Delaware	95-4106894
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

AURA SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED AUGUST 31, 2003 AND 2002
(Unaudited)

	Three Months		Six Months
	2003	2002	2003	2002
Net Revenues	$ 519,679	$ 272,978	$ 617,291	$ 456,717
Cost of goods	288,949	145,120	355,732	226,105
Gross Profit	230,730	127,858	261,559	230,612
Expenses
Engineering, research and development expenses	462,865	939,157	958,937	2,171,975
Selling, general and administrative	1,082,770	2,127,569	2,260,538	4,288,044
Impairment loss on long-lived assets	1,956,338	2,300,000	1,956,338	2,300,000
Total costs and expenses	3,501,973	5,366,726	5,175,813	8,760,019
Loss from operations	(3,271,243)	(5,238,868)	(4,914,254)	(8,529,407)
Other (income) and expense
Impairment of investments	-	700,000	-	700,000
Interest expense, net	368,099	385,750	1,012,187	467,984
Other (income) expense, net	(1,205)	(630,580)	(32,900)	(45,151)
Minority interest in net loss of consolidated subsidiary	(101,687)	-	(66,213)	-
Loss before extraordinary item	(3,536,450)	(5,694,038)	(5,827,328)	(9,652,240)
Extraordinary item Gain on extinguishment of debt obligations, net of income taxes of $0	-	-	65,594	-
Net loss	$(3,536,450)	$(5,694,038)	$(5,761,734)	$(9,652,240)
Imputed dividend to preferred shareholders	73,889	-	123,923	-
Net loss available to common shareholders
Basic and diluted loss available to common shareholders per share
Before extraordinary item Extraordinary item	$ (0.008) $ -	$ (0.014) $ -	$ (0.014) $ -	$ (0.024) $ -
Total basic and diluted loss per share	$ (0.008)	$ (0.014)	$ (0.014)	$ (0.024)
Weighted average shares used to compute basic and diluted loss available to common shareholders per share	430,923,150	411,461,450	430,923,150	406,925,606

See accompanying notes to condensed consolidated financial statements.

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AURA SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED AUGUST 31, 2003 AND 2002
(Unaudited)

	2003		2002
Net cash used in operations	$ (2,841,962)		$ (6,519,826)
Investing activities:
Proceeds from sale of investment	415,000		85,000
Note receivable	103,041		200,734
Net cash provided by investing activities	518,041		285,734
Financing activities:
Issuance of debt	200,000		1,000,000
Repayment of debt	(314,044)		(250,000)
Issuance of convertible notes	2,260,409		-
Net proceeds from sale of common stock	-		4,510,000
Net proceeds from sale of Series A preferred stock	109,500		-
Net cash provided by financing activities:	2,255,865		5,260,000
Net increase (decrease) in cash	(68,056)		(974,092)
Cash and cash equivalents at beginning of period	163,693		1,143,396
Cash and cash equivalents at end of period	$ 95,637		$ 169,304
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$134,214		$305,000

Unaudited supplemental disclosure of noncash investing and financing activities:

During the six months ended August 31, 2003, the Company:

- issued $11,047 of convertible notes payable to satisfy a fee reimbursement obligation to Koyah Leverage Partners, LLP

- exchanged $3,605,973 of convertible notes payable, plus accrued interest, for 534,020 shares of Series A Convertible, Redeemable Preferred Stock.

During the six months ended August 31, 2002, the Company:

- issued 292,508 shares of the Company's common stock in satisfaction of $92,140 in liabilities.

See accompanying notes to condensed consolidated financial statements.

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AURA SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2003
(Unaudited)

 

1)                  Basis of Presentation

The condensed consolidated financial statements include the accounts of Aura Systems, Inc. and subsidiaries (the "Company"). All inter-company balances and inter-company transactions have been eliminated.

In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments (which include normal recurring adjustments) and reclassifications for comparability necessary to present fairly the financial position of Aura Systems, Inc. and subsidiaries at August 31, 2003 and the results of its operations for the three and six months ended August 31, 2003 and 2002.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

2)                  Going Concern

In connection with the audit of its consolidated financial statements for the year ended February 28, 2003, the Company received a report from its independent auditors that includes an explanatory paragraph describing uncertainty as to the Company's ability to continue as a going concern. Except as otherwise disclosed, the condensed consolidated financial statements have been prepared on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. . The Company's consolidation and reduction of the scope of its operations has resulted in several writedowns of assets, which have occurred over time as the Company determines, based on its current information, that such asset is impaired. Further writedowns may occur and would occur were the Company to cease operations.

The Company continues to experience acute liquidity challenges. The Company had cash of approximately $100,000 and $200,000 at August 31 and February 28, 2003, respectively. For the six months ended August 31, 2003 and the year ended February 28, 2003, the Company incurred a net loss of approximately $5,800,000 and $16,100,000, respectively, on net revenues of approximately $500,000 and $1,100,000, respectively. The Company had working capital deficiencies at August 31 and February 28, 2003 of approximately $12,400,000 and $15,600,000, respectively. These conditions, combined with the Company's historical operating losses, raise substantial doubt as to the Company's ability to continue as a going concern. At September 30, 2003, the Company had approximately $300,000 of cash.

The Company requires additional debt or equity financing to fund ongoing operations. The Company is seeking to raise additional capital; however, there can be no assurance that the Company will raise sufficient capital to fund ongoing operations. The issuance of additional shares of equity in connection with such financing could dilute the interests of existing stockholders of the Company and such dilution could be substantial. The Company must increase its authorized shares in order to be able to sell common equity and intends to propose to stockholders such action as well as a reverse stock split of its common shares; there can be no assurance that either such action will be approved. The inability to secure additional funding could result in the Company having to cease operations.

