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AURA SYSTEMS INC

AUSI
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Business Summary

Aura Systems, Inc. operates in the electric motor and power generation industry, having innovated and commercialized Axial Flux Induction electric motors and generators . The global electric motor market is substantial, with almost 30 million motors sold for industrial use alone each year , and electric motors account for approximately 53% of global electricity demand . The market is driven by the universal trend toward electrification, creating large demand for motors in electric vehicles, planes, and boats . The global Electric Vehicle Market is projected to grow from 4 million units in 2021 to 34.76 million units by 2030 . The global generator sales market was $20.3 billion in 2019 and is estimated to reach $27.16 billion by 2027 . Aura's axial flux induction technology avoids permanent magnets and rare earth elements, using only copper and steel with aluminum for housing , positioning it against the industry's reliance on rare earth permanent magnets, nearly all of which are processed in China .

The Company faces substantial competition from companies offering different technologies, with most competitors having far greater financial, technical, and marketing resources . Key players in the electric motor market include Nidec Motor Corporation, ABB Ltd., Siemens AG, WEG Electric Corp, Regal Beloit Corporation, Wolong, and Teco Westinghouse . In the genset market, Onan, Honda, Generac, and Kohler are well-established brands, with over 40 registered genset-manufacturing companies in the United States . Aura's competitive advantages include higher power density, with energy density of more than 45 kW/liter for machines in the 250-kW range , efficiency of more than 97% for 250 kW EV applications , and using approximately 60% less copper than equivalent traditional radial flux induction motors . The Company has shipped over 11,000 axial flux induction machines in the 5-15 kW range , with a historical failure rate of less than 0.5% over a 20-year period .

Aura's business model consists of three major components: sales and marketing, design and engineering, and axial flux induction motors and generators manufacturing . Sales and marketing approaches include direct sales in North America and the use of agents and distributors in other areas, with exploration of limited licensing of technology to very large potential users and potential joint ventures with existing industrial motor/generator suppliers . The Company generates revenue from the sale of its generator sets, recognizing revenue at the time of product delivery to the domestic distributor . In Fiscal 2026, one significant customer, CBOL, accounted for 55% of revenues .

Aura's product line includes the AuraGen for commercial and industrial applications and the VIPER for military applications . The Company has completed designs for 1.5 kW, 3.75 kW, a new 10 kW, and second generation of 250 kW motors and generators . In the first 6 months of 2026, the Company designed a 50 kW solution consisting of 40 kW of AC power and 10 kW of DC power, as well as a new 5 kW solution consisting of 2.5 kW of AC and 2.5 kW of DC power with an ability to handle up to 2.5 kW of unscheduled power spikes, both for specific U.S. military applications . The new 10 kW mobile power generator is approximately 20% smaller in diameter and 10% smaller in axial length than the legacy 8.5 kW solution . The Company also completed the design for a 250-kW generator that is air cooled and will operate at 3600 rpm , and designs for a 5-horsepower motor (3.75kW) for swimming pools applications and a 1.5 kW motor for some industrial applications .

During Fiscal 2026, the Company issued 22,830,396 shares of common stock for a total of approximately $3.6 million , and in Fiscal 2025, issued 13,704,800 shares for approximately $3.4 million . The Company did not repurchase any shares of its common stock during the fiscal years ended February 28, 2026 and 2025 . In June 2026, the Company extended its lease for the Lake Forest facility for two more years . The Company also completed the design of 1.5 kW, 3.75 kW, a new 10 and second generation of 250 kW motors and generators of its axial flux induction technology .

Net revenue was $278,000 for Fiscal 2026, compared to $50,000 for Fiscal 2025 . Gross profit was $253,000 for Fiscal 2026, compared to $21,000 for Fiscal 2025 . The Company recorded net losses of approximately $10.9 million and $21.1 million for Fiscal 2026 and 2025, respectively . Engineering, research and development expenses were approximately $1.6 million for Fiscal 2026, compared to $1.2 million for Fiscal 2025 . Selling, general and administration expenses were $2.2 million for Fiscal 2026 as compared to $3.6 million for Fiscal 2025 . Interest expense increased by $0.4 million to $2.2 million for Fiscal 2026, as compared to $1.8 million for Fiscal 2025 .

