Artificial Intelligence Technology Solutions Inc. 10-Q/A

ITEM 1. FINANCIAL STATEMENTS ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) May 31, 2026 February 28, 2026 * ASSETS Current assets: Cash $ 94,643 $ 109,043 Accounts receivable, net 974,897 1,004,201 Device parts inventory, net 1,378,950 1,318,742 Prepaid expenses and deposits 556,737 503,017 Total current assets 3,005,227 2,935,003 Operating lease asset 891,922 931,814 Revenue earning devices, net of accumulated depreciation of $ 3,781,667 and $ 3,257,668 , respectively 4,850,345 5,097,627 Fixed assets, net of accumulated depreciation of $ 562,268 and $ 540,426 , respectively 176,943 183,185 Trademarks 36,157 35,319 Investment at cost 100,000 100,000 Security deposit 19,280 19,280 Total assets $ 9,079,874 $ 9,302,228 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable and accrued expenses $ 2,675,960 $ 3,007,270 Customer deposits 127,520 147,326 Current operating lease liability 239,242 243,690 Current portion of deferred variable payment obligation 3,459,840 3,161,727 Loan payable - related party 331,946 461,633 Deferred compensation for CEO 1,990,751 1,811,856 Current portion of loans payable, net of discount of $ 871,697 and $ 635,774 26,897,629 8,848,140 Current portion of accrued interest payable 9,167,495 2,271,106 Total current liabilities 44,890,383 19,952,748 Non-current operating lease liability 643,129 676,694 Loans payable, net 7,953,001 24,188,380 Deferred variable payment obligation 2,525,000 2,525,000 Incentive compensation plan payable 5,500,000 5,500,000 Accrued interest payable 3,207,606 9,122,552 Total liabilities 64,719,119 61,965,374 Series B Convertible, Redeemable Preferred Stock. $ 0.001 par value; 8 % cumulative dividend payable quarterly,$ 1,200 stated value, 5,000 shares authorized, no shares issued and outstanding at May 31, 2026 and February 28, 2026, respectively — — Series C Convertible, Redeemable Preferred Stock. $ 0.001 par value; $ 1,200 stated value, redeemable at 109.5 %, 12 % dividend, 1,000 shares authorized, 354 and 417 shares issued and outstanding at May 31, 2026 and February 28, 2026, respectively 465,465 547,941 Convertible, Redeemable Preferred Stock, value 465,465 547,941 Commitments and Contingencies Stockholders’ deficit: Preferred Stock, undesignated; 15,534,000 shares authorized; no shares issued and outstanding at May 31, 2026 and February 28, 2026, respectively — — Series G Redeemable Preferred Stock. $ 0.001 par value; 100,000 shares authorized, no shares issued and outstanding at May 31, 2026 and February 28, 2026, respectively — — Series E Preferred Stock, $ 0.001 par value; 4,350,000 shares authorized; 3,350,000 and 3,350,000 shares issued and outstanding, respectively 3,350 3,350 Series F Convertible Preferred Stock, $ 1.00 par value; 10,000 shares authorized; 2,513 and 2,513 shares issued and outstanding, respectively 2,513 2,513 Preferred Stock, value 2,513 2,513 Common Stock, $ 0.00001 par value; 27,500,000,000 shares authorized as of May 31, 2026 and February 28, 2026 (subsequently decreased to 12,000,000,000 shares authorized effective July 15, 2026 — see Summary of Common Stock Activity below); 388,482,589 and 267,872,804 shares issued, issuable and outstanding, respectively 3,885 2,679 Additional paid-in capital 120,717,508 117,803,027 Preferred stock to be issued 99,086 99,086 Accumulated deficit ( 176,931,052 ) ( 171,121,742 ) Total stockholders’ deficit ( 56,104,710 ) ( 53,211,087 ) Total liabilities and stockholders’ deficit $ 9,079,874 $ 9,302,228 * Derived from audited information The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. - 3 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended May 31, 2026 Three Months Ended May 31, 2025 Revenues $ 1,831,202 $ 1,854,837 Cost of goods sold 134,183 173,381 Depreciation and amortization 513,195 447,955 Total Cost of Goods Sold 647,378 621,336 Gross Profit 1,183,824 1,233,501 Operating expenses: Research and development (see Note 10) 885,593 1,087,619 General and administrative 2,907,577 3,232,211 Depreciation and amortization 32,646 34,121 Operating lease cost and rent 67,372 58,219 Total operating expenses 3,893,188 4,412,170 Loss from operations ( 2,709,364 ) ( 3,178,669 ) Other expense, net: Interest expense ( 2,298,874 ) ( 1,415,349 ) Loss on settlement of debt ( 707,600 ) — Total other expense, net ( 3,006,474 ) ( 1,415,349 ) Net loss $ ( 5,715,838 ) $ ( 4,594,018 ) Net loss per share - basic $ ( 0.02 ) $ ( 0.03 ) Net loss per share - diluted $ ( 0.02 ) $ ( 0.03 ) Weighted average common share outstanding - basic 325,956,059 155,176,712 Weighted average common share outstanding - diluted 325,956,059 155,176,712 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. - 4 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ DEFICIT (Unaudited) Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Deficit Temporary Equity Shareholder’s Deficit Series C Preferred Stock Series E Preferred Stock Series F Preferred Stock Common Stock Additional Paid-In Accumulated Total Shareholders’ Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Deficit Balance at February 28, 2025 306 $ 402,084 3,350,000 $ 3,350 2,513 $ 101,599 144,124,538 $ 1,441 $ 106,459,528 $ ( 156,496,930 ) $ ( 49,931,012 ) Issuance of shares, net of $ 121,746 issuance costs — — — — — — 19,000,000 190 2,691,104 — 2,691,294 Debt exchanged for common shares — — — — — — 6,850,000 69 1,250,431 — 1,250,500 Series C Preferred shares issued as dividend 9 12,073 — — — — — — ( 12,073 ) — ( 12,073 ) Stock based compensation — — — — — — — — 80,355 — 80,355 Net loss — — — — — — — — — ( 4,594,018 ) ( 4,594,018 ) Balance at May 31, 2025 315 $ 414,157 3,350,000 $ 3,350 2,513 $ 101,599 169,974,538 $ 1,700 $ 110,469,345 $ ( 161,090,948 ) $ ( 50,514,954 ) Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Deficit Temporary Equity Shareholder’s Deficit Series C Preferred Stock Series E Preferred Stock Series F Preferred Stock Common Stock Additional Paid-In Accumulated Total Shareholders’ Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Deficit Balance at February 28, 2026 417 $ 547,941 3,350,000 $ 3,350 2,513 $ 101,599 267,872,804 $ 2,679 $ 117,803,027 $ ( 171,121,742 ) $ ( 53,211,087 ) Issuance of shares, net of $ 77,391 issuance costs — — — — — — 36,786,492 368 823,112 — 823,480 Debt exchanged for common shares — — — — — — 39,000,000 390 1,453,110 — 1,453,500 Commitment fee issuable — — — — — — 1,250,000 13 28,738 — 28,751 Commitment fee issued — — — — — — 5,000,000 50 173,450 — 173,500 Commitment fee returnable — — — — — — 14,100,000 141 ( 141 ) — — Redemption of Series C on conversion to common shares ( 298 ) ( 391,572 ) — — — — 24,473,250 244 484,800 ( 93,472 ) 391,572 Issuance of Series C shares 222 291,708 — — — — — — ( 91,708 ) — ( 91,708 ) Series C Preferred shares issued as dividend 13 17,388 — — — — — — ( 17,388 ) — ( 17,388 ) Stock based compensation — — — — — — — — 60,508 — 60,508 Rounding shares — — — — — — 43 — — — — Net loss — — — — — — — — — ( 5,715,838 ) ( 5,715,838 ) Balance at May 31, 2026 354 $ 465,465 3,350,000 $ 3,350 2,513 $ 101,599 388,482,589 $ 3,885 $ 120,717,508 $ ( 176,931,052 ) $ ( 56,104,710 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. - 5 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended May 31, 2026 Three Months Ended May 31, 2025 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 5,715,838 ) $ ( 4,594,018 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 545,841 482,076 Bad debts expense 70,000 48,982 Inventory provision — — Reduction of right of use asset 38,013 33,865 Accretion of lease liability 23,281 27,428 Stock based compensation 60,508 80,355 Amortization of debt discounts 385,493 47,089 Loss on settlement of debt 707,600 — Increase (decrease) in related party accrued payroll and interest ( 129,687 ) 5,700 Changes in operating assets and liabilities: Accounts receivable ( 40,696 ) 424,655 Prepaid expenses and deposits on inventory ( 51,841 ) 104,498 Deposit on right of use asset — ( 13,187 ) Device parts inventory ( 336,925 ) ( 480,951 ) Accounts payable and accrued expenses ( 332,150 ) 524,109 Customer deposits ( 19,806 ) ( 487 ) Operating lease liability payments ( 60,449 ) ( 58,962 ) Deferred compensation for CFO 178,895 ( 1,246,687 ) Current portion of deferred variable payment obligations for payments 298,112 301,287 Accrued interest payable 1,620,342 993,063 Net cash used in operating activities ( 2,759,307 ) ( 3,321,185 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets ( 15,600 ) ( 8,422 ) Acquisition of trademarks ( 838 ) ( 1,298 ) Net cash (used in) investing activities ( 16,438 ) ( 9,720 ) CASH FLOWS FROM FINANCING ACTIVITIES: Share proceeds net of issuance costs 823,480 2,839,777 Proceeds on issuance of Series C shares 200,000 — Proceeds from loans payable 2,714,028 — Repayment of loans payable ( 976,163 ) ( 50,000 ) Net cash provided by financing activities 2,761,345 2,789,777 Net change in cash ( 14,400 ) ( 541,128 ) Cash, beginning of period 109,043 865,975 Cash, end of period $ 94,643 $ 324,847 Supplemental disclosure of cash and non-cash transactions: Cash paid for interest $ 19,257 $ 8,910 Cash paid for income taxes $ — $ — Noncash investing and financing activities: Transfer from device parts inventory to fixed assets and revenue earning devices $ 276,717 $ 917,294 Exchange of notes payable and accrued interest for common shares $ 745,900 $ 1,250,500 Discount applied to face value of loan $ 419,167 $ — Conversion of Series C shares to common shares $ 391,572 $ — Series C preferred shares issued as dividend $ 17,388 $ 12,073 Commitment fee shares as debt discount $ 202,050 $ — Right of use asset for lease liability $ — $ 53,739 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. - 6 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. GENERAL INFORMATION Artificial Intelligence Technology Solutions Inc. (“AITX” or the “Company”) was incorporated in Florida on March 25, 2010 and reincorporated in Nevada on February 17, 2015. On August 24, 2018, Artificial Intelligence Technology Solutions Inc., changed its name from On the Move Systems Corp (“OMVS”). Robotic Assistance Devices, LLC (“RAD”), was incorporated in the State of Nevada on July 26, 2016 as a Limited Liability Company. On July 25, 2017, Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc., through the issuance of 10,000 common shares to its sole shareholder. On August 28, 2017, AITX completed the acquisition of RAD (the “Acquisition”), whereby AITX acquired all the ownership and equity interest in RAD for 3,350,000 shares of AITX Series E Preferred Stock and 2,450 shares of Series F Convertible Preferred Stock. AITX’s prior business focus was transportation services, and was exploring the on-demand logistics market by developing a network of logistics partnerships. As a result of the closing of the Acquisition, AITX has succeeded to the business of RAD, and AITX’s business going forward will consist of one segment activity, which is the delivery of artificial intelligence and robotic solutions for operational, security and monitoring needs. The Acquisition was treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes since substantially all of AITX’s operations were disposed of as part of the consummation of the transaction. Therefore, no goodwill or other intangible assets were recorded by AITX as a result of the Acquisition. RAD is treated as the accounting acquirer as its stockholders control the Company after the Acquisition, even though AITX was the legal acquirer. As a result, the assets and liabilities and the historical operations that are reflected in these financial statements are those of RAD as if RAD had always been the reporting company. 