What changed in this filing

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Item 1. Financial Statements

2025-01-21 compared with 2024-10-22 · 145 added, 116 removed, 558 unchanged (32% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Accounts receivable

Prepaid and other current assets

25 unchanged sentences

150,000,000 shares authorized;

111,544,011 and 104,591,648 issued and outstanding August 31, 2024, and February 29, 2024, respectively

114,860,011 and 104,591,648 issued and outstanding November 30, 2024, and February 29, 2024, respectively

Additional paid-in capital

7 unchanged sentences

Three-Months Ended

Six-Months Ended

Nine-Months Ended

(amounts in thousands, except share and per share data)

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CONDENSED STATEMENTS OF SHAREHOLDERS’

and Six Months Ended August 31, 2023

and Nine Months Ended November 30, 2024

(amounts in thousands, except share data)

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Common shares issued for cash

Balance, May 31, 2023

Fair value of modified warrants - related party

Balance, May 31, 2024 (unaudited)

Common shares issued for cash

Fair value of stock options

Balance, August 31, 2024 (unaudited)

$ ( 500,638 )

and Six Months Ended August 31, 2024

Common shares issued for cash

Balance, November 30, 2024 (unaudited)

$ ( 501,178 )

and Nine Months Ended November 30, 2023

(amounts in thousands, except share data)

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Common shares issued for cash

Fair value of modified warrants - related party

Balance, May 31, 2024

Balance, May 31, 2023 (unaudited)

Common shares issued for cash

Fair value of stock options

Balance, August 30, 2023 (unaudited)

$ ( 477,035 )

Common shares issued for cash

Fair value of warrants issued with convertible notes payable

Balance, November 30, 2023 (unaudited)

$ ( 477,945 )

See accompanying notes to these unaudited financial

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CONDENSED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

(amounts in thousands)

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Changes in operating assets and liabilities:

Accounts receivable

Prepaid and other current assets

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Proceeds from issuance of common stock

Proceeds from issuance of convertible notes payable

Principal payments of notes payable

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NOTES TO CONDENSED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED AUGUST 31, 2024 AND

THREE AND NINE MONTHS ENDED NOVEMBER 30, 2024

(Amounts in thousands, except share and per

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Aura Systems Inc., (“Aura”, the “Company”)

a Delaware corporation, is engaged in the development, commercialization, manufacturing, licensing and sale of products and components

based on its Axial Flux Induction technology for electric motors and generators.

Our power generation solution based on axial flux induction

is known as the AuraGen ® for commercial and industrial applications and the VIPER for military applications.

developing axial flux induction electric motors for industrial/commercial applications as well as for two-and four-wheel EV applications.

a Delaware corporation, is engaged in the development, manufacturing, licensing and sale of products and components based on the Company’s

Axial Flux Induction technology for electric motors, generators, electric motors for industrial/commercial applications, as well as for

two-and four-wheel EV applications.

The Company’s power generation solution based on axial flux induction is known as the AuraGen ® for

commercial and industrial applications and the VIPER for military applications.

Basis of Presentation

The accompanying unaudited condensed financial

statements as of and for the six months ended on August 31, 2024 and prior 2023, have been prepared in conformity with accounting principles

statements as of and for the nine months ended on November 30, 2024 and 2023, have been prepared in conformity with accounting principles

generally accepted in the United States of America (“U.S.

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These financial statements should be read in conjunction with that report.

results of operations for the period ended August 31, 2024, may not necessarily be indicative of the results of the full fiscal year ending

February 28, 2025.

results of operations for the period ended November 30, 2024, may not necessarily be indicative of the results of the full fiscal year

ending February 28, 2025.

The Company’s fiscal year ends on the last

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has experienced recurring operating losses and relies on debt and equity offerings to generate working capital.

During the six-month period ended August 31,

During the nine-month period ended November 30,

2024, the Company recognized a net loss from operations of $ 4,026 and used cash in operating activities of $ 2,483 .

As of August 31,

As of November 30,

2024, the Company also has a shareholder deficit of $ 39,451 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.

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 if the Company is unable to generate

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and ultimately to attain profitability.

During the next twelve months the Company intends

to continue to attempt to increase the Company’s operations and focus on the development and sale of a family of axial flux motos

for industrial/commercial and EV applications.

In addition, we also focus on development and sale of our axial flux induction generators

for commercial and military applications as well as for wind turbines and other environmental related applications.

In addition, the Company

plans 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.

Higher inflation, the actions by the Federal Reserve

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Vendor Concentration

As of August 31, 2024, four vendors accounted

As of November 30, 2024, four vendors accounted

for 40 %, 12 %, 11 % and 9 % of accounts payable.

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The following table sets forth by level, within

the fair value hierarchy, the Company’s assets and liabilities at fair value as of August 31, 2024 and February 29, 2024:

August 31, 2024

the fair value hierarchy, the Company’s assets and liabilities at fair value as of November 30, 2024 and February 29, 2024:

November 30, 2024

(amounts in thousands)

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The following table provides a roll-forward of

the derivative liability measured at fair value on a recurring basis using unobservable level 3 inputs for the period ended August 31,

the derivative liability measured at fair value on a recurring basis using unobservable level 3 inputs for the period ended November 30,

2024, as follows:

(amounts in thousands, except share data)

(amounts in thousands)

Fair Value of

2 unchanged sentences

Change in fair value of derivative liability

Gain on extinguishment

August 31, 2024

November 30, 2024

Convertible Instruments

The Company evaluates its various freestanding

financial instruments, including warrants and convertible notes payable, to determine if such instruments are liability classified, pursuant

to ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) or derivatives or contain features that qualify as embedded

derivatives pursuant to ASC 815, Derivatives and Hedging (“ASC 815”).

The classification of instruments, including whether

such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

Under ASC 815-40-35, the Company has adopted a sequencing

policy to determine equity or liability classification for contracts involving the Company’s own equity that require cash settlement

if sufficient shares are not available to settle the contracts in equity.

The sequencing policy is applied consistently in determining

the classification of freestanding financial instruments.

Loss per share

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debt, and the treasury stock method for options and warrants, which could occur if all potentially dilutive securities were exercised.

For the six months ended August 31, 2024, and

For the nine months ended November 30, 2024, and

2023, the calculations of basic and diluted loss per share are the same because potentially dilutive securities would have had an anti-dilutive

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Recently Adopted Accounting Pronouncements

Recent accounting pronouncements and guidance

In November 2024, the FASB issued ASU No.

“Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation

of Income Statement Expenses” which includes amendments that require disclosure in the notes to financial statements of specified

information about certain costs and expenses, including purchases of inventory;

employee compensation;

and depreciation, amortization

and depletion expenses for each caption on the income statement where such expenses are included.

The amendments are effective for the

Company’s annual periods beginning March 1, 2027, with early adoption permitted, and should be applied either prospectively or retrospectively.

The Company is in the process of evaluating this ASU to determine its impact on the Company’s disclosures.

Other recent accounting pronouncements and guidance

issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities

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Unamortized debt discount

(a) In Fiscal 2013 and 2014, the Company issued six convertible

notes payable in the aggregate of $ 4,000 .

The notes are unsecured, bear interest at 5 % per annum and are convertible into shares of common

stock at a conversion price of $ 1.40 per share, as adjusted.

The notes were originally due in 2014 to 2017 and were all amended in 2018

to change the maturity date to January 11, 2023.

As of August 31, 2024 and February 29, 2024, the outstanding balance of the convertible

notes payable amounted to $ 1,403 and are past due.

(b) In Fiscal 2024 the Company issued convertible notes payable

to unrelated individuals and entities totaling $ 110 in exchange for cash.

The notes are unsecured, bear interest at rate of 10 % per annum,

and matured in March 2024.

The notes payable are convertible into shares of common stock at a conversion price of $ 0.20 per share.

of August 31, 2024 and February 29, 2024, the outstanding balance of the convertible notes payable amounted to $ 110 and $ 106 , respectively,

and are past due.

Fiscal 2013 and 2014, the Company issued six convertible notes payable in the aggregate of $ 4,000 .

The notes are unsecured, bear interest

at 5 % per annum and are convertible into shares of common stock at a conversion price of $ 1.40 per share, as adjusted.

The notes were

originally due in 2014 to 2017 and were all amended in 2018 to change the maturity date to January 11, 2023.

As of November 30, 2024

and February 29, 2024, the outstanding balance of the convertible notes payable amounted to $ 1,403 and are past due.

Fiscal 2024 the Company issued convertible notes payable to unrelated individuals and entities totaling $ 110 in exchange for cash.

notes are unsecured, bear interest at rate of 10 % per annum, and matured in March 2024.

The notes payable are convertible into shares

of common stock at a conversion price of $ 0.20 per share.

As of November 30, 2024 and February 29, 2024, the outstanding balance of the

convertible notes payable amounted to $ 110 and $ 106 , respectively, and are past due.

NOTE 3 – CONVERTIBLE NOTE PAYABLE-RELATED

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The convertible note is convertible into shares of common stock at a conversion price of $ 1.40 per share,

As of August 31, 2024 and February 29, 2024, the outstanding balance of the convertible note amounted to $ 3,000 and

As of November 30, 2024 and February 29, 2024, the outstanding balance of the convertible note amounted to $ 3,000

and is past due.

October 4, 2023, the Company issued a convertible note payable of $ 20 in exchange for cash to a member of the Company’s Board of

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payable is convertible to common stock at a conversion price of $ 0.20 per share.

