What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-06-14 compared with 2022-05-27 · 255 added, 521 removed, 536 unchanged (59% of the section changed)

2 unchanged sentences

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.

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.

Fiscal Year Ended February 28, 2023:

8 unchanged sentences

Quarter ended May 31, 2021

On May 12, 2022, the closing price

per share of the Company’s common stock as quoted on the OTC was $0.0126.

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

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.

On April 3, 2022, the closing price per share of the

Company’s common stock as quoted on the OTC was $0.0057.

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.

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.

of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting.

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.

As of April 3, 2023, there were 84 holders of AITX’s

common stock of which 21 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.

The Company is authorized to issue 7.225,000,000 shares

of common stock, with a par value of $0.00001.

The closing price of its common stock on April 3, 2023, as quoted by OTC Markets Group,

Inc., was $0.0057.

There were 5,919,914,956 shares of common stock issued and outstanding as of April 3, 2023.

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, 2023 and February

28, 2022, 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.

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.

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.

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

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.

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.

On April 14, 2021 the Company adopted an Incentive

Stock Option 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.

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.

On August 11, 2022 the Company amended

the 2021 Plan increasing the maximum number of shares applicable to the 2021 Plan from 5,000,000 to 100,000,000.

On September 1, 2022, the Company as part of the afore-mentioned

Incentive Stock Option Plan issued 100,000,000 shares to 64 employees.

The shares were issued with an exercise price of $0.02, vest after

4 years with a 5 year term having a fair value of $1,020,000.

For the year ended February 28, 2023 the Company recorded $122,050 in stock-based

compensation.

At February 28, 2023 there remains 95,725,000 options outstanding.

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 at February 29, 2023.

Plan Category

13 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 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.

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 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;

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).

Series G Preferred Stock

The board of directors has designated

100,000 shares of 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.

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

The Transfer Agent for our capital stock is Transhare

with an address at 15500 Roosevelt Boulevard, Suite 302, Clearwater, Florida 33760.

Their telephone number is Office phone:

303-662-1112.

Recent Sales of Unregistered Securities

The following is a summary of

transactions by AITX involving sales of its securities that were not registered under the Securities Act.

The following is a summary of transactions by AITX

involving sales of its securities that were not registered under the Securities Act.

Transaction (*)

481 unchanged sentences

4,733,110,360

Consideration

Shares Issued

April 6, 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 $1,350,6500 and net proceeds (after issuance costs) of $1,255,104

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.01 per share for gross proceeds of $411,729 and net proceeds (after issuance costs) of $390,4761

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.01 per share for gross proceeds of $292,268 and net proceeds (after issuance costs) of $276,630

June 15, 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 $317,845 and net proceeds (after issuance costs) of $300,927

June 27, 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 $292,386 and net proceeds (after issuance costs) of $276,742

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.01 per share for gross proceeds of $221,755 and net proceeds (after issuance costs) of $209,643

July 11, 2022

Exercise of warrants

Cashless exercise of 8,250,000 warrants

July 19, 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 $163,167 and net proceeds (after issuance costs) of $153,983

July 21, 2022

Exercise of warrants

Cashless exercise of 53,128,210 warrants

August 12, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.009 per share for gross proceeds of $225,065 and net proceeds (after issuance costs) of $212,787

August 22, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.009 per share for gross proceeds of $225,065 and net proceeds (after issuance costs) of $212,787

August 30, 2022

Common stock issued pursuant to share purchase agreement at 92% VWAP over previous 3 day period

$0.009 per share for gross proceeds of $284,290 and net proceeds (after issuance costs) of $281,280

August 31, 2022

Cancellation of common stock

Pursuant to an SEC enforcement action against a lender

September 7, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.008 per share for gross proceeds of $167,289 and net proceeds (after issuance costs) of $157,900

September 19, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.008 per share for gross proceeds of $147,542 and net proceeds (after issuance costs) of $139,140

