What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-06-01 compared with 2020-07-13 · 764 added, 682 removed, 21 unchanged (99% of the section changed)

Aura Systems, Inc., is a Delaware corporation

that was founded in 1987.

The Company designs, assembles, tests and sells our proprietary and patented axial flux induction machine

known as the AuraGen ®

for industrial and commercial applications and the VIPER for military applications (collectively referred

to as the “AuraGen ®

Our patented AuraGen ®

system ––

when applied as a generator ––

uses an existing engine (of a vehicle or any other prime mover) to create mechanical

energy which is then converted into electric power by our system.

Our control system is used to deliver such power to the user.

When used as an electric motor, our system delivers mechanical power to drive mechanical devices.

During the first half of fiscal

2016, the Company significantly reduced operations due to lack of financial resources.

During the second half of fiscal 2016,

the Company’s operations were further disrupted when the Company was forced to move from its facilities in Redondo Beach,

California to a smaller facility in Stanton, California.

During fiscal 2017, the Company curtailed much of its engineering, manufacturing,

sales, and marketing activities to focus on renegotiating numerous financial obligations.

During fiscal 2018, the Company successfully

restructured in excess of $30 million of debt and held its first stockholder meeting since 2011.

During fiscal 2019, the Company

continued to focus on seeking new sources of financing and utilized a contract manufacturer to produce some initial products.

Since July 2019, the Company has focused its efforts on the sales and manufacturing of its products as well as rebuilding relationships

with its vendors and suppliers.

Though these efforts, since July 8, 2019, the Company has shipped more than one-hundred and thirty

units and during fiscal 2020, we recognized revenue of approximately $822,000.

Traditional induction machines representing

a radial flux design has been the workhorse of industry due to their robustness, attractive cost, and easy control.

However, radial

flux machines are heavy and bulky.

Axial flux induction machines (such as the AuraGen ®

), on the other hand, have all the advantages

of radial flux machines, but with the advantage of higher energy density (more energy per unit volume).

This results in axial

flux machines being smaller and lighter yet with equivalent performance to the radial flux design.

Unlike permanent magnet (“PM”)

machines, induction machines do not use any permanent magnets and therefore the controller can change the magnetic (B) fields,

since, generally the magnetic (B) field is proportionate to the voltage divided by the frequency (V/f).

It is generally accepted

that for PM machines, as machine size grows, the magnetic losses increase proportionately, and partial load efficiency drops.

On the other hand, with induction machines, as the machine size grows, magnetic losses do not necessarily grow.

Induction drives

could offer an advantage when high-performance is desired.

The peak efficiency of an induction drive will be somewhat lower than

with PM machines, but average efficiency may increase.

In addition, most permanent magnets used in motor/generator applications

are Neodymium-based.

Today, more than 80% of Neodymium (a rare earth metal) is produced in China.

Induction machines, such as

Systems, Inc., is a Delaware corporation that was founded in 1987.

The Company designs, assembles, tests and sells our proprietary

and patented axial flux (“AF”) induction machines known as the AuraGen ®

for industrial and commercial

applications and the AuraGen ®

VIPER for military applications (collectively referred to as the “AuraGen ®

The AuraGen ®

, however, do not use any permanent magnets.

Although the first radial flux machines

were demonstrated in the early 1900’s, such machines were never widely adopted due to various characteristics of this technology

that were deemed to be prohibitive to mainstream utilization, including:

(i) strong axial magnetic attraction force between the

stator and the rotor, (ii) fabrication difficulties such as cutting the slots in laminated cores, (iii) high cost involved in

manufacturing the laminated stator core, (iv) difficulties in assembling the machine and maintaining a uniform air gap and (v)

providing a laminated rotor that can stand the large centrifugal forces.

Through technological innovations and developments by

Aura, however, these historical objections to the axial flux machines have been overcome and do not present a barrier for widespread

adoption of the AuraGen ®

can be used either as an electric motor or generator depending on the rotational speed of the rotor

relative to the rotational speed of the magnetic field produced by the stator;

when the rotor rotates slower than the magnetic

field the AuraGen ®

acts as an electric motor and when the rotor rotates faster than the magnetic field, the AuraGen ®

acts as a generator.

induction machines use a radial flux (“RF”) design as opposed to the axial flux design of the AuraGen ®

These traditional RF machines have been the conventional workhorses of industry due to their robustness, attractive cost, and

ease of control.

However, RF machines are both heavy and bulky making them ill-suited for a variety of applications in which size

and weight are paramount considerations, including most mobile applications.

Although axial flux technology has long been recognized

as having a higher energy density (more energy per unit volume) than traditional RF induction machines, for many years, however,

RF technology was considered the only solution because of perceived insurmountable technological impediments to the creation of

a viable axial flux equivalent including:

(i) challenges controlling the strong axial magnetic attraction force between the stator

and the rotor, (ii) fabrication difficulties such as cutting the slots in laminated cores, (iii) high cost involved in manufacturing

the laminated stator core, (iv) difficulties in assembling the machine and maintaining a uniform air gap and (v) providing a laminated

rotor that can stand the large centrifugal forces.

Aura, however, has overcome these barriers through a variety of technological

issue of a strong axial magnetic attraction force between the stator and the rotor was addressed by Aura’s patented approach

of using a topology of two stators and a rotor sandwiched between them or two rotors and a stator sandwiched between.

related to the fabrication and the high cost of manufacturing of the laminated stator cores were resolved by Aura using a unique

technique involving punching the slots while rolling the steel, resulting in a continuous punched steel ribbon at a cost less

than traditional punched laminates.

Using various modern techniques and instruments, Aura has also overcome the difficulties in

assembling the machine and maintaining a uniform air gap.

Aura has also developed a patented cast rotor that does not require

any laminates and provides the structural integrity to withstand large centrifugal forces, while at the same time provides the

proper electric and magnetic properties.

Thus, although the general operating principals of the AuraGen ®

same as a traditional RF machine, the novel design of the AuraGen ®

and its unique performance characteristics offer

perceivable advantages over traditional RF technology.

Smaller Footprint and a Lighter Weight Makes the AuraGen ®

Uniquely Suited

for Applications in which Fit, and Weight are Critical Factors .

On average, the AuraGen ®

system is approximately 50 percent lighter than comparable RF systems.

on average the AuraGen ®

has a volume of approximately 35% only.

the AuraGen ®

Mobile Power System is

composed of two primary subsystems (i) the patented axial flux alternator, (ii) the electronic control unit (“ECU”)

The architecture of our ECU is designed to separate the power generation from the power user, thus creating a flexible system

that can support multi voltages simultaneously.

The system architecture is based on having a direct current (“DC”)

power bus that is used to excite the alternator and also to collect energy from the alternator.

The user AC loads are supported

from the power bus through a PWM based inverter and DC loads are supported through a Buck converter used in conjunction with a

bidirectional power supply (BDPS) from the high voltage power buss.

Neither the AC nor the DC loads are directly supported by

is uniquely able to be installed in locations traditional

RF technology cannot possibly fit or that the significant weight of traditional RF technology

otherwise makes prohibitive.

The use of an AuraGen ®

motor or generator

with a disc rotor can thus be adopted in the construction of various devices with advantages

in size, weight, and function.

In addition, Aura’s axial flux design readily lends

itself to stacking multiple rotors and stators on the same shaft, thus designing a relatively

compact system capable of very large outputs.

● AuraGen ®

Provides Greater Output Efficiency as Compared to Traditional RF Technology .

Aura’s Axial Flux rotor design has significantly less inertia than the rotor used

in equivalent traditional RF machines.

As a result, Aura’s systems require less

input horsepower to rotate at the required rpm, resulting in an increase in output efficiency.

In addition, Aura’s stators require approximately 60% less copper than used in

equivalent RF machines with much shorter stator coil end turns and shorter flux return

As a result, Aura’s design provides lower copper losses (additional increase

in output efficiency) and lower manufacturing cost.

In addition, specific AuraGen geometry/symmetry

results in magnetic flux paths that inherently avoid parasitic eddy currents without

need for laminates.

Other electrical machines that are Dependent on Foreign Rare Earth Metals, the AuraGen ®

The AuraGen ®

/VIPER, but rather the control system is such that the AuraGen ®

/VIPER alternator function is to support the

power buss to ensure no significant drop in voltage as the load is applied.

This immediately leads to a load following design

where the demand on the alternator at any moment in time is equal to the demanded user load (up to the maximum alternator power

capabilities).

The BDPS also provides the seamless transition to maintain the power bus when the prime mover is turned off (batteries

are used to support the power bus).

The issue of the strong axial magnetic

attraction force between the stator and the rotor was addressed by Aura’s patented approach of using a topology of two stators

and a rotor sandwiched between them.

This was disclosed in Aura’s U.S.

Patent 5,734,217 and U.S.

Patent 6,157,175.

to other benefits, the topology is such that the axial forces on the bearings are small and negligible.

The Company also developed a cast rotor

for the axial flux machine as described in U.S.

Patents 5,734,217 and 6,157,175.

This rotor does not require any laminates and

provides the structural integrity to withstand large centrifugal forces, while at the same time provides the proper electric and

magnetic properties.

After a lengthy development period, the

Company first began commercializing the AuraGen ®

, being an induction machine, does not use

any permanent magnets (“PM”).

Typical PM machines use NeFeB magnets (rare

earths) that are mostly produced in China.

In an article titled U.S.

Needs a Strong Defense

Against China’s Rare Earth weapon, written by James Stavridis of Bloomberg opinion

March 4, 2021 “China controls roughly 80% of the rare-earths market, between what

it mines itself and processes in raw material from elsewhere.

If it decided to wield

the weapon of restricting the supply —

something it has repeatedly threatened to

it would create a significant challenge for manufacturers and a geopolitical

predicament for the industrialized world.

In 2010, Beijing threatened to cut

off exports to Japan over the disputed Senkaku Islands.

