================================================================================




                       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 May 31, 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 July 9, 2001

         Common Stock, par value                     319,274,142 Shares
             $.005 per share




================================================================================



<PAGE>


                       AURA SYSTEMS, INC. AND SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>

                                                                                                      Page No.

PART I.       FINANCIAL INFORMATION

<S>                                                                                                   <C>
         ITEM 1.      Financial Statements

                      Statement Regarding Financial Information                                        1

                      Condensed Consolidated Balance Sheets as of
                      May 31, 2001 and February 28, 2001                                               2

                      Condensed Consolidated Statement of Operations for the three
                      Months Ended May 31, 2001 and 2000                                               3

                      Condensed Consolidated Statements of Cash Flows for the Three
                      Months Ended May 31, 2001 and 2000                                               4

                      Notes to Condensed Consolidated Financial Statements
                                                                                                       5

         ITEM 2.      Management's Discussion and Analysis of Financial Condition and
                      Results of Operations                                                            7

PART II.  OTHER INFORMATION

         ITEM 1.      Legal Proceedings                                                                10
         ITEM 2       Changes in securities                                                            10

         ITEM 6.      Exhibits and reports on Form 8-K                                                 10

SIGNATURES                                                                                             11
</TABLE>




<PAGE>





                       AURA SYSTEMS, INC. AND SUBSIDIARIES

                           QUARTER ENDED MAY 31, 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 for
the year ended February 28, 2001 as filed with the SEC (file number 0-17249).




<PAGE>


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

                                                                                   May 31,                  February 28,
Assets                                                                              2001                       2001      *
                                                                               -------------              ----------------

Current assets
<S>                                                                          <C>                        <C>
     Cash and equivalents                                                    $       1,216,114          $      1,265,912
     Receivables, net                                                                2,858,812                 1,062,041
     Inventories, net                                                                9,570,785                 9,756,399
     Notes receivable                                                                1,408,995                 1,405,857
     Other current assets                                                              736,025                   452,940
                                                                               ---------------          ----------------

       Total current assets                                                         15,790,731                13,943,149
                                                                               ---------------          ----------------

     Property and equipment, at cost                                                39,896,446                41,289,011
     Less accumulated depreciation
         and amortization                                                          (20,860,607)              (20,966,852)
                                                                              -----------------         -----------------

Net property and equipment                                                          19,035,839                20,322,159


     Long term investments                                                           1,883,835                 1,883,835
     Long term receivables                                                           2,475,194                 2,516,139
     Patents and trademarks, net                                                     3,293,181                 3,370,263
     Other assets                                                                    3,260,631                 3,242,498
                                                                               ---------------          ----------------
       Total                                                                 $      45,739,411         $      45,278,043
                                                                              ================          ================

Liabilities and Stockholders' Equity

Current liabilities:
     Notes payable                                                                   8,271,606         $      14,300,594
     Accounts payable                                                                3,006,455                 3,463,146
     Accrued expenses                                                                1,358,892                 1,284,754
                                                                              ----------------          ----------------

       Total current liabilities                                                    12,636,953                19,048,494
                                                                              ----------------          ----------------

Notes payable and other liabilities                                                 23,108,928                24,184,514

COMMITMENTS AND CONTINGENCIES

Stockholders' equity
   Common stock par value $.005 per share and
additional paid in capital.  Issued and outstanding
319,056,635 and 291,089,582 shares respectively.                                   274,842,057               264,787,864
   Cumulative currency translation adjustment (CTA)                                   (365,932)                 (365,932)
   Accumulated deficit                                                            (264,482,595)             (262,376,897)
                                                                              -----------------         -----------------

       Total stockholders' equity                                                    9,993,530                 2,045,035
                                                                              ----------------          ----------------
       Total                                                                 $      45,739,411         $      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
                  FOR THREE MONTHS ENDED MAY 31, 2001 AND 2000
                                   (Unaudited)


