10-Q

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 August 31, 2020

OR

☐   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	(I.R.S. Employer
incorporation or organization)	Identification No.)

10541 Ashdale Street

Stanton, CA 90680

(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 ☒

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

Class	Outstanding October 9, 2020
Common Stock, par value $0.0001 per share	62,485,178 shares

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

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

AURA SYSTEMS, INC.

INDEX

Index			Page No.
PART I. FINANCIAL INFORMATION			1
	ITEM 1.	Financial Statements (Unaudited)	1
		Balance Sheets as of August 31, 2020 and February 29, 2020	1
		Statements of Operations for the Three and Six months ended August 31, 2020 and 2019	2
		Statements of Cash Flows for the Six months ended August 31, 2020 and 2019	3
		Statements of Changes in Shareholders’ Deficit	4
		Notes to Financial Statements	5
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	22
	ITEM 4.	Controls and Procedures	23
PART II. OTHER INFORMATION			24
	ITEM 1.	Legal Proceedings	24
	ITEM 1A.	Risk Factors	25
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
	ITEM 3.	Defaults Upon Senior Securities	25
	ITEM 4.	Mine Safety Disclosures	26
	ITEM 5.	Other Information	26
	ITEM 6.	Exhibits	26
	SIGNATURES AND CERTIFICATIONS		27

i

ITEM 1. FINANCIAL STATEMENTS

AURA SYSTEMS, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

	August 31,			February 29,
	2020			2020
Assets
Current assets
Cash and cash equivalents	$	191,731		$	19,807
Inventory		104,225			90,037
Other current assets		4,583			1,487
Total current assets		300,540			111,330
Non-Current Assets		-			-
Total assets	$	300,540		$	111,330
Liabilities & Shareholders’ Deficit
Current liabilities
Accounts payable	$	2,001,516		$	2,537,061
Accrued expenses		682,950			1,946,290
Customer advances		440,331			440,331
Accrued expense-related party		-			1,008,328
Accrued interest-notes payable-related party		338,527			262,911
Accrued interest-notes payable		195,962			498,698
Notes payable, current portion		231,516			983,717
Notes payable and accrued interest-related party		11,752,402			11,333,960
Total current liabilities		15,643,205			19,011,296
Notes payable-related party		3,000,000			3,000,000
Notes payable		183,911			0
Convertible notes payable		1,402,971			1,402,971
Total liabilities		20,230,087			23,414,267
Commitments and contingencies (note 7)		-			-
Shareholders’ deficit
Common stock: $0.0001 par value; 150,000,000 shares authorized at August 31 and February 29, 2020; 61,818,512 and 56,400,874 issued and outstanding at August 31 and February 29, 2020, respectively		6,180			5,639
Additional paid-in capital		444,672,986			443,417,452
Accumulated deficit		(464,608,713	)		(466,726,027	)
Total shareholders’ deficit		(19,929,547	)		(23,302,937	)
Total liabilities and shareholders’ deficit	$	300,540		$	111,330

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

1

AURA SYSTEMS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Three-Months Ended August 31,						Six-months Ended August 31,
	2020			2019			2020			2019
Net revenue	$	5,000		$	348,075		$	53,633		$	348,075
Cost of goods sold		3,466			29,208			43,859			32,097
Gross profit		1,534			318,867			9,774			315,978
Operating expenses
Engineering, research & development		63,293			34,359			97,287			92,552
Selling, general & administration		432,104			211,059			775,663			508,282
Total operating expenses		495,397			245,418			872,950			600,834
Profit (loss) from operations		(493,863	)		73,449			(863,176	)		(284,856	)
Other (income) expense:
Interest expense, net		327,123			284,788			616,810			601,803
Other income		(2,672,414	)		-			(2,679,414	)		-
Gain on extinguishment of debt		(871,887	)		-			(871,887	)		-
Gain on legal settlement		-			-			(46,000	)		-
Income (loss) before income tax provision		2,723,315			(211,339	)		2,117,314			(886,659	)
Income tax provision		-			-			-			-
Net income (loss)	$	2,723,315		$	(211,339	)	$	2,117,314		$	(886,659	)
Basic income (loss) per share	$	0.05		$	(0.00	)	$	0.04		$	(0.02	)
Weighted average shares outstanding-basic		59,515,727			53,863,602			58,294,261			44,356,148
Dilutive income (loss) per share	$	0.04		$	(0.00	)	$	0.04		$	(0.02	)
Weighted average shares outstanding-dilutive		63,561,907			53,863,602			62,340,440			44,356,148

See accompanying notes to these unaudited financial statements.

2

AURA SYSTEMS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six-Months Ended August 31,
	2020			2019
Net income (loss)	$	2,117,314		$	(886,659	)
Adjustments to reconcile net income (loss) to cash used in operating activities
Fair Market Value of warrants issued for services		-			-
Stock-based compensation expense		174,076			-
Gain on write-off of expired liabilities		(3,540,826	)		-
Changes in working capital assets and liabilities:
Inventory		(14,189	)		-
Other current assets		(3,097	)		8,357
Accrued interest on notes payable		579,971			569,590
Accts payable, customer deposits and accrued expenses		(145,630	)		(105,065	)
Cash used in operating activities		(832,381	)		(413,777	)
Cash flows from financing activities
Issuance of common stock		815,000			150,353
Payment on notes payable		(35,000	)		-
Proceeds from Federal PPP & SBA notes		224,305			-
Cash provided by financing activities		1,004,305			150,353
Net decrease in cash and cash equivalents		171,924			(263,424	)
Beginning cash		19,807			358,209
Ending cash	$	191,731		$	94,785
Cash paid in the period for:
Interest	$	2,500		$	-
Income taxes	$	-		$	-
Supplemental schedule of non-cash transactions:
Note payable converted into shares of common stock	$	267,000		$	-

See accompanying notes to these unaudited financial statements.

3

AURA SYSTEMS INC.

CONDENSED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(Unaudited)

			Common		Additional					Total
	Common		Stock		Paid-In		Accumulated			Shareholders’
	Stock Shares		Amount		Capital		Deficit			Deficit
Balance, February 28, 2019		53,714,145	$	5,371	$	442,519,092	$	(464,119,162	)	$	(21,594,699	)
Shares issued for cash		156,250		15		49,985					50,000
Net loss		-		-		-		(675,321	)		(675,321	)
Balance, May 31, 2019		53,870,395	$	5,386	$	442,569,077	$	(464,794,483	)	$	(22,220,020	)
Shares issued for cash		501,765		51		100,302		-			100,353
Shares issued for settlement		1,030,385		103		329,620		-			329,723
Net loss		-		-		-		(211,339	)		(211,339	)
Balance, August 31, 2019		55,402,545	$	5,540	$	442,998,999	$	(465,005,822	)	$	(22,001,283	)
Balance, February 29, 2020		56,400,874		5,639		443,417,452		(466,726,027	)		(23,302,937	)
Shares issued for cash		1,358,333		135		234,865		-			235,000
Stock-based compensation expense		-		-		77,599		-			77,599
Net loss		-		-		-		(606,001	)		(606,001	)
Balance, May 31, 2020		57,759,207		5,774		443,729,916		(467,332,029	)		(23,596,339	)
Shares issued for cash		3,866,664		387		579,613		-			580,000
Shares issued for settlement		192,641		19		266,981		-			267,000
Stock-based compensation expense		-		-		96,476		-			96,476
Net income		-		-		-		2,723,315			2,723,315
Balance, August 31, 2020		61,818,512		6,180		444,672,986		(464,608,713	)		(19,929,547	)

See accompanying notes to these unaudited financial statements.

4

AURA SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)

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, was founded to engage in the development, commercialization, and sales 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. In addition, the Company has also developed and patented High Force Electromagnetic Linear Actuators which it has sold in prior years.

Basis of Presentation 

In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. However, the results of operations included in such financial statements may not necessary be indicative of annual results.

The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 29, 2020 (“Fiscal 2020”) filed with the Securities and Exchange Commission (“SEC”) on July 13, 2020 (“2020 Form 10-K.”).

Our fiscal year ends on the last day of February. Accordingly, the current fiscal year is ending on February 28, 2021; we refer to the current fiscal as (“Fiscal 2021”). The prior fiscal year is Fiscal 2020.

Significant Accounting Policies

For a detailed discussion about the Company’s significant accounting policies, refer to Note 2 — “Summary of Significant Accounting Policies,” in our financial statements included in Company’s 2020 Form 10-K. During the three and six-months ended August 31, 2020, the Company recognized aggregate gains of approximately $2.7 million in connection with the cancellation of certain accounts payable balances and accrued payroll related to unpaid wages and salaries and approximately $0.9 million in connection with demand promissory notes with three persons for which the respective statute of limitations periods have expired.

5

Earnings Per Share

The following table sets forth the basic and dilutive earnings per share for the three and six-months ended August 31, 2020. The dilutive earning per share includes only the dilutive incremental effect of additional shares issued on an “as if converted basis” in relation to the convertible notes payable principle amounts outstanding as of August 31, 2020 (see Notes 3 and 6).

	Three-Months Ended August 31, 2020
	Income		Shares		Per-share
	(Numerator)		(denominator)		Amount
Basic EPS
Income available to common stockholders	$	2,723,315		59,515,727	$	0.05
Effect of Dilutive Securities
Convertible notes payable	$	48,559		4,046,180	$	0.01
Dilutive EPS
Income available to common stockholders plus assumed conversions	$	2,771,874		63,561,907	$	0.04

	Six-Months Ended August 31, 2020
	Income		Shares		Per-share
	(Numerator)		(denominator)		Amount
Basic EPS
Income available to common stockholders	$	2,117,314		58,294,261	$	0.04
Effect of Dilutive Securities
Convertible notes payable	$	97,117		4,046,180	$	0.02
Dilutive EPS
Income available to common stockholders plus assumed conversions	$	2,214,431		62,340,440	$	0.04

6

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current year presentation.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument. Subsequent to the issuance of ASU 2016-13, the FASB clarified the guidance through several ASUs. The collective new guidance (ASC 326) generally requires entities to use a current expected credit loss model, which is a new impairment model based on expected losses rather than incurred losses. Under this model, an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect. The entity’s estimate would consider relevant information about past events, current conditions, and reasonable and supportable forecasts. ASC 326 is effective for annual and interim fiscal reporting periods beginning after December 15, 2022, with early adoption permitted for annual reporting periods beginning after December 15, 2018. The Company is continuing to evaluate the expected impact of this ASC 326 but does not expect it to have a material impact on its financial statements upon adoption.

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The unaudited condensed financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. 

If the Company is unable to generate profits on a sustained basis and is unable to continue to obtain financing for its working capital requirements, it may have to curtail its business sharply 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.

Beginning with the second quarter of fiscal year 2020, we increased operations of our AuraGen^®/VIPER business and revenue for the three and six-months ended August 31, 2020 was $5,000 and $53,633, respectively, as compared to $348,075 of revenue in the comparable periods of Fiscal 2020.

7

NOTE 3 – NOTES PAYABLE

Non-related party and related party notes payable transaction consisted of the following:

Non-Related Party Promissory Notes (see below)	August 31, 2020			February 29, 2020
Demand promissory notes payable with 1 and 4 individuals as of  August 31, 2020 and February 29, 2020, respectively, carrying an  interest rate of 10% (see Demand Promissory Notes below)	$	10,000		$	768,537
Messrs. Abdou notes payable		180,181			215,181
U.S. Payroll Protection Plan loan program		74,405			-
U.S. Small Business Administration-Economic Injury Disaster Loan		150,841			-
Total Demand and Notes Payable		415,427			983,718
Convertible Promissory Note originally dated August 10, 2012, due January 11, 2023, convertible into shares of our common stock at a price of $0.76 per share, carrying interest rate of 5%. See Convertible Promissory Notes – Dalrymple August 2012 for further details.		264,462			264,462
Convertible Promissory Note originally dated October 2, 2012, due January 11, 2023, convertible into shares of our common stock at a price of $0.76 per share, carrying interest rate of 5%. See Convertible Promissory Notes – Dalrymple October 2012 for further details.		133,178			133,178
Senior secured convertible notes originally dated May 7, 2013, due January 11, 2023, convertible into shares of our common stock at a price of $0.75 per share, carrying interest rate of 5%. See Convertible Debt – Kenmont Capital Partners, LPD Investments and Guenther for further details.		945,825			945,825
Senior secured convertible notes originally dated June 20, 2013, due January 11, 2023, convertible into shares of our common stock at a price of $0.50 per share, carrying interest rate of 5%. See Convertible Debt – Dresner and Lempert for further details.		59,506			59,506
Total Convertible Promissory Notes		1,402,971			1,402,971
Accrued Interest - notes payable		195,962			498,698
Total Non-Related Party		2,014,360			2,885,387
Notes Payable -Related Party (see Note 6)
Convertible Note payable – related party, carrying an interest rate of  5% - see Note 6, Breslow Note, for further details		3,000,000			3,000,000
Kopple Notes Payable-related party , see Kopple Notes, Note 6:		10,909,742			10,494,933
Mel Gagerman Notes Payable, see Gagerman, Note 6:		142,660			139,026
On November 20, 2019, the Company entered into a preliminary agreement with Jiangsu Shengfeng, the Company’s Chinese joint venture. Payment terms consist of a non-interest bearing promissory note and a payment plan pursuant to which the $700,000 is paid over a 12-month period beginning March 15, 2020 through February 15, 2021.		700,000			700,000
Accrued Interest - notes payable- related party		338,527			262,911
Total Related Party		15,090,930			14,596,871
Total notes payable and accrued interest		17,105,289			17,482,258
Less: Current portion	$	(12,518,407	)	$	(13,079,287	)
Long-term portion	$	4,586,882		$	4,402,971

8

Demand Promissory Notes and Notes Payable

The Demand Promissory Notes at August 31 and February 29, 2020 are for one and four individuals, respectively, issued in September 2015 that are payable on demand with an interest rate of 10% per annum.

As of August 31, 2020, the principle amount owed to the Mr. Zeitlin, a former director of the Company, was $10,000.

In the second quarter of fiscal year 2021, liabilities with respect to $758,537 in principal plus $385,349 in accrued interest were reversed as the related statute of limitations were determined to have expired. This reversal resulted in an aggregate reduction of current liabilities of $1,143,886, the recording of an issuance of 192,641 shares of common stock on the Condensed Balance Sheet as of August 31, 2020, and the recognition of $871,887 as gain on extinguishment of debt on the Condensed Statements of Operations for the three and six-months ended August 31, 2020.

Abdou and Abdou

On June 20, 2013, the Company entered into an agreement with two individuals, Mr. M. Abdou and Mr. W. Abdou, for the sale of $125,000 of secured convertible notes payable (the “Notes”) and warrants. The Notes had a 1-year maturity date and were convertible into shares of common stock at the conversion price of $0.50 per share. The warrants were subsequently exercised. The Company recorded $24,470 as a discount, which has been fully amortized. There is a remaining balance of $125,000 as of February 28, 2019. In 2016, the Company and the Company’s former Chief Executive Officer, Melvin Gagerman, were named among several other defendants in a lawsuit filed by Messrs. Abdou demanding repayment of loans totaling $125,000 plus accrued interest and exemplary damages. In January 2017, the Company entered into an agreement with all secured creditors other than Mr. W. Abdou and Mr. M. Abdou. In September 2018, the court entered a judgment of approximately $235,000 plus legal fees of in favor of the Messrs. Abdou. The Company subsequently appealed this judgment and, in September 2019, reached a settlement agreement with these creditors for a principal amount of $325,000, of which approximately $180,000 and $215,000 were outstanding as of August 31 and February 29, 2020, respectively.

Paycheck Protection Plan Loan

During April 2020, the Company ceased operations for approximately 6 weeks in compliance with State of California and the County of Orange public health pronouncements associated with the COVID-19 pandemic. On April 23, 2020, we obtained a Paycheck Protection Program (“PPP”) loan in the amount of approximately $74,400 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Interest on the loan is at the rate of 1% per year, and all loan payments are deferred for six months, at which time the balance is payable in 18 monthly installments if not forgiven in accordance with the CARES Act and the terms of the promissory note executed by the Company in connection with the loan. The promissory note contains events of default and other provisions customary for a loan of this type. As required, the Company intends to use the PPP loan proceeds for payroll, healthcare benefits, rent and other qualifying expenses. The program provides that the use of PPP Loan amount shall be limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. While we intend to apply for the forgiveness of the PPP Loan, there is no assurance that we will obtain forgiveness of the PPP Loan in whole or in part. As of August 31, 2020, $37,202 was classified as notes payable, non-current and $37,203 was classified as part of notes payable, current portion.

