| Delaware                          | 95-4106894                           |
|-----------------------------------|--------------------------------------|
| (State or other jurisdiction      | (I.R.S. Employer Identification No.) |
| of incorporation or organization) |                                 |

| Large Accelerated Filer ¨ |   | Accelerated Filer ¨    |
|--------------------------------|--------|-----------------------------|
| Non-accelerated filer ¨   |   | Smaller Reporting Company x |

----

| Class                                     |   | Outstanding December 31, 2010 |
|-------------------------------------------|--------|-------------------------------|
|                                      |   |                          |
| Common Stock, par value $0.0001 per share |   | 57,489,238 shares             |

----

|  Index |                          |                                                                                                                              |   | Page No.                                                       |
|-------------|-------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|
| PART I.     | FINANCIAL INFORMATION         |                                                                                                                              |   |                                                           |
|        |                          |                                                                                                                              |   |                                                           |
|        | ITEM 1.                       | Financial Statements (Unaudited)                                                                                                  |   |                                                           |
|        |                          |                                                                                                                              |   |                                                           |
|        |                          | Statement Regarding Financial Information                                                                                         |   | 4                                                              |
|        |                          |                                                                                                                              |   |                                                           |
|        |                          | Unaudited Condensed  Balance Sheets as of November 30, 2010 and February 28, 2010                                       |   | 5                                                              |
|        |                          |                                                                                                                              |   |                                                           |
|        |                          | Unaudited Condensed  Statements of Operations for the Three and Nine  Months Ended November 30, 2010 and 2009 |   | 6                                                              |
|        |                          |                                                                                                                              |   |                                                           |
|        |                          | Unaudited Condensed Statements of Cash Flows for the Nine Months Ended November 30, 2010 and 2009                                 |   | 7                                                              |
|        |                          |                                                                                                                              |   |                                                           |
|        |                          | Notes to Unaudited Condensed  Financial Statements                                                                      |   | 8                                                              |
|        |                          |                                                                                                                              |   |                                                           |
|        | ITEM 2.                       | Management's Discussion and Analysis of Financial Condition and Results of Operations                                             |   | 16                                                             |
|        |                          |                                                                                                                              |   |                                                           |
|        | ITEM 4T.                      | Controls and Procedures                                                                                                           |   | 22                                                             |
|        |                          |                                                                                                                              |   |                                                           |
| PART II.    | OTHER INFORMATION             |                                                                                                                              |   |                                                           |
|        |                          |                                                                                                                              |   |                                                           |
|        | ITEM 2.                       | Unregistered Sales of Equity Securities and Use of Proceeds                                                                  |   | 23                                                             |
|        |  ITEM 3.            |   Defaults Upon Senior Securities                                                                                            |   |           23 |
|        | ITEM 6.                       | Exhibits                                                                                                                          |   | 23                                                             |
|        |                          |                                                                                                                              |   |                                                           |
|        | SIGNATURES AND CERTIFICATIONS |                                                                                                                              | 23     |

