UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~November~~May 3031, ~~2023~~2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

AURA SYSTEMS, INC.

(Exact name of Registrant as specified in its charter)

Delaware		95-4106894
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

20431 North Sea Circle

Lake Forest, CA 92630

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (310) 643-5300

Former name, former address and former fiscal year, if changed since last report:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ☐ NO ☒

Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large, accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated filer	☒	Smaller Reporting Company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

Class		Outstanding ~~January~~July 1619, 2024
Common Stock, par value $0.0001 per share		~~102~~111,~~008~~527,~~954~~248 shares

AURA SYSTEMS, INC.

INDEX

Index			Page No.	~~Page No.~~
PART I. FINANCIAL INFORMATION
ITEM 1.	~~ITEM~~Financial 1.Statements (Unaudited)	~~Financial Statements (Unaudited)~~	1	1
		Condensed Balance Sheets as of November 30, 2023 (unaudited) and February 28, 2023		1
	Condensed Balance Sheets as of May 31, 2024 (unaudited) and February 29, 2024		1
		Condensed Statements of Operations for the Three months and Nine months ended November 30, 2023 and 2022 (unaudited)		2
	Condensed Statements of Operations May 31, 2024 and May 31, 2023		2
		Condensed Statements of Changes in Shareholders’ Deficit for the Three months and Nine months ended November 30, 2023 and 2022 (unaudited)		3
	Condensed Statements of Shareholders Deficit as of May 31, 2024 and May 31, 2023		3
		Condensed Statements of Cash Flows for the Nine months ended November 30, 2023 and 2022 (unaudited)		4
	Condensed Statements of Cash Flows May 31, 2024 and May 31, 2023		4
	Notes to Condensed Financial Statements	~~Notes to Condensed Financial Statements~~	5	5
ITEM 2.	~~ITEM~~Management’s 2.Discussion and Analysis of Financial Condition and Results of Operations	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	18	20
ITEM 3.	~~ITEM~~Quantitative 3.and Qualitative Disclosures About Market Risk	~~Quantitative and Qualitative Disclosures About Market Risk~~	23	26
ITEM 4.	~~ITEM~~Controls 4.and Procedures	~~Controls and Procedures~~	23	26
PART II. OTHER INFORMATION
ITEM 1.	~~ITEM~~Legal 1.Proceedings	~~Legal Proceedings~~	24	27
ITEM 1A.	~~ITEM~~Risk ~~1A.~~Factors	~~Risk Factors~~	25	28
ITEM 2.	~~ITEM~~Unregistered 2.Sales of Equity Securities and Use of Proceeds	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	25	28
ITEM 3.	~~ITEM~~Defaults 3.Upon Senior Securities	~~Defaults Upon Senior Securities~~	25	28
ITEM 4.	~~ITEM~~Mine 4.Safety Disclosures	~~Mine Safety Disclosures~~	25	28
ITEM 5.	~~ITEM~~Other 5.Information	~~Other Information~~	25	28
ITEM 6.	~~ITEM 6.~~Exhibits	~~Exhibits~~	26	29
SIGNATURES AND CERTIFICATIONS			27	30

ITEM 1. FINANCIAL STATEMENTS

AURA SYSTEMS, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

	May 31, 2024			February 29, 2024
(amounts in thousands, except share data)	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	297		$	124
Accounts receivables		15			-
Inventories		-			20
Prepaid and other current assets		140			175
Total current assets		452			319
Property and equipment, net		710			378
Operating lease right-of-use asset		559			607
Lease security deposit		160			160
Total assets	$	1,881		$	1,464

Liabilities and Shareholders’ Deficit
Current liabilities
Accounts payable and accrued expenses	$	2,407		$	2,625
Accrued interest		1,702			2,598
Customer advances		447			447
Notes payable current portion		163			119
Convertible notes payable – past due		1,513			1,508
Convertible note payable-related party current portion		4,270			3,020
Notes payable-related parties, current portion		782			4,632
Operating lease liability, current portion		246			238
Derivative liability		17,171			-
Total current liabilities		28,701			15,187

Notes payable, non-current portion		438			286
Convertible note payable-related party, non-current portion		8,011			7,088
Operating lease liability		358			423
Total liabilities		37,508			22,984

Commitments and contingencies		-			-

Shareholders’ deficit
Common stock: $0.0001 par value; 150,000,000 shares authorized; 109,047,248 and 104,591,648 issued and outstanding May 31, 2024, and February 29, 2024, respectively		11			10
Additional paid-in capital		458,610			457,460
Accumulated deficit		(494,248	)		(478,990	)
Total shareholders’ deficit		(35,627	)		(21,520	)
Total liabilities and shareholders’ deficit	$	1,881		$	1,464

	November 30, 2023			February 28, 2023
(amounts in thousands, except share data)	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	45		$	15
Inventories		47			155
Prepaid and other current assets		169			142
Total current assets		261			312
Property and equipment, net		405			461
Operating lease right-of-use asset		660			816
Lease security deposit		160			160
Total assets	$	1,486		$	1,749
Liabilities and Shareholders’ Deficit
Current liabilities
Accounts payable and accrued expenses (including $396 and $376 due to related party, respectively)	$	2,496		$	2,758
Accrued interest (including $1,898 and $995 due to related party, respectively)		2,400			1,471
Customer advances		447			454
Convertible notes payable , ($1,403 past due)		1,498			1,403
Convertible note payable-related party, ($3,000 past due)		3,020			3,000
Notes payable, current portion		136			92
Notes payable-related parties, current portion		4,632			4,632
Operating lease liability, current portion		230			207
Derivative warrant liability		-			9
Total current liabilities		14,859			14,026
Notes payable, non-current portion		301			256
Note payable-related party, non-current portion		7,088			7,065
Operating lease liability		485			660
Total liabilities		22,733			22,007
Commitments and contingencies		-			-
Shareholders’ deficit
Common stock: $0.0001 par value; 150,000,000 shares authorized; 101,242,286 and 94,648,346 issued and outstanding at November 30, 2023 and February 28, 2023, respectively.		10			9
Additional paid-in capital		456,688			454,507
Accumulated deficit		(477,945	)		(474,774	)
Total shareholders’ deficit		(21,247	)		(20,258	)
Total liabilities and shareholders’ deficit	$	1,486		$	1,749

The accompanying notes are an integral part of these unaudited financial statements

~~The accompanying notes are an integral part of these unaudited financial statements.~~1

1AURA SYSTEMS, INC.

~~AURA SYSTEMS,~~CONDENSED ~~INC.~~STATEMENTS OF OPERATIONS

~~CONDENSED STATEMENTS OF OPERATIONS~~(Unaudited)

(Unaudited)

	Three Months Ending May 31
	2024			2023

(amounts in thousands, except share and per share data)
Net revenue	$	47		$	10
Cost of goods		(47	)		15
Gross profit (loss)		-			(5	)

Operating expenses:
Engineering, research and development		310			207
Selling, general & administration		374			508
Total operating expenses		684			715

Loss from operations		(684	)		(720	)

Other income (expense):
Interest expense, net (including $271 and $411 to related parties)		(275	)		(428	)
Loss on debt extinguishment - related party		(19,324	)		-
Change in fair value derivative liability		5,023			-
Other		2			7

Net loss	$	(15,258	)	$	(1,141	)

Basic and diluted loss per share	$	(0.14	)	$	(0.01	)
Basic and diluted weighted-average shares outstanding		106,140,039			96,036,536

	Three-Months Ended						Nine-Months Ended
	November 30,						November 30,
	2023			2022			2023			2022
(amounts in thousands, except share and per share data)
Net revenue	$	47		$	54		$	57		$	70
Cost of goods sold (includes inventory write-down of $32 and $90 for the three and nine months ended November 30, 2023)		99			26			194			55
Gross profit (loss)		(52	)		28			(137	)		15
Operating expenses
Engineering, research and development (including $29, $50, $117 and $119 to related party, respectively)		33			229			528			640
Selling, general & administration		494			622			1,344			2,028
Total operating expenses		527			851			1,872			2,668
Loss from operations		(579	)		(823	)		(2,009	)		(2,653	)
Other income (expense):
Interest expense, net (including $200, $199, $981 and $324 to related parties, respectively)		(332	)		(260	)		(1,171	)		(489	)
Change in fair value of derivative warrant liability		1			(181	)		9			560
Net loss	$	(910	)	$	(1,264	)	$	(3,171	)	$	(2,582	)
Basic and diluted loss per share	$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.03	)
Basic and diluted weighted-average shares outstanding		100,396,097			90,759,938			98,247,106			87,433,942

See accompanying notes to these unaudited financial statements.

~~See accompanying notes to these unaudited financial statements.~~2

2AURA SYSTEMS, INC.

~~AURA SYSTEMS,~~CONDENSED ~~INC.~~STATEMENTS OF SHAREHOLDERS’ DEFICIT

~~CONDENSED STATEMENTS OF SHAREHOLDERS’ DEFICIT~~(Unaudited)

~~(Unaudited)~~Three Months ended May 31, 2024 and 2023

Three Months and Nine Months Ended November 30, 2023

(in thousands, except share data)	Common Stock Shares		Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit			Total Shareholders’ Deficit

Balance, February 28, 2023		94,648,346	$	9	$	454,507	$	(474,774	)	$	(20,258	)
Common shares issued for cash		2,586,362		-		853		-			853
Net loss		-		-		-		(1,141	)		(1,141	)
Balance, May 31, 2023 (unaudited)		97,234,708	$	9	$	455,360	$	(475,915	)	$	(20,546	)

Balance, February 29, 2024		104,591,648	$	10	$	457,460	$	(478,990	)	$	(21,520	)
Common shares issued for cash		4,455,600		1		1,117		111			1,117
Fair value of modified warrants - related party						33					33
Net loss		-		-				(15,258	)		(15,258	)
Balance, May 31, 2024 (unaudited)		109,047,248	$	11	$	458,610	$	(494,248	)	$	(35,627	)

(amounts in thousands, except share data)	Common Stock Shares		Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit			Total Shareholders’ Deficit
Balance, February 28, 2023		94,648,346	$	9	$	454,507	$	(474,774	)	$	(20,258	)
Common shares issued for cash		2,586,362		-		853		-			853
Net loss		-		-		-		(1,141	)		(1,141	)
Balance, May 31, 2023 (unaudited)		97,234,708		9		455,360		(475,915	)		(20,546	)
Common shares issued for cash		2,290,909		1		756		-			757
Net loss		-		-		-		(1,120	)		(1,120	)
Balance, August 31, 2023 (unaudited)		99,525,617		10		456,116		(477,035	)		(20,909	)
Common shares issued for cash		1,716,669		-		567		-			567
Fair value of warrants issued with convertible notes payable						5					5
Net loss		-		-		-		(910	)		(910	)
Balance, November 30, 2023 (unaudited)		101,242,286	$	10	$	456,688	$	(477,945	)	$	(21,247	)

See accompanying notes to these unaudited financial statements.

~~Three Months and Nine Months Ended November 30, 2022~~3

(amounts in thousands, except share data)	Common Stock Shares		Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit			Total Shareholders’ Deficit
Balance, February 28, 2022		83,119,104	$	8	$	450,137	$	(471,364	)	$	(21,220	)
Common shares issued for cash		2,116,665		-		635		-			635
Fair value of warrants issued for note settlement		-		-		1,051		-			1,051
Net loss		-		-		-		(553	)		(552	)
Balance, May 31, 2022 (unaudited)		85,235,769		8		451,823		(471,917	)		(20,086	)
Common shares issued for cash		3,943,668		1		1,033		-			1,034
Net loss		-		-		-		(766	)		(766	)
Balance, August 31, 2022 (unaudited)		89,179,437		9		452,856		(472,683	)		(19,818	)
Common shares issued for cash		3,437,092		-		931		-			932
Net loss		-		-		-		(1,264	)		(1,264	)
Balance, November 30, 2022 (unaudited)		92,616,529	$	9	$	453,787	$	(473,947	)	$	(20,150	)

AURA SYSTEMS, INC.

~~See accompanying~~CONDENSED ~~notes~~STATEMENTS toOF ~~these~~CASH ~~unaudited financial statements.~~FLOWS

3(Unaudited)

AURA SYSTEMS, INC.

	May 31, 2024			May 31, 2023
(amounts in thousands)
Net loss	$	(15,258	)	$	(1,141	)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization		25			26
Inventory write-down		20			-
Loss on debt extinguishment – related party		19,324			-
Change in fair value of derivative liability		(5,023	)		(7	)
Changes in operating assets and liabilities:
Accounts receivable		(15	)		-
Inventory		-			(7	)
Prepaid and other current assets		35			(9	)
Operating lease right-of-use asset		48			49
Accounts payable, accrued expenses and customer advances		(218	)		(3	)
Accrued interest		335			345
Operating lease liability		(57	)		(50	)
Cash used in operating activities		(784	)		(797	)

Cash used in investing activities:
Purchase of property and equipment		(36	)		(1	)
Cash used in investing activities		(36	)		(1	)

Cash flows from financing activities:
Proceeds from issuance of common stock		1,117			853
Payment of notes payable		(124	)		(20	)
Cash provided by financing activities		993			833

Net increase in cash and cash equivalents		173			35
Cash and cash equivalents-beginning of period		124			15
Cash and cash equivalents-end of period	$	297		$	50
Cash paid for:
Interest	$	-		$	67
Income taxes	$	-		$	-
Supplemental schedule of non-cash transactions:
Fair value of modified warrants - related party	$	33		$	-
Notes payable issued for the purchase of property and equipment	$	321		$	-
Fair value of convertible note payable	$	9,261		$	-
Extinguishment of note payable and accrued interest – related party	$	12,164		$	-
Conversion feature of convertible note payable – related party accounted as derivative liability	$	22,194		$	-

~~CONDENSED STATEMENTS~~See OFaccompanying ~~CASH~~notes ~~FLOWS~~to these unaudited financial statements.

~~(Unaudited)~~4

	Nine Months Ended
	November 30, 2023			November 30, 2022
(amounts in thousands)
Net loss	$	(3,171	)	$	(2,582	)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization		79			57
Inventory write-down		90			4
Change in fair value of derivative warrant liability		(9	)		(560	)
Changes in operating assets and liabilities:
Inventory		18			(29	)
Prepaid and other current assets		128			73
Operating lease right-of-use asset		156			136
Accounts payable, accrued expenses and customer advances		(262	)		583
Accrued interest on notes payable		952			183
Customer advances		(7	)		14
Operating lease liability		(152	)		(133	)
Cash used in operating activities		(2,178	)		(2,254	)
Cash used in investing activities:
Purchase of property and equipment		(23	)		(54	)
Cash flows from financing activities:
Proceeds from issuance of common stock		2,177			2,600
Proceeds from issuance of convertible notes payable		120			-
Payment of notes payable		(66	)		(208	)
Cash provided by financing activities		2,231			2,392
Net increase in cash and cash equivalents		30			84
Cash and cash equivalents-beginning of period		15			150
Cash and cash equivalents-end of period	$	45		$	234
Cash paid for:
Interest	$	160		$	128
Income taxes	$	-		$	-
Supplemental schedule of non-cash transactions:
Note payable issued for software licensing agreement	$	155		$	-
Fair value of warrants issued for note settlement	$	-		$	1,051

AURA SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

~~See accompanying~~THREE ~~notes~~MONTHS toENDED ~~these~~MAY ~~unaudited~~31, ~~financial~~2024 ~~statements.~~AND 2023 (Unaudited)

4(Amounts in thousands, except share and per share amounts)

~~AURA SYSTEMS,~~NOTE ~~INC. NOTES~~1 TO– ~~CONDENSED~~NATURE ~~FINANCIAL~~OF ~~STATEMENTS~~OPERATIONS AND SUMMARY ~~(Unaudited)~~OF SIGNIFICANT ACCOUNTING POLICIES

~~(Amounts in~~Nature ~~thousands,~~of ~~except share and per share amounts)~~Operations

~~NOTE~~Aura Systems Inc., (“Aura”, the “Company”) 1a –Delaware ~~NATURE~~corporation, OFis ~~OPERATIONS~~engaged ~~AND~~in ~~SUMMARY~~the OFdevelopment, ~~SIGNIFICANT~~commercialization, ~~ACCOUNTING~~manufacturing, ~~POLICIES~~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. We are developing axial flux induction electric motors for industrial/commercial applications as well as for two- and four-wheel EV applications.