Economic Injury Disaster Loan

Entities negatively impacted by the COVID-19 pandemic were eligible to apply for loans sponsored by the United States Small Business Administration (“SBA”) Economic Injury Disaster Loan (“EIDL Loan”) program. On July 1, 2020, the Company received cash proceeds of $149,900 under this program. The proceeds can be used to fund payroll, healthcare benefits, rent and other qualifying expenses, and the loan is not subject to a loan forgiveness provision. The standard EIDL Loan repayment terms include: interest accrues at 3.75% per annum effective July 1, 2020; the payment schedule contains a one-year deferral period on initial principle and interest payments; the loan term is thirty years; The Company pledged the assets of the Company as collateral for the loan; and there is no prepayment penalty or fees. As of August 31, 2020, the amount outstanding including accrued interest of $941 is $150,841 and is classified as part of notes payable, non-current on the August 31, 2020 balance sheet.

9

Convertible Notes Payable

Kenmont Capital Partners

On May 7, 2013, the Company transferred 4 notes payable with a total principal value of $1,000,000 together with accrued interest, and consulting fees to a senior secured convertible note with a principal value of $1,087,000 (“New Kenmont Note”) and warrants to Kenmont Capital Partners LP. The New Kenmont Note had a 1-year maturity date and was convertible into shares of common stock at the conversion price of $0.75 per share. The warrants were subsequently exercised. The Company recorded $342,020 as a discount, which has been fully amortized. There was a remaining balance of $549,954 as of August 31 and February 29, 2020, respectively.

LPD Investments

On May 7, 2013, the Company transferred 2 note payables with a total principal value of $550,000 together with accrued interest to a senior secured convertible note with a principal value of $558,700 (“New LPD Note”) and warrants to LPD Investments, Ltd. The New LPD Note had a 1-year maturity date and was convertible into shares of common stock at the conversion price of $0.75 per share. The warrants were subsequently exercised. The Company recorded $175,793 as a discount, which has been fully amortized. There is a remaining balance of $163,677 as of August 31 and February 29, 2020, respectively.

Guenther

On May 7, 2013, the Company entered into an agreement with an individual, Mr. Guenther, for the sale of $750,000 of secured convertible note payable (the “Note”) and warrants. The Note had a 1-year maturity date and was convertible into shares of common stock at the conversion price of $0.75 per share. The warrants entitle the holder to acquire 1,000,000 shares and have an initial exercise price of $0.75 per share and have a 7-year term. The Company recorded $235,985 as a discount, which has been fully amortized. There is a remaining balance of $232,194 as of August 31 and February 29, 2020, respectively.

Dresner and Lempert

On June 20, 2013, the Company entered into an agreement with two individuals, Mr. Dresner and Dr. Lempert, for the sale of $200,000 of secured convertible notes payable (the “Notes”) and warrants. The Notes had a 1-year maturity date and were convertible into shares of common stock at the conversion price of $0.50 per share. The warrants were subsequently exercised. The Company recorded $39,152 as a discount, which has been fully amortized. During Fiscal 2020, Dr. Lempert converted his share of the amount outstanding into common shares and the balance outstanding of $59,506 as of August 31 and February 29, 2020, respectively, is for Dresner exclusively.

 Dalrymple – August 2012

On August 10, 2012, the Company entered into an agreement with an individual, Mr. Dalrymple, for the sale of $1,000,000 of unsecured Convertible Promissory Note. The Convertible Promissory Note balance together with all accrued interest thereon was due and payable on August 10, 2017 and the annual interest rate was 7% per annum and was due to be repaid 5 years from the closing date. On January 11, 2018, the note was renegotiated with a final payment date of January 11, 2023 with an annual interest rate of 5%.  The Company recorded $310,723 as a debt discount, which will be amortized over the life of the note. There is a remaining balance of $264,462 as of August 31 and February 29, 2020, respectively.

 Dalrymple – October 2012

On October 2, 2012, the Company entered into an agreement with an individual, Mr. Dalrymple, for the sale of $500,000 of unsecured Convertible Promissory Note. This Convertible Promissory Note balance together with all accrued interest thereon was due and payable on October 2, 2017 and the annual interest rate was 7% per annum and was due to be repaid 5 years from the closing date. On January 11, 2018, the note was renegotiated with a final payment date of January 11, 2023 with an annual interest rate of 5%. The Company recorded $137,583 as a debt discount, which will be amortized over the life of the note. There is a remaining balance of $133,178 as of August 31 and February 29, 2020, respectively.

10

On January 30, 2017, the Company entered into an agreement entitled First Amendment to Transaction Documents with five of seven secured creditors holding a security interest in all of the Company’s assets except for its patents and other intellectual properties. All of the creditors entered into the January 30, 2017 agreement with the exception of Mr. W. Abdou and Mr. M. Abdou. The original agreement dated May 7, 2013 provided that if at least 75% of the stock issuable upon conversion of the convertible notes votes to amend the agreement and/or waive any conditions or defaults, then any such amendments or waivers shall be binding on all secured creditors. The five secured creditors signing the amendment total in excess of 95% of the issuable stock upon conversion and, therefore the agreement is binding on all seven of the secured creditors. The agreement provided that all accrued and unpaid interest will be added to the principal amount. The amended note provided for no interest from November 1, 2016 to February 14, 2018, the date at which the 1-for-7 reverse stock split became effective at which time 80% of the total debt including accrued interest was converted into shares of common stock and a new five year 5% per annum convertible note was issued for the remainder. The new amended and restated senior convertible notes have a maturity date of January 30, 2022. The five creditors and the Company entered into a Second Amendment to Transaction Documents on March 14, 2017 and a Third Amendment to Transaction Documents on April 8, 2017, both of which extended the required date of the stockholder approval of the 1-for-7 reverse stock split, which approval was obtained in January 2018. The amended and restated senior convertible notes also require the Company to make a “Required Cash Payment” as defined in the agreement if the Company receives at least $4,000,000 in aggregate gross proceeds from the sale of equity securities (including securities convertible into equity securities) of the Company in one or a series of related transactions. The Required Cash Payment is equal to the current outstanding balance of the notes, which was approximately $1,005,000 as of August 31 and February 29, 2020, respectively, plus any outstanding accrued interest.

NOTE 4 – ACCRUED EXPENSES

Accrued expenses consisted of the following as of the period referenced below:

	August 31,		February 29,
	2020		2020
Accrued payroll and related expenses	$	600,508	$	1,868,928
Other accrued expenses		77,442		77,362
	$	682,950	$	1,946,290

Accrued payroll and related expenses consist primarily of salaries and vacation time accrued but not paid to employees due to our lack of financial resources. In the second quarter of fiscal year 2021, liabilities with respect to approximately $1.3 million in accrued payroll and related expenses were reversed as the related statute of limitation periods were determined to have expired.

NOTE 5 – SHAREHOLDERS’ EQUITY

Common Stock

During the three and six-months ended August 31, 2020, the Company issued 3,866,664 and 5,224,997 shares of common stock, respectively, for $580,000 and $815,000 in cash, respectively. During the three and six-months ended August 31, 2019, the Company issued 501,765 and 658,015 shares of common stock, respectively, for $100,353 and $150,353 in cash, respectively. During August 2019, 1,030,385 shares were issued for a settlement valued at $329,723 and during August 2020, 192,641 shares were issued in connection with the Veen settlement (see Note 3).

Employee Options and Warrants

The 2006 Employee Stock Option Plan

In September 2006, our Board of Directors adopted the 2006 Employee Stock Option Plan, subject to shareholder approval, which was obtained at a special shareholders meeting in 2009. Under the 2006 Plan, the Company may grant options for up to the greater of three million or 10% of the number of shares of the Common Stock of Aura from time to time outstanding. As of February 29, 2020, and August 31, 2020, there were no stock options outstanding.

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The 2011 Director and Executive Officers Stock Option Plan

In October 2011, shareholders approved the 2011 Director and Executive Officers Stock Option Plan at the Company’s annual meeting. Under the 2011 Plan, the Company may grant options for up to 15% of the number of shares of Common Stock of the Company from time to time outstanding, with a contractual option term of five-years, and a vesting period not less than six-months and one day following date of grant. In the six-months ended August 31, 2020, the Board of Directors approved grants of 250,000 stock options to each board member for an aggregate of 1,250,000 options, with an exercise price of $0.25 per option and at a market price of $0.16 on March 19, 2020, the date of grant. The following table provides the assumptions required to apply the Black-Scholes Merton option model to determine the fair value of the stock options as of the grant date:

	Options Issued During the Six-Months Ended August 31, 2020
Exercise Price	$	0.25
Share Price	$	0.16
Volatility %		225	%
Risk-free rate		0.57	%
Expected term (yrs.)		4.0

The aggregate fair value of the 1,250,000 options granted in March 2020 is $194,000, or $0.155 per option, with $96,477 and $174,076 recorded as part of sales, general and administration expense during the three and six-months ended August 31, 2020, respectively. No stock-based compensation expense was recorded during Fiscal 2020.

The following tables provide additional information regarding stock options outstanding and exercisable under the 2011 Director and Executive Officers Stock Option Plan:

	Number of Shares		Exercise Price		Weighted Average Intrinsic Value
Outstanding, February 29, 2020		1,040,001	$	1.40	$	-
Granted		1,250,000		0.25		-
Exrecised		-		-		-
Cancelled		-		-		-
Outstanding, August 31, 2020		2,290,001	$	0.77	$	-

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 $1.40		2,290,001		1,040,001		3.5 Yrs.	$	0.77	$	1.40

Warrants

Historically, warrants have been issued to investors and others for services and enticements to invest funds with the Company. Generally, these warrants fully vest immediately or within a 90-day period from the date of grant and have an expiration date of five-years from the date of grant. With grants dated prior to Fiscal 2021, an exercise price of $1.40 has been used with all warrants. No warrants were issued in the six-months ended August 31, 2020.

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Activity in issued and outstanding warrants is as follows for the six-months ended August 31, 2020:

	Number of		Exercise
	Shares		Price
Outstanding, February 29, 2020		5,816,939	$	1.40
Granted		-		-
Exrecised		-		-
Cancelled		-		-
Outstanding, August 31, 2020		5,816,939	$	1.40

Other information related to the warrants outstanding and exercisable as of August 31, 2020 follows:

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
$	1.40		5,816,939		5,816,939		2.19 Yrs.	$	1.40	$	1.40

NOTE 6 – RELATED PARTIES TRANSACTIONS

Notes payable-related party, non-current - $3,000,000 on the condensed balance sheets as of August 31 and February 29, 2020 consists of the Breslow Note as described below:

Breslow Note

On January 24, 2017, the Company entered into a Debt Refinancing Agreement with Mr. Breslow, a former Director of the Company. Pursuant to the agreement, both Mr. Breslow and the Company acknowledged that total debt owed to Mr. Breslow was $23,872,614 including $8,890,574 of accrued interest. Mr. Breslow agreed to cancel and forgive all interest due, waive all events of default and sign a new five-year convertible note in the amount of $14,982,041 providing for no interest for six months and interest of 5% per annum thereafter payable monthly in arrears. The note also provides various default provisions. In accordance with the agreement, on February 14, 2018, the effective date of the 1-for-7 reverse stock split, $11,982,041 of the note was converted into 7,403,705 shares of common stock and the then accrued interest of $9,388,338 was forgiven. A new $3,000,000 convertible five-year note representing the remaining balance was entered into at a conversion rate of $1.40. The note bears interest at a rate of 5% per annum payable monthly in arrears with accrued interest of $338,527 and $262,911 recorded as accrued interest-related party (see Note 4) as of August 31 and February 29, 2020, respectively.

Notes payable and accrued interest-related party, current - $11,752,402 on the condensed balance sheet as of August 31 and $11,333,960 as of February 29, 2020 consists of the Kopple Notes, the Gagerman Note and the Jiangsu Shengfeng Note as set forth below:

Kopple Notes

As of August 31, and February 29, 2020, the principal amount owed to Robert Kopple (former Vice-Chairman of our Board) of $5,607,323 was unchanged. As of August 31, 2020, accrued interest of $5,302,419 was owed to Mr. Kopple for a total balance of $10,909,742. As of February 29, 2020, accrued interest of $4,887,610 was owed to Mr. Kopple for a total balance of $10,494,933.

On August 19, 2013, the Company entered into an agreement with Robert Kopple, a former member of its Board of Directors for the sale of $2,500,000 of convertible notes payable (the “Kopple Notes”) and warrants. The Kopple Notes carried a base interest rate of 9.5%, have a 4-year maturity date and were convertible into shares of common stock at the conversion price of $3.50 per share (conversion feature expired in 2017). The warrants were subsequently exercised. The Company recorded $667,118 as a discount, which has been fully amortized. The Company also entered into a demand note payable with this individual in the amount of $20,000, which bears interest at a rate of 5% per annum.

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Gagerman Note

On August 31, 2020, the Gagerman note consisted of $82,000 of unsecured note payable plus accrued interest of $60,660 for a total owed to Melvin Gagerman of $142,660, the Company’s former CEO and CFO, pursuant to a demand note entered into on April 5, 2014. Interest accrues at 10% per annum. On February 29, 2020, the amount owed to Gagerman was $139,026.

Jiangsu Shengfeng Note

On November 20, 2019, the Company entered into a preliminary agreement with Jiangsu Shengfeng, the Company’s Chinese joint venture, to return $700,000 previously advanced to the Company in September 2018 and recorded as part of customer advance on the balance sheet as of February 28, 2019. Following this agreement which would consists of a non-interest-bearing promissory note and a payment plan pursuant to which the $700,000 would be paid over a 12-month period. Principal loan amount on August 31, 2020 and February 29, 2020 was $700,000, respectively, and is classified as part of notes payable and accrued interest-related party, current on the balance sheets as of August 31, 2020.

Accrued expense-related party – In the second quarter of fiscal year 2021, liabilities with respect to approximately $1,008,000 in accrued payroll and related expenses to former officers of the Company were reversed to other income in the Condensed Statement of Operations for the three and six-months ended August 31, 2020 as the related statute of limitation periods were determined to have expired.

NOTE 7 – COMMITMENTS & CONTINGENCIES

Leases

Our facilities consist of approximately 20,000 square feet in Stanton, California and, prior to July 31, 2020, an additional storage facility in Santa Clarita, California. The Stanton facility is used for assembly and testing of AuraGen®/VIPER systems and is rented on a month-to-month basis at $10,000 per month. Prior to July 2020, the Company paid $5,000 per month, on a month-to-month basis, for the Santa Clarita storage facility. Following the closure of this facility, the Company is currently renting on a month-to-month basis approximately 1,000 square feet of temporary offsite storage space at a monthly cost of approximately $2,500.

Commencing in February 2019 and ending in July 2019, the Company rented approximately 300 square feet of office space in Irvine, California at a cost of $ 2,350 per month on a month-to-month basis.

Following the adoption of Topic 842, Leases, as of the start of Fiscal 2020, the Company determined that there was no impact on its Condensed Financial Statements during the fiscal year ended February 29, 2020, and as of August 31, 2020, it is management’s intention to vacate the existing facilities and consolidate operations at a different location as soon as practical. The standard requires entities to evaluate all lease transactions including leases previously classified as operating leases, and, if required under Topic 842, a right-to-use asset and a corresponding lease liability to be recorded on the balance sheet in the period in which a lease commences.

Contingencies

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 $238,000 in accrued salary and related charges by the California labor board. The Company believes that this award does not reflect the amount owed which is significantly lower and is exploring all its options and available remedies and is working toward an offer to settle this matter.

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The Company is presently engaged in a dispute with one of its former directors, Robert Kopple, relating to approximately $10.6 million (representing approximately $5.4 million loaned to the Company over the course of 2013 to 2016; approximately $170,000 Mr. Kopple claims to have advanced or paid to third parties on Aura’s behalf; and approximately $5 million Mr. Kopple claims to be owed for interest, loan fees and late payment charges) and approximately 3.33 million warrants which Mr. Kopple claims to be owed to him and his affiliates by the Company. In July 2017, Mr. Kopple filed suit against the Company as well as against current director Mr. Diaz-Verson and former directors Mr. Breslow and Mr. Howsmon, as well as Mr. Gagerman, our former CEO and a former director, in connection with these allegations. In 2018, the Court dismissed Mr. Diaz-Verson, Mr. Breslow, Mr. Howsmon and Mr. Gagerman from the suit. While the Company believes that it has certain valid defenses in these matters, the Company is currently in settlement discussions with Mr. Kopple. However, to-date, no settlement has been reached in large part because Mr. Kopple continues to demand that as part of any such settlement, he receive unilateral control over significant aspects of the Company’s financial and management functions such as, but not limited to, the right to unilaterally direct the Company’s ordinary business expenditures and requiring the Company to seek his approval for the hiring of nearly all personnel, all to the exclusion of the Company’s management team and stockholder-elected Board of Directors. The Company believes that allowing Mr. Kopple such level of operational control over the Company without any accountability would be highly detrimental to the Company and is incompatible with the Board of Directors’ duties to shareholders and creditors as a whole.