Two years ago, Beijing was reportedly

considering restrictions on exports to the U.S.

generally, as well as against specific

companies (such as defense giant Lockheed Martin Corp.) that it deemed in violation of

its policies against selling advanced weapons to Taiwan.

In applications that require

variable speed and variable loads, such as in EV applications, the magnetic B field should

be adjusted such that the sum of the eddy-current, hysteresis, and I²

Generally bucking B fields are required to adjust for the B field produced

by the Permanent magnets .

In contrast, Aura’s induction machines do not

have any PM and B fields are easily adjustable.

This means that at light loads the controller

can reduce voltage such that magnetic losses are reduced, and efficiency is maximized.

Thus, Aura’

induction machine when operated with an Aura’s smart controller

has an advantage over a PM machine –

magnetic and conduction losses can be traded

such that efficiency is optimized.

This advantage.

becomes increasingly important as

performance is increased.

a lengthy development period, the Company first began commercializing the AuraGen ®

in late 1999 and early 2000.

In 2001, our first commercial product was a

5,000-watt 120/240V AC machine;

we subsequently added an 8,500-watt configuration and introduced the BDPS that allowed us to provide

simultaneously an AC/DC solution.

In fiscal 2008, the Company introduced a system that generates up to 16,000 watts of continuous

power by combining two 8,000-watt systems on a single-shaft (dual system).

Since July 2019, we have upgraded a version of our

electronic controller using Silicon Carbide (SiC) switching to 10,000 watts continuous and a dual system was upgraded to 20,000

watts of output power.

Impact of the COVID-19 Pandemic

The COVID-19 global pandemic has negatively

affected the global economy, disrupted global supply chains, and created extreme volatility and disruptions to capital and credit

markets in the global financial markets.

We began to see the impact of COVID-19 during our fourth quarter of fiscal 2020 with

our Chinese joint venture’s manufacturing facilities being required to close and many of our customers suspending their

own operations due to the COVID-19 pandemic.

As a result, net sales and production levels during the fourth quarter of fiscal

2020 and the first quarter of fiscal 2021 were significantly reduced, thus impacting our results of operations during these quarters.

In response to the COVID-19 pandemic and business disruption,

we implemented certain measures to manage costs, preserve liquidity and enhance employee safety.

In 2001, the first commercial AuraGen ®

product was a 4-pole machine which, when combined with our proprietary and

patented electronic control unit (“ECU”), generated 5 kW of exportable 120/240 VAC power.

We subsequently added a

6-pole configuration and introduced our patented bi-directional power supply that provided for 8.5 kW watts of exportable power

with the capability of providing both alternating (“AC”) and direct (“DC”) power simultaneously.

2008, the Company introduced an AuraGen ®

system that generated up to 17 kW of continuous power by combining two

8.5 kW systems on a single shaft.

Starting in July 2019, we began to redesign and upgrade the ECU and develop new axial flux generator

configurations.

As a result of such efforts, our redesigned ECU allows us to replace the old 5 kW solution with a 6.5 kW solution

using the same 4-pole generator as well as to upgrade the output of the 6-pole machine from 8.5 kW to 12.5 kW.

Our recent efforts

have also resulted in the development of a 15-kW solution specifically designed to address cell tower needs of 240 VAC and simultaneously

48 VDC as well as a new 4 kW solution targeting micro-mobility applications that is 7.5 inches in diameter and 5 inches deep that

is being configured both as a motor and automotive alternator.

date, the Company has sold approximately 10,000 AuraGen ®

solutions for numerous applications.

the first half of Fiscal 2016, the Company significantly reduced operations due to lack of financial resources.

During the second

half of Fiscal 2016, the Company’s operations were further disrupted when the Company was forced to move from its facilities

in Redondo Beach, California to a smaller shared facility in Stanton, California.

During Fiscal 2017, the Company curtailed much

of its engineering, manufacturing, sales, and marketing activities to focus on renegotiating numerous financial obligations.

Fiscal 2018, the Company successfully restructured in excess of $30 million of debt and held its first stockholder meeting since

During Fiscal 2019, the Company continued to focus on seeking new sources of financing and utilized a contract manufacturer

for very limited manufacturing.

During fiscal 2019 the Company sold 11 systems.

March 2019, stockholders of the Company represented a majority of the outstanding shares of the Company’s common stock delivered

signed written consents to the Company removing Ronald Buschur, William Anderson and Si Ryong Yu as members of the Company’s

Board and electing Ms.

Cipora Lavut, Mr.

David Mann, and Dr.

Robert Lempert as directors of the Company in their stead.

of Aura’s refusal to recognize the legal effectiveness of the consents, in April 2019 the stockholders filed suit in

the Court of Chancery of the State of Delaware pursuant to Section 225 of the Delaware General Corporations Law, seeking

an order confirming the validity of the consents.

On July 8, 2019 the Court of Chancery entered final judgment in favor of the

stockholder plaintiffs, confirming that (a) Ronald Buschur, Si Ryong Yu and William Anderson had been validly removed by the holders

of a majority of the Company’s outstanding stock acting by written consent (b) Ms.

Lempert had been

validly elected by the holders of a majority of the Company’s outstanding stock acting by written consent, and (c) the Company’s

Board of Directors validly consists of Cipora Lavut, David Mann, Robert Lempert, Gary Douglas and Salvador Diaz-Versón,

See Item 3, Legal Proceedings for more information.

Following this ruling by the Court of Chancery, the newly confirmed Board

of Directors terminated the employment of Melvin Gagerman, who had served as CEO and CFO of the Company since 2006, and installed

Lavut as President, Mr.

Mann as Chief Financial Officer and Dr.

Lempert as Secretary of the Company.

assuming control in the second half of Fiscal 2020, the Company’s new management team began significantly increasing its

engineering, manufacturing and marketing activities as well as rebuilding relationships with its vendors and suppliers.

these efforts, since July 8, 2019, the Company has shipped more than one-hundred and forty units (a greater than ten-fold increase

over Fiscal 2019) and recorded approximately $0.9 million in revenue.

During Fiscal 2021, the Company’s revenues and operations

were adversely affected by the COVID-19 pandemic which resulted in a decline in revenues and shipments to customers.

of the COVID-19 Pandemic

COVID-19 global pandemic has negatively affected the global economy, disrupted global supply chains, and created extreme volatility

and disruptions to capital and credit markets in the global financial markets.

We began to see the impact of COVID-19 during our

fourth quarter of Fiscal 2020 with our Chinese joint venture’s manufacturing facilities being required to close and many

of our customers suspending their own operations due to the COVID-19 pandemic.

As a result, net sales and production levels during

the fourth quarter of Fiscal 2020 and the entirety of Fiscal 2021 were significantly reduced, thus impacting our results of operations

during these fiscal periods.

response to the COVID-19 pandemic and business disruption, we implemented certain measures to manage costs, preserve liquidity

and enhance employee safety.

These measures included the following:

Reduction of payroll costs through temporary furloughs;

Enhanced cleaning and disinfection procedures at our facilities, temperature checks for

our workers, promotion of social distancing at our facilities and requirements for employees to work from home where possible;

Reduction of capital expenditures;

Deferral of discretionary spending.

The extent of the impact of the COVID-19

pandemic on our business, financial results and liquidity will depend largely on future developments, including the duration of

the spread of the COVID-19 outbreak within the U.S.

and globally, the impact on capital and financial markets and the related

impact on our customers, especially in the commercial vehicle markets.

These future developments are outside of our control, are

highly uncertain and cannot be predicted.

If the impact is prolonged, then it can further increase the difficulty of planning

for operations and may require us to take further actions as it relates to costs and liquidity.

These and other potential impacts

of the COVID-19 pandemic will adversely impact our results for the first quarter of fiscal 2021, as well as the full fiscal year,

and that impact could be material.

Business Arrangements

During fiscal 2018 and fiscal 2019, the

Company’s engineering, manufacturing, sales, and marketing activities were reduced while we focused on renegotiating numerous

financial obligations.

During this time, the Company’s agreements with numerous customers, third party vendors, and organizations

and entities material to the operation of the Company business were canceled, delayed or terminated.

During fiscal 2018, the Company

successfully restructured in excess of $30 million of debt.

During fiscal 2019, the Company continued to address its financial

needs and began utilizing an outside contractor to manufacture the AuraGen ®

Utilizing contractors, the Company shipped

11 units to customers during fiscal 2019.

In the second half of fiscal 2020, the Company began significantly increasing its engineering,

manufacturing and marketing activities.

From July 8, 2019 through the end of fiscal year 2020 (February 29, 2020), we have shipped

more than 130 units to customers, a greater than ten-fold increase over fiscal 2019.

In March 2017, the Company signed a joint

venture agreement with a Chinese company to build, service and distribute AuraGen ®

products in China.

Under the Jiangsu Shengfeng

joint venture agreement, the Chinese partner owns 51% of the joint venture and the Company owns 49%.

The Chinese partner contributed

a total of approximately $9.75 million to the venture principally in the form of facilities, equipment, and approximately $500,000

of working capital while the Company contributed $250,000 in cash as well as a limited license.

The limited license sold to the

joint venture, however, does not permit the venture to manufacture the AuraGen ®

rather, the joint venture is required

to purchase all rotor subassemblies as well as certain software elements directly from the Company.

During fiscal 2018, Jiangsu

Shengfeng placed a $1,000,000 order with the Company including a $700,000 advance payment of which the Company has failed to deliver

produce in accordance with the order received.

On November 20, 2019, the Company reached a preliminary agreement with Jiangsu

Shengfeng regarding the return of $700,000 previously advanced to the Company.

The preliminary agreement reached consists of a

non-interest-bearing promissory note and a payment plan pursuant to which the $700,000 is to be paid over a 11-month period beginning

March 15, 2020 through February 15, 2021.

The preliminary agreement was subject to the JV continuous operation.

However, starting

in January 2020 the JV was shut down by the Chinese authority a due to the COVID-19 virus, and as of the date of this filing,

the JV operation has not restarted.

