UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended February 28, 2021

 

or

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission file number: 000-55079

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

27-2343603

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

10800 Galaxie Avenue,
Ferndale, MI

 

48220

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (877) 787-6268

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to section 12(g) of the Act:

 

Title of each class

 

Name of each exchange on which registered

Common stock, $0.00001 par value

 

OTC PINK

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

[  ] Yes    [X] No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

[  ] Yes    [X] No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X] Yes    [  ] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[X] Yes    [  ] No

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

[X]      

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

Large accelerated filer

[  ]

Accelerated filer

[  ]

 

 

 

 

 

Non-accelerated filer

[X]

Smaller reporting company

[X]

 

 

Emerging growth company

[  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

[  ]       

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

[  ] Yes    [X] No

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of August 31, 2020 based upon the closing price reported on such date was approximately $2,650,151. Shares of voting stock held by each officer and director and by each person who, as of August 31, 2020, may be deemed as have beneficially owned more than 10% of the outstanding voting stock have been excluded. This determination of affiliate status is not necessarily a conclusive determination of affiliate status for any other purpose.

 

As of May 25, 2021, there were 3,545,772,882 shares of the registrant’s common stock issued and outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

None.




Table of Contents

 

 

 

Page

PART I 

 

 

 

 

Item 1.

Business

1

 

 

 

Item 1A.

Risk Factors

10

 

 

 

Item 1B.

Unresolved Staff Comments

10

 

 

 

Item 2.

Properties

10

 

 

 

Item 3.

Legal Proceedings

10

 

 

 

Item 4.

Mine Safety Disclosures

10

 

 

 

PART II 

 

 

 

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

10

 

 

 

Item 6.

Selected Financial Data

23

 

 

 

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

 

 

 

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

31

 

 

 

Item 8.

Financial Statements and Supplementary Data

31

 

 

 

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

31

 

 

 

Item 9A.

Controls and Procedures

31

 

 

 

Item 9B.

Other Information

33

 

 

 

PART III 

 

 

 

 

Item 10.

Directors, Executive Officers and Corporate Governance

33

 

 

 

Item 11.

Executive Compensation

35

 

 

 

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

36

 

 

 

Item 13.

Certain Relationships and Related Transactions, and Director Independence

37

 

 

 

Item 14.

Principal Accounting Fees and Services

37

 

 

 

PART IV 

 

 

 

 

Item 15.

Exhibits, Financial Statement Schedules

38

 

 

 

 

Signatures

40




CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended February 28, 2021. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.




PART I


ITEM 1. BUSINESS


Business Overview


Robotic Assistance Devices, LLC was incorporated in the State of Nevada on July 26, 2016, as an LLC and was founded by current President Steve Reinharz. Mr. Reinharz, has 25+ years in various leadership/ownership roles in the security industry and was part of a successful exit to a global multinational security company in 2004. Mr. Reinharz started his first security integration company in 1996, which he grew to 30+ employees before closing that company in 2003. In 2017, Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc. (“RAD”), through the issuance of 10,000 common shares to its sole shareholder.


Artificial Intelligence Technology Solutions Inc. (formerly known as On the Move Systems Corp.) (“AITX” or the “Company”) was incorporated in Florida on March 25, 2010, and reincorporated in Nevada on February 17, 2015. On August 24, 2018, On the Move Systems Corp. changed its name to Artificial Intelligence Technology Solutions Inc. (“AITX”).


In 2017, AITX acquired all the ownership and equity interests in RAD (the “Acquisition”). Before the Acquisition, AITX’s business focus had been transportation services, and AITX was exploring the on-demand logistics market by developing a network of logistics partnerships. After the Acquisition, AITX shifted its business focus to align with RAD’s mission. Since that time, AITX has been engaged in pursuing the delivery of artificial intelligence (AI) and robotic solutions for operational, security, and monitoring needs. More specifically, the Company is focused on applying advanced AI-driven technologies, paired with multi-use hardware and supported by custom software and cloud services, to intelligently automate and integrate a variety of high-frequency security, concierge, and operational tasks.


Since substantially all of AITX’s operations were disposed of with the transaction’s consummation, the Acquisition was treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes. AITX recorded no goodwill or other intangible assets 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. Therefore, the assets, liabilities, and historical operations reflected in these financial statements are those of RAD as if RAD had always been the reporting company.


RAD’s solutions are offered as a recurring monthly subscription, typically with a minimum 12-month subscription contract. RAD’s solutions are expected to earn over 75% gross margin over the life of each deployed asset when under subscription. RAD also sells units which generally limits gross margin to the 50% range.  Specifically, RAD provides workflow automation solutions delivered through a system of hardware, software and cloud services. All elements of hardware and software design offered by RAD are 100% designed, developed and owned by RAD except for gunshot detection capabilities. EAGL Technologies supplies RAD with gunshot detection technical features through a dealer agreement.


Mission


AITX’s mission is to apply Artificial Intelligence (AI) technology to solve enterprise problems categorized as expensive, repetitive, difficult to staff, and outside of the core competencies of the client organization.


A short list of basic examples include:


 

1.

Typical security guard-related functions such as monitoring a parking lot during and after hours and responding appropriately. This scenario applies to perimeters, interior yard areas, and related similar environments.

 

 

 

 

2.

Integrated hardware/software with AI-driven responses, simulating and expanding on what legacy or manned solutions could perform.

 

 

 

 

3.

Automation of common access control functions through technology utilizing facial recognition and machine vision, leapfrogging most legacy solutions in use today.


RAD’s first industry focus is the more than $100 billion global security services market.1 RAD’s current goal is to disrupt and capture a significant portion of both the human security guard market (over $30 billion)2 and “physical security” (video surveillance, access control, visitor management, etc.) market (over $20 billion) through its innovative RAD solution ecosystem.

__________

1 https://www.statista.com/statistics/323113/distribution-of-the-security-services-market-worldwide/

2 https://www.statista.com/statistics/294206/revenue-of-security-services-in-the-us/


- 1 -



RAD solutions are unique because they:


 

1.

Start with an AI-driven autonomous response utilizing cellular-optimized communications, while easily connecting to a human operator for a manned response, as needed.

 

 

 

 

2.

Use unique hardware purpose-built by RAD for delivery of these solutions. Various form factors have been customized to deliver this new functionality.

 

 

 

 

3.

Deliver services through RAD-developed software and cloud services, allowing enterprise IT groups to focus on core competencies instead of maintenance of complex video and security platforms.


AITX Subsidiaries


AITX owns and operates three (3) wholly-owned subsidiaries.


 

1.

Robotic Assistance Devices, Inc. (RAD I) is the primary operating company of AITX. The company holds the dealer and  end-user contracts, employs all US employees, operates the California and Michigan facilities, and is the primary industry-facing entity of AITX. RAD I owns all intellectual property related to RADSoC, RAD Mobile SOC, RADGuard, and their core operating architecture. RAD I owns everything related to AITXs line of stationary devices and their manufacturing. RAD I also implements and services the devices.

 

 

 

 

2.

Robotic Assistance Devices Group, Inc. (RAD G) is RAD G is an AITX subsidiary, separate from RAD I and RAD M, created for the purposes of expected future sales through a channel that is incompatible and non-competitive with RAD I’s existing channel. RAD G is focused on the development of advanced software and electronics solutions and hopes to have a solution in the marketplace by the end of 2021. The Company expects that this first solution, which will be software-only, will be marketed through RAD I. Additional solutions under development are likely to have a direct go-to-market strategy that complements RAD I’s strategy. Development efforts for these entities are highly confidential and will remain so until marketable solutions are ready to launch.

 

 

 

 

3.

Robotic Assistance Devices Mobile, Inc. (RAD M) is RAD M is an AITX subsidiary, separate from RAD I and RAD G, created for the purposes of future developments, partnerships, and marketing in which the Company may engage in the future. RAD M is focused on the development of autonomous mobile devices, both ground-based and airborne. RAD Ms first solution, the ROAMEO unmanned ground vehicle, incorporates RAD M technologies related to the development of custom chassis, drive train, power management, perception, and prediction. ROAMEO features technology from RAD I to perform its functions. The Company believes that ROAMEO will bring the first outdoor, rugged, commercial security and facility robot to market. This mobile solution will complement the stationary systems. ROAMEO is manufactured, implemented, and maintained by RAD I. ROAMEO will begin serial production in RAD’s Michigan facility in June or July 2021. RAD M will continue developing additional mobility solutions that RAD I will bring to market.


Background - First Commercial Rugged Outdoor Security Robot


Mr. Reinharz started RAD in the summer of 2016. RAD originally partnered with SMP Robotics Systems Corp. (SMP) and commercialized the SMP S5 Robot for the security market. RAD’s commercialization of the platform focused on integrating traditional security industry manufacturers’ solutions onto the robotics platform. After two paid proofs-of-concept for large utility companies (under NDA) and over 18 months of development and testing, RAD began deployments with various Fortune 500 customers. These deployments were scheduled to start in October 2017 but were delayed until December 2017 due to various supply chain challenges.


By March 2018 it was apparent that S5 platform was not sustainable and RAD began to pull robots out of service.


The robots were rejected by customers due to unsatisfactory reliability and some technical flaws that could not be solved, despite full efforts by SMP and RAD. RAD now considers this phase of the company ‘Phase 1’ into robotics. The Company attempted over 40 deployments during this period.


RAD has had no contact with SMP Robotics since April 2018.


Much of RAD’s existing convertible debt was acquired in support of the RAD/SMP robotics program. This convertible debt has largely been converted to long-term debt and warrants as shown in these financial filings.


- 2 -



ROAMEO will deliver on AITX’s goal of bringing the first outdoor, rugged, commercial security and facility robot to market. This mobile solution will complement the stationary systems AITX already has operating in physical security applications serving customers in a wide range of environments.


Background – RAD’s 2nd Generation Ecosystem


RAD’s primary strategy has always been to use AI technology and modern systems to transform the security industry. Mobile robots, indoor and outdoor, are a part of that strategy. However, to ultimately realize the delivery of these solutions, a set of “stationary robots” required development.


These stationary robots launched in April 2018 with the Security Control and Observation Tower (SCOT), development of which began in August 2017. SCOT performs many of the same functions as a stationary human security guard, plus many tasks that human guards cannot, and does so at approximately 15% of the cost. There is no known comparable solution available today that blends technology, usability, unique features, and price. SCOT received an enthusiastic response from the security market and industry accolades. SCOTs positive reception reinvigorated RAD, which accelerated the development of the software and cloud services that support SCOT. SCOT runs on the RAD Software Suite. This software suite is a cloud and mobile platform at the heart of all RAD security solutions.


A beta version SCOT was first shown to potential customers at the end of February 2018 in an exposition held in Ohio that tested customer reception and elicited voice-of-the-customer input. SCOT and the preliminary RAD Software Suite received a favorable customer response. Customer feedback was incorporated into SCOT, and ideas on SCOT derivatives were added to the hardware development roadmap.


In April 2018, at the ISC West, a large annual physical security event held in the United States, SCOT won three awards: (1) The Security Industry Association’s (SIA) New Product Award for Law Enforcement/Guarding3, (2) A 2018 Secure Campus Award from Campus Security and Life Safety Magazine, and (3) A ‘Govie’ award for government security solutions from Security Today Magazine.


RAD has not submitted entries for any awards since mid-2018 but expects future awards participation.


RAD’s pivot to SCOT and its future derivatives is complete, and RAD’s current facilities can produce a mix of up to 100 units per month with moderate additional investment in equipment and manpower.


Currently Available Hardware Solutions


RAD’s hardware lineup has improved and expanded since initial launch in April 2018. RAD’s hardware lineup includes:


 

1.

“SCOT 2.0” , which replaced SCOT 1.x.  SCOT 1 was upgraded during the first year after its introduction and became SCOT 1.4., which features a mature software platform and a refined hardware platform. SCOT solutions have operated with over 99% uptime since inception. It SCOT 1.4 embodies and offers the full complement of solutions driven by the RAD Cloud.


Scot 2.0 is a SCOT 1.4 enclosed in an appealing modern enclosure. It also features additional LCD monitors (like those used in the WALLY, described below), curved LED panels to support visibility, flexible messaging (as opposed to the flat LED panels used in SCOT 1.x), and an advanced locking system. SCOT 2.0 is the realization of the concepts pioneered, demonstrated, and tested throughout the 1.x series. The SCOT lineup is indoor/outdoor rated.

 

 

 

 

2.