----

----

|                                                                                                                                                                                                           |   | November 30, 2010 |         |   | February 28, 2010 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------------|--------|-------------------|--------|
| ASSETS                                                                                                                                                                                                         |   |              |         |   |              |   |
| Current assets:                                                                                                                                                                                                |   |              |         |   |              |   |
| Cash and cash equivalents                                                                                                                                                                                      |   | $                 | -            |   |              | $      | 45,294 |   |
| Accounts receivable, net of allowance for doubtful accounts of $50,000  at November 30, 2010 and February 28, 2010                                                                              |   |              | 706,086      |   |              |   | 313,671 |   |
| Inventory - current                                                                                                                                                                                            |   |              | 1,500,000    |   |              |   | 1,500,000 |   |
| Other current assets                                                                                                                                                                                           |   |              | 205,481      |   |              |   | 241,749 |   |
| Total current assets                                                                                                                                                                                           |   |              | 2,411,567    |   |              |   | 2,100,714 |   |
|                                                                                                                                                                                                           |   |              |         |   |              |   |   |   |
| Property, plant, and equipment, net                                                                                                                                                                            |   |              | 427,353      |   |              |   | 557,838 |   |
| Inventory, non-current, net of allowance for obsolete inventory of $2,067,298 and $2,212,626 at November 30 and February 28, 2010, respectively                                                                |   |              | 1,997,030    |   |              |   | 2,140,194 |   |
|                                                                                                                                                                                                           |   |              |         |   |              |   |
| Total assets                                                                                                                                                                                                   |   | $                 | 4,835,950    |   |              | $      | 4,798,746 |   |
|                                                                                                                                                                                                           |   |              |         |   |              |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                                                          |   |              |         |   |              |
| Current liabilities:                                                                                                                                                                                           |   |              |         |   |              |   |   |   |
| Book overdraft                                                                                                                                                                                                 |   | $                 | 67,393       |   |              | $      | - |   |
| Accounts payable                                                                                                                                                                                               |   |              | 1,552,771    |   |              |   | 1,130,276 |   |
| Notes payable                                                                                                                                                                                                  |   |              | 195,000      |   |              |   | 90,000 |   |
| Convertible notes payable                                                                                                                                                                                      |   |              | 340,000      |   |              |   | 457,500 |   |
| Notes payable and accrued interest- related party                                                                                                                                                              |   |              | 9,061,310    |   |              |   | 5,603,199 |   |
| Accrued expenses                                                                                                                                                                                               |   |              | 2,802,294    |   |              |   | 1,768,560 |   |
| Customer advances                                                                                                                                                                                              |   |              | 323,828      |   |              |   | 411,616 |   |
|                                                                                                                                                                                                           |   |              |         |   |              |   |
| Total current liabilities                                                                                                                                                                                      |   |              | 14,342,596   |   |              |   | 9,461,151 |   |
|                                                                                                                                                                                                           |   |              |         |   |              |   |   |   |
| Convertible note payable                                                                                                                                                                                       |   |              | 500,000      |   |              |   | 500,000 |   |
|                                                                                                                                                                                                           |   |              |         |   |              |   |
| Total liabilities                                                                                                                                                                                              |   |              | 14,842,596   |   |              |   | 9,961,151 |   |
|                                                                                                                                                                                                           |   |              |         |   |              |   |   |   |
|                                                                                                                                                                                                           |   |              |         |   |              |   |   |   |
| Commitments                                                                                                                                                                                                    |   |              |         |   |              |   |   |   |
|                                                                                                                                                                                                           |   |              |         |   |              |   |   |   |
|                                                                                                                                                                                                           |   |              |         |   |              |   |   |   |
| Stockholders' deficit :                                                                                                                                                                                        |   |              |         |   |              |   |   |   |
| Common stock, $0.0001par value; 75,000,000 shares authorized at November 30, 2010 and February 28, 2010; 57,189,238 and 52,689,061 issued and outstanding at November 30, 2010 and February 28, 2010 |   |              | 5,719        |   |              |   | 5,268 |   |
| Stock to be issued                                                                                                                                                                                             |   |              | 50,000       |   |              |   | - |   |
| Additional paid-in capital                                                                                                                                                                                     |   |              | 377,856,854  |   |              |   | 374,890,469 |   |
| Accumulated deficit                                                                                                                                                                                            |   |              | (387,919,219 | )      |              |   | (380,058,142 | ) |
|                                                                                                                                                                                                           |   |              |         |   |              |   |
| Total stockholders' deficit                                                                                                                                                                                    |   |              | (10,006,646  | )      |              |   | (5,162,405 | ) |
|                                                                                                                                                                                                           |   |              |         |   |              |   |
| Total liabilities and stockholders' deficit                                                                                                                                                                    |   | $                 | 4,835,950    |   |              | $      | 4,798,746 |   |
|                                                                                                                                                                                                           |   |              |         |   |              |   |

