What changed in this filing

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Item 9A. Controls and Procedures

2023-06-14 compared with 2022-05-27 · 989 added, 933 removed, 1346 unchanged (59% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

As of February 28, 2022, we carried

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

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

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

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

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

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

regarding required disclosure.

As of February 28, 2023, we carried out an evaluation,

under the supervision and with the participation of our management, including our principal executive officer and principal financial

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

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

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

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

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

required disclosure.

Limitations on Systems of Controls

Our management, including our

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

controls will prevent all error or fraud.

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

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

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

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

Due to the inherent limitations

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

have been detected.

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

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

with generally accepted accounting principles.

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

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

Management’s Report on Internal Control over Financial Reporting

Our management is responsible

for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is defined

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

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

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

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

those policies and procedures that:

Our management, including our principal executive

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

all error or fraud.

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

that the objectives of the control system are met.

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

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

Due to the inherent limitations in all control systems,

no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

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

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

accepted accounting principles.

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

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

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and

maintaining adequate internal control over financial reporting.

Internal control over financial reporting is defined in Rule 13a-15(f)

or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s

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

to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external

purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures

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

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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

Because of its inherent limitations,

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

Projections of any evaluation of effectiveness to future

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

with the policies or procedures may deteriorate.

Because of its inherent limitations, internal control

over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of effectiveness to future periods are

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

or procedures may deteriorate.

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

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

and presentation.

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

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

However, these inherent limitations are known features of

the financial reporting process.

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

As of February 28, 2022, management

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

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

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

Based on that evaluation, they concluded that, during the

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

GAAP rules as more fully described below.

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

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

The matters involving internal controls and procedures that our management

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

Integrated Framework (2013) by the Committee

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

Therefore, even those

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

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

on a timely basis by internal control over financial reporting.

However, these inherent limitations are known features of the financial

reporting process.

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

As of February 28, 2023, management assessed the effectiveness

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

in Internal Control-Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission

and SEC guidance on conducting such assessments.

Based on that evaluation, they concluded that, during the period covered by this report,

such internal controls and procedures were not effective to detect the inappropriate application of U.S.

GAAP rules as more fully described

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

affected our internal controls and that may be considered to be material weaknesses.

The matters involving internal controls and procedures

that our management considered to be material weaknesses under the criteria established in Internal Control – Integrated Framework

(2013) by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) were:

lack of a functioning audit committee;

lack of a majority of independent

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

inadequate segregation of duties consistent with control

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

inadequate segregation of

duties consistent with control objectives;

management is dominated by a single individual;

use of the inappropriate methodology of allocating proceeds in certain debt

transactions and the expensing timing of the related debt discount;

use of inappropriate fair values in certain preferred stock issuances

and settlements.

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

our financial statements as of February 28, 2022.

Management believes that the material

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

However, management believes that the lack of a functioning

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

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

in future periods.

This report does not include an

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

Management’s report

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

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

use of the inappropriate methodology of allocating

proceeds in certain debt transactions and the expensing timing of the related debt discount;

use of inappropriate fair values in certain

preferred stock issuances and settlements.

The aforementioned material weaknesses were identified by our Chief Executive Officer in connection

with the review of our financial statements as of February 28, 2023.

Management believes that the material weaknesses set

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

However, management believes that the lack of a functioning audit committee

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

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

This report does not include an attestation report

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

Management’s report was not subject

to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit us

to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

No changes were made to our internal

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

affect, our internal control over financial reporting.

No changes were made to our internal control over

financial reporting during the year ended February 28, 2023 that have materially affected, or are reasonably likely to materially affect,

our internal control over financial reporting.

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE

The following table sets forth

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

Our directors serve for one year

and until their successors are elected and qualified.

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

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

The board of directors has no nominating,

auditing or compensation committees.

The following table sets forth the names, positions

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

Our directors serve for one year and until their successors

are elected and qualified.

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

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

The board of directors has no nominating, auditing or compensation

Steven Reinharz (1)

Chief Executive Officer, Chief Financial Officer, Secretary and Director

Chief Executive Officer, Secretary and Director (2)

Anthony Brenz

Chief Financial Officer

Director as of March 2, 2021

Biographical information concerning

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

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

Biographical information concerning our director and

executive officers listed above is set forth below.

Steven Reinharz .

was founded by Mr.

RAD was founded by

Reinharz in July of 2016, and he has been continuously employed by RAD and its affiliated companies since that time.

He is the holder of a majority of the capital stock of the Company.

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

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

As Chief Executive

Officer of the Company and President of RAD, Mr.

Reinharz leverages his extensive knowledge and interest in robotics and artificial intelligence

to design and develop robotic solutions that increase business efficiency and deliver immediate and impressive cost savings.

is an active voice in both the security and artificial intelligence industries.

He started and ran his own security integration company

from the age of 24 to 31, becoming one of California’s leading system integrators.

Reinharz later was part of a team that successfully

sold an integrator to a global security firm for $42 million and has held various other security industry roles.

Reinharz speaks and

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

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

through the Security Industry Association.

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

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

There are no family relationships

between any of the executive officers and directors.

During the past 10 years, Mr.

Parsons was not involved in any of the legal proceedings

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

There are no arrangements or understandings between Mr.

Parsons and any other person pursuant

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

He is the holder

of a majority of our capital stock.

Reinharz has served as a member of the Board of Directors since March 2, 2021 and as our Chief

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

as of April 26, 2021 upon Anthony Brenz’s appointment as our Chief Financial Officer.

As our Chief Executive Officer and President

Reinharz leverages his extensive knowledge and interest in robotics and artificial intelligence to design and develop robotic

solutions that increase business efficiency and deliver immediate and impressive cost savings.

Reinharz is an active voice in both

the security and artificial intelligence industries.

He started and ran his own security integration company from the age of 24 to 31,

becoming one of California’s leading system integrators.

Reinharz later was part of a team that successfully sold an integrator

to a global security firm for $42 million and has held various other security industry roles.

Reinharz speaks and contributes to panels

at ISC East and West, and ASIS.

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

Industry Association.

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

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

Anthony Brenz was appointed as our Chief

Financial Officer on April 26, 2021.

He is an accomplished senior financial and operational executive for over 20 years of experience

in finance and operations, including corporate strategy, procurement and supply chain, human resources, and customer service.

2018 to December 2020, Anthony Brenz was the Vice President/Director Finance of AirBoss Flexible Products Company.

From September 2014

to April 2018, he was the Chief Financial Officer/Vice President of Finance of Thomson Aerospace and Defense (a Parker Meggitt Company).

From August 2012 to September 2014, he was the Vice President/Director of Finance of M B Aeospace US Holdings, Inc.

Anthony Brenz received

a Bachelor of Accountancy from Walsh College in Troy Michigan in 1989 and has been licensed as a Certified Public Accountant in Michigan

There are no family relationships between any of the

executive officers and directors.

Board Committees and Director Independence

Reinharz serves as director,

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

functions of those committees are being undertaken by our directors.

Since we do not have any independent directors and have only

two directors, our directors believes that the establishment of committees of the Board would not provide any benefits to our company

and could be considered more form than substance.

We currently have an employee

director, Mr.

Reinharz, but no independent directors, as such term is defined in the listing standards of The NASDAQ Stock Market, and

we do not anticipate appointing additional directors in the near future.

Our directors are not “audit

committee financial experts”

Reinharz serves as director, and we do not have

a separately designated audit committee, compensation committee or nominating and corporate governance committee.

The functions of those

committees are being undertaken by our directors.

Since we do not have any independent directors and have only two directors, our

directors believes that the establishment of committees of the Board would not provide any benefits to our company and could be considered

more form than substance.

We currently have an employee director, Mr.

but no independent directors, as such term is defined in the listing standards of The NASDAQ Stock Market, and we do not anticipate appointing

additional directors in the near future.

Our directors are not “audit committee financial experts”

within the meaning of Item 401(e) of Regulation S-K.

As with most small, early stage companies, until

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

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

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

Committee of our Board of Directors.

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

committee financial expert.

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

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

Board of Directors include “independent”

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

committee of our Board of Directors.

As with most small, early stage companies, until such time that the Company further

develops its business, achieves a stronger revenue base and has sufficient working capital to purchase directors and officer’s insurance,

the Company does not have any immediate prospects to attract independent directors.

When the Company is able to expand our Board of Directors

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

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

Our securities are

not quoted on an exchange that has requirements that a majority of our Board members be independent, and the Company is not currently

otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent”

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

Procedures for Nominating Directors

There have been no material changes

to the procedures by which security holders may recommend nominees to the Board since the most recently completed fiscal quarter.

not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum

qualifications for director candidates, nor has our sole director established a process for identifying and evaluating director nominees.

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

the procedures to be followed.

Our sole director has not considered or adopted any of these policies, as we have never received a recommendation

from any stockholder for any candidate to serve on our Board of Directors.

Given our relative size and lack of directors and officers

insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future.

While there have been no nominations

of additional directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration

of director nominees.

There have been no material changes to the procedures

by which security holders may recommend nominees to the Board since the most recently completed fiscal quarter.

We do not have a policy

regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications

for director candidates, nor has our sole director established a process for identifying and evaluating director nominees.

adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures

to be followed.

Our sole director has not considered or adopted any of these policies, as we have never received a recommendation from

any stockholder for any candidate to serve on our Board of Directors.

Given our relative size and lack of directors and officers insurance

coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future.

While there have been no nominations of additional

directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration of director

Director Qualifications

Steve Reinharz is our sole

director and was appointed on March 2, 2021.

Steve Reinharz is our sole director and was appointed

on March 2, 2021.

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

Garett Parsons was appointed

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

Parsons had significant operational experience in our industry and brought

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

(see bio on page 33).

Code of Ethics and Business Conduct

We have adopted a code of ethics

meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002.

We believe our code of ethics is reasonably designed to deter

wrongdoing and promote honest and ethical conduct;

We have adopted a code of ethics meeting the requirements

of Section 406 of the Sarbanes-Oxley Act of 2002.

We believe our code of ethics is reasonably designed to deter wrongdoing and promote

honest and ethical conduct;

provide full, fair, accurate, timely, and understandable disclosure in public reports;

comply with applicable laws;

comply with applicable

ensure prompt internal reporting of violations;

and provide accountability for adherence to the provisions

of the code of ethics.

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

Director Compensation

Apart from a settlement paid upon

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

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

or any oher cash compensation for services rendered as a director during the years ended February 28, 2022 and February 28, 2021 to any

of the individuals serving on our Board during that period.

Apart from a settlement paid upon Mr.

Parsons resignation

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

We reimburse our directors for all reasonable

ordinary and necessary business-related expenses, but we did not pay any other director’s fees or any other cash compensation for

services rendered as a director during the years ended February 28, 2023 and February 28, 2022 to any of the individuals serving on our

Board during that period.

Compliance with Section 16(a) of the Securities

Exchange Act of 1934

Section 16(a) of the Exchange

Act requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity

securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning

their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively.

Executive officers, directors and

greater than 10% stockholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file.

on our review of the copies of such forms received by us, or written representations that no other reports were required, and to the best

of our knowledge, we believe that all of our officers, directors, and owners of 10% or more of our common stock filed all required Forms

Section 16(a) of the Exchange Act requires our executive

officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the

SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common

shares and other equity securities, on Forms 3, 4 and 5 respectively.

Executive officers, directors and greater than 10% stockholders

are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file.

Based on our review of the copies

of such forms received by us, or written representations that no other reports were required, and to the best of our knowledge, we believe

that all of our officers, directors, and owners of 10% or more of our common stock filed all required Forms 3, 4, and 5.

EXECUTIVE COMPENSATION

The following table summarizes

all compensation recorded by us in the past two fiscal years for Mr.

Reinharz , our President and Chief Executive Officer , Anthony Brenz,

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

The following table summarizes all compensation recorded

by us in the past two fiscal years for Mr.

Reinharz , our President and Chief Executive Officer , Anthony Brenz, our Chief Financial Officer

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

2023 AND 2022 SUMMARY COMPENSATION TABLE

4 unchanged sentences

Chief Executive Officer, Chief Financial Officer, Secretary (1)

Anthony Brenz, Chief Financial Officer (2)

Garett Parsons,

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

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

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

Anthony Brenz

Chief Financial Officer (1)

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

Employment Agreements

On March 1, 2021, Mr.

Parsons entered

into a consulting agreement with the Company whereby he would provide services for the Company for a three-year term.

The consulting agreement

sets his annual compensation as $96,000 for the first year, $108,000 for the second year, and $120,000 for the third year.

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

Parsons entered into a consulting

agreement with us whereby he would provide services for a three-year term.

The consulting agreement sets his annual compensation as $96,000

for the first year, $108,000 for the second year, and $120,000 for the third year.

On June 22, 2021, Mr.

Garett Parsons submitted his

resignation as our director effective as of June 22, 2021 as a result of personal reasons.

In connection with the resignation of Mr.

Parsons, the Company and Mr.

Parsons entered into a resignation letter agreement which

cancels the previous consulting agreement.

Pursuant to the terms of this letter, Mr.

Parsons will receive, among other things, a lump

sum payment equal to $265,700 which was paid in June 2021.This payment was a settlement as director of the company and not included as

executive compensation above.

