Aura Systems Inc 10-Q for FY2027 Q1
Aura Systems Inc (AUSI)
About this 10-Q
Aura Systems Inc filed this 10-Q on September 22, 2026, covering the quarter ended May 31, 2026 (FY2027 Q1).
Headline figures
Quarter ended May 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2000
- down 98.9% from $185K a year earlier
- Net loss
- $8.41M
- compared with a net loss of $2.84M a year earlier
- Diluted EPS
- -$0.06
- compared with -$0.02 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the quarterly period ended
OR
For the transition period from ______________ to______________
Commission File Number:
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices and zip code)
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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: ☒ 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 ☐ ☒
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 | ☐ |
| ☒ | 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 August 31, 2026 | |
| Common Stock, par value $0.0001 per share |
AURA SYSTEMS, INC.
INDEX
i
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AURA SYSTEMS, INC.
CONDENSED BALANCE SHEETS
(Amounts in thousands, except share data)
| May 31, 2026 |
February 28, 2026 |
|||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Inventories | ||||||||
| Prepaid and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| Security deposit | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Shareholders’ Deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued interest | ||||||||
| Customer advances | ||||||||
| Convertible notes payable, current portion - past due | ||||||||
| Convertible note payable-related party, including $ | ||||||||
| Notes payable, current portion | ||||||||
| Notes payable-related party, including $ | ||||||||
| Operating lease liabilities, current portion | ||||||||
| Derivative liability | ||||||||
| Total current liabilities | ||||||||
| Notes payable, net of current portion | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Shareholders’ deficit | ||||||||
| Common stock: $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and shareholders’ deficit | $ | $ | ||||||
See accompanying notes to these financial statements.
1
AURA SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except share and per share data)
| Three Months Ended May 31, |
||||||||
| 2026 | 2025 | |||||||
| Net revenue | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Engineering, research and development | ||||||||
| Selling, general and administration | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Interest expense, net (including $ | ( | ) | ( | ) | ||||
| Loss on reclassification of equity-classified instruments to derivative liability | ( | ) | ||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted loss per share | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted weighted-average shares outstanding | ||||||||
See accompanying notes to these financial statements.
2
AURA SYSTEMS, INC.
CONDENSED STATEMENTS OF SHAREHOLDERS’ DEFICIT
(Unaudited)
(Amounts in thousands, except share data)
| Three Months Ended May 31, 2026 | ||||||||||||||||||||
| Common Stock Shares |
Common Stock Amount |
Additional Paid-In Capital |
Accumulated Deficit |
Total Shareholders’ Deficit |
||||||||||||||||
| Balance, February 28, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Reclassification of equity-classified instruments to derivative liability | ( | ) | ( | ) | ||||||||||||||||
| Common shares issued for cash | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance, May 31, 2026 (unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Three Months Ended May 31, 2025 | ||||||||||||||||||||
| Common Stock Shares |
Common Stock Amount |
Additional Paid-In Capital |
Accumulated Deficit |
Total Shareholders’ Deficit |
||||||||||||||||
| Balance, February 28, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Common shares issued for cash | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance, May 31, 2025 (unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
See accompanying notes to these unaudited financial statements.
3
AURA SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands, except share data)
| Three Months Ended May 31, |
||||||||
| 2026 | 2025 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Loss on reclassification of equity-classified instruments to derivative liability | ||||||||
| Change in fair value of derivative liability | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Inventory | ||||||||
| Prepaid and other current assets | ||||||||
| Operating lease right-of-use asset | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accrued interest | ||||||||
| Customer advances | ||||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Principal payments of convertible notes payable | ( | ) | ||||||
| Principal payments of notes payable | ( | ) | ( | ) | ||||
| Cash provided by financing activities | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents-beginning of period | ||||||||
| Cash and cash equivalents-end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Reclassification of equity-classified instruments to derivative liability | $ | $ | ||||||
See accompanying notes to these unaudited financial statements.
4
AURA SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
THREE MONTHS ENDED MAY 31, 2026 AND 2025
(Unaudited)
(Amounts in thousands, except share and per share amounts)
NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Aura Systems, Inc. (“Aura”, “We” or the “Company”), a Delaware corporation, is engaged in the development, commercialization, and sale of products, systems, and components, using its patented and proprietary electromagnetic technology. Aura develops and sells AuraGen® axial flux mobile induction power systems to the industrial, commercial, and defense mobile power generation markets.
