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 August 31, 2002 Commission File Number 000-17249

                               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 October 10, 2002

Common Stock, par value                                 417,170,294 Shares
$.005 per share

<TABLE>
<CAPTION>

                       AURA SYSTEMS, INC. AND SUBSIDIARIES

                                      INDEX

                                                                                                     Page No.
<S>           <C>                                                                                    <C>

PART I.       FINANCIAL INFORMATION

     ITEM 1.     Financial Statements

                     Statement Regarding Financial Information                                            2

                     Condensed Consolidated Balance Sheets as of August 31, 2002                          3

                     (unaudited) and February 28, 2002

                     Condensed Consolidated  Statements of Operations for the Three Months and Six        4
                     Months Ended August 31, 2002 (unaudited) and 2001 (unaudited)

                     Condensed  Consolidated  Statements  of Cash Flows for the Six  Months  Ended        5
                     August 31, 2002 (unaudited) and 2001 (unaudited)

                     Notes to Condensed Consolidated Financial Statements                                 6

         ITEM 2.     Management's Discussion and Analysis of Financial Condition and Results of           9
                     Operations

         ITEM 4.     Controls and Procedures                                                              14

PART II. OTHER INFORMATION

         ITEM 1.      Legal Proceedings                                                                   15

         ITEM 2.      Changes in Securities                                                               15

         ITEM 6.      Exhibits and Reports on Form 8-K                                                    15

SIGNATURES AND CERTIFICATIONS                                                                             16
</TABLE>





                       AURA SYSTEMS, INC. AND SUBSIDIARIES
                          QUARTER ENDED AUGUST 31, 2002


PART I.  FINANCIAL INFORMATION

The consolidated 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
consolidated   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  consolidated
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, 2002 as filed with the SEC (file number 000-17249).

                       AURA SYSTEMS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                August 31,
                                                                                   2002                 February 28,
Assets                                                                          (Unaudited)                  2002
                                                                                -----------             -------------
<S>                                                                            <C>                      <C>

Current assets:
Cash and equivalents                                                            $     169,304              $1,143,396
Receivables, net                                                                      180,288                  67,491
Inventories, net                                                                    4,743,625               5,006,424
Notes receivable                                                                      202,053                 168,792
Other current assets                                                                  533,837                 228,758
                                                                                -------------            ------------

       Total current assets                                                         5,829,107               6,614,861

Property and equipment, at cost                                                    16,163,742              16,309,956
Less accumulated depreciation and amortization                                     (8,504,505)             (5,935,475)
                                                                                -------------            ------------

Net property and equipment                                                          7,659,237              10,374,481

Non-current inventories                                                             4,500,000               4,500,000
Long term investments                                                               1,000,000               1,700,000
Long term receivables                                                               2,113,351               2,347,346
Patents and trademarks, net                                                         2,907,768               3,061,932
Other assets                                                                          150,645                 163,370
                                                                                -------------             -----------
      Total                                                                    $   24,160,108             $28,761,990
                                                                               ==============             ===========


Liabilities and Stockholder's Equity

Current liabilities:
Accounts payable                                                               $    2,599,502              $3,032,134
Notes payable                                                                       3,559,195               3,913,623
Convertible notes                                                                   1,000,000                     ---
Accrued expenses                                                                    2,711,474               2,181,657
                                                                                -------------             -----------

Total current liabilities                                                           9,870,171               9,127,414

Notes payable and other liabilities                                                 6,648,406               6,981,843

COMMITMENTS AND CONTINGENCIES
Stockholders' equity
    Common  stock par value  $.005  per share and  additional  paid in
    capital.  Issued and outstanding  413,140,294 shares at August 31,
    2002 and 387,690,068 shares at                                                304,973,495             300,332,457
    February 28, 2002.

