AITXD Swings to Q3 Profit on Debt Settlement, Revenue Jumps

TL;DR

**AITXD's Q3 profit is a mirage from a one-time debt gain; the underlying financials scream 'going concern risk' and smart money should steer clear.**

AI Summary

Artificial Intelligence Technology Solutions Inc. (AITXD) reported a net income of $763,064 for the three months ended August 31, 2025, a significant improvement from a net loss of $3,930,323 in the prior-year period. However, for the six months ended August 31, 2025, the company still posted a net loss of $3,830,953, albeit an improvement from the $8,124,682 net loss in the same period of 2024. Revenues increased substantially, reaching $1,888,749 for the three months ended August 31, 2025, up from $1,344,183 in the prior year, and $3,743,586 for the six months, compared to $2,526,983 in 2024. The company's cash position decreased from $865,975 at February 28, 2025, to $323,021 at August 31, 2025, with negative cash flow from operating activities of $5,400,554 for the six months. AITXD faces significant going concern risks due to an accumulated deficit of $160,357,755 and negative working capital of $6,409,368 as of August 31, 2025. Strategic outlook includes an equity financing agreement for up to $30,000,000, with $29,000,000 remaining to be issued, and management's belief in extending non-convertible debt. A substantial gain of $4,370,185 on settlement of debt significantly impacted the net income for the three-month period.

Why It Matters

AITXD's ability to generate a quarterly net income, driven by a substantial debt settlement gain and increased revenue, offers a glimmer of hope for investors in this high-risk AI and robotics firm. However, the persistent negative working capital and accumulated deficit of over $160 million highlight severe financial instability, making it a highly speculative investment. For employees, the going concern warning signals potential job insecurity, while customers might question the long-term viability of their service providers. In the broader market, AITXD's struggles underscore the capital-intensive nature and competitive pressures within the AI and robotics sector, where many emerging companies face significant hurdles to profitability and sustained operations.

Risk Assessment

Risk Level: high — AITXD exhibits a high risk level due to an accumulated deficit of $160,357,755 and negative working capital of $6,409,368 as of August 31, 2025. The company also reported negative cash flow from operating activities of $5,400,554 for the six months ended August 31, 2025, raising substantial doubt about its ability to continue as a going concern.

Analyst Insight

Investors should exercise extreme caution and consider this a highly speculative investment. Given the significant going concern warning and reliance on future equity raises and debt extensions, investors should avoid initiating new positions and those holding shares should re-evaluate their risk tolerance and consider exiting.

Financial Highlights

debt To Equity

N/A

revenue

$3,743,586

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

$763,064

eps

N/A

gross Margin

N/A

cash Position

$323,021

revenue Growth

48.15%

Key Numbers

• $763,064 — Net Income (for the three months ended August 31, 2025, compared to a $3,930,323 net loss in the prior year.)
• $3,830,953 — Net Loss (for the six months ended August 31, 2025, an improvement from $8,124,682 in 2024.)
• $1,888,749 — Revenues (for the three months ended August 31, 2025, up from $1,344,183 in 2024.)
• $3,743,586 — Revenues (for the six months ended August 31, 2025, up from $2,526,983 in 2024.)
• $4,370,185 — Gain on Settlement of Debt (a significant one-time gain contributing to the three-month net income.)
• $5,400,554 — Net Cash Used in Operating Activities (for the six months ended August 31, 2025, indicating ongoing cash burn.)
• $160,357,755 — Accumulated Deficit (as of August 31, 2025, highlighting substantial historical losses.)
• $6,409,368 — Negative Working Capital (as of August 31, 2025, indicating short-term liquidity issues.)
• $323,021 — Cash (as of August 31, 2025, a decrease from $865,975 at February 28, 2025.)
• $29,000,000 — Remaining Equity Financing (available under a June 2025 agreement, crucial for future operations.)

