What changed in this filing

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Item 1. Business

2023-05-26 compared with 2022-06-21 · 775 added, 762 removed, 100 unchanged (94% 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 (“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 ® 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.

Traditional 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 or

weight) 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 innovations.

The 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.

The issues related to the fabrication and the high cost of manufacturing

of the laminated stator cores were resolved by Aura using a 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 ®

are the same as a traditional RF machine, the novel design of the AuraGen ® and its unique performance characteristics offer

perceivable advantages over traditional RF technology.

● A 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.

Likewise, on average the AuraGen ® has a volume of approximately

35% of RF equivalent machines.

As a result, the AuraGen ® is uniquely able to be installed in locations traditional RF

technology cannot possibly due to size and weight.

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 paths.

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 All of

the above contribute to an increase in efficiency.

● Unlike Other

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

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 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 do —

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.

● Most EVs use PM machines.

In applications that require

variable speed and variable loads, such as in EV applications, the magnetic B field should be adjusted over the operating range.

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’s induction machine when operated with an Aura 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.

After a lengthy development period, the Company

first began commercializing the AuraGen ® in late 1999 and early 2000.

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.

In Fiscal 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 15 kW.

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 new 4 kW and 10 kW solutions.

The new 4 kW as a motor is approximately 6.5 inches in diameter and approximately 5 inches

deep and has efficiency above 90%.

The new 10 kW design as a mobile generator is approximately 8 inches in diameter, and 5 inches in axial

length and efficiency higher than 92%.

To date, the Company has sold approximately 11,000

AuraGen ® solutions for numerous applications.

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 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.

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 for very limited manufacturing.

During fiscal 2019 the Company sold 11 systems.

In 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.

Systems, Inc.

(“Aura”), is a Delaware corporation founded in 1987.

The Company innovated and commercialized the technology

for Axial Flux Induction electric motors and generators.

Aura’s axial flux induction motor technology (“AAFIM”) provides

an industrial solution that does not use any permanent magnets, no rare earth elements, is smaller and lighter, uses significant less

materials (just copper and steel), very high efficiency, significantly less copper, highly reliably, very robust, and no scheduled maintenance.

industrial electric motor market is expected to grow from an estimated USD 113.3 billion in 2020 to USD 169.1 billion by 2026,

at a CAGR of 6.9% during the forecast period 1 .

motors are employed in infrastructure, major structures, and industries all around the world.

Each year, almost 30 million

motors are sold for industrial use alone 2 .

Electric motors find application in a variety of equipment throughout industry.

industrial applications include:

(i) compressors, (ii) fans and blowers, (iii) heavy duty equipment, (iv) HVAC systems, (v) pumps

and (vi) machine tools (lathes and mills, etc.).

universal global trend for electrification has created in addition to the industrial demand for motors a very large demand for motors

used in electric transportation for vehicles, planes, and boats (“EV”).

In such applications, one or more electric motors

are used for propulsion.

Most electric motors currently used for electric mobility employ high energy permanent magnets 3

due to their high efficiency and small size.

The magnetic material is usually sintered neodymium–iron–boron (NdFeB) made

or processed in China.

is expected that over 100 million electric motors will be required per year by 2032 to meet the demand for the growing

EV market 4 .

Electric Vehicle applications, AAFIM provide efficiencies that are equal to or higher than ones provided by the best high energy permanent

magnet solution (“PM”).

AAFIM are smaller, have higher reliability, are more robust, have larger operating speed range, are

not limited to 100 degrees C operating temperature for the equivalent PM machine.

In addition, AAFIM costs are significantly lower than

the equivalent PM machines.

history of electric machines reveals that the earliest machines were, in fact, axial flux machines.

However, after the first radial flux

machines were demonstrated in the beginning of the 20 th century, radial flux machines were accepted as the mainstream configuration.

The reason for shelving the axial flux machines were multifold and can be summarized as follows:

(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 keeping a uniform air gap and (v) providing

a laminated rotor that can withstand the large centripetal forces.

Markets & Markets Electric Motor Market Published Date:

November 2020 | Report Code:

Precedence Research October 6, 2021

Will rare earth be eliminated in EV motor-Dr.

James Edmondson November 2, 2020

Emerging Electric Motor Technologies for the EV Market September 28, 2021 Luke Gear

recent years there has been great interest in axial flux topology for numerous industrial, commercial, and electric mobility motor and

power generation applications.

However, to date the commercial focus in axial flux motors has been designs using rare earth permanent

magnets (“PM”).

The use of rare earth permanent magnets in axial flux topology can be attributed to the historical belief

that it is “ difficult to manufacture a laminated rotor with a cage winding for an axial flux machine.

If the cage windings

are replaced with nonmagnetic high conductivity (Cu or AL) homogenous disk or steel disk coated with Cu layer, the performance of the

machine drastically deteriorates” ( Axial Flux Permanent Magnet Brushless Machines by Jacek F Gieras, Rong-Jie Wang

and Maarten K Kamper 2008).

Systems with its axial flux induction technology solved the issues related to the rotor back in 2002 and has shipped over 11,000 axial

flux induction machines in the 5-15 kW range to numerous military and commercial users .

