<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AURA SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
AURA SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 19, 1998
To the Stockholders of Aura Systems, Inc.:
The Annual Meeting of Stockholders of Aura Systems, Inc., a Delaware
corporation (the "Company"), will be held on, August 19, 1998 at 3:00 p.m.,
PDT, near the Company's corporate offices at the Marriott Hotel, 1400 Park
View Avenue, Manhattan Beach, California for the following purposes:
(1) To elect a Board of Directors of 12 members;
(2) To consider and act upon a proposal submitted by a stockholder
requesting the Board of Directors, prior to engaging in any financing
transactions similar to those described in the attached proxy statement,
consider providing the existing stockholders of the Company an opportunity
to invest in the Company on the terms being offered to private investors;
and
(3) To transact any other business which may properly come before the
meeting.
Stockholders of record at the close of business on June 26, 1998 will be
entitled to notice of and to vote at the meeting and any adjournments thereof.
All Stockholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, PLEASE COMPLETE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. The giving of
your proxy will not affect your right to vote in person should you later
decide to attend the meeting.
Any stockholder of record of the Company at the close of business on June
26, 1998, may attend. Any beneficial owner of shares with a letter of
authorization from his recordholder may attend the meeting.
By Order of the Board of Directors
/s/ Michael I. Froch
Michael I. Froch
Secretary
El Segundo, California
July 20, 1998
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Please mark, date, and sign the enclosed Proxy and return it at an early date
in the enclosed postage-prepaid return envelope so that, if you are unable to
attend the Annual Meeting, your shares may be voted.
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<PAGE>
AURA SYSTEMS, INC.
2335 ALASKA AVENUE
EL SEGUNDO, CALIFORNIA 90245
(310) 643-5300
PROXY STATEMENT
JULY 20, 1998
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Aura Systems, Inc. ("Aura" or the
"Company") for the Annual Meeting of Stockholders to be held at 3:00 p.m. on
August 19, 1998 (the "Annual Meeting") and any postponements or adjournments
thereof. Any Stockholder giving a proxy may revoke it before or at the meeting
by providing a proxy bearing a later date or by attending the meeting and
expressing a desire to vote in person. If the enclosed proxy is properly
signed and returned, the shares represented thereby will be voted at the
Annual Meeting as directed by the Stockholder on the proxy card; and, if no
choice is specified, they will be voted (i) "FOR" the directors nominated by
the Board of Directors, (ii) "FOR" the stockholder proposal, and (iii) in the
discretion of the persons acting as proxies, for any other matters. Your
cooperation in promptly returning the enclosed proxy will reduce Aura's
expenses and enable its management and employees to continue their normal
duties for your benefit with minimum interruption for follow-up proxy
solicitation.
Only Stockholders of record at the close of business on June 26, 1998 are
entitled to receive notice of and to vote at the meeting. On that date, Aura
had outstanding 81,169,372 shares of Common Stock. The shares of Common Stock
vote as a single class. Holders of shares of Common Stock on the record date
are entitled to vote one vote for each share held. The presence at the Annual
Meeting, either in person or by proxy, of the holders of a majority of the
shares of Common Stock issued, outstanding and entitled to vote is necessary
to constitute a quorum for the transaction of business.
In accordance with Delaware law, abstentions and "broker non-votes" (i.e.
proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owners or other persons entitled to
vote shares as to a matter with respect to which brokers or nominees do not
have discretionary power to vote) will be treated as present for purposes of
determining the presence of a quorum. For purposes of determining approval of
a matter presented at the meeting, abstentions will be deemed present and
entitled to vote and will, therefore, have the same legal effect as a vote
"against" a matter presented at the meeting. Broker non-votes will be deemed
not entitled to vote on the matter as to which the non-vote is indicated.
Therefore, a broker non-vote will have no legal effect on the vote for
directors or any other matter requiring the affirmative vote of a plurality of
the votes cast, and will have the same legal effect as a vote "against" any
other matters presented at the meeting which require approval by a majority of
the shares represented in person or by proxy at the meeting.
In the event that sufficient votes in favor of the proposal are not received
by the date of the Annual Meeting, the persons named as proxies may propose
one or more adjournments of the Annual Meeting to permit further solicitations
of proxies. Any such adjournment will require the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
proxy at the Annual Meeting. The persons named as proxies will vote in favor
of such adjournment or adjournments.
The cost of preparing, assembling, printing and mailing the materials, the
Notice and the enclosed form of Proxy, as well as the cost of soliciting
proxies relating to the Annual Meeting, will be borne by the Company. The
Company will request banks, brokers, dealers, and voting trustees or other
nominees to forward solicitation materials to their customers who are
beneficial owners of shares, and will reimburse them for the reasonable out-
of-pocket expenses of such solicitations. The original solicitation of proxies
by mail may be supplemented by telephone, telegram, personal solicitation or
other means by officers and other regular employees or agents of the
1
<PAGE>
Company, but no additional compensation will be paid to such individuals on
account of such activities. The Company has retained the proxy solicitation
firm of Georgeson & Company, Inc. to assist the Company in the solicitation of
Proxies and will be paid a fee of $6,500.00 plus its reasonable out-of-pocket
expenses. This Proxy Statement and the accompanying Notice of Annual Meeting
and form of Proxy are being mailed or delivered to Stockholders on or about
July 20, 1998.
PROPOSAL NO. 1
ELECTION OF 12 NOMINEES FOR DIRECTORS
NOMINEES AND VOTING
The Bylaws of the Company provide for a board of 12 directors. Consequently,
at the Annual Meeting, 12 directors will be elected to serve until the next
Annual Meeting and until their successors are elected and qualified. Proxies
may not be voted for more than 12 persons. The Company has nominated for
election as directors the 12 persons named below. Each of these nominees has
indicated that they are able and willing to serve as directors.
Unless otherwise instructed, the Company's proxy holders intend to vote the
shares of Common Stock represented by the proxies in favor of the election of
these nominees. If for any reason any of these nominees will be unable or
unwilling to serve, the shares represented by the enclosed proxy will be voted
for the election of the balance of those named and such other person or
persons as the Board of Directors may recommend. The Board of Directors has no
reason to believe that any such nominee will be unable or unwilling to serve.
Directors are elected by a plurality of the votes cast.
The Company's nominees and directors are listed below, together with their
ages, principal occupations, offices with the Company and year in which each
became a director of the Company.
The Board of Directors of the Company recommends that the Stockholders vote
"FOR" the election of the 12 nominees for director.
IDENTIFICATION OF DIRECTORS
The following table sets forth all of the current directors, executive
officers and key employees of Aura, their age and the office they hold with
the Company. Executive officers and employees serve at the discretion of the
Board. All directors hold office until the next annual meeting of stockholders
of the Company and until their successors have been duly elected and
qualified.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF DIRECTORS AGE SINCE POSITION WITH THE COMPANY
----------------- --- -------- ------------------------------------------------------------
<S> <C> <C> <C>
Zvi (Harry) Kurtzman.... 51 1987 Chief Executive Officer, Chairman, Board of Directors
Gerald S. Papazian...... 42 1997 President, Chief Operating Officer and Director
Arthur J. Schwartz,
Ph.D................... 50 1987 Executive Vice President and Director
Cipora Kurtzman Lavut... 42 1989 Senior Vice President and Director
Neal B. Kaufman......... 53 1989 Senior Vice President and Director
Steven C. Veen.......... 42 1997 Senior Vice President, Chief Financial Officer, Director and
member of Audit Committee
Harvey Cohen............ 65 1993 Director, member of Audit Committee
Brigadier Ashok Dewan... 59 1997 Director, member of Audit and Compensation Committees
Peter Liu............... 50 1997 Director, member of Audit and Compensation Committees
Salvador Diaz-Verson,
Jr..................... 46 1997 Director, member of Audit and Compensation Committees
Maj. Gen. Guy L. Hecker,
Jr. (Ret.)............. 66 Nominee
Robert H. Book.......... 47 Nominee
</TABLE>
2
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BUSINESS EXPERIENCE OF DIRECTORS AND NOMINEES DURING THE PAST FIVE YEARS
Zvi (Harry) Kurtzman is the CEO and Chairman of the Board of Directors of
the Company and has served in this capacity since 1987. Mr. Kurtzman also
served as the Company's President from 1987 to 1997. Mr. Kurtzman obtained his
B.S. and M.S. degrees in physics from California State University, Northridge
in 1970 and 1971, respectively, and completed all course requirements for a
Ph.D. in theoretical physics at the University of California, Riverside. He
was employed as a senior scientist with the Science Applications International
Corp. a scientific research company in San Diego, from 1984 to 1985 and with
Hughes Aircraft Company, a scientific and aerospace company, from 1983 to
1984. Prior thereto, Mr. Kurtzman was a consultant to major defense
subcontractors in the areas of computers, automation and engineering.