Basis of Presentation
The accompanying unaudited condensed financial statements as of and for the three months ended May 31, 2026 and 2025, 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, 2026, was derived from the Company’s audited Financial Statements as of February 28, 2026, included in the Company’s Annual Report on Form 10-K filed with the SEC on September 10, 2026. These financial statements should be read in conjunction with that report. The results of operations for the period ended May 31, 2026, may not necessarily be indicative of the results of the full fiscal year ending February 28, 2027.
The Company’s fiscal year ends on the last calendar day of February. Accordingly, the current fiscal year will end on February 28, 2027, and is referred to as “Fiscal 2027”. Our prior fiscal years ended February 28, 2026, February 28, 2025, and February 29, 2024, and are referred to as “Fiscal 2026”, “Fiscal 2025,” and “Fiscal 2024”, respectively.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not yet generated sufficient revenues to fund operations, has experienced recurring operating losses, and relies on debt and equity offerings to generate working capital.
During the three-month period ended May 31, 2026, the Company recognized a net loss of $
If the Company is unable to generate profits and obtain financing for its working capital requirements, it may have to further curtail its business or cease operations 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 depends on its ability to generate sufficient cash flow to meet its obligations on a timely basis, retain its current financing, obtain additional financing, and ultimately attain profitability.
5
Use of Estimates
The preparation of financial statements in conformity with U.S. 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 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.
Concentration of Credit and Other Risks
Financial instruments that may subject the Company to concentration of credit risk include cash and accounts receivable. The Company deposits cash with a limited number of financial institutions. Balances held at any one financial institution may at times exceed Federal Deposit Insurance Corporation insurance limits of up to $
During the three months ended May 31, 2026, one customer accounted for
As of May 31, 2026, four vendors accounted for
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers.
Our primary source of revenue is manufacturing and delivering axial flux induction motors and generator sets used primarily in mobile power applications. Our principal sales channels are domestic end users and international distributors and agents. 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, warrants, and shares of common stock to employees and non-employees in non-capital raising transactions for services and financing costs. The Company measures share-based compensation cost at the grant date, based on the estimated fair value of the award, and recognizes it as expense over the requisite service period. The Company recognizes compensation expense for non-employees in the same period and manner as if it had paid cash for the services.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine whether they are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments accounted for as liabilities, the Company initially records the instrument at fair value and then remeasures it at each reporting date, with changes in 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 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.
6
The Company uses Level 3 inputs for its valuation methodology for the derivative liabilities as their fair values were determined by using a Black-Scholes pricing model. The Company’s derivative liabilities are adjusted to reflect fair value at each reporting date, with any increase or decrease in the fair value being recorded in the statement of operations.
To determine the number of authorized but unissued shares available to satisfy outstanding convertible securities, the Company uses a sequencing method to prioritize its convertible securities as prescribed by ASC 815-40-35. At each reporting date, the Company reviews its convertible securities to determine whether their classification is appropriate.
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 on the lowest-level input that is significant to the fair value measurement. Under ASC 820, Fair Value Measurement and Disclosures, 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 fair value because of 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 May 31, 2026 and February 28, 2026:
| May 31, 2026 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liability – convertible note conversion option | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| February 28, 2026 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liability – convertible note conversion option | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The Company estimated the fair value of the derivative liability using the Black-Scholes Model.
7
The following table provides a roll-forward of the derivative liability measured at fair value on a recurring basis using unobservable level 3 inputs for the period ended May 31, 2026, as follows:
| Fair Value of Derivative Liability | ||||
| February 28, 2026 | $ | |||
| Reclassification of equity-classified instruments to derivative liability | ||||
| Change in fair value of derivative liability | ||||
| May 31, 2026 | $ | |||
Loss per share
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.
For the three months ended May 31, 2026 and 2025, 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:
| May 31, 2026 | May 31, 2025 | |||||||
| Warrants | ||||||||
| Options | ||||||||
| Convertible notes | ||||||||
| Total | ||||||||
Recent Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses which includes amendments that require disclosure in the notes to financial statements of specified information about certain costs and expenses, including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. The amendments are effective for the Company’s annual periods beginning January 1, 2027, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is evaluating this ASU to determine its impact on the Company’s disclosures.