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

<S>                                                                     <C>                         <C>
Net Revenues                                                            $    2,874,569              $       381,521

     Cost of goods                                                           1,440,623                      302,321
                                                                        --------------               --------------

Gross Profit                                                                 1,433,946                       79,200
                                                                        --------------               --------------

Operating Expenses

     Overhead expenses                                                       2,301,285                    2,212,036
     Selling, general and administrative                                     2,254,461                    2,203,516
     Research and development                                                  271,806                       32,048
                                                                        --------------               --------------

     Total expenses                                                          4,827,552                    4,447,600
                                                                        --------------               --------------

Loss from operations                                                       (3,393,606)                  (4,368,400)
                                                                        --------------               --------------

Other (income) and expense

     (Gain) on sale of assets                                                 (399,189)                  (1,756,746)
     (Gain) on settlement with Deutsche Financial Services                  (1,150,000)                           -
     Other (income) expense                                                   (144,252)                    (563,401)
     Interest expense -net                                                     405,533                      562,013
                                                                         -------------               --------------

Net loss                                                                $   (2,105,698)             $    (2,610,266)
                                                                        ===============              ===============

Net loss per common share-basic                                         $         (.01)             $          (.01)
                                                                         ==============              ===============

Weighted average shares used
to compute net loss per share                                              300,710,598                   237,107,199
                                                                           ===========                   ===========
</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 THREE MONTHS ENDED MAY 31, 2001 AND 2000
                                   (Unaudited)

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

<S>                                                                  <C>                       <C>
Net cash (used) in operations                                        $     (4,174,294)         $        (29,064)
                                                                      ----------------          ----------------

Cash flows from investing activities:
      Proceeds from sale of assets                                            399,189                    64,311
      Payments from notes receivable                                           37,807                   905,092
      Purchase of property and equipment                                     (107,434)                        -
                                                                      ----------------          ---------------

     Net cash provided by investing
         activities                                                           329,562                   969,403
                                                                      ---------------           ---------------

Cash flows from financing activities:

     Repayment on line of credit                                           (1,300,000)                 (100,000)
      Proceeds from exercise of warrants                                       27,000                         -
     Repayment of debt                                                       (629,966)                 (978,601)
      Net proceeds from issuance of common stock                            5,697,900                   284,000
                                                                      ---------------           ---------------

     Net cash provided (used) by financing
     activities:                                                            3,794,934                  (794,601)
                                                                      ---------------           ----------------

Net increase (decrease) in cash and equivalents                               (49,798)                  145,738
Cash and equivalents at beginning of period                                 1,265,912                   260,437
                                                                      ---------------           ---------------

Cash and equivalents at end of period                                $      1,216,114          $        406,175
                                                                      ===============           ===============

Supplemental  disclosures of cash flow  information  Cash paid during the period
       for:
              Interest                                               $        447,291          $        303,817
              Income Tax                                                            0                         0
                                                                      ----------------          ----------------
</TABLE>



Supplemental disclosure of non-cash investing and financing activities:

In the quarter ended May 31, 2001,  10,851,381  shares of the  Company's  common
stock were issued in satisfaction  of $4,330,994 in liabilities.  In the quarter
ended May 31, 2000,  $1,000,000 of convertible debt was converted into 3,000,000
shares of the Company's  Common Stock. The Company also issued 462,963 shares of
its common  stock to satisfy a liability  in the amount of  $125,000.  Effective
March 1, 2000,  the Company  sold the assets of its  ceramics  facility 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 and an additional $100,000 payment on June 1, 2000.



     See accompanying notes to condensed consolidated financial statements.