~~Nature~~ Basis of ~~Operations~~Presentation

~~Aura~~The accompanying unaudited condensed financial statements as of and ~~Systems~~for the three months ended on May 31, ~~Inc.~~2024 and prior 2023, have been prepared in conformity with accounting principles generally accepted in the United States of America (“~~Aura~~U.S. GAAP”,) and the applicable rules and regulations of the Securities and Exchange Commission (the “~~Company~~SEC”) aregarding ~~Delaware~~interim ~~corporation,~~financial isreporting. ~~engaged~~Certain information and note disclosures normally included in the ~~development,~~financial statements ~~commercialization~~prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited condensed financial statements reflect all adjustments of a normal recurring nature that are necessary for ~~and~~a ~~sale~~fair presentation of ~~products~~the results for the periods presented. The Condensed Balance Sheet information as of February 29, ~~systems~~2024, ~~and~~was ~~components~~derived from the Company’s audited Financial Statements as of February 29, ~~using~~2024, ~~its~~included ~~patented~~in ~~and~~the ~~proprietary~~Company’s ~~electromagnetic~~Annual ~~technology~~Report on Form 10-K filed with the SEC on June 4, 2024. ~~Aura~~These ~~develops~~financial ~~and~~statements ~~sells AuraGen®~~should ~~axial~~be ~~flux~~read ~~mobile~~in ~~induction~~conjunction ~~power~~with ~~systems~~that toreport. The results of operations for the ~~industrial~~period ended May 31, ~~commercial~~2024, ~~and~~may ~~defense~~not ~~mobile~~necessarily ~~power~~be ~~generation markets~~indicative of the results of the full fiscal year ending February 28, 2025.

~~Basis~~The Company’s fiscal year ends on the last calendar day of ~~Presentation~~February. Accordingly, the current fiscal year will end on February 28, 2025, and is referred to as “Fiscal 2025”. Our prior fiscal years ended February 29, 2024, February 28, 2023, and 2022, and are referred to as “Fiscal 2024”, “Fiscal 2023” and “Fiscal 2022”, respectively.

~~The accompanying~~Going unaudited condensed financial statements as of and for the three and nine months ended November 30, 2023 and 2022, have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited condensed financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the periods presented. The Condensed Balance Sheet information as of February 28, 2023, was derived from the Company’s audited Financial Statements as of February 28, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on May 26, 2023. These financial statements should be read in conjunction with that report. The results of operations for the period ended November 30, 2023, may not necessarily be indicative of the results that may be expected for the full fiscal year ending February 29, 2024.Concern

The ~~Company’s~~ ~~fiscal~~accompanying ~~year~~financial ~~ends~~statements onhave ~~the~~been prepared ~~last~~assuming ~~calendar~~that ~~day of February. Accordingly,~~ the ~~current~~Company ~~fiscal year~~ will ~~end~~continue onas ~~February~~a ~~29, 2024~~going ~~and~~concern. isThe ~~referred~~Company tohas asnot ~~“Fiscal~~yet ~~2024”.~~generated ~~Our~~sufficient ~~prior~~revenues ~~fiscal~~to ~~years~~fund ~~ended February 28~~operations, has ~~2023,~~experienced ~~February~~recurring ~~28,~~operating ~~2022~~losses and ~~2021,~~relies ~~and are~~on ~~referred~~debt toand asequity ~~“Fiscal~~offerings ~~2023”,~~to ~~“Fiscal~~generate ~~2022”~~working ~~and “Fiscal 2021”, respectively~~capital.

~~Going~~During the three-month period ended May 31, 2024, ~~Concern~~the Company recognized net loss of $15,258 from operations and used cash in operating activities of $784. 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. 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.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. During the nine-month period ended November 30, 2023, the Company recognized net loss of $3,171 and used cash in operating activities of $2,178, respectively. As of November 30, 2023, the Company also has a shareholder deficit of $21,247 and notes payable totaling $5,200 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 28, 2023, 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 altogether. 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.

5During the next twelve months the Company intends to continue to attempt to increase the Company’s operations and focus on 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.

During the next twelve months the Company intends 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, 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. The Company anticipates being able to obtain new sources of funding to support these actions in the upcoming fiscal year.Inflation

~~Inflation~~Higher inflation, the actions by the Federal Reserve Bank to address inflation, most notably continuing increases in interest rates, and the volatility of 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 fiscal 2023 and fiscal 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.

Higher inflation, the actions by the Federal Reserve Bank to address inflation, most notably continuing increases in interest rates, and the volatility of 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 fiscal 2023 and the nine months of fiscal 2024 and will continue to impact the Company’s business in the remaining months of fiscal 2024 and fiscal 2025. The implications of higher government deficits and debt, tighter monetary policy, and higher longCOVID-~~term interest rates may drive a higher cost of capital for the business and an increase in the Company’s operating expenses.~~19

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.

~~As of~~Use ~~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.Estimates

~~Use~~The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of ~~Estimates~~assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates include assumptions made for inventory valuation, impairment testing of long-lived assets, the valuation allowance for deferred tax assets, assumptions used in valuing notes payable, derivative liabilities, assumptions used in valuing share-based compensation, and accruals for potential liabilities. Amounts could materially change in the future. Actual results could differ from those estimates.

~~The preparation~~Vendor of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported periods. Significant estimates include assumptions made for inventory reserve, impairment testing of long-lived assets, the valuation allowance for deferred tax assets, assumptions used in valuing derivative liabilities, assumptions used in valuing share-based compensation, and accruals for potential liabilities. Amounts could materially change in the future. Actual results could differ from those estimates.Concentration

~~Vendor~~As of May 31, 2024 , four vendors accounted for ~~Concentration~~39%, 12%, 11% and 10% of the Company’s accounts payable.

As of ~~November 30, 2023 and~~ February 2829, ~~2023~~2024, ~~there were~~ four vendors ~~who~~ accounted for ~~over~~42%, 1011%, of11% ~~the~~and ~~Company’s~~10% of accounts payable.

Revenue Recognition

The Company recognizes revenue in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers.

Our primary source of revenue is the manufacture and delivery of generator sets used primarily in mobile power applications. Our principal sales channel is sales to a domestic distributor. In accordance with ASC 606, the Company recognizes revenue, net of discounts, for our generator sets at time of product delivery to the domestic distributor (i.e. point-in-time), which also corresponds to the passage of legal title to the customer and the satisfaction of our performance obligation to the customer.6

6Our primary source of revenue is the manufacture and delivery of axial flux induction motors and generator sets used primarily in mobile power applications. Our principal sales channel is sales to domestic end users and distributors and agents internationally. In accordance with ASC 606, the Company recognizes revenue, net of discounts, for our generator sets at the time of product delivery and acceptance by the customer (i.e. point-in-time), which also corresponds to the passage of legal title to the customer and the satisfaction of our performance obligation to the customer.

Share-Based Compensation

The Company periodically issues stock options and warrants, and shares of common stock to employees and non-employees in non-capital raising transactions for services and for financing costs. Share-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for such services.

Fair Value of Financial Instruments

The Company determines the fair values of its financial instruments based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. Under ASC 820, Fair Value Measurement and Disclosures (“ASC 820”), the fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:

●

Level 1 – Quoted prices (unadjusted) for identical assets and liabilities in active markets;

●

Level 2 – Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly; and

●

Level 3 – Unobservable inputs.

The recorded amounts of inventory, other current assets, accounts payable, and accrued expenses approximate their fair value due to their short-term nature. The carrying amounts of notes payable and convertible notes payable approximate their respective fair values because of their current interest rates payable in relation to current market conditions.

The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities at fair value as of ~~November~~ 30May 31, ~~2023~~2024 and February 28 29, ~~2023~~2024:

(amounts in thousands)	~~November~~May 3031, ~~2023~~2024
	Level 1		Level 2		Level 3		Total
Liabilities
Derivative warrant liability	$	-	$	-	$	-	$	-
Derivative liability – convertible note conversion option	$	-	$	-	$	17,171	$	17,171
Total	$	-	$	-	$	-17,171	$	-17,171

	February 28, 2023
	February 29, 2024
	Level 1		Level 2		Level 3		Total
Liabilities
Derivative warrant liability	$	-	$	-	$	9	$	9
Derivative liability	$	-	$	-	$		$
Total	$	-	$	-	$	9	$	9

The Company estimated the fair value of the derivative ~~warrant~~ liability using the Binomial Model.

The following table provides a roll-forward of the ~~warrant~~ derivative liability measured at fair value on a recurring basis using unobservable level 3 inputs for the period ended ~~November~~May 3031, ~~2023~~ 2024, as follows:

(amounts in thousands, except share data)	~~Number~~Fair Value of Derivative ~~Warrants~~Warrant ~~Outstanding~~Liability			~~Fair Value of Derivative Warrant Liability~~
February 28, 2023		113,100		$	9
February 29, 2024	$	-
Change in fair value of derivative warrant liability		-			(9	)
Recognition of derivative liability for a convertible note payable conversion option		22,194
Gain on extinguishment on expiration of warrants		-			-
Change in fair value of derivative liability		(5,023	)
November 30, 2023		113,100		$	-
Gain on extinguishment		-
May 31, 2024	$	17,171

~~Reclassifications~~Loss per share

~~Certain February~~The ~~28,~~Company’s ~~2023~~loss ~~balances~~per ~~have~~share amounts have been ~~reclassified~~computed tobased ~~conform~~on ~~with~~ the ~~November~~weighted-average ~~30,~~number ~~2023~~of ~~presentation.~~shares Inof ~~presenting~~common stock outstanding for the period. Basic earnings (loss) per share ~~Company’s~~is ~~balance~~computed ~~sheet~~by atdividing ~~February~~net ~~28,~~earnings ~~2023,~~(loss) ~~the~~available ~~Company~~to ~~originally~~common ~~presented~~shareholders ~~accrued~~by ~~interest~~the weighted average number of ~~$1,389~~shares ~~and~~of ~~accrued~~common ~~payroll~~stock ~~and~~outstanding ~~other~~during ~~expenses~~the ofperiod. ~~$441,~~Diluted ~~totaling~~earnings ~~$1,830~~(loss) asper ashare ~~separate~~is ~~line~~computed ~~item~~by ~~called~~dividing ~~Accrued~~net ~~Expenses.~~earnings In(loss) ~~addition,~~available ~~$82~~to ofcommon ~~accrued interest~~shareholders ~~was~~by ~~included~~the inweighted ~~notes~~average ~~payable-related~~number ~~parties,~~of ~~current~~shares ~~portion.~~of Incommon ~~presenting~~stock ~~the~~assuming ~~Company’s~~all ~~balance~~potential ~~sheet~~shares athad ~~November~~been 30issued, ~~2023,~~ and the ~~Company~~additional ~~has~~shares ~~reclassified~~of ~~the~~common stock ~~balance~~were ofdilutive. ~~accrued~~Diluted ~~interest~~earnings of(loss) ~~$1,471~~per asshare areflects ~~separate~~the ~~line~~potential ~~item~~dilution, ~~and~~using the ~~balance~~as-if-converted ofmethod ~~accrued~~for convertible ~~payroll~~debt, and ~~other~~the ~~expenses~~treasury ofstock ~~$441~~method asfor ~~part~~options ~~of accounts payable~~ and ~~accrued~~warrants, ~~expense~~which ~~and~~could ~~reduced~~occur ~~notes~~if ~~payable-related~~all ~~parties,~~potentially ~~current~~dilutive ~~portion~~securities bywere ~~$82~~exercised.

~~Loss~~For the three months ended May 31, 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 effect. The potentially dilutive securities consisted of the following:

The Company’s loss per share amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares of common stock assuming all potential shares had been issued, and the additional shares of common stock were dilutive. Diluted earnings (loss) per share reflects the potential dilution, using the as-if-converted method for convertible debt, and the treasury stock method for options and warrants, which could occur if all potentially dilutive securities were exercised.

	May 31 2024		May 31, 2023
Warrants		6,521,664		3,564,764
Options		4,250,000		4,250,000
Convertible notes		46,756,007		3,946,823
Total		57,527,671		12,500,209

~~For the~~Recent ~~nine-months~~Accounting ended November 30, 2023 and 2022, the calculations of basic and diluted loss per share are the same because potentially dilutive securities would have had an anti-dilutive effect. The potentially dilutive securities consisted of the following:Pronouncements

	November 30, 2023		November 30, 2022
Warrants		3,624,764		8,132,498
Options		4,250,000		5,059,769
Convertible notes		3,986,274		3,868,414
Total		11,861,038		17,060,681

Recently Adopted Accounting Pronouncements

8Recent accounting pronouncements and guidance issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (the “SEC”) did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

~~Recent Accounting Pronouncements~~8

~~Recently Adopted~~NOTE ~~Accounting~~2 ~~Pronouncements~~– CONVERTIBLE NOTES PAYABLE

In May 2021, the FASB issued ASU 2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation— Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. The Company adopted ASU 2021-04 effective March 1, 2022. The adoption of ASU 2021-04 did not have any impact on the Company’s financial statement presentation or disclosures.

	May 31 2024		February 29, 2024,
(amounts in thousands)
Convertible notes payable – past due	$	1,513	$	1,509
Unamortized debt discount		-		(1	)
Net	$	1,513	$	1,508

In ~~September~~ ~~2016,~~Fiscal 2013 and 2014, the ~~FASB~~Company issued ~~ASU~~six ~~2016-13, Measurement~~convertible ofnotes ~~Credit~~payable ~~Losses~~in onthe ~~Financial~~aggregate ~~Instruments~~of $4,000. ~~ASU~~The ~~2016-13~~notes ~~requires entities~~are tounsecured, ~~use~~bear ainterest ~~forward-looking~~at ~~approach~~5% ~~based~~per onannum ~~current~~and are ~~expected~~convertible ~~credit~~into ~~losses~~shares ~~(“CECL”)~~of tocommon ~~estimate~~stock ~~credit~~at ~~losses~~a ~~on certain~~conversion ~~types~~price of ~~financial~~$1.40 ~~instruments~~per share, ~~including~~as ~~trade receivables~~adjusted. ~~This~~The ~~may~~notes ~~result~~were inoriginally ~~the~~due ~~earlier~~in ~~recognition~~2014 to of2017 ~~allowances~~and ~~for~~were ~~losses. ASU~~all ~~2016-13~~amended isin ~~effective~~2018 ~~for~~to change the ~~Company~~maturity ~~beginning~~date ~~March~~to 1January 11, 2023,. ~~and~~As ~~early~~of ~~adoption~~May is31, ~~permitted.~~2024 ~~The~~and ~~Company~~February ~~adopted~~29, ~~ASU~~2024, ~~2021-04~~the ~~effective~~outstanding ~~March~~balance ~~1, 2023. The adoption~~ of ~~ASU~~the ~~2016-13~~convertible ~~did~~notes ~~not~~payable ~~have~~amounted ~~any~~to ~~impact~~$1,403 onand ~~the~~are ~~Company’s~~past ~~financial statement presentation or disclosures~~due.

~~Other~~In Fiscal 2024 the Company ~~recent~~issued ~~accounting~~convertible ~~pronouncements~~notes payable to unrelated individuals and ~~guidance~~entities ~~issued~~totaling by$110 ~~the~~in ~~FASB,~~exchange ~~including~~for ~~its~~cash. ~~Emerging~~The ~~Issues~~notes ~~Task~~are ~~Force~~unsecured, ~~the~~bear interest ~~American~~at ~~Institute~~rate of ~~Certified~~ ~~Public~~10% ~~Accountants~~per annum, and ~~the~~mature ~~Securities~~in ~~and~~March ~~Exchange~~2024. ~~Commission~~The ~~(the~~notes ~~“SEC”)~~payable ~~did~~are ~~not~~convertible orinto ~~are~~shares ~~not~~of ~~believed~~common bystock ~~management~~at a conversion toprice ~~have~~of a$0.20 ~~material~~per ~~impact~~share. onAs of May 31, 2024 and February 29, 2024, the ~~Company’s~~outstanding ~~present~~balance orof ~~future~~the ~~financial~~convertible ~~statements~~notes payable amounted to $110 and $106, respectively, and are past due.

NOTE 2 3 – CONVERTIBLE ~~NOTES~~NOTE PAYABLE-RELATED PARTY

Convertible ~~notes~~ note payable – related party consisted of the following:

	November 30, 2023			February 28, 2023
	May 31, 2024			February 29, 2024
(amounts in thousands)
(a) Convertible notes payable 1 – past due	$	1,403		$	1,403
(a) Convertible note payable 1 – past due	$	3,000		$	3,000
(b) Convertible notes payable 2		100			-
(b) Convertible note payable 2 – past due		20			20
Total		1,503			1,403
(c) Convertible note payable 3 - Kopple		9,261			-
Unamortized debt discount		(5	)		-
Total	$	12,281		$	3,020
Net	$	1,498		$	1,403

(a) InOn ~~Fiscal~~January ~~2013~~24, ~~and 2014~~2017, the Company ~~issued~~entered ~~six~~into ~~convertible~~a ~~notes~~debt ~~payable~~refinancing inagreement with a former director and current shareholder of the ~~aggregate~~Company. As part of the agreement, the Company issued a $43,000 convertible note. The ~~notes~~convertible ~~are~~note is unsecured, ~~bear~~bears interest at 5% per annum, and ~~are~~was due February 2, 2023. The convertible note is convertible into shares of common stock at a conversion price of $1.40 per share, as adjusted. ~~The~~As ~~notes~~of ~~were~~May ~~originally~~31, ~~due~~2024 ~~in 2014 to 2017~~ and ~~were all amended in 2018 and the maturity date for all the notes was changed to January 11, 2023. As~~ February 2829, ~~2023~~2024, ~~the~~ outstanding balance of the convertible ~~notes~~note ~~payable~~ amounted to $13,~~403~~000 and ~~are~~is past due.