Other recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission have not had and are not expected by management to have a material impact on the Company’s present or future financial statements.
8
NOTE 2 – CONVERTIBLE NOTES PAYABLE
Convertible notes payable consisted of the following:
| May 31, 2026 | February 28, 2026 | |||||||
| (a) Convertible notes payable 1 – past due | $ | $ | ||||||
| (b) Convertible notes payable 2 – past due | ||||||||
| Total | $ | $ | ||||||
| (a) |
| (b) |
At May 31, 2026, the total outstanding convertible notes payable of $
NOTE 3 – CONVERTIBLE NOTE PAYABLE-RELATED PARTY
Convertible note payable – related party consisted of the following:
| May 31, 2026 | February 28, 2026 | |||||||
| (a) Convertible note payable to former director – past due | $ | $ | ||||||
| (b) Convertible note payable to director – past due | ||||||||
| (c) Convertible note payable – Kopple | ||||||||
| Total | $ | $ | ||||||
| (a) | Convertible note payable-former Director |
| (b) | Convertible note payable-Director |
| (c) | Convertible note payable-Kopple |
| The convertible note payable to Robert Kopple and associated entities (collectively “Kopple”), as amended in March 2024, is secured by tangible and intangible assets of the Company, bears interest at a rate of |
9
The convertible note (i) requires $
During the year ended February 28, 2026, the $
At February 28, 2025, Kopple alleged that the Company failed to comply with certain non-monetary terms, including failing to hold a shareholders’ meeting by August 1, 2024, or otherwise secure additional shares needed to allow the exercise of Kopple’s conversion rights, and failure to pay
The Company disputes Kopple’s alleged failures to perform the non-monetary terms and is currently in discussion with Kopple to resolve this matter.
The Company is also subject to certain affirmative and negative covenants, such as periodic submission of financial statements to Kopple and restrictions on future financing and investment activities, as defined in the agreement, including a covenant not to 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 meeting them will not affect the Company’s operations.
As of May 31, 2026, the total outstanding convertible notes payable-related party of $
NOTE 4 – NOTES PAYABLE
Notes payable consisted of the following:
| May 31, 2026 | February 28, 2026 | |||||||
| Secured notes payable | ||||||||
| (a) Note payable – EID loan | $ | $ | ||||||
| (b) Notes payable – vehicle | ||||||||
| (c) Note payable – software license | ||||||||
| (d) Notes payable – machinery and other equipment | ||||||||
| Unsecured notes payable | ||||||||
| (e) Note payable – other | ||||||||
| Total | $ | $ | ||||||
| Current | ( | ) | ( | ) | ||||
| Non-current | $ | $ | ||||||
(a)
During Fiscal 2021, the Company received a $
10
(b)
During Fiscal 2022, the Company issued a note payable to purchase a vehicle for $
(c)
During Fiscal 2024, the Company obtained a loan of $
During Fiscal 2026, the Company obtained a loan of $
The aggregate total of the note payable-software licenses as of May 31, 2026 and February 28, 2026, amounted to $
(d)
During Fiscal 2025, the Company obtained a $
During Fiscal 2026, the Company obtained a $
The aggregate total of the note payable-machinery and other equipment as of May 31, 2026 and February 28, 2026, amounted to $
(e)
As of May 31, 2026, and February 28, 2026, the Company has one note payable due to an individual issued in September 2015 that is payable on demand with an interest rate of
11
NOTE 5 – NOTES PAYABLE-RELATED PARTIES
Notes payable-related parties consisted of the following:
| May 31, 2026 | February 28, 2026 | |||||||
| Note payable-Jiangsu Shengfeng – past due | $ | $ | ||||||
On November 20, 2019, the Company owned
NOTE 6 – ACCRUED INTEREST
Accrued interest consisted of the following:
| May 31, 2026 | February 28, 2026 | |||||||
| Convertible notes payable (past due) (see Note 2) | $ | $ | ||||||
| Convertible notes payable - related party – Kopple (see Note 3) | ||||||||
| Convertible notes payable - related party – Others (see Note 3) | ||||||||
| Notes payable (see Note 4) | ||||||||
| Total | $ | $ | ||||||
NOTE 7 – LEASES
During the three months ended May 31, 2026 and 2025, lease costs totaled $
As of February 28, 2026, operating lease liabilities totaled $
As of May 31, 2026, the weighted average remaining lease terms for an operating lease are
In June 2026, the Company amended its facility lease agreement to extend the lease term to August 2028 and revise the monthly lease payments. The amendment will be accounted for as a lease modification in June 2026, including remeasurement of the lease liability and corresponding right-of-use asset using the discount rate in effect on the modification date.