‘WALLY’ was announced in June 2018 at the BOMA International Show in San Antonio, Texas. WALLY is a wall-mounted derivative of SCOT that is also indoor/outdoor rated. It is designed to bring the RAD ecosystem to entryways, elevator lobbies, loading docks, and other areas where wall mounting is preferable.


WALLY has been upgraded several times since inception, with the current version being the “WALLY 2.1 HSO,” which includes a Health Screening Option. This feature automates temperature checks of workers and visitors entering a facility and simplifies contact tracing follow-up. RAD anticipates strong demand for this feature as COVID occupancy restrictions loosen and businesses struggle to efficiently process many more people entering their facilities.  

__________

3 SIA’s New Product Showcase recognizes innovative products, services and solutions in electronic physical security, and SCOTs award comes in the Law Enforcement/Guarding Systems category. Technologies within the program are used in the protection of life and property in residential, commercial, and institutional settings, displaying SCOTs importance in long-range human detection and acting as a force multiplier for safety and defense against outside threats.


- 3 -



 

3.

“AVA” was introduced by the Company in March 2020 and replaces “FRED,” which had been introduced in 2018 as a complement to the RAD ecosystem and focused exclusively on verified entry methods. AVA performs not only the tasks previously performed by FRED but also additional tasks. RAD delivered the first AVA unit in September 2020. [Mounted on gate stanchions and appropriate for office access.]

 

 

 

 

4.

“ROSA” (Responsive Observation Security Agent) was introduced in 2019. In addition to providing surveillance capabilities, the unit has been designed to deter loitering, vandalism, and other criminal behaviors by autonomously responding to trespassers with escalating lights, sirens, and targeted messaging.  Case studies of two successful installations have been shared widely among the security community and have received coverage in the trade press4. ‘ROSA180’ was announced in May 2021 and is the successor to ROSA.

 

 

 

 

5.

“ROSA270” was announced in May 2021 and complements the existing RAD I stationary lineup. It offers an expanded 270° field of view.


Software Solutions


RAD has created a variety of front-end and back-end software solutions to power its ecosystem. RADGUARD is customer-facing software (on the touchscreens of RAD’s field devices), and management solutions include RADSOC (Security Operations Center) and RADPMC (Property Management Center).


RAD has developed a variety of utilities that allow automatic over-the-air updates, most of which are within a back-end application called SCOT Manager.


RAD has developed Visitor Management, Access Control, and other applications itself instead of seeking to partner with legacy manufacturers. It is RAD’s opinion that the legacy paradigm in the physical space underserves the markets in terms of cost, functionality, and integration.


RAD recently introduced its own Video Management System into RADSOC, delivering a fully integrated solution that facilitates robust security and property management capabilities.


The Company believes that RAD’s ability to deliver easy-to-use, easy-to-obtain, and easy-to-support software, combined with custom workflow-automation applications, is key to the Company’s success.


Manufacturing & Assembly


RAD uses various domestic and overseas machine shops for raw material procurement and machining of the required plastic and metal pieces that build RAD devices. RAD’s sourcing has redundancy through use of multiple machine shops producing the same products for RAD. In addition, all pieces within any RAD device can be procured from a choice of suppliers.


RAD’s margins are based on current small batch production and assembly. The Company expects that economies of scale will drive greater gross margin as quantities and efficiencies increase.


Roadmap


RAD expects to introduce new products and updates to several products during the remainder of 2021 and early 2022, including the following:


1) ROAMEO 2.0 in June 2021. This release will significantly improve the robot’s perception, prediction, battery, speed, and autonomous charging.


2) ROSA270 to be announced June 2021. This is a new solution.


3) ROSA180, the successor to last year’s ROSA.


4) Other hardware and software solutions, currently being developed, one of which is expected to be introduced in June 2021.

__________

4 https://roboticassistancedevices.com/case-study-citrus-construction/  and  https://roboticassistancedevices.com/case-study-midway-car-rental/


- 4 -



RAD’s hardware and software have benefited from continuous significant improvements and to date has over 600,000 paid operating hours.


Team and Culture


AITX has built a strong start-up culture based on performance, sacrifice, and rewards. Attracting employees who can thrive in this environment requires a different approach to corporate growth and development. RAD’s governing philosophy centers around the principles of “Emotional Intelligence. Self-awareness, composure, internal motivation, empathy, and social skills are prerequisites for joining the RAD team, and each candidate interview begins with a review of the foundational elements that comprise RAD culture.


Team members are open to multitasking and wearing multiple hats, as situations demand. This allows management to focus on larger goals and long-term strategies. We try to ensure that our entire staff shares the same core beliefs and values as the Company, allowing us to adapt and adjust quickly to changes that might grind other companies to a halt. Members have been no stranger to the difficulties that face a startup, including unexpected setbacks, delays in funding, or a cash crunch, but they have persevered with dedication and enthusiasm for our greater mission. They have met incredibly tight deadlines, volunteered to make financial sacrifices, and assisted wherever and however they can.


We believe that RAD’s high-EQ work culture creates productive, motivated employees that has allowed the Company to weather the difficult period of robot deployments and our transition to 2nd generation solutions.


Market Environment


RAD believes that its experience has shown that the security market is ripe for disruption. It has captured the interest of many Fortune 500 companies. The Company believes that no other company operating in the physical security space has the solutions, distribution channel, reputation, sales or support model to rival RAD in the near term. In addition, the Company expects that the launch of RAD’s mobile solutions will significantly increase the gap between it and would-be competitors. RAD will be a one-stop-shop for proven and comprehensive mobile and stationary workflow improvement devices and systems.


RAD’s technology model includes a “new paradigm” for the security industry: Security in a Box. Every RAD solution features connection to the RAD Software Suite, a platform for AI processing, usage analytics, cloud-sided video, communications interface, audit logs, and much more.


Positive market reception for RAD solutions is due to the following conditions:


 

1.

The security guard industry is characterized by poor customer satisfaction and industry consolidation. It’s self-described to be a “race to the bottom” to provide the lowest cost to end-users who require at least some level of security services for crime deterrence and insurance purposes. There are 1.1 million security guards in the United States and the security guard industry represents over $20 billion in annual sales. The average security guard hourly rate is $20 per hour.

 

 

 

 

2.

Enterprise organizations’ security divisions/groups are continuously challenged to reduce cost. For example, Universal Parcel Service (UPS) spends over $120 million per year in security guard services, Lockheed Martin over $60 million per year, and NBC Universal over $25 million per/year. The security guard industry has not had any significant disruption or innovation since its inception.

 

 

 

 

3.

Guard companies struggle to offer quality service at a reasonable price. Security organizations are eagerly receptive to solutions that improve performance and reduce cost. Guard companies are facing a worker shortage, to the point that they are turning away customers. There is a glut of low-wage jobs available, and compared to opportunities in the retail and service sector, guard positions are undesirable. The work is lonely and boring, and there is little or no room for career growth. Security companies have two alternatives; drastically increase hourly pay to attract more candidates, or automate their processes to require fewer workers who perform more interesting jobs. The former option is expected to increase the cost of services to the end-user; the latter option is expected to reduce the price while delivering security services that may equal or exceed the quality of services performed by individual guards. RAD is uniquely positioned to facilitate this second model, thereby helping to eliminate the staffing crisis for guard companies who embrace RAD’s solutions.

 

 

 

 

4.

RAD’s device rental model delivers significantly lower operating costs. With RAD’s current stationary solutions retailing from under $1/hour to $5/hour, customers immediately benefit from substantial savings and more comprehensive security.


- 5 -



 

5.

RAD’s services options allow end-users to incorporate or fully replace their existing Security Operation Centers with RAD solutions. RAD’s “Solutions-As-A-Service” Rental Program offers customized options to help organizations achieve operational and security goals.


The above conditions speak to the historical lack of innovation in the guarding market. RAD upends this tradition by approaching security challenges through a truly revolutionary approach. The market is now positioned for major disruption with the application of AI-based solutions, as lead by RAD. As such, the interest in RAD solutions has been overwhelming. Major companies, including the largest U.S. guarding company, are aligning with RAD to offer these services to their customer base.


Prospective ROAMEO Impact


The Company’s release of ROAMEO positions it as a near-competitor to Knightscope, a Palo Alto based robotics company in business since 2012. RAD’s approach is different from Knightscope’s on many elements of technology.


RAD expects that a small number of expected ROAMEO orders will make a substantial impact on RAD’s financial performance and create momentum for significant adoption of the entire RAD lineup.


Customer Acceptance of RAD Solutions


RAD end-users include one Fortune Top 10 company and a number of other Fortune 500 companies. RAD is currently deployed in logistics, commercial real estate, healthcare, and retail industries. The Company believes that if RAD is ultimately deployed to only 5% of the facilities within any of these industries, the Company will be profitable.


RAD’s batch production of SCOTs & WALLYs have all been committed prior to the completion of the production cycle, with an average delivery time of 45 days. RAD has set a goal, predicated on steady demand, to reduce delivery time to 15 days.


RAD Industry Leadership Role


Mr. Reinharz has earned a prominent role as a spokesperson for AI and change in the security industry. He has lectured and participated in several panels for some of the security industry’s largest events and organizations. Mr. Reinharz sits on the SIA’s Autonomous Working Group committee, which is dedicated to helping shape the industry and support progressive legislation. Most recently, Mr. Reinharz provided a lecture to NYC’s ASIS CPP group that qualified as a continuing education credit.


It is expected that Mr. Reinharz will continue his promotion of the new paradigm for the next few years until adoption is widespread.


Go To Market Strategy


RAD’s strategy continues to focus on the creation and support of a strong dealer channel. This approach affords multiple benefits to RAD with few downsides. RAD has successfully integrated through the largest U.S. guarding company and recently signed another top-three guarding company as a RAD dealer. Furthermore, RAD has been signing up and developing mid-sized and smaller dealers. RAD is on track to establish a focused group of dealers, most of whom will exclusively represent RAD solutions.


Supplemental to nurturing a solid dealer channel, RAD will, under certain circumstances, accept subscriptions directly from end-users. These situations are largely characterized by the end-user not having a guarding company, having a guarding company that RAD does not want as a dealer, or other extenuating circumstances. RAD has no desired ratio of dealer vs. direct subscriptions. Dealer subscriptions remain the primary focus.


Competition


RAD has no direct competition save for one immediate competitor and one potential competitor.


RAD is considered part of the “drones” category of the security industry, although at RAD we consider ourselves to be in the workflow automation industry.


- 6 -



RAD deliberately restricts information that is public for three main reasons:


 

1.

Usually, activities are covered by mutual non-disclosure agreements and RAD generally will not ask for permission to publicize customer activities.

 

 

 

 

2.

These are generally security applications, and most companies prefer not to advertise the details of their security systems.

 

 

 

 

3.

Until RAD hits the “tipping point,” we prefer to keep our solutions somewhat stealth so as not to give our would-be competitors ideas to copy.


We anticipate that, eventually, some competition may enter the market. RAD seeks to maintain a 2+ year competitive advantage through a broad line of hardware solutions, the fastest and smoothest user interface, and the strongest feature set with the most mature back-end. Furthermore, RAD seeks to expand its sales staff and become the dominant incumbent in this new market that it has created.


Covid Impact


The company issued a Covid Impact notice on March 24, 2020 that can be found here:


https://secureservercdn.net/198.71.233.11/48b.407.myftpupload.com/wp-content/uploads/2020/03/covidUpdate.pdf.


In summary, Covid accelerated some opportunities and sales while stunting others. Overall, the Company believes that the Covid pandemic will spur the use of innovative cost-saving technology like that created by RAD. Indeed, at the time of this writing, RAD is engaged in several large and high-level discussions with companies actively looking to reduce cost due to the pandemic. RAD expects this to remain a priority, even in light of vaccination availability and a reopening economy. Furthermore, the elimination of millions of low-wage jobs at the start of the pandemic and the current widespread competition to now replace those workers has exacerbated the already difficult challenge of attracting candidates for security guard positions. With the security industry facing a severe security guard shortage, RAD’s technology-based solutions are a desirable, affordable, and readily available alternative.


Employees


As of May 9, 2021, we have 50 employees, including full-time contract employees in California and Canada. None of our employees are represented by a union. We consider our employee relations to be excellent. AITX is rolling out its approved (April 2021 8-K) ESOP to all employees during the 2nd and 3rd quarters.