Business Outlook

Management estimates that the Company will need an additional $5 million to maintain existing operations for Fiscal 2027 and to increase shipment volume to customers .

The Company is focused on expanding its product line for electric power generation and designing electric motors for both 2- and 4-wheel EV applications . The Company is also currently in discussions for usage of its technology for numerous wind turbines applications . The global drive for electrification is creating a need for alternatives to permanent magnet motors, and Aura's axial flux induction machine is positioned as a solution that does not use any magnets . The Company is also exploring limited licensing of its technology to very large potential users as well as potential joint ventures with existing industrial motor/generator suppliers .

The Company expects to expand operations next year, which will require additional space . In 2026, the Company extended the lease for its Lake Forest facility to two more years as it looks for a larger facility outside of California . The Company has significantly increased its engineering capabilities in fiscal 2025 and 2026, hiring expert engineers in thermodynamics, electromagnetic motor design, power electronics and control, and mechanical design . The Company has also acquired advanced engineering tools such as Ansys Maxwell finite elements, MATLAB and 3-D solid work .

The Company's engineering, research and development costs for fiscal 2026 were approximately $1.6 million . The Company does not anticipate paying any dividends on its common stock in the foreseeable future .

The Company faces significant headwinds, including a going concern qualification from its independent registered public accounting firm . The Company incurred a net loss of $10.9 million, used cash in operations of $3.2 million, and at February 28, 2026, had a stockholders' deficit of $44.8 million . At February 28, 2026, notes payable and related accrued interest with an aggregate balance of $5.2 million have reached maturity and are past due . The Company does not have any sufficient committed sources of capital and does not know whether additional financing will be available when needed . Higher inflation, actions by the Federal Reserve Bank to address inflation, and rising energy prices create uncertainty about the future economic environment .

Risk Factors

The Company faces substantial doubt about its ability to continue as a going concern, having incurred a net loss of $10.9 million, used cash in operations of $3.2 million, and had a stockholders' deficit of $44.8 million at February 28, 2026 . Notes payable and related accrued interest with an aggregate balance of $5.2 million have reached maturity and are past due . The Company has substantial indebtedness, with total liabilities of $46.2 million at February 28, 2026, including a $22.8 million derivative liability related to debt conversion rights to a related party . The Company's business is not diversified, focusing all resources on the commercialization of its axial flux induction motors and AuraGen mobile power products . The Company relies on third-party manufacturers for most AuraGen components and does not have written agreements with any suppliers . The Company may not have sufficient authorized shares of common stock to satisfy the full conversion of its outstanding convertible securities .

