AITX registers 1.6B shares for resale by selling stockholder; no proceeds to company

This is a resale registration for up to 1,555,000,000 shares to be sold by Trillium Partners, LP (a selling stockholder), not a primary offering by the company. Trillium currently holds zero shares; the shares consist of 5,000,000 Commitment Shares and up to 1,550,000,000 Put Shares under a Purchase Agreement. All proceeds from sales go to the selling stockholder, not to AITX.

The company's common stock trades on the OTC Markets under symbol AITX at $0.0086 per share as of July 15, 2026. This is the reference price for the resale offering; the selling stockholder may sell at prevailing market prices.

Trillium Partners, LP is subject to a 4.99% beneficial ownership cap, meaning it cannot hold more than 4.99% of the company's outstanding shares at any given time. This cap limits how many shares Trillium can acquire and hold simultaneously under the Purchase Agreement, though it may sell shares and acquire more over time.

The company reported a GAAP net loss of approximately $6,130,886 for fiscal year ended February 28, 2026, bringing total accumulated deficit to approximately $171 million. This is the bottom-line loss figure after all expenses and other items.

Revenue grew 26% to $14,510,251, for fiscal 2026, with gross margin expanding from approximately 61% to 71%. Despite revenue growth and margin improvement, the company remains deeply unprofitable with a $14.5 million net loss.

The company burned $9,344,534 in operating cash flow during fiscal 2026 and has negative working capital of $17,017,745 as of February 28, 2026. Management states it does not anticipate positive cash flow from operations in the near future.

The company has funded operations through equity and debt issuances, including variable-priced instruments, and expects to continue relying on external financing including an equity line described elsewhere in the prospectus. This indicates ongoing dilution risk for existing shareholders.

The company claims it targets an approximately $50 billion U.S. market for security and guarding services with its AI-driven Solutions-as-a-Service model. This is the company's own market-size estimate, not an established fact.

This registration covers only secondary shares being sold by the Selling Stockholder. The company receives zero proceeds from these resales; all sale proceeds go to the selling stockholder, not to AITX.

The company has a separate put agreement with Trillium that could generate up to $10 million in gross proceeds over 36 months. However, the company states it does not expect to draw the full commitment amount based on historical trading volumes and agreement limitations.

Any proceeds from future put sales to Trillium will fund working capital and general corporate purposes including R&D, sales and marketing, device deployment capex, and debt repayment. The company has not allocated specific amounts to any particular use.

The company has entered into a Purchase Agreement for an equity line of credit that prices Put Shares at a 15% discount to market price during the pricing period. The structure includes 5,000,000 Commitment Shares issued upfront. The discount mechanism means dilution accelerates as the stock price falls — the company must issue more shares to raise the same dollar amount at lower prices.

The table illustrates dilution from selling $10,000,000 of Put Shares at three price scenarios, based on 387,232,589 shares outstanding as of July 1, 2026. At the assumed recent price of $0.1000, total issuance would be 122,647,059 shares (24.1% dilution). At 25% below recent price ($0.0750), dilution rises to 29.5%. At 50% below recent price ($0.0500), dilution reaches 38.3%. The scenarios show how the 15% discount amplifies dilution as the stock price declines.

The dilution calculations use a baseline of 387,232,589 shares of common stock outstanding as of June 1, 2026. The table adds the Put Shares and Commitment Shares to this baseline to calculate total shares outstanding after issuance and the resulting dilution percentages.

The company cautions that the dilution scenarios are illustrative only and actual dilution will depend on market prices during pricing periods and the amount of $ 33,672,294 Put Shares the company elects to sell. The table does not reflect beneficial ownership limitations, exchange caps, or other issuance limitations that may apply under the Purchase Agreement or listing rules, meaning actual dilution could differ materially.

The company reports accumulated deficit exceeding $176 million, total liabilities substantially exceeding total assets, and negative stockholders' equity. The auditor has expressed substantial doubt about the company's ability to continue as a going concern. These conditions raise material uncertainty about the company's ability to meet obligations as they come due.

The company reported a net loss of approximately $6,130,886 for the fiscal year ended February 28, 2026, and approximately $ 1,831,202 for the three months ended May 31, 2026. The company has not achieved profitability in any fiscal year, and operating expenses have consistently exceeded gross profit.

Approximately 96% of the company's loans payable is owed to entities controlled by a single individual (the CEO). This concentration creates refinancing risk and potential conflicts of interest between that lender and the broader shareholder base, as transactions may not be negotiated at arm's length.

