exhibit 10.36

***THIS  NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR  ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, DISTRIBUTED, ASSIGNED,  OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE  REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING  ANY SUCH TRANSACTION, (B) THE TRANSFER IS MADE IN ACCORANCE WITH RULE 144 UNDER  SUCH ACT, (C) THE BORROWER RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE  HOLDER OF THE NOTE (CONCURRED IN BY LEGAL COUNSEL FOR THE BORROWER) STATING  THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (D) THE BORROWER  OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.***

**CONVERTIBLE  PROMISSORY NOTE**

Principal Amount: $____________  ____________________  Interest Rate: 10%  January 19, 2004

FOR  VALUE RECEIVED, the undersigned, AURA SYSTEMS, INC., a Delaware corporation  ("Borrower"), hereby promises to pay to the order of _______________ ("Lender"),  at such places and times and under the terms and conditions set forth below,  the principal amount of this Convertible Promissory Note (this "Note")  set forth above, together with interest thereon and any other amounts set forth  herein.

1.       Principal Payments. The entire principal balance of this Note shall  be due and payable on March 31, 2004 (the "Maturity Date"). 

2.                   Interest Rate and Payment.  The outstanding principal balance of this Note shall accrue interest at the  rate of ten percent (10%) per annum. Accrued interest under this Note shall  be due and payable on the Maturity Date.

3.       Prepayment. In light of the conversion feature of this Note and to protect  Lender's right of conversion hereunder, Borrower shall not have the right to  prepay the outstanding principal balance of this Note or accrued interest thereon,  in whole or in part, prior to the Maturity Date without the prior written consent  of Lender; provided, however, that Borrower may prepay such principal balance  or accrued interest, in whole only, prior to the Maturity Date without such  consent if Borrower (i) gives Lender twenty (20) days prior written notice of  such prepayment and (ii) together with and at the time of such prepayment, pays  Lender a fee equal to twenty percent (20%) of the outstanding principal balance  as compensation to Lender for the loss of its continued conversion rights (which  fee Lender shall have the right, at its option, to convert pursuant to Section  9 below in lieu of payment thereof in the same manner as principal, interest  or other amounts payable under this Note). The parties acknowledge and agree  that the damages suffered by Lender in the event of the loss of its continued  conversion right is difficult to determine and that the parties have set such  fee as liquidated damages in an amount that they believe reasonably estimates  such damages.

4.       Collection Costs Borne by Borrower. Borrower agrees to pay all costs  and expenses, including without limitation reasonable attorneys' fees, incurred  by Lender in enforcing the terms of this Note or in collecting this Note, including  without limitation in any out-of-court workout, any court action, any appeal  or any bankruptcy proceeding.

5.       Late Charge. If any payment  of principal or interest under this Note shall not be made within five (5) days  after the due date, this Note shall bear interest (after as well as before judgment)  at a rate of five percent (5%) per annum above the rate of interest which would  otherwise have been payable under this Note or the maximum rate of interest  permitted to be charged by applicable law, whichever is less.  

6.       **Governing Law. Consistent with the governing law and venue provisions  of the Intercreditor Agreement (as defined below) this Note shall be governed  by and construed and interpreted in accordance with the law of the State of  Washington, without regard to that state's conflict of laws principles. All  disputes between the parties hereto, whether sounding in contract, tort, equity  or otherwise, shall be resolved only by state and federal courts located in  Spokane, Washington, and the courts to which an appeal therefrom may be taken.  All parties hereto waive any objections to the location of the above referenced  courts, including but not limited to any objection based on lack of jurisdiction,  improper venue or forum non-convenes. Notwithstanding the foregoing, any party  obtaining any order or judgment in any of the above referenced courts may bring  an action in a court in another jurisdiction in order to enforce such order  or judgment.**

7.       Intended Beneficiaries. Nothing in this Note, express or implied, is  intended to confer upon any party other than the parties hereto or their respective  permitted successors and assigns any rights, remedies, obligations or liabilities  under or by reason of this Note, except as expressly provided in this Note.

8.       Severability. If any part of this Note is determined to be illegal or  unenforceable, all other parts shall remain in full force and effect.

9.       Conversion of Note. In the event Borrower completes any debt or equity  financing after the date hereof, then at the option of Lender, the outstanding  principal balance of this Note and all accrued interest, fees or other amounts  payable under this Note, at any time prior to payment thereof, may be converted,  in whole or in part, into the debt or equity securities or instruments issued  in any such financing on the best terms offered to any lender or investor in  such financing, but with a twenty percent (20%) discount in price from such  best terms. In the event Borrower completes more than one debt or equity financing  after the date hereof, then such right of conversion shall apply to each such  financing. 

