What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-05-29 compared with 2024-05-28 · 244 added, 208 removed, 123 unchanged (79% of the section changed)

11 unchanged sentences

AITX reincorporated into Nevada on February 17, 2015.

AITX’ fiscal year end is February

28 (February 29 during leap year).

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

AITX’ fiscal year end is

February 28 (February 29 during leap year).

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

number is 877-767-6268.

of Operations

17 unchanged sentences

Direct sales of goods and services

revenue for the year ended February 29, 2024 was $2,227,559, which represented an increase of $895,603 compared to total revenue of $1,331,956

revenue for the year ended February 28, 2025, was $6,130,886, which represented an increase of $3,903,327 or 175% compared to total revenue

of $2,227,559 for the year ended February 29, 2024.

Rental activities increased by $3,424,048 or 211%, as the Company continues to grow

its product line and customer base.

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

for the year ended February 28, 2025.

Rental activities increased by $872,071 or 116%, as the Company continues to grow its product line

and customer base.

Direct sales grew by 4% driven by higher training revenue for the year ended February 29, 2024.

gross profit for the year ended February 28, 2025 was $3,744,564, which represented an increase of $3,178,747, compared to total gross

2 unchanged sentences

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

The Gross profit % was stable as the increase in

higher margin rental activities in the product mix, and overhead being allocated over a higher sales base was offset by a higher inventory

provision for the permanent impairment in value of two products that the Company will not be continuing.in their current form

The gross profit % increased as the increase in

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

Also, in the prior year there

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

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

expenses for the years ended February 28, 2025 and February 29, 2024 comprised of the following:

8 unchanged sentences

Operating expenses

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

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

General and administrative expenses consisted primarily of

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

Our operating expenses during

the years ended February 29, 2024 and February 28, 2023 were $15,085,869 and $13,344,563, respectively.

The overall $1,741,206

increase in operating expenses was primarily attributable to the following changes in operating expenses:

and development expenses decreased by $747,334 as the Company focused on current product development and spent less money on longer

term projects.

and administrative expenses increased by $1,544,822 primarily due to the following changes:

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

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

General and administrative expenses consisted primarily of professional

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

Our operating expenses during the years ended

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

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

was primarily attributable to the following changes in operating expenses:

Research and development

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

The Company moved

General and administrative

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

the year ended February 28, 2025 stock based compensation to CEO in equity awards was $1,500,000 with a charge of $331,685 for the

Employee Stock Option Plan (ESOP) all totaling $1,793,599 compare with stock based compensation to CEO in equity awards was $499,500

with $118,500 fees paid to consultants and a charge of $ 122,050 for the ESOP all totaling $740,050 for the year ended February 28,

This represents an increase of $1,053,549 in stock based compensation.

The stock based compensation for the CEO is payable

in Series G and has been deferred until after a year.

salaries and payroll levies for the CEO increased by $731,447 in discretionary bonus charged, $537,747 of which is deferred compensation

Employee Stock Option Plan (ESOP) all totaling $1,831,685 compared with stock based compensation to CEO in equity awards was $1,521,000

and a charge of $272,599 for the ESOP all totaling $1,793,599 for the year ended February 29, 2024.

This represents an increase of

$38,086 in stock based compensation.

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

after a year.

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

and will not be paid out this year.

salaries and payroll levies for the staff decreased by $218,382 due to staff reductions early in the fiscal year.

fees decreased by $117,726 due to decreases in financial reporting and consulting costs.

expense increased by $74,476.

duty and brokerage increased by $154,172 due to higher purchases in 2024.

and marketing costs decreased by $179,742 as the Company reduced its promotion efforts.

debts expense decreased by $139,989 due to write off of uncollectible accounts in the prior year.

increased slightly by $11,102.

shows and travel decreased by $111,752 as a result of less promotional and business travel in fiscal 2024.

remaining increases were distributed amongst other general and administrative accounts such as website design warehouse expense,

repairs and maintenance, and utilities amongst others.

lease cost and rent increased by $135.There was a new vehicle lease and a lease for premises that expired during the current fiscal

and amortization increased by $375,932 due to the increase in revenue earning devices and demo devices, computer equipment, tooling

,leasehold improvements and manufacturing equipment in fixed assets.

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

on revenue earning devices was $584,177 for the year ending February 29,2024 due to the discontinuance of two products in their present

There was no such impairment in the prior year’s period

Base salary increased by $20,000.

salaries and payroll levies for the staff increased by $732,953 due to staff increases (6).

Commissions increased by

$274,208 due to increased revenues.

Office expense increased

Insurance costs increased

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

Repairs and maintenance

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

The remaining increases

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

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

Operating lease cost and

rent decreased by $19,675.

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

Depreciation and amortization

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

(Gain) loss on disposal

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

There was no impairment

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

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

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

income (expense)

income (expense) consisted of the change of fair value of derivative instruments interest expense and gain on settlement of debt.

income (expense) during the years ended February 29, 2024 and February 28, 2023, was ($6,719,304) and ($5,418,777), respectively.

income (expense) consisted of interest expense and gain on settlement of debt.

