AITX.OIDArtificial Intelligence Technology Solutions INC

S-1: Artificial Intelligence Technology Solutions Files S-1 for $30 Million Equity Offering Amidst Significant Losses and Going Concern Warning

Sentiment:

Registration Statement 20 June 2025 9:31 AM

📋All filings for Artificial Intelligence Technology Solutions INC

Artificial Intelligence Technology Solutions Inc. (AITX) has filed an S-1 registration statement to potentially sell up to 10 billion common shares to AIV Investments, LLC for up to $30 million, as the company continues to face substantial losses and its auditor expresses doubt about its ability to continue as a going concern.

Capital raiseThe company has entered into an Equity Financing Agreement with AIV Investments, LLC, allowing AITX to sell up to $30,000,000 of its common stock to AIV over a two-year period.Approximately $24 million remains to be issued under this arrangement as of September 2024.The company anticipates continuing to rely on sales of its securities, which may include common stock, preferred stock, convertible debt, and/or warrants, to fund its business operations.The common stock will be purchased by AIV at a discount to the prevailing market price, leading to potential dilution for existing shareholders.

Worse than expectedThe company's auditor has expressed substantial doubt about its ability to continue as a going concern.The company reported a significant accumulated deficit of $156,496,930 and negative working capital of $2,548,138.Despite revenue growth, the company continues to incur substantial net losses and negative cash flow from operations, indicating ongoing financial challenges.

Summary

AITX is registering up to 10 billion common stock shares for resale by AIV Investments, LLC, from which AITX may receive up to $30 million in gross proceeds through an Equity Financing Agreement.
The company reported total revenue of $6,130,886 for the year ended February 28, 2025, a 175% increase from $2,227,559 in the prior year.
Gross profit significantly increased by 562% to $3,744,564 for the year ended February 28, 2025, up from $565,817 in the previous year, with gross profit margin improving to 61% from 25%.
Despite revenue growth, the company incurred a net loss of $18,935,592 for the year ended February 28, 2025, a slight improvement from a net loss of $20,708,716 in the prior year.
The company had negative cash flow from operating activities of $12,196,388 and an accumulated deficit of $156,496,930 as of February 28, 2025.
Working capital remained negative at $2,548,138 as of February 28, 2025, though an improvement from negative $18,099,085 in the prior year.
The auditor has expressed substantial doubt about AITX's ability to continue as a going concern.
AITX's business focuses on applying AI and robotic solutions for security and monitoring, with products like SARA (Agentic AI platform), ROSA, RIO, AVA, TOM, RADCam, ROAMEO, RADDOG LE2, HERO (under development), ROSS, and RAM.
The CEO, Steven Reinharz, holds 2/3rds of the voting power due to ownership of Series E Preferred Stock, giving him substantial control.
The company achieved SOC 2 Type 2 status in February 2025, demonstrating commitment to data protection and internal processes.

Sentiment

Score: 3

Explanation: While the company shows strong revenue and gross profit growth, and has innovative products, the persistent substantial net losses, significant accumulated deficit, negative working capital, and the auditor's going concern warning indicate severe financial instability and high operational risk. The reliance on dilutive equity financing and the CEO's concentrated voting power further contribute to a negative sentiment for investors.

Positives

Total revenue increased by 175% to $6,130,886 for the year ended February 28, 2025, compared to $2,227,559 in the prior year.
Gross profit increased by 562% to $3,744,564 for the year ended February 28, 2025, from $565,817 in the prior year.
Gross profit percentage improved significantly to 61% for the year ended February 28, 2025, up from 25% in the prior year, driven by higher-margin rental activities and better overhead allocation.
Net loss decreased by 9% to $18,935,592 for the year ended February 28, 2025, compared to $20,708,716 in the prior year.
The company achieved SOC 2 Type 2 status in February 2025, indicating strong data protection and internal process compliance.
Management reports a growing sales funnel in both quantity and quality, with improving conversion rates from opportunities to clients.
The company has secured an Equity Financing Agreement with AIV Investments, LLC for up to $30,000,000 over a two-year period, with approximately $24 million remaining to be issued.
Customer acceptance of RAD solutions is noted, with deployments in Fortune Top 10 and other Fortune 500 companies across various industries.
The company's CEO, Steven Reinharz, holds a prominent role as a spokesperson for AI in the security industry and was elected to the Security Industry Association (SIA) Board.

