AuraSource, Inc. - Quarter Report: 2010 June (Form 10-Q)

form10-q.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended June 30, 2010

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-28585

AuraSource, Inc.

(Exact name of registrant as specified in its charter)

Nevada

(State or Other Jurisdiction of Incorporation or Organization)

68-0427395

(IRS Employer Identification No.)

1490 South Price Rd. #219

Chandler, AZ 85286

(Address of principal executive offices, zip code)

Registrant's telephone number (including area code): (480) 292-7179

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x NO 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  Accelerated Filer  Non-accelerated Filer x Smaller reporting company 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at August 13, 2010
Common Stock, $.001 par value		28,262,190

AURASOURCE, INC.

INDEX

PART I	FINANCIAL INFORMATION
ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS:
	Consolidated Balance Sheets — June 30, 2010 (Unaudited) and March 31, 2010
	Consolidated Statements of Operations (Unaudited) — Three months ended June 30, 2010 and 2009
	Consolidated Statements of Stockholders’ Equity (Deficit) — Three months ended June 30, 2010
	Consolidated Statements of Cash Flows (Unaudited) —Three months ended June 30, 2010 and 2009
	Notes to Consolidated Financial Statements
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 4.	CONTROLS AND PROCEDURES

PART II	OTHER INFORMATION
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 6.	EXHIBITS

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PART I - FINANCIAL INFORMATION

ITEM I — CONSOLIDATED FINANCIAL STATEMENTS

AuraSource, Inc.

(A Development Stage Enterprise)

Consolidated Balance Sheets

(Unaudited)

	June 30,				March 31,
	2010				2010
ASSETS	(Unaudited)
Current assets
Cash and cash equivalents		$	1,305,270		$	1,642,006
Prepaid expenses			43,750			4,294
Total current assets			1,349,020			1,646,300

Fixed assets, net of accumulated depreciation			29,135			31,074

Total assets		$	1,378,155		$	1,677,374


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable		$	54,892		$	32,008
Accrued expenses			30,000			30,000


Total current liabilities			84,892			62,008

Commitments and contingencies

Shareholders' equity
Preferred stock, 10,000 shares authorized, no shares issued and
outstanding, no rights or privileges designated			-			-
Common stock, $.001 par value, 150,000,000 shares authorized 28,262,190 shares issued and outstanding at June 30, 2010 and March 31, 2010, respectively.			28,262			28,262
Committed common stock			300,000			-
Common stock subscription receivable			(300,000	)		-
Additional paid in capital			4,445,248			4,451,915
Accumulated deficit			(3,180,247	)		(2,864,811	)
Total shareholders' equity			1,293,263			1,615,366

Total liabilities and shareholders' equity		$	1,378,155		$	1,677,374


The accompanying notes are an integral part of these consolidated financial statements.

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AuraSource, Inc.

(A Development Stage Enterprise)

Consolidated Statements of Operations

For the Three months Ended June 30, 2010 and 2009 and for the Period March 15, 1990 (Inception) through June 30, 2010

(Unaudited)

						From March 15, 1990 (Inception) to June 30,
	2010		2009			2010

Revenue, net	$	-	$	-		$	-

Cost of revenue		-		-			-

Gross profit		-		-			-

Operating expenses:
General & administrative expenses		316,667		712,448			3,184,728
Total operating expenses		316,667		712,448			3,184,728

Loss from operations		( 316,667)		( 712,448	)		(3,184,728)

Merger fee, net		-		-			80,000
Interest income / (expense) and other, net		1,231		(5,011	)		(75,519)

Net loss applicable to common stockholders	$	(315,436)	$	(717,459)		$	(3,180,247)

Basic & Diluted Loss per share	$	(0.01)	$	(0.03)

Weighted average shares outstanding		28,262,190		20,826,667

The accompanying notes are an integral part of these consolidated financial statements.

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AURASOURCE, INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE PERIOD MARCH 15, 1990 (INCEPTION)

THROUGH JUNE 30, 2010

(Unaudited)

