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As filed with the Securities and Exchange Commission on January 8, 1997
Registration No. 333-1315
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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AURA SYSTEMS, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 95-4106394
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2335 Alaska Avenue, El Segundo, California 90245
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(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive office)
Zvi (Harry) Kurtzman, Chief Executive Officer
Aura Systems, Inc.
2335 Alaska Avenue
El Segundo, CA 90245
(310) 643-5300
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(Name, Address, including zip code, and
telephone number, including area code, of agent for service)
Copy to:
Samuel S. Guzik, Esq.
Guzik & Associates
1800 Century Park East, Fifth Floor
Los Angeles, CA 90067
(310) 788-8600
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Approximate date of proposed sale to the public: From time to time after the
effective date of the Registration Statement.
If the only securities registered on this form are being offered pursuant to
dividend or interest reinvestment plans, check the following box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM PROPOSED
OFFERING MAXIMUM
TITLE OF EACH CLASS AMOUNT TO PRICE PER AGGREGATE AMOUNT OF
OF SECURITIES TO BE BE UNIT OR OFFERING PRICE REGISTRATION
REGISTERED REGISTERED (2) SHARE (1) (1) FEE (3)
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Common Stock, $.005 par value 11,832,941 $1.9687 $23,295,510.75 $8,032.93
=========================================================================================================
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__________________
(1) Estimated for the purpose of calculating the registration fee pursuant to
Rule 457(c) on the basis of the high and low price of the Registrant's
Common Stock on December 31, 1996.
(2) Pursuant to Rule 416, there are also being registered such additional
securities as may be issued pursuant to the anti-dilution provisions of the
Options, Warrants and Notes.
(3) Of this amount, $6,127.62 was paid on February 29, 1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
AURA SYSTEMS, INC.
________________
Cross-Reference Sheet Pursuant to Regulation S-K, Item 501(b)
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Item Number and Heading in Form S-3
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Registration Statement Location in Prospectus
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1. Forepart of the Registration Statement
and Outside Front Cover Page of Prospectus Front Cover Page
2. Inside Front and Outside Back Cover Inside Front Cover Page;
Pages of Prospectus and Outside Back Cover
Pages of Prospectus;
Additional Information
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges Summary; Risk Factors
4. Use of Proceeds Inapplicable
5. Determination of Offering Price Risk Factors; Plan of
Distribution
6. Dilution Inapplicable
7. Selling Security Holders Selling Stockholders and
Plan of Distribution
8. Plan of Distribution Front Cover page of
Prospectus; Selling
Stockholders and Plan of
Distribution
9. Description of Securities to be Description of Capital
Registered Stock
10. Interest of Named Experts and Counsel Legal Matters
11. Material Changes Recent Developments
12. Incorporation of Certain Information Incorporation of Certain
by Reference Information by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities Inapplicable
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to completion, dated January 8, 1997
PROSPECTUS
________________________________________________________________________________
AURA SYSTEMS, INC.
COMMON STOCK
________________________________________________________________________________
This Prospectus relates to the resale by the Selling Stockholders identified
herein of (i) an aggregate of 1,995,063 shares of Common Stock, $.005 par value
("Common Stock") of Aura Systems, Inc. ("Aura" or the "Company") which may be
acquired by the Selling Stockholders upon the exercise of outstanding warrants
at exercise prices ranging from $2.35 to $7.25 per share (the "Warrants"); (ii)
an aggregate of 1,009,578 shares of Common Stock of the Company which may be
acquired by the Selling Stockholders upon the exercise of outstanding options at
exercise prices ranging from $1.50 to $5.50 per share (the "Options"); and
(iii) an indeterminate number of shares which may be acquired by the Selling
Stockholders upon conversion of the Company's 8% Convertible Notes (the "8%
Notes"); and (iv) 1,328,300 shares of Common Stock of the Company acquired by
certain Selling Stockholders in private transactions which are being offered for
the account of the Selling Stockholders named herein. See "Selling Stockholders
and Plan of Distribution." Although the Company will receive proceeds from the
exercise of outstanding Warrants and Options from time to time if and when they
are exercised, the Company will not receive any of the proceeds from the sale of
shares by the Selling Stockholders offered hereby.
1,516,578 shares covered by this Prospectus were previously registered by
the Company and were covered by a Prospectus dated August 30, 1994. Such
registration statement and Prospectus have been superseded in their entirety by
this Prospectus and the new Registration Statement to which it relates.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS," AT PAGE 6, FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The Common Stock of the Company is traded on the NASDAQ Stock Exchange under
the symbol "AURA". On January 7, 1997, the last reported sales price for
Aura's Common Stock on the NASDAQ Stock Exchange was $2.53. See "PRICE RANGE OF
COMMON STOCK".
The date of this Prospectus is __________ ____, 1997
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AVAILABLE INFORMATION
Aura is subject to the informational reporting requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Regional Offices located at 7 World Trade Center, New
York, New York 10048 and Northwestern Atrium Center, 500 W. Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can also be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates.
The Company has filed with the Commission a Registration Statement (together
with all amendments and exhibits, the "Registration Statement") on Form S-3
under the Securities Act of 1933 (the "Securities Act") with respect to the
Common Stock offered pursuant to this Prospectus. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
agreement or other document referred to herein are not necessarily complete and
reference is made to the copy of such agreement or other reference is made to
the Registration Statement and to the exhibits and schedules filed therewith.
Copies of the material containing this information may be obtained from the
Commission upon payment of the prescribed fee.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, all of which are previously filed with the
Commission pursuant to the Securities Exchange Act of 1934, are hereby
incorporated by reference in this Prospectus: (i) the Company's Annual Report on
Form 10-K and Form 10-K/A for the fiscal year ended February 29, 1996 ("1996
Form 10-K"); (ii) the Company's Quarterly Reports on Form 10-Q, including
amendments thereto, for the quarters ended May 31, 1996 and August 31, 1996;
(iii) the Company's Form 8-K dated September 20, 1996; and (iv) the Company's
Proxy Statement dated July 8, 1996.
All other reports and documents filed by the Company subsequent to the date
of this Prospectus pursuant to Sections 13(a), 13(c), and 14 or 15(d) of the
Exchange Act prior to the termination of the offering of the Common Stock
covered by this Prospectus shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of those
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that such statement is modified or
replaced by a statement contained in this Prospectus or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference into this Prospectus. Any such statement so modified or superseded
shall not be deemed, except as so modified or replaced, to constitute a part of
this Prospectus. The Company will provide without charge to each person to whom
a copy of this Prospectus has been delivered, upon the written request of any
such person, a copy of any or all of the documents referred to above that have
been or may be incorporated in this Prospectus by reference, other than exhibits
to such documents. Written requests for such copies should be directed to
Steven C. Veen, Senior Vice President and Chief Financial Officer, Aura Systems,
Inc., 2335 Alaska Avenue, El Segundo, California 90245, (310) 643-5300.
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SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and financial statements (including the notes thereto)
appearing elsewhere in this Prospectus. An investment in the shares of the
Common Stock offered hereby involves a high degree of risk. Prospective
investors should carefully consider the factors discussed under "RISK FACTORS".