In May 2018, Shelley Scholnick dba JB Transporters brought suit against the Company claiming ongoing fees in excess of $52,000 owed for the storage of the Company’s property. Notably, in June 2017, the Company had brought suit against J.B. Moving & Delivery, a business operated and controlled by a relative of Scholnick, Jacob Binstok, for damages suffered by the Company as a result of the defendant’s improper storage of the Company’s property and improper refusal to return such property. In 2018, the Company successfully received a judgment against J.B. Moving & Delivery in the amount of approximately $114,000. In April 2020, Aura and Scholnick entered into a Confidential Settlement and Release Agreement wherein (i) the 2018 action initiated by Scholnick against Aura was resolved with no amounts owing by Aura and the complaint and cross-complaint were subsequently dismissed with prejudice; and (ii) the amount owing to Aura pursuant to the judgment against J.B. Moving and Delivery was compromised and resolved through a single lump-sum payment to Aura.

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 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 29, 2020, issued on July 13, 2020 (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 fiscal year ends on the last day of February. We refer to our fiscal years in this Quarterly Report on Form 10-Q as “Fiscal” and the calendar year in which the fiscal year ends. As such, the current fiscal year ending on February 28, 2021 is designated as Fiscal 2021. The prior fiscal year ended on February 29, 2020 is referred to as Fiscal 2020.

During Fiscal 2017 through 2018, we reduced our engineering, manufacturing, sales, and marketing activities to focus on renegotiating numerous financial obligations and minimizing expenditures while we attempted to raise additional funding and pursue some initial engineering activities.

In Fiscal 2018, we successfully eliminated approximately 68% of our total indebtedness. Specifically, our secured creditors converted approximately $5.73 million of secured debt into approximately 4.1 million shares of our common stock. The converted debt represented approximately 80% of the total secured debt of the Company. The balance of the secured debt (approximately $960,000) is to be paid to the secured creditors in cash if we raise at least $4.0 million in proceeds through new equity offerings in one or a series of related offerings. Additionally, in Fiscal 2018, approximately $12.77 million of unsecured debt was converted into approximately 9.3 million shares of the Company’s common stock and approximately $12.3 million of unsecured debt was forgiven. In total, during Fiscal 2018, we eliminated a total of approximately $30.8 million of debt. In the second quarter of fiscal year 2021 approximately $3.8 million of unpaid salaries, accounts payables and demand notes was extinguished, representing a gain of approximately $3.5 million on the Condensed Statement of Operations for the three and six-months ended August 31, 2020, as the respective statute of limitation periods were deemed to have expired.

The Company is presently engaged in a dispute with one of its former directors, Robert Kopple, relating to approximately $10.6 million (representing approximately $5.4 million loaned to the Company over the course of 2013 to 2016; approximately $170,000 Mr. Kopple claims to have advanced or paid to third parties on Aura’s behalf; and approximately $5 million Mr. Kopple claims to be owed for interest, loan fees and late payment charges) and approximately 3.33 million warrants which Mr. Kopple claims to be owed to him and his affiliates by the Company. In July 2017, Mr. Kopple filed suit against the Company as well as against current director Mr. Diaz-Verson and former directors Mr. Breslow and Mr. Howsmon, as well as Mr. Gagerman, our former CEO and a former director, in connection with these allegations. In 2018, the Court sustained demurrers by Mr. Diaz-Verson, Mr. Breslow, Mr. Howsmon and Mr. Gagerman and as a result of these successful demurrers; all four of these defendants have been dismissed from the suit. While the Company believes that it has certain valid defenses in these matters, the Company is currently in settlement discussions with Mr. Kopple. However, to-date, no settlement has been reached in large part because Mr. Kopple continues to demand that as part of any such settlement, he receive unilateral control over significant aspects of the Company’s financial and management functions such as, but not limited to, the right to unilaterally direct the Company’s ordinary business expenditures and requiring the Company to seek his approval for the hiring of nearly all personnel, all to the exclusion of the Company’s management team and stockholder-elected Board of Directors. The Company believes that allowing Mr. Kopple such level of operational control over the Company without any accountability would be highly detrimental to the Company and is incompatible with the Board of Directors’ duties to shareholders and creditors as a whole.

On February 14, 2018, we effectuated a one-for-seven reverse stock split.

In Fiscal 2019, we began increasing our engineering and manufacturing activities. We utilized contractors for these services in order to minimize our expense while we continued to pursue new sources of financing. In July 2019 under our new management team, we began significantly increasing our sales, engineering, manufacturing and marketing activities.

Our business is based on the exploitation of our patented mobile power 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.

(i) Our sales and marketing approaches are composed of direct sales in North America and the use of agents, distributors. In North America, our primary focus is in (a) mobile exportable power applications, and (c) U.S. Military applications.

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(ii) 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, different voltages, three phase options, shore power systems, higher current solutions as well as interface kits for different platforms. After suspending the majority of our engineering, manufacturing, sales, and marketing activities to focus on renegotiating numerous financial obligations in Fiscal 2018 and 2019, we incurred modest engineering expenses of approximately $50,000 and $84,000 during the three and six-months ended August 31 2020, respectively, and approximately $34,000 and $93,000 during the three and six-months ended August 31, 2019, respectively.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial conditions 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. The preparation of financial statements requires management to make estimates and disclosures on 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. The full impact of the COVID-19 pandemic is unknown and cannot be reasonably estimated for these key estimates and assumptions. However, we made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent that there are differences between these estimates and actual results, our financial statements may be materially affected.

Revenue Recognition

The core principle of ASC 606, Revenue from Contracts with Customers (“ASC 606”), is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying ASC 606, all revenue transactions must be evaluated using a five-step approach to determine the amount and timing of revenue to be recognized. The five-step approach requires (1) identifying the contract with the customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when performance obligations are satisfied.

Our primary source of revenue is the manufacture and delivery of AuraGen/VIPER sets used primarily in mobile power applications, which represented 100% of our revenues of approximately $5,000 and $54,000 for the three and six-months ended August 31, 2020, respectively, and $354,000 for the three and six-months ended August 31, 2019, respectively. Our current principle sales channel is sales to a domestic distributor.

In accordance with ASC 606, we recognize the entirety of the revenue, net of discounts, for our AuraGen/VIPER sets at time of product delivery to the 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 payment terms are cash payment due upon delivery and typically includes a 2.5% price discount in accordance with this policy. Our commercial terms and conditions do not include a right of return for reasons other than a defect in performance or quality. We offer 18 months assurance-type warranty covering material and manufacturing defects, which we account for under the guidance of ASC 460, Guarantees. We have a limited history of shipments, and, as such, we have not recorded a warranty liability on our balance sheets at August 31, 2020 and February 29, 2020, respectively; however, we expect warranty claims to eventually be nil, therefore, we have not delayed the recognition of revenue during Fiscal 2021 and 2020.

Inventory Valuation and Classification

Inventories are valued at the lower of cost (first-in, first-out) or market, on a standard cost basis. We review the components of inventory on a regular basis for excess or obsolete inventory based on estimated future usage and sales. From Fiscal 2015 through 2019 we minimally operated and therefore only produced minimal product. As a result, while we believed that a portion of the inventory had value, we were unable to substantiate demand and fully reserved all inventory in Fiscal 2019. Beginning with Fiscal 2020, production has increased, and fully reserved inventory has been used in current production. We classify all of our inventory as raw material and work-in-process.

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Stock-Based Compensation

We account for stock-based compensation under the provisions of FASB ASC 718, “Compensation – Stock Compensation”, which requires the measurement of all share-based payments to employees, including grants of employee stock options, using a fair value-based method and the recording of such expense in the statements of operations.

We account for stock option and warrant grants issued and vesting to non-employees, such as consultants and third parties, in accordance with FASB ASC 718, “Compensation – Stock Compensation”, where appropriate, whereas the fair value of the equity-based compensation is based upon the measurement date as determined at the earlier of either (a) the date at which a performance commitment is reached or (b) at the date at which the necessary performance to earn the equity instruments is complete.

In accordance with established public company accounting practice, we have consistently utilized the Black-Scholes option-pricing model to calculate the fair value of stock options and warrants issued as compensation, primarily to management, employees, and directors.  The Black-Scholes option-pricing model is a widely accepted method of valuation that public companies typically utilize to calculate the fair value of options and warrants that they issue in such circumstances. During the six-month period ended August 31, 2020, our Board of Directors awarded a total of 1,250,000 stock options to the five members of the board, with a five-year term, an exercise price of $0.25 per option, and a vesting period of not less than six-months and one day. Using the Black-Scholes option model, we determined an aggregate fair value of $194,000 of which $96,000 and $174,000 were recorded in the three and six-months ended August 31, 2020, respectively. No stock-based compensation expense was recorded during Fiscal 2020.

Impact of COVID-19

The COVID-19 global pandemic has negatively affected the global economy, disrupted global supply chains, and created extreme volatility and disruptions to capital and credit markets in the global financial markets. We began to see the impact of COVID-19 during our fourth quarter of Fiscal 2020 with our Chinese joint venture’s manufacturing facilities being required to close and many of our customers suspending their own operations due to the COVID-19 pandemic. As a result, net sales and production levels during the fourth quarter of Fiscal 2020 and the first two quarters of Fiscal 2021 were significantly reduced, thus impacting our results of operations during these quarters.

In response to the COVID-19 pandemic and business disruption, we implemented certain measures to manage costs, preserve liquidity and enhance employee safety. These measures included the following:

● Enhanced cleaning and disinfection procedures at our facility, promotion of social distancing at our facility and requirements for employees to work from home where possible;

● Reduction of capital expenditures; and

● Deferral of discretionary spending.

The extent of the impact of the COVID-19 pandemic on our business, financial results and liquidity will depend largely on future developments, including the duration of the spread of the COVID-19 outbreak within the U.S. and globally, the impact on capital and financial markets and the related impact on our customers, especially in the commercial vehicle markets. These future developments are outside of our control, are highly uncertain and cannot be predicted. If the impact is prolonged, then it can further increase the difficulty of planning for operations and may require us to take further actions as it relates to costs and liquidity. These and other potential impacts of the COVID-19 pandemic will adversely impact our results for the first two quarters of Fiscal 2021, as well as the full fiscal year, and that impact could be material.

Going Concern

The financial statements contained herein in Item I. Financial Statement have been prepared assuming we will continue as a going concern. During the three and six-months ended August 31, 2020, we reported net profit of approximately $2.7 million and $2.1 million, respectively, and had negative cash flows from operating activities of approximately $832,000 for the six-month period ended August 31, 2020. The profits in the current year are attributed to the recognizable non-operating income associated with the cancellation of certain liabilities due the expiration of the statute of limitations. This reduction is due to the debt being cancelled based on a cancellation of indebtedness due, supported by a statute of limitations. 

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If we are unable to generate operating profits on a sustained basis and is unable to continue to obtain financing for its working capital requirements, we may have to curtail its business sharply 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. Our 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 our current financing, to obtain additional financing, and ultimately to attain profitability.

Results of Operations

Three months ended August 31, 2020 compared to three months ended August 31, 2019

Net revenue was $5,000 for the three-months ended August 31, 2020 (the “Three-Months FY2021”) compared to $348,000 for the three-months ended August 31, 2019 (the “Three-Months FY2020”). During the current quarter of 2021, we delivered 1 generator unit to a foreign customer as compared to 52 units delivered in the same quarter in the prior year. Revenue year-on-year has been negatively impacted by the COVID-19 pandemic. We cannot project with confidence the timing or amount of revenue that we can expect until the pandemic is under control or until an effective vaccine becomes widely available.

Cost of goods sold was approximately $3,500 in the Three-Months FY2021 compared to approximately $29,000 in the Three-Months FY2020 resulting in a gross profit of $1,500, or a gross margin of 30%, and a $319,000 gross profit in the Three-Months FY2020 and a gross margin of 91%. Gross profit and related gross margin for the Three-Months FY2021 shipments were largely influenced by the low volume of shipments in the quarter which reduced our ability to fully absorb fixed operating costs. The gross margin of 91% in the Three-Months FY2020 was achieved by taking advantage of inventory on-hand, previously fully reserved due to lack of estimable demand, to offset the unit cost of 52 units sold in that quarter. We do not expect gross margins above 90% to occur regularly for shipments of generator units in future quarters as the availability of usable parts from fully reserved inventory will decline.

Engineering, research and development expenses were approximately $63,000 in the Three-Months FY2021, compared to approximately $34,000 in the Three-Months FY2020, or an increase of 62%.

Selling, general and administrative (“SG&A”) expense increased approximately $221,000 (105%) to approximately $432,000 in the Three-Months FY2021 from approximately $211,000 in the Three-Months FY2020. During Three-Months FY2021, we recorded (i) $96,000 of stock-based compensation expense related to the grant of 1,250,000 options to our five board members, (ii) incurred approximately $64,000 in one-time costs to physically close our offsite storage facility in Santa Clarita, CA and consolidate usable inventory into temporary storage facilities (iii) incurred additional salaries and consulting costs of approximately $80,000 due to change in executive management that occurred in the Three-Months FY2020, (iv) higher accounting fees of $38,000 due to the timing of the fiscal year end audit occurring in the second quarter of Fiscal 2021 due to COVID-19 delays, offset partially by (v) reduced travel expenses of $33,000.

Net interest expense in the Three-Months FY2021 increased approximately $42,000 or 15%, to approximately $327,000 from approximately $285,000 in the Three-Months FY2020 due largely to interest costs related to past due payables of $38,000.

Other income and gain on extinguishment of debt totals $3.5 million in the Three-Months FY2021, as compared to $0 in the same period of Fiscal 2020. This amount was attributed to the extinguishment of approximately $2.3 million in accrued payroll and related expenses, $0.4 million in accounts payable, and three demand notes of approximately $0.8 million consisting of interest and principle, all of which represent liabilities with respect to which the applicable statute of limitation periods have been deemed to have expired as of the effective date of this filing.

Net profit for the Three-Months FY2021 increased by approximately $2.9 million, to approximately $2.7 million from a loss of $211,000 in the Three-Months FY2020 due primarily to the $3.5 million in current liabilities extinguished partially offset by (i) lower gross profit on reduced number of shipments of $318,000 (ii) $96,000 of stock-based compensation expense, (iii) higher salaries and consulting costs of $94,000, (iv) one-time relocation of inventory costs of $64,000, and (v) higher interest costs and other expenses of $57,000.

Six months ended August 31, 2020 compared to six months ended August 31, 2019

Net revenue was $54,000 for the Six-Months ended August 31, 2020 (the “Six-Months FY2021”) compared to $348,000 for the Six-Months ended August 31, 2019 (the “Six-Months FY2020”). During Six-Months FY2021,

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we delivered 9 generator units as compared to 52 units delivered in Six-Months FY2020. Revenue year-on-year has been negatively impacted by the COVID-19 pandemic. We cannot project with confidence the timing or amount of revenue that we can expect until the pandemic is under control or until an effective vaccine becomes widely available.

Cost of goods sold was approximately $44,000 in the Six-Months FY2021 compared to approximately $32,000 in the Six-Months FY2020 resulting in a gross profit of $10,000, or a gross margin of 19%, and a $316,000 gross profit in the Six-Months FY2020 and a gross margin of 91%. Gross profit and related gross margin for the Six-Months FY2021 shipments were largely influenced by the low volume of shipments in the period which reduced our ability to fully absorb fixed operating costs. The gross margin of 91% in the Six-Months FY2020 was achieved by taking advantage of inventory on-hand, previously fully reserved due to lack of estimable demand, to offset the unit cost of 52 units sold year-to-date. We do not expect gross margins above 90% to occur regularly for shipments of generator units in future periods as the availability of usable parts from fully reserved inventory will decline.