	Preferred Stock					Common Stock					APIC			Committed Stock		Accumulated Deficit				Total
	Shares			Amount		Shares			Amount						(Subscription Receivable)
Balance at March 15, 1990			$	-		40		$	-		$	370		$		$	(295	)	$	75
Common stock issued for services						352						2,424								2,424
Acquire oil and gas properties	7,000			280,000		493			1			82,807,828								83,087,829
Additional capital contributed												22,286								22,286
Fair value of salaries donated												151,500								151,500
Reclassify common stock for repurchase obligation									(1	)		(212,500	)							(212,500	)
Rescission of oil and gas purchase:
Common stock shares not returned in lieu of services	(7,000	)		(280,000	)							(82,804,200	)							(83,084,200	)
Cancellation of repurchase obligation									1			212,500								212,500
Issuance of preferred stock for services	1,100,000			2,200																2,200
Common stock for services						27,741			28			9,972								10,000
Conversion of preferred stock	(1,100,000	)		(2,200	)	44,874			45			2,155
Stockholder advances contributed as additional paid in capital												22,725								22,725
Issuance of shares for acquisition of Mobile Nation, Inc.						3,520,000			3,520			31,680								35,200
Common stock for services						480,000			480			4,320								4,800
Shares returned to treasury						(3,520,000	)		(3,520	)		(31,680	)							(35,200	)
Common stock for services						20,000			20			1,980								2,000
Additional capital contributed												600								600
Net loss																	(450,598	)		(450,598	)
Net income																	42,231			42,231
Balance at March 31, 2008				-		573,500			574			221,960			-		(408,662	)		(186,128	)
Issuance of shares, July 2008						19,426,500			19,426			188,074								207,500
Stock compensation						300,000			300			2,791								3,091
Issuance of options												13,407								13,407
Issuance of shares, March 2009						50,000			50			49,950								50,000
Net loss																	(215,864	)		(215,864	)
Balance at March 31, 2009				-		20,350,000			20,350			476,182			-		(624,526	)		(127,994	)
Capital contribution												386,578								386,578
Issuance of shares for services, May 2009						1,350,000			1,350			648,650								650,000
Issuance of shares, September 2009						3,095,000			3,095			1,545,017								1,548,112
Issuance of shares, October 2009						2,084,000			2,084			1,049,641								1,051,725
Issuance of shares for services, November 2009						1,100,000			1,100			448,900								450,000
Issuance of shares for services, March 2010						283,190			283			198,078								198,361
Issuance of options												56,887								56,887
Offering costs related to share issuance												(358,018)								(358,018)
Net loss																	(2,240,285)			(2,240,285)
Balance at March 31, 2010				-		28,262,190			28,262			4,451,915			-		(2,864,811)			1,615,366
Issuance of options												8,333								8,333
Common shares committed, not issued															300,000					300,000
Stock subscription receivable															(300,000)					(300,000)
Offering costs related to issuance												(15,000)								(15,000)
Net loss																	(315,436)			(315,436)
Balance at June 30, 2010	-		$	-		28,262,190		$	28,262		$	4,445,248		$	-	$	(3,180,247)		$	1,293,263

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AuraSource, Inc.

(A Development Stage Enterprise)

Consolidated Statements of Cash Flows

For the Three months Ended June 30, 2010 and 2009 and for the Period March 15, 1990 (Inception) through June 30, 2010

(Unaudited)

	2010			2009			Cumulative from March 15, 1990 (Inception) to June 30, 2010
Cash flows from operating activities:
Net loss	$	(315,436	)	$	(717,459	)	$	(3,180,247	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,939			172			8,271
Stock issued for services rendered		-			663,406			1,326,504
Options issued for services rendered		8,333			-			78,627
Fair value of salaries donated as capital		-			-			151,500
Changes in operating assets and liabilities:
Prepaid expenses		(39,457	)		-			(43,750	)
Accounts payable and accrued expenses		7,884			4,734			70,343
Accrued interest payable – related parties		-			5,009			15,457
Non-refundable deposits		-			-			(100,000	)
Net cash used in operating activities		(336,737	)		(44,138	)		(1,673,295	)

Cash flows from investing activities :
Advances to former stockholders		-			-			(14,018	)
Repayment of advances from former stockholders		-			-			14,018
Advances from stockholders, net		-			-			22,725
Capital equipment purchases		-			-			(37,406	)
Sale of assets to MongSource net of cash on hand		-			(88,567	)		(90,119	)
Net cash used in investing activities		-			(88,567	)		(104,800	)

Cash flows from financing activities
Proceeds from issuance of common stock		-			-			3,144,193
Offering costs		-			-			(350,518	)
Net proceeds from issuance of note payable		-			205,724			459,690
Repayment of debt		-			-			(170,000	)
Net cash provided by financing activities		-			205,724			3,083,365

Net change in cash and cash equivalents		(336,737	)		73,019			1,305,270

Cash and cash equivalents - beginning balance		1,642,006			145,436			-

Cash and cash equivalents - ending balance	$	1,305,270		$	218,455		$	1,305,270

Supplemental disclosures of cash flows information:
Cash received/(paid) during the period for:
Interest	$	-		$	-		$	-
Income taxes	$	-		$	-		$	-
Stockholder Advances forgiven and converted to additional paid in capital	$	-		$	-		$	22,725
Non-Cash Financing Activity:
Forgiveness of debt in exchange for all ownership interest in AuraSource, LLC, a Mongolian subsidiary	$	-		$	-		$	386,578

The accompanying notes are an integral part of these consolidated financial statements.

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AURASOURCE, INC.

(A Development Stage Enterprise)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Current Operations and Background — AuraSource, Inc. (“AuraSource” or “Company) focuses on clean energy technology development. AuraSource developed the AuraFuel TM and AuraCoal TM processes. AuraSource formed AuraSource Qinzhou Co. Ltd., a WFOE in China to acquire these types of Hydrocarbon Clean Fuel (“HCF”) technologies, performing research and development related to HCF technology and products based on this technology, licensing HCF technology to third parties and selling services and products derived from this technology.