THE COMPANY
Aura Systems, Inc. ("Aura" or the "Company") is engaged in the development,
commercialization and sales of products, systems and components using its
patented and proprietary electromagnetic and electro-optical technology, as well
as other products such as sound cards, multimedia kits, modems, and computer
monitors. The Company's proprietary and patented technology is being developed
for use in systems and products for commercial, industrial, consumer and
government use. To date, a combination of Aura funds and commercial and
governmental development contracts have been utilized in the process of
developing product applications.
In 1996 the Company merged its operations into four operating divisions:
(1) AuraSound, which manufactures and sells professional and consumer sound
systems and components and interactive products, including speakers, amplifiers,
Bass Shakers, and sound cards; (2) NewCom, which manufactures, sells and
distributes computer related products, including CD ROM drives, modems, computer
speakers, monitors, sound cards and multimedia kits; (3) Automotive and
Industrial, which is commercializing products with automotive and industrial
applications, including AuraGen and EVA; and (4) Display Systems, which is
commercializing Aura's actuated mirror array technology in consumer and
commercial display systems for use in televisions, computer displays and
theaters.
TECHNOLOGY
The Company's electromagnetics technology involves: (i) high force
electromagnetic actuators ("HFAs"), which are devices that create lateral force
upon command and combine the high forces and long strokes of hydraulic or
pneumatic actuators with the speed and precision of voice coil actuators; (ii)
electromagnetic actuators ("EMA"), an actuator with no permanent magnets which
provides greater control than a standard solenoid; (iii) patented magnetic
techniques and circuits that provide high efficiency in a smaller and lighter
package, as compared to the standard techniques available for electric motors
and generators ("AuraGen" and "FAS") and (iv) electromagnetic actuation and
control systems for variable opening and closing time, used to control valves
for internal combustion engines ("EVA"). The Company's electro-optical
technology consists of actuated mirror array ("AMA") display technology, which
is a new and unique light valve with no absorptive or dispersive elements
between the light source and the image displayed to the user, which the Company
expects has applications in large screen television, movie or exhibition
displays.
PRINCIPAL PRODUCTS AND APPLICATIONS
SOUND RELATED PRODUCTS
Speakers
Aura has developed a line of audio speakers based upon Aura's patented
electromagnetic actuator and other proprietary magnetic and acoustical
techniques. Utilizing the Company's "Neo-Radial Technology"
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("NRT"), Aura has developed speakers that are more efficient, require no
magnetic shielding and provide longer stroke for deeper base as well as lower
distortion due to its under-hung magnetic configuration. Aura's expertise and
know-how in magnetic materials, circuit and actuation has resulted in other
speaker designs that provide improved power capabilities as well as lower
distortion, using dual magnetic systems ("DMS") circuits and magnetic circuits
and drivers using combinations of Neo and ferrite magnets.
AuraSound speakers have been sold commercially since 1992, and are currently
being sold to both end users and computer and television OEM's as well as the
auto aftermarket and the professional sound market. In 1996 the AuraSound
division introduced three new product lines utilizing its proprietary
technology: Aspect multi-media speakers (NRT), designed for the computer
multimedia market; the Mobile Reference series (NRT), which is the top-of-the-
line for car sound aftermarket, and the Mobile performance series (DMS), which
is a middle-of-the-line car aftermarket sound systems. Aspect series speakers
are sold through dealers and mass merchandisers throughout the country, both as
stand alone and packaged in multimedia kits. The auto aftermarket speakers are
sold through dealers and installers.
MYS Speakers. The AuraSound division expanded its range of sound products
and distribution channels in 1996 with the acquisition of MYS Corp. of Japan.
MYS has developed the Linaeum line of home audio speakers, which utilize a
patented advanced driver technology. MYS also manufactures, markets and sells
other moderately priced, conventional multimedia and bookshelf sound systems
through Radio Shack and others. MYS has also recently begun to incorporate the
NRT driver into some of its speaker lines.
Revolver Speakers. The AuraSound division expanded its range of sound
products for home theater in Europe with the acquisition of Revolver Corp. in
the U.K. in the latter part of 1996. Revolver markets and sells middle range
home theater sound systems in the U.K. and many of the other European countries.
Currently, Aura is upgrading the Revolver line with its technologies for both
NRT drivers and other acoustical techniques developed by AuraSound engineering.
Professional Speakers. AuraSound NRT speakers are showcased by its wholly
owned subsidiary, Electrotec, Inc., which leases high end concert sound systems
to the contemporary touring music industry. In addition, the AuraSound
professional NRT speakers are sold to high end manufacturers and distributors.
Bass Shakers
In Fiscal 1995 the Company commenced production of the Bass Shaker, a
patented electromagnetic actuator which generates the bass effect of a large
sub-woofer in both car and home stereo systems without producing the loud volume
which typically accompanies bass range speakers. In 1996 the Company also
introduced the Bass Shaker Plus, a complete system that includes the Bass
Shakers, a fader system, Aura digital amplifier and installation accessories.
Currently, the Bass Shaker and Bass Shaker Plus are sold through approximately
400 dealers across the U.S. Alpine is an OEM for the Bass Shaker and both
systems are sold internationally through distributors.
Interactors and Theater Seat Transducers
The Company has developed a line of interactive products which utilize
Aura's electromagnetic technology. The first interactive product developed by
Aura, introduced in 1994, was called the Interactor, a vest that incorporated an
electromagnetic actuator and is configured to be worn over the upper torso and
can be plugged into video game systems currently on the market. The product is
currently sold mostly in Europe. Aura is also selling its Theater Seat
Transducer, which creates the same interactive experience in
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movie theaters with a movie action or sound track. The system is a variation of
the Bass Shaker used for cars and homes. In addition, the Company is
manufacturing, marketing and selling an interactive pillow based on the same
actuation system used in the Interactor, to be used with sound systems,
computers and television to enhance end user experiences. This product is sold
through distributors.
Amplifiers
In order to fill its product line the Company acquired Phillips Sound Labs
("PSL") to provide 12 volt power amplifiers to complement the speaker systems
sold by the Company. These current amplifiers are sold through dealers and
distributors under the PSL and FORCE brand names.
Sound Cards
Aura designs, manufactures, and sells sound cards for computer systems for
both OEM's and in multimedia kits sold through distributors. Aura recently
enhanced its capabilities in this area with the addition of a group of
scientists and engineers from Crystal Lake Corp. in Portland, Oregon.
COMPUTER RELATED PRODUCTS
Multimedia Products
Aura, principally through its NewCom subsidiary, is engaged in the
manufacture and sale of leading edge, high performance computer multimedia
products for the personal computer market through distributors and mass
merchandisers. These products include, among others, computer sound cards,
which can be utilized with both AuraSound and conventional speakers, data fax
modems, CD-ROM's, amplifiers and other components. NewCom also manufactures and
sells multimedia kits to end users in order to add or upgrade multimedia
capabilities to their personal computer systems. These multimedia kits
typically include CD-ROM's bundled with sound cards and conventional or
AuraSound 3" desktop speakers as well as numerous CD titles.
Display Monitors
Since 1993, the Company has been distributing computer monitors to third
party distributors in order to develop relationships with potential OEM
customers for its speakers and other computer related products. The Company has
also recently commenced sales of computer monitors, mostly in India, under both
the Newcom and Aura brand names. In addition, in late 1996 the Company acquired
a Web TV license and will start shipping its unique Net Pal setup box in the
first quarter of 1997. This Net Pal appliance will allow consumers with standard
television sets to access the Internet. In late 1996 the Company also acquired a
distribution license from Alaris Corp. to market and distribute to dealers a new
product that will allow users to send both video and sound (VideoGram) through
conventional E-mail. This system is composed of both hardware and software.