2. GOING CONCERN The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern. For the three months ended May 31, 2026, the Company had negative cash flow from operating activities of $ 2,759,307 . As of May 31, 2026, the Company has an accumulated deficit of $ 176,931,052 , and negative working capital of $ 41,885,156 . Management does not anticipate having positive cash flow from operations in the near future. These factors raise a substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements. The Company does not have the resources currently to repay all its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business. 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 raising funds . There is no assurance that management will be able to raise funds nor can we provide assurance that these possible raises may not have dilutive effects. On June 23, 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 three-year period. There still remains $ 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. 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. - 7 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 3. ACCOUNTING POLICIES Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and in conformity with the condensing instructions on Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto in the Company’s latest Annual Report filed with the SEC on Form 10-K as filed on June 9, 2026. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Robotic Assistance Devices, Inc., Robotic Assistance Devices Group , Inc, Robotic Assistance Devices Mobile, Inc., and Robotic Assistance Devices Residential, Inc., and Robotic Assistance Devices Lanka (Private) Limited. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the three months ended May 31, 2026, are not necessarily indicative of the results that may be expected for the entire year. Use of Estimates In order to prepare financial statements in conformity with accounting principles 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. 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. Concentrations Loans payable At May 31, 2026 there were $ 35,722,326 of loans payable, $ 32,466,506 or 91 % of these loans to companies controlled by one individual. At February 28, 2026 there were $ 33,672,294 loans payable, $ 32,178,506 or 96 % of these loans to companies controlled by one individual. Cash The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market instruments. The Company places its cash and cash equivalents with high-quality, U.S. financial institutions and, to date has not experienced losses on any of its balances. Accounts Receivable Accounts receivable are comprised of balances due from customers, net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. There was an allowance of $ 240,000 and $ 170,000 provided as of May 31, 2026, and February 28, 2026, respectively. For the three months ending May 31, 2026, two customers account for 23 % of total accounts receivable. For the three months ending May 31, 2025, three customers account for 53 % of total accounts receivable Device Parts Inventory Device parts inventory is stated at the lower of cost or net realizable value using the weighted average cost method. The Company records a valuation reserve for obsolete and slow-moving inventory, relying principally on specific identification of such inventory. The Company uses these device parts in the assembly of revenue earning devices (and demo devices) as well as research and development. Depending on use, the Company will transfer the parts to the corresponding asset or expense if used in research and development. A charge to income is taken when factors that would result in a need for an increase in the valuation, such as excess or obsolete inventory, are noted. As of May 31, 2026, and February 28, 2026, there was a valuation reserve of $ 175,000 and $ 175,000 , respectively. - 8 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Revenue Earning Devices Revenue earning devices are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of 48 months. The Company continually evaluates revenue earning devices to determine whether events or changes in circumstances have occurred that may warrant revision of the estimated useful life or whether the devices should be evaluated for possible impairment. The Company uses a combination of the undiscounted cash flows and market approaches in assessing whether an asset has been impaired. The Company measures impairment losses based upon the amount by which the carrying amount of the asset exceeds the fair value. Fixed Assets Fixed assets are stated at cost. Depreciation is provided on the straight-line method based on the estimated useful lives of the respective assets which range from two 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. SCHEDULE OF FIXED ASSETS STATED AT COST Computer equipment and software 2 or 3 years Office equipment 4 years Manufacturing equipment 7 years Warehouse equipment 5 years Tooling 2 years Demo Devices 4 years Vehicles 3 years Leasehold improvements 5 years, the life of the lease The Company periodically evaluates the fair value of fixed assets whenever events or changes in circumstances indicate that its carrying amounts may not be recoverable. Upon retirement or other disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is recognized in income. Research and Development Research and development costs are expensed in the period they are incurred in accordance with ASC 730, Research and Development unless they meet specific criteria related to technical, market and financial feasibility, as determined by Management, including but not limited to the establishment of a clearly defined future market for the product, and the availability of adequate resources to complete the project. If all criteria are met, the costs are deferred and amortized over the expected useful life or written off if a product is abandoned. At May 31, 2026 and February 28, 2026, the Company had no deferred development costs. Contingencies Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. Sales of Future Revenues The Company has entered into transactions, as more fully described in footnote 8, 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: - 9 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ● Does the agreement purport, in substance, to be a sale ● Does the Company have continuing involvement in the generation of cash flows due to 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 is implicitly limited by the terms of the agreement ● Does the Company’s revenue for a reporting period underlying the agreement have only a minimal impact on the investor’s rate of return ● Does the investor have recourse relating to payments due In the event a transaction is determined to be a sale of future revenues, it is recorded as deferred revenue and amortized using the sum-of-the-revenue method. In the event a transaction is determined to be debt, it is recorded as debt and amortized using the effective interest method. As of the date of these financial statements, the Company has determined that all such agreements are debt. Revenue Recognition ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” , supersedes the revenue recognition requirements and industry specific guidance under Revenue Recognition (Topic 605) . Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. Topic 606 defines a five-step process that must be evaluated and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing accounting principles generally accepted in the United States of America (“U.S. GAAP”) including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company adopted Topic 606 on March 1, 2018, using the modified retrospective method. Under the modified retrospective method, prior period financial positions and results will not be adjusted. There was no cumulative effect adjustment recognized as a result of this adoption. Refer to Note 4 – Revenue from Contracts with Customers for additional information. For the three months ended May 31, 2026, two customers accounted for 36 % of total revenue and for the three months ended May 31, 2025, two customers accounted for 65 % of total revenue. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending February 28, 2027, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements. Leases Lease agreements are evaluated to determine if they are sales/finance leases meeting any of the following criteria at inception: (a) transfer of ownership of the underlying asset; (b) purchase option that is reasonably certain of being exercised; (c) the lease term is greater than a major part of the remaining estimated economic life of the underlying asset; or (d) if the present value of the sum of lease payments and any residual value guaranteed by the lessee that has not already been included in lease payments in accordance with ASC 842-10-30-5(f) equals or exceeds substantially all of the fair value of the underlying asset. - 10 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) If at its inception, a lease meets any of the four lease criteria above, the lease is classified by the Company as a sales/finance; and if none of the four criteria are met, the lease is classified by the Company as an operating lease. Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term, whereby an equal amount of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in the later years. The difference between rent expense recognized and actual rental payments is recorded as deferred rent and included in liabilities. Distinguishing Liabilities from Equity The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity , to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares. Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity. Our Chief Executive Officer/ Chairman holds sufficient shares of the Company’s voting preferred stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO/ Chairman can at any time unilaterally vote to increase the number of authorized shares of common stock of the Company, without the need to call a general meeting of common shareholders of the Company. Initial Measurement The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received. Subsequent Measurement – Financial Instruments Classified as Liabilities The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other income (expenses). Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides a framework for measuring fair value in accordance with generally accepted accounting principles. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). - 11 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC Topic 820 are described as follows: ● Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. ● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3 – Inputs that are unobservable for the asset or liability. Measured on a Recurring Basis The following table presents information about our liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fell: SCHEDULE OF LIABILITIES MEASURED AT FAIR VALUE Amount at Fair Value Measurement Using Fair Value Level 1 Level 2 Level 3 May 31, 2026 Assets Investment at cost $ 100,000 $ 50,000 $ — $ 50,000 Liabilities Incentive compensation plan payable – revaluation of equity awards payable in Series G shares $ 5,500,000 $ — $ — $ 5,500,000 February 28, 2026 Assets Investment at cost $ 100,000 $ 50,000 $ — $ 50,000 Liabilities Incentive compensation plan payable – revaluation of equity awards payable in Series G shares $ 5,500,000 $ — $ — $ 5,500,000 For the incentive compensation plan referred to above , the Company recorded stock based compensation of $ 0 and $ 0 for the three months ended May 31, 2026 and May 31, 2025 with corresponding adjustments to incentive compensation plan 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 their fair values because of the short maturity of these instruments. Earnings (Loss) per Share Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive. Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share. Recently Adopted Accounting Pronouncements ASU 2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The amendments require enhanced disclosures about significant segment expenses and other segment items, require disclosure of the title and position of the chief operating decision maker (“CODM”), explain how the CODM uses reported measures of segment profit or loss to assess performance and allocate resources, and expand interim disclosure requirements. The amendments apply to entities with a single reportable segment as well as entities with multiple reportable segments. - 12 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The Company adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , during fiscal 2025. The standard requires enhanced disclosures regarding segment expenses and CODM information and applies to entities with a single reportable segment. Adoption of the standard impacted the Company’s segment reporting disclosures only and did not affect its consolidated financial position, results of operations, or cash flows. Recently issued accounting pronouncement not yet effective ASU 2024-04—Debt with Conversion and Other Options (Topic 470-20): Induced Conversions of Convertible Debt Instruments In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments . The amendments clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions or as debt extinguishments. Under the amended guidance, an induced conversion requires that the inducement offer provide the holder, at a minimum, the consideration issuable under the existing conversion privileges of the instrument. The amendments are effective for annual reporting periods beginning after December 15, 2025, including interim reporting periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this guidance will have on its consolidated financial statements and related disclosures. ASU 2025-05—Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets In July 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets . The amendments refine the guidance in ASC 326 related to the measurement of expected credit losses for accounts receivable and contract assets arising from revenue transactions accounted for under ASC 606. The update clarifies the application of the current expected credit loss (“CECL”) model to such assets, including the use of practical expedients and considerations in estimating expected credit losses over the contractual term of the asset. The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-05 on its consolidated financial statements and related disclosures. 4. REVENUE FROM CONTRACTS WITH CUSTOMERS Revenue is earned primarily from two sources: 1) direct sales of goods or services and 2) short-term rentals. Direct sales of goods or services are accounted for under Topic 606, and short-term rentals are accounted for under Topic 842 (which addresses lease accounting and was adopted on March 1, 2019). As disclosed in the revenue recognition section of Note 3 – Accounting Polices, the Company adopted Topic 606 in accordance with the effective date on March 1, 2018. Note 3 includes disclosures regarding the Company’s method of adoption and the impact on the Company’s financial statements. Revenue is recognized on direct sales of goods or services when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. After adopting Topic 842, also referred to above in Note 3, the Company is accounting for revenue earned from rental activities where an identified asset is transferred to the customer and the customer has the ability to control that asset. The Company recognizes revenue from its device rental activities when persuasive evidence of a contract exists, the performance obligations have been satisfied, the transaction price is fixed or determinable and collection is reasonably assured. Performance obligations associated with device rental transactions are satisfied over the rental period. Rental periods are short-term in nature. Therefore, the Company has elected to apply the practical expedient which eliminates the requirement to disclose information about remaining performance obligations. Payments are due from customers at the completion of the rental, except for customers with negotiated payment terms, generally net 30 days or less, which are invoiced and remain as accounts receivable until collected. The following table presents revenues from contracts with customers disaggregated by product/service: SCHEDULE OF REVENUES FROM CONTRACTS WITH CUSTOMERS Three Months Ended May 31, 2026 Three Months Ended May 31, 2025 Device rental activities $ 1,613,095 $ 1,627,286 Direct sales of goods and services 218,107 227,551 Revenue $ 1,831,202 $ 1,854,837 - 13 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 5. LEASES We lease certain warehouses, and office space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, we did not combine lease and non-lease components. There is no lease renewal. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Below is a summary of our lease assets and liabilities at May 31, 2026 and February 28, 2026. SCHEDULE OF LEASE ASSETS AND LIABILITIES Leases Classification May 31, 2026 February 28, 2026 Assets Operating Operating Lease Assets $ 891,922 $ 931,814 Liabilities Current Operating Current Operating Lease Liability $ 239,242 $ 243,690 Noncurrent Operating Noncurrent Operating Lease Liabilities 643,129 676,694 Total lease liabilities $ 882,371 $ 920,384 Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate of 10 % which for the leases noted above was based on the information available at commencement date in determining the present value of lease payments. We compare against loans we obtain to acquire physical assets and not loans we obtain for financing. The loans we obtain for financing are generally at significantly higher rates and we believe that physical space or vehicle rental agreements are in line with physical asset financing agreements. CAM charges were not included in operating lease expense and were expensed in general and administrative expenses as incurred. Operating lease cost and rent was $ 67,372 and $ 58,219 for the three months ended May 31, 2026 and May 31, 2025, respectively. 6. INVESTMENT 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. On June 3, 2024 the Company acquired a $ 50,000 convertible note receivable from Nightingale Intelligent Systems, Inc., a private Delaware corporation that provides unmanned aerial vehicles (UAV) for commercial applications. On January 3, 2025 the Company exchanged it’s convertible note receivable for : 1,770,840 Series A preferred shares, 15,000 common shares and 165,000 common share warrants. On February 28, 2025, there was a 10 :1 split . The Company now holds 177,084 Series A preferred shares, 1,500 common shares and 16,500 common share warrants (at a strike price of $ 0.80 /share). The Company values the Nightingale Intelligent Systems, Inc.’s shares and warrants at $ 50,000 bringing total investments at cost to $ 100,000 at May 31, 2026 and February 28, 2026. 7. REVENUE EARNING DEVICES Revenue earning devices consisted of the following: SCHEDULE OF REVENUE EARNING DEVICES May 31, 2026 February 28, 2026 Revenue earning devices $ 8,632,012 $ 8,355,295 Less: Accumulated depreciation ( 3,781,667 ) ( 3,257,668 ) Total $ 4,850,345 $ 5,097,627 During the three months ended May 31, 2026, the Company made total additions to revenue earning devices of $ 276,717 which were transfers from inventory. During the three months ended May 31, 2025, the Company made total additions to revenue earning devices of $ 895,547 which were transfers from inventory Depreciation and amortization for the years ended May 31, 2026, and May 31, 2025, are as follows: SCHEDULE OF DEPRECIATION AND AMORTIZATION Depreciation and Amortization RED Three Months Ended May 31 2026 Three Months Ended May 31, 2025 Cost of Goods Sold $ 513,195 $ 447,955 Operating expenses 10,804 4,104 Total Depreciation and Amortization RED $ 523,999 $ 452,059 - 14 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 8. FIXED ASSETS Fixed assets consisted of the following: SCHEDULE OF FIXED ASSETS May 31, 2026 February 28, 2026 Automobile $ 74,237 $ 74,237 Demo devices 265,421 265,421 Tooling 122,620 107,020 Machinery and equipment 17,246 17,246 Computer equipment 157,448 157,448 Office equipment 15,312 15,312 Furniture and fixtures 21,225 21,225 Warehouse equipment 38,746 38,746 Leasehold improvements 26,956 26,956 Fixed assets gross 739,211 723,611 Less: Accumulated depreciation ( 562,268 ) ( 540,426 ) Fixed assets, net of accumulated depreciation $ 176,943 $ 183,185 During the three months ending May 31, 2026, the Company made additions of $ 15,600 . During the three months ending May 31, 2025, the Company made additions of $ 46,071 of which $ 22,347 were transfers from inventory with remaining additions of $ 23,724 . Depreciation and amortization for the years ended May 31, 2026, and May 31, 2025, are as follows: SCHEDULE OF DEPRECIATION AND AMORTIZATION IN OPERATING EXPENSES Depreciation and Amortization Three Months Ended May 31 2026 Three Months Ended May 31, 2025 Fixed assets $ 21,842 $ 30,017 Revenue earning devices 10,804 4,104 Total Depreciation and Amortization included in operating expenses $ 32,646 $ 34,121 9. 