NOTE 8 – DERIVATIVE LIABILITY
In March 2024, pursuant to the amendment of the Kopple note payable (see Note 3), 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 $
12
The Company has also issued other convertible notes payable and warrants that provide for the issuance of common stock upon conversion or exercise. As discussed in Note 9, when the number of shares issuable under the Company's outstanding convertible securities and warrants exceeds the number of authorized and unissued shares available, the Company applies a sequencing policy — allocating remaining authorized shares first to warrants, then to convertible notes payable — to determine which instruments are covered. As of February 28, 2026, the Company's remaining authorized and unissued shares, after this allocation, were sufficient to cover all such other convertible notes payable and warrants, which accordingly remained classified in equity.
During the three months ended May 31, 2026, the number of shares potentially issuable under the Company's outstanding convertible notes payable and warrants, together with other outstanding commitments to issue common stock, increased to the point that the Company's remaining authorized and unissued shares were no longer sufficient to cover all of these instruments. As a result, in addition to the Kopple conversion feature, the conversion and exercise features of certain other convertible notes payable and warrants that had previously been classified in equity were reclassified as derivative liabilities as of May 31, 2026. The Company intends to seek stockholder approval to increase its authorized shares of common stock. If additional shares are authorized, the Company will reassess the classification of these instruments at that time.
The Company measures the derivative liability at fair value using a Black-Scholes option-pricing model. The fair value of the derivative liability was $
The following tables summarize the derivative liability:
| May 31, 2026 | February 28, 2026 | |||||||
| Stock price | $ | $ | ||||||
| Risk free interest rate | % | % | ||||||
| Expected volatility | % | % | ||||||
| Expected life in years | ||||||||
| Expected dividend yield | % | % | ||||||
| Number of common stock issuable | ||||||||
| Fair value of derivative liability | $ | $ | ||||||
NOTE 9 – SHAREHOLDERS’ DEFICIT
Common Stock
On May 31, 2026 and February 28, 2026, the Company had
During the three months ended May 31, 2026, the Company issued
During the three months ended May 31, 2025, the Company issued
On May 31, 2026, the Company had insufficient authorized and unissued shares to satisfy all its commitments to deliver shares. The Company’s sequencing policy resulted in the allocation of authorized and unissued shares in the following order at May 31, 2026 (i) warrants, and (ii) convertible notes payable and convertible note payable-related party. The sequence is based upon reclassifying securities with the earliest maturity date first. This sequencing and the lack of sufficient authorized shares resulted in the Company recording the conversion option of the warrants, convertible notes payable, and convertible note payable-Kopple as a derivative liability (see Note 8).
13
Stock Options
A summary of the Company’s stock option activity is as follows:
| Number of Shares | Exercise Price | Weighted Average Intrinsic Value | ||||||||||
| Total options, February 28, 2026 | $ | $ | ||||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Expired | ||||||||||||
| Total options, May 31, 2026 | $ | $ | ||||||||||
| Exercisable, May 31, 2026 | $ | $ | ||||||||||
There was intrinsic value as of May 31, 2026, as the exercise prices of these options were greater than the market price of the Company’s stock.
| 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 | |||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
Warrants
A summary of the Company’s warrant activity is as follows:
| Number of Warrants | Exercise Price | |||||||
| Outstanding, February 28, 2026 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Expired | ||||||||
| Outstanding, May 31, 2026 | $ | |||||||
There was intrinsic value as of May 31, 2026, as the exercise prices of these warrants were greater than the market price of the Company’s stock.
| 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 | |||||||||||||||||
| $ | $ | |||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
NOTE 10 – RELATED PARTY TRANSACTIONS
As of May 31, 2026 and February 28, 2026, BetterSea LLC (“BetterSea”) was a
As of May 31, 2026 and February 28, 2026, accrued expenses include accrued payroll due to officers of $
14
NOTE 11 – CONTINGENCIES
The Company is subject to legal proceedings and claims arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and assesses potential losses from 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.