9(b) On 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 Directors. The convertible note is unsecured, bears interest at rate of 10% per annum and matured in March 2024. The convertible note payable is convertible to common stock at a conversion price of $0.20 per share. As of May 31, 2024 and February 29, 2024, outstanding balance of the convertible note amounted to $3,000 and is past due.

(b) During the nine months ended November 30, 2023, the Company issued five convertible notes payable to unrelated individuals and entities totaling $100,000 in exchange for cash. The notes are unsecured, bear interest at rate of 10% per annum, and mature in March 2024. The notes payable are convertible into shares of common stock at a conversion rate of $0.20 per share.9

As(c) ~~part~~In ofMarch 2022, the ~~offering~~Company issued a note payable to Kopple (see Note 5). On March 7, 2024, the Company ~~also granted~~amended the note ~~holders~~payable ~~who~~to ~~participated~~Kopple. inThe ~~this~~amendment ~~offering~~included, ~~warrants~~among toother ~~purchase~~things (see Note 5) granting Kopple a ~~total~~conversion right to be able to convert the note payable into equity of ~~60,000~~the ~~shares~~Company at a conversion price of ~~common~~the ~~stock,~~lower of ~~which,~~ $1.00 per share or 50~~,000~~% ~~were~~of ~~issued~~the to10 ~~these~~day ~~noteholders.~~volume ~~The~~weighted ~~warrants~~average ~~are~~price ~~fully~~of ~~vested~~the ~~upon~~Company’s ~~grant,~~common ~~expire~~stock. inAs 18the ~~months,~~amended ~~and~~Kopple ~~are~~note ~~exercisable~~payable ~~into~~is ~~shares of~~convertible into common stock, atit ~~$0.50~~is ~~per~~now ~~share~~reported as a convertible note payable The conversion right will be effective August 30, 2024. The Company ~~recorded~~accounted afor ~~debt~~the ~~discount~~amended terms of $5the tonote ~~account~~payable ~~the~~as ~~relative~~a ~~fair~~debt ~~value~~extinguishment ofand the ~~warrants~~existing ~~granted. The~~note ~~fair~~payable ~~value~~and ofaccrued ~~the~~interest ~~warrants~~totaling ~~were~~$12,164 ~~computed~~was ~~using~~derecognized and the ~~BlackScholes~~amended ~~Option~~convertible ~~Pricing~~note ~~Model~~payable ~~with~~was ~~the~~recorded ~~following~~at ~~assumptions:~~its ~~stock~~fair ~~price~~ value of $09,261 (see Note 5).~~17;~~ ~~exercise~~The ~~price~~convertible ofnote ~~$0.50;~~payable ~~expected~~is ~~life~~secured ofby ~~1.5~~tangible ~~years;~~and ~~volatility~~intangible ~~rate~~assets of ~~160%;~~the ~~and~~Company, ~~discount~~bears interest at a rate of 510%. ~~The~~per ~~discount will~~annum beand ~~amortized~~matures toin ~~interest~~June ~~expense~~2029. ~~over~~As ~~the~~of ~~expected~~May ~~term~~31, 2024, outstanding balance of the convertible note ~~payable~~amounted to $9,261.

~~As of~~The ~~November~~Company ~~30,~~is ~~2023,~~also ~~outstanding~~subject ~~balance~~to ofcertain ~~convertible~~affirmative ~~notes~~and ~~payable~~negative ~~amounted~~covenants such as periodic submission of financial statements to $1Kopple and restrictions on future financing and investing activities,~~503~~ as defined in the agreement, including the covenant to not create any indebtedness that is senior in right of ~~which,~~payment ~~$1,403~~to the Kopple debt. Management believes such covenants are ~~past~~normal ~~due~~for this type of transaction and that management believes meeting these covenants will not affect the operations of the Company.

NOTE 3 4 – ~~CONVERTIBLE NOTE~~ NOTES PAYABLE~~-RELATED PARTY~~

~~Convertible note~~Notes payable ~~– related party~~ consisted of the following:

	November 30, 2023			February 28, 2023
(amounts in thousands)	May 31, 2024			February 29, 2024
(amounts in thousands)
Secured notes payable
(a) Convertible note payable 1 – past due	$	3,000		$	3,000
(a) Note payable-EID loan	$	150		$	150
(b) Convertible note payable 2		20			-
(b) Notes payable-vehicle and equipment		85			106
Non-current		-			-
(c) Note payable - software license		124			139
Current	$	3,020		$	3,000
(d) Notes payable – machinery and other equipment		232			-
Unsecured notes payable
(e) Note payable-other		10			10
Total	$	601		$	405
Current		(163	)		(119	)
Non-current		438			286

(a) OnNote January 24, 2017, the Company entered into a debt refinancing agreement with a former director and current shareholder of the Company. As part of the agreement, the Company issued a $3,000 convertible note. The convertible note is unsecured, bears interest at 5% per annum, and was due February 2, 2023. The convertible note is convertible into shares of common stock at a conversion price of $1.40 per share, as adjusted. As of February 28, 2023, outstanding balance of the convertible note amounted to $3,000 and is past due.payable-EID loan

~~(b)~~ During ~~the~~Fiscal ~~nine months ended November 30~~2021, ~~2023,~~ the Company ~~issued~~received a ~~convertible note payable of~~ $~~20,000~~150 loan inunder ~~exchange~~the ~~for~~United ~~cash~~States toSmall aBusiness ~~member~~Administration of(“SBA”) ~~the~~Economic ~~Company’s~~Injury ~~Board~~Disaster ofLoan ~~Directors~~(“EID Loan”) program. The ~~convertible~~loan ~~note~~ is ~~unsecured~~due July 1, ~~bears~~2050, interest accrues at ~~rate of 10~~3.75% per annum, and ~~will mature in March 2024. The convertible note payable~~ is ~~convertible~~secured toby ~~common stock at a conversion rate of $0.20 per share. As part of~~ the assets ~~offering, the Company also granted the note holders who participated in this offering a total~~ of ~~60,000 warrants, of which, 10,000 warrants were issued to~~ the ~~related party note holder (see Note 2)~~Company.

~~As of~~(b) ~~November~~Notes ~~30, 2023, outstanding balance of the convertible notes~~ payable-~~related~~vehicle ~~party~~and ~~amounted~~equipment ~~to $3,020, of which, $3,000 is past due.~~

During Fiscal 2022, the Company issued two notes payable to purchase equipment and a vehicle for $329. The notes are secured by the equipment and vehicle purchased. 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. 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.

~~NOTE 4 – NOTES PAYABLE~~10

~~Notes payable~~(c) ~~consisted~~Note ofpayable-software ~~the following:~~license

(amounts in thousands)	November 30, 2023		February 28, 2023
Secured notes payable
(a) Note payable-EID loan	$	150	$	150
(b) Notes payable-vehicle, equipment and software		278		188
Unsecured notes payable
(c) Note payable-other		10		10
Total	$	438	$	348
Non-current		302		256
Current		136		92

During Fiscal 2024, the Company obtained a loan of $155 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 8% per annum and will mature in September 2026.

(ad) ~~Economic~~ ~~Injury~~Notes ~~Disaster~~payable ~~(EID)~~– ~~Loan~~machinery and other equipment

~~On July~~During 1,Fiscal ~~2020~~2025, the Company ~~received~~obtained a loan of $~~150~~274 ~~loan~~from ~~under~~a ~~the~~financing ~~United~~institution ~~States~~to ~~Small~~finance ~~Business~~the ~~Administration~~purchase ~~(“SBA”)~~of ~~Economic~~a ~~Injury Disaster~~production ~~Loan~~machine ~~(“EID~~by ~~Loan”)~~the ~~program~~Company. The ~~loan~~note payable is ~~due~~secured ~~July~~by 1,the ~~2050~~production machine, ~~interest~~bears ~~accrues~~a atstraight ~~3.75%~~up ~~per~~fee ~~annum~~of $74,285 ~~and~~to isbe ~~secured~~paid by over the ~~assets~~course of the ~~Company~~loan which will mature in April 2029.

~~(b)~~In addition, the Company entered into a 60 month financing ~~Notes~~lease ~~payable-vehicle~~for a forklift with a cost of $47. The lease has an interest rate of 8%, ~~equipment~~include ~~and~~a ~~software~~bargain purchase option to acquire the forklift at the end of the lease term for a payment of one dollar.

~~During Fiscal~~The ~~2022,~~aggregate ~~the~~total ~~Company~~of ~~issued~~the ~~two~~note ~~notes~~ payable ~~to purchase equipment~~ and ~~a vehicle for $329. The notes are secured by the equipment~~financing ~~and~~lease ~~vehicle~~obligation ~~purchased.~~as ~~The~~of ~~first~~May ~~note for $210 is due October~~ 31, 2024, ~~and~~amounted ~~requires 36 equal monthly payments of approximately~~ $~~6, including interest at 2~~232.~~9% per annum. 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.~~

~~During Fiscal~~(e) ~~2024,~~Note the Company financed the annual subscription for engineering software for $155. The note is unsecured, due October 15, 2026 and requires 36 equal payments of approximately $5, including interest at 8% per annum.payable-other

As of ~~November~~May 3031, ~~2023~~2024, and February 2829, ~~2023~~2024, the Company ~~balance~~has ofone ~~the~~note ~~three~~payable ~~notes~~due ~~was~~to ~~$278~~an ~~and~~individual ~~$188,~~issued ~~respectively.~~in ~~These~~September ~~notes~~2015 that is payable ~~are~~on ~~secured by~~demand ~~the~~with ~~assets~~an interest rate of ~~the~~10% ~~Company~~per annum.

~~(c) Note~~NOTE ~~payable~~5 – NOTES PAYABLE-~~other~~RELATED PARTIES

~~As of~~Notes ~~November 30, 2023 and February 28, 2023, the Company has one note~~ payable-related ~~due~~parties toconsisted ~~an individual issued in September 2015 that is payable on demand with an interest rate~~ of ~~10%~~the ~~per annum.~~following:

(amounts in thousands)	May 31 2024		February 29, 2024

(a) Note payable-Kopple	$	-	$	10,915
(b) Note payable- Gagerman		82		82
(c) Note payable-Jiangsu Shengfeng		700		700
Total		782		11,697
Non-current		-		(7,065	)
Current	$	782	$	4,632

~~NOTE 5~~ –(a) ~~NOTES~~Note ~~PAYABLE~~payable-~~RELATED PARTIES~~ Kopple

~~Notes~~In fiscals 2013 through 2018, the Company issued notes payable to Robert Kopple and associated entities (collectively “Kopple”) in the aggregate of $6,107. Robert Kopple is the former Vice-~~related~~Chairman ~~parties~~of ~~consisted~~the Company’s Board of Directors and is a current shareholder in the ~~following:~~Company. The notes were unsecured, bear interest at rates ranging from 5% and 15% per annum and were due in fiscal 2014 through fiscal 2018. Beginning in 2017, Kopple brought suit against the Company for repayment of the notes.

(amounts in thousands)	November 30, 2023			February 28, 2023
Unsecured notes payable
(a) Notes payable-Kopple (as restructured)	$	10,938		$	10,915
(b) Note payable- Gagerman		82			82
(c) Note payable-Jiangsu Shengfeng – past due		700			700
Total	$	11,720		$	11,697
Non-current		(7,088	)		(7,065	)
Current	$	4,632		$	4,632

On March 14, 2022, the Company reached an agreement with Kopple to resolve all remaining litigation between them, including all amounts owed to Kopple under the notes. Under the terms of the settlement, the Company agreed to issue a new note and pay Kopple an aggregate amount of $10,000 to be paid in installment, of which, $3,000 was due in June 2022, and the remaining $7,000 to be annually for seven years at $1,000 per year. Additionally, the settlement agreement granted Kopple warrants exercisable into 3,331,664 shares of the Company’s common stock at a price of $0.85 per share. The Company used the Black-Scholes option pricing model to compute the fair value of the warrants of $1,051.

~~(a) Kopple Note~~11

~~In fiscals~~The ~~2013~~settlement ~~through~~provides ~~2018,~~for ~~the~~certain ~~Company~~increases in ~~issued~~the ~~notes~~amounts payable to ~~Robert~~ Kopple and ~~associated entities (collectively “Kopple”) in~~ the ~~aggregate~~right ~~principal amount~~ of ~~$6,107.~~such ~~Robert~~parties ~~Kopple~~to isenter ~~the~~judgement ~~former~~against ~~Vice-Chairman of~~ the Company’s ~~Board~~if ~~of Directors and is a current shareholder in~~ the Company. ~~Between~~remains ~~July 2017 and March 2022, the Company was engaged~~ in ~~litigation with Kopple relating~~uncured todefault ~~more~~in ~~than~~its ~~$13,000~~payment ofobligations. ~~principal~~Interest ~~and~~on ~~accrued interest due under~~ the ~~notes,~~new ~~and~~note ~~the~~also ~~equivalent~~began ofaccruing ~~the~~in ~~approximately~~January 232023 ~~million~~at 6% ~~warrants~~per annum.

~~On March~~The ~~14,~~Company ~~2022,~~assessed the ~~Company~~settlement ~~reached an agreement~~ with Kopple under ~~and~~ASC ~~resolved~~470 ~~all~~and ~~remaining~~determined ~~litigation~~that ~~between~~the ~~them,~~guidance ~~including~~under ~~all~~troubled ~~amounts owed~~debt torestructuring ~~Kopple~~should ~~under~~apply as the ~~notes.~~Company ~~Under~~was ~~the~~experiencing ~~terms~~financial difficulties ofand ~~the~~Kopple ~~settlement~~granted a concession. Per ASC 470-60, the ~~Company~~carrying ~~agreed~~value toof ~~issue~~the arestructured ~~new~~ note ~~and~~remains ~~pay~~the ~~Kopple~~same anas ~~aggregate~~before the ~~amount~~restructuring, ofreduced ~~$10,000,~~only ~~including~~by ~~$3,000~~the ~~initially~~fair ~~due~~value inof ~~June~~the ~~2022,~~warrants ~~and~~issued ~~$1,000~~in toconnection bewith ~~paid~~the ~~annually~~transaction. ~~for~~The ~~seven~~Company ~~years~~determined ~~after~~that the future ~~initial~~undiscounted ~~$3,000 is~~cash ~~paid.~~flows ~~Additionally,~~of the ~~settlement~~restructured ~~agreement~~new ~~granted~~Kopple ~~Koppel~~note aexceeded ~~five~~the ~~year~~carrying value, ~~fully~~and ~~vested~~accordingly, ~~warrant~~no ~~exercisable~~gain ~~into~~was 3recognized,~~331,664~~ and ~~shares~~no ~~of the~~adjustment ~~Company’s~~was ~~common~~made ~~stock~~to atthe acarrying ~~price~~value of ~~$0.85~~the ~~per~~debt, ~~share~~other ~~with~~than athe adjustment for the fair value of ~~$1,100~~the warrants.

~~The Company~~In ~~assessed~~June 2022, the ~~settlement~~first ~~with~~installment ~~Kopple~~of ~~under~~$3,000 became due, ~~ASC~~of ~~470~~which ~~and~~$150 was ~~determined~~only ~~that the guidance under troubled debt restructuring should apply~~paid. ~~The~~ ~~carrying~~Subsequently, ~~value of~~ the ~~restructured~~ note ~~remains~~was ~~the~~amended ~~same~~several astimes ~~before~~to extend the ~~restructuring,~~payment ~~reduced~~date ~~only~~of by the ~~fair~~remaining ~~value~~balance of $2,850 of the ~~warrants issued~~initial inpayment, ~~connection~~and ~~with~~ the ~~transaction. The~~ Company ~~determined~~incurred ~~that~~extension ~~the~~and ~~future~~forbearance ~~undiscounted~~fees ~~cash~~totaling ~~flows~~$335 that ofwas ~~the~~recorded ~~restructured new Kopple~~as ~~note~~part ~~exceeded~~of ~~the~~interest ~~carrying~~expense. ~~value,~~In ~~and~~January ~~accordingly~~2023, nopursuant ~~gain was recognized, and no adjustment was made~~ to the ~~carrying~~terms ~~value~~ of the ~~debt, other~~amended ~~than~~note ~~the~~payable, ~~adjustment for~~ the ~~fair~~Company ~~value~~started ofaccruing ~~the~~interest ~~warrants. Interest expense~~ on the ~~new~~outstanding ~~Kopple~~ note isbalance ~~computed~~at ~~using~~ a ~~new effective~~ rate ~~that equates the present value~~ of 6% ~~the~~per ~~future~~annum, ~~cash~~compounded ~~payments~~annually. ~~specified~~As byof ~~the~~February ~~new~~29, ~~terms~~2024, ~~with~~outstanding ~~the~~principal ~~carrying~~balance amount ~~value~~ of ~~the debt~~$10,915.

