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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Artificial Intelligence Technology Solutions Inc (PK) | USOTC:AITX | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.0003 | -6.67% | 0.0042 | 0.0042 | 0.005 | 0.0046 | 0.0042 | 0.0045 | 65,377,116 | 21:59:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
FOR THE QUARTERLY PERIOD ENDED
OR
FOR THE TRANSITION PERIOD FROM _______________ TO _______________
COMMISSION FILE NUMBER:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification Number) | |
(Address of principal executive offices) | (Zip code) |
(
(Registrant’s telephone number, including area code)
not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | [_] | Accelerated filer | [_] | |
[X] | Smaller reporting company | |||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [_]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
shares of common stock were issued and outstanding as of September 26, 2023.
Table of Contents
- 2 -
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
* | |||||||
August 31, 2023 | February 28, 2023* | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash | $ | $ | |||||
Accounts receivable, net | |||||||
Device parts inventory, net | |||||||
Prepaid expenses and deposits | |||||||
Total current assets | |||||||
Operating lease asset | |||||||
Revenue earning devices, net of accumulated depreciation of $ |
|||||||
Fixed assets, net of accumulated depreciation of $ |
|||||||
Trademarks | |||||||
Investment at cost | |||||||
Security deposit | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | $ | |||||
Advances payable- related party | |||||||
Customer deposits | |||||||
Current operating lease liability | |||||||
Current portion of deferred variable payment obligation | |||||||
Loan payable - related party | |||||||
Incentive compensation plan payable | |||||||
Current portion of loans payable, net of discount of $ |
|||||||
Vehicle loan - current portion | |||||||
Current portion of accrued interest payable | |||||||
Total current liabilities | |||||||
Non-current operating lease liability | |||||||
Loans payable, net of discount of $ |
|||||||
Deferred variable payment obligation | |||||||
Accrued interest payable | |||||||
Total liabilities | |||||||
Commitments and Contingencies | |||||||
Stockholders' deficit: | |||||||
Preferred Stock, undesignated; shares authorized; shares issued and outstanding at August 31, 2023 and February 28, 2023, respectively | |||||||
Series G Convertible Preferred Stock. $ par value; shares authorized, shares issued and outstanding at August 31, 2023 and February 28, 2023, respectively | |||||||
Series E Preferred Stock, $ par value; shares authorized; and shares issued and outstanding, respectively | |||||||
Series F Convertible Preferred Stock, $ par value; shares authorized; and shares issued and outstanding, respectively | |||||||
Common Stock, $ par value; shares authorized and shares issued, issuable and outstanding, respectively | |||||||
Additional paid-in capital | |||||||
Preferred stock to be issued | |||||||
Accumulated deficit | ( |
) | ( |
) | |||
Total stockholders' deficit | ( |
) | ( |
) | |||
Total liabilities and stockholders' deficit | $ | $ |
* |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
- 3 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended |
Three Months Ended |
Six Months Ended |
Six Months Ended |
||||||||||
August 31, 2023 | August 31, 2022 | August 31, 2023 | August 31, 2022 | ||||||||||
Revenues | $ | $ | $ | $ | |||||||||
Cost of Goods Sold | |||||||||||||
Gross Profit | |||||||||||||
Operating expenses: | |||||||||||||
Research and development (Note 10) | |||||||||||||
General and administrative | |||||||||||||
Depreciation and amortization | |||||||||||||
Operating lease cost and rent | |||||||||||||
Total operating expenses | |||||||||||||
Loss from operations | ( |
) | ( |
) | ( |
) | ( |
) | |||||
Other income (expense), net: | |||||||||||||
Change in fair value of derivative liabilities | |||||||||||||
Interest expense | ( |
) | ( |
) | ( |
) | ( |
) | |||||
Gain (loss) on settlement of debt | |||||||||||||
Total other expense net | ( |
) | ( |
) | ( |
) | ( |
) | |||||
Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
Net loss per share - basic | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
Net loss per share - diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
Weighted average common share outstanding - basic | |||||||||||||
Weighted average common share outstanding - diluted |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
- 4 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ DEFICIT
(Unaudited)
Series E | Series F | Additional | Total | ||||||||||||||||||||||
Preferred Stock | Preferred Stock | Common Stock | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | |||||||||||||||||
Balance at February 28, 2022 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||
Issuance of shares, net of $ |
— | — | |||||||||||||||||||||||
Rounding | — | — | — | ( |
) | ( |
) | ||||||||||||||||||
Net income | — | — | — | ( |
) | ( |
) | ||||||||||||||||||
Balance at May 31, 2022 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||
Issuance of shares, net of $ |
— | — | |||||||||||||||||||||||
Cashless exercise of warrants | — | — | ( |
) | |||||||||||||||||||||
Relative fair value of warrants issued with debt | — | — | — | ||||||||||||||||||||||
Cancelled shares | — | — | ( |
) | ( |
) | |||||||||||||||||||
Exchange of warrants for debt | — | — | — | ( |
) | ( |
) | ||||||||||||||||||
Shares as payment for services | — | — | |||||||||||||||||||||||
Net income | — | — | — | ( |
) | ( |
) | ||||||||||||||||||
Balance at August 31, 2022 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
- 5 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ DEFICIT
(Unaudited)
Series E | Series F | Additional | Total | ||||||||||||||||||||||
Preferred Stock | Preferred Stock | Common Stock | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | |||||||||||||||||
Balance at February 28, 2023 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||
Issuance of shares, net of $ |
— | — | |||||||||||||||||||||||
Relative fair value of Series F warrants issued with loans payable | — | — | — | ||||||||||||||||||||||
Stock based compensation | — | — | — | ||||||||||||||||||||||
Net income | — | — | — | ( |
) | ( |
) | ||||||||||||||||||
Balance at May 31, 2022 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||
Issuance of shares, net of $ |
— | — | |||||||||||||||||||||||
Shares as payment for services | — | — | |||||||||||||||||||||||
Stock based compensation | — | — | — | ||||||||||||||||||||||
Net income | — | — | — | ( |
) | ( |
) | ||||||||||||||||||
Balance at August 31, 2023 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
- 6 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended August 31, 2023 |
Six Months Ended August 31, 2022 |
||||||
CASH FLOWS USED IN OPERATING ACTIVITIES: | |||||||
Net loss | $ | ( |
) | $ | ( |
) | |
Adjustments to reconcile net income to net cash used in operating activities: | |||||||
Depreciation and amortization | |||||||
Bad debts expense | |||||||
Inventory provision | |||||||
Reduction of right of use asset | |||||||
Accretion of lease liability | |||||||
Stock based compensation | |||||||
Change in fair value of derivative liabilities | ( |
) | |||||
Amortization of debt discounts | |||||||
(Gain) loss on settlement of debt | (38,740 | ) | (3,992 | ) | |||
Increase in related party accrued payroll and interest | |||||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | ( |
) | ( |
) | |||
Prepaid expenses | ( |
) | ( |
) | |||
Device parts inventory | ( |
) | ( |
) | |||
Accounts payable and accrued expenses | |||||||
Customer deposits | ( |
) | |||||
Operating lease liabilities | ( |
) | ( |
) | |||
Current portion of deferred variable payment obligation for payments | |||||||
Accrued interest payable | |||||||
Net cash used in operating activities | ( |
) | ( |
) | |||
CASH FLOWS USED IN INVESTING ACTIVITIES: | |||||||
Purchase of fixed assets | ( |
) | ( |
) | |||
Net cash used in investing activities | ( |
) | ( |
) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Share proceeds net of issuance costs | |||||||
Proceeds from loans payable | |||||||
Repayment of loans payable | ( |
) | ( |
) | |||
Proceeds from convertible debt and warrants issued | |||||||
Net cash provided by financing activities | |||||||
Net change in cash | ( |
) | |||||
Cash, beginning of period | |||||||
Cash, end of period | $ | $ | |||||
Supplemental disclosure of cash and non-cash transactions: | |||||||
Cash paid for interest | $ | $ | |||||
Cash paid for income taxes | $ | $ | |||||
Noncash investing and financing activities: | |||||||
Transfer from device parts inventory to revenue earning devices | $ | $ | |||||
Exchange of warrants for debt | $ | — | $ | 3,000,000 | |||
Discount applied to face value of loans | $ | $ | |||||
Exercise of warrants | $ | — | $ | 97 | |||
Series F warrants issued as part of debt | $ | $ | |||||
Shares issued for services | $ | 44,460 | $ | — | |||
Cancellation of Series E preferred shares and common shares | $ | — | $ | 171 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
- 7 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL INFORMATION
Artificial Intelligence Technology Solutions Inc. (“AITX” or the “Company”) was incorporated in Florida on March 25, 2010 and reincorporated in Nevada on February 17, 2015. On August 24, 2018, Artificial Intelligence Technology Solutions Inc., changed its name from On the Move Systems Corp (“OMVS”).
Robotic Assistance Devices, LLC (“RAD”), was incorporated in the State of Nevada on July 26, 2016 as a Limited Liability Company. On July 25, 2017, Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc., through the issuance of
common shares to its sole shareholder.
On August 28, 2017, AITX completed the acquisition of RAD (the “Acquisition”), whereby AITX acquired all the ownership and equity interest in RAD for
shares of AITX Series E Preferred Stock and shares of Series F Convertible Preferred Stock. AITX’s prior business focus was transportation services, and was exploring the on-demand logistics market by developing a network of logistics partnerships. As a result of the closing of the Acquisition, AITX has succeeded to the business of RAD, and AITX’s business going forward will consist of one segment activity, which is the delivery of artificial intelligence and robotic solutions for operational, security and monitoring needs.
The Acquisition was treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes since substantially all of AITX’s operations were disposed of as part of the consummation of the transaction. Therefore, no goodwill or other intangible assets were recorded by AITX 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. As a result, the assets and liabilities and the historical operations that are reflected in these financial statements are those of RAD as if RAD had always been the reporting company.
2. GOING CONCERN
The accompanying unaudited 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 six months ended August 31, 2023, the Company
had negative cash flow from operating activities of $
The Company does not have the resources at this time to repay 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.
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 March 2023, the Company entered into an equity financing agreement whereby an
investor will purchase up to $
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. The Company this fiscal quarter through to September 26, 2023 has raised an additional
$
- 8 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and in conformity with the condensing instructions on Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto in the Company’s latest Annual Report filed with the SEC on Form 10-K as filed on June 14, 2023. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Robotic Assistance Devices, Inc., Robotic Assistance Devices Group , Inc, Robotic Assistance Devices Mobile, Inc., On the Move Experience, LLC and On the OMV Transports, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the six months ended August 31, 2023 are not necessarily indicative of the results that may be expected for the entire year.
Use of Estimates
In order to prepare financial statements in conformity with accounting principles 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 preferred stock and derivative liabilities.
Concentrations
Loans payable
At August 31, 2023 there were $
Cash
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market instruments. The Company places its cash and cash equivalents with high-quality, U.S. financial institutions and, to date has not experienced losses on any of its balances.
Accounts Receivable
Accounts receivable are comprised of balances due
from customers, net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated,
and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. There was an allowance of $ and
$ provided as of August 31, 2023 and February 28, 2023, respectively. For the three months ended August 31, 2023 , two customers
account for
Device Parts Inventory
Device parts inventory is stated at the lower of cost
or net realizable value using the weighted average cost method. The Company records a valuation reserve for obsolete and slow-moving inventory,
relying principally on specific identification of such inventory. The Company uses these device parts in the assembly of revenue earning
devices (and demo devices) as well as research and development. Depending on use, the Company will transfer the parts to the corresponding
asset or expense if used in research and development. A charge to income is taken when factors that would result in a need for an
increase in the valuation, such as excess or obsolete inventory, are noted. As of August 31, 2023 and February 28, 2023 there was a valuation
reserve of $
- 9 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Revenue Earning Devices
Revenue earning devices are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of 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 to years. Major repairs or improvements are capitalized. Minor replacements and maintenance and repairs which do not improve or extend asset lives are expensed currently.
Computer equipment and software | or years | |
Office equipment | ||
Manufacturing equipment | ||
Warehouse equipment | ||
Tooling | ||
Demo Devices | ||
Vehicles | ||
Leasehold improvements | years, the life of the lease |
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 August 31, 2023 and February 28, 2023, the Company
had
Contingencies
Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.
Sales of Future Revenues
The Company has entered into transactions, as more fully described in footnote 8, 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:
- 10 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
● | 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 is 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.
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. The Company adopted Topic 606 on March 1, 2018, using
the modified retrospective method. Under the modified retrospective method, prior period financial positions and results will not be adjusted.
There was no cumulative effect adjustment recognized as a result of this adoption. Refer to Note 4 – Revenue from Contracts with
Customers for additional information. For the six months ended August 31, 2023 , customers accounted for
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
On December 22, 2017, the Tax Cuts and Jobs Act (“Tax
Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws
and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation
is enacted.
Leases
Lease agreements are evaluated to determine if they are sales/finance leases meeting any of the following criteria at inception: (a) transfer of ownership of the underlying asset; (b) purchase option that is reasonably certain of being exercised; (c) the lease term is greater than a major part of the remaining estimated economic life of the underlying asset; or (d) if the present value of the sum of lease payments and any residual value guaranteed by the lessee that has not already been included in lease payments in accordance with ASC 842-10-30-5(f) equals or exceeds substantially all of the fair value of the underlying asset.
- 11 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
If at its inception, a lease meets any of the four lease criteria above, the lease is classified by the Company as a sales/finance; and if none of the four criteria are met, the lease is classified by the Company as an operating lease.
Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term, whereby an equal amount of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in the later years. The difference between rent expense recognized and actual rental payments is recorded as deferred rent and included in liabilities.
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 Chief Executive Officer/ Chairman holds sufficient shares of the Company’s voting preferred stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO/ 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:
- 12 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
● | 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:
Fair Value Measurement Using | |||||||||||||
Amount at Fair Value |
Level 1 | Level 2 | Level 3 | ||||||||||
August 31, 2023 | |||||||||||||
Liabilities | |||||||||||||
Incentive compensation plan payable- revaluation of equity awards payable in Series G shares | $ | $ | $ | $ | |||||||||
February 28, 2023 | |||||||||||||
Liabilities | |||||||||||||
Incentive compensation plan payable- revaluation of equity awards payable in Series G shares | $ | $ | $ | $ |
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.
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.
- 13 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Recently Issued Accounting Pronouncements
Recently Issued Accounting Standards Not Yet Adopted
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. Adoption of the standard requires using either a modified retrospective or a full retrospective approach. Management is currently evaluating the effect of these provisions on the Company’s financial position and results of operations.
4. REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue is earned primarily from two sources: 1) direct sales of goods or services and 2) short-term rentals. Direct sales of goods or services are accounted for under Topic 606, and short-term rentals are accounted for under Topic 842 (which addresses lease accounting and was adopted on March 1, 2019).