----

|                                                                             |   | Three Months |       |   | Nine Months |   |
|----------------------------------------------------------------------------------|--------|--------------|------------|--------|-------------|--------|
|                                                                             |   | 2010         |       |   | 2009        |   |   | 2010 |   |   | 2009 |   |
| Net Revenues                                                                     |   | $            | 1,250,255  |   |        | $      | 1,160,577 |   |   | $ | 2,835,722 |   |   | $ | 2,425,383 |   |
|                                                                             |   |         |       |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods sold                                                               |   |         | 698,517    |   |        |   | 563,148 |   |   |   | 1,482,364 |   |   |   | 1,384,184 |   |
|                                                                             |   |         |       |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                                                     |   |         | 551,738    |   |        |   | 597,429 |   |   |   | 1,353,358 |   |   |   | 1,041,199 |   |
|                                                                             |   |         |       |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Expenses                                                                         |   |         |       |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Engineering, research and development expenses                                   |   |         | 472,045    |   |        |   | 562,082 |   |   |   | 1,284,700 |   |   |   | 1,626,357 |   |
| Selling, general and administrative expenses                                     |   |         | 2,121,240  |   |        |   | 1,991,747 |   |   |   | 7,197,289 |   |   |   | 12,367,815 |   |
| Total costs and expenses                                                         |   |         | 2,593,285  |   |        |   | 2,553,829 |   |   |   | 8,481,989 |   |   |   | 13,994,172 |   |
|                                                                             |   |         |       |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                                             |   |         | (2,041,547 | )      |        |   | (1,956,400 | ) |   |   | (7,128,631 | ) |   |   | (12,952,973 | ) |
|                                                                             |   |         |       |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Other income and (expense)                                                       |   |         |       |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense, net                                                            |   |         | (211,663   | )      |        |   | (217,032 | ) |   |   | (670,284 | ) |   |   | (553,265 | ) |
| Loss on settlement of debt                                                       |   |         | -          |   |        |   | - |   |   |   | (57,032 | ) |   |   | - |   |
| Other income (expense), net                                                      |   |         | (826       | )      |        |   | - |   |   |   | (5,129 | ) |   |   | (21,850 | ) |
| Total other income (expense)                                                     |   |         | (212,489   | )      |        |   | (217,032 | ) |   |   | (732,445 | ) |   |   | (575,115 | ) |
| Net Loss                                                                         |   | $            | (2,254,036 | )      |        | $      | (2,173,432 | ) |   | $ | (7,861,076 | ) |   | $ | (13,528,088 | ) |
|                                                                             |   |         |       |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Total basic and diluted loss per share                                           |   | $            | (0.04      | )      |        | $      | (0.05 | ) |   | $ | (0.14 | ) |   | $ | (0.29 | ) |
| Weighted average shares used tocompute basic and diluted income (loss) per share |   |         | 56,123,980 |   |        |   | 48,171,882 |   |   |   | 54,672,840 |   |   |   | 47,412,895 |   |

----

|                                                                        |   | 2010   |       |   | 2009   |   |
|-----------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Cash flow from operating activities:                                        |   |   |       |   |   |   |
| Net Loss                                                                    |   | $      | (7,861,076 | )      |   | $      | (13,528,088 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |   |       |   |   |   |   |   |
| Depreciation expense                                                        |   |   | 140,083    |   |   |   | 92,452 |   |
| Amortization of debt discount                                               |   |   | 72,000     |   |   |   | 220,289 |   |
| Loss on settlement of debt                                                  |   |   | 57,032     |   |   |   | 22,750 |   |
| Stock options and warrants expense                                          |   |   | 128,999    |   |   |   | 6,807,417 |   |
| Stock issued for services                                                   |   |   | 803,000    |   |   |   | - |   |
| (Increase) decrease in:Accounts receivable                                  |   |   | (392,415   | )      |   |   | (289,283 | ) |
| Inventory                                                                   |   |   | 143,164    |   |   |   | 343,820 |   |
| Other current assets and deposit                                            |   |   | 36,268     |   |   |   | (107,753 | ) |
| Increase (decrease) in:                                                     |   |   |       |   |   |   |   |   |
| Cash overdraft                                                              |   |   | 67,393     |   |   |   | - |   |
| Accounts payable, customer deposit and accrued expenses                     |   |   | 2,210,963  |   |   |   | 1,291,101 |   |
| Net cash used in operations                                                 |   |   | (4,594,589 | )      |   |   | (5,147,305 | ) |
|                                                                        |   |   |       |   |   |   |   |   |
| Investing activities:                                                       |   |   |       |   |   |   |   |   |
| Acquisition of plant and equipment                                          |   |   | (9,599     | )      |   |   | (318,151 | ) |
|                                                                        |   |   |       |   |   |   |
|                                                                        |   |   |       |   |   |   |   |   |
| Financing activities:                                                       |   |   |       |   |   |   |   |   |
| Issuance of common stock                                                    |   |   | 1,453,894  |   |   |   | 1,667,496 |   |
| Proceeds from stock to be issued                                            |   |   | 50,000     |   |   |   | - |   |
| Proceeds from (repayments of) notes payable, net                            |   |   | 145,000    |   |   |   | 757,500 |   |
| Proceeds from (repayments of) notes payable, related party, net             |   |   | 2,910,000  |   |   |   | 2,650,000 |   |
| Exercise of warrants                                                        |   |   | -          |   |   |   | 94,428 |   |
|                                                                        |   |   |       |   |   |   |
| Net cash provided by financing activities:                                  |   |   | 4,558,894  |   |   |   | 5,169,424 |   |
|                                                                        |   |   |       |   |   |   |
| Net increase (decrease) in cash & cash equivalents                      |   |   | (45,294    | )      |   |   | (296,032 | ) |
|                                                                        |   |   |       |   |   |   |   |   |
| Cash and cash equivalents at beginning of period                            |   |   | 45,294     |   |   |   | 317,256 |   |
|                                                                        |   |   |       |   |   |   |
| Cash and cash equivalents at end of period                                  |   | $      | -          |   |   | $      | 21,224 |   |
|                                                                        |   |   |       |   |   |   |
| Supplemental disclosures of cash flow information                           |   |   |       |   |   |   |   |   |
| Cash paid during the period for:                                            |   |   |       |   |   |   |   |   |
| Interest                                                                    |   | $      | 17,562     |   |   | $      | 26,088 |   |
|                                                                        |   |   |       |   |   |   |   |   |

