What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-22 compared with 2024-07-22 · 119 added, 99 removed, 172 unchanged (56% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (Amounts in thousands, except share and per share amounts)

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Amounts in thousands, except share and per share amounts)

Forward Looking Statements

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the following:

ability to generate positive cash flow from operations;

ability to obtain additional financing to fund our operations;

impact of economic, political and market conditions on us and our customers;

impact of unfavorable results of legal proceedings;

exposure to potential liability arising from possible errors and omissions, breach of fiduciary duty, breach of duty of care, waste

of corporate assets and/or similar claims that may be asserted against us;

ability to compete effectively against competitors offering different technologies;

business development and operating development;

expectations of growth in demand for our products;

Other risks described under the heading “Risk Factors” in

Part II, Item 1A of this Quarterly Report on Form 10-Q and those risks discussed in our other filings with the Securities and Exchange

Commission, including those risks discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year

ended February 29, 2024, issued on June 4, 2024 (as the same may be updated from time to time in subsequent quarterly reports), which

discussion is incorporated herein by this reference.

Our ability to generate positive cash flow from operations;

Our ability to obtain additional financing to fund our operations;

The impact of economic, political and market conditions on us and our customers;

The impact of unfavorable results of legal proceedings;

Our exposure to potential liability arising from possible errors and omissions, breach of fiduciary duty, breach of duty of care, waste of corporate assets and/or similar claims that may be asserted against us;

Our ability to compete effectively against competitors offering different technologies;

Our business development and operating development;

Our expectations of growth in demand for our products;

Other risks described under the heading “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and those risks discussed in our other filings with the Securities and Exchange Commission, including those risks discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended February 29, 2024, issued on June 4, 2024 (as the same may be updated from time to time in subsequent quarterly reports), which discussion is incorporated herein by this reference.

We do not intend to update or revise any forward-looking

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We are also currently in discussions for usage of our technology for numerous wind turbines applications.

fiscal 2024 and first quarter of fiscal 2025 we have significantly increased our engineering capabilities with having hired experts’

engineers in thermo dynamics (Ph.D.), electromagnetic motor design (Ph.D.) Power electronics & control (Ph.D.) and mechanical design

We have also acquired the latest in advance engineering tools such as Ansys Maxwell finite elements, MATLAB and 3-D solid work.

Our engineering, research and development costs for the three months ended May 31, 2024, were approximately $98.4.

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 fiscal 2024 and first quarter of fiscal 2025

we have significantly increased our engineering capabilities with having hired experts’ engineers in thermo dynamics (Ph.D.), electromagnetic

motor design (Ph.D.) Power electronics & control (Ph.D.) and mechanical design (M.S.M.E).

We have also acquired the latest in advance

engineering tools such as Ansys Maxwell finite elements, MATLAB and 3-D solid work.

Our engineering, research and development costs for

the three months ended August 31, 2024, were approximately $98.4.

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.

Cipora Lavut, Mr.

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Robert Lempert as directors of the Company in their stead.

3, Legal Proceedings for more information.

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

was replaced.

See Item 3, Legal Proceedings for more information.

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.

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Gagerman as CFO.

Lempert was appointed

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

Lempert was appointed as Secretary of the Company

by the Board of Directors also in July 2019.

Critical Accounting Policies and Estimates

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derivative instrument could be required within 12 months of the balance sheet date.

Higher inflation, the actions by the Federal Reserve Bank to address

inflation, most notably continuing increases in interest rates, and rising energy prices create uncertainty about the future economic

Higher inflation, the actions by the Federal Reserve

Bank to address inflation, most notably continuing increases in interest rates, and rising energy prices create uncertainty about the

future economic environment.

The Company expects that the impact of these issues will continue to evolve.

The Company believes these factors impacted

the Company’s business in fiscals 2023 and 2024 and will continue to impact the Company’s business in fiscal 2025.

The implications

of higher government deficits and debt, tighter monetary policy, and higher long-term interest rates may drive a higher cost of capital

for the business and an increase in the Company’s operating expenses.

The Company believes these factors

impacted the Company’s business in fiscals 2023 and 2024 and will continue to impact the Company’s business in fiscal 2025.

The implications of higher government deficits and debt, tighter monetary policy, and higher long-term interest rates may drive a higher

cost of capital for the business and an increase in the Company’s operating expenses.

As of the date of this filing, the COVID-19 pandemic

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Results of Operations

Three months ended May 31, 2024, compared to

three months ended May 31, 2023

Three months ended August 31, 2024, compared

to three months ended August 31, 2023

Net revenue was $3 for the three-months ended

May 31, 2024, compared to $10 for the three-months ended May 31, 2023.

August 31, 2024, compared to $0 for the three-months ended August 31, 2023.

Revenues continue to be negatively impacted due to a generally

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Cost of goods sold was $(18) in the three-months

ended May 31, 2024, compared to $15 for the three-months ended May 31, 2023.

ended August 31, 2024, compared to $80 for the three-months ended August 31, 2023.