AUTOMOTIVE AND INDUSTRIAL
Automotive
Aura has developed two breakthrough automotive products, each of which has
been demonstrated through a working prototype in a fully functioning gasoline
powered vehicle. Aura's Electromagnetic Valve Actuator System ("EVA") is a
patented electromagnetically powered system which opens and closes engine valves
at any user specified time. The system simplifies conventional engine mechanics
by eliminating the entire camshaft assembly. The Company is retro-fitting EVA to
adapt its design and configuration for different types of diesel, automobile and
motorcycle engines. The Company is under contract with 13 companies to
demonstrate EVA on running engines. AuraGen is a unique electromagnetic
generator that is mounted to the automobile engine, which generates both 110
volt and 220 volt AC power. AuraGen is the only load follower AC generator: the
power generated by AuraGen is directly proportional to the load on the
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system. This allows for longer lifetime as well as more economical usage.
AuraGen turns a vehicle's idling engine into a generator capable of producing
thousands of watts of power. The AuraGen will be marketed and sold in the
automobile aftermarket. Potential markets include construction fleets,
recreation vehicles, military vehicles and emergency vehicles. The Flywheel
Alternator System ("FAS") is a unique AuraGen mounted directly to the flywheel
of an automobile engine, which replaces the conventional starter and alternator.
The FAS is being developed for OEM applications.
Industrial
Aura has developed a family of electromagnetic actuators (HFA's and EMA's)
that are being built and sold for a variety of industrial applications. The
Company is also jointly developing with DCT Corporation a robotics welder to be
used in automotive assembly applications. Currently, the Company is selling low
volume actuators to end users for a variety of applications.
DISPLAY SYSTEMS
In 1992, the Company entered into a joint development and licensing
agreement with Daewoo Electronics Co., Ltd. ("Daewoo") to develop and
commercialize televisions using the AMA display technology. Daewoo, who is
solely responsible for manufacturing and sales under the license agreement, has
advised the Company that it may be able to begin commercial production of large
screen display televisions under the license agreement in 1997. There are no
assurances as to when or if Daewoo will commence commercial production of
televisions incorporating Aura's AMA display technology.
PRINCIPAL SOURCES OF REVENUE
For the six month period ended August 31, 1996, multimedia kits were the
largest single source of revenue, constituting $12.6 million, or 27%; speakers
(exclusive of speakers in multimedia kits) contributed $11 million, or 24%, the
majority of which represents speaker sales by MYS Corp.; computer monitors and
modems contributed $9.7 million and $5.4 million of revenue, or 21% and 12%
respectively during the period. In Fiscal 1996 multimedia products accounted for
$17 million of revenues, or 20%. During Fiscal 1996 modems and speakers
contributed $12 million and $9 million, or 15% and 11% of revenues,
respectively. For the fiscal years ended February 29, 1996 and February 28,
1995, sales of computer monitors accounted for revenues of $24.1 million and
$6.5 million, or 29% and 15%, respectively. During Fiscal 1995, Interactors
accounted for $21 of revenues, or 48%. No other products accounted for more
than 10% of revenues during the foregoing periods.
References herein to the "Company" or "Aura" include Aura and its
subsidiaries, unless the context indicates otherwise. The Company's
headquarters are located at 2335 Alaska Avenue, El Segundo, California 90245,
and its telephone number is (310) 643-5300.
RISK FACTORS
See "RISK FACTORS" for a discussion of certain factors that investors should
consider carefully in evaluating an investment in the Common Stock offered
hereby. These risk factors include, among other things, a history of operating
losses, the continuing need for additional capital, competition and other
factors.
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THE OFFERING
The securities offered by the Selling Stockholders include the following:
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Shares of Common Stock issuable upon exercise of
Outstanding Warrants............................... 1,995,063
Shares of Common Stock issuable upon exercise of
Outstanding Options................................ 1,009,578
Shares of Common Stock issuable upon conversion
of 8% Notes........................................ 3,833,768/1/
Other Shares of Outstanding Common Stock........... 1,328,300
Shares Outstanding:
Common Stock Outstanding before
The Offering....................................... 76,684,101
Common Stock Outstanding after the Offering (assuming
exercise or conversion of all Warrants, Options and
8% Notes)/2/....................................... 83,522,510
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Use of Proceeds Although the Company will receive up to $11,749,160 of
proceeds from the exercise of Warrants and Options from time
to time, the Company will not receive any proceeds from this
Offering by Selling Stockholders.
NASDAQ Stock Exchange Symbol.................................AURA
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/1/ Assumes a conversion price of $1.95 per share and the conversion of all
of the 8% Notes. The actual conversion price is determined by a formula based
upon the market price of Aura's Common Stock at the time of conversion. The
right of the holders of the Notes to convert the principal into Common Stock is
subject and subordinate to the Company's right to redeem the Notes. See "Recent
Developments" herein.
/2/ Based upon the number of shares outstanding as of January 7, 1997.
Excludes (i) approximately 3,000,000 shares not covered by this Prospectus which
are reserved for issuance upon conversion of outstanding warrants and options,
(ii) approximately 1,085,000 shares issuable upon conversion of the Secured 7%
Convertible Notes, (iii) approximately 4,076,000 shares issuable upon exercise
of outstanding options under the Company's 1989 Stock Option Plan, and (iv) an
indeterminate number of shares issuable upon conversion of $1,795,000
outstanding Debentures. See "Recent Developments" herein.
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SUMMARY FINANCIAL INFORMATION
AURA SYSTEMS, INC. AND SUBSIDIARIES
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(UNAUDITED) (UNAUDITED)
SIX MONTHS SIX MONTHS YEAR ENDED YEAR ENDED YEAR ENDED
ENDED ENDED FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
AUGUST 31, AUGUST 31, 1996 1995 1994
1996 1995
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OPERATING DATA:
Gross Revenues $ 45,979,896 $27,214,373 $ 82,259,010 $44,214,242 $ 16,369,825
Net income (loss) 1,130,662 (1,734,950) (26,087,090) (2,649,879) (10,594,302)
Net income (loss) per share .02 (.01) (.48) (.07) (.35)
Weighted average
shares outstanding 64,394,950 48,075,734 53,860,527 37,217,673 30,117,742
BALANCE SHEET DATA:
Working Capital $ 79,540,075 $33,178,431 $ 71,362,882
Total Assets $145,148,338 78,449,421 134,080,568
Total Liabilities (including
deferred income) $ 29,327,942 $27,074,409 $ 34,917,462
Net Stockholders' Equity $115,820,396 $51,375,012 $ 99,163,106
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RISK FACTORS
THE SHARES OF AURA'S COMMON STOCK MUST BE CONSIDERED A SPECULATIVE
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INVESTMENT INVOLVING A HIGH DEGREE OF RISK. IN ADDITION TO OTHER INFORMATION
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CONTAINED IN THIS PROSPECTUS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER
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THE FOLLOWING FACTORS IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE
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INVESTING IN THE SHARES OF COMMON STOCK OFFERED HEREBY.