On March 26, 2019, various stockholders of the Company controlling a combined total of more than
NOTE 12 - SEGMENT INFORMATION
The Company operates and manages its business as
Significant segment expenses include employee compensation, stock-based compensation, merchant fees, and consulting and outside provider costs. Other operating expenses include all remaining costs necessary to operate our business and primarily include advertising, corporate compliance, and overhead expenses.
| Three Months Ended May 31, | ||||||||
| 2026 | 2025 | |||||||
| Net sales | $ | $ | ||||||
| Cost of sales | ||||||||
| Gross profit | ||||||||
| Less: | ||||||||
| Employee compensation and benefits | ||||||||
| Consulting and outside provider costs | ||||||||
| Property lease and utility costs | ||||||||
| Depreciation expense | ||||||||
| Program software and licensing expense | ||||||||
| Other operating expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | ||
NOTE 13 – SUBSEQUENT EVENTS
Subsequent to May 31, 2026, the Company issued and sold
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Amounts in thousands, except share and per share amounts)
Forward Looking Statements
This Report contains forward-looking 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 Discussion and Analysis of Financial Condition and Results of Operations,” regarding future events or prospects are forward-looking statements. The words “approximates,” “believes,” “forecasts,” “expects,” “anticipates,” “estimates,” “intends,” “plans” “would,” “could,” “should,” “seek,” “may,” or other similar expressions in this Report, as well as other statements regarding matters that are not historical fact, constitute forward-looking statements. We caution investors that any forward-looking statements presented in this Report are based on the beliefs of, assumptions made by, and information currently available to, us. Such statements are based on assumptions and the actual outcome will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. As a result, our actual future results may differ from our expectations, and those differences may be material. Accordingly, investors should use caution in relying on forward-looking statements to anticipate future results or trends.
Some 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:
| ● | Our ability to generate positive cash flow from operations; |
| ● | Our ability to obtain additional financing to fund our operations; |
| ● | The impact of economic, political and market conditions on us and our customers; |
| ● | The impact of unfavorable results of legal proceedings; |
| ● | Our exposure to potential liability arising from possible errors and omissions, breach of fiduciary duty, breach of duty of care, waste of corporate assets and/or similar claims that may be asserted against us; |
| ● | Our ability to compete effectively against competitors offering different technologies; |
| ● | Our business development and operating development; |
| ● | Our expectations of growth in demand for our products; and |
| ● | Other risks described under the heading “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and those risks discussed in our other filings with the Securities and Exchange Commission, including those risks discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended February 28, 2026, issued on September 10, 2026 (as the same may be updated from time to time in subsequent quarterly reports), which discussion is incorporated herein by this reference. |
We do not intend to update or revise any forward-looking statements, whether because of new information, future events or otherwise, except to the extent required by law. You should interpret all subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf as being expressly qualified by the cautionary statements in this Report. As a result, you should not place undue reliance on these forward-looking statements.
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Overview
Our business is based on the application of our axial flux induction technology to 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 provides: (i) higher motor/generator efficiency, which directly translates into lower operating costs; (ii) lighter and smaller machines that lead to lower manufacturing costs; (iii) higher reliability that results in less downtime and lower maintenance costs; (iv) construction uses only copper and steel, without rare earth materials or other types of permanent magnets. This supports global availability and reduces market and geopolitical risks associated with dependence on a single source; and (v) the use of approximately 60% less copper than equivalent radial flux induction machines, resulting in less mining to extract the needed copper and a direct positive environmental impact.
Our business model consists of three major components: (i) sales and marketing; (ii) design and engineering; and (iii) manufacturing axial flux induction motors and generators. Our sales and marketing approach consists of direct sales in North America and the use of agents and distributors in other regions. In addition, we are exploring limited licensing of our technology to very large potential users, as well as potential joint ventures with existing industrial motor and generator suppliers. The second component of our business model focuses on designing, engineering, and commercializing new commercial and industrial electric motors based on our axial flux induction technology for numerous applications, such as pumps, compressors, and HVAC systems. We are also designing electric motors for both two- and four-wheel electric vehicle applications and expanding the product line for electric power generation. The third component of our business model is to establish manufacturing capabilities for the axial flux induction products being engineered and designed.