Parsons entered into a resignation letter agreement which cancels the previous consulting agreement.

Pursuant to the terms

of this letter, Mr.

Parsons will receive, among other things, a lump sum payment equal to $265,700 which was paid in June 2021.This payment

was a settlement as director of the company and not included as executive compensation above.

On April 9, 2021 Mr.

entered into an employment agreement with the Company in connection with his service as Chief Executive Officer.

The agreement began on

April 9, 2021 and has a three-year term, renewable thereafter on an annual basis if neither party files a notice of termination 90 days

prior to the term renewal date.

The agreement provides for compensation of $240,000 base salary (to be reviewed annually by the Board

of Directors) and bonuses to be granted at the discretion of the Board of Directors.

In addition, the Company will grant stock options

Reinharz entered into an employment

agreement with the Company in connection with his service as Chief Executive Officer.

The agreement began on April 9, 2021 and has a three-year

term, renewable thereafter on an annual basis if neither party files a notice of termination 90 days prior to the term renewal date.

agreement provides for compensation of $240,000 base salary (to be reviewed annually by the Board of Directors) and bonuses to be granted

at the discretion of the Board of Directors.

In addition, the Company will grant stock options to Mr.

Reinharz under the following conditions:

Reinharz shall be granted an award of 10,000,000 million shares/options/warrants if Objective #1 is achieved.

Objective #1 :

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

trading period.

2 unchanged sentences

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

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

Reinharz shall be granted

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

Objective #2 :

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

For example, pursuant to a Company Stock Plan, if one is adopted, Mr.

1 unchanged sentence

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

On July 12, 2021 the Company and CEO amended the April

9, 2021 Employment Agreement effective July 1, 2021 whereby the following objectives and awards were added to the two existing ones:

On July 12, 2021 the Company and CEO amended the April 9, 2021 Employment

Agreement effective July 1, 2021 whereby the following objectives and awards were added to the two existing ones:

Objective #3 :

19 unchanged sentences

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

The fair value of the first two

awards was obtained through the use of the Monte Carlo method was $69,350 with a charge to stock- based compensation and a corresponding

charge to paid in capital.

The fair value of the remaining rewards was determined by calculating the vesting amounts of each reward and

then determining for each reporting period the requisite service rendered and applying that against the cash redemption value of the number

of shares of Series G issuable for each tier in the agreement.

For the period ended January 31, 2022 that amount totaled $1,979,500 with

a charge to stock-based compensation and a corresponding charge to incentive compensation plan payable.

With the achievement of objectives

3,4,5 and 8 of the equity awards described above the CEO was granted 1,500 Series G Preferred shares which were redeemed in the reporting

period for $1,500,000 in cash.

As part of the grant, the Company is responsible for grossing up the award value and has accrued additional

compensation for the estimated taxes to be paid by the executive.

On April 20,2021 an offer letter

was agreed with Anthony Brenz for a base salary of $180,000, a discretionary quarterly bonus and future participation in the Employee

Stock Option Plan.

Employment commenced on April 26, 2021 and Mr.

Brenz was appointed the Company’s Chief Financial Officer on June

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

The fair value of the first two awards was obtained

through the use of the Monte Carlo method was $69,350 with a charge to stock- based compensation and a corresponding charge to paid in

The fair value of the remaining rewards was determined by calculating the vesting amounts of each reward and then determining

for each reporting period the requisite service rendered and applying that against the cash redemption value of the number of shares of

Series G issuable for each tier in the agreement.

For the period ended February 28, 2023 that amount totaled $499,500 with a charge to

stock-based compensation and a corresponding charge to incentive compensation plan payable.

For the period ended February 28, 2022 that

amount totaled $1,979,500 with a charge to stock-based compensation and a corresponding charge to incentive compensation plan payable.

With the achievement of objectives 3,4,5 and 8 of the equity awards described above the CEO was granted 1,500 Series G Preferred shares

which were redeemed in the reporting period for $1,500,000 in cash.

As part of the grant, the Company is responsible for grossing up the

award value and has accrued additional compensation for the estimated taxes to be paid by the executive.

On April 20,2021 an offer letter was agreed with Anthony

Brenz for a base salary of $180,000, a discretionary quarterly bonus and future participation in the Employee Stock Option Plan.

commenced on April 26, 2021 and Mr.

Brenz was appointed the Company’s Chief Financial Officer on June 24, 2021.

The base salary

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

O utstanding Equity Awards at 2022 Fiscal Year-End

The following table provides information

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

Reinharz and Mr Brenz, our sole executive

officers outstanding as of February 28, 2022:

The following table provides information concerning

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

Reinharz and Mr Brenz, our sole executive officers

outstanding as of February 28, 2023:

OPTION AWARDS

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Steven Reinharz

April 9, 2024

Steven Reinharz

April 9, 2024

Anthony Brenz

On April 14, 2021, the Shareholders

of Series E Preferred Stock and the Board of Directors of our Company (“Board”) approved and adopted the 2021 Incentive Stock

Plan (the “2021 Plan”).

The purpose of the 2021 Plan is

to promote the success of the Company by authorizing incentive awards to retain Directors, executives, selected Employees and Consultants,

and reward participants for making major contributions to the success of the Company.

The 2021 Plan authorizes the granting of stock options,

restricted stock, restricted stock units, stock appreciation rights and stock awards.

A total of five million (5,000,000) shares of common

stock may be issued under the 2021 Plan.

On April 14, 2021, the Shareholders of Series E Preferred

Stock and the Board of Directors of our Company (“Board”) approved and adopted the 2021 Incentive Stock Plan (the “2021

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.

The purpose of the 2021 Plan is to promote the success

of the Company by authorizing incentive awards to retain Directors, executives, selected Employees and Consultants, and reward participants

for making major contributions to the success of the Company.

The 2021 Plan authorizes the granting of stock options, restricted stock,

restricted stock units, stock appreciation rights and stock awards.

A total of one hundred million (100,000,000) shares of common stock

may be issued under the 2021 Plan.

All awards under the 2021 Plan, whether vested or unvested, are subject to the terms of any recoupment,

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OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

At February 28, 2022, AITX had

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

The following table sets forth information regarding the beneficial ownership

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

At May 31, 2023, we had 6,117,570,789 shares of Common

Stock issued and outstanding.

The following table sets forth information regarding the beneficial ownership of our Common Stock as of

May 3, 2023, and reflects:

each of our executive officers;

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

Information on beneficial ownership

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

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

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

except as otherwise provided below.

Amount and Nature of Beneficial Ownership (1)

Information on beneficial ownership of securities

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

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

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

otherwise provided below.

Amount and Nature of

Beneficial Ownership (1)

Common Stock (2)

Named Executive Officers and Directors:

Steve Reinharz (4)

Steven Reinharz (3)

20,414,041,490

Garett Parsons (3)

Anthony Brenz

All executive officers and directors as a group (3 persons)

20,414,041,490

5% Stockholders:

Steve Reinharz (4)

5% Shareholders:

Steven Reinharz

20,414,041,490

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Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares.

Based on 3,545,772,882 shares of the Company’s common stock issued and outstanding as of May 11, 2022.

Parsons is a Company director and formerly the Company’s President, Chief Executive Officer and Chief Financial Officer and owns 1,000,000 shares of our Series E Preferred Stock and 184 shares of our Series F Preferred Stock.

Parsons converted the 184 shares of the Company’s Series F Preferred stock, he would receive 804,164,568 shares of the Company’s common stock, which is included in the chart above as if such conversion has occurred.

Further, 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 common stock.

As a result, the holders of Series E preferred stock has 2/3rds of the voting power of all shareholders at any time corporate action requires a vote of shareholders.

Steve Reinharz is a director and the Company’s Chief Executive Officer, Chief Financial Officer and Secretary as well as the CEO of RAD and is the holder of (i) 3,350,000 shares of our Series E Preferred Stock and, (ii) 2,450 shares of our Series F Convertible Preferred Stock.

Reinharz converted the 2,450 shares of the Company’s Series F Convertible Preferred Stock, he would receive 10,707,626,040 shares of the Company’s common stock, which is included in the chart above as if such conversion has occurred.

Based on 6,117,570,789 shares of the Company’s common stock issued and outstanding as of May 31, 2023.

Reinharz converted the 2,450 shares of the Company’s Series F Convertible Preferred Stock, he would receive 20,414,041,490 shares of the Company’s common stock, which is included in the chart above as if such conversion has occurred.

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AND DIRECTOR INDEPENDENCE

We do not have a written policy

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

When such transactions arise,

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

For the years ended February 28, 2022 and February 28, 2021, the Company

made net repayments of $803,394 and $693,049, respectively, to its loan payable-related party.

At February 28, 2022, the loan payable-related

party was $193,556 and $904,806 at February 29, 2020.

As of February 28, 2022, included in the balance due to the related party is $108,000

of deferred salary and interest, $90,000 of which bears interest at 12%.

At February 28, 2021 there was $883,710, with $642,000 bearing

interest at 12%.

We do not have a written policy for the review, approval

or ratification of transactions with related parties or conflicted transactions.

When such transactions arise, they are referred to our

board of directors for its consideration.

For the years ended February 28, 2023 and February

28, 2021, the Company made net repayments of $0 and $803,394, respectively, to its loan payable-related party.

At February 28, 2023,

the loan payable-related party was $206,516 and $193,556 at February 28, 2022.

As of February 28, 2023, included in the balance due to

the related party is $108,000 of deferred salary all of which bears interest at 12%.

At February 28, 2023 there was $108,000 of deferred

salary with $90,000 bearing interest at 12%.

The accrued interest included at February 28, 2023 was $15,660 (2022- $2,700).

Pursuant to the amended Employment Agreement with its Chief Executive Officer,

the Company issued 1,500 shares of Series G Preferred Shares which are redeemable at the Company’s option at $1,000 per share and

recorded $1,500,000 of stock based compensation.

During the year ended February 28, 2022, the Company redeemed these shares for $1,500,000

and accrued $479,500 as incentive compensation plan payable with a corresponding recognition of stock based compensation due to the expectation

of additional awards being met.

During the years ended February 28, 2022 and February 28, 2021, the Company

was charged $2,258,819 and $121,973, respectively in consulting fees for research and development to a company partially owned by a principal

During the year ended February 28, 2023 pursuant to

the amended Employment Agreement with its Chief Executive Officer the Company accrued $499,500 as incentive compensation plan payable

with a corresponding recognition of stock based compensation due to the expectation of additional awards being met.

At February 28, 2023,

the balance of incentive compensation plan payable was $979,000 (2022-$479,500).

This will be payable in Series G Preferred Shares which

are redeemable at the Company’s option at $1,000 per share.

During the year ended February 28, 2022, pursuant

to the amended Employment Agreement with its Chief Executive Officer, the Company issued 1,500 shares of Series G Preferred Shares which

are redeemable at the Company’s option at $1,000 per share and recorded $1,500,000 of stock based compensation.

The Company redeemed

these shares for $1,500,000 and accrued $479,500 as incentive compensation plan payable with a corresponding recognition of stock based

compensation due to the expectation of additional awards being met.

During the years ended February 28, 2023 and February

28, 2022, the Company was charged $3,578,981 and $2,258,819, respectively in consulting fees for research and development to a company

partially owned by a principal shareholder.

The principal shareholder received no compensation from this partially owned research and

development company and the fees were spent on core development projects.

PRINCIPAL ACCOUNTING FEES AND SERVICES

On October 31, 2019 the

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

LLC (“LJ Soldinger”) as the Company’s new independent registered public accounting firm..

The following table shows the

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

On October 31, 2019 the Board of Directors of the

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

as the Company’s new independent registered public accounting firm..

The following table shows the fees that were billed

for the audit and other services provided by LJ Soldinger for the fiscal years ended February 28, 2023 and 2022.

Audit-Related Fees

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All Other Fees

Audit Fees - This category

includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and

services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal

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

of interim financial statements.

Audit-Related Fees - This

category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to

the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.”

for the fees disclosed under this category would include consultation regarding correspondence with the SEC, other accounting consulting

and other audit services.

Tax Fees - This category

consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice.

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

All Other Fees - This category

consists of fees for other miscellaneous items.

As part of its responsibility

for oversight of the independent registered public accountants, the Board has established a pre-approval policy for engaging audit and

permitted non-audit services provided by our independent registered public accountants.

In accordance with this policy, each type of audit,

audit-related, tax and other permitted service to be provided by the independent auditors is specifically described and each such service,

together with a fee level or budgeted amount for such service, is pre-approved by the Board.

All of the services provided by LJ Soldinger

described above were approved by our Board.

The Company’s principal

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

Audit Fees - This category includes the

audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that

are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years.

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

financial statements.

Audit-Related Fees - This category consists

of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance

of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees

disclosed under this category would include consultation regarding correspondence with the SEC, other accounting consulting and other

audit services.

Tax Fees - This category consists of professional

services rendered by our independent registered public accounting firm for tax compliance and tax advice.

The services for the fees disclosed

under this category include tax return preparation and technical tax advice.

All Other Fees - This category consists

of fees for other miscellaneous items.

As part of its responsibility for oversight of the

independent registered public accountants, the Board has established a pre-approval policy for engaging audit and permitted non-audit

services provided by our independent registered public accountants.