    Accumulated deficit                                                          (297,331,964)          (287,679,724)
                                                                                -------------           -------------

       Total stockholders' equity                                                   7,641,531              12,652,733
                                                                                -------------           -------------
       Total                                                                   $   24,160,108             $28,761,990
                                                                               ==============           =============


     See accompanying notes to condensed consolidated financial statements.
</TABLE>



<TABLE>
<CAPTION>


                       AURA SYSTEMS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               THREE AND SIX MONTHS ENDED AUGUST 31, 2002 AND 2001
                                   (Unaudited)


                                                            Three Months                            Six Months
                                                            ------------                            ----------

                                                       2002               2001               2002              2001
                                                      -----              -----              -----             -----
<S>                                                 <C>                 <C>                <C>                <C>


Net Revenues                                      $ 272,978          $ 863,273         $  456,717          $ 3,737,842

     Cost of goods                                  145,120            313,174            226,105            1,753,797
                                                  ---------          ---------         ----------          -----------
Gross Profit                                        127,858            550,099            230,612            1,984,045

Expenses

     Engineering expenses                           797,245          2,251,713          1,894,015            4,552,998
     Selling, general and administrative          2,108,369          3,307,802          4,268,844            5,562,263
     Research and development                       141,912            239,403            277,960              511,209
     Asset impairment loss                        2,300,000                ---          2,300,000                  ---
                                                 ----------          ---------          ---------             --------

     Total costs and expenses                     5,347,526          5,798,918          8,740,819           10,626,470
                                                 ---------           ---------          ---------           ----------

 Loss from operations                            (5,219,668)        (5,248,819)        (8,510,207)          (8,642,425)

Other (income) and expense

     Asset impairment                                   ---                ---            700,000                  ---
     (Gain) loss on disposition of assets, net      (12,671)               ---            (12,671)            (399,189)
     Other (income) expense, net                     82,092            (44,250)           (32,480)            (188,502)
     Legal settlements, net                             ---            400,000                ---             (750,000)
     Interest expense, net                          385,750            430,242            467,984              835,775
                                                 ----------          ---------          ---------            ----------
Net loss before taxes                            (5,674,839)        (6,034,811)        (9,633,040)           (8,140,509)
Income tax expense                                  (19,200)               ---            (19,200)                 ---
                                                 ----------          ---------          ---------            ----------

Net loss                                        $(5,694,039)       $(6,034,811)       $(9,652,240)        $(8,140,509)
                                                ===========        ===========        ===========         =============

Net loss per common share-basic                 $      (.01)       $      (.02)       $      (.02)        $      (.03)
                                                ===========        ===========        ===========         =============

Weighted average shares used to
compute net loss  per share                      411,461,450        320,872,132        406,925,606         310,736,279
                                                ============       ============        ===========         ============

</TABLE>



     See accompanying notes to condensed consolidated financial statements.

<TABLE>
<CAPTION>


                       AURA SYSTEMS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED AUGUST 31, 2002 AND 2001
                                   (Unaudited)


                                                                             2002                     2001
                                                                            ------                   ------
<S>                                                                       <C>                      <C>

Net cash used in operations                                             $(6,519,826)              $(6,104,484)

Investing activities:

Proceeds from sale of assets                                                 85,000                   399,189
Additions to property and equipment                                             ---                  (188,219)
Note receivable                                                             200,734                    76,375
                                                                         ----------                 ----------

Net cash provided by investing activities                                   285,734                   287,345

Financing activities:

Issuance of debt                                                          1,000,000                        ---
Repayment on line of credit                                                     ---                 (1,984,000)
Repayment of debt                                                          (250,000)                (2,274,083)
Net proceeds from sale of stock                                           4,510,000                  8,951,432
Proceeds from exercise of warrants                                              ---                     27,000
                                                                         ----------                  ----------
Net cash provided by financing activities:                                5,260,000                  4,720,349
                                                                         ----------                  ----------

Net increase (decrease) in cash                                            (974,092)                (1,096,790)

Cash and cash equivalents at beginning of period                          1,143,396                  1,265,912
                                                                         ----------                  ----------

Cash and cash equivalents at end of period                                $ 169,304                  $ 169,122
                                                                          =========                  ==========

Supplemental disclosures of cash flow information
       Cash paid during the period for:
              Interest                                                     $ 305,000                 $ 885,033
              Income Tax                                                   $  19,200                 $     ---
</TABLE>


Supplemental disclosure of noncash investing and financing activities:

Six months ended August 31, 2002:
     In the six months ended August 31, 2002,  292,508  shares of the  Company's
common stock were issued in satisfaction of $92,140 in liabilities.