Accomplishments & Highlights


AITX, and its subsidiaries RAD I, RAD M, and RAD G, list of accomplishments highlights successes in adding to the strength of its executive leadership team, expanding its sales and distribution channels, launching new products, while growing its presence, visibility and profile within its existing marketplaces. Milestones and accomplishments over the past 12 months include:


Authorized Dealers Added to Dealer Network


RAD has more than 25 authorized dealers across the United States, Canada, and the EU, with plans for continued expansion. Dealers include the largest security companies in the world, including Allied Universal and Securitas. The ongoing addition of authorized dealers introduces and delivers RAD products to new markets. Dealer announcement and highlights include:


5/18/2020 - Artificial Intelligence Technology Solutions Increases Dealer Network

9/14/2020 - Robotic Assistance Devices Announces Hawaiian Expansion with Titan Security Services

9/21/2020 - Robotic Assistance Devices Announces a Strengthened Southern California Presence with GMI Integrated Facility Solutions Inc.

12/17/2020 - Robotic Assistance Devices Announces Dealer Agreement with Civitas Group

1/6/2021 - Robotic Assistance Devices Announces Dealer Agreement with Protos Security

2/12/2021 – NexGen Security Solutions and Servexo Protective Services Sign with Robotic Assistance Devices - Indicates that Momentum for Products Accelerates

3/5/2021 - Robotic Assistance Devices Announces Dealer Agreement with St. Moritz Security Services

3/11/2021 - Robotic Assistance Devices Announces Dealer Agreement with DSI


- 7 -



RAD Took an Active Part in the War Against COVID-19


The years 2020 and 2021 thus far have been framed by the global impact of COVID-19. Since the early days of the pandemic, RAD has been active in offering businesses of all sizes all-in-one solutions to maintaining a safe and health work environment. Wally HSO (Health Screening Option) and ROSA (with Face Covering Detection) have been integral in helping businesses open their facilities in a safe and secure manner. COVID-19 related product announcements and orders include:


4/6/2020 - Artificial Intelligence Technology Solutions Conducts Coronavirus Type Pandemic First Response

5/8/2020 - Artificial Intelligence Technology Solutions Announces Health Screening Product Enhancement

7/1/2020 - Robotic Assistance Devices Deploys Artificial Intelligence-Powered Face Mask Detection Reporting Analytic

7/22/2020 - Robotic Assistance Devices Announces Face Mask Detection Orders

7/29/2020 - Robotic Assistance Devices Announces First Health Screening Device Order

8/13/2020 - Robotic Assistance Devices Receives Multi Unit Order for Face Mask Detection Enabled ROSAs

8/28/2020 - Robotic Assistance Devices Announces Second “Wally” Order from Fortune 500 Company

11/24/2020 - Artificial Intelligence Technology Solutions Receives Wally HSO Order from Top 20 Largest Medical Devices Company in the World

2/23/2021 - Robotic Assistance Devices Announces Large Expansion Order Received from Fortune 50 Client

3/30/2021 - Robotic Assistance Devices Receives 2-Unit Wally HSO Order from New Dealer DSI


RAD I and RAD M Continued to Expand Their Product Offerings


Throughout all of fiscal year 2021, RAD released new products and made important updates to existing solutions. Notably, AVA and ROAMEO formally joined the RAD product lineup, with deployments immediately following their announcements. As fiscal year 2022 got underway, ROSA180 and ROSA270 will be poised to take their places in this expanding product lineup.


RAD Sales Continue to Surge


Throughout FY 2021, RAD made great strides in increasing sales and recurring monthly revenue. Through the addition of several new authorized dealers, an expanded product offering, new sales / business development team members and expanded client communications campaigns, the Company has experienced a measurable increase in demand and unit orders. RAD often publicly announces orders that are significant in volume, market penetration, or use case application. Order highlights from FY 2021 include:

Throughout fiscal year 2021, RAD made great strides in increasing sales and recurring monthly revenue. Through the addition of several new authorized dealers, an expanded product offering, new sales/ usiness development team members and expanded client communications campaigns, the Company has experienced a measurable increase in demand and unit orders. RAD often publicly announces orders that are significant in volume, market penetration, or use case application. Order highlights from FY 2021 include:


3/31/2020 - Artificial Intelligence Technology Solutions Secures Seven-Unit Order From Transit Agency

5/12/2020 - Artificial Intelligence Technology Solutions Secures Nine Unit Order From Real Estate Company

6/4/2020 - Artificial Intelligence Technology Solutions Receives first AVA Order

6/24/2020 - Artificial Intelligence Technology Solutions Signs Agreement With Fortune 500 Client

7/9/2020 - Robotic Assistance Devices Announces Orders

11/10/2020 - Artificial Intelligence Technology Solutions Receives First Auto Dealership Order

11/17/2020 - Artificial Intelligence Technology Solutions Receives ROSA Order from Large Construction Company

12/22/2020 - Robotic Assistance Devices Large Opportunity on the Immediate Horizon

1/8/2021 - Robotic Assistance Devices Announces That Previously Anticipated Order Is In Hand

1/13/2021 - Robotic Assistance Devices Receives Opening Order From Civitas Group, RAD’s Recently Signed Dealer in Romania

1/28/2021 - Robotic Assistance Devices Announces that 2021 is off to a Great Start

3/1/2021 - Artificial Intelligence Technology Solutions Announces Accelerated Order Activity - New Orders from Fortune Ranked Clients

4/14/2021 - Robotic Assistance Devices Receives 10-Unit Order from Titan Security Technologies

4/19/2021 - Major US Airport Poised to Deploy RAD Solutions

4/21/2021 - Robotic Assistance Devices Receives Opening Order from Recently Signed Dealer St. Moritz Security Services

4/28/2021 - Robotic Assistance Devices Receives 3-Unit ROSA Order

5/10/2021 - Robotic Assistance Devices Receives 17 Unit Order


- 8 -



The AITX and RAD Teams Continue to Grow


The Company and its subsidiaries have been able to attract highly qualified and experienced individuals to help in research and development, procurement, manufacturing, shipping and customer support. Staffing at RAD I, RAD M, and RAD G increased from 18 full time and 4 part-time employees and contract employees at the end of February 2020 to 50 as of May 9, 2021.


Notable Additions to the AITX and RAD Executive Teams:


7/13/2020 - Robotic Assistance Devices Announces Team Expansion

10/5/2020 - Artificial Intelligence Technology Solutions Announces Board of Advisors

3/2/2021 - Artificial Intelligence Technology Solutions Announces Executive Team Expansion

4/12/2021 - Robotic Assistance Devices Welcomes Christopher Almonrode, CPP, as Vice President Security & Industry

4/26/2021 - Robotic Assistance Devices Appoints New Chief Financial Officer


AITX and RAD Develop Working Relationships with Industry Partners


Continually expanding its marketability, RAD has formed several symbiotic relationships, meant to enhance the company’s and products’ performance and reach. Notable announced partnerships include:


9/29/2020 - Artificial Intelligence Technology Solutions Partners With Centralized Vision to Expand Premium Service Offerings

11/5/2020 - Artificial Intelligence Technology Solutions and Swan Island Networks Announce Strategic Alliance

3/24/2021 - Robotic Assistance Devices to Integrate EAGL Gunshot Detection Technology into All Security Devices


RAD Expands Its Production Capacity to Keep Up With Demand


In fiscal year 2021, RAD undertook two major production investments. First, it initially expanded its facilities in southern California, and it then announced a major expansion to a 30,000 square foot facility near Detroit, Michigan. The new Michigan facility, dubbed REX (RAD Excellence Center) is expected to be fully operational by the end of June 2021, staffed with up to 75 employees.


Manufacturing announcements include:


12/30/2020 – Robotic Assistance Devices Announces Growth, Upgrades Two Locations

3/9/2021 - Robotic Assistance Devices Announces That Its ‘QuickShip’ Turnaround Time in Full Operation

3/18/2021 - Robotic Assistance Devices Signs Lease for New Production Facility in Greater Detroit Area

5/5/2021 - Robotic Assistance Devices Experiences Great Advances Through April


RAD Client Satisfaction – Documented via Case Studies


RAD has issued 2 formal case studies, published in their related industry trade publications. These document the verifiable contributions that the clients’ RAD units have made to enhance their property’s security profile, while reducing overall costs. Excerpts from the case studies include:


“Damage to vehicles, graffiti on the exterior of the building, the homeless tampering with our electrical outlets to charge their phones, trash left around the property – that’s all gone since we put the ROSAs in.”


“We’re paying a fraction of what we were paying before and more importantly, we’ve seen a drop in crime. ROSA is doing the same or better than having a security guard in place.”


The future implementation of such case studies will advance RAD’s reach into new vertical markets. Published case studies include:


3/15/2021 - Robotic Assistance Devices Published Case Study Regarding Security and Cost Savings at Client Citrus Construction

 

 

4/6/2021 - Robotic Assistance Devices’ ROSA Proves Its Value in Automotive Applications


Legal Proceedings


See Item 3 - Legal Proceedings.


- 9 -



ITEM 1A. RISK FACTORS


Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), we are not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).


ITEM 1B. UNRESOLVED STAFF COMMENTS


Not applicable.


ITEM 2. PROPERTIES


We maintain our corporate offices at 701 North Green Valley Parkway, Suite 200, Henderson, Nevada, 89704 pursuant to a month-to-month lease. Our annual rental cost for this facility is approximately $936 per year. RAD maintains a mailing address of 31103 Ranch Viejo Road, Suite D2114, San Juan Capistrano, CA 92675, USA for a nominal fee of $264 per year. RAD entered into a 15-month lease at 18009 Sky Park Circle Suite E , Irvine, California 92614, that began on December 18, 2020 and terminates on March 31, 2022, at annual cost of  $46,308. This property is used as the West Coast Sales and Service Center. The lease is not renewable.


On March 10, 2021 the Company entered into a ten-year lease of a 29,316 square foot building located  at 10800 Galaxie Avenue,  Ferndale, Michigan 48220. The lease began on May 1, 2021. These premises are being used for offices, manufacturing and distribution. The annual rental cost for this facility is approximately $190,000, plus a proportionate share of operating expenses of approximately $28,000 annually


ITEM 3. LEGAL PROCEEDINGS


From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. There are no legal proceedings pending at this time.


In April 2019 the principals of WeSecure filed lawsuit in California Superior Court seeking damages for non-payment of the remaining balance from the sale of WeSecure assets. In June 2019, the case was settled for $180,000, payable in 14 monthly installments. The final installment   totaling $25,000, unpaid consulting fees payable to the two principals through to September 2019 totaling $125,924, and labor code violations of $48,434 all totaling $199,358 plus attorney’s fees and damages. The parties finally settled all claims with a full release for $180,000 in June 2019 payable in 14 monthly installments. The final $122,000 payment was made in March 2021.


ITEM 4. MINE SAFETY DISCLOSURES


Not applicable.


PART II


ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES


Market Information


AITX’s common stock began trading on the “Over the Counter” Bulletin Board (“OTC”) under the symbol “AITX” in June 2011 and as AITX on August 24, 2018. The following table sets forth, for the period indicated, the prices of the common stock in the over-the-counter market, as reported and summarized by OTC Markets Group, Inc. On August 24, 2018, the Company undertook a 100:1 reverse stock split and on March 27, 2020 a 10,000:1 reverse split. The share capital has been retrospectively adjusted accordingly to reflect this reverse stock split, except for the conversion price of certain convertible notes as the conversion price is not subject to adjustment from forward and reverse stock splits.


These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown, or commission and may not represent actual transactions. There is an absence of an established trading market for the Company’s common stock, as the market is limited, sporadic and highly volatile, which may affect the prices listed below.


- 10 -



 

 

High

 

Low

Fiscal Year Ended February 28, 2021:

 

 

 

 

 

 

Quarter ended February 28, 2021

 

$

0.29

 

$

0.00

Quarter ended November 30, 2020

 

$

0.01

 

$

0.00

Quarter ended August 31, 2020

 

$

0.10

 

$

0.00

Quarter ended May 31, 2020

 

$

2.00

 

$

0.03

 

 

 

 

 

 

 

Fiscal Year Ended February 29, 2020:

 

 

 

 

 

 

Quarter ended February 29, 2020

 

$

2.00

 

$

0.50

Quarter ended November 30, 2019

 

$

3.00

 

$

0.50

Quarter ended August 31, 2019

 

$

61.00

 

$

2.00

Quarter ended May 31, 2019

 

$

67.00

 

$

12.00


On May 11, 2021, the closing price per share of the Company’s common stock as quoted on the OTC was $0.08.