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HISTORY OF LOSSES; SIGNIFICANT ACCUMULATED DEFICIT; POSSIBILITY OF FUTURE LOSSES
The Company and its predecessors on a consolidated basis have recognized net
losses in each fiscal year to date. The Company has incurred cumulative losses
in each fiscal year to date and has an accumulated deficit through February 28,
1996 ("Fiscal 1996") of approximately $67 million. Although the Company profit
for the six months ended August 31, 1996, of $1.1 million, there can be no
assurance that Company will remain profitable or that its activities or
operations will be successful. In addition, because the Company's efforts have
been directed towards product development and the introduction of new products
in the recent past, revenues and operating results have been uneven and may
continue to be so during Fiscal 1997 and beyond.
GENERAL NEED FOR ADDITIONAL CAPITAL AND NO ASSURANCE IT WILL BE AVAILABLE
The cash flow generated from the Company's operations to date has not been
sufficient to fund its working capital needs. The Company has relied upon
external sources of financing to maintain its liquidity, principally private and
bank indebtedness and equity financing. The Company expects to fund any
operating shortfall in Fiscal 1996 and Fiscal 1997 from cash on hand and
available credit facilities, and expects to continue to seek external sources of
capital such as debt and equity financing. There are no assurances that such
funds will be available at the times or in the amounts required by the Company.
In the event any such financing involves the issuance of equity securities,
existing stockholders may suffer dilution in net tangible book value per share.
The unavailability of funds could have a material adverse effect on the
Company's financial statements, results of operations and ability to expand its
operations.
HIGHLY COMPETITIVE INDUSTRIES; RAPID TECHNOLOGICAL CHANGE
The industries in which the Company operates are extremely competitive and
characterized by rapid technological change. Many of its competitors have
substantially greater financial resources than the Company, spend considerably
larger sums than the Company on research, new product development and marketing,
and have long-standing customer relationships. Furthermore, the Company must
compete with many larger and better established companies in the hiring and
retention of qualified personnel. Although the Company believes it has certain
technological advantages over its competitors, realizing and maintaining such
advantages will require the Company to develop customer relationships and will
depend on market acceptance of its products. Future revenues and profits will
be dependent to a large extent on the introduction of new products. Competitive
pressures could reduce market acceptance of the Company's products, and there
can be no assurance the Company will have the financial resources, technical
expertise or marketing and support capabilities to compete successfully in the
future.
DEPENDENCE ON KEY PERSONNEL
The Company depends to a considerable degree on the continued services of
Zvi (Harry) Kurtzman, its President, and Arthur J. Schwartz, its Executive Vice
President, as well as a limited number of highly qualified scientists. The
Company has non-competition and secrecy agreements with these individuals;
-9-
<PAGE>
however, none of these individuals has an employment agreement with the Company,
nor does the Company maintain key-man life insurance. The loss of any of these
individuals could have a material adverse effect on the Company.
PROTECTION OF PATENTS AND PROPRIETARY TECHNOLOGY
The Company protects its proprietary technology by means of patent
protection, trade secrets and unpatented proprietary know-how. No assurance can
be given that pending or future patent applications will issue as patents or
that any patents which have been or may be issued will provide the Company with
adequate protection with respect to the covered products or technology.
Moreover, a portion of the Company's proprietary technology is dependent upon
unpatented trade secrets and know-how. Although the Company enters into
confidentiality agreements with individuals and companies having access to
proprietary technology whenever practicable, such agreements may not provide
meaningful protection for this technology in the event of any unauthorized use
or disclosure of such know-how. Further, in cases where patent protection does
not exist, the Company may be exposed to competitors who independently develop
substantially equivalent technology or otherwise gain access to the Company's
trade secrets, know-how or other proprietary information.
LIMITED MANUFACTURING EXPERIENCE; DEPENDENCE UPON THIRD PARTY MANUFACTURERS
Although the Company has substantial experience in the manufacture of
microwave components and has begun to acquire experience regarding manufacture
of products utilizing its magnetics technology, the Company currently has
limited capability to manufacture its proposed products by itself on a
commercial scale. Accordingly, the Company could experience delays in meeting
customer needs. In order to reduce risks associated with manufacturing, for
certain of its manufacturing needs, the Company has entered and in the future
intends to enter into joint development, joint venture or subcontract
arrangements with qualified manufacturers. As a result, the Company expects
that it will be dependent on partners, licensees or other entities for
commercial scale manufacturing of its products. In the event the Company
decides to establish a commercial scale manufacturing facility, the Company may
require substantial additional funds and personnel and would be required to
comply with regulations applicable to such a facility. There can be no
assurance that the Company will be able to enter into arrangements for the
manufacturing of its product or to obtain additional capital to conduct such
activities independently.
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of Common Stock in the public market by stockholders (and
future issuances of Common Stock upon the exercise of options, warrants, or
convertible debt) may adversely affect the market price of the Company's stock.
For example, pursuant to an outstanding registration statement on file with the
Commission a total of approximately 7,000,000 shares of Common Stock issuable
upon the exercise of outstanding warrants and options are eligible for future
resale in the public market. Approximately 1,085,000 shares will become eligible
for resale upon the conversion of the Company's 7% Secured Convertible Notes.
In addition, the Company has outstanding approximately $1.8 million of
convertible debentures (the "Debentures") which are convertible into shares of
Common Stock. See "Recent Developments-Recent Financing Activities" herein.
SHAREHOLDER LITIGATION
Claims have been made against the Company and certain of its directors in
two purported class action lawsuits filed in May 1995 alleging that as a result
of information disseminated by the Company the market
-10-
<PAGE>
price of Aura's Common Stock was artificially inflated at certain times. These
claims were dismissed by the court, and the plaintiffs have filed an appeal to
the court of appeals, which is currently pending. Although no prediction can be
made as to the ultimate outcome of the proceedings, the Company believes that it
has meritorious defenses. See Note 5 to the Company's financial statements
appearing in its Form 10-Q for the quarter ended August 31, 1996.
ABSENCE OF DIVIDENDS
The Company has never paid cash dividends on its Common Stock and does not
expect to pay any cash dividends in the foreseeable future. The Company
currently intends to retain any future earnings for use in its business.
EFFECT OF ANTI-TAKEOVER PROVISIONS
The Company is subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law, which prohibits the Company from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person first becomes an
"interested stockholder," unless the business combination is approved in a
prescribed manner. The application of Section 203 could also have the effect of
delaying or preventing a change in control of the Company.
-11-
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company on a
consolidated basis, (i) as of August 31, 1996, and (ii) and as adjusted on a pro
forma basis to give effect to the issuance of 3,004,641 shares by the Company
covered by this Prospectus upon the exercise of 1,995,063 Warrants and 1,009,578
Options and conversion of the 8% Notes, the issuance of $10,000,000 principal
amount of Debentures subsequent to August 31, 1996, and the conversion of
$16,055,000 principal amount of Debentures into Common Stock subsequent to
August 31, 1996. For further information regarding the Debentures and the 8%
Notes, see "Recent Developments" herein.