In accordance with this policy, each type of audit, audit-related,

tax and other permitted service to be provided by the independent auditors is specifically described and each such service, together with

a fee level or budgeted amount for such service, is pre-approved by the Board.

All of the services provided by LJ Soldinger described

above were approved by our Board.

The Company’s principal accountant did not engage

any other persons or firms other than the principal accountant’s full-time, permanent employees.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements

The consolidated financial statements

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

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

The consolidated financial statements and Report of

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

F-1 and included on pages F-2 through F-36.

(2) Financial Statement Schedules

All schedules for which provision

is made in the applicable accounting regulations of the SEC are either not required under the related instructions, are not applicable

(and therefore have been omitted), or the required disclosures are contained in the financial statements included herein.

All schedules for which provision is made in the applicable

accounting regulations of the SEC are either not required under the related instructions, are not applicable (and therefore have been

omitted), or the required disclosures are contained in the financial statements included herein.

(3) Exhibits.

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Stock Purchase Agreement, dated August 28, 2017, by and among the registrant, Steve Reinharz and Robotic Assistance Devices Inc.

(incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the Commission on August 31, 2017).

Articles of Incorporation of the registrant filed with the Nevada Secretary of State on September 8, 2014.

(incorporated by reference to Exhibit 3.1 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

Plan and Agreement of Merger of Artificial Intelligence Technology Solutions Inc.

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(a Nevada corporation).

(incorporated by reference to Exhibit 3.2 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

Bylaws of the registrant (incorporated by reference to Exhibit 3.2 to the registrant’s registration statement on Form S-1 (File No.

(incorporated by reference to Exhibit 3.2 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

Bylaws of the registrant (incorporated by reference to Exhibit 3.2 to the registrant’s registration statement on Form S-1 (File No.

333-168530), filed with the Commission on August 4, 2010).

Certificate of Designations filed with the Nevada Secretary of State on February 8, 2017.

(incorporated by reference to Exhibit 3.4 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

Certificate of Designations filed with the Nevada Secretary of State on May 3, 2017.

(incorporated by reference to Exhibit 3.5 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

Amendment to Certificate of Designations filed with the Nevada Secretary of State on May 3, 2017 (incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed with the Commission on May 12, 2017).

(incorporated by reference to Exhibit 3.5 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

Preferred Stock Purchase Agreement dated January 31, 2017 and entered into between the Company and Capital Venture Holdings LLC.

(incorporated by reference to Exhibit 10.1 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

Code of Ethics (incorporated by reference to Exhibit 14.1 to the registrant’s registrant statement on Form S-1 (File No.

(incorporated by reference to Exhibit 10.1 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

Code of Ethics (incorporated by reference to Exhibit 14.1 to the registrant’s registrant statement on Form S-1 (File No.

333-168530), filed with the Commission on August 4, 2010).

List of Subsidiaries .

Consent of Independent Registered Public Accounting Firm .

Consent of Independent Registered Public Accounting Firm for Form S-3 (333-259260) .

Consent of Independent Registered Public Accounting Firm for Form S-1 (333-271031) .

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

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Insider Trading Policy .

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

Inline XBRL Instance Document –

the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

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

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Taxonomy Extension Schema Document *

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Filed or furnished herewith.

To be submitted by amendment.

Pursuant to the requirements of

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ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

June 14, 2023

/s/ Steven Reinharz

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President, Chief Executive Officer

June 14, 2023

/s/ Anthony Brenz

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

June 14, 2023

Steven Reinharz

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Chief Financial Officer (principal financial and accounting officer)

June 14, 2023

Anthony Brenz

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Consolidated Statements of Operations

Consolidated Statement of Stockholders’

Consolidated Statement of Stockholders’ Deficit

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

Index to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance

sheets of Artificial Intelligence Technology Solutions, Inc.

(the “Company”) as of February 28, 2022 and 2021, and the related

consolidated statements of operations, stockholders’

deficit, and cash flows for each of the years in the two years ended February

We have audited the accompanying consolidated balance sheets of Artificial

Intelligence Technology Solutions, Inc.

and subsidiaries (the “Company”) as of February 28, 2023 and 2022, and the related

consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two years ended February

28, 2023, and the related notes (collectively referred to as the financial statements).

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accepted in the United States of America.

Explanatory Paragraph –

Going Concern

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As more fully explained in Note 1, which includes management’s

plans in regards to this uncertainty, the Company had a net loss of approximately $62 million, an accumulated deficit of approximately

$94 million and stockholders’

deficit of approximately $21 million as of and for the year ended February 28, 2022, and therefore

there is substantial doubt about the ability of the Company to continue as a going concern.

The financial statements do not include any

adjustments that might result from the outcome of this uncertainty.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming

that the Company will continue as a going concern.

As more fully explained in Note 1, which includes management’s plans in regards

to this uncertainty, the Company had a net loss of approximately $18 million, an accumulated deficit of approximately $112 million and

stockholders’ deficit of approximately $32 million as of and for the year ended February 28, 2023, and therefore there is substantial

doubt about the ability of the Company to continue as a going concern.

Management’s plans in regard to these matters are described

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are

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As part of our audits, we are required to obtain an understanding of internal

control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting.

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Critical Audit Matters

The critical audit matters communicated below are

matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the

Audit Committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially

challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the

financial statements, taken as a whole, and we are not, by F-2 communicating the critical audit matters below, providing separate opinions

on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter Description –

Settlements, Amendments and Extensions

In the year ended February 28, 2022, the Company entered

into a number of agreements to settle outstanding notes payable and convertible notes payable and to amend debt provisions associated

with the sale of future revenues through the issuance of shares of its common stock and different classes of preferred stock.

at year end, the Company entered into three separate agreements to extend the maturity dates of several of its high dollar value notes

payable that were then near maturity.

Critical Audit Matter Determination

Debt settlements, amendments to the debt provisions

associated with the sales of future revenues and the extension of maturity dates can encompass significantly complex accounting issues.

It takes a high degree of training to understand and recognize the accounting implications of the various terms of the settlement agreements

in regards to notes payable and convertible notes, amendments to debt provisions associated with the sales of future revenues and the

agreements to extend the maturity dates of notes payables.

Critical Audit Matter Audit Procedures

Our audit procedures related to evaluating the Company’s

accounting for the settlements of convertible note payables and notes payable, the amendments to the debt associated with the sale of

future revenues and for the maturity extensions of the notes payable were as follows:

We read the various instruments, identified the features that impact the accounting for the settlements and extensions, including the grant of warrants as inducements to enter into the extension agreements.

We reviewed the assumptions, methods and models used to calculate the allocation of fair value of the instruments at time of settlement, amendment or extension.

We performed independent calculations on a test basis of specific instruments to evaluate the model used in calculating the settlement loss associated with the note payable and convertible note payable settlements, the amendments to debt provisions associated with the sales of future revenues and the interest expense associated with maturity extensions.

Critical Audit Matter Relevant Financial Statement

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

Critical Audit Matter Description –

As discussed in both Note 1 to the consolidated financial

statements and above, the Company has incurred significant losses since inception, and has an accumulated deficit of approximately $94

million and a stockholders’

deficit of $21 million as of February 28, 2022.

Critical Audit Matter Determination

The following items were considered in determining

that a going concern was a critical audit matter.

Significant losses and significant cash used in operations in the year end February 28, 2022

We also took into consideration the Company’s need to raise additional debt and equity financing over the next twelve months and the amounts raised as of the time of filing of its financial statements

Critical Audit Matter Audit Procedures

We reviewed the Company’s negative cash flows

from operations

We noted the limited working capital resources

We noted subsequent events and proceeds received from

the ongoing private placement offering as of the date of our opinion

We compared subsequent funding from the private placements

of notes completed as of the filing of these financial statements to the estimated cash flows required to continue operations for the

year subsequent to the date of our report.

Critical Audit Matter Relevant Financial Statement

We reviewed the completeness of the Company’s

Going Concern footnote and the details of the Company’s plans to continue operations for the next twelve months and management’s

disclosure as noted above that there is substantial doubt about the Company’s ability to continue as a going concern.

Critical audit matters are matters arising from the

current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that

(1) relate to accounts or disclosures that material to the financial statements and (2) involved our especially challenging, subjective,

or complex judgments.

We determined that there were no critical audit matters.

/s/ L J Soldinger Associates, LLC

Deer Park, Illinois

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

PCAOB Auditor ID:

June 14, 2023

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

PCAOB Audit ID:

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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Fixed assets, net of accumulated depreciation of $ 182,002 and $ 49,065 , respectively

Investment at cost

Security deposit

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Accounts payable and accrued expenses

Advances payable

Balance owed WeSecure

Advances payable- related party

Customer deposits

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Common Stock, $ 0.00001 par value;

5,000,000,000 shares authorized 4,735,210,360 and 3,229,426,884 shares issued and outstanding, respectively

7,225,000,000 shares authorized 5,848,741,599 and 4,735,210,360 shares issued, issuable and outstanding, respectively

Additional paid-in capital

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Accumulated deficit

( 112,253,711

Total stockholders' deficit

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these consolidated financial statements.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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Interest expense

Loss on settlement of debt

Gain (loss) on settlement of debt

Total other income (expense), net

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these consolidated financial statements.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED FEBRUARY 28, 2023 AND FEBRUARY

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Balance at February 28, 2021

Contributed capital

Adjustment to derivative liability

Common stock issued for debt conversion

3,229,426,884

Exercise of warrants

Common shares and warrants issued with promissory notes

Class F shares issued for services

Cancellation of Series F Preferred Shares

Issuance of Series F shares as part of debt settlement

Warrants issued as part of debt settlement

Rounding shares

Balance at February 28, 2021

3,229,426,884

Preferred Stock

Shareholders'

Balance at February 28, 2021

3,229,426,884

Cancellation of Series E Shares

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4,735,210,360

Index to Financial Statements

Preferred Stock

Shareholders'

Balance at February 28, 2022

4,735,210,360

Issuance of shares net of $ 447,858 issuance costs

1,057,841,576

Cashless exercise of 108,378,210 warrants

Penalty shares issued pursuant to a share purchase agreement

Relative fair value of Series F warrants issued with debt

Relative fair value of warrants issued with debt

Fair value of 955,000,000 warrants cancelled for debt issuance

Shares issued for services

Cancelled shares

Stock based compensation - employee stock option plan

Balance at February 28, 2023

5,848,741,599

( 112,253,711

The accompanying notes are an integral part of

these consolidated financial statements.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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Purchase of fixed assets

Purchase of investment

Acquisition of trademarks

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Repayment of convertible debt

Proceeds from deferred variable payment obligation

Proceeds from loans payable

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Dividend upon redemption of cancelled issuable Series F shares

Cash acquired on consolidation of RAD G

Net borrowings(repayments) on loan payable - related party

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Transfer from device parts inventory to fixed assets

Net assets on consolidation of RAD G

Conversion of convertible notes and interest to shares of common stock

Release of derivative liability on conversion of convertible notes payable

Debt discount from derivative liabilities

Derivative debt discount on revaluation of loan amendment

Settlement and exchange of convertible notes payable

Exchange of notes payable for Series F preferred shares

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Warrants issued as part of debt issuance

Exchange of warrants for debt

Refund on abandoned trademarks

Penalty shares pursuant to a share purchase agreement

Exercise of warrants

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Series F preferred shares issued on exercise of warrants

Opening balance sheet RAD G

The accompanying notes are an integral part of

these consolidated financial statements.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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Artificial Intelligence Technology Solutions Inc.

(formerly known as On the Move Systems Corp.) (“AITX”

or the “Company”) was incorporated in Florida on March 25,

(formerly known as On the Move Systems Corp.) (“AITX” or the “Company”) was incorporated in Florida on March 25,

2010 and reincorporated in Nevada on February 17, 2015.

On August 24, 2018, Artificial Intelligence Technology Solutions Inc., changed

its name from On the Move Systems Corp (“OMVS”).

Robotic Assistance Devices, LLC (“RAD”),

its name from On the Move Systems Corp (“OMVS”).

Robotic Assistance Devices, LLC (“RAD”),

was incorporated in the State of Nevada on July 26, 2016 as a LLC.

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On August 28, 2017, AITX completed the acquisition

of RAD (the “Acquisition”), whereby AITX acquired all the ownership and equity interest in RAD for 3,350,000 shares of AITX

Series E Preferred Stock and 2,450 shares of Series F Convertible Preferred Stock.

AITX’s prior business focus was transportation

services, and AITX was exploring the on-demand logistics market by developing a network of logistics partnerships.

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stock of RAD.

As a result, AITX’s business going forward will consist of one segment activity which is the delivery of artificial

intelligence and robotic solutions for operational, security and monitoring needs.

The Acquisition was treated as a reverse recapitalization

effected by a share exchange for financial accounting and reporting purposes since substantially all of AITX’s operations were disposed

of as part of the consummation of the transaction.

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As of February 28, 2023 the Company has an accumulated deficit of $ 112,253,711

and working capital of $2,502,718.

and negative working capital of $ 12,610,601 .

Management does not anticipate having positive cash flow from operations in the near future.

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.

These factors raise 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

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Without additional capital, the Company will not be able to remain in business.