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The cash flow generated from the Company's operations to date has not been sufficient to fund its working capital needs, and the Company does not expect that operating cash flow will be sufficient to fund its working capital needs in its fiscal year ending February 28, 2004. In order to maintain liquidity, the Company has relied and continues to rely upon external sources of financing, principally equity financing and private and bank indebtedness. The Company expects to fund any operating shortfall in the current fiscal year from cash on hand, sales of non-core assets and external financings. Currently, the Company has no firm commitments from third parties to provide additional financing and there can be no assurance that financing will be available at the times or in the amounts required. If future financing involves the issuance of equity securities, existing stockholders may suffer dilution in net tangible book value per share and such dilution may be significant. If financing cannot be arranged in the amounts and at the times required, the Company will cease operations. The Company has no bank line of credit. . The Company is currently in default on many of its payment obligations and needs to restructure its existing obligations. Management is seeking to raise financing for the Company and to restructure the Company's obligations but there can be no assurance that the Company will be successful.

The Company's ability to continue as a going concern is dependent upon the successful achievement of profitable operations and the ability to generate sufficient cash from operations and financing sources to meet its obligations.

3)                  Capital

In March 25, 2003, the Board of Directors of the Company authorized 1,500,000 shares of Series A convertible, redeemable preferred stock (the "Series A Preferred") with a par value of $0.005. Each Series A Preferred share is convertible into common stock at $0.08 per share. The Series A Preferred can be converted at the option of the holder provided that the Company does not exercise the mandatory conversion on any date on or after March 31, 2004. The Company may exercise its right to mandatory conversion provided that the current market value of the Company's common stock equal or exceeds 120% of the then prevailing conversion price. As the redemption of the Series A Preferred is at the option of the Company, all preferred outstanding has been classified as equity in the accompanying condensed consolidated financial statements.

The Series A Preferred has liquidation preference of $10 per share plus accrued but unpaid dividends. The holders of the Series A Preferred are entitled to cumulative dividends at a rate of 5% per annum, payable in arrears on the first day of each quarter, commencing on September 1, 2003. The Company may redeem the shares on or after March 31, 2004 in whole or in part at a redemption price equal to $10 per share, plus the amount of any accumulated and unpaid dividends.

In the six months ended August 31, 2003, Series A Preferred outstanding increased by a total of 591,110 shares as follows: 534,020 shares were issued in exchange for convertible notes payable, plus accrued interest, totaling approximately $3,700,000 and 57,090 shares were issued for $259,500 cash proceeds. As of August 31, 2003 cumulative preferred dividends of $123,923 have accrued but have not been declared or paid. These unpaid dividends represent an increase in the liquidation preference for the outstanding Series A Preferred.

The Company did not issue shares of Common Stock during the six months ended August 31, 2003.

During the quarter ended August 31, 2003, the Company issued stock options to three executive officers to purchase, in the aggregate, 8,100,000 shares of the Company's common stock at prices at or above the market price at the date of grant.

During the quarter ended August 31, 2003, the Company issued stock options to a Board member to purchase 1,300,000 shares of the Company's common stock at a price above the market price on the date of grant. In September 2003, the Company issued stock options to members of the Board of Directors to purchase, in the aggregate, 9,250,000 shares of the Company's common stock at a price equal to the closing market price on the date of grant.

During the quarter ended August 31, 2003, the Board of Directors authorized the issuance of 8,000 shares of Series A Preferred in settlement of a $57,423 payable to a law firm in which a Board member is a partner. As of August 31, 2003, these shares have not been issued and this amount continues to be included in Accounts Payable.

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Inventories

Inventories, stated at the lower of cost (first in, first out) or market, consist of the following:

	August 31. 2003 (unaudited)	February 28, 2003
Raw materials	$ 3,894,841	$ 3,846,439
Finished goods	6,589,633	6,819,286
Reserved for potential product obsolescence	(1,678,000)	(1,678,000)
	8,806,474	8,987,725
Non-current portion	6,808,596	7,573,225
	$ 1,997,878	$ 1,414,500

Inventories consist primarily of components and completed units for the Company's AuraGen product.

The Company does not expect to realize all of its inventories within the 12-month period ending August 31, 2004. Because of this, the Company has assessed the net realizability of these assets, the proper classification of the inventory, and the potential obsolescence of inventory. In these evaluations, management has recorded a reserve of $1,678,000 at August 31 and February 28, 2003. The net inventories as of August 31 and February 28, 2003 which are not expected to be realized within a 12-month period have been reclassified as long term.

5)                  Patents and Trademarks

During the second quarter of fiscal 2004, the Company reevaluated its intentions with regard to its patents and trademarks related to products not related to its core business. This evaluation resulted in the conclusion that certain of these patents and trademarks would not generate revenues or cash flows during their remaining lives and, accordingly, the value of these assets was written off. This was recorded as an impairment loss on long-lived assets and classified as an operating expense.

6)                  Notes Payable and Other Liabilities

Notes payable and other liabilities consist of the following:

	August 31, 2003 (unaudited)	February 28, 2003
Notes payable-buildings (a)	$ 5,005,065	$ 5,058,774
Convertible notes payable (b)	-	2,012,320
Convertible notes payable (c)	625,000	1,750,000
Convertible notes payable (d)	1,827,242	-
Litigation payable (e)	2,201,604	2,201,604
Trade debt (f)	1,161,480	1,308,533
Note payable-related party (g)	1,000,000	1,000,000
Notes payable-equipment (h)	10,832	14,147
	11,831,223	13,345,378
Less: current portion	11,794,554	13,305,103
Long-term portion	$ 36,669	$ 40,275

(a)       Notes payable-buildings consist of a 1st Trust Deed on two buildings in California bearing interest at the rate of 7.625%. A final balloon payment is due in Fiscal 2009. In April 2003, the Company defaulted on these notes payable and the notes remain in default at July 31, 2003. As such, these notes payable were classified as current liabilities at August 31 and February 28, 2003.