Six months ended August 31, 2001:
     In the six months  ended  August 31,  2001,  $413,009 of notes  payable and
accrued  interest was  converted  into 750,927  shares of the  Company's  common
stock. The Company also issued  10,765,220 shares of its common stock to satisfy
liabilities  in the amount of  $4,219,401.  In the six months  ended  August 31,
2001, a settlement was reached resolving a dispute  requiring  payments totaling
$400,000 over a period of 40 months.  As of August 31, 2001, an initial  payment
of $10,000 had been made.


     See accompanying notes to condensed consolidated financial statements.



                               AURA SYSTEMS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 August 31, 2002
                                   (Unaudited)


1)       Basis of Presentation

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

     In the  opinion of  management,  the  accompanying  condensed  consolidated
financial  statements  reflect all adjustments  (which include normal  recurring
adjustments) and reclassifications for comparability necessary to present fairly
the financial position of Aura Systems,  Inc. at August 31, 2002 and the results
of its operations for the three and six months ended August 31, 2002 and 2001.

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

2)       Going Concern

     In  connection  with the audit for the year ended  February 28,  2002,  the
Company  received  a report  from its  independent  auditors  that  includes  an
explanatory  paragraph  describing  uncertainty  as to the Company's  ability to
continue as a going concern.  The  consolidated  financial  statements  included
herein  contemplate  the  ability to  continue  as such and do not  include  any
adjustments that might result from this uncertainty.

3)       Capital

     In the six months ended August 31, 2002, common stock outstanding increased
by a total of  25,450,226  shares as  follows:  25,157,718  shares were sold for
gross  proceeds  of  $4,510,000,  and  292,508  shares  were  issued to  satisfy
liabilities in the amount of $92,140.

4)       Inventories
<TABLE>
<CAPTION>

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

                                                                        August 31,           February 28,
                                                                           2002                  2002
                                                                        ----------           -------------
<S>                                                                   <C>                   <C>

    Raw materials                                                      $3,948,609          $   4,043,697
    Finished goods                                                      7,093,016              7,258,138
    Reserved for potential product obsolescence                        (1,798,000)            (1,795,411)
                                                                       -----------         --------------
                                                                      $ 9,243,625          $    9,506,424
                                                                       ===========         ===============
</TABLE>


     Inventories  consist  primarily of components  and completed  units for the
Company's AuraGen product. The net inventories as of February 28, 2002 which are
not  expected to be realized  within a 12 month period have been  classified  as
long-term.

5)Significant Customers

     In the six months ended August 31, 2002,  the Company sold AuraGen  related
products to three significant customers for a total of approximately $162,000 or
35% of net revenues.  None of these  customers are related to or affiliated with
the Company.

6)       Asset Impairment

     Subsequent to the quarter ended May 31, 2002 Aura became aware of financial
difficulties  relative  to  its  investment  in  Algo  Technologies,  Inc.  Aura
recognized a $700,000  impairment  charge as the Company  concluded there was an
other than temporary decline in the value of the investment.  It is now recorded
at its estimated fair market value of approximately $500,000.

     In the second  quarter of fiscal  2003,  the  Company's  Board of Directors
approved  a plan to sell the land and  buildings  which  are  currently  used as
Aura's headquarters and operating  location.  The Company has received bona-fide
offers which indicate there is a significant decrease in the market price of the
assets.  The current  market value is less than the recorded net book value.  As
the land and  buildings are held for sale and the amount to be realized from the
sale is less  than  the net  book  value,  the  Company  has  recorded  an asset
impairment charge.  The estimated charge is $2,300,000.  This amount will change
in the future once a final  transaction is completed.  The Company has accounted
for this charge in accordance  with FASB No. 144  "Accounting for the Impairment
or Disposal of Long-Lived  Assets".  As such, the expense is recorded as part of
the loss from operations.

