SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    Form 10-Q


                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

\For the Quarter Ended November 30, 2001          Commission File Number 0-17249



                               AURA SYSTEMS, INC.
             (Exact name of Registrant as specified in its charter)

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

                                2335 Alaska Ave.
                          El Segundo, California 90245
                    (Address of principal executive offices)

Registrant's telephone number, including area code:           (310) 643-5300

Former name, former address and former fiscal year, if changed since last
report: None


     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing   requirements   for  the  past  90  days:   YES  X  NO

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.

          Class                        Outstanding at January 14, 2002

 Common Stock, par value                     350,410,344 Shares
     $.005 per share
<PAGE>


<TABLE>
<CAPTION>
                       AURA SYSTEMS, INC. AND SUBSIDIARIES

                                      INDEX


                                                                                                        Page No.
PART I.      FINANCIAL INFORMATION

         ITEM 1.     Financial Statements

<S>                                                                                                         <C>
                     Statement Regarding Financial Information                                              2

                     Condensed Consolidated Balance Sheets as of
                     November 30, 2001 and February 28, 2001                                                3

                     Condensed Consolidated Statement of Operations for the Three Months and Nine
                     Months Ended November 30, 2001 and 2000                                                4

                     Condensed Consolidated Statements of Cash Flows for the
                     Nine Months Ended November 30, 2001 and 2000                                           5

                     Notes to Condensed Consolidated Financial Statements                                   6

         ITEM 2.     Management's Discussion and Analysis of Financial Condition and Results of
                     Operations                                                                             8


PART II. OTHER INFORMATION

         ITEM 1.     Legal Proceedings                                                                      11

         ITEM 2.     Changes in Securities                                                                  11

         ITEM 6.     Exhibits and Reports on Form 8-K                                                       11

SIGNATURES                                                                                                  12
</TABLE>
<PAGE>


                       AURA SYSTEMS, INC. AND SUBSIDIARIES

                         QUARTER ENDED NOVEMBER 30, 2001

                          PART I. FINANCIAL INFORMATION

       The  financial  statements  included  herein  have been  prepared by Aura
Systems,  Inc.  (the  "Company"),  without  audit,  pursuant  to the  rules  and
regulations  of  the  Securities  and  Exchange   Commission  (the  "SEC").   As
contemplated  by the SEC under Rule 10-01 of  Regulation  S-X, the  accompanying
financial  statements  and  footnotes  have been  condensed and therefore do not
contain all disclosures  required by generally accepted  accounting  principles.
However,  the Company  believes  that the  disclosures  are adequate to make the
information presented not misleading.  These financial statements should be read
in conjunction  with the financial  statements and notes thereto included in the
Company's Form 10-K/A for the year ended February 28, 2001 as filed with the SEC
(file number 0-17249) on August 14, 2001.
<PAGE>


<TABLE>
<CAPTION>
                       AURA SYSTEMS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

                                                                                November 30,              February 28,
                                                                                 2001                      2001*
                                                                             -------------            ---------------
ASSETS

Current assets:
<S>                                                                           <C>                           <C>
     Cash and equivalents                                                     $        33,975               $ 1,265,912
     Receivables-net                                                                  889,518                 1,062,041
     Inventories                                                                   10,780,094                 9,756,399
     Notes receivable                                                               1,415,462                 1,405,857
     Other current assets                                                             571,116                   452,940
                                                                              ---------------           ---------------

Total current assets                                                               13,690,165                13,943,149
                                                                              ---------------           ---------------

     Property and equipment, at cost                                               39,322,465                41,289,011
     Less accumulated depreciation
         and amortization                                                         (23,000,369)              (20,966,852)
                                                                              ----------------          ----------------

Net property and equipment                                                         16,322,096                20,322,159

     Long-term investments                                                          1,883,835                 1,883,835
     Long-term receivables                                                          2,390,814                 2,516,139
     Patents and trademarks- net                                                    3,139,016                 3,370,263
     Other assets                                                                   3,277,327                 3,242,498
                                                                              ---------------           ---------------
       Total                                                                  $    40,703,253           $    45,278,043
                                                                               ==============           ===============