As of August 31, 2024 and February 29, 2024, the outstanding

As of November 30, 2024 and February 29, 2024, the outstanding

balance of the convertible note amounted to $ 20 and is past due.

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at a rate of 10 % per annum and matures in June 2029.

As of August 31, 2024, the outstanding balance of the convertible note amounted

As of November 30, 2024, the outstanding balance of the convertible note amounted

An installment payment of $ 2 million, due in December 2024, was extended to February 27, 2025.

The Company is also subject to certain

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The first note for

$ 210 is due October 31, 2024, and requires 36 equal monthly payments of approximately $ 6 , including interest at 2.9 % per annum.

note for $ 78 is due January 20, 2027, and requires 72 equal monthly payments of approximately $ 1.5 , including interest at 10.9 % interest

$ 210 was paid in full in October 2024.

The second note for $ 78 is due January 20, 2027, and requires 72 equal monthly payments of approximately

$ 1.5 , including interest at 10.9 % interest per annum .

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by tangible and intangible assets of the Company, bears interest at an average rate of 8 % per annum and will mature in September

During Fiscal 2025, the Company obtained a loan

of $ 179 from a financing institution to finance the use of a third-party software license by the Company.

The note payable is secured

by tangible and intangible assets of the Company, bears interest at an average rate of 14.41 % per annum and will mature in November 2025.

The aggregate total of the note payable-software

licenses as of November 30, 2024, amounted to $ 232 .

(d) Notes payable – machinery and other

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The note payable is secured by the

production machine, bears a straight up fee of $ 74,285 to be paid over the course of the loan which will mature in April 2029.

production machine and will mature in April 2029.

In addition, the Company entered into a 60-month

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The aggregate total of the note payable and financing

lease obligation as of August 31, 2024, amounted to $ 293 .

lease obligation as of November 30, 2024, amounted to $ 289 .

(e) Note payable-other

As of August 31, 2024, and February 29, 2024,

As of November 30, 2024, and February 29, 2024,

the Company has one note payable due to an individual issued in September 2015 that is payable on demand with an interest rate of 10 %

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until the Company makes a principal payment of $ 2 million by December 2024;

(iv) effective August 30, 2024, the Company granted Kopple

the right (but not any obligation) to convert the note payable into equity of the Company at a conversion price equal to the lower of

one dollar per share or 50 % of the 10 day volume weighted average price per share of the Company’s common stock;

(iv) effective November 30, 2024, the Company granted

Kopple the right (but not any obligation) to convert the note payable into equity of the Company at a conversion price equal to the lower

of one dollar per share or 50 % of the 10 day volume weighted average price per share of the Company’s common

(v) 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;

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;

(vii) extends the warrant expiration date of the warrants granted to Kopple in March 2022 from March 8, 2029, to March 31, 2031.

installment payment of $ 2.0 million, which became due in December 2024, was extended to February 27, 2025.

The Company accounted for the amended terms of

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is now convertible to common stock, for financial reporting purposes, the new note payable of $ 9,261 is reported as a convertible note

payable (see Note 3).

payable-related party (see Note 3).

(b) Note payable-Gagerman

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In early fiscal 2024 the joint venture was dissolved and liquidated

As of August 31, 2024, and December 31, 2023, the outstanding balance of this note payable amounted to $ 700 .

without filing any demands or claims for payments.

As of November 30, 2024, and February 29, 2024, the outstanding balance of this note

payable amounted to $ 700 .

NOTE 6 – ACCRUED INTEREST

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The Lake Forest lease is

for 66-months effective February 2021 through August 31, 2026.

The initial monthly base rental rate was approximately $ 22 per month and

escalates 3 % each year to approximately $ 26 per month in 2026.

The lease liability was determined by discounting the future lease payments

under the lease terms using a 10 % per annum discount rate to arrive at the current lease liability.

for 66-months effective February 2021 through November 30, 2026.

The initial monthly base rental rate was approximately $ 22 per month

and escalates 3 % each year to approximately $ 26 per month in 2026.

The lease liability was determined by discounting the future lease

payments under the lease terms using a 10 % per annum discount rate to arrive at the current lease liability.

Operating lease right-of-use (“ROU”)

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cash flow information related to leases for the period are as follows:

(amounts in thousands) August 31,

2024 August 31,

(amounts in thousands) November 30,

2024 November 30,

Operating lease cost (included in general and administration in the Company’s statement of operations) $ 211 $ 209

3 unchanged sentences

Average discount rate – operating leases 10.0 % 10.0 %

The supplemental balance sheet information related to leases for the

period is as follows:

The supplemental balance sheet information related

to leases for the period is as follows:

Operating leases

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estimated the fair value of the conversion option derivative liability using a Black-Scholes option pricing model and recorded the fair

value of the derivative liability of $ 22,194 at March 7, 2024, the date of issuance, and $ 20,799 at August 31, 2024.

value of the derivative liability of $ 22,194 at March 7, 2024, the date of issuance, and $ 19,993 at November 30, 2024.