One customer has previously accounted for approximately 47% of six-month revenue. The loss of one or more significant customers or a material reduction in subscription renewal rates could materially and adversely affect the company's revenue, cash flow, and operating results.

The company commenced commercial billing on ROAMEO in May 2026 after approximately $20 million in cumulative development investment. ROAMEO's commercial viability depends on continued reliable performance of autonomous navigation, sensors, connectivity, and AI integration in real-world conditions. Scaling to meet commercial demand will require significant production capacity expansion not yet demonstrated at commercial scale. Mechanical failures, software defects, or operational issues could damage reputation, result in contract terminations, and materially impair the company's ability to achieve revenue projections.

The company reported a net loss of approximately $14.5 million for fiscal 2026. As of February 28, 2026, it had an accumulated deficit of $171,121,742 and a total stockholders' deficit of $53,211,087, meaning liabilities exceeded assets by over $53 million.

96% of the company's total loans payable ($32,178,506 out of $33,672,294) is owed to companies controlled by a single individual, up from 87% the prior year. This extreme concentration creates dependency on one creditor and potential conflicts of interest.

The company had only $109,043 in cash as of February 28, 2026 (down from $865,975 the prior year), while total liabilities of $61,965,374 substantially exceeded total assets of $9,302,228. Operating activities consumed $9.3 million in cash during fiscal 2026.

Revenue grew 26% to $14,510,251, in fiscal 2026, but two customers accounted for approximately 55% of total revenue, creating significant customer concentration risk.

The company's debt bears interest at rates up to 22% per annum (mostly 12%), certain notes were in default as of February 28, 2026, and accrued interest payable totaled $11,393,658. Substantially all long-term debt matures in fiscal year ending February 29, 2028.

The company reports total loans payable of $33,672,294 as of February 28, 2026, with $9,483,914 classified as current (due within one year) and $24,188,380 as non-current. Multiple loans are marked with an asterisk indicating default status. The debt structure includes promissory notes, convertible notes, and business loans with interest rates ranging from 12% to 65%.

AITX settled a $4,790,185 debt (principal plus accrued interest) with a deceased lender's estate for only $420,000, resulting in a $4,370,185 gain on debt settlement. This court-approved settlement in August 2025 eliminated a significant liability at approximately 9 cents on the dollar.

The company entered into a business loan on December 17, 2025 with a 65% annual interest rate, receiving net proceeds of $300,000 after $105,060 in fees. The loan requires weekly repayments totaling $405,060 over approximately 40 weeks and is personally guaranteed by the CEO. As of February 28, 2026, $75,098 had been repaid.

Two convertible notes ($495,000 and $165,000) issued in December 2025 and February 2026 allow conversion at 80% of the lowest traded price over the prior 15 trading days after 180 days. This down-round conversion feature creates significant dilution risk for existing shareholders when the notes convert below market prices.

The company has a dual-class voting structure where Series E Preferred Stock carries twice the voting power of all other equity. The holder of 3,350,000 Series E shares controls 2/3 of total voting power, meaning public common shareholders have limited influence over corporate decisions regardless of their economic stake.

The company increased authorized common shares from 5 billion to 27.5 billion over three years (2022-2025), a 450% increase, reflecting repeated capital raises and dilution. A subsequent decrease to 12 billion was approved March 19, 2026 but did not become effective until July 15, 2026, after the fiscal year-end.

The company executed a 1-for-100 reverse stock split on February 5, 2026, reducing the share count by 99%. Reverse splits are typically undertaken to meet minimum price requirements or address low stock prices, and often signal financial distress or poor stock performance.

The company reported a GAAP net loss of $14,510,251 for the year ended February 28, 2026, down from $18,935,592 in the prior year. Despite the improvement, the company remains unprofitable and has incurred losses since inception, with cumulative net operating loss carryforwards of approximately $90,000,000 at February 28, 2026.

Trillium Partners LP is the sole selling stockholder, with Stephen Hicks controlling voting and disposition of the shares. The shares being registered are Commitment Shares and shares issuable upon the company's exercise of put rights under the Purchase Agreement.

The independent auditor L J Soldinger Associates issued an unqualified opinion on the consolidated financial statements for fiscal years ended February 28, 2026 and February 28, 2025, but included an explanatory paragraph raising substantial doubt about the company's ability to continue as a going concern. This flag indicates the auditor identified conditions (typically recurring losses, working capital deficiency, or liquidity issues) that cast doubt on the company's viability over the next twelve months.