What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-06-21 compared with 2021-06-01 · 34 added, 392 removed, 9 unchanged (98% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

shares are quoted on the Pink Sheets operated by OTC Markets, Inc.

under the symbol “AUSI”.

Set forth below are high

and low bid prices for our common stock for each quarterly period in the two most recent Fiscal years.

Such quotations reflect

inter-dealer prices, without retail mark-up, markdown or commissions and may not necessarily represent actual transactions in

the common stock.

MARKET FOR REGISTRANT’S COMMON

EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our shares are quoted on the Pink Sheets operated

by OTC Markets, Inc.

under the symbol “AUSI”.

Set forth below are high and low bid prices for our common stock for each quarterly

period in the two most recent Fiscal years.

Such quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions

and may not necessarily represent actual transactions in the common stock.

We had approximately 3,400 stockholders of record as of May

7 unchanged sentences

Fourth Quarter ended February 28, 2021

May 26, 2021, the reported closing sales price for our common stock was $0.39

have not paid any dividends on our common stock and we do not anticipate paying any dividends on our common stock in the foreseeable

of Unregistered Securities

the year ended February 28, 2021, we issued 14,706,568 shares of common stock for a total of $2,516,909, inclusive of 608,241

shares of common stock in settlement of $370,909 of debt.

the year ended February 29, 2020, we issued approximately 3,752,000 shares of common stock, for a total of $898,735 inclusive

of approximately 1,169,000 and 50,000 shares of common stock in settlement of $363,382 of debt and $10,000 for the provision of

services, respectively.

Separately, 1,065,051 shares of common stock were cancelled in accordance with settlement of a loan agreement.

raised were for general corporate working capital purposes.

All such securities were issued and sold in reliance on the exemption

from registration contained in Section 4(a)(2) of the Securities Act of 1933, and the certificates representing such securities

contain a restrictive legend reflecting the limitations on future transfer of those securities.

The offer and sale of these securities

was made without public solicitation or advertising.

The investors represented to us that they were knowledgeable and sophisticated

and were experienced in business and financial matters so as to be capable of evaluating an investment in our securities and were

an “accredited investor”

within the meaning of Regulation D promulgated under the Securities Act of 1933.

these investors was afforded full access to information regarding our business.

of Equity Securities

did not repurchase any shares of our common stock during the fiscal years ended February 29, 2020 and February 28, 2021.

SELECTED FINANCIAL DATA

a smaller reporting company, we are not required to provide disclosure under this Item 6.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Looking Statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations includes forward-looking statements.

For cautions about relying on such forward-looking statements, please refer to the section entitled “Forward Looking Statements”

at the beginning of this Report immediately prior to “Item 1”.

business is based on the exploitation of our Axial Flux Induction solution known as the AuraGen ®

for commercial

and industrial applications and the VIPER for military applications.

Our business model consists of two major components:

sales and marketing, (ii) design and engineering.

Our sales and marketing approaches are composed of direct sales in North America

and the use of agents, distributors.

In North America, our primary focus is in (a) mobile exportable power applications, (b) EV

applications and (c) U.S.

Military applications.

The second component of our business model is focused on the design of new products

and engineering support for the sales activities described above.

The engineering support consists of the introduction of new

features for our AuraGen ®

/VIPER solution such as higher power/torque solutions, and different input

and output voltages (DC and AC input and output versions)

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

Gagerman as CFO.

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

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 2019).

Although our operations were impacted in Fiscal 2021 by the COVID-19 pandemic, during Fiscal

2021 we continued to expand our engineering and manufacturing capabilities.

See “Item 1.

Impact of the COVID-19

Pandemic”

included elsewhere in this Annual Report on Form 10-K for information regarding the impact of COVID-19 on our

Our engineering, research and development costs for Fiscal 2021 were approximately $237,000.

Subsequent to the end

of Fiscal 2021, we relocated all administrative offices and operations to a new state-of-the-art facility consisting of approximately

18,000 square feet in Lake Forest, California.

This new facility is wholly occupied by Aura.

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.