<TABLE>
<CAPTION>
SECURITIES ISSUED
-----------------------------------------
ACTUAL AS ADJUSTED /1/
------ -----------
<S> <C> <C>
Total Debt:
Current Installments of
Notes Payable $ 3,701,454 $ 3,701,454
Secured 7% Convertible
Notes - due 2002 and
other debt 8,608,794 8,608,794
Convertible Debentures 7,850,000 1,795,000
8% Notes -- --
Stockholders' equity:
Common Stock, $.005 per
value, 100,000,000 shares
authorized, and
67,299,391 shares issued
and outstanding, and 83,522,510
as adjusted 336,497 416,344
Additional paid-in capital 182,035,332 216,954,523
Accumulated deficit (66,551,433) (66,551,433)
----------- -----------
Net stockholders' equity 115,820,396 150,819,434
----------- -----------
Total Capitalization $135,980,644 $164,924,682
=========== ===========
</TABLE>
- -------------------
/1/ Based upon the number of shares outstanding as of January 7, 1997.
Excludes (i) approximately 3,000,000 shares not covered by this Prospectus which
are reserved for issuance upon conversion of outstanding warrants and options,
(ii) approximately 1,085,000 shares issuable upon conversion of the Secured 7%
Convertible Notes, (iii) approximately 4,076,000 shares issuable upon exercise
of outstanding options under the Company's 1989 Stock Option Plan, and (iv) an
indeterminate number of shares issuable upon conversion of the remaining
$1,795,000 of Debentures.
-12-
<PAGE>
PRICE RANGE OF COMMON STOCK
From March 1987 until November 1988, Aura's Common Stock was traded over-
the-counter but was not quoted in any automated quotation system of a registered
securities association. Since November 1988 Aura Common Stock has been quoted
on the NASDAQ quotation system under the trading symbol "AURA". In May 1991
Aura shares became listed on the NASDAQ Stock Exchange.
Set forth below are high and low sales prices of the Common Stock of Aura
for each quarterly period in each of the three most recent fiscal years through
November 30, 1996. Such quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not necessarily represent actual
transactions in Common Stock. The Company had 4,449 stockholders of record as of
December 23, 1996.
<TABLE>
<CAPTION>
PERIOD HIGH LOW
- ------ ---- ---
<S> <C> <C>
Fiscal Year Ended February 28, 1995 ("Fiscal 1995")
First Quarter ended May 31, 1994 9.00 6.50
Second Quarter ended August 31, 1994 9.38 7.00
Third Quarter ended November 30, 1994 7.88 3.94
Fourth Quarter ended February 28, 1995 5.38 3.06
Fiscal Year Ended February 29, 1996 ("Fiscal 1996")
First Quarter ended May 31, 1995 5.68 3.00
Second Quarter ended August 31, 1995 5.50 4.50
Third Quarter ended November 30, 1995 8.25 4.50
Fourth Quarter through February 29, 1996 6.75 4.06
Fiscal Year Ended February 28, 1997 ("Fiscal 1997")
First Quarter ended May 31, 1996 5.56 3.88
Second Quarter ended August 31, 1996 4.31 2.50
Third Quarter ended November 30, 1996 3.31 1.88
</TABLE>
On January 7, 1997, the last reported sales price for the Company's Common
Stock was $2.53.
DIVIDEND POLICY
The Company has not paid any dividends on its Common Stock and currently
intends to retain any future earnings for use in its business. Therefore, the
Company does not anticipate paying any dividends on its Common Stock in the
foreseeable future.
-13-
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following Selected Consolidated Financial Data has been taken or derived
from the audited consolidated financial statements of the Company or the
Company's unaudited financial statements, and should be read in conjunction with
and is qualified in its entirety by the full consolidated financial statements,
related notes and other information included elsewhere herein.
<TABLE>
<CAPTION>
Six Months Ended Year Ended
----------------------- ----------
(Unaudited)
August 31, August 31, February 29, February 28, February 28, February 28, February 29,
1996 1995 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues 45,979,896 27,214,373 82,259,010 44,214,242 $ 16,369,825 $11,005,379 $11,134,502
Cost of Revenues 31,464,592 21,752,429 71,849,204 30,064,935 13,714,813 10,605,654 7,488,192
Research and development
expenses 4,064,235 988,804 5,225,735 2,037,467 2,286,051 2,813,018 2,040,662
General and administrative
expenses 9,068,158 6,150,896 26,399,794 14,407,919 6,259,748 6,402,428 5,277,936
Provision for contract losses --- 133,261 17,133 183,597 435,267
Equity losses from AMS
investments/1/ --- --- --- --- 9,454 511,923 649,355
Total costs and expenses 13,132,393 7,139,700 46,643,582 22,287,199 20,516,620 15,891,412
Income (Loss) from operations 1,382,911 (1,677,756) (26,385,883) (2,429,340) (5,917,374) (9,511,241) (4,756,910)
Other Income and Expense:
Interest expenses (income) net 252,249 57,194 (298,793) 220,539 301,928 133,876 42,925
Class action litigation
and other settlement --- --- --- --- 4,375,000 --- ---
Net Income (loss) $ 1,130,662 $(1,734,950) $(26,087,090) $ (2,649,879) $(10,594,302) $(9,645,117) $(4,799,835)
Net Income (loss) per common
share $ .02 $ (.04) $ (.48) $ (.07) $ (.35) $ (.36) $ (.19)
Weighted average number of
common shares 51,374,076 35,819,115 53,860,527 37,217,673 30,117,742 26,881,421 25,837,069
<CAPTION>
August 31, August 31, February 29, February 28, February 28, February 28, February 29,
Balance Sheet Data 1996 1995 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Working capital $ 79,540,075 $33,178,431 $ 71,362,882 $ 33,796,181 $ 11,353,783 $ 3,593,473 $ 4,906,224
Total assets 145,148,338 78,449,421 134,080,568 73,467,003 37,564,037 22,695,481 20,158,394
Total Liabilities and
deferrals 29,327,942 27,074,409 34,917,462 19 ,213,584 19,488,244 15,439,765 4,634,002
Net stockholders' equity 115,820,396 51,375,012 99,163,106 54,253,419 18,075,793 7,255,716 15,524,392
</TABLE>
- ----------------------------
/1/ In the fiscal years ended February 28, 1994, February 28, 1993 and
February 29, 1992, the Company reported results of Aura Medical Systems, Inc. on
the equity method. In the fiscal years ended February 29, 1996 and February 28,
1995 they were consolidated.
-14-
<PAGE>
RECENT DEVELOPMENTS
The following information describes certain changes in the Company's affairs
which have occurred since the end of Fiscal 1996 and should be read in
conjunction with the financial statements, related notes and other information
included elsewhere or incorporated by reference in this Prospectus.
RECENT FINANCING ACTIVITIES
In the Fall of 1996 the Company completed a private placement of $10,000,000
principal amount of its unsecured Debentures. The Debentures bear interest at
the rate of between 5-8% per annum, payable quarterly in arrears, with the
entire unpaid principal balance due in 1998. Principal may be converted by the
holder into Common Stock of the Company in accordance with a stated formula,
subject to certain conditions, prior to maturity. At January 7, 1997,
approximately $1.8 million principal amount of the Debentures remained
outstanding.
In December 1996 the Company completed a private placement of $7.5 million
of its unsecured convertible notes (the "8% Notes") to three institutional
investors. The Notes bear interest at the rate of 8% per annum, payable
quarterly in arrears, with the entire principal balance due in 1998. Principal
may be converted by the holder into Common Stock of the Company in accordance
with a stated formula commencing in February 1997. The Company has the right to
redeem the Notes at any time prior to maturity upon payment of the applicable
redemption premium. Under the terms of the placement, the Company is
registering the shares issuable upon conversion of the 8% Notes, the resale of
which are covered by this Prospectus.