Management has plans to address the Company’s

financial situation as follows:

The company began raising money through it’s

S-3 this year and made improvements in paying off debt, investing in inventory and at February 28, 2022 had $4.6 million of cash on hard.

Management is committed to raise either non-dilutive funds or minimally dilutive funds.

There is no assurance that these funds will be

able to be raised nor can we provide assurance that these possible raises may not have dilutive effects.

The Company through to February

28, 2022 has raised approximately $12.5 million net of issuance costs through the sale of its common shares and approximately $9.4 million

in proceeds from debt issuances.

At the same time management points to its successful

history with maintaining Company operations and reminds all with reasonable confidence this will continue.

Management has plans

to address the Company’s financial situation as follows:

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.

In March 2023, the Company entered into an equity financing agreement whereby an

investor will purchase up to $ 30,000,000 of the Company’s common stock at a discount over a two-year period.

and April the Company reduced personnel that were working on far-future solutions as well as other department reductions.

Combined with

other cost cutting measures management estimates it reduced the monthly expense burn by $ 200,000 - $ 300,000 with little impact on short

and medium term operations.

Management believes that it has the necessary support to continue operations by continuing its funding methods

in the following ways :

growing revenues ,equity proceeds and non-convertible debt.

Management has had many recent conversations with

the Company’s primary debt holder and believes that the non-convertible debt on the balance sheet will be extended.

Management notes

that non-convertible debt on the books has been extended by this debt holder twice in the past and notes that this debt holder has been

a strong supporter of the Company.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

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The accompanying financial statements have been prepared

in accordance with generally accepted accounting principles in the United States (“GAAP”) and in conformity with the instructions

on Form 10-K of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”).

in accordance with generally accepted accounting principles in the United States (“GAAP”) and in conformity with the instructions

on Form 10-K of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”).

audited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Robotic Assistance Devices,

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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

The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently

anticipated by management and on which the financial statements are based.

The most significant estimates included in these consolidated

financial statements are those associated with the assumptions used to value equity instruments used in debt settlements, amendments and

Reclassifications

Certain amounts in the Company’s consolidated

financial statements for prior periods have been reclassified to conform to the current period presentation.

These reclassifications have

not changed the results of operations of prior periods.

In order to prepare financial statements in conformity

with accounting principals generally accepted in the United States, management must make estimates , judgements and assumptions that affect

the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any, are disclosed in the

financial statements.

The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution

currently anticipated by management and on which the financial statements are based.

The most significant estimates included in these

consolidated financial statements are those associated with the assumptions used to value equity instruments used in debt settlements,

amendments and extensions.

Concentrations

Loans payable

At February 28, 2023 there were $ 31,254,345 of loans

payable, $ 26,540,506 or 85 % of these loans to companies controlled by one individual.

At February 28, 2022 there were $ 26,233,598 of

loans payable $ 21,709,459 or 83 % of these loans to companies controlled by the same individual.

The Company considers all highly liquid investments

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as of February 28, 2023 and February 28, 2022, respectively.

For the year ended February 28, 2022 , three customers account for 63% of

total accounts receivable (2021- 68%).

For the year ended February 28, 2023 , two customers account for 48 % of total

accounts receivable .

For the year ended February 28, 2022 , three customers account for 63 % of total accounts receivable.

Device Parts Inventory

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reserve of $ 195,000 and $ 65,000 , respectively.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Revenue Earning Devices

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of the asset exceeds the fair value.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Fixed assets are stated at cost.

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Computer equipment

Furniture and fixtures

Office equipment

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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.

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, 2023 and February

28, 2022, the Company had no deferred development costs.

Contingencies

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If these estimates and assumptions

change or prove to be incorrect, it could have a material impact on the Company’s consolidated financial statements.

Contingencies

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of each agreement, with the following primary criteria determinative of whether the agreement constitutes a sale of future revenues or

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

Does the investor have recourse relating to payments due

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the Company has determined that all such agreements are debt.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition

ASU 2014-09, “Revenue from Contracts with

Customers (Topic 606)”

, supersedes the revenue recognition requirements and industry specific guidance under Revenue Recognition

(Topic 605) .

Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount

that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.

Topic 606 defines a five-step

process that must be evaluated and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition

process than required under existing accounting principles generally accepted in the United States of America (“U.S.

including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction

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

For the year ended February 28, 2022 , two customers

accounted for 43% of total revenue (2021- 49%).

ASU 2014-09, “Revenue from Contracts

with Customers (Topic 606)” , supersedes the revenue recognition requirements and industry specific guidance under Revenue

Recognition (Topic 605) .

Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers

in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.

Topic 606 defines

a five-step process that must be evaluated and, in doing so, it is possible more judgment and estimates may be required within the revenue

recognition process than required under existing accounting principles generally accepted in the United States of America (“U.S.

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

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

For the year ended February 28,

2023 , two customers accounted for 45 % of total revenue (2022- 43 %).

Income taxes are accounted for under the asset and

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liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax

Act”) was signed into law.

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax

Act”) was signed into law.

ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws

and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation

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

A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act

will result in reductions to the Company’s net operating loss carryforward and valuation allowance.

The Company will continue to

analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s

fiscal year ending February 28, 2022, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated

analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s

fiscal year ending February 28, 2023, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated

financial statements.

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fair value of the underlying asset.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

If at its inception, a lease meets any of the four

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and actual rental payments is recorded as deferred rent and included in liabilities.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Distinguishing Liabilities from Equity

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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

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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

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

Subsequent Measurement –

Financial Instruments

Subsequent Measurement – Financial Instruments

Classified as Liabilities

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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.

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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).

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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.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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;

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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.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Level 3 – Inputs that are unobservable for the asset or liability.

Measured on a Recurring Basis

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

Derivative liability –

conversion features pursuant to convertible notes payable

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

See Note 12 for specific inputs used in determining

fair value for derivative liability.

The carrying amounts of the Company’s financial

Derivative liability – conversion features pursuant to convertible notes payable

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

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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

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conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Recently Issued Accounting Pronouncements

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The Company adopted the new guidance effective February

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

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

In January 2020,

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effective February 1, 2021.

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

In August 2020,

the FASB issued amended guidance on the accounting for convertible instruments and contracts in an entity’s own equity.

removes the separation model for convertible debt instruments and preferred stock, amends requirements for conversion options to be classified

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We are currently assessing the effect that the adoption of this standard will have

on the Company’s consolidated financial statements upon adoption.

Issued Accounting Standards Not Yet Adopted

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Early adoption is permitted on a retrospective basis to the beginning of the fiscal year of

The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements for prior

acquisitions;

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business combinations.

In November 2021, the FASB

issued new guidance to increase the transparency of transactions with a government that are accounted for by applying a grant or contribution

accounting model by analogy.

The guidance requires annual disclosures of such transactions to include the nature of the transactions and

the significant terms and conditions, the accounting treatment and the impact to the company’s financial statements.

is effective for annual periods beginning in 2022 and is to be applied on either a prospective or retrospective basis.

The Company is

currently evaluating the impact of adoption on its consolidated financial statements.

REVENUE FROM CONTRACTS WITH CUSTOMERS

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As disclosed in the revenue recognition section of

Note 2 –

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

Note 2 – Accounting Polices, the Company adopted Topic 606 in accordance with the effective date on March 1, 2018.

Note 2 includes

disclosures regarding the Company’s method of adoption and the impact on the Company’s financial statements.

Revenue is recognized

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the entity expects to be entitled to in exchange for those goods or services.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Upon adoption of Topic 842, also referred to above

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

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table presents revenues from contracts

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Direct sales of goods and services

NOTE 4 –

We lease certain warehouses, and office space.

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for both the twelve months ended February 28, 2023 and February 28, 2022, respectively.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

On December 23, 2022 the Company entered into a Simple

Agreement for Future Equity (SAFE) contract to invest $ 50,000 to acquire shares of a company’s capital stock at a discount.

REVENUE EARNING ROBOTS

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During the year ended February 28, 2023, the Company

made total additions to revenue earning devices of $647,116 including $647,116 in inventory transfers During the year ended February 28,

2021, the Company made total additions to revenue earning devices of $137,914 which were transfers from inventory.

made total additions to revenue earning devices of $ 871,334 which was transferred from inventory.

During the year ended February 28, 2022,

the Company made total additions to revenue earning devices of $ 647,116 including $ 647,116 in inventory transfers.

During the year ended

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and $ 208,510 for the years ended February 28, 2023 and February 28, 2022, respectively.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Fixed assets consisted of the following:

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February 28, 2022

Machinery and equipment

Computer equipment

Office equipment

Furniture and fixtures

Warehouse equipment

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During the year ended February 28, 2023, the Company

made additions to fixed assets of $ 258,402 and also additions through inventory transfers of $ 52,471 .

During the year ended February 28, 2022, the Company

made additions to fixed assets of $ 115,493 , additions through inventory transfers of $ 12,868 and the Company sold a vehicle having a net

book value of $ 875 for fair value proceeds of $ 30,000 and recorded a gain on disposal of fixed assets of $ 29,125 .

During the year ended February 28, 2021, the Company

made additions to fixed assets of $37,764 and the Company disposed of office equipment having a net book value of $1,553 for proceeds

of $1,000 and recorded a loss on disposal of $553.

Depreciation expense was $24,376 and $17,475 for the

years ended February 28, 2022 and February 28, 2021, respectively.

Depreciation expense was $ 132,937 and $ 24,376 for

the years ended February 28, 2023 and February 28, 2022, respectively.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DEFERRED VARIABLE PAYMENT OBLIGATION

On February 1, 2019 the Company entered into an agreement

with an investor whereby the investor would pay up to $900,000 in exchange for a perpetual 9% rate payment (Payments) on the Company’s

with an investor whereby the investor would pay up to $ 900,000 in exchange for a perpetual 9 % rate payment (Payments) on the Company’s

reported quarterly revenue from operations excluding any gains or losses from financial instruments (Revenues).

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arrangements with two investors:

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

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

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

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

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

At February 29, 2020, $ 50,000 has been paid to the Company.

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30 days after the end of each fiscal quarter.

If the Payments would deplete RAD’s available cash by more than 30%, the Payments

may be deferred for up to 12 months after the quarterly report at an interest rate of 6% per annum on the unpaid amount.

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similar arrangement with the (February 1, 2019) investor above whereby the investor would advance up to $ 225,000 in exchange for a perpetual

2.25% rate Payment on the Company’s quarterly Revenues (commencing on quarter ending May 31, 2020).

2.25 % rate Payment on the Company’s quarterly Revenues (commencing on quarter ending May 31, 2020).

At February 29, 2020 the investor

has advanced $ 109,000 and the investor advanced the $ 116,000 remainder as of May 2020.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

On December 30, 2019 the Company entered into another

similar arrangement with a new investor whereby the investor would advance up to $ 100,000 in exchange for a perpetual 1.00 % rate Payment

on the Company’s quarterly Revenues (commencing quarter ended November 30, 2020).

At February 29, 2020 the investor has advanced

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similar arrangement with the (first May 9, 2019) investor above whereby the investor would advance up to $ 100,000 in exchange for

a perpetual 1.00% rate Payment on the Company’s quarterly Revenues.

a perpetual 1.00 % rate Payment on the Company’s quarterly Revenues.

At May 31, 2020 the investor has fully funded this commitment.

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agreement with the first investor whereby the investor would pay up to $ 800,000 in exchange for a perpetual 2.75 % rate payment (Payment)

on the Company’s reported quarterly revenue.

These Payments are to be made 90 days after the fiscal quarter with the first payment

being due no later than May 31, 2021.

If the Payments would deplete RAD’s available cash by more than 20%, the payment may be deferred.

The investor had agreed to pay $100,000 per month over an 8 month period with the first payment due July 2020 and the final payment no

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financing on the products the Company leases to its customers.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In summary of all agreements mentioned above if in

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2019 (unless otherwise indicated) based on the quarterly Revenues for the quarter ended May 31, 2019 and will accrue every quarter thereafter.

As of February 28, 2022, the Company has accrued approximately $325,600 in Payments (February 28, 2021 -$91,587).

As of February 28, 2023, the Company has accrued approximately $542,1777 in Payments, of which $325,600 is in arrears.

As of February

28, 2022, the Company has accrued approximately $325,600 in Payments, of which $90,300 is in arrears.

No notices have been received by

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

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long-term balances other than Payments already owed is the cash received of $ 2,525,000 and $ 2,525,000 , respectively.

For the year ended February 28, 2022, the Company

has received $0 related to the deferred payment obligation as the balance remains $2,525,000 at February 28, 2022.

For the year ended

February 28, 2021, $966,000 has been paid to the Company bringing the balance to $2,525,000 at February 28, 2021.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For both the years ended February 28, 2023 and February

28, 2022, the Company has received $ 0 related to the deferred payment obligation as the balance remains $ 2,525,000 at both February 28,

2023 and February 28, 2022.

CONVERTIBLE NOTES PAYABLE

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July 18, 2017 *

December 31, 2016

December 31, 2020

January 19, 2021

January 19, 2022

January 27,2021

January 27, 2022

August 9, 2022

August 9, 2023

current portion of convertible notes payable

4 unchanged sentences

Current portion of convertible notes payable, net of discount

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

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

This note was in default as of February 28, 2022.