Through our wholly owned subsidiary, we will conduct operations in China, to perform research and development related to HCF technology, to sell services and products related to and licenses for our HCF technology, and to possibly acquire additional HCF-related technology.

Additionally, we formed Qinzhou Kai Yu Yuan New Energy Co., Ltd., a joint venture between AuraSource, Mongolia Energy, and Kaiyuyuan Mineral Investment Group (“KMIG”) to build an AuraFuel plant. KMIG provided the full funding for this plant. AuraSource is providing the project management expertise and the license for the AuraFuel process. The joint venture contracted China Shandong Metallurgical Engineering Corp. as EPC general contractor which will provide a turnkey solution under an initial operation service contract. The AuraFuel plant will utilize the AuraFuel process which AuraSource licensed from China Chemical Economic Cooperation Center (“CCECC”). CCECC is a Chinese governmental division which leads China’s energy and environmental research and development. AuraSource obtained the license for the Gulf of Tonkin Economic Region. The AuraFuel process utilizes a low temperature catalytic process to convert oil shale and low ranking coal into feedstock for the petrochemical industry.

There can be no assurance we will be able to carry out our development plans for our HCF technology, including AuraCoal and AuraFuel. Our ability to pursue this strategy is subject to the availability of additional capital and further development of our HCF technology. We will also need to finance the cost of pursuing a strategy to effectively protect our intellectual property rights in the United States and abroad where we intend to market our technology and products.

Going Concern — The accompanying consolidated financial statements were prepared assuming we will continue as a going concern. We have suffered recurring losses from operations since inception and have an accumulated deficit of $3,180,247 at June 30, 2010. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should we be unable to continue our existence. The recovery of our assets is dependent upon continued operations of the Company.

In addition, our recovery is dependent upon future events, the outcome of which is undetermined. We intend to continue to attempt to raise additional capital, but there can be no certainty that such efforts will be successful.

Basis of Presentation and Principles of Consolidation — The accompanying consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).

The unaudited consolidated financial statements were prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with US GAAP have been omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes for the year ended March 31, 2010 included in our Annual Report on Form 10-K. The results of the three months ended June 30, 2010 are not necessarily indicative of the results to be expected for the full year ending March 31, 2011.

Use of Estimates — The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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Cash and Cash Equivalents — We consider investments with original maturities of 90 days or less to be cash equivalents.

Income Taxes — The Company accounts for income taxes in accordance with ASC Topic 740. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at currently effective tax rates, of future deductible or taxable amounts attributable to events that have been recognized on a cumulative basis in the financial statements. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized.

Stock-Based Compensation — The Company recognizes the cost of employee services received in exchange for an award of equity instruments in the consolidated financial statements over the period the employee is required to perform the services in exchange for the award.

Net Loss Per Share — The Company computes basic and diluted net loss per share by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. Common equivalent shares related to stock options and warrants were excluded from the computation of basic and diluted earnings per share, for the three months ended June 30, 2010 because their effect is anti-dilutive.

Concentration of Credit Risk — Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash. The Company maintains its cash with high credit quality financial institutions; at times, such balances with any one financial institution may exceed FDIC insured limits.

Financial Instruments and Fair Value of Financial Instruments — Our financial instruments consist of cash and accounts payable. The carrying values of cash, accounts payable, and notes payable are representative of their fair values due to their short-term maturities. We measure the fair value of financial assets and liabilities on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are to be considered from the perspective of a market participant that holds the asset or owes the liability. We also establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes three levels of inputs that may be used to measure fair value:

Level 1:		Quoted prices in active markets for identical or similar assets and liabilities.

Level 2:		Quoted prices for identical or similar assets and liabilities in markets that are not active or observable inputs other than quoted prices in active markets for identical or similar assets and liabilities.

Level 3:		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amount of the Company’s financial assets and liabilities, including cash and accounts payable, approximate fair value, without being discounted, due to the short-term maturities during which these amounts are outstanding.

Recent Accounting Pronouncements

During the three months ended June 30, 2010, there were several new accounting pronouncements issued by the FASB the most recent of which was Accounting Standards Update 2010-21, Accounting for Technical Amendments to Various SEC Rules and Schedules Amendments to SEC Paragraphs Pursuant to Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies (SEC Update). Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s financial statements.

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NOTE 2 – NOTE PAYABLE

On July 11, 2008, we entered into a Revolving Promissory Note (the “Note”) with Mongsource USA, LLC, the majority stockholder of the Company. Through June 11, 2009, Mongsource USA, LLC had advanced us approximately $475,000. On September 6, 2008, we entered into an Exploration Licenses Transfer Agreement, with Mongsource USA, LLC, under which Mongsource USA, LLC transferred to the Company three mineral exploration licenses in Mongolia.

On June 11, 2009, we entered into an agreement with MongSource USA, LLC where by we transferred all rights and ownership interests in our assets relating to the exploration and development of mineral resources which includes all assets of AuraSource LLC, a Mongolian subsidiary, for the forgiveness of the Note and all amounts due under the Note. We recorded a capital contribution of $386,578 to account for this agreement.

