v3.26.3
LOANS PAYABLE
 6 Months Ended
Aug. 31, 2026
Debt Disclosure [Abstract]  
LOANS PAYABLE

11. LOANS PAYABLE

 

Loans payable at August 31, 2026 consisted of the following:

 

Date   Maturity   Description   Principal     Interest Rate  
July 18, 2016   July 18, 2017   Promissory note (1)*   $ 3,500       22 %
December 10, 2020   March 1, 2027   Promissory note (2)     3,921,168       A12 %
December 10, 2020   March 1, 2027   Promissory note (3)     2,754,338       A12 %
December 14, 2020   March 1, 2027   Promissory note (5)     310,375       12 %
December 30, 2020   March 1, 2027   Promissory note (6)     350,000       A 12 %
January 1, 2021   March 1, 2027   Promissory note (7)     25,000       12 %
January 1, 2021   March 1, 2027   Promissory note (8)     145,000       12 %
January 14, 2021   March 1, 2027   Promissory note (9)     237,500       A 12 %
February 22, 2021   March 1, 2027   Promissory note (10)     1,650,000       12 %
March 1, 2021   March 1, 2027   Promissory note (11)     6,000,000       12 %
June 8, 2021   June 8, 2027   Promissory note (12)     2,750,000       12 %
September 14, 2021   September 14, 2027   Promissory note (14)     1,650,000       A 12 %
July 28, 2022   March 1, 2027   Promissory note (15)     170,000       15 %
August 30, 2022   August 30, 2027   Promissory note (16)     3,000,000       A 15 %
September 7, 2022   March 1, 2027   Promissory note (17)     400,000       15 %
September 8, 2022   March 1, 2027   Promissory note (18)     475,000       15 %
October 13, 2022   March 1, 2027   Promissory note (19)     350,000       15 %
October 28, 2022   October 31, 2026   Promissory note (20)     67,410       A 15 %
November 9, 2022   October 31, 2026   Promissory note (20)     400,000       A 15 %
November 10, 2022   October 31, 2026   Promissory note (20)     400,000       A 15 %
November 15, 2022   October 31, 2026   Promissory note (20)     400,000       A 15 %
January 11, 2023   October 31, 2026   Promissory note (20)     400,000       A 15 %
February 6, 2023   October 31, 2026   Promissory note (20)     400,000       A 15 %
April 5, 2023   October 31, 2026   Promissory note (20)     400,000       A 15 %
April 20, 2023   October 31, 2026   Promissory note (20)     400,000       A 15 %
May 11, 2023   October 31, 2026   Promissory note (20)     400,000       A 15 %
October 27, 2023   October 31, 2026   Promissory note (20)     400,000       A 15 %
November 30, 2023   August 30, 2027   Purchase Agreement (21)     203,000       15 %
March 8, 2024   August 30, 2027   Purchase Agreement (22)     350,000       15 %
July 26, 2025   November 15, 2026E   Promissory note (23)     165,000       C 15 %
August 7, 2025   November 15, 2026E   Promissory note (24)     245,000       C 15 %
August 25, 2025   November 15, 2026E   Promissory note (25)     137,500       C 15 %
August 25, 2025   May 6, 2026   Future Receivables Purchase and Sale Agreement (26)     —       108 %
September 25, 2025   November 15, 2026E   Promissory note (27)     550,000       C 15 %
October 30, 2025   October 30, 2026   Promissory note (28)     200,000       C 15 %
November 6, 2025   November 6, 2026   Promissory note (29)     275,000       C 15 %
  November 24, 2026   Promissory note (30)     450,000       C 15 %
December 9, 2025   December 9, 2026   Promissory note (31)     450,000       C 15 %
December 17, 2025   September 23, 2026   Business loan (32)     —       65 %
December 22, 2025   December 22, 2026   Convertible note (33)     355,000       12 %
December 27, 2025   December 27, 2026   Promissory note (34)     275,000       C 15 %
January 12, 2026   January 12, 2027   Promissory note (35)     330,000       C 15 %
January 27, 2026   January 27, 2027   Promissory note (36)     170,000       C 15 %
February 2, 2026   February 2, 2027   Promissory note (37)     330,000       C 15 %
February 19, 2026   February 19, 2027   Convertible note (38)     165,000       12 %
February 24, 2026   February 24, 2027   Promissory note (39)     170,000       C 15 %
March 16, 2026   March 16, 2027   Promissory note (13)     170,000       C 15 %
March 25, 2026   March 25, 2027   Convertible note (40)     110,000       12 %
March 25, 2026   March 25, 2026   Convertible note (41)     —       12 %
April 9, 2026   January 15, 2027   Convertible note (42)     257,000       10 %
April 13, 2026   April 13, 2027   Future Receivables Purchase and Sale Agreement (43)     463,904       NA  
April 20, 2026   April 20, 2027   Convertible note (44)     277,778       12 %
May 1, 2026   January 15, 2027   Convertible note (45)     157,000       10 %
May 4, 2026   May 4, 2027   Convertible Note (46)     700,000       12 %
May 28 2026   May 28 2027   Convertible Note (47)     138,889       12 %
May 29, 2026   May 29, 2027   Promissory note (4)     225,000       C 15 %
June 3, 2026   June 3, 2027   Convertible Note(48)     230,000       6 %
June 9, 2026   June 9, 2027   Convertible Note(49)     55,000       10 %
June 9, 2026   June 9, 2027   Convertible Note(50)     110,000       10 %
June 15, 2026   June 15, 2027   Convertible Note(51)     165,000       10 %
June 24, 2026   June 24, 2027   Convertible Note(52)     166,667       10 %
June 26, 2026   March 30, 2027   Convertible Note(53)     157,000       10 %
July 9, 2026   July 9, 2027   Promissory note(54)     165,000       C 15 %
July 30, 2026   April 15, 2027   Promissory note(55)     200,000       NA
August 11, 2026   August 11, 2027   Convertible Note(56)     209,300       12 %
August 11, 2026   July 6, 2027   Promissory note(57)     200,000       NA
August 19, 2026   August 19, 2027   Convertible Note(58)     150,000       12 %
August 27, 2026   May 13, 2027   Promissory note(59)     225,000       NA
    $ 37,212,329          
                 