Negatives

The company reported a net loss of $18,935,592 for the year ended February 28, 2025, and has an accumulated deficit of $156,496,930.
Negative cash flow from operating activities was $12,196,388 for the year ended February 28, 2025.
The company has negative working capital of $2,548,138 as of February 28, 2025.
The auditor has expressed substantial doubt about the company's ability to continue as a going concern.
The company does not anticipate having positive cash flow from operations in the near future and lacks resources to repay all credit/debt obligations or fully implement its business plan without additional capital.
Operating expenses increased by $3,126,208 (22%) to $17,691,437 for the year ended February 28, 2025, primarily due to increased general and administrative expenses.
Stock-based compensation and deferred CEO bonuses significantly contributed to increased general and administrative expenses.
The company's common stock trades on the OTC Pink and is subject to SEC's penny stock rules, which may limit trading activity and liquidity.
The CEO holds 2/3rds of the voting power through Series E Preferred Stock, limiting common shareholders' voting control and creating potential conflicts of interest.
Future equity offerings, including the current S-1 filing, are expected to cause substantial dilution to common stock shareholders.
The company does not anticipate paying dividends in the foreseeable future.

Risks

The business is at an early stage and has not yet generated any profits, with a limited operating history.
The auditor has expressed substantial doubt about the company's ability to continue as a going concern due to negative cash flow, accumulated deficit, and negative working capital.
Financial results are expected to fluctuate and are difficult to predict due to limited operating history and evolving markets.
The company has a limited number of deployments, and its success depends on an unproven market for advanced physical security technology.
Inability to effectively manage growth could strain management, operational, and financial resources.
Costs may grow more quickly than revenues, harming business and profitability.
Loss of key personnel (Steven Reinharz, Anthony Brenz, Mark Folmer) or failure to attract and retain qualified personnel could harm the business.
Lack of independent audit, compensation, or nomination committees means shareholders rely on the sole, non-independent director for these functions.
Inability to protect intellectual property (no patents filed as of report date) could diminish brand value and adversely affect business.
General economic factors, including macroeconomic conditions and geopolitical events (e.g., Russia-Ukraine conflict), may negatively affect operations.
Future reoccurrence of the COVID-19 pandemic could adversely affect business, financial condition, and results of operations (e.g., higher shipping/labor costs, supply chain issues).
Business is subject to data security risks, including security breaches, which could damage brand and increase costs.
Business success depends largely on the success of efforts to lease products through dealerships, with no assurance of securing sufficient agreements.
Current and future competition may harm business prospects and operations, especially from better-capitalized competitors.
Ability to operate and collect digital information is dependent on evolving privacy laws and client corporate policies, which may limit deployment.
An investment in the company's securities is highly speculative, with no assurance of return and risk of losing the entire investment.
Common stock shareholders lack voting control due to the CEO's ownership of Series E Convertible Preferred Stock (2/3rds voting power).
Future offerings, including the current S-1, will dilute common stock, and the company anticipates continuing to rely on sales of securities.
Failure or inability to raise capital when needed or on acceptable terms could have a material adverse effect on the business and stock price.
Debt financing may involve significant restrictive covenants, and there's no assurance such financing will be available on satisfactory terms.
The trading price of common stock may fluctuate significantly due to various internal and external factors.
Difficulty selling stock in public markets due to the company's small size, limited operating history, and lack of analyst/institutional coverage.
Common shares are subject to SEC's penny stock rules and FINRA sales practice requirements, limiting trading activity and liquidity.
The company does not anticipate paying dividends in the future, meaning returns depend solely on stock appreciation.
Significant ongoing costs will be incurred to ensure compliance with U.S. corporate governance and accounting requirements.
Sales of shares by AIV Investments, LLC under the Equity Financing Agreement may cause material decreases in stock price and decrease percentage ownership of other shareholders.
Funding from the Purchase Agreement with AIV may be limited or insufficient to fund operations or implement strategy due to various conditions and limitations.
The Selling Stockholder (AIV) has a financial incentive to sell common stock immediately upon receiving shares due to purchasing at a discount, which could further depress the stock price.
Management has broad discretion in the use of net proceeds from sales to AIV, which may not align with investor desires or maximize returns.

