<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 19, 1997
REGISTRATION NO. 333-1315
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
PRE-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------
AURA SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4106394
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2335 ALASKA AVENUE, EL SEGUNDO, CALIFORNIA 90245
(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
(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
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
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO PER UNIT OR OFFERING REGISTRATION
OF SECURITIES TO BE REGISTERED BE REGISTERED(2) SHARE(1) PRICE(1) FEE(3)
- ------------------------------- ---------------- ---------------- ---------------- ------------
<S> <C> <C> <C> <C>
Common Stock, $.005 par value.. 11,832,941 $1.9687 $23,295,510.75 $8,032.93(3)
Common Stock, $.005 par value.. 1,109,980 $2.2969(1) $ 2,549,513.06 $ 879.14
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
- --------
(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 March 17, 1997.
(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) Previously paid on February 29, 1996, and January 8, 1997.
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)
<TABLE>
<CAPTION>
ITEM NUMBER AND HEADING IN FORM S-3
REGISTRATION STATEMENT LOCATION IN PROSPECTUS
----------------------------------- ----------------------
<C> <S> <C>
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus...... Front Cover Page
2. Inside Front and Outside Back
Cover Pages of Prospectus..... Inside Front Cover Page; 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
Registered.................... Description of Capital Stock
10. Interest of Named Experts and
Counsel....................... Legal Matters
11. Material Changes............... Recent Developments
12. Incorporation of Certain Incorporation of Certain Information by
Information by Reference...... Reference
13. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities................... Inapplicable
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 MARCH 19, 1997
PROSPECTUS
- --------------------------------------------------------------------------------
AURA SYSTEMS, INC.
COMMON STOCK
- --------------------------------------------------------------------------------
This Prospectus relates to the resale by the Selling Stockholders identified
herein of (i) an aggregate of 2,895,063 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 $2.00 to $7.25 per share (the "Warrants"); (ii)
an aggregate of 1,134,578 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) 1,413,280 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 March 17, 1997, the last reported sales price for Aura's
Common Stock on the NASDAQ Stock Exchange was $2.28. See "PRICE RANGE OF COMMON
STOCK".
The date of this Prospectus is , 1997
<PAGE>
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
Commission also maintains a Web site on the Internet, http://www.sec.gov, that
also contains such reports, proxy statements and other information filed by
the Company.
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, August 31,
1996, and November 30, 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.
2
<PAGE>
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 the sale of other products which do not utilize this technology, such
as sound cards, CD ROMs, 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 manufacturers or packages for sale,
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. For further information regarding the business of the Company, see
"Business of the Company" herein.
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.
3
<PAGE>
THE OFFERING
The securities offered by the Selling Stockholders include the following:
<TABLE>
<C> <S>
Shares of Common Stock issuable upon exercise
of Outstanding Warrants..................... 2,895,063
Shares of Common Stock issuable upon exercise
of Outstanding Options...................... 1,134,578
Shares of Common Stock issuable upon
conversion of 8% Notes...................... 3,833,768(1)
Other Shares of Outstanding Common Stock..... 1,413,280
Shares Outstanding:
Common Stock Outstanding before The Offering. 76,995,257
Common Stock Outstanding after the Offering
(assuming the exercise or conversion of all
Warrants, Options and 8% Notes)(2).......... 84,883,641
Use of Proceeds.............................. Although the Company will
receive up to $13,916,160 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
</TABLE>
- --------
(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 February 25, 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 $900,000 of outstanding Debentures. See "Recent Developments"
herein.
4
<PAGE>
SUMMARY FINANCIAL INFORMATION
AURA SYSTEMS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
NINE MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, FEBRUARY 29, FEBRUARY FEBRUARY 28,
1996 1995 1996 28, 1995 1994
------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Gross Revenues........ $ 80,322,923 $ 55,213,242 $ 82,259,010 $44,214,242 $ 16,369,825
Net income (loss)..... 1,998,908 (2,022,571) (26,087,090) (2,649,879) (10,594,302)
Net income(loss) per
share................ .03 (.04) (.48) (.07) (.35)
Weighted average
shares outstanding... 65,818,905 51,374,076 53,860,527 37,217,673 30,117,742
BALANCE SHEET DATA:
Working Capital....... $ 86,800,774 $ 86,445,237 $ 71,362,882
Total Assets.......... 168,989,719 129,998,677 134,080,568
Total Liabilities
(including
deferred income)..... 42,730,118 15,989,039 34,917,462
Net Stockholders'
Equity............... 126,259,601 114,009,638 99,163,106
</TABLE>
5
<PAGE>
RISK FACTORS
THE SHARES OF AURA'S COMMON STOCK MUST BE CONSIDERED A SPECULATIVE
INVESTMENT INVOLVING A HIGH DEGREE OF RISK. IN ADDITION TO OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER
THE FOLLOWING FACTORS IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE
INVESTING IN THE SHARES OF COMMON STOCK OFFERED HEREBY.