Management Priorities

Management's message emphasizes the Company's axial flux induction technology as a disruptive solution for the electric motor and generator industry, highlighting its advantages in efficiency, size, weight, and cost . The Company is focused on completing prototypes for its new product line, which should be in Fiscal 2026 . Management has identified the need for an additional $5 million to maintain existing operations for Fiscal 2027 and to increase shipment volume to customers . The strategic priorities include expanding the product line for electric power generation, designing electric motors for EV applications, and setting up manufacturing of the axial flux induction products .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Introduction
  2. [2] Item 1, Business — Introduction
  3. [3] Item 1, Business — Markets Served by the AuraGen /VIPER Induction Motor Applications
  4. [4] Item 1, Business — EV applications
  5. [5] Item 1, Business — EV applications
  6. [6] Item 1, Business — Mobile and Remote Power Applications
  7. [7] Item 1, Business — Introduction
  8. [8] Item 1, Business — Introduction
  9. [9] Item 1, Business — Competition
  10. [10] Item 1, Business — Competition
  11. [11] Item 1, Business — Competition
  12. [12] Item 1, Business — Aura's Axial Flux induction ("AAFIM") Competitive Edge
  13. [13] Item 1, Business — Aura's Axial Flux induction ("AAFIM") Competitive Edge
  14. [14] Item 1, Business — Aura's Axial Flux induction ("AAFIM") Competitive Edge
  15. [15] Item 1, Business — Introduction
  16. [16] Item 1, Business — Durability; No Scheduled Maintenance
  17. [17] Item 7, MD&A — Overview
  18. [18] Item 7, MD&A — Overview
  19. [19] Item 7, MD&A — Revenue Recognition
  20. [20] Item 1, Business — Significant Customers
  21. [21] Item 7, MD&A — Overview
  22. [22] Item 1, Business — Recent Developments
  23. [23] Item 1, Business — Recent Developments
  24. [24] Item 1, Business — Introduction
  25. [25] Item 1, Business — Introduction
  26. [26] Item 1, Business — Introduction
  27. [27] Item 5, Market for Registrant's Common Equity — Sales of Unregistered Securities
  28. [28] Item 5, Market for Registrant's Common Equity — Sales of Unregistered Securities
  29. [29] Item 5, Market for Registrant's Common Equity — Repurchases of Equity Securities
  30. [30] Item 2, Properties
  31. [31] Item 1, Business — Recent Developments
  32. [32] Item 7, MD&A — Results of Operations
  33. [33] Item 7, MD&A — Results of Operations
  34. [34] Item 7, MD&A — Net Loss
  35. [35] Item 7, MD&A — Engineering, Research and Development
  36. [36] Item 7, MD&A — Selling, General and Administrative Expense
  37. [37] Item 7, MD&A — Other Income (Expense) and Interest Expense
  38. [38] Item 7, MD&A — Liquidity and Capital Resources
  39. [39] Item 7, MD&A — Overview
  40. [40] Item 7, MD&A — Overview
  41. [41] Item 1, Business — Targeted Market
  42. [42] Item 7, MD&A — Overview
  43. [43] Item 1, Business — Facilities, Manufacturing Process and Suppliers
  44. [44] Item 1, Business — Facilities, Manufacturing Process and Suppliers
  45. [45] Item 7, MD&A — Overview
  46. [46] Item 7, MD&A — Overview
  47. [47] Item 7, MD&A — Overview
  48. [48] Item 5, Market for Registrant's Common Equity — Dividend Policy
  49. [49] Item 1A, Risk Factors — Going Concern
  50. [50] Item 1A, Risk Factors — Going Concern
  51. [51] Item 1A, Risk Factors — Going Concern
  52. [52] Item 1A, Risk Factors — Going Concern
  53. [53] Item 7, MD&A — Inflation
  54. [54] Item 1A, Risk Factors — Going Concern
  55. [55] Item 1A, Risk Factors — Going Concern
  56. [56] Item 1A, Risk Factors — We have substantial indebtedness
  57. [57] Item 1A, Risk Factors — Our business is not diversified
  58. [58] Item 1A, Risk Factors — We may experience delays in product shipments
  59. [59] Item 1A, Risk Factors — The Company may not have sufficient authorized shares
  60. [60] Item 7, MD&A — Overview
  61. [61] Item 7, MD&A — Results of Operations
  62. [62] Item 7, MD&A — Liquidity and Capital Resources
  63. [63] Item 7, MD&A — Overview
  64. [64] Item 8, Financial Statements — Statements of Operations
  65. [65] Item 8, Financial Statements — Statements of Operations
  66. [66] Item 8, Financial Statements — Statements of Operations
  67. [67] Item 8, Financial Statements — Statements of Operations
  68. [68] Item 8, Financial Statements — Statements of Operations
  69. [69] Item 8, Financial Statements — Statements of Operations
  70. [70] Item 8, Financial Statements — Statements of Operations
  71. [71] Item 1A, Risk Factors — We have substantial indebtedness
  72. [72] Item 1A, Risk Factors — We have substantial indebtedness
  73. [73] Item 8, Financial Statements — Balance Sheets

Analysis on 9/10/2026