Robert Kopple, our former

Vice Chairman of the Board, was the only significant unsecured note holder that did not executed formal agreements regarding the

restructure of his debt.

Kopple claims that he and his affiliates are presently owed approximately $11.3 million.

Kopple’s claims.

See “Item 3.

Legal Proceedings”

included elsewhere in this Annual Report on Form 10-K for

information regarding the dispute with Mr.

Kopple regarding these transactions.

Kopple has not accepted our numerous offers

to settle this debt and continues to demand that as part of any such resolution, he receive unilateral control over significant

aspects of the Company’s financial and management functions such as, but not limited to, the right to unilaterally direct

the Company’s ordinary business expenditures and requiring the Company to seek his approval for the hiring of nearly all

personnel, all to the exclusion of the Company’s management team and stockholder-elected Board of Directors.

believes that allowing Mr.

Kopple such level of operational control over the Company without any accountability would be highly

detrimental to the Company and is incompatible with the Board of Directors’

duties to shareholders and creditors as a whole.

Fiscal 2019, we effectuated a one-for-seven reverse stock split and began increasing our engineering and manufacturing activities.

We incurred engineering expenses of approximately $494,000 during Fiscal 2019.

Most corporate operations were temporarily suspended,

however, in Fiscal 2020 when the Company’s then-management team reallocated significant resources to unsuccessfully oppose

an action by shareholders controlling a majority of the outstanding shares of the Company’s common stock 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.

See Item 3, Legal Proceedings for more information.

As a result, during Fiscal 2020 we

incurred only modest engineering expenses of approximately $172,000 (representing a reduction of approximately 65% from the prior

fiscal year).

Also, in Fiscal 2020, Melvin Gagerman ––

Aura’s CEO and CFO since 2006 ––

was replaced.

Accounting Policies and Estimates

management’s discussion and analysis of our financial conditions and results of operations are based upon our financial

statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.

The preparation of financial statements requires management to make estimates and disclosures on the date of the financial statements.

In preparing our financial statements, we have made our best estimates and judgments of certain amounts included in the financial

We use authoritative pronouncements, historical experience and other assumptions as the basis for making judgments.

The full impact of the COVID-19 pandemic is unknown and cannot be reasonably estimated for these key estimates and assumptions.

However, we made appropriate accounting estimates based on the facts and circumstances available as of the reporting date.

the extent that there are differences between these estimates and actual results, our financial statements may be materially affected.

core principle of ASC 606, Revenue from Contracts with Customers (“ASC 606”), is that an entity recognizes

revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which

the entity expects to be entitled in exchange for those goods or services.

In applying ASC 606, all revenue transactions must

be evaluated using a five-step approach to determine the amount and timing of revenue to be recognized.

The five-step approach

requires (1) identifying the contract with the customer, (2) identifying the performance obligations in the contract, (3) determining

the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing

revenue when performance obligations are satisfied.

primary source of revenue is the manufacture and delivery of AuraGen/VIPER systems used primarily in mobile power applications,

which represented 100% of our revenues of approximately $115,000 and $822,000 for the Fiscal years ended February 28, 2021 and

February 29, 2020, respectively.

Our current principal sales channel is sales to a domestic distributor and to end users directly.

accordance with ASC 606, we recognize the entirety of the revenue, net of discounts, for our AuraGen/VIPER systems at time of

product delivery to the costumer (i.e.

point-in-time), which also corresponds to the passage of legal title to the customer and

the satisfaction of our performance obligations to the customer.

Our payment terms are cash payment due upon delivery and typically

includes a 2.5% price discount in accordance with this policy.

Our commercial terms and conditions do not include a right of return

for reasons other than a defect in performance or quality.

We offer 18 months assurance-type warranty covering material and manufacturing

defects, which we account for under the guidance of ASC 460, Guarantees.

We have a limited history of shipments, and, as

such, we have not recorded a warranty liability on our balance sheets on February 28, 2021 and February 29, 2020, respectively;

however, we expect warranty claims to eventually be nil, therefore, we have not delayed the recognition of revenue during Fiscal

years 2021 and 2020.

