What changed in this filing

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Item 1. Business

2024-06-04 compared with 2023-05-26 · 571 added, 587 removed, 288 unchanged (80% of the section changed)

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 .

Aura Systems, Inc.

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.

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 1 .

Electric 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:

Common 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.).

The 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.

electric motors currently used for electric mobility employ high energy permanent magnets 3 due to their high efficiency and

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

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 4 .

For 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.

The 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

November 2020 | Report Code:

1 unchanged sentence

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.

Edmondson November 2, 2020

Emerging Electric Motor Technologies for the EV Market

September 28, 2021, Luke Gear

In recent years there has been great interest

in axial flux topology for numerous industrial, commercial, and electric mobility motor and power generation applications.

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).

Aura 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 layer.

ID 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 .

Aura 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.

Aura’s 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

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.

Aura’s 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.

Aura’s Axial Flux induction

(“AAFIM”) Competitive Edge

○ Performance-

5 unchanged sentences

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.

of more than 96%.

AAFIM solution also has significantly lower rotor inertia than other

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

22 unchanged sentences

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.

Emerging Electric Motor Technologies for the EV Market

September 28, 2021 Luke Gear Electric motors

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 12 kW.

Our more recent efforts have

resulted in our new 10 kW mobile power generator that which is approximately 20% smaller in diameter and 10% smaller in axial length than

the legacy 8.5 kW solution and we have completed the design and are now in the process of fabrication of a 250-kW axial flux motor which

has approximately the same dimensions as our legacy 8.5 kW mobile power solution.

This new 250 kW motor has a base speed of 5,000 rpm

and an operating range of up to 20,000 rpm.

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.

David Mann, and Dr.

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.

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

Lempert as Secretary of the Company.

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.

Mann as Chief Financial Officer and Dr.

Lempert as Secretary

of the Company.

Impact of the COVID-19 Pandemic

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 2023, Fiscal 2022 and Fiscal 2021.

Such disruptions

have continued into Fiscal 2024, impacting our business.

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 ® mobile power 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 of working capital while the Company contributed

$250 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 order with the Company including a $700 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 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 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.

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

In 2023, the JV was dissolved and liquidated.

As of February 29, 2024, the

unpaid balance of $700 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 to fully write-off the Jiangsu Shengfeng investment due to the uncertainty of

the operation.

In 2023 the JV was dissolved and liquidated.

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

Cipora Lavut, Mr.

1 unchanged sentence

Robert Lempert as directors of the Company in their stead.

Item 3, Legal Proceedings for more information.

See Item 3, Legal Proceedings

for more information.

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

In July 2019 Ms.

Lavut succeeded Mr.

succeeded Mr.

Gagerman as President and Mr.

1 unchanged sentence

Gagerman as CFO.

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.

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.

Lempert was appointed as Secretary of the Company

by the Board of Directors also in July 2019.

Recent Developments.

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 2023, Fiscal 2022 and Fiscal 2021.

Such disruptions

have continued into Fiscal 2024, 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.

Each year, approximal 30 million motors

are sold for industrial use alone.

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.

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.

Electric motors are employed

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

Each year, approximal 30 million motors are sold for industrial

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.

Specifically, system optimization approaches which

address the entire motor system demonstrate high potential for energy savings.

For most countries the saving potentials for energy efficiency

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

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.

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.

Numerous studies show a high

potential for energy efficiency improvement in motor systems.

Specifically, system optimization approaches which address the entire motor

system demonstrate high potential for energy savings.

For most countries the saving potentials for energy efficiency improvements in

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

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

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

7 unchanged sentences

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

Identification

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

October 16, 2020

Markets & Markets Electric Motor Market Published Date:

& Markets Electric Motor Market Published Date:

Nov 2020 | Report Code:

Precedence Research October 6, 2021

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

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.

Research October 6, 2021

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 majority 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 10 (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.

11 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

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.

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

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

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.

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

14 unchanged sentences

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.

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

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

Market & market Electric Vehicle Market May 2021 Report code AT4907

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

Market & market Electric Vehicle Market May 2021

Report code AT4907

Precedence research June 9, 2021

Will rare earth be eliminated in EV motor-Dr.

James Edmondson Nov 2-2020

Edmondson Nov 2-2020

Vikendi December 29, 2021

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.

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.

15 In the past during political disputes China threatened to cease export of

As 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

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 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).

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

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

The AuraGen ® operation when integrated in a vehicle or a boat is completely seamless and transparent to the

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.

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

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.

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

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:

the complicated

legacy of rare earth mining 12.

2021 Harvard International Review

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.

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

The market for automotive alternators

is presently dominated mainly by four companies:

Denso, Valeo, Mitsubishi Electric, and Hitachi Automotive.

These companies jointly control nearly 80% of the global market.

The compact size and significant increase in efficiency of the

AuraGen ® provides an ideal replacement (fit and form) for high output automotive alternators while offering higher efficiency,

longer lifetime and the flexibility of 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.

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 and development for a 10-kW alternator

with a diameter of 10 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 90%.

The AuraGen ®

solution increase in efficiency over traditional generators, when combined with our load following architecture and the ability to provide

both AC and VDC simultaneously.

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 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

Our axial flux technology is an induction machine.

32 unchanged sentences

Motor Intelligence.

Automotive alternator market growth trends forecast 2021-2026

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.