Aura’s proprietary rotor does not

require any laminates and provides the structural integrity to withstand very large centripetal forces while, at the same time, providing

the proper electric and magnetic properties without the usual issues associated with a solid rotor or a steel disk coated with a copper

TechEX research forecasts a huge increase in demand of axial flux motors over the next 10 years, with first applications in high performance

vehicles and certain hybrid applications 5 .

has during the last few years optimized its axial flux induction machine technology (no PM) where the performance (efficiency, torque,

energy density) is now equal to or greater than the very best of both axial and radial permanent magnet machines.

Of course, this is

done using only copper and steel with aluminum for housing at a fraction of the cost of equivalent PM machines.

Axial Flux Induction technology is the culmination of decades of cutting-edge electromagnetic research and more than $150 million in

development by Aura scientists and engineers.

Aura’s axial flux induction technology used for mobile power generation was first

used in a combat zone by U.S.

forces in the U.N actions in the Balkans and since then, the U.S.

military has used it in combat zones

in both Iraq and Afghanistan.

To date the Company shipped over 11,000 systems for mobile power applications in the 5-15 kW range of which

over 3,000 systems were for various military applications.

Axial Flux Induction Machine has inherited advantages 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) significantly higher energy density, (iv) fewer overall materials,

and (v) high efficiency.

In addition, being an induction machine, Aura’s solution does not have any brushes or commutators and

therefore do not have any potential for sparks.

Axial Flux induction (“AAFIM”) Competitive Edge

○ Performance-

AAFIM provides the highest power density across all other known motor technologies with energy

density of more than 76 kW/liter for machines in the 250-kW range.

In addition, Aura’s

solution provides efficiencies that are higher than any other solutions for commercial and

industrial applications.

For 250 kW EV applications Aura’s designs show efficiency

AAFIM solution also has significantly lower rotor inertia than other solutions.

This increases the machine efficiency even further since it requires less input torque to

move the rotor.

and weight-Aura’s solution is significantly smaller in volume and has lower weight

than any known solution for equivalent power rated machines (even includes PM machines).

When compared to traditional radial flux (“RF”) induction machines, AAFIM has

less than 50 % of the weight and more than 50% reduction in volume.

The AAFIM pancake design

creates a solution that can be integrated with vehicles and boats for seamless exportable

provides a significant cost advantage over equivalent induction and PM machines.

advantage comes from (a) the higher energy density which means less materials and (b) in

the case of PM machines significant cost advantage for equivalent machines by just elimination

of the permanent magnets.

When compared to radial flux induction, Aura’s solution uses

approximately 60% less copper.

Due to the fractional materials used and the simple manufacturing

processes Aura’s high-performance machines are less expensive to manufacture than other

equivalent machines.

Advantages-Aura’s solution is extremely reliable with the only components to wear out

are the bearings.

AAFIM do not require any scheduled maintenance and the only materials used

are copper and steel for the active components and aluminum for the housing.

These materials

are readily available everywhere and are not controlled by any country or political group.

In addition to the performance, Aura’s rotor lends itself to mass manufacturing.

of Aura’s axial flux induction machines have been operating for twenty years and have

shown remarkable reliability.

Emerging Electric Motor Technologies for the EV Market September 28, 2021 Luke Gear Electric motors

a lengthy development period, the Company first began commercializing the AuraGen ® in late 1999 and early 2000.

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.

In Fiscal 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 15 kW.

more recent efforts have also resulted in the development of the following upgraded optimum designs:

5,000 base-20,000

Electric Vehicles

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.

1 unchanged sentence

Robert Lempert as directors of the Company in their stead.

Because 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, Jr.

Because 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, Jr.

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 Ms.

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 Ms.

Lavut as President, Mr.

Mann as Chief Financial Officer and Dr.

Mann as Chief Financial Officer and

Lempert as Secretary of the Company.

In February 2022,

Steven Willett was appointed CFO.

Upon 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.

Through 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 $1.0 million in revenue.

During Fiscal 2022 and 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.

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 entirety of Fiscal 2021 were significantly

reduced, thus impacting our results of operations during these fiscal periods.

In 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

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;

Deferral of discretionary spending.

As of the filing of this Annual Report on Form

10-K on June 15, 2022, 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 continue to adversely impact our results

for the current year, Fiscal 2023, 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.

Also, during Fiscal 2018, 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 ® rotor;

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.

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 due to the COVID-19 virus, and

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

In February 29, 2020, the unpaid balance of $700,000 was reported as

part of notes payables – related party in the accompanying financial statements.

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.

In 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.

In February 2022, Mr.

Steven Willett was appointed the Company’s CFO.

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, Fiscal 2022 and Fiscal 2023 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:

monitoring of operating expenses including wages and salaries;

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

to work from home where possible;

of capital expenditures;

of discretionary spending.

of the filing of this Annual Report on Form 10-K on May 26, 2023, 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.

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 continue to adversely impact our results for the current year, Fiscal 2024, and that impact could be material.

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.

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 ® mobile power products in China.

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

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 ® rotor;

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.

The preliminary agreement reached consists of a non-interest-bearing

promissory note and a payment plan pursuant to which the $700,000 was to be paid over an 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.

As of February 28, 2023, the unpaid balance of $700,000 was reported as part of notes payables – related party in the accompanying

financial statements.

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.

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.

1 unchanged sentence

Robert Lempert as directors of the Company in their stead.

See Item 3, Legal Proceedings for more information.

in Fiscal 2020, Melvin Gagerman, Aura’s CEO and CFO since 2006, was replaced.

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

Gagerman as President and Mr.