Valuation and Classification

are valued at the lower of cost or market, on an average cost basis.

We review the components of inventory on a regular basis

for excess or obsolete inventory based on estimated future usage and sales.

From Fiscal 2015 through 2019 we minimally operated

and therefore only produced minimal product.

As a result, while we believed that a portion of the inventory had value, we were

unable to substantiate its demand and market value, we fully reserved it as of February 28, 2019.

Following the change of management

in July 2019, revenues of $822,000 were recorded during the remainder of Fiscal 2020 along with increased production levels giving

rise to approximately $92,000 and $90,000 of inventory on-hand on February 28, 2021 and February 29, 2020, respectively.

account for stock-based compensation under the provisions of FASB ASC 718, “Compensation –

Stock Compensation”,

which requires the measurement of all share-based payments to employees and non-employee directors, including grants of employee

stock options, using a fair value-based method and the recording of such expense in the statements of operations.

account for stock option and warrant grants issued and vesting to non-employees, such as consultants and third parties, in accordance

with FASB ASC 718, “Compensation –

Stock Compensation”, where appropriate, whereas the fair value of the equity-based

compensation is based upon the measurement date as determined at the earlier of either (a) the date at which a performance

commitment is reached or (b) at the date at which the necessary performance to earn the equity instruments is complete.

the past, several years and in accordance with established public company accounting practice, we have consistently utilized the

Black-Scholes option-pricing model to calculate the fair value of stock options and warrants issued as compensation, primarily

to management, employees, and directors.

The Black-Scholes option-pricing model is a widely accepted method of valuation

that public companies typically utilize to calculate the fair value of options and warrants that they issue in such circumstances.

1,250,000 stock options were granted to all member of the board of directors in Fiscal 2021, and approximately $193,000 of stock-based

compensation expense was recorded during Fiscal 2021.

adopted ASC 842 , Leases , in Fiscal 2020, which required that public companies evaluate all operating leases in accordance

with ASC 842 and recognize a lease liability on the balance sheet by determining the present value of the remaining lease payments

for each lease using a discount rate based on the Company’s incremental borrowing rate.

A corresponding right-of-use asset

is also recognized that is amortized over the remaining term of the lease.

Throughout Fiscal 2020 and the majority of Fiscal 2021,

we did not implement the new guidance to our existing leases because the guidance does not require application of the standard

for leases that are less than 12 months with lease renewal unlikely.

All of the facility leases were month-to-month with management’s

intention of exiting the leases and facilities as soon as practical.

In February 2021, we entered into a 66-month facility lease

in Lake Forest, CA that began on March 1, 2021, which resulted in the application of ASC 842 for the fiscal year ended February

As of February 28, 2020, we recognized a lease liability and a right-of-use asset of $1.2 million, respectively.

Fiscal 2022 and beyond, we will be applying the new lease standard to this lease and any other operating leases we enter into

in the future.

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 Fiscal 2021 were significantly reduced, thus impacting our results of operations during

these 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:

of payroll costs through temporary furloughs;

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;

of capital expenditures;

of discretionary spending.

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 2022, as well as the full Fiscal

year, and that impact could be material.

of Operations

2021 compared to Fiscal 2020

in July 2019, our new management team began significantly to increase sales, manufacturing and marketing operations as compared

to prior years leading up to Fiscal 2020.

Since that date and through the remainder of Fiscal 2020, we had revenues of $822,000,

consisting primarily of our shipment of 132 AuraGen ®

/VIPER units to primarily one major customer.

Revenues in Fiscal

2021 of approximately $115,000 consisted of the delivery of 20 AuraGen ®

/VIPER units.

We believe that the reduction

in revenue in Fiscal 2021 was impacted significantly by the COVID-19 pandemic and its impact on the global economy and the dependency

on one major customer.

of goods sold was $81,449 and $177,000 in the years ended February 28, 2021 and February 29, 2020, respectively.

above within Critical Accounting Policies and Estimates, our inventory was fully reserved at February 28, 2019 due to uncertainty

surrounding its eventual recovery through the sale of our principal product.

