444,466 $ — $ — $ 444,466 See Note 12 for specific inputs used in determining fair value. The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and advances, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments. Earnings (Loss) per Share Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive. Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share. Recently Issued Accounting Pronouncements In September 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses . ASU 2016-13 was issued to provide more decision-useful information about the expected credit losses on financial instruments and changes the loss impairment methodology. ASU 2016-13 is effective for reporting periods beginning after December 15, 2019 using a modified retrospective adoption method. A prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The standard did not materially impact our consolidated net loss, accumulated deficit, and had no impact on cash flows. The Company has adopted this on March 1, 2020. - 30 -