The following tables summarize the derivative

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NOTE 9 – SHAREHOLDERS’ DEFICIT

During the six-months ended August 31, 2024, the

Company issued 6,952,363 shares of common stock for approximately $ 1,764 in cash.

As part of the offering, the Company also granted certain

investors warrants to purchase 3,000,000 shares of common stock.

The warrants are fully vested, exercisable at $ 1.00 per share, and will

expire in 3 years.

During the six-months ended August 31, 2023, the

Company issued 4,877,271 shares of common stock for approximately $ 1,610 in cash.

During the nine-months ended November 30, 2024,

the Company issued 10,268,363 shares of common stock for approximately $ 2,623 in cash.

As part of the offering, the Company also granted

certain investors warrants to purchase 3,000,000 shares of common stock.

The warrants are fully vested, exercisable at $ 1.00 per share,

and will expire in 3 years.

During the nine-months ended November 30, 2023,

the Company issued 6,593,940 shares of common stock for approximately $ 2,177 in cash.

Stock Options

A summary of the Company’s stock option activity for the six-months

ended August 31, 2024, is as follows:

A summary of the Company’s stock option activity for the nine-months

ended November 30, 2024, is as follows:

(amounts in thousands, except share and per share data)

Outstanding, February 29, 2024

Outstanding, August 31, 2024

The Company granted no stock options under its

stock option 2011 Plan for the six-month period ended August 31, 2023.

During the six months ended August 31, 2024, the

Company’s Board of Directors approved options exercisable into 4,000,000 shares to be issued pursuant to the Company’s 2011

Outstanding, November 30, 2024

During the nine months ended November 30, 2024,

the Company’s Board of Directors approved options exercisable into 4,000,000 shares to be issued pursuant to the Company’s

3,000,000 options were issued to Board members and 1,000,000 options were issued to an employee, with immediate vesting.

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expected term of the share option award.

As of August 31, 2024, the intrinsic value as

During the nine-month period ended November 30,

2023, the Company granted no stock options under the Company’s 2011 Plan.

As of November 30, 2024, the intrinsic value as

these stock options amounted to $ 68 .

The exercise prices and information related to options under the 2011 Plan outstanding on August

The exercise prices and information related to options under the 2011 Plan outstanding on November

30, 2024 is as follows:

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A summary of the Company’s warrant activity

for the six-months ended August 31, 2024, is as follows:

for the nine-months ended November 30, 2024, is as follows:

Average Exercise

Outstanding, February 29, 2024

Outstanding, August 31, 2024

There was no intrinsic value as of August 31,

Outstanding, November 30, 2024

There was no intrinsic value as of November 30,

2024, as the exercise prices of these warrants were greater than the market price of the Company’s stock.

The exercise prices and

information related to the warrants as of August 24, 2024, is as follows:

information related to the warrants as of November 24, 2024, is as follows:

Exercise Price Stock Warrants

5 unchanged sentences

Exercise Price

Warrants Exercisable

of Warrants Exercisable

$ 0.50 3,511,664 3,511,664 6.13 $ 0.50 0.50

1 unchanged sentence

NOTE 10 – RELATED PARTY TRANSACTIONS

As of August 31, 2024, and February 29, 2024,

As of November 30, 2024, and February 29, 2024,

BetterSea LLC was an 7.3 % and 8.8 %, respectively, shareholder of the Company.

For the six months ending on August 31, 2024 and 2023, the

Company incurred consulting fees to BetterSea of $ 82 and $ 80 , respectively.

As of August 31, 2024, and February 29, 2024, a total of approximately

$ 213 and $ 213 respectively, was due to BetterSea and included accounts payable and accrued expenses.

For the nine months ending on November 30, 2024 and 2023,

the Company incurred consulting fees to BetterSea of $ 120 and $ 117 , respectively.

As of November 30, 2024, and February 29, 2024, a total

of approximately $ 218 and $ 213 respectively, was due to BetterSea and included accounts payable and accrued expenses.

NOTE 11 – CONTINGENCIES

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NOTE 12 – SUBSEQUENT EVENTS

Subsequent to August 31, 2024, the Company issued

2,876,070 shares of common stock for cash $ 719 .

Subsequent to November 30, 2024, the Company issued

920,000 shares of common stock in exchange for cash proceeds of approximately $ 230,000 .

Subsequent to November 30, 2024, all litigation

with Gagerman (see Note 11) was settled with no cost to the Company.

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 1. Financial Statements