Mann succeeded Mr.

Gagerman as CFO.

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

Lempert was appointed as Secretary

of the Company by the Board of Directors also in July 2019.

In February 2022, Mr.

Steven Willett was appointed CFO.

During 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 2022 (February 28, 2022), we

shipped more than 140 units to customers (a more than a ten-fold increase over Fiscal 2019).

Recent Developments.

Beginning 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

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.

As 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.

Resurgences in certain parts of the world resulted in further business disruptions

periodically throughout Fiscal 2022 and Fiscal 2021.

Such disruptions have continued into the first quarter of Fiscal 2023, impacting

our business.

Despite 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.

The AuraGen ® /VIPER Product Overview:

Markets Served by the AuraGen ® /VIPER

Induction Motor Applications

Aura’s 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.

Because even 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.

Electric motor are the main users of electricity,

accounting for approximately 53% of the global demand for electricity.

Over 65% of the energy used to support electric motors is used

for industrial motor systems.

1 The industrial electric

motor market is expected to grow from an estimated USD 113.3 billion in 2020 to USD 169.1 billion by 2026, at a

CAGR of 6.9% during the forecast period 2 .

The increase in

global electricity consumption, and the use of electrical equipment and machines in different industries and the renewables sector are

major factors driving growth in the electric motor market during the forecast period

During the second

half of Fiscal 2020, the Company began significantly increasing its engineering, manufacturing and marketing activities.

Since July 8,

2019, the date of the management change, through the end of Fiscal year 2023, the Company has shipped approximately 155 units.

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 2022 and Fiscal 2021.

Such disruptions

have continued into Fiscal 2023, 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:

Served by the AuraGen ® /VIPER

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.

Because even 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.

motor are the main users of electricity, accounting for approximately 53% of the global demand for electricity.

Over 65% of the

energy used to support electric motors is used for industrial motor systems.

6 The industrial electric motor

market is expected to grow from an estimated USD 113.3 billion in 2020 to USD 169.1 billion by 2026, at a CAGR

of 6.9% during the forecast period.

The increase in global electricity consumption, and the use of electrical

equipment and machines in different industries and the renewables sector are major factors driving growth in the electric motor

market during the forecast period.

motors are employed in infrastructure, major structures, and industries all around the world.

1 unchanged sentence

are sold for industrial use alone.

Electric motors

find application in a variety of equipment throughout industry.

Common industrial applications include:

(i) compressors, (ii)

fans and blowers, (iii) heavy duty equipment, (iv) HVAC systems, (v) pumps and (vi) machine tools (laths and mills etc.) Electric

motors and generators are one of the most important tools in modern day life.

8 Electric motors find application in a variety of equipment throughout industry.

industrial applications include:

(i) compressors, (ii) fans and blowers, (iii) heavy duty equipment, (iv) HVAC systems, (v) pumps

and (vi) machine tools (laths and mills etc.) Electric motors and generators are one of the most important tools in modern day

studies show a high potential for energy efficiency improvement in motor systems.

3 unchanged sentences

improvements in motor systems with best available technology lie between 9 and 13 percent of the national industrial electricity

Aura’s machines use approximately

60% less copper, are approximately 1/3 the size and weight and are more efficient than the equivalent traditional radial flux (“RF”)

induction machine.

When compared to radial and axial flux permanent

magnet machines, Aura machines are less expensive to manufacture, do not use any rare earths, do not use any permanent magnets, are not

dependent on supply from China, are more robust, have a higher operating speed range, have lower maintenance, have a longer lifetime,

and are generally smaller, lighter and higher in efficiency.

EV applications

The universal global

trend for electrification has created in addition to the industrial demand for motors also a very large demand for motors used in electric

transportation for vehicles, planes, and boats (“EV”).

In such applications, one or more electric motors are used for

machines use approximately 60% less copper, are approximately 1/3 the size and weight and are more efficient than the equivalent traditional

radial flux (“RF”) induction machine.

compared to radial and axial flux permanent magnet machines, Aura machines are less expensive to manufacture, do not use any rare earths,

do not use any permanent magnets, are not dependent on supply from China, are more robust, have a higher operating speed range, have

lower maintenance, have a longer lifetime, and are generally smaller, lighter and higher in efficiency.

universal global trend for electrification has created in addition to the industrial demand for motors also a very large demand for motors

used in electric transportation for vehicles, planes, and boats (“EV”).

In such applications, one or more electric motors

are used for propulsion.

The power to drive the electric motors is generally a battery system or fuel cell.

Both batteries and fuel cells convert some

form of fuel to electricity through some chemical process.

EVs include, but are not limited to, road and off-road vehicles, surface

and underwater vessels, electric aircraft, and electric spacecraft.

Identification of Technoeconomic Opportunities with the Use of Premium Efficiency Motors as Alternative for Developing Countries -Julio R.

Both batteries and fuel cells

convert some form of fuel to electricity through some chemical process.

EVs include, but are not limited to, road and off-road vehicles,

surface and underwater vessels, electric aircraft, and electric spacecraft.

Identification of Technoeconomic Opportunities with the Use of Premium Efficiency Motors as Alternative for Developing Countries -Julio

October 16, 2020

3 unchanged sentences

Energy efficiency in electric motor systems- UN industrial Development Organization Venna 2012

It is rather interesting

to note that, while electric motors have been around for more than 200 years, technical information on electric motors in EVs is very

scarce and generally only found in niche technology sites.