In December 1996 the Company obtained a $12 million revolving credit
facility from a major financial institution. The credit facility is secured by
certain of the Company's inventory and accounts receivable.
-15-
<PAGE>
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
All of the shares of Common Stock of the Company covered by this Prospectus
are being sold for the account of the selling stockholders named in the table
below under "Shares of Common Stock Offered by Selling Stockholders (the
"Selling Stockholders"). The shares being offered by the Selling Stockholders
upon the exercise of outstanding, unexercised Warrants and Options consist of
the following: (i) 135,000 shares issuable upon exercise of outstanding Warrants
at an exercise price of $4.00 per share; (ii) 675,000 shares issuable upon
exercise of outstanding Warrants at $5.00 per share; (iii) 611,578 shares
issuable upon exercise of outstanding Options at $4.00 per share; (iv) 170,000
shares issuable upon exercise of outstanding Options at $3.06 per share; (v)
38,000 shares issuable upon exercise of outstanding Options at $1.50 per share;
(vi) 40,000 shares issuable upon exercise of outstanding Options at $4.75 per
share; (vii) 550,000 shares issuable upon exercise of outstanding Warrants at
$4.0625 per share; (viii) 10,000 shares issuable upon exercise of outstanding
Warrants at $7.25 per share; (ix) 50,000 shares issuable upon exercise of
outstanding Warrants at $5.375 per share; (x) 100,000 shares issuable upon
exercise of outstanding Options at $4.50 per share; (xi) 50,000 shares issuable
upon exercise of outstanding Options at $5.50 per share; (xii) 575,063 shares
issuable upon exercise of outstanding Warrants at $2.35 per share; and (xiii) an
indeterminate number of shares issuable upon conversion of the 8% Notes. All of
the Warrants and Options are presently exercisable. The 3,004,641 shares of
Common Stock issuable upon the exercise of outstanding Warrants and Options may
be issued from time to time by the Company in accordance with the terms of the
respective Warrants and Options. For further information regarding the terms of
the Warrants, Options and 8% Notes, see "DESCRIPTION OF CAPITAL STOCK" and
"RECENT DEVELOPMENTS."
The remaining 1,328,300 shares of Common Stock offered by the Selling
Stockholders pursuant to this Prospectus consist of (i) 315,000 shares issued to
Parviz Nazarian in July 1995 in connection with the acquisition by Aura of an
interest in Auratech, Inc., an Aura affiliate; (ii) 66,135 shares issued to the
shareholders of GS Systems, Inc. in July 1994 to acquire certain noise
cancellation technology; (iii) 812,000 shares issued to four individuals in
October 1994 in exchange for their common stock in Aura Medical Systems, Inc., a
subsidiary of the Company; and (iv) 35,165 shares of Common Stock issued to Wall
Street Group upon exercise of options at $2.84 per share.
The shares of Common Stock offered by the Selling Stockholders may be
offered for sale from time to time at market prices prevailing at the time of
sale or at negotiated prices, and without payment of any underwriting discounts
or commissions except for usual and customary selling commissions paid to
brokers or dealers. This Prospectus has been prepared so that future sales of
the shares of Common Stock by the Selling Stockholders will not be restricted
other than as set forth herein. In connection with any sales, the Selling
Stockholders and any brokers participating in such sales may be deemed to be
"underwriters" within the meaning of the Securities Act.
Pursuant to Rule 10b-6 of the Exchange Act, a Selling Stockholder who is
neither affiliated nor directly or indirectly acting in concert with the issuer
or with any other Selling Stockholder will be required to observe the
appropriate "cooling off" period and other restrictions only prior to the
individual stockholder's distribution and until such distribution ends or the
shares are withdrawn from registration. Conversely, a Selling Stockholder who
is affiliated or acting in concert with the issuer or another Selling
Stockholder will be required to observe the appropriate "cooling off" period and
other restrictions under Rule 10b-6 with resect to all offers and sales by
affiliated persons.
Except as described above or reflected in the footnotes to the Selling
Stockholder Table below, no Selling Stockholder has had any material
relationship with the Company or an affiliate of the Company within the past
three years.
-16-
<PAGE>
The shares of Common Stock sold for the account of the Selling Stockholders
may be sold in one or more of the following transactions: (a) block trades in
which the broker or dealer so engaged will attempt to sell such shares as agent
but may position and resell a portion of the block as principal to facilitate
any transaction, (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus, and (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers and dealers engaged by Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers or
dealers will receive commissions or discounts from Selling Stockholders in
amounts to be negotiated (and, if such broker-dealer acts as agent for the
purchaser of such shares, from such purchaser). Broker-dealers may agree with
the Selling Stockholders to sell a specified number of such shares at a
stipulated price per share, and, to the extent such a broker-dealer is unable to
do so acting as agent for a Selling Stockholder, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
such Selling Stockholder. Broker-dealers who acquire such shares as principals
may thereafter resell such shares from time to time in transactions (which may
involve crosses and book transactions and which may involve sales to and through
other broker-dealers, including transaction, of the nature described above) in
the over-the-counter market, in negotiated transactions or otherwise, at market
prices prevailing at the time of sale or at negotiated transactions or
otherwise, at market prices prevailing at the time of sale or at negotiated
prices, and in connection with such resales may pay to or receive from the
purchasers of such shares commissions as described above.
-17-
<PAGE>
Listed below are the names of each selling stockholder (the "Selling
Stockholders"), the total number of shares owned and the number of shares to be
sold in this offering by each Selling Stockholder, and the percentage of Common
Stock owned by each Selling Stockholder before and after this Offering:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF SHARES OF
COMMON STOCK TO COMMON STOCK
SHARES OF BE OFFERED FOR OWNED OF
COMMON STOCK SELLING RECORD AFTER
OWNED OF RECORD STOCKHOLDER'S COMPLETION OF
NAME PRIOR TO OFFERING** ACCOUNT** OFFERING
- ---- ------------------- ---------------- -----------------
NUMBER PERCENT NUMBER PERCENT
-------- -------- ------ -------
<S> <C> <C> <C> <C> <C>
Mark Berg 14,600 * 14,600
Joseph Bevacqua 84,100 * 30,000 54,100 *
Lawrence Bober 14,915 * 14,915
H.F. Boeckmann II 400,000 * 400,000
Jerry Breslauer 100,000 * 100,000
Harvey Cohen (1) 100,000 * 100,000
Dusseldorf Securities Ltd. 119,805 * 119,805
Matthew & Phyllis Faenza 25,000 * 15,000 10,000 *
Fairway Capital Limited 650,628(2) * 562,924(2) 87,704 *
William Oliver Frick
TTEE, The Frick Trust
DTD 9/12/87 15,000 * 15,000
Robert M. Friedland 100,000 * 100,000
Dr. Daniel Graupe 27,220 * 27,220
Greatworth Investments
Ltd. 60,000 * 60,000
Greystone Capital, Ltd. 71,883 * 71,883
Samuel S. Guzik(3) 40,000 * 40,000
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF SHARES OF
COMMON STOCK TO COMMON STOCK
SHARES OF BE OFFERED FOR OWNED OF
COMMON STOCK SELLING RECORD AFTER
OWNED OF RECORD STOCKHOLDER'S COMPLETION OF
NAME PRIOR TO OFFERING** ACCOUNT** OFFERING
- ---- -------------------- ---------------- -----------------
NUMBER PERCENT NUMBER PERCENT
--------- -------- ------ -------
<S> <C> <C> <C> <C> <C>
Douglas W. Haney &
Ingerlise M. Haney,
JTWROS 15,000 * 15,000
Ralph M. Haney Trust
Douglas W. Haney
Trustee 6,100 * 6,100
Melvyn Honig 12,000 * 12,000
Infinity Investors Ltd. 3,456,980(2) 4.1 3,091,295(2)
Udaya & Sadhana
Jagirdar, JTWROS 36,000 * 36,000
Sadhana Jagirdar C/F Ravij
Jagirdar U/CA/UTMF 6,500 * 6,500
Sadhana Jagirdar C/F Sunjay
Jagirdar U/CA/UTMF 6,500 * 6,500
Dale Kaufman 10,000 * 10,000
Kemper Clearing Corp.