| Machinery and equipment | 5 to 10 years |
|-------------------------|---------------|
| Furniture and fixtures  | 7 years       |

|                                        |   | November 30, 2010 |       |   | February 28,2010 |   |
|---------------------------------------------|--------|-------------------|------------|--------|------------------|--------|
|                                        |   |              |       |   |             |   |
| Raw materials                               |   | $                 | 2,380,426  |   |             | $      | 2,626,206 |   |
| Finished goods                              |   |              | 3,183,902  |   |             |   | 3,226,614 |   |
| Reserved for potential product obsolescence |   |              | (1,939,828 | )      |             |   | (2,076,018 | ) |
|                                        |   |              |       |   |             |   |
|                                        |   |              | 3,624,500  |   |             |   | 3,776,802 |   |
| Non-current portion                         |   |              | (1,997,030 | )      |             |   | (2,140,194 | ) |
| Discount on long term inventory             |   |              | (127,470   | )      |             |   | (136,608 | ) |
|                                        |   |              |       |   |             |   |
| Current portion                             |   | $                 | 1,500,000  |   |             | $      | 1,500,000 |   |
|                                        |   |              |       |   |             |   |

|                                           |   | November 30, 2010 |      |   | February 28, 2010 |   |
|------------------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|
|                                           |   |              |      |   |              |   |
| Machinery and equipment                        |   | $                 | 964,111   |   |              | $      | 1,060,519 |   |
| Furniture and fixtures                         |   |              | 163,302   |   |              |   | 1,493,293 |   |
| Leasehold Improvements                         |   |              | 485,080   |   |              |   | 481,887 |   |
|                                           |   |              |      |   |              |   |   |   |
|                                           |   |              | 1,612,493 |   |              |   | 3,035,699 |   |
| Less accumulated depreciation and amortization |   |              | 1,185,140 |   |              |   | 2,477,861 |   |
|                                           |   |              |      |   |              |   |   |   |
| Property, plant and equipment, net             |   | $                 | 427,353   |   |              | $      | 557,838 |   |
|                                           |   |              |      |   |              |   |   |   |

|                                 |   | November 30, 2010 |      |   | February 28, 2010 |   |
|--------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|
|                                 |   |              |      |   |              |   |
| Accrued payroll and related expenses |   | $                 | 2,718,849 |   |              | $      | 1,716,279 |   |
| Accrued interest                     |   |              | 46,147    |   |              |   | 41,631 |   |
| Other                                |   |              | 37,298    |   |              |   | 10,650 |   |
|                                 |   |              |      |   |              |   |   |   |
| Total                                |   | $                 | 2,802,294 |   |              | $      | 1,768,560 |   |
|                                 |   |              |      |   |              |   |   |   |

|                                |   | November 30, 2010 |      |   | February 28, 2010 |   |
|-------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|
|                                |   |              |      |   |              |   |
| Demand notes payable  (a) |   | $                 | 195,000   |   |              | $      | 90,000 |   |
| Convertible notes payable (b)       |   |              | 840,000   |   |              |   | 957,500 |   |
|                                |   |              | 1,035,000 |   |              |   | 1,047,500 |   |
|                                |   |              |      |   |              |   |   |   |
| Less: Current portion               |   |              | 535,000   |   |              |   | 547,500 |   |
|                                |   |              |      |   |              |   |   |   |
| Long-term portion                   |   | $                 | 500,000   |   |              | $      | 500,000 |   |
|                                |   |              |      |   |              |   |   |   |

| Year Ending February 28, |   |   |      |
|--------------------------|--------|--------|-----------|
| 2011                     |   | $      | 535,000   |   |
| 2012                     |   |   | -         |   |
| 2013                     |   |   | 500,000   |   |
| Total                    |   | $      | 1,035,000 |   |

|                           | 2006 Plan |                            |
|--------------------------------|-----------|---------------------------------|
|                           |      | Weighted-Average Exercise Price |   | Aggregate Intrinsic Value |   | Number of Options |   |
| Outstanding, February 28, 2010 |      | $                               | 1.50 |   |   |   |   | 6,283,500 |   |
| Issued                         |      | $                               | 1.50 |   |   |   |   | 224,000 |   |
| Cancelled                      |      | $                               | 1.50 |   |   |   |   | (3,000 | ) |
| Outstanding, November 30, 2010 |      | $                               | 1.50 |   |   |   |   | 6,504,500 |   |