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 reported quarterly revenue from operations excluding any gains or losses from financial instruments (Revenues). At February 29, 2020 the investor has advanced the full $ 900,000 . On May 9, 2019 the Company entered into two similar arrangements with two investors: (1) 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. (2) 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. These variable payments (Payments) are to be made 30 days after the end of each fiscal quarter. If the Payments would deplete RAD’s available cash by more than 30%, the Payments may be deferred for up to 12 months after the quarterly report at an interest rate of 6% per annum on the unpaid amount. In the event that at least 10% of the assets of the Company are sold by the Company, the investors would be entitled to the fair market value (FMV) of all future Payments associated with the assets sold as determined by an independent valuator to be chosen by the investors. The FMV cannot exceed 30% of the total asset disposition price defined as the total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect a change in control, then the investors must be paid the FMV of all future Payments in one lump payment. The FMV cannot exceed 30% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments. - 15 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) On November 18, 2019, the Company entered into another similar arrangement with the (February 1, 2019) investor above whereby the investor would advance up to $ 225,000 in exchange for a perpetual 2.25 % rate Payment on the Company’s quarterly Revenues (commencing on quarter ending May 31, 2020). At February 29, 2020, the investor has advanced $ 109,000 and the investor advanced the $ 116,000 remainder as of May 2020. On December 30, 2019, the Company entered into another similar arrangement with a new investor whereby the investor would advance up to $ 100,000 in exchange for a perpetual 1.00 % rate Payment on the Company’s quarterly Revenues (commencing quarter ended November 30, 2020). At February 29, 2020, the investor has advanced $ 50,000 with the remainder to be advanced no later than June 30, 2020. If the total investor advances turns out to be less than $ 100,000 , this would not constitute a breach of the agreement, rather the 1.00 % rate would be adjusted on a pro-rata basis. On April 22, 2020, the Company entered into another similar arrangement with the (first May 9, 2019) investor above whereby the investor would advance up to $ 100,000 in exchange for a perpetual 1.00 % rate Payment on the Company’s quarterly Revenues. At May 31, 2020, the investor has fully funded this commitment. On July 1, 2020, the Company entered into a similar agreement with the first investor whereby the investor would pay up to $ 800,000 in exchange for a perpetual 2.75 % rate payment (Payment) on the Company’s reported quarterly revenue. These Payments are to be made 90 days after the fiscal quarter with the first payment being due no later than May 31, 2021. If the Payments would deplete RAD’s available cash by more than 20%, the payment may be deferred. The investor had agreed to pay $100,000 per month over an 8 month period with the first payment due July 2020 and the final payment no later than February 28, 2021. As at August 31, 2020 the investor had fully funded the $800,000 commitment. On August 27, 2020, the Company and the first investor referred to above consolidated the three separate agreements of February 1, 2019 for $ 900,000 , November 18, 2019 for $ 225,000 and July 1, 2020 for $ 800,000 into a new agreement for a total of $ 1,925,000 . This new agreement is for similar terms as the above agreements save for the following: the rate payment is revised to 14.25 % payable on revenues commencing the quarter ended August 31, 2020. Upon an event of default that we are unable to cure in the time allotted under the agreements, these Payments may be secured with a priority lien by UCC filing against all of our assets, but is subordinated to equipment financing or leasing agreements on the products the Company leases to its customers. In summary of all agreements mentioned above if in the event that at least 10 % of the assets of the Company are sold by the Company, the investors would be entitled to the fair market value (FMV) of all future Payments associated with the assets sold as determined by an independent valuator to be chosen by the investors. The FMV cannot exceed 43.77% of the total asset disposition price defined as the total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect a change in control, then the investors must be paid the FMV of all future Payments in one lump payment. The FMV cannot exceed 43.77% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments. As of March 1, 2021 as a result of the amendment with the first investor noted below, this aggregate asset disposition % was reduced from 43.77 % to 33.77%. The Payments first become payable on June 30, 2019 (unless otherwise indicated) based on the quarterly Revenues for the quarter ended May 31, 2019 and accrue every quarter thereafter. As of May 31, 2026, the Company has accrued $ 3,459,840 in Payments of which $ 2,202,545 are in arrears. As of February 28, 2026, the Company has accrued approximately $ 3,161,727 in Payments, of which $ 1,901,259 is in arrears. No notices have been received by the Company. The Company has recorded cumulative interest of 6 % interest totaling $ 204,427 commencing this quarter, on the balance in arrears, and will continue to adjust quarterly. On March 1, 2021, the first investor referred to above whose aggregate investment is $ 1,925,000 revised his agreements as follows: 1) The rate payment was reduced from 14.25 % to 9.65 % 2) The asset disposition % (see below) was reduced from 31 % to 21 % - 16 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) In consideration for the above changes, the investor received 40 Series F Convertible Preferred Stock and a warrant to purchase 367 shares of its Series F Convertible Preferred Stock with a five 5 -year term and an exercise price of $ 1.00 . During the three months ended May 31, 2021, the warrant holder exercised warrants to acquire 38 shares of Series F Convertible Preferred Stock. The Company attributed a fair value based on recent transactions for the Series F Preferred stock and warrants of $ 33,015,214 and recorded a loss on settlement of debt with a corresponding adjustment to paid in capital. The Company retains total involvement in the generation of cash flows from these revenue streams that form the basis of the payments to be made to the investors under this agreement. Because of this, the Company has determined that the agreements constitute debt agreements. As of May 31, 2026, and February 28, 2026, the long-term balances other than Payments already owed is the cash received of $ 2,525,000 and $ 2,525,000 , respectively. For both the three months ended May 31, 2026, and year ended February 28, 2026, the Company has received $ 0 related to the deferred payment obligation since there were no new agreements during this period. The balance remains $ 2,525,000 at both May 31, 2026 and February 28, 2026. 10. RELATED PARTY TRANSACTIONS For both the three months ended May 31, 2026, and May 31, 2025, the Company had repayments of net advances of $ 129,687 and $ 0 , respectively. At May 31, 2026, the loan payable-related party was $ 331,946 and $ 461,633 at February 28, 2026. Included in the balance due to the related party at May 31, 2026, is $ 255,414 of deferred salary and interest, $ 157,513 of which bears interest at 12 %. As of February 28, 2026, included in the balance due to the related party is $ 285,638 of deferred salary all of which bears interest at 12 %. The accrued interest included in the loan at May 31, 2026, and February 28, 2026, was $ 84,956 , and $ 79,268 , respectively. During the three months ended May 31, 2026, the Company paid out gross payments to the CEO of $ 71,105 offset by a bonus accrual of $ 250,000 , which yields a net change of $ 178,895 relating to deferred compensation for CEO. This was all in accordance with a December 2023 board action allowing for $ 1 million of annual discretionary compensation as well as a February 28, 2026, board action which provided an additional $ 1.5 million in compensation. During the three months ended May 31, 2025, the Company paid out gross payments to the CEO of $ 1,496,687 offset by a bonus accrual of $ 250,000 , which yielded a net change of $ 1,246,687 relating to deferred compensation for CEO. The balance of deferred compensation for CEO was $ 1,990,751 and $ 1,811,856 at May 31, 2026, and February 28, 2026, respectively For the three months ended May 31, 2026, the Company accrued $ 0 (three months ended May 31, 2025-$ 0 ) of incentive compensation plan payable to the CEO. This will be payable in Series G Preferred Shares, which are redeemable at the Company’s option at $ 1,000 per share. On May 31, 2026, and February 28, 2026, there was $ 5,500,000 and $ 5,500,000 incentive compensation payable. During the three months ended May 31, 2026, and 2025, the Company was charged $ 390,130 and $ 736,875 , respectively for fees for research and development from 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. As at May 31, 2026, and February 28, 2026, the balance due to this company was $ 76,532 and $ 160,557 , respectively. - 17 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 11. LOANS PAYABLE Loans payable at May 31, 2026 consisted of the following: SCHEDULE OF LOANS PAYABLE Date Maturity Description Principal Interest Rate July 18, 2016 July 18, 2017 Promissory note (1)* $ 3,500 22 % December 10, 2020 March 1, 2027 Promissory note (2) 3,921,168 A 12 % December 10, 2020 March 1, 2027 Promissory note (3) 2,754,338 A 12 % December 14, 2020 March 1, 2027 Promissory note (5) 310,375 12 % December 30, 2020 March 1, 2027 Promissory note (6) 350,000 A 12 % January 1, 2021 March 1, 2027 Promissory note (7) 25,000 12 % January 1, 2021 March 1, 2027 Promissory note (8) 145,000 12 % January 14, 2021 March 1, 2027 Promissory note (9) 237,500 A 12 % February 22, 2021 March 1, 2027 Promissory note (10) 1,650,000 12 % March 1, 2021 March 1, 2027 Promissory note (11) 6,000,000 12 % June 8, 2021 June 8, 2027 Promissory note (12) 2,750,000 12 % September 14, 2021 September 14, 2027 Promissory note (14) 1,650,000 A 12 % July 28, 2022 March 1, 2027 Promissory note (15) 170,000 15 % August 30, 2022 August 30,2027 Promissory note (16) 3,000,000 A 15 % September 7, 2022 March 1, 2027 Promissory note (17) 400,000 15 % September 8, 2022 March 1, 2027 Promissory note (18) 475,000 15 % October 13, 2022 March 1, 2027 Promissory note (19) 350,000 15 % October 28, 2022 October 31, 2026 Promissory note (20) 293,000 A 15 % November 9, 2022 October 31, 2026 Promissory note (20) 400,000 A 15 % November 10, 2022 October 31, 2026 Promissory note (20) 400,000 A 15 % November 15, 2022 October 31, 2026 Promissory note (20) 400,000 A 15 % January 11, 2023 October 31, 2026 Promissory note (20) 400,000 A 15 % February 6, 2023 October 31, 2026 Promissory note (20) 400,000 A 15 % April 5. 2023 October 31, 2026 Promissory note (20) 400,000 A 15 % April 20, 2023 October 31, 2026 Promissory note (20) 400,000 A 15 % May 11, 2023 October 31, 2026 Promissory note (20) 400,000 A 15 % October 27, 2023 October 31, 2026 Promissory note (20) 400,000 A 15 % November 30, 2023 April 30, 2027 Purchase Agreement (21) 203,000 15 % March 8, 2024 August 8, 2027 Purchase Agreement (22) 350,000 15 % July 26, 2025 July 26, 2026 Promissory note (23) 165,000 C 15 % August 7,2025 August 7,2026 Promissory note (24) 245,000 C 15 % August 25, 2025 August 25, 2026 Promissory note (25) 137,500 C 15 % August 25, 2025 May 6, 2026 Future Receivables Purchase and Sale Agreement (26) — 108 % September 25, 2025 September 25, 2026 Promissory note (27) 550,000 C 15 % October 30. 2025 October 30. 