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
achieved a profit for the nine months ended November 30, 1996, there can be no
assurance that the 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 1998 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;
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.
6
<PAGE>
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
$900,000 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, Zvi
Kurtzman, Arthur J. Schwartz, Cipora Kurtzman Lavut, Neal B. Kaufman, Harvey
Cohen, and Norman Reitman, and two former directors, in two purported class
action lawsuits filed in May 1995 alleging that as a result of information
disseminated by the Company the market 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 as to
all of the named defendants other than Norman Reitman and Harvey Cohen, which
appeal 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. The
Company is not a party to any agreements which restrict its ability to pay
dividends in the future.
7
<PAGE>
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.
8
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company on a
consolidated basis, (i) as of November 30, 1996, and (ii) and as adjusted on a
pro forma basis to give effect to the issuance of 4,029,641 shares by the
Company covered by this Prospectus upon the exercise of 2,895,063 Warrants and
1,134,578 Options, conversion of the 8% Notes, and the conversion of $895,000
principal amount of Debentures into Common Stock subsequent to November 30,
1996. For further information regarding the 8% Notes, see "Recent
Developments" herein.
<TABLE>
<CAPTION>
SECURITIES ISSUED
--------------------------
AS
ACTUAL ADJUSTED(1)
------------ ------------
<S> <C> <C>
Total Debt:
Current Installments of Notes Payable........ $ 5,396,104 $ 5,396,104
Secured 7% Convertible Notes--due 2002 and other
debt........................................... 8,389,465 8,389,465
Convertible Debentures.......................... 5,340,000 900,000
8% Notes........................................ -- --
Stockholders' equity:
Common Stock, $.005 par value, 100,000,000
shares authorized, and 74,074,790 shares
issued and outstanding, and 84,883,641 as
adjusted..................................... 370,374 421,469
Additional paid-in capital 191,572,414 220,011,398
Accumulated deficit............................. (65,683,187) (65,683,187)
------------ ------------
Net stockholders' equity........................ 126,259,601 154,749,680
------------ ------------
Total Capitalization........................ $145,385,170 $169,435,249
============ ============
</TABLE>
- --------
(1) Based upon the number of shares outstanding as of February 25, 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 $900,000 of Debentures.
9
<PAGE>
BUSINESS OF THE COMPANY
Aura 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 the sale of products which do not
utilize this technology, such as sound cards, CD ROMs 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 or
packages for sale, 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
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" ("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.
10
<PAGE>
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 U.K. Ltd.
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, with sales being discontinued in
the U.S. Aura is also selling its Theater Seat Transducer, which creates the
same interactive experience in 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.
11
<PAGE>
Computer Related Products
Multimedia Products
Aura, principally through its NewCom subsidiary, is engaged in the
manufacture, packaging 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 3"
desktop speakers as well as numerous CD titles licensed from unaffiliated
third parties. CD-ROM's distributed by Aura, and until the fourth quarter of
Fiscal 1997, conventional speakers contained in the multimedia kits, have been
sourced from unaffiliated third parties. Commencing in the fourth quarter of
Fiscal 1997 the Company has included its AuraSound desktop speakers and
conventional speakers manufactured by MYS in some of the multimedia kits.
Display Monitors
Since 1993, the Company has been distributing computer monitors manufactured
by unaffiliated third parties 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, the Company
will start shipping its unique Web Pal set top box in the first quarter of
1997. This Web 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 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, which has been demonstrated in a commercial vehicle, 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.
12
<PAGE>
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 nine month period ended November 30, 1996, multimedia kits were the
largest single source of revenue, constituting $23 million, or 29%; speakers
(exclusive of speakers in multimedia kits) contributed $20 million, or 25%,
the majority of which represents speaker sales by MYS Corp.; computer monitors
and modems contributed $12.9 million and $9.0 million of revenue, or 16% and
11% respectively during the period. In Fiscal 1996 multimedia kits accounted
for $17 million of revenues, or 20%. During Fiscal 1996 modems and speakers
(exclusive of speakers in multimedia kits) 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 million of revenues, or 48%.
No other products accounted for more than 10% of revenues during the foregoing
periods.
13
<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 approximately
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
Fourth Quarter ended February 28, 1997........................... 3.06 1.75
</TABLE>
On March 17, 1997, the last reported sales price for the Company's Common
Stock was $2.28.