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(b)       The notes payable bear interest at 5% per annum, mature at various dates, and are convertible into shares of the Company's Series A Preferred at a rate of $1.00 principal amount of notes for each $2.20 of Series A Preferred. During the quarter ended May 31, 2003, the Company issued an additional $466,500 of these notes payable and recorded interest expense of $466,500 related to the conversion feature thereon. On March 31, 2003, these notes were converted into shares of Series A Preferred (see Note 3).

(c)       The notes carry an 8% interest rate and are convertible into common stock at various conversion rates. During the quarter ended March 31, 2003, the Company issued an additional $200,000 of these convertible notes payable. In March, 2003, $1,125,000 of the notes were converted into Series A Preferred (see Note 3).

(d)       Between May 29 and July 11, 2003, the Company received $600,000 of interim funding from Koyah Leverage Partners, LLP to meet its immediate cash needs and issued term notes bearing interest at 5% per annum, convertible into shares of Series A Preferred (the "Term Notes"). From July 24, 2003 through August 31, 2003, the Company has received an additional $1,227,242 of interim funding. These amounts are evidenced by secured notes (the "Secured Notes") payable on October 24, 2003, which date automatically extends to January 24, 2004 if the Company has not received $2,000,000 of additional funding by October 24, 2003. The Secured Notes bear interest at 10% per annum and are convertible at the option of the holder into new debt or equity securities at of the Company at a 20% discount to the best terms by which such new debt or equity is sold to any new investor. The Secured Notes may be prepaid on notice at a 20% premium. Repayment of the Secured Notes is secured by substantially all the assets of the Company (with limited exceptions). The $600,000 of Term Notes were replaced with Secured Notes as part of this transaction.

From September 1 through 30, 2003, the Company has received an additional $766,147 of interim funding evidenced by additional Secured Notes. Although the Company is in discussions with the investor with regard to further financing, there can be no assurance that additional financing will be obtained.

(e)       The litigation payable represents the legal settlements entered into by Aura with various parties. These settlements call for payment terms with 8% interest rate to the plaintiffs through fiscal 2004.

(f)        Trade debt was restructured with payment terms over a three-year period with interest at 8% per annum commencing in January 2000.

During the quarter ended May 31, 2003 and the year ended February 28, 2003, the Company settled $59,818 and $1,456,213, respectively, of this trade debt, including accrued interest, for $14,356 and $385,142, respectively. The gains on the extinguishment of debt of $65,594 and $1,050,995, which are reflected as extraordinary items in the six months ended August 31, 2003 and the year ended February 28, 2003, respectively, resulted in extraordinary income per share of less than $0.01 in each period. To fund these transactions, the Company issued $307,862 of the convertibles notes payable described in (b) above in the year ended February 28, 2003.

(g)       Note payable - related party consisted of a $1,000,000 note payable, which was entered into in connection with the sale of a minority interest in Aura Realty, as more fully described in Financial Position, Liquidity and Capital Resources below. The note bears interest at 12.3% per annum and is secured by a security interest in a certain note receivable. The Company is required to make interest only payments for the first 17 months of the term, and the $1,000,000 principal is due on May 31, 2004.

(h)       Notes payable-equipment consists of a note maturing in February 2005 with an interest rate of 8.45%.

7)                  Significant Customers

In the six months ended August 31, 2003, the Company sold AuraGen related products to two significant customers for a total of approximately $378,000 or 61% of net revenues. None of these customers is related to or affiliated with the Company.

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In June 2003, the Company received an order for over $1,000,000 of AuraGen(R) units, including mounting brackets and installation, from one of its significant customers. During the quarter ended August 31, 2003, approximately $250,000 of this order was delivered. These deliveries are included in the preceding significant customer discussion. The remainder of this order will be delivered at the customer's request through June 2006.

At August 31, 2003, the Company held accounts receivable from one of these significant customers for approximately $85,000 or 30% of net receivables.

8)                  Contingencies

The Company is engaged in certain material legal proceedings as described in Part II, Item 2 of this Form 10-Q. Appropriate provisions have been made in the financial statements for all judgments and settlements noted therein, and as otherwise stated in such discussion.

 

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

This Form 10-Q report may contain forward-looking statements which involve risks and uncertainties. Such forward-looking statements include, but are not limited to, statements regarding future events and the Company's plans and expectations. The Company's actual results may differ significantly from the results discussed in forward-looking statements as a result of certain factors, including those discussed in the Company's Form 10-K for the period ended February 28, 2003 and this report. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations or any events, conditions or circumstances on which any such statement is based. This report includes product names, trade names and marks of companies other than the Company. All such company or product names are trademarks, registered trademarks, trade names or marks of their respective owners and are not the property of the Company.

Overview

Aura Systems, Inc., a Delaware corporation, ("Aura" or the "Company") designs, assembles and sells the AuraGen(R), the Company's patented mobile power generator that uses the engine of a vehicle to generate power. It installs under-the-hood in many motor vehicles and delivers on-location, plug-in electricity for any end use including industrial, commercial, recreational and military applications. The Company began commercializing the AuraGen(R) in late 1999. To date, AuraGen(R) units have been sold to more than 500 customers in more than 10 industries, including recreational, utilities, telecommunications, emergency/rescue, public works, catering, oil and gas, transportation, government and the military.