In October, 1996, the Securities and Exchange Commission ("Commission")
issued an order (Securities Act Release No. 7352) instituting an
administrative proceeding against Aura Systems, Zvi Kurtzman, and an Aura
former officer. The proceeding was settled on consent of all the parties,
without admitting or denying any of the Commission's findings. In its order,
the Commission found that Aura and the others violated the reporting,
recordkeeping and anti-fraud provisions of the securities laws in 1993 and
1994 in connection with its reporting on two transactions in reports
previously filed with the Commission. The Commission's order directs that each
party cease and desist from committing or causing any future violation of
these provisions. The Commission did not require Aura to restate any of the
previously issued financial statements or otherwise amend any of its prior
reports filed with the Commission. Also, the Commission did not seek any
monetary penalties from Aura, Mr. Kurtzman or anyone else. Neither Mr.
Kurtzman nor anyone else personally benefited in any way from these events.
For a more complete description of the Commission's Order, see the
Commission's release referred to above.
Arthur J. Schwartz, Ph.D. is the Executive Vice President and director of
the Company since February 1987. Dr. Schwartz obtained his M.S. degree in
physics from the University of Chicago in 1971 and a Ph.D. in physics from the
University of Pittsburgh in 1978. Dr. Schwartz was employed as a Technical
Director with Science Applications International Corp., a scientific research
company in San Diego, California from 1983 to 1984 and was a senior physicist
with Hughes Aircraft Company, a scientific and aerospace company, from 1980 to
1984. While at Hughes, he was responsible for advanced studies and development
where he headed a research and development effort for new technologies to
process optical signals detected by space sensors.
Cipora Kurtzman Lavut is Senior Vice President Corporate Communications and
has served in this capacity since December 1991. She previously served as Vice
President in charge of Marketing and Contracts for the Company since 1988 and
was appointed director of the Company in 1989. She graduated in 1984 from
California State University at Northridge with a B.S. degree in Business
Administration.
Neal B. Kaufman is Senior Vice President of Aura, and has served in this
capacity since 1988. Mr. Kaufman is also a director of the Company and has
served in this capacity since 1989. Mr. Kaufman graduated from the University
of California, Los Angeles, in 1967 where he obtained a B.S. in engineering.
He was employed as a software project manager with Abacus Programming Corp., a
software development firm, from 1975 to 1985 where he headed a team of
software specialists on the Gas Centrifuge Nuclear Fuel enrichment program for
the United States Department of Energy and developed software related to the
Viking and Marine projects for the California Institute of Technology Jet
Propulsion Laboratory in Pasadena, California.
Steven C. Veen, a certified public accountant, is the company's Senior Vice
President, Chief Financial Officer, and has served in this capacity since
March 1994. He joined the Company as its Controller in December 1992. Prior to
that, he had over twelve years experience in varying capacities in the public
accounting profession. Mr. Veen served from 1983 to December 1992 with Muller,
King, Black, Mathys & Acker, Certified Public Accountants. He received a B.A.
in accounting from Michigan State University in 1981. Mr. Veen joined the
Board of Directors in September 1997. He also serves as a director of NewCom,
Inc. and as its Chief Financial Officer.
3
<PAGE>
Gerald S. Papazian has been the Company's President and Chief Operating
Officer since July 1997. He has been with Aura Systems for ten years and has
been involved in the day-to-day operations of the Company with direct
responsibility for contract administration, purchasing, inventory control,
logistics, warehousing, shipping and receiving and human resources. He joined
the Company in August 1988 from Bear, Stearns & Co., an investment banking
firm, where he served from 1986 as Vice President, Corporate Finance. His
responsibilities there included valuation of companies for potential
financing, merger or acquisition. Prior to joining Bear Stearns, Mr. Papazian
was an Associate in the New York law firm of Stroock & Stroock & Lavan, where
he specialized in general corporate and securities law with the extensive
experience in public offerings. He received a BA, Economics (magna cum laude)
from the University of Southern California in 1977 and a JD and MBA from the
University of California, Los Angeles in 1981. He currently serves as a
trustee of the University of Southern California. Mr. Papazian joined the
Company's Board of Directors in September 1997. He also serves on the Board of
Directors of NewCom, Inc.
Harvey Cohen is a director of the Company and has served in this capacity
since August 1993. Mr. Cohen is President of Margate Advisory Group, Inc., an
investment advisor registered with the Securities and Exchange Commission, and
a management consultant since August 1981. Mr. Cohen has consulted to the
Company on various operating and growth strategies since June 1989 and
assisted in the sale of certain of the Company's securities. From December
1979 through July 1981, he was President and Chief Operating Officer of
Silicon Systems, Inc., a custom integrated circuit manufacturer which made its
initial public offering in February 1981 after having raised $4 million in
venture capital in 1980. From 1975 until 1979, Mr. Cohen served as President
and Chief Executive Officer of International Communication Sciences, Inc., a
communications computer manufacturing start-up company for which he raised
over $7.5 million in venture capital. From 1966 through 1975, Mr. Cohen was
employed by Scientific Data Systems, Inc. ("S.D.S."), a computer manufacturing
and service company, which became Xerox Data Systems, Inc. ("X.D.S.") after
its acquisition by Xerox in 1979. During that time, he held several senior
management positions, including Vice President-Systems Division of S.D.S. and
Senior Vice President-Advanced Systems Operating of the Business Planning
Group. Mr. Cohen received his B.S. (Honors) in Electrical Engineering in 1955
and an MBA in 1957 from Harvard University.
Brigadier Ashok Dewan is a director of the Company and has served in this
capacity since September 1997. Mr. Dewan is the founder and Chairman of K&K
Enterprises of India (K&K), since its formation in 1986. K&K is engaged in the
manufacture, sale and distribution of consumer electronics, and has been an
OEM supplier to companies such as Philips, ASM, JBL and Infinity Systems. In
1995, Aura and K&K formed a joint venture, Dewan-Aura, which manufactured and
sold Aura's speakers and Bass Shakers in the republic of Taiwan, the Indian
subcontinent, Middle East and Europe. In 1989, Mr. Dewan founded Chand
International, which is engaged in the manufacture and sale of garments, and
has served as its Chairman since its formation.
Peter Liu is a director of the Company and has served in this capacity since
September 1997. Mr. Liu is the Chairman and CEO of W I Harper Group. As
Chairman and co-founder of W I Harper Group, Mr. Liu directs and implements
both W I Harper Group corporate and client Asia-Pacific market and business
development strategies. Mr. Liu has established relationships with prominent,
key officials and executives in both private and public sectors of China, as
well as throughout other major Asian economic communities. Mr. Liu was General
Partner of the Walden Group of Venture Capital Funds and the Executive Vice
President and Director of IVCIC, Walden's fund based in Taiwan. Before co-
founding IVCIC, Mr. Liu served as the President of Marsquare International, an
international trade and merchandising company based in San Francisco. Mr. Liu
was a co-founder of California National Bank and served as partner of Chester
International, a management consulting firm focused on international business
development. Mr. Liu earned a Bachelor of Science degree and a Masters Degree
in Business Administration from the University of California at Berkeley.
4
<PAGE>
Salvador Diaz-Verson, Jr. is a director of the Company and has served in
this capacity since September 1997. Mr. Diaz-Verson is the founder, and since
1991 has been the Chairman and President of Diaz-Verson Capital Investments,
Inc., an Investment Adviser registered with the Securities and Exchange
Commission. Mr. Diaz-Verson served as president and member of the Board of
Directors of American Family Corporation (AFLAC Inc.) a publicly held
insurance holding company, from 1979 until 1991. Mr. Diaz-Verson also served
as Executive Vice President and Chief Investment Officer of American Family
Life Assurance Company, subsidiary of AFLAC Inc. from 1976 through 1991. Mr.
Diaz-Verson is a graduate of Florida State University. He is currently a
director of the board of Miramar Securities, Clemente Capital Inc., Regions
Bank of Georgia and The Philippine Strategic Investment Holding Limited.
Major General Guy L. Hecker, Jr. (Retired) has been the President and co-
founder of Stafford Burke & Hecker Inc., a high technology consulting firm
based in Alexandria, Virginia, since its formation in 1982. Prior to such
time, General Hecker served for more than 27 years in the United States Air
Force ("USAF"). His several distinguished positions include serving as
Director of the USAF Office of Legislative Liaison as well as an appointment
in the USAF Office of the Deputy Chief of Staff, Research, Development and
Acquisition. He has also served as a USAF commander of fighter and bomber
aircraft units, including the command of a bomber wing and an air division.
General Hecker's military accomplishments have been recognized by the USAF in
his receipt of the Distinguished Service Medal, Silver Star, Legion of Merit,
Distinguished Flying Cross and the Bronze Star. He presently is a member of
the Board of Directors of Stafford Burke & Hecker, Inc., Nav Com Defense
Electrons, Inc., and 8x8 Inc., a Nasdaq listed company. General Hecker
received his B.A. degree from the Citadel in 1954 where he is currently on the
Board of Advisors to the Board of Visitors and a recipient of an honorary
Ph.D. He received his M.A. in International Economics and International
Relations from George Washington University in 1971. He is a graduate of the
Program for Management and Development at the Harvard University School of
Business.