Most EV literature only notes

the motor’s relative quietness, its torque response, its simplicity, and long-term low maintenance requirements.

Most of the space

dedicated to the powertrain (motor, motor- controller and some cases a gear box) is focuses, instead, on the battery—its size and

weight, where it sits, the range, how long it takes to fully charge, etc.

Yet, the only function of the battery system is to support the

electric motors and its controller.

In addition to the batteries, the electric

motor and supporting power electronics are critical components of EV drivetrain.

It is expected that over 100 million electric motors

will be required per year by 2032 to meet the demand for the growing EV market 5

(where would all the rare earths come from to support 100 million motors per year?).

The global Electric

Vehicle Market size is projected to grow from 4 million units in 2021 to 34.76 million units by 2030 6 .

The AC motor (most power by alternating current) is expected to witness the fastest growth in the electric motor market during the

forecast period.

The global electric powertrain market (electric

motor, plus motor controller plus a gear box) size is projected to surpass around US$ 200 billion by 2027 and growing at a CAGR 13.8%.

The motor/generator component expected to show lucrative growth over the analysis period attributed to the escalated penetration of plug-in

hybrid battery electric vehicle (“PHEV”) and battery electric vehicle (“BEV”) across the globe 7

There are several key performance metrics for

electric motors.

Power and torque density enables improved driving dynamics in a smaller and lighter package, with weight and space being

at a premium in EVs.

is rather interesting to note that, while electric motors have been around for more than 200 years, technical information on electric

motors in EVs is very scarce and generally only found in niche technology sites.

Most EV literature only notes the motor’s relative

quietness, its torque response, its simplicity, and long-term low maintenance requirements.

Most of the space dedicated to the powertrain

(motor, motor- controller and some cases a gear box) is focuses, instead, on the battery—its size and weight, where it sits, the

range, how long it takes to fully charge, etc.

Yet, the majority function of the battery system is to support the electric motors and

its controller.

addition to the batteries, the electric motor and supporting power electronics are critical components of EV drivetrain.

It is expected

that over 100 million electric motors will be required per year by 2032 to meet the demand for the growing EV market 10 (where

would all the rare earths come from to support 100 million motors per year?).

global Electric Vehicle Market size is projected to grow from 4 million units in 2021 to 34.76 million units by 2030.

The AC motor (most power by alternating current) is expected to witness the fastest growth in the electric motor market during

the forecast period.

global electric powertrain market (electric motor, plus motor controller plus a gear box) size is projected to surpass around US$ 200

billion by 2027 and growing at a CAGR 13.8%.

The motor/generator component expected to show lucrative growth over the analysis period

attributed to the escalated penetration of plug-in hybrid battery electric vehicle (“PHEV”) and battery electric vehicle

(“BEV”) across the globe.

are several key performance metrics for electric motors.

Power and torque density enables improved driving dynamics in a smaller and

lighter package, with weight and space being at a premium in EVs.

Another critical area is efficiency.

Improving efficiency means that less energy stored in the battery is

wasted when accelerating the vehicle, resulting in improved range from the same battery capacity.

Smaller motor system weight will also

contribute to increase in range since less weight needs to be moved.

Most electric motors

currently used for electric mobility employ high energy permanent magnets 8 .

The magnetic material is usually sintered neodymium–iron–boron (NdFeB) made or processed in China.

Neodymium is one of the

rare earth elements.

China has around a third of all rare earth reserves and around 90% of global production 9 .

In 1987 the Chinese President Deng Xiaoping famously said, “ the middle East has Oil;

Improving efficiency means that

less energy stored in the battery is wasted when accelerating the vehicle, resulting in improved range from the same battery

Smaller motor system weight will also contribute to increase in range since less weight needs to be moved.

electric motors currently used for electric mobility employ high energy permanent magnets.

13 The magnetic material is usually

sintered neodymium–iron–boron (NdFeB) made or processed in China.

Neodymium is one of the rare earth elements.

around a third of all rare earth reserves and around 80% of global production.

14 In 1987 the Chinese President Deng Xiaoping

famously said, “ the middle East has Oil;

China has rare earths ”.

Analytics Expert briefing on July 30, 2020, states that “(i) Permanent Magnets will account for 3⁄4 of rare earth demand by

2030 up from 1⁄4 in 2020 and (ii)Electric vehicles and off shore wind will drive demand and be most vulnerable to supply shocks” .

An Oxford Analytics Expert briefing on July 30, 2020,

states that “(i) Permanent Magnets will account for 3⁄4 of rare earth demand by 2030 up from 1⁄4 in 2020 and (ii)Electric

vehicles and offshore wind will drive demand and be most vulnerable to supply shocks” .

magnet (“PM”) machines can be extremely light in weight and highly efficient.

In PM machines the magnetic field B is fixed

by the magnets and the only way to change this is with a bucking field.

These bucking currents result in increase in temperature that

could affect the magnetization of the permanent magnets.

PM machines the operating temperature must be kept at below 100 o C because at that temperature the magnets start to lose some

of their magnetization and at 180 o C they become completely demagnetized.

However, in EV applications at low speed, one needs

to use a lot of current (generating high heat) to get the required torque;

similarly, at high speeds one needs a lot of current for the

bucking fields to reduce the B field.

Thus, PM machines for electric mobility require a very complex cooling system.