The Company was founded in 1987 and, until 1992, primarily engaged in supplying defense technology to classified military programs. In 1992 the Company transitioned to being primarily a supplier of consumer and industrial products and services using its developed technology. In 1994, the Company founded NewCom, Inc., which sold and distributed computer communications and sound products such as CD-ROMs and sound cards. In 1997, the Company acquired MYS Corporation of Japan, a manufacturer of speaker systems. NewCom ceased operations in 1999 and the Company experienced severe financial hardship from this and other causes. In fiscal 2000, the Company sold MYS, the Company's business divisions providing sound products, and other assets, restructured substantial indebtedness and concentrated its focus on the AuraGen(R) product. Sales and support of the AuraGen(R) currently provide all the Company's operating revenues.

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Early in its AuraGen(R) program, the Company determined it was most cost-effective to outsource production of components and subassemblies to volume-oriented manufacturers, rather than produce these parts in house. As a result of this decision, and based on then anticipated sales, the Company purchased, prior to fiscal 2001, a substantial inventory of components at volume prices, most of which was then assembled into finished AuraGen(R) units. Since sales did not meet such expectations, the Company has been selling product from this inventory for several years. It is important to note that these assembled units and components in inventory do not deteriorate with age and that even though there have been improvements and modifications to the AuraGen(R) product over this period, the units in inventory require only minor applications of parts and labor to bring them to current specifications. In fiscal 2002 and fiscal 2003, the Company has substantially reduced its internal staffing to be more appropriate to the slower-than-anticipated level of sales. The Company has also suspended substantially all research and development activities.

The Company's financial statements have been prepared on the assumption the Company continues as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, as a result of the Company's losses from operations and its default on certain of its obligations (see Note 7), there is substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amount and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company's ability to continue as a going concern is dependent upon the successful achievement of profitable operations and the ability to generate sufficient cash from operations and financing sources to meet the Company's obligations. In order to attract additional financing, the Company expects that payment terms of its obligations will need to be restructured, including resolution of the current defaults on many of its payment obligations. The Company is currently seeking to restructure payment terms of its outstanding obligations in connections with its efforts to raise additional financing through a private placement.  There can be no assurance that such efforts will be successful.

Results of Operations

For the three and six months period ended August 31, 2003

The Company's net loss for the six months ended August 31, 2003 (the "Six Months FY2004") was $5,761,734 compared to a net loss of $9,652,240 for the six months ended August 31, 2002 (the "Six Months FY2003"). Substantially all of the improvement is due to the Company's ongoing efforts to reduce its costs of operations, primarily through reductions in headcount and cost of labor. The net loss also was reduced by a 35% increase in sales. Because the Company is selling from inventory, the Company's cost of goods is relatively constant and an increase in revenues results in a decrease in the Company's loss. Net operating revenues and gross profit were $617,291 and $261,559, respectively, in the Six Months FY2004 and $459,717 and $230,612, respectively, in Six Months FY2003.

The Company's net loss for the three months ended August 31, 2003 (the "Second Quarter FY2004") was $3,536,450 compared to a net loss of $5,694,038 for the three months ended August 31, 2002 (the "Second Quarter FY2003"). Net operating revenues and gross profit were $519,679 and $230,730, respectively, in the Second Quarter FY2004 and $272,978and $127,858, respectively, in Second Quarter FY2003.

Net revenues for the Six Months FY2004 of $617,291 represent an increase of $160,574 (35%) from $456,717 in the Six Months FY2003. Net revenues for the Second Quarter FY2004 of $519,679 represent an increase of $246,701 (90%) from $272,978 in the Second Quarter FY2003. Revenues are higher in Fiscal 2004 due largely to Second Quarter FT2004 delivery of approximately $240,000 of product against a $1,000,000 order from an existing customer. The Company is seeking to increase sales by educating purchasers and potential purchasers on the advantages of the Company's product as compared to competing technology and sales have varied in response to the relative success of the Company's efforts.

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Cost of goods increased to $355,732 for the Six Months FY2004 from $226,105 in the Six Months FY2003; a $129,627 (57%) increase. Cost of Goods increasedto $288,949 in the Second Quarter FY2004 from $145,120 in the First Quarter FY2003; a $143,829 (99%) increase. These increases were larger than the changes in net revenues resulting in a reduction in gross margins to 42% and 44% in the Six Months FY2004 and Second Quarter FY2004, respectively, from 50% and 47% for the Six Months FY2003 and Second Quarter FY2003, respectively. This minor reduction in gross margin results from volume discount pricing given on the significant order discussed above. The Company's cost of goods from other sales was consistent with historical gross margins. Cost of goods includes only the direct material and labor costs incurred in production and does not include any allocation of rent, depreciation, overhead or other administrative expenses.

Engineering, research and development expenses decreased by $1,213,038 (56%) to $958,937 in the Six Months FY2004 from $2,1711,975 in the Six Months FY2003 and decreased by $476,292 (51%) to $462,865 in the Second Quarter FY2004 from $939,157 in the Second Quarter FY2003. The decrease was primarily due to the cost control efforts taken throughout fiscal 2003 and into the Six Months FY2004, most significantly, reductions in headcount. Labor and labor related costs included in engineering expense amounted to approximately $810,000 in the Six Months Quarter FY2004, compared to approximately $1,520,000 in the Six Months FY2003. The Company also reduced its research and development activities throughout fiscal 2003 and expects these efforts to continue at or below this reduced level at least through the remainder of fiscal 2004.