As disclosed in the revenue recognition section of Note 3 – Accounting Polices, the Company adopted Topic 606 in accordance with the effective date on March 1, 2018. Note 3 includes disclosures regarding the Company’s method of adoption and the impact on the Company’s financial statements. Revenue is recognized on direct sales of goods or services 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.
After adopting Topic 842, also referred to above in Note 3, the Company is accounting for revenue earned from rental activities where an identified asset is transferred to the customer and the customer has the ability to control that asset. The Company recognizes revenue from its device rental activities when persuasive evidence of a contract exists, the performance obligations have been satisfied, the transaction price is fixed or determinable and collection is reasonably assured. Performance obligations associated with device rental transactions are satisfied over the rental period. Rental periods are short-term in nature. Therefore, the Company has elected to apply the practical expedient which eliminates the requirement to disclose information about remaining performance obligations. Payments are due from customers at the completion of the rental, except for customers with negotiated payment terms, generally net 30 days or less, which are invoiced and remain as accounts receivable until collected.
The following table presents revenues from contracts with customers disaggregated by product/service:
Three Months Ended |
Three Months Ended |
Six Months Ended |
Six Months Ended |
||||||||||
August 31, 2023 | August 31, 2022 | August 31, 2023 | August 31, 2022 | ||||||||||
Device rental activities | $ | $ | $ | $ | |||||||||
Direct sales of goods and services | |||||||||||||
Revenues | $ | $ | $ |
- 14 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. LEASES
We lease certain warehouses, and office space. Leases with an initial term of months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, we did not combine lease and non-lease components.
There is no lease renewal. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.
Below is a summary of our lease assets and liabilities at August 31, 2023 and February 28, 2023.
Leases | Classification | August 31, 2023 | February 28, 2023 | ||||||
Assets | |||||||||
Operating | Operating Lease Assets | $ | $ | ||||||
Liabilities | |||||||||
Current | |||||||||
Operating | Current Operating Lease Liability | $ | $ | ||||||
Noncurrent | |||||||||
Operating | Noncurrent Operating Lease Liabilities | ||||||||
Total lease liabilities | $ | $ |
Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate of 10% which for the leases noted above was based on the information available at commencement date in determining the present value of lease payments. We compare against loans we obtain to acquire physical assets and not loans we obtain for financing. The loans we obtain for financing are generally at significantly higher rates and we believe that physical space or vehicle rental agreements are in line with physical asset financing agreements. CAM charges were not included in operating lease expense and were expensed in general and administrative expenses as incurred.
Rent expense and operating lease cost was $
6. REVENUE EARNING DEVICES
Revenue earning devices consisted of the following:
August 31, 2023 | February 28, 2023 | ||||||
Revenue earning devices | $ | $ | |||||
Less: Accumulated depreciation | ( |
) | ( |
) | |||
Total | $ | $ |
During the three and six months ended August 31, 2023
the Company made total additions to revenue earning devices of $
Depreciation expense was $
- 15 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
7. FIXED ASSETS
Fixed assets consisted of the following:
August 31, 2023 | February 28, 2023 | ||||||
Automobile | $ | $ | |||||
Demo devices | |||||||
Tooling | |||||||
Machinery and equipment | |||||||
Computer equipment | |||||||
Office equipment | |||||||
Furniture and fixtures | |||||||
Warehouse equipment | |||||||
Leasehold improvements | |||||||
Less: Accumulated depreciation | ( |
) | ( |
) | |||
$ | $ |
During the three months ended August 31, 2023, the
Company made additions of $
Depreciation expense was $
8. DEFERRED VARIABLE PAYMENT OBLIGATION
On February 1, 2019 the Company entered into an agreement
with an investor whereby the investor would pay up to $
On May 9, 2019 the Company entered into two similar arrangements with two investors:
(1) | The investor would pay up to $ | |
(2) | The investor would pay up to $ |
In the event that at least 10% of the assets of the
Company are sold by the Company, the investors would be entitled to the fair market value (FMV) of all future Payments associated with
the assets sold as determined by an independent valuator to be chosen by the investors. The FMV cannot exceed 30% of the total asset disposition
price defined as the total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common
or preferred shares are sold by the Company to a third party as to effect a change in control, then the investors must be paid the FMV
of all future Payments in one lump payment.
- 16 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On November 18, 2019, the Company entered into another
similar arrangement with the (February 1, 2019) investor above whereby the investor would advance up to $
On December 30, 2019, the Company entered into another
similar arrangement with a new investor whereby the investor would advance up to $100,000 in exchange for a perpetual
On April 22, 2020, the Company entered into another
similar arrangement with the (first May 9, 2019) investor above whereby the investor would advance up to $
On July 1, 2020, the Company entered into a similar
agreement with the first investor whereby the investor would pay up to $
On August 27, 2020, the Company and the first investor
referred to above consolidated the three separate agreements of February 1, 2019 for $
In summary of all agreements mentioned above if in
the event that at least
The Payments first become payable on June 30, 2019
(unless otherwise indicated) based on the quarterly Revenues for the quarter ended May 31, 2019 and accrue every quarter thereafter. As
of August 31, 2023, the Company has accrued $
On March 1, 2021, the first investor referred to above whose aggregate
investment is $
1) | The rate payment was reduced from | |
2) | The asset disposition % (see below) was reduced from |
In consideration for the above changes, the investor
received 40 Series F Convertible Preferred Stock and a warrant to purchase
- 17 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Company retains total involvement in the generation
of cash flows from these revenue streams that form the basis of the payments to be made to the investors under this agreement. Because
of this, the Company has determined that the agreements constitute debt agreements. As of August 31, 2023, and February 28, 2023, the
long-term balances other than Payments already owed is the cash received of $
For both the three months and six months ended August
31, 2023 and year ended February 28, 2023, the Company has received $
9. RELATED PARTY TRANSACTIONS
For both the three months ended August 31, 2023 and
August 31, 2022 , the Company had
Pursuant to the amended Employment Agreement with its Chief Executive Officer, for the three months and six ended August 31, 2023, the Company accrued $62,000 (2022-$63,000) and $125,000 (2022-$224,500) of incentive compensation plan payable with a corresponding recognition of stock based compensation due to the expectation of additional awards being met. This will be payable in Series G Preferred Shares which are redeemable at the Company’s option at $ per share. At August 31, 2023 and February 28, 2023 there was $1,104,000 and $979,000 of incentive compensation payable.
During the three months ended August 31, 2023 and
2022, the Company was charged $
During the six months ended August 31, 2023 and 2022,
the Company was charged $
10. OTHER DEBT – VEHICLE LOAN
In December 2016, RAD entered into a vehicle loan
for $
- 18 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
11. LOANS PAYABLE
Loans payable at August 31, 2023 consisted of the following:
Annual | ||||||||||
Date | Maturity | Description | Principal | Interest Rate | ||||||
July 18, 2017 | Promissory note | (1) * | $ | |||||||
December 10, 2023 | Promissory note | (2) | ||||||||
December 10, 2023 | Promissory note | (3) | ||||||||
December 10, 2023 | Promissory note | (4) | ||||||||
December 14, 2023 | Promissory note | (5) | ||||||||
December 30, 2023 | Promissory note | (6) | ||||||||
January 1, 2024 | Promissory note | (7) | ||||||||
January 1, 2024 | Promissory note | (8) | ||||||||
January 14, 2024 | Promissory note | (9) | ||||||||
February 22, 2024 | Promissory note | (10) | ||||||||
March 1, 2024 | Promissory note | (11) | ||||||||
June 8, 2024 | Promissory note | (12) | ||||||||
July 26, 2026 | Promissory note | (13) | ||||||||
September 14, 2024 | Promissory note | (14) | ||||||||
July 28, 2023 | Promissory note | (15) | — | |||||||
August 30,2024 | Promissory note | (16) | ||||||||
September 7, 2023 | Promissory note | (17) | ||||||||
September 8, 2023 | Promissory note | (18) | ||||||||
October 13, 2023 | Promissory note | (19) | ||||||||
October 31, 2026 | Promissory note | (20) | ||||||||
October 31, 2026 | Promissory note | (20) | ||||||||
October 31, 2026 | Promissory note | (20) | ||||||||
October 31, 2026 | Promissory note | (20) | ||||||||
October 31,2026 | Promissory note | (20) | ||||||||
October 31, 2026 | Promissory note | (20) | ||||||||
October 31, 2026 | Promissory note | (20) | ||||||||
October 31, 2026 | Promissory note | (20) | ||||||||
October 31, 2026 | Promissory note | (20) | ||||||||
$ | ||||||||||
Less: current portion of loans payable | ( |
) | ||||||||
Less: discount on non-current loans payable | ( |
) | ||||||||
Non-current loans payable, net of discount | $ | |||||||||
Current portion of loans payable | $ | |||||||||
Less: discount on current portion of loans payable | ( |
) | ||||||||
Current portion of loans payable, net of discount | $ |
* |
- 19 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) | |
(2) |
|
(3) | |
(4) | |
(5) | |
(6) | |
(7) | |
(8) | |
(9) | |
(10) |
- 20 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(11) | |
(12) | |
(13) | |
(14) | |
(15) | |
(16) | |
(17) | |
(18) | |
(19) |
- 21 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(20) | October 28, 2022, $ November 9, 2022, $ November 10, 2022, $ November 15, 2022, $ January 11, 2023, $ February 6, 2023, $ April 5, 2023, $ April 20, 2023, $ May 11, 2023, $ |
- 22 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
13. STOCKHOLDERS’ EQUITY (DEFICIT)
Summary or Preferred Stock Activity
No preferred stock activity during the period.
Number of Series F Preferred Warrants | Weighted Average Exercise Price | Weighted Average Remaining Years | ||||
Outstanding at March 1, 2023 | $ |
|||||
Issued | ||||||
Exercised | — | |||||
Forfeited and cancelled | — | |||||
Outstanding at August 31, 2023 | $ |
During the six months ended August 31, 2023, as part
of debt issuance the Company issued 183 Series F Preferred Warrants to a lender for a relative fair value of $
Summary of Common Stock Activity
The Company increased authorized common shares from
to on August 30, 2023.
For the three months ended August 31, 2023, the Company
issued
Common shares | August 31, 2023 | February 28, 2023 | |||||
Issued | |||||||
Issuable | |||||||
Issued, issuable and outstanding |
Summary of Common Stock Warrant Activity
For the three months and six months ended August 31, 2023 and August 31, 2022, the Company recorded a total of $
and $ , and $ and $ respectively, to stock-based compensation for options and warrants with a corresponding adjustment to additional paid-in capital.
Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Years | ||||
Outstanding at February 28, 2023 | $ |
|||||
Issued | — | |||||
Exercised | — | |||||
Forfeited and cancelled | — | |||||
Outstanding at August 31, 2023 | $ |
- 23 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Years | ||||
Outstanding at February 28 , 2023 | $ |
|||||
Issued | — | |||||
Exercised | — | |||||
Forfeited, extinguished and cancelled | ( |
) | $ |
|||
Outstanding at August 31, 2023 | $ |
15. COMMITMENTS AND CONTINGENCIES
Litigation
Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s condensed consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.
The related legal costs are expensed as incurred.
Operating Lease
On December 18, 2020,
On March 10, 2021,
On September 30, 2021,
On January 28, 2022,
The Company’s leases are accounted for as operating
leases. Rent expense and operating lease cost are recorded over the lease terms on a straight-line basis. Rent expense and operating lease
cost was $
Maturity of Lease Liabilities | Operating Leases |
||
August 31, 2024 | $ | ||
August 31, 2025 | |||
August 31, 2026 | |||
August 31, 2027 | |||
August 31, 2028 | |||
August 31, 2029 and after | |||
Total lease payments | |||
Less: Interest | ( |
) | |
Present value of lease liabilities | $ |
- 24 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The net income (loss) per common share amounts were determined as follows:
For the Three Months Ended | For the Six Months Ended | ||||||||||||
August 31, | August 31, | ||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||
Numerator: | |||||||||||||
Net income (loss) available to common shareholders | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
Effect of common stock equivalents | |||||||||||||
Add: interest expense on convertible debt | |||||||||||||
Add (less) loss (gain) on settlement of debt | — | (3,992 | ) | — | (3,992 | ) | |||||||
Add (less) loss (gain) on change of derivative liabilities | ( |
) | ( |
) | |||||||||
Net income (loss) adjusted for common stock equivalents | ( |
) | ( |
) | ( |
) | ( |
) | |||||
Denominator: | |||||||||||||
Weighted average shares – basic | |||||||||||||
Net income (loss) per share – basic | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | |
Dilutive effect of common stock equivalents: | |||||||||||||
Convertible Debt | — | — | — | — | |||||||||
Preferred shares | — | — | — | — | |||||||||
Warrants | — | — | — | — | |||||||||
— | — | — | — | ||||||||||
Denominator: | |||||||||||||
Weighted average shares – diluted | |||||||||||||
Net income (loss) per share – diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) |
For the Three Months Ended | For the Six Months Ended | ||||||||||||
August 31, | August 31, | ||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||
Convertible notes and accrued interest | |||||||||||||
Convertible Series F Preferred Shares | |||||||||||||
Stock options and warrants | |||||||||||||
Total |
* |
For the Three and Six Months Ended | ||||
August 31, 2023 | August 31, 2022 | |||
Convertible Series F Preferred Shares |
17. SUBSEQUENT EVENTS
Subsequent to August 31, 2023 through to October 12, 2023:
— The Company issued
common shares pursuant to a share purchase agreement for gross proceeds of $ , issuance costs of $ and net proceeds of $ .
- 25 -
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The following discussion of our financial condition and results of operations for the three and six months ended August 31, 2023 and August 31, 2022 should be read in conjunction with our unaudited consolidated financial statements and the notes to those 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 Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended February 28, 2023, as filed on June 14, 2023 with the SEC. 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.
Unless expressly indicated or the context requires otherwise, the terms “AITX”, the “Company”, “we”, “us”, and “our” refer to Artificial Intelligence Technology Solutions Inc.
Overview
AITX was incorporated in Florida on March 25, 2010. AITX reincorporated into Nevada on February 17, 2015. AITX’s 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.
AITX’s mission is to apply Artificial Intelligence (AI) technology to solve enterprise problems categorized as expensive, repetitive, difficult to staff, and outside of the core competencies of the client organization.
A short list of basic examples include:
1. | Typical security guard-related functions such as monitoring a parking lot during and after hours and responding appropriately. This scenario applies to perimeters, interior yard areas, and related similar environments. | |
2. | Integrated hardware/software with AI-driven responses, simulating and expanding on what legacy or manned solutions could perform. | |
3. | Automation of common access control functions through technology utilizing facial recognition and machine vision, leapfrogging most legacy solutions in use today. |
RAD solutions are unique because they:
1. | Start with an AI-driven autonomous response utilizing cellular-optimized communications, while easily connecting to a human operator for a manned response, as needed. | |
2. | Use unique hardware purpose-built by RAD for delivery of these solutions. Various form factors have been customized to deliver this new functionality. | |
3. | Deliver services through RAD-developed software and cloud services, allowing enterprise IT groups to focus on core competencies instead of maintenance of complex video and security platforms. |
We encourage everyone to ensure they have the most up to date news by visiting AITX at AITX News - AITX - Artificial Intelligence Technology Solutions.
- 26 -
Management Discussion and Analysis
Results of Operations for the Three Months Ended August 31, 2023 and 2022
The following table shows our results of operations for the three months ended August31, 2022 and 2021. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.
Period | ||||||||||||
Three Months Ended |
Three Months Ended |
Change | ||||||||||
August 31, 2023 | August 31, 2022 | Dollars | Percentage | |||||||||
Revenues | $ | 386,363 | $ | 267,484 | $ | 118,879 | 44% | |||||
Gross profit | 297,349 | 233,270 | 64,079 | 27% | ||||||||
Operating expenses | 3,342,601 | 3,411,702 | (69,101 | ) | (2% | ) | ||||||
Loss from operations | (3,045,252 | ) | (3,178,432 | ) | 133,180 | (4% | ) | |||||
Other income (expense), net | (1,714,476 | ) | (994,433 | ) | (720,043 | ) | 72% | |||||
Net Loss | $ | (4,759,728 | ) | $ | (4,172,865 | ) | $ | (586,863 | ) | 14% |
Revenue
The following table presents revenues from contracts with customers disaggregated by product/service:
Three Months Ended |
Three Months Ended |
Change | ||||||||||
August 31, 2023 | August 31, 2022 | Dollars | Percentage | |||||||||
Device rental activities | $ | 343,543 | $ | 228,214 | $ | 115,329 | 51% | |||||
Direct sales of goods and services | 42,820 | 39,270 | 3,550 | 9% | ||||||||
$ | 386,363 | $ | 267,484 | $ | 118,879 | 44% |
Total revenue for the three-month period ended August 31, 2023 was $386,363 which represented an increase of $118,879 compared to total revenue of $267,484 for the three months ended August 31, 2022. This increase is a result of higher rental sales in the current year’s quarter. Rental activities increased by 51% over the prior year’s quarter as the Company continues to grow its core business.
Gross profit
Total gross profit for the three-month period ended August 31, 2023 was $297,349, which represented an increase of $64,079 compared to gross profit of $233,270 for the three months ended August 31, 2022. The gross profit increased due to the higher sales.. The gross profit % of 77% for the three-month period ended August 31, 2023 was lower than the gross profit % of 87% for the prior year’s corresponding period.
Operating Expenses
Period | ||||||||||||
Three Months Ended |
Three Months Ended |
Change | ||||||||||
August 31, 2023 | August 31, 2022 | Dollars | Percentage | |||||||||
Research and development | $ | 794,548 | $ | 963,786 | $ | (169,238 | ) | (18% | ) | |||
General and administrative | 2,294,471 | 2,238,442 | 56,029 | 3% | ||||||||
Depreciation and amortization | 191,041 | 145,793 | 45,248 | 31% | ||||||||
Operating lease cost and rent | 62,541 | 63,681 | (1,140 | ) | (2% | ) | ||||||
Operating expenses | $ | 3,342,601 | $ | 3,411,702 | $ | (69,101 | ) | (2% | ) |
- 27 -
Our operating expenses were comprised of general and administrative expenses, research and development, and depreciation. General and administrative expenses consisted primarily of professional services, automobile expenses, advertising, salaries and wages, travel expenses and consultants. Our operating expenses during the three-month period ended August 31, 2023 and August 31, 2022, were $3,342,601 and $3,411,702, respectively. The overall decrease of $69,101 was primarily attributable to the following changes in operating expenses of:
● | General and administrative expenses increased by $56,029. In comparing the three months ended August 31, 2023 and August 31, 2022 the decrease in G&A was primarily due to decreases in wages and salaries of $130,629 due to reduction in force, stock-based compensation of $68,727, office expenses of $12,885, travel $43,876, and bad debts expense of $31,270 due to fewer slow payers. These decreases were partially offset by an increase in professional fees of $173,170 mostly due compliance and audit fees increase and other G&A increases. |
● | Research and development decreased by $169,238 due to a reduction in funding on development of future products. |
● | Depreciation and amortization increased by $45,248 due to large increases in revenue earning devices, demo devices, tooling and computer equipment. |
● | Operating lease cost and rent decreased by $1,140. |
Other Income (Expense)
Other income (expense) consisted of interest. Other income (expense) during the three months ended August 31, 2023 and August 31, 2022, was ($1,714,476) and ($994,433), respectively. The $720,043 increase in other expense was primarily attributable to the increase in interest and amortization of debt due to higher loans.
Net loss
We had a net loss of $4,759,728 for the three months ended August 31, 2023, compared to a net loss of $4,172,865 for the three months ended August 31, 2022. The increase in net loss of $586,863 is primarily a result of higher other expenses consisting of interest and debt amortization costs. This increase was partially offset by higher gross profit and lower operating expenses.
Results of Operations for the Six Months Ended August 31, 2023 and 2022
The following table shows our results of operations for the six months ended August 31, 2023 and 2022. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.
Revenue
Period | ||||||||||||
Six Months Ended |
Six Months Ended |
Change | ||||||||||
August 31, 2023 | August 31, 2022 | Dollars | Percentage | |||||||||
Revenues | $ | 771,571 | $ | 652,641 | $ | 118,930 | 18% | |||||
Gross profit | 591,046 | 324,703 | 266,343 | 82% | ||||||||
Operating expenses | 6,585,273 | 6,999,791 | (414,518 | ) | (6% | ) | ||||||
Loss from operations | (5,994,227 | ) | (6,675,088 | ) | 680,681 | (10% | ) | |||||
Other income (expense), net | (3,320,692 | ) | (2,169,463 | ) | (1,151,229 | ) | 53% | |||||
Net loss | $ | (9,314,919 | ) | $ | (8,844,551 | ) | $ | (470,368 | ) | 5% |
The following table presents revenues from contracts with customers disaggregated by product/service:
Six Months Ended |
Six Months Ended |
Change | ||||||||||
August 31, 2023 | August 31, 2022 | Dollars | Percentage | |||||||||
Device rental activities | $ | 581,692 | $ | 468,019 | $ | 113,673 | 24% | |||||
Direct sales of goods and services | 189,879 | 184,622 | 5,257 | 3% | ||||||||
$ | 771,571 | $ | 652,641 | $ | 118,930 | 18% |
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Total revenue for the six-month period ended August 31, 2023 was $771,571 which represented an increase of $118,930 compared to total revenue of $652,641 for the six months ended August 31, 2022. This increase is a result of higher rental sales as the Company deployed 81more units when comparing these periods.
Gross profit
Total gross profit for the six-month period ended August 31, 2023 was $591,046 which represented an increase of $266,343, compared to gross profit of $324,703 for the six months ended August 31, 2022. The gross profit increased due to the higher sales and higher margin sales. The gross profit % of 77% for the six month period ended August 31, 2023 was higher than the gross profit % of 50% for the prior year’s corresponding period. The direct sales for the six months ended August 31, 2023 consisted of higher proportion of training revenue at higher gross profit vs unit sales for the six months ended August 31, 2022. The gross profit % of 77% for the six month period ended August 31, 2023 was higher than the gross profit % of 50% for the prior year’s corresponding period.
Operating Expenses
Period | ||||||||||||
Six Months Ended |
Six Months Ended |
Change | ||||||||||
August 31, 2023 | August 31, 2022 | Dollars | Percentage | |||||||||
Research and development | $ | 1,686,305 | $ | 1,987,521 | $ | (301,216 | ) | (15% | ) | |||
General and administrative | 4,414,902 | 4,638,834 | (223,932 | ) | (5% | ) | ||||||
Depreciation and amortization | 358,983 | 239,788 | 119,195 | 50% | ||||||||
Operating lease cost and rent | 125,083 | 133,648 | (8,565 | ) | (6% | ) | ||||||
Operating expenses | $ | 6,585,273 | $ | 6,999,791 | $ | (414,518 | ) | (6% | ) |
General and administrative expenses consisted primarily of professional services, automobile expenses, advertising, salaries and wages, travel expenses and consultants. Our operating expenses during the six-month period ended August 31, 2023 and August 31, 2022, were $6,585,273 and $6,999,791, respectively. The overall decrease of $414,518 was primarily attributable to the following changes in operating expenses of:
● | General and administrative expenses decreased by $223,932. In comparing the six months ended August 31, 2023 and August 31, 2022 the decrease may be partially explained by the following decreases: wages and salaries by $181,156, stock based compensation by $114,506, subcontractors by $26,541, sales and marketing by $49,346, travel by $39,971, investor relations stock agents and regulatory expenses by $35,772, bad debts expense $120,270 and office expense by $19,972. These were partially offset by increases in the following account: professional fees by $259,677 and other G& A increases. |
● | Research and development decreased by $301,216 due to a reduction in funding on development of future products. |
● | Depreciation and amortization increased by $119,195 due to the acquisition of ERP computer software, computer equipment tooling, and 81 new revenue earning devices. |
● | Operating lease cost and rent decreased by $8,565 due to one less lease in the current period. |
Other Income (Expense)
Other income (expense) during the six months ended August 31, 2023 and August 31, 2022, was ($3,320,692) and ($2,169,463), respectively. The $1,151,229 increase in other expense was primarily attributable to the increase in interest and debt amortization expense which is a result of higher loans in 2023.
Net loss
We had a net loss of 9,314,919 for the six months ended August 31, 2023, compared to a net loss of $8,844,551 for the six months ended August 31, 2022. The increase in net loss of $470,368 is primarily a result of higher other expenses consisting of interest and debt amortization costs. This increase was partially offset by higher gross profit and lower operating expenses
- 29 -
Liquidity, Capital Resources and Cash Flows
Management believes that we will continue to incur losses for the immediate future. Therefore, we will need additional equity or debt financing until we can achieve profitability and positive cash flows from operating activities, if ever. These conditions raise substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial statements do not include and adjustments relating to the recovery of assets or the classification of liabilities that may be necessary should we be unable to continue as a going concern.
As of August 31, 2023, we had a cash balance of $1,512,112, accounts receivable of $260,671, device parts inventory of $1,689,930 and $28,753,936 in current liabilities. At the current cash consumption rate, we will need to consider additional funding sources going forward. We are taking proactive measures to reduce operating expenses and drive growth in revenue.
The successful outcome of future activities cannot be determined at this time and there is no assurance that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results.
Capital Resources
The following table summarizes total current assets, liabilities and working capital (deficit) for the periods indicated:
August 31, 2023 | February 28, 2023 | ||||||
Current assets | $ | 4,137,971 | $ | 3,438,992 | |||
Current liabilities | 28,753,936 | 16,049,593 | |||||
Working capital | $ | (24,615,965 | ) | $ | (12,610,601 | ) |
As of August 31, 2023 and February 28, 2023, we had a cash balance of $1,512,112 and $939,759, respectively.
Summary of Cash Flows
Summary of Cash Flows | Six Months Ended August 31, 2023 |
Six Months Ended August 31, 2022 |
|||||
Net cash used in operating activities | $ | (6,335,216 | ) | $ | (6,754,462 | ) | |
Net cash used in investing activities | $ | (3,463 | ) | $ | (207,197 | ) | |
Net cash provided by financing activities | $ | 6,911,032 | $ | 2,676,586 |
Net cash used in operating activities.
Net cash used in operating activities for the six months ended August 31, 2023 was $6,335,216 which included a net loss of $9,314,919, non-cash activity such as the bad debts expense of $24,730, reduction of right of use asset of $58,220, accretion of lease liability $66,864, stock based compensation of $228,434, gain on settlement of debt of ($38,740) , change in operating assets and liabilities of $968,783, amortization of debt discount of $1,258,198, increase in related party accrued payroll and interest of $54,230 and depreciation and amortization of $358,983 to derive the uses of cash in operations.
Net cash used in investing activities.
Net cash used in investing activities for the six months ended August 31, 2023 was $3,463, which was the purchase of fixed assets,
Net cash provided by financing activities.
Net cash provided by financing activities was $6,911,032 for the six months ended August 31, 2023. This consisted of share proceeds net of issuance costs of 6,115,032, proceeds from loans payable of $1,050,000, reduced by repayments on loans payable of $254,000.
Off-Balance Sheet Arrangements
None.
- 30 -
Critical Accounting Policies and Estimates
Critical accounting policies and estimates are further discussed in our Annual Report on Form 10-K for the year ended February 28, 2023, as filed on June 14, 2023.
Related Party Transactions
For both the three months ended August 31, 2023 and August 31, 2022 , the Company had no repayments of net advances from its loan payable-related party. At August 31, 2023, the loan payable-related party was $260,746 and $206,516 at February 28, 2023. Included in the balance due to the related party at August 31, 2023 is $172,265 of deferred salary and interest, $145,500 of which bears interest at 12%. At February 28, 2023, included in the balance due to the related party is $108,000 of deferred salary with $108,000 bearing interest at 12%. The accrued interest included in loan at August 31, 2023 and February 28, 2023 was $23,515 and $15,660 respectively.
Pursuant to the amended Employment Agreement with its Chief Executive Officer, for the three months and six ended August 31, 2023, the Company accrued $62,000 (2022-$63,000) and $125,000 (2022-$224,500) of incentive compensation plan payable with a corresponding recognition of stock based compensation due to the expectation of additional awards being met. This will be payable in Series G Preferred Shares which are redeemable at the Company’s option at $1,000 per share. At August 31, 2023 and February 28, 2023 there was $1,104,000 and $979,000 of incentive compensation payable.
During the three months ended August 31, 2023 and 2022, the Company was charged $777,260 and $957,395, respectively for fees for research and development from a company partially owned by a principal shareholder.
During the six months ended August 31, 2023 and 2022, the Company was charged $1,659,275 and $1,959,129, respectively for fees for research and development from a company partially owned by a principal shareholder.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable for a smaller reporting company.
ITEM 4. CONTROLS AND PROCEDURES
Management’s Report on Internal Control over Financial Reporting
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)) as of August 31, 2023. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of August 31, 2023, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us 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.
1. | As of August 31, 2023, we did not maintain effective controls over our control environment. Specifically, we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness. | |
2. | As of August 31, 2023, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness. |
Our management, including our principal executive officer and principal financial officer, do 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.
- 31 -
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
This item is not applicable to smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Each issuance of securities was issued without registration in reliance of the exemption from registration Section 3(a)9 of the Securities Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company has not defaulted upon senior securities.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to the Company.
ITEM 5. OTHER INFORMATION
None.