Dividends


To date, we have not paid dividends on shares of the Company’s common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, AITX’s financial condition, and other factors deemed relevant by its Board of Directors.


Holders of Common Stock


As of May 12, 2021, there were 12 holders of AITX’s common stock of which 12 were active. The number of foregoing holders does not include beneficial owners of common stock whose shares are held in the names of banks, brokers, nominees or other fiduciaries.


Common Stock


The Company is authorized to issue 5,000,000,000 shares of common stock, with a par value of $0.00001. The closing price of its common stock on May 11, 2021, as quoted by OTC Markets Group, Inc., was $0.0752. There were 3,545,772,882 shares of common stock issued and outstanding as of May 11, 2021. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non-assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of its assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of the Company’s common are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the Board of Directors from funds legally available.


Our Articles of Incorporation, Bylaws, and the applicable statutes of the state of Nevada contain a more complete description of the rights and liabilities of holders of our securities.


During the years ended February 28, 2021 and February 29, 2020, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.


On August 24, 2018, the Company undertook a 100:1 reverse stock split and on March 27, 2020 the Company undertook a 10,000:1 reverse stock split. The share capital has been retrospectively adjusted accordingly to reflect this reverse stock split, except for the conversion price of certain convertible notes as the conversion price is not subject to adjustment from forward and reverse stock splits.


Non-cumulative voting


Holders of shares of the Company’s common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.


- 11 -



Securities Authorized for Issuance under Equity Compensation Plans


On April 14, 2021 the Company adopted an Incentive Stock Plan where full details are disclosed in Exhibit 10.1 of the Company’s 8K filing of April 20,2021. Under the plan the Company may grant options to service providers and employees to acquire up to 5,000,000 shares of the Company’s common stock. The options will be under the varying terms and conditions of an agreement but the exercise price cannot be lower than 100% to 110% of the fair value of the stock at date of grant and the term of the grant can be no longer than 5 years.


As of the date of this filing , no grants have been issued under this plan.


The following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance.


Plan Category

 

Number of Securities to

be issued upon exercise

of outstanding options,

warrants and rights

 

Weighted average

exercise price of

outstanding options,

warrants and rights

 

Number of securities

remaining available for

future issuance

Equity compensation plans approved by security holders.

 

 

 

1

 

 

 

 

 

 

 

Equity compensation plans not approved by security holders.

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

1


Preferred Stock


The Company is authorized to issue up to 20,000,000 shares of $0.001 par value preferred stock. The board of directors is authorized to designate any series of preferred stock up to the total authorized number of shares.


Series E Preferred Stock


The Board of Directors has designated 4,350,000 shares of Series E Preferred Stock. As of the date of this report, there are 4,350,000 shares of Series E Preferred Stock outstanding. The Series E Preferred Stock ranks subordinate to the Company’s common stock as to distributions of assets upon liquidation, dissolution or winding up of the Corporation. The Series E preferred stock is non-redeemable, does not have rights upon liquidation of the Company and does not receive dividends. The outstanding shares of Series E Preferred Stock have the right to take action by written consent or vote based on the number of votes equal to twice the number of votes of all outstanding shares of equity instruments with voting rights. As a result, the holders of Series E Preferred Stock have 2/3rds of the voting power of all shareholders at any time corporate action requires a vote of shareholders.


Series F Convertible Preferred Stock


The Board of Directors has designated 4,350 shares of Series F Convertible Preferred Stock with a par value of $1.00 per share. As of the date of this report, there are 2,716 shares of Series F Convertible Preferred Stock outstanding. The Series F Convertible Preferred Stock is non-redeemable, does not have rights upon liquidation of the Company, does not have voting rights and does not receive dividends. Each holder may, at any time and from time to time convert all, but not less than all, of their shares of Series F Convertible Preferred Stock into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the date of conversion by three and 45 100ths (3.45) on a pro rata basis. So long as any shares of Series F Convertible Preferred Stock are outstanding, the Company shall not, without first obtaining the approval of the majority of the holders: (a) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series F convertible preferred stock; (b) create any Senior Securities; (c) create any pari passu Securities; (d) do any act or thing not authorized or contemplated by the Certificate of Designation which would result in any taxation with respect to the Series F Convertible Preferred Stock under Section 305 of the Internal Revenue Code of 1986, as amended, or any comparable provision of the Internal Revenue Code as hereafter from time to time amended, (or otherwise suffer to exist any such taxation as a result thereof).


- 12 -



Series G Preferred Stock


The board of directors has designated 1,000 shares of Series G Preferred Stock. As of the date of this report, there are no shares of Series G Preferred Stock outstanding. The Series G preferred stock does not have voting rights, does not have rights upon liquidation of the Company and does not receive dividends.


Transfer Agent and Registrar


The Transfer Agent for our capital stock is Transhare with an address at 15500 Roosevelt Boulevard, Suite 302, Clearwater, Florida 33760. Their telephone number is Office phone: 303-662-1112.


Recent Sales of Unregistered Securities


The following is a summary of transactions by AITX involving sales of its securities that were not registered under the Securities Act.


Date

 

Transaction (*)

 

Principal Converted

 

Interest Converted

 

Fees Converted

 

Total Amount Converted

 

Shares Issued**

Number of shares outstanding February 28, 2017

 

 

 

 

 

 

 

 

 

 

 

18

March 7, 2017

 

conversion

 

$1,840

 

$—

 

$—

 

$1,840

 

1

March 22, 2017

 

conversion

 

1,971

 

 

 

1,971

 

1

March 27, 2017

 

cancelation***

 

 

 

 

 

(1)

April 3, 2017

 

conversion

 

1,487

 

3,397

 

 

4,884

 

1

April 7, 2017

 

conversion

 

1,000

 

 

 

1,000

 

1

April 20, 2017

 

conversion

 

920

 

 

 

920

 

1

April 24, 2017

 

conversion

 

6,876

 

 

 

6,876

 

1

April 26, 2017

 

conversion

 

1,130

 

 

 

1,130

 

1

May 2, 2017

 

conversion

 

1,130

 

 

 

1,130

 

1

May 4, 2017

 

conversion

 

1,240

 

 

 

1,240

 

1

May 4, 2017

 

conversion

 

8,854

 

 

 

8,854

 

1

May 8, 2017

 

conversion

 

9,296

 

 

 

9,296

 

1

May 12, 2017

 

conversion

 

1,432

 

 

 

1,432

 

1

May 15, 2017

 

conversion

 

11,661

 

 

 

11,661

 

1

May 15, 2017

 

conversion

 

1,550

 

 

 

1,550

 

2

May 18, 2017

 

conversion

 

13,629

 

 

 

13,629

 

2

May 23, 2017

 

conversion

 

9,684

 

3,059

 

 

12,743

 

1

May 24, 2017

 

conversion

 

1,730

 

 

 

1,730

 

2

May 30, 2017

 

conversion

 

1,890

 

 

 

1,890

 

2

June 7, 2017

 

conversion

 

1,985

 

 

 

1,985

 

2

June 9, 2017

 

conversion

 

2,085

 

 

 

2,085

 

2

June 12, 2017

 

conversion

 

2,185

 

 

 

2,185

 

2


- 13 -



(continued)

Date

 

Transaction (*)

 

Principal Converted

 

Interest Converted

 

Fees Converted

 

Total Amount Converted

 

Shares Issued**

June 14, 2017

 

conversion

 

2,295

 

 

 

2,295

 

2

June 19, 2017

 

conversion

 

2,400

 

 

 

2,400

 

2

June 20, 2017

 

conversion

 

2,500

 

 

 

2,500

 

3

June 20, 2017

 

conversion

 

3,000

 

358

 

 

3,358

 

June 22, 2017

 

warrant exercise****

 

 

 

 

 

3

June 28, 2017

 

conversion

 

2,800

 

 

 

2,800

 

3

June 28, 2017

 

warrant exercise****

 

 

 

 

 

3

July 5, 2017

 

conversion

 

3,050

 

 

 

3,050

 

3

July 6, 2017

 

warrant exercise****

 

 

 

 

 

3

July 7, 2017

 

warrant exercise****

 

 

 

 

 

July 7, 2017

 

conversion

 

3,400

 

 

 

3,400

 

3

July 26, 2017

 

conversion

 

3,500

 

 

 

3,500

 

4

July 28, 2017

 

conversion

 

9,750

 

 

 

9,750

 

1

July 28, 2017

 

conversion

 

4,000

 

 

 

4,000

 

4

August 2, 2017

 

conversion

 

75,000

 

 

 

75,000

 

4

August 2, 2017

 

conversion

 

75,000

 

2,483

 

 

77,483

 

4

August 4, 2017

 

conversion

 

11,184

 

 

 

11,184

 

August 14, 2017

 

conversion

 

4,500

 

 

 

4,500

 

5

August 21, 2017

 

conversion

 

4,700

 

 

 

4,700

 

5

August 29, 2017

 

conversion

 

4,900

 

 

 

4,900

 

5

September 5, 2017

 

conversion

 

26,250

 

 

 

26,250

 

5

September 18, 2017

 

conversion

 

27,250

 

 

 

27,250

 

5

September 27, 2017

 

conversion

 

29,000

 

 

 

29,000

 

6

October 16, 2017

 

conversion

 

30,500

 

 

 

30,500

 

6

October 16, 2017

 

conversion

 

10,000

 

 

 

10,000

 

Number of shares outstanding February 28, 2018

 

 

 

 

 

 

 

 

 

 

 

124

April 16, 2018

 

conversion

 

132,160

 

 

 

132,160

 

6

April 26, 2018

 

conversion

 

14,500

 

 

500

 

15,000

 

1

May 1, 2018

 

conversion

 

26,250

 

 

 

26,250

 

3

May 3, 2018

 

conversion

 

5,000

 

 

 

5,000

 

May 7, 2018

 

conversion

 

27,900

 

 

 

27,900

 

3

May 10, 2018

 

conversion

 

32,400

 

 

 

32,400

 

4

May 11, 2018

 

conversion

 

14,500

 

 

500

 

15,000

 

2

May 15, 2018

 

conversion

 

7,060

 

 

500

 

7,560

 

2

May 15, 2018

 

conversion

 

8,000

 

 

 

8,000

 

1

May 21, 2018

 

conversion

 

20,250

 

 

 

20,250

 

3

May 22, 2018

 

conversion

 

6,075

 

 

 

6,075

 

1

May 24, 2018

 

conversion

 

13,056

 

3,300

 

 

16,356

 

2

May 30, 2018

 

conversion

 

8,182

 

 

 

8,182

 

2

May 30, 2018

 

conversion

 

15,000

 

 

 

15,000

 

3

June 7, 2018

 

conversion

 

2,922

 

 

 

2,922

 

1

June 18, 2018

 

conversion

 

17,000

 

 

 

17,000

 

4

June 19, 2018

 

conversion

 

14,500

 

 

500

 

15,000

 

3

June 28, 2018

 

conversion

 

18,000

 

 

 

18,000

 

4

June 28, 2018

 

cancellation

 

(7,060)

 

 

(500)

 

(7,560)

 

(2)

July 5, 2018

 

conversion

 

14,500

 

 

500

 

15,000

 

4

July 5, 2018

 

conversion

 

8,818

 

 

 

8,818

 

3

July 11, 2018

 

conversion

 

10,200

 

 

 

10,200

 

4

July 11, 2018

 

conversion

 

14,500

 

 

500

 

15,000

 

5

July 19, 2018

 

conversion

 

16,000

 

 

500

 

16,500

 

5

July 19, 2018

 

conversion

 

11,000

 

1,366

 

 

12,366

 

4

July 23, 2018

 

conversion

 

14,500

 

 

500

 

15,000

 

7

July 25, 2018

 

conversion

 

5,000

 

 

 

5,000

 

2

July 31, 2018

 

conversion

 

11,000

 

1,455

 

 

12,455

 

6

August 24, 2018

 

conversion

 

 

15,300

 

 

15,300

 

10

August 27, 2018

 

conversion

 

5,500

 

 

500

 

6,000

 

10


- 14 -



(continued)

Date

 

Transaction (*)

 

Principal Converted

 

Interest Converted

 

Fees Converted

 

Total Amount Converted

 

Shares Issued**

August 29, 2018

 

conversion

 

4,280

 

 

500

 

4,780

 

11

August 30, 2018

 

conversion

 

6,000

 

 

 

6,000

 