Selling, general and administrative ("SG&A") expenses decreasedto $2,260,538 in the Six Months FY2004 from $4,288,044 in the Six Months FY2003; a reduction of $2,027,506 (47%) and decreased to $1,082,770 in the Second Quarter FY2004 from $2,127,569 in the Second Quarter FY2003; a reduction of $1,0440799 (49%). The SG&A expenses were lower due primarily to cost control efforts taken throughout fiscal 2003 and into the Six Months FY2004, most significantly, reductions in headcount. Labor and labor related costs included in SG&A amounted to approximately $1,077,000 in the Six Months FY2004, compared to approximately $2,321,000 in the Six Months Quarter FY2003.

In the Second Quarter FY2004, the Company recorded a $1956,338 long-lived asset impairment charge resulting from the write off of some of the Company's patents and trademarks. During the Second Quarter FY2004, the Company reevaluated its intentions with regard to its patents and trademarks related to products not related to its core business. This evaluation resulted in the conclusion that certain of these patents and trademarks would not generate revenues or cash flows during their remaining lives and, accordingly, the value of these assets was written off. In the Second Quarter FY2003, the Company recorded a $2,300,000 long-lived asset impairment charge resulting from a decline in the realizable value of the Company's headquarters facilities.

In the Second Quarter FY2003, the Company recorded a $700,000 impairment of investments charge resulting from a decline in realizable value of certain non-core investments. There was no similar impairment charge recorded in Second Quarter FY2004.

Net interest expense for the Six Months FY2004 of $1,012,187 was $544,203 (116%) greater than the $467,984 of net interest expense recorded in the Six Months FY2003. This increase was due principally to the recording of $466,500 of expense, in the First Quarter FY2004, representing the beneficial conversion feature related to the issuance of convertible notes payable. Net interest expense for the Second Quarter FY2004 of $368,099 was $17,651 (5%) less than the $385,750 of net interest expense recorded in the Second Quarter FY2003. Interest expense for Second Quarter FY2004 included approximately $199,000 of penalty interest and late fees, $79,000 of which related to the First Quarter FY2004, triggered by the defaults on the mortgage note payable on the Company's headquarters facility (see Financial Position, Liquidity and Capital Resources). Interest expense for the Second Quarter FY2003 included approximately $224,000 of interest charges from prior periods related to restructured trade debt obligations.

Other income was $32,900 and $1,205 in the Six Months FY2004 and Second Quarter FY2004, respectively, compared to other income of $32,480 in the Six Months FY2003 and other expense of $82,091 Second Quarter FY2003.

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Critical Accounting Policies and Estimates

The Company's discussion and analysis of its financial conditions and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires management to make estimates and disclosures on the date of the financial statements. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to revenue recognition. The Company uses authoritative pronouncements, historical experience and other assumptions as the basis for making judgments. Actual results could differ from those estimates. The Company believes that the following critical accounting policies affect its more significant judgments and estimates in the preparation of its consolidated financial statements.

Revenue recognition

The Company is required to make judgments based on historical experience and future expectations, as to the reliability of shipments made to its customers. These judgments are required to assess the propriety of the recognition of revenue based on Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition," and related guidance. The Company makes these assessments based on the following factors: i) customer-specific information, ii) return policies, and iii) historical experience for issues not yet identified.

Inventory   

The Company is required to make judgments based on historical experience and future expectations as to the realizability of inventory. The Company makes these assessments based on the following factors: i) existing orders, ii) age of the inventory, iii) historical experience and iv) the status of the Company's expectation as to future sales.

Valuation of long-lived assets

Long-lived assets, consisting primarily of property and equipment, and patents and trademarks, comprise a significant portion of the Company's total assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable. Recoverability of assets is measured by a comparison of the carrying value of an asset to its future net cash flows expected to be generated by those assets. The cash flow projections are based on historical experience, management's view of growth rates within the industry, and the anticipated future economic environment.

Factors that could trigger a review for impairment include:

(a) significant underperformance relative to expected historical or projected future operating results,

(b) significant changes in the manner an asset is used or the Company's overall business strategy, and

(c) significant negative industry or economic trends.

When the Company determines that an asset is impaired, it measures any such impairment by discounting such value to the present using a discount rate appropriate to the perceived risk in realizing such value. When the Company determines that an impaired asset has no foreseeable realizable value, it writes such asset down to zero.

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Financial Position, Liquidity and Capital Resources

The Company continues to experience acute liquidity challenges. The Company had cash of approximately $100,000 and $200,000 at August 31 and February 28, 2003, respectively. For the six months ended August 31, 2003 and the year ended February 28, 2003, the Company incurred a net loss of approximately $5,800,000 and $16,100,000, respectively, on net revenues of approximately $500,000 and $1,100,000, respectively. The Company had working capital deficiencies at August 31 and February 28, 2003 of approximately $12,400,000 and $15,600,000, respectively. These conditions, combined with the Company's historical operating losses, raise substantial doubt as to the Company's ability to continue as a going concern. At September 30, 2003, the Company had approximately $300,000 of cash.

The Company requires additional debt or equity financing to fund ongoing operations. The Company is seeking to raise additional capital; however, there can be no assurance that the Company will raise sufficient capital to fund ongoing operations. The issuance of additional shares of equity in connection with such financing could dilute the interests of existing stockholders of the Company and such dilution could be substantial. The Company must increase its authorized shares in order to be able to sell common equity and intends to propose to stockholders such action as well as a reverse stock split of its common shares; there can be no assurance that either such action will be approved. The inability to secure additional funding could result in the Company having to cease operations.