Less: current portion of loans payable     (35,562,328 )        
Less: discount on non-current loans payable     (11,337 )        
Non-current loans payable, net of discount   $ 1,638,664          
                 
Current portion of loans payable   $ 35,562,328          
Less: discount on current portion of loans payable     (2,782,491 )        
Current portion of loans payable, net of discount   $ 32,779,837          
                 
Convertible notes   $ 3,403,634          
Loans payable   33,808,695          
Total Loans Payable   $ 37,212,329          

 

* In default

 

A On June 15, 2026 the Company and lender entered into a Loan Amendment Agreement whereby it was agreed that simple interest was to be calculated from the loan issuance date through to February 28, 2026 and commencing March 1, 2026 compounded on the respective principal and interest balance at February 28, 2026.

 

C Compounding annually

 

EOn August 24, 2026 the Company and lender agreed to extend all the indicated notes above to November 15, 2026 in the best interest of all Parties for no fee.

 

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(1) This note was transferred from convertible notes payable because in August 2022 it was no longer convertible due to restrictions placed on the lender.
   
(2) This promissory note was issued as part of a debt settlement whereby $2,683,357 in convertible notes and associated accrued interest of $1,237,811 totaling $3,921,168 was exchanged for this promissory note of $3,921,168, and a warrant to purchase 450,000,000 shares at an exercise price of $.002 per share and a three-year maturity having a relative fair value of $990,000. This note is secured by a general security charging all of the Company’s present and after-acquired property. On November 28, 2023, the parties extended the maturity date from December 10, 2023, to March 1, 2025, with all other terms and conditions remaining the same. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. On December 10, 2025 an exchange agreement was made whereby principal and interest of this note may be exchanged for common shares at 90% of the 5 days’ lowest bid of shares. For the three months ending May 31, 2026 the company exchanged $336,000 accrued interest for 14,000,000 common shares at a fair value of $910,700 with a loss on settlement of $574,700.
   
(3) This promissory note was issued as part of a debt settlement whereby $1,460,794 in convertible notes and associated accrued interest of $1,593,544 totaling $3,054,338 was exchanged for this promissory note of $3,054,338, and a warrant to purchase 250,000,000 shares at an exercise price of $0.002 per share and a three-year maturity having a relative fair value of $550,000. This note is secured by a general security charging all of the Company’s present and after-acquired property. $300,000 has been repaid during the year ended February 29, 2024. On November 28, 2023, the parties extended the maturity date from December 10, 2023, to March 1, 2025, with all other terms and conditions remaining the same. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. On November 24, 2025, the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of the note into common shares at an exchange amount of 90% of the previous 5 day’s lowest bid price. On February 8, 2026, the holder exchanged $192,000 in accrued interest for 8,000,000 common shares at fair value of $320,000 with a loss on settlement of $128,000.
   
(4) Original $225,000 note may be pre-payable at any time. The note balance includes an original issue discount of $25,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of $5,679, with an unamortized discount of $19,321 at August 31, 2026.
   
(5) This promissory note was issued as part of a debt settlement whereby $235,000 in convertible notes and associated accrued interest of $75,375 totaling $310,375 was exchanged for this promissory note of $310,375, and a warrant to purchase 25,000,000 shares at an exercise price of $0.002 per share and a three-year maturity having a fair value of $182,500. On December 14, 2023, the parties extended the maturity date from December 14, 2023 date to March 1, 2027.
   
(6) The note, with an original principal amount of $350,000, may be pre-payable at any time. The note balance includes an original issue discount of $35,000 and was issued with a warrant to purchase 50,000,000 shares at an exercise price of $0.025 per share with a 3-year term and having a relative fair value of $271,250. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $271,250 with a corresponding adjustment to paid in capital for the relative fair value of the warrant. On March 1, 2024, the unamortized relative fair value discount of $65,092 was removed with a corresponding adjustment to accumulated deficit. A $8,399 unamortized discount remained. On November 28, 2023, the parties extended the maturity date from December 10, 2023, to March 1, 2025, with all other terms and conditions remaining the same. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same..
   