Future Outlook

Management aims to grow revenues, achieve positive cash flow, reduce debt, and prepare for an uplist to Nasdaq, targeted for 2026. They estimate that with continued reasonable performance, the company could obtain and maintain profitability while working to pay down debt in preparation for the Nasdaq uplist. The company expects economies of scale to drive greater gross margin as quantities and efficiencies increase in manufacturing and assembly. They anticipate continuing to rely on sales of securities, including common stock, preferred stock, convertible debt, and/or warrants, to fund operations.

Management Comments

"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."
"AITX isn't following trends, its setting them, delivering intelligent security where traditional models can't keep up."
"AI doesn't just assist, it now observes, decides, and acts on our behalf faster, more accurately, and more consistently."
"Management feels that ironing out technical and production challenges are well in hand and clearing the way for a greater volume of deployments."
"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."

Industry Context

AITX operates in the rapidly transforming global security industry, targeting the human security guard and physical security markets, which are approaching $1 trillion. The industry is shifting away from traditional, labor-intensive models towards AI-driven, autonomous solutions due to labor shortages, rising costs, and demand for real-time responsiveness. AITX positions itself as a leader in this shift, offering integrated hardware, software, and AI solutions that provide proactive detection, communication, and deterrence, aiming to redefine security rather than just compete within existing paradigms. The company highlights the accelerating global market for AI agents and AI in video surveillance, indicating strong tailwinds for its product categories.

Comparison to Industry Standards

AITX's solutions are unique in starting with AI-driven autonomous response, easily connecting to a human operator as needed, differentiating from passive monitoring systems.
SARA, AITX's Agentic AI platform, is noted as unique for combining voice AI, situational logic, and autonomous action at scale, unlike other security solutions.
ROSA is stated to outperform legacy cameras and passive systems by actively preventing incidents, not just recording them, and replaces the cost and complexity of security guards or video monitoring services.
RIO eliminates the need for expensive guard posts or legacy, non-AI trailer systems, offering autonomous detection, analysis, and engagement.
AVA replaces or enhances traditional guard shacks by automating entry verification, offering a modern solution without the high cost of traditional gate staffing.
TOM offers a professional, scalable, and cost-efficient alternative to staffed front desks, combining interactive engagement, ID verification, and real-time escalation.
RADCam is designed to engage, respond, and help resolve situations in real time, unlike security cameras that 'just watch'.
ROAMEO offers round-the-clock coverage with intelligent, autonomous decision-making, detecting, speaking, escalating, and alerting while on the move, unlike traditional security patrols or static surveillance systems.
RADDOG LE2 combines utility with approachability, making it ideal for law enforcement agencies looking to modernize and humanize their security and public safety efforts.
HERO, once launched, is expected to redefine physical security by offering a humanoid presence with conversational intelligence and autonomous patrol capabilities, a combination not offered by other security robots.
ROSS works with existing IP security cameras, transforming them into proactive security tools, unlike most analytics platforms that require proprietary cameras or expensive upgrades.
RAM provides plug-and-play simplicity, AI intelligence, and voice engagement to existing security cameras, offering a direct path to upgrading infrastructure without overhauling entire systems.
AITX's Firearm Detection focuses on clear, visible threats and reacts instantly, integrated across its device lineup and analytics platform, offering a real-time response capability unmatched by others.
The company claims 'No VC Dependence' and 'Speed to Market' (weeks, not quarters) as competitive advantages over many AI startups that offer software-only solutions without deployment infrastructure.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Committee Structure	The company does not have separately designated audit, compensation, or nominating and corporate governance committees. These functions are performed by the Board of Directors as a whole, which consists of only two directors, neither of whom is independent.	NA	This structure lacks independent oversight, which could lead to conflicts of interest and potentially less robust decision-making regarding financial reporting, executive compensation, and director nominations. It may also hinder the ability to attract independent directors.
Director Independence	The company currently has an employee director (Steven Reinharz) but no independent directors, as defined by NASDAQ listing standards. They do not anticipate appointing additional directors in the near future.	NA	Lack of independent directors raises concerns about corporate governance best practices and the ability to provide unbiased oversight of management. This is a common characteristic of small, early-stage companies but poses risks.
Authorized Common Stock Increase	The Board of Directors approved and a consenting shareholder authorized an increase in authorized common stock by 5 billion shares to a total of 20 billion shares. The state of Nevada approved this increase.	2025-03-04	This increase provides the company with more flexibility to issue shares for financing, including the current equity financing agreement, but significantly increases the potential for future shareholder dilution.