NOTE 3 – DISCONTINUED OPERATIONS

As explained in Note 2, on June 11, 2009, we entered into an agreement with MongSource USA, LLC where by we transferred all rights and ownership interests in our assets relating to the exploration and development of mineral resources which includes all assets of AuraSource LLC, a Mongolian subsidiary, for the forgiveness of the Note and all amounts due under the Note.

NOTE 4 - CONCENTRATION OF CREDIT RISK

We maintain our cash balances in various financial institutions that from time to time exceed amounts insured by the Federal Deposit Insurance Corporation (up to $250,000, per financial institution as of June 30, 2010). As of June 30, 2010, our deposits exceeded insured amounts by approximately $327,000. We have not experienced any losses in such accounts and we believe we are not exposed to any significant credit risk on cash.

Currently, we maintain a bank account in China. As of June 30, 2010, we had $715,777 in this account. This account is not insured and we believe is exposed to significant credit risk on cash.

NOTE 5 – STOCK ISSUANCE

On May 28, 2009, Mr. Liu, our CEO, was granted 1,000,000 restricted shares for his services from July 8, 2008 to May 31, 2009. During such time, Mr. Liu received no other compensation. Additionally, Mr. Liu, Mr. Kohler, our Secretary, and Mr. Stoppenhagen, our CFO, were granted, 100,000 shares of restricted stock which vests the earlier of two years or termination from the board. The Company recorded stock compensation arising from the grants of $13,407 and $650,000.

On October 22, 2009, the Company completed a private placement to certain institutional and accredited investors (“Investors”) pursuant to which the Company sold 5,279,693 shares of the Company’s common stock for $2,639,847. The Company intends to use proceeds of the offering for working capital and to develop a pilot plant in the Gulf of Tonkin Economic and Development Area which utilizes a low temperature catalytic process to reform oil shale, asphalt shale and low-ranking coal to hydrocarbon clean fuel products in a highly-efficient manner. The Company has no material relationship with any of the institutional and accredited investors participating in the private placement offering other than in respect of the Subscription Agreements.

In connection with the closing of the private placement offering, the Company paid $263,985 to Source Capital Group, Inc. as exclusive agents for the private placement offering and will issue Source Capital Group, Inc. 527,969 three year warrants.

On November 2, 2009, the Board of Directors (“BOD”) granted Mr. Liu, Mr. Kohler and Mr. Stoppenhagen 100,000 shares of restricted stock which vests the earlier of two years or termination from the board. The Company recorded stock compensation arising from the grants of $150,000.

On December 18, 2009, the Board of Directors granted two consultants 800,000 shares of restricted stock 600,000 of which vests immediately and 200,000 of which vests quarterly over three years. The Company recorded stock compensation arising from the grants of $308,333 during the three and nine months ended December 31, 2009.

On March 1, 2010, the BOD granted two consultants 283,000 shares of common stock. The Company recorded stock compensation arising from the grants of approximately $198,000 during the year ended March 31, 2010.

During the three months ended June 30, 2010, the Company recorded a stock subscription receivable of $300,000. In connection with this subscription receivable, the Company has incurred $15,000 in commission expense that has been included in accounts payable at June 30, 2010. The Company has not yet issued shares for this and also recorded committed common stock of $300,000. The Company has committed to issue 240,000 shares of common stock at $1.25 per share with a par value of $0.001.

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NOTE 6 - STOCK OPTIONS

In January 2009, we granted 60,000 options to purchase shares of our common stock at an exercise price of $3.50 to members of our BOD. The options vest quarterly starting January 1, 2009 and have an expiration period of 10 years. We will record compensation expense of $53,628 in the quarters in which the options vest. During the three months ended June 30, 2010, the Company has recorded $8,333 in compensation expense related to the vesting of options. The Company assumed all stock options issued during the quarter will vest. Though these expenses will result in a deferred tax benefit, we have a full valuation allowance against the deferred tax benefit.

The Company adopted the detailed method provided in ASC 718 for calculating the beginning balance of the additional paid-in capital pool (“APIC pool”) related to the tax effects of employee stock-based compensation, and to determine the subsequent impact on the APIC pool and Consolidated Statements of Cash Flows of the income tax effects of employee stock-based compensation awards that are outstanding.

The fair value of each stock option granted is estimated on the grant date using the Black-Scholes option pricing model. The Black-Scholes option pricing model has assumptions for risk free interest rates, dividends, stock volatility and expected life of an option grant. The risk free interest rate is based upon market yields for United States Treasury debt securities at a 7-year constant maturity. Dividend rates are based on the Company’s dividend history. The stock volatility factor is based on the last 60 days of market prices prior to the grant date. The expected life of an option grant is based on management’s estimate. The fair value of each option grant, as calculated by the Black-Scholes method, is recognized as compensation expense on a straight-line basis over the vesting period of each stock option award.