(7) This promissory note was issued as part of a debt settlement whereby $9,200 in convertible notes and associated accrued interest of $6,944 totaling $16,144 was exchanged for this promissory note of $25,000. This note is secured by a general security charging all of the Company’s present and after-acquired property. On November 28, 2023, the parties extended the maturity date from January 1, 2024, to March 1, 2025, with all other terms and conditions remaining the same. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same.
   
(8) This promissory note was issued as part of a debt settlement whereby $79,500 in convertible notes and associated accrued interest of $28,925 totaling $108,425 was exchanged for this promissory note of $145,000. This note is secured by a general security charging all of the Company’s present and after-acquired property. On November 28, 2023, the parties extended the maturity date from January 1, 2024, to March 1, 2025, with all other terms and conditions remaining the same. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same.

 

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(9) The note, with an original principal amount of $550,000, may be pre-payable at any time. The note balance includes an original issue discount of $250,000 and was issued with a warrant to purchase 50,000,000 shares at an exercise price of $0.025 per share with a 3-year term and having a relative fair value of $380,174. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $380,174 with a corresponding adjustment to paid in capital. On March 1, 2024, the unamortized relative fair value discount of $80,284 was removed with a corresponding adjustment to accumulated deficit. A $10,559 unamortized discount remained. On November 28, 2023, the parties extended the maturity date from January 14, 2024, to March 1, 2025, with all other terms and Conditions remaining the same. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. The loan is fully amortized. Through an exchange agreement on February 11, 2025, the Company repaid $162,000 in interest through the issuance of 600,000 common shares. On March 28, 2025 the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of the note into common shares at an exchange amount of 90% of the previous 5 day’s lowest VWAP price. On March 5, 2025 the Company repaid $150,500 in loan principal as well as $275,000 in accrued interest (all totaling $425,500) was repaid on March 5, 2025 through the issuance of 1,850,000 common shares at a fair value of $444,000 with a loss on settlement of $18,500.
   
(10) The note, with an original principal balance of $1,650,000, may be pre-payable at any time. The note balance includes an original issue discount of $150,000 and was issued with a warrant to purchase 100,000,000 shares at an exercise price of $0.135 per share with a 3-year term and having a relative fair value of $1,342,857. The discount and warrant are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $1,342,857 with a corresponding adjustment to paid in capital for the relative fair value of the warrant. The maturity date was extended from February 22, 2022, to February 22, 2024, on February 28, 2022, in exchange for warrants to purchase 50,000,000 at an exercise price of $.0164 and a 3-year term. These warrants have a fair value of $950,000 recorded as interest expense with a corresponding adjustment to paid in capital recorded in the year ended February 28, 2022. On November 28, 2023, the parties extended the maturity date from February 22, 2024, to March 1, 2025, with all other terms and conditions remaining the same. On March 1, 2024, the unamortized relative fair value discount of $497,614 was removed with a corresponding adjustment to accumulated deficit. A $55,585 unamortized discount remained. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. The loan is fully amortized. On November 24, 2025, the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of the note into common shares at an exchange amount of 90% of the previous 5 day’s lowest bid price. For the three months ending May 31, 2026, the Company exchanged $80,000 of accrued interest for 5,000,000 common at a fair value of $100,000 with a loss on settlement of $20,000.
   
(11) The unsecured note may be pre-payable at any time. Cash proceeds of $5,400,000 were received. The note balance of $6,000,000 includes an original issue discount of $600,000 and was issued with a warrant to purchase 300,000,000 shares at an exercise price of $0.135 per share with a 3-year term and having a relative fair value of $4,749,005 using Black-Scholes with assumptions described in note 13. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $4,749,005 with a corresponding adjustment to paid in capital for the relative value of the warrant. The maturity was extended from March 1, 2022 to March 1, 2024 on February 28, 2022 in exchange for warrants to purchase 150,000,000 shares of common stock at an exercise price of $.0164 and a 3 year term. These warrants have a fair value of $2,850,000 recorded as interest expense with a corresponding adjustment to paid in capital recorded in the year ended February 28, 2022. This note has been fully amortized. This note was again extended to March 1, 2025. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same. On March 28, 2025 the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of the note into common shares at an exchange amount of 90% of the previous 5 day’s lowest VWAP price. For the year ended February 28, 2026, the Company has issued 36,500,000 common shares at fair market value of $4,365,500 to repay $3,840,500 in accrued interest with a loss on settlement of debt of $525,000.
   
(12) The note, with an original principal balance of $2,750,000, may be pre-payable at any time. The note balance includes an original issue discount of $50,000 and was issued with a warrant to purchase 170,000,000 shares at an exercise price of $0.064 per share with a 3-year term and having a relative fair value of $2,035,033. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $2,035,033 with a corresponding adjustment to paid in capital. The maturity date was extended from June 8, 2022 to June 8, 2024 on February 28, 2022 in exchange for warrants to purchase 85,000,000 at an exercise price of $.0164 and a 3 year term. These warrants have a fair value of $1,615,000 recorded as interest expense with a corresponding adjustment to paid in capital recorded in the year ended February 28, 2022. This note was extended to June 8, 2025. On March 1, 2024, the unamortized relative fair value discount of $33,547 was removed with a corresponding adjustment to accumulated deficit. A $4,121 unamortized discount remained. The loan is fully amortized. On April 16, 2025, the parties again extended the maturity date from June 8, 2025, to June 8, 2027, with all other terms and conditions remaining the same. On November 24, 2025, the Company entered into an exchange agreement where the holder can exchange all or part of price the principal and interest of the note into common shares at an exchange amount of 90% of the previous 5 day’s lowest bid price. For the year ended February 28, 2026 the holder exchanged $1,416,000 in accrued interest for 25,000,000 common shares at a fair value of $1,680,000 with a loss on settlement of $264,000.
   