Default interest rate 22%

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

The conversion price is not subject to adjustment from forward or reverse stock splits.

The per share conversion price into which Principal Amount and interest (including any Default Interest) under this Note shall be convertible into shares of Common Stock hereunder (the “Conversion Price”) shall be equal to $0.10 per share (the “Fixed Conversion Price”);

provided, however, that if, the lowest traded price on the date six (6) months from the issue date hereof is below the Fixed Conversion Price, and no default exists, the conversion shall be $0.05 (the “Alternative Fixed Conversion Price”) provided, further , that upon any Event of Default (as defined herein) after the Issue Date, the Conversion Price shall equal the lower of (i) $0.03 (the “Default Fixed Conversion Price”);

or (ii) seventy percent (70%) multiplied by the lowest closing price of the Common Stock during the fifteen (15) consecutive Trading Day period immediately preceding the date of the respective event of default (the “Default Conversion Price”);

the Company amended this agreement with the lender whereby the conversion rate was changed from $0.10 to $0.03 as a result of a dilutive issuance.

This resulted an additional derivative discount of $438,835 and a loss on extinguishment of $360,125.

The conversion price was not subject to adjustment from forward or reverse stock splits.

Effective in August 2022 this note (and accrued interest) was no longer convertible.

Subject to adjustment for dilutive issuances

During the years ended February 28, 2023 and February

28, 2021, the Company incurred original issue discounts of $0 and $77,500, respectively, and debt discounts from derivative liabilities

of $438,835 and $143,133, respectively, related to both new and re-valued convertible notes payable.

These amounts are included in discounts

on convertible notes payable and are being amortized to interest expense over the life of the convertible notes payable.

During the years

ended February 28, 2022 and February 28, 2021, the Company recognized interest expense related to the amortization of debt discount of

$$775,986 and $190,197, respectively.

The Company recorded penalty interest of $0 during the year ended February 28, 2022 and $939,705

during the year ended February 28, 2021 that is payable upon maturity if not already converted or settled prior to maturity.

28, 2022, the Company incurred original issue discounts of $ 75,000 and $ 0 , respectively, and debt discounts (and relative fair value debt

discounts) from derivative liabilities of $ $ 393,949 and $ 438,835 , respectively, related to both new and re-valued convertible notes payable.

These amounts are included in discounts on convertible notes payable and are being amortized to interest expense over the life of the

convertible notes payable.

During the years ended February 28, 2023 and February 28, 2022, the Company recognized interest expense related

to the amortization of debt discount of $ 524,699 and $ 775,986 , respectively.

All the notes above are unsecured.

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convertible notes issued during the years ended February 28, 2022 and February 28, 2021.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Convertible notes issued

During the year ended February 28, 2023, the Company

had the following convertible note activity:

The Company transferred the above July 18, 2016 $3,500 note to loans payable as the note was no longer convertible.

This was a result of an SEC action against the debt holder who was also a common stockholder.

On August 9, 2022 the Company entered into a new convertible note for $750,000 with a one year

maturity, interest rate of 12%, with a warrant (Warrant 1) to purchase 47,000,000 common shares with a five year maturity and an

exercise price of $0.01, and an additional warrant (Warrant 2) to purchase 47,000,000 common shares with a five

year maturity and an exercise price of $0.008 to be cancelled and extinguished if the note balance is $375,000 or less by

The Company received $619,250 in cash proceeds, recorded an original issue discount of $75,000, recognized

$393,949 based on a relative fair value calculation as debt discount with a corresponding adjustment to paid-in capital for the

attached warrants, and transaction fees of $55,750.

The discount is amortized over the term of the loan.

This note and related

accrued interest have been fully repaid at February 28, 2023.

The Company determined that the embedded conversion

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

During the year ended February 28, 2021, the Company

had the following convertible note activity:

The Company entered into a convertible note agreement with a lender on January 27, 2021 with a principal amount of $550,000 received cash proceeds of $463,500 with an original issue discount of $50,000 and issuance fees of $36,500.

The note has a one year maturity and bears interest at 10%.

The note was issued with a warrant to purchase 8,250,000 shares at an exercise price of $0.10 per share with a 3 year term and having a fair value of $1,149,225 using Black-Scholes with assumptions described in note 13 and 5,000,000 common shares having a fair value of 697,000.

After allocating these charges to debt and equity according to their respective values , the initial debt balance net of a debt discount was $70,377 and the adjustment to paid in capital was $310,961.The discounts are being amortized over the term of the loan.

In addition for the year ended February 28, 2021, the Company recorded a derivative discount on the embedded conversion feature of $82,162, , amortization expense of $12,401 with an unamortized discount of $467,222 at February 28, 2021.

The Company entered into a convertible note agreement with a lender on January 19, 2021 with a principal amount of $275,000 received cash proceeds of $229,150 with an original issue discount of $27,500, and issuance fees of $18,350.

The note has a one year maturity and bears interest at 12%.

The note was issued with a warrant to purchase 11,000,000 shares at an exercise price of $0.045per share with a 3 year term and having a fair value of $594,000 using Black-Scholes with assumptions described in note 13.

The discounts are being amortized over the term of the loan.

After allocating these charges to debt and equity according to their respective values , the initial debt balance net of a debt discount was $40,191 and the adjustment to paid in capital of $127,988.

Also, for the year ended February 28, 2021, the Company recorded a derivative discount on the embedded conversion feature of $60,971, amortization expense of $8,255 with an unamortized discount of $226,554 at February 28, 2021.

The Company recorded $939,705 in penalties as increases on various notes, with a corresponding charge to interest.

Holders of certain convertible notes payable elected to convert a total of $2,420,559 of principal and $1,148,127 accrued interest, into 2,329,798,068 shares of common stock.

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

The Company entered into various debt settlement during the year where they settled principal of $556,664 and interest of $260,514 totaling $817,718 for cash payments totaling $770,813.

The Company entered into various debt settlement during the year where they exchanged principal of $4,671,030 and interest of $3,042,613 totaling $7,713,643 in exchange for new promissory notes totaling $7,713 ,643 bearing interest at 12% and with three year maturities.

In addition as part of the debt exchange the Company issued 805,000,000 warrants with a 3 year term and an exercise price of $0.002 having a fair value using black-scholes of $1,898,500 and 55 Series F Preferred Stock having a fair value of $1,151,166.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

6 unchanged sentences

As of February 28, 2023, included in the balance due to

the related party is $108,000 of deferred salary and interest, $90,000 of which bears interest at 12%.

At February 28, 2021 there was

$883,710, with $642,000 bearing interest at 12%.

the related party is $ 108,000 of deferred salary all of which bears interest at 12 %.

At February 28, 2023 there was $ 108,000 of deferred

salary with $ 90,000 bearing interest at 12 %.

The accrued interest included at February 28, 2023 was $ 15,660 (2022- $ 2,700 ).

Pursuant to the amended Employment Agreement with

its Chief Executive Officer, the Company issued 1,500 shares of Series G Preferred Shares which are redeemable at the Company’s

option at $1,000 per share and recorded $1,500,000 of stock based compensation.

During the year ended February 28, 2022, the Company redeemed

During the year ended February 28, 2023 pursuant to

the amended Employment Agreement with its Chief Executive Officer the Company accrued $ 499,500 as incentive compensation plan payable

with a corresponding recognition of stock based compensation due to the expectation of additional awards being met.

At February 28, 2023,

the balance of incentive compensation plan payable was $ 979,000 (2022-$ 479,500 ).

This will be payable in Series G Preferred Shares which

are redeemable at the Company’s option at $ 1,000 per share.

During the year ended February 28, 2022, pursuant

to the amended Employment Agreement with its Chief Executive Officer, the Company issued 1,500 shares of Series G Preferred Shares which

are redeemable at the Company’s option at $ 1,000 per share and recorded $ 1,500,000 of stock based compensation.

The Company redeemed

these shares for $ 1,500,000 and accrued $ 479,500 as incentive compensation plan payable with a corresponding recognition of stock based

1 unchanged sentence

During the years ended February 28, 2023 and February

28, 2021, the Company was charged $2,258,819 and $121,973, respectively in consulting fees for research and development to a company partially

owned by a principal shareholder.

OTHER DEBT –

VEHICLE LOANS

28, 2022, the Company was charged $ 3,578,981 and $ 2,258,819 , respectively in consulting fees for research and development to a company

partially owned by a principal shareholder.

The principal shareholder received no compensation from this partially owned research and

development company and the fees were spent on core development projects.

OTHER DEBT – VEHICLE LOANS

In December 2016, RAD entered into a vehicle loan

17 unchanged sentences

as of February 28, 2023 and February 28, 2022, respectively, of which all were classified as current.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

3 unchanged sentences

Interest Rate

July 18, 2016

July 18, 2017

Promissory note

June 11, 2018

1 unchanged sentence

Promissory note

August 10, 2018

September 1, 2018

Promissory note

August 16, 2018

August 16, 2019

Promissory note

August 16, 2018

October 1, 2018

Promissory note

January 31, 2019

1 unchanged sentence

Promissory note

January 24, 2019

January 24, 2021

June 30, 2019

27 unchanged sentences

Promissory note

April 3, 2020

April 3, 2021

Promissory note

August 13, 2020

August 13, 2021

Promissory note

September 15, 2020

1 unchanged sentence

Promissory note

September 15, 2020

September 15, 2022

Promissory note

October 6, 2020

34 unchanged sentences

Promissory note

December 31, 2021

December 31, 2024

Promissory note

January 14, 2021

7 unchanged sentences

Promissory note

March 23, 2021

March 23, 2022

Promissory note

March 23, 2021

March 23, 2022

July 12, 2021

July 26, 2026

Promissory note

September 14, 2021

September 14, 2024

Promissory note

2 unchanged sentences

Promissory note

August 30, 2022

August 30,2024

Promissory note

September 7, 2022

1 unchanged sentence

Promissory note

Less current portion of loans payable

Less discount on loans payable

Loans payable

September 8, 2022

September 8, 2023

Promissory note

October 13, 2022

October 13, 2023

Promissory note

October 28, 2022

October 31, 2026

Promissory note

November 9, 2022

October 31, 2026

Promissory note

November 10, 2022

October 31, 2026

Promissory note

November 15, 2022

October 31, 2026

Promissory note

January 11, 2023

October 31,2026

Promissory note

February 6, 2023

October 31,2026

Promissory note

current portion of loans payable

Less discount on loans payable

discount on non-current loans payable

Non-current loans payable, net of discount

Current portion of loans payable

discount on current portion of loans payable

Current portion of loans payable, net of discount

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note is in default.

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

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

The note may be pre-payable at any time.

Default interest rate 22 %

Loans with a principal balance of $ 1,661,953 along with associated accrued interest of $ 342,138 totaling $ 2,004,091 were paid in March 2022, with a remaining accrued liability of $ 62,979 .

Original $ 78,432 note may be pre-payable at any time.

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

The loan and accrued interest were fully paid in March 2022.

Repayable in 12 monthly instalments of $ 4,562 commencing August 11, 2018 and secured by revenue earning devices having a net book value of at least $ 48,000 .

No repayments have been made by the Company and no notices have been received.

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

The note may be pre-payable at any time.

The loan and accrued interest were fully paid in March 2022.

Original $ 7,850 note may be pre-payable at any time.

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

The note may be pre-payable at any time.

The loan and accrued interest were fully paid in March 2022.

Original $ 86,567 note may be pre-payable at any time.

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

$257,000 Canadian loan.

Interest payable every calendar quarter commencing June 30, 2019, if unpaid accrued interest to be paid at maturity.

An additional interest amount calculated as 4% of RAD revenues from SCOT rentals for the fiscal years 2020 and 2021 shall be payable March 31, 2020 and March 31, 2021, respectively.

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

the lender’s security in this respect shall be postponeable to security in favor of institutional financing obtained by RAD.

Additional funding of $26,146 during the quarter ended May 31, 2021.

This loan and accrued interest was fully repaid on November 15, 2021 for a cash payment of $443,978.

The payment includes $194,804 of loan repayment $55,299 in accrued interest, $18,135 in interest expense, $18,492 in foreign exchange loss and $157,249 in loss on settlement of debt.

The note may be pre-payable at any time.

The loan and accrued interest were fully paid in March 2022.

Original $ 79,104 note may be pre-payable at any time.

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

The loan and accrued interest were fully paid in March 2022.

Original $ 12,000 note may be pre-payable at any time.

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

The loan and accrued interest were fully paid in March 2022.

Original $ 11,000 note may be pre-payable at any time.

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

The loan and accrued interest were fully paid in March 2022.

Original $ 5,000 note may be pre-payable at any time.

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

The loan and accrued interest were fully paid in March 2022.

Original $ 13,000 note may be pre-payable at any time.

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

The loan and accrued interest were paid in March 2022.

The unsecured note may be pre-payable at any time.

3 unchanged sentences

After allocating these charges to debt and equity according to their respective values, a debt discount of $ 4,749,005 with a corresponding adjustment to paid in capital for the relative value of the warrant.

For the year ended February 28, 2022, the Company recorded amortization expense of $5,349,005 with an unamortized discount of $0 at February 28, 2022.

For both the years ended February 28, 2023, the Company recorded amortization expense of $ 0 with an unamortized discount of $ 0 at February 28, 2023.