Liabilities and Stockholder's Equity

Current liabilities:
     Notes payable                                                            $     5,545,116           $    14,300,594
     Accounts payable                                                               3,406,978                 3,463,146
     Accrued expenses                                                               1,271,006                 1,284,754
                                                                              ---------------           ---------------

Total current liabilities                                                          10,223,100                19,048,494
                                                                              ---------------              ------------

Notes payable and other liabilities                                                20,866,232                24,184,514
                                                                              ---------------           ---------------

COMMITMENTS AND CONTINGENCIES

Stockholders' equity
   Common stock par value $.005 per share and        additional   paid
in capital. Issued and outstanding  343,402,688     and    291,089,582
shares respectively.                                                              281,591,836               264,787,864
   Accumulated deficit                                                           (271,977,915)             (262,742,829)
                                                                             -----------------          ----------------

       Total stockholders' equity                                                   9,613,921                 2,045,035
                                                                                -------------           ---------------
       Total                                                                     $ 40,703,253           $    45,278,043
                                                                                 ============           ===============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

*Amounts  at  February  28,  2001  have  been  derived  from  audited  financial
statements


<PAGE>


<TABLE>
<CAPTION>

                       AURA SYSTEMS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             THREE AND NINE MONTHS ENDED NOVEMBER 30, 2001 AND 2000
                                   (Unaudited)

                                                                   Three Months                             Nine Months

                                                               2001              2000                 2001                2000
                                                               ----              ----                 ----                ----

<S>                                                     <C>                <C>                  <C>                  <C>
Net Revenues                                            $     306,126      $     501,803        $   4,043,968        $   1,270,209

     Cost of goods                                            168,874            224,756            1,922,671              744,239
                                                          -----------        -----------            ---------      ---------------

Gross Profit                                                  137,252            277,047            2,121,297              525,970

Expenses
     Engineering expenses                                   1,727,078          2,157,907            6,280,076            6,708,843
     Selling, general and administrative                    2,113,016          2,307,128            7,675,279            9,055,140
     Research and development                                 168,385            246,384             679,594               332,335
                                                        -------------      -------------    ---      -------        --------------

     Total costs and expenses                               4,008,479          4,711,419           14,634,949           16,096,318
                                                       --------------     --------------    ---    ----------       --------------

Loss from operations                                       (3,871,227)        (4,434,372)         (12,513,652)         (15,570,348)

Other (income) and expense
     (Gain) loss on disposition of assets                      65,823                 --             (333,366)          (1,756,746)
     Other (income) expense                                    69,670           (207,185)            (118,832)            (580,638)
     Legal settlements                                     (2,000,000)           367,872           (2,750,000)             720,834
     Interest expense-net                                     620,045            557,960            1,455,820            1,616,982
                                                     ----------------   ----------------            ---------    -----------------

Loss before extraordinary item                             (2,626,765)        (5,153,019)         (10,767,274)        (15,570,780)

Extraordinary item
     Gain on extinguishment of debt obligations, net
     of income taxes of $0                                 1,532,188             500,000            1,532,188           1,581,175
                                                           ---------             -------            ---------           ---------

Net loss                                              $   (1,094,577)     $   (4,653,019)         $(9,235,086)       $(13,989,605)
                                                       ===============    ===============        =============       =============

Net loss per common share - basic                     $         (.003)       $       (.02)   $            (.03)    $          (.06)
                                                     ===============    =================   ==================    ================

Loss from continuing operations per share            $          (.008)             (.02)            $   (.035)             $(.06)
                                                     =================             =====            ==========   ================

Extraordinary income per share                       $            .005               --     $             .005         $        --
                                                     =================             =====    ==================         ===========

Weighted average shares used
to compute net loss per share - basic                    334,634,968         274,403,680           317,626,223         253,849,598
                                                         ===========         ===========           ===========    ================
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


<PAGE>

<TABLE>
<CAPTION>

                       AURA SYSTEMS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED NOVEMBER 30, 2001 AND 2000
                                   (Unaudited)