7)       Contingencies

     The Company is not  engaged  presently  in any  on-going  litigation  which
management  expects to have a material impact on the financial position of Aura.
Refer to the Company's Form 10-K,  Item 3 Legal  Proceedings  for the year ended
February  28, 2002 as filed with the SEC (file number  000-17249)  for a further
discussion  of the legal  activities.  In the case of a judgment or  settlement,
appropriate provisions have been made in the financial statements.

8)       Notes Payable and Other Liabilities
<TABLE>
<CAPTION>

Notes payable and other liabilities consist of the following:

                                                                    August 31,         February 28,
                                                                       2002                2002
                                                               -------------------  ------------------
       <S>                                                      <C>                   <C>

         Litigation payable (a)                                 $      2,189,207     $      2,327,300
         Notes payable-equipment (b)                                      17,324               20,371
         Notes payable-buildings (c)                                   5,107,260            5,157,138
         Trade debt (d)                                                2,893,810            3,140,657
         Related party note payable (e)                                       --              250,000
         Convertible notes (f)                                         1,000,000                   --
                                                                -----------------    ----------------
                                                                      11,207,601           10,895,466
         Less: current portion                                         4,559,195            3,913,623
                                                                -----------------    ----------------
         Long-term portion                                      $      6,648,406     $      6,981,843
                                                                ================     ================
</TABLE>


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

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

               (c) Notes  payable-buildings  consists of a 1st Trust Deed on two
          buildings  in  California  bearing  interest at the rate of 7.625%.  A
          final balloon payment is due in fiscal 2009.

               (d)  Trade  debt  was  restructured  with  payment  terms  over a
          three-year  period with interest at 8% per annum commencing in January
          2000.  The Company has failed to make every  monthly  payment  due. As
          such, the maturity date of January 2003 will most likely be extended.

               (e) In the fourth  quarter of fiscal  2002,  the Company  entered
          into a short  term  loan  agreement  with a  member  of the  Board  of
          Directors for $250,000. The note accrued interest at a rate of 10% and
          was repaid in March 2002.

               (f) Convertible notes payable are due at six month maturity dates
          in January to February 2003.  Interest  accrues at 8% simple  interest
          due in arrears.  If upon  equity  funding for an amount of at least $2
          million  prior to maturity  date,  the notes will convert  mandatorily
          into common stock either at the contractual  conversion rates of $0.07
          - $0.11 per share, respectively, or the average of the new equity sale
          rate,  whichever is less. In September  and October  2002,  the amount
          increased by an additional $375,000 and $125,000,  respectively,  with
          the same terms.

9)       Subsequent Event

     In September  and October  2002,  the Company  received  $500,000  from two
significant  shareholders in the form of convertible notes. The notes are due in
180 days  from the date of  issuance  and  carry an  interest  rate of 8% due at
maturity.  If Aura receives  equity funding for an amount of at least $2 million
prior to the maturity date, the notes will mandatorily convert into common stock
either  at  the   contractual   conversion   rates  of  $0.07-$0.11  per  share,
respectively, or the average of the new equity sale rate, whichever is less.

     In September and October 2002, the Company  conducted a private offering to
a group of accredited investors for the sale of 4,030,000 shares of common stock
for a total of $285,500.


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Overview

     This Form 10-Q 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, 2002, and factors discussed in this report.

Results of Operations

         For the six month period ended August 31, 2002

     Net revenues  for the six month  period ended August 31, 2002  decreased to
$456,717  from  $3,737,842  in the prior  year.  This  represents  a decrease of
$3,281,125 from the prior year comparable period. Revenues are lower because the
Company did not ship  significant  quantities to its distributors as was done in
the prior year.  Revenue of $1.3 million was  recognized in the prior year first
quarter  relative to shipments  made to CRS Emergency  which were later returned
and revenues reversed.

     Cost of goods  decreased  to $226,105 in the six month  period ended August
31, 2002 from  $1,753,797  in the six month  period ended August 31, 2001 due to
the decrease in net  revenues  noted  above.  Cost of goods  includes the direct
material and labor costs incurred.