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. The Company is not a party to any agreements which would
restrict its ability to pay dividends in the future.
14
<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>
NINE MONTHS ENDED YEAR ENDED
-------------------------- --------------------------------------------------------------------
NOVEMBER 30, NOVEMBER 30, FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29,
1996 1995 1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $ 80,322,923 $ 55,213,242 $ 82,259,010 $44,214,242 $ 16,369,825 $11,005,379 $11,134,502
Cost of Revenues........ 59,004,256 43,890,839 71,849,204 30,064,935 13,714,813 10,605,654 7,488,192
Research and development
expenses............... 5,719,512 1,921,718 5,225,735 2,037,467 2,286,051 2,813,018 2,040,662
General and
administrative
expenses............... 13,236,608 11,472,459 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............... 18,956,120 13,394,177 46,643,582 22,287,199 20,516,620 15,891,412
Income (Loss) from
operations............ 2,362,547 (2,071,774) (26,385,883) (2,429,340) (5,917,374) (9,511,241) (4,756,910)
Other Income and
Expense:
Interest expenses
(income) net.......... (235,055) (446,614) (298,793) 220,539 301,928 133,876 42,925
Class action litigation
and other settlement.. -- -- -- -- 4,375,000 -- --
Net Income (loss)...... $ 1,998,908 $ (2,022,571) $(26,087,090) $(2,649,879) $(10,594,302) $(9,645,117) $(4,799,835)
Net Income (loss) per
common share.......... $ .03 $ (.04) $ (.48) $ (.07) $ (.35) $ (.36) $ (.19)
Weighted average number
of common shares...... 65,818,905 51,374,076 53,860,527 37,217,673 30,117,742 26,881,421 25,837,069
<CAPTION>
NOVEMBER 30, NOVEMBER 30, 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>
Balance Sheet Data:
Working capital......... $ 86,800,774 $ 86,445,237 $ 71,362,882 $33,796,181 $ 11,353,783 $ 3,593,473 $ 4,906,224
Total assets............ 168,989,719 129,998,677 134,080,568 73,467,003 37,564,037 22,695,481 20,158,394
Total Liabilities and
deferrals.............. 42,730,118 15,989,039 34,917,462 19,213,584 19,488,244 15,439,765 4,634,002
Net stockholders'
equity................. 126,259,601 114,009,638 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.
15
<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 February 25, 1997,
approximately $900,000 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.
16
<PAGE>
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
All of the shares of Common Stock of the Company covered by this Prospectus
which may be offered from time to time 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
which may be 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; (xiii) 900,000 shares issuable upon exercise of outstanding
Warrants at $2.00 per share; (xiv) 25,000 shares issuable upon exercise of
outstanding Options at $3.00 per share; (xv) 50,000 shares issuable upon
exercise of outstanding Options at $2.34 per share; (xvi) 50,000 shares
issuable upon exercise of outstanding Options at $3.50 per share; and (xvii)
an indeterminate number of shares issuable upon conversion of the 8% Notes.
All of the Warrants and Options are presently exercisable. The 4,054,641
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 1,413,280 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; (iv) 35,165 shares of Common Stock issued to Wall
Street Group upon exercise of options at $2.84 per share; and (v) 84,980
shares issued to three individuals in connection with the acquisition of
P.S.L.
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 rules promulgated under 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 Regulation M with respect 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.
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,
17
<PAGE>
(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.
