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Item 1A. Risk Factors

2026-09-10 compared with 2025-06-13 · 62 added, 59 removed, 304 unchanged (28% of the section changed)

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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 their report on the Company’s February 29, 2024,

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

In addition, the Company’s independent registered public accounting firm, in their audit report on the Company’s February

28, 2026, audited financial statements, included an explanatory paragraph regarding substantial doubt about the Company’s ability

to continue as a going concern.

Our ability to continue as

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We derive a substantial portion of our revenues

from customers in industries susceptible to trends and factors affecting those industries, including the COVID-19 pandemic.

from customers in industries susceptible to trends and factors affecting those industries.

Our axial flux induction technology

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condition and results of operations.

As a result of the COVID-19

pandemic, global vehicle production has decreased, and some manufacturers have completely shut down manufacturing operations in some countries

and regions, including the United States and Europe.

As a result, we have experienced, and are likely to continue to experience, delays

in the production and distribution of our products and the loss of sales.

If the global economic effects caused by the COVID-19 pandemic

continue or increase, overall customer demand may continue to decrease which could have a further adverse effect on our business, results

of operations and financial condition.

We will need additional capital in the future

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we will not be able to continue our operations.

As a result of our operating

losses, we have largely financed our operations through sales of our equity securities.

Beginning with Fiscal 2017, the Company significantly

reduced its engineering, manufacturing, sales, and marketing activities to focus on renegotiating numerous financial obligations and conserving

For Fiscal 2025 and Fiscal 2024, we had approximately $3.2 million negative and $3.0 million negative cash flows from operations,

respectively, due primarily to the impact of the COVID-19 pandemic.

The Company’s engineering and manufacturing activities remained

limited due to our inability to increase sales and raise significant amounts of new financing.

Our ability to continue as a going concern

is directly dependent upon our ability to obtain additional operating capital and generating sufficient operating cash flow.

impacts of the COVID-19 pandemic, increased interest rates and inflation have caused significant uncertainty and volatility in the credit

markets and there can be no assurance that lenders or investors will make additional commitments to provide financing to us under current

circumstances.

As a result of the impacts of the COVID-19 pandemic, we may be required to raise additional capital and our access to and

cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability

of sufficient amounts of financing, and our prospects.

If we are unable to obtain additional funding as and when we need it, we will not

be able to recommence operations or undertake our planned expansion.

For Fiscal 2026 and Fiscal

2025, we had approximately $3.2 million negative and $3.2 million negative cash flows from operations, respectively.

The Company’s

engineering and manufacturing activities remained limited due to our inability to increase sales and raise significant amounts of new

Our ability to continue as a going concern is directly dependent upon our ability to obtain additional operating capital and

generating sufficient operating cash flow.

Increased interest rates and inflation have caused significant uncertainty and volatility

in the credit markets and there can be no assurance that lenders or investors will make additional commitments to provide financing to

us under current circumstances.

As a result, we may be required to raise additional capital and our access to and cost of financing will

depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient

amounts of financing, and our prospects.

If we are unable to obtain additional funding as and when we need it, we will not be able to

recommence operations or undertake our planned expansion.

If we do not receive additional financing

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an adverse effect on our business.

Any significant impairment of our intellectual property rights could harm our business and or our ability

Any significant impairment of our intellectual property rights could harm our business and our ability

Protecting our intellectual property rights is costly and time consuming and we may need to resort to litigation to enforce

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our business and the cost of defending these disputes would reduce our operating results.

We have been named as a party in various

legal proceedings, and we may be named in additional litigation, all of which will require significant management time and attention,

result in significant legal expenses and may result in an unfavorable outcome, which could have a material adverse effect on our business,

operating results and financial condition.

In the future we may be named in litigation,

all of which will require significant management time and attention, result in significant legal expenses and may result in an unfavorable

outcome, which could have a material adverse effect on our business, operating results and financial condition.

We have been in the past and

may in the future become subject to various legal proceedings and claims that arise in or outside the ordinary course of business.

current pending proceedings are described under Part I, Item 3.