                                                                                2001                        2000
                                                                         ------------------          -----------
<S>                                                                             <C>              <C>
      Net cash (used) in operations                                            $(7,038,896)     $         (9,012,671)
                                                                                 -----------               -----------

      Cash flows from investing activities:

           Proceeds from sale of assets                                            399,189                     64,311
           Additions to property and equipment                                    (228,383)                   (17,123)
           Note receivable                                                         115,720                  1,363,551
                                                                           ---------------            ---------------

           Net cash provided by (used) in investing
               activities                                                          286,526                  1,410,739

      Cash flows from financing activities:

           Repayment on line of credit                                          (1,984,000)                  (400,000)
           Repayment of debt                                                     (3,182,655)               (1,718,977)
           Net proceeds from sale of stock                                       10,659,313                 9,884,315
           Proceeds from exercise of stock options                                      775                         --
           Proceeds from exercise of warrants                                        27,000                         --
                                                                                 ---- ------           ----------------

           Net cash provided  (used) by financing
             activities:                                                          5,520,433                  7,765,338
                                                                                  ---------                  ---------

      Net increase (decrease) in cash and cash equivalents
                                                                                 (1,231,937)                   163,406

      Cash and cash equivalents at beginning of year                              1,265,912                    260,437
                                                                            ---------------            ---------------

      Cash and cash equivalents at end of period                           $         33,975           $        423,843
                                                                            ===============            ===============

      Supplemental  disclosures  of cash flow  information
             Cash paid during the period for:
                    Interest                                                     $1,422,542           $      1,519,221
                    Income Tax                                                            0                          0
                                                                             ==============             ==============
</TABLE>


Supplemental disclosure of noncash investing and financing activities:

     In the nine months ended  November 30, 2001,  $413,009 of notes payable and
accrued  interest were  converted  into 750,927  shares of the Company's  common
stock.  The Company  also issued  14,868,866  shares of common  stock to satisfy
liabilities in the amount of  $5,778,786.  In the nine months ended November 30,
2000,  $2,363,019 of notes  payable and accrued  interest  were  converted  into
5,648,917 shares of the Company's  common stock.  The Company issued  12,042,627
shares of common stock to satisfy liabilities of $6,509,189.  Effective March 1,
2000, the Company sold the assets of its Ceramics subsidiary for $3.5 million in
the form of a note  receivable of $2.5 million,  a cash down payment of $64,311,
included above,  and the payment of $800,000 to third parties in satisfaction of
liabilities.

     See accompanying notes to condensed consolidated financial statements.


<PAGE>


                       AURA SYSTEMS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1)   Basis of Presentation

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

     In the  opinion of  management,  the  accompanying  condensed  consolidated
financial   statements  reflect  all  adjustments  (which  include  only  normal
recurring  adjustments) and  reclassifications  for  comparability  necessary to
present fairly the financial position of Aura Systems, Inc. at November 30, 2001
and the results of its  operations  for the three and nine months ended November
30, 2001 and 2000.

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  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.

     In  connection  with the audit for the year ended  February  28,  2001,  we
received  a report  from  our  independent  certified  public  accountants  that
includes  an  explanatory  paragraph  describing  uncertainty  in our ability to
continue as a going concern.  Our  consolidated  financial  statements  included
herein contemplate our ability to continue as a going concern and as such do not
include any adjustments that might result from this uncertainty.


2)   Capital

     In the quarter ended November 30, 2001, common stock outstanding  increased
by a total of  17,334,687  shares  from the  quarter  ended  August 31,  2001 as
follows:  4,000,000  shares  were  sold for gross  proceeds  of  $1,520,000,  an
additional  280,000  shares were issued as finders fees for private  placements,
options were exercised for 2,500 shares resulting in proceeds of $775, 4,103,646
shares  were issued to satisfy  liabilities  in the amount of  $1,559,385  and a
total of 8,948,541 shares were issued as a result of repricing agreements.