Robert H. Book is President and CEO of MB Asia Capital Corporation, a
leading international management consulting firm specializing in cross border
mergers and acquisitions, and strategic/advisory financial services. MB Asia
Corporation has offices in Hong Kong, Bangkok, and Fort Lee, New Jersey.
Concurrently with his responsibilities at MB Asia Capital Corporation, from
1993 to 1995, Mr. Book was the Chairman and Chief Executive Officer of MB USA,
Inc. a Nasdaq listed health care company. During 1986 through 1989, Mr. Book
was also the Chairman of the Board and controlling shareholder of Photech
Imaging Systems, Inc., a company created as a result of an acquisition from
Rhone Poulenc Inc., which Mr. Book planned, executed, and successfully
concluded, resulting in the formation of a 300 employee company with sales of
approximately $50 million. In 1973, Mr. Book co-founded R.W. Consultants, Inc.
Commencing its operations as an executive search firm, the company evolved
into a leading national/international management consulting firm specializing
in cross border mergers, acquisitions, and strategic planning, with a
concentration in Asia. Mr. Book is a graduate of New York University.
FAMILY RELATIONSHIPS
Cipora Kurtzman Lavut, a Senior Vice President and director, is the sister
of Zvi Kurtzman, who is the Chief Executive Officer/President and a director
of the Company. Jacob Mail, Vice President, Operational Planning is a first
cousin of Cipora Kurtzman Lavut and Zvi Kurtzman.
5
<PAGE>
MANAGEMENT
Listed below are Executive Officers of the Company who are not directors or
nominees, their ages, titles and background information. All the officers
listed below hold their offices at the pleasure of the Board of Directors.
<TABLE>
<S> <C> <C>
Michael Froch............... 36 General Counsel and Secretary
Gregory Um, Ph.D............ 50 President, Aura Display
Keith O. Stuart............. 42 President Tech Center
Ronald J. Goldstein......... 57 President Aura Automotive
Jacob Mail.................. 48 Vice President Operations Planning
Yoshikazu Masayoshi......... 57 Chairman, AuraSound, President, MYS Corporation
</TABLE>
Michael I. Froch is General Counsel and Secretary of the Company. He has
served as General Counsel since March 1997 and as Secretary since July 1997.
He also serves as Director and Secretary of NewCom, Inc., the Company's
majority owned subsidiary. He joined the Company in 1994 as corporate counsel.
From 1991 through 1994, Mr. Froch was engaged in private law practice in
California. Mr. Froch is admitted to the California and District of Columbia
bars. He received his Juris Doctor degree from Santa Clara University School
of Law in 1989, during which time he served as judicial extern to the
Honorable Spencer M. Williams, United States District Judge for the Northern
District of California. He received his A.B. degree from the University of
California at Berkeley in 1984, serving from 1982 through 1983 as Staff
Assistant to the Honorable Tom Lantos, Member of Congress.
Gregory Um, Ph.D. is President of the Display Division. Dr. Um is in charge
of transforming technological ideas into commercial products. Dr. Um has 15
years of experience in project management and industrial technical experience
in the fields of scene projection systems, sensor systems and analysis signal
processing algorithms, wavefront sensors, high energy laser pointing and
tracking systems, physics of thermodynamics and thermal properties. He is the
principal inventor of the Aura Systems scene projectors and has directed all
of the scene projector development efforts within the company. Prior to
joining Aura. Dr. Um was a Senior Scientist at Hughes Aircraft Co., a
scientific and aerospace company, with major achievements in the areas of
sensors, optics, and algorithms. Dr. Um has over 20 professional publications.
Keith O. Stuart is President of the Research Center and has served in this
capacity since 1995. Previously he served as Vice President in charge of
Hardware Development for Aura since 1988 and as a Program manager in 1987. Mr.
Stuart obtained his B.S. and M.S. degrees in electrical engineering from the
University of California Los Angeles in 1978 and 1980, respectively. Mr.
Stuart worked for Cyphermaster, Inc. during 1986 and was employed by Hughes
Aircraft Company, a scientific and aerospace company, prior thereto. Mr.
Stuart has designed and fabricated digitally controlled, magnetically
supported gimbals that isolate the seeker portion of a United States Space
Defense Initiative and has also developed a multi-computer automated test
station for the evaluation of sophisticated electro-optical devices.
Ronald J. Goldstein is President of Automotive and has served as an
executive in marketing and business development since he joined the Company in
1989. He holds two M.S. degrees in Computing Technology and the Management of
R & D from George Washington University and has completed course work for a
Ph.D. in Nuclear Engineering from North Carolina State University. Mr.
Goldstein has over 25 years of experience in high technology both in
government and industry. Prior to joining Aura Mr. Goldstein was Manager of
Space Initiatives at Hughes Aircraft Company, a scientific and research
company, where he was responsible for the design, production and marketing of
a wide variety of aerospace systems and hardware. Prior to joining Hughes in
1982, Mr. Goldstein was the Special Assistant for National Programs in the
Office of the Secretary of Defense, and before that held high level program
management positions with the Defense Department and Central Intelligence
Agency.
6
<PAGE>
Jacob Mail is Vice President, Operational Planning and has served in this
capacity since 1995. Mr. Mail served over 20 years at Israeli Aircraft
Industries, starting as a Lead Engineer and progressing to Program manager. He
was responsible for the development and production of hydraulic actuation,
steering control systems, rotor brake systems and other systems and subsystems
involved in both commercial and military aircraft. Systems designed by Mr.
Mail are being used today all over the western world. In addition, Mr. Mail
has extensive experience in the preparation of technical specifications
planning and in organizing production in accordance with customer
specifications at full quality assurance.
Yoshikazu Masayoshi is Chairman of AuraSound and President of MYS
Corporation, joining the Company in Fiscal 1997 as part of Aura's acquisition
of MYS and its subsidiaries. Mr. Masayoshi has been with MYS since its
founding in 1986 and has, during that time, extended the Japan based R&D
center and created the MYS factory in Malaysia. Prior to joining MYS, he
served as the Senior Vice President of Jyoto Works Co., Ltd., from 1963 to
1986, where he marketed speaker components to loudspeaker manufacturers
worldwide. Mr. Masayoshi holds a B.A. from Kinki University of Osaka, Japan.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the Company's
Common Stock owned as of May 31, 1998 (i) by each person who is known by Aura
to be the beneficial owner of more than five percent (5%) of its outstanding
Common Stock, (ii) by each of the Company's directors and nominees and those
executive officers named in the Summary Compensation Table, and (iii) by all
directors and executive officers as a group:
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK PERCENT OF COMMON
NAME BENEFICIALLY OWNED STOCK BENEFICIALLY OWNED
- ---- ---------------------- ------------------------
<S> <C> <C>
ICM Asset Management, Inc.... 8,346,000 10.3%
Zvi (Harry) Kurtzman......... 1,721,391(1)(2) 2.1%
Arthur J. Schwartz........... 1,554,334(1)(3)(4) 1.9%
Cipora Kurtzman Lavut........ 1,352,006(5) 1.7%
Neal B. Kaufman.............. 1,391,388(1)(7) 1.7%
Harvey Cohen................. 343,942(6) *
Yoshikazu Masayoshi.......... 283,455(8) *
Brigadier Ashok Dewan........ 0 *
Sal Diaz-Verson, Jr.......... 44,000 *
Peter Liu.................... 0 *
Gerald S. Papazian........... 183,844(9) *
Steven C. Veen............... 166,028(10) *
Robert H. Book............... 0 *
Maj. Gen. Guy L. Hecker, Jr.
(Ret.)...................... 204,000 *
All executive officers and
directors as a group (18
persons).................... 8,505,885 11%
</TABLE>
- --------
*Less than 1% of outstanding shares.
(1)Includes 175,000 shares held of record by Advanced Integrated Systems, Inc.
(2) Includes 470,000 shares which may be purchased pursuant to options and
convertible securities exercisable within 60 days of May 31, 1998.
(3) Includes 315,000 shares which may be purchased pursuant to options and
convertible securities exercisable within 60 days of May 31, 1998.
(4) Includes 32,000 shares held by Dr. Schwartz as custodian for his children,
to which Dr. Schwartz disclaims any beneficial ownership.
(5) Includes 315,000 shares which may be purchased pursuant to options
exercisable within 60 days of May 31, 1998.
(6) Includes 155,000 shares beneficially owned, of which 75,000 shares may be
purchased pursuant to options and convertible securities within 60 days of
May 31, 1998. In connection with his investment advisory business, this
amount also includes 20,000 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 as to which Mr. Cohen
disclaims beneficial ownership.
(7) Includes 270,000 shares which may be purchased pursuant to options and
convertible securities exercisable within 60 days of May 31, 1998.
(8) Includes 283,455 shares which were received as part of the MYS acquisition
purchase consideration.
(9) Includes 164,000 shares which may be purchased pursuant to options
exercisable within 60 days of May 31, 1998.
(10) Includes 140,000 shares which may be purchased pursuant to options and
warrants exercisable within 60 days of May 31, 1998,
The mailing address for ICM Asset Management, inc. is 601 W. Main Ave.,
Suite 6700, Spokane, WA 99201. The ailing address for each of the other
persons is c/o Aura Systems, Inc., 2335 Alaska Avenue, El Segundo, CA 90245.