The gross loss and related gross margin loss were largely

influenced by the low volume of shipments in this quarter which reduced our ability to fully absorb fixed operating costs.

Engineering, research and development expenses

were $239 in the three-months ended August 31, 2024, compared to $287 for the three-months ended August 31, 2023.

Selling, general and administration (“SG&A”)

expenses for the three months ending August 31, 2024, were $2,255 as compared to $342 for the three months ending August 31, 2023, an

increased by $1,913 or 559%.

The increase in SG&A was due to increased headcount and pay increases, and $1,601 in stock-based compensation,

which did not occur in the prior year period.

Interest expense decreased by $123 to $289 from

$412 for the three months ending August 31, 2024, and 2023 respectively.

Six months ended August 31, 2024, compared

to six months ended August 31, 2023

Net revenue was $50 for the six-months ended August

31, 2024, compared to $10 for the six-months ended August 31, 2023.

Revenues continue to be negatively impacted due to a generally low

level of resources on our legacy products as well as our shift to the development and production of the prototype for our new product

We cannot project with confidence the timing or amount of revenue that we can expect until the prototype is completed, which should

be in Fiscal 2025.

Cost of goods sold was $29 in the six months ended

August 31, 2024, compared to $95 for the six-months ended August 31, 2023.

This resulted in a gross profit of $21 compared to a gross

loss of $5 for the three-months ended May 31, 2023.

The gross loss and related gross margin loss were largely influenced by the low volume

of shipments in this quarter which reduced our ability to fully absorb fixed operating costs.

In addition, the cost of goods sold in the

three-months ended May 31, 2024, included an increase in the inventory reserve of $32.

loss of $85 for the six-months ended August 31, 2023.

The cost of goods sold in the six-months ended August 31, 2024, included an increase

in the inventory reserve of $20.

The gross loss and related gross margin for the six-months ended August 31, 2023 were largely influenced

by the low volume of shipments in this quarter which reduced our ability to fully absorb fixed operating costs.

Engineering, research and development expenses

were $310 in the three-months ended May 31, 2024, compared to $207 for the three-months ended May 31, 2023.

were $549 in the six-months ended August 31, 2024, compared to $494 for the six-months ended August 31, 2023.

Selling, general and administration (“SG&A”)

expenses for the three months ending May 31, 2024, were $396 as compared to $508 for the three months ending May 31, 2024.

by $112 or 22% in the three-month period ending May 31, 2024, compared to the three-months ended May 31, 2023.

expenses for the six months ending August 31, 2024, were $2,629 as compared to $850 for the six months ending August 31, 2023, an increased

by $1,779 or 209%.

The increase in SG&A was due to increased headcount and pay increases, and $1,601 in stock-based compensation,

which did not occur in the prior period.

Interest expense decreased by $276 to $564 from

$428 for the three months ending May 31, 2024, and 2023 respectively.

$840 for the six months ending August 31, 2024, and 2023 respectively.

Liquidity and Capital Resources

Going Concern

During the three-month period ended May 31, 2024,

During the six-month period ended August 31, 2024,

the Company recognized net loss of $21,648 from operation and used cash in operating activities of $1,619.

As of May 31, 2024, the Company

also has a shareholder deficit of $35,627 and notes payable totaling $5,315 are also past due.

These factors raise substantial doubt about

the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued.

the Company’s independent registered public accounting firm, in its report on the Company’s February 29, 2024, financial statements,

raised substantial doubt about the Company’s ability to continue as a going concern.

The financial statements do not include any

adjustments that might be necessary if the Company is unable to continue as a going concern.

As of August 31, 2024, the

Company also has a shareholder deficit of $39,770 and notes payable totaling $5,315 are also past due.

These factors raise substantial

doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued.

In addition, the Company’s independent registered public accounting firm, in its report on the Company’s February 29, 2024,

financial statements, raised substantial doubt about the Company’s ability to continue as a going concern.

The financial statements

do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

In the event the Company is unable to generate

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and ultimately to attain profitability.

During the next twelve months we intend to

continue to attempt to increase the Company’s operations and focus on the sale of our AuraGen®®/VIPER products both

domestically and internationally and to add to our existing management team.

In addition, we plan to source new suppliers for

manufacturing operations, rebuild the engineering and sales teams, and to the extent appropriate, utilize third party contractors to

support the operation.

We anticipate being able to obtain new sources of funding to support these actions in the upcoming fiscal

At May 31, 2024, we had cash of approximately

$297, compared to cash of approximately $124 at February 29, 2024.

Subsequent to May 31, 2024, the Company issued 920,000 shares of common

stock in exchange for cash proceeds of approximately $235.

During the next twelve months we intend to continue

to attempt to increase the Company’s operations and focus on the sale of our AuraGen®®/VIPER products both domestically

and internationally and to add to our existing management team.