In the Balance Sheet as of February 29, 2020, the unpaid balance of $700,000 was reclassified

as part of notes payable.

During fiscal 2020, the Company recorded an impairment expense of $250,000 to fully write-off the Jiangsu

Shengfeng investment due to the uncertainty of the operation as of this time.

On March 26, 2019, various stockholders

of the Company, controlling a combined total of more than 27.5 million shares, delivered a signed written consent to the Company

removing Ronald Buschur as a member of the Company’s Board and electing Cipora Lavut as a director of the Company.

On March 27, 2019, those same stockholders delivered a further signed written consent to the Company removing William Anderson

and Si Ryong Yu as members of the Company’s Board and electing Robert Lempert and David Mann as directors of the Company.

These written consents represented a majority of the outstanding shares of the Company’s common stock as of March 26,

2019 and March 27, 2019, respectively.

Because of Aura’s refusal to recognize the legal effectiveness of the consents,

on April 8, 2019 the stockholders filed suit in the Court of Chancery of the State of Delaware pursuant to Section 225

of the Delaware General Corporations Law, seeking an order confirming the validity of the consents and declaring that Aura’s

Board consists of Ms.

Douglas and Mr.

Diaz-Versón, Jr.

On July 8, 2019 the Court of Chancery entered final judgment in favor of the stockholder plaintiffs, confirming that (a) Ronald

Buschur, Si Ryong Yu and William Anderson had been validly removed by the holders of a majority of the Company’s outstanding

stock acting by written consent (b) Ms.

Lempert had been validly elected by the holders of a majority

of the Company’s outstanding stock acting by written consent, and (c) the Company’s Board of Directors validly consists

of Cipora Lavut, David Mann, Robert Lempert, Gary Douglas and Salvador Diaz-Versón, Jr.

See Item 3, Legal Proceedings for

more information.

The AuraGen ®

Careful monitoring

of operating expenses including wages and salaries;

Enhanced cleaning

and disinfection procedures at our facilities, promotion of social distancing at our facilities and requirements for employees

to work from home where possible;

Reduction of capital

expenditures;

of the filing of this Annual Report on Form 10-K, the extent of the impact of the COVID-19 pandemic on our business, financial

results and liquidity will depend largely on future developments, including the effectiveness of vaccination programs globally,

the impact on capital and financial markets and the related impact on our customers, especially in the commercial vehicle markets.

These future developments are outside of our control, are highly uncertain and cannot be predicted.

If the impact is prolonged

due, for example, to variant strains of the Covid-19 having an adverse impact, then it can further increase the difficulty of

planning for operations and may require us to take further actions as it relates to costs and liquidity.

These and other potential

impacts of the COVID-19 pandemic will adversely impact our results for the current year, Fiscal 2022, and that impact could be

Fiscal 2018 and Fiscal 2019, the Company’s engineering, manufacturing, sales, and marketing activities were reduced while

we focused on renegotiating numerous financial obligations.

During this time, the Company’s agreements with numerous customers,

third party vendors, and organizations and entities material to the operation of the Company business were canceled, delayed or

During Fiscal 2018, the Company successfully restructured in excess of $30 million of debt.

Also, during Fiscal 2018,

the Company signed a joint venture agreement with a Chinese company to build, service and distribute AuraGen ®

Under the Jiangsu Shengfeng joint venture agreement, the Chinese partner owns 51% of the joint venture and the Company

The Chinese partner contributed a total of approximately $9.75 million to the venture principally in the form of facilities,

equipment, and approximately $500,000 of working capital while the Company contributed $250,000 in cash as well as a limited license.

The limited license sold to the joint venture, however, does not permit the venture to manufacture the AuraGen ®

rather, the joint venture is required to purchase all rotor subassemblies as well as certain software elements directly

from the Company.

During Fiscal 2018, Jiangsu Shengfeng placed a $1,000,000 order with the Company including a $700,000 advance

payment of which the Company has failed to deliver product in accordance with the order received.

On November 20, 2019, the Company

reached a preliminary agreement with Jiangsu Shengfeng regarding the return of $700,000 previously advanced to the Company.

preliminary agreement reached consists of a non-interest-bearing promissory note and a payment plan pursuant to which the $700,000

is to be paid over a 11-month period beginning March 15, 2020 through February 15, 2021.

The preliminary agreement was subject

to the JV continuous operation.

However, starting in January 2020 the JV was shut down by the Chinese authority due to the COVID-19

virus, and as of the date of this filing, the JV operation has not restarted.

In the Balance Sheet as of February 29, 2020, the

unpaid balance of $700,000 was reclassified as part of notes payable.

During Fiscal 2020, the Company recorded an impairment expense

of $250,000 to fully write-off the Jiangsu Shengfeng investment due to the uncertainty of the operation as of this time.

Fiscal 2019, the Company continued to address its financial needs and began utilizing an outside contractor to manufacture the

AuraGen ®

Utilizing contractors, the Company shipped 11 units to customers during Fiscal 2019.

Fiscal 2020 stockholders of the Company successfully removed Ronald Buschur, William Anderson and Si Ryong Yu from the Company’s

Board of Directors and elected Ms.

Cipora Lavut, Mr.

David Mann and Dr.

Robert Lempert as directors of the Company in their stead.

See Item 3, Legal Proceedings for more information.

Also, in Fiscal 2020, Melvin Gagerman, Aura’s CEO and CFO since 2006,

was replaced.

In July 2019 Ms.

Lavut succeeded Mr.

Gagerman as President and Mr.

Mann succeeded Mr.

Gagerman as CFO.

was appointed as Secretary of the Company by the Board of Directors also in July 2019.

In the second half of Fiscal 2020, the

Company began significantly increasing its engineering, manufacturing and marketing activities.

From July 8, 2019 through the

end of Fiscal year 2021 (February 28, 2021), we shipped more than 140 units to customers (more than a ten-fold increase over Fiscal

Developments .

in Fiscal 2020, a novel strain of coronavirus commonly referred to as COVID-19 emerged and spread rapidly across the globe, including

throughout all major geographies in which we operate (North America, Europe, and Asia), resulting in adverse economic conditions

and business disruptions, as well as significant volatility in global financial markets.

Governments worldwide have imposed varying

degrees of preventative and protective actions, such as temporary travel bans, forced business closures, and stay-at-home orders,

all in an effort to reduce the spread of the virus.

Such factors, among others, have resulted in a significant decline in spending

and resource availability.

Additionally, during this period of uncertainty, companies across a wide array of industries have implemented

various initiatives to reduce operating expenses and preserve cash balances, including work furloughs, reduced pay, and severance

actions, which could lower consumers’

disposable income levels or willingness to purchase discretionary items.

a result of the COVID-19 pandemic, we have experienced varying degrees of business disruptions and periods of closure of our corporate

facilities as have our customers, suppliers, and vendors, resulting in significant adverse impacts to our operating results.

in certain parts of the world resulted in further business disruptions periodically throughout Fiscal 2021.

Such disruptions have

continued into the first quarter of Fiscal 2022, impacting our business.

the introduction of COVID-19 vaccines, the pandemic remains highly volatile and continues to evolve.

Accordingly, we cannot predict

for how long and to what extent the pandemic will impact our business operations or the global economy as a whole.

AuraGen ®

/VIPER Product Overview:

The AuraGen ®

is composed of three

basic subsystems.

The first subsystem is the axial flux induction generator that is bolted to, and driven by, the vehicle’s

engine, PTO, or any other prime mover.

The second subsystem is the ECU, which filters and conditions the electricity to provide

clean, steady voltages for both AC and DC power, and provides for variable speed applications as well as load following for increased

The third subsystem consists of mounting brackets and supporting components for installation and integration of the

generator with the vehicle engine, PTO, or the prime mover.

The Company has power solutions for three

continuous power levels:

(a) 5,000 watts;

(b) 10,000 watts;

All the AC power is pure sine wave with total harmonic

distortion of less than 2.1% and is available in 120 VAC and/or 230/240/400 VAC as well as 50/60 Hz and either single or

three phases.

In addition, the power generated on all models can be partitioned to provide simultaneous AC and 14 or 28 VDC.

Served by the AuraGen ®

Motor Applications

axial flux induction machine can be used as either an electric motor or generator as described above.

Due to the inherit advantages

of Aura’s axial flux induction machine, such as (i) no rare earth or any other kind of permanent magnets, (ii) significantly

less copper (60% less) than equivalent traditional induction motors (iii) higher energy density and (iv) fewer overall materials,

we believe Aura’s axial flux induction motor can be used across a wide range of industries and applications.

a small percent increase in motor efficiency translates to a market-wide savings of tens of billions of dollars per year and because

Aura’s axial flux motor design is more efficient than equivalent radial flux induction motors, we believe that with the

proper financial resources, over time, we can capture a reasonable share of the global electric motor market.

motors account for 45% of all the global electric usage every year and are currently widely used in a range of applications including

fans, pumps, compressors, machine tools, domestic appliances, electric vehicles (both two wheels and 4 wheels), HVAC applications,

power tools, and automated robots.

In recent years, high-efficiency electric motors have continued to gain importance for their

longer operating life, lower maintenance and environmental benefit (i.e., better and cleaner energy consumption) when compared

to traditional common solutions.

vehicles “EVs”

are a prime example of a rapidly expanding global market for electric induction motors.

EVs are manufactured

with a goal of reducing operational costs and carbon footprint and increases in production of EVs is expected to provide a positive

impact on the demand for electric motors as they are used in variety of applications ranging from locomotion to comfort components

of the vehicle.

Aura’s axial flux machine with its pancake topology, its reduced size and weight, lends itself to integration

Indeed, the global induction electric motor market is expected to reach $37.72 billion by 2027 (Inkwood research global

induction motors market forecast 2019-2027).

The market is driven by:

(i) the rising demand for electric vehicles across

(ii) increasing affordability of induction motors;

(iii) low maintenance cost as compared to other motors;

(iv) technological

advancements in induction motors, (v) surging automation industries;

and (vi) growing demand for energy-efficient motors.