Legal Proceedings

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. The company believes the claim is without merit but has been mandated to mediation, with a settlement appearing likely in the near future.

Related Party Transactions

Loan payable to a related party was $329,365 as of February 28, 2025, including $190,013 of deferred salary bearing 12% interest.
Net accrual of $1,663,833 in deferred compensation for the CEO for the year ended February 28, 2025, bringing his annual bonus to $2.5 million (of which $836,167 was paid out).
Accrued 1,500 Series G shares totaling $1,500,000 for incentive compensation plan payable for the year ended February 28, 2025.
Charged $2,541,180 in consulting fees for research and development to a company partially owned by a principal shareholder for the year ended February 28, 2025. The principal shareholder received no compensation from this company.
Approximately 87% of total loans payable ($28,581,506 out of $32,801,345) as of February 28, 2025, are to companies controlled by one individual.

Stakeholder Impact

**Shareholders**: Face significant dilution risk from the current and future equity offerings, especially given the large number of shares being registered. Common shareholders also lack voting control due to the CEO's preferred stock holdings. The penny stock rules and FINRA requirements may limit liquidity for common stock.
**Employees**: The company maintains a 'high-EQ work culture' and considers employee relations 'excellent'. Stock-based compensation plans are in place, but some options were forfeited due to terminations. Deferred compensation for the CEO indicates a commitment to key management.
**Customers**: Benefit from the company's focus on AI-driven security solutions, which aim to solve problems like high staffing costs and slow human response times. The company's SOC 2 Type 2 status enhances trust in data security. However, the company's going concern risk could impact long-term service continuity.
**Creditors**: The company has substantial debt, with a significant portion owed to companies controlled by one individual. Management expects to push out debt deadlines and confirms lender support, but the going concern warning indicates repayment challenges.
**Suppliers**: The company relies on various domestic and overseas machine shops for parts, with redundancy in sourcing. Continued financial instability could pose risks to timely payments to suppliers.

Next Steps

Continue to grow revenues and achieve positive cash flow.
Reduce debt in preparation for a Nasdaq uplist.
Target Nasdaq uplist for 2026.
Continue to focus on current product development and improvements.
Address dealer performance issues within the sales network.
Implement initiatives to encourage the security industry to adopt new technologies more readily.
Resolve missed monthly payments with a lender (Promissory Note 22).

Key Dates

Date	Description
2010-03-25	Artificial Intelligence Technology Solutions Inc. (formerly On the Move Systems Corp.) incorporated in Florida.
2015-02-17	Artificial Intelligence Technology Solutions Inc. reincorporated in Nevada.
2016-07-26	Robotic Assistance Devices, LLC (RAD) incorporated in Nevada.
2016-12-01	RAD entered into a vehicle loan for $47,704.
2017-07-25	Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc. (RAD).
2017-08-27	AITX completed the acquisition of RAD.
2017-11-01	RAD entered into another vehicle loan for $47,661.
2018-08-24	On the Move Systems Corp. changed its name to Artificial Intelligence Technology Solutions Inc. (AITX).
2019-02-01	Company entered into an agreement with an investor for deferred variable payment obligation.
2019-05-09	Company entered into two similar deferred variable payment arrangements with two investors.
2019-11-18	Company entered into another deferred variable payment arrangement with the February 1, 2019 investor.
2019-12-30	Company entered into another deferred variable payment arrangement with a new investor.
2020-04-22	Company entered into another deferred variable payment arrangement with the first May 9, 2019 investor.
2020-07-01	Company entered into a similar deferred variable payment agreement with the first investor.
2020-08-27	Company and the first investor consolidated three separate deferred variable payment agreements into a new agreement.
2021-03-01	The first investor revised their deferred variable payment agreements.
2021-03-02	Steven Reinharz became CEO and Director.
2021-03-09	Company entered into a 10-year lease agreement for a manufacturing facility.
2021-04-09	Steven Reinharz entered into an employment agreement with the Company as CEO.
2021-04-14	Shareholders of Series E Preferred Stock and Board approved and adopted the 2021 Incentive Stock Plan.
2021-04-26	Anthony Brenz appointed as Chief Financial Officer; Steven Reinharz resigned as CFO.
2021-07-12	Company and CEO amended the April 9, 2021 Employment Agreement.
2021-09-29	Company entered into a 3-year lease agreement for a vehicle.
2022-07-07	Company increased authorized common shares from 5 billion to 6 billion.
2022-08-10	Company amended the 2021 Incentive Stock Plan, increasing maximum shares to 100 million.
2022-10-28	Company entered into a loan facility with a lender for up to $4,000,000.
2022-12-23	Company entered into a Simple Agreement for Future Equity (SAFE) contract to invest $50,000.
2023-03-18	Company increased authorized common shares from 6 billion to 7.225 billion.
2023-08-14	Company further amended the 2021 Incentive Stock Plan, increasing maximum shares to 200 million.
2023-08-29	Company increased authorized common shares from 7.225 billion to 10 billion.
2023-09-01	Company issued 114,217,035 shares to 48 employees as an addition to the Incentive Stock Option Plan.
2023-11-28	Maturity dates for several promissory notes (2, 3, 6, 7, 8, 9, 10) extended to March 1, 2025.
2023-11-29	Maturity dates for several promissory notes (15, 17, 18, 19) extended to March 1, 2025.
2023-11-30	Company entered into a purchase agreement where a lender will pay $350,000 for future monthly payments.
2024-01-26	Company added Objective #10 to CEO's employment agreement, effective March 1, 2022.
2024-02-04	Company entered into a 3-year lease agreement for a vehicle.
2024-03-01	ASU 2020-06 adoption adjustment to accumulated deficit of $4,175,535.
2024-03-08	Company entered into another agreement where a lender will pay $350,000 for future monthly payments.
2024-03-21	Company increased authorized common shares from 10 billion to 12.5 billion.
2024-04-27	Company created a new class of Series B Convertible Redeemable Preferred Shares and issued 300 shares.
2024-04-30	Company increased authorized Series F Preferred Shares to 10,000.
2024-06-03	Company acquired a $50,000 convertible note receivable from Nightingale Intelligent Systems, Inc.
2024-07-28	Company fully redeemed outstanding Series B shares.
2024-08-08	A Series F preferred shareholder exchanged 20 Series F preferred shares for a $400,000 note payable.
2024-08-22	Lender exchanged $200,000 of note principal for 57,142,857 common shares.
2024-09-01	Company entered into an equity financing agreement with an investor to purchase up to $30,000,000 of common stock over two years.
2024-09-24	A prospective lender filed a claim against the Company for alleged breach of a non-binding term sheet.
2024-10-03	Company increased authorized common shares from 12.5 billion to 15 billion.
2024-12-16	Lender exchanged the remaining $200,000 of note principal for 76,923,076 common shares, fully repaying the note.
2025-01-03	Company exchanged its convertible note receivable for Series A preferred shares, common shares, and common share warrants.
2025-02-10	Company created a new class of Series C Convertible Redeemable Preferred Shares and issued 306 shares.
2025-02-11	Company repaid $162,000 of Promissory Note (9) through the issuance of 60,000,000 common shares.
2025-02-20	Company increased authorized common shares from 15 billion to 20 billion.
2025-02-28	Fiscal year end for Artificial Intelligence Technology Solutions Inc.
2025-03-04	Company filed a Schedule 14C Definitive Information Statement to increase authorized common stock to 20 billion shares.
2025-05-27	Company entered into an Amended Equity Financing Agreement with an investor for up to $30,000,000.
2025-05-28	Number of common stock holders reported as of this date.
2025-05-29	Date of the Independent Registered Public Accounting Firm's Consent report.
2025-06-13	Artificial Intelligence Technology Solutions, Inc. filed a Form S-1 Registration Statement relating to the sale by GHS Investments, LLC.
2025-06-16	Company and AIV Investments, LLC executed identical agreements superseding the GHS agreements; GHS agreements terminated.
2025-06-18	Company filed an S-1 Registration Withdrawal Request for the June 13, 2025 S-1; Date of this prospectus.

Recommendation

sell

Keywords

Artificial Intelligence, Robotics, Security Solutions, Physical Security, Autonomous Devices, AI-powered Security, SARA Agentic AI, ROSA, RIO, AVA, TOM, RADCam, ROAMEO, RADDOG LE2, HERO, ROSS, RAM, Firearm Detection, Security Services Market, Recurring Monthly Revenue, SEC Filing, S-1 Registration, Equity Financing, Going Concern, Dilution, OTC Pink, Corporate Governance, Risk Management

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