The cash flow generated from the Company's operations to date has not been sufficient to fund its working capital needs, and the Company does not expect that operating cash flow will be sufficient to fund its working capital needs in its fiscal year ending February 28, 2004. In the past, in order to maintain liquidity, the Company has relied upon external sources of financing, principally equity financing and private and bank indebtedness. The Company expects to fund any operating shortfall in the current fiscal year from cash on hand, sales of non-core assets and external financings. Currently, the Company has no firm commitments from third parties to provide additional financing and there can be no assurance that financing will be available at the times or in the amounts required. If future financing involves the issuance of equity securities, existing stockholders may suffer dilution in book value per share and such dilution may be significant. If financing cannot be arranged in the amounts and at the times required, the Company will cease operations. The Company has no bank line of credit. . The Company is currently in default on many of its payment obligations and needs to restructure its existing obligations. Management is seeking to raise financing for the Company and to restructure the Company's obligations but there can be no assurance that the Company will be successful.

The Company's ability to continue as a going concern is dependent upon the successful achievement of profitable operations and the ability to generate sufficient cash from operations and financing sources to meet its obligations.

Due to the Company's acute liquidity challenges, it has defaulted in payments under many of its financial obligations (see Note 7 in the Condensed Consolidated Financial Statements). These defaults effectively render these obligations payable on demand and the entire principal balance of each obligation has been included in current liabilities in the accompanying Consolidated Financial Statements. Actions by the parties to these obligations to enforce their rights to collect the amounts due could require the Company to cease operations.

At August 31, 2003, the Company had accounts receivable, net of allowance for doubtful accounts, of $281,672; $410,717 at February 28, 2003. As of September 30, 2003, the Company had net accounts receivable of approximately $150,000.

From April 1 through June 11, 2003, the Company sold a portion of one of its long-term investments realizing net proceeds of approximately $415,000. The Company intends to sell the remainder of this investment and is actively seeking buyers but has no commitments from any buyers at this time. In May 2003, the Company borrowed $200,000, secured by a portion of the remainder of this investment. In August 2003, this secured borrowing, including accrued interest, was paid with proceeds of borrowing under the Secured Notes referred to below.

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There was no spending for property and equipment in the Six Months FY2004 or the Six Months FY2003. The Company has no material capital project that would require funding. The Company's current plant and equipment is sufficient to support its current level of sales.

Debt repayments of $314,044 were made in Six Months FY2004 as compared to $250,000 in Six Months FY2003.

During fiscal 2003, the Company agreed to sell its Aura Realty, Inc. subsidiary ("Aura Realty") to a group of individuals, including five members of the Company's former management including Zvi Kurtzman and Steve Veen, (the "Purchasers") and to lease back the Company's headquarters facility, which is owned by Aura Realty. The purchase price of $7,350,000 was to be paid by assumption or refinancing of the current mortgage on the property (which had a principal balance of approximately $5.1 million). Net of this mortgage, $0.6 million of security deposits and prepayments paid to the Purchasers to secure the Company's performance, $0.1 million of past due amounts owed to certain of the Purchasers and $0.1 million of fees to Purchasers, the Company received approximately $1.5 million, of which $0.9 million was advanced to the Company by the Purchasers prior to closing and $0.6 million was transferred to the Company at the initial closing on December 1, 2002. Also on December 1, 2002, the Company transferred 49.9% of the common stock of Aura Realty to the Purchasers, issued to Purchasers a $1.0 million term note and granted Purchasers a security interest in a note receivable to secure the Company's performance under the agreement. The Purchasers also received warrants to purchase 15,000,000 shares of common stock, exercisable through November 30, 2007, at exercise prices ranging from $0.15 to $0.25 per share. The value of the warrant was calculated at $0.7 million using the Black-Scholes method of valuation. The Purchasers also purchased 21,366,347 shares of the Company's common stock for $1.5 million, which is included in the 2003 Subtotal Shares.

The holder of the mortgage did not consent to the transfer of the Company's remaining 51.1% interest in Aura Realty and the Company failed to make certain payments to the Purchasers as required under the agreement. During June 2003, the Company entered into a forbearance agreement with the Purchasers, whereby the Company agreed to issue the additional warrants required under the agreements for failure to file a stock registration shares and warrants and register the previously issued shares and the shares underlying the warrants for resale to the public, assign the receivable (a note issued by Alpha Ceramic) to the Purchasers, promptly engage an exclusive listing agent for the sale of the property and pay certain amounts in default on the mortgage. The Company is currently in negotiations with the Purchasers and the holder of the mortgage relative to these matters. The Company originally recorded and reported the Aura Realty transaction as a sale of 100% of its Aura Realty subsidiary. The events subsequent to year end raise significant doubt that the remainder of the transaction contemplated by the agreement will ever be completed. As a result, the transaction has been recorded at February 28, 2003 as a sale of a minority interest in Aura Realty.

On or about September 25, 2003, the Company was notified that the mortgagor holding a deed of trust on the Company's headquarters facility had begun foreclosure proceedings for nonpayment of the mortgage.  The notice states that the mortgagor may sell the property if the Company does not pay all past due payments plus permitted costs, which the notice states totaled $479,828.31 as of September 8, 2003. See Part II, Item 1, Legal Proceedings. Through the Six Months FY2004 and to the date of this report, the Company has taken steps toward curing these defaults and continues to negotiate with the mortgage note holder and the Purchasers. Actions by the parties to these obligations to enforce their rights to collect the amounts due could require the Company to cease operations.

Capital Transactions

In March 2003, the Company issued approximately $400,000 of "5% Discounted Notes". All of these notes (together with other 5% Discounted Notes previously issued) were converted into Series A Preferred on March 31, 2003 as discussed below.