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 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).

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 .

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;

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

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

The market for these power

levels addresses the commercial, leisure and residential markets, and is essentially divided into:

(a) higher power, higher quality and

higher price commercial level units;

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

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.

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.

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

Output Alternators .

High 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.

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 $250-500).

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

7 unchanged sentences

are subject to potential political and economic pressure.

In addition to the temperature challenges of such

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

The main disadvantage of PM generators is the difficulty

of output voltage regulation to compensate for speed and load variation due to the lack of a simple means of field control.

In addition to the temperature

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

The main disadvantage of PM generators

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

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.

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

13 unchanged sentences

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.

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 ® .

10 unchanged sentences

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.

(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

9 unchanged sentences

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.

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

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.

10 unchanged sentences

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

use small, less efficient, auxiliary engines that produce significantly higher levels of emissions per unit of power output than the

automobile engine.

Maintenance .

3 unchanged sentences

The bearings are rated for 28,000 hours.

Aura’s axial flux induction (no PM) can

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 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.

Aura’s axial flux induction

(no PM) can be summarized as:

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 .

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

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

Aura solution provides significant global reduction in the use of raw materials such

as copper, steel, and aluminum.

higher efficiency of Aura’s motor, when used in a manufacturing environment, can lead

to a noticeable reduction in the global consumption of energy .

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.

used for electric vehicles, the smaller size, weight, and increased efficiency could lead

to an increase in range and/or reduced battery weight .

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).

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

9 unchanged sentences

Electric motors

Electric motors for

industrial applications .

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.

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.

high end electric cars.

We are exploring the use of our axial flux induction machine to be integrated into high end electric cars.

This application would require

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.

This application would require approximately 250-300-kW machine that will use 800VDC buss system and will operate at up to 20,000 RPM.

We now have a completed design for an axial flux induction (no PM) design with energy density of more than 50 kW per liter (the best other

known design is approximately 40 kW/liter using rare earth permanent magnets) and efficiency of more than 95%.

Our design has an active

diameter of approximately 9.45 inches and active axial length of approximately 4.92 inches.

Mobile power generation

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to grow by 29% through 2022, increasing to $30.33 billion by 2022.

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

are choosing to upgrade and maintain existing fleets rather than replace

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

number of military vehicles was estimated at over 408,000 in 2012 and is expected to increase to slightly over 418,000 by 2021.

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

19 While traditional markets for military vehicles such

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

new units, which also provides maintenance and upgrade opportunities.

The active number of military vehicles was estimated at over 408,000

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

New vehicle procurement is expected to decline in western defense

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

Automotive alternators.

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

each one used an alternator.

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

Denso, Valeo, Mitsubishi Electric,

and Hitachi Automotive.

These companies jointly control nearly 80% of the global market.

The compact size and significant increase in

efficiency of the AuraGen ® provides an ideal replacement (fit and form) for high output automotive alternators.

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 7 million.

In 2019, 87.9 million units of passenger cars were sold globally, 20 each one used an alternator.

The market for automotive

alternators is dominated mainly by four companies:

Denso, Valeo, Mitsubishi Electric, and Hitachi Automotive.

These companies jointly

control nearly 80% of the global market.

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

an ideal replacement (fit and form) for high output automotive alternators.

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 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.

Transport Refrigeration (“TRU”) .

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

The diesel based

comparable systems provided by Thermo-king and Carrier are somewhat less expensive than our AuraGen ® all-electric solution,

however the diesel solutions require frequent maintenance and the utilization of a separate diesel engine that consumes additional fuel

every operating hour.

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

Environmental Protection

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

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.

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

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

Thermo-king and Carrier.

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

AuraGen ® all-electric solution, however the diesel solutions require frequent maintenance and the utilization of a separate

diesel engine that consumes additional fuel every operating hour.

In addition, the diesel solution emits harmful emissions that have

been recognized by the U.S.

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

and are increasingly subject to federal and state regulations.

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

Motor Intelligence.

Automotive alternator market growth trends forecast 2021-2026

Automotive alternator market growth

trends forecast 2021-2026

Facilities, Manufacturing Process and Suppliers

9 unchanged sentences

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

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 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.

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 2024 was approximately $0.8 million compared to approximately $0.9 million in Fiscal 2023.

Fiscal 2024 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, and (iii) a 250-kW motor solution for EV applications.

In addition, during fiscal 2024

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 2024.

Patents and Intellectual Property

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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.

(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.

(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 decrease.

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

for electric machines evaluation.

Moreover, these laminations deliver higher saturation profile to reach high torque density which

is very important for the EV and EA industries.

(several patents)

New winding patterns can be made to

increase current density for increasing the torque density and the power density.

system (several patents)

Development of novel cooling systems

which make better heat dissipation is used to reach highest torque and power density.

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 newly 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.

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.

of inverter components with motor (2 in 1 integration)

Higher 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

10 unchanged sentences

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.

the Company has a total of eleven (11) 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.

During Fiscal 2024 and

Fiscal 2023 we engaged two independent contractors to support engineering developments.

Significant Customers

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.

In Fiscal 2024, one significant

customer, CBOL, accounted for 55% of revenues.

In Fiscal 2023, one significant customer, CBOL, accounted for 55% of revenues, however

no customer is considered significant.

Raw Materials

17 unchanged sentences

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.

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,

4 unchanged sentences

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