United States as well as countries such as Brazil, Argentina, China, and India are major markets, with a high adoption rate for

energy efficient products in both the industrial and agricultural sectors.

and Remote Power Applications

global generator sales market was $20.3 billion in 2019 and is estimated to reach $27.16 billion by 2027 (Fortune Business Insight).

Most industries dealing with construction and infrastructure rely on mobile generators to support modern computers, digital sensors

and instruments as well as electrical driven tools.

Current automotive alternators cannot supply the existing demanded power for

many such applications and thus the common solution is the use of stand-alone gensets (often referred to a “Auxiliary Power

or simply “APUs”).

These APUs, however, (i) consume large amounts of fuel, (ii) are heavy and bulky and

accordingly must often be towed on trailers, and (iii) require constant maintenance.

Additionally, traditional APUs are generally

not considered to be environmentally friendly power solutions based on their high fuel consumption, loud operating noise levels,

and the emissions they secrete into the air.

In comparison, the AuraGen ®

system is small and light enough to generally

be integrated directly into existing vehicles, does not require significant maintenance, nor does not require any set-up or tear-down

In addition, there are no heavy lifting required and to contact with hot surfaces.

The AuraGen ®

power levels can be generated as the prime mover speed varies from idle to maximum rated speed.

The VIPER (the

military version of the AuraGen ®

system) includes as an option a complete power management system which (i) monitors in real

time the batteries’

voltage and temperature, (ii) provides a partition of the power between AC and DC simultaneously with

the ability to be programmed from all AC to all DC, (iii) monitors the RPM of the generator, (iv) monitors the temperatures of

the generator and the ECU, (v) monitors the raw power generated, (vi) monitors both the AC and DC loads as to voltage and current,

(vii) provides programming of load prioritization and load shedding, and (viii) monitors the voltage of the internal 400-800 VDC

Markets Served by the AuraGen ®

Mobile and Remote (not power grid connected) Power Industry

We believe that the mobile and remote

power generation market is large and growing.

There are four basic market segments (i) military, (ii) stationary but remote commercial/industrial,

(iii) mobile commercial/industrial, and (iv) hybrid, electric and autonomous vehicles.

The military marketplace is also divided

between mobile and stationary applications.

We believe that one of the fastest growing

segments in the military marketplace is On-Board-Exportable-Power (OBEP), which is electric power on vehicles that can be used

to support other than vehicle functions.

The driver behind the increased demand for on-board power include numerous advance weapon

systems as well as increase in C 4 I functions (command, control, communication, computers and information).

most on board power is provided by Auxiliary Power Units (“APUs”) that are (i) large fuel users, (ii) bulky, (iii)

heavy and (iv) require constant maintenance.

Militaries all over the world are seeking more efficient integrated power solutions

for their vehicles.

Similar to the military demands, the commercial

and industrial markets also require on-board power to support modern computers, digital sensors and instruments as well as electrical

driven tools.

Current automotive alternators cannot supply the existing demanded power and thus the common solution is the use

These APUs can be environmentally unfriendly, substantial users of fuel, heavy, bulky and require constant maintenance

and scheduled service.

Vehicles used in the telecommunications, utilities, public works, construction, catering, oil and gas industries,

emergency/rescue, and recreational vehicles rely heavily on mobile power for their daily work.

Hybrid and electric vehicles by

their nature require significant amounts of on-board power to charge batteries as well as to operate electric motors.

The traditional solutions available for mobile and remote power

(AKA APUs), Gensets are standalone power generation units that are not incorporated

into a vehicle and require external fuel (either gasoline or diesel) in order to generate

Gensets (i) are generally noisy and cumbersome to transport because of their

weight and size, (ii) typically run at constant speed to generate 50 or 60 Hz of AC power,

(iii) must be operated at a significant part of the rated power to avoid wet staking,

(iv) are significantly derated in the presence of harmonics in the loads and (v) require

significant scheduled maintenance and service.

Genset technology has been utilized since

● High-Output

Alternators, High-output alternators are traditionally found in trucks and commercial

vehicles and the vehicle’s engine is used as the prime mover.

All high-output alternators

provide their rated power at very high RPM and significantly less power at lower RPM.

In addition, high-output alternators are generally only 30% efficient at the low RPM

range and increase to only 50% efficiency at the high end of the RPM range.

generated by high-output alternators is 12 or 24 Volt DC and an inverter is required

if AC power is needed.

In addition, due to the low power output at low RPMs, in order

to get significant power, a throttle controller is used to speed-up the engine.

Inverters are devices that invert DC to AC.

Inverters as mobile power generators

are traditionally used in low power requirements, typically less than 2,500 watts, and

do not have the ability to recharge the batteries that are traditionally used as the

source of power.

Thus, typical inverter users require other means to recharge the used

batteries such as “shore-power”

More recently dynamic inverters

became available.

Dynamic inverters use power from the alternator to augment power from

the batteries and are able to achieve power levels in excess of 6,000 watts.

inverters introduce significant stresses on both the batteries and alternators, which

causes significant life shortening for both.

When the inverter is turned on, the alternator

is switched off from the vehicle battery and tied into a transformer that uses electronic

controls to change the DC alternator inputs to AC inverter output.

A separate transformer

winding provides battery charging so that fully regulated 120 Volt AC and 12 Volt DC

power is available as long as the engine is running at high enough RPM to provide power

for the load and the battery charging.

All dynamic inverters require a high-output alternator

to be able to output significant AC power.

As is often the case, the limiting factor

is the high-output alternator.

In order to get stable output, a very accurate throttle

controller is also needed to maintain steady speed on the engine.

● Permanent-Magnet

Recently a number of companies have introduced alternators using exotic

permanent magnets.

These alternators tend to have higher power generation capabilities

than regular alternators at lower engine RPM.

In order to be practical in an under-the–hood

environment (200 o F) active cooling must be added, since the magnets are demagnetized

at approximately 176 o F.

There are other issues that require an active control

system that will add and subtract magnetic field strength as the engine RPM increases.

Over 80% of the magnets used for electric machines comes from China.

Fuel cells are solid-state devices that produce electricity by combining a

fuel containing hydrogen with oxygen.

They have a wide range of applications and can

be used in place of the internal combustion engine and traditional lead-acid and lithium-ion

The most widely deployed fuel cells are substantially more expensive

than other power solutions.

● Batteries .

Batteries convert stored chemical energy to electrical power

The Company is involved in the application

of its AuraGen ®

technology to mobile power and, as such, faces substantial competition from companies offering different technologies .

Gensets AKA APU- Portable

generators meet the large market need for auxiliary power.

Millions of units per year are sold in North America alone, and millions

more across the world to meet market demands for 1 to 20 Kilowatts of portable power.

The market for these power levels addresses

the commercial, leisure and residential markets, and divides essentially into:

(a) higher power, higher quality and higher price

commercial level units;

and (b) lower power, lower quality and lower price level units.

Gensets provide the strongest competition

across the widest marketplace for auxiliary power.

Onan, Honda and Kohler, among others, are well established and respected brand

names in the genset market for higher reliability auxiliary power generation.

There are over 40 registered genset-manufacturing

companies in the United States.

High Output Alternators -

when integrated in a vehicle or a boat is completely seamless and transparent to the user

for law enforcement, emergency responders and militaries alike, mobile power is generally a necessity.

Indeed, one of the fastest

growing segments for mobile power is the military marketplace for On-Board-Exportable-Power (OBEP), which is electric power on

vehicles that can be used to support non-vehicle functions such as weapon systems and C 4 I functions (command, control,

communication, computers and information).

Currently, most on-board power is provided by APUs.

Given the drawbacks of APUs, however,

militaries, law enforcement and first responders all over the world are seeking more efficient integrated power solutions for

their vehicles.

addition, numerous leisure users are increasingly demanding mobile power for use of air-conditioning, appliances and other amenities.

stand-alone gensets (often referred to “auxiliary power units”

or simply “APU”s), all automotive users

rely on integrated alternators in their vehicles for such things as navigation systems, electric seating, electric windows, sound/

phone systems and lights.

In 2019 alone, 87.9 million passenger vehicles were sold globally (Motor Intelligence.

Automotive alternator

market growth trends forecast 2021-2026);

each one used an alternator.

The market for automotive alternators is presently dominated

mainly by four companies:

Denso, Valeo, Mitsubishi Electric, and Hitachi Automotive.

These companies jointly control nearly 80%

of the global market.

The compact size and significant increase in efficiency of the AuraGen ®

provides an ideal

replacement (fit and form) for high output automotive alternators while offering higher efficiency, longer lifetime and the flexibility

of multiple types of voltage both AC and DC.

AuraGen ®

solution increase in efficiency over traditional generators, when combined with our load following architecture

and the ability to provide both AC and -48VDC simultaneously makes our solution very attractive to cell towers operators that

depend on diesel power.

Our solution has the potential for a significant reduction in diesel fuel consumption for such an application.

refrigeration is also an ideal market for the AuraGen ®

mobile power solution since it enables the electrification

of the system by eliminating the small diesel engine used to run the onboard refrigeration system.

The Aura solution significantly

reduces fuel consumption and eliminates the harmful emissions generated by the traditional small engine used in such applications.

Company is involved in the application of its AuraGen ®

technology to electric motors and mobile power.

it faces substantial competition from companies offering different technologies .

are four (4) basic approaches for electrical machines:

(i) the rotor can be electrically excited such that it creates a magnetic

field with constant orientation (as in synchronous machines) and usually uses brushes and or commutators;

(ii) the shape of the

rotor can induce reluctance variations in the stator (as in switched reluctance machines);

(iii) the rotor can be permanently

magnetized with permanent magnets (“PM “) as in brushless DC machines;

and (iv) the rotor field can be induced from

the stator due to the rotor’s structure as in induction machines.

Our axial flux technology is geared toward the induction

machine market.

machines are machines in which the rotor coil is supplied with current through brushes.