10

August 30, 2018

 

rounding shares

 

 

 

 

 

August 31, 2018

 

conversion

 

20,000

 

 

 

20,000

 

11

August 31, 2018

 

conversion

 

7,500

 

 

500

 

8,000

 

11

September 5, 2018

 

conversion

 

8,800

 

1,375

 

 

10,175

 

13

September 5, 2018

 

conversion

 

7,800

 

 

 

7,800

 

13

September 7, 2018

 

conversion

 

7,000

 

 

500

 

7,500

 

13

September 12, 2018

 

conversion

 

5,355

 

 

 

5,355

 

15

September 12, 2018

 

conversion

 

6,500

 

 

500

 

7,000

 

14

September 13, 2018

 

conversion

 

5,395

 

 

 

5,395

 

13

September 13, 2018

 

conversion

 

3,436

 

 

500

 

3,936

 

14

September 18, 2018

 

conversion

 

5,670

 

 

 

5,670

 

19

September 20, 2018

 

conversion

 

3,448

 

 

500

 

3,948

 

19

September 21, 2018

 

conversion

 

6,720

 

 

 

6,720

 

19

September 24, 2018

 

conversion

 

5,250

 

 

 

5,250

 

18

September 26, 2018

 

conversion

 

6,132

 

 

 

6,132

 

23

September 28, 2018

 

conversion

 

3,084

 

 

500

 

3,584

 

23

October 1, 2018

 

conversion

 

3,100

 

 

 

3,100

 

20

October 3, 2018

 

conversion

 

4,030

 

 

 

4,030

 

26

October 3, 2018

 

conversion

 

2,202

 

 

500

 

2,702

 

25

October 5, 2018

 

conversion

 

2,750

 

485

 

 

3,235

 

16

October 5, 2018

 

conversion

 

4,449

 

 

 

4,449

 

29

October 8, 2018

 

conversion

 

8,835

 

 

 

8,835

 

105

October 9, 2018

 

conversion

 

4,158

 

 

500

 

4,658

 

30

October 10, 2018

 

conversion

 

4,988

 

 

 

4,988

 

29

October 15, 2018

 

conversion

 

5,935

 

 

 

5,935

 

33

October 18, 2018

 

conversion

 

9,000

 

 

 

9,000

 

113

October 19, 2018

 

conversion

 

4,400

 

713

 

 

5,113

 

33

October 23, 2018

 

conversion

 

9,840

 

 

 

9,840

 

317

November 1, 2018

 

conversion

 

9,400

 

 

 

9,400

 

94

November 5, 2018

 

conversion

 

6,195

 

 

 

6,195

 

52

November 15, 2018

 

conversion

 

7,980

 

 

 

7,980

 

95

November 27, 2018

 

conversion

 

3,850

 

724

 

 

4,574

 

123

December 6, 2018

 

conversion

 

4,056

 

797

 

 

4,853

 

141

December 7, 2018

 

conversion

 

2,034

 

 

 

2,034

 

66

December 10, 2018

 

conversion

 

2,367

 

 

 

2,367

 

76

December 10, 2018

 

conversion

 

2,333

 

 

500

 

2,833

 

91

December 10, 2018

 

conversion

 

1,475

 

 

500

 

1,975

 

91

December 10, 2018

 

conversion

 

3,348

 

 

 

3,348

 

90

December 11, 2018

 

conversion

 

2,489

 

 

 

2,489

 

80

December 11, 2018

 

conversion

 

4,340

 

 

 

4,340

 

140

December 12, 2018

 

conversion

 

3,500

 

 

 

3,500

 

94

December 12, 2018

 

conversion

 

6,600

 

1,306

 

 

7,906

 

213

December 13, 2018

 

conversion

 

2,408

 

 

500

 

2,908

 

134

December 13, 2018

 

conversion

 

3,426

 

 

 

3,426

 

111

December 14, 2018

 

conversion

 

4,154

 

 

 

4,154

 

134

December 18, 2018

 

conversion

 

4,368

 

 

 

4,368

 

141

December 19, 2018

 

conversion

 

3,100

 

 

500

 

3,600

 

160

December 19, 2018

 

conversion

 

1,000

 

3,348

 

 

4,348

 

161

December 20, 2018

 

conversion

 

 

 

 

 

130

December 20, 2018

 

conversion

 

2,155

 

 

500

 

2,655

 

169

December 20, 2018

 

conversion

 

3,636

 

 

 

3,636

 

117

December 20, 2018

 

conversion

 

7,480

 

1,520

 

 

9,000

 

333

December 24, 2018

 

conversion

 

2,970

 

 

 

2,970

 

110

December 26, 2018

 

conversion

 

3,213

 

 

 

3,213

 

143

December 27, 2018

 

conversion

 

1,870

 

1,381

 

 

3,252

 

120


- 15 -



(continued)

Date

 

Transaction (*)

 

Principal Converted

 

Interest Converted

 

Fees Converted

 

Total Amount Converted

 

Shares Issued**

December 28, 2018

 

conversion

 

3,700

 

 

500

 

4,200

 

227

December 31, 2018

 

conversion

 

4,869

 

 

 

4,869

 

216

December 31, 2018

 

conversion

 

5,365

 

 

 

5,365

 

290

January 2, 2019

 

conversion

 

7,370

 

1,562

 

 

8,932

 

425

January 7, 2019

 

conversion

 

3,360

 

 

 

3,360

 

240

January 7, 2019

 

conversion

 

3,944

 

 

 

3,944

 

290

January 8, 2019

 

conversion

 

4,080

 

 

 

4,080

 

300

January 9, 2019

 

conversion

 

3,161

 

 

500

 

3,661

 

317

January 10, 2019

 

conversion

 

3,380

 

 

 

3,380

 

325

January 11, 2019

 

conversion

 

5,280

 

1,150

 

 

6,430

 

397

January 11, 2019

 

conversion

 

3,625

 

 

 

3,625

 

290

January 14, 2019

 

conversion

 

3,400

 

 

 

3,400

 

340

January 15, 2019

 

conversion

 

4,100

 

 

 

4,100

 

410

January 15, 2019

 

conversion

 

4,300

 

 

 

4,300

 

430

January 17, 2019

 

conversion

 

4,800

 

 

 

4,800

 

480

January 22, 2019

 

conversion

 

4,435

 

 

 

4,435

 

504

January 22, 2019

 

conversion

 

4,230

 

 

 

4,230

 

470

January 23, 2019

 

conversion

 

3,816

 

 

 

3,816

 

530

January 25, 2019

 

conversion

 

3,781

 

 

 

3,781

 

556

January 28, 2019

 

conversion

 

3,276

 

 

 

3,276

 

585

January 29, 2019

 

conversion

 

3,690

 

 

 

3,690

 

615

January 29, 2019

 

conversion

 

3,870

 

 

 

3,870

 

645

January 30, 2019

 

conversion

 

4,080

 

 

 

4,080

 

680

January 31, 2019

 

conversion

 

4,500

 

 

 

4,500

 

750

January 31, 2019

 

conversion

 

4,290

 

 

 

4,290

 

715

February 4, 2019

 

conversion

 

4,740

 

 

 

4,740

 

790

February 5, 2019

 

cancellation

 

(2,658)

 

 

 

(2,658)

 

(17)

February 5, 2019

 

conversion

 

4,980

 

 

 

4,980

 

830

February 12, 2019

 

conversion

 

5,340

 

 

 

5,340

 

890

February 14, 2019

 

conversion

 

5,236

 

 

 

5,236

 

935

February 21, 2019

 

conversion

 

4,956

 

 

 

4,956

 

900

Number of shares outstanding February 28, 2019

 

 

 

 

 

 

 

 

 

 

 

20,026

May 6, 2019

 

conversion

 

5,768

 

 

 

5,768

 

1,030

May 6, 2019

 

conversion

 

15,000

 

 

 

15,000

 

882

May 6, 2019

 

conversion

 

11,900

 

 

 

11,900

 

992

May 7, 2019

 

conversion

 

6,048

 

 

 

6,048

 

1,080

May 7, 2019

 

conversion

 

11,900

 

 

 

11,900

 

992

May 8, 2019

 

conversion

 

6,384

 

 

 

6,384

 

1,140

May 8, 2019

 

conversion

 

11,800

 

 

 

11,800

 

983

May 8, 2019

 

conversion

 

7,312

 

 

500

 

7,812

 

1,240

May 9, 2019

 

conversion

 

12,500

 

 

 

12,500

 

1,136

May 10, 2019

 

conversion

 

7,200

 

 

 

7,200

 

655

May 8, 2019

 

conversion

 

4,400

 

 

 

4,400

 

1,000

May 13, 2019

 

conversion

 

7,493

 

 

 

7,493

 

1,338

May 13, 2019

 

conversion

 

12,650

 

3,786

 

 

16,436

 

1,957

May 21, 2019

 

conversion

 

3,281

 

 

 

3,281

 

586

May 22, 2019

 

conversion

 

11,550

 

3,526

 

 

15,076

 

2,094

July 11, 2019

 

conversion

 

11,000

 

3,984

 

 

14,984

 

1,921

July 25, 2019

 

conversion

 

8,584

 

 

 

8,584

 

2,000

July 30, 2019

 

conversion

 

16,940

 

6,350

 

 

23,290

 

3,882

July 31, 2019

 

conversion

 

9,872

 

 

 

9,872

 

2,300

August 2, 2019

 

conversion

 

10,301

 

 

 

10,301

 

2,400

August 8, 2019

 

conversion

 

21,450

 

8,170

 

 

29,620

 

4,937

August 11, 2019

 

conversion

 

10,945

 

 

 

10,945

 

2,550

August 11, 2019

 

conversion

 

5,837

 

 

 

5,837

 

1,360

August 12, 2019

 

conversion

 

8,800

 

 

 

8,800

 

2,750


- 16 -



(continued)

Date

 

Transaction (*)

 

Principal Converted

 

Interest Converted

 

Fees Converted

 

Total Amount Converted

 

Shares Issued**

August 12, 2019

 

conversion

 

13,915

 

5,337

 

 

19,252

 

4,011

August 13, 2019

 

conversion

 

3,528

 

 

 

3,528

 

1,260

August 14, 2019

 

conversion

 

5,920

 

 

 

5,920

 

2,960

August 15, 2019

 

conversion

 

12,650

 

4,877

 

 

17,527

 

5,842

August 15, 2019

 

conversion

 

6,200

 

 

 

6,200

 

3,100

August 16, 2019

 

conversion

 

8,060

 

 

 

8,060

 

4,030

August 19, 2019

 

conversion

 

6,784

 

 

 

6,784

 

4,240

August 20, 2019

 

conversion

 

7,136

 

 

 

7,136

 

4,460

August 20, 2019

 

conversion

 

12,100

 

4,705

 

 

16,805

 

7,002

August 21, 2019

 

conversion

 

4,284

 

5,628

 

 

9,912

 

4,690

August 22, 2019

 

conversion

 

 

6,348

 

 

6,348

 

5,290

August 23, 2019

 

conversion

 

 

4,400

 

 

4,400

 

5,500

August 26, 2019

 

conversion

 

7,810

 

3,068

 

 

10,878

 

9,065

August 26, 2019

 

conversion

 

 

3,416

 

 

3,416

 

4,270

August 27, 2019

 

conversion

 

 

2,240

 

 

2,240

 

2,800

August 29, 2019

 

conversion

 

 

5,344

 

 

5,344

 

6,680

September 3, 2019

 

conversion

 

 

5,616

 

 

5,616

 

7,020

September 3, 2019

 

conversion

 

6,149

 

2,449

 

 

8,598

 

14,329

September 4, 2019

 

conversion

 

 

2,956

 

 

2,956

 

7,390

September 5, 2019

 

conversion

 

 

3,240

 

 

3,240

 

8,100

September 6, 2019

 

conversion

 

 

3,560

 

 

3,560

 

8,900

September 9, 2019

 

conversion

 

 

3,752

 

 

3,752

 

9,380

September 10, 2019

 

conversion

 

 

3,944

 

 

3,944

 

9,860

September 10, 2019

 

conversion

 

6,826

 

2,750

 

 

9,575

 

15,959

September 11, 2019

 

conversion

 

 

4,129

 

 

4,129

 

10,300

September 12, 2019

 

conversion

 

2,447

 

2,233

 

 

4,680

 

11,700

September 13, 2019

 

conversion

 

4,920

 

 

 

4,920

 