Engineering, research and development expenses were approximately $97,000 in the Six-Months FY2021, compared to approximately $92,000 in the Six-Months FY2020, or a decrease of 3%

Selling, general and administrative (“SG&A”) expense increased approximately $267,000 (53%) to approximately $775,000 in the Six-Months FY2021 from approximately $508,000 in the Six-Months FY2020. During Six-Months FY2021, we recorded (i) $174,000 of stock-based compensation expense related to the grant of 1,250,000 options to our five board members, (ii) incurred approximately $64,000 in one-time costs to physically close our offsite storage facility in Santa Clarita, CA and consolidate usable inventory into temporary storage facilities (iii) incurred additional salaries and consulting costs of approximately $14,000, and (iv) higher accounting fees of $37,000 due to the timing of the fiscal year end audit occurring in the second quarter of Fiscal 2021 due to COVID-19 delays.

Net interest expense in the Six-Months FY2021 increased approximately $15,000 or 3%, to approximately $617,000 from approximately $602,000 in the Six-Months FY2020 due largely to interest costs related to past due payables of $38,000.

Gain on debt settlement was $46,000 in the Six-Months FY2021 as compared to $0 in the same period of Fiscal 2020 due primarily to the settlement of a legal issue. Other income and gain on extinguishment of debt totals approximately $3.6 million in the Six-Months FY2021, as compared to $0 in the same period of Fiscal 2020. This amount was attributed to the extinguishment of approximately $2.3 million in accrued payroll and related expenses, $0.4 million in accounts payable, and three demand notes of approximately $0.8 million consisting of interest and principle, all of which represent liabilities with respect to which the applicable statute of limitation periods have been deemed to have expired as of the effective date of this filing.

Net income for the Six-Months FY2021 increased by approximately $3.0 million, to $2.1 million from a loss of $887,000 in the Six-Months FY2020 due primarily to the $3.5 million in cancellations of current liabilities partially offset by (i) lower gross profit on reduced number of shipments of $306,000 (ii) $174,000 of stock-based compensation expense, (iii) higher salaries and consulting costs of $31,000, (iv) one-time relocation of inventory costs of $64,000, and (v) higher interest costs and other income/expenses of net $30,000.

Liquidity and Capital Resources

Net cash used in operations for the six-months ended August 31, 2020, was approximately $832,000, an increase of $418,000 from the comparable period in the prior fiscal year. Net cash provided by financing activities during the six-months ended August 31, 2020, was approximately $1,004,000 consisting of (i) cash proceeds from issuance of common stock of $815,000, (ii) combined proceeds of $224,000 related to the U.S. federal Paycheck Protection Program (“PPP”) loan program related to COVID-19 and the U.S. Small Business Administration (“SBA”) Economic Injury Disaster Loan (“EIDL”) loan program, and partially offset by (iii) a $35,000 principle payments on a note payable; compared to cash provided by financing of $150,000 in the same period of Fiscal 2020 consisting of cash proceeds from the issuance of 658,015 common shares. The cash flow generated from our operations to date has not been sufficient to fund our working capital needs, and we cannot predict when operating cash flow will be sufficient to fund working capital needs.

There were no acquisitions of property and equipment during the three-months ended August 31, 2020 and 2019.

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The total of accrued expenses and accrued expenses-related party as of August 31, 2020 decreased by approximately $1.3 million to $683,000 from approximately $2,954,000 as of February 29, 2020 due to the cancellation of the unpaid salaries of $2.3 million. During the same six-month period in Fiscal 2021, accrued interest on all notes payable due to related parties and non-related parties, increased by approximately $579,000 for recurring interest costs offset by approximately $386,000 of cancellations related to the three demand notes as a result of statute of limitations expiration. This reduction is due to the debt being cancelled based on a cancellation of indebtedness due, supported by a statute of limitations.

The Company had a deficit of $19.9 million in shareholders’ equity as of August 31, 2020, compared to $23.3 million as of February 29, 2020 with the net positive change of $2.9 million attributed to (i) net profit year-to-date of approximately $2.1 million (ii) the issuance of approximately 5.2 million shares valued at approximately $0.8 million for cash and (ii) the granting to board members 1,250,000 options in March 2020 with an aggregate fair value of $194,000, of which approximately $174,000 was recognized as expense during the first two quarters of Fiscal 2021.

On April 23, 2020, we obtained a PPP loan in the amount of approximately $74,400 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Interest on the loan is at the rate of 1% per year, and all loan payments are deferred for six months, at which time the balance is payable in 18 monthly installments if not forgiven in accordance with the CARES Act and the terms of the promissory note executed by the Company in connection with the loan. The promissory note contains events of default and other provisions customary for a loan of this type. As required, the Company intends to use the PPP loan proceeds for payroll, healthcare benefits, rent and other qualifying expenses. The program provides that the use of PPP Loan amount shall be limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. While we intend to apply for the forgiveness of the PPP Loan, there is no assurance that we will obtain forgiveness of the PPP Loan in whole or in part.

On July 1, 2020, we obtained an EIDL loan in the amount of $149,900 administered by the SBA. As required under this program, the proceeds of the loan are to be used for payments of ordinary working capital needs negatively impacted by the COVID-19 pandemic. Interest accrues from the date of the loan of July 1, 2020 at a rate of 3.75% per annum, a loan term of 30 years, no prepayment penalties or fees, and there is a one-year deferral period during which interest accrues but no payments are required to be made. Following the deferral period for a period of 29 years, an estimated monthly payment of $734 is required to fully amortize the principle and accrued interest over the term of the loan. The Company pledged the assets of the Company as collateral for the loan.

In the past, in order to generate liquidity, we have relied upon external sources of financing, principally equity financing and private indebtedness. We have no bank line of credit and require additional debt or equity financing to fund ongoing operations. The issuance of additional shares of equity in connection with any such financing could dilute the interests of our existing stockholders, and such dilution could be substantial. If we cannot raise needed funds, we would 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.

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ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the specified time periods. For the last 3 Fiscal years, these control and procedures broke down due to insufficient capital to maintain such controls and procedures. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to its management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, the Company’s management evaluated, with the participation of the Company’s Principal Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures. Based on the evaluation, the Company’s Principal Executive Officer and Chief Financial Officer concluded that these controls and procedures were effective as of the end of the period covered by this report in ensuring that information requiring disclosure is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. The Company continues to remediate the findings contained in our Annual Report on Form 10-K, for the Fiscal year ended February 29, 2020, issued on July 13, 2020.

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 August 31, 2020, not previously identified in our Annual Report on Form 10-K, for the Fiscal year ended February 29, 2020 and issued on July 13, 2020 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.

In 2017, the Company’s former COO was awarded approximately $238,000 in accrued salary and related charges by the California labor board. The Company believes that this award does not reflect the amount owed which is significantly lower and is exploring all its options and available remedies and is working toward an offer to settle this matter.

The Company is presently engaged in a dispute with one of its former directors, Robert Kopple, relating to approximately $10.9 million (representing approximately $5.4 million loaned to the Company over the course of 2013 to 2016; approximately $170,000 Mr. Kopple claims to have advanced or paid to third parties on Aura’s behalf; and approximately $5.3 million Mr. Kopple claims to be owed for interest, loan fees and late payment charges) and approximately 3.33 million warrants which Mr. Kopple claims to be owed to him and his affiliates by the Company. In July 2017, Mr. Kopple filed suit against the Company as well as against current director Mr. Diaz-Verson and former directors Mr. Breslow and Mr. Howsmon, as well as Mr. Gagerman, our former CEO and a former director, in connection with these allegations. In 2018, the Court sustained demurrers by Mr. Diaz-Verson, Mr. Breslow, Mr. Howsmon and Mr. Gagerman and as a result of these successful demurrers; all four of these defendants have been dismissed from the suit. While the Company believes that it has certain valid defenses in these matters, the Company is currently in settlement discussions with Mr. Kopple. However, to-date, no settlement has been reached in large part because Mr. Kopple continues to demand that as part of any such settlement, he receive unilateral control over significant aspects of the Company’s financial and management functions such as, but not limited to, the right to unilaterally direct the Company’s ordinary business expenditures and requiring the Company to seek his approval for the hiring of nearly all personnel, all to the exclusion of the Company’s management team and stockholder-elected Board of Directors. The Company believes that allowing Mr. Kopple such level of operational control over the Company without any accountability would be highly detrimental to the Company and is incompatible with the Board of Directors’ duties to shareholders and creditors as a whole.

In May 2018, Shelley Scholnick dba JB Transporters brought suit against the Company claiming ongoing fees in excess of $52,000 owed for the storage of the Company’s property. Notably, in June 2017, the Company had brought suit against J.B. Moving & Delivery, a business operated and controlled by a relative of Scholnick, Jacob Binstok, for damages suffered by the Company as a result of the defendant’s improper storage of the Company’s property and improper refusal to return such property. In 2018, the Company successfully received a judgment against J.B. Moving & Delivery in the amount of approximately $114,000. In April 2020, Aura and Scholnick entered into a Confidential Settlement and Release Agreement wherein (i) the 2018 action initiated by Scholnick against Aura was resolved with no amounts owing by Aura and the complaint and cross-complaint were subsequently dismissed with prejudice; and (ii) the amount owing to Aura pursuant to the judgment against J.B. Moving and Delivery was compromised and resolved through a single lump-sum payment to Aura.

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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.

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 2020 Annual Report on Form 10-K issued on July 13, 2020.

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

During the six-months ended August 31, 2020, we issued 5,224,997 shares of common stock for cash proceeds of $815,000.

ITEM 3. Defaults Upon Senior Securities.

As of the date of this filing, Robert Kopple, our former Vice Chairman of the Board, is the only significant unsecured note holder that has not executed formal agreements regarding the restructure of his debt. Mr. Kopple claims that he and his affiliates are owed approximately $10.9 million (representing approximately $5.4 million loaned to the Company over the course of 2013 to 2016; approximately $170,000 Mr. Kopple claims to have advanced or paid to third parties on Aura’s behalf; and approximately $5.3 million Mr. Kopple claims to be owed for interest, loan fees and late payment fees) on terms significantly preferable to other similarly situated unsecured creditors as well as warrants to purchase approximately 3.3 million shares of our common stock. We dispute Mr. Kopple’s claims and we are currently in a legal dispute regarding these claims. See “Item 1. Legal Proceedings” included elsewhere in this Quarterly Report on Form 10-Q for information regarding the dispute with Mr. Kopple regarding these transactions as well as “Note 3 – Notes Payable” and “Note 5 – Related Parties Transactions” to the Company’s condensed financial statements, “Liquidity and Capital Resources” in “Item 2 and Management’s Discussion and Analysis of Financial Condition and Results of Operations” elsewhere in this quarterly report on Form 10-Q for additional information regarding amounts that may be owed under the Company’s notes payable and the recent restructuring of certain Company debt. Mr. Kopple has not accepted our numerous offers to settle this debt and continues to demand that as part of any such resolution, he receive unilateral control over significant aspects of the Company’s financial and management functions such as, but not limited to, the right to unilaterally direct the Company’s ordinary business expenditures and requiring the Company to seek his approval for the hiring of nearly all personnel, all to the exclusion of the Company’s management team and stockholder-elected Board of Directors. The Company believes that allowing Mr. Kopple such level of operational control over the Company without any accountability would be highly detrimental to the Company and is incompatible with the Board of Directors’ duties to shareholders and creditors as a whole.

In June 2014, we entered into a Financing Letter of Agreement (the “June 2014 Agreement”) with two affiliate entities of Mr. Kopple, KF Business Ventures and the Kopple Family Partnership (the “Additional Kopple Parties”), pursuant to which the Additional Kopple Parties loaned us an additional $1,000,000 (the “June 2014 Loan”). In connection with the June 2014 Loan, Mr. Kopple also added $202,205 in penalties and accrued interest, credited us with $200,000 for amounts previously repaid by us and several earlier advances into a single new note (the “June 2014 Kopple Note”) in the principal amount of $2,715,2067 and bearing simple interest at a rate of 10% per annum.

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Pursuant to the June 2014 Agreement, the Kopple Parties also placed various restrictions on our ability to raise additional capital, hire qualified personnel and pay certain expenses without his prior approval for so long as the principal amount of his note remained outstanding. The June 2014 Kopple Note also required us to issue Mr. Kopple a stock purchase warrant (the “June 2014 Kopple Warrant”) to purchase approximately 771,000 shares of our common stock at an exercise price of $0.70 per share, to be exercisable for seven years. Additionally, if we borrowed funds, issued capital stock or rights to acquire or convert into capital stock, or granted rights in respect to territories to any person for cash consideration of more than $5 million in the aggregate after the date of the June 2014 Kopple Note, we would be required to pay the entire amount of such cash consideration in excess of $5 million as a mandatory prepayment of the June 2014 Kopple Note. Additionally, Mr. Kopple required a default provision providing that in the event that the entire outstanding balance of the June 2014 Kopple Note was not paid in full prior to October 1, 2014, then for each consecutive calendar month during the period beginning October 1, 2014 and ending March 31, 2015, we would issue to Mr. Kopple additional stock purchase warrants, each to purchase 416,458 shares of our common stock, up to a maximum aggregate of approximately 2.5 million shares of our common stock, at $0.70 per share (the “Kopple Penalty Warrants”), the Kopple Penalty Warranties to be exercisable for seven years from the time of their respective issuances. In addition to the Kopple Penalty Warrants, the default provision under the June 2014 Kopple Note provides for a 5% late charge on the total amount due plus 15% per year interest. We have not repaid the Kopple Parties in full for the amounts loaned to us. Additionally, we have not issued any of the Kopple Penalty Warrants and management believes that Mr. Kopple is not entitled to receive them. We have also cancelled the June 2014 Kopple Warrant.

We consider the transactions described above with Mr. Kopple to be related party transactions.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information.

None.

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	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.DEF	XBRL Definition Linkbase
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document

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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: October 23, 2020	AURA SYSTEMS, INC.
	(Registrant)
	By:	/s/ Cipora Lavut
		Cipora Lavut
		President

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EX-31.1

Exhibit 31.1

CERTIFICATION

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: October 23, 2020

By:	/s/ Cipora Lavut
	Cipora Lavut
	President

EX-31.2

Exhibit 31.2

CERTIFICATION

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: October 23, 2019

By:	/s/ David Mann
	David Mann
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Cipora Lavut, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Aura Systems, Inc. on Form 10-Q for the period ended August 31, 2020 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Aura Systems, Inc. at the dates and for the periods indicated.

Date: October 23, 2019

By:	/s/ Cipora Lavut
	Cipora Lavut
	President

I, David Mann, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Aura Systems, Inc. on Form 10-Q for the period ended August 31, 2020 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Aura Systems, Inc. at the dates and for the periods indicated.

Date: October 23, 2019

By:	/s/ David Mann
	David Mann
	Chief Financial Officer

A signed original 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.