In ~~June~~ ~~2022~~March 2024, the ~~first~~Company ~~installment~~and ofKopple 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 on ~~became~~or ~~due~~before December 15, of2024; ~~which~~(ii) increased the stated interest rate to 10%; (iii) added a fee of $~~150~~15 monthly until ~~was~~the ~~paid~~Company ~~and~~makes a principal payment of $2~~,850~~ million isby ~~still~~December ~~outstanding.~~2024; ~~Subsequently~~(iv) effective August 30, 2024, the ~~note~~Company will grant ~~was~~Kopple ~~amended~~the ~~several~~right ~~times~~(but not any obligation) to ~~extend~~convert the ~~payment~~note ~~date~~payable into equity of the ~~remaining~~Company ~~balance~~at a conversion price equal to the lower of ~~$2,850~~one dollar per share or 50% of the 10 day ~~initial~~volume ~~payment~~weighted ~~through~~average ~~January~~price ~~2023, and~~per share of the Company’s ~~incurred~~common stock; ~~extension~~(v) ~~and~~will ~~forbearance~~require ~~fees~~the ~~totaling~~Company ~~$335.In~~to ~~January~~pay 20% ~~2023,~~of ~~pursuant~~all tocollected ~~the~~revenues ~~terms~~within 10 days of the ~~amended~~end ~~note~~of ~~payable,~~each fiscal quarter; (vi) will require the Company ~~started~~to ~~accruing~~pay ~~interest~~Kopple 20% onof ~~the~~any ~~outstanding~~amount ~~note~~raised ~~balance~~in atnew acapital ~~rate~~in ofthe 6%form ~~per~~of ~~annum~~equity, ~~compounded~~debt ~~annually~~or convertible debt above $3.5 million; (vii) Asreduces the exercise price of ~~February 28,~~the ~~2023,~~warrants ~~outstanding~~granted ~~principal~~to ~~balance~~Kopple ~~amounted~~in March 2022 from $0.85 per share to $100.50 per share; and (vii) extends the warrant expiration date from March 8,~~915~~ 2029, to March 31, 2031.

The Company accounted for the amended terms of the note payable as a debt extinguishment because the present value of the cash flows under the amended debt terms is greater by 10% compared to the present value of the remaining cash flows under the original existing debt terms. Furthermore, the amendment granted a conversion option to the note holder and is deemed substantially different from the existing note. The Company recorded a loss on debt extinguishment of $19,324 as a result of this amendment, which is the difference between (i) the fair value of the amended convertible note payable of $9,261, combined with the fair value of the conversion option of $22,194 (see Note 8), and the change in the fair value of the amended warrants of $33, and (ii) the net carrying amount of the existing note payable of $12,164.

~~During the~~As ~~nine~~a ~~months ended November 30~~result, ~~2023,~~ the ~~note~~net ~~was~~carrying ~~again~~amount ~~amended~~of ~~multiple times to extend~~ the existing ~~payment~~note ~~term~~payable of ~~the~~$12,164 ~~remaining~~was ~~balance of~~derecognized ~~$2,850~~and ofamended ~~the~~note ~~initial~~payable ~~payment~~was ~~and~~recorded ~~installment~~at ~~payment~~its fair value of $19,~~000,~~261. ~~originally~~As ~~due~~the inKopple new ~~June~~note ~~2023,~~payable ~~through~~is ~~August~~now 1,convertible ~~2023.~~to Ascommon astock, ~~result of~~for ~~these~~financial ~~amendments~~reporting purposes, the ~~Company~~new ~~incurred~~note ~~additional~~payable ~~extension~~of ~~and~~$9,261 ~~forbearance~~is ~~fees~~now reported ~~totaling~~as ~~$390~~a ~~and~~convertible ~~adjustment~~note topayable ~~principal~~(see ~~balance of~~Note ~~$23~~3).

~~As of~~(b) ~~November~~Note 30, 2023, the outstanding principal balance of amounted to $10,938. As of November 30, 2023 and the date of this report, the Company and Kopple are currently in negotiations for another extension of the deadline for payment of the $3,850, consisting of the $2,850 initial payment and the installment payment of $1,000. Currently, Kopple has agreed in principle that such further amendment will also indicate that the Company is not in default of the agreement as of November 30, 2023, and through the date that the financial statements are issued. Based upon the foregoing no adjustments have been made to reflect the Kopple debt in default.payable-Gagerman

~~The settlement~~Melvin ~~agreement~~Gagerman, ~~with Kopple provides for certain increases in~~ the Company’s ~~amounts~~former ~~payable~~CEO ~~to Kopple~~ and ~~the~~CFO ~~right~~whose ofemployment ~~such~~was ~~parties~~permanently toterminated ~~enter a~~in ~~judgement~~July ~~against~~2019, ~~the~~claims ~~Company~~that ~~if the Company remains~~ in ~~unsecured~~April ~~default~~2014 ~~in its payment obligations. Pursuant to~~ the ~~settlement~~Company ~~agreement,~~issued ~~the~~an ~~Company~~unsecured isdemand ~~also~~promissory ~~subject~~note to ~~certain~~him ~~affirmative and negative covenants such as periodic submission of financial statements to Koppel and restrictions on future financing and investing activities, as defined~~ in the ~~agreement,~~amount ~~including~~of ~~the~~$82 ~~covenant to not create any indebtedness~~ that isbears ~~senior~~interest inat ~~right~~a rate of ~~payment~~10% toper ~~the Kopple debt~~annum. ~~Management~~Gagerman ~~believes~~claims ~~such~~that ~~covenants are normal for~~ this ~~type of transaction~~ ~~and~~note ~~that~~has ~~management~~not ~~believes~~been ~~meeting~~repaid ~~these~~to ~~covenants~~date ~~will not affect operations~~ and ~~the~~is ~~Company~~now owed.

~~(b)~~In June 2022, Gagerman ~~Note~~brought ~~payable~~suit against the Company for repayment of this alleged note. Despite the fact that, based on Gagerman’s allegations, the note was issued during a period when Gagerman was the Company’s CEO, CFO, Corporate Secretary and Chairman of the Company’s Board of Directors, Gagerman has stated that he does not possess a copy of the alleged promissory note. The Company disputes that any amount is presently owed to Gagerman. Additionally, the Company has filed a cross-complaint against Gagerman for, among things, conversion, violation of California Business & Professions Code §17200, and various breaches of fiduciary duty that the Company believes Gagerman committed against the Company.

~~Melvin Gagerman,~~Although the Company disputes Gagerman’s ~~former~~claims, ~~CEO~~under ~~and~~the ~~CFO~~guidance ~~whose~~of ~~employment~~ASC ~~was~~450 ~~permanently~~– ~~terminated in July 2019~~Contingencies, ~~claims that in April 2014~~ the Company ~~issued~~has anrecorded ~~unsecured~~the ~~demand~~claimed ~~promissory~~ note payable ~~to him in the amount of~~ $82 ~~that bears interest at a rate of 10% per annum. Gagerman claims that this note has not been repaid to date~~ and iscorresponding ~~now~~accrued ~~owed~~interest.

In June 2022, Gagerman brought suit against the Company for repayment of this alleged note. Despite the fact that, based on Gagerman’s allegations, the note was issued during a period when Gagerman was the Company’s CEO, CFO, Corporate Secretary and Chairman of the Company’s Board of Directors, Gagerman has stated that he does not possess a copy of the alleged promissory note. The Company disputes that any amount is presently owed to Gagerman. Additionally, the Company has filed a cross-complaint against Gagerman for, among things, conversion, violation of California Business & Professions Code §17200, and various breaches of fiduciary duty that the Company believes Gagerman committed against the Company.12

~~Although the~~(c) ~~Company~~Jiangsu ~~disputes Gagerman’s claims, under the guidance of ASC 450 – Contingencies, the Company has recorded the~~Shengfeng ~~claimed note payable $82 and corresponding accrued interest.~~Note

~~(c)~~On November 20, 2019, the Company owned 49% of a Chinese joint venture named Jiangsu Shengfeng. ~~Note~~The Joint venture advanced Aura $700 in prior years for products that the Company failed to deliver to the joint venture. The Company reached an agreement with the joint venture regarding the return of $700 that had been advanced to the Company in prior years. As a result, in November 2019, the Company issued a non-interest-bearing promissory note for $700 to the joint venture to be paid over an 11-month period beginning March 15, 2020, through February 15, 2021. The joint venture stopped operations in 2020 as a result of COVID-19 and never resumed or restarted operations. In fiscal 2024 the joint venture was dissolved and liquidated. As of May 31, 2024, and 2023, the outstanding balance of this note payable amounted to $700.

~~On November~~The ~~20, 2019, the~~ Company ~~reached~~is ancurrently ~~agreement~~in negotiations with ~~a former joint venture partner Jiangsu Shengfeng regarding~~ the ~~return~~noteholder ~~of $700 that had been advanced~~ to ~~the~~settle ~~Company~~or inextinguish ~~prior years. As a result, in November 2019,~~ the ~~Company issued a non-interest-bearing promissory~~ note ~~for $700 to be paid over an 11-month period beginning March 15, 2020, through February 15, 2021. As of November 30, 2023 and February 28, 2023, the outstanding balance of this note~~ payable ~~amounted to $700~~.

~~The Company~~NOTE is6 ~~currently~~– inACCRUED ~~negotiations with the noteholder to settle or extinguish the note payable.~~INTEREST

13Accrued interest consisted of the following:

NOTE 6 – ACCRUED INTEREST

	May 31, 2024		February 29, 2024
(amounts in thousands)
Convertible notes payable (past due)	$	455	$	425
Convertible notes payable - related party - Kopple		232		-
Convertible notes payable - related party - others		901		863
Notes payable - related party – Kopple		-		1,226
Notes payable - related party - others		92		62
Notes payable		22		22

Total	$	1,702	$	2,598

~~Accrued~~NOTE ~~interest~~7 ~~consisted~~– ~~of the following:~~LEASES

	November 30, 2023		February 28, 2023
(amounts in thousands)
Convertible notes payable (past due)	$	408	$	354
Convertible notes payable related party (past due)		826		713
Notes payable (related party)		1,145		364
Notes payable		21		23
Other		-		17
	$	2,400	$	1,471

Our administrative and production operations including warehousing, are housed in an approximately 18,000 square foot facility in Lake Forest, California. 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.

~~NOTE~~Operating 7lease –right-of-use (“ROU”) ~~LEASES~~assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

~~Operating~~The ~~lease~~components ~~right-~~of~~-use~~ ~~(“ROU”) assets and liabilities are recognized at commencement date based on the present value of~~ lease ~~payments~~expense ~~over~~and ~~the lease term. ROU assets~~supplemental ~~represent~~cash ~~our~~flow ~~right~~information related to ~~use~~leases ~~an underlying asset~~ for the ~~lease~~period ~~term~~are ~~and~~as lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The operating lease ROU asset includes any lease payments made and excludes lease incentives.follows:

The components of lease expense and supplemental cash flow information related to leases for the period are as follows:

(amounts in thousands)	May 31, 2024			May 31, 2023
Lease Cost
Operating lease cost (included in general and administration in the Company’s statement of operations)	$	69		$	70

Other Information
Cash paid for amounts included in the measurement of lease liabilities	$	72		$	71
Weighted average remaining lease term – operating leases (in years)		2.25			3.25
Average discount rate – operating leases		10.0	%		10.0	%

(amounts in thousands)	Nine-Months ended November 30, 2023			Nine-Months ended November 30, 2022
Lease Cost
Operating lease cost (included in general and administration in the Company’s statement of operations)	$	209		$	209
Other Information
Cash paid for amounts included in the measurement of lease liabilities	$	212		$	206
Weighted average remaining lease term – operating leases (in years)		2.75			3.75
Average discount rate – operating leases		10.0	%		10.0	%

The supplemental balance sheet information related to leases for the period is as follows:

	At May 31, 2024
Operating leases
Long-term right-of-use assets	$	559

Short-term operating lease liabilities	$	246
Long-term operating lease liabilities		358
Total operating lease liabilities	$	604

~~The~~Maturities ~~supplemental~~of ~~balance~~the ~~sheet~~Company’s ~~information~~lease ~~related~~liability ~~to leases for the period~~ is as follows:

	At November 30, 2023
	Operating Lease
Operating leases
Years Ending February 28:
Long-term right-of-use assets	$	660
2025 (9 months)	$	225
Short-term operating lease liabilities	$	230
2026		299
Long-term operating lease liabilities		485
2027		155
Total operating lease liabilities	$	715
Total lease payments		679
Less: imputed interest/present value discount		(68	)
Present value of lease liability	$	604

~~Maturities~~NOTE of8 ~~the~~– ~~Company’s~~DERIVATIVE ~~lease liability is as follows:~~LIABILITY

	Operating Lease
Years Ending February 28:
2024 (3 months remaining)	$	70
2025		291
2026		300
2027		154
Total lease payments		815
Less: Imputed interest/present value discount		(100	)
Present value of lease liabilities	$	715

In March 2024, pursuant to the amendment of the Kopple note payable (see Note 5), the Company granted Kopple the right to convert the amended 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. The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that the conversion option should be classified as a derivative liability since it does not have an explicit limit to the number of shares to be delivered upon settlement of the conversion option. The derivative liability is remeasured to fair value at each reporting period, and the change in the fair value is recognized in earnings in the accompanying statements of operations. The Company 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 $17,171 at May 31, 2024.

~~NOTE 8 – DERIVATIVE WARRANT LIABILITY~~14

~~In prior years the Company issued warrants that include a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder.~~ The ~~Company~~following ~~determined that~~tables ~~the~~summarize ~~warrants do not satisfy~~ the ~~criteria for classification as equity instruments due to the existence of the cash settlement feature~~derivative that is not within the sole control of the Company, and the warrants are accounted for as liabilities in accordance with ASC 815. The fair value of the warrants is remeasured at each reporting period, and the change in the fair value is recognized in earnings in the accompanying statements of operations. The warrant liability ~~will ultimately be converted into the Company’s equity when the warrants are exercised or will be extinguished upon the expiration of the outstanding warrants.~~:

The following tables summarize the derivative warrant liability:

(amounts in thousands, except share and per share data)	May 31, 2024			March 7, 2024 - Issuance
Stock price	$	0.42		$	0.15
Risk free interest rate		4.52	%		4.07	%
Expected volatility		181	%		182	%
Expected life in years		5.08			5.31
Expected dividend yield		0	%		0	%
Number of common stock issuable		41,964,867			151,481,943
Fair value of derivative liability	$	17,171		$	22,194

(amounts in thousands, except share and per share data)	November 30, 2023			February 28, 2023
Stock price	$	0.17		$	0.25
Risk free interest rate		5.2	%		4.7	%
Expected volatility		171	%		190	%
Expected life in years		0.21			0.97
Expected dividend yield		0	%		0	%
Number of warrant shares		113,100			113,100
Fair value of derivative warrant liability	$	-		$	9

NOTE 9 – SHAREHOLDERS’ DEFICIT

15Common Stock

	Number of Derivative Warrants Outstanding		Fair Value of Derivative Warrant Liability
February 28, 2023		113,100	$	9
Change in fair value of derivative warrant liability		-		(9	)
Gain on extinguishment on expiration of warrants		-		-
November 30, 2023		113,100	$	-

During the three-months ended May 31, 2024, the Company issued 4,455,600 shares of common stock for approximately $1,117 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.

~~NOTE~~During 9the –three-months ~~SHAREHOLDERS’~~ended ~~DEFICIT~~May 31, 2023, the Company issued 2,586,362 shares of common stock for approximately $853 in cash

~~Common~~ Stock Options

~~During~~A ~~the~~summary ~~nine-months~~of ~~ended November 30, 2023,~~ the Company’s ~~issued~~stock ~~6,593,940~~option ~~shares~~activity offor ~~common~~the ~~stock~~three-months ended ~~for~~May ~~approximately~~31, $22024,~~177~~ inis ~~net~~as ~~cash.~~follows:

During the nine-months ended November 30, 2022 the Company issued 9,497,425 shares of common stock for approximately $2,600 in net cash.

(amounts in thousands, except share and per share data)	Number of Options		Exercise Price		Weighted Average Intrinsic Value
Outstanding, February 29, 2024		4,250,000	$	0.37	$	-
Granted		-		-		-
Exercised		-		-		-
Cancelled		-		-		-
Outstanding, May 31, 2024		4,250,000	$	0.37	$	-

~~Stock~~As ~~Options~~of May 31, 2024, the intrinsic value as these stock options amounted to $382. The exercise prices and information related to options under the 2011 Plan outstanding on May 31, 2024 is as follows:

A summary of the Company’s stock option activity for the nine-months ended November 30, 2023 is as follows:

Range of Exercise Price				Stock Options Outstanding				Stock Options Exercisable				Weighted Average Remaining Contractual Life				Weighted Average Exercise Price of Options Outstanding				Weighted Average Exercise Price of Options Exercisable
$	0.25 to $.50				4,250,000				4,250,000				1.92			$	0.37			$	0.37

(amounts in thousands, except share and per share data)	Number of Options			Exercise Price		Weighted Average Intrinsic Value
Outstanding, February 28, 2023		4,792,857		$	0.48	$	-
Granted		-			-		-
Exercised		-			-		-
Cancelled		(542,857	)		1.40		-
Outstanding, November 30, 2023		4,250,000		$	0.37	$	-

The Company granted no stock options under its stock option 2011 Plan for the three-month period ended May 31, 2023, and the three-month period ended February 29, 2024.