<PAGE>


                       AURA SYSTEMS, INC. AND SUBSIDIARIES
                         NOTES TO CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS
                                  May 31, 2001
                                   (Unaudited)

1)   Basis of Presentation

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

     In  the  opinion  of  management,   the  accompanying  unaudited  condensed
consolidated  financial  statements  contain all adjustments (which include only
normal recurring adjustments) and reclassifications for comparability  necessary
to present fairly the financial  position of Aura Systems,  Inc. at May 31, 2001
and the results of its  operations and cash flows for the three months ended May
31, 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  amounts 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)   Capital

     In the quarter ended May 31, 2001, common stock outstanding  increased by a
total of  27,967,053  shares as follows:  16,329,958  shares were sold for gross
proceeds of  $5,709,400,  685,714 shares were issued as finders fees for private
placements, 100,000 shares were issued upon exercise of warrants for proceeds of
$27,000, and 10,851,381 shares were issued to satisfy liabilities of $4,330,994.
Included in the shares  issued to satisfy  liabilities  were  10,000,000  shares
valued at $4,000,000 issued in partial  satisfaction of the estimated  liability
of $5,500,000 to Deutsche  Financial  Services.  This transaction  resulted in a
gain of $1,150,000.

3)   Inventories

     Inventories,  stated at the lower of cost (first in,  first out) or market,
consist of the following:
<TABLE>
<CAPTION>
                                                                     May 31,              February 28,
                                                                       2001                   2001
                                                                       ----                   ----
<S>                                                              <C>                      <C>
Raw materials                                                    $     3,934,479          $    3,516,826
Finished goods                                                         5,927,710               6,530,977
Reserved for potential product obsolescence                             (291,404)               (291,404)
                                                                   --------------          -------------
                                                                 $     9,570,785          $    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 quarter  ended May 31, 2001,  the Company  sold AuraGen  related
products to five significant customers for a total of approximately $2.7 million
or 94% of net revenues. None of the above customers are related to or affiliated
with the Company.

5)       Contingencies

         The Company is engaged in various legal actions. See the Company's Form
10-K,  Item 3 Legal  Proceedings  for the year ended  February 28, 2001 as filed
with the SEC (file number 0-17249) for a discussion of the legal activities.  In
the case of a judgment or settlement,  appropriate  provisions have been made in
the financial statements.




<PAGE>


                      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 for the
period ended February 28, 2001, and factors discussed in this Report.

     Results of Operations

     Net revenues  for the quarter  ended May 31, 2001  increased to  $2,874,569
from  $381,521  in the  prior  year  quarter,  as the  Company's  customer  base
continued  to expand.  This  represents  an increase of over 750% from the prior
year comparable  quarter and an increase of over 230% from the fourth quarter of
the prior  fiscal  year.  While the  Company  expects  revenue  to  continue  to
increase,  no  assurances  can be  given  that  this  rate of  increase  will be
maintained.

     Cost of goods  increased from $302,321 in the quarter ended May 31, 2000 to
$1,440,623 in the quarter ended May 31, 2001, due to the increase in sales noted
above.

     Gross margins  increased to 49.9% from 20.8% in the prior year quarter as a
result of a combination of price increases and cost reductions for the Company's
products.  Margins  can vary  quarter to  quarter  as a result of  product  mix,
options and  accessories  purchased  and system  sales as opposed to  individual
component sales.

     Overhead  expenses  increased  slightly  by  $89,249 to  $2,301,285  in the
quarter ended May 31, 2001 from $2,212,036 in the prior year fiscal quarter.

     Selling,  general  and  administrative  expenses  increased  slightly  from
$2,203,516  in the quarter ended May 31, 2000 to $2,254,461 in the quarter ended
May 31, 2001.

     Research and development expense increased to $271,806 in the quarter ended
May 31, 2001 from  $32,048 in the  quarter  ended May 31,  2000,  as the Company
expanded its efforts in developing  variations  of the 5Kw AuraGen,  such as the
8.5 Kw, 10 Kw, 12.5 Kw, and the inverter option.

     Depreciation  and  amortization  for the quarter ended May 31, 2001 totaled
$1,477,199 compared to $1,648,760 in the prior year quarter.

