What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-06-09 compared with 2025-05-29 · 189 added, 248 removed, 119 unchanged (79% of the section changed)

11 unchanged sentences

AITX reincorporated into Nevada on February 17, 2015.

AITX’ fiscal year end is

February 28 (February 29 during leap year).

AITX is located at 10800 Galaxie Ave, Ferndale Michigan, 48220, and our telephone

number is 877-767-6268.

AITX’ fiscal year end is February

28 (February 29 during leap year).

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

of Operations

2 unchanged sentences

below are not necessarily indicative of the results that may be expected for any future period.

February 28, 2025

February 29, 2024

Operating expenses

2 unchanged sentences

(13,946,873 )

Other income (expense), net

$ (18,935,592 )

Other income (expense),

$ (14,510,251 )

1 unchanged sentence

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

February 28, 2025

February 29, 2024

Device rental activities

Direct sales of goods and services

Direct sales of goods

revenue for the year ended February 28, 2026, was $7,745,336, which represented an increase of $1,614,450 or 26% compared to total revenue

2 unchanged sentences

its product line and customer base.

Direct sales grew by $479,279 or 80% driven by higher monitoring (RMC) revenue on new installations

for the year ended February 28, 2025.

Direct sales were $255,631 or 24% lower than the prior year because most customers chose the Company’s

rental model.

gross profit for the year ended February 28, 2026 was $5,533,700, which represented an increase of $1,789,136, compared to total gross

1 unchanged sentence

The increase is a result of the increase in revenues above, and gross profit

% which was 61% for the year ended February 28, 2025 was also 25% for the prior year.

The gross profit % increased as the increase in

higher margin rental activities in the product mix, and overhead being allocated over a higher sales base.

Also, in the prior year there

was a higher inventory provision for the permanent impairment in value of two products that the Company discontinued in their current

This resulted in an unusually low gross profit % for the year ended February 29, 2024.

% which was 71% for the year ended February 28, 2026 was 61% for the prior year.

The gross profit % increased as the increase in higher

margin rental activities in the product mix, and overhead being allocated over a higher sales base.

expenses for the years ended February 28, 2026 and February 28, 2025 comprised of the following:

February 28, 2025

February 29, 2024

Research and development

1 unchanged sentence

Depreciation and amortization

Impairment on revenue earning devices

Operating lease cost and rent

(Gain) loss on disposal of fixed assets

Loss on disposal of fixed

Operating expenses

operating expenses were comprised of general and administrative expenses, research and development, depreciation and amortization, operating

lease and rent and a (gain) loss on disposal of fixed assets.

General and administrative expenses consisted primarily of professional

services, automobile expenses, advertising, salaries and wages, travel expenses and rent.

Our operating expenses during the years ended

February 28, 2025 and February 29, 2024 were $17,691,437and $14,555,229, respectively.

The overall $3,126,208 increase in operating expenses

was primarily attributable to the following changes in operating expenses:

Research and development

expenses increased by $16,273 as the Company continued to focus on current product development and improvements.

The Company moved

General and administrative

expenses increased by $3,601,629 primarily due to the following changes:

lease and rent and a loss on disposal of fixed assets.

General and administrative expenses consisted primarily of professional services,

automobile expenses, advertising, salaries and wages, travel expenses and rent.

Our operating expenses during the years ended February

28, 2026 and February 28, 2025 were $17,477,097 and $17,691,437, respectively.

The overall $214,340 decrease in operating expenses was

primarily attributable to the following changes in operating expenses:

and development expenses increased by $665,597 as the Company continued to focus on current product development , new software solutions

and improvements.

and administrative expenses decreased by $625,313 primarily due to the following changes:

is a summary of account decreases:

the year ended February 28, 2026 stock based compensation to CEO in equity awards was $1,500,000 with a charge of $315,848 for the

1 unchanged sentence

and a charge of $331,685 for the ESOP all totaling $$1,831,685 for the year ended February 28, 2025.

This represents an increase of

$38,086 in stock based compensation.

This represents an decrease

of $15,837 in stock based compensation.

The stock based compensation for the CEO is payable in Series G and has been deferred until

after a year.

salaries and payroll levies for the CEO increased by $1,500,000 in discretionary bonus charged, all of which is deferred compensation

and will not be paid out this year.