During Fiscal 2021, we benefited from the utilization

of fully reserved inventory to deliver 20 units and recorded material cost at 25% of sales value, direct labor at 45% of sales

value and other overheads at 3% of sales.

Similarly, during Fiscal 2020, cost of goods sold consisted of direct material, outside

manufacturing services, inbound freight costs, direct labor and indirect manufacturing labor costs.

Approximately, $122,000 of

previously reserved direct material was utilized in production to enable deliveries of 132 units which resulted in a reduction

of cost of goods sold by the same amount.

As production levels increase over time, the amount of recoverable inventory will decline

and the amount of direct material recorded within cost of goods sold will increase, reducing the gross profit contribution of

units of sales.

Research and Development

research and development costs increased by $65,000 to $237,000 in Fiscal 2021 from approximately $173,000 in Fiscal 2020.

38% increase is a result of increased expenses incurred in the process of designing a new electronic control unit (“ECU”)

for our AuraGen ®

/VIPER products as well as sustaining engineering expenses related to the expansion of manufacturing

General and Administrative Expense

general and administrative expenses increased approximately $60,000, or 4.7%, to $1,319,000 in Fiscal 2021 from $1,259,000 in

Fiscal 2020 due to (i) non-recurring expense of approximately $108,000 related to the moving costs for consolidation of operations

following the exits from the Santa Clarita in July 2020 and Stanton facilities into a new facility in Lake Forest, CA (ii) stock-based

compensation expense of $194,000 related to the grant of 1,250,000 options to acquire shares of our common stock to member of

the board of directors in March 2020 (iii) reduced by a reduction of legal fees of $118,000 and (iv) reduced by lower other expenses

of $124,000 due to reduced operations during the pandemic.

of Joint Venture

Fiscal 2020, we recorded an impairment charge of $250,000 in relation to the Chinese joint venture entered into in 2017 for the

purpose of developing the Chinese market for our principal product.

Due to the lack of operating activity, uncertainties surrounding

expanding opportunities and related cash flows in the Chinese market, and public health considerations with respect to the COVID-19

pandemic, we recorded the impairment charge and wrote-off the carrying value of the same amount from the balance sheet on February

Non-Operating

Income, Interest Expense and Tax Provision

interest expense increased to $1,293,000 in Fiscal 2021 from $1,234,000 in Fiscal 2020, an increase of $59,000, or 4.8%, on approximately

$11.8 and $11.2 million of principal amounts due at February 28, 2021 and February 29, 2020, respectively.

We recorded other income

of approximately $3.6 million on debt settlements of $0.9 million and cancellation of liabilities of $2.7 million following the

expiration of the statute of limitations for settlement.

In Fiscal 2020 we recorded other expense of approximately $0.3 million

in relation to a settlement of amounts due to our president prior to March 2020.

had net income of $0.8 million and loss of $2.6 million in the Fiscal years ended February 28, 2021 and February 29, 2020, respectively,

or an increase of income of approximately $3.4 million due to (i) gain on debt settlement of $1.3 million (ii) $2.6 million gain

related to the Fiscal 2021 cancellation of current liabilities from our balance due to the expiration of the statute of limitations

(iii) impairment expense of $0.3 million related to the write-off of the Chinese joint venture, partially offset by (iv) reduction

in gross profit of $0.6 million due to reduced shipments of generator sets from Fiscal 2020 to Fiscal 2021 and (v) higher operating

expenses of $0.2 million.

and Capital Resources

Fiscal 2021, we had income of approximately $0.8 million and negative cash flows from operations of approximately $1.9 million.

During Fiscal 2020 we had a loss of $2.6 million and negative cash flows from operations of approximately $0.8 million.

The improvement

in net income is due to non-cash gains on the cancellation of current liabilities and certain debt instruments while the decline

in operating cash flows is attributed to a sharp reduction in operating activities caused principally by the COVID-19 pandemic.

The COVID-19 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.

In the event that economic conditions remain impacted

for longer than we expect due to the COVID-19 pandemic, our liquidity position could be severely impacted and there can be no

assurance that lenders or investors will make additional financial commitments under current circumstances.

As a result of the

impacts of the COVID-19 pandemic, we may be required to raise additional capital and our access to and cost of financing will

depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient

amounts of financing, and our future prospects.

February 28, 2021, we had cash of approximately $391,000, compared to cash of approximately $20,000 at February 29, 2020.

capital at February 28, 2021 was a $15.5 million deficit as compared to an $18.9 million deficit at the end of the prior fiscal

Accounts payable and accrued expenses decreased $2.0 million due primarily to the cancellation of payables and accrued salaries

following the expiration of the statute of limitations and a reduction in operating activities year over year.

At February 28,

2021 and February 29, 2020, we had no accounts receivable.

In Fiscal 2021 and 2020 we incurred approximately $15,000 and zero

for property and equipment, respectively.

February 28, 2021 and 2019, we had 150,000,000 shares of $0.0001 par value common stock authorized for issuance.

During the year

ended February 28, 2021, the Company issued a total of approximately 14.7 million shares of common stock, of which 14.1 million

shares were issued for cash totaling approximately $2.1 million and the remainder of 0.6 million shares for settlement of debt

totaling $371,000.

During the year ended February 28, 2020, we issued 2.5 million shares of common stock for cash totaling $525,000,

1.2 million shares for settlement of debt of $366,000, $50,000 shares of common stock for services rendered to us of $10,000 and

a cancellation of $1.1 million shares outstanding in October 2019 in connection with a settlement agreement.

to Fiscal 2020, in order to maintain liquidity, we relied upon external sources of financing, principally equity financing and

private indebtedness.

We have no bank line of credit and will require additional debt or equity financing to fund ongoing operations.

Based on a cash flow analysis performed by management, we estimate that we will need an additional $5.0 million to maintain existing

operations for the Fiscal year 2022 and increase the volume of shipments to customers.

We cannot assure the reader that additional

financing will be available nor that the commercial targets will be met in the amounts required to keep the business operating.

The issuance of additional shares of equity in connection with such financing could dilute the interests of our existing stockholders,

and such dilution could be substantial.

If we cannot raise the needed funds, we would also be forced to make further substantial

reductions in our operating expenses, which could adversely affect our ability to implement our current business plan and ultimately

our viability as a company.

Debt - Robert Kopple, who was Vice Chairman of our Board of Directors from September 2013 through January 11,

2018, claims that we owe him and certain affiliated parties an aggregate of approximately $11.3 million in principal and interest,

and warrants to purchase 3,331,664 shares of our common stock at a price of $0.70 per share, as a result of various loans made

Kopple and his affiliates (collectively, the “Kopple Parties”) to us between 2013 and 2016 as well as additional

amounts he claims to have advanced on Aura’s behalf.

or about March 23, 2013, the Kopple Parties made various cash advances to us in the aggregate original principal amount of $2,500,000,

evidenced by an unsecured convertible note (the “Original Kopple Note”) with the right to convert outstanding principal

and accrued and unpaid interest at $3.50 per share (post 1:7 reverse split).

On or around June 20, 2014, $500,000 of the Original

Kopple Note was reclassified as a short-term note, the principal amount of the Original Kopple Note was reduced from $2.5 million

to $2.0 million and the Original Kopple Note was amended to provide that an event of default under the June 2014 Agreement (as

described and defined below) would also constitute an event of default under the Original Kopple Note.

in June 2014, we entered into a Financing Letter of Agreement (the “June 2014 Agreement”) with two affiliate entities

Kopple, KF Business Ventures and the Kopple Family Partnership (the “Additional Kopple Parties”), pursuant

to which the Additional Kopple Parties loaned us an additional $1,000,000 (the “June 2014 Loan”).

In connection with

the June 2014 Loan, Mr.