 Borrower  shall give Lender prompt written notice of each such financing. Lender may  exercise such conversion right by providing written notice of exercise to Borrower,  together with delivery of this Note to the Company for surrender. In the event  of any stock splits, stock dividends, recapitalizations or similar events after  the date of such financing but prior to the date of conversion, then the number  and kind of debt or equity securities issuable upon conversion shall be appropriately  adjusted. Such conversion shall be effective immediately upon giving such notice  and as of such date Borrower shall be treated for all purposes as the holder  of the shares issuable upon conversion. 

 As  soon as practicable after such conversion, Borrower, at its expense, shall cause  to be issued in the name of and delivered to Lender the debt or equity securities  or instruments to which Lender shall be entitled upon such conversion. Upon  a partial conversion of this Note, this Note shall be surrendered by Lender  and replaced with a new Note of like tenor for the remaining balance of the  Note surrendered. The new Note shall be delivered to Lender as soon as practicable  after such partial conversion. No fractional shares of stock shall be issued  upon such conversion. If upon such conversion a fractional share results, the  number of shares to be issued upon conversion shall be rounded upwards or downwards  to the nearest whole number. 

10.  Representations of Lender. By acceptance of this  Note, Lender represents to Borrower that Lender is an "accredited investor"  as such term is defined in Regulation D promulgated under the Securities Act  of 1933, as amended (the "Securities Act"), and that this Note and any securities  issuable upon any conversion thereof are being acquired for Lender's own account  and for the purpose of investment and not with a view to, or for sale in connection  with, the distribution of the same, nor with any present intention of distributing  or selling the same. 

11.  No Shareholder Rights. This Note shall not entitle  Lender to any voting rights or any other rights as a shareholder of Borrower  until any conversion of this Note.

12.  Security. This Note shall be secured by a junior  security interest in tangible and intangible personal property of Borrower pursuant  to a Security Agreement being executed by Borrower (the "Security Agreement")  and a Stock Pledge Agreement being executed by the Borrower. 

13.  Defaults. Each of the following shall constitute  a default under this Note (a "Default"):

(a)       Failure by Borrower to make any payment due under this Note;  any representation or warranty by Borrower under this Note or any other agreement  with Lender shall be false or inaccurate in any material respect when made;  or failure by Borrower to comply with the provisions of any other covenant,  obligation or term of this Note or any other agreement with the Lender;

(b)      Failure by Borrower to pay when due any other indebtedness  or obligations in excess of fifty thousand dollars ($50,000) which shall continue  after the applicable grace period, if any, specified in the agreement relating  to such indebtedness or obligation; failure by Borrower to comply with the provisions  of any other covenant, obligation or term of any agreement relating to such  indebtedness or obligation which shall continue after the applicable grace period,  if any, specified in such agreement if the effect of such failure is to accelerate,  or permit the acceleration of, the due date of such indebtedness or obligation;  or any such indebtedness or obligation shall be declared to be due and payable,  or required to be prepaid, prior to the stated maturity date thereof; provided,  however, that the existing defaults listed in the Schedule of Exceptions attached  hereto shall not constitute a Default so long as any creditor involved in such  defaults takes no further actions and exercises no further remedies to collect  on the obligations involved and the Company otherwise remains in compliance  with all other provisions of this Note and all other agreements with Lender;

(c)       Borrower makes a general assignment for the benefit of creditors,  files a petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions  to any court for a receiver or trustee for Borrower or any substantial part  of its property, commences any proceeding relating to the arrangement, readjustment,  reorganization or liquidation under any bankruptcy or similar laws; there is  commenced against Borrower any such proceedings which remain undismissed for  a period of sixty (60) days; or Borrower by any act indicates its consent or  acquiescence in any such proceeding or the appointment of any such trustee or  receiver; or

(d) Lender shall fail  to have a valid perfected security interest in any of the collateral covered  by the Security Agreement , a valid security interest in the any of the collateral  covered by the Stock Pledge Agreement or a perfected security interest in any  of the collateral covered by the Stock Pledge Agreement after delivery thereof  to Lender or its agent or designee.

14.  Acceleration; No Exclusive Remedy. Upon any Default  set forth in Section 13(c) above, all principal, interest and other amounts  owing hereunder automatically shall become immediately due and payable. Upon  any other Default, Lender may declare, by written notice to Borrower, that all  principal, accrued interest and other amounts owing hereunder shall be immediately  due and payable to Lender. Notwithstanding anything to the contrary herein,  Lender shall be entitled to any and all remedies available to it in the event  of a Default hereunder and Lender's pursuance of any particular remedy shall  not preclude Lender from seeking any other remedies available to it at law or  in equity.

15.  Notices. Any notice under this Note shall be given  in writing and shall be addressed to the party to be notified at the address  indicated below, or at such other address as such party may designate by written  notice to the other party. 

