The information contained in this Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended March 31, 2022 and presume readers have access to, and will have read, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this Form 10-Q.

The following discussion contains certain statements that may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, "Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Annual Report on Form 10-K for the year ended March 31, 2022 in the section entitled "Risk Factors" for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited consolidated financial statements and notes thereto that appear elsewhere in this report.





Overview

AuraSource focuses on the development and production of environmentally friendly and cost-effective beneficiation process for complex ore, tailings and slimes materials as industrial application solutions. AuraSource's core technology includes physical separation, hydrometallurgical and pyrometallurgy processes.

Recently, due to our various international sourcing contacts, we have been requested from various parties to source vendors and customers in the automotive industry. There can be no assurances that our efforts towards this line of business will succeed.

AuraSource's physical separation includes ultrafine grinding and impurities removal, which separate metallic and non-metallic minerals. AuraSource develops and tests hydrometallurgical flow sheets for the recovery and refining of metals from concentrate leaching, precipitation, cementation, ion-exchange, solvent extraction, electro-winning, and process simulations. AuraSource also carries out high-temperature research and process development for the production of a wide variety of mineral commodities.

AuraSource formed AuraSource Qinzhou, to acquire these types of technologies, performing R&D related to the reduction of harmful emissions and energy costs. AuraSource is currently looking to license this technology to third parties through joint ventures with strategic partners and/or selling services and products derived from this technology. Currently, we have seven patents patent issued related to our technologies: 1) ultrafine grinding and 2) ultrafine separation.

There can be no assurance we will be able to carry out our development plans for our technology. Our ability to pursue this strategy is subject to the availability of additional capital and further development of our technology. We also need to finance the cost of effectively protecting our intellectual property rights in the United States ("US") and abroad where we intend to market our technology and products.



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Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP") requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of expenses during the reporting period. On an ongoing basis, we evaluate our estimates which are based on historical experience and on other assumptions that we believe to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions. The following accounting policies require significant management judgments and estimates:

We account for our business acquisitions under the purchase method of accounting in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 805, "Business Combinations." The total cost of acquisitions is allocated to the underlying net assets, based on their respective estimated fair values. The excess of the purchase price over the estimated fair value of the tangible net assets acquired is recorded as intangibles. Determining the fair value of assets acquired and liabilities assumed requires management's judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives, and market multiples, among other items.

We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other sources. There can be no assurance that actual results will not differ from these estimates.





Results of Operations

For the Three Months Ended September 30, 2022 and 2021





Revenues

Revenues were $0 and $0 for the three months ended September 30, 2022 and 2021, respectively.



Cost of Sales

Cost of sales was $0 and $0 for the three months ended September 30, 2022 and 2021, respectively.





Gross Profit

Gross profit was $0 and $0 for the three months ended September 30, 2022 and 2021, respectively.

General and Administrative Expenses

General and administrative expenses were $137,646 and $212,483 for the three months ended September 30, 2022 and 2021, respectively which is mainly due to the decrease in stock compensation.



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Interest Income (Expense) and Other

Interest income (expense) and other was $(96,727) and $(87,572) for the three months ended September 30, 2022 and 2021, respectively.

For the Six Months Ended September 30, 2022 and 2021





Revenues

Revenues were $0 and $0 for the six months ended September 30, 2022 and 2021, respectively. The increase in revenues were due to one mineral processing contract.





Cost of Sales

Cost of sales was $0 and $0 for the six months ended September 30, 2022 and 2021, respectively.





Gross Profit

Gross profit was $0 and $0 for the six months ended September 30, 2022 and 2021, respectively.

General and Administrative Expenses

General and administrative expenses were $286,675 and $411,336 for the six months ended September 30, 2022 and 2021, respectively which is mainly due to the decrease in stock compensation.

Interest Income (Expense) and Other

Interest income (expense) and other was $(193,516) and $(172,629) for the six months ended September 30, 2022 and 2021, respectively.

Liquidity and Capital Resources

Net cash used in operating activities was $(42,965) and $(23,423) in the six months ended September 30, 2022 and 2021, respectively. The decrease in cash used for operations was mainly due to an increase in deposit offset by a reduction in accounts payable for the six months ended September 30, 2022 and 2021, respectively.

Net cash used in investing activities was $0 in the six months ended September 30, 2022 and 2021, respectively.

Net cash provided by financing activities was $19,500 and $0 in the six months ended September 30, 2022 and 2021, respectively. This was primarily due to the proceeds from the issuance of loans and stock received in 2022.



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The Company suffered recurring losses from operations and has an accumulated deficit of $21,073,805 at September 30, 2022. The Company has incurred losses of $480,191 and $583,966 for the six months ended September 30, 2022 and 2021, respectively. The Company has not continually generated significant revenues. Unless our operations continue to generate significant revenues and cash flows from operating activities, our continued operations will depend on whether we are able to raise additional funds through various sources, such as equity and debt financing, other collaborative agreements and strategic alliances. Our management is actively engaged in seeking additional capital to fund our operations in the short to medium term. Such additional funds may not become available on acceptable terms and there can be no assurance that any additional funding that we do obtain will be sufficient to meet our needs in the short and long term.





Inflation and Seasonality

Inflation has not been material to us during the past five years. Seasonality has not been material to us.

Recent Accounting Pronouncements

Refer to the notes to the consolidated financial statements in our March 31, 2022 Annual Report on Form 10-K for a complete description of recent accounting standards which we have not yet been required to implement and may be applicable to our operation, as well as those significant accounting standards that have been adopted during the current year.

Off-Balance Sheet Arrangements

As of September 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

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