(13) Original $170,000 note may be pre-payable at any time. The note balance includes an original issue discount of $20,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of $8,440, with an unamortized discount of $11,560 at August 31, 2026.

 

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(14) The note, with an original principal balance of $1,650,000, may be pre-payable at any time. The note balance includes an original issue discount of $150,000 and was issued with a warrant to purchase 250,000,000 shares at an exercise price of $0.037 per share with a 3-year term and having a relative fair value of $1,284,783, The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values, a debt discount of $1,284,783 with a corresponding adjustment to paid in capital. On March 1, 2024, the unamortized relative fair value discount of $572,549 was removed with a corresponding adjustment to accumulated deficit. A $66,846 unamortized discount remained. On April 16, 2025, the parties again extended the maturity date from September 14, 2025, to September 14, 2027, with all other terms and conditions remaining the same. On November 24, 2025, the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of the note into common shares at an exchange amount of 90% of the previous 5 day’s lowest bid price. For the six months ended August 31, 2026, the Company recorded amortization expense of $4,989, with an unamortized discount of $11,337 at August 31, 2026.
   
(15) Original $170,000 note may be pre-payable at any time. The note balance includes an original issue discount of $20,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. On November 29, 2023, the parties extended the maturity date from July 28, 2023, to March 1, 2025, with all other terms and conditions remaining the same. This note has been fully amortized. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same.
   
(16) A warrant holder exchanged 955,000,000 warrants for a promissory note of $3,000,000, bearing interest at 15% with a two year maturity. The fair value of the warrants was determined to be $2,960,500 with a corresponding adjustment to paid-in capital and a debt discount of $39,500 which will be amortized over the term of the loan. Principal and interest due at maturity. On March 1, 2024, the unamortized relative fair value discount of $11,535 was removed with a corresponding adjustment to accumulated deficit. This note has been fully amortized. This note was extended to August 30, 2025. On April 16, 2025, the parties again extended the maturity date from August 30, 2025, to August 30, 2027, with all other terms and conditions remaining the same. On November 24, 2025, the Company entered into an exchange agreement where the holder can exchange all or part of the principal and interest of the note into common shares at an exchange amount of 90% of the previous 5 day’s lowest bid price.
   
(17) Original $400,000 note may be pre-payable at any time. The note balance includes an original issue discount of $50,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. On November 29, 2023, the parties extended the maturity date from September 7, 2023, to March 1, 2025, with all other terms and conditions remaining the same. This note has been fully amortized. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same.
   
(18) Original $475,000 note may be pre-payable at any time. The note balance includes an original issue discount of $75,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. On November 29, 2023, the parties extended the maturity date from September 8, 2023, to March 1, 2025, with all other terms and conditions remaining the same. This note has been fully amortized. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same.
   
(19) Original $350,000 note may be pre-payable at any time. The note balance includes an original issue discount of $50,000. Principal and interest due at maturity. Secured by a general security charging all of the Company’s present and after-acquired property. On November 29, 2023, the parties extended the maturity date from October 13, 2023, to March 1, 2025, with all other terms and conditions remaining the same. This note has been fully amortized. On April 16, 2025, the parties again extended the maturity date from March 1, 2025, to March 1, 2027, with all other terms and conditions remaining the same.
   
(20) On October 28, 2022, the Company entered into an loan facility with a lender for up to $4,000,000 including an original issue discount of $500,000. In exchange the Company will issue one series F Preferred Share, extended 329 series F warrants with a March 1, 2026 maturity to a new October 31, 2033 maturity, and issue up to 10 tranches with each tranche of $400,000, with cash proceeds of $350,000 an original issue discount of $50,000, October 31, 2026 maturity, and 61 Series F warrants with a October 31, 2033 maturity. Secured by a general security charging all of the Company’s present and after-acquired property. At February 29, 2024 the Company has issued all 10 tranches totaling $ 4,000,000 as follows:
   
  October 28, 2022, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants and 1 Series F Preferred Share having a relative fair value of $299,399. On March 1, 2024, the unamortized relative fair value discount of $286,775 was removed with a corresponding adjustment to accumulated deficit. A $47,892 unamortized discount remained. For the six months ended August 31, 2026, the Company recorded amortization expense of $10,761, with an unamortized discount of $3,667 at August 31, 2026. For the six months ending August 31, 2026, the Company exchanged $332,590 of principal and $237,400 of accrued interest totaling $589,990 for 77,000,000 common at a fair value of $860,800 with a loss on settlement of $298,810.

 

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(20) November 9, 2022, $400,000 loan, original issue discount of $50,000 , 61 Series F Preferred Share warrants having a relative fair value of $299,750. On March 1, 2024, the unamortized relative fair value discount of $288,513 was removed with a corresponding adjustment to accumulated deficit. A $48,126 unamortized discount remained. For the six months ended August 31, 2026, the Company recorded amortization expense of $10,816, with an unamortized discount of $3,686 at August 31, 2026.