“Legal Proceedings.”

The results of these lawsuits

and future legal proceedings cannot be predicted with certainty.

The results of lawsuits and

future legal proceedings cannot be predicted with certainty.

Also, our insurance coverage may be insufficient or not provide any coverage

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rights to a related party.

After adjusting for the derivative liability, the current liabilities are $20.9 million as compared to $15.2

million on February 29, 2024.

On February 28, 2025, we had total liabilities of $39.0 million, of which $17.6 million was due to a derivative

liability related to debt conversion rights to a related party.

The current liability portion was $38.4 million, of which $17.6 million

was due to a derivative liability related to debt conversion rights to a related party.

We expect to obtain the money

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plan to grow our business, our failure to efficiently manage our growth could have an adverse effect on our business.

If we are successful in executing

our business plan, we may experience growth in our business that could place a significant strain on our management and other resources.

Our ability to manage this growth will require us to successfully assimilate new employees, improve existing management information systems

and reorganize our operations.

If we successfully execute

our business plan, we may experience growth that could place significant strain on our management and other resources.

Our ability to

manage this growth will require us to successfully assimilate new employees, improve existing management information systems, and reorganize

our operations.

If we fail to manage growth efficiently, our business could be adversely affected.

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We will need to renew sources of component

supplies to meet increases in demand for the AuraGen ® .

There is no assurance that our suppliers can or will supply the

components to us on favorable terms or at all.

supplies to meet increases in demand for our Axial flux Induction machine ® .

There is no assurance that our suppliers can

or will supply the components to us on favorable terms or at all.

As we recommence our operations

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and Procedures contained herein in this Annual Report, management has concluded that as of February 28, 2026, its internal controls over

financial reporting were effective.

While the Company believes it has addressed and remediated material weaknesses identified in 2022,

there can be no guarantee that other weaknesses in its financial reporting controls will not be identified in the future.

Presently, the

Company does not have the financial resources to fully comply with all the requirements of Section 404.

If, in the future, we identify

one or more material weaknesses in our internal controls over financial reporting during this continuous evaluation process, our management

may not be able to assert that such internal controls are effective.

Therefore, if we are unable to assert that our internal controls

over financial reporting are effective in the future, or if our auditors are unable to attest that our internal controls are effective

or they are unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy

and completeness of our financial reports, which would have an adverse effect on our business and the market price of our Common Stock.

financial reporting were not effective.

While the Company believes it has addressed and remediated material weaknesses, there can be no

guarantee that other weaknesses in its financial reporting controls will not be identified in the future.

Presently, the Company does

not have the financial resources to fully comply with all the requirements of Section 404.

If, in the future, we identify one or more

material weaknesses in our internal controls over financial reporting during this continuous evaluation process, our management may not

be able to assert that such internal controls are effective.

Therefore, if we are unable to assert that our internal controls over

financial reporting are effective in the future, or if our auditors are unable to attest that our internal controls are effective or they

are unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and

completeness of our financial reports, which would have an adverse effect on our business and the market price of our Common Stock.

Trading on the OTC Markets is volatile and

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any shares of our common stock.

The Company may

not have sufficient authorized shares of common stock to satisfy the full conversion of its outstanding convertible securities.

described in Notes 6, 7, and 13 to the financial statements, the number of shares of common stock potentially issuable upon conversion

of the Company’s outstanding convertible notes, and the exercise of options and warrants, currently exceeds the number of authorized

but unissued shares of common stock available.

The Company does not have a present obligation to issue shares in excess of its authorized

share capital.

However, if holders of such securities seek conversion or exercise and the Company does not have sufficient authorized

shares available, the Company would be required to obtain shareholder approval to amend its Certificate of Formation to increase the number

of authorized shares.

There can be no assurance that such approval would be obtained in a timely manner or at all.

If the Company is unable

to obtain the necessary authorization, holders of these securities may be unable to convert or exercise their securities when otherwise

entitled to do so.

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 1A. Risk Factors