- 32 -
ITEM 6. EXHIBITS
Exhibit No. | Description of Document |
3.1 | Articles of Incorporation (1) |
3.2 | Bylaws (2) |
14 | Code of Ethics (2) |
21 | Subsidiaries of the Registrant (3) |
31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer. (3) |
31.2 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial and accounting officer. (3) |
32.1 | Section 1350 Certification of principal executive officer. (3) |
32.2 | Section 1350 Certification of principal financial accounting officer. (3) |
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. (3) |
101.SCH | Inline XBRL Taxonomy Extension Schema Document (3) |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (3) |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (3) |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (3) |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (3) |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) (3) |
__________
(1) | Incorporated by reference to our Form 10-KT file with the Securities and Exchange Commission on March 12, 2018. |
(2) | Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on August 4, 2010. |
(3) | Filed or furnished herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Artificial Intelligence Technology Solutions Inc. | |
Date: October 12, 2023 | BY: /s/ Steven Reinharz |
Steven Reinharz | |
President, Chief Executive Officer (principal executive officer) | |
Date: October 12, 2023 | BY: /s/ Anthony Brenz |
Anthony Brenz | |
Chief Financial Officer (principal financial officer) |
- 33 -
Exhibit 21.1
Artificial Intelligence Technology Solutions Inc.
Subsidiaries
Name | Jurisdiction of Incorporation | |
Robotic Assistance Devices, Inc. | Nevada | |
Robotic Assistance Devices Group, Inc. | Nevada | |
Robotic Assistance Devices Mobile, Inc. | Nevada |
Exhibit 31.1
RULE 13A-14(A)/15D-14(A) CERTIFICATION
I, Steven Reinharz, certify that:
1. I have reviewed this Form 10-Q for the period ended August 31, 2023 of Artificial Intelligence Technology Solutions Inc.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: October 12, 2023 | BY: /s/ Steven Reinharz |
Steven Reinharz | |
President, Chief Executive Officer (principal executive officer) |
Exhibit 31.2
RULE 13A-14(A)/15D-14(A) CERTIFICATION
I, Anthony Brenz, certify that:
1. I have reviewed this Form 10-Q for the period ended August 31, 2023 of Artificial Intelligence Technology Solutions Inc.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: October 12, 2023 | BY: /s/ Anthony Brenz |
Anthony Brenz | |
Chief Financial Officer (principal financial officer) |
Exhibit 32.1
SECTION 1350 CERTIFICATION
In connection with the quarterly report of Artificial Intelligence Technology Solutions Inc. (the “Company”) on Form 10-Q for the period ended August 31, 2023 as filed with the Securities and Exchange Commission (the “Report”), I, Steven Reinharz, President of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
Date: October 12, 2023 | BY: /s/ Steven Reinharz |
Steven Reinharz | |
President, Chief Executive Officer (principal executive officer) |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
SECTION 1350 CERTIFICATION
In connection with the quarterly report of Artificial Intelligence Technology Solutions Inc. (the “Company”) on Form 10-Q for the period ended August 31, 2023 as filed with the Securities and Exchange Commission (the “Report”), I, Anthony Brenz, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
Date: October 12, 2023 | BY: /s/ Anthony Brenz |
Anthony Brenz | |
Chief Financial Officer (principal financial officer) |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) |
Aug. 31, 2023 |
Feb. 28, 2023 |
---|---|---|
Accumulated depreciation, revenue earning devices | $ 1,044,294 | $ 779,839 |
Accumulated depreciation, fixed assets | 276,530 | 182,002 |
Discount of current portion of loans payable | 966,767 | 1,651,597 |
Discount of loans payable | $ 4,654,370 | $ 4,130,291 |
Preferred stock, authorized | 15,545,650 | 15,545,650 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per shares) | $ 0.00001 | $ 0.00001 |
Common stock, authorized | 10,000,000,000 | 10,000,000,000 |
Preferred stock, shares issued | 7,039,806,793 | 5,848,741,599 |
Common stock, shares, outstanding | 7,039,806,793 | 5,848,741,599 |
Series G Preferred Stock [Member] | ||
Preferred stock, authorized | 100,000 | 100,000 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, par value (in dollars per shares) | $ 0.001 | $ 0.001 |
Series E Preferred Stock [Member] | ||
Preferred stock, authorized | 4,350,000 | 4,350,000 |
Preferred stock, shares outstanding | 3,350,000 | 3,350,000 |
Preferred stock, shares issued | 3,350,000 | 3,350,000 |
Preferred stock, par value (in dollars per shares) | $ 0.001 | $ 0.001 |
Series F Preferred Stock [Member] | ||
Preferred stock, authorized | 4,350 | 4,350 |
Preferred stock, shares outstanding | 2,533 | 2,533 |
Preferred stock, shares issued | 2,533 | 2,533 |
Preferred stock, par value (in dollars per shares) | $ 1.00 | $ 1.00 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2023 |
Aug. 31, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
|
Income Statement [Abstract] | ||||
Revenues | $ 386,363 | $ 267,484 | $ 771,571 | $ 652,641 |
Cost of Goods Sold | 89,014 | 34,214 | 180,525 | 327,938 |
Gross Profit | 297,349 | 233,270 | 591,046 | 324,703 |
Operating expenses: | ||||
Research and development (Note 10) | 794,548 | 963,786 | 1,686,305 | 1,987,521 |
General and administrative | 2,294,471 | 2,238,442 | 4,414,902 | 4,638,834 |
Depreciation and amortization | 191,041 | 145,793 | 358,983 | 239,788 |
Operating lease cost and rent | 62,541 | 63,681 | 125,083 | 133,648 |
Total operating expenses | 3,342,601 | 3,411,702 | 6,585,273 | 6,999,791 |
Loss from operations | (3,045,252) | (3,178,432) | (5,994,227) | (6,675,088) |
Other income (expense), net: | ||||
Change in fair value of derivative liabilities | 3,595 | 3,595 | ||
Interest expense | (1,753,216) | (1,002,020) | (3,359,432) | (2,177,050) |
Gain (loss) on settlement of debt | 38,740 | 3,992 | 38,740 | 3,992 |
Total other expense net | (1,714,476) | (994,433) | (3,320,692) | (2,169,463) |
Net loss | $ (4,759,728) | $ (4,172,865) | $ (9,314,919) | $ (8,844,551) |
Net loss per share - basic | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) |
Net loss per share - diluted | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) |
Weighted average common share outstanding - basic | 6,568,957,612 | 4,970,040,852 | 6,266,833,467 | 4,884,349,362 |
Weighted average common share outstanding - diluted | 6,568,957,612 | 4,970,040,852 | 6,266,833,467 | 4,884,349,362 |
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT (Unaudited) - USD ($) |
Series E Preferred Stock [Member] |
Series F Preferred Stock [Member] |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Total |
|||
---|---|---|---|---|---|---|---|---|---|
Beginning balance, value at Feb. 28, 2022 | $ 3,350 | $ 101,618 | $ 47,353 | $ 73,015,576 | $ (94,144,254) | $ (20,976,357) | |||
Beginning balance, (in shares) at Feb. 28, 2022 | 3,350,000 | 2,532 | 4,735,210,360 | ||||||
Issuance of shares, net of $176,672 issuance costs | $ 1,339 | 1,643,883 | 1,645,222 | ||||||
Issuance of shares, net of issuance costs (in shares) | 133,881,576 | ||||||||
Rounding | (1) | (1) | |||||||
Net income | (4,671,686) | (4,671,686) | |||||||
Ending balance, (in shares) at May. 31, 2022 | 3,350,000 | 4,869,091,936 | |||||||
Ending balance, value at May. 31, 2022 | $ 3,350 | 101,618 | $ 48,692 | 74,659,458 | (98,815,940) | (24,002,822) | |||
Beginning balance, value at Feb. 28, 2022 | $ 3,350 | $ 101,618 | $ 47,353 | 73,015,576 | (94,144,254) | (20,976,357) | |||
Beginning balance, (in shares) at Feb. 28, 2022 | 3,350,000 | 2,532 | 4,735,210,360 | ||||||
Net income | (8,844,551) | ||||||||
Ending balance, (in shares) at Aug. 31, 2022 | 3,350,000 | 2,532 | 5,063,354,356 | ||||||
Ending balance, value at Aug. 31, 2022 | $ 3,350 | $ 101,618 | $ 50,635 | 74,111,156 | (102,988,805) | (28,722,046) | |||
Beginning balance, value at May. 31, 2022 | $ 3,350 | 101,618 | $ 48,692 | 74,659,458 | (98,815,940) | (24,002,822) | |||
Beginning balance, (in shares) at May. 31, 2022 | 3,350,000 | 4,869,091,936 | |||||||
Issuance of shares, net of $176,672 issuance costs | $ 1,917 | 1,889,350 | 1,891,267 | ||||||
Issuance of shares, net of issuance costs (in shares) | 191,691,135 | ||||||||
Net income | (4,172,865) | (4,172,865) | |||||||
Cashless exercise of warrants | $ 97 | (97) | |||||||
Cashless exercise of warrants (in shares) | 9,688,179 | ||||||||
Relative fair value of warrants issued with debt | 404,374 | 404,374 | |||||||
Cancelled shares | $ (171) | 171 | |||||||
Cancelled Shares (in shares) | (17,116,894) | ||||||||
Exchange of 955,000,000 warrants for debt | (2,960,500) | (2,960,500) | |||||||
Shares as payment for services | $ 100 | 118,400 | 118,500 | ||||||
Ending balance, (in shares) at Aug. 31, 2022 | 3,350,000 | 2,532 | 5,063,354,356 | ||||||
Shares as payment for services (in shares) | 10,000,000 | ||||||||
Ending balance, value at Aug. 31, 2022 | $ 3,350 | $ 101,618 | $ 50,635 | 74,111,156 | (102,988,805) | (28,722,046) | |||
Beginning balance, value at Feb. 28, 2023 | $ 3,350 | $ 101,619 | $ 58,489 | 80,247,252 | 112,253,711 | (31,843,001) | [1] | ||
Beginning balance, (in shares) at Feb. 28, 2023 | 3,350,000 | 2,533 | 5,848,741,599 | ||||||
Issuance of shares, net of $176,672 issuance costs | $ 2,809 | 1,316,100 | 1,318,909 | ||||||
Issuance of shares, net of issuance costs (in shares) | 280,929,190 | ||||||||
Net income | 4,555,193 | (4,555,193) | |||||||
Ending balance, (in shares) at May. 31, 2023 | 3,350,000 | 6,129,670,789 | |||||||
Ending balance, value at May. 31, 2023 | $ 3,350 | 101,619 | $ 61,298 | 82,563,520 | 116,808,904 | (34,079,117) | |||
Relative fair value of Series F warrants issued with loans payable | 947,447 | 947,447 | |||||||
Stock based compensation | 52,721 | 52,721 | |||||||
Beginning balance, value at Feb. 28, 2023 | $ 3,350 | $ 101,619 | $ 58,489 | 80,247,252 | 112,253,711 | (31,843,001) | [1] | ||
Beginning balance, (in shares) at Feb. 28, 2023 | 3,350,000 | 2,533 | 5,848,741,599 | ||||||
Net income | (9,314,919) | ||||||||
Ending balance, (in shares) at Aug. 31, 2023 | 3,350,000 | 2,533 | 7,039,806,793 | ||||||
Shares as payment for services (in shares) | 6,500,000 | ||||||||
Ending balance, value at Aug. 31, 2023 | $ 3,350 | $ 101,619 | $ 70,399 | 87,445,715 | (121,568,632) | (33,947,549) | |||
Beginning balance, value at May. 31, 2023 | $ 3,350 | 101,619 | $ 61,298 | 82,563,520 | 116,808,904 | (34,079,117) | |||
Beginning balance, (in shares) at May. 31, 2023 | 3,350,000 | 6,129,670,789 | |||||||
Issuance of shares, net of $176,672 issuance costs | $ 9,036 | 4,787,087 | 4,796,123 | ||||||
Issuance of shares, net of issuance costs (in shares) | 903,636,004 | ||||||||
Net income | (4,759,728) | (4,759,728) | |||||||
Shares as payment for services | $ 65 | 44,395 | 44,460 | ||||||
Ending balance, (in shares) at Aug. 31, 2023 | 3,350,000 | 2,533 | 7,039,806,793 | ||||||
Ending balance, value at Aug. 31, 2023 | $ 3,350 | $ 101,619 | $ 70,399 | 87,445,715 | (121,568,632) | (33,947,549) | |||
Stock based compensation | $ 50,713 | $ 50,713 | |||||||
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CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT (Unaudited) (Parenthetical) - USD ($) |
3 Months Ended | |||
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Aug. 31, 2023 |
May 31, 2023 |
Aug. 31, 2022 |
May 31, 2022 |
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Statement of Stockholders' Equity [Abstract] | ||||
Issuance cost of shares | $ 176,672 | $ 81,285 | $ 95,293 | $ 117,157 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) |
6 Months Ended | |
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Aug. 31, 2023 |
Aug. 31, 2022 |
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CASH FLOWS USED IN OPERATING ACTIVITIES: | ||
Net loss | $ (9,314,919) | $ (8,844,551) |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 358,983 | 239,786 |
Bad debts expense | 24,730 | 145,000 |
Inventory provision | 70,000 | |
Reduction of right of use asset | 58,220 | 56,854 |
Accretion of lease liability | 66,864 | 72,090 |
Stock based compensation | 228,434 | 343,000 |
Change in fair value of derivative liabilities | (3,595) | |
Amortization of debt discounts | 1,258,198 | 671,594 |
Increase in related party accrued payroll and interest | 54,230 | 6,480 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (20,377) | (158,183) |
Prepaid expenses | (77,410) | (23,984) |
Device parts inventory | (941,261) | (632,760) |
Accounts payable and accrued expenses | 16,775 | 351,014 |
Customer deposits | 24,798 | (8,128) |
Operating lease liabilities | (125,083) | (128,944) |
Current portion of deferred variable payment obligation for payments | 125,457 | 106,120 |
Accrued interest payable | 1,965,885 | 987,737 |
Net cash used in operating activities | (6,335,216) | (6,754,462) |
CASH FLOWS USED IN INVESTING ACTIVITIES: | ||
Purchase of fixed assets | (3,463) | (207,197) |
Net cash used in investing activities | (3,463) | (207,197) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Share proceeds net of issuance costs | 6,115,032 | 3,255,289 |
Proceeds from loans payable | 1,050,000 | 500,000 |
Repayment of loans payable | (254,000) | (1,697,953) |
Proceeds from convertible debt and warrants issued | 619,250 | |
Net cash provided by financing activities | 6,911,032 | 2,676,586 |
Net change in cash | 572,353 | (4,285,073) |
Cash, beginning of period | 939,759 | 4,648,146 |
Cash, end of period | 1,512,112 | 363,073 |
Supplemental disclosure of cash and non-cash transactions: | ||
Cash paid for interest | 9,892 | 405,117 |
Cash paid for income taxes | ||
Noncash investing and financing activities: | ||
Transfer from device parts inventory to revenue earning devices | 889,230 | 452,526 |
Discount applied to face value of loans | 150,000 | 39,500 |
Series F warrants issued as part of debt | $ 947,447 |
GENERAL INFORMATION |
6 Months Ended |
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Aug. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GENERAL INFORMATION | 1. GENERAL INFORMATION
Artificial Intelligence Technology Solutions Inc. (“AITX” or the “Company”) was incorporated in Florida on March 25, 2010 and reincorporated in Nevada on February 17, 2015. On August 24, 2018, Artificial Intelligence Technology Solutions Inc., changed its name from On the Move Systems Corp (“OMVS”).