There was no intrinsic value as of November 30, 2023, as the exercise prices of these options were greater than the market price of the Company’s stock. The exercise prices and information related to options under the 2011 Plan outstanding on November 30, 2023 is as follows:15

Range of Exercise Price				Stock Options Outstanding				Stock Options Exercisable				Weighted Average Remaining Contractual Life				Weighted Average Exercise Price of Options Outstanding				Weighted Average Exercise Price of Options Exercisable
	$0.25 to $.50				4,250,000				4,250,000				1.92			$	0.37			$	0.37

Warrants

~~The~~A ~~Company~~summary ~~granted~~of nothe ~~stock~~Company’s ~~options~~warrant ~~under its~~activity ~~stock option 2011 Plan~~ for the ~~nine~~three-~~month~~months ~~period~~ ended ~~November~~May 3031, ~~2023~~2024, ~~and~~is ~~the~~as ~~nine-month period ended November 30, 2022.~~follows:

	Number of Warrants		Weighted Average Exercise Price
Outstanding, February 29, 2024		3,521,664	$	0.83
Granted		3,000,000		1.00
Exercised		-		-
Cancelled		-		-
Outstanding, May 31, 2024		6,521,664	$	0.77

~~Warrants~~As noted above, during the three-months ended May 31, 2024, the Company issued 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.

AThere ~~summary~~was no intrinsic value as of May 31, 2024, as the exercise prices of these warrants were greater than the market price of the Company’s ~~warrant~~stock. ~~activity~~The exercise prices and information ~~for~~related to the ~~nine-months~~warrants ~~ended~~as ~~November~~of 30May 24, ~~2023~~2024, is as follows:

		Number of Warrants				Exercise Price
Range of Exercise Price				Stock Warrants Outstanding				Stock Warrants Exercisable		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price of Warrants Outstanding		Weighted Average Exercise Price of Warrants Exercisable
Outstanding, February 28, 2023			3,564,764			$	0.86
$	0.50 to $1.40				3,521,664				3,564,764		1.47	$	0.83		0.83
Granted			60,000				0.50
$	1.00				3,000,000				3,000,000		3.00	$	1.00	$	1.00
Exercised			-				-
Cancelled			-				-
Outstanding, November 30, 2023			3,624,764			$	0.85

~~There~~NOTE ~~was~~10 – noRELATED ~~intrinsic~~PARTY value as of November 30, 2023, 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 November 30, 2023 is as follows:TRANSACTIONS

Range of Exercise Price				Stock Warrants Outstanding				Stock Warrants Exercisable				Weighted Average Remaining Contractual Life				Weighted Average Exercise Price of Warrants Outstanding				Weighted Average Exercise Price of Warrants Exercisable
	$0.50 to $1.40				3,624,764				3,564,764				5.02			$	0.85			$	0.85

As of May 31, 2024, and February 29, 2024, BetterSea LLC was an 8.4% and 8.8%, respectively, shareholder of the Company. For the three months ending on May 31, 2024 and 2023, the Company incurred consulting fees to BetterSea of $ 40 and $36, respectively. As of May 31, 2024, and February 29, 2024, a total of approximately $ 221 and $213 respectively, was due to BetterSea and included accounts payable and accrued expenses.

InNOTE ~~March~~11 ~~2022,~~– pursuant to an agreement with a note holder (see Note 5), the Company issued to Mr. Kopple 3,331,664 warrants to purchase the Company’s common stock with a term of 7 years and at an exercise price of $0.85 per share. The Company determined the fair value of the Kopple Warrants was $1,051 using a Black-Scholes model using the assumptions as set forth in the table below:CONTINGENCIES

Warrants issued during the Nine-Months Ended November 30, 2022
Exercise Price	$	0.85
Share Price	$	0.317
Volatility %		225	%
Risk-Free Rate		1.98	%
Expected Term (yrs.)		7.0
Dividend Rate		0	%

The Company is subject to legal proceedings and claims that have arisen in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and evaluates potential losses on such litigation if the amount of the loss is estimable and the loss is probable. However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty. Although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company for amounts in excess of management’s expectations, the Company’s financial statements for that reporting period could be materially adversely affected.

~~NOTE 10 – RELATED PARTY TRANSACTIONS~~16

AsIn ofJune ~~November~~2022, 30Melvin Gagerman, ~~2023~~the Company’s former CEO and ~~February~~CFO ~~28,~~whose ~~2023~~employment with Aura was permanently terminated in July 2019, brought suit against the Company for repayment ~~Bettersea~~of ~~LLC~~an ~~(“Bettersea”)~~allegedly unsecured demand promissory note in the principal amount of $82 which he claims was anentered 9%into in April 2014 and bears interest at a rate of 10% per annum. Despite the fact that, ~~respectively~~based on Gagerman’s allegations, ~~shareholder~~the innote was issued during a period when he was the Company’s CEO, CFO, Corporate Secretary and Chairman of Aura’s Board of Directors, Gagerman has stated that he does not possess a copy of the alleged promissory note. The Company disputes that any amount is presently owed to Gagerman and has filed a cross-complaint against him for, among things, conversion, violation of California Business& Professions Code §17200, and various breaches of fiduciary duty that the Company believes Gagerman committed against Aura, including without limitation, Gagerman’s actions in opposing the valid 2019 stockholder consent action (see Note 5).

~~For~~On March 26, 2019, various stockholders of the Company ~~nine~~controlling a combined total of more than 27.5 million shares delivered a signed written consent to the Company removing Ronald Buschur as a member of the Company’s Board and electing Cipora Lavut as a director of the Company. On March 27, 2019, those same stockholders delivered a further signed written consent to the Company removing William Anderson and Si Ryong Yu as members of the Company’s Board and electing Robert Lempert and David Mann as directors of the Company. These written consents represented a majority of the outstanding shares of the Company’s common stock as of March 26, 2019, and March 27, 2019, respectively. Because of Aura’s refusal to recognize the legal effectiveness of the consents, on April 8, 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 and declaring that Aura’s Board consists of Ms. Lavut, Mr. Mann, Dr. Lempert, Mr. Douglas and Mr. Diaz-~~months~~Versón, ~~ended~~Jr. ~~November~~On 30July 8, ~~2023~~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 ~~November~~consent 30(b) Ms. Lavut, ~~2022~~Mr. Mann and Dr. 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 ~~incurred~~Board ~~total~~of ~~fees~~Directors validly consists of Cipora Lavut, David Mann, Robert Lempert, Gary Douglas and Salvador Diaz- Versón, Jr. As a result of prior management’s unsuccessful opposition to ~~Bettersea~~this stockholders’ action filed in the Court of ~~$117~~Chancery, such stockholders may be potentially entitled to recoup their litigation costs from the Company under Delaware’s corporate benefit doctrine and/or ~~$119~~other legal provisions. To date, ~~respectively~~no final determination has been made as to the amount of recoupment, ~~for~~if ~~various~~any, ~~consulting~~to ~~services~~which such stockholders may be entitled.

AsNOTE of12 – ~~November~~SUBSEQUENT ~~30, 2023 and February 28, 2023, a total of $222 and $223, respectively, was due to Bettersea and included in accounts payable and accrued expenses.~~EVENTS

17Subsequent to May 31, 2024, the Company issued 2,480,000 shares of common stock for cash $235.

~~NOTE 11 – CONTINGENCIES~~17

~~The~~ITEM ~~Company is subject to legal proceedings and claims that have arisen in the ordinary course of business~~2. ~~Our~~MANAGEMENT’S ~~management~~DISCUSSION ~~evaluates~~AND ~~our~~ANALYSIS ~~exposure~~OF toFINANCIAL ~~these~~CONDITION ~~claims~~AND ~~and~~RESULTS ~~proceedings~~OF ~~individually and~~OPERATIONS (Amounts in ~~the aggregate and evaluates potential losses on such litigation if the amount of the loss is estimable and the loss is probable. However~~thousands, ~~the~~except ~~outcome~~share ~~of legal proceedings~~ and ~~claims~~per ~~brought~~share against the Company is subject to significant uncertainty. Although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company for amounts ~~in excess of management’s expectations, the Company’s financial statements for that reporting period could be materially adversely affected.~~)

InForward ~~2017,~~Looking the Company’s former COO was awarded approximately $238 in accrued salary and related charges by the California labor board. In August 2021, the Company reached a settlement by which the Company agreed to pay approximately $330, representing the principal award plus accrued interest. As of the time of this filing, the Company has paid approximately $318 toward the settlement amount. The remaining balance of approximately $12 is to be paid no later than January 31, 2024, and accrues interest of 10% per annum until paid. Statements

~~Between July~~This ~~2017~~Report ~~and~~contains ~~March~~forward-looking ~~2022,~~statements within the ~~Company~~meaning ~~was~~of ~~engaged~~the infederal ~~litigation~~securities ~~with~~laws. aStatements ~~former~~other ~~director,~~than ~~Robert~~statements ~~Kopple,~~of ~~relating~~historical tofact ~~more~~included ~~than~~in ~~$13~~this Report,~~000~~ ~~and~~including the ~~current~~statements ~~equivalent~~under of the ~~approximately~~heading 23“Management’s ~~million~~Discussion ~~warrants,~~and ~~exercisable~~Analysis ~~for seven years at a price~~ of ~~$0.10~~Financial ~~per~~Condition ~~share, which Mr. Kopple~~ and ~~his~~Results ~~affiliated~~of ~~entities (collectively “Kopple~~Operations,”~~) claimed should have been originally issued to them pursuant to~~ ~~various~~regarding ~~agreements~~future ~~with~~events ~~the~~or ~~Company~~prospects ~~entered~~are ~~into~~forward-looking ~~between 2013 and 2016~~statements. InThe ~~March~~words ~~2022~~“approximates,” ~~the~~“believes,” ~~Company~~“forecasts,” “expects,” ~~reached~~“anticipates,” a“estimates,” ~~settlement~~“intends,” ~~(the~~“plans” “~~Binding~~would,” ~~Term Sheet~~“could,”) ~~with Kopple that resolved all claims asserted against the Company without any admission~~“should,” ~~concession or finding of any fault~~“seek,” ~~liability~~“may,” or ~~wrongdoing~~other onsimilar ~~the~~expressions ~~part~~in ofthis ~~the Company. Under the terms of the settlement~~Report, ~~the~~as ~~Company agreed to pay an aggregate~~well ~~amount~~as ofother ~~$10,000~~statements ~~over~~regarding amatters ~~period~~that ofare ~~seven~~not ~~years,~~historical ~~including $3~~fact,~~000~~ ~~initial~~constitute ~~payment~~forward-looking tostatements. beWe ~~paid~~caution ininvestors ~~June~~that ~~2022.~~any forward-looking ~~$150~~statements ~~was~~presented ~~paid~~ in ~~June~~this ~~2022, and~~Report ~~the~~are ~~balance~~based ofon the ~~initial~~beliefs ~~payment~~ of $2,~~850~~ ~~was~~assumptions ~~extended~~made ~~to August 1~~by, ~~2023. The Company~~ and ~~Koppel~~information ~~have~~currently ~~agreed in principle to another~~available ~~extension of the deadlines for payments owed by the Company~~ to, ~~Kopple and intend to memorialize such an agreement in writing in January 2024~~us. Such ~~further~~statements ~~amendment~~are ~~will~~based ~~also~~on ~~indicate~~assumptions ~~that~~and ~~by such extension~~ the ~~Company~~actual isoutcome ~~not~~will inbe ~~default~~affected onby ~~the~~known ~~Binding~~and ~~Term~~unknown ~~Sheet as of November 30~~risks, ~~2023~~trends, uncertainties and ~~through~~factors ~~the date~~ that ~~the financial statements~~ are ~~issued.~~ ~~All~~beyond ~~amounts,~~our ~~including~~control ~~all~~or ~~accrued~~ability ~~interest and deferred fees, are~~ to bepredict. ~~paid~~Although nowe ~~later~~believe ~~than~~that ~~eight~~our ~~years~~assumptions ~~from~~are ~~the~~reasonable, ~~date~~they ofare ~~the~~not ~~initial~~guarantees ~~payment.~~of ~~The~~future ~~settlement~~performance ~~also~~and ~~provides~~some ~~for~~will ~~standard~~inevitably ~~mutual~~prove ~~general~~to ~~release~~be ~~provisions~~incorrect. ~~and~~As ~~includes~~a ~~customary representations~~result, ~~warranties, and~~our ~~covenants,~~actual ~~including~~future ~~certain~~results ~~increases~~may indiffer ~~the~~from ~~amount~~our ~~payable to the Kopple Parties~~ expectations, and ~~the~~those ~~right~~differences ofmay ~~such~~be ~~parties~~material. toAccordingly, ~~enter~~investors ~~judgment against~~should ~~the~~use ~~Company~~caution ~~if the Company remains~~ in ~~uncured~~relying ~~default~~on inforward-looking ~~its~~statements ~~payment~~to ~~obligations~~anticipate future ~~under~~results ~~the~~or ~~settlement (see Note 5)~~trends.

18Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include the following:

On● ~~March~~Our ~~26,~~ability ~~2019, various stockholders of the Company controlling a combined total of more than 27.5 million shares delivered a signed written consent~~ to ~~the~~generate ~~Company~~positive ~~removing~~cash ~~Ronald Buschur~~flow as a member of the Company’s Board and electing Cipora Lavut as a director of the Company. On March 27, 2019, those same stockholders delivered a further signed written consent to the Company removing William Anderson and Si Ryong Yu as members of the Company’s Board and electing Robert Lempert and David Mann as directors of the Company. These written consents represented a majority of the outstanding shares of the Company’s common stock as of March 26, 2019 and March 27, 2019, respectively. Because of Aura’s refusal to recognize the legal effectiveness of the consents, on April 8, 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 and declaring that Aura’s Board consists of Ms. Lavut, Mr. Mann, Dr. Lempert, Mr. Douglas and Mr. Diaz-Versón, Jr. 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. Lavut, Mr. Mann and Dr. 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. As a result of prior management’s unsuccessful opposition to this stockholders’ action filed in the Court of Chancery, such stockholders may be potentially entitled to recoup their litigation costs from the Company under Delaware’s corporate benefit doctrine and/or other legal provisions. To date, no final determination has been made as to the amount of recoupment, if any, to which such stockholders may be entitled.operations;

In● ~~June~~Our ~~2022,~~ability ~~Melvin~~to ~~Gagerman,~~obtain ~~the~~additional ~~Company’s former~~financing CEO and CFO whose employment with Aura was permanently terminated in July 2019, brought suit against the Company for repayment of an allegedly unsecured demand promissory note in the principal amount of $82 which he claims was entered into in April 2014 and bears interest at a rate of 10% per annum. Despite the fact that, based on Gagerman’s allegations, the note was issued during a period when he was the Company’s CEO, CFO, Corporate Secretary and Chairman of Aura’s Board of Directors, Gagerman has stated that he does not possess a copy of the alleged promissory note. The Company disputes that any amount is presently owed to ~~Gagerman~~fund ~~and~~our has filed a cross-complaint against him for, among things, conversion, violation of California Business& Professions Code §17200, and various breaches of fiduciary duty that the Company believes Gagerman committed against Aura, including without limitation, Gagerman’s actions in opposing the valid 2019 stockholder consent action.operations;

~~NOTE~~● ~~12 –~~The ~~SUBSEQUENT~~impact ~~EVENTS~~of economic, political and market conditions on us and our customers;

~~Subsequent~~● toThe ~~November~~impact ~~30, 2023, the Company issued 766,668 shares~~ of ~~common~~unfavorable ~~stock~~results ~~in exchange for cash proceeds~~ of ~~approximately~~legal ~~$253.~~proceedings;

19● 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;

~~ITEM~~● 2.Our ~~MANAGEMENT’S~~ability ~~DISCUSSION~~to ~~AND~~compete ~~ANALYSIS~~effectively OFagainst ~~FINANCIAL~~competitors ~~CONDITION~~offering ~~AND~~different ~~RESULTS OF OPERATIONS~~technologies;

~~(Amounts~~● inOur ~~thousands,~~business ~~except~~development ~~share~~ and ~~per share~~operating ~~amounts)~~development;

~~Forward~~● ~~Looking~~Our ~~Statements~~expectations of growth in demand for our products; and

~~This~~● ~~Report~~Other ~~contains~~risks ~~forward-looking~~described ~~statements within the meaning of the federal securities laws. Statements other than statements of historical fact included in this Report, including the statements~~ under the heading “~~Management’s~~Risk ~~Discussion and Analysis of Financial Condition and Results of Operations,~~Factors” ~~regarding~~ ~~future~~in ~~events~~Part ~~or prospects are forward-looking statements. The words “approximates~~II,” ~~“believes,”~~Item ~~“forecasts,” “expects,”~~1A ~~“anticipates,”~~of ~~“estimates,” “intends,” “plans” “would,” “could,” “should,” “seek,” “may,” or other similar expressions in~~ this Quarterly Report, ason ~~well as~~Form ~~other statements regarding matters that are not historical fact, constitute forward~~10-~~looking~~Q ~~statements.~~and Wethose ~~caution~~risks ~~investors~~discussed ~~that any forward-looking statements presented~~ in ~~this~~our ~~Report~~other ~~are~~filings ~~based~~with on the ~~beliefs~~Securities ~~of, assumptions made by,~~ and ~~information~~Exchange ~~currently available to~~Commission, ~~us.~~including ~~Such~~those ~~statements~~risks ~~are~~discussed ~~based~~under ~~on assumptions and~~ the ~~actual~~caption ~~outcome~~“Risk ~~will~~Factors” bein ~~affected by known and unknown risks, trends, uncertainties and factors that are beyond~~ our ~~control~~Annual orReport ~~ability~~on toForm ~~predict.~~10-K ~~Although~~for wethe ~~believe~~year ~~that~~ended ~~our~~February ~~assumptions~~29, ~~are reasonable~~2024, ~~they~~issued ~~are~~on ~~not~~June ~~guarantees of future performance and some will inevitably prove to be incorrect. As a result~~4, ~~our~~2024 ~~actual~~(as ~~future~~the ~~results~~same may ~~differ~~be updated from ~~our~~time ~~expectations, and~~to ~~those~~time ~~differences~~in ~~may~~subsequent bequarterly ~~material. Accordingly~~reports), ~~investors~~which ~~should~~discussion ~~use~~is ~~caution~~incorporated inherein ~~relying~~by onthis ~~forward-looking statements to anticipate future results or trends~~reference.