The maturity was extended from March 1, 2022 to March 1, 2024 on February 28, 2022 in exchange for warrants to purchase 150,000,000 shares of common stock at an exercise price of $ .0164 and a 3 year term.

These warrants have a fair value of $2,850,000 recorded as interest expense with a corresponding adjustment to paid in capital.

In exchange for 28 Series F preferred shares, the Company issued a noninterest bearing unsecured

loan for $2,545,900.

A fair value of the loan of $2,267,768 was determined with a debt discount off $278,132.

For the year ended

February 28, 2022, the Company recorded amortization expense $54,102.

On June 2, 2021 the Company exchanged the $2,545,900 debt

having a net book value of $2,321,870 for 39,167,693 common shares having a fair value of $2,177,724.

The Company recorded a gain on

settlement of debt of $144,146.

In exchange for 55 Series F preferred shares, the Company issued a noninterest bearing unsecured

loan for $5,000,875.

A fair value of the loan of $4,465,067 was determined with a debt discount off $535,808.

For the year ended

February 28, 2022, the Company recorded amortization expense of $107,162.

On June 2, 2021 the Company exchanged the $5,000,875 debt

having a net book value $4,572,229 for 76,936,539 common shares having a fair value of $4,277,672.

The Company recorded a gain on

settlement of debt of $294,557.

The note may be pre-payable at any time.

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

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The note may be pre-payable at any time.

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

The note may be pre-payable at any time.

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

The note may be pre-payable at any time.

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

The note may be pre-payable at any time.

These warrants have a fair value of $ 2,850,000 recorded as interest expense with a corresponding adjustment to paid in capital recorded in the year ended February 28, 2022.

Original $ 43,500 note may be pre-payable at any time.

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

The note may be pre-payable at any time.

The loan and accrued interest were fully paid in March 2022.

Original $ 85,000 note may be pre-payable at any time.

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

$ 40,000 CDN loan, both principal and interest are due at maturity, if unpaid there is a 10% penalty on unpaid balance.

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

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

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

If principal or interest unpaid there is a 10% penalty on unpaid balance.

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

Total loan of $44,183 (in $USD) and related accrued interest paid during the quarter ended May 31, 2021.

The note may be pre-payable at any time.

The loan and accrued interest were fully paid in March 2022.

Original $ 62,000 note may be pre-payable at any time.

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

The note may be pre-payable at any time.

The loan and accrued interest were fully paid in March 2022.

Original $ 31,000 note may be pre-payable at any time.

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

The note may be pre-payable at any time.

The loan and accrued interest were fully paid in March 2022.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Original $ 50,000 note may be pre-payable at any time.

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

The note may be pre-payable at any time.

The loan and accrued interest were fully paid in March 2022.

Original $ 42,000 note may be pre-payable at any time.

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

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

If principal or interest unpaid there is a 10% penalty on unpaid balance.

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

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

The note may be pre-payable at any time.

The loan and accrued interest were fully paid in March 2022.

Original $ 300,000 note may be pre-payable at any time.

The note balance includes an original issue discount of $ 50,000 .

Interest payable monthly, principal due at maturity.

Secured by a general security charging all of RAD’s present and after-acquired property.

For the year ended February 28, 2022, the Company recorded amortization expense of $23,885 with an unamortized discount of $14,745 at February 28, 2022.

Principal and interest repayable in 28 monthly instalments commencing December 6, 2020, the first 6 months at $2,000 per month, the remaining 22 payments at $ 8,500 per month.

Secured by a general security charging all of RAD’s present and after-acquired property.

The loan and accrued interest were fully paid in March 2022.

Original principal of $ 150,000 and interest repayable in 28 monthly instalments commencing December 6, 2020, the first 6 months at $ 2,000 per month, the remaining 22 payments at $ 8,500 per month.

Secured by revenue earning devices.

The note may be pre-payable at any time.

The loan and accrued interest were fully paid in March 2022.

Original $ 110,000 note may be pre-payable at any time.

The note balance includes an original issue discount of $ 10,000 and was issued with a warrant to purchase 70,000,000 shares at an exercise price of $ 0.00165 per share, with a 3 -year term and having a relative fair value of $ 41,176 .

1 unchanged sentence

After allocating these charges to debt and equity according to their respective values, a debt discount of $ 41,176 with a corresponding adjustment to paid in capital.

For the year ended February 28, 2022, the Company recorded amortization expense of $12,039 with an unamortized discount of $36,290 at February 28, 2022.

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

The loan and accrued interest were fully paid in March 2022.

Original principal of $ 65,000 and interest repayable in 21 monthly instalments of $ 4,060 commencing February 23, 2021.

Secured by revenue earning devices.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The note may be pre-payable at any time.

The loan and accrued interest were fully paid in March 2022.

Original $ 300,000 note may be pre-payable at any time.

The note balance includes an original issue discount of $ 25,000 and was issued with a warrant to purchase 230,000,000 shares at an exercise price of $ 0.00165 per share with a 3 -year term and having a relative fair value of $ 125,814 .

1 unchanged sentence

After allocating these charges to debt and equity according to their respective values, a debt discount of $ 125,814 with a corresponding adjustment to paid in capital for the relative value of the warrant.

For the year ended February 28, 2022, the Company recorded amortization expense of $33,823 with an unamortized discount of $109,977 at February 28, 2022.

The note may be pre-payable at any time.

The loan and accrued interest were fully paid in March 2022.

Original $ 82,500 note may be pre-payable at any time.

The note balance includes an original issue discount of 7,500 and was issued with a warrant to purchase 100,000,000 shares at an exercise price of $ 0.002 per share with a 3 -year term and having a relative fair value of $ 54,545 .

1 unchanged sentence

After allocating these charges to debt and equity according to their respective values, a debt discount of $ 54,545 with a corresponding adjustment to paid in capital for the relative value of the warrant.

For the year ended February 28, 2022, the Company recorded amortization expense of $9,856 with an unamortized discount of $50,714 at February 28, 2022.

The loan and accrued interest were fully paid in March 2022.

This promissory note was issued as part of a debt settlement whereby $ 2,683,357 in convertible notes and associated accrued interest of $ 1,237,811 totaling $ 3,921,168 was exchanged for this promissory note of $ 3,921,168 , and a warrant to purchase 450,000,000 shares at an exercise price of $ .002 per share and a three-year maturity having a relative fair value of $ 990,000 .

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

This promissory note was issued as part of a debt settlement whereby $ 1,460,794 in convertible notes and associated accrued interest of $ 1,593,544 totaling $ 3,054,338 was exchanged for this promissory note of $ 3,054,338 , and a warrant to purchase 250,000,000 shares at an exercise price of $.002 per share and a three-year maturity having a relative fair value of $ 550,000 .

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

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

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

This promissory note was issued as part of a debt settlement whereby $100,000 in convertible notes and associated accrued interest of $37,589 totaling $137,589 was exchanged for this promissory note of $192,625.

Loan fully repaid at May 31,2021.

The note may be pre-payable at any time.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The note, with an original principal amount of $ 350,000 , may be pre-payable at any time.

The note balance includes an original issue discount of $ 35,000 and was issued with a warrant to purchase 50,000,000 shares at an exercise price of $ 0.025 per share with a 3 -year term and having a relative fair value of $ 271,250 .

3 unchanged sentences

This promissory note was issued as part of a debt settlement whereby $ 9,200 in convertible notes and associated accrued interest of $ 6,944 totaling $ 16,144 was exchanged for this promissory note of $ 25,000 .

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

This promissory note was issued as part of a debt settlement whereby $ 79,500 in convertible notes and associated accrued interest of $ 28,925 totaling $ 108,425 was exchanged for this promissory note of $ 145,000 .

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

The note may be pre-payable at any time.

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

The note, with an original principal amount of $ 550,000 , may be pre-payable at any time.

The note balance includes an original issue discount of $ 250,000 and was issued with a warrant to purchase 50,000,000 shares at an exercise price of $ 0.025 per share with a 3 -year term and having a relative fair value of $ 380,174 .

1 unchanged sentence

After allocating these charges to debt and equity according to their respective values, a debt discount of $ 380,174 with a corresponding adjustment to paid in capital.

For the year ended February 28, 2022, the Company recorded amortization expense of $58,224 with an unamortized discount of $367,232 at February 28, 2022.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The note may be pre-payable at any time.

For the year ended February 28, 2023, the Company recorded amortization expense of $ 127,897 , respectively, with an unamortized discount of $ 239,336 at February 28, 2023.

The note, with an original principal balance of $ 1,650,000 , may be pre-payable at any time.

The note balance includes an original issue discount of $ 150,000 and was issued with a warrant to purchase 100,000,000 shares at an exercise price of $ 0.135 per share with a 3 -year term and having a relative fair value of $ 1,342,857 .

3 unchanged sentences

The maturity date was extended from February 22, 2022 to February 22, 2024 on February 28, 2022 in exchange for warrants to purchase 50,000,000 at an exercise price of $ .0164 and a 3 year term.

These warrants have a fair value of $950,000 recorded as interest expense with a corresponding adjustment to paid in capital.

The note may be pre-payable at any time.

These warrants have a fair value of $ 950,000 recorded as interest expense with a corresponding adjustment to paid in capital recorded in the year ended February 28, 2022.

The note, with an original principal balance of $ 2,750,000 , may be pre-payable at any time.

The note balance includes an original issue discount of $ 50,000 and was issued with a warrant to purchase 170,000,000 shares at an exercise price of $ 0.064 per share with a 3 -year term and having a relative fair value of $ 2,035,033 .

3 unchanged sentences

The maturity date was extended from June 8, 2022 to June 8, 2024 on February 28, 2022 in exchange for warrants to purchase 85,000,000 at an exercise price of $ .0164 and a 3 year term.

These warrants have a fair value of $1,615,000 recorded as interest expense with a corresponding adjustment to paid in capital.

This loan was in exchange for 184 Series F preferred shares from a former director.

These warrants have a fair value of $ 1,615,000 recorded as interest expense with a corresponding adjustment to paid in capital recorded in the year ended February 28, 2022.

This loan, with an original principal balance of $ 4,000,160 , was in exchange for 184 Series F preferred shares from a former director.

The interest and principal are payable at maturity.

The loan is unsecured.

The note may be pre-payable at any time.

The note balance includes an original issue discount of $150,000 and was issued with a warrant to purchase 250,000,000 shares at an exercise price of $0.037 per share with a 3-year term and having a relative fair value of $1,284,783 using Black-Scholes with assumptions described in note 14.

The discounts are being amortized over the term of the loan.

For the year ended February 28, 2023 there was repayments $ 115,800 on the note.

The note, with an original principal balance of $ 1,650,000 , may be pre-payable at any time.

The note balance includes an original issue discount of $ 150,000 and was issued with a warrant to purchase 250,000,000 shares at an exercise price of $ 0.037 per share with a 3 -year term and having a relative fair value of $ 1,284,783 , The discounts are being amortized over the term of the loan.

After allocating these charges to debt and equity according to their respective values, a debt discount of $ 1,284,783 with a corresponding adjustment to paid in capital.

For the year ended February 28, 2023, the Company recorded amortization expense of $ 188,002 , with an unamortized discount of $ 1,214,431 at February 28, 2023.

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

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Original $ 170,000 note may be pre-payable at any time.

The note balance includes an original issue discount of $ 20,000 .

Principal and interest due at maturity.

Secured by a general security charging all of RAD’s present and after-acquired property.

For the year ended February 28, 2023, the Company recorded amortization expense of $ 10,974 , with an unamortized discount of $ 9,026 at February 28, 2023.

Original $ 400,000 note may be pre-payable at any time.

The note balance includes an original issue discount of $ 50,000 .

Principal and interest due at maturity.

Secured by a general security charging all of RAD’s present and after-acquired property.

For the year ended February 28, 2023, the Company recorded amortization expense of $ 22,179 with an unamortized discount of $ 27,821 at February 28, 2023.

A warrant holder exchanged 955,000,000 warrants for a promissory note of $ 3,000,000 , bearing interest at 15 % with a two year maturity.

The fair value of the warrants was determined to be $ 2,960,500 with a corresponding adjustment to paid-in capital and a debt discount of $ 39,500 which will be amortized over the term of the loan.

Principal and interest due at maturity.

For the year ended February 28, 2023, the Company recorded amortization expense of $ 8,632 , with an unamortized discount of $ 30,868 at February 28, 2023.

Original $ 475,000 note may be pre-payable at any time.

The note balance includes an original issue discount of $ 75,000 .

Principal and interest due at maturity.

Secured by a general security charging all of RAD’s present and after-acquired property.

For the year ended February 28, 2023, the Company recorded amortization expense of $ 38,271 with an unamortized discount of $ 32,909 at February 28, 2023.

Original $ 350,000 note may be pre-payable at any time.

The note balance includes an original issue discount of $ 50,000 .

Principal and interest due at maturity.

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

For the year ended February 28, 2023, the Company recorded amortization expense of $ 17,091 with an unamortized discount of $ 46,407 at February 28, 2023.

On October 28, 2022 the Company entered into an loan

facility with a lender for up to $ 4,000,000 including an original issue discount of $500,000.