Robotic Assistance Devices, LLC (“RAD”), was incorporated in the State of Nevada on July 26, 2016 as a Limited Liability Company. On July 25, 2017, Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc., through the issuance of common shares to its sole shareholder.
On August 28, 2017, AITX completed the acquisition of RAD (the “Acquisition”), whereby AITX acquired all the ownership and equity interest in RAD for shares of AITX Series E Preferred Stock and shares of Series F Convertible Preferred Stock. AITX’s prior business focus was transportation services, and was exploring the on-demand logistics market by developing a network of logistics partnerships. As a result of the closing of the Acquisition, AITX has succeeded to the business of RAD, and AITX’s business going forward will consist of one segment activity, which is the delivery of artificial intelligence and robotic solutions for operational, security and monitoring needs.
The Acquisition was treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes since substantially all of AITX’s operations were disposed of as part of the consummation of the transaction. Therefore, no goodwill or other intangible assets were recorded by AITX 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. As a result, the assets and liabilities and the historical operations that are reflected in these financial statements are those of RAD as if RAD had always been the reporting company. |
GOING CONCERN |
6 Months Ended |
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Aug. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | 2. GOING CONCERN
The accompanying unaudited 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 six months ended August 31, 2023, the Company had negative cash flow from operating activities of $6,335,216. As of August 31, 2023, the Company has an accumulated deficit of $121,568,632, and negative working capital of $24,615,965. Management does not anticipate having positive cash flow from operations in the near future. These factors raise a 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 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.
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 March 2023, the Company entered into an equity financing agreement whereby an investor will purchase up to $12,500,000 of the Company’s common stock at a discount over a two-year period. In March and April 2023 the Company reduced personnel that were working on far-future solutions as well as other department reductions. Combined with other cost cutting measures management estimates it reduced the monthly expense burn by $ 200,000 - $ 300,000 with little impact on short and medium term operations. Management believes that it has the necessary support to continue operations by continuing its funding methods in the following ways : growing revenues ,equity proceeds and non-convertible debt. Management has had many recent conversations with the Company’s primary debt holder and believes that the non-convertible debt on the balance sheet will be extended. Management notes that non-convertible debt on the books has been extended by this debt holder twice in the past and notes that this debt holder has been a strong supporter of the Company.
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. The Company this fiscal quarter through to September 26, 2023 has raised an additional $5.2 million net of issuance costs through the sale of its common shares. |
ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTING POLICIES | 3. ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and in conformity with the condensing instructions on Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto in the Company’s latest Annual Report filed with the SEC on Form 10-K as filed on June 14, 2023. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Robotic Assistance Devices, Inc., Robotic Assistance Devices Group , Inc, Robotic Assistance Devices Mobile, Inc., On the Move Experience, LLC and On the OMV Transports, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the six months ended August 31, 2023 are not necessarily indicative of the results that may be expected for the entire year.
Use of Estimates
In order to prepare financial statements in conformity with accounting principles 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 preferred stock and derivative liabilities.
Concentrations Loans payable
At August 31, 2023 there were $32,200,345 of loans payable, $27,890,506 or 87% of these loans to companies controlled by one individual. At February 28, 2023 there were $31,254,345 of loans payable $26,540,506 or 85% of these loans to companies controlled by the same individual.
Cash
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market instruments. The Company places its cash and cash equivalents with high-quality, U.S. financial institutions and, to date has not experienced losses on any of its balances.
Accounts Receivable
Accounts receivable are comprised of balances due from customers, net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. There was an allowance of $ and $ provided as of August 31, 2023 and February 28, 2023, respectively. For the three months ended August 31, 2023 , two customers account for 37% of total accounts receivable . For the three months ended August 31, 2022 , four customers account for 54% of total accounts receivable.
Device Parts Inventory
Device parts inventory is stated at the lower of cost or net realizable value using the weighted average cost method. The Company records a valuation reserve for obsolete and slow-moving inventory, relying principally on specific identification of such inventory. The Company uses these device parts in the assembly of revenue earning devices (and demo devices) as well as research and development. Depending on use, the Company will transfer the parts to the corresponding asset or expense if used in research and development. A charge to income is taken when factors that would result in a need for an increase in the valuation, such as excess or obsolete inventory, are noted. As of August 31, 2023 and February 28, 2023 there was a valuation reserve of $195,000 and $195,000, respectively.
Revenue Earning Devices
Revenue earning devices are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of 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 to 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 August 31, 2023 and February 28, 2023, the Company had no deferred development costs.
Contingencies
Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.
Sales of Future Revenues
The Company has entered into transactions, as more fully described in footnote 8, 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:
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.
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. The Company adopted Topic 606 on March 1, 2018, using the modified retrospective method. Under the modified retrospective method, prior period financial positions and results will not be adjusted. There was no cumulative effect adjustment recognized as a result of this adoption. Refer to Note 4 – Revenue from Contracts with Customers for additional information. For the six months ended August 31, 2023 , customers accounted for 33% of total revenue (2022- 26%).
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending February 28, 2024, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements
Leases
Lease agreements are evaluated to determine if they are sales/finance leases meeting any of the following criteria at inception: (a) transfer of ownership of the underlying asset; (b) purchase option that is reasonably certain of being exercised; (c) the lease term is greater than a major part of the remaining estimated economic life of the underlying asset; or (d) if the present value of the sum of lease payments and any residual value guaranteed by the lessee that has not already been included in lease payments in accordance with ASC 842-10-30-5(f) equals or exceeds substantially all of the fair value of the underlying asset.
If at its inception, a lease meets any of the four lease criteria above, the lease is classified by the Company as a sales/finance; and if none of the four criteria are met, the lease is classified by the Company as an operating lease.
Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term, whereby an equal amount of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in the later years. The difference between rent expense recognized and actual rental payments is recorded as deferred rent and included in liabilities.
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 Chief Executive Officer/ Chairman holds sufficient shares of the Company’s voting preferred stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO/ 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:
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.
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 Not Yet Adopted
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. Adoption of the standard requires using either a modified retrospective or a full retrospective approach. Management is currently evaluating the effect of these provisions on the Company’s financial position and results of operations.
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REVENUE FROM CONTRACTS WITH CUSTOMERS |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE FROM CONTRACTS WITH CUSTOMERS | 4. REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue is earned primarily from two sources: 1) direct sales of goods or services and 2) short-term rentals. Direct sales of goods or services are accounted for under Topic 606, and short-term rentals are accounted for under Topic 842 (which addresses lease accounting and was adopted on March 1, 2019).
As disclosed in the revenue recognition section of Note 3 – Accounting Polices, the Company adopted Topic 606 in accordance with the effective date on March 1, 2018. Note 3 includes disclosures regarding the Company’s method of adoption and the impact on the Company’s financial statements. Revenue is recognized on direct sales of goods or services 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.
After adopting Topic 842, also referred to above in Note 3, the Company is accounting for revenue earned from rental activities where an identified asset is transferred to the customer and the customer has the ability to control that asset. The Company recognizes revenue from its device rental activities when persuasive evidence of a contract exists, the performance obligations have been satisfied, the transaction price is fixed or determinable and collection is reasonably assured. Performance obligations associated with device rental transactions are satisfied over the rental period. Rental periods are short-term in nature. Therefore, the Company has elected to apply the practical expedient which eliminates the requirement to disclose information about remaining performance obligations. Payments are due from customers at the completion of the rental, except for customers with negotiated payment terms, generally net 30 days or less, which are invoiced and remain as accounts receivable until collected.
The following table presents revenues from contracts with customers disaggregated by product/service:
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LEASES |
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Leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | 5. LEASES
We lease certain warehouses, and office space. Leases with an initial term of months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, we did not combine lease and non-lease components.
There is no lease renewal. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.
Below is a summary of our lease assets and liabilities at August 31, 2023 and February 28, 2023.
Note: As most of our leases do not provide an implicit rate, we use our incremental borrowing rate of 10% which for the leases noted above was based on the information available at commencement date in determining the present value of lease payments. We compare against loans we obtain to acquire physical assets and not loans we obtain for financing. The loans we obtain for financing are generally at significantly higher rates and we believe that physical space or vehicle rental agreements are in line with physical asset financing agreements. CAM charges were not included in operating lease expense and were expensed in general and administrative expenses as incurred.
Rent expense and operating lease cost was $62,541 and $125,083 for the three and six months ended August 31, 2023, respectively, and $63,681 and $133,648 for the three and six months ended August 31, 2022, respectively. |
REVENUE EARNING DEVICES |
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REVENUE EARNING DEVICES | 6. REVENUE EARNING DEVICES
Revenue earning devices consisted of the following:
During the three and six months ended August 31, 2023 the Company made total additions to revenue earning devices of $341,042 and $785,464, respectively, which were transfers from inventory. During the three and six months ended August 31, 2022 the Company made total additions to revenue earning devices of $251,946 and $426,047, respectively, which were transfers from inventory.
Depreciation expense was $141,614 and $264,455 for the three and six months ended August 31, 2023, respectively, and $116,125 and $187,539 for the three and six months ended August 31, 2022, respectively. |
FIXED ASSETS |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FIXED ASSETS | 7. FIXED ASSETS
Fixed assets consisted of the following:
During the three months ended August 31, 2023, the Company made additions of $75,057 which were transfers from inventory. During the six months ended August 31, 2023, the Company made additions of $107,230 of which $103,767 were transfers from inventory with remaining additions of $3,463. During the three months ended August 31, 2022, the Company made additions of $139,946 of which $20,693 were transfers from inventory with remaining additions of $118,983. During the six months ended August 31, 2022, the Company made additions of $233,676 of which $26,479 were transfers from inventory with remaining additions of $207,197.
Depreciation expense was $49,427 and $94,528 for the three and six months ended August 31, 2023, respectively, and $29,668 and $52,249 for the three and six months ended August 31, 2022, respectively. |
DEFERRED VARIABLE PAYMENT OBLIGATION |
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Deferred Variable Payment Obligation | ||||||||||||||||
DEFERRED VARIABLE PAYMENT OBLIGATION | 8. DEFERRED VARIABLE PAYMENT OBLIGATION
On February 1, 2019 the Company entered into an agreement with an investor whereby the investor would pay up to $900,000 in exchange for a perpetual 9% rate payment (Payments) on the Company’s reported quarterly revenue from operations excluding any gains or losses from financial instruments (Revenues). At February 29, 2020 the investor has advanced the full $900,000.
On May 9, 2019 the Company entered into two similar arrangements with two investors:
These variable payments (Payments) are to be made 30 days after the end of each fiscal quarter. If the Payments would deplete RAD’s available cash by more than 30%, the Payments may be deferred for up to 12 months after the quarterly report at an interest rate of 6% per annum on the unpaid amount.
In the event that at least 10% of the assets of the Company are sold by the Company, the investors would be entitled to the fair market value (FMV) of all future Payments associated with the assets sold as determined by an independent valuator to be chosen by the investors. The FMV cannot exceed 30% of the total asset disposition price defined as the total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect a change in control, then the investors must be paid the FMV of all future Payments in one lump payment. The FMV cannot exceed 30% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments.
On November 18, 2019, the Company entered into another similar arrangement with the (February 1, 2019) investor above whereby the investor would advance up to $225,000 in exchange for a perpetual 2.25% rate Payment on the Company’s quarterly Revenues (commencing on quarter ending May 31, 2020). At February 29, 2020, the investor has advanced $109,000 and the investor advanced the $116,000 remainder as of May 2020.
On December 30, 2019, the Company entered into another similar arrangement with a new investor whereby the investor would advance up to $100,000 in exchange for a perpetual 1.00% rate Payment on the Company’s quarterly Revenues (commencing quarter ended November 30, 2020). At February 29, 2020, the investor has advanced $50,000 with the remainder to be advanced no later than June 30, 2020. If the total investor advances turns out to be less than $100,000, this would not constitute a breach of the agreement, rather the 1.00% rate would be adjusted on a pro-rata basis.
On April 22, 2020, the Company entered into another similar arrangement with the (first May 9, 2019) investor above whereby the investor would advance up to $100,000 in exchange for a perpetual 1.00% rate Payment on the Company’s quarterly Revenues. At May 31, 2020, the investor has fully funded this commitment.
On July 1, 2020, the Company entered into a similar agreement with the first investor whereby the investor would pay up to $800,000 in exchange for a perpetual 2.75% rate payment (Payment) on the Company’s reported quarterly revenue. These Payments are to be made 90 days after the fiscal quarter with the first payment being due no later than May 31, 2021. If the Payments would deplete RAD’s available cash by more than 20%, the payment may be deferred. The investor had agreed to pay $100,000 per month over an 8 month period with the first payment due July 2020 and the final payment no later than February 28, 2021. As at August 31, 2020 the investor had fully funded the $800,000 commitment.
On August 27, 2020, the Company and the first investor referred to above consolidated the three separate agreements of February 1, 2019 for $900,000, November 18, 2019 for $225,000 and July 1, 2020 for $800,000 into a new agreement for a total of $1,925,000. This new agreement is for similar terms as the above agreements save for the following: the rate payment is revised to 14.25% payable on revenues commencing the quarter ended August 31, 2020. Upon an event of default that we are unable to cure in the time allotted under the agreements, these Payments may be secured with a priority lien by UCC filing against all of our assets, but is subordinated to equipment financing or leasing agreements on the products the Company leases to its customers.
In summary of all agreements mentioned above if in the event that at least 10% of the assets of the Company are sold by the Company, the investors would be entitled to the fair market value (FMV) of all future Payments associated with the assets sold as determined by an independent valuator to be chosen by the investors. The FMV cannot exceed 43.77% of the total asset disposition price defined as the total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect a change in control, then the investors must be paid the FMV of all future Payments in one lump payment. The FMV cannot exceed 43.77% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments. As of March 1, 2021 as a result of the amendment with the first investor noted below. This aggregate asset disposition % was reduced from 43.77 % to 33.77%.
The Payments first become payable on June 30, 2019 (unless otherwise indicated) based on the quarterly Revenues for the quarter ended May 31, 2019 and accrue every quarter thereafter. As of August 31, 2023, the Company has accrued $667,634 in Payments of which $431,719 are in arrears. As of February 28, 2023, the Company has accrued $542,177 in Payments of which $325,600 are in arrears. No notices have been sent to the Company.