~~Some~~We ofdo ~~the~~not ~~risks~~intend ~~and~~to ~~uncertainties~~update ~~that~~or ~~may~~revise ~~cause~~any forward-looking ~~our~~statements, ~~actual~~whether ~~results~~because of new information, ~~performance~~future events or ~~achievements~~otherwise except to ~~differ~~the ~~materially~~extent ~~from~~required ~~those~~by ~~expressed~~law. orYou ~~implied~~should byinterpret all subsequent written or oral forward-looking statements ~~include~~attributable to us or persons acting on our behalf as being expressly qualified by the ~~following:~~cautionary statements in this Report. As a result, you should not place undue reliance on these forward-looking statements.

~~● Our ability to generate positive cash flow from operations;~~18

~~● Our ability to obtain additional financing to fund our operations;~~Overview

●Our ~~The~~business ~~impact~~is based on the exploitation of ~~economic~~our Axial Flux Induction technology for both 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. Aura’s axial flux induction technology provide: (i) higher motor/generator efficiency, ~~political~~that directly translated to lower cost for operations (ii) lighter and smaller machines that lead to lower manufacturing cost, (iii) higher reliability that results in less down time and maintenance cost, (iv) the only raw materials used for construction are copper and steel without any rare earth or any other types of permanent magnets. This immediately results in global availability without market ~~conditions~~risks as well as geopolitical risks of dependence on ussingle source, and (v) ~~our~~the ~~customers;~~use of approximately 60% less of copper than the equivalent radial flux induction machines, results in less needed mining to extract the needed copper with direct positive environmental impact.

●Our business model consists of three major components: (i) sales and marketing, iii) design and engineering and (iii) axial flux induction motors and generators manufacturing. Our sales and marketing approaches are composed of direct sales in North America and the use of agents and distributors in other areas. In addition, we are also exploring limited licensing of our technology to very large potential users as well as potential joint ventures with existing industrial motor/generator suppliers. The ~~impact~~second component of ~~unfavorable~~our ~~results~~business model is focused on the design, engineer and commercialize of ~~legal~~new ~~proceedings;~~commercial and industrial electric motors based on our axial flux induction for numerous applications such as pumps, compressors, and HVAC. We are also designing electric motors for both 2- and 4-wheel EV application, as well as, expending the product line for electric power generation. The third component of our business model is to set up manufacturing of the axial flux induction products being engineered and design.

●We ~~Our~~are ~~exposure~~currently tocompleting ~~potential~~a ~~liability~~250-kW ~~arising~~electric motor ~~from~~prototype ~~possible~~based ~~errors~~on our axial flux induction for EV applications. This activity is in conjunction with a large European tier 1 automotive supplier interest and ~~omissions,~~inputs. ~~breach~~We ofhave ~~fiduciary~~also ~~duty,~~in ~~breach~~May of2024 ~~duty~~completed the installation of ~~care,~~our ~~waste~~new ofsmaller ~~corporate~~10-kW ~~assets~~mobile ~~and/or~~power ~~similar~~generator ~~claims~~on ~~that~~a Polaris ~~may~~type beATV ~~asserted~~platform ~~against~~for ~~us;~~US military applications. We expect in the coming months to start shipping this new product to a specific customer. We are also currently in discussions for usage of our technology for numerous wind turbines applications.

●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 ~~ability~~engineering, toresearch ~~compete~~and ~~effectively~~development ~~against~~costs ~~competitors~~for ~~offering~~the ~~different~~three ~~technologies;~~months ended May 31, 2024, were approximately $98.4.

●In ~~Our~~Fiscal 2020 ~~business~~stockholders ~~development~~of the Company successfully removed Ronald Buschur, William Anderson and ~~operating~~Si ~~development;~~Ryong Yu from the Company’s Board of Directors and elected Ms. Cipora Lavut, Mr. David Mann and Dr. Robert Lempert as directors of the Company in their stead. 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. Gagerman as President and Mr. Mann succeeded Mr. Gagerman as CFO. Dr. Lempert was appointed as Secretary of the Company by the Board of Directors also in July 2019.

~~● Our expectations of growth in demand for our products; and~~19

●Critical ~~Other~~Accounting ~~risks~~Policies ~~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 28, 2023, issued on May 26, 2023 (as the same may be updated from time to time in subsequent quarterly reports), which discussion is incorporated herein by this reference.Estimates

WeOur domanagement’s ~~not~~discussion ~~intend~~and toanalysis of ~~update~~our orfinancial ~~revise~~conditions ~~any~~and ~~forward-looking~~ results of operations are based upon our financial statements, ~~whether~~which ~~because~~have been prepared in accordance with accounting principles generally accepted in the United States of ~~new~~America. ~~information,~~The ~~future~~preparation ~~events~~of orfinancial ~~otherwise~~statements ~~except~~requires management to make estimates and disclosures on the ~~extent~~date ~~required~~of bythe ~~law~~financial statements. ~~You~~In ~~should~~preparing ~~interpret~~our financial statements, we have made our best ~~all~~estimates ~~subsequent~~and ~~written~~judgments orof ~~oral~~certain ~~forward-looking~~amounts included in the financial statements. ~~attributable~~We touse usauthoritative orpronouncements, ~~persons~~historical ~~acting~~experience and other assumptions as the basis for making judgments. For these key estimates and assumptions, we made appropriate accounting estimates based on ~~our~~the ~~behalf~~facts and circumstances available as ~~being~~of ~~expressly~~the ~~qualified by~~reporting date. To the ~~cautionary~~extent that there are significant differences between these estimates and actual results, our financial statements inmay ~~this~~be ~~Report~~materially affected. AsSignificant aestimates ~~result~~include assumptions made for inventory reserve, ~~you~~impairment ~~should~~testing ~~not~~of ~~place~~long-lived ~~undue~~assets, ~~reliance~~the valuation allowance for deferred tax assets, assumptions used in valuing derivative liabilities, assumptions used in valuing share-based compensation, and accruals for potential liabilities. Amounts could materially change in the future. Actual results could differ from those estimates. There were no changes to our critical accounting policies described in the financial statements included in our Annual Report on ~~these~~Form ~~forward~~10-~~looking~~K for the fiscal year ended February 29, 2024, that impacted our condensed financial statements and related notes included herein.

20Revenue Recognition

~~Overview~~The Company recognizes revenue in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. In accordance with ASC 606, we recognize revenue, net of discounts, for our generator sets at time of product delivery to the domestic distributor (i.e. point-in-time), which also corresponds to the passage of legal title to the customer and the satisfaction of our performance obligations to the customer.

Our business is based on the exploitation of our Axial Flux Induction solution known as the AuraGen® for commercial and industrial applications and the VIPER for military applications. Our business model consists of two major components: (i) sales and marketing, (ii) design and engineering. Our sales and marketing approaches are composed of direct sales in North America and the use of agents and distributors in other areas. In North America, our primary focus is in (a) mobile exportable power applications, (b) EV applications, (c) U.S. Military applications and (d) industrial applications. The second component of our business model is focused on the design of new products and engineering support for the sales activities described above. The engineering support consists of the introduction of new features for our AuraGen®/VIPER solution such as higher power/torque solutions, and different input and output voltages (DC and AC input and output versions).Inventories

InInventories ~~Fiscal~~are ~~2020~~valued ~~stockholders~~at of the ~~Company~~lower ~~successfully removed~~of ~~Ronald~~cost ~~Buschur~~(first-in, first-out) ~~William~~or ~~Anderson~~net ~~and~~realizable Sivalue, ~~Ryong~~on Yuan ~~from~~average ~~the~~cost ~~Company’s Board of Directors and elected Ms~~basis. ~~Cipora~~We ~~Lavut,~~review ~~Mr. David~~the ~~Mann~~components ~~and Dr. Robert Lempert as directors~~ of ~~the~~inventory ~~Company~~on ina ~~their~~regular ~~stead.~~basis ~~See Item 3, Legal Proceedings~~ for ~~more~~excess ~~information.~~or ~~Also,~~obsolete ininventory ~~Fiscal~~based ~~2020,~~on ~~Melvin~~estimated ~~Gagerman~~future ––usage ~~Aura’s CEO~~ and ~~CFO since 2006 –– was replaced~~sales. InWhen ~~July~~evidence ~~2019~~exists ~~Ms.~~that ~~Lavut succeeded Mr. Gagerman as President and Mr. Mann succeeded Mr. Gagerman as CFO. Dr. Lempert was appointed as Secretary of~~ the ~~Company by~~net ~~the~~realizable ~~Board~~value of ~~Directors~~inventory ~~also~~is inlower ~~July~~than ~~2019. In the second half of Fiscal 2020, the Company began significantly increasing~~ its ~~engineering,~~ ~~manufacturing and marketing activities. From July 8~~cost, ~~2019 through~~ the ~~end~~difference ofis ~~Fiscal~~recognized ~~year~~as ~~2022 (February 28, 2022), we shipped more than 140 units to customers (more than~~ a ~~ten-fold~~loss ~~increase over Fiscal 2019). Although our operations were impacted~~ in ~~Fiscal 2022 and Fiscal 2021 by~~ the ~~COVID-19~~period ~~pandemic, during these periods we continued to expand our engineering and manufacturing capabilities. See “Item 1. Business. Impact of the COVID-19 Pandemic” included~~ in ~~our~~which ~~Annual~~it ~~Report on Form 10-K for fiscal 2022 for information regarding the impact of COVID-19 on our operations~~occurs. ~~Our~~Once ~~engineering,~~inventory ~~research~~has ~~and~~been ~~development~~written ~~costs for the nine months ended November 30~~down, ~~2023, and~~it ~~the~~creates ~~nine months ended November 30, 2022 were approximately $228 and $411, respectively. During the three months ended May 31, 2021, we relocated all administrative offices and operations to~~ a new ~~state-of-the-art facility consisting of approximately 18,000 square feet~~ incost ~~Lake~~basis ~~Forest,~~for ~~California.~~inventory ~~This~~that ~~new~~may ~~facility~~not isbe ~~wholly~~subsequently ~~occupied~~written ~~by Aura~~up.

~~During~~Derivative ~~Fiscal~~Financial 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 $30,000 of debt. Robert Kopple, our former Vice Chairman of the Board, was the only significant unsecured note holder that did not executed formal agreements regarding the restructure of his debt. See “Item 3. Legal Proceedings” included in our Annual Report on Form 10-K for Fiscal 2022 filed with the SEC on June 21, 2022, and Part II, Other Information Item 1, contained in this Quarterly Report for information regarding the dispute and settlement with Mr. Kopple regarding these transactions. In March 2022, the Company reached a settlement that resolves the various claims asserted against us by Mr. Kopple and his affiliated entities (collectively the “Kopple Parties”). 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 is to be paid within approximately four months of the settlement date, after which, interest will accrue on the unpaid balance at a rate of 6%, compounded annually. All amounts, including all accrued interest, are to be paid no later than eight years from the date of the initial payment. The Kopple Parties have also received seven-year warrants to purchase up to an aggregate of 3,331,664 shares of our common stock at a price of $0.85 per share. The settlement also provides for standard mutual general release provisions and includes customary representations, warranties, and covenants, including certain increases in the amount payable to the Kopple Parties and the right of such parties to enter judgment against the Company if the Company remains in uncured default in its payment obligations under the settlement.Instruments

21The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

~~Critical Accounting Policies and Estimates~~Inflation

~~Our~~Higher ~~management’s~~inflation, ~~discussion~~the ~~and~~actions ~~analysis of~~by ~~our~~the ~~financial~~Federal ~~conditions~~Reserve ~~and~~Bank ~~results~~to ofaddress inflation, ~~operations~~most ~~are~~notably ~~based~~continuing ~~upon~~increases ~~our~~in ~~financial~~interest ~~statements~~rates, ~~which~~and ~~have~~rising ~~been~~energy ~~prepared~~prices increate ~~accordance with~~uncertainty ~~accounting~~about ~~principles generally accepted in~~ the ~~United~~future ~~States of America~~economic environment. The ~~preparation~~Company ofexpects ~~financial~~that ~~statements requires management to make estimates and disclosures on~~ the ~~date~~impact of ~~the~~these ~~financial~~issues ~~statements.~~will Incontinue ~~preparing~~to ~~our~~evolve. ~~financial~~The ~~statements,~~Company webelieves ~~have~~these ~~made~~factors ~~our best~~impacted ~~estimates~~the ~~and~~Company’s ~~judgments~~business ~~of certain amounts included~~ in ~~the~~fiscals ~~financial~~2023 ~~statements. We use authoritative pronouncements, historical experience~~ and ~~other~~2024 ~~assumptions as the basis for making judgments. For these key estimates~~ and ~~assumptions,~~will wecontinue ~~made~~to ~~appropriate~~impact ~~accounting estimates based on~~ the ~~facts~~Company’s ~~and~~business ~~circumstances~~in ~~available~~fiscal ~~as of the reporting date~~2025. ToThe ~~the~~implications of ~~extent~~higher ~~that~~government ~~there~~deficits ~~are significant differences between these estimates~~ and ~~actual results~~debt, ~~our~~tighter ~~financial~~monetary ~~statements may be materially affected. Significant estimates include assumptions made for inventory reserve~~policy, ~~impairment~~and ~~testing~~higher of long-~~lived~~term ~~assets,~~interest ~~the~~rates ~~valuation~~may ~~allowance~~drive ~~for~~a ~~deferred~~higher ~~tax~~cost ~~assets,~~of ~~assumptions used in valuing~~capital ~~derivative liabilities, assumptions used in valuing share-based compensation, and accruals~~ for ~~potential liabilities. Amounts could materially change in~~ the ~~future.~~business ~~Actual~~and ~~results~~an ~~could~~increase ~~differ from those estimates. There were no changes to our critical accounting policies described~~ in the ~~financial~~Company’s ~~statements~~operating ~~included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2023, that impacted our condensed financial statements and related notes included herein~~expenses.

~~Revenue Recognition~~20

The Company recognizes revenue in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. In accordance with ASC 606, we recognize revenue, net of discounts, for our generator sets at time of product delivery to the domestic distributor (i.e. pointCOVID-~~in-time), which also corresponds to the passage of legal title to the customer and the satisfaction of our performance obligations to the customer.~~19

~~Inventories~~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.

~~Inventories~~Results ~~are valued at the lower~~ of cost (first-in, first-out) or net realizable value, on an average cost basis. We review the components of inventory on a regular basis for excess or obsolete inventory based on estimated future usage and sales. When evidence exists that the net realizable value of inventory is lower than its cost, the difference is recognized as a loss in the period in which it occurs. Once inventory has been written down, it creates a new cost basis for inventory that may not be subsequently written up.Operations

~~Derivative~~Three ~~Financial~~months ~~Instruments~~ended May 31, 2024, compared to three months ended May 31, 2023

~~The~~Net ~~Company~~revenue ~~evaluates~~was ~~its~~$47 ~~financial~~for ~~instruments to~~the ~~determine~~three-months ifended May ~~such~~31, ~~instruments~~2024, ~~are~~compared ~~derivatives~~to or$10 ~~contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted~~ for ~~as liabilities,~~ the ~~derivative instrument is initially recorded at its fair value and is then re~~three-~~valued~~months atended ~~each reporting~~May ~~date~~31, ~~with~~2023. ~~changes~~Revenues incontinue ~~the~~to ~~fair~~be ~~value~~negatively ~~reported~~impacted indue ~~the~~to ~~statements~~a ofgenerally low ~~operations.~~level ~~The classification~~ of ~~derivative~~resources ~~instruments, including~~on ~~whether~~our ~~such~~legacy ~~instruments~~products ~~should~~as bewell ~~recorded~~ as ~~liabilities~~our orshift asto ~~equity,~~the isdevelopment ~~evaluated~~and atproduction of the ~~end~~prototype offor ~~each~~our ~~reporting~~new ~~period~~product line. ~~Derivative instrument~~We ~~liabilities~~cannot ~~are~~project ~~classified~~with inconfidence the ~~balance~~timing ~~sheet as current~~ or ~~non-current~~amount ~~based~~of onrevenue ~~whether~~that orwe ~~not~~can ~~net-cash~~expect ~~settlement~~until of the ~~derivative~~ ~~instrument~~prototype ~~could~~is becompleted, ~~required~~which ~~within~~should be 12in ~~months~~Fiscal ~~of the balance sheet date~~2025.