September 30, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 5 day period

$0.007 per share for gross proceeds of $103,152 and net proceeds (after issuance costs) of $96,969

October 12, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.006 per share for gross proceeds of $80,278 and net proceeds (after issuance costs) of $75,240

October 20, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.006 per share for gross proceeds of $94,361 and net proceeds (after issuance costs) of $88,618

October 31, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.005 per share for gross proceeds of $89,237 and net proceeds (after issuance costs) of $83,750

November 9, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.005 per share for gross proceeds of $72,964 and net proceeds (after issuance costs) of $68,291

Consideration

Shares Issued

November 17, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.005 per share for gross proceeds of $80,548 and net proceeds (after issuance costs) of $75,496

November 22, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.006 per share for gross proceeds of $354,770 and net proceeds (after issuance costs) of $336,007

December 7, 2022

Common stock issued pursuant to share purchase agreement at 92% VWAP over previous 3 day period

$0.008 per share for gross proceeds of $231,840 and net proceeds (after issuance costs) of $228,840

December 9, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.006 per share for gross proceeds of $207,058 and net proceeds (after issuance costs) of $195,680

December 20, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.005 per share for gross proceeds of $139,080 and net proceeds (after issuance costs) of $131,102

December 29, 2022

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.005 per share for gross proceeds of $135,832 and net proceeds (after issuance costs) of $128,016

January 9, 2023

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.004 per share for gross proceeds of $123,603 and net proceeds (after issuance costs) of $116,397

January 17, 2023

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.005 per share for gross proceeds of $118,338 and net proceeds (after issuance costs) of $111,397

January 20, 2023

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.005 per share for gross proceeds of $214,971 and net proceeds (after issuance costs) of $203,197

January 27, 2023

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.005 per share for gross proceeds of $303,216 and net proceeds (after issuance costs) of $287,030

February 6, 2023

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.007 per share for gross proceeds of $387,943 and net proceeds (after issuance costs) of $367,521

February 10, 2023

Exercise of warrants

Cashless exercise of 47,000,000 warrants

February 13, 2023

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.007 per share for gross proceeds of $652,837 and net proceeds (after issuance costs) of $619,170

February 22, 2023

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.006 per share for gross proceeds of $511,317 and net proceeds (after issuance costs) of 484,726

February 28, 2023

Common stock issued as penalty pursuant to share purchase agreement

Corresponding adjustment to paid in capital

February 28, 2023

Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period

$0.005 per share for gross proceeds of $253,832 and net proceeds (after issuance costs) of $240,115

Number of shares outstanding February 28, 2023*****

5,836,641,599

* Conversions occur at discounts ranging from 40-50% of average market

5 unchanged sentences

***** 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.

****** At February 28, 2023 there were 12,100,000 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.

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

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

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

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

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.

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

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.

We have not repurchased any shares of our common stock

during the fiscal years ended February 28, 2023 or 2022.

SELECTED FINANCIAL DATA

Not applicable.

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.

AITX was incorporated in Florida

on March 25, 2010.

AITX reincorporated into Nevada on February 17, 2015.

fiscal year end is February 28 (February 29 during

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

Results of Operations

The following table shows our

results of operations for the years ended February 28, 2022 and February 28, 2021.

The historical results presented below are not necessarily

indicative of the results that may be expected for any future period.

February 28, 2022

February 28, 2021

Operating expenses

Loss from operations

Other income (expense), net

The following table presents revenues

from contracts with customers disaggregated by product/service:

February 28, 2022

February 28, 2021

Device rental activities

Direct sales of goods and services

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.

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:

February 28, 2022

February 28, 2021

Research and development

General and administrative

Depreciation and amortization

Operating lease cost and rent

(Gain) loss on disposal of fixed assets

Operating expenses

Our operating expenses were comprised

of general and administrative expenses, research and development, depreciation and amortization, and a (gain) loss on disposal of

fixed assets.

General and administrative expenses consisted primarily of professional services, automobile expenses, advertising, salaries

and wages, travel expenses and rent.