Unlike commutators, brushes

only transfer electric current to a moving rotor;

commutators also provide switching of the current direction.

Large, brushed

machines which are run with DC to the stator windings at synchronous speed are the most common generator in power plants

because they also supply reactive power to the grid.

They can be started by the turbine and can generate power at constant

speed without a controller.

This type of machine is often referred to in the literature as a “synchronous machine”.

machines have no windings in the rotor, only a ferromagnetic material shaped so that “electromagnets”

in the stator can “grab”

the teeth in the rotor resulting in a slight movement.

The electromagnets are then turned

off, while another set of electromagnets is turned on to move the stator further.

Reluctance machines are also sometimes referred

to as “step motors”

as a result of the step-like movement.

These machines are suited for low speed and accurate position

Reluctance machines can be supplied with PMs in the stator to improve performance.

The “electromagnet”

then “turned off”

by sending a negative current to the coil.

When the current is positive the magnet and the current

cooperate to create a stronger magnetic field, which will improve the reluctance machine’s maximum torque without increasing

the currents maximum absolute value.

machines have permanent magnets in the rotor which set up a magnetic field.

The magnetic field is created by modern

PMs (Neodymium Iron Boron magnets “NeFeB”), which means that PM machines have a higher torque/volume and torque/weight

ratio than machines with rotor coils under continuous operation.

In general, it is usually possible to overload electric machines

for a short time until the current in the coils heats parts of the machine to a temperature which cause damage.

However, PM machines

are very sensitive to such overloads because too high of a current in the coils can create a magnetic field strong enough to demagnetize

The majority (85%) NeFeB magnets are produced in China.

Magnax and many other are examples of Companies using such

induction machine (no PM) is the most common electrical machine in use today.

A changing magnetic field in the stator

induces a current in the rotor.

The current in the rotor produces its own magnetic field, which then interacts with the magnetic

field of the stator, causing the rotor to turn.

The name induction comes from the fact that current is induced in the rotor

by the changing magnetic field of the stator.

Radial flux induction machines have been the workhorse of industry due to their

robustness, attractive cost, and easy of control;

however, they are relatively, heavy and bulky.

On the other hand, Aura’s

axial flux (“AF”) induction machines, have all of the advantages of the radial flux machines but with the advantage

of higher energy density resulting in a smaller and lighter machine with equivalent or better performance.

Unlike the PM machines,

induction machines do not use any permanent magnets and therefore the controller can change the B fields since B is proportionate

to the voltage divided by the frequency (V/f).

our axial flux induction technology provides significant advantages in both cost (significant less copper, steel and aluminum),

size/weight and performance, most of our competitors in induction technology have far greater financial, technical, and marketing

resources than we have.

They have larger budgets for research, new product development and marketing, and have long-standing customer

relationships.

players in the market are (i) Nidec Motor Corporation, (ii) ABB Ltd., (iii) Siemens AG, (iv) WEG Electric Corp, (v) Regal Beloit

Corporation, (vi) Wolong, and (vii)Teco Westinghouse.

are five basic approaches used in mobile generators

Portable generators meet the large market need for auxiliary power.

Millions of units per year are sold

in North America alone, and millions more are sold across the world to meet market demands for 1 to 20 Kilowatts of portable power.

The market for these power levels addresses the commercial, leisure and residential markets, and is essentially divided into:

(a) higher power, higher quality and higher price commercial level units;

and (b) lower power, lower quality and lower price level

Gensets provide the strongest competition across the widest marketplace for auxiliary power.

Onan, Honda and Kohler, among

others, are well established and respected brand names in the genset market for higher reliability auxiliary power generation.

There are over 40 registered genset-manufacturing companies in the United States.

of the key suppliers are Caterpillar (US), Cummins (US), Rolls-Royce Holdings (UK), Atlas Copco (Sweden), Mitsubishi Heavy Industries,

(Japan), Yanmar (Japan), Generac (US), ABB (Switzerland), Siemens Energy (Germany), Weichai Group (China), Kohler Co.

Kirloskar Oil Engines Ltd.

(India), Denyo (Japan), and Sterling & Wilson (India).

Output Alternators .

There are many High Output Alternator manufacturers.

Some of the better known are:

Delco-Remy, Bosh, Nippon Densu, Hitachi, Mitsubishi

and Prestolite.

All alternators provide their rated power at very high RPM and significantly less power at lower RPM.

alternators are generally only 30% efficient at the low RPM range and increase to 50% efficiency at the high RPM range.

Inverters- There are many

inverter manufacturers;

across the globe the best known one is Xentrex.

The pricing of industrial grade sine wave inverters is

approximately $700-850 per kilowatt plus the cost of a high output alternator (estimated at $1,000) and a good throttle controller

(estimated in the range of $250-500).

Permanent-Magnet (“PM”)

-A number of companies have introduced alternators using exotic Neodymium (NdFeB) magnets.

These alternators

tend to have higher power generation capabilities than regular alternators at lower RPM.

Unfortunately, PM machines with NdFeB

magnets are very sensitive to temperature and, unlike the AuraGen ®

, cannot survive the typical under-the-hood environment

In order to apply such devices for automotive applications one must add expensive and cumbersome active cooling

since the magnets are demagnetized at approximately (176 o F).

To date, such machines have been used mostly in wind-power

generation applications.

In addition to the temperature challenges

of such machines, there are other issues involving active control of the magnetic field.

The main disadvantage of PM generators

is the difficulty of output voltage regulation to compensate for speed and load variation due to the lack of a simple means of

field control.

Fuel Cells- Fuel cells are

solid-state, devices that produce electricity by combining a fuel containing hydrogen with oxygen.

They have a wide range of applications

and can be used in place of the internal combustion engine and traditional lead-acid and lithium-ion batteries.

These systems

are, however, generally prohibitively expensive, and the most widely deployed fuel cells are estimated to cost significantly

more per kilowatt than alternative solutions.

Others- Symetron Technology

by Raser Inc.

is sometimes mistaken for a new form of a motor or generator.

Rather, the Symetron technology is simply

a variable frequency motor/generator controller that uses numerous control schemes to optimize performance.

The Symetron technology

involves adaptive tuning to continuously optimize motor and system efficiency for the speed and torque operating point.

The Symetron controller is a potential

competitor to variable speed motor controllers provided by such companies as of ABB, or Baldor-Electric Co.

Evans Electric in Australia has introduced

an axial flux machine with a complete conductive rotor.

Such a machine was first introduced by Brinner more than 20 years ago

and was abandoned because the rotor lacked the required rigidity to withstand the magnetic and centrifugal forces.

machine is cited in Aura’s patents.

Transport Refrigeration (“TRU”) -

The main competitors for the all-electric TRU are traditional diesel-based solutions provided by Thermo-king and Carrier.

diesel based comparable systems provided by Thermo-king and Carrier are somewhat less expensive than our AuraGen ®

solution, however the diesel solutions require frequent maintenance and the utilization of a separate diesel engine that consumes

considerable fuel every operating hour.

In addition, the diesel solutions emit harmful emissions that have been recognized by

Environmental Protection Agency, California’s Air Resource Board and others as dangerous pollutants and are increasingly

subject to federal and state regulations.

Most of our competitors have far greater financial, technical,

and marketing resources than we have.

They have larger budgets for research, new product development and marketing, and have long-standing

customer relationships.

We also compete with many larger and more established companies in the hiring and retention of qualified

Our financial condition has limited our ability to market the AuraGen ®

The AuraGen ®

uses different technology

and because our product is radically different from traditionally available mobile power solutions, users may require lengthy

evaluation periods to gain confidence in the product.

OEMs and large fleet users also typically require considerable time to make

changes to their planning and production.

Competitive Advantages of the AuraGen ®

We believe the AuraGen ®

be a superior product due to its convenience, cost efficiency, fuel efficiency, reliability, flexibility in power output, quality

of the electricity generated, and its ability to provide the full power at variable speeds as well as provide load following architecture.

Size and Weight .

The AuraGen ®

’s patented breakthrough design is more

than 50% smaller and lighter as compared to traditional solutions of comparative output.

This ultra-compact design allows the AuraGen ®

to reside “under-the-hood”

of most vehicles and to be powered by a vehicle’s primary engine or power takeoff

“PTO”.

In comparison, traditional solutions are too large and bulky to be

integrated directly into most vehicles and, therefore, require their own independent

power source.

The AuraGen ®

power solution is also more efficient than traditional

due to the significant increase in efficiency of the AuraGen ®

conventional designs.

Traditional alternators, for example, are at best 50% efficient

and require approximately 1 gallon of fuel per each 7.6 kW-Hr.

Some of the better-known ones are:

Bosh, Nippon Densu, Hitachi, Mitsubishi and Prestolite.

All alternators provide their rated power at very high RPM and significantly

less power at lower RPM.

In addition, alternators are generally only 30% efficient at the low RPM range and increase to 50% efficiency

at the high RPM range.

There are many inverter manufacturers across the globe;

the best known one is Xentrex.

The pricing of industrial grade sine wave

inverters is approximately $400 per kilowatt plus the cost of a high output alternator (estimated at $1,000) and a good throttle

controller (estimated in the range of $250-500).

Permanent-Magnet

Alternators .

A number of companies have introduced alternators using exotic rare earth Neodymium (NdFeB) magnets.

These alternators tend to have higher power generation capabilities than regular alternators at lower RPM.

Unfortunately, PM machines

with NdFeB magnets are very sensitive to temperature and, unlike the AuraGen ®

, cannot survive the typical under-the-hood

environment (200 o F+).

In order to apply such devices for automotive applications one must add an active cooling system

to keep the magnets from demagnetizing at approximately (176 o F).

In addition, most of the rare earth magnets (NeFeB)

are manufactured in china and are subject to potential political and economic pressure.

addition to the temperature challenges of such machines, there are other issues involving active control of the magnetic field.

The main disadvantage of PM generators is the difficulty of output voltage regulation to compensate for speed and load variation

due to the lack of a simple means of field control.

Fuel cells are solid-state, devices that produce electricity by combining a fuel containing hydrogen with oxygen.

They have a wide range of applications and can be used in place of the internal combustion engine and traditional lead-acid and

lithium-ion batteries.

These systems are generally more expensive.

The most widely deployed fuel cells are estimated to cost

significantly more per kilowatt than alternative solutions.

Electric in Australia has introduced an axial flux machine with a complete conductive rotor.

Such a machine was first introduced

by Brinner more than 20 years ago and was abandoned because the rotor lacked the required rigidity to withstand the magnetic and

centrifugal forces.

The Brinner machine is cited in Aura’s issued patents.

companies are introducing axial flux machines;

however, they generally use rare earth NeFeB magnets (made in China) and are thus

not induction machines but rather permanent magnet machines.

Some of the better-known companies are EVO, Magnax and Phi Power.

Refrigeration (“TRU”) .

The main competitors for the all-electric TRU are traditional diesel-based solutions

provided by Thermo-king and Carrier.

The diesel based comparable systems provided by Thermo-king and Carrier are somewhat less

expensive than our AuraGen ®

all-electric solution, however the diesel solutions require frequent maintenance and

the utilization of a separate diesel engine.

The separate diesel engine consumes additional fuel every operating hour.

the diesel solution emits harmful emissions that have been recognized by the U.S.

Environmental Protection Agency, California’s

Air Resource Board and others as dangerous pollutants and are increasingly subject to federal and state regulations.

based Cell Towers .

In many parts of the world typically cell towers require 240VAC for cooling and -48V for the communication

The traffic load in cell towers can vary drastically throughout a 24-hours cycle and thus the power requirement varies

Our AuraGen ®

solution is designed to be a load following system that automatically adjusts the input

power required as the load varies.

For example, during busy hours the load to support the traffic may be 15kW, compared to the

middle of the night, the traffic load may be significantly lower.

The diesel engines used in such cell towers are sized to support

the maximum load and are significantly less efficient at partial loads thus using more fuel.

The AuraGen load following architecture

maintains the same efficiency regardless of the immediate load and therefore results in considerable fuel savings through the

24-hour cycle.

of our competitors have far greater financial, technical, and marketing resources than we have.

They have larger budgets for research,

new product development and marketing, and have long-standing customer relationships.

We also compete with many larger and more

established companies in the hiring and retention of qualified personnel.

Our financial condition has limited our ability to market

the AuraGen ®

in comparison is approximately 80% efficient and requires approximately only 1 gallon

of fuel per each 12.16 kW-Hr.

Thus, given a need for 10 kW of power, for example, the

traditional solution will require approximately 1.3 gallons per hour of fuel while the

AuraGen ®

solution will require only 0.83 gallons per hour for the same output.

The AuraGen ®

solution is also a load-following solution that further increases efficiency.

A load following solution is able to adjust the

amount of power output generated at any one moment to mirror the immediate demand.

This is an important characteristic as power

demands generally fluctuate (sometimes dramatically).

Traditional solutions, in comparison, are not load-following and simply

provide power at their maximum output rating at all times, irrespective of demand.

By producing only that amount of power necessary

to meet actual demand, however, the AuraGen ®

becomes especially efficient whenever less than maximum power output is required.

The AuraGen ®

solution provides full power at near idol.

that, unlike most other traditional systems, the AuraGen ®

system’s ability

to provide users with full power is largely independent of the speed of the prime mover.

The ability to operate at variable speed makes the Aura solution very attractive when

the speed of the prime mover varies and is unpredictable, such as in automotive applications.

The variable speed solution is a direct consequence of our system architecture where

we separated the power generation from the power delivery by the power bus.

uses a different technology and because our product is radically different from traditionally available

mobile power solutions, users may require lengthy evaluation periods to gain confidence in the product.

OEMs and large fleet users

also typically require considerable time to make changes to their planning and production.

Advantages of the AuraGen ®

Axial Flux Induction technology

a motor -Aura’s Axial Flux (“AF”) induction motor/generator is increasingly attracting attention from

high impact potential users seeking advantages over conventional motors, particularly for Electric Vehicle applications.

advantages include (i) compact construction, (ii) better power to weight ratio, (iii) shorter axial length, (iv) better efficiency,

(v) better torque to volume and weight ratio, (vi) very high utilization of active materials (less than 50% of the copper) and

(vii) excellent ventilation and cooling.

Induction machines (i) do not use any rare earth elements and have no permanent magnets.

Due to their flat shape, lower weight and compact construction, Aura’s axial flux motors are ideal for pumps, fans, food

processors, HVHC, etc.

An axial flux machine is also preferred in applications where the rotor can be integrated with the rotating

part of mechanical loads.

AuraGen ®

motor’s operational range is between -40 and 340 degrees F;

therefore, it is suitable to operate in a harsh

As an alternator .

induction machine provides significant advantages in power generation, particularly in mobile applications.

Its smaller volume and higher

efficiency, when combined with the geometric shape means it can be integrated with existing vehicles and boats.

Such integrated solutions

do not require set up time.

There are no heavy weights to lift (gensets), usable cargo space is optimized and there is no need for separate

fuel/containers.

Remarkably, there is no scheduled maintenance required.

AuraGen ®

alternator’s operational range is between -40- and 340-degrees F;

therefore, it is suitable for

operating under the hood of a vehicle where the ambient temperature can easily be above 200 degrees F.

Earth-Forward,

1 unchanged sentence

The AuraGen ®

system is significantly more environmentally

friendly than traditional generator and mobile power technology.

Because of its extreme

efficiency and resulting small size, the AuraGen ®

system is significantly more environmentally friendly than traditional

motors and generator.

Because of its extreme efficiency and smaller size, the AuraGen ®

system utilizes fewer resources

to manufacture.

Moreover, the AuraGen ®

uses a vehicle’s primary automotive

engine, which is already highly regulated for environmental protection.

Traditional mobile

power solutions, in comparison, use small, less efficient, auxiliary engines that produce

significantly higher levels of emissions per unit of power output than the automobile

In applications, such as transport

refrigeration, use of the AuraGen ®

system eliminates the need for a separate auxiliary diesel engine to run the refrigeration

because these auxiliary diesel engines are highly pollutive as to both emissions and noise, the AuraGen ®

has the potential

to meaningfully impact air and noise pollution levels in areas where it is employed.

● Durability;

and materials to manufacture (in particular less than 60% of the copper).

When used in power generation, the AuraGen ®

uses a vehicle’s primary automotive engine, which is already highly regulated for environmental protection.

mobile power solutions, in comparison, use small, less efficient, auxiliary engines that produce significantly higher levels of

emissions per unit of power output than the automobile engine.

No Scheduled Maintenance .

The AuraGen ®

is not sensitive to temperature or

altitude variations and generates the rated power at or near idle engine RPM.

The AuraGen ®

also does not require scheduled maintenance and is offered with a three-year warranty,

compared to the typical one-year warranty available for traditional solutions.

Targeted Markets

The Company is reexamining and identifying

key markets upon which to focus as the Company expands operations.

The uses of mobile generators in many

industries are well documented and understood.

Most industries dealing with construction and maintaining infrastructure rely on

mobile generators for their primary power source.

In addition, numerous leisure users are demanding friendly mobile power to use

for their air-conditioning and appliances while traveling by RVs or boats.

Aura already has a well-defined global interest in

numerous market segments with over 10,000 systems installed in 20 countries.

The global opportunities can clearly expand rapidly

by providing social and economic benefit to end-users.

Traditionally, these markets have been

served by generators knows as gensets, also known as Auxiliary Power Units (“APU”) that consist of a small diesel

or gasoline engine and an alternator.

The largest segments of mobile power users require power in the 3.5 to 15 kilowatts (“kW”)

The global motor and generator manufacturing industry in 2013 had revenue of about $100 billion annually 1 .

Military market

One of the fastest growing segments is

the military marketplace for On-Board-Exportable-Power (OBEP);

electric power on vehicles that can be used to support additional

functions over and above those of traditional vehicle functions.

The drivers for increased demand for on-board power include numerous

advanced weapon systems as well as an increase in C 4 I functions (Command, Control Communication, Computers and Intelligence).

Similar to the military demands, the commercial and industrial markets also require on-board power to support modern computers,

digital sensors and instruments as well as electrically driven tools.

Current automotive alternators cannot supply

the existing demanded power and, thus, the common solution is the use of Auxiliary Power Unit.

Vehicles used in the telecommunications,

transport refrigeration, utilities, public works, construction, catering, oil and gas service industries, emergency/rescue, and

recreational vehicles and boats rely heavily on mobile power for their daily needs.

One focused market for the Company’s

VIPER solution is military applications.

The global military land vehicles market is expected to grow by 29% through 2022, increasing

to $30.33 billion by 2022, according to market researcher, Frost & Sullivan in London 2 .

While traditional markets for military vehicles such as the U.S.

are choosing to upgrade and maintain existing fleets rather than

replace aging vehicles, other regions are looking to purchase new units, which also provides maintenance and upgrade opportunities.

The active number of military vehicles was estimated at over 408,000 in 2012 and is expected to increase to slightly over 418,000

New vehicle procurement is expected to decline in western defense and increase in emerging markets of APAC and the Middle

End-users are focusing more on quality over quantity in all new procurements.

1 www.researchandmarkets.com/research/85nfdq/motor _

Press Release | Wed Feb 27, 2013

motor/generator solution does not require any scheduled maintenance.

The historical failure rate over a 20-year period is less than 0.5%.

The bearings are rated for 28,000 hours.

Company is re-examining and identifying new key markets to focus on as the Company expands operations.

global drive for electrification is in search of better more effective electric motors.

The recent realization by many potential

users of such motors that permanent magnet motors are depending on NeFeB rare earth magnets from China has created a need for

alternative to the PM motors.