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Document and Entity Information - shares	6 Months Ended
	Aug. 31, 2020	Oct. 09, 2020
Document and Entity Information [Abstract]
Entity Registrant Name	AURA SYSTEMS INC
Entity Central Index Key	0000826253
Amendment Flag	false
Current Fiscal Year End Date	--02-28
Document Type	10-Q
Document Period End Date	Aug. 31, 2020
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Incorporation State Country Code	DE
Entity File Number	0-17249
Entity Interactive Data Current	No
Entity Common Stock, Shares Outstanding		62,485,178

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Condensed Balance Sheets (Unaudited) - USD ($)	Aug. 31, 2020	Feb. 29, 2020
Current assets
Cash and cash equivalents	$ 191,731	$ 19,807
Inventory	104,225	90,037
Other current assets	4,583	1,487
Total current assets	300,540	111,330
Non-Current Assets
Total assets	300,540	111,330
Current liabilities
Accounts payable	2,001,516	2,537,061
Accrued expenses	682,950	1,946,290
Customer advances	440,331	440,331
Accrued expense-related party		1,008,328
Accrued interest-notes payable-related party	338,527	262,911
Accrued interest-notes payable	195,962	498,698
Notes payable, current portion	231,516	983,717
Notes payable and accrued interest-related party	11,752,402	11,333,960
Total current liabilities	15,643,205	19,011,296
Notes payable-related party	3,000,000	3,000,000
Notes payable	183,911	0
Convertible notes payable	1,402,971	1,402,971
Total liabilities	20,230,087	23,414,267
Commitments and contingencies (note 7)
Shareholders' deficit
Common stock: $0.0001 par value; 150,000,000 shares authorized at August 31 and February 29, 2020; 61,818,512 and 56,400,874 issued and outstanding at August 31 and February 29, 2020, respectively	6,180	5,639
Additional paid-in capital	444,672,986	443,417,452
Accumulated deficit	(464,608,713)	(466,726,027)
Total shareholders' deficit	(19,929,547)	(23,302,937)
Total liabilities and shareholders' deficit	$ 300,540	$ 111,330

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Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Aug. 31, 2020	Feb. 29, 2020
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	61,818,512	56,400,874
Common stock, shares outstanding	61,818,512	56,400,874

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Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Aug. 31, 2020	Aug. 31, 2019	Aug. 31, 2020	Aug. 31, 2019
Income Statement [Abstract]
Net revenue	$ 5,000	$ 348,075	$ 53,633	$ 348,075
Cost of goods sold	3,466	29,208	43,859	32,097
Gross profit	1,534	318,867	9,774	315,978
Operating expenses
Engineering, research & development	63,293	34,359	97,287	92,552
Selling, general & administration	432,104	211,059	775,663	508,282
Total operating expenses	495,397	245,418	872,950	600,834
Profit (loss) from operations	(493,863)	73,449	(863,176)	(284,856)
Other (income) expense:
Interest expense, net	327,123	284,788	616,810	601,803
Other income	(2,672,414)		(2,679,414)
Gain on extinguishment of debt	(871,887)		(871,887)
Gain on legal settlement			(46,000)
Income (loss) before income tax provision	2,723,315	(211,339)	2,117,314	(886,659)
Income tax provision
Net income (loss)	$ 2,723,315	$ (211,339)	$ 2,117,314	$ (886,659)
Basic income (loss) per share	$ 0.05	$ 0.00	$ 0.04	$ (0.02)
Weighted average shares outstanding-basic	59,515,727	53,863,602	58,294,261	44,356,148
Dilutive income (loss) per share	$ 0.04	$ 0.00	$ 0.04	$ (0.02)
Weighted average shares outstanding-dilutive	63,561,907	53,863,602	62,340,440	44,356,148

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Condensed Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Aug. 31, 2020	Aug. 31, 2019
Cash flows from operating activities:
Net income (loss)	$ 2,117,314	$ (886,659)
Adjustments to reconcile net income (loss) to cash used in operating activities
Fair Market Value of warrants issued for services
Stock-based compensation expense	174,076
Gain on write-off of expired liabilities	(3,540,826)
Changes in working capital assets and liabilities:
Inventory	(14,189)
Other current assets	(3,097)	8,357
Accrued interest on notes payable	579,971	569,590
Accts payable, customer deposits and accrued expenses	(145,630)	(105,065)
Cash used in operating activities	(832,381)	(413,777)
Cash flows from financing activities
Issuance of common stock	815,000	150,353
Payment on notes payable	(35,000)
Proceeds from Federal PPP & SBA notes	224,305
Cash provided by financing activities	1,004,305	150,353
Net decrease in cash and cash equivalents	171,924	(263,424)
Beginning cash	19,807	358,209
Ending cash	191,731	94,785
Cash paid in the period for:
Interest	2,500
Income taxes
Supplemental schedule of non-cash transactions:
Note payable converted into shares of common stock	$ 267,000

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Condensed Statements of Shareholders' Deficit (Unaudited) - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning balance at Feb. 28, 2019	$ 5,371	$ 442,519,092	$ (464,119,162)	$ (21,594,699)
Beginning balance, Shares at Feb. 28, 2019	53,714,145
Shares issued for cash	$ 15	49,985		50,000
Shares issued for cash, Shares	156,250
Net loss			(675,321)	(675,321)
Ending balance at May. 31, 2019	$ 5,386	442,569,077	(464,794,483)	(22,001,283)
Ending balance, Shares at May. 31, 2019	53,870,395
Beginning balance at Feb. 28, 2019	$ 5,371	442,519,092	(464,119,162)	(21,594,699)
Beginning balance, Shares at Feb. 28, 2019	53,714,145
Shares issued for cash				150,353
Shares issued for cash, Shares	658,015
Net loss				(886,659)
Ending balance at Aug. 31, 2019	$ 5,540	4,429,998,999	(465,005,822)	(22,001,283)
Ending balance, Shares at Aug. 31, 2019	55,402,545
Beginning balance at May. 31, 2019	$ 5,386	442,569,077	(464,794,483)	(22,001,283)
Beginning balance, Shares at May. 31, 2019	53,870,395
Shares issued for cash	$ 51	100,302		100,353
Shares issued for cash, Shares	501,765
Shares issued for settlement	$ 103	329,620		329,723
Shares issued for settlement, Shares	1,030,385
Net loss			(211,339)	(211,339)
Ending balance at Aug. 31, 2019	$ 5,540	4,429,998,999	(465,005,822)	(22,001,283)
Ending balance, Shares at Aug. 31, 2019	55,402,545
Beginning balance at Feb. 29, 2020	$ 5,639	443,417,452	(466,726,027)	(23,302,937)
Beginning balance, Shares at Feb. 29, 2020	56,400,874
Shares issued for cash	$ 135	234,865		235,000
Shares issued for cash, Shares	1,358,333
Stock-based compensation expense		77,599		77,599
Net loss			(606,001)	(606,001)
Ending balance at May. 31, 2020	$ 5,774	443,729,916	(467,332,029)	(23,596,339)
Ending balance, Shares at May. 31, 2020	(57,759,207)
Beginning balance at Feb. 29, 2020	$ 5,639	443,417,452	(466,726,027)	(23,302,937)
Beginning balance, Shares at Feb. 29, 2020	56,400,874
Shares issued for cash				815,000
Shares issued for cash, Shares	5,224,997
Net loss				2,117,314
Ending balance at Aug. 31, 2020	$ 6,180	444,672,986	(464,608,713)	(19,929,547)
Ending balance, Shares at Aug. 31, 2020	61,818,512
Beginning balance at May. 31, 2020	$ 5,774	443,729,916	(467,332,029)	(23,596,339)
Beginning balance, Shares at May. 31, 2020	(57,759,207)
Shares issued for cash	$ 387	579,613		580,000
Shares issued for cash, Shares	3,866,664
Shares issued for settlement	$ 19	266,981		267,000
Shares issued for settlement, Shares	192,641
Stock-based compensation expense		96,476		96,476
Net loss			2,723,315	2,723,315
Ending balance at Aug. 31, 2020	$ 6,180	$ 444,672,986	$ (464,608,713)	$ (19,929,547)
Ending balance, Shares at Aug. 31, 2020	61,818,512

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Nature of Operations and Summary of Significant Accounting Policies

6 Months Ended

Aug. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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, was founded to engage in the development, commercialization, and sales 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. In addition, the Company has also developed and patented High Force Electromagnetic Linear Actuators which it has sold in prior years.

Basis of Presentation 

In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. However, the results of operations included in such financial statements may not necessary be indicative of annual results.

The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted. These unaudited condensed financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended February 29, 2020 ("Fiscal 2020") filed with the Securities and Exchange Commission ("SEC") on July 13, 2020 ("2020 Form 10-K.").

Our fiscal year ends on the last day of February. Accordingly, the current fiscal year is ending on February 28, 2021; we refer to the current fiscal as ("Fiscal 2021"). The prior fiscal year is Fiscal 2020.

Significant Accounting Policies

For a detailed discussion about the Company's significant accounting policies, refer to Note 2 — "Summary of Significant Accounting Policies," in our financial statements included in Company's 2020 Form 10-K. During the three and six-months ended August 31, 2020, the Company recognized aggregate gains of approximately $2.7 million in connection with the cancellation of certain accounts payable balances and accrued payroll related to unpaid wages and salaries and approximately $0.9 million in connection with demand promissory notes with three persons for which the respective statute of limitations periods have expired.

Earnings Per Share

The following table sets forth the basic and dilutive earnings per share for the three and six-months ended August 31, 2020. The dilutive earning per share includes only the dilutive incremental effect of additional shares issued on an "as if converted basis" in relation to the convertible notes payable principle amounts outstanding as of August 31, 2020 (see Notes 3 and 6).

	Three-Months Ended August 31, 2020
	Income		Shares		Per-share
	(Numerator)		(denominator)		Amount
Basic EPS
Income available to common stockholders	$	2,723,315		59,515,727	$	0.05
Effect of Dilutive Securities
Convertible notes payable	$	48,559		4,046,180	$	0.01
Dilutive EPS
Income available to common stockholders plus assumed conversions	$	2,771,874		63,561,907	$	0.04

	Six-Months Ended August 31, 2020
	Income		Shares		Per-share
	(Numerator)		(denominator)		Amount
Basic EPS
Income available to common stockholders	$	2,117,314		58,294,261	$	0.04
Effect of Dilutive Securities
Convertible notes payable	$	97,117		4,046,180	$	0.02
Dilutive EPS
Income available to common stockholders plus assumed conversions	$	2,214,431		62,340,440	$	0.04

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current year presentation.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument. Subsequent to the issuance of ASU 2016-13, the FASB clarified the guidance through several ASUs. The collective new guidance (ASC 326) generally requires entities to use a current expected credit loss model, which is a new impairment model based on expected losses rather than incurred losses. Under this model, an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect. The entity's estimate would consider relevant information about past events, current conditions, and reasonable and supportable forecasts. ASC 326 is effective for annual and interim fiscal reporting periods beginning after December 15, 2022, with early adoption permitted for annual reporting periods beginning after December 15, 2018. The Company is continuing to evaluate the expected impact of this ASC 326 but does not expect it to have a material impact on its financial statements upon adoption.

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Going Concern

6 Months Ended

Aug. 31, 2020

Going Concern [Abstract]

GOING CONCERN

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The unaudited condensed financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. 

If the Company is unable to generate profits on a sustained basis and is unable to continue to obtain financing for its working capital requirements, it may have to curtail its business sharply 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.

Beginning with the second quarter of fiscal year 2020, we increased operations of our AuraGen^®/VIPER business and revenue for the three and six-months ended August 31, 2020 was $5,000 and $53,633, respectively, as compared to $348,075 of revenue in the comparable periods of Fiscal 2020.

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Notes Payable

6 Months Ended

Aug. 31, 2020

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTE 3 – NOTES PAYABLE

Non-related party and related party notes payable transaction consisted of the following:

Non-Related Party Promissory Notes (see below)	August 31, 2020			February 29, 2020
Demand promissory notes payable with 1 and 4 individuals as of  August 31, 2020 and February 29, 2020, respectively, carrying an  interest rate of 10% (see Demand Promissory Notes below)	$	10,000		$	768,537
Messrs. Abdou notes payable		180,181			215,181
U.S. Payroll Protection Plan loan program		74,405			-
U.S. Small Business Administration-Economic Injury Disaster Loan		150,841			-
Total Demand and Notes Payable		415,427			983,718
Convertible Promissory Note originally dated August 10, 2012, due January 11, 2023, convertible into shares of our common stock at a price of $0.76 per share, carrying interest rate of 5%. See Convertible Promissory Notes – Dalrymple August 2012 for further details.		264,462			264,462
Convertible Promissory Note originally dated October 2, 2012, due January 11, 2023, convertible into shares of our common stock at a price of $0.76 per share, carrying interest rate of 5%. See Convertible Promissory Notes – Dalrymple October 2012 for further details.		133,178			133,178
Senior secured convertible notes originally dated May 7, 2013, due January 11, 2023, convertible into shares of our common stock at a price of $0.75 per share, carrying interest rate of 5%. See Convertible Debt – Kenmont Capital Partners, LPD Investments and Guenther for further details.		945,825			945,825
Senior secured convertible notes originally dated June 20, 2013, due January 11, 2023, convertible into shares of our common stock at a price of $0.50 per share, carrying interest rate of 5%. See Convertible Debt – Dresner and Lempert for further details.		59,506			59,506
Total Convertible Promissory Notes		1,402,971			1,402,971
Accrued Interest - notes payable		195,962			498,698
Total Non-Related Party		2,014,360			2,885,387
Notes Payable -Related Party (see Note 6)
Convertible Note payable – related party, carrying an interest rate of  5% - see Note 6, Breslow Note, for further details		3,000,000			3,000,000
Kopple Notes Payable-related party , see Kopple Notes, Note 6:		10,909,742			10,494,933
Mel Gagerman Notes Payable, see Gagerman, Note 6:		142,660			139,026
On November 20, 2019, the Company entered into a preliminary agreement with Jiangsu Shengfeng, the Company's Chinese joint venture. Payment terms consist of a non-interest bearing promissory note and a payment plan pursuant to which the $700,000 is paid over a 12-month period beginning March 15, 2020 through February 15, 2021.		700,000			700,000
Accrued Interest - notes payable- related party		338,527			262,911
Total Related Party		15,090,930			14,596,871
Total notes payable and accrued interest		17,105,289			17,482,258
Less: Current portion	$	(12,518,407	)	$	(13,079,287	)
Long-term portion	$	4,586,882		$	4,402,971

Demand Promissory Notes and Notes Payable

The Demand Promissory Notes at August 31 and February 29, 2020 are for one and four individuals, respectively, issued in September 2015 that are payable on demand with an interest rate of 10% per annum.

As of August 31, 2020, the principle amount owed to the Mr. Zeitlin, a former director of the Company, was $10,000.

In the second quarter of fiscal year 2021, liabilities with respect to $758,537 in principal plus $385,349 in accrued interest were reversed as the related statute of limitations were determined to have expired. This reversal resulted in an aggregate reduction of current liabilities of $1,143,886, the recording of an issuance of 192,641 shares of common stock on the Condensed Balance Sheet as of August 31, 2020, and the recognition of $871,887 as gain on extinguishment of debt on the Condensed Statements of Operations for the three and six-months ended August 31, 2020.

Abdou and Abdou

On June 20, 2013, the Company entered into an agreement with two individuals, Mr. M. Abdou and Mr. W. Abdou, for the sale of $125,000 of secured convertible notes payable (the "Notes") and warrants. The Notes had a 1-year maturity date and were convertible into shares of common stock at the conversion price of $0.50 per share. The warrants were subsequently exercised. The Company recorded $24,470 as a discount, which has been fully amortized. There is a remaining balance of $125,000 as of February 28, 2019. In 2016, the Company and the Company's former Chief Executive Officer, Melvin Gagerman, were named among several other defendants in a lawsuit filed by Messrs. Abdou demanding repayment of loans totaling $125,000 plus accrued interest and exemplary damages. In January 2017, the Company entered into an agreement with all secured creditors other than Mr. W. Abdou and Mr. M. Abdou. In September 2018, the court entered a judgment of approximately $235,000 plus legal fees of in favor of the Messrs. Abdou. The Company subsequently appealed this judgment and, in September 2019, reached a settlement agreement with these creditors for a principal amount of $325,000, of which approximately $180,000 and $215,000 were outstanding as of August 31 and February 29, 2020, respectively.

Paycheck Protection Plan Loan

During April 2020, the Company ceased operations for approximately 6 weeks in compliance with State of California and the County of Orange public health pronouncements associated with the COVID-19 pandemic. On April 23, 2020, we obtained a Paycheck Protection Program ("PPP") loan in the amount of approximately $74,400 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). Interest on the loan is at the rate of 1% per year, and all loan payments are deferred for six months, at which time the balance is payable in 18 monthly installments if not forgiven in accordance with the CARES Act and the terms of the promissory note executed by the Company in connection with the loan. The promissory note contains events of default and other provisions customary for a loan of this type. As required, the Company intends to use the PPP loan proceeds for payroll, healthcare benefits, rent and other qualifying expenses. The program provides that the use of PPP Loan amount shall be limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. While we intend to apply for the forgiveness of the PPP Loan, there is no assurance that we will obtain forgiveness of the PPP Loan in whole or in part. As of August 31, 2020, $37,202 was classified as notes payable, non-current and $37,203 was classified as part of notes payable, current portion.

Economic Injury Disaster Loan

Entities negatively impacted by the COVID-19 pandemic were eligible to apply for loans sponsored by the United States Small Business Administration ("SBA") Economic Injury Disaster Loan ("EIDL Loan") program. On July 1, 2020, the Company received cash proceeds of $149,900 under this program. The proceeds can be used to fund payroll, healthcare benefits, rent and other qualifying expenses, and the loan is not subject to a loan forgiveness provision. The standard EIDL Loan repayment terms include: interest accrues at 3.75% per annum effective July 1, 2020; the payment schedule contains a one-year deferral period on initial principle and interest payments; the loan term is thirty years; The Company pledged the assets of the Company as collateral for the loan; and there is no prepayment penalty or fees. As of August 31, 2020, the amount outstanding including accrued interest of $941 is $150,841 and is classified as part of notes payable, non-current on the August 31, 2020 balance sheet.