Key Players & Entities

• Artificial Intelligence Technology Solutions Inc. (company) — registrant
• AITX (company) — registrant ticker
• Robotic Assistance Devices, LLC (company) — wholly owned subsidiary
• SEC (regulator) — Securities and Exchange Commission
• $763,064 (dollar_amount) — net income for three months ended August 31, 2025
• $3,930,323 (dollar_amount) — net loss for three months ended August 31, 2024
• $1,888,749 (dollar_amount) — revenues for three months ended August 31, 2025
• $4,370,185 (dollar_amount) — gain on settlement of debt for three months ended August 31, 2025
• $160,357,755 (dollar_amount) — accumulated deficit as of August 31, 2025
• $6,409,368 (dollar_amount) — negative working capital as of August 31, 2025

FAQ

Risk Factors

• Going Concern and Liquidity [high — financial]: AITXD faces significant going concern risks due to an accumulated deficit of $160,357,755 and negative working capital of $6,409,368 as of August 31, 2025. The company's cash position decreased to $323,021 from $865,975, with negative cash flow from operations of $5,400,554 for the six months.
• Reliance on Financing [high — financial]: The company's ability to continue as a going concern is heavily dependent on its ability to secure additional funding. An equity financing agreement for up to $30,000,000 exists, with $29,000,000 remaining to be issued, which is critical for future operations.
• Historical Losses [high — financial]: The company has a substantial accumulated deficit of $160,357,755 as of August 31, 2025, indicating a long history of net losses that have eroded equity.
• Cash Burn from Operations [high — operational]: A net cash used in operating activities of $5,400,554 for the six months ended August 31, 2025, demonstrates a significant ongoing operational cash burn that depletes available cash reserves.

Industry Context

The Artificial Intelligence technology sector is characterized by rapid innovation and significant investment. Companies often face long development cycles and high R&D costs, leading to periods of unprofitability. Market adoption rates and competitive pressures are key drivers of success. AITXD operates within this dynamic environment, where securing funding and achieving scalable revenue are critical.

Regulatory Implications

As a publicly traded company, AITXD is subject to SEC regulations and reporting requirements. The company's financial disclosures, particularly regarding its going concern status and liquidity, are closely scrutinized by regulators and investors. Compliance with accounting standards and timely filing of reports are essential.

What Investors Should Do

1. Monitor Equity Financing Execution
2. Analyze Operational Cash Flow Trends
3. Evaluate Debt Management Strategy
4. Assess Revenue Growth Sustainability

Key Dates

• 2025-08-31: End of Second Quarter Reporting Period — Marks the period for which the 10-Q financial statements are reported, showing a net income of $763,064 for the quarter but a net loss of $3,830,953 for the six months.
• 2025-02-28: End of First Quarter Reporting Period — The balance sheet reflects cash of $865,975 at this date, prior to the decrease to $323,021 by August 31, 2025.
• 2025-06-01: Equity Financing Agreement — An agreement was put in place allowing for up to $30,000,000 in equity financing, with $29,000,000 still available, crucial for addressing liquidity concerns.

Glossary

Accumulated Deficit

The total cumulative net losses of a company since its inception, less any cumulative net income. (AITXD has a substantial accumulated deficit of $160,357,755, indicating significant historical unprofitability.)

Negative Working Capital

Occurs when a company's current liabilities exceed its current assets, indicating potential short-term liquidity problems. (AITXD has negative working capital of $6,409,368, highlighting immediate challenges in meeting short-term obligations.)

Going Concern

An accounting assumption that a business will continue to operate for the foreseeable future. (The company's financial condition, including its accumulated deficit and negative working capital, raises substantial doubt about its ability to continue as a going concern.)

Net Cash Used in Operating Activities

The amount of cash a company has spent on its core business operations over a period, after accounting for revenues and expenses. (A negative figure of $5,400,554 for six months indicates that the company's operations are consuming cash rather than generating it.)

Gain on Settlement of Debt

A profit realized when a company extinguishes its debt for less than its carrying amount. (A significant gain of $4,370,185 on debt settlement positively impacted the net income for the three-month period.)