 

November 10, 2022, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $302,020. On March 1, 2024, the unamortized relative fair value discount of $291,694 was removed with a corresponding adjustment to accumulated deficit. A $48,290 unamortized discount remained. For the six months ended August 31, 2026, the Company recorded amortization expense of $10,854, with an unamortized discount of $7,793 at August 31, 2026.

 

November 15, 2022, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $299,959. On March 1, 2024, the unamortized relative fair value discount of $287,814 was removed with a corresponding adjustment to accumulated deficit. A $47,976 unamortized discount remained. For the six months ended August 31, 2026, the Company recorded amortization expense of $11,057, with an unamortized discount of $3,399 at August 31, 2026.

 

January 11, 2023, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $299,959. On March 1, 2024, the unamortized relative fair value discount of $286,813 was removed with a corresponding adjustment to accumulated deficit. A $48,124 unamortized discount remained. For the six months ended August 31, 2026, the Company recorded amortization expense of $10,815, with an unamortized discount of $3,687 at August 31, 2026.

 

February 6, 2023, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $299,959. On March 1, 2024, the unamortized relative fair value discount of $288,342 was removed with a corresponding adjustment to accumulated deficit. A $48,294 unamortized discount remained. For the six months ended August 31, 2026, the Company recorded amortization expense of $10,855, with an unamortized discount of $3,701 at August 31, 2026.

 

April 5, 2023, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $296,245. On March 1, 2024, the unamortized relative fair value discount of $286,821 was removed with a corresponding adjustment to accumulated deficit. A $48,409 unamortized discount remained. For the six months ended August 31, 2026, the Company recorded amortization expense of $10,882, with an unamortized discount of $3,712 at August 31, 2026.

 

April 20, 2023, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $302,219. On March 1, 2024, the unamortized relative fair value discount of $294,824 was removed with a corresponding adjustment to accumulated deficit. A $48,777 unamortized discount remained. For the six months ended August 31, 2026, the Company recorded amortization expense of $10,969, with an unamortized discount of $3,742 at August 31, 2026.

 

May 11, 2023, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $348,983. On March 1, 2024, the unamortized relative fair value discount of $348,831 was removed with a corresponding adjustment to accumulated deficit. A $49,978 unamortized discount remained. For the six months ended August 31, 2026, the Company recorded amortization expense of $11,252, with an unamortized discount of $3,844 at August 31, 2026.

 

October 27 2023, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $261,759. On March 1, 2024, the unamortized relative fair value discount of $254,487 was removed with six a corresponding adjustment to accumulated deficit. A $48,611 unamortized discount remained. For the three months ended August 31, 2026, the Company recorded amortization expense of $10,930, with an unamortized discount of $3,727 at August 31, 2026.

 

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(21) On November 30, 2023, the Company entered into an agreement where the lender will pay the Company $350,000 in exchange for thirteen future monthly payments of $36,750 commencing on April 30,2024 through to April 30, 2025 totaling $477,750. The effective interest rate is 35% per annum. Secured by a general security charging all of RAD’s present and after-acquired property. Default rate of 15% per annum calculated daily on any missed monthly payment and after original maturity. The Company has repaid $147,000 and $53,000 in accrued interest in July to account for the missed April through to August 2024 payments in agreement with the lender. The Company have missed the subsequent monthly payments. On April 16, 2025, the parties extended the maturity date from April 30, 2025, to April 30, 2026, with all other terms and conditions remaining the same. On April 30,2026, the parties extended the maturity to April 30, 2027, with the default rate still applicable after April 30, 2025.
   
(22) On March 8, 2024, the Company entered into another agreement where the lender will pay the Company $350,000 in exchange for thirteen future monthly payments of $36,750 commencing on August 8, 2024 through to August 8, 2025 totaling $477,750. The effective interest rate is 35% per annum. Secured by a general security charging all of RAD’s present and after- acquired property. Default rate of 15% per annum calculated daily on any missed monthly payment and after original maturity. The August 2024 through to August 2025 payments have not been made and the note was not repaid at original maturity. On August 8, 2025 the parties extended the maturity to August 8, 2027 , with the default rate still applicable after August 8, 2025.
   
(23) Original $165,000 note may be pre-payable at any time. The note balance includes an original issue discount of $15,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. The discount was expensed. On August 24, 2026, the Company extended the maturity to November 15, 2026, see footnote E above.
   
(24) Original $245,000 note may be pre-payable at any time. The note balance includes an original issue discount of $25,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. The discount was expensed. On August 24, 2026, the Company extended the maturity to November 15, 2026, see footnote E above.
   
(25) Original $137,500 note may be pre-payable at any time. The note balance includes an original issue discount of $12,500. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. The discount was expensed. On August 24, 2026, the Company extended the maturity to November 15, 2026, see footnote E above.
   