Base salary increased by $20,000.

salaries and payroll levies for the CEO decreased by $1,388,989 which is explained by a $1,500,000 decrease in discretionary bonus

charged, all of which was deferred compensation offset by a $100,000 increase in base salary increased and an $11,011 increase in

payroll levies.

fees decreased by $125,716 due to lower legal fees because of litigation in the prior year that has been resolved with no litigation in the current year.

decreases are partially offset by the following increases:

salaries and payroll levies for the staff increased by $91,609 due to staff increases (2).

Commissions increased by

$274,208 due to increased revenues.

Office expense increased

Insurance costs increased

by $117,181 due to more employees and higher health insurance costs.

Repairs and maintenance

increased by $137,901 due to repair of more active revenue earning devices in the field.

The remaining increases

and offsetting decreases were distributed amongst other general and administrative accounts such as installation expense, dues and

subscriptions, marketing, travel, and production supplies amongst others.

Operating lease cost and

rent decreased by $19,675.

There was a vehicle lease that expired during the current fiscal year.

Depreciation and amortization

increased by $105,732 due to the increase in demo devices, computer equipment, warehouse equipment in fixed assets.

(Gain) loss on disposal

of fixed assets decreased by $16,426 due to a vehicle disposal in 2024 that yielded a gain.

There was no impairment

on revenue earning devices for the year ended February 28, 2025.

Impairment on revenue earning devices was $584,177 for the year

ending February 29,2024 due to the discontinuance of two products in their present form.

increased by $198,781 due to higher revenues.

expense increased by $184,084 due to an increase in computer software purchases.

costs increased by $100,670 due to higher general and liability insurance costs.

increased by $76,119 due to more overseas travel to explore and find lower cost suppliers.

costs l increased by $79,102 due to higher revenues.

costs increased by $51,449 to promote new products.

and subscriptions increased by $28,180 for new software subscriptions.

debts expense increased by $54,723.

remaining increases and offsetting decreases were distributed amongst other general and administrative accounts.

lease cost and rent increased by $11,152.

These are due to new short -term leases in the current year.

and amortization decreased by $288,088 due to a change in allocation , based on experience for revenue earning devices used.

on disposal of fixed assets was $22,312 in the current year as older equipment was disposed of.

income (expense)

3 unchanged sentences

change in other income (expense) was due to the following:

expense decreased by $1,301,063.

Amortization of debt discounts decreased by $2,112,829, and for the year ended February 28, 2025

was $271,234 compared with $2,384,163 for the year ended February 29, 2024.

This decrease was due to many notes maturing in the prior

year and being fully amortized.

Interest expense was $4,188,866 for the year ended February 28, 2025, compared with $4,011,681 for

the year ended February 28, 2024.

This $177,195 increase was due to $350,000 of new notes this year and a full years interest on

the prior year’s $1,750,000 new notes, many of which were issued in the last two quarters.

Deferred variable payment obligation

(DVPO) expense was $996,881 for the year ended February 28, 2025, compared with $362,200 for the year ended February 29, 2024.

$634,881 increase was a result of the large increase in revenues.

on settlement of debt increased by $429,522 due to a write-off of accounts payable and vehicle loans that were greater than six years

old during the current fiscal year.

Company’s loss from operations for the year ended February 28, 2025 was $13,946,873 which represented an decrease in loss of $42,539

expense increased by $544,558 due to the following :

Amortization of debt discounts increased by $264,835, and for the year ended

February 28, 2026 was $536,070 compared with $271,235 for the year ended February 28, 2025.

This increase was due to the amortization

of new note discounts..

Interest expense was $4,147,535 for the year ended February 28, 2026, compared with $4,188,866 for the year

ended February 28, 2025.

This $41,331 decrease was due to the settlement of a $3.7 million loan which offset new interest on new

Deferred variable payment obligation (DVPO) expense was $1,260,469 for the year ended February 28, 2026, compared with $996,881

for the year ended February 28, 2025.

This $263,588 increase was a result of the increase in revenues.

on settlement of debt increased by $2,999,423 to a gain on settlement of a $3.7 million loan offset by a loss on settlement of accrued

interest during the current year.