We recently completed designs for 1.5 kW, 3.75 kW, and new 10 kW machines, as well as second-generation 250 kW machines, for both electric motor and generator applications. We are also currently designing 50 kW and new 5 kW machines for specific military applications. We are also in discussions regarding the use of our technology in numerous wind turbine applications.
In fiscal 2025 and 2026, we significantly increased our engineering capabilities by hiring expert engineers in thermodynamics (Ph.D.), electromagnetic motor design (Ph.D.), power electronics and controls (Ph.D.), and mechanical design (M.S.M.E.). We also acquired advanced engineering tools, including Ansys Maxwell finite element software, MATLAB, and 3D SolidWorks. Our engineering, research and development costs for fiscal 2026 were approximately $1.6 million.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and disclosures as of the date of the financial statements. In preparing our financial statements, we have made our best estimates and judgments of certain amounts included in the financial statements. We use authoritative pronouncements, historical experience, and other assumptions as the basis for making judgments. For these key estimates and assumptions, we made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent that there are significant differences between these estimates and actual results, our financial statements may be materially affected. 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. There were no changes to our critical accounting policies described in the financial statements included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2026, that impacted our condensed financial statements and related notes included herein.
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. In accordance with ASC 606, we recognize revenue, net of discounts, for our generator sets at the time of product delivery and acceptance 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.
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Inventories
Inventories are valued at the lower of cost (first-in, first-out) or net realizable value, on an average cost basis. We regularly review inventory components 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 is written down, it creates a new cost basis that may not be subsequently written up.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine whether they are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments accounted for as liabilities, the Company initially records the instrument at fair value and then remeasures it at each reporting date, with changes in 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 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.
Inflation
Higher inflation, the actions by the Federal Reserve Bank to address inflation, most notably continuing increases in interest rates, and rising energy prices create uncertainty about the future economic environment. The Company expects that the impact of these issues will continue to evolve. The Company believes these factors impacted the Company’s business in fiscal 2025 and 2026 and will continue to impact the Company’s business in fiscal 2027. 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 increase the Company’s operating expenses.
Results of Operations
Three months ended May 31, 2026, compared to three months ended May 31, 2025
Revenues
Net revenue was $2 for the three months ended May 31, 2026, compared to $185 for the three months ended May 31, 2025. 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 2027.
Cost of Goods
Cost of goods sold was $0 in the three months ended May 31, 2026, compared to $25 for the three months ended May 31, 2025.
Engineering, Research and Development
Engineering, research and development expenses were $386 in the three months ended May 31, 2026, compared to $353 for the three months ended May 31, 2025. The increase is primarily attributable to the purchase of engineering software and program licenses.
Selling, General and Administrative Expense
Selling, general and administrative expenses for the three months ended May 31, 2026, were $468 compared to $484 for the three months ended May 31, 2025, a decrease of $16 or 3%. The decrease is primarily attributable to lower professional services fees, offset by higher travel and meeting expenses and increased health insurance premiums during the period.
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Other Income (Expense) and Interest Expense
Interest expense decreased by $114 to $480 for the three months ended May 31, 2026, as compared to $594 for the three months ended May 31, 2025. The Company estimated the fair value of the conversion option derivative liability using a Black-Scholes option pricing model and recorded changes in the fair value of the derivative liability of $7,028 and $1,570 for the three months ended May 31, 2026 and 2025, respectively.
Net Loss
We recorded net losses of $8,408 and $2,841 for the three months ended May 31, 2026 and 2025, respectively. Our net loss increased due to lower gross profit, higher operating expenses, and changes in the fair value of our derivative liability.
Liquidity and Capital Resources
For the three months ended May 31, 2026, we recorded a net loss of $8,408, used cash in operations of $719, and, as of May 31, 2026, had a shareholders’ deficit of $53,566. In addition, notes payable with an aggregate balance of $5,446 had reached maturity and were past due. These conditions raise substantial doubt about our ability to continue as a going concern for at least one year from the date of issuance of these financial statements. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s February 28, 2026, audited financial statements, raised substantial doubt about the Company’s ability to continue as a going concern.
Prior to Fiscal 2026, to maintain liquidity, we relied on external sources of financing, principally equity 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 conducted by management, we estimate that we will need an additional $5,246 to maintain existing operations for Fiscal 2027 and to increase shipment volume 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. Issuing additional equity shares in connection with such financing could dilute the interests of our existing stockholders, and the dilution could be substantial. If we cannot raise the funds needed, we will also be forced to make further substantial reductions in our operating expenses, which could adversely affect our ability to implement our current business plan and ultimately our viability as a company.