In exchange the Company will issue one series

F Preferred Share, extended 329 series F warrants with a March 1, 2026 maturity to a new October 31, 2033 maturity, and issue up to 10

tranches with each trance of $400,000, with cash proceeds of $350,000 an original issue discount of $50,000, October 31, 2026 maturity,

and 61 Series F warrants with a October 31, 2033 maturity.

Secured by a general security charging all of the Company’s present and

after-acquired property.

At November 30, 2022 the Company has issued 6 tranches as follows:

October 28, 2022, $ 400,000 loan, original issue discount

of $ 50,000 , 61 Series F Preferred Share warrants and 1 Series F Preferred Share having a relative fair value of $299,399.

ended February 28, 2023, the Company recorded amortization expense of $ 1,375 with an unamortized discount of $ 348,024 at February 28,

November 9, 2022, $ 400,000 loan, original issue discount

of $ 50,000 , 61 Series F Preferred Share warrants e having a relative fair value of $299,750.

For the year ended February 28, 2023, the

Company recorded amortization expense of $ 1,312 with an unamortized discount of $ 348,438 at February 28, 2023.

November 10, 2022, $ 400,000 loan, original issue discount

of $ 50,000 , 61 Series F Preferred Share warrants e having a relative fair value of $302,020.

For the year ended February 28, 2023, the

Company recorded amortization expense of $ 1,139 with an unamortized discount of $ 350,881 at February 28, 2023.

November 15, 2022, $ 400,000 loan, original issue discount

of $ 50,000 , 61 Series F Preferred Share warrants e having a relative fair value of $299,959.

For the year ended February 28, 2023, the

Company recorded amortization expense of $ 2,143 with an unamortized discount of $ 347,815 at February 28, 2023.

January 11, 2023, $ 400,000 loan, original issue discount

of $ 50,000 , 61 Series F Preferred Share warrants e having a relative fair value of $299,959.

For the year ended February 28, 2023, the

Company recorded amortization expense of $ 802 with an unamortized discount of $ 347,189 at February 28, 2023.

February 6, 2023, $ 400,000 loan, original issue discount

of $ 50,000 , 61 Series F Preferred Share warrants e having a relative fair value of $299,959.

For the year ended February 28, 2023, the

Company recorded amortization expense of $ 100 with an unamortized discount of $ 348,426 at February 28, 2023.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DERIVATIVE LIABILITIES

As of February 28, 2023, and February 28, 2022, the

Company revalued the fair value of all of the Company’s derivative liabilities associated with the conversion features on the convertible

notes payable and determined that it had a total derivative liability of $ 0 , and $ 7,587 , respectively.

The Company estimated the fair value of the derivative

liabilities using the multinomial lattice model using the following key assumptions during the year ended February 28, 2021:

$0.04 - $0.026

Fair value of Company common stock

$0.0632 - $0.0145

Dividend yield

Expected volatility

125.3% - 107.7%

Risk free interest rate

0.15% - 0.13%

Expected term (years)

The Company estimated the fair value of the derivative

liabilities using the multinomial lattice model using the following key assumptions during the year ended February 28, 2021:

$0.2899 - $0.0013

Fair value of Company common stock

$0.138 - $0.0013

Dividend yield

Expected volatility

355.10% - 196.50%

Risk free interest rate

0.09% - 0.15%

Expected term (years)

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

During the years ended February 28, 2022, and February

28, 2021 the Company released $422,272 and $2,387,687, respectively, of the Company’s derivative liability to equity due to the

conversions of principal and interest on the associated notes.

The changes in the derivative liabilities (Level 3

financial instruments) measured at fair value on a recurring basis for the year ended February 28, 2022 were as follows:

Balance as of February 28, 2021

Derivative discount on loan amendment

Adjustment to derivative liability due to debt extinguishment

Release of derivative liability on conversion of convertible notes payable

Change in fair value of derivative liabilities

Balance as of February 28, 2022

The changes in the derivative liabilities (Level 3

financial instruments) measured at fair value on a recurring basis for the year ended February 28, 2021 were as follows:

Balance as of February 29, 2020

Release of derivative liability on conversion of convertible notes payable

Debt discount due to derivative liabilities

Adjustment to derivative liability due to debt settlement

Change in fair value of derivative liabilities

Balance as of February 28, 2021

STOCKHOLDERS’

For the year ended February 28,

2023, the Company recorded a change in fair value of derivative liabilities of $ 0 and $ 3,595 , respectively and a gain on settlement of

debt (with a corresponding adjustment to derivative liabilities) of $ 0 and $ 3,992 , respectively.

For the year ended February 28, 2022,

the Company recorded a change in fair value of derivative liabilities of $ 372,214 and a gain on settlement of debt (with a corresponding

adjustment to derivative liabilities) of $ 81,228 , respectively.

STOCKHOLDERS’ DEFICIT

Preferred Stock:

7 unchanged sentences

As of the date of this report, there are 3,350,000 shares of Series E Preferred Stock outstanding.

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.

26 unchanged sentences

(or otherwise suffer to exist any such taxation as a result thereof).

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Summary of Preferred Stock Activity

Series G Preferred Stock

4 unchanged sentences

of the Company and does not receive dividends.

Summary of Preferred Stock Activity

Series E Preferred Stock

During the year ended February 28, 2023 there was

no Series E share activity.

During the year ended February 28, 2022 Series E shareholders

2 unchanged sentences

The company recorded an adjustment to paid in capital.

Series F Preferred Stock

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Series F Preferred Shares

Each holder of Series F Convertible Preferred Shares

may, at any time and from time to time convert all, but not less than all, of their shares into a number of fully paid and nonassessable

shares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the date

of conversion by three and 45 100ths (3.45) on a pro rata basis.

On August 23, 2021, the Company filed amended Series

F preferred shares such that Series F preferred shares are not convertible into common stock by a holder until (A) August 23, 2023 or

(B) the date on which such a conversion may be required for the purpose of (i) uplisting the Company to a new stock exchange, or (ii)

selling more than 50% of the Company’s assets.

Summary or Preferred Stock Activity

During the year ended February 28, 2023 Series F shareholders

had the following activity:

1 Series F Preferred Share and a total of 366 Series F Preferred Stock Warrants issued along with debt to a lender.

During the year ended February 28, 2022 Series F shareholders

had the following activity:

40 Series F Preferred Shares and a warrant to purchase 367 Series F Preferred Shares with a five-year term and an exercise price of $ 1.00 were issued to an investor in exchange for amending their deferred variable payment obligation agreement.

7 unchanged sentences

On August 24, 2021the Series F preferred warrant holder agreed to not exercise his warrant privileges on his remaining 329 warrant shares before September 1, 2023.

Unissued Series F Preferred Stock

At both February 28, 2023 and February 28, 2022 there

remains 46 issuable Series F preferred stock at a value of $99,086.

During the year ending February 28, 2022 the Company

redeemed (through cancellation) 19 shares of issuable Series F preferred stock having a value of $ 74,984 for $500,000, with the difference

of $425,016 recorded as a dividend.

On October 28, 2022 as part of a $4,000,000 loan facility (described in Note 12) the Company extended

the maturity date of the 329 existing Series F Preferred Warrants currently held by the lender to October 31, 2033 from October 31, 2026.

Summary of Preferred Stock Warrant Activity

Schedule of Summary of stock Option Activity

Number of Series F Preferred Warrants

4 unchanged sentences

Outstanding at February 28, 2023

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

On August 23, 2021, the Company filed amended Series

F preferred shares such that Series F preferred shares are not convertible into common stock by a holder until (A) August 23, 2023 or

(B) the date on which such a conversion may be required for the purpose of (i) uplisting the Company to a new stock exchange, or (ii)

selling more than 50% of the Company’s assets.

On July 22, 2020 the board of directors passed a resolution

whereby the sole director agreed to return for cancellation, 816 of his 1000 Series F preferred shares to the Company.

On December 1, 2020 the company issued 110 Series

F shares having a fair value of $362,084 to a consultant for services previously rendered which was recorded as professional fees with

a corresponding adjustment to accrued liabilities.

Unissued Series F Preferred Stock

During the year ending February 28, 2022 the Company

redeemed (through cancellation) 19 shares of issuable Series F preferred stock having a value of $ 74,984 for $500,000, with the difference

of $425,016 recorded as a dividend.

At November 30, 2021 there remains 46 issuable Series F preferred stock at a value of $99,086.

February 28, 2021 there was 65 issuable Series F preferred stock at a value of $174,070.

During the year ended February 28, 2021 the Company

had the following preferred stock activity:

On July 22, 2020 the board of directors passed a resolution whereby the sole director agreed to return for cancellation, 816 of his 1000 Series F preferred shares to the Company.

On December 1, 2020 the company issued 110 Series F shares having a fair value of $362,084 to a consultant for services previously rendered which was recorded as professional fees with a corresponding adjustment to accrued liabilities.

On December 14, 2020, as part of a debt settlement described in Note 8 , the company issued 55 Series F preferred shares to a lender at a fair value of $1,151,166.

Series G Preferred Stock

During the year ended February 28, 2023 there was

no Series G share activity.

During the year ending February 28, 2022 Series G

3 unchanged sentences

Summary of Common Stock Activity

The Company increased authorized common shares from

5,000,000,000 to 6,000,000,000 on July 8, 2022 and again increased authorized common shares from 6,000,000,000 to 7,225,000,000 on March

Summary of Common Stock Activity

During the year ended, February 28, 2023, common shareholders

had the following activity:

the Company issued 1,057,841,576 common shares with gross proceeds of $ 8,21,027 and net proceeds of $ 7,771,169 after issuance costs of $ 447,858 .

the Company issued 17,500,000 common shares as penalty to an investor pursuant to a share purchase agreement.

the Company issued 45,306,557 shares through the cashless exercise of 108,378,210 warrants.

the Company cancelled 17,116,894 shares as a result of an SEC enforcement action against a lender and issued 10,000,000 shares for $ 118,500 as payment for services.

During the year ending February 28, 2022, common shareholders

8 unchanged sentences

warrant holders exercised warrants to acquire 411,000,000 shares on a cashless basis for 395,022,447 common shares with a corresponding adjustment to paid in capital.

The table below represent the common shares issued,

issuable and outstanding at February 28, 2023 and February 28, 2022:

Common shares

February 28, 2023

February 28, 2022

5,836,641,599

4,733,110,360

Issued, issuable and outstanding

5,848,741,599

4,735,210,360

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

On March 27, 2020 , the Company undertook a 10,000:1

reverse stock split.

The share capital has been retrospectively adjusted accordingly to reflect this reverse stock split, except for the

conversion price of certain convertible notes as the conversion price is not subject to adjustment from forward and reverse stock splits

(see Note 13).

Certain instruments issued prior to the reverse split that exercise into shares of our common stock are now shown in fractional

units due to the effect of the reverse split.

If exercised, the Company is required to issue whole shares under its articles of incorporation.

During the year ended February 28, 2021 the Company

had the following common stock activity:

The Company issued 2,329,798,068 shares of its common stock for the conversion of debt and related interest and fees totaling $3,568,686 including $2,420,559 of principal and $1,148,127 of interest, and additionally $20,500 in fees in connection with debt converted during the period, as well as the release of the related derivative liability.

In connection with a note issuance in January 2021, the Company issued 5,000,000 shares of common stock

Summary of Warrant Activity

Summary of Warrant and Stock Option Activity

Weighted Average

10 unchanged sentences

Forfeited and cancelled

Outstanding at February 28, 2022

( 955,000,000 )

Outstanding at February 28, 2023

Required dilution adjustment per warrant agreement

For the years ended February 28, 2023 and February

1 unchanged sentence

to additional paid-in capital.

For both the years ended February 28, 2022 and February 28, 2021 the Company

recorded a total of $2,158,050 and $0 respectively, to stock-based compensation for options, and shares with a corresponding adjustment

to additional paid-in capital.

For the years ended February 28, 2023 and February 28, 2022 the

Company recorded a total of $ 240,550 and $ 1,678,550 respectively, to stock-based compensation for options, and shares with a

corresponding adjustment to additional paid-in capital.

In addition the Company recorded other stock based compensation of $ 499,500

and $ 479,500 , respectively with a corresponding adjustment to incentive compensation plan payable, payable in Series G Preferred

shares which have not yet been issued.

During the year ended February 28, 2023 warrant holders

had the following activity:

On August 30, 2022 a warrant holder exchanged 955,000,000 warrants for a promissory note of $ 3,000,000 , bearing interest at 15 % with a two year maturity.

The fair value of the warrants was determined to be 2,960,500 with a corresponding adjustment to paid-in capital and a debt discount of $ 39,500 which will be amortized over the term of the loan.