Company’s loss from operations for the year ended February 28, 2026 was $11,943,397 which represented a decrease in loss of $2,003,476

compared to a loss of $13,946,873 for the year ended February 28, 2025.

The higher revenues and gross profit in 2024 were partially offset

by higher operating expenses for the reasons set out above.

The higher revenues and gross profit in 2026 along with the decrease

in operating expenses contributed to this change.

Note that the Company had a net loss of $14,510,251 for the year ended February 28,

2026, as compared to net loss of $18,935,592 for the year ended February 28, 2025.

This $1,773,124 change is mostly attributable

to a decrease in amortization expense.

This $4,425,341 change is mostly attributable to a

the lower loss from operations and gain on settlement of debt.

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

19 unchanged sentences

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

In September 2024, 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.

There remains approximately

$24 million left to issue under this arrangement.

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

its funding methods in the following ways :

growing revenues, through equity proceeds, and issuing non-convertible debt.

In May 2026, the Company entered into an

equity financing agreement whereby an investor will purchase up to $10,000,000 of the Company’s common stock at a discount over

a two-year period.

There remains approximately $10 million left to issue under this arrangement.

Management believes that it has the

necessary support to continue operations by continuing its funding methods in the following ways :

growing revenues ,through equity proceeds,

and issuing debt.

following table summarizes total current assets, liabilities and working capital for the period indicated:

February 28, 2025

February 29, 2024

Current assets

5 unchanged sentences

of Cash Flows

February 28, 2025

February 29, 2024

Net cash used in operating activities

4 unchanged sentences

cash used in operating activities for the year ended February 28, 2026 was $9,344,534, which included a net loss of $14,510,251, non-cash

activity such as the gain on settlement of debt of $468,262, amortization of debt discount of $271,234, stock based compensation of $1,831,685,

reduction in right of use asset $119,151, accretion of lease liability $118,502, increase in related party accrued payroll and interest

$71,927, inventory provision of ($494,000), bad debts expense $83,682, depreciation and amortization of $1,480,636 and change in operating

activity such as the gain on settlement of debt of $3,434,685, amortization of debt discount of $536,078, penalty added to the face value

of loan of $24,510, stock based compensation of $1,815,848, reduction in right of use asset $141,217, accretion of lease liability $103,956,

increase in related party accrued payroll and interest $132,268, inventory recovery of ($290,000), loss on disposal of revenue earning

devices and fixed assets of $93,249, bad debts expense $138,405, depreciation and amortization of $2,122,730 and change in operating

assets and liabilities of $3,782,141.

2 unchanged sentences

This consisted of the purchase of fixed assets of

($23,724), purchase of trademarks of ($6,241) and purchase of investment of ($50,000).

($10,863), purchase of trademarks of ($1,998).

cash provided by (used in) financing activities.

1 unchanged sentence

This consisted of share proceeds net of issuance

costs of $12,702,010, proceeds from the issuance of Series B Preferred Shares of $278,000, proceeds from the issuance of Series C Preferred

Shares of $278,580 and proceeds from loans payable $350,000 offset by repayments of loans payable of $183,000 and redemption of Series

B Preferred Shares of ($389,188).

costs of $5,219,853, and proceeds from loans payable $4.808,171 offset by repayments of loans payable of $1,302,561 and redemption of

Series C Preferred Shares of ($125,000).

Sheet Arrangements

12 unchanged sentences

used to value equity instruments used in debt settlements, amendments and extensions.

Revenue Earning Devices

Revenue earning devices are stated at cost.

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

The Company continually evaluates revenue earning devices

to determine whether events or changes in circumstances have occurred that may warrant revision of the estimated useful life or whether

the devices should be evaluated for possible impairment.

The Company uses a combination of the undiscounted cash flows and market approaches

in assessing whether an asset has been impaired.

The Company measures impairment losses based upon the amount by which the carrying amount

of the asset exceeds the fair value.

Fixed assets are stated at cost.

is provided on the straight-line method based on the estimated useful lives of the respective assets which range from three to five years.

Earning Devices

earning devices are stated at cost.