All the components

in the machine are designed for maximum specifications but operationally the machine is limited by temperature requirements of the magnets.

The cost of such machines is high due to (i) The permanent magnets, (ii) the complex cooling system and (iii) complex controller.

Emerging Electric Motor Technologies for the EV Market Sep 28, 2021 Luke Gear

4 unchanged sentences

Vikendi December 29, 2021

Permanent magnet (“PM”)

machines can be extremely light in weight and highly efficient.

In PM machines the magnetic field B is fixed by the magnets and the only

way to change this is with a bucking field.

These bucking currents result in increase in temperature that could affect the magnetization

of the permanent magnets.

In PM machines the operating temperature must

be kept at below 100 o C because at that temperature the magnets start to lose some of their magnetization and at 180 o C

they become completely demagnetized.

However, in EV applications at low speed, one needs to use a lot of current (generating high heat)

to get the required torque;

similarly, at high speeds one needs a lot of current for the bucking fields to reduce the B field.

machines for mobility require a very complex cooling system.

All the components in the machine are designed for maximum specifications

but operationally the machine is limited by temperature requirements of the magnets.

The cost of such machines is high due to (i) The

permanent magnets ($50-$70 per kg), (ii) the complex cooling system and (iii) complex controller.

In addition to the cost issues, the permanent

magnets are subject to the economic and political control of China.

There is always the possible situation that China economically

weaponizes rare earth and stops sending the refined product to the U.S so they cannot be used in weapon systems or commercial applications

such as electric vehicles 10 .

In the past during political

disputes China threatened to cease export of rare earths 11 .

Unlike the PM machines, Aura’s axial

flux 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).

Thus, the Aura machine, when operated with a smart inverter, has an advantage over a PM

The Aura machine has a smaller volume, equal or better efficiency, more reliable and a large cost advantage.

This advantage becomes

increasingly important as performance is increased .

Mobile and Remote Power Applications

The 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 Units” 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 do they require

any set-up or tear-down time.

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

The AuraGen ®

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

Likewise, 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.

In addition, numerous leisure users are increasingly

demanding mobile power for use of air-conditioning, appliances and other amenities.

addition to the cost issues, the permanent magnets are subject to the economic and political control of China.

There is always the

possible situation that China economically weaponizes rare earth and stops sending the refined product to the U.S so they cannot be used

in weapon systems or commercial applications such as electric vehicles.

15 In the past during political disputes China

threatened to cease export of rare earths.

to environmental, rare-earth magnets used in EV applications are responsible for major environmental pollution.

The extraction of rare

earths “ produce mountains of toxic waste , with high risk of environmental and health hazards.

For every ton of rare

earth produced, the mining process yields 13-kg of dust, 9,600-12,000 cubic meters of waste gas, 75 cubic meters of wastewater,

and one ton of radioactive residue.

This stems from the fact that rare earth element ores have metals that, when mixed

with leaching pond chemicals , contaminate air, water, and soil.

Most worrying is that rare earth ores are often laced with

radioactive thorium and uranium, which result in especially detrimental health effects.

Overall, for every ton of rare earth, 2,000

tons of toxic waste are produced .” 17

the PM machines, Aura’s axial flux 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).

Thus, the Aura machine, when operated with a smart

inverter, has an advantage over a PM machine.

The Aura machine has a smaller volume, equal or better efficiency, more reliable and a

large cost advantage.

This advantage becomes increasingly important as performance is increased .

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 Units”

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 maintenance, nor do they require any set-up or tear-down time.

In addition, there is no heavy lifting

required and to contact with hot surfaces.

The AuraGen ® operation 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.

China Maintains Dominance in Rare Earth Production-National defense 9/8/21 by Stew Magnuson

Supercomputers Predict rare earth Market Vulnerability-National defense 9/9/21 by Stew Magnuson

Beside 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 12 (each one used an

The market for automotive alternators is presently dominated mainly by four companies:

Denso, Valeo, Mitsubishi Electric,

and Hitachi Automotive.

Not so “green” technology:

the complicated legacy of rare earth mining 12.Aug.2021 Harvard International Review

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

In 2019 alone, 87.9 million passenger vehicles were sold globally 18 (each one used an alternator).

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 multi types of voltage both AC and DC.

Recently, the Company completed

the design for a 10-kW alternator with diameter of less than 8 inches and axial length of less than 6 inches.

The new 10 kW alternator

will provide the full 10 kW power at alternator speeds of 2,500-13,000 rpm with efficiency higher than 92%.

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 a significant reduction in diesel fuel consumption for such an application.

The Company is involved in the application of

its AuraGen ® technology to electric motors and mobile power.

Therefore, it faces substantial competition from companies

offering different technologies .

Electric Motors

There are four (4) basic approaches for electrical

(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

and (iv) the rotor field can be induced from the stator due to the rotor’s structure as in induction machines.

axial flux technology is an induction machine.

Brushed 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;

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 multi types of voltage both AC and DC.

Recently, the Company completed the design for a 10-kW

alternator with diameter of less than 8 inches and axial length of less than 6 inches.

The new 10 kW alternator will provide the full

10 kW power at alternator speeds of 2,500-13,000 rpm with efficiency higher than 92%.

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.

Company is involved in the application of its AuraGen ® technology to electric motors and mobile power.

Therefore, 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) that 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 an induction machine.

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

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”.