8
<PAGE>
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
Aura's Board of Directors held eight meetings during the year ended February
28, 1998. Each director whose term is expected to continue attended more than
75% of the Board meetings during Fiscal 1998. During the last fiscal year the
Company did not maintain a nominating committee. Since August 1993, the
Company has maintained a Compensation Committee which currently consists of
Messrs. Diaz-Verson, Jr., Brigadier Ashok Dewan, and Peter Liu. The
Compensation Committee met four times during Fiscal 1998. Since January 1989,
the Company has maintained an Audit Committee which currently consists of all
five outside directors and Steven Veen, Senior Vice President and Chief
Financial Officer of the Company. The Audit Committee approves the selection
and engagement of independent accountants and reviews with them the plan and
scope of their audit for each year, the results of the audit when completed,
and their fees for services performed. The Audit Committee met eight times
during the fiscal year ended February 28, 1998 and has met once in the current
fiscal year.
Effective December 1992, the Company elected to begin to compensate non-
officer directors at the rate of $5,000 per year. Effective September 1997,
each non-employee director is entitled to receive $30,000 per year for serving
as a director, and $5,000 per year for each director who serves on the audit
committee.
EXECUTIVE COMPENSATION
CASH COMPENSATION FOR EXECUTIVES
The following table summarizes all compensation paid to the Company's Chief
Executive Officer, and to the four most highly compensated executive officers
of the Company other than the Chief Executive Officer whose total compensation
exceeded $100,000 during the fiscal year ended February 28, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION(1) COMPENSATION AWARDS
NAME AND PRINCIPAL --------------- ------------------- ALL OTHER
POSITION YEAR SALARY OPTIONS/SARS COMPENSATION(2)
- ------------------ --------------- ------------------- ---------------
<S> <C> <C> <C> <C> <C>
Zvi (Harry) Kurtzman(1). 1998 $ 245,018 0 $1,900
Chief Executive Officer 1997 212,549 0
1996 191,791 0
Arthur J. Schwartz(1)... 1998 $ 172,115 0 $1,900
Ph.D., Executive Vice
President 1997 163,971 0
1996 153,216 0
Cipora Kurtzman
Lavut(1)............... 1998 $ 162,225 0 $1,666
Senior Vice President
Corporate Communica-
tions 1997 150,000 0
1996 138,269 0
Neal B. Kaufman(1)...... 1998 $ 162,972 0 $1,900
Senior Vice President 1997 151,654 0
1996 146,350 0
Yoshikazu Masayoshi..... 1998 $ 273,242 0 $ 0
President, MYS Corpora-
tion 1997 270,000 0
1996 0 0
</TABLE>
- --------
(1) The amounts shown are the amounts paid or accrued to the named officers
during the respective fiscal years.
(2) Such compensation consisted of total Company contributions made to the
plan account of each individual pursuant to the Company's Employees Stock
Ownership Plan during the fiscal year ended February 28, 1998.
No cash bonuses or restricted stock awards were granted to the above
individuals during the fiscal years ended February 28, 1998, February 28, 1997
and February 29, 1996.
9
<PAGE>
The following table summarizes certain information regarding the number and
value of all options to purchase Common Stock of the Company held by the Chief
Executive Officer and those other executive officers named in the Summary
Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
END FISCAL YEAR END*
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Zvi (Harry) Kurtzman........ 470,000 0 $577,100 $ 0
Arthur Schwartz............. 315,000 0 $367,850 $ 0
Neal Kaufman................ 270,000 0 $321,500 $ 0
Cipora Kurtzman Lavut....... 315,000 0 $367,850 $ 0
Yoshikazu Masayoshi......... 0 0 $ 0 $ 0
</TABLE>
- --------
* Based on the average high and low reported prices of the Company's Common
Stock on the last day of the fiscal year ended February 28, 1998.
No options were exercised by the above individuals during the fiscal year
ended February 28, 1998.
10
<PAGE>
OPTION REPRICING
The following table sets forth certain information regarding repricing of
stock options held by executive officers of the Company during the last ten
fiscal years. For further information regarding the repricing of these options
see "Compensation Committee Report" below.
<TABLE>
<CAPTION>
LENGTH OF
MARKET PRICE ORIGINAL
NUMBER OF OF STOCK AT OPTION TERM
SECURITIES UNDERLYING TIME OF EXERCISE PRICE REMAINING
DATE OF OPTIONS/SARS REPRICED REPRICING AT TIME OF NEW EXERCISE AT DATE OF
NAME REPRICING (#) ($) REPRICING ($) PRICE ($) REPRICING
- ---- --------- --------------------- ------------ -------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Zvi (Harry) Kurtzman.... 7/9/97 70,000 1.62 3.06 2.06 24 months
7/9/97 50,000 1.62 7.25 2.06 51 months
7/9/97 50,000 1.62 3.00 2.06 61 months
7/9/97 150,000 1.62 5.25 2.06 46 months
Arthur J. Schwartz...... 7/9/97 70,000 1.62 3.06 2.06 24 months
7/9/97 50,000 1.62 7.25 2.06 51 months
7/9/97 50,000 1.62 3.00 2.06 61 months
7/9/97 75,000 1.62 5.25 2.06 46 months
Neal B. Kaufman......... 7/9/97 70,000 1.62 3.06 2.06 24 months
7/9/97 50,000 1.62 7.25 2.06 51 months
7/9/97 50,000 1.62 3.00 2.06 61 months
7/9/97 30,000 1.62 5.25 2.06 46 months
Cipora Kurtzman Lavut... 7/9/97 70,000 1.62 3.06 2.06 24 months
7/9/97 50,000 1.62 7.25 2.06 51 months
7/9/97 50,000 1.62 3.00 2.06 61 months
7/9/97 75,000 1.62 5.25 2.06 46 months
Keith Stuart............ 7/9/97 100,000 1.62 3.06 2.06 24 months
7/9/97 100,000 1.62 3.00 2.06 61 months
7/9/97 30,000 1.62 7.31 2.06 45 months
Michael I. Froch........ 7/9/97 50,000 1.62 5.06 2.06 54 months
Ronald Goldstein........ 7/9/97 100,000 1.62 3.06 2.06 24 months
7/9/97 30,000 1.62 3.00 2.06 61 months
7/9/97 10,000 1.62 5.25 2.06 46 months
Jacob Mail.............. 7/9/97 100,000 1.62 5.06 2.06 54 months
7/9/97 50,000 1.62 4.88 2.06 47 months
Gerald S. Papazian...... 7/9/97 6,000 1.62 3.06 2.06 24 months
7/9/97 20,000 1.62 3.00 2.06 61 months
7/9/97 50,000 1.62 5.25 2.06 46 months
7/9/97 50,000 1.62 5.06 2.06 54 months
Steve C. Veen........... 7/9/97 50,000 1.62 5.25 2.06 46 months
7/9/97 25,000 1.62 5.06 2.06 54 months
Gregory Um.............. 7/9/97 100,000 1.62 3.06 2.06 24 months
7/9/97 120,000 1.62 3.00 2.06 61 months
7/9/97 100,000 1.62 5.25 2.06 46 months
7/9/97 100,000 1.62 3.50 2.06 51 months
</TABLE>
11
<PAGE>
In July 1997 the Board of Directors approved the repricing of stock options
granted to Harvey Cohen, a director of the Company, prior to 1997, to $2.06
per share. The repriced options for Mr. Cohen consist of 50,000 options
granted in August 1993, 50,000 options granted in July 1994 and 50,000 options
granted in July 1995 at original exercise prices of $5.50, $7.88 and $3.50,
respectively.
EMPLOYMENT AGREEMENTS
Effective as of March 5, 1998 the Company, following unanimous approval of
all five outside, disinterested, directors of the Board of Directors, entered
into employment agreements with each of Messrs. Kurtzman, Schwartz, Kaufman
and Ms. Kurtzman Lavut. The employment agreements provide for a term of three
years, in each case with provision for automatic one year extensions until
either the executive or the Company notifies the other that such party does
not wish to extend the agreement. Messrs. Kurtzman, Schwartz, Kaufman and Ms.
Kurtzman Lavut are paid base salaries of $385,000, $205,000, $195,000,
$195,000 per year pursuant to their respective employment agreements. In
addition, such agreements provide for discretionary annual bonuses as
determined by the Board of Directors and target bonuses of up to 50% of the
executive's base salary based on the attainment of certain criteria determined
by the Compensation Committee. The employment agreements also provide for
standard employee benefits, including participation in the Company's stock
incentive plan. In addition, the Company is required to maintain, during the
executive's term of employment, a life insurance policy with a face value of
two times the executive's base salary, provided such premiums do not exceed
$10,000 per year.