| Options Outstanding    |   | Exercisable Options |      |
|------------------------|--------|---------------------|-----------|
| Range of ExercisePrice |   | Number              |      | Weighted Average Remaining Life |   | Weighted Average Exercise Price |   | Weighted Average Remaining Life |   | Number |   | Weighted Average Exercise Price |   |
|   $1.50           |   |                | 6,504,500 |   |   | 3.48 years |   | $ | 1.50 |   |   | 3.45 years |   |   | 6,255,964 |   | $ | 1.50 |   |

|                           |   | Number of Shares |      |   | Exercise Prices |   |
|--------------------------------|--------|------------------|-----------|--------|-----------------|--------|
| Outstanding, February 28, 2010 |   |             | 6,612,793 |   |            | $      | 0.75-4.00 |   |
| Issued                         |   |             | 350,642   |   |            | $      | 1.50 |   |
| Outstanding, November 30, 2010 |   |             | 6,963,435 |   |            | $      | 0.75-4.00 |   |

| Range of Exercise Prices |   | 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 |   |  Intrinsic Value |
|--------------------------|--------|----------------------------|--------|----------------------------|--------|---------------------------------------------|--------|---------------------------------------------------------|--------|---------------------------------------------------------|--------|-----------------------|
| $1.50                    |   | 350,642                    |   | 350,642                    |   | 87 months                                   |   | $1.50                                                   |   | $1.50                                                   |   | $0.00                 |
| $0.75-1.25               |   | 1,354,710                  |   | 1,354,710                  |   | 44 months                                   |   | $1.25                                                   |   | $1.25                                                   |   | $0.00                 |
| $1.50                    |   | 1,900,000                  |   | 1,900,000                  |   | 43 months                                   |   | $1.50                                                   |   | $1.50                                                   |   | $0.00                 |
| $2.00-$3.00              |   | 1,934,991                  |   | 1,934,991                  |   | 3 months                                    |   | $2.44                                                   |   | $2.49                                                   |   | $0.00                 |
| $3.50                    |   | 805,589                    |   | 805,589                    |   | 13 months                                   |   | $3.50                                                   |   | $3.50                                                   |   | $0.00                 |
| $4.00                    |   | 617,503                    |   | 617,503                    |   | 2 months                                    |   | $4.00                                                   |   | $4.00                                                   |   | $0.00                 |
|                     |   | 6,963,435                  |   | 6,963,435                  |   |                                        |   |                                                    |   |                                                    |   |                  |

|          |   | 2010   |      |   | 2009   |   |
|---------------|--------|--------|-----------|--------|--------|--------|
|          |   |   |      |   |   |   |
| United States |   | $      | 2,083,848 |   |   | $      | 1,737,148 |   |
| Canada        |   |   | 430,786   |   |   |   | 231,849 |   |
| Asia          |   |   | 307,008   |   |   |   | 439,495 |   |
| Europe        |   |   | 6,580     |   |   |   | 16,891 |   |
| Other         |   |   | 7,500     |   |   |   | - |   |
|          |   |   |      |   |   |   |   |   |
| Total         |   | $      | 2,835,722 |   |   | $      | 2,425,383 |   |
|          |   |   |      |   |   |   |   |   |

| · | Our ability to generate positive cash flow from operations; |
|--------|-------------------------------------------------------------|

| · | Our ability to obtain additional financing to fund our operations; |
|--------|--------------------------------------------------------------------|

| · | Our business development and  operating development; and |
|--------|--------------------------------------------------------------------|

| · | Our expectations of growth in demand for our products. |
|--------|--------------------------------------------------------|

|   | (1) | A number of anticipated contracts totaling in excess of $7 million were delayed. The overall economy was unstable, causing delays in purchasing decisions by numerous commercial and industrial users. In particular the state of the economy had a major negative impact on the trucking industry and therefore a major negative impact on anticipated mobile electric power purchasing in trucks. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | The downturn in the economy has caused the expected orders from our potential customer for small wind turbines to be delayed.  Aura was anticipating delivering $3.5 million in small wind turbine solutions. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | The development of certain modules and configurations took longer than expected, resulting in delays of availability of product.  In particular the integration of the AuraGen with the Zanotti transport refrigeration system was not completed until November 2010 (impact of $6.0 million) |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | The Company’s poor cash position caused numerous delays in shipments by not having the capital to purchase components and parts in a timely fashion. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

----