The following discussion should be read in conjunction with the Financial Statements and notes thereto included in Item 8 of Part II of this Annual Report on Form 10-K.





Overview

We have divided our activities into two divisions: AuraMetal and AuraMoto.

AuraMetalTM is focused 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. We have developed seven patented technologies: 1) ultrafine grinding and 2) ultrafine separation. To date, we have not had any sustainable projects. As such, there can be no assurances that our efforts towards this line of business will succeed.

AuraMotoTM is focused on sourcing various vendors and customers in the automotive industry. We entered into the industry due to our various international sourcing contacts. We have been requested from various parties to source vendors and customers in the automotive industry. This business line is still in development. As this is a new enterprise for the Company, there can be no assurances that our efforts towards this line of business will succeed.

Recently Issued Accounting Pronouncements

Refer to the notes to the consolidated financial statements 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.





Critical Accounting Policies

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 various other assumptions that are believed 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:

Revenue Recognition - The Company recognizes revenue in accordance with ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. When we are paid in advance for products or services we classify these amounts as deferred revenue. Upon the receipt of these products at the destination port, we recognize revenue. For services, and we amortized the price over the term of the agreement. Starting April 1, 2018, the Company implemented ASC 606. Either the retrospective or cumulative effect transition method is permitted. The Company adopted this policy. There has been not been an impact on the financial results of the Company.



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Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of- In accordance with ASC 360 and ASC 820, we evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. We currently believe there is no impairment of our long-lived assets. There can be no assurance, however, that market conditions will not change or demand for our products under development will continue. Either of these could result in future impairment of long-lived assets.

Fiscal Year 2022 Compared to Fiscal Year 2021





Results from Operations



Revenues

Revenues were $0 for the years ended March 31, 2022 and 2021.





Cost of Sales

Cost of sales was $0 for the years ended March 31, 2022 and 2021.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses were $772,893 and $620,129 for the years ended March 31, 2022 and 2021, respectively. The increase in expense of $152,764 in selling, general and administrative expenses was primarily due increase in stock compensation expense in 2022.

Interest Income (Expense) and Other, Net

Interest income (expense) and other, net was ($356,804) and ($306,690) for the years ended March 31, 2022 and 2021, respectively. The increase in interest expense for the year ending March 31, 2022 and 2021 was primarily due to the outstanding note payables.

Liquidity and Capital Resources

Net cash used in operating activities was $44,450 and $41,542 for the years ended March 31, 2022 and 2021, respectively. The increase in cash used for operations was mainly due to an increase in rent expense.

Net cash used in investing activities was$0 and $5,481 for the years ended March 31, 2022 and 2021, respectively.

Net cash provided by financing activities was $0 and $102,232 for the years ended March 31, 2022 and 2021, respectively. The increase in cash flows from financing activities was due to an increase in stock issued for cash in 2021 compared to 2022.



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The Company suffered recurring losses from operations and has an accumulated deficit of $20,593,614 at March 31, 2022. Currently, we have not generated consistent revenues as of March 31, 2022, had a cash balance of $3,437. The Company is seeking various forms of financing. To the extent additional funding is not achieved this will delay our business plans. We believe we have sufficient cash resources for the next 6 months, in order to meet our business goals we will need to seek additional funding or enter into strategic partnerships.





Going Concern Uncertainties

As of the date of this annual report, there is doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our business operations and loan commitments. Our future success and viability, therefore, are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon the Company and our shareholders.





Capital Expenditures

We had $0 capital expenditures for the years ended March 31, 2022 and 2021, respectively.

Commitments and Contractual Obligations

Effective January 1, 2020, AuraSource, Inc. (the "Company") entered into an Employment Agreement (the "Employment Agreement") with Philip Liu, the Company's CEO. Under the Employment Agreement, Mr. Liu will receive a base salary of $240,000 per year and a guaranteed bonus of $40,000 per year. Each quarter Mr. Liu shall receive 100,000 options to purchase the Company's common at an exercise price of $0.052 per share. Mr. Liu will be eligible for an incentive bonus based on his performance. Additionally, Mr. Liu will receive a car allowance of $500 per month and an office allowance of $500 per month. The term of the contract is from January 1, 2020 to December 31, 2025.

Effective January 1, 2020, the Company entered into an Employment Agreement (the "Employment Agreement") with Eric Stoppenhagen, the Company's CFO. Under the Employment Agreement, Mr. Stoppenhagen will receive a base salary of $120,000 per year and a guaranteed bonus of $20,000 per year. Each quarter Mr. Stoppenhagen shall receive 100,000 options to purchase the Company's common at an exercise price of $0.052 per share. Mr. Stoppenhagen will be eligible for an incentive bonus based on his performance. Additionally, Mr. Stoppenhagen will receive a car allowance of $250 per month and an office allowance of $250 per month. The term of the contract is from January 1, 2020 to December 31, 2025.

We currently do not have any other material commitments and contractual obligations.

Off-Balance Sheet Arrangements

As of March 31, 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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