Other income (expense) during the years ended February

28, 2025 and February 29, 2024, was ($4,988,719) and ($6,719,304), respectively.

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

in fair value of derivative liabilities decreased by $3,595 due to the re-valuation of derivative liability on convertible notes

that were converted or settled during the prior year ended February 28, 2023.

At both February29, 2024 and February 28, 2023 there

was no longer any convertible debt.

expense increased by $1,331,580.

Amortization of debt discounts for the year ended February 29, 2024 of $2,384,163 compared with

$1,980,033 for the year ended February 28, 2023.

Interest expense was $4,011,681 for the year ended February 29, 2024 compared with

$ $3,196,882 for the year ended February 28, 2023.

Deferred variable payment obligation (DVPO) expense was $362,200 for the year

ended February 29,2024 compared with $216,577 for the year ended February 28, 2023.

Interest and debt amortization were both higher

during the current year due to approximately $2 million in new debt.

on settlement of debt increased by $34,788 due to a settlement in accounts payable during the current fiscal year.

Company’s loss from operations for the year ended February 29, 2024 was $13,989,412 which represented an increase in loss of $1,298,732

expense decreased by $1,301,063.

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

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

This decrease was due to many notes maturing in the prior

year and being fully amortized.

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

the year ended February 28, 2024.

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

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

Deferred variable payment obligation

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

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

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

old during the current fiscal year.

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

compared to a loss of $13,989,412 for the year ended February 29, 2024.

The higher revenues and gross profit in 2024 were offset by higher

operating expenses for the reasons set out above.

The higher revenues and gross profit in 2024 were partially offset

by higher operating expenses for the reasons set out above.

Note that the Company had a net loss of $18,935,592 for the year ended February

28, 2025, as compared to net loss of $20,708,716 for the year ended February 29, 2024.

This change is mostly attributable to an increase

in other expense and an increase in general and administrative costs.

This $1,773,124 change is mostly attributable

to a decrease in amortization expense.

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

19 unchanged sentences

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

In March 2023, the Company entered into

an equity financing agreement whereby an investor will purchase up to $30,000,000 of the Company’s common stock at a discount over

a two-year period.

There remains approximately $21 million left to issue under this arrangement.

Management believes that it has the

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

growing revenues ,through equity proceeds,

and issuing non-convertible debt.

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.

In September 2024, the Company entered

into an equity financing agreement whereby an investor will purchase up to $30,000,000 of the Company’s common stock at a discount

over a two-year period.

There remains approximately

$24 million left to issue under this arrangement.

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

its funding methods in the following ways :

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

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

15 unchanged sentences

Net cash provided by financing activities

cash used in operating activities for the year ended February 29, 2024 was $12,951,753, which included a net loss of $20,708,716,

non-cash activity such as the gain on settlement of debt of ($16,426), amortization of debt discount of $2,384,163, stock based

compensation of $1,793,599, reduction in right of use asset $120,131, accretion of lease liability $130,020, increase in related

party accrued payroll and interest $105,101, inventory provision of $437,820, impairment on revenue earning devices for $584,177,

bad debts expense $42,892, depreciation and amortization of $854,047 and change in operating assets and liabilities of

cash used in operating activities for the year ended February 28, 2025 was $12,196,388, which included a net loss of $18,935,592, non-cash

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

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

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

assets and liabilities of $3,724,649.

cash provided by (used in) investing activities.

cash provided by investing activities for the year ended February 29, 2024 was $4,194.

This consisted of the purchase of fixed assets

of ($22,165), proceeds of disposal of fixed asset of $21,000 and reimbursement of security deposit of $5,359.

cash used in investing activities for the year ended February 28, 2025 was $79,965.

This consisted of the purchase of fixed assets of

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

cash provided by (used in) financing activities.

1 unchanged sentence

This consisted of share proceeds net of issuance

costs of $10,825,895 and proceeds from loans payable $1,750,000 offset by repayments of loans payable of $408,000 and net repayments

on loan payable-related party of $54,179, respectively.

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

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

B Preferred Shares of ($389,188).

Sheet Arrangements

11 unchanged sentences

The most significant estimates included in these consolidated financial statements are those associated with the assumptions

used to value derivative liabilities.

Earning Devices

earning devices are stated at cost.

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

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

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

The Company uses a

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

The Company measures

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

assets are stated at cost.

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

assets which range from three to five years.

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

Revenue Earning Devices

Revenue earning devices are stated at cost.

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

The Company continually evaluates revenue earning devices

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

the devices should be evaluated for possible impairment.

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

in assessing whether an asset has been impaired.

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

of the asset exceeds the fair value.

Fixed assets are stated at cost.

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

Major repairs or improvements are capitalized.

Minor replacements and maintenance and repairs

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

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

are expensed currently.

Computer equipment

4 unchanged sentences

5 years, the life of the lease

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

amounts may not be recoverable.