In addition, we plan to source new suppliers for manufacturing operations,

rebuild the engineering and sales teams, and to the extent appropriate, utilize third party contractors to support the operation.

We anticipate

being able to obtain new sources of funding to support these actions in the upcoming fiscal year.

At August 31, 2024, we had cash of $15, compared

to cash of approximately $124 at February 29, 2024.

Subsequent to August 31, 2024, the Company issued 2,876,070 shares of common stock

in exchange for cash proceeds of approximately $719.

Prior to Fiscal 2020, in order to maintain liquidity,

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Kopple and his affiliated entities (collectively

the “Kopple”) claimed should have been originally issued to them pursuant to various agreements with the Company entered

to between 2013-2016.

In March 2022, the Company reached a settlement with Kopple that resolves all claims asserted against the Company

without any admission, concession or finding of any fault, liability or wrongdoing on the part of the Company.

Under the terms of the

settlement, we have agreed to pay an aggregate amount of $10,000 over a period of seven years;

$3,000 of which was originally to be paid

in June 2022, and subsequently extended to August 1, 2023.

Beginning in January 2023, interest began to accrue on the unpaid balance

at a rate of 6%, compounded annually.

All amounts, including all accrued interest and deferred forbearance fees, are to be paid no later

than eight years from the date of the initial payment.

As of the date of this report, the Company has not yet paid the full $3,000 installment

due to Kopple;

the “Kopple”) claimed should have been originally issued to them pursuant to various agreements with the Company entered to

between 2013-2016.

In March 2022, the Company reached a settlement with Kopple that resolves all claims asserted against the Company without

any admission, concession or finding of any fault, liability or wrongdoing on the part of the Company.

Under the terms of the settlement,

we have agreed to pay an aggregate amount of $10,000 over a period of seven years;

$3,000 of which was originally to be paid in June 2022,

and subsequently extended to August 1, 2023.

Beginning in January 2023, interest began to accrue on the unpaid balance at a rate of 6%,

compounded annually.

All amounts, including all accrued interest and deferred forbearance fees, are to be paid no later than eight years

from the date of the initial payment.

As of the date of this report, the Company has not yet paid the full $3,000 installment due to Kopple;

having only made a partial payment of $150 in June 2022.

In March 2024, the Company and Kopple again amended the note

The amendment (i) replaced the requirement to pay the $3,850 past due principal balance with the requirement to pay $2,000 due

December 15, 2024, effectively extending the payment of $1,850 to future periods;

In March 2024, the Company and Kopple again amended the note payable.

The amendment

(i) replaced the requirement to pay the $3,850 past due principal balance with the requirement to pay $2,000 due December

15, 2024, effectively extending the payment of $1,850 to future periods;

(ii) increased the stated interest rate to 10%;

(iii) added a fee of $15 monthly until the Company makes a principal payment of $2 million by December 2024;

(iv) effective

August 30, 2024, the Company will grant Kopple a conversion right that gives Kopple the option to be able to convert the note payable

into equity of the Company at a conversion price of the lower of $1.00 per share or 50% of the 10 day volume weighted

average price of the Company’s common stock;

(v) during Fiscal 2025, will require the Company to pay 20% of all collected

revenues within 10 days of the end of each fiscal quarter;

(vi) will require the Company to pay Kopple 20% of any amount raised

in new capital in the form of equity, debt or convertible debt above $3.5 million;

(vii) reduces the exercise price of the warrants

granted to Kopple in March 2022 from $0.85 per share to $0.50 per share;

and (vii) extends the warrant expiration date from

March 8, 2029, to March 31, 2031.

added a fee of $15 monthly until the Company makes a principal payment of $2 million by December 2024;

(iv) effective August

30, 2024, the Company will grant Kopple a conversion right that gives Kopple the option to be able to convert the note payable into equity

of the Company at a conversion price of the lower of $1.00 per share or 50% of the 10 day volume weighted average

price of the Company’s common stock;

(v) during Fiscal 2025, will require the Company to pay 20% of all collected revenues

within 10 days of the end of each fiscal quarter;

(vi) will require the Company to pay Kopple 20% of any amount raised in new capital

in the form of equity, debt or convertible debt above $3.5 million;

(vii) reduces the exercise price of the warrants granted to Kopple

in March 2022 from $0.85 per share to $0.50 per share;

and (vii) extends the warrant expiration date from March 8, 2029, to

March 31, 2031.

Legal Proceedings” and

“Part IV, Item 15, Notes 9 and 17 to the Financial Statements” included in the Company’s Annual Report on Form 10-K

filed with the SEC on May 31, 2024 for information regarding the dispute and settlement with Mr.

filed with the SEC on August 31, 2024 for information regarding the dispute and settlement with Mr.

Kopple regarding these transactions.

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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-Q

Item 2. Management’s Discussion and Analysis