The following assumptions were used to determine the fair value of stock options granted using the Black-Scholes option-pricing model:


Dividend yield		0.0	%
Volatility		25	%
Average expected option life	5.00 years
Risk-free interest rate		1.76	%

The following table summarizes activity in the Company's stock option grants for the three months ending June 30, 2010:

	Number of Shares		Weighted Average Price Per Share
Balance at March 31, 2010		60,000	$	3.50
Granted		-		-
Balance at June 30, 2010		60,000		3.50

The following summarizes pricing and term information for options issued to employees and directors which are outstanding as of June 30, 2010:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding at June 30, 2010		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable at June 30, 2010		Weighted Average Exercise Price

$3.50		60,000		9.00		$3.50		60,000		$3.50

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NOTE 7 - LOSS PER SHARE

The following table sets forth common stock equivalents (potential common stock) for the three months ended June 30, 2010 and 2009 that are not included in the loss per share calculation above because their effect would be anti-dilutive for the periods indicated:

	Three months Ended June 30,
	2010		2009
Weighted average common stock equivalents:
Non-Plan Stock Options		60,000		60,000

NOTE 8 – RELATED PARTY TRANSACTIONS

On July 11, 2008, we entered into a Revolving Promissory Notewith Mongsource, our majority stockholder. Under the terms of the Note, Mongsource agreed to advance to the Company, from time to time and upon request of the Company, amounts up to $500,000 during the commitment period, commencing July 11, 2008 and expiring December 31, 2009 (the “Expiration Date”). The Note accrued interest at 10%. All advances made under the Note and all accrued and unpaid interest thereon due and payable on the Expiration Date. The Note included customary default provisions and provides that all obligations under the Note will accelerate and become immediately due and payable upon the occurrence of an event of default, including default in payment, breach by the Company of any material provisions of the Note, or the commencement and continuation of a bankruptcy proceeding. The Note provided that upon the occurrence of an event of default, Mongsource held a first credit position on the entire amount owed on the Note, including the all unpaid principal and interest and interest will continue to accrue after the event of default at 10% or the legal rate of interest, whichever is lower.

In December 2008, we entered into an agreement with a firm affiliated with Mr. John P. Boesel, III, a Senior Vice President and Branch Manager of Source Capital Group and paid a commission of $263,985 to Source Capital Group, Inc., $52,797 for unaccountable expenses and was issued 527,969 three year warrants. Mr. Boesel is also a founding investor and director of Mongsource BVI and a member, manager and founding investor of Mongsource.

On June 11, 2009, we entered into an agreement with MongSource USA, LLC where by we transferred all rights and ownership interests in our assets relating to the exploration and development of mineral resources which includes all assets of AuraSource LLC, a Mongolian subsidiary, in exchange for the forgiveness of the Note and all amounts due under the Note. We recorded a capital contribution of $386,578 as of the result of this agreement.

Effective August 1, 2009, we 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 guaranteed bonus of $40,000 per year. 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 August 1, 2009 to March 31, 2014. For the quarter ended June 30, 2010, Mr. Liu received $73,000 as total compensation pursuant to this Employment Agreement.

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ITEM 2 . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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, 2010 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, 2010 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, Inc., a Nevada corporation, (“AuraSource” or the “Company”) focuses on clean energy technology development. AuraSource developed the AuraFuel TM and AuraCoal TM processes. AuraSource formed AuraSource Qinzhou Co. Ltd. (“AuraSource Qinzhou Co. Ltd.” or “AC”), a Wholly Foreign Owned Enterprise (“WFOE”) in China to acquire these types of Hydrocarbon Clean Fuel (“HCF”) technologies, performing research and development related to HCF technology and products based on this technology, licensing HCF technology to third parties and selling services and products derived from this technology. The Company was incorporated on November 6, 1998 and started its current business in December 2008.

Through our WFOE, we will conduct operations in China, to perform research and development related to HCF technology, to sell services and products related to and licenses for our HCF technology, and to possibly acquire additional HCF-related technology.

Hydrocarbon Clean Fuel (HCF) Technology

We believe our HCF technology, AuraCoal TM , is a next generation of hydrocarbon clean fuel technology. It involves grinding coal into fine particles, mixing it with water and selected chemicals to make a slurry and using a proprietary biological treatment of the coal slurry mixture to reduce heavy minerals, such as sulfur. We believe such slurry will have sufficient fluidity to move through pipelines, process delivery piping and burner injection nozzles. Our goal is to demonstrate to power plants and similar users that our HCF technology can convert their plants to use the technology at a lower cost than any current alternative. Given sufficient capital and development of our HCF technology, we plan to market it to plants in China and the United States with the objective of having a beta demonstration site in each country.

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Given sufficient capital, development and protection of our HCF technology, among other factors, AuraSource plans to utilize the HCF technology as follows:

·	license HCF technology to international clients in applicable industries, such as coal producers and power plants;
·	develop strategic partnerships to deliver consulting services with respect to design, engineering, procurement and construction for HCF applications;
·	enter into joint ventures with coal producers to supply HCF treated coal to power plants;
·	process coal using HCF technology and sell such coal to end users at a marked-up price;
·	assist customers to convert their plants to HCF rather than oil, gas or other natural resources in order to save energy costs; and
·	establish centers for processing coal with our HCF technology to supply power plants and other customers.