Convertible Notes Payable

Kenmont Capital Partners

On May 7, 2013, the Company transferred 4 notes payable with a total principal value of $1,000,000 together with accrued interest, and consulting fees to a senior secured convertible note with a principal value of $1,087,000 ("New Kenmont Note") and warrants to Kenmont Capital Partners LP. The New Kenmont Note had a 1-year maturity date and was convertible into shares of common stock at the conversion price of $0.75 per share. The warrants were subsequently exercised. The Company recorded $342,020 as a discount, which has been fully amortized. There was a remaining balance of $549,954 as of August 31 and February 29, 2020, respectively.

LPD Investments

On May 7, 2013, the Company transferred 2 note payables with a total principal value of $550,000 together with accrued interest to a senior secured convertible note with a principal value of $558,700 ("New LPD Note") and warrants to LPD Investments, Ltd. The New LPD Note had a 1-year maturity date and was convertible into shares of common stock at the conversion price of $0.75 per share. The warrants were subsequently exercised. The Company recorded $175,793 as a discount, which has been fully amortized. There is a remaining balance of $163,677 as of August 31 and February 29, 2020, respectively.

Guenther

On May 7, 2013, the Company entered into an agreement with an individual, Mr. Guenther, for the sale of $750,000 of secured convertible note payable (the "Note") and warrants. The Note had a 1-year maturity date and was convertible into shares of common stock at the conversion price of $0.75 per share. The warrants entitle the holder to acquire 1,000,000 shares and have an initial exercise price of $0.75 per share and have a 7-year term. The Company recorded $235,985 as a discount, which has been fully amortized. There is a remaining balance of $232,194 as of August 31 and February 29, 2020, respectively.

Dresner and Lempert

On June 20, 2013, the Company entered into an agreement with two individuals, Mr. Dresner and Dr. Lempert, for the sale of $200,000 of secured convertible notes payable (the "Notes") and warrants. The Notes had a 1-year maturity date and were convertible into shares of common stock at the conversion price of $0.50 per share. The warrants were subsequently exercised. The Company recorded $39,152 as a discount, which has been fully amortized. During Fiscal 2020, Dr. Lempert converted his share of the amount outstanding into common shares and the balance outstanding of $59,506 as of August 31 and February 29, 2020, respectively, is for Dresner exclusively.

 Dalrymple – August 2012

On August 10, 2012, the Company entered into an agreement with an individual, Mr. Dalrymple, for the sale of $1,000,000 of unsecured Convertible Promissory Note. The Convertible Promissory Note balance together with all accrued interest thereon was due and payable on August 10, 2017 and the annual interest rate was 7% per annum and was due to be repaid 5 years from the closing date. On January 11, 2018, the note was renegotiated with a final payment date of January 11, 2023 with an annual interest rate of 5%.  The Company recorded $310,723 as a debt discount, which will be amortized over the life of the note. There is a remaining balance of $264,462 as of August 31 and February 29, 2020, respectively.

 Dalrymple – October 2012

On October 2, 2012, the Company entered into an agreement with an individual, Mr. Dalrymple, for the sale of $500,000 of unsecured Convertible Promissory Note. This Convertible Promissory Note balance together with all accrued interest thereon was due and payable on October 2, 2017 and the annual interest rate was 7% per annum and was due to be repaid 5 years from the closing date. On January 11, 2018, the note was renegotiated with a final payment date of January 11, 2023 with an annual interest rate of 5%. The Company recorded $137,583 as a debt discount, which will be amortized over the life of the note. There is a remaining balance of $133,178 as of August 31 and February 29, 2020, respectively.

On January 30, 2017, the Company entered into an agreement entitled First Amendment to Transaction Documents with five of seven secured creditors holding a security interest in all of the Company's assets except for its patents and other intellectual properties. All of the creditors entered into the January 30, 2017 agreement with the exception of Mr. W. Abdou and Mr. M. Abdou. The original agreement dated May 7, 2013 provided that if at least 75% of the stock issuable upon conversion of the convertible notes votes to amend the agreement and/or waive any conditions or defaults, then any such amendments or waivers shall be binding on all secured creditors. The five secured creditors signing the amendment total in excess of 95% of the issuable stock upon conversion and, therefore the agreement is binding on all seven of the secured creditors. The agreement provided that all accrued and unpaid interest will be added to the principal amount. The amended note provided for no interest from November 1, 2016 to February 14, 2018, the date at which the 1-for-7 reverse stock split became effective at which time 80% of the total debt including accrued interest was converted into shares of common stock and a new five year 5% per annum convertible note was issued for the remainder. The new amended and restated senior convertible notes have a maturity date of January 30, 2022. The five creditors and the Company entered into a Second Amendment to Transaction Documents on March 14, 2017 and a Third Amendment to Transaction Documents on April 8, 2017, both of which extended the required date of the stockholder approval of the 1-for-7 reverse stock split, which approval was obtained in January 2018. The amended and restated senior convertible notes also require the Company to make a "Required Cash Payment" as defined in the agreement if the Company receives at least $4,000,000 in aggregate gross proceeds from the sale of equity securities (including securities convertible into equity securities) of the Company in one or a series of related transactions. The Required Cash Payment is equal to the current outstanding balance of the notes, which was approximately $1,005,000 as of August 31 and February 29, 2020, respectively, plus any outstanding accrued interest.

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Accrued Expenses

6 Months Ended

Aug. 31, 2020

Payables and Accruals [Abstract]

ACCRUED EXPENSES

NOTE 4 – ACCRUED EXPENSES

Accrued expenses consisted of the following as of the period referenced below:

	August 31,		February 29,
	2020		2020
Accrued payroll and related expenses	$	600,508	$	1,868,928
Other accrued expenses		77,442		77,362
	$	682,950	$	1,946,290

Accrued payroll and related expenses consist primarily of salaries and vacation time accrued but not paid to employees due to our lack of financial resources. In the second quarter of fiscal year 2021, liabilities with respect to approximately $1.3 million in accrued payroll and related expenses were reversed as the related statute of limitation periods were determined to have expired.

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Shareholders' Equity

6 Months Ended

Aug. 31, 2020

Stockholders' Equity Note [Abstract]

SHAREHOLDERS' EQUITY

NOTE 5 – SHAREHOLDERS' EQUITY

Common Stock

During the three and six-months ended August 31, 2020, the Company issued 3,866,664 and 5,224,997 shares of common stock, respectively, for $580,000 and $815,000 in cash, respectively. During the three and six-months ended August 31, 2019, the Company issued 501,765 and 658,015 shares of common stock, respectively, for $100,353 and $150,353 in cash, respectively. During August 2019, 1,030,385 shares were issued for a settlement valued at $329,723 and during August 2020, 192,641 shares were issued in connection with the Veen settlement (see Note 3).

Employee Options and Warrants

The 2006 Employee Stock Option Plan

In September 2006, our Board of Directors adopted the 2006 Employee Stock Option Plan, subject to shareholder approval, which was obtained at a special shareholders meeting in 2009. Under the 2006 Plan, the Company may grant options for up to the greater of three million or 10% of the number of shares of the Common Stock of Aura from time to time outstanding. As of February 29, 2020, and August 31, 2020, there were no stock options outstanding.

The 2011 Director and Executive Officers Stock Option Plan

In October 2011, shareholders approved the 2011 Director and Executive Officers Stock Option Plan at the Company's annual meeting. Under the 2011 Plan, the Company may grant options for up to 15% of the number of shares of Common Stock of the Company from time to time outstanding, with a contractual option term of five-years, and a vesting period not less than six-months and one day following date of grant. In the six-months ended August 31, 2020, the Board of Directors approved grants of 250,000 stock options to each board member for an aggregate of 1,250,000 options, with an exercise price of $0.25 per option and at a market price of $0.16 on March 19, 2020, the date of grant. The following table provides the assumptions required to apply the Black-Scholes Merton option model to determine the fair value of the stock options as of the grant date:

	Options Issued During the Six-Months Ended August 31, 2020
Exercise Price	$	0.25
Share Price	$	0.16
Volatility %		225	%
Risk-free rate		0.57	%
Expected term (yrs.)		4.0

The aggregate fair value of the 1,250,000 options granted in March 2020 is $194,000, or $0.155 per option, with $96,477 and $174,076 recorded as part of sales, general and administration expense during the three and six-months ended August 31, 2020, respectively. No stock-based compensation expense was recorded during Fiscal 2020.

The following tables provide additional information regarding stock options outstanding and exercisable under the 2011 Director and Executive Officers Stock Option Plan:

	Number of Shares		Exercise Price		Weighted Average Intrinsic Value
Outstanding, February 29, 2020		1,040,001	$	1.40	$	-
Granted		1,250,000		0.25		-
Exrecised		-		-		-
Cancelled		-		-		-
Outstanding, August 31, 2020		2,290,001	$	0.77	$	-

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 $1.40		2,290,001		1,040,001		3.5 Yrs.	$	0.77	$	1.40

Warrants

Historically, warrants have been issued to investors and others for services and enticements to invest funds with the Company. Generally, these warrants fully vest immediately or within a 90-day period from the date of grant and have an expiration date of five-years from the date of grant. With grants dated prior to Fiscal 2021, an exercise price of $1.40 has been used with all warrants. No warrants were issued in the six-months ended August 31, 2020.

Activity in issued and outstanding warrants is as follows for the six-months ended August 31, 2020:

	Number of		Exercise
	Shares		Price
Outstanding, February 29, 2020		5,816,939	$	1.40
Granted		-		-
Exrecised		-		-
Cancelled		-		-
Outstanding, August 31, 2020		5,816,939	$	1.40

Other information related to the warrants outstanding and exercisable as of August 31, 2020 follows:

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
$	1.40		5,816,939		5,816,939		2.19 Yrs.	$	1.40	$	1.40

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Related Parties Transactions

6 Months Ended

Aug. 31, 2020

Related Party Transactions [Abstract]

RELATED PARTIES TRANSACTIONS

NOTE 6 – RELATED PARTIES TRANSACTIONS

Notes payable-related party, non-current - $3,000,000 on the condensed balance sheets as of August 31 and February 29, 2020 consists of the Breslow Note as described below:

Breslow Note

On January 24, 2017, the Company entered into a Debt Refinancing Agreement with Mr. Breslow, a former Director of the Company. Pursuant to the agreement, both Mr. Breslow and the Company acknowledged that total debt owed to Mr. Breslow was $23,872,614 including $8,890,574 of accrued interest. Mr. Breslow agreed to cancel and forgive all interest due, waive all events of default and sign a new five-year convertible note in the amount of $14,982,041 providing for no interest for six months and interest of 5% per annum thereafter payable monthly in arrears. The note also provides various default provisions. In accordance with the agreement, on February 14, 2018, the effective date of the 1-for-7 reverse stock split, $11,982,041 of the note was converted into 7,403,705 shares of common stock and the then accrued interest of $9,388,338 was forgiven. A new $3,000,000 convertible five-year note representing the remaining balance was entered into at a conversion rate of $1.40. The note bears interest at a rate of 5% per annum payable monthly in arrears with accrued interest of $338,527 and $262,911 recorded as accrued interest-related party (see Note 4) as of August 31 and February 29, 2020, respectively.

Notes payable and accrued interest-related party, current - $11,752,402 on the condensed balance sheet as of August 31 and $11,333,960 as of February 29, 2020 consists of the Kopple Notes, the Gagerman Note and the Jiangsu Shengfeng Note as set forth below:

Kopple Notes

As of August 31, and February 29, 2020, the principal amount owed to Robert Kopple (former Vice-Chairman of our Board) of $5,607,323 was unchanged. As of August 31, 2020, accrued interest of $5,302,419 was owed to Mr. Kopple for a total balance of $10,909,742. As of February 29, 2020, accrued interest of $4,887,610 was owed to Mr. Kopple for a total balance of $10,494,933.

On August 19, 2013, the Company entered into an agreement with Robert Kopple, a former member of its Board of Directors for the sale of $2,500,000 of convertible notes payable (the "Kopple Notes") and warrants. The Kopple Notes carried a base interest rate of 9.5%, have a 4-year maturity date and were convertible into shares of common stock at the conversion price of $3.50 per share (conversion feature expired in 2017). The warrants were subsequently exercised. The Company recorded $667,118 as a discount, which has been fully amortized. The Company also entered into a demand note payable with this individual in the amount of $20,000, which bears interest at a rate of 5% per annum.

Gagerman Note

On August 31, 2020, the Gagerman note consisted of $82,000 of unsecured note payable plus accrued interest of $60,660 for a total owed to Melvin Gagerman of $142,660, the Company's former CEO and CFO, pursuant to a demand note entered into on April 5, 2014. Interest accrues at 10% per annum. On February 29, 2020, the amount owed to Gagerman was $139,026.

Jiangsu Shengfeng Note

On November 20, 2019, the Company entered into a preliminary agreement with Jiangsu Shengfeng, the Company's Chinese joint venture, to return $700,000 previously advanced to the Company in September 2018 and recorded as part of customer advance on the balance sheet as of February 28, 2019. Following this agreement which would consists of a non-interest-bearing promissory note and a payment plan pursuant to which the $700,000 would be paid over a 12-month period. Principal loan amount on August 31, 2020 and February 29, 2020 was $700,000, respectively, and is classified as part of notes payable and accrued interest-related party, current on the balance sheets as of August 31, 2020.

Accrued expense-related party – In the second quarter of fiscal year 2021, liabilities with respect to approximately $1,008,000 in accrued payroll and related expenses to former officers of the Company were reversed to other income in the Condensed Statement of Operations for the three and six-months ended August 31, 2020 as the related statute of limitation periods were determined to have expired.

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Commitments & Contingencies

6 Months Ended

Aug. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS & CONTINGENCIES

NOTE 7 – COMMITMENTS & CONTINGENCIES

Leases

Our facilities consist of approximately 20,000 square feet in Stanton, California and, prior to July 31, 2020, an additional storage facility in Santa Clarita, California. The Stanton facility is used for assembly and testing of AuraGen®/VIPER systems and is rented on a month-to-month basis at $10,000 per month. Prior to July 2020, the Company paid $5,000 per month, on a month-to-month basis, for the Santa Clarita storage facility. Following the closure of this facility, the Company is currently renting on a month-to-month basis approximately 1,000 square feet of temporary offsite storage space at a monthly cost of approximately $2,500.

Commencing in February 2019 and ending in July 2019, the Company rented approximately 300 square feet of office space in Irvine, California at a cost of $ 2,350 per month on a month-to-month basis.

Following the adoption of Topic 842, Leases, as of the start of Fiscal 2020, the Company determined that there was no impact on its Condensed Financial Statements during the fiscal year ended February 29, 2020, and as of August 31, 2020, it is management's intention to vacate the existing facilities and consolidate operations at a different location as soon as practical. The standard requires entities to evaluate all lease transactions including leases previously classified as operating leases, and, if required under Topic 842, a right-to-use asset and a corresponding lease liability to be recorded on the balance sheet in the period in which a lease commences.

Contingencies

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 $238,000 in accrued salary and related charges by the California labor board. The Company believes that this award does not reflect the amount owed which is significantly lower and is exploring all its options and available remedies and is working toward an offer to settle this matter.

The Company is presently engaged in a dispute with one of its former directors, Robert Kopple, relating to approximately $10.6 million (representing approximately $5.4 million loaned to the Company over the course of 2013 to 2016; approximately $170,000 Mr. Kopple claims to have advanced or paid to third parties on Aura's behalf; and approximately $5 million Mr. Kopple claims to be owed for interest, loan fees and late payment charges) and approximately 3.33 million warrants which Mr. Kopple claims to be owed to him and his affiliates by the Company. In July 2017, Mr. Kopple filed suit against the Company as well as against current director Mr. Diaz-Verson and former directors Mr. Breslow and Mr. Howsmon, as well as Mr. Gagerman, our former CEO and a former director, in connection with these allegations. In 2018, the Court dismissed Mr. Diaz-Verson, Mr. Breslow, Mr. Howsmon and Mr. Gagerman from the suit. While the Company believes that it has certain valid defenses in these matters, the Company is currently in settlement discussions with Mr. Kopple. However, to-date, no settlement has been reached in large part because Mr. Kopple continues to demand that as part of any such settlement, he receive unilateral control over significant aspects of the Company's financial and management functions such as, but not limited to, the right to unilaterally direct the Company's ordinary business expenditures and requiring the Company to seek his approval for the hiring of nearly all personnel, all to the exclusion of the Company's management team and stockholder-elected Board of Directors. The Company believes that allowing Mr. Kopple such level of operational control over the Company without any accountability would be highly detrimental to the Company and is incompatible with the Board of Directors' duties to shareholders and creditors as a whole.