  Aura Systems, Inc.    2335 Alaska Avenue   El Segundo, CA 90245   Attn: Neal Meehan    Fax: 310-643-8719

  [Lender Contact Info]

16.  Intercreditor  Agreement. The terms and conditions of this  Note shall also be governed by and subject to the terms and conditions of an  Intercreditor Agreement dated as of the date hereof (the "Intercreditor  Agreement") among the Borrower, Lender, Koyah Leverage Partners, L.P.,  Koyah Partners, L.P. and the other parties named therein.

17.  Miscellaneous. 

(a)       No delay or omission on the part of Lender in exercising  any right under this Note shall operate as a waiver of such right or of any  other right under this Note.

(b)      Borrower hereby waives presentation for payment, demand,  notice of demand and of dishonor and non-payment of this Note, protest and notice  of protest, diligence in collecting, and the bringing of suit against any other  party. The pleading of any statute of limitations as a defense to any demand  against the Borrower, any endorsers, guarantors and sureties of this Note is  expressly waived by each and all of such parties to the extent permitted by  law. Time is of the essence under this Note.

(c)       Any payment hereunder shall first be applied to any enforcement  or collections costs, then against accrued interest or late charges hereunder  and then against the outstanding principal balance hereof. 

(d)      All payments under this Note shall be made without set-off,  deduction or counterclaim.

(e) Borrower and Lender  intend to comply at all times with applicable usury laws. If at any time such  laws would render usurious any amounts due under this Note under applicable  law, then it is Borrower's and Lender's express intention that Borrower not  be required to pay interest on this Note at a rate in excess of the maximum  lawful rate, that the provisions of this section shall control over all other  provisions of this Note which may be in apparent conflict hereunder, that such  excess amount shall be immediately credited to the principal balance of this  Note, and the provisions hereof shall immediately be reformed and the amounts  thereafter decreased, so as to comply with the then applicable usury law, but  so as to permit the recovery of the fullest amount otherwise due under this  Note.

 (f)   This Note may be transferred or assigned by Lender in whole or in part  if, on Borrower's reasonable request, Lender provides an opinion of counsel  reasonably satisfactory to Borrower that such transfer does not require registration  under the Securities Act of 1933, as amended, and applicable state securities  law, except that this Note may be transferred by a Lender which is a partnership  or limited liability company to a partner, former partner, member, former member  or other affiliate of such partner or limited liability company, as the case  may be, if (i) the transferee agrees in writing to be subject to the terms  of this Note and (ii) Lender delivers notice of such transfer to Borrower.  Any rights and obligations of Borrower and Lender under this Note shall be binding  upon and inure to the benefit of their respective permitted successors, assigns,  heirs, administrators and transferees. 

 (g)   If at any time the number of authorized but unissued shares of Borrower  shall not be sufficient to effect the conversion of this Note, Borrower will  take all such corporate action as may be necessary to increase its authorized  but unissued shares to such number of shares as shall be sufficient for such  purpose. The parties acknowledge that Borrower currently does not have any  authorized but unissued shares of its common stock available for issuance and  Borrower hereby agrees to use its best efforts to take action to call a shareholder  meeting and increase its authorized but unissued common stock as soon as practicable.  

 (h)   Any term of this Note may be amended and the observance of any term of  this Note may be waived (either generally or in a particular instance and either  retroactively or prospectively) only with the written consent of Borrower and  Lender in the case of an amendment and only with the written consent of the  waiving party in the case of a waiver. 

 (i)   All shares issued upon conversion of this Note shall be validly issued,  fully paid and non-assessable, and Borrower shall pay all taxes and other governmental  charges that may be imposed in respect of the issue or delivery thereof. Borrower  shall not be required to pay any transfer tax or other similar charge imposed  in connection with any transfer involved in the issuance of any certificate  for shares in any name other than that of Lender. 

 (j)   Borrower will not, by amendment of its Certificate of Incorporation  or Bylaws, or through reorganization, consolidation, merger, dissolution, issue  or sale of securities, sale of assets or any other voluntary action, avoid or  seek to avoid the observance or performance of any of the terms of this Note,  but will at all times in good faith assist in the carrying out of all such terms  and in the taking of all such action as may be necessary or appropriate in order  to protect the rights of Lender under this Note against impairment. Without  limiting the generality of the foregoing, Borrower (i) will not increase  the par value of any shares issuable upon conversion of this Note above the  amount payable therefore upon such exercise, and (ii) will take all such  action as may be necessary or appropriate in order that Borrower may validly  and legally issue fully paid and non-assessable shares upon conversion of this  Note. 

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**ORAL AGREEMENTS  OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING  REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.**

  AURA SYSTEMS, INC.

  By:

  Name:

  Title:

**SCHEDULE  OF EXCEPTIONS**

1.  Shareholder  litigation (Barovich/Chiau et al) judgment settlement for approximately $789,000  is in default. In April 2003, this creditor served Writs of Execution against  the Company's bank accounts but has taken no further action. 

2.  Convertible  notes payable, issued in August - October 2002 for a total principal amount  of $625,000 are in default.