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. As of May 31, 2026, management’s assessment identified the following material weaknesses in the Company’s internal control over financial reporting:
We continue to have a material weakness in our internal control over financial reporting as disclosed in the February 28, 2026, Annual Report on Form 10-K, in that we have an insufficient number of full-time personnel with an appropriate level of U.S. GAAP knowledge and experience and ongoing training in the application of U.S. GAAP and SEC disclosure requirements commensurate with the Company’s financial reporting requirements.
Notwithstanding the identified material weaknesses, management has concluded that the Financial Statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. GAAP.
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 May 31, 2026, not previously identified in our Annual Report on Form 10-K, for the fiscal year ended February 28, 2026 and issued on September 10, 2026 which have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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PART II - OTHER INFORMATION
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. The Company settled certain matters subsequent to year end that did not individually or in the aggregate, have a material impact on the Company’s financial condition or operating results.
Between July 2017 and March 2022, the Company was engaged in litigation with a former director, Robert Kopple, relating to debt and warrants, which Mr. Kopple and his affiliated entities (collectively, “Kopple”) claimed should originally have been issued to them pursuant to various agreements entered into with the Company between 2013 and 2016.
In March 2022, the Company reached a settlement with Kopple 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 $10 million over a period of seven years, including an initial payment of $3 million to be paid in June 2022. In June 2022, $150 was paid, and the balance of the initial payment of $2.85 million was extended to May 29, 2023. In exchange for the extension, the Company was required to pay $165 in extension and forbearance fees in cash and $430 in accrued forbearance fees. Beginning in January 2023, interest accrues on the unpaid balance at a rate of 6%, compounded annually. 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. Kopple has also received seven-year warrants to purchase up to an aggregate of approximately 3.3 million 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 Kopple 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.
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 for 36 month 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) only during Fiscal 2025, will require the Company to pay 20% of all collected revenues within 10 days of the end of each fiscal quarter; toward the outstanding debt reduction (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 toward the outstanding debt reduction; (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 principal payment of $2 million was extended to March 31, 2025, for $100,000. Subsequently, the principal payment was extended several times up to September 30, 2026.
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.
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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 2026 Annual Report on Form 10-K issued on September 10, 2026.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended May 31, 2026, the Company issued 6,860,000 shares of common stock for approximately $751 in net cash.
ITEM 3. Defaults Upon Senior Securities.
None
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information.
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 Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to § 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2 | Certification of 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). |
21
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: September 22, 2026 | AURA SYSTEMS, INC. | |
| (Registrant) | ||
| By: | /s/ Cipora Lavut | |
| Cipora Lavut | ||
| President | ||
22
Exhibit 31.1
Certification of Chief Executive Officer
Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
I, Cipora Lavut, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Aura Systems, Inc. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: September 22, 2026 | /s/ Cipora Lavut |
| Cipora Lavut | |
|
Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
Certification of Chief Financial Officer
Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
I, David Mann, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Aura Systems, Inc. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: September 22, 2026 | /s/ David Mann |
| David Mann | |
| Principal Financial and Accounting Officer |
Exhibit 32.1
Certification of Chief Executive Officer
Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code
Pursuant to U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of Aura Systems, Inc. (the “Company”) does hereby certify, to the best of such officer’s knowledge, that:
| 1. | The Quarterly Report on Form 10-Q of the Company for the quarterly period ended May 31, 2026 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: September 22, 2026 | /s/ Cipora Lavut |
| Cipora Lavut | |
|
President and Chief Executive Officer (Principal Executive Officer) |
The certifications set forth above are being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Aura Systems, Inc. and will be retained by Aura Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
Certification of Chief Financial Officer
Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code
Pursuant to U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Principal Financial Officer of Aura Systems, Inc. (the “Company”) does hereby certify, to the best of such officer’s knowledge, that:
| 1. | The Quarterly Report on Form 10-Q of the Company for the quarterly period ended May 31, 2026 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: September 22, 2026 | /s/ David Mann |
| David Mann | |
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
The certifications set forth above are being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Aura Systems, Inc. and will be retained by Aura Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.