In May 2018, Shelley Scholnick dba JB Transporters brought suit against the Company claiming ongoing fees in excess of $52,000 owed for the storage of the Company's property. Notably, in June 2017, the Company had brought suit against J.B. Moving & Delivery, a business operated and controlled by a relative of Scholnick, Jacob Binstok, for damages suffered by the Company as a result of the defendant's improper storage of the Company's property and improper refusal to return such property. In 2018, the Company successfully received a judgment against J.B. Moving & Delivery in the amount of approximately $114,000. In April 2020, Aura and Scholnick entered into a Confidential Settlement and Release Agreement wherein (i) the 2018 action initiated by Scholnick against Aura was resolved with no amounts owing by Aura and the complaint and cross-complaint were subsequently dismissed with prejudice; and (ii) the amount owing to Aura pursuant to the judgment against J.B. Moving and Delivery was compromised and resolved through a single lump-sum payment to Aura.

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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Nature of Operations and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Aug. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

Nature of Operations

Aura Systems, Inc., ("Aura", "We" or the "Company") a Delaware corporation, was founded to engage in the development, commercialization, and sales 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. In addition, the Company has also developed and patented High Force Electromagnetic Linear Actuators which it has sold in prior years.

Basis of Presentation

Basis of Presentation 

In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. However, the results of operations included in such financial statements may not necessary be indicative of annual results.

The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted. These unaudited condensed financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended February 29, 2020 ("Fiscal 2020") filed with the Securities and Exchange Commission ("SEC") on July 13, 2020 ("2020 Form 10-K.").

Our fiscal year ends on the last day of February. Accordingly, the current fiscal year is ending on February 28, 2021; we refer to the current fiscal as ("Fiscal 2021"). The prior fiscal year is Fiscal 2020.

Significant Accounting Policies

Significant Accounting Policies

For a detailed discussion about the Company's significant accounting policies, refer to Note 2 — "Summary of Significant Accounting Policies," in our financial statements included in Company's 2020 Form 10-K. During the three and six-months ended August 31, 2020, the Company recognized aggregate gains of approximately $2.7 million in connection with the cancellation of certain accounts payable balances and accrued payroll related to unpaid wages and salaries and approximately $0.9 million in connection with demand promissory notes with three persons for which the respective statute of limitations periods have expired.

Earnings Per Share

Earnings Per Share

The following table sets forth the basic and dilutive earnings per share for the three and six-months ended August 31, 2020. The dilutive earning per share includes only the dilutive incremental effect of additional shares issued on an "as if converted basis" in relation to the convertible notes payable principle amounts outstanding as of August 31, 2020 (see Notes 3 and 6).

	Three-Months Ended August 31, 2020
	Income		Shares		Per-share
	(Numerator)		(denominator)		Amount
Basic EPS
Income available to common stockholders	$	2,723,315		59,515,727	$	0.05
Effect of Dilutive Securities
Convertible notes payable	$	48,559		4,046,180	$	0.01
Dilutive EPS
Income available to common stockholders plus assumed conversions	$	2,771,874		63,561,907	$	0.04

	Six-Months Ended August 31, 2020
	Income		Shares		Per-share
	(Numerator)		(denominator)		Amount
Basic EPS
Income available to common stockholders	$	2,117,314		58,294,261	$	0.04
Effect of Dilutive Securities
Convertible notes payable	$	97,117		4,046,180	$	0.02
Dilutive EPS
Income available to common stockholders plus assumed conversions	$	2,214,431		62,340,440	$	0.04

Use of Estimates

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Reclassifications

Certain prior period amounts have been reclassified to conform to the current year presentation.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument. Subsequent to the issuance of ASU 2016-13, the FASB clarified the guidance through several ASUs. The collective new guidance (ASC 326) generally requires entities to use a current expected credit loss model, which is a new impairment model based on expected losses rather than incurred losses. Under this model, an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect. The entity's estimate would consider relevant information about past events, current conditions, and reasonable and supportable forecasts. ASC 326 is effective for annual and interim fiscal reporting periods beginning after December 15, 2022, with early adoption permitted for annual reporting periods beginning after December 15, 2018. The Company is continuing to evaluate the expected impact of this ASC 326 but does not expect it to have a material impact on its financial statements upon adoption.

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Nature of Operations and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Aug. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of earnings Per Share

	Three-Months Ended August 31, 2020
	Income		Shares		Per-share
	(Numerator)		(denominator)		Amount
Basic EPS
Income available to common stockholders	$	2,723,315		59,515,727	$	0.05
Effect of Dilutive Securities
Convertible notes payable	$	48,559		4,046,180	$	0.01
Dilutive EPS
Income available to common stockholders plus assumed conversions	$	2,771,874		63,561,907	$	0.04

	Six-Months Ended August 31, 2020
	Income		Shares		Per-share
	(Numerator)		(denominator)		Amount
Basic EPS
Income available to common stockholders	$	2,117,314		58,294,261	$	0.04
Effect of Dilutive Securities
Convertible notes payable	$	97,117		4,046,180	$	0.02
Dilutive EPS
Income available to common stockholders plus assumed conversions	$	2,214,431		62,340,440	$	0.04

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Notes Payable (Tables)

6 Months Ended

Aug. 31, 2020

Debt Disclosure [Abstract]

Schedule of non-related party and related party notes payable transaction

Non-Related Party Promissory Notes (see below)	August 31, 2020			February 29, 2020
Demand promissory notes payable with 1 and 4 individuals as of  August 31, 2020 and February 29, 2020, respectively, carrying an  interest rate of 10% (see Demand Promissory Notes below)	$	10,000		$	768,537
Messrs. Abdou notes payable		180,181			215,181
U.S. Payroll Protection Plan loan program		74,405			-
U.S. Small Business Administration-Economic Injury Disaster Loan		150,841			-
Total Demand and Notes Payable		415,427			983,718
Convertible Promissory Note originally dated August 10, 2012, due January 11, 2023, convertible into shares of our common stock at a price of $0.76 per share, carrying interest rate of 5%. See Convertible Promissory Notes – Dalrymple August 2012 for further details.		264,462			264,462
Convertible Promissory Note originally dated October 2, 2012, due January 11, 2023, convertible into shares of our common stock at a price of $0.76 per share, carrying interest rate of 5%. See Convertible Promissory Notes – Dalrymple October 2012 for further details.		133,178			133,178
Senior secured convertible notes originally dated May 7, 2013, due January 11, 2023, convertible into shares of our common stock at a price of $0.75 per share, carrying interest rate of 5%. See Convertible Debt – Kenmont Capital Partners, LPD Investments and Guenther for further details.		945,825			945,825
Senior secured convertible notes originally dated June 20, 2013, due January 11, 2023, convertible into shares of our common stock at a price of $0.50 per share, carrying interest rate of 5%. See Convertible Debt – Dresner and Lempert for further details.		59,506			59,506
Total Convertible Promissory Notes		1,402,971			1,402,971
Accrued Interest - notes payable		195,962			498,698
Total Non-Related Party		2,014,360			2,885,387
Notes Payable -Related Party (see Note 6)
Convertible Note payable – related party, carrying an interest rate of  5% - see Note 6, Breslow Note, for further details		3,000,000			3,000,000
Kopple Notes Payable-related party , see Kopple Notes, Note 6:		10,909,742			10,494,933
Mel Gagerman Notes Payable, see Gagerman, Note 6:		142,660			139,026
On November 20, 2019, the Company entered into a preliminary agreement with Jiangsu Shengfeng, the Company's Chinese joint venture. Payment terms consist of a non-interest bearing promissory note and a payment plan pursuant to which the $700,000 is paid over a 12-month period beginning March 15, 2020 through February 15, 2021.		700,000			700,000
Accrued Interest - notes payable- related party		338,527			262,911
Total Related Party		15,090,930			14,596,871
Total notes payable and accrued interest		17,105,289			17,482,258
Less: Current portion	$	(12,518,407	)	$	(13,079,287	)
Long-term portion	$	4,586,882		$	4,402,971

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Accrued Expenses (Tables)

6 Months Ended

Aug. 31, 2020

Payables and Accruals [Abstract]

Schedule of accrued expenses

	August 31,		February 29,
	2020		2020
Accrued payroll and related expenses	$	600,508	$	1,868,928
Other accrued expenses		77,442		77,362
	$	682,950	$	1,946,290

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Shareholders' Equity (Tables)

6 Months Ended

Aug. 31, 2020

Stockholders' Equity Note [Abstract]

Schedule of Black-Scholes Merton option model to determine the fair value of the stock options as of the grant date

	Options Issued During the Six-Months Ended August 31, 2020
Exercise Price	$	0.25
Share Price	$	0.16
Volatility %		225	%
Risk-free rate		0.57	%
Expected term (yrs.)		4.0

Schedule of employee stock option plan

	Number of Shares		Exercise Price		Weighted Average Intrinsic Value
Outstanding, February 29, 2020		1,040,001	$	1.40	$	-
Granted		1,250,000		0.25		-
Exrecised		-		-		-
Cancelled		-		-		-
Outstanding, August 31, 2020		2,290,001	$	0.77	$	-

Schedule of exercise price options outstanding

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 $1.40		2,290,001		1,040,001		3.5 Yrs.	$	0.77	$	1.40

Schedule of activity in issued and outstanding warrants

	Number of		Exercise
	Shares		Price
Outstanding, February 29, 2020		5,816,939	$	1.40
Granted		-		-
Exrecised		-		-
Cancelled		-		-
Outstanding, August 31, 2020		5,816,939	$	1.40

Schedule of exercise prices warrants outstanding

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
$	1.40		5,816,939		5,816,939		2.19 Yrs.	$	1.40	$	1.40

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Nature of Operations and Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended		6 Months Ended
	Aug. 31, 2020	Aug. 31, 2019	Aug. 31, 2020	Aug. 31, 2019
Basic EPS
Income (Numerator) income available to common stockholders	$ 2,723,315		$ 2,117,314
Shares (denominator) income available to common stockholders	59,515,727		58,294,261
Per-share amount income available to common stockholders	$ 0.05	$ 0.00	$ 0.04	$ (0.02)
Effect of Dilutive Securities
Income (Numerator) convertible notes payable	$ 48,559		$ 97,117
Shares (denominator convertible notes payable	4,046,180		4,046,180
Per-share amount convertible notes payable	$ 0.01		$ 0.02
Dilutive EPS
Income (Numerator income available to common stockholders plus assumed conversions	$ 2,771,874		$ 2,214,431
Shares (denominator) income available to common stockholders plus assumed conversions	63,561,907		62,340,440
Per-share amount income available to common stockholders plus assumed conversions	$ 0.04		$ 0.04

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Going Concern (Details) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	Aug. 31, 2020	Aug. 31, 2020	Feb. 29, 2020
Going Concern (Textual)
Recognized revenue	$ 5,000	$ 53,633	$ 348,075

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Notes Payable (Details) - USD ($)	Aug. 31, 2020	Feb. 29, 2020
Debt Instrument [Line Items]
Total Demand and Notes Payable	$ 415,427	$ 983,718
Total Convertible Promissory Notes	1,402,971	1,402,971
Accrued Interest - notes payable- see Note 7	195,962	498,698
Total Non-Related Party	2,014,360	2,885,387
Demand promissory notes payable [Member]
Debt Instrument [Line Items]
Demand and Notes Payble	10,000	768,537
Messrs. Abdou notes payable [Member]
Debt Instrument [Line Items]
Demand and Notes Payble	180,181	215,181
U.S. Payroll Protection Plan loan program [Member]
Debt Instrument [Line Items]
Demand and Notes Payble	74,405
Convertible Promissory Note dated August 10, 2012 [Member]
Debt Instrument [Line Items]
Convertible Promissory Notes	264,462	264,462
Convertible Promissory Note originally dated October 2, 2012 [Member]
Debt Instrument [Line Items]
Convertible Promissory Notes	133,178	133,178
Senior secured convertible notes originally dated May 7, 2013 [Member]
Debt Instrument [Line Items]
Convertible Promissory Notes	945,825	945,825
Senior secured convertible notes originally dated June 20, 2013 [Member]
Debt Instrument [Line Items]
Convertible Promissory Notes	59,506	59,506
U.S. Small Business Administration-Economic Injury Disaster Loan [Member]
Debt Instrument [Line Items]
Demand and Notes Payble	$ 150,841

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Notes Payable (Details) (Parenthetical)	Aug. 31, 2020 $ / shares
Convertible Promissory Note originally dated August 10, 2012 [Member]
Debt Instrument [Line Items]
Notes payable interest rate	5.00%
Common stock at price	$ 0.76
Convertible Promissory Note originally dated October 2, 2012 [Member]
Debt Instrument [Line Items]
Notes payable interest rate	5.00%
Common stock at price	$ 0.76
Senior secured convertible notes originally dated May 7, 2013 [Member]
Debt Instrument [Line Items]
Notes payable interest rate	5.00%
Common stock at price	$ 0.75
Senior secured convertible notes originally dated June 20, 2013 [Member]
Debt Instrument [Line Items]
Notes payable interest rate	5.00%
Common stock at price	$ 0.50

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Notes Payable (Details 1) - USD ($)	Aug. 31, 2020	Feb. 29, 2020
Debt Instrument [Line Items]
Convertible Note payable	$ 183,911	$ 0
Accrued Interest - notes payable- related party	338,527	262,911
Jiangsu Shengfeng [Member]
Debt Instrument [Line Items]
Convertible Note payable	700,000	700,000
Accrued Interest - notes payable- related party	338,527	262,911
Total Related Party	15,090,930	14,596,871
Total notes payable and accrued interest	17,105,289	17,482,258
Less: Current portion	(12,518,407)	(13,079,287)
Long-term portion	4,586,882	4,402,971
Notes Payable [Member]
Debt Instrument [Line Items]
Convertible Note payable	3,000,000	3,000,000
Kopple Notes Payable-related party [Member]
Debt Instrument [Line Items]
Convertible Note payable	10,909,742	10,494,933
Mel Gagerman Notes Payable [Member]
Debt Instrument [Line Items]
Convertible Note payable	$ 142,660	$ 139,026

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Notes Payable (Details 1) (Parenthetical) - Notes Payable [Member]	Aug. 31, 2020 USD ($)
Debt Instrument [Line Items]
Notes payable interest rate	5.00%
Convertible notes payable	$ 700,000