On August 9, 2022 as part of a debt issuance the Company issued two 47,000,000 warrants at an exercise price of $ 0.01 and $ 0.008 per share, respectively both with a 5 -year term and with a total relative fair value of $ 393,949 all using a Monte Carlo simulation to include reset events, exercise at maturity, and cashless exercise features with assumptions described below:

of valuation techniques

$ 0.008 - $ 0.01

Fair value of Company’s common stock

Dividend yield

Expected volatility

88.2 % - 90.00 %

Risk free interest rate

Expected term (years)

Cashless exercise of 108,378,210 warrants for 45,306,557 common shares

During the year ended February 28, 2022 warrant holders

had the following activity:

warrant holders exercised warrants to acquire 411,000,000 shares on a cashless basis for 395,022,447 common shares with a corresponding adjustment to paid in capital.

in conjunction with debt disclosed in Note 11 (44), the Company issued warrants to a lender to purchase 170,000,000 shares at an exercise price of $0.064 per share with a 3-year term and having a relative fair value of $2,035,033, in conjunction with debt disclosed in Note 11 (10), the Company issued warrants to a lender to purchase 300,000,000 shares at an exercise price of $0.135 per share with a 3-year term and having a relative fair value of $4,749,005,andin conjunction with debt disclosed in Note 11 (46), the Company issued warrants to a lender to purchase 250,000,000 shares at an exercise price of $0.037 per share with a 3-year term and having a relative fair value of $1,284,783 all using the Black-Scholes model with assumptions described below:

in conjunction with debt disclosed in Note 11 (44), the Company issued warrants to a lender to purchase 170,000,000 shares at an exercise price of $0.064 per share with a 3-year term and having a relative fair value of $2,035,033, in conjunction with debt disclosed in Note 11 (10), the Company issued warrants to a lender to purchase 300,000,000 shares at an exercise price of $0.135 per share with a 3-year term and having a relative fair value of $4,749,005,and in conjunction with debt disclosed in Note 11 (46), the Company issued warrants to a lender to purchase 250,000,000 shares at an exercise price of $0.037 per share with a 3-year term and having a relative fair value of $1,284,783 all using the Black-Scholes model with assumptions described below:

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

of valuation techniques for warrants

$ 0.135 - $ 0.037

Fair value of Company’s common stock

$ 0.146 - $ 0.0071

5 unchanged sentences

Expected term (years)

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

in conjunction with debt extensions on notes payable disclosed in Note 12 (10, 43, 44), the Company issued warrants to a lender to purchase a total 285,000,000 shares at an exercise price of $ 0.164 per share with a 3 -year term and having an aggregate fair value of $ 5,415,000 , recorded as interest with a corresponding adjustment to paid in capital all using the Black-Scholes model with assumptions described below:

Fair value of Company’s common stock

Dividend yield

4 unchanged sentences

$ 0.041 - $ 0.029

Fair value of Company’s common stock

$ 0.039 - $ 0.028

1 unchanged sentence

Expected volatility

35.30 - 35.90 %

Risk free interest rate

0.46 - 0.95 %

Expected term (years)

Summary of Common Stock Option Activity

Summary of CEO Compensation Grant

13 unchanged sentences

Two hundred fifty (250) shares of Series G preferred stock.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Objective #6 :

4 unchanged sentences

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

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Objective #8 :

9 unchanged sentences

Series G issuable for each tier in the agreement.

For the period ended January 31 2022 that amount totaled $1,979,500 with a charge to

For the period ended February 28, 2023 that amount totaled $ 499,500 with a charge to

stock-based compensation and a corresponding charge to incentive compensation plan payable.

With the achievement of objectives 3,4,5 and

8 of the equity awards described above the CEO was granted 1,500 Series G Preferred shares which were redeemed in the reporting period

for $1,500,000 in cash.

As part of the grant, the Company is responsible for grossing up the award value and has accrued additional compensation

for the estimated taxes to be paid by the executive.

For the period ended February 28, 2022 that

amount totaled $ 1,979,500 with a charge to stock-based compensation and a corresponding charge to incentive compensation plan payable.

With the achievement of objectives 3,4,5 and 8 of the equity awards described above the CEO was granted 1,500 Series G Preferred shares

which were redeemed in the reporting period for $ 1,500,000 in cash.

As part of the grant, the Company is responsible for grossing up the

award value and has accrued additional compensation for the estimated taxes to be paid by the executive.

On April 14, 2021, the Shareholders of Series E Preferred

Stock and the Board of Directors of our Company (“Board”) approved and adopted the 2021 Incentive Stock Plan (the “2021

Plan”).

Stock and the Board of Directors of our Company (“Board”) approved and adopted the 2021 Incentive Stock Plan (the “2021

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.

The purpose of the 2021 Plan is to promote the success

3 unchanged sentences

restricted stock units, stock appreciation rights and stock awards.

A total of five million (5,000,000) shares of common stock may be

issued under the 2021 Plan.

All awards under the 2021 Plan, whether vested or unvested, are subject to the terms of any recoupment, clawback

or similar policy of the Company in effect from time to time, as well as any similar provisions of applicable law, which could in certain

circumstances require repayment or forfeiture of awards or any shares of stock or other cash or property received with respect to the

awards, including any value received from a disposition of the shares acquired upon payment of the awards.

The 2021 Plan will be administered

by the Board or any Committee authorized by the Board, if applicable, which will have the sole authority to, among other things:

and interpret the 2021 Plan;

A total of one hundred million (100,000,000) shares of common stock

may be issued under the 2021 Plan.

All awards under the 2021 Plan, whether vested or unvested, are subject to the terms of any recoupment,

clawback or similar policy of the Company in effect from time to time, as well as any similar provisions of applicable law, which could

in certain circumstances require repayment or forfeiture of awards or any shares of stock or other cash or property received with respect

to the awards, including any value received from a disposition of the shares acquired upon payment of the awards.

The 2021 Plan will be

administered by the Board or any Committee authorized by the Board, if applicable, which will have the sole authority to, among other

construe and interpret the 2021 Plan;

make rules and regulations relating to the administration of the 2021 Plan;

select participants;

and establish

the terms and conditions of awards, all in accordance with the terms of the 2021 Plan.

The 2021 Plan will remain in effect until April

14, 2031, unless sooner terminated by the Board.

and establish the terms and conditions of awards, all in accordance with the terms of the 2021 Plan.

The 2021 Plan will remain in effect

until April 14, 2031, unless sooner terminated by the Board.

Termination will not affect awards then outstanding.

During the year ended February 28, 2023 the Company

had the following common stock option activity:

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 using the Black-Scholes model with assumptions described below:

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Fair value of Company’s common stock

Dividend yield

Expected volatility

Risk free interest rate

Expected term (years)

The Company recorded $ 122,050 in stock-based compensation

which represents the current expense over the vesting period.

Options to purchase 4,275,000 shares were forfeited due to employee terminations

During the year ended February 28, 2022 the Company

had no common stock option activity:

Summary of Common Stock Option Activity

Number of Warrants

Weighted Average Exercise Price

Weighted Average Remaining Years

Outstanding at March 1, 2022

Forfeited, extinguished and cancelled

Outstanding at November 30, 2022

COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

If these estimates and assumptions

change or prove to be incorrect, it could have a material impact on the Company’s condensed consolidated financial statements.

Contingencies

1 unchanged sentence

heavily on estimates and assumptions.

In March 2021, the Company settled with former landlords

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

A gain on settlement of debt of $32,552 was recorded.

In April 2019 the principals of WeSecure filed a lawsuit

against the Company in California Superior Court seeking a total of $199,358 plus attorney’s fees and damages.

The total included

claims for the non-payment of a balance from the sale of WeSecure assets to the Company, unpaid consulting fees payable to the two principals

of WeSecure, and labor code violations.

In June 2019, the parties settled all claims for $180,000, payable in 14 monthly installments,

and a full release.

The $122,000 balance owing at February 28, 2021 was paid in full on March 17, 2021.

The related legal costs are expensed as incurred.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Purchase Commitment

On August 15 ,2021 the Company entered into a memorandum

of understanding with Ghost Robotics whereby the Company will modify and resell a Ghost Robotics (“Ghost”) product (“V50”)

in development in exchange for the following:

the Company will pay Ghost a non refundable marketing fee of $500,000 with $100,000 payable September 1, 2021 with the remaining $400,000 to be paid in instalments of $40,000 per month over the following 10 months commencing October 1, 2021.

the Company will purchase $85,000 of other Ghost products for research and development purposes.

This amount will be credited against future purchases of 6 V50’s that the Company will modify and resell.

Ghost agrees not to sell its V50 to three specific customers for a three-year period commencing after the first commercial sales of the V50.

the Company will re-brand their modified version of the V50 and be responsible for its testing and support.

Operating Lease

4 unchanged sentences

On March 10, 2021, the Company entered into a 10 year

lease agreement for a manufacturing facility at 10800 Galaxie Avenue, Ferndale, Michigan, 48220, commencing on May 1, 2021 through to

lease agreement for q manufacturing facility at 10800 Galaxie Avenue, Ferndale, Michigan, 48220, commencing on May 1, 2021 through to

April 30, 2031 with a minimum base rent of $ 15,880 per month.

8 unchanged sentences

The Company paid a security deposit of $ 1,500 .

The Company’s leases are accounted for as operating

Rent expense and operating lease cost are recorded over the lease terms on a straight-line basis.

Rent expense and operating lease

cost was $ 260,271 and $ 275,785 for the years ended February 28, 023 and February 28, 2022, respectively.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Maturity of Lease Liabilities

7 unchanged sentences

Present value of lease liabilities

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

EARNINGS (LOSS) PER SHARE

5 unchanged sentences

interest expense on convertible debt

penalty interest on convertible debt

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

3 unchanged sentences

4,029,658,082

Net income (loss) per share –

Weighted average shares –

Net income (loss) per share – basic

Weighted average shares – diluted

5,091,857,082

4,029,658,082

Net income (loss) per share –

Net income (loss) per share – diluted

The anti-dilutive shares of common stock equivalents

3 unchanged sentences

Convertible Class F Preferred Shares *

16,336,475,742

11,141,522,749

Stock options and warrants

1 unchanged sentence

1,261,773,222

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

Had these Series F preferred shares been convertible at February 28, 2023 and 2022 the dilutive effects would be as follows:

Series F Preferred shares been convertible the dilutive effects would be as follows:

For the Year Ended

Convertible Series F Preferred Shares

20,178,158,517

The Company has adopted ASC 740-10, “

, which requires the use of the liability method in the computation of income tax expense and the current and deferred

16,336,475,742

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company has adopted ASC 740-10, “ Income

Taxes” , which requires the use of the liability method in the computation of income tax expense and the current and deferred

income taxes payable (deferred tax liability) or benefit (deferred tax asset).

3 unchanged sentences

following for the fiscal years ended February 28, 2023 and February 28, 2022:

Schedule of income tax expense

February 28, 2023

5 unchanged sentences

income tax purposes.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following is a reconciliation of the expected

statutory federal income tax provision to the actual income tax benefit for the fiscal years ended February 28, 2022 and February 28,

The following is a reconciliation of the expected statutory federal income

tax provision to the actual income tax benefit for the fiscal years ended February 28, 2023 and February 28, 2022:

Schedule of federal statutory income tax

February 28, 2023

2 unchanged sentences

Non deductible interest

Non deductible settlement losses

Non deductible stock based compensation

Non deductible changes in fair value of instruments

Other non deductible expenses

Change in valuation allowance

1 unchanged sentence

Federal statutory rate

State income tax benefit, net of federal benefit

Non deductible interest

Non deductible settlement losses

Non deductible stock based compensation

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

Warrant values within debt discount

Non deductible changes in fair value of instruments

Other non deductible expenses

Change in valuation allowance

1 unchanged sentence

28, 2022, the expected tax benefit, temporary timing differences and long-term timing differences are calculated at the 21 % statutory

Significant components of the Company’s deferred

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Significant components of the Company’s deferred

tax assets and liabilities were as follows for the fiscal years February 28, 2023 and February 28, 2022:

Schedule of deferred income tax assets

February 28, 2023

22 unchanged sentences

reserved by a valuation allowance.

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company has maintained a full valuation allowance

11 unchanged sentences

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

The Company’s tax returns for the years ended

February 28, 2022, and February 28, 2021, and February 29, 2020 are open for examination under Federal statute of limitations.

Index to Financial Statements

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SUBSEQUENT EVENTS

Subsequent to February 28, 2022 through to May 27

in May 2022, the Company issued 100,000,000 common

Subsequent to February 28, 2023 through to June 5,

— the Company issued 280,929,190 common

shares pursuant to a share purchase agreement for gross proceeds of $ 1,400,194 , issuance costs of $ 81,285 and cash proceeds of $ 1,318,909 .

in March 2022 the Company repaid debt totaling $1,613,953

and related accrued interest of $349,879 to a lender.

— on March 19 ,2023 the shareholders

approved an increase to its authorized common stock by 1,225,000,000 shares

— on March 22, 2023 the Company entered

into an Equity Financing Agreement whereby an investor shall invest up to $30,000,000 over the course of twenty four (24) month at a purchase

price of eighty percent (80%) of the lowest trade price in the 9 day preceding period.

If the average Closing Price for the Common Stock

during the three (3) trading days preceding a purchase is equal to or greater than one cent ($.01) per share, the applicable purchase

price shall equal eighty five percent (85%) of the lowest trade price in the 9 day preceding period.

Following an up-list to the NASDAQ

or an equivalent national exchange by the Company, the purchase price shall equal ninety percent (90%) of the lowest Volume Weighted Average

Price (“VWAP”) for the Common Stock during the 9 day preceding period subject to a floor of $4.50 per share, below which the

Company shall not be required to sell shares.

In conjunction with the above agreement, the Company entered into a Registration Rights

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

What changed 10-K

Item 9A. Controls and Procedures