(26)

On August 25, 2025, the Company entered into Future Receivables Purchase and Sale Agreement secured by a general security charging all of RAD’s present and after- acquired property. The Company received net proceeds of $555,671 after fees of $29,329 and a financing fee of $222,300 for total fees of $251,629. The Company must repay $807,300, in weekly payments of 7% of estimated receipts from accounts receivables. The estimated monthly payments will be approximately $99,725. For the year ended May 31, 2026, the Company recorded amortization expense of $59,207, with an unamortized discount of $0 at May 31, 2026. For the year ended

 

February 28, 2026, the Company has repaid $617,348. During the six months ending August 31, 2026 the remaining balance of $ 189,952 was fully repaid.

   
(27) Original $550,000 note may be pre-payable at any time. The note balance includes an original issue discount of $50,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of $26,263, with an unamortized discount of $3,749 at August 31, 2026. On August 24, 2026, the Company extended the maturity to November 15, 2026, see footnote E above.
   
(28) Original $200,000 note may be pre-payable at any time. The note balance includes an original issue discount of $25,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of $12,777, with an unamortized discount of $4,558 at August 31, 2026.
   
(29) Original $275,000 note may be pre-payable at any time. The note balance includes an original issue discount of $25,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of 12,775, with an unamortized discount of $4,997 at August 31, 2026.
   
(30) Original $450,000 note may be pre-payable at any time. The note balance includes an original issue discount of $50,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of $22,244, with an unamortized discount of $17,052 at August 31, 2026.

 

(31)

 

 Original $450,000 note may be pre-payable at any time. The note balance includes an original issue discount of $50,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of $24,610, with an unamortized discount of $14,980 at August 31, 2026.
   
(32) On December 17, 2025, the Company entered into a business loan secured by a general security charging all of RAD’s present and after- acquired property. The Company received net proceeds of $300,000 after fees of $14,000 and a financing fee of $91,060 for total fees of $105,060. The Company must repay $405,060, in 4 weekly payments of $2,276.50 and 36 weekly payments of $10,998.72. The loan is personally guaranteed by the CEO. For the year ended February 28, 2026, the Company recorded amortization expense of $19,478 with an unamortized discount of $85,582 at February 28, 2026. For the three months ended May 31, 2026, the Company has repaid $87,990 with the balance of $241,972 transferred to the April 13, 2026 loan described in footnote (43),thereby fully extinguishing this loan.
   
(33) $495,000 convertible note that may be redeemed at a premium at any time. The Company received proceeds of $440,000, with fees of $10,000 and an original issue discount of $45,000. Principal and interest due at maturity. For the six months ended August 31, 2026, the Company recorded amortization expense of $26,935, with an unamortized discount of $18,360 at August 31, 2026. . After 180 days , the note and interest is convertible at a conversion price of 80% of the lowest traded price in the 15 prior trading days. For the six months ended 31, 2026 the lender converted $140,000 principal and $9.992 for a total of $149,992 of debt into 42,130,411 common shares.

 

(34)

Original $275,000 note may be pre-payable at any time. The note balance includes an original issue discount of $25,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of $12,193, with an unamortized discount of $8,685 at August 31, 2026.

 

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(35)

Original $330,000 note may be pre-payable at any time. The note balance includes an original issue discount of $30,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of $14,486, with an unamortized discount of $11,650 at August 31, 2026.

 

(36) Original $170,000 note may be pre-payable at any time. The note balance includes an original issue discount of $20,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of $9,520, with an unamortized discount of $8,711 at August 31, 2026.
   
(37) Original $330,000 note may be pre-payable at any time. The note balance includes an original issue discount of $30,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of $14,572, with an unamortized discount of $13,564 at August 31, 2026.
   
(38) $165,000 convertible note that may be redeemed at a premium at any time. The Company received proceeds of $142,500, with fees of $7,500 and an original issue discount of $15,000. Principal and interest due at maturity. For the six months ended August 31, 2026, the Company recorded amortization expense of $10,699, with an unamortized discount of $11,317 at August 31, 2026. After 180 days , the note and interest is convertible at a conversion price of 80% of the lowest traded price in the 15 prior trading days.
   
(39) Original $170,000 note may be pre-payable at any time. The note balance includes an original issue discount of $20,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of $9,442, with an unamortized discount of $10,370 at August 31, 2026.
   
(40) $110,000 convertible note that may be redeemed subject to a premium ranging from 110% to 140% if redeemed within the first 180 days of the note. The Company received proceeds of $95,000, with fees of $5,000 and an original issue discount of $10,000. The Company also recorded a debt discount from derivative liabilities of $67,202. Principal and interest due at maturity. In addition the For the six months ended August 31, 2026, the Company recorded amortization expense of $27,775, with an unamortized discount of $54,427 at August 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 80% of the lowest traded price in the 15 prior trading days.

 

(41) $630,000 convertible note that may be redeemed subject to a premium ranging from 110% to 140% if redeemed within the first 180 days of the note. The Company received proceeds of $595,000, with fees of $5,000 and an original issue discount of $30,000. Principal and interest due at maturity. A refundable commitment fee of 14.1 million common shares was issued, but is returnable if the loan plus accrued interest is paid back by May 5, 2026. The loan was intended as a short term loan with high redemption premiums commencing after 40 days and high conversion discounts after 180 days whereby the note would convert at 20% of the lowest traded price 15 days prior trading to the conversion date. On May 5, 2026, the Company repaid in full, principal and interest of $638,492 and the 14.1 million commitment fee shares will be returned.. For the three months ended May 31, 2026, the Company recorded amortization expense of $35,000, with an unamortized discount of $0 at May 31, 2026.