AuraCoal tm Clean Coal Technology

AuraCoal is patent pending technology designed to remove sulfur and ash from coal pre-combustion. This reduces energy costs and helps to eliminate harmful emissions. This proprietary clean coal technology produces a coal water mixture, which contains only trace amounts of sulfur and ash and constitutes a superb alternative to oil or natural gas. AuraCoal can be delivered via pipeline in a non-volatile state. The conversion to an AuraCoal system is designed to deliver immediate and substantive reductions in harmful particle emissions as well as savings in transportation, processing and safety costs. AuraSource plans to commence construction of its pilot plant in November 2010 and distribute the coal based clean industrial fuel produced by this proprietary new generation of clean coal technology in 2011.

AuraCoal is a new generation of HCF technology. With the adoption of our proprietary AuraCoal Clean Coal technology, we believe we will be able to convert old coal systems into power generating systems that produce emissions containing only trace amounts of sulfur and ash. We believe AuraCoal technology can:

·	reduce harmful emissions and energy costs;
·	reduce and/or eliminate the need for scrubbers;
·	reduce a power plant’s need for related precipitators and/or sulfur acceptors; and
·	enable a power plant to effectively manage its carbon emissions.

AuraFuel tm

AuraSource also licensed another proprietary hydrocarbon clean fuel technology, AuraFuel, which utilizes a low temperature catalytic process to convert oil shale, asphalt shale and low-ranking coal to hydrocarbon clean fuel products in a highly efficient manner. This technology was developed by the Energy and Environmental Research Institute of Heilongjiang (“EERI”), a Chinese government owned energy research institute. EERI patented the technology and the production process. AuraSource licensed this technology for Guangxi province of China and the United States. We are currently developing our own intellectual property associated with this technology. AuraSource through its joint venture, China Qinzhou KaiYuYuan New Energy Co., Ltd. started construction on a pilot plant in April 2010 with production anticipating to begin in 2011. In the United States, we are currently in our planning stages and pursuing a suitable site on public or private lands to start a pilot plant in 2011.

The process is an above-ground retorting technology, which has a simple and robust design, energy self-sufficiency, minimal water usage, and high oil yields.

The AuraFuel process consists of the following main steps:

1)	Crushing. Before retorting, raw oil shale is crushed into fine particles.
2)	Retorting. The AuraFuel process uses an annular rotary retort that heats raw oil shale. Due to the rotating feature, the retorting is a continuous process. The annular retort consists of several zones, including heating zone, reaction zone and heat recovery zone. Incoming raw shale goes into the heating zone in which the shale is heated. Then the shale enters the reaction zone in which pyrolysis of oil shale happens. Most of the pyrolysis is complete in the reaction zone. In the heat recovery zone, the spent shale is cooled and waste heat is recycled. After one cycle of motion, the retorting process is complete and spent shale is discharged.
3)	Post-processing. Produced oil vapors and gases are cleaned and delivered to a condensation system where oil condenses and non-condensable gases are fed back to the retort as energy sources. The oil goes through a distillation process to produce gasoline, diesel or residual oil.

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HCF Overview

We believe our HCF technology will provide an emerging type of energy saving and emission reducing fuel substitute for oil. The HCF coal product appears to exhibit fuel economy, liquidity and stability, ease of loading and unloading, storage and transportation without precipitation of the product. It seems to be conducive to pumping over long-distance pipelines, transport by railway and truck tankers and maritime shipping.

Hydrocarbon clean fuel atomization performance depends on the energy value of coal preparation and concentration, which we believe is generally the equivalent of half the energy value of heavy oil, industrial boilers, industrial kilns, power generation boiler oil and coal combustion generation.

We believe HCF has a broad range of industrial applications. Our initial objective will be to pursue applications related to power plants and industrial boilers, including steam and hot water boilers.

First Generation Coal-Water Slurry (Slurry Generation)

The first generation of HCF occurred at the U.S. Black Mesa coal slurry pipeline, which is the only operating long-distance coal-water slurry pipeline in the world. See www.informaworld.com/index/778734328.pdf . This pipeline traverses 273 miles, with an annual capacity of 4,800,000 tons. See http://www.britannica.com/EBchecked/topic/68053/Black-Mesa-pipeline . The coal was liquefied to be transported economically.

The Second Generation Hydrocarbon clean fuel (Mixture Generation)

In the second generation process, coal is a coal-water slurry physically processed with new products, consisting of approximately 65% to 70% coal and 35% to 30% water and trace chemical additives prepared in a paste, commonly known as high concentration coal-water slurry, or water coal slurry.

The Third Generation Hydrocarbon clean fuel (The Ultra-Fine Coal-Water Fuel Generation)

We believe our technology will be the third generation of HCF. We believe the third generation of HCF will be a lower-cost and more efficient technology that can be used in greater depth and in a wider array of applications, and may be an alternative to oil resource applications. We expect the third generation of HCF technology will contain only trace amounts of sulfur and ash, in fine particle sizes, which allows the burning of the mixture to cause minor wear and tear on equipment. Additionally, we believe the use of ultra-fine grinding machines allows preparation of an ultra-fine paste for a new type of fuel. We believe the HCF technology may yield potential environmental advantages relative to heavy oil.