On March 25, 2003, the Company designated 1,500,000 shares of its authorized preferred stock as Series A Convertible Redeemable Preferred Stock (the "Series A Preferred"). Each share of Series A Preferred has a par value of $.005, a liquidation preference of $10.00 plus accrued unpaid dividends and is convertible into common stock at $.080 per share, based on the liquidation preference. Dividends accrue on each share at the rate of 5% of the liquidation preference per annum. The Company may call the Series A Preferred for redemption on or after March 31, 2004 subject to certain conditions. As of August 31, 2003, 591,110 shares of Series A Preferred were outstanding, issued as set forth below.

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On March 31, 2003, the Company exchanged $1,125,000 of 8% Notes and converted $1,101,573 of 5% Notes and $1,342,900 of 5% Discounted Notes, plus accrued interest in all cases, into 534,020 shares of Series A Preferred. The average effective net acquisition price of the shares of Common Stock underlying the conversion feature, based on the mounts paid for the notes, is $0.054 per share.

Between May 29 and July 11, 2003, the Company received $600,000 of interim funding from Koyah Leverage Partners, LLP to meet its immediate cash needs and issued term notes bearing interest at 5% per annum, convertible into shares of Series A Preferred (the "Term Notes"). From July 24, 2003 through August 31, 2003, the Company has received an additional $1,227,242 of interim funding. These amounts are evidenced by secured notes payable (the "Secured Notes") on October 24, 2003, which date automatically extends to January 24, 2004 if the Company has not received $2,000,000 of additional funding by October 24, 2003. The Secured Notes bear interest at 10% per annum and are convertible at the option of the holder into new debt or equity securities at of the Company at a 20% discount to the best terms by which such new debt or equity is sold to any new investor. The Secured Notes may be prepaid on notice at a 20% premium. Repayment of the Secured Notes is secured by substantially all the assets of the Company (with limited exceptions). The $600,000 of Term Notes were replaced with Secured Notes as part of this transaction.

From September 1 through 30, 2003, the Company has received an additional $766,147 of interim funding evidenced by additional Secured Notes. Although the Company is in discussions with the investor with regard to further financing, there can be no assurance that additional financing will be obtained.

Also during the first quarter of fiscal 2004:

-          the Company issued 24,090 shares of Series A Preferred in a private placement for net cash proceeds of $109,500. The effective net acquisition price of the shares of Common Stock underlying the conversion feature, based on the amounts paid for the preferred stock is $0.036 per share.

-          the Company issued convertible notes payable to third party investors totaling $200,000. The notes bear interest at 5% per annum and are due on demand no later than August 29, 2003. The notes are convertible into Series A Preferred stock at $10.00 per share. The effective net acquisition price of the shares of Common Stock underlying the conversion feature, based on the amounts paid for the notes, is $0.080 per share.

-          the Company issued a $200,000 note in exchange for a loan. The note and $10,000 fixed fee interest became due on June 7, 2003. As part of this borrowing, the Company issued warrants to purchase 3,000,000 shares of common stock at $0.050 per share. The Company paid this note in full in August 2003.

ITEM 4 CONTROLS AND PROCEDURES

(a) The Company's chief executive officer and its chief financial officer, after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15-d-14(c)) as of a date within 90 days of the filing date of this quarterly report (the "Evaluation Date") have concluded that as of the Evaluation Date, the Company's disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to them timely by others within those entities.

(b) There were no significant changes in the Company's internal controls or in other factors that could significantly affect the Company's disclosure controls and procedures subsequent to the Evaluation Date, nor were there any significant deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions. As a result, no corrective actions were taken.

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PART II - OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

Due to the Company's acute liquidity challenges, it has defaulted in payments under many of its financial obligations (see Part I, Item 2. - Liquidity and Capital Resources and Note 7 in the Condensed Consolidated Financial Statements). These defaults effectively render these obligations payable on demand and the entire principal balance of each obligation has been included in current liabilities in the accompanying Condensed Consolidated Financial Statements. The Company is engaged in numerous legal actions by creditors seeking payment of sums owed. Actions by the parties to these obligations to enforce their rights to collect the amounts due could require the Company to cease operations.

Foreclosure Proceeding  

On or about September 25, 2003, the Company was notified that the mortgagor holding a deed of trust on the Company's headquarters facility had begun foreclosure proceedings for nonpayment of the mortgage.  The notice states that the mortgagor may sell the property if the Company does not pay all past due payments plus permitted costs, which the notice states totaled $479,828.31 as of September 8, 2003.  Penalty interest and late charges accrue at the rate of approximately $42,000 per month.  Due to the defaults on the mortgage, the entire mortgage has been classified as a current payable on the Company's financial statements.  According to the notice, the Company has until at least December 2, 2003, to make such cure payment, or to negotiate a settlement providing for lesser payments acceptable to the mortgagor.  The loss of the Company's headquarters facility, without relocation of the Company, would cause the Company to cease operations. 

The Company has been addressing this situation through making monthly payments equal to the required monthly payment under the mortgage plus and additional amount to reduce the arrearages for the past several months. The Company has engaged in discussions with the mortgagor and indicated its intention to intention to cure the unpaid amounts.

The defaults under the mortgage also result in defaults in the Agreement for Sale and Leaseback under which the Company was selling its Aura Realty subsidiary , which owns the buildings subject to this mortgage (see discussion above under Item 2 - Financial Position, Liquidity and Capital Resources).

The Company has also undertaken efforts to sell these buildings and move its headquarters and processing facilities to a new location. If not otherwise done sooner, the Company expects that the defaults under the mortgage and the Agreement for Sale and Leaseback would be cured from the proceeds of such sale.