Each of the employment agreements provides that if the Company terminates
the executive's employment without "cause" (as defined in the employment
agreements), then such executive is entitled to receive the base salary at the
rate then in effect for the remainder of the term (or for a period of six
months if greater), a bonus equal to the highest annual discretionary bonus in
the preceding three year period prior to such termination for each fiscal year
during the Severance Period, continuation of all life insurance premium
payments and all outstanding equity awards would vest. Pursuant to the terms
of the employment agreements Messrs. Kurtzman, Schwartz, Kaufman and Ms.
Kurtzman Lavut also received a one time option grant to purchase,
respectively, 1,000,000, 500,000, 500,000 and 500,000 shares of Common Stock
under the Company's Option Plan, which options vest over five years. The per
share exercise price of such grant is $3.31, which is 5% above the fair market
value of the options on the date such options were granted.
The employment agreements provide that during the term of employment, each
executive will be subject to certain confidentiality and non-solicitation
restrictions.
SEVERANCE AGREEMENTS
Effective as of March 5, 1998, the Company, following unanimous approval of
all five outside, disinterested, directors of the Board of Directors, entered
into severance agreements with each of Messrs. Kurtzman, Schwartz, Kaufman and
Ms. Kurtzman Lavut. The severance agreements provide for a term of three
years, with a provision for automatic one-year extensions until either the
executive or the Company notifies the other that such party does not wish to
extend the agreement. If a Change in Control (as defined in the agreement)
occurs, the agreements will continue for at least 24 months following the date
of such Change in Control. The agreements provide that if, following a Change
in Control, the executive's employment is terminated without Cause (as defined
in the agreement) or with Good Reason (as defined in the agreement) or the
executive terminates his or her employment for any reason during the one month
period commencing on the first anniversary of the Change in Control, the
executive would be entitled to receive (i) three times the sum of the base
salary plus the highest annual bonus earned by the executive in the three year
period immediately preceding such termination; (ii) continued employee
benefits for three years, reduced to the extent benefits of the same type are
received by or made available to the executive during the 36 month period
following termination; and (iii) accelerated vesting of stock options. To the
extent the executive becomes subject to the "golden parachute" excise tax
imposed under Section 4999 of the Internal Revenue Code of 1986, the executive
would receive an additional cash payment in an amount sufficient to offset the
effects of such excise tax.
12
<PAGE>
COMPENSATION COMMITTEE REPORT
The Company maintains a Compensation Committee (the "Committee"), consisting
entirely of outside, disinterested, directors who are not employees or former
employees of the Company. The Committee recommends salary practices for
executive officers of the Company, with all compensation determinations
ultimately made by a majority of the outside, disinterested, directors. Prior
to Fiscal 1998, compensation of executive officers, other than the Chief
Executive Officer, was determined by the Chief Executive Officer after review
and consultation with the Committee.
Compensation Philosophy
The Company's policy in compensating executive officers is to establish
methods and levels of compensation that will provide strong incentives to
promote the profitability and growth of the Company and reward superior
performance. Compensation of executive officers includes salary as well as
stock-based programs. The Board believes that compensation of the Company's
key executives should be sufficient to attract and retain highly qualified
personnel and also provide meaningful incentives for measurably superior
performance. The Company places special emphasis on equity-based compensation,
particularly in the form of options. This approach also serves to match the
interests of the executive officers with the interest of the stockholders. The
Company seeks to reward achievement of long and short-term performance goals
which are measured by a number of factors, including improvements in revenue
and achieving profitability.
Included in the factors considered by the Committee in setting the
compensation of the Company's Chief Executive Officer are the growth in the
Company's commercial sales, the development of commercial applications for the
Company's technology, and the effective allocation of capital resources.
During Fiscal 1998, the Company made significant progress in connection with
its efforts to expand the commercial applications of its technology and the
commercial sale of its products.
Employment Contracts
The Company offers employment contracts to key executives only when it is in
the best interest of the Company and its stockholders to attract and retain
such key executives and to ensure continuity and stability of management.
Effective as of March 1998, the Company entered into employment and severance
agreements with Mr. Kurtzman, the Company's Chief Executive Officer, and
Messrs. Schwartz and Kaufman and Ms. Kurtzman Lavut (the "Named Executive
Officers") and other key executives of the Company. The Committee reviewed and
approved such agreements unanimously after consulting with a nationally
recognized employee benefits firm and determining that such agreements were
necessary in order to retain highly qualified executives whose abilities are
critical to the long-term success and competitiveness of the Company.
Compensation of Chief Executive Officer and Other Executives
The Compensation Committee increased Mr. Kurtzman's salary in March 1998 to
$385,000, effective as of December 1997, after consulting with a nationally
recognized employee benefits firm. The increase reflected the Compensation
Committee's assessment of his performance and Mr. Kurtzman's service to the
Company. Salary increases for other senior executives effected during 1998
were based on similar considerations including individual performance,
position, tenure, experience and compensation surveys of comparable companies.
In March 1998, the Committee reviewed and unanimously approved stock option
awards under the Company's stock option plan after consulting with a
nationally recognized employee benefits firm. The Committee granted Mr.
Kurtzman an option to purchase 1,000,000 shares of Common Stock, which vest
20% per year over five years. The options are exercisable at $3.31 per share
which was 105% of the market price of the Company's Common Stock on the date
of grant. Senior executives in the Company participate in the stock option
plan and the Compensation Committee granted such executives options to
purchase Common Stock during Fiscal 1998. In determining the number of shares
to award to Mr. Kurtzman and other executives, the
13
<PAGE>
Compensation Committee considered several factors, including primarily Mr.
Kurtzman's and other executives' actual and potential contributions to the
Company's long term success, and the size of awards provided to other
executives in comparable companies holding similar positions.
In July 1997 the Compensation Committee unanimously recommended the
repricing of stock options granted to key employees, including Mr. Kurtzman
and the Named Executive Officers. The Compensation Committee's repricing of
options for key employees was made to those persons who have made significant
contributions to the Company's business, for the purpose of maintaining
corporate morale and creating an incentive for continued employment. See
"Option Repricing".
Effective in Fiscal 1999 Mr. Kurtzman and the Named Executive Officers are,
pursuant to their employment agreements with the Company, entitled to a
discretionary annual bonus as determined by the Compensation Committee and a
majority of the outside, disinterested, directors of the Board of Directors.
In determining the amounts of such bonuses, the Compensation Committee
considers the individual performance of each executive and the performance of
the Company.
Section 162(m) Policy
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
provides that publicly held companies may not deduct compensation paid to
certain of its top executive officers to the extent such compensation exceeds
$1 million per officer in any year. However, pursuant to regulations issued by
the Treasury Department, certain limited exemptions to Section 162(m) apply
with respect to "qualified performance-based compensation" and to compensation
paid in certain circumstances by companies in the first few years following
their initial public offering of stock. The Company has taken steps to provide
that these exemptions will apply to compensation paid to its executive
officers, and the Company will continue to monitor the applicability of
Section 162(m) to its ongoing compensation arrangements. Accordingly, the
Company does not expect that amounts of compensation paid to its executive
officers will fail to be deductible by reason of Section 162(m).
COMMITTEE MEMBERS
Brigadier Ashok Dewan
Peter Liu
Salvator Diaz-Verson, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of outside directors Messrs.
Brigadier Ashok Dewan, Peter Liu, and Salvador Diaz-Verson, Jr. Decisions
regarding compensation of executive officers for the fiscal year ended
February 28, 1998 were made unanimously by the outside, disinterested,
directors of the Board of Directors, after reviewing recommendations of the
Compensation Committee. Decisions regarding option grants under the 1989
Option Plan for the fiscal year ended February 28, 1998 were made unanimously
by the outside, disinterested, directors of the Board of Directors, after
reviewing recommendations of the Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In 1995, the Company entered into an agreement with K&K Enterprises of India
("K&K") for the formation of a joint venture to manufacture and sell speakers
using Aura's proprietary technology. K&K acquired a license to the Company's
technology and granted an exclusive sub-license to the joint venture. As
consideration for the license, the Company was to have received a $1,000,000
fee, $400,000 of which was received in Fiscal 1996. The joint venture began
shipping product in Fiscal 1996. In 1995 the Company also entered into an
agreement with K&K for the formation of a joint venture to manufacture Aura's
Bass Shaker(TM). In connection with the agreement, Aura granted K&K an
exclusive license to use Aura's patented and proprietary technology.
14
<PAGE>
As consideration for the license to K&K, the Company was entitled to receive
license fee payments quarterly over the life of the patent. Scheduled payments
for the first five years totaled approximately $2.9 million, of which $500,000
was received in Fiscal 1996. The two joint ventures were merged in Fiscal 1996
into one joint venture encompassing both. The new venture was renamed Dewan-
Aura. The Indian joint venture started production in late Fiscal 1996. In late
Fiscal 1998 (3rd quarter) the parties agreed to terminate the license
agreement and the Company moved manufacturing to Malaysia, the Philippines and
Mexico where the Company had already been manufacturing these products during
Fiscal 1998.