     Gross  margins  decreased  to 50% from 53% in the prior year as a result of
customer  and product  mix.  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.

     Engineering expenses decreased by $2,658,983 to $1,894,015 in the six month
period  ended  August 31,  2002 from  $4,552,998  in the prior  year  comparable
period.  The  decrease  was  primarily  due to the  elimination  of the  tooling
depreciation.  Depreciation  and  amortization  for the six month  period  ended
August 31, 2002 totaled $84,273  compared to $2,396,684 for the six month period
ended August 31, 2001.  Engineering  cost also decreased due to actions taken in
the first  quarter of fiscal 2003  relative to a reduction  in force.  In fiscal
2001,  the Company  reclassified  certain costs that had been  characterized  as
overhead  costs  and  included  in cost of goods.  These  items  were  primarily
engineering  and facility  related and have now been  classified as  engineering
expenses in the operating  expense  category.  This was done to more  accurately
reflect  the  actual  cost of the  product  sold  and  provide  a  gross  profit
presentation based on the sale of the product itself.

     Selling, general and administrative (SG&A) expenses decreased to $4,268,844
in the six month period ended August 31, 2002 from  $5,562,263  in the six month
period ended  August 31, 2001.  The SG&A  expenses  were lower due  primarily to
lower litigation expenses incurred.  A majority of the lawsuits which existed in
the prior year have been  settled or  dismissed,  thus  requiring  less in legal
fees.  SG&A costs also  decreased due to the reduction in force that occurred in
the first  quarter of fiscal 2003. In addition,  sales and marketing  costs were
lower.  However,  sales and  marketing  costs are  expected  to  increase in the
future.  The lower SG&A  costs  were  partially  offset by  consulting  expenses
recognized  for the former  management of the Company in the first  quarter,  as
well as the one-time  severance expense recognized in the second quarter for the
former CEO.

     Research and development  expense  decreased from $511,209 in the six month
period  ended  August 31, 2001 to $277,960 in the six month  period ended August
31, 2002.  In the prior year the Company had expanded its efforts in  developing
variations  of the 5 kW  AuraGen,  such as the 8.5 kW, 10 kW,  12.5 kW, and the
inverter option. In the current year, much of that initial activity is complete,
and the  headcount  for the R&D staff has been  reduced.  The  Company  plans to
continue  its  efforts  and  expend  costs  relative  to the  AuraGen  and other
proprietary intellectual property in the future.

     In the second quarter of fiscal 2003, the Company's Board of Directors
approved  a plan to  sell  the  land  and  buildings  which  are  now  the  Aura
headquarters and operating location.  The Company has received bona-fide offers,
which  indicate a  significant  decrease in the market price of the assets.  The
current market value is less than the net book value.  As the land and buildings
are held for sale and the amount to be  realized  from the sale is less than the
net book value,  the  Company  has  recorded  an asset  impairment  charge.  The
estimated impairment is $2,300,000. This amount will change in the future once a
final  transaction  is  completed.  The Company has accounted for this charge in
accordance  with FASB No. 144  "Accounting  for the  Impairment  or  Disposal of
Long-Lived  Assets".  As such,  the expense is recorded as part of the loss from
operations.

     The Company recorded a gain of $399,189 on the sale of assets and a gain of
$1.2 million on the settlement with Deutsche Financial Services in the six month
period  ended  August 31,  2001.  There were asset sales in the  current  period
ending August 31, 2002 for a net gain of $12,671.

     Other  income and expense for the six month  period  ended  August 31, 2001
consisted primarily of settlement of accounts payable.  Other income and expense
for the six month  period  ended  August  31,  2002  consists  primarily  of the
recognition  of an impaired  investment,  reimbursement  of prior  period  legal
expenses and lease rental income. In the six month period ended August 31, 2002,
Aura  became  aware  of  significant  financial  difficulties  relative  to Algo
Technologies,  Inc. Aura recognized a $700,000  impairment charge as the Company
concluded  there  is an  other  than  temporary  decline  in the  value  of Algo
Technologies,  Inc. The  investment is now recorded as its estimated fair market
value of approximately $500,000.