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

Company continually evaluates revenue earning devices to determine whether events or changes in circumstances have occurred that may

warrant revision of the estimated useful life or whether the devices should be evaluated for possible impairment.

The Company uses a

combination of the undiscounted cash flows and market approaches in assessing whether an asset has been impaired.

The Company measures

impairment losses based upon the amount by which the carrying amount of the asset exceeds the fair value.

assets are stated at cost.

Depreciation is provided on the straight-line method based on the estimated useful lives of the respective

assets which range from three to five years.

Major repairs or improvements are capitalized.

Minor replacements and maintenance and repairs which do not improve or extend asset lives

are expensed currently.

Minor replacements and maintenance and repairs

which do not improve or extend asset lives are expensed currently.

Computer equipment

3 unchanged sentences

Leasehold improvements

5 years, the life of the lease

The Company periodically evaluates the fair value

of fixed assets whenever events or changes in circumstances indicate that its carrying amounts may not be recoverable.

Upon retirement

or other disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain

or loss, if any, is recognized in income.

Research and Development

Research and development costs are expensed in

the period they are incurred in accordance with ASC 730, Research and Development unless they meet specific criteria related to

technical, market and financial feasibility, as determined by Management, including but not limited to the establishment of a clearly

defined future market for the product, and the availability of adequate resources to complete the project.

If all criteria are met, the

costs are deferred and amortized over the expected useful life or written off if a product is abandoned.

At February 28, 2025 and February

29, 2024, the Company had no deferred development costs.

Sales of Future Revenues

The Company has entered into transactions, as

more fully described in footnote 11, in which it has received funding from investors in exchange for which it will make payments to those

investors based on the level of sales of certain revenue categories, generally based on a percentage of sales for those certain revenues.

The Company determines whether these agreements constitute sales of future revenues or are in substance debt based on the facts and circumstances

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

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

Does the Company have continuing involvement in the generation of cash flows due the investor

Is the transaction cancellable by either party through payment of a lump sum or other transfer of assets

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

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

Does the investor have recourse relating to payments due

In the event a transaction is determined to be

a sale of future revenues, it is recorded as deferred revenue and amortized using the sum-of-the-revenue method.

In the event a transaction

is determined to be debt, it is recorded as debt and amortized using the effective interest method.

As of the date of these financial

statements, the Company has determined that all such agreements are debt.

Revenue Recognition

ASU 2014-09, “Revenue from Contracts

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

Recognition (Topic 605) .

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

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

Topic 606 defines

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

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

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

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

Distinguishing Liabilities from Equity

The Company relies on the guidance provided by

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

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

The Company will determine the liability classification

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

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

Once the Company determines that a financial instrument

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

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

The Company will determine temporary equity classification

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

5 years, the life of the

Company periodically evaluates the fair value of fixed assets whenever events or changes in circumstances indicate that its carrying

amounts may not be recoverable.

Upon retirement or other disposition of fixed assets, the cost and related accumulated depreciation are

removed from the accounts and the resulting gain or loss, if any, is recognized in income.

and Development

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, 2026 and February 28, 2025, the Company had no deferred development costs.

of Future Revenues

Company has entered into transactions, as more fully described in footnote 11, in which it has received funding from investors in exchange

for which it will make payments to those investors based on the level of sales of certain revenue categories, generally based on a percentage

of sales for those certain revenues.

The Company determines whether these agreements constitute sales of future revenues or are in substance

debt based on the facts and circumstances of each agreement, with the following primary criteria determinative of whether the agreement

constitutes a sale of future revenues or debt:

the agreement purport, in substance, to be a sale

the Company have continuing involvement in the generation of cash flows due the investor

the transaction cancellable by either party through payment of a lump sum or other transfer of assets

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

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

the investor have recourse relating to payments due

the event a transaction is determined to be a sale of future revenues, it is recorded as deferred revenue and amortized using the sum-of-the-revenue

In the event a transaction is determined to be debt, it is recorded as debt and amortized using the effective interest method.

As of the date of these financial statements, the Company has determined that all such agreements are debt.

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

Distinguishing

Liabilities from Equity

Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity , to classify certain redeemable

and/or convertible instruments.