 

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(42) $257,000 convertible note that may be redeemed subject to a premium ranging from 120% to 125% if redeemed within the first 180 days of the note. The Company received proceeds of $250,000, with fees of $7,000. The Company also recorded a debt discount from derivative liabilities of $181,916. Principal and interest due at maturity. For the six months ended August 31, 2026, the Company recorded amortization expense of $73,182, with an unamortized discount of $115,374 at August 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65% of the lowest closing traded price in the 10 prior trading days.
   
(43) On April 13, 2026, the Company entered into a business loan secured by a general security charging all of RAD’s present and after- acquired property. The Company received net proceeds of $295,028 after fees of $16,500 and a financing fee of $91,060 for total fees of $105,060 and a payback of the $241,972 balance on the December 17, loan described in footnote (32) . The Company must repay $709,500, in 52 weekly payments of $13,644. The loan is personally guaranteed by the CEO. For the six months ended August 31, 2026, the Company recorded amortization expense of $59,712 with an unamortized discount of $112,788 at August 31, 2026. For the six months ended August 31, 2026, the Company has repaid $245,596.
   
(44) $277,778 convertible note that may be redeemed anytime with payment of the first year’s accrued interest of $33,333. The Company received proceeds of $245,000, with fees of $5,000 and an original issue discount of $27,778. In addition a commitment fee of 5,000,000 common shares having a fair value of $173,500 was issued and added as a discount. The Company also recorded a debt discount from derivative liabilities of $71,500 with derivative liability loss of $187,621 for a total derivative liability of $259,121 . Principal and interest due at maturity. For the six months ended August 31, 2026, the Company recorded amortization expense of $64,733, with an unamortized discount of $213,045 at August 31, 2026. The note and interest is convertible at any time a conversion price of 75% of the lowest closing traded price in the 10 prior trading days.
   
(45) $157,000 convertible note that may be redeemed subject to a premium ranging from 120% to 125% if redeemed within the first 180 days of the note. The Company received proceeds of $150,000, with fees of $7,000. The Company also recorded a debt discount from derivative liabilities of $109,385. Principal and interest due at maturity. For the six months ended August 31, 2026, the Company recorded amortization expense of $42,901, with an unamortized discount of $73,484 at August 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65% of the lowest closing traded price in the 10 prior trading days.
   
(46) $700,000 convertible note redeemable 90 days after issuance in monthly installments of 10% of the outstanding principal and interest. The Company received proceeds of $615,000, with fees of $15,000 and an original issue discount of $70,000. In addition a commitment fee of 1,250,000 common shares having a fair value of $28,751 was issued and recorded as a discount. The Company also recorded a debt discount from derivative liabilities of $169,653. Principal and interest due at maturity. For the six months ended August 31, 2026, the Company recorded amortization expense of $83,268, with an unamortized discount of $200,135 at August 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65% of the lowest traded price in the 10 prior trading days.

 

(47) $138,889 convertible note that may be redeemed subject to a premium ranging from 110% to 135% if redeemed within the first 180 days of the note. The Company received proceeds of $119,000, with fees of $6,000 and an original issue discount of $13,889. The Company also recorded a debt discount from derivative liabilities of $169,653. Principal and interest due at maturity. For the six months ended August 31, 2026, the Company recorded amortization expense of $18,960, with an unamortized discount of $115,860 at August 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65% of the lowest traded price in the 10 prior trading days.

 

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(48)

$230,000 convertible note that may be redeemed subject to a premium ranging from 105% to 140% if redeemed within the first 180 days of the note. The Company received proceeds of $200,000, with an original issue discount of $23,000 and fees of $7,000. The Company also recorded a debt discount from derivative liabilities of $200,000 with derivative liability loss of $33,317 for a total derivative liability of $233,317. Principal and interest due at maturity. For the six months ended August 31, 2026, the Company recorded amortization expense of $25,987, with an unamortized discount of $204,013 at August 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65% of the lowest closing traded price in the 20 prior trading days.

   
(49) $55,000 convertible note that may be redeemed anytime at a premium of 120% with payment of the first year’s accrued interest of $5,500. The Company received proceeds of $47,500, with an original issue discount of $5,000 and fees of $2,500. The Company also recorded a debt discount from derivative liabilities of $47,500 with derivative liability loss of $22,823 for a total derivative liability of $70,323. Principal and interest due at maturity. For the six months ended August 31, 2026, the Company recorded amortization expense of $11,826, with an unamortized discount of $43,174 at August 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65% of the lowest closing traded price in the 10 prior trading days.

 

(50) $110,000 convertible note that may be redeemed s anytime at a premium of 120% with payment of the first year’s accrued interest of $11,000. The Company received proceeds of $95,000, with an original issue discount of $10,000 and fees of $5,000. The Company also recorded a debt discount from derivative liabilities of $95,000 with derivative liability loss of $45,226 for a total derivative liability of $140,226. Principal and interest due at maturity. For the six months ended August 31, 2026, the Company recorded amortization expense of $11,647, with an unamortized discount of $98,353 at August 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65% of the lowest closing traded price in the 10 prior trading days.