Our axial flux induction machine is a solution that does not use any magnets and has the required

performance characteristic as well as fit and form for numerous applications.

motors for micro mobility .

Our axial flux machine due to its topology and pancake design is an ideal hub motor

for scooters, mopeds and other 2-wheel electric vehicles.

We are currently designing a 3.5-4 kW motor to be integrated in the

hub of a specific scooter customer.

This machine will use a 48V battery as the input power source.

The global market segment for

micro mobility is projected to be very large.

motors for electric delivery trucks .

We are exploring the use of our axial flux induction machine to be integrated

into electric delivery trucks.

This application would require a 70-kW machine that will use 600-800VDC battery system.

physics of the AuraGen, the power is proportional to the radius cubed of the machine.

For example, a machine with a rotor radius

of 6 inches will have the power and torque required for small to medium delivery trucks.

The power and torque requirements have

been confirmed recently during a discussion with a delivery truck manufacturer.

motors for flywheels .

Our axial flux machine lends itself to multi stacking of rotors and stators on a single shaft to

create motors in the 250-750kW range with a diameter of approximately 13-14 inches.

Due to the solid rotor disk of our axial flux

machine one can operate such machines safely in the 15,000 RPM range.

We are exploring some opportunities with a flywheel manufacturing

company for such applications.

motors for electric boats - We started to explore the possibility of using our axial flux induction machine as a drive

motor for small to medium electric boats.

We have received a number of RFI (request for information) from boat manufacturers.

We started discussions with a drone manufacturer for potential applications of our axial flux induction motor for medium to large

power generation

One focused market for the Company’s VIPER solution is military applications.

The global military

land vehicles market is expected to grow by 29% through 2022, increasing to $30.33 billion by 2022, according to market researcher

(John Keller July 10, 2014 Military and Aerospace Electronics).

3 Frost and Sullivan, October 2012

Hybrid APU Market

technology can provide for a significant fuel savings for users that operate diesel APUs with the future introduction of an Aura-designed

hybrid APU solution as shown by the diagram.

The logic for a hybrid solution is based on the following:

● Significant

reduction is fuel usage

● Significant

reduction in the diesel engine usage provides for longer life and lower maintenance costs

to start inductive load without the need to oversize the diesel engine

to seamlessly deal with power spikes

● Significant

reduction in noise

Electric Motor Market

Aura’s axial flux induction machine

can be used both as a generator and or as an electric motor.

The global electric motor sales market size is expected

to reach $214.5 billion by 2025 4 , according to a

new report by Grand View Research, Inc.

Electric motors are used in all heating, ventilation, and cooling (HVAC) equipment.

are also used in multiple applications across industry verticals such as home appliances, industrial machinery, and motor vehicles,

among others.

According to a new market research report ,

the overall induction motor market is expected to exhibit high growth.

The driving factor for the growth of the induction

motor market is its simple and rugged physical structure.

Induction motors are robust and can operate in any environmental condition.

Due to the absence of brushes and slip rings (which can cause sparks), they are safe to operate in polluted and explosive working

And, unlike synchronous motors, induction motors do not require starting mechanisms since they have a self-starting

This leads to their reliable, cost and operational effectiveness, and easy maintenance.

Hence, induction motors are preferred

over synchronous motors.

Vehicle Electrification Market

Vehicle electrification can be grouped

as (i) hybrid vehicles, (ii) electric vehicles, (iii) electrification of Heating Ventilation and Air conditioning (“HVAC”),

and (iv) high power alternators.

For the hybrid segment, Aura’s product line needs to consist of 60-75 kW solutions for

locomotion with very low rpm and a 5-10 kW solution for electric power generation.

For the general electric car segment, the required

power is approximately 150-200 kW solution with high torque at low rpm.

The general automotive electrification of HVAC requires

a 5-10 kW solution and the high-power alternator requires 2.5-3 kW with both 28 and 56 VDC.

While traditional markets for military vehicles such as the U.S.

are choosing to upgrade and maintain existing fleets rather than replace aging vehicles, other regions are looking to purchase

new units, which also provides maintenance and upgrade opportunities.

The active number of military vehicles was estimated at

over 408,000 in 2012 and is expected to increase to slightly over 418,000 by 2021.

New vehicle procurement is expected to decline

in western defense and increase in emerging markets of APAC and the Middle East.

alternators .

In 2019, 87.9 million units of passenger cars were sold globally (Motor Intelligence.

Automotive alternator

market growth trends forecast 2021-2026) each one used an alternator.

The market for automotive alternators is dominated mainly

by four companies:

Denso, Valeo, Mitsubishi Electric, and Hitachi Automotive.

These companies jointly control nearly 80% of the

global market.

The compact size and significant increase in efficiency of the AuraGen ®

provides an ideal replacement

(fit and form) for high output automotive alternators

based cell towers .

According to Statista

(Technology and telecommunication Thomas Alsop, September22, 2020), in 2019, there were

395,562 mobile wireless cell sites in the United States, with a large amount of investment going toward 5G-ready cell sites and

antennas as per the source.

Phil Marshall, chief research officer at Tolaga Research,

estimates the global number of base stations at 6.5 million sites, while Chinese equipment vendor Huawei puts the number at 7

Many of the cell sites are powered by diesel generators.

The AuraGen ®

power solution technology

could meet all of the above requirements.

The power required for the upcoming autonomous driven vehicle is a perfect fit for the

Aura’s alternator which should support both 28V and 56 volts at a very competitive price and exceptional efficiency.

The auto electrification is a developing

market with potential estimates that vary drastically from one to another.

What is well known is that the demand of high output

high efficiency alternators is in the many millions of units per year.

Aura’s technology allows for significant cost savings

in the manufacturing process and significant improvements in efficiency and performance.

4 https://www.grandviewresearch.com

Press Release

Facilities, Manufacturing Process and Suppliers

During fiscal 2020, our facilities consisted

of approximately 20,000 square feet in Stanton, California and an additional storage facility in Santa Clarita, California.

Stanton facility is used for final assembly and testing of AuraGen ®

/VIPER systems under a month-to-month rent agreement for

$10,000 per month.

The monthly rent for the Santa Clara storage facility is also under a month-to-month rental agreement for $5,000

In May 2020, we gave notice of our intention to vacate the Santa Clara storage facility by July 31, 2020.

From February

to July 2019, the Company also rented on a month-to-month basis approximately 300 square feet of office space in Irvine, California

at a cost of $2,350 per month.

In July 2019, our new management team terminated the 300 square feet of office space in Irvine,

Our current Stanton facility is not sufficient

to support the expected increase in operations and the Company is actively searching for a new facility to be used for production,

testing, warehousing, engineering, and office space for support staff.

Our Jiangsu Shengfeng joint venture, of

which the Company owns 49% and as further described in “Business Arrangements”, owns facilities of approximately 400,000

square feet, consisting of approximately 200,000 square feet of manufacturing space and 200,000 square feet of general office

and engineering space.

The Jiangsu Shengfeng facilities are fully paid for and there is no monthly or annual rent associated with

these facilities.

As the Company begun to increase operations,

we will need to renew relationships and contracts with our suppliers or locate suitable new suppliers for subassemblies and other

Research and Development

We believe that ongoing research and development

is important to the success of our product in order to utilize the most recent technology, develop additional products and additional

uses for existing products, stay current with changes in vehicle manufacture and design and maintain an advantage over potential

Our engineering, research and development costs for fiscal 2020 was approximately $0.2 million compared to approximately

$0.5 million in fiscal 2019.

In fiscal 2019 we began redesign work

on our Electronic Control Unit (“ECU”) to include state-of-the-art power electronics and processors.

redesign was temporarily suspended in mid-2019 when the Company’s then-management team reallocated significant resources

to oppose shareholders controlling a majority of the outstanding shares of the Company’s common stock who sought to replace

certain members of the Company’s Board of Directors.

On July 8, 2019 the Delaware Court of Chancery entered final judgment

confirming the validity of this stockholder action to remove certain directors.

With the new management team installed, work on

the ECU redesign resumed and, in September 2019, we successfully tested and implemented this newly designed ECU.

In fiscal 2021

we plan to begin delivering the new ECU solution.

Patents and Intellectual Property

Our intellectual property portfolio consists of trademarks,

proprietary know-how, trade secrets, and patents.

In the area of electromagnetic technology,

we have developed numerous magnetic systems and designs that result in a significant increase of magnetic field density per unit

volume that can be converted into useful power energy or work.

This increase in field density is a factor of three to four, which,

when incorporated into mechanical devices, could result in a significant reduction in size and cost of production for the same

The applications of these technological

advances are in machines used every day by industrial, commercial, and consumers.

We have applied technology to numerous applications

in industrial machines, such as generators, motors, actuators, and linear motors.

We hold the following patents:

with expiration dates in 2020, 2024, 2024 and 2033 respectively.

At the end of fiscal 2013 and the first

quarter of fiscal 2014, we filed five new patent applications related to the AuraGen ®

These new patent applications are specifically

designed to cover the (i) integration of the AuraGen ®

power solution with transport refrigeration, (ii) the interface kit

of the AuraGen ®

solution increase in efficiency

over traditional generators, when combined with our load following architecture and the ability to provide both AC and -48VDC

simultaneously makes our solution very attractive to cell towers operators that depend on diesel power.

Our solution has the potential

for significant diesel fuel savings in such an application.

We have received some levels of interest in usage of our solution

in cell towers from users in African and the Philippines .

Refrigeration (“TRU”) .

The main competitors for the all-electric TRU are traditional diesel-based solutions

provided by Thermo-king and Carrier.

The diesel based comparable systems provided by Thermo-king and Carrier are somewhat less

expensive than our AuraGen ®

all-electric solution, however the diesel solutions require frequent maintenance and

the utilization of a separate diesel engine that consumes additional fuel every operating hour.

In addition, the diesel solution

emits harmful emissions that have been recognized by the U.S.

Environmental Protection Agency, California’s Air Resource

Board and others as dangerous pollutants and are increasingly subject to federal and state regulations.