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Notes Payable (Details Textual)							1 Months Ended				3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 02, 2020	Jan. 11, 2018	Jun. 20, 2013 USD ($) $ / shares	May 07, 2013 USD ($) Notes $ / shares shares	Oct. 02, 2012 USD ($)	Aug. 10, 2012 USD ($)	Apr. 23, 2020	Sep. 30, 2018 USD ($)	Feb. 14, 2018 $ / shares	Jan. 30, 2017	Aug. 31, 2020 USD ($)	Aug. 31, 2019 USD ($)	Aug. 31, 2020 USD ($) shares	Aug. 31, 2019 USD ($)	Feb. 29, 2020 USD ($)	Feb. 28, 2019 USD ($)	Feb. 28, 2018 USD ($) shares	Jan. 24, 2017 USD ($)
Notes Payable (Textual)
Paycheck protection plan loan, Description							We obtained a Paycheck Protection Program (“PPP”) loan in the amount of approximately $74,400 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Interest on the loan is at the rate of 1% per year, and all loan payments are deferred for six months, at which time the balance is payable in 18 monthly installments if not forgiven in accordance with the CARES Act and the terms of the promissory note executed by the Company in connection with the loan. The promissory note contains events of default and other provisions customary for a loan of this type. As required, the Company intends to use the PPP loan proceeds for payroll, healthcare benefits, rent and other qualifying expenses. The program provides that the use of PPP Loan amount shall be limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. While we intend to apply for the forgiveness of the PPP Loan, there is no assurance that we will obtain forgiveness of the PPP Loan in whole or in part. As of August 31, 2020, $37,202 was classified as notes payable, non-current and $37,203 was classified as part of notes payable, current portion.
Gain on extinguishment of debt											$ (871,887)		$ (871,887)
Economic Injury Disaster Loan, description	The Company received cash proceeds of $149,900 under this program. The proceeds can be used to fund payroll, healthcare benefits, rent and other qualifying expenses, and the loan is not subject to a loan forgiveness provision. The standard EIDL Loan repayment terms include: interest accrues at 3.75% per annum effective July 1, 2020; the payment schedule contains a one-year deferral period on initial principle and interest payments; the loan term is thirty years; The Company pledged the assets of the Company as collateral for the loan; and there is no prepayment penalty or fees. As of August 31, 2020, the amount outstanding including accrued interest of $941 is $150,841 and is classified as part of notes payable, non-current on the August 31, 2020 balance sheet.
Director [Member]
Notes Payable (Textual)
Debt amount																		$ 23,872,614
Conversion price per share of notes payable | $ / shares									$ 1.40
Principle amount													10,000
Reverse stock split, description									1-for-7 reverse stock split.
Notes maturity date, term									5 years
Notes payable interest rate									5.00%									5.00%
Convertible Secured Notes [Member] | Dresner and Lempert [Member]
Notes Payable (Textual)
Pre conversion debt principal amount			$ 200,000
Conversion price per share of notes payable | $ / shares			$ 0.50
Amortization of debt discount			$ 39,152
Remaining principle and interest balance													59,506		$ 59,506
Notes maturity date, term			1 year
Convertible Secured Notes [Member] | Abdou and Abdou [Member]
Notes Payable (Textual)
Pre conversion debt principal amount			$ 125,000
Conversion price per share of notes payable | $ / shares			$ 0.50
Amortization of debt discount			$ 24,470
Remaining principle and interest balance													180,000		215,000	$ 125,000
Notes maturity date, term			1 year
Repayment of loans			$ 125,000
Judgment of approximately value plus legal fees								$ 235,000
Amount of accrued interest			$ 125,000
Convertible Debt [Member]
Notes Payable (Textual)
Description of convertible promissory note										All of the creditors entered into the January 30, 2017 agreement with the exception of Mr. W. Abdou and Mr. M. Abdou. The original agreement dated May 7, 2013 provided that if at least 75% of the stock issuable upon conversion of the convertible notes votes to amend the agreement and/or waive any conditions or defaults, then any such amendments or waivers shall be binding on all secured creditors. The five secured creditors signing the amendment total in excess of 95% of the issuable stock upon conversion and, therefore the agreement is binding on all seven of the secured creditors. The agreement provided that all accrued and unpaid interest will be added to the principal amount. The amended note provided for no interest from November 1, 2016 to February 14, 2018, the date at which the 1-for-7 reverse stock split became effective at which time 80% of the total debt including accrued interest was converted into shares of common stock and a new five year 5% per annum convertible note was issued for the remainder. The new amended and restated senior convertible notes have a maturity date of January 30, 2022. The five creditors and the Company entered into a Second Amendment to Transaction Documents on March 14, 2017 and a Third Amendment to Transaction Documents on April 8, 2017, both of which extended the required date of the stockholder approval of the 1-for-7 reverse stock split, which approval was obtained in January 2018. The amended and restated senior convertible notes also require the Company to make a “Required Cash Payment” as defined in the agreement if the Company receives at least $4,000,000 in aggregate gross proceeds from the sale of equity securities (including securities convertible into equity securities) of the Company in one or a series of related transactions. The Required Cash Payment is equal to the current outstanding balance of the notes, which was approximately $1,005,000 as of August 31 and February 29, 2020, respectively, plus any outstanding accrued interest.
Demand Promissory Notes Payable [Member]
Notes Payable (Textual)
Debt amount																	$ 267,000
Principle amount															768,537
Converted shares of common stock | shares																	192,641
Repayment of loans																	$ 267,000
Aggregate reduction of current liabilities											1,143,886		1,143,886
LPD Investments, Ltd. [Member] | Convertible Secured Notes [Member]
Notes Payable (Textual)
Pre conversion debt principal amount				$ 550,000
Debt amount				$ 558,700
Conversion price per share of notes payable | $ / shares				$ 0.75
Amortization of debt discount				$ 175,793
Remaining principle and interest balance													163,677		163,677
Number of notes payable to transferred | Notes				2
Notes maturity date, term				1 year
Initial exercise price | $ / shares				$ 0.75
Kenmont Capital Partners [Member] | Convertible Secured Notes [Member]
Notes Payable (Textual)
Pre conversion debt principal amount				$ 1,000,000
Debt amount				$ 1,087,000
Conversion price per share of notes payable | $ / shares				$ 0.75
Amortization of debt discount				$ 342,020
Remaining principle and interest balance													549,954		549,954
Number of notes payable to transferred | Notes				4
Notes maturity date, term				1 year
Initial exercise price | $ / shares				$ 0.75
Refinancing Agreements [Member] | Convertible Secured Notes [Member] | Guenther [Member]
Notes Payable (Textual)
Pre conversion debt principal amount				$ 750,000
Conversion price per share of notes payable | $ / shares				$ 0.75
Term of warrant				7 years
Amortization of debt discount				$ 235,985
Number of common shares entitlement on exercise of warrant one (in shares) | shares				1,000,000
Remaining principle and interest balance													232,194		232,194
Notes maturity date, term				1 year
Initial exercise price | $ / shares				$ 0.75
Unsecured Debt [Member] | Convertible Debt [Member] | Dalrymple [Member]
Notes Payable (Textual)
Pre conversion debt principal amount					$ 500,000	$ 1,000,000
Amortization of debt discount						$ 310,723
Remaining principle and interest balance					$ 137,583								264,462		$ 264,462
Due date of notes		Jan. 11, 2023
Notes maturity date, term					5 years	5 years
Notes payable interest rate		5.00%			7.00%	7.00%
Unsecured Debt [Member] | Convertible Debt One [Member] | Dalrymple [Member]
Notes Payable (Textual)
Remaining principle and interest balance													133,178
Secured creditors September 2019 [Member] | Former Chief Executive Officers [Member]
Notes Payable (Textual)
Debt amount											$ 325,000		$ 325,000
Demand Promissory Notes Payable [Member]
Notes Payable (Textual)
Description of convertible promissory note													In the second quarter of fiscal year 2021, liabilities with respect to $758,537 in principal plus $385,349 in accrued interest were reversed as the related statute of limitations were determined to have expired.
Issuance of common stock | shares													192,641
Gain on extinguishment of debt													$ 871,887

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Accrued Expenses (Details) - USD ($)	Aug. 31, 2020	Feb. 29, 2020
Payables and Accruals [Abstract]
Accrued payroll and related expenses	$ 600,508	$ 1,868,928
Other accrued expenses	77,442	77,362
Total	$ 682,950	$ 1,946,290

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Accrued Expenses (Details Textual)	Aug. 31, 2020 USD ($)
Accrued Expenses (Textual)
Accrued payroll and related expenses	$ 1,300,000

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Shareholders' Equity (Details)	6 Months Ended
	Aug. 31, 2020 $ / shares
Stockholders' Equity Note [Abstract]
Exercise Price	$ 0.25
Share Price	$ 0.16
Volatility %	225.00%
Risk-free rate	0.57%
Expected term (yrs.)	4 years

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Shareholders' Equity (Details 1) - 2006 Plan [Member]	6 Months Ended
	Aug. 31, 2020 USD ($) $ / shares shares
Number of Shares
Number of Shares, Outstanding, February 29, 2020 | shares	1,040,001
Number of Shares, Granted | shares	1,250,000
Number of Shares, Exercised | shares
Number of Shares, Cancelled | shares
Number of Shares, Outstanding, August 31, 2020 | shares	2,290,001
Exercise Prices
Exercise Prices, Outstanding, February 29, 2020	$ 1.40
Exercise Prices, Granted	0.25
Exercise Prices, Exercised
Exercise Prices, Cancelled
Exercise Price, Outstanding, August 31, 2020	0.77
Weighted Average Intrinsic Value
Weighted Average Intrinsic Value, Granted
Weighted Average Intrinsic Value, Exercised | $
Weighted Average Intrinsic Value, Cancelled
Weighted Average Intrinsic Value, Outstanding, August 31, 2020 | $

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Shareholders' Equity (Details 2) - $1.40 [Member]	6 Months Ended
	Aug. 31, 2020 $ / shares shares
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Stock Options Outstanding | shares	2,290,001
Stock Options Exercisable | shares	1,040,001
Weighted Average Remaining Contractual Life	3 years 6 months
Weighted Average Exercise Price of Options Outstanding	$ 0.77
Weighted Average Exercise Price of Options Exercisable	1.40
Minimum [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Range of Exercise Price	0.25
Maximum [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Range of Exercise Price	$ 1.40

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Shareholders' Equity (Details 3)	6 Months Ended
	Aug. 31, 2020 $ / shares shares
Class of Warrant or Right [Line Items]
Exercise Prices, Outstanding, August 31, 2020	$ 1.40
Warrants [Member]
Class of Warrant or Right [Line Items]
Number of Shares, Outstanding, February 29, 2020 | shares	5,816,939
Number of Shares, Granted | shares
Number of Shares, Exercised | shares
Number of Shares, Cancelled | shares
Number of Shares, Outstanding, August 31, 2020 | shares	5,816,939
Exercise Prices, Outstanding, February 28, 2019	$ 1.40
Exercise Prices, Granted
Exercise Prices, Exercised
Exercise Prices, Cancelled
Exercise Prices, Outstanding, August 31, 2020	$ 1.40

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Shareholders' Equity (Details 4) - $ / shares	6 Months Ended
	Aug. 31, 2020	Feb. 29, 2020
Class of Warrant or Right [Line Items]
Range of Exercise Prices	$ 0.25
Warrant [Member]
Class of Warrant or Right [Line Items]
Stock Warrants Outstanding	5,816,939	5,816,939
Warrant [Member] | $1.40 [Member]
Class of Warrant or Right [Line Items]
Range of Exercise Prices	$ 1.40
Stock Warrants Outstanding	5,816,939
Stock Warrants Exercisable	5,816,939
Weighted Average Remaining Contractual Life	2 years 2 months 8 days
Weighted Average Exercise Price of Warrants Outstanding	$ 1.40
Weighted Average Exercise Price of Warrants Exercisable	$ 1.40

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Shareholders' Equity (Details Textual) - USD ($)	3 Months Ended				6 Months Ended
	Aug. 31, 2020	May 31, 2020	Aug. 31, 2019	May 31, 2019	Aug. 31, 2020	Aug. 31, 2019
Shareholders' Equity (Textual)
Common stock for cash	$ 580,000	$ 235,000	$ 100,353	$ 50,000	$ 815,000	$ 150,353
Shares issued for debt settlement, shares					192,641	1,030,385
Shares issued for debt settlement						$ 329,723
Warrants exercise price	$ 1.40				$ 1.40
Warrants exercise price, description					The aggregate fair value of the 1,250,000 options granted in March 2020 is $194,000, or $0.155 per option, with $96,477 and $174,076 recorded as part of sales, general and administration expense.
2011 Director and Executive Officers Stock Option Plan [Member]
Shareholders' Equity (Textual)
Employee stock options, description					Under the 2011 Plan, the Company may grant options for up to 15% of the number of shares of Common Stock of the Company from time to time outstanding, with a contractual option term of five-years, and a vesting period not less than six-months and one day following date of grant. In the six-months ended August 31, 2020, the Board of Directors approved grants of 250,000 stock options to each board member for an aggregate of 1,250,000 options, with an exercise price of $0.25 per option and at a market price of $0.16 on March 19, 2020.
2006 Employee Stock Option Plan [Member]
Shareholders' Equity (Textual)
Employee stock options, description					Under the 2006 Plan, the Company may grant options for up to the greater of three million or 10% of the number of shares of the Common Stock of Aura from time to time outstanding. As of February 29, 2020, and August 31, 2020, there were no stock options outstanding.
Common Stock [Member]
Shareholders' Equity (Textual)
Shares of common stock	3,866,664	1,358,333	501,765	156,250	5,224,997	658,015
Common stock for cash	$ 387	$ 135	$ 51	$ 15

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Related Parties Transactions (Details) - USD ($)	1 Months Ended		6 Months Ended
	Nov. 20, 2020	Feb. 14, 2018	Aug. 31, 2020	Feb. 29, 2020	Jan. 24, 2017
Related Parties Transactions (Textual)
Notes payable-related party			$ 3,000,000	$ 3,000,000
Accrued interest-related party			338,527	262,911
Notes payable and accrued interest-related party			11,752,402	11,333,960
Accrued payroll and related expenses			$ 1,008,000
Convertible Secured Notes [Member]
Related Parties Transactions (Textual)
Interest rate			5.00%
Mr. Breslow [Member]
Related Parties Transactions (Textual)
Unsecured notes payable and accrued interest - related party					$ 14,982,041
Debt amount					23,872,614
Convertible note payable and accrued interest-related party, net of discount		$ 9,388,338			$ 8,890,574
New debt agreement, term		5 years
Convertible note, amount		$ 11,982,041
Convertible note, shares		7,403,705
Reverse stock split, description		1-for-7 reverse stock split.
Interest rate		5.00%			5.00%
Remaining balance		$ 3,000,000
Conversion rate per share		$ 1.40
CEO [Member] | Unsecured Debt [Member]
Related Parties Transactions (Textual)
Unsecured notes payable and accrued interest - related party			$ 82,000
CEO [Member] | Accrued interest [Member]
Related Parties Transactions (Textual)
Unsecured notes payable and accrued interest - related party			$ 60,660
Mr. Kopple [Member]
Related Parties Transactions (Textual)
Related party transaction, description			On August 19, 2013, the Company entered into an agreement with Robert Kopple, a former member of its Board of Directors for the sale of $2,500,000 of convertible notes payable (the “Kopple Notes”) and warrants. The Kopple Notes carried a base interest rate of 9.5%, have a 4-year maturity date and were convertible into shares of common stock at the conversion price of $3.50 per share (conversion feature expired in 2017). The warrants were subsequently exercised. The Company recorded $667,118 as a discount, which has been fully amortized. The Company also entered into a demand note payable with this individual in the amount of $20,000, which bears interest at a rate of 5% per annum.
Balance of principle and accrued interest			$ 10,909,742	10,494,933
Principle loan amount			5,607,323	5,607,323
Mr. Kopple [Member] | Accrued interest [Member]
Related Parties Transactions (Textual)
Additional accrued interest			5,302,419	4,887,610
Gagerman [Member]
Related Parties Transactions (Textual)
Unsecured notes payable and accrued interest - related party			$ 142,660
Interest rate			10.00%
Remaining balance				139,026
Jiangsu Shengfeng [Member]
Related Parties Transactions (Textual)
Related party transaction, description			Following this agreement which would consists of a non-interest-bearing promissory note and a payment plan pursuant to which the $700,000 would be paid over a 12-month period. Principal loan amount on August 31, 2020 and February 29, 2020 was $700,000, respectively, and is classified as part of notes payable and accrued interest-related party, current on the balance sheets as of August 31, 2020.
Companies return	$ 700,000
Principle loan amount			$ 700,000	$ 700,000

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Commitments & Contingencies (Details)	1 Months Ended			6 Months Ended
	Mar. 26, 2019 shares	Dec. 31, 2018 USD ($)	May 31, 2018 USD ($)	Aug. 31, 2020 USD ($) ft²	Jul. 31, 2020 ft²	Dec. 31, 2017 USD ($)
Commitments & Contingencies (Textual)
Area of facility (in square feet) | ft²				1,000	20,000
Contingencies description	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.
Stockholders combined total | shares	27,500,000
Ongoing fees			$ 52,000
Moving and delivery amount		$ 114,000
Director [Member]
Commitments & Contingencies (Textual)
Secured debt, description				The Company is presently engaged in a dispute with one of its former directors, Robert Kopple, relating to approximately $10.6 million (representing approximately $5.4 million loaned to the Company over the course of 2013 to 2016; approximately $170,000 Mr. Kopple claims to have advanced or paid to third parties on Aura's behalf; and approximately $5 million Mr. Kopple claims to be owed for interest, loan fees and late payment charges) and approximately 3.33 million warrants which Mr. Kopple claims to be owed to him and his affiliates by the Company.
California labor board [Member]
Commitments & Contingencies (Textual)
Accrued salary and related charges						$ 238,000
Storage Facility [Member]
Commitments & Contingencies (Textual)
Rent per month				$ 5,000
Stanton Facility [Member]
Commitments & Contingencies (Textual)
Rent per month				$ 10,000
Office Space [Member]
Commitments & Contingencies (Textual)
Area of facility (in square feet) | ft²				300
Rent per month				$ 2,350
Offsite Storage Space [Member]
Commitments & Contingencies (Textual)
Rent per month				$ 2,500