Year-Over-Year Comparison

Compared to the prior year's six-month period, AITXD has significantly reduced its net loss from $8,124,682 to $3,830,953, driven by a substantial increase in revenues from $2,526,983 to $3,743,586. However, the company's cash position has deteriorated, falling from $865,975 at February 28, 2025, to $323,021 at August 31, 2025, and operating cash burn remains a concern. New risks related to negative working capital and continued reliance on future financing are prominent.

Filing Documents

• form10-q.htm (10-Q) — 1543KB
• ex21-1.htm (EX-21.1) — 5KB
• ex31-1.htm (EX-31.1) — 11KB
• ex31-2.htm (EX-31.2) — 11KB
• ex32-1.htm (EX-32.1) — 7KB
• ex32-2.htm (EX-32.2) — 7KB
• 0001493152-25-018105.txt ( ) — 9328KB
• aitx-20250831.xsd (EX-101.SCH) — 64KB
• aitx-20250831_cal.xml (EX-101.CAL) — 63KB
• aitx-20250831_def.xml (EX-101.DEF) — 308KB
• aitx-20250831_lab.xml (EX-101.LAB) — 489KB
• aitx-20250831_pre.xml (EX-101.PRE) — 388KB
• form10-q_htm.xml (XML) — 1741KB

Financial Statements

Financial Statements 3 Condensed Consolidated Balance Sheets as of August 31, 2025 and February 28, 2025 (Unaudited) 3 Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended August 31, 2025 and 2024 (Unaudited) 4 Condensed Consolidated Statements of Stockholders' Deficit for the Six Months Ended August 31, 2025 and 2024 (Unaudited) 5-6 Condensed Consolidated Statements of Cash Flows for the Six Months Ended August 31, 2025 and 2024 (Unaudited) 7 Notes to the Consolidated Financial Statements (Unaudited) 8-27 ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 28 ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 33 ITEM 4.

Controls and Procedures

Controls and Procedures 33 PART II OTHER INFORMATION ITEM 1.

Legal Proceedings

Legal Proceedings 34 ITEM 1A.

Risk Factors

Risk Factors 34 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 34 ITEM 3. Defaults Upon Senior Securities 34 ITEM 4. Mine Safety Disclosures 34 ITEM 5. Other Information 34 ITEM 6. Exhibits 35

SIGNATURES

SIGNATURES 36 - 2 - Table of Contents PART I – FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC. CONDENSED CONSOLIDATED BALANCE SHEETS August 31, 2025 (unaudited) February 28, 2025 * ASSETS Current assets: Cash $ 323,021 $ 865,975 Accounts receivable, net 931,219 1,367,331 Share proceeds receivable — 418,669 Device parts inventory, net 1,075,239 1,583,726 Prepaid expenses and deposits 452,827 792,842 Total current assets 2,782,306 5,028,543 Operating lease asset 1,007,980 1,010,545 Revenue earning devices, net of accumulated depreciation of $ 3,243,187 and $ 2,292,172 , respectively 5,348,428 4,539,180 Fixed assets, net of accumulated depreciation of $ 552,367 and $ 491,186 , respectively 237,653 258,328 Trademarks 35,319 33,321 Investment at cost 100,000 100,000 Security deposit 15,880 15,880 Total assets $ 9,527,566 $ 10,985,797 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable and accrued expenses $ 2,599,482 $ 2,121,871 Customer deposits 83,929 91,578 Current operating lease liability 245,173 197,349 Current portion of deferred variable payment obligation 2,510,325 1,901,258 Loan payable - related party 396,940 329,365 Deferred compensation for CEO 1,197,683 2,202,600 Current portion of loans payable, net of discount of $ 251,629 and $ 0 1,825,276 519,105 Current portion of accrued interest payable 332,866 213,555 Total current liabilities 9,191,674 7,576,681 Non-current operating lease liability 747,619 810,513 Loans payable, net of discount of $ 269,445 and $ 360,163 , respectively 25,606,435 31,922,078 Deferred variable payment obligation 2,525,000 2,525,000 Incentive compensation plan payable 4,000,000 4,000,000 Accrued interest payable 14,336,829 13,680,453 Total liabilities 56,407,557 60,514,725 Series B Convertible, Redeemable Preferred

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