Listed below are the names of each selling stockholder (the "Selling
Stockholders"), the total number of shares owned of record (or beneficially
where indicated) 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>
SHARES OF
SHARES OF NUMBER OF COMMON STOCK
COMMON STOCK SHARES OF OWNED OF RECORD
OWNED OF RECORD COMMON STOCK AFTER
PRIOR TO BE OFFERED COMPLETION OF
TO OFFERING** FOR SELLING OFFERING
-------------------- STOCKHOLDER'S ------------------
NAME NUMBER PERCENT ACCOUNT** 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)......... 393,942(1) * 125,000 268,942(1) *
Robert Deeds & Margaret
Deeds, JTWROS.......... 19,028 * 19,028 *
M.G. Doughterty......... 11,176 * 11,176 *
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 *
Josef Grunwald.......... 600,000 * 600,000 *
Samuel S. Guzik(3)...... 40,000 * 40,000 *
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 *
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
SHARES OF NUMBER OF COMMON STOCK
COMMON STOCK SHARES OF OWNED OF RECORD
OWNED OF RECORD COMMON STOCK AFTER
PRIOR TO BE OFFERED COMPLETION OF
TO OFFERING** FOR SELLING OFFERING
-------------------- STOCKHOLDER'S ------------------
NAME NUMBER PERCENT ACCOUNT** NUMBER PERCENT
---- --------- ------- ------------- ------- -------
<S> <C> <C> <C> <C> <C>
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 *
Robert Olenoff............... 125,000 * 125,000 *
Gerald Papazian(4)........... 38,000 * 38,000 *
John T. Phillips & Carol
Phillips, JTWROS............ 19,028 * 19,028 *
Norman Reitman(5)............ 607,142(5) * 325,000 282,142(5) *
Phillip Saffman.............. 25,000 * 25,000 *
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 *
Suryakant Shah............... 300,000 * 300,000 *
Alan Skobin C/F Jeffrey
Skobin...................... 12,000 * 12,000 *
Lawrence Shultz.............. 570,000 * 570,000 *
Emile & Camilo Jorge......... 50,000 * 50,000 *
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 *
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) Includes 155,000 shares beneficially owned by Mr. Cohen, of which 145,000
may be purchased pursuant to options and convertible securities. Also
includes 31,250 shares and 207,692 shares which may be purchased upon
conversion of 7% Secured Convertible Notes, over which Mr. Cohen has
voting and investment control and disclaims beneficial ownership. Mr.
Cohen is a Director of the Company.
(2) Assumes a conversion price of $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) Includes 365,000 shares which may be purchased pursuant to options and
242,142 shares beneficially owned by Mr. Reitman, of which 12,500 shares
are owned by Mr. Reitman's wife and in which he disclaims any beneficial
interest. Mr. Reitman is a Director of the Company.
(6) Mr. Veen is a Vice President and the Chief Financial Officer of the
Company.
(7) Includes 25,000 shares which may be purchased pursuant to the exercise of
options. Mr. Saffman is a Director of the Company.
19
<PAGE>
DESCRIPTION OF CAPITAL STOCK
As of February 25, 1997, the authorized capital stock of the Company
consisted of 100,000,000 shares of Common Stock, par value $.005 per share, of
which 76,995,257 were 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 1997 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.
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.
20
<PAGE>
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.
21
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION....................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. 2
SUMMARY..................................................................... 3
RISK FACTORS................................................................ 6
CAPITALIZATION.............................................................. 9
BUSINESS OF THE COMPANY..................................................... 10
PRICE RANGE OF COMMON STOCK................................................. 14
SELECTED CONSOLIDATED FINANCIAL DATA........................................ 15
RECENT DEVELOPMENTS......................................................... 16
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION............................... 17
DESCRIPTION OF CAPITAL STOCK................................................ 20
LEGAL MATTERS............................................................... 20
EXPERTS..................................................................... 21
ADDITIONAL INFORMATION...................................................... 21
</TABLE>
i
<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............................................. $ 8,912.07
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.......................................................... $27,912.07
==========
</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.(4)
24.1 Power of Attorney(3)
</TABLE>
- --------
(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.
(4) Included in Exhibit 5.1.
(b) Financial Statement Schedules
None
II-1
<PAGE>
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 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
II-2
<PAGE>
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 18TH DAY OF MARCH, 1997.
Aura Systems, Inc.
/s/ Zvi (Harry) Kurtzman
By___________________________________
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>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Zvi (Harry) Kurtzman President and Director March 18, 1997
____________________________________ (Principal Executive
Zvi (Harry) Kurtzman Officer)
/s/ Steven C. Veen Vice President, Chief March 18, 1997
____________________________________ Financial Officer
Steven C. Veen (Principal Financial
Officer and Principal
Accounting Officer)
* Director March 18, 1997
____________________________________
Arthur J. Schwartz
* Director March 18, 1997
____________________________________
Cipora Kurtzman Lavut
* Director March 18, 1997
____________________________________
Norman Reitman
* Director March 18, 1997
____________________________________
Harvey Cohen
* Director March 18, 1997
____________________________________
Anthony T. Cascio
* Director March 18, 1997
____________________________________
Neal B. Kaufman
Director March 18, 1997
____________________________________
Phillip G. Saffman
</TABLE>
/s/ Steven C. Veen
*By____________________________
Steven C. Veen
Attorney-in-fact
II-4
<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
March 18, 1997
VIA EDGAR
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Bryan Brown
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) 1,413,280 shares
of Common Stock which are issued and outstanding; (ii) 2,895,063 shares of
Common Stock issuable upon the exercise of outstanding Warrants (the
"Warrants"); (iii) 1,134,578 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 1,413,280 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
March 18, 1997