In February 1997, the Company entered into a license agreement with K&K
Enterprises in India to commercialize the AuraGen(TM) in the Indian, Nepal,
Sri Lanka and Bangladesh markets. The agreement called for a license fee of
$3,500,000 to be paid in payments over a 24 month period starting in June
1997, a fixed per unit royalty for every unit built and shipped in the
licensed territory after December 1998. Due to the delays associated with
commencement of production of the AuraGen there was a delay in the
commencement of license payments. Subsequent to the end of Fiscal 1998 the
Company received the first license payment of $300,000. Royalty payments per
unit were to be on a scheduled basis every quarter after December 1, 1998. The
Company expected that payments of the remaining portion of the license would
be proportionally delayed due to the late start. On May 11, 1998, India
conducted a series of nuclear tests and on May 13, 1998 the President of the
United States imposed a range of economic sanctions upon India pursuant to the
Arms Export Control Act. These sanctions and the current climate generally
affected the Company's ability to request and obtain necessary United States
Department of State and Commerce Indian export approvals and licenses. New and
pending export licensing requests with respect to dual-use products and
transfers of high technology were either being placed on hold or denied. In
view of these uncertainties the license was suspended temporarily in June 1998
by agreement of the parties.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and beneficial
owners of more than ten percent of the Common Stock, to file with the
Securities and Exchange Commission and the National Association of Securities
Dealers, Inc. reports of ownership and changes in ownership of the Common
Stock. Copies of such reports are required to be furnished to the Company.
Based solely on its review of the copies of such reports furnished to the
Company, or written representations that no reports were required, the Company
believes that during its fiscal year ended February 28, 1998, all filing
requirements applicable to its officers, directors, and ten percent beneficial
owners were satisfied.
15
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return of the
Company with the cumulative total return on the Nasdaq Stock Market Index
(U.S.) and the S&P Tech Composite Index. The Comparisons in the graph are
required by the Securities and Exchange Commission and are not intended to
forecast or be indicative of possible future performance of the Company's
common stock.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG AURA SYSTEMS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX AND THE
S & P TECHNOLOGY SECTOR INDEX
[PERFORMANCE GRAPH APPEARS HERE]
$100 INVESTED ON 2/28/93 IN STOCK OR
INDEX-INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING FEBRUARY 28
<TABLE>
<CAPTION>
FEB-93 FEB-94 FEB-95 FEB-96 FEB-97 FEB-98
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Aura Systems, Inc..................... 100 184 89 144 71 83
Nasdaq Stock Market Index (U.S.)...... 100 118 118 165 195 264
S & P Technology Sector............... 100 121 139 207 269 323
</TABLE>
16
<PAGE>
INDEPENDENT AUDITORS
Pannell Kerr Forster has been selected to serve as the Company's independent
auditors for the fiscal year ending February 28, 1999. Representatives of
Pannell Kerr Forster are expected to be present at the meeting and will have
the opportunity to make a statement if they so desire, and will be available
to respond to appropriate questions. Pannell Kerr Forster has served as the
Company's independent auditors since 1992.
PROPOSAL NO. 2
STOCKHOLDER PROPOSAL
The Company has received the following stockholder proposal and supporting
statement from Albert H. Kahn, whose address is c/o Kahn-Carlin & Co., 3350
South Dixie Highway, Miami, Florida 33133. Mr. Kahn claims to be the holder of
record of 530,000 shares of common stock of the Company and has given notice
to the Company of his intention to introduce the following resolution at the
1998 Annual Meeting of Stockholders. The affirmative vote of at least a
majority of the Company's common stock represented in person or by proxy at
the Annual Meeting is required for approval of the proposal. The Company's
Board of Directors recommends voting "FOR" this proposal.
PROPOSAL REGARDING FUTURE FINANCINGS
Whereas, in December 1996, Aura Systems, Inc. (the "Company") issued
$7,500,000 of unsecured, convertible Notes, which were convertible at the
lesser of $2.24, or 85% of the five lowest closing bid prices during the 30
days preceding the conversion date, but in no event less than 65% of the
lowest closing bid price within five trading days of the conversion date;
Whereas, in March 1997, the Company issued $15,000,000 of convertible
debentures which were convertible at prices below the market price of the
Company's common stock at the time of conversion, and which were
subsequently modified to eliminate the conversion feature in exchange for
increasing the interest rate to 18% per annum and the payment of a fee of
$935,000 per quarter that they remained outstanding, together with the
issuance of warrants to acquire 2,250,000 shares of common stock
exercisable at $2.50;
Whereas, in June 1997, the Company issued a $4,000,000 convertible
debenture, which the Company subsequently agreed to redeem for cash on or
before March 1, 1998 and to issue 218,000 five-year warrants, exercisable
at $3.00;
Whereas, in December 1997, the Company issued $5,500,000 of convertible
debentures which are convertible into common stock at $3.81, together with
five-year warrants to acquire 1,585,865 shares of common stock, exercisable
at $3.81;
Whereas, in March 1998, the Company issued $8,000,000 of convertible
debentures, which may be convertible at $3.13;
Whereas, the issuance of such securities may have had a significant
adverse effect on the value of the Company's common stock and may have
afforded outsiders the opportunity to invest in the Company's securities on
advantageous terms not available to the Company's shareholders;
Therefore, Be It Resolved that the stockholders of the Company request
that the Board of Directors, prior to engaging in any financing transaction
similar to those described above, consider providing the existing
stockholders of the Company an opportunity to invest in the Company on the
terms being offered to private investors.
17
<PAGE>
STATEMENT OF ALBERT H. KAHN IN SUPPORT OF HIS STOCKHOLDER PROPOSAL
Following is the statement of Albert H. Khan in support of his proposal.
The Company has repeatedly engaged in financing transactions that have
been actually or potentially dilutive to existing shareholders. While the
price of the Company's common stock has languished private investors in a
series of transactions (a number of which have been renegotiated within a
short time after issuance) have been afforded the opportunity to acquire
securities convertible into the Company's common stock at prices below the
prevailing market price at the time of conversion, have acquired 5-year
warrants to acquire the Company's common stock at relatively low fixed
prices, and have received interest rates of up to 18% per annum, in
addition to substantial quarterly fees. It is reasonable to assume that
these transactions have contributed to the poor performance of the
Company's common stock. The proposal requests that the Board, before
engaging in any future transactions of this kind, at least consider the
possibility that these advantageous (to the investor if not the Company)
investments be offered to the shareholders of the Company.
WHILE THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL, it
believes that the description of the financing transactions set forth in the
"whereas" clauses of the stockholder's proposal are not current or complete
and that certain statements contained in the stockholder's supporting
statement do not fully address important considerations relating to the
underlying financing transactions. However, because the Board of Directors
believes that the stockholder's proposal conceptually is beneficial, the Board
of Directors is in favor of the stockholder proposal. For a current and more
complete description of these financing transactions please see "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources" in the Company's Form 10-K for the fiscal
year ended February 28, 1998.
MISCELLANEOUS
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholder proposals complying with the applicable rules under the
Securities Exchange Act of 1934 intended to be presented at the 1999 Annual
Meeting of Stockholders must be received at the offices of the Company by
March 20, 1999 to be considered by Aura for inclusion in Aura's proxy
statement and form of proxy relating to that meeting. Such proposals should be
directed to the attention of the Secretary, Aura Systems, Inc., 2335 Alaska
Avenue, El Segundo, California 90245.
OTHER MATTERS
Neither Aura nor any of the persons named as proxies knows of matters other
than those above stated to be voted on at the Annual Meeting. However, if any
other matters are properly presented at the meeting, it is the intention of
the persons named as proxies to vote in accordance with their judgment on such
matters, subject to direction by the Board of Directors.
Under the Company's By-laws, nominations for director of the Company and
other stockholder proposals, other than those made by the Board of Directors,
may only be made by stockholders of record on the record date who have
delivered a written notice to the Secretary of the Company no later than 10
days following the Notice of Annual Meeting. The stockholder's written notice
relating to nominees for directors must contain (i) the name and address of
the stockholder making the nomination and the nominee, (ii) the consent of the
nominee to serve as a director if elected, and (iii) such information
concerning the person making the nomination and the nominee as would be
required by Securities and Exchange Commission ("SEC") rules to be included in
a proxy statement soliciting proxies for the election of such nominee.
The stockholder's written notice relating to proposals other than for
director nominees must contain (i) the name and address of the stockholder
making the proposals, (ii) any material interest of the stockholder in the
18
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proposal, and (iii) such information concerning the person making the proposal
and the proposal itself as would be required by SEC rules to be included in a
proxy statement soliciting proxies for such proposal. Presentation of any
stockholder proposal at the 1998 Annual Meeting is also subject to procedures
established by the Chairman of the Meeting consistent with Delaware corporate
law.
The 1998 Annual Report to Stockholders accompanies this Proxy Statement, but
is not to be deemed a part of the proxy soliciting material.
While you have the matter in mind, please complete, sign and return the
enclosed proxy card promptly.
By Order of the Board of Directors
/s/ Michael I. Froch
Michael I. Froch
Secretary
El Segundo, California
July 20, 1998
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PROXY AURA SYSTEMS, INC.