C/F James O. McCash
IRA/R/O 40,000 * 40,000
Laurentian Bank and Trust
c/o E.M. Lowy 30,000 * 30,000
Marlene Lavut 21,000 * 10,000
Peter J. McDermott 15,000 * 15,000
Mirabon Investments 30,000 * 30,000
Parviz Nazarian 315,000 * 315,000
Chester Parkinson 23,000 * 23,000
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF SHARES OF
COMMON STOCK TO COMMON STOCK
SHARES OF BE OFFERED FOR OWNED OF
COMMON STOCK SELLING RECORD AFTER
OWNED OF RECORD STOCKHOLDER'S COMPLETION OF
NAME PRIOR TO OFFERING** ACCOUNT** OFFERING
- ---- ------------------- ---------------- -----------------
NUMBER PERCENT NUMBER PERCENT
-------- -------- ------ -------
<S> <C> <C> <C> <C> <C>
Robert Olenoff 125,000 * 125,000
Gerald Papazian(4) 38,000 * 38,000
Norman Reitman(5) 150,000 * 150,000
Stephen Schwartz 90,578 * 90,578
Seacrest Capital Limited 562,924(2) * 562,924(2)
Nancy & Suryakant
Shah JTWROS 102,056 * 100,000 2,056 *
Alan Skobin C/F
Jeffrey Skobin 12,000 * 12,000
Lawrence Shultz 620,000 * 620,000
David Sitrick 24,000 * 24,000
Steven P. & Katherine
Snyder, J.T. 7,000 * 7,000
Paul Sullivan 25,000 * 25,000
Steven C. Veen(6) 15,000 * 15,000
Wall Street Group 35,165 * 35,165
Anthony Theoharous 70,000 * 70,000
Sy Weintraub 296,000 * 296,000
Robert W. Whalen 53,000 * 53,000
Tom Wiley 70,000 * 70,000
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF SHARES OF
COMMON STOCK TO COMMON STOCK
SHARES OF BE OFFERED FOR OWNED OF
COMMON STOCK SELLING RECORD AFTER
OWNED OF RECORD STOCKHOLDER'S COMPLETION OF
NAME PRIOR TO OFFERING** ACCOUNT** OFFERING
- ---- ------------------- ---------------- -----------------
NUMBER PERCENT NUMBER PERCENT
-------- -------- ------ -------
<S> <C> <C> <C> <C> <C>
D & S Wilstein
Family Trust 220,000 * 200,000 20,000 *
Leonard Wilstein
and Joyce Wilstein
Revocable Trust 200,000 * 200,000
</TABLE>
________________
*Less than one percent.
**Assumes the exercise of all Options and Warrants.
(1) Mr. Cohen is a Director of the Company.
(2) Assumes a conversion price of conversion price $1.95 per share and the
conversion of all 8% Notes. The actual conversion price is determined by a
formula based upon the market price of Aura Common Stock prior to
conversion. Therefore, the actual number of shares sold could be more or
less than the number shown, depending upon the conversion price and the
dollar amount converted.
(3) Mr. Guzik is a principal of Guzik & Associates, counsel for the Company.
See "Legal Matters" herein.
(4) Mr. Papazian is a Vice President of the Company.
(5) Mr. Reitman is a Director of the Company.
(6) Mr. Veen is a Vice President and the Chief Financial Officer of the
Company.
-21-
<PAGE>
DESCRIPTION OF CAPITAL STOCK
As of January 7, 1997, the authorized capital stock of the Company consists
of 100,000,000 shares of Common Stock, par value $.005 per share, of which
76,684,101 are issued and outstanding.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all matters to
be voted upon by the stockholders. Common stockholders are entitled to receive
such dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor. The Common Stock has no
preemptive or conversion rights or other subscription rights and there are no
redemptive or sinking funds provisions applicable to the Common Stock. All
outstanding shares of Common Stock are fully paid and nonassessable, and all the
shares of Common Stock offered by the Company hereby will, when issued, be fully
paid and nonassessable.
WARRANTS AND OPTIONS
The Company's outstanding warrants and options contain substantially similar
terms. They are exercisable at prices ranging from $1.50 per share to $15.00
per share and expire between 1996 and 2006. The warrants and options, which are
exercisable in whole or in part, have registration rights which allow the
underlying shares of Common Stock to be included in a registration proposed by
the Company. The warrants and options also have provisions which require the
adjustment of the exercise price in the event of certain Company distributions,
reclassifications, stock splits, or issuances of rights or warrants to purchase
Common Stock at less than market value to holders of Common Stock.
ANTI-TAKEOVER PROVISIONS
The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203"). In general, Section 203 prohibits certain publicly held
Delaware corporations from engaging in a "business combination" with an
"interested stockholder" for a period of three years following the date of the
transaction in which the person or entity became an interested stockholder,
unless the business combination is approved in a prescribed manner. For
purposes of Section 203, "business combination" is defined broadly to include
mergers, asset sales and other transactions resulting in a financial benefit to
the interested stockholder. An "interested stockholder" is any person or entity
who, together with affiliates and associates, owns (or within the three
immediately preceding years did own) 15% or more of the Company's voting stock.
The provisions of Section 203 requiring a super majority vote to approve certain
corporate transactions could enable a minority of the Company's stockholders to
exercise veto powers over such transactions and could have the effect of
delaying or preventing a change in control of the Company without further action
by the stockholders.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is Interwest
Transfer, Salt Lake City, Utah.
-22-
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of Common
Stock offered hereby will be passed upon for the Company by Guzik & Associates,
Los Angeles, California. Samuel S. Guzik, Esq., a principal of this firm, owns
40,000 options covered by the Registration Statement to which this Prospectus
relates, which options are exercisable at $4.75 per share.
EXPERTS
The consolidated financial statements of the Company and subsidiaries for
the years ended February 29, 1996, February 28, 1995, and February 28, 1994,
incorporated by reference in this Prospectus and Registration Statement have
been audited by Pannell Kerr Forster, independent auditors. Such financial
statements and schedules have been so incorporated in reliance upon such report
given the authority of such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement under the Securities Act of 1933, as amended, with
respect to the Common Stock offered hereby. This Prospectus does not contain
all the information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Common Stock, reference is hereby made to such Registration Statement, exhibit
and schedules. Statements contained in this Prospectus regarding the contents
of any contract or other document are not necessarily complete with respect to
each such contract or document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Registration Statement, including the exhibits
and schedules thereto, may be inspected without charge at the Commission in
Washington, D.C. and copies of such material may be obtained from such upon
payment of the fees prescribed by the Commission.
