S-1: Artificial Intelligence Technology Solutions Files for $10 Million Common Stock Resale by GHS Investments

Artificial Intelligence Technology Solutions (AITX) has filed a registration statement for the resale of up to one billion shares of its common stock by GHS Investments, LLC, potentially generating up to $8 million in gross proceeds for the company.

Summary

• Artificial Intelligence Technology Solutions Inc. (AITX) has filed a registration statement for the resale of up to one billion shares of its common stock by the selling stockholder, GHS Investments, LLC.
• The company will not receive any proceeds from the resale of common stock offered by the Selling Stockholder.
• However, AITX may receive aggregate gross proceeds of up to $8.0 million from the sale of its common stock registered herein to the Selling Stockholder, pursuant to the March 22, 2023 Equity Financing Agreement entered into with GHS.
• The Purchase Agreement provides that the Company may discretionarily sell to GHS up to $12,500,000 of shares (Purchase Shares) of the Company's common stock upon our issuance of Purchase Notices to GHS.
• The Selling Stockholder will sell its Purchase Shares at prevailing market prices or in privately negotiated transactions.
• 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 the Selling Stockholder will bear all commissions and discounts attributable to its sales.
• 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 company has a September 24, 2023 Placement Agreement with JH Darbie & Company (Darbie) to introduce third party investors to us for which we are obligated to pay Darbie: (a) upon consummation of the closing of a financing on our behalf, a finders fee in cash equal to 8% of the gross proceeds of an equity/convertible security (4% of for Equity Lines of Credit) and/or cash equal to 3% of the gross proceeds of a non-convertible debt transaction; (b) pay Darbie non-callable warrants equal to 8% warrant coverage of the amount raised (0% warrant coverage for Equity Lines of Credit.
• In conjunction with (b), the warrants will entitle the holder to purchase our securities at a purchase price equal to 120% of the introduced party's exercise price of the transaction or the public market closing price of our common stock on the date of the transaction, whichever is lower.

Sentiment

Score: 4

Explanation: The document presents a mixed sentiment. While it highlights the potential for AITX to generate revenue through the resale of its common stock, it also emphasizes the speculative nature of the investment and the company's financial challenges, including the auditor's doubt about its ability to continue as a going concern.

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.

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 company's costs may grow more quickly than its revenues, harming its business and profitability.
• 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.
• General political, social and economic conditions can adversely affect the company's business.
• The company's businesses may be materially adversely affected by the recent coronavirus (COVID-19) outbreak or the related market decline and volatility.
• The future reoccurrence of the COVID-19 pandemic could adversely affect the company's business, financial condition and results of operations.
• 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 it 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 company has and may in the future utilize debt financing to fund its operations.
• 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.
• Should GHS sell the one 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 our operations or to implement our 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.
• We may use the net proceeds from sales of our common stock to GHS pursuant to the EFA in ways with which you may disagree.

Future Outlook

The document contains forward-looking statements regarding the company's plans, objectives, expectations, and intentions, which are subject to risks and uncertainties.

Industry Context

AITX operates in the global security services market, focusing on disrupting the human security guard and physical security markets through AI-driven technologies and robotic solutions.

Comparison to Industry Standards

• AITX considers Knightscope as a near-competitor in the mobile security robotics market.
• AITX 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.

Stakeholder Impact

• Shareholders may experience dilution as a result of the offering.
• The offering may cause material declines in the trading price of AITX's common stock.
• The Selling Stockholder will pay less than the then-prevailing market price for AITX's common stock.
• AITX 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.
• AITX 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, AITX, Artificial Intelligence Technology Solutions, equity financing, registration statement, securities, offering