2335 ALASKA AVENUE, EL SEGUNDO, CA 90245
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Zvi (Harry) Kurtzman and Michael I. Froch as
Proxies, each with the power to appoint their substitutes and with full power
to act alone, and hereby authorizes them to represent and to vote as designated
below, all shares of Common Stock of Aura Systems, Inc. held of record by the
undersigned on June 26, 1998, at the Annual Meeting of Stockholders to be held
on August 19, 1998, including any adjournments or continuances thereof.
The proxies appointed hereby are instructed to vote as indicated herein on
the following proposals as more fully described in the Company's Notice of
Meeting of Stockholders and Proxy Statement, each dated July 20, 1998, receipt
of which is hereby acknowledged, and in their discretion on any other business
which may properly come before the meeting or adjournment thereof.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE NOMINEES SPECIFIED
IN ITEM NO. 1 BELOW AND FOR THE STOCKHOLDER PROPOSAL IN ITEM NO. 2 BELOW, AND
THE PROXY WILL BE SO VOTED UNLESS OTHERWISE SPECIFIED.
<TABLE>
<S> <C> <C>
1. Election of Directors [_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed below
contrary below)
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee strike a
line through the nominee's name below).
<TABLE>
<S> <C> <C> <C>
Zvi (Harry) Kurtzman Cipora Kurtzman Lavut Brigadier Ashok Dewan Neal B. Kaufman
Harvey Cohen Steven C. Veen Arthur J. Schwartz Salvador Diaz-Verson, Jr.
Peter Liu Robert H. Book Gerald S. Papazian Maj. Gen. Guy L. Hecker, Jr. (Ret.)
</TABLE>
[_] FOR [_] AGAINST [_] ABSTAIN
2. Stockholder Proposal. To approve the stockholder proposal requesting that
the Board of Directors, prior to engaging in any financing transactions
similar to those described in the Proxy Statement, consider providing the
existing stockholders of the Company an opportunity to invest in the Company
on the terms being offered to private investors:
[_] FOR [_] AGAINST [_] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE
VOTED FOR PROPOSAL NO. 1 AND PROPOSAL NO. 2.
Dated: ______________________, 1998
Please sign exactly as the name
appears below. When shares are
held by joint tenants, both should
sign. When signing as attorney, as
executor, administrator, trustee
or guardian, please give full
title as such. If a corporation,
please sign in full corporate name
by President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
-----------------------------------
Signature
-----------------------------------
Signature if held jointly
If you also expect to attend the
stockholders' meeting, the Board
of Directors requests you check
the box below:
[_] I/we plan to attend the
stockholders meeting
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
GENERATORS FOR 60 HZ 120/240 VOLT POWER ON VEHICLES
FERNANDO B. MORINIGO, PH.D.
AURA SYSTEMS, INC.
RONALD J. GOLDSTEIN
AURA SYSTEMS, INC.
INTRODUCTION
Modern automotive vehicles use ever increasing amounts of electrical power
for operating vehicle systems. In addition, a number of accessories requiring
electrical power for operation on board or from vehicles have become
increasingly popular among both drivers and passengers. As a result of these
trends, the alternators common in the industry have become only marginally
adequate, particularly for vehicles that are often idling or being driven at
slow speeds.
At the same time, the number of commercial/professional users who have need
of electric power for using tools and other equipment on board or from their
vehicles has also increased enormously. A few examples suffice to give the
flavor of this trend in either or both stationary and mobile vehicle
operation: Ambulances and similar medical rescue vehicles carry equipment that
requires substantial electric power; television news crews that report on the
air from distant sites require power, particularly at night if illumination is
required; construction crews must operate tools and computers anywhere and
often without commercial power available and military vehicles require
substantial amounts of power for operation of their communications, sensors
and computers.
Another group desires substantial electrical power at unusual sites or on
board vehicles for convenience, recreation, entertainment and emergency
preparedness. The general public might wish to have enough electric power to
operate a coffee pot, a hair dryer, a refrigerator, a television set, and a
computer. Building industries workers might welcome the possibility of
plugging in electrical tools to an outlet on their vehicle instead of having
to depend on the presence of an outlet connected to the commercial power grid
through a long extension cord. Campers might wish to enhance their comfort and
entertainment possibilities at places far away from an electric meter. Anyone
might want their lights, microwave, heater, TV, computer and modem back on
during the long hours or days commercial power is knocked out by natural
disaster.
In response to these needs, a variety of devices has been on the market. For
relatively low power applications or periods of short duration, inverters that
furnish 60 Hz 120 volt power from a battery are common. For somewhat higher
power or for longer periods, generator sets in which a small internal
combustion engine is attached to a generator are available.
In today's age many users, commercial and personal, increasingly rely upon
digital equipment and sensitive devices which require consistent, full clean
(sine wave) power. In other words, users want to use anything, anytime,
anywhere--with the push of a button. Today noisy, sometimes balky portable
generators do not fill this need conveniently and certainly not
environmentally.
This paper reports first on the engineering challenges of the AuraGen(TM)
Mobile Generator, a new device and system for generating the power required to
meet the needs and desires described in the preceding paragraphs. Secondly,
this paper reports on the output characteristics of the new device, including
power quality, capacity, and efficiency. Thirdly, this paper considers
possible future trends in this realm.
ENGINEERING CHALLENGES
CAPACITY--The standard alternator is compact, simple and durable, but its
design is not suited to high power demands. The power rating is usually quoted
in amperes of current, which translate to watts when multiplied by the
voltage, usually 14 volts. A 60 ampere rating alternator is able to provide
840 watts of power.
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<PAGE>
That is a substantial amount of power for the weight of the device, and if one
were to desire 5 kW output one might conceive of the idea of just using 6
standard alternators, or one of 6 times the capacity, achieved by linearly
increasing the dimensions. What is missing in this calculation is the fact
that the full power rating does not occur at idle, but at a specific very high
engine speed. The power output at idle is possibly in the neighborhood of 140
watts.
Apart from the above described capacity, there is a problem if the capacity
is desired at 120 Volts 60 Hz, and not at the 14 volts DC output of the
standard automotive electrical system. While devices that can convert the
automotive DC into 120 volts AC exist, at the 5 kW capacity they are bulky and
heavy, and expensive.
These considerations led to the conclusion that in order to provide
substantial amounts of commercial quality power on board a vehicle at any
engine speed, a device entirely different from the standard alternator would
be required.
WEIGHT--The capacity problem is solved by generator sets consisting of a
relatively small internal combustion engine attached to an electrical
generator. In such a system, the frequency of the generated power is directly
proportional to the rotational speed of the generator. The weight of the
dedicated internal combustion engine is very substantial. Such systems are in
use on large trucks to provide refrigerator power, and on large recreational
vehicles to provide power for air conditioning. In these applications, the
power is used to run a compressor motor. For other applications, the stability
of the frequency and voltage is poor, and much electronic equipment (such as
computers and television sets) will not operate properly.
Generator sets that have frequency and voltage stability tend to be much
larger, heavier and costly. One example is a unit of 5 kW capacity used by the
U. S. Army, with a gross weight of over 500 kg, which is towed on its own
trailer. Even a standard portable commercial gasoline generator set--without
the noted frequency voltage stability--weighs on the order of 90 to 140 kg.
The engineering challenge was to invent a unit that would have extremely
tight voltage and frequency stability, that can be used for the most sensitive
electronic equipment, at a very small fraction of the weight.
MANUFACTURING COST--Using existing technology, the most compact electric
motors or generators are those that make use of high strength permanent
magnets that are designated in terms of the rare earth components, "Neodymium"
or "Samarium-Cobalt". There has been in recent years a very sizable
improvement in the magnetic field strength achievable by use of permanent
magnets by optimizing alloys, and one might consider designs for generators or
alternators to exploit these new materials. Unfortunately, for a 5 kW or
similar capacity unit operating at the lower range of engine speeds, the
amount of permanent magnet material has a cost that makes the devices
envisaged too expensive for most applications. The problem is compounded by
the high temperatures that are typically found under the hood in the vicinity
of an engine. Permanent magnet materials lose their magnetic strength at high
temperatures, and temperature cycling and vibration also contribute
significantly to deterioration in performance of permanent magnet devices.
It was an additional engineering challenge to construct the under hood
components of a suitable generator system with materials that are able to
function in the under hood temperature environment without gradual
deterioration.
INDUCTION GENERATOR CHARACTERISTICS
There is no difference, in terms of the physics of the device, between an
electric generator and an electric motor. The difference in function
represents the direction of energy flow, so that a generator is simply a motor
operated backwards, and vice versa. Conceptually at least, any type of
motor/generator might have been considered for use.
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The selection of three phase induction machines for the system had a number
advantages for the automotive generator application, among them: (1) the
existence of very robust and mature designs that require absolutely no
maintenance, (2) no moving contacts except for the bearings, (3) construction
from very common materials, namely steel laminations and copper wire, that can
operate indefinitely at relatively high temperatures. (4) the techniques for
making a very efficient machine of this type are well known.