12,300

September 16, 2019

 

conversion

 

2,818

 

2,342

 

 

5,160

 

12,900

September 17, 2019

 

conversion

 

 

2,960

 

 

2,960

 

7,400

September 18, 2019

 

conversion

 

 

4,760

 

 

4,760

 

11,900

September 19, 2019

 

conversion

 

 

2,920

 

 

2,920

 

7,300

September 20, 2019

 

conversion

 

202

 

1,998

 

 

2,200

 

5,500

September 25, 2019

 

conversion

 

4,506

 

234

 

 

4,740

 

12,600

October 3, 2019

 

conversion

 

5,651

 

349

 

 

6,000

 

15,000

October 10, 2019

 

conversion

 

3,760

 

280

 

 

4,040

 

10,100

October 25, 2019

 

conversion

 

2,584

 

556

 

 

3,140

 

15,700

November 4, 2019

 

conversion

 

2,926

 

354

 

 

3,280

 

16,400

November 27, 2019

 

conversion

 

2,970

 

770

 

 

3,740

 

18,700

January 3, 2020

 

conversion

 

 

2,640

 

 

2,640

 

13,200

January 27, 2020

 

conversion

 

3,360

 

 

 

3,360

 

16,800

February 1, 2020

 

cancellation

 

(3,360)

 

 

 

(3,360)

 

(16,800)

February 5, 2020

 

cancellation

 

 

(640)

 

 

(640)

 

(3,200)

February 5, 2020

 

conversion

 

 

4,060

 

 

4,060

 

20,300

February 29, 2020

 

rounding shares issuable

 

 

 

 

 

2,946

Number of shares outstanding February 29, 2020

 

 

 

 

 

 

 

 

 

 

 

418,415


- 17 -



(continued)

Date

 

Transaction (*)

 

Principal Converted

 

Interest Converted

 

Fees Converted

 

Total Amount Converted

 

Shares Issued**

March 29, 2020

 

Conversion

 

 

2,568

 

 

2,568

 

21,400

March 30, 2020

 

Conversion

 

742

 

 

500

 

1,242

 

20,700

March 31, 2020

 

Conversion

 

 

1,013

 

 

1,013

 

21,100

April 3, 2020

 

Conversion

 

 

936

 

 

936

 

19,500

April 6, 2020

 

Conversion

 

868

 

 

500

 

1,368

 

22,800

April 7, 2020

 

Conversion

 

 

1,186

 

 

1,186

 

24,700

April 7, 2020

 

Conversion

 

1,500

 

 

500

 

2,000

 

25,000

April 8, 2020

 

Conversion

 

 

1,104

 

 

1,104

 

23,000

April 13, 2020

 

Conversion

 

 

1,474

 

 

1,474

 

30,700

April 14, 2020

 

Conversion

 

 

1,272

 

 

1,272

 

26,500

April 16, 2020

 

Conversion

 

1,456

 

 

500

 

1,956

 

32,600

April 17, 2020

 

Conversion

 

 

1,613

 

 

1,613

 

33,600

April 20, 2020

 

Conversion

 

 

1,776

 

 

1,776

 

37,000

April 20, 2020

 

Conversion

 

1,200

 

 

500

 

1,700

 

23,611

April 21, 2020

 

Conversion

 

 

1,448

 

 

1,448

 

31,000

April 23, 2020

 

Conversion

 

 

1,773

 

 

1,773

 

38,500

April 24, 2020

 

Conversion

 

 

1,392

 

 

1,392

 

43,500

April 24, 2020

 

Conversion

 

1,941

 

 

500

 

2,441

 

42,420

April 27, 2020

 

Conversion

 

 

1,469

 

 

1,469

 

45,900

April 28, 2020

 

Conversion

 

 

781

 

 

781

 

24,400

April 28, 2020

 

Conversion

 

 

1,376

 

 

1,376

 

43,000

April 29, 2020

 

Conversion

 

2,400

 

 

500

 

2,900

 

48,333

April 30, 2020

 

Conversion

 

 

1,408

 

 

1,408

 

44,000

April 30, 2020

 

Conversion

 

2,225

 

 

500

 

2,725

 

54,500

May 1, 2020

 

Conversion

 

 

1,792

 

 

1,792

 

56,009

May 4, 2020

 

Conversion

 

 

1,728

 

 

1,728

 

54,000

May 4, 2020

 

Conversion

 

5,060

 

2,719

 

 

7,779

 

129,643

May 4, 2020

 

Conversion

 

2,724

 

 

500

 

3,224

 

71,640

May 5, 2020

 

Conversion

 

 

2,365

 

 

2,365

 

73,900

May 6, 2020

 

Conversion

 

3,750

 

 

500

 

4,250

 

78,703

May 7, 2020

 

Conversion

 

 

2,170

 

 

2,170

 

67,800

May 7, 2020

 

Conversion

 

2,640

 

 

500

 

3,140

 

78,500

May 8, 2020

 

Conversion

 

 

1,592

 

 

1,592

 

59,400

May 11, 2020

 

Conversion

 

1,843

 

 

500

 

2,343

 

90,100

May 12, 2020

 

Conversion

 

 

2,095

 

 

2,095

 

100,700

May 12, 2020

 

Conversion

 

1,910

 

 

500

 

2,410

 

95,000

May 12, 2020

 

Conversion

 

4,070

 

2,208

 

 

6,278

 

201,231

May 13, 2020

 

Conversion

 

 

2,413

 

 

2,413

 

116,000

May 14, 2020

 

Conversion

 

 

1,936

 

 

1,936

 

94,000

May 14, 2020

 

Conversion

 

2,698

 

 

500

 

3,198

 

123,000

May 14, 2020

 

Conversion

 

3,300

 

 

500

 

3,800

 

121,794

May 15, 2020

 

Conversion

 

 

1,764

 

 

1,764

 

98,000

May 15, 2020

 

Conversion

 

4,510

 

2,416

 

 

6,926

 

232,206

May 18, 2020

 

Conversion

 

 

2,728

 

 

2,728

 

155,000

May 19, 2020

 

Conversion

 

 

2,546

 

 

2,546

 

148,000

May 19, 2020

 

Conversion

 

3,108

 

 

500

 

3,608

 

164,000

May 19, 2020

 

Conversion

 

3,108

 

 

500

 

3,608

 

164,000

May 19, 2020

 

Conversion

 

2,450

 

 

500

 

2,950

 

121,399

May 20, 2020

 

Conversion

 

 

2,477

 

 

2,477

 

144,000

May 21, 2020

 

Conversion

 

 

3,560

 

 

3,560

 

207,000


- 18 -



(continued)

Date

 

Transaction (*)

 

Principal Converted

 

Interest Converted

 

Fees Converted

 

Total Amount Converted

 

Shares Issued**

May 22, 2020

 

Conversion

 

3,600

 

 

500

 

4,100

 

210,000

May 22, 2020

 

Conversion

 

5,665

 

3,112

 

 

8,777

 

416,744

May 25, 2020

 

Conversion

 

3,238

 

 

500

 

3,738

 

230,000

May 26, 2020

 

Conversion

 

 

3,120

 

 

3,120

 

240,000

May 27, 2020

 

Conversion

 

 

2,280

 

 

2,280

 

190,000

May 28, 2020

 

Conversion

 

 

2,148

 

 

2,148

 

179,000

May 28, 2020

 

Conversion

 

6,050

 

3,347

 

 

9,397

 

522,072

May 28, 2020

 

Rounding shares

 

 

 

 

 

9

May 29, 2020

 

Conversion

 

4,000

 

 

500

 

4,500

 

257,731

June 1, 2020

 

Conversion

 

 

2,367

 

 

2,367

 

202,000

June 1, 2020

 

Conversion

 

4,380

 

 

 

4,380

 

300,000

June 1, 2020

 

Conversion

 

8,680

 

 

 

8,680

 

620,000

June 3, 2020

 

Conversion

 

 

3,427

 

 

3,427

 

357,000

June 4, 2020

 

Conversion

 

4,372

 

 

500

 

4,872

 

435,000

June 4, 2020

 

Conversion

 

 

2,554

 

 

2,554

 

285,000

June 3, 2020

 

Conversion

 

7,095

 

3,954

 

 

11,049

 

754,703

June 4, 2020

 

Conversion

 

9,744

 

 

 

9,744

 

870,000

June 5, 2020

 

Conversion

 

 

3,916

 

 

3,916

 

445,000

June 8, 2020

 

Conversion

 

4,770

 

 

 

4,770

 

530,000

June 8, 2020

 

Conversion

 

 

2,980

 

 

2,980

 

487,000

June 8, 2020

 

Conversion

 

6,600

 

3,700

 

 

10,300

 

1,122,004

June 9, 2020

 

Conversion

 

3,593

 

 

500

 

4,093

 

535,000

June 10, 2020

 

Conversion

 

4,396

 

 

500

 

4,896

 

640,000

June 10, 2020

 

Conversion

 

 

2,472

 

 

2,472

 

404,000

June 11, 2020

 

Conversion

 

 

2,935

 

 

2,935

 

587,000

June 11, 2020

 

Conversion

 

4,320

 

 

 

4,320

 

720,000

June 12, 2020

 

Conversion

 

6,600

 

3,718

 

 

10,318

 

1,433,000

June 15, 2020

 

Conversion

 

 

3,126

 

 

3,126

 

704,000

June 15, 2020

 

Conversion

 

9,435

 

 

 

9,435

 

1,700,000

June 15, 2020

 

Conversion

 

4,218

 

 

500

 

4,718

 

850,000

June 17, 2020

 

Conversion

 

 

3,135

 

 

3,135

 

825,000

June 17, 2020

 

Conversion

 

4,750

 

 

 

4,750

 

1,000,000

June 17, 2020

 

Conversion

 

5,830

 

3,303

 

 

9,133

 

1,902,773

June 18, 2020

 

Conversion

 

 

2,608

 

 

2,608

 

815,000

June 18, 2020

 

Conversion

 

4,300

 

 

500

 

4,800

 

1,200,000

June 19, 2020

 

Conversion

 

3,500

 

 

500

 

4,000

 

1,000,000

June 19, 2020

 

Conversion

 

 

2,797

 

 

2,797

 

874,000

June 19, 2020

 

Conversion

 

6,490

 

3,686

 

 

10,176

 

2,119,985

June 22, 2020

 

Conversion

 

 

4,627

 

 

4,627

 

1,446,000

June 22, 2020

 

Conversion

 

6,930

 

3,950

 

 

10,880

 

2,266,600

June 23, 2020

 

Conversion

 

 

5,120

 

 

5,120

 

1,600,000

June 22, 2020

 

Conversion

 

10,000

 

 

 

10,000

 

2,500,000

June 23, 2020

 

Conversion

 

6,100

 

 

500

 

6,600

 

1,650,000

June 23, 2020

 

Conversion

 

10,120

 

5,775

 

 

15,895

 

3,311,362

June 23, 2020

 

Conversion

 

2,488

 

 

500

 

2,988

 

747,000

June 24, 2020

 

Conversion

 

8,400

 

 

 

8,400

 

2,100,000

June 24, 2020

 

Conversion

 

17,200

 

 

 

17,200

 

4,300,000

June 24, 2020

 

Conversion

 

10,120

 

5,781

 

 

15,901

 

3,312,766

June 24, 2020

 

Conversion

 

1,150

 

 

500

 

1,650

 

343,750

June 25, 2020

 

Conversion

 

 

7,040

 

 

7,040

 

2,200,000


- 19 -



(continued)

Date

 

Transaction (*)

 

Principal Converted

 

Interest Converted

 

Fees Converted

 

Total Amount Converted

 

Shares Issued**

June 25, 2020

 

Conversion

 

10,300

 

 

500

 

10,800

 

2,700,000

June 25, 2020

 

Conversion

 

11,275

 

6,448

 

 

17,723

 

3,692,421

June 26, 2020

 

Conversion

 

 

6,400

 

 

6,400

 

2,000,000

June 29, 1930

 

Conversion

 

12,800

 

 

 

12,800

 

3,200,000

June 29, 2020

 

Conversion

 

3,355

 

485

 

 

3,840

 

1,200,000

June 30, 2020

 

Conversion

 

4,841

 

119

 

 

4,960

 

1,550,000

June 29, 2020

 

Conversion

 

13,000

 

861

 

 

13,861

 

2,887,685

July 1, 2020

 

Conversion

 

12,980

 

 

500

 

13,480

 

3,370,000

July 1, 2020

 