     Net  interest  expense  for the six month  period  ended  August 31,  2002,
decreased  from  $835,775 to $467,984 in the current year due to the  continuing
reduction  in the  debt  level  of the  Company.  Current  interest  income  was
approximately $103,000 primarily from the long-term note receivable.

     For the six month period ended August 31, 2002 Aura's net loss increased to
$9,652,240  as compared to the same six month period in the prior year which had
a net loss of  $8,140,509.  The loss  increased  due to the lower  gross  profit
resulting from lower revenue,  an asset impairment  charge amounting to $700,000
relative to  investments  held, and for the  $2,300,000  impairment  loss on the
Company  owned  real  estate.  The  loss  was  partially  offset  due  to  lower
depreciation  and labor costs  incurred.  At the  beginning of fiscal 2003,  the
Company put into place cost savings controls that included a reduction in force.
The Company's  headcount  has  decreased  from 109 at February 28, 2002 to 76 at
August 31, 2002.  The loss was also lower due to a reduced net interest  expense
as a result of significant debt being paid off at the end of fiscal 2002.

         For the three month period ended August 31, 2002

     Net revenues for the three month period ended August 31, 2002  decreased to
$272,978 from $863,273 in the prior year quarter.  This represents a decrease of
$590,295 from the prior year comparable quarter.  Revenues are lower because the
Company did not ship  significant  quantities to its distributors as was done in
the prior year.  However,  the second  quarter net revenue did increase from the
prior two quarters. Management expects the revenue trend to continue to increase
in  future  quarters.  Management  believes  its  plan to  improve  revenues  is
succeeding  through a combination  of strategic  business  initiatives,  outside
military and  government  consulting,  and the  addition of sales and  marketing
professionals to its organization.

     Cost of goods  decreased to $145,120 in the three month period ended August
31, 2002 from $313,174 in the quarter ended August 31, 2001, due to the decrease
in net revenues noted above. Cost of goods includes only the direct material and
labor costs incurred.

     Gross  margins  decreased  to 47% from 64% in the prior  year  quarter as a
result of the product and customer mix. Margins can vary quarter to quarter as a
result of product mix, options and accessories purchased, and system sales.

     Engineering expenses decreased by $1,454,468 to $797,245 in the three month
period  ended August 31, 2002 from  $2,251,713  in the prior year  quarter.  The
decrease  was  primarily  due to the  elimination  of the tooling  depreciation.
Depreciation  and  amortization for the three month period ended August 31, 2002
totaled  $41,800  compared to $1,197,234 for the three month period ended August
31, 2001.  The lower costs in the current  quarter also reflect the full savings
benefit as a result of the reduction in force that occurred in the first quarter
of fiscal 2003.

     SG&A  expenses  decreased  to  $2,108,369  in the three month  period ended
August 31, 2002 from $3,307,802 in the three month period ended August 31, 2001.
The  SG&A  expenses  were  lower  due  primarily  to lower  litigation  expenses
incurred.  A majority of the lawsuits  which existed in the prior year have been
settled or dismissed,  thus requiring less in legal fees. The lower costs in the
current  quarter  also  reflect  the full  savings  benefit  as a result  of the
reduction  in force  that  occurred  in the first  quarter  of fiscal  2003.  In
addition,  sales and  marketing  costs were lower in the current  year  quarter.
Sales and marketing costs are expected to increase in the future. The lower SG&A
costs were partially offset by the severance expense incurred for the former CEO
of the Company.

     Research and development expense decreased from $239,403 in the three month
period  ended August 31, 2001 to $141,912 in the three month period ended August
31, 2002.  In the prior year the Company had expanded its efforts in  developing
variations  of the 5 kW  AuraGen,  such as the 8.5 kW, 10 kW,  12.5 kW,  and the
inverter option. In the current year, much of that initial activity is complete,
and the  headcount  for the R&D staff has been  reduced.  The  Company  plans to
continue its efforts and expend costs relative the AuraGen and other proprietary
intellectual property in the future.