     3) Inventories

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

<TABLE>
<CAPTION>
                                                                             November 30,             February 28,
                                                                                 2001                     2001
                                                                                 ----                     ----
<S>                                                                       <C>                        <C>
         Raw materials                                                    $     4,241,066            $    3,516,826
         Finished goods                                                         6,830,432                 6,530,977
         Reserved for potential product obsolescence                             (291,404)                 (291,404)
                                                                            --------------                 ---------
                                                                          $    10,780,094            $    9,756,399
                                                                           ==============             =============
</TABLE>

     Inventories  consist  primarily of components  and completed  units for the
Company's  AuraGen  product.  The reserve  for  potential  product  obsolescence
consists solely of parts for the Company's actuator products.

4)   Significant Customers

     In the nine months  ended  November  30,  2001,  the Company  sold  AuraGen
related products to five (5) significant  customers for a total of approximately
$3.3 million or 83% of net revenues.  None of these  customers are related to or
affiliated with the Company.



<PAGE>


5)   Recently issued accounting pronouncements

     In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
Business  Combinations,  and SFAS No. 142, Goodwill and Other Intangible Assets,
effective  for fiscal years  beginning  after  December 15, 2001.  Under the new
rules,  goodwill and intangible  assets deemed to have indefinite  lives will no
longer be amortized but will be subject to annual impairment tests in accordance
with the statements.  Other intangible assets will continue to be amortized over
their useful lives. The Company has not determined if SFAS Nos. 141 and 142 will
have a significant impact on the Company's financial statements when adopted.

     In June  2001,  the  FASB  issued  SFAS  No.  143,  "Accounting  for  Asset
Retirement  Obligations." This statement applies to legal obligations associated
with the  retirement  of  long-lived  assets that  result from the  acquisition,
construction,  development,  and/or the normal  operation of long-lived  assets,
except for certain  obligations of lessees.  This statement is not applicable to
the Company.

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived Assets." This statement addresses financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
This  statement  supercedes  SFAS No. 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets  and  for  Long-Lived  Assets  to be  Disposed  of,"  and the
accounting and reporting  provisions of Accounting  Principles Board Opinion No.
30,  "Reporting the Results of Operations - Reporting the Effects of Disposal of
a Segment of a Business,  and Extraordinary,  Unusual and Infrequently Occurring
Events and  Transactions,"  for the  disposal  of a segment of a  business,  and
amends Accounting Research Bulletin No. 51, "Consolidated Financial Statements,"
to eliminate the exception to  consolidation  for a subsidiary for which control
is likely to be temporary.  The Company does not expect adoption of SFAS No. 144
to have a material  impact,  if any,  on its  financial  position  or results of
operations.

6)   Contingencies

     The Company is engaged in various legal proceedings. See the Company's Form
10-K/A,  Item 3 - Legal  Proceedings,  for the year ended  February  28, 2001 as
filed with the SEC (file number 0-17249) on August 14, 2001 for a description of
the  legal  proceedings.   To  the  extent  that  judgment  has  been  rendered,
appropriate provision has been made in the financial statements.

     Securities and Exchange Commission

     The  Company  has been  informed by the Staff of the SEC that it intends to
recommend that the Commission bring a civil action against Aura,  NewCom Inc. (a
former  subsidiary of Aura),  Zvi Kurtzman,  Steven Veen and Gerald Papazian for
violations of the antifraud and books and records  provisions of the  securities
laws. This grew out of an investigation into the Company's financial  statements
for various  transactions  during  fiscal years 1996 through  1999.  The Company
originally  disclosed the  investigation  by press release in January 1999.  The
Staff  advised  the  Company  that it would  recommend  that the SEC seek  civil
penalties and enjoin the companies and the individuals  from future  violations.
In  addition,  the SEC Staff would  recommend  that the SEC impose  director and
officer  bars  against  Messrs.  Kurtzman and Veen and a bar against Mr. Veen to
prohibit his practicing as an accountant before the SEC. The Company is informed
that in order to avoid potential  lengthy and costly  litigation the individuals
have agreed to propose to settle with the SEC without  admitting  or denying any
of the Staff's  allegations.  The Company has engaged in conversations  with the
Staff of the SEC regarding  settlement of the matter, but no agreements have yet
been reached. Although Aura believes that it will reach a settlement in a manner
that will not have a  material  adverse  effect on the  Company's  business,  it
cannot predict with  certainty  when or if such a settlement  will occur or what
the actual  effects of such a  settlement  would be. The Audit  Committee of the
Board  will  conduct a full  review of the  Company's  accounting  controls  and
procedures.


