AURA SYSTEMS INC SEC 10-K Report

Aura Systems, Inc., a company specializing in the development and commercialization of Axial Flux Induction Motor (AAFIM) technology, has released its annual Form 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces. Aura Systems is focused on leveraging its innovative technology for electric vehicle applications and mobile power generation, positioning itself as a key player in these growing markets.

Financial Highlights

Net Revenue: $50 million. Revenues continue to be negatively impacted due to a generally low level of resources on legacy products and a shift to the development and production of numerous prototypes for the new product line.

Gross Profit: $21 million. The gross profit improved compared to a gross loss in the previous fiscal year, largely due to a reduction in the cost of goods sold.

Net Loss: $21.1 million. The increase in net loss was due to increased stock-based compensation expense, the recording of a loss on debt extinguishment to a related party, and the change in fair value of the derivative liability.

Business Highlights

Axial Flux Induction Technology: Aura Systems has developed and commercialized Axial Flux Induction Motor (AAFIM) technology, which offers high efficiency, compact design, and lightweight construction without the use of permanent magnets or rare earth elements. This technology is positioned as a strategic choice for electric vehicle applications due to its superior power-to-weight ratio and efficiency.

Product Development: The company completed the design and fabrication of a 250-kW oil-cooled electric motor prototype and a 250-kW air-cooled generator using axial flux induction technology. Additionally, designs for a 5-horsepower motor for swimming pools and a 10-kW motor for farm irrigation applications were completed, with production expected in the coming quarters.

Military Applications: Aura's axial flux induction technology has been used in military applications, with over 3,000 systems shipped for various military uses. The company has developed a new 10 kW mobile power generator that is smaller and more efficient, generating interest from the US military.

Joint Ventures and Partnerships: Aura entered a joint venture with a Chinese company to distribute AuraGen® mobile power products in China. However, the joint venture was dissolved in 2023 due to operational challenges and the impact of COVID-19.

Research and Development: Aura invested approximately $1.2 million in R&D during Fiscal 2025, focusing on the development of new electric motor and generator designs, including the filing of three new patent applications related to axial flux induction machines.

Manufacturing and Facilities: The company operates an 18,000 square foot facility in Lake Forest, California, and plans to expand operations, which will require additional space. Aura's manufacturing process emphasizes the use of copper and steel, avoiding reliance on rare earth materials.

Competitive Edge: Aura's axial flux induction machines offer significant advantages over traditional radial flux and permanent magnet machines, including higher efficiency, lower cost, and reduced reliance on rare earth materials. The technology is particularly suited for electric vehicles and mobile power applications.

Future Outlook: Aura plans to continue expanding its product line and market presence, focusing on electric vehicle applications and mobile power generation. The company is also exploring potential joint ventures and licensing opportunities to leverage its axial flux induction technology.

Strategic Initiatives

Strategic Focus: The company is focused on exploiting its Axial Flux Induction technology for electric motors and generators, with a business model that includes sales and marketing, design and engineering, and manufacturing. They are exploring limited licensing of their technology and potential joint ventures with existing industrial motor/generator suppliers.

Recent Developments: Recent strategic initiatives include the completion of a 250-kW electric motor prototype for EV applications and a 10-kW mobile power generator for military applications.

Capital Management: The company issued 13,704,800 shares of common stock during the year ended February 28, 2025, raising approximately $3,430,000 for general corporate working capital purposes. They have not paid any dividends and do not anticipate paying any in the foreseeable future. The company did not repurchase any shares of its common stock during the fiscal years ended February 28, 2025, and February 29, 2024.

Future Outlook: The company faces substantial doubt regarding its ability to continue as a going concern due to a net loss of $21.1 million and a stockholders’ deficit of $37.6 million as of February 28, 2025. They estimate needing an additional $6 million to maintain operations for Fiscal 2026 and increase shipment volumes. The company plans to continue developing prototypes and expanding its product line, with expectations to complete these prototypes in Fiscal 2026.

Challenges and Risks

Commercialization Challenges: Aura Systems faces significant challenges in the commercialization of its Axial Flux Induction technology, particularly in establishing an effective distribution network and strategic OEM relationships. The company's focus on a single technology line rather than diversifying into other areas makes it highly dependent on the commercial success of its axial flux induction motors and generators.

Litigation and Financial Risks: The company has been involved in costly and time-consuming litigation with shareholders, which has had a material adverse effect on its business and financial condition. The company's ability to continue as a going concern is in doubt due to substantial net losses, negative cash flows, and a significant stockholders' deficit.

COVID-19 Impact: The company also faces risks related to the COVID-19 pandemic, which has disrupted global vehicle production and supply chains, potentially leading to delays in product distribution and loss of sales.

Indebtedness and Financial Flexibility: The company is exposed to risks associated with its substantial indebtedness and obligations to pay interest, which could limit its financial flexibility and competitive position.

Market Risks: Aura Systems is exposed to market risks, including the volatility of trading on the OTC Markets, which could depress the market price of its common stock and make it difficult for stockholders to resell their shares. The company is also subject to risks related to inflation and rising energy prices, which could increase operating expenses and impact the company's financial performance.

Credit Market Uncertainty: The uncertainty in the credit markets, driven by the impacts of the COVID-19 pandemic, increased interest rates, and inflation, poses a significant risk to the company's ability to secure necessary funding.

SEC Filing: AURA SYSTEMS INC [ AUSI ] - 10-K - Jun. 13, 2025