Reluctance 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

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 control.

Reluctance machines can be supplied with PMs in the stator

to improve performance.

The “electromagnet” is then “turned off” by sending a negative current to the coil.

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.

PM 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 magnets.

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

Magnax and many other are examples

of Companies using such an approach.

Reluctance machines can

be supplied with PMs in the stator to improve performance.

The “electromagnet” is 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 current’s 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.

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 causes 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 magnets.

The majority (80%) of NeFeB magnets are produced in China.

Magnax and many other are examples of Companies using such an approach.

Motor Intelligence.

Automotive alternator market growth trends forecast 2021-2026

AC 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.

in the rotor produces its own magnetic field, which then interacts with the magnetic field of the stator, causing the rotor to turn.

name induction comes from the fact that current is induced in the rotor by the changing magnetic field of the stator.

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 and higher efficiency 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).

Although 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

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.

Key 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.

There are five basic approaches used in mobile generators

Gensets AKA APU .

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

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 ease 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 and higher

efficiency 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 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.

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 units.

Gensets provide the strongest competition across the widest

marketplace for auxiliary power.

Onan, Honda, Generac 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

Some of the key suppliers are

Caterpillar (US), Cummins (US), Rolls-Royce Holdings (UK), Atlas Copco (Sweden), Mitsubishi Heavy Industries, Ltd.

(Japan), Yanmar (Japan),

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

(US), Kirloskar Oil Engines Ltd.

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

High Output Alternators .

Gensets provide

the strongest competition across the widest marketplace for auxiliary power.

Onan, Honda, Generac 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.

(US), 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 ones 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.

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;

Some of the better-known ones 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.

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

Permanent-Magnet Alternators.

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+).

order to apply such devices for automotive applications one must add an active cooling system to keep the magnets from demagnetizing at

approximately 200 o F.

In addition, most of the rare earth magnets (NeFeB) are manufactured in China and are subject to potential

political and economic pressure.

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

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

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 an active cooling system to keep the magnets

from demagnetizing at approximately 200 o F.

In addition, most of the rare earth magnets (NeFeB) are manufactured in China and

are subject to potential political and economic pressure.

In addition to the temperature challenges of such

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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.

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.

The Brinner machine is cited in Aura’s

issued patents.

Numerous companies are introducing axial flux

however, they generally use rare earth NeFeB magnets (made in China) and are thus not induction machines but rather permanent

magnet machines.

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.

systems are generally more expensive.

The most widely deployed fuel cells are estimated to cost significantly more per kilowatt than

alternative solutions.

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.

The Brinner machine

is cited in Aura’s issued patents.

Numerous 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 YASA, EVO, Magnax and Phi Power.

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

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 personnel.

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

The AuraGen ® 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.

The AuraGen ®

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.

Competitive Advantages of the AuraGen ® Axial Flux

Induction technology

As 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.

These 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 60% 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.

The AuraGen ® motor’s operational

range is between -40 and 340-degrees F;

As 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.

These 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 60% 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.

The AuraGen ®

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

therefore, it is suitable to operate in a harsh environment.

As an alternator.

Aura’s 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

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

Aura’s 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.

The 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, Green Technology .

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 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.

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 engine.

No Scheduled Maintenance .

The 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, Green

The AuraGen ® system is significantly more environmentally friendly than traditional motors and

Because of its extreme efficiency and smaller size, the AuraGen ® system utilizes fewer resources 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.

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

Maintenance .

The AuraGen ® motor/generator solution does not require any scheduled maintenance.

The historical failure rate for Aura’s

machines over a 20-year period is less than 0.5%.

The historical

failure rate for Aura’s machines over a 20-year period is less than 0.5%.

The bearings are rated for 28,000 hours.

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be summarized as:

● Disruptive since it addresses the entire field of electrical motors and generators by providing a solution that is smaller,

lighter, more efficient, cost less to manufacture and does not use any permanent magnets .

● Aura has demonstrated mass production of this technology with more than 11,000 machines.

● The market opportunity for industrial applications of Aura’s motors/generators is more than $100 billion per year.

● The EV powertrain business opportunity for the Aura’s is a significant percentage of the $200+ billion per year projected

● The economic value proposition is well defined in terms of cost, performance and size.

● The Aura solution provides significant global reduction in the use of raw materials such as copper, steel, and aluminum.

● The higher efficiency of Aura’s motor, when used in a manufacturing environment, can lead to a noticeable reduction in

the global consumption of energy .

● When used for mobile power generation, Aura’s technology leads to a significant reduction in global pollution by being

able to reduce and, in many situations, eliminate completely small diesel and gasoline engines used in power generation.

● When used for electric vehicles, the smaller size, weight, and increased efficiency could lead to an increase in range and/or

reduced battery weight .

● When used in remote stand-alone diesel power generation such as cell towers, Aura’s increased efficiency, lower rotor inertia,

voltages flexibility and load-following architecture results in a significant reduction in fuel usage (and, of course, reduced pollution).

● Aura’s significantly (65% less) lower rotor inertia and variable speed capabilities make Aura’s solution ideal for

small hydro applications that are currently being ignored because of construction cost, low head, and slow flow situations.

● Disruptive since it addresses

the entire field of electrical motors and generators by providing a solution that is smaller, lighter, more efficient, cost less to

manufacture and does not use any permanent magnets .

● Aura has demonstrated mass

production of this technology with more than 11,000 machines.