On March 1, 2021, the first investor referred to above whose aggregate investment is $1,925,000 revised his agreements as follows:
In consideration for the above changes, the investor received 40 Series F Convertible Preferred Stock and a warrant to purchase 33,015,214 and recorded a loss on settlement of debt with a corresponding adjustment to paid in capital. shares of its Series F Convertible Preferred Stock with a five-year term and an exercise price of $ . During the three months ended May 31, 2021, the warrant holder exercised warrants to acquire shares of Series F Convertible Preferred Stock. The Company attributed a fair value based on recent transactions for the Series F Preferred stock and warrants of $
The Company retains total involvement in the generation of cash flows from these revenue streams that form the basis of the payments to be made to the investors under this agreement. Because of this, the Company has determined that the agreements constitute debt agreements. As of August 31, 2023, and February 28, 2023, the long-term balances other than Payments already owed is the cash received of $2,525,000 and $2,525,000, respectively.
For both the three months and six months ended August 31, 2023 and year ended February 28, 2023, the Company has received $0 related to the deferred payment obligation since there were no new agreements during this period. The balance remains $2,525,000 at both August 31, 2023 and February 28, 2023. |
RELATED PARTY TRANSACTIONS |
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Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 9. RELATED PARTY TRANSACTIONS
For both the three months ended August 31, 2023 and August 31, 2022 , the Company had no repayments of net advances from its loan payable-related party At August 31, 2023, the loan payable-related party was $260,746 and $206,516 at February 28, 2023. Included in the balance due to the related party at August 31, 2023 is $172,265 of deferred salary and interest, $ of which bears interest at 12%. At February 28, 2023, included in the balance due to the related party is $108,000 of deferred salary with $108,000 bearing interest at 12%. The accrued interest included in loan at August 31, 2023 and February 28, 2023 was $23,515 and $15,660 respectively.
Pursuant to the amended Employment Agreement with its Chief Executive Officer, for the three months and six ended August 31, 2023, the Company accrued $62,000 (2022-$63,000) and $125,000 (2022-$224,500) of incentive compensation plan payable with a corresponding recognition of stock based compensation due to the expectation of additional awards being met. This will be payable in Series G Preferred Shares which are redeemable at the Company’s option at $ per share. At August 31, 2023 and February 28, 2023 there was $1,104,000 and $979,000 of incentive compensation payable.
During the three months ended August 31, 2023 and 2022, the Company was charged $777,260 and $957,395, respectively for fees for research and development from a company partially owned by a principal shareholder.
During the six months ended August 31, 2023 and 2022, the Company was charged $1,659,275 and $1,959,129, respectively for fees for research and development from a company partially owned by a principal shareholder. |
OTHER DEBT – VEHICLE LOAN |
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Other Debt Vehicle Loan | |
OTHER DEBT – VEHICLE LOAN | 10. OTHER DEBT – VEHICLE LOAN
In December 2016, RAD entered into a vehicle loan for $47,704 secured by the vehicle. The loan is repayable over years maturing November 9, 2021, and repayable $1,019 per month including interest and principal. In November 2017, RAD entered into another vehicle loan secured by the vehicle for $47,661. The loan is repayable over years, maturing October 24, 2022 and repayable at $923 per month including interest and principal. The principal repayments made were $0 for both the year ended February 28, 2022 and February 28, 2021. Regarding the second vehicle loan, the vehicle was returned at the end of fiscal 2019 and the car was subsequently sold by the lender for proceeds of $21,907 which went to reduce the outstanding balance of the loan. A loss of $3,257 was recorded as well. A balance of $21,578 remains on this vehicle loan at both February 28, 2021 and February 29, 2020. For the first vehicle loan, the vehicle was retired in 2020, the proceeds of the disposal of $18,766 was applied against the balance of the loan with a $5,515 gain on the remaining asset value of $13,251. A balance of $16,944 remains on this vehicle loan at both February 28, 2022 and February 28, 2021. The remaining total balances of the amounts owed on the vehicle loans were $38,522 and $38,522 as of August 31, 2023 and February 28, 2023, respectively, of which all were classified as current. |
LOANS PAYABLE |
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LOANS PAYABLE | 11. LOANS PAYABLE
Loans payable at August 31, 2023 consisted of the following:
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STOCKHOLDERS’ EQUITY (DEFICIT) |
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STOCKHOLDERS’ EQUITY (DEFICIT) | 13. STOCKHOLDERS’ EQUITY (DEFICIT)
Summary or Preferred Stock Activity
No preferred stock activity during the period.
During the six months ended August 31, 2023, as part of debt issuance the Company issued 183 Series F Preferred Warrants to a lender for a relative fair value of $947,447. (see Note 11)
Summary of Common Stock Activity
The Company increased authorized common shares from to on August 30, 2023.
For the three months ended August 31, 2023, the Company issued 4,972,795 and net proceeds of $4,796,193 after issuance costs of $176,672. For the six months ended August 31, 2023, the Company issued common shares with gross proceeds of $6,372,989 and net proceeds of $6,115,032 after issuance costs of $257,956. In addition for the three and six months ended the Company issued shares with a fair value of $ 44,460 as payment for services of $ 83,200. A gain on settlement of debt of $38,640 has been recorded. The Company also issued previously recorded as issuable shares pursuant to agreements. common shares with gross proceeds of $
Summary of Common Stock Warrant Activity
For the three months and six months ended August 31, 2023 and August 31, 2022, the Company recorded a total of $ and $ , and $ and $ respectively, to stock-based compensation for options and warrants with a corresponding adjustment to additional paid-in capital.
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | 15. COMMITMENTS AND CONTINGENCIES
Litigation
Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s condensed consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.
The related legal costs are expensed as incurred.
Operating Lease
On December 18, 2020, the Company entered into a 15-month lease agreement for office space at 18009 Sky Park Circle Suite E, Irvine CA, 92614, commencing on December 18, 2020 through to March 31, 2022 with a minimum base rent of $3,859 per month. The Company paid a security deposit of $3,859.
On March 10, 2021, the Company entered into a 10 year lease agreement for q manufacturing facility at 10800 Galaxie Avenue, Ferndale, Michigan, 48220, commencing on May 1, 2021 through to April 30, 2031 with a minimum base rent of $15,880 per month. The base rent increase by 3% per annum commencing May 1, 2024. The Company paid a security deposit of $15,880.
On September 30, 2021, the Company entered into a 3-year lease agreement for a vehicle commencing September 30, 2021 through to April 30, 2031 with a minimum base rent of $1,538 per month. The Company paid a down payment of $18,462.
On January 28, 2022, the Company entered into a 2-year lease agreement for office space at 1516 E Edinger, Santa Ana, California, 92705, commencing on February 1, 2022 through to January 31, 2024 with a minimum base rent of $1,500 per month. The Company paid a security deposit of $1,500.
The Company’s leases are accounted for as operating leases. Rent expense and operating lease cost are recorded over the lease terms on a straight-line basis. Rent expense and operating lease cost was $62,541 and $125,083 for the three and six months ended August 31, 2023, respectively, and $63,681 and $133,648 for the three and six months ended August 31, 2022, respectively.
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EARNINGS (LOSS) PER SHARE |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS (LOSS) PER SHARE |
The net income (loss) per common share amounts were determined as follows:
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SUBSEQUENT EVENTS |
6 Months Ended |
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Aug. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS
Subsequent to August 31, 2023 through to October 12, 2023:
— The Company issued common shares pursuant to a share purchase agreement for gross proceeds of $ , issuance costs of $ and net proceeds of $ . |
ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and in conformity with the condensing instructions on Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto in the Company’s latest Annual Report filed with the SEC on Form 10-K as filed on June 14, 2023. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Robotic Assistance Devices, Inc., Robotic Assistance Devices Group , Inc, Robotic Assistance Devices Mobile, Inc., On the Move Experience, LLC and On the OMV Transports, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the six months ended August 31, 2023 are not necessarily indicative of the results that may be expected for the entire year. |
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Use of Estimates | Use of Estimates
In order to prepare financial statements in conformity with accounting principles 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 preferred stock and derivative liabilities. |
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Concentrations | Concentrations Loans payable
At August 31, 2023 there were $32,200,345 of loans payable, $27,890,506 or 87% of these loans to companies controlled by one individual. At February 28, 2023 there were $31,254,345 of loans payable $26,540,506 or 85% of these loans to companies controlled by the same individual. |
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Cash | Cash
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market instruments. The Company places its cash and cash equivalents with high-quality, U.S. financial institutions and, to date has not experienced losses on any of its balances. |
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Accounts Receivable | Accounts Receivable
Accounts receivable are comprised of balances due from customers, net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. There was an allowance of $ and $ provided as of August 31, 2023 and February 28, 2023, respectively. For the three months ended August 31, 2023 , two customers account for 37% of total accounts receivable . For the three months ended August 31, 2022 , four customers account for 54% of total accounts receivable. |
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Device Parts Inventory | Device Parts Inventory
Device parts inventory is stated at the lower of cost or net realizable value using the weighted average cost method. The Company records a valuation reserve for obsolete and slow-moving inventory, relying principally on specific identification of such inventory. The Company uses these device parts in the assembly of revenue earning devices (and demo devices) as well as research and development. Depending on use, the Company will transfer the parts to the corresponding asset or expense if used in research and development. A charge to income is taken when factors that would result in a need for an increase in the valuation, such as excess or obsolete inventory, are noted. As of August 31, 2023 and February 28, 2023 there was a valuation reserve of $195,000 and $195,000, respectively. |
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Revenue Earning Devices | Revenue Earning Devices
Revenue earning devices are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of 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. |
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Fixed Assets | 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 to 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. |
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Research and Development | 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 August 31, 2023 and February 28, 2023, the Company had no deferred development costs. |
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Contingencies | Contingencies
Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. |
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Sales of Future Revenues | Sales of Future Revenues
The Company has entered into transactions, as more fully described in footnote 8, 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:
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 | 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. The Company adopted Topic 606 on March 1, 2018, using the modified retrospective method. Under the modified retrospective method, prior period financial positions and results will not be adjusted. There was no cumulative effect adjustment recognized as a result of this adoption. Refer to Note 4 – Revenue from Contracts with Customers for additional information. For the six months ended August 31, 2023 , customers accounted for 33% of total revenue (2022- 26%). |
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Income Taxes | Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending February 28, 2024, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements |
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Leases | Leases
Lease agreements are evaluated to determine if they are sales/finance leases meeting any of the following criteria at inception: (a) transfer of ownership of the underlying asset; (b) purchase option that is reasonably certain of being exercised; (c) the lease term is greater than a major part of the remaining estimated economic life of the underlying asset; or (d) if the present value of the sum of lease payments and any residual value guaranteed by the lessee that has not already been included in lease payments in accordance with ASC 842-10-30-5(f) equals or exceeds substantially all of the fair value of the underlying asset.
If at its inception, a lease meets any of the four lease criteria above, the lease is classified by the Company as a sales/finance; and if none of the four criteria are met, the lease is classified by the Company as an operating lease.
Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term, whereby an equal amount of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in the later years. The difference between rent expense recognized and actual rental payments is recorded as deferred rent and included in liabilities. |
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Distinguishing Liabilities from Equity | 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 Chief Executive Officer/ Chairman holds sufficient shares of the Company’s voting preferred stock that give sufficient voting rights under the articles of incorporation and bylaws of the Company such that the CEO/ 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). |
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Fair Value of Financial Instruments | 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:
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. |
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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. |
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements
Recently Issued Accounting Standards Not Yet Adopted
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. Adoption of the standard requires using either a modified retrospective or a full retrospective approach. Management is currently evaluating the effect of these provisions on the Company’s financial position and results of operations. |
ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed assets consisted of the following: |
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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 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:
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REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) |
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The following table presents revenues from contracts with customers disaggregated by product/service: | The following table presents revenues from contracts with customers disaggregated by product/service:
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LEASES (Tables) |
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Below is a summary of our lease assets and liabilities at August 31, 2023 and February 28, 2023. | Below is a summary of our lease assets and liabilities at August 31, 2023 and February 28, 2023.