     The  Company  recorded  a gain of  $399,189  on the sale of  assets  in the
quarter  ended May 31,  2001  compared  to a gain of  $1,756,746  on the sale of
assets of its ceramics facility in the quarter ended May 31, 2000.

     Other  income and  expense  for the  quarter  ended May 31,  2001  consists
primarily of  settlement of accounts  payable.  Other income and expense for the
quarter ended May 31, 2000 consists  primarily of settlement of accounts payable
of  approximately  $190,000,  reimbursement  of prior period  legal  expenses of
approximately  $180,000,  and  insurance  claims and  refunds  of  approximately
$90,000.

     Net  interest  expense for the quarter  ended May 31,  2001,  decreased  to
$405,533 from $562,013 in the prior year quarter due to the continuing reduction
in the debt level of the Company.

     Financial Position, Liquidity and Capital Resources

     At May 31, 2001,  the Company had cash of  $1,216,114 as compared to a cash
level of $1,265,912 at February 28, 2001.  Inventories at May 31, 2001 decreased
by $185,614 from February 28, 2001.

     Cash flows used in  operations  increased by  $4,145,230 as compared to the
fiscal quarter ended May 31, 2000. The Company's  working capital was $3,153,778
at May 31, 2001 as compared  to a negative  $5,105,345  at the fiscal year ended
February  28,  2001 while the current  ratio  improved to 1.25:1 at May 31, 2001
from .73:1 at February 28, 2001.

     In the fiscal  quarter  ended May 31,  2001,  the  Company  received  gross
proceeds  of  $5,709,400  from the sale of  16,329,958  shares of the  Company's
common stock.  The Company issued 100,000 shares of common stock pursuant to the
exercise  of  warrants,  resulting  in proceeds  of  $27,000.  The Company  also
satisfied liabilities of $4,330,994 through the issuance of 10,851,381 shares of
common stock.

     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 10K,  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).

     Forward Looking Statements

     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 second
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
contingencies:  changed business  conditions in the automotive  industry and the
overall  economy;   increased   marketing  and  manufacturing   competition  and
accompanying price pressures; inefficiencies,  delays and increased depreciation
costs in connection with the start of production in 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.
There might exist a difficulty in obtaining raw materials,  supplies,  power and
natural  resources and any other items needed for the  production of Company and
other products,  creating capacity  constraints,  limiting the amounts of orders
for certain  products and thereby  causing  effects on the Company's  ability to
ship its  products.  Manufacturing  economies  may fail to develop when planned,
products  may be  defective  and/or  customers  may fail to  accept  them in the
consumer 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.  Furthermore,  any  financing or other  financial  incentives by the
Company  under or  related to major  infrastructure  contracts  could  result in
increased  bad debt or other  expenses or  fluctuation  of profit  margins  from
period to period.  The focus by some of the  Company's  businesses  on any large
system order 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  constraints  on any  company  statements.  The cost and other
effects of legal and administrative  cases and proceedings impose 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 5 to
the Company's Condensed Financial  Consolidated  Financial  Statements appearing
elsewhere herein.

Item 2:  Changes in Securities

         During the first quarter of Fiscal 2002 the Company conducted a private
offering to a group of accredited investors for the sale of 16,329,958 shares of
common stock for total gross proceeds of approximately $5.7 million.

         During the first quarter of Fiscal 2002, an aggregate of 685,714 shares
of  common  stock  were  issued  to two  persons  as  finders  fees for  private
placements.

         During the first  quarter of Fiscal 2002,  10,851,381  shares of common
stock were issued to a small group of creditors for  approximately  $4.3 million
of liabilities.

         All  of  the  foregoing  transactions  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.

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:      July 11, 2001         By:   /s/Steven C. Veen
       -------------------       -----------------------------------------------
                                          Steven C. Veen
                                         Senior Vice President
                                        Chief Financial Officer
                               (Principal Financial and Accounting Officer
                                     and Duly Authorized Officer)