Artificial Intelligence Technology Solutions Inc.: Form 10-K for the period ended Feb 28, 2025

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 and CEO, Steve Reinharz. Mr. Reinharz has 30+ 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 generally offered as a recurring monthly subscription, typically with a minimum 12-month subscription contract. RAD also sells their units and the client that RAD has had longest opts to do this. RAD’s solutions are expected to earn over 75% gross margin over the life of each deployed asset when under subscription and over 50% gross margin when sold. 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.

Steve Reinharz, founder of RAD and single largest equity owner of AITX, became CEO on March 2, 2021.

The Problems that AITX Solves

The labor model is collapsing.

• Security staffing is expensive, hard to fill, and impossible to scale with growing demand.

Human response is too slow for modern threats.

• Incidents happen in seconds. Manual detection and delayed reaction put people, property, and reputations at risk.

Most security roles were never built for people.

• Watching dozens of cameras, identifying anomalies, escalating threats, these tasks are better suited for machines that never fatigue.

Legacy systems are fragmented and reactive.

• Disconnected devices, siloed alerts, and manual workflows prevent true situational awareness or intelligent action.

There’s no “autonomous layer” in physical security.

Every other industry, logistics, manufacturing, finance, has automated routine operations. Physical security is still lacking automation.

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Executive Summary

AITX is a pioneer in practical AI deployment, offering proven, revenue-generating solutions that address long-standing inefficiencies in the security and facility management industries. While many companies are still conceptualizing how AI and generative AI might apply, AITX is actively delivering results through its suite of intelligent, autonomous devices and platforms.

At the core of these solutions is SARA, the Company’s Agentic AI platform. SARA enables autonomous detection, decision-making, and voice-driven response, setting AITX apart from passive monitoring systems and advancing the capabilities of modern security technology.

AITX represents a compelling opportunity in a high-growth industry driven by rising demand for smarter, more efficient alternatives to traditional security models.

Simply put, AITX is redefining how security and safety is deployed.

“AITX isn’t following trends, it’s setting them, delivering intelligent security where traditional models can’t keep up.”

Steve Reinharz, CEO/CTO, AITX

Market Focus

Targeting the global security and facility management markets as they approach $1 trillion in size according to Steve Reinharz.

Proven Deployment

Multiple revenue-generating products currently deployed across commercial and public sectors.

Tech Advantage

Agentic AI SARA and other AITX solutions enable real-time, autonomous engagement and decision-making.

Real-World Validation

AITX technologies are delivering measurable impact. From reducing incidents and lowering operational costs to improving safety and response times, RAD deployments are earning strong praise from clients across multiple industries. These endorsements highlight more than just satisfaction. They reflect a broader industry shift toward intelligent, automated security solutions that outperform legacy approaches.

Large Southeast Hospital Network

“Our staff feels safer now that they’re protected by RAD Light My Way. There have been no serious incidents since the installation of the system.”

• David Pope, Chief Operating Officer, Scotland Memorial Hospital

Global Logistics Leader

“By combining our logistics expertise with RAD’s innovative robotics, we’ve deployed even more cost-effective solutions that didn’t exist just a few years ago.”

• Thomas Nelson, Senior Director of Security at GXO

Innovated RAD Channel Partner

“With RAD’s help, we’ve customized an innovative 24-hour solution by decreasing the reliance on manpower and leaning more into RAD’s available technology.”

• Justin Frazer, Director of Systems, EPIC Security Works

Leading Electronics Distributor

“AVA provides us with what we need for efficient access control. Its ability to effortlessly process deliveries and shipments, along with its video and data records, keep us apprised of what is coming in and going out of our gates in real time.”

• Eddie Cabana, Senior Manager, Safety & Security, Ingram Micro

RAD Authorized Dealer

“RAD solutions are what the security industry needs right now. We expect to save this client close to $300,000 over the next three years with just two ROSAs.”

• Chris Daniels, Director of Sales and Marketing, USA Security

Southern California Car Rental Location

“Thanks to the ROSA units, we’ve addressed all sorts of issues. Damage to vehicles, graffiti on the exterior of the building, that’s all gone since we put the ROSAs in.”

• Sean Perez, General Manager, Midway Car Rental
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Products + Solutions

AITX delivers a comprehensive portfolio of AI-powered security technologies, combining intelligent hardware and advanced software to modernize how security is deployed, managed, and experienced. Each solution is designed to operate independently or as part of an integrated system, enabling scalable and cost-effective protection across a wide range of industries.

AITX delivers a comprehensive portfolio of AI-powered security technologies, combining intelligent hardware and advanced software to modernize how security is deployed, managed, and experienced. Each solution is designed to operate independently or as part of an integrated system, enabling scalable and cost-effective protection across a wide range of industries. Powering this ecosystem is SARA, AITX’s Agentic AI platform, which empowers devices to detect, decide, and respond in real time.

Why Our Robots Have Names Like ROAMEO and TOM

At AITX, we believe security technology doesn’t have to feel cold or sci-fi. Thats why many of our solutions have names that sound more like teammates than machines. Whether its ROAMEO patrolling a corporate campus or TOM greeting visitors at the front desk, these names help humanize our devices, making them more approachable and easier to embrace. We’re building robots for the real world, not a movie set.

Mobile Solutions

ROAMEO

RADDOG

HERO

Access and Entry

AVA

TOM

Stationary Solutions

ROSA

RIO

RADCam

RAM

Software and Intelligence

SARA

Agentic AI

ROSS

Firearm Detection

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SARA™

Speaking Autonomous Responsive Agent (Agentic AI)

SARA is AITX’s Agentic AI, intelligent voice and decision-making platform. Powered by large language models, SARA gives RAD devices the ability to speak, listen, interpret, and take action based on real-time situations.

Primary Use Cases

• Remote video monitoring replacement
• Command center automation
• AI-powered escalation and deterrence
• Interactive access control and public engagement

Market Impact

SARA is the brain behind the Company’s next-gen devices, enabling AITX to disrupt the $3 billion remote monitoring industryi, and the entire $50 billion security industryii. As deployments grow, so does the adoption of SARA-powered autonomy, fueling recurring software revenue and opening up new verticals.

Competitive Advantage

Unlike static analytics or scripted alerts, SARA can adapt, engage dynamically, and respond intelligently to a wide variety of human behavior. No other security solution on the market combines voice AI, situational logic, and autonomous action at this scale.

Industry Recognition

SARA received top honors at ISC West 2025, winning both Judges Choice and Best in Threat Detection and Response Solutions in the prestigious Security Industry Associations New Product Showcase. These accolades underscore the industry’s recognition of SARA as a category-defining solution that reshapes how remote monitoring is delivered.

Market Size

The global market for AI agents is accelerating rapidly, growing from $5.4 billion in 2024 to a projected $50.3 billion by 2030 at a compound annual growth rate of 45.8%iii. In the United States alone, the sector is expected to grow from $1.6 billion to $13.5 billion over the same periodiv. This extraordinary expansion reflects a shift toward intelligent, autonomous systems that actively engage, assist, and perform, exactly the kind of functionality delivered today by AITX’s SARA platform.

The Emergence of Agentic AI

The security industry is beginning to experience what the tech world has been forecasting for years: the rise of Agentic AI. Unlike traditional AI tools that offer suggestions or basic automation, Agentic AI systems perceive their environment, make decisions, take action, and adapt over time with minimal human involvement.

At AITX, this is not theoretical. It is happening now.

Agentic AI powers devices that do more than follow a script. They observe, assess, engage, escalate, and interact in real time. Whether it is a security device initiating a voice deterrent or an AI agent managing visitor access, these systems replace manual intervention with autonomous action that is consistent, immediate, and intelligent.

SARA, the Speaking Autonomous Responsive Agent, is a leading example of this approach in practice. Through conversational AI, layered decision making, and integration with both analytics and cloud infrastructure, SARA enables RAD, and other devices to perform as active participants in a security workflow.

As businesses and institutions face growing security challenges, shrinking labor pools, and rising costs, Agentic AI is emerging as the most scalable and sustainable answer. It does not just monitor. It responds.

AITX is at the forefront of this transformation, bringing real-world, field-proven Agentic AI to clients across commercial, public, and residential sectors.

“Agentive AI changes the relationship between humans and machines. AI doesn’t just assist, it now observes, decides, and acts on our behalf - faster, more accurately, and more consistently.”

Steve Reinharz, CEO/CTO, AITX

i Verified Market Reports, “Solar Camera Trailer Market Size, Industry Trends & Forecast 2033,” March 2025

https://www.verifiedmarketreports.com/product/solar-camera-trailer-market/

ii National Equipment Register, “July 4th Heavy Equipment Theft Trends and Security Tips 2023,” June 2023.

https://www.ner.net/wp-content/uploads/2023/06/NER-July-4th-Theft-Trends-and-Security-Tips-2023.pdf

iii Grand View Research, “Access Control Market Size & Share | Industry Report, 2030,” 2024

https://www.grandviewresearch.com/industry-analysis/access-control-market-report

iv Grand View Research, “Visitor Management System Market Size & Share Report, 2030,” 2024

https://www.grandviewresearch.com/industry-analysis/visitor-management-system-market-report

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ROSA™

Responsive Observation Security Agent

ROSA is a compact, self-contained security device that provides autonomous deterrence, detection, and response. It combines visual analytics, audio engagement, and AI-driven escalation in a sleek, visible form factor. SARA, AITX’s Agentic AI platform, is integrated into every ROSA unit, enabling it to interpret activity, make decisions, and respond in real time without human intervention.

Primary Use Cases

• Perimeter and property protection
• Firearm detection and response
• Entry point monitoring
• Loitering and trespassing deterrence

Market Impact

ROSA is AITX’s most deployed solution to date, generating recurring monthly revenue (RMR) with every unit. It serves as the foundation for other devices, including RIO and RAM, and has been credited with stopping crimes before they escalate.

Competitive Advantage

ROSA replaces the cost and complexity of security guards or video monitoring services. With onboard AI, two-way communication, and autonomous actions, it outperforms legacy cameras and passive systems by actively preventing incidents, not just recording them. With SARA embedded, ROSA gains the ability to assess context, escalate appropriately, and respond with precision.

Industry Recognition

ROSA has earned widespread acclaim across the security industry. It was selected as a winner of the CBRE Innovation Challenge, recognizing breakthrough technologies in commercial real estate. At the 2021 ASTORS Awards by American Security Today, ROSA was named Best Robotic Perimeter Protection and Best Motion Detection Solution. It has also been honored as a Security Today New Product of the Year, further validating its role as a transformative security solution for real-world applications.

Market Size

The global video surveillance market was valued at $54.42 billion in 2024 and is projected to reach $88.71 billion by 2030, growing at a compound annual growth rate of 8.5%v. Within that space, AI-driven surveillance is emerging as a key growth segment, estimated at $6.51 billion in 2024 and expected to grow at a CAGR of 28.1% to reach $28.76 billion by 2030vi. This rapid acceleration underscores the demand for intelligent, real-time monitoring solutions, positioning AITX and devices like ROSA at the center of the industry’s evolution.

Market Drivers

-Rising Security Concerns:

Increasing incidents of theft, vandalism, and other security breaches are prompting businesses to invest in advanced surveillance solutions.

-Technological Advancements:

The integration of Agentic AI and machine learning in surveillance systems enhances real-time monitoring and threat detection capabilities.

v Market Research Future, “Smart Home Security Camera Market Outlook, Size Share & Growth Forecast 2025-2034,” 2025

https://www.marketresearchfuture.com/reports/smart-home-security-camera-market-33370

vi Custom Market Insights, “Global Security Robots Market Size, Share & Trends Analysis Report, 2025–2034.”

https://www.custommarketinsights.com/report/security-robots-market/

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RIO™

ROSA Independent Observatory

RIO is a portable, solar-powered security tower that includes a single or dual ROSA unit mounted atop a solar panel trailer. Designed for rapid outdoor deployment, it delivers high-visibility deterrence and autonomous response in locations where traditional infrastructure is impractical or too costly. With SARA, AITX’s Agentic AI platform, embedded through each ROSA unit, RIO operates with intelligent decision-making, real-time escalation, and autonomous voice intervention.

Primary Use Cases

• Retail parking lots
• Construction site security
• Healthcare and hospital perimeters
• Logistics yards and distribution centers
• Public events and temporary high-risk zones

Market Impact

RIO is one of AITX’s fastest-growing product categories, especially in the retail, construction and healthcare markets. Its rapid deployment model aligns perfectly with temporary or high-turnover environments. Each RIO includes one or two ROSA devices, compounding recurring revenue through bundled subscriptions.

Competitive Advantage

RIO, with its single or double ROSA units, eliminates the need for expensive guard posts or legacy, non-AI trailer systems. With SARA integrated into each unit, RIO delivers autonomous detection, analysis, and engagement, redefining what portable perimeter security should be.

Notable Deployments

Hundreds of RIO units are actively deployed across the United States, protecting a wide range of environments. These include logistics hubs, healthcare campuses, construction sites, solar farms, municipalities, and urban districts such as CIDs and BIDs.

Market Size

The global solar camera trailer market was valued at $1.2 billion in 2024 and is projected to reach $2.5 billion by 2033, growing at a CAGR of 8.9% from 2026 to 2033vii.

This growth is driven by increasing demand for portable surveillance solutions across sectors like construction, public safety, and infrastructure.

Market Drivers

-Rising Equipment Theft:

The U.S. construction industry reported a 12% year-over-year increase in equipment theft in 2023viii, accelerating demand for solar-powered surveillance systems.

-Cost Efficiency:

Deploying solar surveillance trailers can reduce guarding costs significantly. For instance, hiring a solar surveillance trailer with live monitoring services costs around $1,000 a month, compared to up to $40,000 a month for traditional security guards.

vii Fact.MR, “Autonomous Patrolling Robot Market Outlook, 2023–2033.”

https://www.factmr.com/report/autonomous-patrolling-robot-market

viii Market Research Intellect, “Robotic Dogs Market Size and Forecast,” 2024

https://www.marketresearchintellect.com/product/robotic-dogs-market-size-and-forecast/

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AVA™

Autonomous Verified Access

AVA is a smart gate security solution that manages vehicle entry using AI-powered license plate recognition, two-way voice interaction, and cloud-based authorization. It replaces or enhances traditional guard shacks by automating entry verification. Integrated with SARA, AITX’s Agentic AI platform, AVA performs real-time analysis, verifies credentials, and engages drivers through intelligent voice interaction.

Primary Use Cases

• Distribution centers and logistics hubs
• Gated residential communities (with HOAP)
• Corporate and industrial campuses
• Commercial and multi-tenant properties

Market Impact

AVA expands AITX’s footprint into both residential and commercial access control, delivering recurring revenue while solving the high costs and labor challenges of manned entry points. AVA’s success has driven adoption of HOAP, the Homeowners Association Platform, a full-featured resident and guest access platform. Through HOAP, HOAs can issue digital passes, receive entry notifications, and manage visitor logs from any device. With SARA integrated, AVA not only verifies access but also delivers voice-driven reporting and automated follow-up to ensure every interaction is documented and addressed.

Together, AVA and HOAP are on a mission to reimagine what residential gate control looks like. They replace outdated call boxes and guards in booths with intelligent, automated engagement. This modern solution enhances both security and convenience, giving communities a premium access experience without the high cost of traditional gate staffing.

Industry Recognition

AVA was recognized by the Security Industry Associations New Product Showcase Awards in the category of Access Control Software, Hardware, Devices and Peripherals. This honor reinforces AVAs position as an innovative solution in the field of automated access management.

Market Size

The global access control market is projected to grow from $10.76 billion in 2024 to $17.30 billion by 2030, reflecting a compound annual growth rate of 8.4%. In the United States, the market is expected to expand from $2.62 billion to $3.68 billion over the same periodix. This sustained growth underscores the shift toward intelligent, autonomous systems for managing vehicle and personnel entry, positioning AVA at the forefront of a rapidly evolving segment of physical security.

Market Drivers

-Labor Shortages:

Organizations are seeking automated solutions to manage vehicle access points, reducing reliance on human guards.

-Security Concerns:

Rising incidents of unauthorized access and the need for real-time monitoring are driving the adoption of advanced access control systems.

ix Fortune Business Insights, Humanoid Robots Market Size, Share & Trends Report, 2032”

https://www.fortunebusinessinsights.com/humanoid-robots-market-110188

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TOM™

The Office Manager

TOM is an AI-powered solution that automates visitor management and front desk functions. It provides consistent engagement, credential verification, and access control without the need for onsite reception or security staff. With SARA, AITX’s Agentic AI platform, supporting every TOM unit, the system can guide interactions, assess visitor behavior, and initiate appropriate response and reporting actions in real time.

Primary Use Cases

• Office building entry points
• Corporate campuses
• Multi-tenant commercial facilities
• Government and educational institutions

Market Impact

TOM is helping modernize how commercial spaces handle entry and access. As organizations seek ways to automate and streamline front-facing operations, TOM offers a professional, scalable, and cost-efficient alternative to staffed desks. Its ability to tie into RAD-I’s broader ecosystem increases its utility and adoption potential.

Competitive Advantage

Unlike static kiosks or basic sign-in systems, TOM combines interactive engagement, ID verification, and real-time escalation options. It enhances both the user experience and security posture, offering a comprehensive solution that adapts to high-traffic or high-security environments.

Notable Deployments

One of the world’s largest third-party logistics providers relies on TOM to manage visitor intake and processing across its North American distribution network. TOM has helped this client streamline facility access, improve accountability and enhance site-level security. This enterprise deployment showcases TOM’s scalability and its ability to meet the rigorous demands of high-volume, high-security environments.

Market Size

The global visitor management system market is projected to grow from $1.87 billion in 2024 to $4.04 billion by 2029, reflecting a 16.6% compound annual growth rate. In the United States, adoption is already strong, with the market estimated at $8.7 billionx, driven by increased demand for secure, automated, and efficient visitor access solutions.

Market Drivers

CLRASN-Shift to Hybrid Work Model:

Organizations are adopting flexible work arrangements, necessitating efficient visitor management solutions to monitor and control access.

-Operational Efficiency:

Automation of check-in processes reduces administrative burdens and improves the visitor experience.

x **MarketsandMarkets, “**AI in Video Surveillance Market by Offering, Deployment Type, Application, Vertical & Region – Global Forecast to 2030,” 2024

https://www.marketsandmarkets.com/Market-Reports/ai-in-video-surveillance-market-84216922.html

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RADCam™

The Security Camera That Doesn’t Just Watch, It Responds

RADCam is an AI-powered, voice-enabled security camera designed for homeowners, property managers, and small businesses. RADCam doesn’t just record, it engages, responds, and helps resolve situations in real time.

Primary Use Cases

• Residential home security
• Small businesses
• Enterprise clients
• Gated entry points and garages

Market Impact

RADCam began as a disruptive force in the residential security market through the Company’s residential subsidiary RAD-R, offering real-time AI engagement for homeowners. Now, following strong early demand, AITX has expanded RADCam into the small-to-medium business and enterprise markets through its commercial subsidiary RAD-I. These new versions of RADCam are specifically configured to serve the unique needs of commercial properties, offices, storefronts, and large-scale deployments.

In residential settings, SARA takes the form of an ‘SOS feature’, enabling RADCam to speak, escalate, and notify in real time. In SMB and enterprise deployments, SARA is fully integrated, providing agentic decision-making, continuous interaction, and automated reporting across all monitored environments.

The SMB configuration adds enhanced detection and interaction capabilities, making it ideal for locations needing consistent security presence without adding staff. The enterprise version integrates with RADSoC, RAD-I’s command and control software, allowing centralized management across dozens or even hundreds of RADCam devices. This evolution transforms RADCam into a scalable solution that fits anywhere from the front porch to the corporate campus.

By entering these broader markets, RADCam is positioned to become a foundational element in how businesses approach autonomous security. The expansion opens up new, higher-margin revenue channels while further validating the flexibility and scalability of AITX’s AI technology..

Market Size

The global home security camera market is projected to grow from $10.51 billion in 2024 to $60.99 billion by 2034, reflecting a CAGR of 19.23%. In the U.S., the market is expected to expand from $3.02 billion in 2024 to $17.84 billion by 2034xi.

Market Drivers

-Rising Crime Rates:

An uptick in property crimes and package thefts has led homeowners and small businesses to invest in security solutions.

-Smart Home Integration:

The proliferation of IoT devices has made it easier to integrate security cameras into existing smart home ecosystems, enhancing user convenience.

Affordability and Accessibility:

The decreasing cost of high-quality cameras has made advanced security solutions more accessible to a broader audience.

xi MarketsandMarkets, AI in Video Surveillance Market by Offering (Hardware, Software, Services), Deployment Type (On-premises, Cloud), Application (Intrusion Management, Facial Recognition, License Plate Recognition), Vertical and Region – Global Forecast to 2030, April 2024

https://www.marketsandmarkets.com/Market-Reports/ai-in-video-surveillance-market-84216922.html

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ROAMEO™

Rugged Observation Assistance Mobile Electronic Officer

ROAMEO is a fully autonomous, mobile security robotic vehicle designed to patrol large outdoor spaces. Equipped with AI analytics, voice engagement, and real-time deterrence capabilities, ROAMEO performs routine security patrols without human intervention. SARA, AITX’s Agentic AI platform, is integrated to enable ROAMEO to assess situations, engage appropriately, and report autonomously as it navigates complex environments.

Primary Use Cases

• Corporate and educational campuses
• Distribution centers and logistics yards
• Municipal parks and entertainment venues
• Parking lots and stadium exteriors

Market Impact

ROAMEO represents AITX’s answer to the high cost and limitations of today’s security personnel. It is about to be deployed across public and private sectors as an alternative to guard teams in vehicles or golf carts. Demand is strong enough that AITX is currently accepting orders with scheduled deliveries expected soon, a clear indicator of market interest and confidence in ROAMEOs capabilities. Each deployment generates long-term recurring revenue and expands the Company’s position in autonomous mobile security.

Competitive Advantage

Unlike traditional security patrols or static surveillance systems, ROAMEO offers round-the-clock coverage with intelligent, autonomous decision making. It detects, speaks, escalates, and alerts, all while on the move. With SARA’s support, ROAMEO delivers contextual awareness, adaptive response, and continuous reporting, providing a modern, scalable approach to security that solves labor shortages and reduces operating costs.

An Eager Market Awaits ROAMEO

Even before its full production launch, ROAMEO has generated substantial interest across multiple sectors. With confirmed pre-sales already in place and a growing sales pipeline of qualified opportunities, the security industry is watching closely.

Market Size

The global security robots’ market is projected to grow from $19.07 billion in 2024 to $76.67 billion by 2034, reflecting a CAGR of 14.93%xii. Specifically, the autonomous patrolling robot segment is expected to expand from $157.4 million in 2023 to $438.3 million by 2033, at a CAGR of 10.8%xiii.

Market Drivers

-Labor Cost Pressures:

Rising wages and labor shortages are prompting organizations to seek automated security solutions.

-24/7 Surveillance Needs:

The demand for continuous monitoring in large facilities and public spaces is increasing.

-Technological Advancements:

Improvements in AI, sensor technology, and mobility are enhancing the capabilities of security robots.

xii DataIntelo, AI Gun Detection System Market Report – Global Forecast 2023–2032, 2024

https://dataintelo.com/report/ai-gun-detection-system-market

xiii Verified Market Research, Commercial Security System Market Size and Forecast, 2024 Edition

https://www.verifiedmarketresearch.com/product/commercial-security-system-market/

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RADDOG™ LE2

Wheeled Robotic Platform for Tactical Support and Public Safety

RADDOG LE2 is a wheeled, four-legged robotic platform developed for law enforcement and tactical applications. It delivers remote visual and audio interaction, helping agencies operate in situations that may be unsafe or inefficient for human officers. Integrated with SARA, AITX’s Agentic AI platform, RADDOG can autonomously interact, communicate, and assist officers with voice-driven commands, situational updates, and public engagement.

Primary Use Cases

• Law enforcement patrols and crowd engagement
• Tactical surveillance in high-risk environments
• Community events and public safety demonstrations
• Campus and municipal security support

Core Benefits

• Provides officers with safe, remote situational awareness
• Enhances public outreach with interactive engagement
• Operates in confined or hazardous spaces
• Adds a modern, high-tech layer to agency visibility

Market Impact

RADDOG is already active in police departments where it serves both operational and community outreach roles. From delivering situational intel to becoming a crowd favorite at events, RADDOG LE2 bridges the gap between safety technology and public trust. With SARA embedded, RADDOG enhances real-time communication and behavioral intelligence, helping departments project both authority and approachability. Its presence enhances department image while contributing to safer, smarter operations.

Competitive Advantage

RADDOG LE2 is not a novelty robot. It combines utility with approachability, making it ideal for law enforcement agencies looking to modernize and humanize their security and public safety efforts. With growing interest from law enforcement and public safety leaders, RADDOG LE2 is quickly establishing itself as a symbol of forward-thinking policing.

Market Size

The global robotic dog market was valued at $1.2 billion in 2023 and is projected to reach $4.6 billion by 2031, growing at a CAGR of 7.1% from 2024 to 2031xiv.

Market Drivers

-Public Safety and Law Enforcement:

Law enforcement agencies are exploring robotic dogs for search and rescue missions, enhancing operational efficiency and officer safety.

Advancements in AI and Robotics:

Continuous improvements in artificial intelligence and sensor technologies are enhancing the capabilities of robotic dogs, making them more adaptable and efficient for various applications.

Increased Demand for Security:

The need for reliable and autonomous security solutions in the public sector is driving the adoption of robotic dogs for tasks like perimeter patrol, threat detection, and reconnaissance.

xiv Grand View Research, U.S. Home Security Camera Market Size, Share & Trends Analysis Report, 2024

https://www.grandviewresearch.com/industry-analysis/us-home-security-camera-market/

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HERO™

Humanoid Enforcement and Response Officer

HERO is a humanoid security robot currently under development by RAD-M. Designed to operate in high-traffic environments, HERO combines autonomous movement, AI-driven engagement, and real-time incident response into a single, commanding presence. HERO will feature full integration with SARA, AITX’s Agentic AI platform, enabling advanced situational awareness, interactive communication, and dynamic escalation in public-facing environments.

Primary Use Cases

• Retail centers and shopping malls
• Stadiums, arenas, and entertainment venues
• Airports, transit hubs, and public buildings
• Government and high-visibility corporate campuses

Core Benefits

• Provides highly visible deterrence in sensitive public areas
• Engages with the public using advanced conversational AI
• Integrates with RAD-Is broader security ecosystem
• Designed to monitor, interact, and escalate

Market Impact

Expected for release in late 2025, HERO has already generated significant buzz among security professionals, law enforcement, and the public. Its presence at trade shows and events signals AITX’s commitment to leading the next evolution in autonomous security. HERO is being engineered to address complex deployment scenarios where appearance, mobility, and communication matter just as much as detection and response.

Competitive Advantage

HERO is more than a concept. it is the embodiment of AITX’s long-term vision. No other security robot on the market offers a humanoid presence with conversational intelligence and autonomous patrol capabilities. When launched, HERO is expected to redefine what physical security looks like in the modern world.

Market Size

The global humanoid robot market was valued at $3.28 billion in 2024, projected to reach $66.0 billion by 2032, growing at a CAGR of 45.5%xv.

Within this sector, humanoid security robots like HERO have emerged as a strong niche segment, addressing the need for interactive, autonomous security solutions in various industries.

Market Drivers

-Labor Shortages and Rising Costs:

Increasing demand for automation in industries facing workforce constraints.

-Advancements in Robotics:

Enhanced capabilities in AI and sensor technologies are propelling humanoid robot development.

-Demand for Interactive Security Solutions:

There’s a growing demand for security robots that can engage with individuals, provide assistance, and respond dynamically to situations.

xv Fortune Business Insights, Humanoid Robots Market Size, Share & Trends Report, 2032”

https://www.fortunebusinessinsights.com/humanoid-robots-market-110188

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ROSS™

RAD Operations System Software

ROSS is RAD-I’s software platform that revitalizes legacy IP security cameras by integrating them into an intelligent, AI-powered ecosystem. It transforms passive devices into proactive security tools with capabilities like object detection, license plate recognition, loitering alerts, and real-time response automation. With SARA on ROSS’ side, these upgraded devices gain the ability to escalate alerts, communicate autonomously, and support voice-driven response workflows.

Primary Use Cases

• Upgrading legacy security camera infrastructure
• Integrating outdated systems with modern analytics
• Enabling intelligent threat detection across large facilities
• Reduces the need for costly hardware replacements

Core Benefits

• Adds RAD-level AI analytics to existing IP security cameras
• Enables real-time alerts via SMS or automated systems
• Supports escalating, customizable response workflows
• Connects to the broader RAD ecosystem for integration

Market Impact

ROSS allows organizations to maximize their current infrastructure investment while elevating security performance. It extends the life and relevance of installed cameras by equipping them with todays most advanced AI tools. For clients hesitant to replace entire camera networks, ROSS provides a smart, budget-conscious path to modernization.

Competitive Advantage

Where most analytics platforms require proprietary cameras or expensive upgrades, ROSS works with what organizations already have. It empowers traditional hardware with human detection, firearm recognition, vehicle alerts, and more, all managed through RAD-I’s software platform. ROSS brings modern capability to yesterday’s cameras.

Market Size

The global AI in video surveillance market was valued at $3.90 billion in 2024, projected to reach $12.46 billion by 2030, growing at a CAGR of 21.3%xvi.

Market Drivers

-Enhanced Public Safety and Security:

Growing concerns over public safety are leading to increased deployment of intelligent surveillance systems.

-Advancements in AI:

Rapid developments in AI technologies are enhancing the capabilities of video analytics, making them more accurate and efficient.

-Cost-Effective Surveillance Solutions:

AI analytics enable organizations to optimize existing camera infrastructures, reducing the need for additional hardware investments.

xvi **MarketsandMarkets, “**AI in Video Surveillance Market by Offering, Deployment Type, Application, Vertical & Region – Global Forecast to 2030,” 2024

https://www.marketsandmarkets.com/Market-Reports/ai-in-video-surveillance-market-84216922.html

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RAM™

ROSA Accessory Module

RAM is a hardware module that transforms existing IP security cameras into interactive, intelligent devices. It adds voice capability, two-way audio, and real-time AI functionality, similar to a RAD-I ROSA device, allowing legacy cameras to detect, speak, engage, and escalate without the need for full device replacement. Integrated with SARA, AITX’s Agentic AI platform, RAM enables context-aware responses, autonomous escalation, and voice-driven interaction from even the most basic surveillance setups.

Primary Use Cases

• Enhancing passive cameras in retail or commercial properties
• Upgrading camera systems in schools, healthcare, or government facilities
• Extending the life of existing infrastructure with minimal installation
• Adding SARA-powered interaction to areas not suitable for RAD-I devices

Market Impact

RAM opens the door to RAD-I’s advanced capabilities for clients with large investments in traditional surveillance. Instead of ripping out existing hardware, RAM enhances what’s already in place. This dramatically reduces upgrade costs while delivering a serious boost in functionality. With SARA onboard, RAM makes it possible to bring agentic behavior and intelligent engagement to previously passive systems. It provides a low-friction entry point into fully autonomous, interactive security.

Competitive Advantage

No other device offers this combination of plug-and-play simplicity, AI intelligence, and voice engagement. RAM gives existing security cameras the power to act, not just watch. It’s the most direct path to upgrading security infrastructure without overhauling entire systems.

Market Size

The AI in video surveillance market in the U.S. was valued at $3.90 billion in 2024 and is expected to reach $12.46 billion by 2030, with a CAGR of 21.3%xvii.

Market Drivers

-Cost-Effective Upgrades:

Organizations seek to enhance existing surveillance systems without the expense of complete overhauls, making inline devices like RAM appealing.

-Integration with Legacy Systems:

The ability to retrofit current infrastructure with advanced analytics capabilities addresses budget constraints and extends the life of existing equipment.

-Edge Computing:

Processing data closer to the source reduces latency and bandwidth usage, enabling real-time analytics and quicker response times.

xvii MarketsandMarkets, AI in Video Surveillance Market by Offering (Hardware, Software, Services), Deployment Type (On-premises, Cloud), Application (Intrusion Management, Facial Recognition, License Plate Recognition), Vertical and Region – Global Forecast to 2030, April 2024

https://www.marketsandmarkets.com/Market-Reports/ai-in-video-surveillance-market-84216922.html

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Firearm Detection Analytic

AI-Powered Threat Detection for Visible Firearms

AITX’s Firearm Detection is an AI-based analytic that identifies visible handguns and long guns in real time. Integrated into select RAD-I devices and available via ROSS, it enables immediate response and alert escalation the moment a threat is recognized. With SARA, AITX’s Agentic AI platform, firearm detection becomes more than identification, it becomes action. SARA can escalate alerts, notify local security, contact administrators, and initiate outreach to first responders within moments of detection.

Primary Use Cases

• School campuses and educational facilities
• Hospitals and healthcare centers
• Government and municipal buildings
• Retail environments and public gathering spaces

Market Impact

With growing concern regarding active shooter incidents and visible weapons in public spaces, AITX’s Firearm Detection provides a proactive layer of defense. By turning cameras and devices into intelligent sentries, organizations gain precious seconds that can prevent tragedy or reduce harm. In an unfolding active shooter incident, every second counts. The Company’s Firearm Detection analytic is meant to provide schools, first responders, administrators, educators, employers, students, and other personnel those precious seconds. This technology enhances safety protocols without requiring major infrastructure changes. In recognition of its impact, AITX’s Firearm Detection technology was honored with the American Security Today ASTORS Award for Best Metal/Weapons Detection Solution.

Competitive Advantage

Unlike some systems that rely on concealed weapon prediction or extensive human monitoring, the Company’s Firearm Detection focuses on clear, visible threats and reacts instantly. Integrated across RAD-I’s device lineup and analytics platform, it is a scalable and proven solution that adds meaningful value to modern security strategies. With SARA delivering intelligent escalation and voice-driven guidance, AITX offers a real-time response capability no others can match.

Market Size

The global AI gun detection system market is projected to grow from $1.2 billion in 2023 to $4.6 billion by 2032, reflecting a CAGR of 16.2% over the forecast periodxviii.

Market Drivers

-Rising Public Safety Concerns:

An uptick in gun-related incidents globally has heightened the demand for proactive security solutions that can detect firearms before any harm occurs.

-Integration with Existing Infrastructure:

AI gun detection systems can be seamlessly integrated with current surveillance systems.

-Technological Advancements:

Continuous improvements in AI, machine learning, and sensor technologies have enhanced the accuracy and reliability of gun detection systems, making them more effective in various environments.

xviii DataIntelo, AI Gun Detection System Market Report – Global Forecast 2023–2032, 2024

https://dataintelo.com/report/ai-gun-detection-system-market

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Significant Market Opportunity

The global security industry is undergoing rapid transformation, and AITX is positioned squarely at its center.

According to Verified Market Research, the global commercial security system market is projected to reach $376 billion by 2028xix, driven by increasing demand for automation, efficiency, and real-time responsiveness. On the residential side, the U.S. home security camera market alone is valued at over $7.8 billion, with millions of households seeking smarter, more proactive protectionxx.

What’s fueling this growth is a widespread industry shift. Traditional security models that rely heavily on human guards are being reevaluated. Labor shortages, rising costs, and limitations in response time are pushing organizations to adopt AI-driven, autonomous solutions. Businesses, institutions, and homeowners are no longer satisfied with passive monitoring. They want proactive systems that can detect, communicate, deter, and escalate without delay.

AITX addresses this need with a comprehensive suite of solutions that serve both the commercial and residential markets. From large-scale enterprise deployments to home security, the Company’s devices and platforms offer intelligent response capabilities at a fraction of the cost of manned security.

With the launch of RADCam and the rapid adoption of solutions like ROAMEO, RIO, AVA, and ROSA across verticals including healthcare, education, logistics, and retail, AITX is tapping into multiple high-growth opportunities simultaneously. This diverse positioning ensures that the Company is not only riding the wave of market change but helping to drive it.

$376 Billion

Projected size of the global commercial security system market by 2028

Source: Verified Market Research

$7.8 Billion

Current size of the U.S. home security camera market

Source: Grand View Research

175%+ Revenue Growth

AITX’s fiscal year 2025 growth compared to prior year

Source: AITX, April 2025

Labor Shortages & Costs

Driving organizations toward autonomous, AI-powered solutions

Competitive Landscape

Redefining Security, Not Just Competing

The security industry is saturated with outdated approaches. Legacy guard services depend on costly, inconsistent human labor. Traditional camera manufacturers sell passive hardware with limited intelligence. Many AI startups promise innovation, but most offer software-only solutions without the infrastructure to deploy them effectively.

AITX breaks from these models. The Company delivers a fully integrated ecosystem that combines proprietary hardware, software, AI analytics, and voice engagement into unified, field-ready solutions.

From ROAMEO to RADCam, AITX controls its product lifecycle, enabling unmatched speed to market and deployment scale.

With nearly one thousand devices deployed and recurring revenue on the rise, AITX is executing today what others promise for tomorrow:

xix Verified Market Research, Commercial Security System Market Size and Forecast, 2024 Edition

https://www.verifiedmarketresearch.com/product/commercial-security-system-market/

xx Grand View Research, U.S. Home Security Camera Market Size, Share & Trends Analysis Report, 2024

https://www.grandviewresearch.com/industry-analysis/us-home-security-camera-market/

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-An Integrated Model

Hardware, software, and AI, all in-house

-Multi-Segment Reach

Serving residential, commercial, and enterprise clients

-Voice Engagement

Real-time deterrence, not just passive recording

-No VC Dependence

Grown without SPACs or institutional capital

-Speed to Market

Weeks, not quarters, from concept to deployment

The AITX Business Model

Recurring Revenue Engine

Subscription-based model that scales with deployment

Multi-Segment Subsidiary Strategy

RAD-I (Enterprise), RAD-M (Mobile), RAD-G (Tech Dev), RAD-R (Residential)

In-House Control = Margin Growth

Manufacturing, software, and deployment fully managed internally

Dealer and Channel Distribution

Expanding reach through trusted networks

Flexible Deployments

Customizable subscriptions for varied security needs

AI-Powered Value

Proactive, intelligent solutions replace outdated systems

Profit Path

Margin efficiency grows with every new deployment

AITX delivers automation-first security solutions through a vertically integrated platform of hardware, software, and AI.

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AITX’s Technology Advantage

Proven AI, Autonomous Devices, Real-Time Results

AITX’s platform replaces outdated surveillance with real-time intelligence. Its proprietary AI and autonomous devices are already deployed in the field, delivering measurable results.

SARA at the Core

Voice-driven AI engine powering real-time detection, deterrence, engagement, and escalation

Vertically Integrated Stack

Hardware, software, and firmware developed in-house for speed and precision

Autonomous Mobility

ROAMEO, RADDOG and HERO can effectively patrol large areas without human involvement

Deployments at Scale

Used in enterprise, healthcare, logistics, retail, construction and residential environments

AITX is not theorizing what security could be - it is delivering what others have not.

AITX Subsidiaries

AITX owns and operates five (5) wholly-owned subsidiaries.

1. Robotic Assistance Devices, Inc. (RAD-I)

• AI-driven security solutions
• Autonomous deterrence and response
• Delivery of industry-leading Agentic AI, aka SARA
• Trusted across retail, logistics, education, and more
• www.radsecurity.com (http://www.radsecurity.com)

2. Robotic Assistance Devices, Group (RAD-G)

• Agentic AI development and distribution to OEMs
• OEM and custom AI security technology
• Licensing AI-driven security solutions
• RAD Lanka (Sri Lanka development office)
• www.radgroup.ai (http://www.radgroup.ai)

3. Robotic Assistance Devices, Residential (RAD-R)

• AI-powered security solutions for residential markets
• Agentic AI integration through ‘SOS’ features
• Bringing enterprise-level security automation to residential users
• Enhancing safety through intelligent monitoring and response
• www.radresidential.ai (http://www.radresidential.ai)

4. Robotic Assistance Devices, Mobile (RAD-M)

• Mobile security, delivery, all-purpose solutions
• Agentic AI driven solutions
• Solar-powered, 5G-connected deployments
• No infrastructure required, deployable anywhere

www.radm.ai (http://www.radm.ai)

5. Robotic Assistance Devices Lanka (PVT) Ltd. (RAD L) is a wholly owned subsidiary of RAD G incorporated in Sri Lanka. This Company was setup to take advantage a cost effective, educated workforce and tax savings.

AITX’ main website is aitx.ai. Company and investor information can be found at this site and it is updated regularly.

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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.

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 4th generation solutions.

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The Company is focused on sequential product development while sales grow in order to get close to positive cash flow.

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.

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, amusement, manufacturing 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 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 chairs Security Industry Association’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.

In March 2023 Steve Reinharz was elected to a Board seat for Security Industry Association, Inc (SIA). SIA is the foremost security group steering policy, lobbying various governments and promoting education within the security industry.

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

• 20 -

Employees

As of March 7, 2025, we have a headcount of 116 fully dedicated full-time equivalents including sub-contractors. None of our employees are represented by a union.

We consider our employee relations to be excellent. AITX’ principle shareholder owns a minority interest in the Canadian research and develop company but has not received any compensation of any kind from that company to date.

Accomplishments & Highlights

AITX, and its subsidiaries RAD I, RAD M, RAD G, and RAD R 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:

Cyber and data protection and compliance

The Company continues it’s focus on delivery of safe and secure software and systems to its clients. As such, this year, February 2025, the Company achieved SOC 2 Type 2 status. This status level required considerable work and continuous best practices by all elements of the company. The SOC 2 Report has become a benchmark standard, and now an often-specified requirement, in the software procurement process. Established by the American Institute of Certified Public Accountants (AICPA), criteria and reporting principles are outlined as a means for organizations to create a documented framework of policies and procedures to prove how they manage and secure data in the cloud and ensure protection of customer privacy and ensure internal communications are suitably handled. This achievement reflects the Company’s stated goals of best-in-class data protection and internal processes.

The Company has subsequently maintained SOC 2 Type 2 status and has achieved other cyber certifications.

Discussion on Sales

The sales funnel continues to grow in both quantity and quality. The sales team has matured and stabilized with a Senior Vice President of Sales with seven full time direct sales reports. Additional sales drivers are RAD’s President as well as AITX’ CEO. Furthermore operations team members are instrumental in encouraging clients to expand existing systems.

In the fiscal year ended February 28, 2025 RAD added hundreds sales opportunities to the sales funnel. Furthermore several end users expanded their RAD systems with commitments to continue expansion. RAD’s dealer network also grew although the Company will note that dealer performance has fallen short of expectations and is being addressed. An opportunity is mostly defined as an account that is exhibiting a pain that can be solved by RAD, has a budget, and has reached the point in the sales process where they have a quote they can sign.

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Management has identified that conversion of accounts from opportunities to clients is improving and has identified some of the reasons for the low conversion rate as well as new tactics to break through these obstacles. Advanced new technology sales often involve multiple decision-makers and require a skilled and passionate internal champion. The security industry breeds risk-averse personnel. The Company is pressing several initiatives to change the industry to create an environment where trying new things in the norm as opposed to the exception. An example of these efforts are the Security Industry Association’s (SIA) upcoming Town Hall where three Fortune 500 security practitioners that have implemented new technologies will share their tips for successful internal selling. AITX will be putting more emphasis on these efforts this year.

Between a maturing hardware and software line up, an increasing number of deployments/case studies/success stories, management is excited for the next year’s sales. Management feels that ironing out technical and production challenges are well in hand and clearing the way for a greater volume of deployments.

Press Announcements

During the fiscal year, the Company issued over 100 press releases, the vast majority of them being sales announcements and new authorized dealers being signed. Public events, conferences, awards and new product announcements were also publicized via press releases. All Company press releases can be found here: AITX News - AITX - Artificial Intelligence Technology Solutions

Trade Shows and Conferences

As in previous years, RAD attended several large security industry events including ISC West, GSX, plus dozens of regional conferences with the purpose of presenting the Company’s solutions to a buying audience and continually loading the sales pipeline with new opportunities. RAD often utilizes the events for speaking engagements or panel discussions to propel the Company’s ‘thought leadership’ regarding its AI-powered security and safety solutions.

Additional Points of Interest

This fiscal year was significant for stabilization of technology, better understanding of the sales process and related challenges, positioning as a true leader in the industry and the achievement of several high profile deployments. The Company continues its focus on sales, efficiencies with the goal of achieving positive cash flow within 18 months.

Management, based on regular conversations with the Company’s largest debt holder, expects no issues regarding pushing out debt deadlines as it has done so in years past. Management confirms the support of this lender and notes the most recent non-convertible $ 4m loan facility.

Management reiterates that the plan continues to be to grow revenues, achieve positive cash flow, reduce debt and prepare for an uplist to Nasdaq. Management estimates that with continued reasonable performance the company could obtain and maintain profitability while working to pay down in preparation for Nasdaq uplist targeted for 2026.

Legal Proceedings

See Item 3 - Legal Proceedings.

• 22 -

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).

Risk Management and Strategy

Securing our business information, intellectual property, customer and employee data and technology systems is essential for the continuity of our business, meeting applicable regulatory requirements and maintaining the trust of our stockholders. Cybersecurity is an important and integrated part of our enterprise risk management function that identifies, monitors and mitigates business, operational and legal risks.

To help protect us from a major cybersecurity incident that could have a material impact on operations or our financial results, the Company is in the process of continually implementing policies, programs and controls, including technology investments that focus on cybersecurity incident prevention, identification and mitigation. The steps we expect to take to reduce our vulnerability to cyberattacks and to mitigate impacts from cybersecurity incidents include but are not limited to: penetration testing by a third-party vendor, agent-based security scanning that runs continuously, establishing information security policies and standards, implementing information protection processes and technologies, monitoring our information technology systems for cybersecurity threats and implementing cybersecurity training. The Company has reached SOC 2 Type 2 status which shows the Company’s compliance with best industry practices. The SOC 2 Report has become a benchmark standard, and now an often-specified requirement, in the software procurement process. Established by the American Institute of Certified Public Accountants (AICPA), criteria and reporting principles are outlined as a means for organizations to create a documented framework of policies and procedures to prove how they manage and secure data in the cloud and ensure protection of customer privacy and ensure internal communications are suitably handled. This achievement reflects the Company’s stated goals of best-in-class data protection and internal processes. In addition, we annually purchase a cybersecurity risk insurance policy that would help defray the costs associated with a covered cybersecurity incident if it occurred.

Governance

Our CEO and management are actively engaged in overseeing and reviewing our strategic direction and objectives, taking into account, among other considerations, our risk profile and related exposures, including oversight of risks from cybersecurity threats. As part of this oversight, the Company will update the CEO and Board of Directors periodically, and at least annually, on our cybersecurity program, including with respect to particular cybersecurity threats, cybersecurity incidents, new developments in our risk profile, the status of projects to strengthen our cybersecurity systems, assessments of our cybersecurity program, and the emerging threat landscape.

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.

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.

On September 24, 2024, a prospective lender filed a claim against the Company for an alleged breach of a non-binding term sheet made on June 7, 2024. This claim is an example of predatory lending practices for which the Company has filed a notice of dismissal in the relevant jurisdiction. The Company and its counsel believe the claim is without merit however the courts have mandated mediation, and it appears that the parties may reach a settlement in the near future. The Company has made no accruals.

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.

• 38 -

Results of Operations

The following table shows our results of operations for the years ended February 28, 2025 and February 29, 2024. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

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

Revenue

Total revenue for the year ended February 28, 2025, was $6,130,886, which represented an increase of $3,903,327 or 175% compared to total revenue of $2,227,559 for the year ended February 29, 2024. Rental activities increased by $3,424,048 or 211%, as the Company continues to grow its product line and customer base. Direct sales grew by $479,279 or 80% driven by higher monitoring (RMC) revenue on new installations for the year ended February 28, 2025.

Gross profit

Total gross profit for the year ended February 28, 2025 was $3,744,564, which represented an increase of $3,178,747, compared to total gross profit of $1,096,457 for the year ended February 29, 2024. The increase is a result of the increase in revenues above, and gross profit % which was 61% for the year ended February 28, 2025 was also 25% for the prior year. The gross profit % increased as the increase in higher margin rental activities in the product mix, and overhead being allocated over a higher sales base. Also, in the prior year there was a higher inventory provision for the permanent impairment in value of two products that the Company discontinued in their current form. This resulted in an unusually low gross profit % for the year ended February 29, 2024.

Operating expenses

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

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Our operating expenses were comprised of general and administrative expenses, research and development, depreciation and amortization, operating lease and rent and a (gain) loss on disposal of fixed assets. General and administrative expenses consisted primarily of professional services, automobile expenses, advertising, salaries and wages, travel expenses and rent. Our operating expenses during the years ended February 28, 2025 and February 29, 2024 were $17,691,437and $14,555,229, respectively. The overall $3,126,208 increase in operating expenses was primarily attributable to the following changes in operating expenses:

• Research and development expenses increased by $16,273 as the Company continued to focus on current product development and improvements. The Company moved
• General and administrative expenses increased by $3,601,629 primarily due to the following changes:
• For the year ended February 28, 2025 stock based compensation to CEO in equity awards was $1,500,000 with a charge of $331,685 for the Employee Stock Option Plan (ESOP) all totaling $1,831,685 compared with stock based compensation to CEO in equity awards was $1,521,000 and a charge of $272,599 for the ESOP all totaling $1,793,599 for the year ended February 29, 2024. This represents an increase of $38,086 in stock based compensation. The stock based compensation for the CEO is payable in Series G and has been deferred until after a year.
• Wages, salaries and payroll levies for the CEO increased by $1,500,000 in discretionary bonus charged, all of which is deferred compensation and will not be paid out this year. Base salary increased by $20,000.
• Wages, salaries and payroll levies for the staff increased by $732,953 due to staff increases (6).
• Commissions increased by $274,208 due to increased revenues.
• Office expense increased by $45,157.
• Insurance costs increased by $117,181 due to more employees and higher health insurance costs.
• Repairs and maintenance increased by $137,901 due to repair of more active revenue earning devices in the field.
• The remaining increases and offsetting decreases were distributed amongst other general and administrative accounts such as installation expense, dues and subscriptions, marketing, travel, and production supplies amongst others.
• Operating lease cost and rent decreased by $19,675. There was a vehicle lease that expired during the current fiscal year.
• Depreciation and amortization increased by $105,732 due to the increase in demo devices, computer equipment, warehouse equipment in fixed assets.
• (Gain) loss on disposal of fixed assets decreased by $16,426 due to a vehicle disposal in 2024 that yielded a gain.
• There was no impairment on revenue earning devices for the year ended February 28, 2025. Impairment on revenue earning devices was $584,177 for the year ending February 29,2024 due to the discontinuance of two products in their present form.

Other income (expense)

Other income (expense) consisted of interest expense and gain on settlement of debt. Other income (expense) during the years ended February 28, 2025 and February 29, 2024, was ($4,988,719) and ($6,719,304), respectively.

• 40 -

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

• Interest expense decreased by $1,301,063. Amortization of debt discounts decreased by $2,112,829, and for the year ended February 28, 2025 was $271,234 compared with $2,384,163 for the year ended February 29, 2024. This decrease was due to many notes maturing in the prior year and being fully amortized. Interest expense was $4,188,866 for the year ended February 28, 2025, compared with $4,011,681 for the year ended February 28, 2024. This $177,195 increase was due to $350,000 of new notes this year and a full years interest on the prior year’s $1,750,000 new notes, many of which were issued in the last two quarters. Deferred variable payment obligation (DVPO) expense was $996,881 for the year ended February 28, 2025, compared with $362,200 for the year ended February 29, 2024. This $634,881 increase was a result of the large increase in revenues.
• Gain on settlement of debt increased by $429,522 due to a write-off of accounts payable and vehicle loans that were greater than six years old during the current fiscal year.