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

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

and Development

and development costs are expensed in the period they are incurred in accordance with ASC 730, Research and Development unless

they meet specific criteria related to technical, market and financial feasibility, as determined by Management, including but not limited

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

If all criteria are met, the costs are deferred and amortized over the expected useful life or written off if a product is abandoned.

At February 29, 2024 and February 28, 2023, the Company had no deferred development costs.

of Future Revenues

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

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

of sales for those certain revenues.

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

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

constitutes a sale of future revenues or debt:

the agreement purport, in substance, to be a sale

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

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

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

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

the investor have recourse relating to payments due

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

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

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

2014-09, “Revenue from Contracts with Customers (Topic 606)” , supersedes the revenue recognition requirements and

industry specific guidance under Revenue Recognition (Topic 605) .

Topic 606 requires an entity to recognize revenue when it transfers

promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange

for those goods or services.

Topic 606 defines a five-step process that must be evaluated and, in doing so, it is possible more judgment

and estimates may be required within the revenue recognition process than required under existing accounting principles generally accepted

in the United States of America (“U.S.

GAAP”) including identifying performance obligations in the contract, estimating the

amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance

Distinguishing

Liabilities from Equity

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

and/or convertible instruments.

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

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

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

its equity shares.

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

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

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

Company (i.e.

The Company periodically evaluates the fair value

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

Upon retirement

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

or loss, if any, is recognized in income.

Research and Development

Research and development costs are expensed in

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

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

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

If all criteria are met, the

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

At February 28, 2025 and February

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

Sales of Future Revenues

The Company has entered into transactions, as

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

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

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

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

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

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

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

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

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

Does the investor have recourse relating to payments due

In the event a transaction is determined to be

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

In the event a transaction

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

As of the date of these financial

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

Revenue Recognition

ASU 2014-09, “Revenue from Contracts

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

Recognition (Topic 605) .

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

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

Topic 606 defines

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

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

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

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

Distinguishing Liabilities from Equity

The Company relies on the guidance provided by

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

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

The Company will determine the liability classification

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

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

Once the Company determines that a financial instrument

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

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

The Company will determine temporary equity classification

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

at the option of the holder).

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

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

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

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

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

or cash received.

Measurement – Financial Instruments Classified as Liabilities

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

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

Value of Financial Instruments

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

in accordance with generally accepted accounting principles.

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

between market participants at the measurement date.

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

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

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

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

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

The three levels of the fair value

hierarchy under ASC Topic 820 are described as follows:

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

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

or indirectly.

Otherwise, the

Company accounts for the financial instrument as permanent equity.

Our CEO and Chairman holds sufficient shares of

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

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

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

Initial Measurement

The Company records its financial instruments

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

Subsequent Measurement – Financial Instruments

Classified as Liabilities

The Company records the fair value of its financial

instruments classified as liabilities at each subsequent measurement date.

The changes in fair value of its financial instruments classified

as liabilities are recorded as other income (expenses).

Fair Value of Financial Instruments

ASC Topic 820, Fair Value Measurements and

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

ASC Topic 820 defines fair value as the price

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

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

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

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

The fair value hierarchy consists of three broad

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

the lowest priority to unobservable inputs (Level 3).

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

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

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

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

quoted prices for identical

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

inputs other than quoted prices that are observable for the asset

or liability;

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

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

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

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

on a Recurring Basis

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

fair value hierarchy within which those measurements fell:

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

Measured on a Recurring Basis

The following table presents information about

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

Fair Value Measurement Using

February 28, 2025

Investment at cost

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

1 unchanged sentence

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

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

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

(Loss) per Share

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

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

Diluted EPS give effect to all dilutive potential

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

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

the exercise of stock options and/or warrants.

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

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

Diluted loss per share

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

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

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

nature with regards to earnings per share.

Issued Accounting Pronouncements

September 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses .

ASU 2016-13 was issued to provide more decision-useful

information about the expected credit losses on financial instruments and changes the loss impairment methodology.

ASU 2016-13 is effective

for reporting periods beginning after December 15, 2019 using a modified retrospective adoption method.

A prospective transition approach

is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date.

did not materially impact our consolidated net loss, accumulated deficit, and had no impact on cash flows.

The Company has adopted this

on March 1, 2020.

The carrying amounts of the Company’s financial

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

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

Earnings (Loss) per Share

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

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

(denominator) during the period.

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

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

In computing diluted EPS, the average stock price

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

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

Basic loss per common share is computed based

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

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

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

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

Diluted loss per share contemplates

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

Recently Issued Accounting Pronouncements

Recently Issued Accounting Standards During

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

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

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

Under ASU 2020-06, the embedded

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

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

Consequently,

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

require bifurcation and recognition as derivatives.

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

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

years beginning after December 15, 2021.

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

Early adoption is permitted.

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

first interim period of its fiscal year.

The Company adopted the standard using a modified retrospective approach.

The adjustment to the

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis