S-1: AITX Files for Resale of 2.5 Billion Common Shares by GHS Investments, Potentially Raising $5.3 Million

Artificial Intelligence Technology Solutions (AITX) has filed a registration statement for the resale of up to 2.5 billion common shares by GHS Investments, with the company potentially receiving up to $5.3 million from sales to GHS.

Summary

• Artificial Intelligence Technology Solutions (AITX) has filed a registration statement for the resale of up to 2.5 billion common shares.
• The shares are to be sold by GHS Investments, LLC, a selling stockholder.
• AITX may receive up to $5.3 million from the sale of common stock to GHS pursuant to a March 22, 2023 Equity Financing Agreement.
• The company will not receive proceeds from the resale of shares by GHS.
• AITX's common stock is quoted on the OTC Pink under the symbol AITX.
• As of April 1, 2024, the last reported sales price of AITX's common stock on the OTC Pink was $0.0025 per share.
• The Purchase Agreement allows AITX to sell up to $30,000,000 of shares to GHS at its discretion.
• GHS is considered an underwriter, and broker-dealers involved in selling the shares may also be deemed underwriters.
• AITX will bear all costs, expenses, and fees related to the registration of the common stock, while GHS will bear commissions and discounts.
• Investing in AITX's securities is highly speculative and involves a high degree of risk.

Sentiment

Score: 3

Explanation: The document is largely negative due to the company's financial instability, reliance on speculative investments, and potential dilution of shares. While there are some positive aspects, the overall tone is concerning from an investment perspective.

Positives

• The Equity Financing Agreement with GHS provides a potential source of funding up to $30,000,000.
• The company retains control over the timing and amount of sales to GHS.
• The company has the ability to reduce the monthly expense burn by $ 200,000 $ 300,000 with little impact on short and medium term operations.

Negatives

• Investing in AITX's securities is highly speculative and involves a high degree of risk.
• The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
• The market price of AITX's common stock is subject to significant fluctuations.
• The company has a limited operating history and has not yet generated any profits.
• The company may conduct further offerings in the future, which could dilute the common stock.
• The company's common stock shareholders do not have voting control over the company due to the rights granted to holders of Series E Convertible Preferred Stock.
• The Selling Stockholder will pay less than the then-prevailing market price for our common stock.
• The Selling Stockholder has a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price.

Risks

• The company's business is at an early stage, and it has not yet generated any profits.
• The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
• The company's financial results will fluctuate in the future, which makes them difficult to predict.
• The company has a limited number of deployments and its success depends on an unproven market.
• The company cannot assure you that it can effectively manage its growth.
• The loss of one or more of the company's key personnel, or its failure to attract and retain other highly qualified personnel in the future, could harm its business.
• If the company is unable to protect its intellectual property, the value of its brand and other intangible assets may be diminished and its business may be adversely affected.
• Economic factors generally may negatively affect the company's operations.
• The company's businesses may be materially adversely affected by the recent coronavirus (COVID-19) outbreak or the related market decline and volatility.
• The company's business is subject to data security risks, including security breaches.
• The company's business success depends on large part on the success of its efforts to lease its products through dealerships.
• The company currently faces competition and may face additional competition in the future; if it is unable to compete effectively, its business prospects and operations would be harmed.
• The company's ability to operate and collect digital information on behalf of its clients is dependent on the privacy laws of jurisdictions in which its machines operate, as well as the corporate policies of its clients, which may limit its ability to fully deploy its technologies in various markets.
• The company's success depends on the growth of its industry, most specifically on the growing adoption and use of physical security technology in general and the adoption and use of its products.
• An investment in the company's securities is extremely speculative, and there can be no assurance of any return on the investment.
• The company's common stock shareholders do not have voting control over the company due to the rights granted to holders of its Series E Convertible Preferred Stock.
• Because the company is a smaller reporting company, it may take advantage of certain scaled disclosures available to it, resulting in holders of its securities receiving less information than they would receive from a public company that is not a smaller reporting company.
• To fund its operations, the company may conduct further offerings in the future, in which case its common stock may be diluted.
• The trading price of the company's common stock may fluctuate significantly.
• Because the company is a small company with a limited operating history, holders of common stock may find it difficult to sell their stock in the public markets.
• The company's shares of common stock are subject to the SECs penny stock rules that limit trading activity in the market, which may make it more difficult for holders of common stock to sell their shares.
• FINRA sales practice requirements may also limit a stockholders ability to buy and sell the company's stock.
• The company does not anticipate paying dividends in the future.
• The company will continue to incur significant costs to ensure compliance with United States corporate governance and accounting requirements.
• Due to his ownership of Series E Preferred Stock, the company's Chief Executive Officer has voting rights equal to 66-2/3% of the voting rights held by all of its outstanding capital stock, giving him substantial control over its business and affairs and creating actual or potential conflicts of interests between his interests and the interests of the shareholders.
• The Chief Executive Officers ownership of Series F Preferred Stock permits him to convert the Series F Preferred Shares into a multiple of shares of the then-outstanding common stock. Any such conversion of his Series F Preferred Shares would cause substantial dilution of the shares of common stock held by our common stock shareholders.
• Should GHS sell the 2.5 Billion shares being registered herein or some lesser material amount, sales of our Shares into the open market may cause material decreases in our stock price and decrease the percentage ownership of shares held by our other shareholders.
• Funding from the Purchase Agreement may be limited or insufficient to fund the company's operations or to implement its strategy.
• You may experience future dilution as a result of this offering or future equity offerings.
• The Selling Stockholder will pay less than the then-prevailing market price for our common stock.
• The company may use the net proceeds from sales of its common stock to GHS pursuant to the EFA in ways with which you may disagree.

Future Outlook

Management expects device count deployments may be between 250 and 1250 devices this fiscal year.

Management Comments

• Management feels that the labor problem is going to increase in severity as inflationary pressures continue to drive up employee wages (making guard services more expensive) and reduce economic activity (presumably forcing companies to search out lower cost solutions to existing problems).
• Management, based on daily conversations with clients, dealers and prospects, feels very strongly that there will be continued increasing demand for our solutions.
• Management expects that as volume production grows, starting with ROSA, the company can achieve significant improvements in cost of goods sold.
• Management suggests that revenue from device monitoring from RAD partners could, over time, become up to 15% of company revenues.

Industry Context

RAD believes that its experience has shown that the security market is ripe for disruption and 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.

Comparison to Industry Standards

• ROAMEO positions it as a near-competitor to Knightscope, a Palo Alto based robotics company in business since 2012.
• RADs approach is different from Knightscopes on many elements of technology.

Stakeholder Impact

• Sales of our Shares into the open market may cause material decreases in our stock price and decrease the percentage ownership of shares held by our other shareholders.
• The Selling Stockholder will pay less than the then-prevailing market price for our common stock.
• The company may use the net proceeds from sales of its common stock to GHS pursuant to the EFA in ways with which you may disagree.

Next Steps

• The Selling Stockholder may offer the Purchase Shares for resale from time to time pursuant to this prospectus.
• The company will use the proceeds from the exercise of the Put right pursuant to the Financing Agreement for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for such other corporate purposes as the Board deems to be in our best interests.

Key Dates

Keywords

common stock, resale, GHS Investments, equity financing, AITX, Artificial Intelligence Technology Solutions, securities, offering, shares, stock