~~Inflation~~Cost of goods sold was $47 in the three-months ended May 31, 2024, compared to $15 for the three-months ended May 31, 2023. This resulted in a gross profit of $0 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.

~~Higher inflation~~Engineering, ~~the~~research ~~actions by the Federal Reserve Bank to address inflation, most notably continuing increases in interest rates,~~ and ~~rising~~development ~~energy prices create uncertainty about the~~expenses ~~future~~were ~~economic~~$310 ~~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 ~~2023 and~~ the ~~first nine~~ three-months ofended ~~2024~~May ~~and~~31, ~~will continue to impact the Company’s business in~~ 2024 ~~and 2025. The implications of higher government deficits and debt~~, ~~tighter~~compared ~~monetary~~to ~~policy,~~$207 ~~and higher long-term interest rates may drive a higher cost of capital~~ for the ~~business~~three-months ~~and~~ended anMay ~~increase~~31, ~~in the Company’s operating expenses~~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. A decreased by $112 or 22% in the three-month period ending May 31, 2024, compared to the three-months ended May 31, 2023.

~~COVID-19~~Interest expense decreased by $153 to $275 from $428 for the three months ending May 31, 2024, and 2023 respectively.

AsLiquidity 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~~Capital ~~lingering effects on the Company’s business or results of operations, financial condition, or liquidity.~~Resources

~~Results~~Going ~~of Operations~~Concern

~~Three~~During ~~months~~the three-month period ended ~~November~~May 3031, ~~2023~~2024, the ~~compared~~Company recognized net loss of $15,258 from operation and used cash in operating activities of $784. 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 ~~three~~continue ~~months~~as ~~ended~~a ~~November~~going 30concern within one year of the date that the financial statements are issued. In addition, the ~~2022~~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.

Net revenue was $47 for the three-months ended November 30, 2023 compared to $54 for the three-months ended November 30, 2022. 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 2024.21

~~Cost~~In ofthe ~~goods~~event ~~sold~~the ~~was~~Company ~~$98~~is inunable ~~the~~to ~~three-months~~generate ~~ended~~profits ~~November~~and ~~30,~~is ~~2023~~unable ~~compared~~ to ~~$26~~obtain financing for ~~the~~its ~~three-months~~working ~~ended~~capital ~~November 30~~requirements, ~~2022.~~it ~~This~~may ~~resulted~~have into acurtail ~~gross~~its ~~loss~~business offurther ~~$52~~or ~~compared~~cease tobusiness aaltogether. ~~gross~~Substantial ~~profit~~additional ofcapital ~~$28~~resources ~~for~~will ~~the~~be ~~three-months~~required ~~ended~~to ~~November~~fund ~~30,~~continuing ~~2022.~~expenditures ~~The gross loss and~~ related ~~gross~~to ~~margin~~our ~~loss~~research, ~~for both the three-month~~development, ~~periods~~manufacturing ~~were~~and ~~largely~~business ~~influenced~~development byactivities. ~~the~~The ~~low~~Company’s ~~volume~~continuation ofas ~~shipments~~a ingoing ~~this~~concern ~~quarter~~is ~~which~~dependent ~~reduced~~upon ~~our~~its ability to generate ~~fully~~sufficient ~~absorb~~cash ~~fixed~~flow ~~operating costs.~~to Inmeet ~~addition,~~its ~~the~~obligations ~~gross~~on ~~margin~~a ~~loss~~timely inbasis, ~~the~~to ~~three-months~~retain ~~ended~~its ~~November~~current 30financing, ~~2023~~to ~~included~~obtain anadditional ~~increase~~financing, and inultimately ~~the~~to ~~inventory~~attain ~~reserve of $32~~profitability.

~~Engineering,~~During ~~research~~the ~~and~~next ~~development~~twelve ~~expenses~~months we intend to ~~were~~continue ~~$34~~to inattempt to increase the ~~three-months~~Company’s ~~ended~~operations ~~November~~and ~~30,~~focus ~~2023,~~on ~~compared~~the tosale ~~$229~~of ~~for~~our ~~the~~AuraGen®®/VIPER ~~three-months~~products ~~ended~~both domestically ~~November~~and ~~30,~~internationally ~~2022~~and to add to our existing management team. ~~The~~In ~~decrease~~addition, ~~was due~~we plan to ~~decreased~~source ~~development~~new bysuppliers for manufacturing operations, rebuild the engineering ~~staff~~and ofsales teams, and to the ~~new~~extent ~~prototype~~appropriate, ~~for~~utilize ~~our~~third ~~new~~party ~~product~~contractors ~~line~~to support asthe weoperation. ~~get~~We ~~closer~~anticipate being able to ~~completion~~obtain new sources of funding to support these actions in the upcoming fiscal year.

~~Selling,~~At ~~general~~May ~~and~~31, ~~administration~~2024, ~~(“SG&A”) expenses~~we ~~decreased~~had bycash of approximately $~~113~~297, orcompared ~~19%~~ to ~~$494~~cash inof ~~the~~approximately ~~three-month~~$124 ~~period~~at ~~ending~~February ~~November 30~~29, ~~2023~~2024. ~~compared~~Subsequent to ~~the~~May ~~three-months~~31, ~~ended November 30~~2024, ~~2022.~~the ~~The~~Company ~~decrease~~issued ~~was~~920,000 ~~principally~~shares ~~attributed to lower legal costs~~ of ~~$142,~~common stock ~~and~~in ~~lower~~exchange ~~selling~~for ~~fees~~cash proceeds of $5approximately ~~due to lower sales~~$235.

~~Interest~~Prior ~~expense~~to ~~increased~~Fiscal ~~$71~~2020, ~~during~~in ~~the~~order ~~three-months~~to maintain liquidity, ~~ended~~we ~~November~~relied 30upon external sources of financing, ~~2023~~principally ~~compared~~equity financing and private indebtedness. We have no bank line of credit and will require additional debt or equity financing to ~~the~~fund ~~three-months~~ongoing ~~ended~~operations. ~~November~~Based 30on a cash flow analysis performed by management, ~~2022~~we estimate ~~due~~that ~~principally~~we will need an additional $6,000 to maintain existing operations for Fiscal 2025 and increase the ~~settlement~~volume of shipments to customers. We cannot assure the ~~Kopple~~reader ~~litigation which~~that ~~resulted~~additional financing will be available nor that the commercial targets will be met in the amounts ~~conversion~~required to keep the business operating. The issuance of additional shares of equity in connection with such financing could dilute the ~~Kopple~~interests ~~notes~~of ~~payable~~our ~~into~~existing astockholders, ~~new~~and ~~note.~~such ~~The~~dilution ~~new~~could ~~note~~be ~~did~~substantial. ~~not~~If ~~accrue~~we ~~interest~~cannot ~~until~~raise ~~January~~the ~~2023~~needed funds, we will also sobe ~~the~~forced ~~three-months~~to ~~ended~~make ~~November~~further 30substantial reductions in our operating expenses, ~~2022~~which ~~did~~could ~~not~~adversely ~~include~~affect ~~any~~our ~~Kopple-based~~ability ~~interest~~to implement our current business plan and ultimately our viability as a company.

~~Nine~~Between ~~months~~July ~~ended~~2017 ~~November~~and 30March 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 August 1, 2023. ~~compared~~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 ~~nine~~be ~~months~~paid ~~ended~~no ~~November~~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 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.

Net revenue was approximately $57 for the nine-months ended November 30, 2023 (“Fiscal Q3 2024”) compared to approximately $70 for the nine-months ended November 30, 2022 (“Fiscal Q3 2023”). Revenues continue to be negatively due to a generally low level of resources of our Legacy products as we concentrate on building our new product line. To increase revenues which were impacted by the economic effects of the pandemic, the Company needs to augment its marketing and sales efforts substantially towards our new product line to be released in early Fiscal 2025.22

~~Cost~~See of“Item ~~goods sold was approximately $194 in Fiscal Q3 2024 compared to approximately $56 in Fiscal Q3 2023~~3. ~~This~~Legal ~~resulted~~Proceedings” ~~in a gross loss of approximately $137 or a gross~~and ~~margin~~“Part ~~loss of 239%~~IV, ~~and~~Item ~~approximately $~~15, ~~gross~~Notes ~~profit~~9 and a17 ~~gross~~to ~~margin~~the ~~gain~~Financial ofStatements” ~~21%,~~included in ~~Fiscal~~the Q3Company’s ~~2024~~Annual ~~and~~Report ~~Fiscal~~on Q3Form ~~2023,~~10-K ~~respectively.~~filed ~~The~~with ~~gross~~the ~~loss~~SEC ~~and~~on ~~related~~May ~~gross~~31, ~~margin~~2024 ~~loss~~ for ~~both~~information ~~the~~regarding ~~nine-month periods were largely influenced by~~ the ~~low~~dispute ~~volume of~~and ~~shipments~~settlement inwith ~~both quarters which reduced our ability to fully absorb fixed operating costs~~Mr. InKopple ~~addition,~~regarding ~~the~~these ~~gross margin loss in Fiscal Q3 2024 included an increase in the inventory reserve of $32~~transactions.

Engineering, research and development expenses were approximately $528 in Fiscal Q3 2024, compared to approximately $640 in the Fiscal Q3 2023, or a decrease of 18%. Fiscal Q2 2024 includes a higher engineering staff level and a concentrated effort to optimize the Company’s several new designs of its generators and motors. Fiscal Q3 2023 reflects the Company’s initial efforts to increase its development program, including costs for engineering several new designs, as well as increased testing of its new electronic control unit (“ECU”).

Selling, general and administration (“SG&A”) expenses decreased by approximately $684 or 34% to approximately $1,344 in the Fiscal Q3 2024 period from approximately $2,028 in the Fiscal Q3 2023 period. The decrease during Fiscal Q3 2024 was principally attributed to lower legal costs of $548 almost exclusively related to the settlement of the Kopple litigation in the Fiscal Q1 2023 period. Accounting fees were also down by $31. Selling costs were down by $94 due to lower sales.

Interest expense in Fiscal Q3 2024 increased approximately $681 or 139%, to approximately $1,171 from approximately $489 in the Fiscal Q3 2023 period due principally to the settlement of the Kopple litigation which resulted in the conversion of the Kopple notes payable into a new note. The new note did not accrue interest until January 2023, so FQ3 2023 included no Kopple-based interest. In Fiscal Q3 2024, $472 of interest was accrued on the unpaid balance of the restructured Kopple note, and in addition, the Company recorded $390 of extension and forbearance fees, which are being categorized as interest.

Other income in the Fiscal Q3 2024 period was approximately $9 which represents the favorable change in the fair value of the derivative warrant liability for the nine-months, measured as of November 30, 2023. Comparatively, the revaluation of the derivative warrant liability in Fiscal Q3 2023, measured as of November 30, 2022, resulted in a favorable change in the fair value of approximately $560 for the nine-month period.

Net loss for the nine-month period of Fiscal Q3 2024 increased by approximately $589, to a loss of approximately $3,171 from a net loss of approximately $2,582 in the nine-month period of Fiscal Q3 2023. This was attributed to (i) a significantly lower net gain related to derivative liability valuation of approximately $551 and (ii) higher interest expense of approximately $681, which were partially offset by (i) a decreased operating loss of $644 principally attributable to the lower legal expenses related to the Kopple settlement.

Liquidity and Capital Resources

Going Concern

During the nine-month period ended November 30, 2023, the Company reported a net loss of $3,171 and used cash in operating activities of approximately $2,178. 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 28, 2023, 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.

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, 2023, we had cash of approximately $45, compared to cash of approximately $15 at February 28, 2023. Subsequent to November 30, 2023, the Company issued 766,668 shares of common stock in exchange for cash proceeds of approximately $253. Working capital deficit at November 30, 2023 was a $14,600 deficit as compared to an $13,700 deficit at February 28, 2023. At November 30, 2023 and February 28, 2023, we had no accounts receivable.

Prior to Fiscal 2020, in order to maintain liquidity, we relied upon external sources of financing, principally equity financing and private indebtedness. We have no bank line of credit and will require additional debt or equity financing to fund ongoing operations. 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 customers. We cannot assure the reader that additional financing will be available nor that the commercial targets will be met in the amounts required to keep the business operating. The issuance of additional shares of equity in connection with such financing could dilute the interests of our existing stockholders, and such dilution could be substantial. If we cannot raise the needed funds, 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 (the “Binding Term Sheet”) 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. The Company and Koppel have agreed in principle to another extension of the deadlines for payments owed by Aura to Plaintiffs and intend to memorialize such an agreement in writing on or before January 31, 2024. Such further amendment will also indicate that by such extension the Company is not in default on the Binding Term Sheet (See Part I, Note 5 to the Financial Statements).

See “Item 3. 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 26, 2023 for information regarding the dispute and settlement with Mr. Kopple regarding these transactions.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we are not required to provide disclosure under this Item 3.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our President and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Report. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange Act of 1934 Rules 13a-15(f). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of August 31, 2023.

Changes in Internal Control over Financial Reporting

There have been no other changes in our internal control over financial reporting during our fiscal quarter ended ~~November~~May 3031, ~~2023~~2024, not previously identified in our Annual Report on ~~Form~~ Form 10-K, for the fiscal year ended February 2829, ~~2023~~2024 and issued on May 2631, ~~2023~~2024 which have materially affected or are reasonably likely to to materially affect our internal control over financial reporting.

2623

PART II - OTHER INFORMATION

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

ITEM 1. Legal Proceedings

We are subject to the legal proceedings and claims discussed below as well as certain other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and evaluates potential losses on such litigation if the amount of the loss is estimable and the loss is probable. However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty. Although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company for amounts in excess of management’s expectations, the Company’s financial statements for that reporting period could be materially adversely affected.

In 2017, the Company’s former COO was awarded approximately $238 in accrued salary and related charges by the California labor board. In August 2021, the Company reached a settlement by which the Company agreed to pay approximately $330, representing the principal award plus accrued interest. As of the time of this filing, the Company has paid ~~approximately~~the ~~$317~~full amount toward the settlement amount. The remaining balance ~~of approximately $13~~ is ~~to be paid no later than February 28, 2024 and accrues interest of 10% per annum until paid.~~zero