<PAGE>



     Excalibur v. Aura (Settled)

     On November 12, 1999, a lawsuit was filed by three  investors  against Aura
and others, in Los Angeles Superior Court entitled Excalibur Limited Partnership
v. Aura  Systems,  Inc.  (Case No.  BC220054),  arising out of two NewCom,  Inc.
financings  consummated in December 1998. The NewCom financings  comprised (1) a
$3 million investment into NewCom in exchange for NewCom Common Stock,  Warrants
for NewCom  Common Stock,  and certain  "Repricing  Rights"  which  entitled the
investors to receive  additional shares under certain  circumstances,  and (2) a
loan to NewCom of $1 million in exchange for a  Promissory  Note and Warrants to
purchase  NewCom Common Stock.  The Plaintiffs  alleged in their  complaint that
Aura breached its  agreements  and sought damages of not less than $4.5 million.
Aura alleged  cross-claims  against the  Plaintiffs,  contending that Plaintiffs
violated their  contractual  obligations to Aura by engaging in unlawful  "short
sales" of NewCom stock. Aura also asserted claims against Plaintiffs for damages
based on alleged breaches of Plaintiffs'  contractual obligations to Aura and on
Plaintiffs' alleged misrepresentations to Aura

     On  October  2,  2001,  the  parties  entered  into a General  Release  and
Settlement  Agreement  ("Settlement"),  finally  resolving the entire matter. As
part of the  Settlement,  Aura  received  $2,000,000.  The  Plaintiffs  received
repricing shares sought as part of its underlying contract claims.

     Kerry Morgan, et. al. vs. NewCom, Inc. (Settled)

     In December  1999,  a lawsuit was filed  against  NewCom,  Inc.  which,  as
currently  amended also includes Aura Systems,  Inc.,  Steven Veen, Sultan Khan,
Asif Khan and Zvi Kurtzman,  Deutsche  Financial  Services,  Inc., Best Buy Co.,
Inc.,  Circuit City Stores,  Inc. a/k/a Compusa,  the Computer Super Store,  and
Staples,  Inc., in the Circuit Court for the County of Wayne  Michigan (Case No.
98-838563 CP). The plaintiff's sixth amended  complaint  purported to be a class
action on behalf of a class  alleged  to consist of  approximately  two  hundred
thousand persons who purchased a NewCom Inc., a/k/a Atlas  Peripherals  computer
product  from Best Buy Co.,  Inc.,  Circuit City Stores,  Inc.,  Computer  City,
and/or  Staples,  Inc. The complaint  alleged that  plaintiffs did not receive a
rebate of between twenty to fifty dollars on NewCom products,  as advertised and
promoted by the above mass retailer.  Plaintiffs  further  alleged that the mass
retailers without any  justification,  failed to pay NewCom for product received
and sold. The plaintiffs sought, among other remedies, to recover all or part of
the amount that the retailers failed to pay. Circuit City and Deutsche Financial
Services filed cross-complaints. No date for trial had been set. In August 2001,
based upon  discussions  of the parties under court  supervision,  all litigants
entered into a settlement  Memorandum of  Understanding  which limited the total
Aura defendants portion to $400,000,  payable in monthly installments of $10,000
to the Plaintiffs.  The parties have since entered into a definitive  Settlement
Agreement incorporating the terms of the Memorandum,  which received preliminary
approval of the trial court in December 2001.

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

     Overview

     This Report may contain forward-looking statements, which involve risks and
uncertainties.  The  Company's  actual  results may differ  materially  from the
results  discussed in such  statements.  Certain factors could also cause actual
results  to differ  materially  from  those  discussed  in such  forward-looking
statements,  including  factors  discussed in the Company's  Form 10-K/A for the
period ended February 28, 2001, and factors discussed in this Report.

