AURA SYSTEMS INC (AUSI) presents a deeply negative liquidation posture as of November 30, 2025. Total assets of $1.316M face total liabilities of $38.244M, producing a book stockholders' deficit of $36.928M. Under liquidation haircuts, the asset side deteriorates further: cash of $107K recovers at par; PP&E net book value of $487K recovers at 50-70% ($244K-$341K); inventory of $5K recovers at 60% ($3K); prepaid/other current assets of $333K and deposits of $160K are largely non-recoverable. Applying standard haircuts, total liquidation asset recovery is approximately $600K-$650K against $38.244M in liabilities at face value, yielding an estimated equity recovery of roughly negative $37.6M to $37.8M, consistent with MFFAIS's reported CLV/LLV of negative $37.819M. The liability stack is dominated by the Level 3 derivative liability on the Kopple convertible note conversion option ($15.611M fair value, down from $17.565M at February 28, 2025), related-party convertible notes payable ($12.279M, all current, all past due or in default), accrued interest ($4.232M, up from $2.875M at February 28, 2025—a $1.357M increase in nine months driven primarily by Kopple interest accruing at 15% default rate), non-related-party convertible notes payable ($1.493M, past due), and notes payable ($677K). The Kopple note ($9.259M principal) is the single largest debt instrument; the $2.052M installment payment originally due December 2024 was extended four times through December 31, 2025, with $325K in fees incurred and $248K payable as of the filing date, and the company discloses ongoing negotiations for another extension. Kopple's debt is secured by substantially all tangible and intangible assets, is senior by covenant, and carries a 50%-of-VWAP variable conversion feature that has been classified as a derivative liability due to insufficient authorized shares. The company had only 150M authorized shares against 162.8M antidilutive shares and 132.6M issued shares—meaning authorized share capacity is currently exhausted for conversion purposes. The sequencing policy prioritizes warrants and non-Kopple convertible notes; the Kopple conversion option is therefore bifurcated as a derivative liability. Compared to the prior Q2 filing (August 31, 2025), the stockholders' deficit improved from negative $43.501M to negative $36.928M, driven primarily by a $6.705M non-cash mark-to-market gain on the derivative liability in Q3 (stock price fell from approximately $0.34 to $0.13) rather than any improvement in the debt or asset base. Accrued interest grew by approximately $785K in Q3 alone. The filing discusses going concern doubt explicitly and estimates a need for $6M in additional capital to sustain Fiscal 2026 operations. Cash used in operations was $2.397M for the nine months. PP&E ($487K net) and inventory ($5K) are the only tangible operating assets with liquidation value, and both are de minimis relative to the liability stack. The Jiangsu Shengfeng related-party note ($733K) remains on the balance sheet despite the joint venture's dissolution in early fiscal 2024 with no demand filed; its recoverability as a liability write-off is uncertain and the filing does not separately tag the potential extinguishment gain in XBRL.
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