     In the second  quarter of fiscal  2003,  the  Company's  Board of Directors
approved  a plan to  sell  the  land  and  buildings  which  are  now  the  Aura
headquarters and operating  location.  The Company has received bona-fide offers
which  indicate a  significant  decrease in the market price of the assets.  The
current market value is less than the net book value.  As the land and buildings
are held for sale and the amount to be  realized  from the sale is less than the
net book value,  the  Company  has  recorded  an asset  impairment  charge.  The
estimated impairment is $2,300,000. This amount will change in the future once a
final  transaction  is  completed.  The Company has accounted for this charge in
accordance  with FASB No. 144  "Accounting  for the  Impairment  or  Disposal of
Long-Lived  Assets".  As such,  the expense is recorded as part of the loss from
operations.

     Other  income and expense for the three month  period ended August 31, 2001
consists  primarily of settlement of accounts payable.  Other income and expense
for the  three  month  period  ended  August  31,  2002  consists  primarily  of
reimbursement  of prior period legal expenses and sub-lease  rental income.  The
Company recorded a net gain of $12,671 on the sale of assets in the current year
while  there  were no asset  sales in the same  period  last year.  The  Company
recorded a loss of $400,000  relative to a NewCom  class  action  lawsuit in the
three month  period ended August 31, 2001 while there was no similar loss in the
three month period ended August 31, 2002.

     Net  interest  expense for the three month  period  ended  August 31, 2002,
decreased  from  $430,242 to $385,750  in the  current  year  quarter due to the
continuing  reduction in the debt level of the Company.  Current interest income
was approximately $49,000 primarily from the long-term note receivable.

     The net loss for the three  months  ended  August 31,  2002 was  $5,694,039
compared to a net loss of $6,034,811 for the same period in the prior year. This
decrease in the net loss was  primarily  due to lower  depreciation  expense,  a
reduced labor force, and implementation of cost saving strategies.  In addition,
the Company's net interest  expense was higher in the prior year due to a higher
debt balance.  Aura also recognized a $400,000 legal  settlement  accrual in the
prior year.  The lower net loss was  partially  offset by a lower  gross  profit
recognized  due  to  lower  revenue  in the  current  year  quarter,  and by the
impairment charge relative to the Company's real estate assets.

     The Company received  correspondence  from Daewoo  Electronics Co., Limited
("Daewoo") relative to its Technology License Agreement in the form of a request
to grant transfer of the license to a major public industrial corporation in the
Republic of South  Korea.  The  Technology  License  Agreement  between Aura and
Daewoo  provides for Aura's consent to any transfer and contains  rights to Aura
in any sublicense.  The Company has had preliminary discussions with Daewoo that
could  possibly  affect  materially  the  Company's  results  of  operations  in
subsequent reports. However, no assurances can be given as to the outcome of the
discussions  or whether they will lead to  consummating a consent or sublicense.
The  Company  has  previously  reported  that it had  retained  interest  in the
Company's  other  proprietary  technology  besides the  AuraGen,  including  its
Actuated  Mirror Array ("AMA"),  but that Daewoo had been in a financial  crisis
and negotiating about the future of the AMA technology.

         Financial Position, Liquidity and Capital Resources

     The Company continues to experience acute liquidity  challenges.  At August
31,  2002,  the  Company  had cash of  $169,304  as  compared to a cash level of
$1,143,396 at February 28, 2002. The Company's working capital deficit increased
by $1,528,511  from  $2,512,553 at February 28, 2002 to $4,041,064 at August 31,
2002.  The  deficit  increased  as a result of the  convertible  debt  financing
proceeds  received  in the period  amounting  to  $1,000,000.  A majority of the
Company's current payables relate to liabilities incurred in prior fiscal years.
As such,  the  Company's  credit  availability  is very  limited.