Competition

HCF Technology

We face competition from large companies like Arch Coal, Peabody Massey Energy Company, CONSOL Energy, Foster-Wheeler, GreatPoint Energy, Evergreen Energy, Inc., CoalTek, Inc., Babcock & Wilcox Company, and Yanzhou Coal Mining Company as well as numerous universities and government agencies who have greater financial, marketing, distribution and technological resources than we have, and they may have more well-known brand names in the markets. They may also seek to enter and compete with us in our market.

More indirect competition comes from alternative low-pollution energy sources, including: wind, bio-fuels and solar; all of which need additional technological advancements to be able to produce power at the scale of coal-fueled plants, which today produce 43% of world’s electricity according to U.S. Department of Energy figures published in May 2008.

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Patent and Trademarks

The Company currently relies on unregistered trademarks and patents, and confidentiality of trade secrets. Our ability to compete effectively will depend on our success in protecting the HCF proprietary technology, both in the United States and abroad. There are numerous patents or patent applications relating to HCF. We have filed for patent protection and taken the steps required to obtain international patent protection.

No assurance can be given that any patents relating to the HCF technology will be issued by the United States or any foreign patent offices. Further, no assurance can be given that we will receive any patents in the future based on the continued development of the HCF technology, or that the HCF technology patent protection within and/or outside of the United States will be sufficient to deter others, legally or otherwise, from developing or marketing competitive products utilizing our HCF technology. If patent protection is not available for the HCF technology, we plan to treat it as a trade secret. There can be no assurance that we will be successful in this regard.

In addition to seeking patent protection, we will rely on trade secrets, know-how and continuing technological advancement to seek to achieve and thereafter maintain a competitive advantage in the HCF market. Although we have entered into or intend to enter into confidentiality and invention agreements with our employees, consultants and advisors, no assurance can be given that such agreements will be honored or that we will be able to effectively protect our rights to our unpatented trade secrets and know-how. Moreover, no assurance can be given that others will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets and know-how.

Government Regulations

United States

We believe that existing and proposed legislation and regulations could impact fossil fuel-fired, and specifically coal-fired, power generating facilities nationally and internationally.

The following briefly describes the most significant existing national laws and regulations affecting the potential market for coal processed using our technology. State and regional policies may also impact our market.

The Clean Air Act and Acid Rain Program. The Clean Air Act of 1970, as amended, is currently the primary mechanism for regulating emissions of sulfur dioxide and nitrogen oxide from coal-fired power generating facilities. A key component of the act regulates sulfur dioxide and nitrogen oxide emissions. Specifically, title IV set a goal of reducing sulfur dioxide emissions by 10 million tons below 1980 levels and imposed a two-phased tightening of restrictions on fossil fuel-fired power plants. Phase I began in 1995 and focused primarily on coal-burning electric utility plants in the east and midwest. In 2000, Phase II began and this phase tightened the annual emissions' limits on larger higher emitting plants and set restrictions on smaller, cleaner plants fired by coal, oil, and gas. The Acid Rain Program calls for a 2 million ton reduction in nitrogen oxide emission and focuses on one set of sources that emit nitrogen oxide: coal-fired electric utility boilers. Beginning in January 2000, nitrogen oxide emissions are to be reduced 900,000 tons per year beyond the 1.2 million per year reduction set by the EPA in 1995.

Clean Air Interstate Rule. The Clean Air Interstate Rule was finalized by the EPA in March 2005. Once fully implemented, this rule will reduce sulfur dioxide emissions in 28 states and the District of Columbia by more than 70% and nitrogen oxide emissions by more than 60% from the 2003 levels. Through the use of a cap-and-trade approach, the rule promises to achieve substantial reduction of sulfur dioxide and nitrogen oxide emissions. Reductions of nitrogen oxide emissions began in January 2009, followed by reductions of sulfur dioxide emissions in January 2010. The program will be fully implemented by January 2015.

Clean Air Mercury Rule. The U.S. Environmental Protection Agency, or EPA, finalized the Clean Air Mercury Rule, or CAMR, on March 15, 2005 to reduce mercury emissions from coal-fired power plants. Phase 1 of CAMR was set to go into effect on January 1, 2010. However, on February 8, 2008, the U.S. Circuit Court of Appeals for the District of Columbia vacated the rule, requiring EPA to draft a new regulation. As a result of this ruling, it is likely that individual coal-fired boilers and power plants will be held to stringent levels of mercury emission reductions instead of averaging mercury emissions across multiple plants and across the country.

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China

The Environmental Protection Law (“EPL”) of the People’s Republic of China (“PRC”) governs us and our HCF products. The EPL, promulgated by the National People’s Congress on December 26, 1989, is the cardinal law for environmental protection in China. The law establishes the basic principle for coordinated advancement of economic growth, social progress and environmental protection, and defines the rights and duties of governments at all levels. Local environmental protection bureaus may set stricter local standards than the national standards and enterprises are required to comply with the stricter of the two sets of standards. The EPL requires any entity operating a facility that produces pollutants or other hazards to incorporate environmental protection measures into its operations and to establish an environmental protection responsibility system, which must adopt effective measures to control and properly dispose of waste gases, waste water, waste residue, dust or other waste materials.

Violators of the EPL and various environmental regulations may be subject to warnings, payment of damages and fines. Any entity undertaking construction work or manufacturing activities before the pollution and waste control and processing facilities are inspected and approved by the relevant environmental protection bureau may be ordered to suspend production or operations and may be fined. The violators of relevant environment protection laws and regulations may be exposed to criminal liability if violations result in severe loss of property, personal injuries or death.

In addition, China is a signatory to the 1992 United Nations Framework Convention on Climate Change and the 1997 Kyoto Protocol, which are intended to limit emissions of greenhouse gases. Efforts to control greenhouse gas emission in China could result in reduced use of coal if power generators switch to sources of fuel with lower carbon dioxide emissions, which in turn could reduce the revenues of our business and have a material adverse effect on our results of operations.

The Company endeavors to ensure the safe and lawful operation of its facilities in manufacturing and distribution of HCF and believes it is in compliance in all material respects with applicable PRC laws and regulations.

No enterprise may start production at its facilities until it receives approval from the Ministry of Commerce to begin operations.

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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 ("USGAAP") 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:

We account for our business acquisitions under the purchase method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Codification 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 that are not readily apparent from other sources. There can be no assurance that actual results will not differ from these estimates.

Certain reclassifications have been made to the prior fiscal year amounts disclosed in the consolidated financial statements to conform to the presentation for the period ended June 30, 2010. These reclassifications had no effect on the reported net loss or stockholders’ equity.

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Results of Operations

For the Three Months Ended June 30, 2010 and 2009

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $316,667 and $712,448 for the three months ended June 30, 2010 and 2009, respectively. The decrease of $395,781 in expense was due to a decrease in stock related compensation.

Interest Income, Interest Expense and Other

Interest income/(expense) and other was $1,231 and $(5,011) for the three months ended June 30, 2010 and 2009, respectively. The increase in interest income is the result of higher cash balances.

Liquidity and Capital Resources

Net cash used in operating activities was $321,737 and $44,138 in the three months ended June 30, 2010 and 2009, respectively. The increase was primarily due to non-cash transaction of stock issued for services rendered added back to operating activities in the prior year. There were no such amounts added back in the current period.

Net cash used in investing activities was $0 and 88,567 in the three months ended June 30, 2010 and 2009, respectively. The decrease was due to the transferring of all rights and ownership interests in assets relating to the exploration and development of mineral resources to Mongsource in the period ended June 30, 2009.

Net cash provided by financing activities was $0 and $205,724 in the three months ended June 30, 2010 and 2009, respectively. The difference of $205,724 in cash flows from financing activities was primarily due to proceeds from the issuance of a note payable in the prior period.

The Company suffered recurring losses from operations and has an accumulated deficit of 3,180,247 at June 30, 2010. Currently, we have not generated any revenues. The Company is seeking various forms of financing.

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 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 June 30, 2010, 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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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a “smaller reporting company” as defined by Rule 229.10(f)(1), we are not required to provide the information required by this Item 3.

ITEM 4 - CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Our management, with the participation of our president and our chief financial officer, carried out an evaluation of the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 (the "Exchange Act") Rules 13a-15(e) and 15-d-15(e)) as of the end of the period covered by this report (the "Evaluation Date"). Based upon that evaluation, our President and our Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and (ii) is accumulated and communicated to our management, including our President and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING. There were no changes in our internal controls over financial reporting that occurred during the quarter ended June 30, 2010 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.

PART II - OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

We are not a party to any current or pending legal proceedings that, if decided adversely to us, would have a material adverse effect upon our business, results of operations, or financial condition, and we are not aware of any threatened or contemplated proceeding by any governmental authority against us. To our knowledge, we are not a party to any threatened civil or criminal action or investigation.

ITEM 1A – RISK FACTORS

In addition to the other risk factors and information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2010, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, operating results and/or cash flows.

ITEM 2

- UNREGISTERED SALES OF EQUITY SECURITIES

None

ITEM 3

- DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITME 5

- OTHER INFORMATION

None

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ITEM 6.

Exhibit		Description
31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14 and 15d-14 as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14 and 15d-14 as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification of the Company’s Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AURASOURCE, INC.


Date: August 13, 2010	/s/ PHILIP LIU
	Name: Philip
	Title: Chief Executive Officer

Date: August 13, 2010	/s/ ERIC STOPPENHAGEN
	Name: Eric Stoppenhagen
	Title: Chief Financial Officer

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EXHIBIT INDEX

Exhibit		Description
31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14 and 15d-14 as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14 and 15d-14 as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification of the Company’s Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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