No dealer, salesman or other person has been authorized to give any
information or to make any representation orth than those contained in this
Prospectus. If given or made, such information or representation must not be
relied upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or solicitation of an offer to buy any securities
other than the shares of Common Stock to which it relates or an offer or
solicitation to any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither delivery of this Prospectus nor sale
made hereunder shall under any circumstances create an implication that
information contained herein is correct as of any time subsequent to its date.
-23-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION................................................. 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................... 2
SUMMARY............................................................... 2
RISK FACTORS.......................................................... 6
CAPITALIZATION........................................................ 12
PRICE RANGE OF COMMON STOCK........................................... 13
SELECTED CONSOLIDATED FINANCIAL DATA.................................. 14
RECENT DEVELOPMENTS................................................... 15
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION......................... 16
DESCRIPTION OF CAPITAL STOCK.......................................... 22
LEGAL MATTERS......................................................... 23
EXPERTS............................................................... 23
ADDITIONAL INFORMATION................................................ 23
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses payable by the Registrant in
connection with the sale and distribution of the securities being registered
hereby. All amounts are estimated except the Securities and Exchange Commission
registration fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 8,032.93
Blue Sky fees and expenses.................................. 1,000.00
Accounting fees and expenses................................ 1,000.00
Legal fees and expenses..................................... 15,000.00
Printing and engraving expenses............................. 1,000.00
Registrar and Transfer Agent's fees......................... 500.00
Miscellaneous fees and expenses............................. 500.00
Total....................................................... $27,032.93
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement of expenses incurred) arising under the
Securities Act of 1933, as amended (the "Act"). The Registrant has entered into
agreements with its directors to provide indemnity to such persons to the
maximum extent permitted under applicable laws.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<C> <S>
4.1 Certificate of Incorporation of Registrant.(1)
4.2 Bylaws of Registrant.(1)
4.3 Form of Warrant.(2)
5.1 Opinion of Guzik & Associates.
23.1 Consent of Pannell Kerr Forster, certified public accountants.
23.2 Consent of Guzik & Associates.*
24.1 Power of Attorney(3)
</TABLE>
- ------------
* Included in Exhibit 5.1
(1) Incorporated by reference to the Exhibits to the Registration Statement on
Form S-1 (File No. 33-19530).
II-1
<PAGE>
(2) Incorporated by reference to the Exhibits to the Registrant's Annual Report
on Form 10-K for the fiscal year ended February 28, 1994 (File No. 0-17249).
(3) Incorporated by reference to the signature page of this Registration
Statement as filed with the SEC on February 29, 1996.
(b) Financial Statement Schedules
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-
effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this action do
not apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
II-2
<PAGE>
Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(d) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of El Segundo, State of
California, on the 7th day of January, 1997.
AURA SYSTEMS, INC.
By /s/ Zvi (Harry) Kurtzman
--------------------------------------
Zvi (Harry) Kurtzman
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Zvi (Harry) Kurtzman President and Director January 7, 1997
- --------------------------- (Principal Executive Officer)
Zvi (Harry) Kurtzman
/s/ Steven C. Veen Vice President, Chief January 7, 1997
- --------------------------- Financial Officer
Steven C. Veen (Principal Financial Officer
and Principal Accounting
Officer)
/s/ Arthur J. Schwartz* Director January 7, 1997
- ---------------------------
Arthur J. Schwartz
/s/ Cipora Kurtzman Lavut* Director January 7, 1997
- ---------------------------
Cipora Kurtzman Lavut
/s/ Norman Reitman* Director January 7, 1997
- ---------------------------
Norman Reitman
/s/ Harvey Cohen* Director January 7, 1997
- ---------------------------
/s/ Anthony T. Cascio* Director January 7, 1997
- ---------------------------
Anthony T. Cascio
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Neal B. Kaufman* Director January 7, 1997
- ---------------------------
Neal B. Kaufman
/s/ Phillip G. Saffman* Director January 7, 1997
- ---------------------------
Phillip G. Saffman
* /s/ Steven C. Veen January 7, 1997
- ---------------------------
By Steven C. Veen,
Attorney-in-fact
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
4.1 Certificate of Incorporation of Registrant.(1)
4.2 Bylaws of Registrant.(1)
4.3 Form of Warrant.(2)
5.1 Opinion of Guzik & Associates.
23.1 Consent of Pannell Kerr Forster, certified public accountants.
23.2 Consent of Guzik & Associates.*
24.1 Power of Attorney(3)
</TABLE>
- ------------
* Included in Exhibit 5.1
(1) Incorporated by reference to the Exhibits to the Registration Statement on
Form S-1 (File No. 33-19530).
(2) Incorporated by reference to the Exhibits to the Registrant's Annual Report
on Form 10-K for the fiscal year ended February 28, 1994 (File No. 0-17249).
(3) Incorporated by reference to the signature page of this Registration
Statement as filed with the SEC on February 29, 1996.
<PAGE>
Exhibit 5.1
-----------
Law Offices of
GUZIK & ASSOCIATES
1800 Century Park East, Fifth Floor
Los Angeles, California 90067
Telephone 310-788-8600
Facsimile 310-788-2835
January 7, 1997
Aura Systems, Inc.
2335 Alaska Avenue
El Segundo, California 90245
Re: Aura Systems, Inc. Registration Statement on Form S-3 (File No. 333-
-------------------------------------------------------------------
1315)
-----
Ladies and Gentlemen:
You have requested our opinion regarding the validity of the issuance of
shares of Aura Systems, Inc. Common Stock covered by the above-referenced
Registration Statement on Form S-3. These shares include: (i) 1,328,300 shares
of Common Stock which are issued and outstanding; (ii) 1,995,063 shares of
Common Stock issuable upon the exercise of outstanding Warrants (the
"Warrants"); (iii) 1,009,578 shares of Common Stock issuable upon the exercise
of outstanding Options (the "Options"); and (iv) shares of Common Stock
issuable upon conversion of the Company's $7,500,000 Unsecured Convertible 8%
Notes (the "Notes").
In our opinion: (i) the 1,328,300 outstanding shares of Common Stock
covered by the Registration Statement have been duly and validly issued by the
Company and are fully paid and non-assessable; and (ii) the shares of Common
Stock issuable upon exercise of the Warrants and Options and the conversion of
the Notes, when issued in accordance with the terms of the Warrants, Options or
Notes, as the case may be, will be duly and validly issued by the Company,
fully paid and non-assessable.
We hereby consent to the inclusion of this opinion in the Registration
Statement, including any amendments thereto, and to the reference to this firm
in the Registration Statement under the section entitled "Legal Matters."
Very truly yours,
GUZIK & ASSOCIATES
/s/ Samuel S. Guzik
Samuel S. Guzik
<PAGE>
Exhibit 23.1
------------
CONSENT OF PANNELL KERR FORSTER
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 of our report dated May 28, 1996, on our audits of the
consolidated financial statements of Aura Systems, Inc. as of February 29, 1996,
February 28, 1995, and February 28, 1994, and for each of the three years then
ended, which report appears in Form 10-K and Form 10-K/A of Aura Systems, Inc.
for the fiscal year ended February 29, 1996. We also hereby consent to the
reference to our firm under the caption "Experts" in the Registration Statement.
PANNELL KERR FORSTER
Los Angeles, California
January 7, 1997