     Results of Operations

     Net revenue for the three and nine month  periods  ended  November 30, 2001
decreased by $195,677 and  increased by  $2,773,759  to $306,126 and  $4,043,968
from the corresponding periods in the prior year.

     Cost of goods  for the  three  and nine  months  ended  November  30,  2001
decreased  by  $55,882  and  increased  by  $1,178,432  in  comparison  with the
corresponding  periods  in the prior year as a result of the change in the level
of sales.

     General and administrative  expenses decreased for the three and nine month
periods by $194,112 and $1,379,861 respectively, due primarily to a reduction in
legal   expenses  of   approximately   $785,000  and   accounting   expenses  of
approximately $235,000 during the nine month period.

     Included in engineering  expenses and selling,  general and  administrative
expenses for the three and nine months ended November 30, 2001, is  depreciation
and  amortization  of $1.7 million and $5.0 million,  respectively,  compared to
$1.7 million and $5.0 million in the prior year periods.

     Research and  development  costs  decreased for the three and increased for
the nine months ended  November 30, 2001 by $77,999 and $347,259,  respectively.
The  Company  has  recently  begun to  increase  its  research  and  development
activities  in order to expand its line of AuraGen  products  and expects  these
activities  and  expenses to continue  to grow as the  Company's  cash flow from
operations  allows the Company to develop more variations on the Company's basic
5KW AuraGen,  including,  but not limited to, the 6KW, 8KW,  10KW,  25KW,  AC/DC
versions,   inverter  and  battery  charger  versions,   and  marine  and  other
applications.

     In the nine months ended November 30, 2001, the Company  recorded a gain on
the  disposition  of assets of $333,366  compared to a gain of $1,756,746 in the
prior year which was recorded on the  disposition  of the assets of its ceramics
facility.

     Legal  settlements  for the three and nine months  ended  November 30, 2001
provided income of $2,000,000 and $2,750,000 respectively,  compared to expenses
of $367,872 and $720,834 in the prior year periods.

     Net interest  expense  increased for the three months and decreased for the
nine month periods by $62,085 and $161,162 compared to the prior year period.


     Liquidity and Capital Resources

     In the nine months ended November 30, 2001, cash decreased by $1,231,937 to
$33,975  from  $1,265,912  at February 28,  2001.  Accounts  payable and accrued
expenses decreased by $69,916 from February 28, 2001.  Inventories  increased by
$1,023,695 and accounts receivable decreased by $172,523.

     Cash flows used in  operations  in the nine months ended  November 30, 2001
decreased by $1,973,775  compared to the prior year period.  The decrease is due
primarily to the  decrease in the loss for the current  year  period,  partially
offset by a lower level of reduction in accounts  payable and accrued  expenses.
Working  capital was $3,467,065 at November 30, 2001 as compared to $(5,105,345)
at the 2001 fiscal year end,  with the current  ratio  improving  to 1.34:1 from
 .73:1.

     In the nine months  ended  November  30,  2001,  the Company  received  net
proceeds of  $10,687,088  from the sale of its common  stock and the exercise of
options and warrants.

     In the past the Company's cash flow generated from  operations has not been
sufficient  to  completely  fund its working  capital  needs.  Accordingly,  the
Company has also relied  upon  external  sources of  financing  to maintain  its
liquidity.  In order to finance its existing operations it will be necessary for
the Company to obtain  additional  working  capital from external  sources.  The
Company is presently seeking additional sources of financing, including debt and
equity financing.  No assurances can be provided that these funding sources will
be  available  at the times and in the amounts  required.  The  inability of the
Company to obtain  sufficient  working  capital at the times and in the  amounts
required  would have a material  adverse  effect on the  Company's  business and
operations.

     For additional information regarding the Company's financial condition, see
the Company's  Form 10-K/A,  Item 7 -  Management's  Discussion  and Analysis of
Financial  Condition and Results of Operations  for the year ended  February 28,
2001 as filed with the SEC (file number 0-17249) on August 14, 2001.