 

(51)

$165,000 convertible note that may be redeemed subject to a premium ranging from 115% to 125% if redeemed within the first 180 days of the note. First year’s interest of $16,500 is guaranteed and earned at issue date. Principal and interest due at maturity. The Company received proceeds of $142,800, with an original issue discount of $15,000 and fees of $7,200. The Company also recorded a debt discount from derivative liabilities of $142,800 with derivative liability loss of $61,927 for a total derivative liability of $204,727. For the six months ended August 31, 2026, the Company recorded amortization expense of $15,921, with an unamortized discount of $149,079 at August 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65% of the lowest closing traded price in the 20 prior trading days.

 

(52)

$166,667 convertible note that may be redeemed subject to a premium ranging from 105% to 140% if redeemed within the first 180 days of the note. Principal and interest due at maturity. The Company received proceeds of $144,000, with an original issue discount of $16,667 and fees of $6,000. The Company also recorded a debt discount from derivative liabilities of $140,000 with derivative liability loss of $32,701 for a total derivative liability of $172,701. For the six months ended August 31, 2026, the Company recorded amortization expense of $14,512, with an unamortized discount of $148,155 at August 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65% of the lowest closing traded price in the 20 prior trading days.

 

(53) $157,000 convertible note that may be redeemed subject to a premium ranging from 120% to 125% if redeemed within the first 180 days of the note. The Company received proceeds of $150,000, with fees of $7,000. The Company also recorded a debt discount from derivative liabilities of $169,653. Principal and interest due at maturity. For the six months ended August 31, 2026, the Company recorded amortization expense of $22,688, with an unamortized discount of $94,554 at August 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65% of the average of the three lowest traded prices in the 10 prior trading days.

 

(54) Original $165,000 note may be pre-payable at any time. The note balance includes an original issue discount of $15,000. Principal and interest due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the six months ended August 31, 2026, the Company recorded amortization expense of $1,863, with an unamortized discount of $13,137 at August 31, 2026.

 

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(55) $225,000 note repayable in 36 weekly payments of $6,250 starting August 6, 2026. Non-interest bearing. Secured by a general security charging all of RAD’s present and after-acquired property. Along with the debt the Company issued warrants to purchase 225 Series F shares. A derivative value of $435,024 was determined for the warrants including a derivative discount of $225,000 and derivative liability loss of $210,024. For the six months ended August 31, 2026, the Company recorded amortization expense of $46,622, with an unamortized discount of $178,978 at August 31, 2026. The Company has repaid $25,000.
   
(56) $209,300 convertible note that may be redeemed subject to a discount ranging from 97% to 98% if redeemed within the first 180 days of the note. First year’s interest of $25,116 is guaranteed and earned at issue date. Note is repayable in 10 monthly instalments of $24,442 starting September 15, 2026. The Company received proceeds of $175,000, with an original issue discount of $27,300 and fees of $7,000. The Company also recorded a debt discount from derivative liabilities of $172,065. Principal and interest due at maturity. For the six months ended August 31, 2026, the Company recorded amortization expense of $7,982, with an unamortized discount of $198,383 at August 31, 2026. After an event of default , the note and interest is convertible at a conversion price of 65% of the lowest traded price in the 10 prior trading days.
   
(57) $200,000 note repayable in 32 weekly payments of $6,250 starting November 24, 2026. Non-interest bearing. Secured by a general security charging all of RAD’s present and after-acquired property. Along with the debt the Company issued warrants to purchase 350 Series F shares. A derivative value of $655,270 was determined for the warrants including a derivative discount of $200,000 and derivative liability loss of $455,270. For the six months ended August 31, 2026, the Company recorded amortization expense of $0, with an unamortized discount of $200,000 at August 31, 2026.
   
(58)

$150,000 convertible note that may be redeemed subject to a premium ranging from 105% to 140% if redeemed within the first 180 days of the note. First year’s interest of $18,000 is guaranteed and earned at issue date. Principal and interest due at maturity. The Company received proceeds of $126,000, with an original issue discount of $15,000 and fees of $9,000. The Company included 25,000,000 August 19, 2026 warrants to purchase common shares at an exercise price of $0.006 with a 5 year term. The Company also recorded a debt discount from derivative liabilities of $123,258 with derivative liability loss of $77,366 for a total derivative liability (including warrant liability of $11,742) of $200,624. For the six months ended August 31, 2026, the Company recorded amortization expense of $2,298, with an unamortized discount of $144,960 at August 31, 2026. After 180 days, the note and interest is convertible at a conversion price of 65% of the lowest closing traded price in the 20 prior trading days.

   
(59) $225,000 note repayable in 36 weekly payments of $6,250 starting September 3, 2026. Non-interest bearing. Secured by a general security charging all of RAD’s present and after-acquired property. Along with the debt the Company issued warrants to purchase 350 Series F shares. A derivative value of $368,762 was determined for the warrants including a derivative discount of $225,000 and derivative liability loss of $143,762. For the six months ended August 31, 2026, the Company recorded amortization expense of $0, with an unamortized discount of $225,000 at August 31, 2026.

 

 

ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)