● The market opportunity for

industrial applications of Aura’s motors/generators is more than $100 billion per year.

● The EV powertrain business

opportunity for the Aura’s is a significant percentage of the $200+ billion per year projected business.

● The economic value proposition

is well defined in terms of cost, performance and size.

● The Aura solution provides

significant global reduction in the use of raw materials such as copper, steel, and aluminum.

● The higher efficiency of

Aura’s motor, when used in a manufacturing environment, can lead to a noticeable reduction in the global consumption of energy .

● When used for mobile power

generation, Aura’s technology leads to a significant reduction in global pollution by being able to reduce and, in many

situations, eliminate completely small diesel and gasoline engines used in power generation.

● When used for electric

vehicles, the smaller size, weight, and increased efficiency could lead to an increase in range and/or reduced battery weight .

● When used in remote stand-alone

diesel power generation such as cell towers, Aura’s increased efficiency, lower rotor inertia, voltages flexibility and load-following

architecture results in a significant reduction in fuel usage (and, of course, reduced pollution).

● Aura’s significantly

(65% less) lower rotor inertia and variable speed capabilities make Aura’s solution ideal for small hydro applications that are

currently being ignored because of construction cost, low head, and slow flow situations.

Targeted Market

The Company is re-examining and identifying new

key markets to focus on as the Company expands operations.

The 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.

Electric motors

Electric motors for industrial

The Company is re-examining

and identifying new key markets to focus on as the Company expands operations.

The 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.

Electric motors

Electric motors for

industrial applications .

We have completed the design of 4 kW and 10 kW machines.

The designs show significantly increased efficiency as compared

to equivalent other designs, and in addition they are a fraction of the size and weight, use approximately 50-60% less copper and cost

less to manufacture.

Electric 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

approximately 150-kW machine that will use 600-800VDC battery system.

We started the design activities for this application and expect

to complete the design over the next few months.

The designs show significantly increased efficiency

as compared to equivalent other designs, and in addition they are a fraction of the size and weight, use approximately 50-60% less copper

and cost less to manufacture.

Electric motors for

electric delivery trucks .

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

This application would require 150 to 350 kW machines that will use 800VDC buss system.

We now have an initial electromagnetic

design for a 150-kW with over 96% efficiency.

We expect to have an optimized design by the fourth quarter of 2023.

Electric motors for high end electric cars.

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This application would require

approximately 250-300-kW machine that will use 800VDC battery system and will operate at 20,000 RPM.

Electric motors for flywheels.

axial flux machine lends itself to multi stacking of rotors and stators on a single shaft to create motors in the 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 20,000

Drive 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.

approximately 250-300-kW machine that will use 800VDC buss system and will operate at 20,000 RPM.

We now have a completed axial flux induction

(no PM) design with energy density of 77 kW per liter (the best other known design is approximately 40 kW/liter using rare earth permanent

magnets) and efficiency of 97.5%.

Our optimized design has an active diameter of 220 mm (8.66 inches) and active axial length of 86 mm

(3.4 inches).

Drive 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.

Mobile power generation

Military market .

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 13 .

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.

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

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Automotive alternators .

2019, 87.9 million units of passenger cars were sold globally, 14

In 2019, 87.9 million units of passenger cars were sold globally, 20

each one used an alternator.

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Diesel based cell towers .

According to Statista (Technology

and telecommunication Thomas Alsop sept 22, 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

According to Statista (Technology and telecommunication Thomas Alsop sept 22, 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 million.

Many of the cell sites are powered by diesel generators.

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.

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.

Transport Refrigeration (“TRU”) .

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

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.

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.

Environmental Protection

Agency, California’s Air Resource Board and others as dangerous pollutants and are increasingly subject to federal and state regulations.

A CARB 2015 report “Technology Assessment Transport refrigeration” cites and provides an analysis of our solution that can

be applied for significant pollution reduction and fuel savings for truck-based transport refrigeration.

John Keller July 10, 2014 Military and Aerospace Electronics

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Facilities, Manufacturing Process and Suppliers

During Fiscal 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 Clarita storage facility was also under a month-to-month rental agreement for $5,000 per month and was terminated effective July

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 effective from February 2021, through August 31, 2026.

The monthly base lease rate for the Lake Forest Facility

is currently $22,848 per month with a 3% annual escalation.

As 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.

During Fiscal 2023 and Fiscal

2022, the Company occupied approximately 18,000 square feet of space in Lake Forest, California.

In early Fiscal 2022 the Company consolidated

all its administrative offices and operations into this new modern stand-alone facility.

The Lake Forest facility is subject to a lease

agreement with a 66-month lease period effective from February 2021, through August 31, 2026.

The monthly base lease rate for the Lake

Forest Facility is currently $23,533 per month with a 3% annual escalation.

We expect to expand operations next year that will require

additional space.

As 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.

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 to maintain an advantage over potential competition.

Our engineering, research and development costs for Fiscal 2022 was approximately $0.6 million compared to approximately $0.2 million

in Fiscal 2021.

In 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

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 15 kW.

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 delivered the initial units of our new ECU solution.

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 to maintain an advantage over

potential competition.

Our engineering, research and development costs for Fiscal 2023 was approximately $0.9 million compared to approximately

$0.6 million in Fiscal 2022.