~~Between~~In ~~July 2017 and~~ March ~~2022~~2024, the Company ~~was~~ ~~engaged~~and ~~in litigation with a former director, Robert~~ Kopple, ~~relating~~again ~~to more than $13,000 and~~ amended the ~~current~~note ~~equivalent of the approximately 23 million warrants, exercisable for seven years at a price of $0~~payable.10 ~~per~~The ~~share,~~amendment ~~which Mr. Kopple and his affiliated entities~~ (~~collectively the “Kopple Parties”~~i) ~~claimed~~replaced ~~should~~the ~~have~~requirement ~~been originally issued~~ to ~~them~~pay ~~pursuant to various agreements with~~ the ~~Company entered to between 2013-2016. In March 2022~~$3,850 past ~~the~~due ~~Company~~principal ~~reached~~balance ~~a settlement~~ with the ~~Kopple~~requirement Parties that resolved 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, the Company agreed to pay ~~an aggregate amount of~~ $102,000 due ~~over~~December ~~a period of seven years~~15, ~~including $3~~2024,~~000~~ ~~initial~~effectively ~~payment to~~extending ~~be paid in June 2022. $150 was paid in June 2022, and~~ the ~~balance of the initial~~ payment of $21,850 ~~was extended~~ to ~~August~~future 1,periods; ~~2023, In~~(ii) ~~exchange~~increased ~~for~~ the ~~extension, the Company was required to pay $195 in extension and forbearance fees in cash and $530 in accrued forbearance~~stated ~~fees. Beginning in January 2023,~~ interest ~~accrues on the unpaid balance at a~~ rate ~~of 6~~to 10%,; ~~compounded~~(iii) ~~annually.~~added All amounts, including all accrued interest and deferred fees, are to be paid no later than eight years from the date of the initial payment. The Kopple Parties have also received seven-year warrants to purchase up to an aggregate of 3,331,664 shares of our common stock at a ~~price~~fee of $~~0.85~~15 monthly ~~per share.~~until ~~The settlement also provides for standard mutual general release provisions and includes customary representations, warranties, and covenants, including certain increases in~~ the ~~amount payable to the Kopple Parties and the right of such parties to enter judgment against the~~ Company ifmakes ~~the~~a ~~Company~~principal ~~remains in uncured default in its~~ payment ~~obligations under the settlement. As~~ of ~~the date of this report, the Company has not yet paid the full~~ $~~3,000~~2 million ~~installment due to Kopple, having made an initial payment of $150 in June 2022. The Company and Koppel have agreed in principle to another extension of the deadlines for payments owed~~ by ~~Aura to Plaintiffs and intend to~~December ~~memorialize such an agreement in writing on or before January 31,~~ 2024.; ~~Such further amendment will also indicate that by such extension Aura is not in default on the Binding Term Sheet~~ (~~See Part I, Note 5 to the Financial Statements~~iv)~~.On~~ ~~March~~effective 26August 30, ~~2019~~2024, ~~various stockholders of~~ the Company ~~controlling~~will agrant ~~combined~~Kopple ~~total~~a ofconversion ~~more~~right ~~than~~that ~~27.5~~gives ~~million~~Kopple ~~shares~~the ~~delivered~~option ato ~~signed~~be ~~written~~able ~~consent~~ to ~~the Company removing~~convert ~~Ronald Buschur as a member of~~ the ~~Company’s~~note ~~Board~~payable ~~and~~into ~~electing~~equity ~~Cipora Lavut as a director~~ of the Company~~. On~~ ~~March~~at ~~27, 2019, those same stockholders delivered~~ a ~~further~~conversion ~~signed~~price ~~written consent to the Company removing William Anderson and Si Ryong Yu as members~~ of the ~~Company’s~~lower ~~Board and electing Robert Lempert and David Mann as directors~~ of ~~the Company~~$1.00 per ~~These~~share ~~written~~or 50% ~~consents represented a majority~~ of the 10 day volume ~~outstanding~~weighted ~~shares~~average price of the Company’s common stock; as(v) ofduring ~~March 26,~~Fiscal ~~2019~~2025, ~~and~~will ~~March 27,~~require ~~2019,~~the ~~respectively. Because~~Company ~~of Aura’s refusal~~ to ~~recognize~~pay 20% ~~the legal effectiveness~~ of all ~~the~~collected ~~consents,~~revenues onwithin ~~April 8,~~10 ~~2019,~~days ~~the stockholders filed suit in the Court~~ of ~~Chancery of~~ the ~~State~~end of ~~Delaware~~each ~~pursuant~~fiscal toquarter; ~~Section 225~~(vi) ofwill ~~the~~require ~~Delaware General Corporations Law, seeking an order confirming~~ the ~~validity~~Company ofto ~~the~~pay ~~consents~~Kopple 20% ~~and declaring that Aura’s Board consists~~ of ~~Ms. Lavut,~~any ~~Mr. Mann, Dr. Lempert,~~amount ~~Mr. Douglas~~raised ~~and~~in ~~Mr. Diaz-Versón, Jr.~~new Oncapital ~~July~~in ~~8, 2019~~ the ~~Court~~form of ~~Chancery~~equity, ~~entered~~debt ~~final~~or ~~judgment~~convertible indebt ~~favor~~above of$3.5 million; ~~the stockholder plaintiffs, confirming that~~ (avii) ~~Ronald~~reduces ~~Buschur, Si Ryong Yu and William Anderson had been validly removed by~~ the ~~holders~~exercise ~~of a~~price ~~majority~~ of the warrants ~~Company’s~~granted ~~outstanding~~to ~~stock~~Kopple ~~acting~~in byMarch ~~written~~2022 ~~consent~~from ~~(b) Ms~~$0.85 per ~~Lavut,~~share ~~Mr.~~to ~~Mann and Dr~~$0.50 per ~~Lempert~~share; ~~had been validly elected by the holders of a majority of the Company’s outstanding stock acting by written consent,~~ and (cvii) extends the ~~Company’s~~warrant ~~Board~~expiration date offrom ~~Directors~~March ~~validly consists of Cipora Lavut~~8, ~~David Mann~~2029, ~~Robert~~to ~~Lempert,~~March ~~Gary Douglas and Salvador Diaz-Versón~~31, Jr2031. The AsCompany awill ~~result of~~account ~~prior~~for ~~management’s unsuccessful opposition to~~ this ~~stockholders’~~amendment ~~action filed~~ in the ~~Court~~first ofquarter ~~Chancery,~~ended ~~such~~March ~~stockholders may be potentially entitled to recoup their litigation costs from the Company under Delaware’s corporate benefit doctrine and/or other legal provisions. To date~~31, ~~no final determination has been made as to the amount of recoupment~~2024, ~~if any, to which such stockholders~~for ~~may~~fiscal beyear ~~entitled~~2025.

On March 26, 2019, various stockholders of the Company controlling a combined total of more than 27.5 million shares delivered a signed written consent to the Company removing Ronald Buschur as a member of the Company’s Board and electing Cipora Lavut as a director of the Company. On March 27, 2019, those same stockholders delivered a further signed written consent to the Company removing William Anderson and Si Ryong Yu as members of the Company’s Board and electing Robert Lempert and David Mann as directors of the Company. These written consents represented a majority of the outstanding shares of the Company’s common stock as of March 26, 2019, and March 27, 2019, respectively. Because of Aura’s refusal to recognize the legal effectiveness of the consents, on April 8, 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 and declaring that Aura’s Board consists of Ms. Lavut, Mr. Mann, Dr. Lempert, Mr. Douglas and Mr. Diaz-Versón, Jr. 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. Lavut, Mr. Mann and Dr. 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. As a result of prior management’s unsuccessful opposition to this stockholders’ action filed in the Court of Chancery, such stockholders may be potentially entitled to recoup their litigation costs from the Company under Delaware’s corporate benefit doctrine and/or other legal provisions. To date, no final determination has been made as to the amount of recoupment, if any, to which such stockholders may be entitled.

In June 2022, Melvin Gagerman, the Company’s former CEO and CFO whose employment with Aura was permanently terminated in July 2019, brought suit against the Company for repayment of an allegedly unsecured demand promissory note in the principal amount of $82 which he claims was entered into in April 2014 and bears interest at a rate of 10% per annum. Despite the fact that, based on Gagerman’s allegations, the note was issued during a period when he was the Company’s CEO, CFO, Corporate Secretary and Chairman of Aura’s Board of Directors, Gagerman has stated that he does not possess a copy of the alleged promissory note. The Company disputes that any amount is presently owed to Gagerman and has filed a cross-complaint against him for, among things, conversion, violation of California Business& Professions Code §17200, and various breaches of fiduciary duty that the Company believes Gagerman committed against Aura, including without limitation, Gagerman’s actions in opposing the valid 2019 stockholder consent action.

ITEM 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Item 1A, “Risk Factors,” of the Company’s Fiscal ~~2023~~2024 Annual Report on Form 10-K issued on ~~May~~June 264, ~~2023~~2024.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the ~~nine~~three-months ended ~~November~~May 3031, ~~2023~~2024, we the Company issued 64,~~593~~455,~~940~~ 600 shares of common stock for ~~cash proceeds of~~ approximately $21,~~175.~~117 ~~The~~in ~~proceeds~~net ~~from the sale were used for general working capital purposes~~cash.

ITEM 3. Defaults Upon Senior Securities.

None

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information.

None.

2825

ITEM 6. Exhibits

31.1		Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.

31.2		Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.

32.1		Certification of Principal Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to § 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

2926

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: January 16, 2024	AURA SYSTEMS, INC.
Date: July 22, 2024	AURA SYSTEMS, INC.
	(Registrant)
	By:	/s/ Cipora Lavut
		Cipora Lavut
		President

3027

2024 Yes No 0.01 0.01 0.03 0.03 100396097 87433942 90759938 98247106 Kopple Note In fiscals 2013 through 2018, the Company issued notes payable to Robert Kopple and associated entities (collectively “Kopple”) in the aggregate principal amount of $6,107. Robert Kopple is the former Vice-Chairman of the Company’s Board of Directors and is a current shareholder in the Company. Between July 2017 and March 2022, the Company was engaged in litigation with Kopple relating to more than $13,000 of principal and accrued interest due under the notes, and the equivalent of the approximately 23 million warrants. On March 14, 2022, the Company reached an agreement with Kopple and resolved all remaining litigation between them, including all amounts owed to Kopple under the notes. Under the terms of the settlement, the Company agreed to issue a new note and pay Kopple an aggregate amount of $10,000, including $3,000 initially due in June 2022, and $1,000 to be paid annually for seven years after the initial $3,000 is paid. Additionally, the settlement agreement granted Koppel a five year, fully vested warrant exercisable into 3,331,664 shares of the Company’s common stock at a price of $0.85 per share with a fair value of $1,100. The Company assessed the settlement with Kopple under ASC 470 and determined that the guidance under troubled debt restructuring should apply. The carrying value of the restructured note remains the same as before the restructuring, reduced only by the fair value of the warrants issued in connection with the transaction. The Company determined that the future undiscounted cash flows of the restructured new Kopple note exceeded the carrying value, and accordingly, no gain was recognized, and no adjustment was made to the carrying value of the debt, other than the adjustment for the fair value of the warrants. Interest expense on the new Kopple note is computed using a new effective rate that equates the present value of the future cash payments specified by the new terms with the carrying value of the debt. In June 2022, the first installment of $3,000 became due, of which $150 was paid and $2,850 is still outstanding. Subsequently, the note was amended several times to extend the payment date of the remaining balance of $2,850 of the initial payment through January 2023, and the Company incurred extension and forbearance fees totaling $335.In January 2023, pursuant to the terms of the amended note payable, the Company started accruing interest on the outstanding note balance at a rate of 6% per annum, compounded annually. As of February 28, 2023, outstanding principal balance amounted to $10,915. During the nine months ended November 30, 2023, the note was again amended multiple times to extend the payment term of the remaining balance of $2,850 of the initial payment and installment payment of $1,000, originally due in June 2023, through August 1, 2023. As a result of these amendments, the Company incurred additional extension and forbearance fees totaling $390 and adjustment to principal balance of $23. As of November 30, 2023, the outstanding principal balance of amounted to $10,938. As of November 30, 2023 and the date of this report, the Company and Kopple are currently in negotiations for another extension of the deadline for payment of the $3,850, consisting of the $2,850 initial payment and the installment payment of $1,000. Currently, Kopple has agreed in principle that such further amendment will also indicate that the Company is not in default of the agreement as of November 30, 2023, and through the date that the financial statements are issued. Based upon the foregoing no adjustments have been made to reflect the Kopple debt in default. The settlement agreement with Kopple provides for certain increases in the amounts payable to Kopple and the right of such parties to enter a judgement against the Company if the Company remains in unsecured default in its payment obligations. Pursuant to the settlement agreement, the Company is also subject to certain affirmative and negative covenants such as periodic submission of financial statements to Koppel and restrictions on future financing and investing activities, as defined in the agreement, including the covenant to not create any indebtedness that is senior in right of payment to the Kopple debt. Management believes such covenants are normal for this type of transaction and that management believes meeting these covenants will not affect operations and the Company. Note payable-Gagerman Melvin Gagerman, the Company’s former CEO and CFO whose employment was permanently terminated in July 2019, claims that in April 2014 the Company issued an unsecured demand promissory note to him in the amount of $82 that bears interest at a rate of 10% per annum. Gagerman claims that this note has not been repaid to date and is now owed. In June 2022, Gagerman brought suit against the Company for repayment of this alleged note. Despite the fact that, based on Gagerman’s allegations, the note was issued during a period when Gagerman was the Company’s CEO, CFO, Corporate Secretary and Chairman of the Company’s Board of Directors, Gagerman has stated that he does not possess a copy of the alleged promissory note. The Company disputes that any amount is presently owed to Gagerman. Additionally, the Company has filed a cross-complaint against Gagerman for, among things, conversion, violation of California Business & Professions Code §17200, and various breaches of fiduciary duty that the Company believes Gagerman committed against the Company. Although the Company disputes Gagerman’s claims, under the guidance of ASC 450 – Contingencies, the Company has recorded the claimed note payable $82 and corresponding accrued interest. Jiangsu Shengfeng Note On November 20, 2019, the Company reached an agreement with a former joint venture partner Jiangsu Shengfeng regarding the return of $700 that had been advanced to the Company in prior years. As a result, in November 2019, the Company issued a non-interest-bearing promissory note for $700 to be paid over an 11-month period beginning March 15, 2020, through February 15, 2021. As of November 30, 2023 and February 28, 2023, the outstanding balance of this note payable amounted to $700. 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Yes No 0.01 0.14 106140039 96036536 Note payable-Kopple In fiscals 2013 through 2018, the Company issued notes payable to Robert Kopple and associated entities (collectively “Kopple”) in the aggregate of $6,107. Robert Kopple is the former Vice-Chairman of the Company’s Board of Directors and is a current shareholder in the Company. The notes were unsecured, bear interest at rates ranging from 5% and 15% per annum and were due in fiscal 2014 through fiscal 2018. Beginning in 2017, Kopple brought suit against the Company for repayment of the notes. On March 14, 2022, the Company reached an agreement with Kopple to resolve all remaining litigation between them, including all amounts owed to Kopple under the notes. Under the terms of the settlement, the Company agreed to issue a new note and pay Kopple an aggregate amount of $10,000 to be paid in installment, of which, $3,000 was due in June 2022, and the remaining $7,000 to be annually for seven years at $1,000 per year. Additionally, the settlement agreement granted Kopple warrants exercisable into 3,331,664 shares of the Company’s common stock at a price of $0.85 per share. The Company used the Black-Scholes option pricing model to compute the fair value of the warrants of $1,051. The settlement provides for certain increases in the amounts payable to Kopple and the right of such parties to enter judgement against the Company if the Company remains in uncured default in its payment obligations. Interest on the new note also began accruing in January 2023 at 6% per annum. The Company assessed the settlement with Kopple under ASC 470 and determined that the guidance under troubled debt restructuring should apply as the Company was experiencing financial difficulties and Kopple granted a concession. Per ASC 470-60, the carrying value of the restructured note remains the same as before the restructuring, reduced only by the fair value of the warrants issued in connection with the transaction. The Company determined that the future undiscounted cash flows of the restructured new Kopple note exceeded the carrying value, and accordingly, no gain was recognized, and no adjustment was made to the carrying value of the debt, other than the adjustment for the fair value of the warrants. In June 2022, the first installment of $3,000 became due, of which $150 was only paid. Subsequently, the note was amended several times to extend the payment date of the remaining balance of $2,850 of the initial payment, and the Company incurred extension and forbearance fees totaling $335 that was recorded as part of interest expense. In January 2023, pursuant to the terms of the amended note payable, the Company started accruing interest on the outstanding note balance at a rate of 6% per annum, compounded annually. As of February 29, 2024, outstanding principal balance amount of $10,915. 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 on or before December 15, 2024; (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 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; (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; (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 Company accounted for the amended terms of the note payable as a debt extinguishment because the present value of the cash flows under the amended debt terms is greater by 10% compared to the present value of the remaining cash flows under the original existing debt terms. Furthermore, the amendment granted a conversion option to the note holder and is deemed substantially different from the existing note. The Company recorded a loss on debt extinguishment of $19,324 as a result of this amendment, which is the difference between (i) the fair value of the amended convertible note payable of $9,261, combined with the fair value of the conversion option of $22,194 (see Note 8), and the change in the fair value of the amended warrants of $33, and (ii) the net carrying amount of the existing note payable of $12,164. As a result, the net carrying amount of the existing note payable of $12,164 was derecognized and amended note payable was recorded at its fair value of $9,261. As the Kopple new note payable is now convertible to common stock, for financial reporting purposes, the new note payable of $9,261 is now reported as a convertible note payable (see Note 3). Note payable-Gagerman Melvin Gagerman, the Company’s former CEO and CFO whose employment was permanently terminated in July 2019, claims that in April 2014 the Company issued an unsecured demand promissory note to him in the amount of $82 that bears interest at a rate of 10% per annum. Gagerman claims that this note has not been repaid to date and is now owed. In June 2022, Gagerman brought suit against the Company for repayment of this alleged note. Despite the fact that, based on Gagerman’s allegations, the note was issued during a period when Gagerman was the Company’s CEO, CFO, Corporate Secretary and Chairman of the Company’s Board of Directors, Gagerman has stated that he does not possess a copy of the alleged promissory note. The Company disputes that any amount is presently owed to Gagerman. Additionally, the Company has filed a cross-complaint against Gagerman for, among things, conversion, violation of California Business & Professions Code §17200, and various breaches of fiduciary duty that the Company believes Gagerman committed against the Company. Although the Company disputes Gagerman’s claims, under the guidance of ASC 450 – Contingencies, the Company has recorded the claimed note payable $82 and corresponding accrued interest. Jiangsu Shengfeng Note On November 20, 2019, the Company owned 49% of a Chinese joint venture named Jiangsu Shengfeng. The Joint venture advanced Aura $700 in prior years for products that the Company failed to deliver to the joint venture. The Company reached an agreement with the joint venture regarding the return of $700 that had been advanced to the Company in prior years. As a result, in November 2019, the Company issued a non-interest-bearing promissory note for $700 to the joint venture to be paid over an 11-month period beginning March 15, 2020, through February 15, 2021. The joint venture stopped operations in 2020 as a result of COVID-19 and never resumed or restarted operations. In fiscal 2024 the joint venture was dissolved and liquidated. As of May 31, 2024, and 2023, the outstanding balance of this note payable amounted to $700. 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