Company is in discussions with a group in South Africa for the utilization of our transport refrigeration mobile power solution

in approximately 1,000 trucks.

technology can provide for a significant fuel savings for users that operate diesel APUs with the potential introduction of an

Aura-designed hybrid APU solution.

The logic for a hybrid solution is based on the following advantages (i) significant reduction

in diesel fuel usage, (ii) significant reduction in diesel engine usage provides for longer life and lower maintenance costs,

(iii) ability to start inductive loads without the need to oversize the diesel engine, (iv) ability to seamlessly deal with power

spikes and (v) significant reduction in noise.

Manufacturing Process and Suppliers

Fiscal 2020 and 2021, our facilities consisted primarily of approximately 20,000 square feet in Stanton, California that we shared

with ECS Corporation and an additional storage facility in Santa Clarita, California.

The Stanton facility was under a month-to-month

rental agreement for $10,000 per month.

The monthly rent for the Santa Clara storage facility was also under a month-to-month

rental agreement for $5,000 per month and was terminated effective July 31, 2020.

Following exit from the Santa Clarita facility

in July 2020 through February 28, 2021, we rented temporary storage space for approximately $2,500 per month.

In early Fiscal

2022 we consolidated all administrative offices and operations in a new modern stand-alone facility consisting of approximately

18,000 square feet in Lake Forest, California.

This Lake Forest facility is subject to a lease agreement with a 66-month lease

period spanning from March 1, 2021 through August 31, 2026.

The monthly base lease rate for the Lake Forest Facility is $22,183

the Company continues to expand operations, we will need to renew relationships and contracts with our suppliers or locate suitable

new suppliers for subassemblies and other components.

and Development

believe that ongoing research and development is important to the success of our product in order to utilize the most recent technology,

develop additional products and additional uses for existing products, stay current with changes in vehicle manufacture and design

and maintain an advantage over potential competition.

Our engineering, research and development costs for Fiscal 2021 was approximately

$0.2 million compared to approximately $0.1 million in Fiscal 2020.

Fiscal 2019 we began redesign work on our Electronic Control Unit (“ECU”) to include state-of-the-art power electronics

and processors.

Work on this redesign was temporarily suspended in mid-2019 when the Company’s then-management team reallocated

significant resources to unsuccessfully oppose shareholders controlling a majority of the outstanding shares of the Company’s

common stock who sought to replace certain members of the Company’s Board of Directors.

On July 8, 2019 the Delaware Court

of Chancery entered final judgment confirming the validity of this stockholder action.

With the new management team installed,

starting in July 2019 work on the ECU redesign resumed and, in September 2019, we successfully tested and implemented this newly

designed ECU.

As a result of such efforts, our redesigned ECU allows us to replace the old 5 kW solution with a 6.5 kW solution

using the same 4-pole generator as well as to upgrade the output of the 6-pole machine from 8.5 kW to 12.5 kW.

Our recent efforts

have also resulted in the development of a 15 kW solution specifically designed to address cell tower needs of 240 VAC and simultaneously

48 VDC as well as a new 4 kW solution that is 7.5 inches in diameter and 5 inches deep that is being configured both as a motor

and automotive alternator.

In Fiscal 2022 we plan to begin delivering the new ECU solution.

and Intellectual Property

intellectual property portfolio consists of trademarks, proprietary know-how, trade secrets, and patents.

the area of electromagnetic technology, we have developed numerous magnetic systems and designs that result in a significant increase

of magnetic field density per unit volume that can be converted into useful power energy or work.

This increase in field density

is a factor of three to four, which, when incorporated into mechanical devices, could result in a significant reduction in size

and cost of production for the same performance.

applications of these technological advances are in machines used every day by industrial, commercial, and consumers.

applied technology to numerous applications in industrial machines, such as generators, motors, actuators, and linear motors.

hold the following patents:

with expiration dates in 2020, 2024, 2024 and 2033

respectively.

the end of Fiscal 2013 and the first quarter of Fiscal 2014, we filed five new patent applications related to the AuraGen ®

These new patent applications are specifically designed to cover the (i) integration of the AuraGen ®

power solution

with transport refrigeration, (ii) the interface kit of the AuraGen ®

with prime movers, (iii) a water cooled AuraGen ®

solution for situations where ventilation is not available,

(iv) a unique cable system with safety protection to transfer high power between two moving objects, and (v) a unique clamping

of power electronic components to heat sink to ensure good thermal conductivity.

Government Regulation

We are subject to laws and regulations

that affect the Company’s activities, which include, but are not limited to, the areas of labor, intellectual property and

ownership and infringement, tax, import and export requirements, environmental, and health and safety.

As we recommence operations,

our operations will again be subject to federal, state and local laws and regulations governing the occupational health and safety

of our employees and wage regulations.

For example, we are subject to the requirements of the federal Occupational Safety and

Health Act, as amended, or OSHA, and comparable state laws that protect and regulate employee health and safety.

expend resources to maintain compliance with OSHA requirements and industry best practices.

As of the date of this filing, the Company

has seven full-time equivalent employees.

Additionally, the Company engages independent contractors to support various areas of

the business.

The independent contractors are used on an as-needed basis.

Significant Customers

As of the date of the filing of this Annual

Report on Form 10-K, CBOL Corporation of Chatsworth, California is a significant customer representing more than 95% of our annual

As of the date of the filing of this Annual

Report on Form 10-K, the Company has no significant backlog of orders.

Raw Materials

The most important raw materials we use

in manufacturing our products are steel, copper, and aluminum.

Raw materials are purchased both domestically and outside the United

solution for situations where ventilation is not available, (iv) a unique cable system with safety protection to transfer

high power between two moving objects, and (v) a unique clamping of power electronic components to heat sink to ensure good thermal

conductivity.

patent application for the integration of the AuraGen ®

power solution with transport refrigeration was specifically

geared for U.S.

truck manufactured prior to 2015.

This application was abandoned, and we expect to reexamine the patent ideas

over the next 12 months as applied to both U.S.

and foreign truck for more up-to-date required configurations.

The patent application

for interface kit of the AuraGen ®

with prime mover patent was issued (8,955,624).

A provisional Patent (502,246,733 )

was issued for the water cooled AuraGen ®

solution in 2013.

patent application for a unique cable system with safety protection to transfer high power between two moving objects was abandoned

during the 2015-2019 period.

The patent application for a unique clamping of power electronic components to heat sink to ensure

good thermal conductivity was abandoned since Aura’s power electronic solution has been completely redesigned and the old

design issues are no longer relevant.

are subject to laws and regulations that affect the Company’s activities, which include, but are not limited to, the areas

of labor, intellectual property and ownership and infringement, tax, import and export requirements, environmental, and health

As we recommence operations, our operations will again be subject to federal, state and local laws and regulations

governing the occupational health and safety of our employees and wage regulations.

For example, we are subject to the requirements

of the federal Occupational Safety and Health Act, as amended, or OSHA, and comparable state laws that protect and regulate employee

health and safety.

We expect to expend resources to maintain compliance with OSHA requirements and industry best practices.

of the date of this filing, the Company has a total of nine full-time employees in research and development, sales, operations

and administration.

Additionally, the Company engages independent contractors, on an as-needed basis, to support various areas

of the business.

During fiscal 2021 we engaged three independent contractors, two to support engineering developments, and one

for accounting support.

of the date of the filing of this Annual Report on Form 10-K, CBOL Corporation of Chatsworth, California is a significant customer

representing more than 90% of our annual revenues since July 2019.

of the date of the filing of this Annual Report on Form 10-K, the Company has no significant backlog of orders.

most important raw materials we use in manufacturing our products are steel, copper, and aluminum.

Raw materials are purchased

both domestically and outside the United States.

We have no significant long-term supply contracts.

When possible, we maintain a number of sources for our raw materials,

which we believe contribute to our ability to obtain competitive pricing.

The cost of some of our raw materials and shipping costs

are dependent on petroleum cost.

Higher material prices, cost of petroleum, and costs of sourced products could have an adverse

effect on margins.

We enter into standard purchase agreements

with certain foreign and domestic suppliers to source selected products.

The terms of these arrangements are customary for the

industry and do not contain any long-term contractual obligations on our behalf.

Available Information

We file annual, quarterly and current

reports and other information with the Securities and Exchange Commission (the “SEC”

When possible, we maintain

a number of sources for our raw materials, which we believe contribute to our ability to obtain competitive pricing.

of some of our raw materials and shipping costs are dependent on petroleum cost.

Higher material prices, cost of petroleum, and

costs of sourced products could have an adverse effect on margins.

enter into standard purchase agreements with certain foreign and domestic suppliers to source selected products.

these arrangements are customary for the industry and do not contain any long-term contractual obligations on our behalf.

file annual, quarterly and current reports and other information with the Securities and Exchange Commission (the “SEC”

or the “Commission”).

These materials can be inspected and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C.

Copies of these materials may also be obtained by mail at prescribed rates from the SEC’s Public Reference Room at the above

Information about the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.

The SEC also maintains

a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that

file electronically with the SEC.

On our website, www.aurasystems.com, we

provide free of charge our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments

thereto, as soon as reasonably practicable after they have been electronically filed or furnished to the SEC.

Information contained

on our website is not part of this Annual Report on Form 10-K or our other filings with the SEC.

These materials can be inspected and copied at the SEC’s Public Reference Room at 100

F Street, N.E., Washington, D.C.

Copies of these materials may also be obtained by mail at prescribed rates from the SEC’s

Public Reference Room at the above address.

Information about the Public Reference Room can be obtained by calling the SEC at

1-800-SEC-0330.

The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other

information regarding issuers that file electronically with the SEC.

our website, www.aurasystems.com, we provide free of charge our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current

Reports on Form 8-K, and any amendments thereto, as soon as reasonably practicable after they have been electronically filed or

furnished to the SEC.

Information contained on our website is not part of this Annual Report on Form 10-K or our other filings

with the SEC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business