2026 Promissory note (28) 200,000 C 15 % November 6, 2025 November 6, 2026 Promissory note (29) 275,000 C 15 % November 24, 2025 November 24, 2026 Promissory note (30) 450,000 C 15 % December 9, 2025 December 9, 2026 Promissory note (31) 450,000 C 15 % December 17, 2025 September 23, 2026 Business loan (32) — 65 % December 22, 2025 December 22, 2026 Convertible note (33) 495,000 12 % December 27, 2025 December 27, 2026 Promissory note (34) 275,000 C 15 % January 12, 2026 January 12, 2027 Promissory note (35) 330,000 C 15 % January 27, 2026 January 27, 2027 Promissory note (36) 170,000 C 15 % February 2, 2026 February 2, 2027 Promissory note (37) 330,000 C 15 % February 19, 2026 February 19, 2027 Convertible note (38) 165,000 12 % February 24, 2026 February 24, 2027 Promissory note (39) 170,000 C 15 % March 16, 2026 March 16, 2027 Promissory note (13) 170,000 C 15 % March 25, 2026 March 25, 2027 Convertible note (40) 110,000 12 % March 25, 2026 March 25, 2026 Convertible note (41) — 12 % April 9, 2026 January 15, 2027 Convertible note (42) 257,000 10 % April 13, 2026 April 13, 2027 Future Receivables Purchase and Sale Agreement (43) 641,279 NA April 20, 2026 April 20, 2027 Convertible note (44) 277,778 12 % May 1, 2026 January 15, 2027 Convertible note (45) 157,000 10 % May 4, 2026 May 4, 2027 Convertible Note (46) 700,000 12 % May 28 2026 May 28 2026 Convertible Note (47) 138,889 12 % May 29, 2026 May 29, 2027 Promissory note (4) 225,000 C 15 % $ 35,722,327 Less: current portion of loans payable ( 27,769,326 ) Less: discount on non-current loans payable - Non-current loans payable, net of discount $ 7,953,001 Current portion of loans payable $ 27,769,326 Less: discount on current portion of loans payable ( 871,697 ) Current portion of loans payable, net of discount $ 26,897,629 * In default A On June 15, 2026 the Company and lender entered into a Loan Amendment Agreement whereby it was agreed that simple interest was to be calculated from the loan issuance date through to February 28, 2026 and commencing March 1, 2026 compounded on the respective principal and interest balance at February 28, 2026. C Compounding annually (1) This note was transferred from convertible notes payable because in August 2022 it was no longer convertible due to restrictions placed on the lender. - 18 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (2) 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. On November 28, 2023, the parties extended the maturity date from December 10, 2023, to March 1, 2025, with all other terms and conditions remaining the same. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. On December 10, 2025 an exchange agreement was made whereby principal and interest of this note may be exchanged for common shares at 90 % of the 5 days’ lowest bid of shares. For the three months ending May 31, 2026 the company exchanged $ 336,000 accrued interest for 14,000,000 common shares at a fair value of $ 910,700 with a loss on settlement of $ 574,700 . (3) 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 $ 0.002 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. $ 300,000 has been repaid during the year ended February 29, 2024. On November 28, 2023, the parties extended the maturity date from December 10, 2023, to March 1, 2025, with all other terms and conditions remaining the same. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. On November 24, 2025, the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of the note into common shares at an exchange amount of 90 % of the previous 5 day’s lowest bid price. On February 8, 2026, the holder exchanged $ 192,000 in accrued interest for 8,000,000 common shares at fair value of $ 320,000 with a loss on settlement of $ 128,000 . (4) Original $ 225,000 note may be pre-payable at any time. The note balance includes an original issue discount of $ 25,000 . Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 115 , with an unamortized discount of $ 24,885 at May 31, 2026. (5) 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 . On December 14, 2023, the parties extended the maturity date from December 14, 2023 date to March 1, 2027. (6) 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 . The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $ 271,250 with a corresponding adjustment to paid in capital for the relative fair value of the warrant. On March 1, 2024, the unamortized relative fair value discount of $ 65,092 was removed with a corresponding adjustment to accumulated deficit. A $ 8,399 unamortized discount remained. On November 28, 2023, the parties extended the maturity date from December 10, 2023, to March 1, 2025, with all other terms and conditions remaining the same. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same . The loan is fully amortized. (7) 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. On November 28, 2023, the parties extended the maturity date from January 1, 2024, to March 1, 2025, with all other terms and conditions remaining the same. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same . (8) 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. On November 28, 2023, the parties extended the maturity date from January 1, 2024, to March 1, 2025, with all other terms and conditions remaining the same . On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same . (9) 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 . The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $ 380,174 with a corresponding adjustment to paid in capital. On March 1, 2024, the unamortized relative fair value discount of $ 80,284 was removed with a corresponding adjustment to accumulated deficit. A $ 10,559 unamortized discount remained. On November 28, 2023, the parties extended the maturity date from January 14, 2024, to March 1, 2025, with all other terms and Conditions remaining the same. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. The loan is fully amortized. Through an exchange agreement on February 11, 2025, the Company repaid $ 162,000 in principal st through the issuance of 600,000 common shares. On March 28, 2025 the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of the note into common shares at an exchange amount of 90 % of the previous 5 day’s lowest VWAP price. On March 5, 2025 the Company repaid $ 150,500 in loan principal as well as $ 275,000 in accrued interest (all totaling $ 425,500 ) was repaid on March 5, 2025 through the issuance of 1,850,000 common shares at a fair value of $ 444,000 with a loss on settlement of $ 18,500 . - 19 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (10) 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 . The discount and warrant are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $ 1,342,857 with a corresponding adjustment to paid in capital for the relative fair value of the warrant. 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 recorded in the year ended February 28, 2022. On November 28, 2023, the parties extended the maturity date from February 22, 2024, to March 1, 2025, with all other terms and conditions remaining the same. On March 1, 2024, the unamortized relative fair value discount of $ 497,614 was removed with a corresponding adjustment to accumulated deficit. A $ 55,585 unamortized discount remained. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. The loan is fully amortized. On November 24, 2025, the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of the note into common shares at an exchange amount of 90 % of the previous 5 day’s lowest bid price. For the three months ending May 31, 2026, the Company exchanged $ 80,000 of accrued interest for 5,000,000 common at a fair value of $ 100,000 with a loss on settlement of $ 20,000 . (11) The unsecured note may be pre-payable at any time. Cash proceeds of $ 5,400,000 were received. The note balance of $ 6,000,000 includes an original issue discount of $ 600,000 and was issued with a warrant to purchase 300,000,000 shares at an exercise price of $ 0.135 per share with a 3 -year term and having a relative fair value of $ 4,749,005 using Black-Scholes with assumptions described in note 13. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $ 4,749,005 with a corresponding adjustment to paid in capital for the relative value of the warrant. 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 recorded in the year ended February 28, 2022. This note has been fully amortized. This note was again extended to March 1, 2025. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. On March 28, 2025 the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of the note into common shares at an exchange amount of 90 % of the previous 5 day’s lowest VWAP price. For the year ended February 28, 2026, the Company has issued 36,500,000 common shares at fair market value of $ 4,365,500 to repay $ 3,840,500 in accrued interest with a loss on settlement of debt of $ 525,000 . (12) 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 . The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $ 2,035,033 with a corresponding adjustment to paid in capital. 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 recorded in the year ended February 28, 2022. This note was extended to June 8, 2025. On March 1, 2024, the unamortized relative fair value discount of $ 33,547 was removed with a corresponding adjustment to accumulated deficit. A $ 4,121 unamortized discount remained. The loan is fully amortized. On April 16, 2025, the parties again extended the maturity date from June 8, 2025, to June 8, 2027, with all other terms and conditions remaining the same. On November 24, 2025, the Company entered into an exchange agreement where the holder can exchange all or part of price the principal and interest of the note into common shares at an exchange amount of 90 % of the previous 5 day’s lowest bid price. For the year ended February 28, 2026 the holder exchanged $ 1,416,000 in accrued interest for 25,000,000 common shares at a fair value of $ 1,680,000 with a loss on settlement of $ 264,000 . (13) 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 three months ended May 31, 2026, the Company recorded amortization expense of $ 3,680 , with an unamortized discount of $ 16,320 at May 31, 2026. (14) 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. On March 1, 2024, the unamortized relative fair value discount of $ 572,549 was removed with a corresponding adjustment to accumulated deficit. A $ 66,846 unamortized discount remained. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 2,455 , with an unamortized discount of $ 13,870 at May 31, 2026. On April 16, 2025, the parties again extended the maturity date from September 14, 2025, to September 14, 2027, with all other terms and conditions remaining the same. On November 24, 2025, the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of the note into common shares at an exchange amount of 90 % of the previous 5 day’s lowest bid price. (15) 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. On November 29, 2023, the parties extended the maturity date from July 28, 2023, to March 1, 2025, with all other terms and conditions remaining the same . This note has been fully amortized. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. (16) 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. On March 1, 2024, the unamortized relative fair value discount of $ 11,535 was removed with a corresponding adjustment to accumulated deficit. This note has been fully amortized. This note was extended to August 30, 2025. On April 16, 2025, the parties again extended the maturity date from August 30, 2025, to August 30, 2027, with all other terms and conditions remaining the same. On November 24, 2025, the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of the note into common shares at an exchange amount of 90 % of the previous 5 day’s lowest bid price. (17) 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. On November 29, 2023, the parties extended the maturity date from September 7, 2023, to March 1, 2025, with all other terms and conditions remaining the same . This note has been fully amortized. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. - 20 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (18) 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. On November 29, 2023, the parties extended the maturity date from September 8, 2023, to March 1, 2025, with all other terms and conditions remaining the same. This note has been fully amortized. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. (19) 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 present and after-acquired property. On November 29, 2023, the parties extended the maturity date from October 13, 2023, to March 1, 2025, with all other terms and conditions remaining the same . This note has been fully amortized. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. (20) On October 28, 2022, the Company entered into as secured loan agreement 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 tranche 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. On November 24, 2025, the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of this secured loan agreement into common shares at an exchange amount of 90 % of the previous 5 day’s lowest bid price. At February 29, 2024 the Company has issued all 10 tranches totaling $ 4,000,000 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 . On March 1, 2024, the unamortized relative fair value discount of $ 286,775 was removed with a corresponding adjustment to accumulated deficit. A $ 47,892 unamortized discount remained. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 5,243 , with an unamortized discount of $ 9,185 at May 31, 2026.For the three months ending May 31, 2026, the Company exchanged $ 107,000 of principal and $ 222,900 of accrued interest totaling $ 329,900 for 20,000,000 common at a fair value of $ 442,800 with a loss on settlement of $ 112,900 . November 9, 2022, $ 400,000 loan, original issue discount of $ 50,000 , 61 Series F Preferred Share warrants having a relative fair value of $ 299,750 . On March 1, 2024, the unamortized relative fair value discount of $ 288,513 was removed with a corresponding adjustment to accumulated deficit. A $ 48,126 unamortized discount remained. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 5,269 , with an unamortized discount of 9,233 at May 31, 2026. November 10, 2022, $ 400,000 loan, original issue discount of $ 50,000 , 61 Series F Preferred Share warrants having a relative fair value of $ 302,020 . On March 1, 2024, the unamortized relative fair value discount of $ 291,694 was removed with a corresponding adjustment to accumulated deficit. A $ 48,290 unamortized discount remained. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 5,288 , with an unamortized discount of $ 8,957 at May 31, 2026. November 15, 2022, $ 400,000 loan, original issue discount of $ 50,000 , 61 Series F Preferred Share warrants having a relative fair value of $ 299,959 . On March 1, 2024, the unamortized relative fair value discount of $ 287,814 was removed with a corresponding adjustment to accumulated deficit. A $ 47,976 unamortized discount remained. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 5,528 , with an unamortized discount of $ 8,927 at May 31, 2026. January 11, 2023, $ 400,000 loan, original issue discount of $ 50,000 , 61 Series F Preferred Share warrants having a relative fair value of $ 299,959 . On March 1, 2024, the unamortized relative fair value discount of $ 286,813 was removed with a corresponding adjustment to accumulated deficit. A $ 48,124 unamortized discount remained. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 5,269 , with an unamortized discount of $ 9,233 at May 31, 2026. February 6, 2023, $ 400,000 loan, original issue discount of $ 50,000 , 61 Series F Preferred Share warrants having a relative fair value of $ 299,959 . On March 1, 2024, the unamortized relative fair value discount of $ 288,342 was removed with a corresponding adjustment to accumulated deficit. A $ 48,294 unamortized discount remained. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 5,288 , with an unamortized discount of $ 9,268 at May 31, 2026. - 21 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) April 5, 2023, $ 400,000 loan, original issue discount of $ 50,000 , 61 Series F Preferred Share warrants having a relative fair value of $ 296,245 . On March 1, 2024, the unamortized relative fair value discount of $ 286,821 was removed with a corresponding adjustment to accumulated deficit. A $ 48,409 unamortized discount remained. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 5,302 , with an unamortized discount of $ 9,293 at May 31, 2026. April 20, 2023, $ 400,000 loan, original issue discount of $ 50,000 , 61 Series F Preferred Share warrants having a relative fair value of $ 302,219 . On March 1, 2024, the unamortized relative fair value discount of $ 294,824 was removed with a corresponding adjustment to accumulated deficit. A $ 48,777 unamortized discount remained. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 5,343 , with an unamortized discount of $ 9,368 at May 31, 2026. May 11, 2023, $ 400,000 loan, original issue discount of $ 50,000 , 61 Series F Preferred Share warrants having a relative fair value of $ 348,983 . On March 1, 2024, the unamortized relative fair value discount of $ 348,831 was removed with a corresponding adjustment to accumulated deficit. A $ 49,978 unamortized discount remained For the three months ended May 31, 2026, the Company recorded amortization expense of $ 5,480 , with an unamortized discount of $ 9,616 at May 31, 2026. October 27 2023, $ 400,000 loan, original issue discount of $ 50,000 , 61 Series F Preferred Share warrants having a relative fair value of $ 261,759 . On March 1, 2024, the unamortized relative fair value discount of $ 254,487 was removed with six a corresponding adjustment to accumulated deficit. A $ 48,611 unamortized discount remained. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 5,325 , with an unamortized discount of $ 9,333 at May 31, 2026. (21) On November 30, 2023, the Company entered into an agreement where the lender will pay the Company $ 350,000 in exchange for thirteen future monthly payments of $36,750 commencing on April 30,2024 through to April 30, 2025 totaling $ 477,750 . The effective interest rate is 35 % per annum. Secured by a general security charging all of RAD’s present and after-acquired property. Default rate of 15 % per annum calculated daily on any missed monthly payment and after original maturity. The Company has repaid $ 147,000 and $ 53,000 in accrued interest in July to account for the missed April through to August 2024 payments in agreement with the lender. The Company have missed the subsequent monthly payments. On April 16, 2025, the parties extended the maturity date from April 30, 2025, to April 30, 2026, with all other terms and conditions remaining the same. On April 30,2026, the parties extended the maturity to April 30, 2027, with the default rate still applicable after April 30, 2025. (22) On March 8, 2024, the Company entered into another agreement where the lender will pay the Company $ 350,000 in exchange for thirteen future monthly payments of $36,750 commencing on August 8, 2024 through to August 8, 2025 totaling $ 477,750 . The effective interest rate is 35 % per annum. Secured by a general security charging all of RAD’s present and after- acquired property. Default rate of 15 % per annum calculated daily on any missed monthly payment and after original maturity. The August 2024 through to August 2025 payments have not been made and the note was not repaid at original maturity. On August 8, 2025 the parties extended the maturity to August 8, 2027 , with the default rate still applicable after August 8, 2025. (23) Original $ 165,000 note may be pre-payable at any time. The note balance includes an original issue discount of $ 15,000 . Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. The discount was expensed. (24) Original $ 245,000 note may be pre-payable at any time. The note balance includes an original issue discount of $ 25,000 . Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. The discount was expensed. (25) Original $ 137,500 note may be pre-payable at any time. The note balance includes an original issue discount of $ 12,500 . Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. The discount was expensed. (26) On August 25, 2025, the Company entered into Future Receivables Purchase and Sale Agreement secured by a general security charging all of RAD’s present and after- acquired property. The Company received net proceeds of $ 555,671 after fees of $ 29,329 and a financing fee of $ 222,300 for total fees of $ 251,629 . The Company must repay $ 807,300 , in weekly payments of 7 % of estimated receipts from accounts receivables. The estimated monthly payments will be approximately $ 99,725 . For the year ended May 31, 2026, the Company recorded amortization expense of $ 59,207 , with an unamortized discount of $ 0 at May 31, 2026. For the year ended February 28, 2026, the Company has repaid $ 617,348 . During the three months ending May 31, 2026 the remaining balance of $ 189,952 was fully repaid. (27) Original $ 550,000 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 three months ended May 31, 2026, the Company recorded amortization expense of $ 12,724 , with an unamortized discount of $ 17,288 at May 31, 2026. (28) Original $ 200,000 note may be pre-payable at any time. The note balance includes an original issue discount of $ 25,000 . Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 6,158 , with an unamortized discount of $ 11,127 at May 31, 2026. (29) Original $ 275,000 note may be pre-payable at any time. The note balance includes an original issue discount of $ 25,000 . Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 6,189 , with an unamortized discount of $ 11,582 at May 31, 2026. (30) Original $ 450,000 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 three months ended May 31, 2026, the Company recorded amortization expense of $ 10,760 , with an unamortized discount of $ 28,536 at May 31, 2026. - 22 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (31) Original $ 450,000 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 three months ended May 31, 2026, the Company recorded amortization expense of $ 11,888 , with an unamortized discount of $ 27,702 at May 31, 2026. (32) On December 17, 2025, the Company entered into a business loan secured by a general security charging all of RAD’s present and after- acquired property. The Company received net proceeds of $ 300,000 after fees of $ 14,000 and a financing fee of $ 91,060 for total fees of $ 105,060 . The Company must repay $ 405,060 , in 4 weekly payments of $2,276.50 and 36 weekly payments of $10,998.72. The loan is personally guaranteed by the CEO. For the year ended February 28, 2026, the Company recorded amortization expense of $ 19,478 with an unamortized discount of $ 85,582 at February 28, 2026. For the three months ended May 31, 2026, the Company has repaid $ 87,990 with the balance of $ 241,972 transferred to the April 13, 2026 loan described in footnote (43),thereby fully extinguishing this loan. (33) $ 495,000 convertible note that may be redeemed at a premium at any time. The Company received proceeds of $ 440,000 , with fees of $ 10,000 and an original issue discount of $ 45,000 . Principal and interest due at maturity. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 13,062 , with an unamortized discount of $ 32,233 at May 31, 2026. . After 180 days , the note and interest is convertible at a conversion price of 80 % of the lowest traded price in the 15 prior trading days. (34) Original $ 275,000 note may be pre-payable at any time. The note balance includes an original issue discount of $ 25,000 . Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 5,908 , with an unamortized discount of $ 14,970 at May 31, 2026. (35) Original $ 330,000 note may be pre-payable at any time. The note balance includes an original issue discount of $ 30,000 . Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 7,019 , with an unamortized discount of $ 19,117 at May 31, 2026. (36) 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 three months ended May 31, 2026, the Company recorded amortization expense of $ 4,594 , with an unamortized discount of $ 13,637 at May 31, 2026. (37) Original $ 330,000 note may be pre-payable at any time. The note balance includes an original issue discount of $ 30,000 . Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 7,059 , with an unamortized discount of $ 21,078 at May 31, 2026. (38) $ 165,000 convertible note that may be redeemed at a premium at any time. The Company received proceeds of $ 142,500 , with fees of $ 7,500 and an original issue discount of $ 15,000 . Principal and interest due at maturity. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 5,167 , with an unamortized discount of $ 16,849 at May 31, 2026. After 180 days , the note and interest is convertible at a conversion price of 80 % of the lowest traded price in the 15 prior trading days. (39) 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 three months ended May 31, 2026, the Company recorded amortization expense of $ 4,555 , with an unamortized discount of $ 15,257 at May 31, 2026. (40) $ 110,000 convertible note that may be redeemed subject to a premium ranging from 110 % to 140 % if redeemed within the first 180 days of the note. The Company received proceeds of $ 95,000 , with fees of $ 5,000 and an original issue discount of $ 10,000 . Principal and interest due at maturity. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 2,429 , with an unamortized discount of $ 12,571 at May 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 80 % of the lowest traded price in the 15 prior trading days. - 23 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (41) $ 630,000 convertible note that may be redeemed subject to a premium ranging from 110 % to 140 % if redeemed within the first 180 days of the note. The Company received proceeds of $ 595,000 , with fees of $ 5,000 and an original issue discount of $ 30,000 . Principal and interest due at maturity. A refundable commitment fee of 14.1 million common shares was issued, but is returnable if the loan plus accrued interest is paid back by May 5, 2026. The loan was intended as a short term loan with high redemption premiums commencing after 40 days and high conversion discounts after 180 days whereby the note would convert at 20 % of the lowest traded price 15 days prior trading to the conversion date. On May 5, 2026, the Company repaid in full, principal and interest of $ 638,492 and the 14.1 million commitment fee shares will be returned.. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 35,000 , with an unamortized discount of $ 0 at May 31, 2026. (42) $ 257,000 convertible note that may be redeemed subject to a premium ranging from 120 % to 125 % if redeemed within the first 180 days of the note. The Company received proceeds of $ 250,000 , with fees of $ 7,000 . Principal and interest due at maturity. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 7,000 , with an unamortized discount of $ 0 at May 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65 % of the lowest closing traded price in the 10 prior trading days. (43) On April 13, 2026, the Company entered into a business loan secured by a general security charging all of RAD’s present and after- acquired property. The Company received net proceeds of $ 295,028 after fees of $ 16,500 and a financing fee of $ 91,060 for total fees of $ 105,060 and a payback of the $ 241,972 balance on the December 17, loan described in footnote (32) . The Company must repay $ 709,500 , in 52 weekly payments of $ 13,644 . The loan is personally guaranteed by the CEO. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 16,587 with an unamortized discount of $ 155,913 at February 28, 2026. For the three months ended May 31, 2026, the Company has repaid $ 68,221 . (44) $ 277,778 convertible note that may be redeemed anytime with payment of the first year’s accrued interest of $ 33,333 . The Company received proceeds of $ 245,000 , with fees of $ 5,000 and an original issue discount of $ 27,778 . In addition a commitment fee of 5,000,000 common shares having a fair value of $ 173,500 was issued and added as a discount. Principal and interest due at maturity. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 10,072 , with an unamortized discount of $ 196,206 at May 31, 2026. The note and interest is convertible at any time a conversion price of 75 % of the lowest closing traded price in the 10 prior trading days. (45) $ 157,000 convertible note that may be redeemed subject to a premium ranging from 120 % to 125 % if redeemed within the first 180 days of the note. The Company received proceeds of $ 150,000 , with fees of $ 7,000 . Principal and interest due at maturity. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 7,000 , with an unamortized discount of $ 0 at May 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65 % of the lowest closing traded price in the 10 prior trading days. (46) $ 700,000 convertible note redeemable 90 days after issuance in monthly installments of 10 % of the outstanding principal and interest. The Company received proceeds of $ 615,000 , with fees of $ 15,000 and an original issue discount of $ 70,000 . In addition a commitment fee of 1,250,000 common shares having a fair value of $ 28,751 was issued and recorded as a discount. Principal and interest due at maturity. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 7,185 , with an unamortized discount of $ 105,565 at May 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65 % of the lowest traded price in the 10 prior trading days. (47) $ 138,889 convertible note that may be redeemed subject to a premium ranging from 110 % to 135 % if redeemed within the first 180 days of the note. The Company received proceeds of $ 119,000 , with fees of $ 6,000 and an original issue discount of $ 13,889 .. Principal and interest due at maturity. For the three months ended May 31, 2026, the Company recorded amortization expense of $ 762 , with an unamortized discount of $ 19,127 at May 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65 % of the lowest traded price in the 10 prior trading days. - 24 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 12. STOCKHOLDERS’ EQUITY (DEFICIT) Summary or Preferred Stock Activity Series C Convertible, Redeemable Preferred Stock (Temporary Equity) On February 10, 2025, in connection with a Share Purchase Agreement the Company created a new class of Series C Convertible Redeemable with 1,000 authorized shares. In exchange for 306 Series C Convertible Redeemable Preferred Shares (“Series C”), the Company received gross proceeds of $ 306,000 with net proceeds of $ 278,580 after paying $ 6,000 in legal fees and $ 21,420 in broker fees both charged against paid in capital. The Company must redeem the shares at stated capital of 1,200 per share and a 1.095 premium at 180 days after issuance. The Company recorded the 306 outstanding shares at its redemption value of $ 402,084 at February 28, 2025, with the offsetting adjustment to paid in capital. During the year the Company issued 12 % quarterly dividends in 44 Series C shares with a value of $ 58,100 . The Company failed to redeem the Series C shares on the August 9, 2025, redemption date and a penalty of 114 Series C shares with a value of $ 149,307 was recorded. In August 2025 the Company redeemed 95 Series C shares for $ 125,000 including a deemed dividend of $ 29,871 . In September 2025 the Company failed to convert a conversion notice of 96 shares. This conversion was withdrawn in December 2025 and a new conversion for 85 Series C shares with a value of $ 111,690 including a dividend of $ 84,690 with a corresponding adjustment to paid in capital. In exchange for the converted Series C shares, the Company issued 1,994,464 common shares. In January 2026, the Company failed to convert a conversion notice of 80 shares. On March 19, 2026 the Company entered into an agreement with the investor whereby the parties agreed to reduce the penalty on the September 2025 and January 2026 failed conversion to 133 Series C shares at a value of $ 175,140 ( The penalty was reduced from 345 Series C shares to 133 Series C shares) . The parties agreed on the Series C share balance at February 28, 2026 to be 417 series C shares. In addition, the parties agreed to issue an additional 222 Series C shares for proceeds of $ 200,000 and fees of $ 22,000 . These shares have a redemption value of $ 291,708 . Also on March 19, 2026, the parties agreed to convert 165 Series C shares at a value of $ 216,810 for 13,550,625 common shares. The shareholder also converted 40 shares at a value of $ 52,560 for 3,285,000 common shares on May 6, 2026, and 93 shares at a value of $ 122,202 for 7,637,628 common shares on May 12, 2026. During the quarter, a dividend of 13 Series C shares having a value of $ $ 17,388 were accrued. At May 31, 2026, there were 354 outstanding series C shares with a redemption value of $ 465,465 . Ay February 28, 2026, there were 417 outstanding series C shares with a redemption value of $ 547,941 . Series F Convertible Preferred Stock 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. Summary of Preferred Stock Warrant Activity SUMMARY OF PREFERRED STOCK WARRANT ACTIVITY Number of Series F Preferred Warrants Weighted Average Exercise Price Weighted Average Remaining Years Outstanding at February 28, 2026 939 $ 1.00 7.5 Issued — — — Exercised — — — Forfeited and cancelled — — — Outstanding at May 31, 2026 939 $ 1.00 7.25 - 25 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Summary of Common Stock Activity For the three months ended May 31, 