Our operating expenses during the years ended February 28, 2022 and February 28, 2021 were $14,346,069

and $3,257,590, respectively.

The overall $11,088,479 increase in operating expenses was primarily attributable to the following increases

in operating expenses of:

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

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

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

This represents an increase of $1,795,966 in stock based compensation.

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

Wages, salaries and payroll levies increased by $2,578,216 as a result of the hiring of more staff to operate the new manufacturing facility.

This is partially offset by a decrease in subcontractors of $200,381 due to employees now performing many of those tasks.

Additionally, base compensation (including payroll levies) to the CEO increased by $33,620 with an addition bonus paid of $1,429,328.

Advertising and marketing costs increased by $131,157 as 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.

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

The higher revenues in 2022 were offset by significantly higher operating expenses for the reasons set out above.

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

Current liabilities (1)

Working capital

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.

Summary of Cash Flows

February 28, 2022

February 28, 2021

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

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

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

Depreciation is provided on a straight-line basis over the estimated useful life of 48 months.

The Company continually evaluates

revenue earning devices to determine whether events or changes in circumstances have occurred that may warrant revision of the estimated

useful life or whether the devices should be evaluated for possible impairment.

The Company uses a combination of the undiscounted cash

flows and market approaches in assessing whether an asset has been impaired.

The Company measures impairment losses based upon the amount

by which the carrying amount of the asset exceeds the fair value.

Fixed assets 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

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.

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

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.

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

GAAP”) including identifying performance obligations in the contract, estimating the amount of variable consideration

to include in the transaction price and allocating the transaction price to each separate performance obligation.

The Company adopted

Topic 606 on March 1, 2018, using the modified retrospective method.

Under the modified retrospective method, prior period financial positions

and results will not be adjusted.

There was no cumulative effect adjustment recognized as a result of this adoption.

While the Company

does not expect fiscal year 2020 net earnings to be materially impacted by revenue recognition timing changes, Topic 606 requires certain

changes to the presentation of revenues and related expenses beginning March 1, 2018.

Refer to Note 3 –

Revenue from Contracts with

Customers for additional information.

Distinguishing Liabilities from Equity

The Company relies on the guidance

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

The Company first determines whether a financial instrument should be classified as a liability.

The Company will determine the liability

classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies

a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.

Once the Company determines that

a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented

between the liability section and the equity section of the balance sheet (“temporary equity”).

The Company will determine

temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e.

at the option

of the holder).

Otherwise, the Company accounts for the financial instrument as permanent equity.

Our CEO and Chairman holds sufficient

shares of the Company’s voting stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company

such that the CEO and Chairman can at any time unilaterally vote to increase the number of authorized shares of common stock of the Company

without the need to call a general meeting of common shareholders of the Company

Initial Measurement

The Company records its financial

instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received.

Subsequent Measurement –

Financial Instruments

Classified as Liabilities

The Company records the fair value

of its financial instruments classified as liabilities at each subsequent measurement date.

The changes in fair value of its financial

instruments classified as liabilities are recorded as other income (expenses).

Fair Value of Financial Instruments

ASC Topic 820, Fair Value

Measurements and Disclosures (“ASC Topic 820”) provides a framework for measuring fair value in accordance with generally

accepted accounting principles.

ASC Topic 820 defines fair value

as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants

at the measurement date.

ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions

developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market

participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

The fair value hierarchy consists

of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities

(Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy under ASC Topic 820 are

described as follows:

Level 1 –

Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2 –

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 2 inputs include quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in markets that are not active;

inputs other than quoted prices that are observable for the asset or liability;

and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 –

Inputs that are unobservable for the asset or liability.

Measured on a Recurring Basis

The following table presents information

about our liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those

measurements fell:

Fair Value Measurement Using

February 28, 2022

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

Derivative liability –

conversion features pursuant to convertible notes payable

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

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.

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 5. Market for Registrant’s Common Equity