Kopple also added $202,205 in penalties and accrued interest, credited us with $200,000 for amounts previously

repaid by us and consolidated several earlier advances into a single new note (the “June 2014 Kopple Note”) in the

principal amount of $2,715,2067 and bearing simple interest at a rate of 10% per annum.

to the June 2014 Agreement, the Kopple Parties also purported to place various restrictions on our ability to raise additional

capital, hire qualified personnel and pay certain expenses without his prior approval for so long as the principal amount of his

note remained outstanding.

The June 2014 Kopple Note also required us to issue Mr.

Kopple a stock purchase warrant (the “June

2014 Kopple Warrant”) to purchase approximately 771,000 shares of our common stock at an exercise price of $0.70 per share,

to be exercisable for seven years.

Additionally, if we borrowed funds, issued capital stock or rights to acquire or convert into

capital stock, or granted rights in respect to territories to any person for cash consideration of more than $5 million in the

aggregate after the date of the June 2014 Kopple Note, we would be required to pay the entire amount of such cash consideration

in excess of $5 million as a mandatory prepayment of the June 2014 Kopple Note.

Additionally, Mr.

Kopple required a default provision

providing that in the event that the entire outstanding balance of the June 2014 Kopple Note was not paid in full prior to October

1, 2014, then for each consecutive calendar month during the period beginning October 1, 2014 and ending March 31, 2015, we would

Kopple additional stock purchase warrants, each to purchase 416,458 shares of our common stock, up to a maximum aggregate

of approximately 2.5 million shares of our common stock, at $0.70 per share (the “Kopple Penalty Warrants”), the Kopple

Penalty Warranties to be exercisable for seven years from the time of their respective issuances.

In addition to the Kopple Penalty

Warrants, the default provision under the June 2014 Kopple Note provides for a 5% late charge on the total amount due plus 15%

per year interest.

We have not repaid the Kopple Parties in full for the amounts loaned to us.

Additionally, we have not issued

any of the Kopple Penalty Warrants and management believes that Mr.

Kopple is not entitled to receive them.

We have also cancelled

the June 2014 Kopple Warrant.

consider the transactions described above with Mr.

Kopple to be related party transactions.

“Item 3.

Legal Proceedings”

included elsewhere in this Annual Report on Form 10-K for information regarding the dispute

Kopple regarding these transactions.

independent auditor has expressed doubt about our ability to continue as a going concern and believes that our ability is dependent

on our ability to implement our business plan, raise capital and generate revenues.

See Report of Independent Registered Public

Accounting Firm on page F-1, together with audited financial statements for the Fiscal year ended February 28, 2021.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

a smaller reporting company, we are not required to provide the information required by this Item 7A.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements at page F-1.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On June 13, 2022, the reported closing sales price for our common stock

Dividend Policy

We have not paid any dividends on our common stock

and we do not anticipate paying any dividends on our common stock in the foreseeable future.

Sales of Unregistered Securities

During the year ended February 28, 2022, we issued

approximately 12,016,000 shares of common stock, for a total of $3,276,330 inclusive of approximately 1,571,000 and 245,000 shares of

common stock in settlement of $550,000 of debt and $73,500 for services, respectively.

During the year ended February 28, 2021, we issued

14,513,963 shares of common stock for a total of $2,249,909, inclusive of 415,636 shares of common stock in settlement of $103,909 of

Funds raised were for general corporate working

capital purposes.

All such securities were issued and sold in reliance on the exemption from registration contained in Section 4(2) of

the Securities Act of 1933, and the certificates representing such securities contain a restrictive legend reflecting the limitations

on future transfer of those securities.

The offer and sale of these securities was made without public solicitation or advertising.

investors represented to us that they were knowledgeable and sophisticated and were experienced in business and financial matters so as

to be capable of evaluating an investment in our securities and were an “accredited investor” within the meaning of Regulation

D promulgated under the Securities Act of 1933.

Each of these investors was afforded full access to information regarding our business.

Repurchases of Equity Securities

We did not repurchase any shares of our common

stock during the fiscal years ended February 28, 2022 and February 28, 2021.

As a smaller reporting company, we are not

required to provide disclosure under this Item 6.

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 5. Market for Registrant’s Common Equity