2026: - On March 19, 2026, the Board of Directors and the holder of a majority of the Company’s voting power approved, by written consent, a decrease in the Company’s authorized common shares from 27,500,000,000 to 12,000,000,000 . The Certificate of Amendment effecting this decrease was not filed with, or accepted by, the Nevada Secretary of State until July 15, 2026, on which date the decrease became effective. As of May 31, 2026 and continuing through the filing date of the Company’s original Quarterly Report on Form 10-Q for the quarter ended May 31, 2026, the Company’s authorized common shares remained 27,500,000,000 . - On February 5, 2026, the holders of a majority of the voting power of the Company’s outstanding voting securities executed the written consent approving a reverse stock split of the Company’s issued and outstanding Common Stock at a ratio of 1-for-100 . This split was deemed effective on March 12, 2026. The common shares have been adjusted to reflect this reverse stock split. - the Company issued 36,784,492 common shares with gross proceeds of $ 900,871 and net proceeds of $ 823,480 after issuance costs of $ 77,391 . - the Company issued 39,000,000 common shares having a fair value of $ 1,453,500 to repay $ 107,000 in loans payable and $ 638,900 in accrued interest totaling $ 745,900 with a loss on settlement of debt of $ 707,600 . -Along with the $ 630,000 loan of March 25, 2026, a refundable commitment fee of 14,100,000 shares was issued. These shares are refundable if the loan was fully repaid by May 5, 2026, and it was. The shares were recorded at par value of $ 141 with a corresponding adjustment to paid in capital. -Along with the $ 277,778 loan of April 20, 2026, a commitment fee of 5,000,000 common shares having a fair value of $ 173,500 was issued and recorded as a discount. -Along with the $ 700,000 loan of May 4, 2026, a commitment fee of 1,250,000 common shares having a fair value of $ 28,751 is issuable and recorded as a discount. These shares will be issued shortly after filing this 10Q. -During the quarter ended March 31, 2026, the Series C Preferred shareholder converted 298 Series C Preferred Shares having a value of $ 391,572 for 24,473,250 common shares with a deemed dividend of $ 93,472 . The common shares issued , issuable and outstanding at May 31,2026 and February 28, 2026: SUMMARY OF COMMON STOCK ISSUED AND OUTSTANDING Common shares May 31, 2026 February 28, 2026 Issued 387,232,589 267,872,804 Issuable 1,250,000 - Issued, issuable and outstanding 388,482,589 267,872,804 Summary of Common Stock Warrant Activity For the three months ending May 31, 2026, and May 31, 2025, the Company recorded a total of $ 60,508 and $ 80,355 respectively, to stock-based compensation for options and warrants with a corresponding adjustment to additional paid-in capital. SUMMARY OF COMMON STOCK WARRANT ACTIVITY Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Years Outstanding at February 28, 2026 470,000 $ 0.04 1.44 Issued — — — Exercised — — — Forfeited and cancelled — — — Outstanding at May 31, 2026 470,000 $ 0.02 1.19 - 26 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Summary of Common Stock Option Activity -Employee Stock Options SUMMARY OF COMMON STOCK OPTION ACTIVITY Number of Options Weighted Average Exercise Price Weighted Average Remaining Years Outstanding at March 1, 2026 1,732,121 $ 2.00 2.10 Issued — — — Exercised — — — Forfeited, extinguished and cancelled — $ — — Outstanding at May 31, 2026 1,732,121 $ 2.00 1.85 13. COMMITMENTS AND CONTINGENCIES Litigation Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s condensed consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. The related legal costs are expensed as incurred. Operating Lease On March 10, 2021, the Company entered into a 10 year lease agreement for a manufacturing facility at 10800 Galaxie Avenue, Ferndale, Michigan, 48220, commencing on May 1, 2021 through to April 30, 2031 with a minimum base rent of $ 15,880 per month. The base rent increase by 3% per annum commencing May 1, 2024. The Company paid a security deposit of $ 15,880 . On February 5, 2024, the Company entered into a 3-year lease agreement for a vehicle commencing February 5, 2024 through to February 5, 2027 with a minimum base rent of $ 1,223 per month. The Company paid a down payment of $ 9,357 . On March 11, 2025, the Company entered into a 3-year lease agreement for a vehicle commencing March 11, 2025 through to March 11, 2028 with a minimum base rent of $ 1,286 per month. The Company paid a down payment of $ 13,188 . The Company recorded the right of use asset of $ 67,372 with a corresponding adjustment to operating lease liability. The Company’s leases are accounted for as operating leases. Rent expense and operating lease cost are recorded over the lease terms on a straight-line basis. The weighted average discount rate used was 10 % and the weighted average remaining lease term at May 31, 2026 was 4.71 years. Rent expense and operating lease cost was $ 67,372 and $ 58,219 for the three months ended May 31, 2026 and May 31, 2025, respectively. SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES Maturity of Lease Liabilities Operating Leases May 31, 2027 $ 239,243 May 31, 2028 222,427 May 31, 2029 207,558 May 31, 2030 207,558 May 31, 2031 190,261 Total lease payments 1,067,047 Less: Interest ( 184,676 ) Present value of lease liabilities $ 882,371 14. EARNINGS (LOSS) PER SHARE The net income (loss) per common share amounts were determined as follows: SCHEDULE OF NET INCOME (LOSS) PER COMMON SHARE May 31, 2026 May 31, 2025 For the Three Months Ended May 31, 2026 May 31, 2025 Numerator: Net loss available to common shareholders $ ( 5,715,838 ) $ ( 4,594,018 ) Effect of common stock equivalents Less: dividends to C preferred shareholders ( 110,860 ) ( 12,073 ) Net loss adjusted for common stock equivalents ( 5,826,698 ) ( 4,606,091 ) Denominator: Weighted average shares – basic 325,956,059 155,176,712 Net loss per share – basic $ ( 0.02 ) $ ( 0.03 ) Denominator: Weighted average shares – diluted 325,956,059 155,176,712 Net loss per share – diluted $ ( 0.02 ) $ ( 0.03 ) - 27 - Table of Contents ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The anti-dilutive shares of common stock equivalents for the three months ended May 31, 2026 and 2025 were as follows: SCHEDULE OF ANTI-DILUTIVE SHARES OF COMMON STOCK EQUIVALENTS May 31, 2026 May 31, 2025 For the Three Months Ended May 31, 2026 May 31, 2025 Convertible or exchangeable debt 3,173,350,733 - Convertible Series F Preferred Shares 1,340,264,933 586,412,155 Convertible Redeemable Series C Preferred Shares 30,948,471 2,958,264 Stock options and warrants 2,202,121 2,261,775 Total 4,546,766,258 591,632,194 15. SUBSEQUENT EVENTS Subsequent to May 31, 2026 through to filing date, — the Company issued 32,797,611 common shares pursuant to a share purchase agreement for gross proceeds of $ 290,783 , issuance costs of $ 14,397 and net proceeds of $ 276,386 . — The Company issued 12,000,000 shares to a lender to settle $ 89,700 in principal pursuant to exchange agreements with the lender. — on June 3, 2026, the Company issued a convertible, redeemable note to a lender for $ 230,000 with cash proceeds of $ 200,000 an original issue discount of $ 23,000 and $ 7,000 for fees. The loan bears interest at 6 %, the note is redeemable by the Company at any time subject to a premium ranging from 105 % to 140 % if redeemed within the first 180 days of the note. The note matures on June 3, 2027, and converts after 180 days at 65 % of the lowest trading price 20 trading days prior to the conversion date, including the conversion date. — on June 9, 2026, the Company issued a convertible, redeemable note to a lender for $ 55,000 with cash proceeds of $ 47,500 , an original issue discount of $ 5,000 , and $ 2,500 for fees. The loan bears interest at 10 %, the note is redeemable by the Company at any time subject to a premium of one years interest of $ 5,500 . The note matures on June 9, 2027, and converts any time at 65 % of the lowest trading price 10 trading days prior to the conversion date. — on June 9, 2026, the Company issued a convertible, redeemable note to a lender for $ 110,000 with cash proceeds of $ 95,000 , an original issue discount of $ 10,000 , and $ 5,000 for fees. The loan bears interest at 10 %, the note is redeemable by the Company at any time subject to a premium of one years interest of $ 11,000 . The note matures on June 9, 2027, and converts any time at 65 % of the lowest trading price 10 trading days prior to the conversion date. — on June 15, 2026, the Company issued a convertible, redeemable note to a lender for $ 165,000 with cash proceeds of $ 142,800 , an original issue discount of $ 15,000 , and $ 7,200 for fees. The loan bears interest at 10 %, the note is redeemable by the Company at any time subject to a premium ranging from 115 % to 125 % if redeemed within the first 180 days of the note. The note matures on June 15, 2027, and converts any time at 65 % of the lowest closing bid price 20 trading days prior to the conversion date. The loan is repayable as follows : on December 15, 2026 a payment of $ 90,750 with 5 monthly payments of $ 15,125 commencing Jan 15, 2027 through to May 15, 2027 with the remaining $ 9,625 balance payable June 15, 2027. — on June 23 , 2026 the Company entered into an Equity Financing Agreement whereby an investor shall invest up to $10,000,000 over the course of thirty-six (36) month at a purchase price of eighty-five percent (85%) of the average of the three lowest bid trade price in the 10 day preceding period. The Company may also issue an accelerated put at a purchase price of 85% of the three closing bid prices 10 days following the put date subject to a floor price equal to the greater of: (A) seventy-five percent (75%) of the Closing Bid Price of the Common Stock on the applicable Put Date; or (B) any higher minimum price per share specified by the Company in the applicable Accelerated Put Notice. A commitment fee of five million common shares of the Company’s Common Stock shall be issued in two equal tranches: (i) first tranche of Two Million and Five Hundred Thousand common shares upon S-1 effectiveness; and the remaining (ii) second tranche of Two Million and Five Hundred Thousand common shares, issued ninety days later. In conjunction with the above agreement, the Company entered into a Registration Rights Agreement as well. — on June 26, 2026, the Company issued a convertible, redeemable note to a lender for $ 157,000 with cash proceeds of $ 150,000 and $ 7,000 for fees. The loan bears interest at 10 %, the note is redeemable by the Company at any time subject to a premium ranging from 120 % to 125 % if redeemed within the first 180 days of the note. The note matures on March 30, 2027, and converts after 180 days at 65 % of the average of the three lowest trading prices, 10 trading days prior to the conversion date. — on July 9, 2026, the Company issued a promissory note to a lender for $ 165,000 with cash proceeds of $ 150,000 and an original issue discount of $ 15,000 for fees. The note matures in one year and bears interest at 15 %, per annum ,compounding annually. The note is secured by the assets of the Company. - 28 - Table of Contents