Conversion

 

22,800

 

 

 

22,800

 

5,700,000

July 1, 2020

 

Conversion

 

12,485

 

7,191

 

 

19,676

 

4,099,085

July 1, 2020

 

Conversion

 

5,222

 

116

 

 

5,338

 

1,668,000

July 2, 2020

 

Conversion

 

7,248

 

112

 

 

7,360

 

2,300,000

July 6, 2020

 

Conversion

 

16,088

 

 

 

16,088

 

4,021,875

July 1, 2020

 

Conversion

 

13,250

 

861

 

 

14,111

 

2,945,058

July 6, 2020

 

Conversion

 

17,600

 

10,195

 

 

27,795

 

5,790,666

July 7, 2020

 

Conversion

 

7,462

 

538

 

 

8,000

 

2,500,000

July 8, 2020

 

Conversion

 

6,297

 

103

 

 

6,400

 

2,000,000

July 9, 2020

 

Conversion

 

18,150

 

10,550

 

 

28,700

 

5,979,187

July 9, 2020

 

Conversion

 

20,000

 

 

 

20,000

 

5,000,000

July 10, 2020

 

Conversion

 

9,403

 

197

 

 

9,600

 

3,000,000

July 14, 2020

 

Conversion

 

 

10,240

 

 

10,240

 

3,200,000

July 14, 2020

 

Conversion

 

12,000

 

 

 

12,000

 

3,000,000

July 14, 2020

 

Conversion

 

9,230

 

370

 

 

9,600

 

3,000,000

July 14, 2020

 

Conversion

 

12,114

 

7,082

 

 

19,196

 

3,999,234

July 14, 2020

 

Conversion

 

24,000

 

 

 

24,000

 

6,000,000

July 14, 2020

 

Conversion

 

 

12,800

 

 

12,800

 

4,000,000

July 16, 2020

 

Conversion

 

22,611

 

13,782

 

 

36,392

 

7,581,749

July 17, 2020

 

Conversion

 

33,000

 

18,736

 

 

51,736

 

10,645,130

July 20, 2020

 

Conversion

 

 

1,600

 

 

1,600

 

500,000

July 20, 2020

 

Conversion

 

32,000

 

 

 

32,000

 

8,000,000

July 20, 2020

 

Conversion

 

28,600

 

16,249

 

 

44,849

 

9,237,550

July 20, 2020

 

Conversion

 

 

10,560

 

 

10,560

 

3,300,000

July 21, 2020

 

Conversion

 

 

6,400

 

 

6,400

 

2,000,000

July 22, 2020

 

Conversion

 

 

6,400

 

 

6,400

 

2,000,000

July 22, 2020

 

Conversion

 

 

24,000

 

 

24,000

 

7,500,000

July 23, 2020

 

Conversion

 

 

6,400

 

 

6,400

 

2,000,000

July 24, 2020

 

Conversion

 

 

6,400

 

 

6,400

 

2,000,000

July 24, 2020

 

Conversion

 

9,000

 

 

 

9,000

 

2,000,000

July 24, 2020

 

Conversion

 

27,500

 

15,741

 

 

43,241

 

6,863,668

July 27, 2020

 

Conversion

 

16,018

 

182

 

 

16,200

 

5,000,000

July 27, 2020

 

Conversion

 

 

22,680

 

 

22,680

 

7,000,000

July 28, 2020

 

Conversion

 

9,150

 

50

 

 

9,200

 

2,500,000

July 29, 2020

 

Conversion

 

50,032

 

7,700

 

 

57,732

 

9,785,085

July 29, 2020

 

Conversion

 

10,456

 

44

 

 

10,500

 

2,500,000

July 29, 2020

 

Conversion

 

 

29,400

 

 

29,400

 

7,000,000

July 29, 2020

 

Conversion

 

27,500

 

15,833

 

 

43,333

 

6,878,219

July 30, 2020

 

Conversion

 

10,463

 

37

 

 

10,500

 

2,500,000

July 30, 2020

 

Conversion

 

 

29,400

 

 

29,400

 

7,000,000

July 30, 2020

 

Conversion

 

57,750

 

 

 

57,750

 

11,000,000


- 20 -



(continued)

Date

 

Transaction (*)

 

Principal Converted

 

Interest Converted

 

Fees Converted

 

Total Amount Converted

 

Shares Issued**

July 30, 2020

 

Conversion

 

12,570

 

30

 

 

12,600

 

3,000,000

July 31, 2020

 

Conversion

 

 

29,400

 

 

29,400

 

7,000,000

July 31, 2020

 

Conversion

 

23,100

 

13,330

 

 

36,430

 

7,019,333

July 31, 2020

 

Conversion

 

6,734

 

66

 

 

6,800

 

2,000,000

August 3, 2020

 

Conversion

 

43,500

 

 

 

43,500

 

10,000,000

August 3, 2020

 

Conversion

 

 

29,400

 

 

29,400

 

7,000,000

August 3, 2020

 

Conversion

 

 

8,500

 

 

8,500

 

2,500,000

August 4, 2020

 

Conversion

 

17,985

 

10,427

 

 

28,412

 

5,474,293

August 4, 2020

 

Conversion

 

 

 

5,800

 

 

5,800

 

2,500,000

August 5, 2020

 

Conversion

 

27,500

 

13,979

 

 

41,479

 

8,837,286

August 6, 2020

 

Conversion

 

33,741

 

18,759

 

 

52,500

 

12,500,000

August 6, 2020

 

Conversion

 

 

17,000

 

 

17,000

 

5,000,000

August 10, 2020

 

Conversion

 

43,294

 

953

 

 

44,247

 

15,000,000

August 11, 2020

 

Conversion

 

25,850

 

15,107

 

 

40,957

 

17,065,350

August 11, 2020

 

Conversion

 

12,533

 

10,000

 

 

22,533

 

11,268,750

August 12, 2020

 

Conversion

 

8,965

 

5,245

 

 

14,210

 

5,920,900

August 14, 2020

 

Conversion

 

27,500

 

15,510

 

 

43,010

 

17,920,835

August 14, 2020

 

Conversion

 

16,000

 

 

 

16,000

 

8,000,000

August 17, 2020

 

Conversion

 

 

12,000

 

 

12,000

 

6,000,000

August 19, 2020

 

Conversion

 

 

12,000

 

 

12,000

 

6,000,000

August 19, 2020

 

Conversion

 

26,510

 

15,040

 

 

41,550

 

17,312,501

August 27, 2020

 

Conversion

 

25,441

 

10,000

 

500

 

35,941

 

17,970,625

August 28, 2020

 

Conversion

 

41,000

 

 

 

41,000

 

20,000,000

August 28, 2020

 

Conversion

 

38,500

 

21,894

 

 

60,394

 

25,164,027

August 31, 2020

 

Conversion

 

39,500

 

 

500

 

40,000

 

20,000,000

September 3, 2020

 

Conversion

 

44,990

 

25,974

 

 

70,964

 

29,568,429

September 4, 2020

 

Conversion

 

48,100

 

 

500

 

48,600

 

27,000,000

September 10, 2020

 

Conversion

 

44,000

 

19,046

 

 

63,046

 

29,188,067

September 14, 2020

 

Conversion

 

36,000

 

 

 

36,000

 

20,000,000

September 16, 2020

 

Conversion

 

36,300

 

15,858

 

 

52,158

 

28,976,854

September 17, 2020

 

Conversion

 

30,000

 

 

 

30,000

 

20,000,000

September 21, 2020

 

Conversion

 

29,700

 

13,074

 

 

42,774

 

35,645,000

September 22, 2020

 

Conversion

 

33,500

 

 

500

 

34,000

 

34,000,000

September 22, 2020

 

Conversion

 

20,000

 

 

 

20,000

 

20,000,000

September 25, 2020

 

Conversion

 

27,500

 

12,179

 

 

39,679

 

38,900,867

September 28, 2020

 

Conversion

 

21,000

 

 

 

21,000

 

30,000,000

September 28, 2020

 

Conversion

 

6,850

 

 

500

 

7,350

 

15,000,000

September 29, 2020

 

Conversion

 

23,300

 

 

500

 

23,800

 

34,000,000

September 30, 2020

 

Conversion

 

27,500

 

12,410

 

 

39,910

 

47,511,901

October 5, 2020

 

Conversion

 

27,500

 

11,991

 

 

39,491

 

50,630,340

October 5, 2020

 

Conversion

 

17,500

 

 

 

17,500

 

25,925,926

October 6, 2020

 

Conversion

 

5,881

 

9,360

 

500

 

15,741

 

24,217,169

October 6, 2020

 

Conversion

 

6,780

 

 

500

 

7,280

 

16,000,000

October 8, 2020

 

Conversion

 

33,000

 

14,762

 

 

47,762

 

61,233,329

October 12, 2020

 

Conversion

 

27,500

 

12,375

 

 

39,875

 

66,458,333

October 15, 2020

 

Conversion

 

41,800

 

26,711

 

 

68,511

 

114,185,778

October 15, 2020

 

Conversion

 

6,500

 

 

500

 

7,000

 

20,000,000

October 21, 2020

 

Conversion

 

22,000

 

10,032

 

 

32,032

 

53,386,667

October 26, 2020

 

Conversion

 

10,000

 

5,000

 

 

15,000

 

25,000,000


- 21 -



(continued)

Date

 

Transaction (*)

 

Principal Converted

 

Interest Converted

 

Fees Converted

 

Total Amount Converted

 

Shares Issued**

October 29, 2020

 

Conversion

 

44,000

 

20,298

 

 

64,298

 

107,164,443

October 29, 2020

 

Conversion

 

27,500

 

14,000

 

 

41,500

 

69,166,666

November 2, 2020

 

Conversion

 

2,500

 

142

 

 

2,642

 

4,403,700

November 9, 2020

 

Conversion

 

38,500

 

18,044

 

 

56,544

 

94,239,448

November 17, 2020

 

Conversion

 

38,500

 

25,450

 

 

63,950

 

106,582,783

November 24, 2020

 

Conversion

 

40,040

 

26,655

 

 

66,695

 

111,157,519

December 1, 2020

 

Conversion

 

44,660

 

29,938

 

 

74,598

 

124,330,726

December 3, 2020

 

Conversion

 

38,170

 

22,938

 

 

61,108

 

101,847,067

December 10, 2020

 

Conversion

 

78,650

 

47,584

 

 

126,234

 

210,390,074

December 28, 2020

 

Warrants

 

 

 

 

1,190

 

119,000,000

January 1, 2021

 

Warrants

 

 

 

 

1,250

 

125,000,000

January 21, 2021

 

Warrants

 

 

 

 

736

 

73,650,793

January 14, 2021

 

Warrants

 

 

 

 

1,300

 

130,000,000

January 20, 2021

 

Warrants

 

 

 

 

323

 

32,338,030

January 20, 2021

 

Warrants

 

 

 

 

1,280

 

127,992,278

February 3, 2021

 

Fees

 

 

 

 

 

5,000,000

February 10, 2021

 

Warrants

 

 

 

 

 

75,000,000

February 16, 2021

 

Warrants

 

 

 

 

 

14,268,324

February 16, 2021

 

Warrants

 

 

 

 

 

130,000,000

February 19, 2021

 

Conversion

 

82,500

 

27,530

 

 

110,030

 

4,075,191

February 23, 2021

 

Warrants

 

 

 

 

 

42,189,696

February 26, 2021

 

Warrants

 

 

 

 

 

24,771,271

Number of shares outstanding February 28, 2021

 

 

 

 

 

 

 

 

 

 

 

3,229,426,884

__________

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

** Shares adjusted for reverse stock splits: 100: 1 on August 24, 2018 and 10,000:1 on March 27, 2020

*** Total proceeds $600

**** Total proceeds $8,922


In connection with the foregoing, the Registrant relied upon the exemption from registration under the Securities Act of 1933, as amended and the rules and regulations of the Securities and Exchange Commission thereunder, in reliance upon Section 4(a)(2) thereof and Regulation D thereunder.


Penny Stock Regulations


The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share. Our Common Stock falls within the definition of penny stock and therefore is subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 individually, or $300,000, together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. In addition, the broker-dealer must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell our Common Stock and may affect the ability of investors to sell their Common Stock in the secondary market.


- 22 -



In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the investors’ ability to buy and sell our stock.


Purchases of Equity Securities by the Registrant and Affiliated Purchasers


We have not repurchased any shares of our common stock during the fiscal year ended February 28, 2021.