Three phase induction machines are manufactured in very large numbers and in
a very large variety of power ratings. Their manufacturing costs are well
known and were considered suitable for an automotive application. However,
there was one barrier to the use of existing designs, and that had to do with
the physical envelope. In order to provide generation of 5 kW of user power,
and making allowances for inefficiencies, it would have been necessary to
consider machines with a ten horsepower rating, or higher. Furthermore, the
rating of a machine correctly describes its output only at one optimal
rotational speed, and for an alternator application that derives its power
through a belt from the principal engine of a vehicle, a wide range of speeds
had to be considered. The requirement for a range of speeds means the basic
machine rating had to be well over 10 horsepower, and such machines are too
large and heavy to be successfully mounted under the hoods of the vehicles.
The innovation that made the system at all possible was the use of axial gap
induction machines, which are much more compact in envelope for a comparable
rating at comparable rotation speed, which is compensated by a somewhat more
complex manufacturing process and tighter requirements on certain key
tolerances. A second innovation that made the system practical is the use of
solid steel structure in the rotor as the magnetic element in the rotor. The
rotors in use in other axial gap machines are not suitable for operation at
the rotational speeds required for this automotive application.
The functional uniqueness of the patented system is explained as follows:
The rotor of an induction machine produces torques as a result of the flow
of electric currents in directions perpendicular both to the magnetic flux
lines and to the axis of rotation. The flow of electric currents in any other
direction, that is, either parallel to the axis of rotation or not
perpendicular to flux lines, is wasteful and may produce huge reductions in
efficiency. In the typical rotor of an induction machine of any design, the
steel that is used to carry the magnetic flux is laminated in order to prevent
electric current flow in wasteful directions. In the patented system used
here, the pattern of magnetic flux lines is shaped by symmetry and the choice
of materials, and it is not necessary to use laminations, because flux lines
will not exist in the rotor in azimuthal directions. The electric currents may
be freely allowed to use paths that include the steel elements. The additional
conductivity of the steel in this case adds to the efficiency instead of
detracting from it.
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<PAGE>
The resulting device, shown in Figure 1 has a diameter of about 11 inches
and has an axial length of 4 1/2 inches.
FIGURE 1. EXTERNAL VIEW OF ASSEMBLED AXIAL GAP GENERATOR.
[PICTURE OF EXTERNAL VIEW OF ASSEMBLED AXIAL GAP GENERATOR]
FIGURE 2. PRODUCTION AURAGEN GENERATOR INSTALLED IN VEHICLE
[PICTURE OF PRODUCTION AURAGEN GENERATOR INSTALLED IN VEHICLE]
ELECTRONIC SYSTEM CHARACTERISTICS
The electronic system required to create electrical energy from the axial
gap generator and deliver it to the user in the commercial power format of 60
Hz 120/240 volts is relatively sophisticated. Not too many years ago it would
have been unthinkably expensive and massive. But the spectacular advances in
solid state power electronics of recent years make the device not only
possible, but possible with relatively small weight and in a small space, and
at relatively low cost.
In addition to the power electronics components, the system requires
sophisticated digital control by a digital signal processor that constantly
monitors the speed of the rotor and the power demands made by the user.
The electronic system may be conceptualized in terms of three separate
functions, namely the power generation and recovery subsystem, the power to
the user delivery system, and the control system.
FIGURE 3. THE POWER GENERATION AND RECOVERY SUBSYSTEM
[GRAPH OF THE POWER GENERATION AND RECOVERY SUBSYSTEM]
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<PAGE>
POWER GENERATION AND RECOVERY SUBSYSTEM--A set of capacitors, usually called
the bus, charged to approximately 400 volts, is used as the source of energy
to operate the electronics and the generator, and it simultaneously serves to
receive the electrical energy generated. The control system maintains the
voltage at a predetermined level. The user's power demands tend to lower the
voltage, the control system responds to this lowering of the voltage, and
commands are issued to change the operating conditions of the generator to
extract more power from the mechanical power source.
The generator requires three phase alternating currents to be flowing in its
coils. The current that flows in the coils is not in phase with the voltages.
During a fraction of the cycle, in each phase, current flows so as to draw
power from the bus to operate the electronics and energize the electromagnets.
During another portion of the cycle, the electromagnetic interactions of rotor
with the three phase electromagnets push current back against the voltages,
charging the capacitors again. The control system manages the timing of the
voltage applications to keep the system in dynamic balance, with a net power
zero to the bus.
FIGURE 4. USER POWER DELIVERY SUBSYSTEM
[DIAGRAM OF USER POWER DELIVERY SUBSYSTEM]
USER POWER DELIVERY SUBSYSTEM--The user power delivery subsystem is
diagrammed in Figure 4. The 60 Hertz, 120/240 Volts power delivered to the
user is created by computer commands from the 400 volt reservoir represented
by the set of capacitors. A set of rapid pulsating connections of varying time
length to the 400 Volt bus create an approximation to the effect of 120 Volts,
60 Hertz. This approximation is smoothed by a set of suitably designed
transformers. The user plugs his or her appliances and loads to receptacles
and connectors which are exactly of the type familiar from home use. At the
user plugs, the power quality, in terms of stability of the frequency,
voltage, and harmonic distortion, is superior to what is normally available in
a household plug.
The system builds in a number of safety features, in every particular
equivalent to the safety features of home circuits, such as fuses and ground
fault interrupts.
FIGURE 5. DIAGRAM OF CONTROL SYSTEM ELEMENTS
[DIAGRAM OF CONTROL SYSTEM ELEMENTS]
THE CONTROL SYSTEM--The functions of the control system, as shown in Figure
5, are multiple and require sophisticated management algorithms. The simplest
function is to manage the generator coil currents so that the reservoir of
charged capacitors is maintained at the correct level despite the power
demands made by the user. In order to maintain the required power generation,
the torque demands from the engine are adjusted. Simultaneously, as the engine
revolutions per minute vary up and down in driving, the frequency of the
current in the coils need to be adjusted, or the generator would operate with
very poor efficiency. Finally, if the demands for additional torque from the
engine result in a slow down of the engine, the system would collapse unless
additional fuel is sent to the engine cylinders to produce larger torques and
maintain speed.
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All of these control functions are inherently unstable, so that a rapid
response from the control system is required whenever the operating conditions
deviate from a narrow range.
MEASURED SYSTEM PERFORMANCE
In this section we discuss several system performance and limitations.
EFFICIENCY VARIATION WITH ENGINE SPEED--The system is indeed capable of
generating 5 kW user power over a wide range of engine speeds. However, the
efficiency peaks around 1400 RPM, and drops off on either side of this
maximum. For continuous operation at the 5 kW level, the engine speed must not
be allowed to become significantly lower than 1400 RPM, or the temperature of
the device will rise to unacceptable levels.
FIGURE 6 : POWER USED BY ELECTRONICS MODULES
[GRAPH OF POWER USED BY ELECTRONICS MODULES]
POWER USED BY ELECTRONICS MODULE--The electronics module and control system
require power for their own operation, and they draw this power from the bus
(Figure 6). The heat corresponding to this power must be removed from the
electronics box sufficiently quickly to maintain temperatures of key solid
state devices below 71 degrees C. The external volume and weight of the
electronics box is dominated by the cooling function.
FIGURE 7. TEMPERATURE MEASUREMENTS ON GENERATOR
[GRAPH OF TEMPERATURE MEASUREMENTS ON GENERATOR]
TEMPERATURE MEASUREMENTS ON GENERATOR--The limitations on the power that can
be drawn continuously from the existing generator design arise from the air
cooling available. For brief periods of time, the generator can in fact
generate considerably more power than the 5 kW. The thermal capacity of the
generator system and the integral fan efficiency in removing heat have been
studied extensively. Graphs similar to the one shown in Figure 7 are the
ultimate test of system adequacy. If the final temperature reached by the unit
under a continuous large load remains within some 66 degrees C of its under-
the-hood environment, the generator system will function without shutdown.
Temperature sensors are built in and automatic shutoff levels are in place to
prevent overheating.
POWER QUALITY MEASUREMENTS--The system provides electric power at any engine
speed having a frequency stability, voltage stability, and harmonic purity
that exceeds the standards acceptable for commercial power. The existing
alternatives to the system, namely inverters or generator sets, do not come
even close. While there are many useful tools and devices that are not fussy
about the quality of the power, computers, television sets, and other
electronics devices cannot operate with unstable power or highly distorted
power.
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FUTURE DEVELOPMENTS
(1) Reduce weight and volume. Small improvements in efficiency may result
in somewhat smaller units of significantly reduced weight that may fit
better into a wider variety of vehicles.
(2) Design a system small enough to fit into an automobile rather than a
truck, and still have enough capacity to operate multiple appliances and
tools.
(3) Design and produce a commercial DC/AC voltage system capable of
supporting vehicle embedded electrical systems and supporting AC devices
simultaneously. This also would better fit a variety of vehicles, and would
broaden product utility. Field experience with the Army VIPER Program
(Vehicle Integrated Power Electrical Resource) will further the
commercialization schedule for such a system (Figure 8).
FIGURE 8. VIPER DC/AC AURAGEN HMMWV
[PICTURE OF VIPER DC/AC AURAGEN HMMWV]
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