What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-21 compared with 2025-01-21 · 70 added, 160 removed, 135 unchanged (63% of the section changed)

24 unchanged sentences

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;

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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The third component of our business model is to set up manufacturing of the axial flux induction products being engineered

We are currently completing a 250-kW electric

motor prototype based on our axial flux induction for EV applications.

We recently completed a 250-kW electric motor

prototype based on our axial flux induction for EV applications.

This activity is in conjunction with a large European tier 1 automotive

supplier interest and inputs.

We have also in May 2024 completed the installation of our new smaller 10-kW mobile power generator on a

Polaris type ATV platform for US military applications.

We expect in the coming months to start shipping this new product to a specific

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

In fiscal 2024 and first nine months 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 nine months ended November 30, 2024, were approximately $745

We also completed the design for a 250-kW generator based on our axial flux induction technology.

to build this new generator over the next few months.

We have also in May 2024 completed the installation of our new smaller 10-kW mobile

power generator on a Polaris type ATV platform for US military applications.

We started working directly with Polaris to perfect the output

from the new generator on their platform.

We completed the designs for 5 horsepower axial flux induction motor for swimming pool pump

applications, and we also completed the design for a 10 horsepower axial flux induction motor for irrigation pump applications.

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

During fiscal 2025 we also applied

for 3 new patents related to axial flux induction machines.

In fiscal 2024 and 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.

In Fiscal 2020 stockholders of the Company successfully

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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 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.

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

has been declared to be officially over.

Despite this fact, there continues to be lingering impacts of the COVID-19 pandemic in the regions

in which the Company operates.

The Company has not observed any impairments of its assets or a significant change in the fair value of

its assets due to the COVID-19 pandemic.

At this time, it is not possible for the Company to predict the duration or magnitude of the

adverse results stemming from the outbreak and its lingering effects on the Company’s business or results of operations, financial

condition, or liquidity.

Results of Operations

Three months ended November 30, 2024, compared

to three months ended November 30, 2023

Net revenue was $0 for the three-months ended

November 30, 2024, compared to $47 for the three-months ended November 30, 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 line.

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 $0 in the three-months

ended November 30, 2024, compared to $99 for the three-months ended November 30, 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 $196 in the three-months ended November 30, 2024, compared to $33 for the three-months ended November 30, 2023

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

expenses for the three months ending November 30, 2024, were $673 as compared to $494 for the three months ending November 30, 2023, an

increased by $179 or 36%.

The increase in SG&A was due to increased headcount and pay increases.

Interest expense decreased by $147 to $479 from

$332 for the three months ending November 30, 2024, and 2023 respectively.

Nine months ended November 30, 2024, compared

to nine months ended November 30, 2023

Net revenue was $50 for the nine-months ended

November 30, 2024, compared to $57 for the nine-months ended November 30, 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 nine months

ended November 30, 2024, compared to $194 for the nine-months ended November 30, 2023.

This resulted in a gross profit of $21 compared

to a gross loss of $137 for the nine-months ended November 30, 2023.

The cost of goods sold in the nine-months ended November 30, 2024,

included an increase in the inventory reserve of $20.

The gross loss and related gross margin for the nine-months ended November 30, 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 $745 in the nine-months ended November 30, 2024, compared to $528 for the nine-months ended November 30, 2023.

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

expenses for the nine months ending November 30, 2024, were $3,302 as compared to $1,344 for the nine months ending November 30, 2023,

an increased by $1,958 or 146%.

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 increased by $128 to $1,043 from

$1,171 for the nine months ending November 30, 2024, and 2023 respectively.

Three months ended

May 31, 2025, compared to three months ended May 31, 2024

Net revenue was $185

for the three-months ended May 31, 2025, compared to $47 for the three-months ended May 31, 2024.

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 line.

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 2026.

Cost of Goods

Cost of goods sold was

$25 in the three-months ended May 31, 2025, compared to $47 for the three-months ended May 31, 2024.

Engineering, Research and Development

Engineering, research

and development expenses were $353 in the three-months ended May 31, 2025, compared to $310 for the three-months ended May 31, 2024.

Selling, General and Administrative Expense

Selling, general and

administration (“SG&A”) expenses for the three months ending May 31, 2025, were $484 as compared to $374 for the three

months ending May 31, 2025, an increased by $110 or 29% in the three-month period ending May 31, 2025, compared to the three-months ended

May 31, 2024.

Other Income (Expense) and Interest Expense

Interest expense increased by $319 to $594 for

the three months ended May 31, 2025, as compared to $275 for the three months ended May 31, 2024.

During the three months ended May 31,

2024, the Company recorded a loss on debt extinguishment of $19,324, which did not occur in the current year period.

The Company estimated

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

value of the derivative liability of ($1,570) and $5,023 at May 31, 2025 and May 31, 2024, respectively.

We recorded net losses of approximately $2,841

and $15,258 for the three months ended March 31, 2025 and 2024, respectively.

The decrease in our net loss was due to several factors,

as noted above, including the recording of a loss on debt extinguishment to a related party, and the change in fair value of our derivative

Liquidity and Capital Resources

Going Concern

During the nine-month period ended November 30,

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

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.

In the event the Company is unable to generate

profits and is unable to obtain financing for its working capital requirements, it may have to curtail its business further or cease business

Substantial additional capital resources will be required to fund continuing expenditures related to our research, development,

manufacturing and business development activities.

The Company’s continuation as a going concern is dependent upon its ability to

generate sufficient cash flow to meet its obligations on a timely basis, to retain its current financing, to obtain additional financing,

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 year.

At November 30, 2024 we had cash of $21, compared

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

Subsequent to November 30, 2024, the Company issued 920,000 shares of common stock

in exchange for cash proceeds of approximately $230,000.

For the three months ended May 31, 2025, we recorded

a net loss of $2,841, used cash in operations of $746, and at May 31, 2025, had a stockholders’ deficit of $39,586.

at May 31, 2025, notes payable and related accrued interest with an aggregate balance of $5,566 have reached maturity and are past due.

These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the

date of issuance of these financial statements.

In addition, the Company’s independent registered public accounting firm, in their

report on the Company’s February 28, 2025, audited financial statements, raised substantial doubt about the Company’s ability

to continue as a going concern.

Prior to Fiscal 2020, in order to maintain liquidity,

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Based on a cash flow analysis performed by management, we

estimate that we will need an additional $6,000 to maintain existing operations for Fiscal 2025 and increase the volume of shipments to

estimate that we will need an additional $6 million to maintain existing operations for Fiscal 2026 and increase the volume of shipments

to customers.

We cannot assure the reader that additional financing will be available nor that the commercial targets will be met in the

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the interests of our existing stockholders, and such dilution could be substantial.

If we cannot raise the needed funds, we will also

If we cannot raise the funds needed, we will also

be forced to make further substantial reductions in our operating expenses, which could adversely affect our ability to implement our

current business plan and ultimately our viability as a company.

Between July 2017 and March 2022, the Company

was engaged in litigation with a former director, Robert Kopple, relating to more than $13,000 and the current equivalent of the approximately

23 million warrants, exercisable for seven years at a price of $0.10 per share, which Mr.

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 November 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

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

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

November 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.

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

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 November 30, 2024 for information regarding the dispute and settlement with Mr.

Kopple regarding these transactions.

Quantitative and Qualitative Disclosures

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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