ITEM 6. SELECTED FINANCIAL DATA


Not applicable.


ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes to those financial statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Forward-Looking Statements and Business sections in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.


Overview


AITX was incorporated in Florida on March 25, 2010. 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.


Results of Operations


The following table shows our results of operations for the years ended February 28, 2021 and February 29, 2020. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.


 

 

Period

 

Change

 

 

Year Ended

February 28, 2021

 

Year Ended

February 29, 2020

 

Dollars

 

Percentage

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

360,888

 

$

260,768

 

$

100,120

 

38%

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

262,721

 

 

177,008

 

 

85,713

 

48%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

3,257,590

 

 

1,959,814

 

 

1,297,776

 

66%

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations  

 

 

(2,994,869

)

 

(1,782,806

)

 

(1,212,063

)

(68%)

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net

 

 

(2,904,042

)

 

(4,430,843

)

 

1,526,801

 

34%

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(5,898,911

)

$

(6,213,649

)

$

314,738

 

5%


- 23 -



Revenue


Total revenue for the year ended February 28, 2021 was $360,888, which represented an increase of $100,120 compared to total revenue of $260,768 for the year ended February 29, 2020. Although limited by resources the Company continues its efforts to grow its business. The Company deployed an additional 33 revenue earning devices during the year ended February 28, 2021.


Gross profit


Total gross profit for the year ended February 29, 2021 was $262,721, which represented an increase of $85,713 compared to total gross profit of $177,008 for the year ended February 29, 2020. The increase is a result of the increase in revenues above.


Operating expenses


Operating expenses for the years ended February 28, 2021 and February 29, 2020 comprised of the following:


 

 

Period

 

Change

 

 

Year Ended

February 28, 2021

 

Year Ended

February 29, 2020

 

Dollars

 

Percentage

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

378,236

 

$

332,520

 

$

45,716

 

14%

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

2,748,494

 

 

1,536,568

 

 

1,211,926

 

79%

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

120,846

 

 

102,241

 

 

18,605

 

18%

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease cost

 

 

9,461

 

 

 

 

9,461

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

Loss (gain) on disposal of fixed assets

 

 

553

 

 

(11,515

)

 

12,068

 

105%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

$

3,257,590

 

$

$1,959,814

 

$

1,297,776

 

66%


Our operating expenses were comprised of general and administrative expenses, research and development, depreciation and amortization, and a loss on disposal  of fixed assets. General and administrative expenses consisted primarily of professional services, automobile expenses, advertising, salaries and wages, travel expenses and rent. Our operating expenses during the years ended February 28, 2021 and February 29, 2020 were $3,257,590 and $1,959,814, respectively. The overall $1,297,776 increase in operating expenses was primarily attributable to the following increases in operating expenses of:


Research and development expenses increased by $45,716 which was due primarily by the increase in R&D Design costs for the ROAMEO prototypes as well as upgrades in the Wally and Rosa product lines.

 

 

General and administrative expenses increased by $1,211,926 primarily due to the following increases:


 

-

Professional fees increased by $98,626 due to higher reporting costs in 2021.

 

 

 

 

-

Stock based payments for fees paid to lenders and consultants was $362,084 for the year ended February 28, 2021, and nil for the prior year.

 

 

 

 

-

Wages, salaries and payroll levies increased by $146,170 as a result of settlements with back pay owed on some employees. Subcontractors increased by $404,300 as well due to the increase in revenues and expansion into new products.

 

 

 

 

-

Supplies increased by approximately $178,000 through their use in new prototypes and designs.


- 24 -



 

-

Rent and operating lease cost increased by approximately $9,000 due to the new operating lease.

 

 

 

 

-

Trade shows and travel decreased by $98,227 as a result of travel restrictions due to the Covid-19 pandemic.

 

 

 

 

-

In general, the Company experienced an increase in operating expenses as a result of the factors above as well as other small increase in advertising , and other general and administrative expenses.The Company expects significant increases in future periods as it ramps up its spending levels for advertising and promotion,


Depreciation and amortization increased by $18,605 due to the increase in revenue earning devices and the new vehicle in fixed assets.  

 

 

Loss (gain) on disposal of fixed assets increased by $12,068 due to disposals in 2020 that generated small gains.


Other income (expense)


Other income (expense) consisted of the change of fair value of derivative instruments interest expense and gain on settlement of debt. Other income (expense) during the years ended February 28, 2021 and February 29, 2020, was ($2,904,042) and ($4,430,843), respectively.


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


Change in fair value of derivative liabilities increased by $1,891,144 due to the re-valuation of derivative liability on convertible notes based on the change in the market price of the Company’s common stock and the decrease in convertible notes payable through debt conversions to common stock and settlements.

 

 

Interest expense decreased by $85,265 due to the loan settlements in fiscal 2021offset by increased penalties in the current year

 

 

Loss on settlement of debt increased by $449,608 due to losses recorded in 2021 versus gains recorded in 2020.


The Company’s loss from operations for the year ended February 28, 2021 was $2,994,869, which represented an increase in   loss of $1,212,063 compared to $1,782,806 for the year ended February 29, 2020. The higher revenues in 2021 were offset by significantly higher operating expenses for the reasons set out above. Note that the Company had a net loss of $5,898,911 for the year ended February 28, 2021 as compared to net loss of $6,213,649 for the year ended February 29, 2020. This change is mostly attributable to the changes in the derivative liability as well as the reasons set out above..


Going Concern


The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.


For the year ended February 28, 2021, the Company had negative cash flow from operating activities of $3,073,325. As of February 28, 2021 the Company has an accumulated deficit of $31,521,754 and negative working capital of $3,203,677. Management does not anticipate having positive cash flow from operations in the near future. These factors raise a substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements.


The Company does not have the resources at this time to repay 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.


- 25 -



Management has plans to address the Company’s financial situation as follows:


In the near term, management plans to raise an additional $ 15 million to $ 50 million before the end of the fiscal year. Management is committed to raise either non-dilutive funds or minimally dilutive funds. There is no assurance that these funds will be able to be raised nor can we provide assurance that these possible raises may not have dilutive effects.


The Company currently projects that next fiscal year’s revenues will be between 5 and 15 times greater than this fiscal year’s revenues. This projection is based on the following factors: 1. an anticipated significant increase in the orders expected to be received after this fiscal year; 2. an expected significant improvement in the Company’s ability to make timely deliveries; and 3. an anticipated significant improvement in the Company’s ability to support many more devices than this it could support during this fiscal year. However, there can be no assurance that the revenues will increase to the extent projected or that the anticipated improvements will actually occur.


This expansion plan will require the Company to expend significant resources, including the hiring of additional staffing, which the Company expects to finish the next fiscal year with between 75 – 125 employees.


After the end of this fiscal year, the Company increased its sales team from one full-time salesperson to five full-time salespersons. The Company expects to finish the next fiscal year with between 8-12 full-time salespersons. In addition, the Company expects that some planned promotional moves will raise the Company’s stature in the market and industry in the next fiscal year. The Company is also increasing staffing in its subsidiaries and expects to considerably increase its technology over the next fiscal year. Over 60% of the Company’s current staff are engaged in research and development activities. The Company expects to increase its research and development activities by opening a second Canadian research and development office in British Columbia, Canada, in the next fiscal year.


The Company expects to announce at least one significant end-user device relationship in the next fiscal year. Similar to the EAGL relationship (RAD integration of their technology into our ecosystem), RAD will take another vendor’s solution and put it into the RAD ecosystem.


The Company has a number of technology projects in process at this time. The Company expects to file applications for several different types of patents throughout the next fiscal year. Moreover, the Company currently expects that RAD-G will introduce at least one solution to the market by the end of next fiscal year. Management of the Company hopes that some of its solutions, successes and promotional efforts will lead to national press coverage during the next fiscal year, similar to August 2020 when 15 major media markets syndicated KTLA’s RAD-face-mask-analytic story.


The Company currently expects that its new Michigan ‘REX’ (RAD Excellence Center) will provide manufacturing expansion to over 100 various devices per month; the Company is taking significant steps to increase sales volume to match.  The Company also expects that REX will become the foremost testing center for the Company’s mobility devices, ground and air, in the next fiscal year.


The Company has embarked on its ‘RAD 3.0’ program in 2021. This program is called ’3.0’ as it will represent the next stage of development.  The Company considers RAD 1.0 to be the early stage with the foreign robot and considers RAD 2.0 to be the current stage. The RAD 2.0 current stage is characterized by growing adoption of the Company’s stationary line, market adoption of its first mobility solution (ROAMEO), significant increases in all areas of Company performance (engineering, production, sales), and the Company’s reputation within the industry that RAD’s solutions perform as promised. RAD 3.0 will be characterized by enhanced internal any cyber controls with fully implemented SOC2 Type 2, implementation and adoption of an ERP, design overhaul, and conversion of some operating elements from the Windows OS platform to the Linux platform. The Company expects that completion of the RAD 3.0 elements, along with the Company’s anticipated  financing efforts, will allow the Company to continue its status as a going concern.


The Company plans to improve the trading market for its shares by uplisting the shares to the OTCQB during the next fiscal year.


The Company plans to continue regular communication with shareholders and other interested parties through the CEO’s Twitter account (@SteveReinharz), regular press releases and on-time SEC filings.


- 26 -



Capital Resources


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


 

 

February 28, 2021

 

February 29, 2020

 

 

 

 

 

 

 

 

 

Current assets

 

$

1,207,033

 

$

88,213

 

Current liabilities(1)

 

 

4,410,710

 

 

19,677,221

 

Working capital

 

$

(3,203,677

)

$

(19,589,008

)

__________

(1)

 As February 28, 2021 and February 29, 2020, current liabilities included approximately $0.4 million and $6.9 million, respectively, of derivative liabilities that are expected to be settled in shares of the Company in accordance with the various conversion terms.


As of February 28, 2021 and February 29, 2020, we had a cash balance of $1,044,418 and $13,307, respectively.


Summary of Cash Flows


 

 

Year Ended

February 28, 2021

 

Year Ended

February 29, 2020

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(3,073,325

)

$

(1,538,488

)

Net cash used in investing activities

 

$

(40,623

)

$

(17,325

)

Net cash provided by financing activities

 

$

4,145,059

 

$

1,547,928

 


Net cash used in operating activities for the year ended February 28, 2021 was $3,073,325, which included a net loss of $5,898,911, non-cash activity such as the change in fair value of derivative liabilities of ($764,025), loss on settlement of debt of $288,234, interest expense related to penalties from debt defaults of $939,705, amortization of debt discount of $201,567, stock based payments of $362,084, loss on disposal of fixed assets $553, loss on debt settlements of $294,744,bad debts expense $24,868, depreciation and amortization of $120,846 and change in operating assets and liabilities of $1,357.010.


Net cash used in investing activities.


Net cash used in investing activities for the year ended February 28, 2021 was $40,623. This consisted primarily of the purchase of fixed assets of $37,764 and cash paid for security deposit of $ 3,859 offset by proceeds of disposal of fixed assets of $1,000.


Net cash provided by financing activities.


Net cash provided by financing activities was $4,145,059 for the year ended February 28, 2021. This consisted of proceeds from convertible notes payable of $692,650, proceeds from loans payable $3,603,623 and proceeds from deferred variable payment obligation of $966,000 and offset by settlements of convertible notes of $250,000, net borrowings from loan payable – related party of $693,049 and repayments of loan payable $173,881.


Off-Balance Sheet Arrangements


We do not have any outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us.


- 27 -



Significant Accounting Policies


Use of Estimates


In order to prepare financial statements in conformity with accounting principals generally accepted in the United States, management must make estimates , judgements and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any , are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions used to value derivative liabilities.


Revenue Earning Devices


Revenue earning devices are stated 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 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.


Demo Devices

 

4 years

Computer equipment

 

3 years

Office equipment

 

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 February 28, 2021 and February 29, 2020, 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 debt:


 

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

 

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

 

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

 

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

 

Does the Companys revenue for a reporting period underlying the agreement have only a minimal impact on the investors rate of return

 

Does the investor have recourse relating to payments due


- 28 -



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. While the Company does not expect fiscal year 2020 net earnings to be materially impacted by revenue recognition timing changes, Topic 606 requires certain changes to the presentation of revenues and related expenses beginning March 1, 2018. Refer to Note 3 – Revenue from Contracts with Customers for additional information.


Distinguishing Liabilities from Equity


The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity, to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.


Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.


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 sour