Securities and Exchange Commission

In June 2002, the Securities and Exchange Commission ("SEC") brought a civil action against the Company, NewCom (a former subsidiary of Aura), and certain former members of the Company's management team, including Zvi (Harry) Kurtzman (the Company's former Chief Executive Officer) and Steven Veen (the Company's former Chief Financial Officer) for violations of the antifraud and books and records provisions of the securities laws. The complaint relates to the financial statements for various transactions during fiscal years 1996 through 1999. The Company originally disclosed the investigation by press release in January 1999. The SEC brought a related action against Gerald Papazian (the Company's former President). Without admitting or denying the allegations in the complaint, the Company as well as the former officers filed consents agreeing to settle the case. The Company consented to a permanent injunction against violations of specified sections of the securities laws, with no penalty imposed based on the Company's financial condition. Mr. Kurtzman consented to a permanent injunction against violations of specified sections of the securities laws, a $75,000 civil penalty and a permanent bar from serving as an officer or director of a publicly-traded company. Mr. Veen consented to a permanent injunction against violations of specified sections of the securities laws, a $50,000 civil penalty and a five-year suspension from appearing or practicing before the SEC. Mr. Papazian consented to a permanent injunction against violations of specified sections of the securities laws and a $25,000 civil penalty.

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In September 2002, a federal grand jury indicted three officers of NewCom, including Mr. Veen, on various conspiracy and fraud charges related to NewCom's financial statements.

Barovich/Chiau et. al. v. Aura Systems, Inc. et. al. (Case No. CV -95-3295).

As previously reported in its Fiscal 2000 report on Form 10K, the Company settled shareholder litigation in the referenced matter in January 1999. On November 20, 1999, the parties entered into an Amended Stipulation of Settlement, providing that the Company make payment of $2,260,000 (plus interest) in thirty-six equal monthly installments of $70,350. On October 22, 2002, after the Company had failed to make certain monthly payments, Plaintiffs applied for and obtained a judgment against the Company for $935,350, representing the balance due with respect to the original principal amount of $2,260,000. The Company has subsequently made only two monthly payments of $70,350 each, reducing the amount owed to $794,650 (plus interest). Subsequent to year end, the Plaintiffs took further legal actions to enforce the October 2002 judgment, culminating in a lien on one of the Company's smaller bank accounts. The Company has made appropriate provisions in its financial statements to fully reflect this liability.

Waltco Engineering Co. v. Aura Systems, Inc. et. al. (YC045396).

On December 11, 2002, Plaintiff, Waltco Engineering Co. ("Waltco"), filed a suit in California Superior Court for Breach of Written Agreement against the Company and related common counts. Waltco asserted that the Company breached the terms of a payment plan. Waltco claimed damages of $283,296.41 and has received a summary judgment for that amount plus costs. The Company is continuing settlement discussions with Waltco but to date no settlement has been reached. The Company has made appropriate provisions in its financial statements to fully reflect its estimated liability in this case.

Arthur Schwartz v. Aura Systems, Inc (Case number BC299519)

A group of former officers of the Company, who resigned on February 28, 2002 following the commencement of an SEC investigation into the Company's accounting practices (as described above) filed a lawsuit against the Company, on July 24, 2003, seeking payment of amounts owed under a consulting arrangement. The Company had renegotiated the amounts payable under the consulting arrangement, but defaulted on such amounts. The suit filed by these former officers seeks full payment based on their original employment agreements. The accruals reflected on the Company's financial statements were based on the revised agreements in place at the time of their resignations and, should these former officers be awarded the full amount sought in this suit, the Company would be required to record additional expense of approximately $1,100,000.

The Company intends to contest this action vigorously and may bring counterclaims against the individuals.

ITEM 2 CHANGES IN SECURITIES

For a discussion of recent sales of securities, see Management's Discussion and Analysis.

All of the noted sales of unregistered securities were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 as these offerings were a private placement to a limited number of accredited investors.

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ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits:

99.1 - Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

99.2 - Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

b) Reports on Form 8-K:

None.

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SIGNATURES

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

AURA SYSTEMS, INC.

(Registrant)

Date: October 13, 2003 By: /s/David A. Rescino

David A. Rescino

Interim Chief Financial Officer

(Principal Financial and Accounting Officer

and Duly Authorized Officer)

CERTIFICATION

I, Neal F. Meehan, Chairman and Chief Executive Officer of Aura Systems, Inc., certify that:

1.          I have reviewed this quarterly report on Form 10-Q of Aura Systems, Inc. and,

2.          Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.          Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.          The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a.       designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.       evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c.       presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.          The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a.       all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b.       any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.          The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/ Neal F. Meehan

Neal F. Meehan

Chairman & Chief Executive Officer

October 13, 2003

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CERTIFICATION

I, David A. Rescino, Interim Chief Financial Officer of Aura Systems, Inc., certify that:

1.          I have reviewed this quarterly report on Form 10-Q of Aura Systems, Inc. and,

2.          Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.          Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.          The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a.    designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.    evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c.    presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.          The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a.    all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b.    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.          The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/ David A. Rescino

David A. Rescino

Interim Chief Financial Officer

October 13, 2003

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EXHIBIT 99.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Aura Systems, Inc. (the "Company") on Form 10-Q for the period ending November 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Neal F. Meehan, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge:

1.       The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.       The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods indicated.

/s/ Neal F. Meehan

Neal F. Meehan

Chairman & Chief Executive Officer

October 13, 2003

EXHIBIT 99.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Aura Systems, Inc. (the "Company") on Form 10-Q for the period ending November 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David A. Rescino, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge:

1.       The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.       The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods indicated.

/s/ David A. Rescino

David A. Rescino

Interim Chief Financial Officer

October 13, 2003