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INCOME TAXES
 12 Months Ended
Feb. 28, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES

14. INCOME TAXES

 

The Company has adopted ASC 740-10, “Income Taxes”, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

 

The income tax expense (benefit) consisted of the following for the fiscal years ended February 28, 2026 and ended February 28, 2025:

 

    February 28,
2026		    February 28,
2025		 
Total current  $—   $— 
Total deferred   —    — 
Total  $—   $— 

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

 

The following is a reconciliation of the expected statutory federal income tax provision to the actual income tax benefit for the fiscal years ended February 28, 2026 and February 28, 2025:

 

   February 28,
2026		 
Federal statutory rate  $(2,900,000)
State income tax benefit, net of federal benefit   (660,000)
Non deductible interest   500,000 
Non deductible stock based compensation   334,000 
Change in valuation allowance   2,726,000 
Total  $— 

 

   February 28,
2025		 
Federal statutory rate  $(4,000,000)
State income tax benefit, net of federal benefit   (900,000)
Non deductible interest   500,000 
Non deductible stock based compensation   322,000 
Change in valuation allowance   4,078,000 
Total  $— 

 

For the years ended February 28, 2026 and February 28, 2025, the expected tax benefit, temporary timing differences and long-term timing differences are calculated at the 21% statutory rate.

 

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

Significant components of the Company’s deferred tax assets and liabilities were as follows for the fiscal years February 28, 2026 and February 28, 2025:

 

   February 28,
2026		   February 28,
2025		 
Deferred tax assets:          
Net operating loss carryforwards  $22,726,000   $20,000,000 
           
Deferred tax liabilities:          
Depreciation   —    — 
Deferred revenue   —    — 
Total deferred tax liabilities   —    — 
           
Net deferred tax assets:          
Less valuation allowance   (22,726,000)   (20,000,000)
Net deferred tax assets (liabilities)  $—   $— 

 

The Company has incurred losses since inception, therefore, the Company has no federal tax liability. Additionally there are limitations imposed by certain transactions which are deemed to be ownership changes which occurred in the Company on August 28, 2017. The net deferred tax asset generated by the loss carryforward has been fully reserved. The cumulative net operating loss carryforward was approximately $90,000,000 at February 28, 2026 and $76,973,800 at February 28, 2025, that is available for carryforward for federal income tax purposes and begin to expire in 2030.

 

Although the Company has tax loss carry-forwards, there is uncertainty as to utilization prior to their expiration. Accordingly, the future income tax asset amounts have been fully reserved by a valuation allowance.

 

The Company has maintained a full valuation allowance against its deferred tax assets at February 28, 2026 and February 28, 2025. A valuation allowance is required to be recorded when it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Since the Company cannot be assured of realizing the net deferred tax asset, a full valuation allowance has been provided.

 

The Company does not have any uncertain tax positions at February 28, 2026 and February 28, 2025 that would affect its effective tax rate. The Company does not anticipate a significant change in the amount of unrecognized tax benefits over the next twelve months. Because the Company is in a loss carryforward position, the Company is generally subject to US federal and state income tax examinations by tax authorities for all years for which a loss carryforward is available. If and when applicable, the Company will recognize interest and penalties as part of income tax expense.

 

The Company’s tax returns for the years ended February 28, 2025 and February 29, 2024, and February 28, 2023 are open for examination under Federal statute of limitations.

 

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS