Item 1.03 Bankruptcy or Receivership.
On December 21, 2012, AuraSound, Inc. (the Company) filed a voluntary petition for relief (the Bankruptcy Filing) under chapter 11 of title 11 of the United States Bankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Central District of California in Santa Ana (the Bankruptcy Court) case number 8:12-bk-24400-MW. The Company will continue to operate its business as a debtor in possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.
The Companys stockholders are cautioned that trading in shares of the Companys common stock during the pendency of the Bankruptcy Filing will be highly speculative and will pose substantial risks. Trading prices for the Companys common stock may bear little or no relationship to the actual recovery, if any, by holders thereof in the Companys Bankruptcy Filing. Accordingly, the Company urges extreme caution with respect to existing and future investments in its common stock.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Chief Restructuring Officer
On December 18, 2012, the Board of Directors of the Company appointed Brian S. Weiss of BSW & Associates (BSWA) as the Companys Chief Restructuring Officer, to lead the Companys restructuring effort.
Mr. Weiss, age 41, is the founder and Principal of BSWA. Mr. Weiss specializes in advising public and private companies in complex transactions including business restructurings and acquisitions/divestitures, Interim/Acting CFO services, and complex SEC and GAAP issues. Prior to founding BSWA in 2006, Mr. Weiss served as Vice President of Finance, North America for Tomy Co. Ltd. Mr. Weiss is a certified public accountant. Mr. Weiss has a B.A. in Business from San Diego State University and an M.B.A. from the University of Southern California.
On December 18, 2012, the Company entered into an engagement agreement (the Agreement) with BSWA, which is controlled by Mr. Weiss. Under the terms of the Agreement, BSWA shall perform services, including, but not limited to:
· Developing bankruptcy strategy;
· Negotiating with creditors;
· Preparing business analysis; and
· Providing restructuring advice and assistance to the Company in developing a plan, if applicable, which would be the basis for a plan under chapter 11 of title 11 of the Bankruptcy Code
In connection with the execution of the Agreement, the Company paid BSWA an initial retainer in the amount of $30,000. As compensation for BSWAs services, the Company will pay BSWA fees at the hourly billing rate of $325. In addition, the Company will reimburse BSWA for reasonable out-of-pocket expenses incurred in connection with the provision of its services to the Company.
Resignations of Chief Executive Officer and Chief Financial Officer
On December 21, 2012, Mr. Robert Tetzloff resigned as Chief Executive Officer of the Company. Mr. Tetzloff remains a member of and the Chairman of the Companys Board of Directors. On January 7, 2013, Mr. Anthony J. Fidaleo resigned as Chief Financial Officer of the Company.