In Fiscal 2023 we have completed the design for (i) 4 kW motor for water pump applications, (ii) a new optimized

10 kW mobile power solution smaller and higher efficiency of the older design, (iii) a new 30 kW optimized mobile power solution and (iv)

a 250-kW motor solution for EV applications.

In addition, during fiscal 2023 we made significant engineering progress in the design of

novel innovative active cooling solutions for very high energy density motors and generators.

We expect to finalize this innovation during

the second quarter of 2023.

Patents and Intellectual Property

Our intellectual property portfolio consists of trademarks, proprietary

know-how, trade secrets, and patents.

Historically the Company obtained over 70 patents in electromagnetic and electrooptical technologies.

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 performance.

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 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 ® 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.

The patent application for the integration of

the AuraGen ® power solution with transport refrigeration was specifically geared for U.S.

trucks manufactured prior to

This application was abandoned, and we expect to reexamine the patent ideas over the next 12 months as applied to both U.S.

foreign trucks 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.

The patent application for a unique cable system

with safety protection to transfer high power between two moving objects was abandoned by prior management 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 since been completely redesigned and the old design issues are no longer relevant.

Our intellectual property

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

Historically the Company obtained over 70 patents

in electromagnetic and electrooptical technologies.

The basic philosophy followed

by Aura is to build layers of defense to protect the Company’s IP.

This is achieved through the development of fundamental patents

and surrounds them with application patents.

The detailed fabrication of the rotor is kept as a trade secret since this is a critical

component in Aura’s proprietary intellectual assets.

The challenges of implementing

a patent philosophy are based on cost.

Patent maintenance costs are expensive, particularly international patents.

In order to maximize

a limited budget, our approach is to first file a number of new US patents.

This will provide a year before international patents need

Current active patents are

(i) Patent 8720618 Issued date 5/3/2014, (ii) Patent 6700214 Issued date 3/2/2004, and ( iii)

Patent 6700802 Issued date 3 /2/2004.

We expect over the next 12

months to file new technology patent applications covering:

Topology (several patents)

Using different number of stators (one or more) and rotors

(one or more) to reach wide range of speed and torque.

Also, utilization of optimal topology makes capability to achieve high power/torque

density which is a key component for the electric vehicle (EV) and electric airplane (EA) industries.

Using new laminations, the hysteresis and eddy current losses

So, a capability is made to increase the efficiency of these machines as the most important parameter for electric machines

Moreover, these laminations deliver higher saturation profile to reach high torque density which is very important for

the EV and EA industries.

Winding (several patents)

New winding patterns can be made to increase current density

for increasing the torque density and the power density.

Cooling system (several patents)

Development of novel cooling systems which make better heat

dissipation is used to reach highest torque and power density.

Vibration and noise (several patents)

Implementation of new methods for vibration and noise reduction

is the key component for electric machines which are used in home appliances, EV and EA.

Using new developed alloys help to decrease losses, increase

efficiency, magnify torque, and power density.

The alloy steel used in the stator cores, alloy casting used for rotor and alloy aluminum

used for enclosure have essential influences on the machine performance.

Advanced Automotive alternator

Current air-cooled automotive alternators are power limited

to around 1.5 kW.

A new design using Aura’s axial flux induction will increase the power to 3.5-5 kW at the same size as current

automotive alternators at a lower reduced cost.

Integration of inverter components with motor (2 in 1 integration)

integration will lead to better overall efficiency and smaller packaging .

In addition, we also plan to file specific motor

application patents for (i) Drone usage, (ii) Pump usage, (iii) Compressors, (iv) Fans and Blower usage, (v) Machine tools usage, (vi)

Specific 2-and 4-wheel EV usage and (vii) Airplane/air taxi applications.

For mobile power applications we plan to file a

number of patent applications for (i) military usage, (ii) Hybrid APU, (iii) diesel power Cell tower usage, (iv)water treatment plants

and (v) marine usage.

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.

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.

As of the date of this filing, the Company has

a total of ten (10) 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 2022 and Fiscal 2021 we engaged

three independent contractors, two to support engineering developments, and one for accounting support.

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.

We expect to expend resources to

maintain compliance with OSHA requirements and industry best practices.

As of the date of this filing,

the Company has a total of eight (8) 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 2023 we engaged

two independent contractors to support engineering developments, and during Fiscal 2022 we engaged three independent contractors, two

to support engineering developments, and one for accounting support.

Significant Customers

In fiscal 2022, there were four customers that

accounted for over 10% individually of the Company’s revenues, however no customer is considered significant.

In fiscal 2021, one

significant customer, CBOL, accounted for 83% of revenues.

As of the date of the filing of this Annual Report

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

In Fiscal 2023, one significant customer, CBOL,

accounted for 55% of revenues.

In Fiscal 2022, there were four customers that accounted for over 10% individually of the Company’s

revenues, however no customer is considered significant.

As of the date of the filing

of this Annual Report on Form 10-K, the Company has approximately $15K in backlog of orders.

In addition, during March 2023, the Company

entered into an agreement with Hippo Multipower(“Hippo”) to provide a minimum of 525 units over the next three (3) years of

the Company’s proprietary Axial Flux Induction Motors to Hippo in support of their contract with the US government.

this minimum quantity of units is approximately $8.5 million.

Deliveries under this contract are expected to begin during the second quarter

of the Company’s Fiscal 2024.

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 States.

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.

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

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.

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” 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 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.

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.

We 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.

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

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.

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