The Company’s loss from operations for the year ended February 28, 2025 was $13,946,873 which represented an decrease in loss of $42,539 compared to a loss of $13,989,412 for the year ended February 29, 2024. The higher revenues and gross profit in 2024 were partially offset by higher operating expenses for the reasons set out above. Note that the Company had a net loss of $18,935,592 for the year ended February 28, 2025, as compared to net loss of $20,708,716 for the year ended February 29, 2024. This $1,773,124 change is mostly attributable to a decrease in amortization expense.

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, 2025, the Company had negative cash flow from operating activities of $12,196,388. As of February 28, 2025 the Company has an accumulated deficit of $156,496,930 and negative working capital of $2,548,138. Management does not anticipate having positive cash flow from operations in the near future. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements.

The Company does not have the resources at this time to repay all its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business. At the same time management points to its successful history with maintaining Company operations and reminds all with reasonable confidence this will continue. Management has plans to address the Company’s financial situation as follows:

Management is committed to raise either non-dilutive funds or minimally dilutive funds. There is no assurance that these funds will be able to be raised nor can we provide assurance that these possible raises may not have dilutive effects. In September 2024, the Company entered into an equity financing agreement whereby an investor will purchase up to $30,000,000 of the Company’s common stock at a discount over a two-year period. There remains approximately $24 million left to issue under this arrangement. Management believes that it has the necessary support to continue operations by continuing its funding methods in the following ways : growing revenues, through equity proceeds, and issuing non-convertible debt.

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Capital Resources

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

As of February 28, 2025 and February 29, 2024, we had a cash balance of $865,975 and $$105,926, respectively.

Summary of Cash Flows

Net cash used in operating activities for the year ended February 28, 2025 was $12,196,388, which included a net loss of $18,935,592, non-cash activity such as the gain on settlement of debt of $468,262, amortization of debt discount of $271,234, stock based compensation of $1,831,685, reduction in right of use asset $119,151, accretion of lease liability $118,502, increase in related party accrued payroll and interest $71,927, inventory provision of ($494,000), bad debts expense $83,682, depreciation and amortization of $1,480,636 and change in operating assets and liabilities of $3,724,649.

Net cash provided by (used in) investing activities.

Net cash used in investing activities for the year ended February 28, 2025 was $79,965. This consisted of the purchase of fixed assets of ($23,724), purchase of trademarks of ($6,241) and purchase of investment of ($50,000).

Net cash provided by (used in) financing activities.

Net cash provided by financing activities was $13,036,402 for the year ended February 28, 2025. This consisted of share proceeds net of issuance costs of $12,702,010, proceeds from the issuance of Series B Preferred Shares of $278,000, proceeds from the issuance of Series C Preferred Shares of $278,580 and proceeds from loans payable $350,000 offset by repayments of loans payable of $183,000 and redemption of Series B Preferred Shares of ($389,188).

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.

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 equity instruments used in debt settlements,amendments and extensions.

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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.

The Company periodically evaluates the fair value of fixed assets whenever events or changes in circumstances indicate that its carrying amounts may not be recoverable. Upon retirement or other disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is recognized in income.

Research and Development

Research and development costs are expensed in the period they are incurred in accordance with ASC 730, Research and Development unless they meet specific criteria related to technical, market and financial feasibility, as determined by Management, including but not limited to the establishment of a clearly defined future market for the product, and the availability of adequate resources to complete the project. If all criteria are met, the costs are deferred and amortized over the expected useful life or written off if a product is abandoned. At February 28, 2025 and February 29, 2024, the Company had no deferred development costs.

Sales of Future Revenues

The Company has entered into transactions, as more fully described in footnote 11, in which it has received funding from investors in exchange for which it will make payments to those investors based on the level of sales of certain revenue categories, generally based on a percentage of sales for those certain revenues. The Company determines whether these agreements constitute sales of future revenues or are in substance debt based on the facts and circumstances of each agreement, with the following primary criteria determinative of whether the agreement constitutes a sale of future revenues or 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 Company’s revenue for a reporting period underlying the agreement have only a minimal impact on the investor’s rate of return
• Does the investor have recourse relating to payments due

In the event a transaction is determined to be a sale of future revenues, it is recorded as deferred revenue and amortized using the sum-of-the-revenue method. In the event a transaction is determined to be debt, it is recorded as debt and amortized using the effective interest method. As of the date of these financial statements, the Company has determined that all such agreements are debt.

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Revenue Recognition

ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, supersedes the revenue recognition requirements and industry specific guidance under Revenue Recognition (Topic 605). Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. Topic 606 defines a five-step process that must be evaluated and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing accounting principles generally accepted in the United States of America (“U.S. GAAP”) including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.

Distinguishing Liabilities from Equity

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

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

Our CEO and Chairman holds sufficient shares of the Company’s voting stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO and Chairman can at any time unilaterally vote to increase the number of authorized shares of common stock of the Company without the need to call a general meeting of common shareholders of the Company

Initial Measurement

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

Subsequent Measurement – Financial Instruments Classified as Liabilities

The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other income (expenses).

Fair Value of Financial Instruments

ASC Topic 820, *Fair Value Measurements and Disclosures (“*ASC Topic 820”) provides a framework for measuring fair value in accordance with generally accepted accounting principles.

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC Topic 820 are described as follows:

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• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.
• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
• Level 3 – Inputs that are unobservable for the asset or liability.

Measured on a Recurring Basis

The following table presents information about our liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fell:

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and advances, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.

Earnings (Loss) per Share

Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.

Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments. Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Standards During the Year

In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The new guidance also requires the if-converted method to be applied for all convertible instruments. The amendments in ASU 2020-06 are effective for public entities, excluding smaller reporting companies as defined, for fiscal years beginning after December 15, 2021. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. A reporting entity is not permitted to adopt the guidance in an interim period, other than the first interim period of its fiscal year. The Company adopted the standard using a modified retrospective approach. The adjustment to the Company’s accumulated deficit at March 1, 2024 was $4,175,535 with a corresponding adjustment to loans payable.

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We do not have any financial instruments that are exposed to significant market risk. We maintain our cash and cash equivalents in bank deposits and short-term, highly liquid money market investments. A hypothetical 100-basis point increase or decrease in market interest rates would not have a material impact on the fair value of our cash equivalents securities, or our earnings on such cash equivalents.

Evaluation of Disclosure Controls and Procedures

As of February 28, 2025, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of February 28, 2025, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Limitations on Systems of Controls

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses identified in our evaluation, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
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• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

As of February 28, 2025, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of U.S. GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

The matters involving internal controls and procedures that our management considered to be material weaknesses under the criteria established in Internal Control – Integrated Framework (2013) by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) were: lack of a functioning audit committee; lack of a majority of independent members and a lack of a majority of outside directors on our board of directors; inadequate segregation of duties consistent with control objectives; management is dominated by a single individual; use of the inappropriate methodology of allocating proceeds in certain debt transactions and the expensing timing of the related debt discount; use of inappropriate fair values in certain preferred stock issuances and settlements. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of February 28, 2025.

Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

No changes were made to our internal control over financial reporting during the year ended February 28, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.