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REVENUE EARNING DEVICES (Tables) |
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Aug. 31, 2023 | |||||||||||||||||||||||||||||||||
Revenue Earning Devices | |||||||||||||||||||||||||||||||||
Revenue earning devices consisted of the following: | Revenue earning devices consisted of the following:
|
FIXED ASSETS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed assets consisted of the following: | Fixed assets consisted of the following:
|
LOANS PAYABLE (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans payable at August 31, 2023 consisted of the following: | Loans payable at August 31, 2023 consisted of the following:
|
STOCKHOLDERS’ EQUITY (DEFICIT) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Summary of Preferred Stock Warrant Activity |
|
||||||||||||||||||||||||||||||||||||||||||
The table below represent the common shares issued, issuable and outstanding at August 31, 2023 and February 28, 2023: |
|
||||||||||||||||||||||||||||||||||||||||||
Summary of Common Stock Warrant Activity |
|
||||||||||||||||||||||||||||||||||||||||||
Summary of Common Stock Option Activity -Employee Stock Options |
|
COMMITMENTS AND CONTINGENCIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Summary of rent expense and operating lease cost are recorded over the lease terms on a straight-line basis. |
|
EARNINGS (LOSS) PER SHARE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The net income (loss) per common share amounts were determined as follows: | The net income (loss) per common share amounts were determined as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The anti-dilutive shares of common stock equivalents for the three and six months ended August 31, 2023 and 2022 were as follows: |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series F Preferred shares been convertible the dilutive effects would be as follows: |
|
GENERAL INFORMATION (Details Narrative) - shares |
Aug. 28, 2017 |
Aug. 31, 2023 |
Feb. 28, 2023 |
Jul. 25, 2017 |
---|---|---|---|---|
Restructuring Cost and Reserve [Line Items] | ||||
Common stock, issued | 7,039,806,793 | 5,848,741,599 | ||
Robotic Assistance Devices LLC [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Common stock, issued | 10,000 | |||
Robotic Assistance Devices LLC [Member] | Series E Preferred Stock [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of shares isuued under acquisition | 3,350,000 | |||
Robotic Assistance Devices LLC [Member] | Series F Preferred Stock [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of shares isuued under acquisition | 2,450 |
GOING CONCERN (Details Narrative) - USD ($) |
1 Months Ended | 6 Months Ended | |
---|---|---|---|
Sep. 26, 2023 |
Mar. 31, 2023 |
Aug. 31, 2023 |
|
Cash flow from operating activities | $ 6,335,216 | ||
Accumulated deficit | 121,568,632 | ||
Working capital | 24,615,965 | ||
Additional issuance costs | $ 5,200,000 | ||
Minimum [Member] | |||
Other cost cutting management estimates | 200,000 | ||
Maximum [Member] | |||
Other cost cutting management estimates | $ 300,000 | ||
Common Stock [Member] | |||
Purchase of common stock | $ 12,500,000 |
Fixed assets consisted of the following: (Details) |
Aug. 31, 2023 |
---|---|
Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Fixed assets, useful life | 2 years |
Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Fixed assets, useful life | 5 years |
Computer Equipment and Software [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Fixed assets, useful life | 2 years |
Computer Equipment and Software [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Fixed assets, useful life | 3 years |
Office Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Fixed assets, useful life | 4 years |
Manufacturing Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Fixed assets, useful life | 7 years |
Warehouse Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Fixed assets, useful life | 5 years |
Tooling [Member] | |
Property, Plant and Equipment [Line Items] | |
Fixed assets, useful life | 2 years |
Demo Devices [Member] | |
Property, Plant and Equipment [Line Items] | |
Fixed assets, useful life | 4 years |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Fixed assets, useful life | 3 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Fixed assets, useful life | 5 years |
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: (Details) - USD ($) |
Aug. 31, 2023 |
Feb. 28, 2023 |
---|---|---|
Platform Operator, Crypto-Asset [Line Items] | ||
Incentive compensation plan payable revaluation of equity awards payable in Series G shares | $ 1,104,000 | $ 979,000 |
Fair Value, Inputs, Level 1 [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Incentive compensation plan payable revaluation of equity awards payable in Series G shares | ||
Fair Value, Inputs, Level 2 [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Incentive compensation plan payable revaluation of equity awards payable in Series G shares | ||
Fair Value, Inputs, Level 3 [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
Incentive compensation plan payable revaluation of equity awards payable in Series G shares | $ 1,104,000 | $ 979,000 |
ACCOUNTING POLICIES (Details Narrative) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Aug. 31, 2023
USD ($)
Number
|
Aug. 31, 2022 |
Aug. 31, 2023
USD ($)
Number
|
Feb. 28, 2023
USD ($)
|
||||
Property, Plant and Equipment [Line Items] | |||||||
Loans payable | $ 32,200,345 | $ 32,200,345 | $ 31,254,345 | ||||
Accounts receivable, net | $ 260,671 | 260,671 | 265,024 | [1] | |||
Percentage of accounts receivable | 37.00% | 54.00% | |||||
Inventory valuation reserves | $ 195,000 | $ 195,000 | 195,000 | ||||
Depreciation life | 48 months | 48 months | |||||
Deferred development costs | $ 0 | $ 0 | 0 | ||||
Percentage of revenue | 33.00% | 26.00% | 33.00% | ||||
Description of deferred tax assets and liabilities | The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. | ||||||
Two Customer [Member] | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Number of customers | Number | 2 | 2 | |||||
Minimum [Member] | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Fixed assets, useful life | 2 years | 2 years | |||||
Maximum [Member] | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Fixed assets, useful life | 5 years | 5 years | |||||
Controller [Member] | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Loans additions | $ 27,890,506 | $ 26,540,506 | |||||
Loans percentage | 87.00% | 87.00% | 85.00% | ||||
|
The following table presents revenues from contracts with customers disaggregated by product/service: (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2023 |
Aug. 31, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
|
Revenue from Contract with Customer [Abstract] | ||||
Device rental activities | $ 343,543 | $ 228,214 | $ 581,692 | $ 468,019 |
Direct sales of goods and services | 42,820 | 39,270 | 189,879 | 184,622 |
Revenues | $ 386,363 | $ 267,484 | $ 771,571 | $ 652,641 |
Below is a summary of our lease assets and liabilities at August 31, 2023 and February 28, 2023. (Details) - USD ($) |
Aug. 31, 2023 |
Feb. 28, 2023 |
|||
---|---|---|---|---|---|
Leases | |||||
Operating lease assets | $ 1,148,682 | $ 1,208,440 | |||
Current operating lease liability | 239,669 | 248,670 | [1] | ||
Noncurrent operating lease liabilities | 901,321 | 950,541 | [1] | ||
Total lease liabilities | $ 1,140,990 | $ 1,199,211 | |||
|
LEASES (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2023 |
Aug. 31, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
|
Leases | ||||
Weighted average remaining lease term | 12 months | 12 months | ||
Rent | $ 62,541 | $ 63,681 | $ 125,083 | $ 133,648 |
Operating lease cost | $ 62,541 | $ 63,681 | $ 125,083 | $ 133,648 |
Revenue earning devices consisted of the following: (Details) - USD ($) |
Aug. 31, 2023 |
Feb. 28, 2023 |
---|---|---|
Revenue Earning Devices | ||
Revenue earning devices | $ 2,800,522 | $ 2,015,058 |
Less: Accumulated depreciation | (1,044,294) | (779,839) |
Total | $ 1,756,228 | $ 1,235,219 |
REVENUE EARNING DEVICES (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2023 |
Aug. 31, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Revenue earning | $ 386,363 | $ 267,484 | $ 771,571 | $ 652,641 |
Depreciation expense | 191,041 | 145,793 | 358,983 | 239,788 |
Robotic Assistance Devices LLC [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Revenue earning | 341,042 | 251,946 | 785,464 | 426,047 |
Depreciation expense | $ 141,614 | $ 116,125 | $ 264,455 | $ 187,539 |
Fixed assets consisted of the following: (Details) - USD ($) |
Aug. 31, 2023 |
Feb. 28, 2023 |
|||
---|---|---|---|---|---|
Property, Plant and Equipment [Line Items] | |||||
Gross | $ 605,121 | $ 497,890 | |||
Less: accumulated depreciation | (276,530) | (182,002) | |||
Fixed assets, net of accumulated depreciation | 328,591 | 315,888 | [1] | ||
Automobiles [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Gross | 101,680 | 101,680 | |||
Demo Devices [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Gross | 172,778 | 69,010 | |||
Tools, Dies and Molds [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Gross | 101,322 | 101,322 | |||
Machinery and Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Gross | 8,825 | 8,825 | |||
Computer Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Gross | 150,387 | 150,387 | |||
Office Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Gross | 15,312 | 15,312 | |||
Furniture and Fixtures [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Gross | 21,225 | 21,225 | |||
Warehouse Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Gross | 14,561 | 14,561 | |||
Leasehold Improvements [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Gross | $ 19,031 | $ 15,568 | |||
|
FIXED ASSETS (Details Narrative) - Robotic Assistance Devices LLC [Member] - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2023 |
Aug. 31, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Additions to fixed assets | $ 75,057 | $ 139,946 | $ 107,230 | $ 233,676 |
Assets transfers from inventory | 20,693 | 103,767 | 26,479 | |
Remaining additions to fixed assets | 118,983 | 3,463 | 207,197 | |
Depreciation expense | $ 49,427 | $ 29,668 | $ 94,528 | $ 52,249 |
DEFERRED VARIABLE PAYMENT OBLIGATION (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 03, 2021 |
Aug. 27, 2020 |
Jul. 01, 2020 |
Apr. 22, 2020 |
Feb. 29, 2020 |
Dec. 30, 2019 |
Nov. 18, 2019 |
May 09, 2019 |
Feb. 01, 2019 |
May 31, 2021 |
Aug. 31, 2023 |
Aug. 27, 2021 |
Feb. 28, 2023 |
||||
Principal amount | $ 32,200,346 | |||||||||||||||
Accrued payment | 667,634 | $ 542,177 | ||||||||||||||
Default on payments | 431,719 | 325,600 | ||||||||||||||
Aggregate investment | $ 1,925,000 | |||||||||||||||
Total payment obligation | 2,525,000 | 2,525,000 | [1] | |||||||||||||
Payment receive | $ 0 | 0 | ||||||||||||||
Investor [Member] | ||||||||||||||||
Maximum amount of debt | $ 1,925,000 | $ 800,000 | $ 100,000 | $ 900,000 | ||||||||||||
Percentage of exchange rate | 14.25% | 2.75% | 1.00% | 1.00% | 9.00% | |||||||||||
Debt instrument, date of first required payment | Feb. 29, 2020 | |||||||||||||||
Description of variable payments terms | These variable payments (Payments) are to be made 30 days after the end of each fiscal quarter. If the Payments would deplete RAD’s available cash by more than 30%, the Payments may be deferred for up to 12 months after the quarterly report at an interest rate of 6% per annum on the unpaid amount. | |||||||||||||||
Description of disposition price | The FMV cannot exceed 30% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments. | The FMV cannot exceed 43.77% of the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments. As of March 1, 2021 as a result of the amendment with the first investor noted below. This aggregate asset disposition % was reduced from 43.77 % to 33.77%. | ||||||||||||||
Principal amount | $ 109,000 | $ 225,000 | ||||||||||||||
Advance amount | 116,000 | |||||||||||||||
Investor [Member] | Series F Preferred Stock [Member] | ||||||||||||||||
Purchase of warrant | 367 | 38 | ||||||||||||||
Exercise price | $ 1.00 | |||||||||||||||
Fair value of warrants | $ 33,015,214 | |||||||||||||||
Investor [Member] | Maximum [Member] | ||||||||||||||||
Percentage of exchange rate | 14.25% | |||||||||||||||
Percentage of total asset disposition price | 31.00% | |||||||||||||||
Investor [Member] | Minimum [Member] | ||||||||||||||||
Percentage of exchange rate | 9.65% | |||||||||||||||
Percentage of total asset disposition price | 21.00% | |||||||||||||||
Investor [Member] | Agreement [Member] | ||||||||||||||||
Maximum amount of debt | $ 900,000 | |||||||||||||||
Investor [Member] | Agreement One [Member] | ||||||||||||||||
Maximum amount of debt | 225,000 | |||||||||||||||
Investor [Member] | Ageement Two [Member] | ||||||||||||||||
Maximum amount of debt | $ 800,000 | |||||||||||||||
Investor One [Member] | ||||||||||||||||
Maximum amount of debt | 400,000 | $ 400,000 | ||||||||||||||
Percentage of exchange rate | 4.00% | |||||||||||||||
Investor Two [Member] | ||||||||||||||||
Maximum amount of debt | $ 50,000 | $ 50,000 | ||||||||||||||
Percentage of exchange rate | 1.11% | |||||||||||||||
Investor Four [Member] | ||||||||||||||||
Percentage of exchange rate | 2.25% | |||||||||||||||
Investor Five [Member] | ||||||||||||||||
Description of variable payments terms | If the Payments would deplete RAD’s available cash by more than 20%, the payment may be deferred. The investor had agreed to pay $100,000 per month over an 8 month period with the first payment due July 2020 and the final payment no later than February 28, 2021. As at August 31, 2020 the investor had fully funded the $800,000 commitment. | |||||||||||||||
Investor Eight [Member] | ||||||||||||||||
Percentage of assets sold | 10.00% | |||||||||||||||
Investor Eight [Member] | ||||||||||||||||
Total payment obligation | $ 2,525,000 | 2,525,000 | ||||||||||||||
Deferred payment obligation | $ 2,525,000 | $ 2,525,000 | ||||||||||||||
|
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Aug. 31, 2023 |
Aug. 31, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
Feb. 28, 2023 |
Feb. 28, 2022 |
|
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||||||
Net borrowings on loan payable - related party | $ 0 | $ 0 | ||||
Loan payable - related party | $ 260,746 | 260,746 | $ 206,516 | |||
Balance due to related party | 172,265 | 172,265 | $ 108,000 | |||
Interest Expense | 1,753,216 | $ 1,002,020 | $ 3,359,432 | 2,177,050 | ||
Percentage of interest expense due to related party | 12.00% | 12.00% | ||||
Deferred salary payable to related party | $ 108,000 | |||||
Interest accrued related party | $ 23,515 | $ 15,660 | ||||
Consulting fees for research and development | $ 777,260 | $ 957,395 | $ 1,659,275 | $ 1,959,129 | ||
Incentives Compensation Plan [Member] | ||||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||||||
Share price | $ 1,000 | $ 1,000 |
OTHER DEBT – VEHICLE LOAN (Details Narrative) - USD ($) |
1 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Nov. 30, 2017 |
Dec. 31, 2016 |
Aug. 31, 2023 |
Feb. 28, 2023 |
Feb. 28, 2022 |
Feb. 28, 2021 |
Feb. 28, 2020 |
Feb. 28, 2019 |
|
Restructuring Cost and Reserve [Line Items] | ||||||||
Vehicle loan secured by automobile | $ 32,200,346 | |||||||
Principal repayments of loan | $ 0 | $ 0 | ||||||
Proceeds of disposal of vehicle offset against vehicle loan | 18,766 | |||||||
Remaining asset value | 5,515 | |||||||
Reclassification of fixed assets to vehicle for disposal | 13,251 | |||||||
Robotic Assistance Devices LLC [Member] | Secured Debt [Member] | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Vehicle loan secured by automobile | $ 47,661 | $ 47,704 | ||||||
Term of debt | 5 years | 5 years | ||||||
Maturity date | Oct. 24, 2022 | Nov. 09, 2021 | ||||||
Payment of debt interest and principal | $ 923 | $ 1,019 | ||||||
Outstanding balance of the loan | $ 21,907 | |||||||
Loss on sale of vehicle | 3,257 | |||||||
Current portion vehicle loan | 21,578 | $ 21,578 | ||||||
Long-term vehicle loan | $ 16,944 | $ 16,944 | ||||||
Total vehicle loan | $ 38,522 | $ 38,522 |
Loans payable at August 31, 2023 consisted of the following: (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 11, 2023 |
Apr. 20, 2023 |
Apr. 05, 2023 |
Feb. 06, 2023 |
Jan. 11, 2023 |
Nov. 15, 2022 |
Nov. 10, 2022 |
Nov. 09, 2022 |
Oct. 28, 2022 |
Feb. 28, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
Feb. 28, 2023 |
Feb. 28, 2021 |
|||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | $ 32,200,346 | $ 32,200,346 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less: current portion of loans payable | (20,369,986) | (20,369,986) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less: discount on non-current loans payable | (4,654,370) | (4,654,370) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-current loans payable, net of discount | 7,175,990 | 7,175,990 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current portion of loans payable | 20,369,986 | 20,369,986 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less: discount on current portion of loans payable | (966,767) | (966,767) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current portion of loans payable, net of discount | $ 19,403,219 | $ 19,403,219 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant purchase | 6,500,000 | 6,500,000 | 12,100,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of warrants | $ 0 | $ 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expenses | $ 1,753,216 | $ 1,002,020 | $ 3,359,432 | $ 2,177,050 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 01 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [1],[2] | Jul. 18, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [1],[2] | $ 3,500 | $ 3,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [1],[2] | 22.00% | 22.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 02 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [3] | Dec. 10, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [3] | $ 3,921,168 | $ 3,921,168 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [3] | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt settlement amount | $ 2,683,357 | $ 2,683,357 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest | $ 1,237,811 | 1,237,811 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 02 [Member] | Warrant [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | $ 3,921,168 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.002 | $ 0.002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of notes | $ 990,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 03 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [4] | Dec. 10, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [4] | $ 3,054,338 | $ 3,054,338 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [4] | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt settlement amount | $ 1,460,794 | $ 1,460,794 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest | $ 1,593,544 | 1,593,544 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 03 [Member] | Warrant [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | $ 3,054,338 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.002 | $ 0.002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of notes | $ 550,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable04 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [5] | Dec. 10, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [5] | $ 165,605 | $ 165,605 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [5] | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt settlement amount | $ 103,180 | $ 103,180 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest | $ 62,425 | 62,425 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable04 [Member] | Warrant [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | $ 165,605 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.002 | $ 0.002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of notes | $ 176,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant purchase | 80,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable05 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [6] | Dec. 14, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [6] | $ 310,375 | $ 310,375 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [6] | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt settlement amount | $ 235,000 | $ 235,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest | $ 75,375 | 75,375 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable05 [Member] | Warrant [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | $ 310,375 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.002 | $ 0.002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of notes | $ 182,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant purchase | 25,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 06 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [7] | Dec. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [7] | $ 350,000 | $ 350,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [7] | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.025 | $ 0.025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 35,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued | 50,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of warrant or right warrants term | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of warrants | $ 271,250 | $ 271,250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt discount | 271,250 | 271,250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | 52,756 | 92,660 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 100,855 | $ 100,855 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 07 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [8] | Jan. 01, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [8] | $ 25,000 | $ 25,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [8] | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt settlement amount | $ 9,200 | $ 9,200 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest | 6,944 | 6,944 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 07 [Member] | Warrant [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | $ 16,144 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 08 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [9] | Jan. 01, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [9] | $ 145,000 | $ 145,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [9] | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt settlement amount | $ 79,500 | $ 79,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest | 28,925 | 28,925 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 08 [Member] | Warrant [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | 145,000 | 145,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for debt conversion | $ 108,425 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 09 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [10] | Jan. 14, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [10] | $ 550,000 | $ 550,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [10] | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.025 | $ 0.025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 250,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued | 50,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of warrant or right warrants term | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of warrants | $ 380,174 | $ 380,174 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt discount | 380,174 | 380,174 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | 62,143 | 113,188 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 126,148 | $ 126,148 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable10 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [11] | Feb. 22, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [11] | $ 1,650,000 | $ 1,650,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [11] | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.0164 | $ 0.135 | $ 0.135 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 150,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued | 100,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of warrant or right warrants term | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of warrants | $ 1,342,857 | $ 1,342,857 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt discount | 1,342,857 | 1,342,857 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | 220,757 | 379,821 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 732,440 | $ 732,440 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expenses | $ 950,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable10 [Member] | Common Stock [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued | 50,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of warrant or right warrants term | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable11 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [12] | Mar. 01, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [12] | $ 6,000,000 | $ 6,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [12] | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.135 | $ 0.135 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued | 300,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of warrant or right warrants term | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt discount | $ 4,749,005 | $ 4,749,005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expenses | $ 2,850,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from issuance of debt | 5,400,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt conversion original debt amount 1 | 600,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable11 [Member] | Valuation Technique, Option Pricing Model [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of warrants | $ 4,749,005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable11 [Member] | Common Stock [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.0164 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued | 150,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of warrant or right warrants term | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable12 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [13] | Jun. 08, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [13] | $ 2,750,000 | $ 2,750,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [13] | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.064 | $ 0.064 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued | 170,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of warrant or right warrants term | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of warrants | $ 2,035,033 | $ 2,035,033 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt discount | 2,035,033 | 2,035,033 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | 175,789 | 330,699 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 463,519 | $ 463,519 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expenses | $ 1,615,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable12 [Member] | Common Stock [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.0164 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued | 85,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of warrant or right warrants term | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable13 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [14] | Jul. 12, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [14] | $ 3,830,360 | $ 3,830,360 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [14] | 7.00% | 7.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal ammount | $ 4,000,160 | $ 4,000,160 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repayment of notes | 27,000 | $ 54,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable14 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [15] | Sep. 14, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [15] | $ 1,650,000 | $ 1,650,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [15] | 12.00% | 12.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.037 | $ 0.037 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 150,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued | 250,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of warrant or right warrants term | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of warrants | $ 1,284,783 | $ 1,284,783 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt discount | 1,284,783 | 1,284,783 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | 115,344 | 202,274 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 127,501 | $ 127,501 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable15 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [16] | Jul. 28, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | $ 170,000 | $ 170,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [16] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 20,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | $ 3,739 | 9,026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 0 | $ 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable16 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [17] | Aug. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [17] | $ 3,000,000 | $ 3,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [17] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt discount | $ 39,500 | $ 39,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | 4,736 | 9,293 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | $ 21,576 | $ 21,576 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of warrant or right outstanding | 955,000,000 | 955,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rate of interest | 15.00% | 15.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of warrant or right, outstanding | $ 2,960,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable17 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [18] | Sep. 07, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [18] | $ 370,000 | $ 370,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [18] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | $ 15,479 | 27,821 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 0 | $ 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable18 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [19] | Sep. 08, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [19] | $ 475,000 | $ 475,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [19] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 75,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | $ 17,799 | 36,729 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 0 | $ 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable19 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [20] | Oct. 13, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [20] | $ 350,000 | $ 350,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [20] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | $ 13,295 | 25,585 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 7,325 | $ 7,325 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable20 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [21] | Oct. 28, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | [21] | $ 400,000 | $ 400,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [21] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of credit facility | $ 4,000,000 | $ 4,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 21 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [21] | Nov. 09, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | $ 400,000 | $ 400,000 | [21] | $ 400,000 | [21] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [21] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | $ 2,472 | $ 4,338 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 343,685 | $ 343,685 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 22 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [21] | Nov. 10, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | $ 400,000 | $ 400,000 | [21] | $ 400,000 | [21] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [21] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | $ 2,438 | $ 4,276 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 344,162 | $ 344,162 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 23 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [21] | Nov. 15, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | $ 400,000 | $ 400,000 | [21] | $ 400,000 | [21] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [21] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | $ 2,233 | $ 3,900 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 346,981 | $ 346,981 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 24 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [21] | Jan. 11, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | $ 400,000 | $ 400,000 | [21] | $ 400,000 | [21] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [21] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | $ 2,489 | $ 4,370 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 343,445 | $ 343,445 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 25 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [21] | Feb. 06, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | $ 400,000 | $ 400,000 | [21] | $ 400,000 | [21] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [21] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | $ 2,541 | $ 4,565 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 342,724 | $ 342,724 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 26 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [21] | Apr. 05, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | $ 400,000 | $ 400,000 | [21] | $ 400,000 | [21] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [21] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | $ 2,436 | $ 4,272 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 344,154 | $ 344,154 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 27 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [21] | Apr. 20, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | $ 400,000 | $ 400,000 | [21] | $ 400,000 | [21] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [21] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | $ 2,523 | $ 3,274 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 342,971 | $ 342,971 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 28 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Date of issuance | [21] | May 11, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | $ 400,000 | $ 400,000 | [21] | $ 400,000 | [21] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual interest rate | [21] | 15.00% | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | $ 2,010 | $ 2,206 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | 350,013 | 350,013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Payable 29 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, face amount | $ 400,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expens | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, unamortized discount | $ 398,983 | $ 398,983 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Summary of Preferred Stock Warrant Activity (Details) - Preferred Stock [Member] - Warrant [Member] |
6 Months Ended |
---|---|
Aug. 31, 2023
$ / shares
shares
| |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Outstanding at beginning | shares | 695 |
Weighted average exercise price at beginning | $ / shares | $ 1.00 |
Weighted average remaining years beginning | 10 years |
Issued | shares | 183 |
Issued | $ / shares | $ 1.00 |
Issued | 9 years 10 months 17 days |
Exercised | shares | 0 |
Exercised | $ / shares | |
Forfeited and cancelled | shares | 0 |
Forfeited and cancelled | $ / shares | |
Outstanding at ending | shares | 878 |
Weighted average exercise price at ending | $ / shares | $ 1.00 |
Weighted average remaining years ending | 9 years 9 months |
The table below represent the common shares issued, issuable and outstanding at August 31, 2023 and February 28, 2023: (Details) - shares |
Aug. 31, 2023 |
Feb. 28, 2023 |
---|---|---|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Issued | 7,039,806,793 | 5,848,741,599 |
Common Stock [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Issued | 7,039,806,793 | 5,836,641,599 |
Issuable | 12,100,000 | |
Issued, issuable and outstanding | 7,039,806,793 | 5,848,741,599 |
Summary of Common Stock Warrant Activity (Details) - Common Stock [Member] - Warrant [Member] |
6 Months Ended |
---|---|
Aug. 31, 2023
$ / shares
shares
| |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Outstanding at beginning | shares | 314,217,451 |
Weighted average exercise price at beginning | $ / shares | $ 0.114 |
Outstanding at beginning (in years) | 1 year 11 months 12 days |
Issued | shares | |
Issued | $ / shares | |
Exercised | shares | |
Exercised | $ / shares | |
Forfeited and cancelled | shares | |
Forfeited and cancelled | $ / shares | |
Outstanding at ending | shares | 314,217,451 |
Weighted average exercise price at ending | $ / shares | $ 0.114 |
Outstanding at ending (in years) | 1 year 5 months 12 days |
Summary of Common Stock Option Activity -Employee Stock Options (Details) - Equity Option [Member] - $ / shares |
6 Months Ended | |
---|---|---|
Aug. 31, 2023 |
Feb. 28, 2023 |
|
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Outstanding at beginning | 95,725,000 | |
Outstanding at beginning | $ 0.02 | |
Weighted average remaining years | 4 years 2 months 30 days | 4 years 9 months |
Issued | ||
Issued | ||
Exercised | ||
Exercised | ||
Forfeited, extinguished and cancelled | (13,025,000) | |
Forfeited, extinguished and cancelled | $ 0.02 | |
Weighted average remaining years | 4 years 9 months | |
Outstanding at ending | 82,700,000 | |
Outstanding at ending | $ 0.02 |
STOCKHOLDERS’ EQUITY (DEFICIT) (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Aug. 31, 2023 |
Aug. 31, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
Feb. 28, 2023 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Increase in shares authorization | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | ||
Issuance of shares | 6,500,000 | 6,500,000 | 12,100,000 | ||
Fair value | $ 44,460 | $ 44,460 | |||
Payment for services | 83,200 | $ 83,200 | |||
Gain on settlement of debt | $ 38,640 | ||||
Equity Option [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Issuance of shares | 903,636,004 | 1,184,565,194 | |||
Gross proceeds | $ 4,972,795 | $ 6,372,989 | |||
Issuance costs | 4,796,193 | 6,115,032 | |||
Net proceeds | $ 176,672 | $ 257,956 | |||
Minimum [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Increase in shares authorization | 7,225,000,000 | 7,225,000,000 | |||
Maximum [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Increase in shares authorization | 10,000,000,000 | 10,000,000,000 | |||
Warrant [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Relative fair value | $ 947,447 | $ 947,447 | |||
Share based compensation | $ 50,713 | $ 103,434 | $ 0 | $ 0 |
Summary of rent expense and operating lease cost are recorded over the lease terms on a straight-line basis. (Details) |
Aug. 31, 2023
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
August 31, 2024 | $ 239,669 |
August 31, 2025 | 207,558 |
August 31, 2026 | 207,558 |
August 31, 2027 | 207,558 |
August 31, 2028 | 207,558 |
August 31, 2029 and after | 553,488 |
Total lease payments | 1,623,389 |
Less: Interest | (482,399) |
Present value of lease liabilities | $ 1,140,990 |
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 28, 2022 |
Sep. 30, 2021 |
Mar. 10, 2021 |
Dec. 18, 2020 |
Aug. 31, 2023 |
Aug. 31, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
Feb. 28, 2023 |
[1] | |||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||
Entity address | the Company entered into a 15-month lease agreement for office space at 18009 Sky Park Circle Suite E, Irvine CA, 92614, commencing on December 18, 2020 through to March 31, 2022 with a minimum base rent of $3,859 per month. | |||||||||||
Annual rent | $ 1,500 | $ 1,538 | $ 15,880 | $ 3,859 | ||||||||
Security deposit | $ 1,500 | $ 18,462 | $ 15,880 | $ 3,859 | $ 21,239 | $ 21,239 | $ 21,239 | |||||
Entity address | the Company entered into a 10 year lease agreement for q manufacturing facility at 10800 Galaxie Avenue, Ferndale, Michigan, 48220, commencing on May 1, 2021 through to April 30, 2031 with a minimum base rent of $15,880 per month. | |||||||||||
Entity address | the Company entered into a 3-year lease agreement for a vehicle commencing September 30, 2021 through to April 30, 2031 with a minimum base rent of $1,538 per month. | |||||||||||
Entity address | the Company entered into a 2-year lease agreement for office space at 1516 E Edinger, Santa Ana, California, 92705, commencing on February 1, 2022 through to January 31, 2024 with a minimum base rent of $1,500 per month. | |||||||||||
Rent expense and operating lease cost | $ 62,541 | $ 63,681 | $ 125,083 | $ 133,648 | ||||||||
|
The net income (loss) per common share amounts were determined as follows: (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Aug. 31, 2023 |
May 31, 2023 |
Aug. 31, 2022 |
May 31, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
|
Earnings Per Share [Abstract] | ||||||
Net Income (Loss) Attributable to Parent | $ (4,759,728) | $ (4,555,193) | $ (4,172,865) | $ (4,671,686) | $ (9,314,919) | $ (8,844,551) |
Interest on Convertible Debt, Net of Tax | 8,543 | 8,737 | ||||
Realized Gain (Loss), Derivative and Foreign Currency Transaction Price Change, Operating, before Tax | (3,595) | (3,595) | ||||
Net Income (Loss) Available to Common Stockholders, Diluted | $ (4,759,728) | $ (4,171,909) | $ (9,314,919) | $ (8,843,401) | ||
Weighted Average Number of Shares Outstanding Basic1 | 6,568,957,612 | 4,970,040,852 | 6,266,833,467 | 4,884,349,362 | ||
Weighted Average Number of Shares Outstanding, Diluted, Adjustment | 6,568,957,612 | 4,970,040,852 | 6,266,833,467 | 4,884,349,362 |
The anti-dilutive shares of common stock equivalents for the three and six months ended August 31, 2023 and 2022 were as follows: (Details) - shares |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Aug. 31, 2023 |
Aug. 31, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
|||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 24,720,755,887 | 1,237,643,136 | 24,720,755,887 | 1,237,643,136 | ||
Series F Preferred Stock [Member] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | [1] | 24,286,988,436 | 24,286,988,436 | |||
Stock Options and Warrants [Member] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 433,767,451 | 401,217,451 | 433,767,451 | 401,217,451 | ||
Convertible Debt Securities [Member] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 836,425,685 | 836,425,685 | ||||
|
Series F Preferred shares been convertible the dilutive effects would be as follows: (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2023 |
Aug. 31, 2022 |
Aug. 31, 2023 |
Aug. 31, 2022 |
|
Earnings Per Share [Abstract] | ||||
Convertible series F preferred shares | 0 | 17,375,422,528 | 0 | 17,375,422,528 |
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - Share Purchase Agreement [Member] |
Oct. 12, 2023
USD ($)
shares
|
---|---|
Subsequent Event [Line Items] | |
Issuance of shares | shares | 120,905,263 |
Gross proceeds | $ 377,224 |
Issuance costs | 8,569 |
Net proceeds | $ 368,655 |
1 Year Artificial Intelligence ... (PK) Chart |
1 Month Artificial Intelligence ... (PK) Chart |
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