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

Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument,

other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of

its equity shares.

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

instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”).

The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the

Company (i.e.

at the option of the holder).

Otherwise, the

Company accounts for the financial instrument as permanent equity.

Our CEO and Chairman holds sufficient shares of

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

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

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

Initial Measurement

The Company records its financial instruments

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

Subsequent Measurement – Financial Instruments

Classified as Liabilities

The Company records the fair value of its financial

instruments classified as liabilities at each subsequent measurement date.

The changes in fair value of its financial instruments classified

as liabilities are recorded as other income (expenses).

Fair Value of Financial Instruments

ASC Topic 820, Fair Value Measurements and

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

ASC Topic 820 defines fair value as the price

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

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

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

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

The fair value hierarchy consists of three broad

levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and

the lowest priority to unobservable inputs (Level 3).

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

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.

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

CEO and Chairman holds sufficient shares of the Company’s voting stock that give sufficient voting rights under the articles of

incorporation and bylaws of the Company such that the CEO and Chairman can at any time unilaterally vote to increase the number of authorized

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

Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value,

or cash received.

Measurement – Financial Instruments Classified as Liabilities

Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date.

in fair value of its financial instruments classified as liabilities are recorded as other income (expenses).

Value of Financial Instruments

Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides a framework for measuring fair value

in accordance with generally accepted accounting principles.

Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date.

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

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

own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable

fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for

identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value

hierarchy under ASC Topic 820 are described as follows:

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

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

or indirectly.

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

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

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

quoted prices for identical

or similar assets or liabilities in markets that are not active;

inputs other than quoted prices that are observable for the asset

or liability;

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

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

Measured on a Recurring Basis

The following table presents information about

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

Fair Value Measurement Using

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

on a Recurring Basis

following table presents information about our liabilities measured at fair value on a recurring basis, aggregated by the level in the

fair value hierarchy within which those measurements fell:

Value Measurement Using

February 28, 2026

Investment at cost

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

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

February 28, 2025

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

The carrying amounts of the Company’s financial

assets and liabilities, such as cash, accounts receivable, prepaid expenses and advances, accounts payable and accrued expenses, approximate

their fair values because of the short maturity of these instruments.

Earnings (Loss) per Share

Basic earnings (loss) per share (“EPS”)

is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding

(denominator) during the period.

Diluted EPS give effect to all dilutive potential common shares outstanding during the period using the

treasury stock method and convertible preferred stock using the if-converted method.

In computing diluted EPS, the average stock price

for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants.

EPS excluded all dilutive potential shares if their effect is anti-dilutive.

Basic loss per common share is computed based

on the weighted average number of shares outstanding during the period.

Diluted loss per share is computed in a manner similar to the

basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those

with the potential to be issued by virtue of convertible debt and other such convertible instruments.

Diluted loss per share contemplates

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

Recently Issued Accounting Pronouncements

Recently Issued Accounting Standards During

In August 2020, the FASB issued ASU 2020-06, Debt

— Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

Under ASU 2020-06, the embedded

conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required

to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital.

Consequently,

a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features

require bifurcation and recognition as derivatives.

The new guidance also requires the if-converted method to be applied for all convertible

The amendments in ASU 2020-06 are effective for public entities, excluding smaller reporting companies as defined, for fiscal

years beginning after December 15, 2021.

For all other entities, the amendments are effective for fiscal years beginning after December

Early adoption is permitted.

A reporting entity is not permitted to adopt the guidance in an interim period, other than the

first interim period of its fiscal year.

The Company adopted the standard using a modified retrospective approach.

The adjustment to the

Company’s accumulated deficit at March 1, 2024 was $4,175,535 with a corresponding adjustment to loans payable.

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

carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and advances,

accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.

(Loss) per Share

earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator)

by the weighted average number of shares outstanding (denominator) during the period.

Diluted EPS give effect to all dilutive potential

common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method.

In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from

the exercise of stock options and/or warrants.

Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.

loss per common share is computed based on the weighted average number of shares outstanding during the period.

Diluted loss per share

is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to

include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments.

Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in

nature with regards to earnings per share.

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 7. Management’s Discussion and Analysis