     Forward Looking Statements

     Except for the  historical  information  contained  in this  document,  the
matters  discussed  herein  are by their  nature  forward-looking.  Readers  are
cautioned that  forward-looking  statements or projections  made by the Company,
including those made in this document,  reflect the Company's  current plans and
expectations  based on  information  currently  available  to it,  and rely on a
number of  assumptions  and estimates  which could be  inaccurate  and which are
subject to risks and  uncertainties.  The Company wishes to caution readers that
important factors, in some cases, have affected, and in the future could affect,
the Company's actual results and could cause the Company's  actual  consolidated
results for the fourth quarter of Fiscal 2002, and beyond,  to differ materially
from those expressed in any forward-looking  statements made by, or on behalf of
the Company.

     Such  factors  include,  but are not  limited to, the  following  risks and
uncertainties:  changed  business  conditions in the industries  targeted by the
Company  and  the  overall  economy;   increased   marketing  and  manufacturing
competition and accompanying  price pressures;  and  inefficiencies,  delays and
increased  depreciation  costs in  connection  with the start of  production  in
potential new plants and expansions.

     Relating  to  the  above  are  potential  difficulties  or  delays  in  the
development,  production,  testing and marketing of products, including, but not
limited to, a failure to ship new products and  technologies  when  anticipated.
Manufacturing  economies  may fail to  develop  when  planned,  products  may be
defective and/or customers may fail to accept them in the marketplace.

     In  addition  to the  above,  risks and  contingencies  may exist as to the
amount and rate of growth in the Company's  selling,  general and administrative
expenses,  and the impact of unusual items resulting from the Company's  ongoing
evaluation  of its business  strategies,  asset  valuations  and  organizational
structures.  The possibility of a single large system order to the Company could
entail fluctuating results from quarter to quarter.

     The effects of, and changes in, trade,  monetary and fiscal policies,  laws
and  regulations,   other  activities  of  governments,   agencies  and  similar
organizations,  and social and economic conditions,  such as trade restrictions,
impose  yet  other  risks  and   uncertainties   with  respect  to  any  Company
forward-looking statements. The events of September 11, 2001 and the advent of a
war on terrorism may or may not impact sales in the mobile power  business.  The
cost and other effects of legal and administrative cases and proceedings present
another factor which may or may not have an impact.




<PAGE>



PART II - OTHER INFORMATION



ITEM 1        Legal Proceedings

              For information regarding pending legal proceedings, see Note 6 to
              the  Company's   Condensed   Consolidated   Financial   Statements
              appearing elsewhere herein.


ITEM 2 Changes in Securities

          During the third  quarter of Fiscal 2002,  4,000,000  shares of common
          stock were  issued in  connection  with a private  placement  to three
          investors,   resulting   in   aggregate   proceeds  of   approximately
          $1,520,000.

          During the third quarter of Fiscal 2002,  2,500 shares of common stock
          were issued upon exercise of outstanding options for proceeds of $775.

          During the third  quarter of Fiscal 2002,  8,948,541  shares of common
          stock were issued under repricing  agreements  with previously  issued
          shares.

          During the third  quarter  of Fiscal  2002,  280,000  shares of common
          stock were issued as finders fees for private placements.

          During the third quarter of Fiscal 2002,  4,103,646 shares were issued
          to satisfy liabilities in the amount of $1,559,385.

          All  of the  foregoing  transactions  were  exempt  from  registration
          pursuant to Section 4(2) of the Securities Act of 1933 as amended (the
          "Securities  Act") as these  offerings  were private  placements  to a
          limited number of "accredited investors" (as defined in the Securities
          Act).


ITEM 6 Exhibits and Reports on Form 8-K

              a)  Exhibits:
                  None

              b)  Reports On Form 8-K:
                  None





<PAGE>




                                   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:    January 15, 2002        By:  /s/Steven C. Veen
        ------------------      --------------------------------------------
                                                 Steven C. Veen
                                              Senior Vice President
                                             Chief Financial Officer
                                   (Principal Financial and Accounting Officer)
                                            (Duly Authorized Officer)