     Cash flows used in operations  increased by $415,342 in the current year to
$6,519,826  as compared to  $6,104,484  in the six months ended August 31, 2001.
The  increase in operating  cash used is primarily a result of lower  revenue in
fiscal 2003. The Company continues to focus on improving its financial  position
through cost control  measures and by decreasing  the long and  short-term  debt
owed by Aura. Aura continues to implement  actions for the purpose of monetizing
under utilized  non-operating  assets in order to fund the operating,  sales and
marketing  activities.  The Company has sold several excess vehicles and intends
to  proceed  with a  sale-leaseback  transaction  on the  Company's  headquarter
properties.  The  expected  gross  proceeds  to the  Company  are  approximately
$3,300,000.

     In the six months  ended  August  31,  2002,  the  Company  received  gross
proceeds  of  $4,510,000  from the sale of  25,067,974  shares of the  Company's
common stock. The Company also satisfied  liabilities of  approximately  $92,140
through the issuance of 292,508 shares of common stock.

     In the second  quarter  ending  August 31, 2002 and in the third quarter of
fiscal 2003, the Company received  $1,000,000 and $500,000,  respectively,  from
two significant shareholders in the form of convertible notes. The notes are due
180 days from their  issuance and carry an interest  rate of 8% due at maturity.
Upon  equity  funding of at least $2,000,000  prior to  maturity,  the notes and
accrued interest are convertible at $0.07-$0.11 per share, respectively,  or the
average equity sale rate, whichever is less.

     The cash flow generated from the Company's  operations to date has not been
sufficient to fund its working  capital  needs,  and the Company does not expect
that operating cash flow will be sufficient to fund its working capital needs in
fiscal 2003.  The Company  expects to fund the operating  cash  shortfall in the
current fiscal year from a combination of increased  revenues,  monetization  of
under utilized assets, and from third party financings.  Currently,  the Company
has no  commitments  from third  parties to provide  additional  financing.  The
Company has no  assurances  that third party  funding  will be  available at the
times or in the amounts required.  If financings  involve the issuance of equity
securities,  existing stockholders are likely to suffer dilution in net tangible
book value per share.  The Company is limited to issuing  500,000,000  shares of
common  stock  and  10,000,000  shares  of  preferred  stock  unless  and  until
shareholders  approve the authorization of additional  shares. As of October 10,
2002, there were 417,170,294  common shares outstanding and substantially all of
the remaining  authorized  common  shares have been reserved for stock  options,
warrants, and convertible notes outstanding.  As of October 10, 2002, there were
no  preferred  shares  outstanding.  The Company is  currently in the process of
monetizing  certain of its long-term  under utilized assets in order to fund the
operating, sales and marketing activities. The Company has entered into a letter
of intent for the sale of Aura Realty,  Inc.,  which  includes the  headquarters
building,  and the subsequent  leaseback of the property.  The letter of intent,
which is  non-binding,  provides that the  purchaser,  in  conjunction  with the
sale-leaseback, will also invest in the Company by purchasing Aura Systems, Inc.
common  stock.  The total gross  proceeds  expected  to be received  approximate
$3,300,000.  The  Company has also  decided to attempt to sublease  one floor of
offices  at its  headquarters  in order to  realize  savings  from its  facility
expenses.

     The limited  availability of funds and sources of raising  additional funds
could have a material  adverse  effect on the  Company's  financial  statements,
results of operations and the ability to continue or expand 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,
2002 as filed with the SEC (file number 000-17249).


         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 third
quarter of Fiscal 2003, 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:  the Company's  on-going  liquidity  concerns;  changed  business
conditions in the  industries  targeted by the Company and the overall  economy;
increased  marketing  and  manufacturing   competition  and  accompanying  price
pressures;  inefficiencies,  delays and increased  costs in connection  with the
start of production 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 on-going
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 constraints on any company statements.  The events of September
11,  2001 and 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.



ITEM 4        Controls and Procedures

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

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



PART II - OTHER INFORMATION


ITEM 1        Legal Proceedings

     For  information  regarding  pending legal  proceedings,  see Note 7 to the
Company's  Condensed   Consolidated  Financial  Statements  appearing  elsewhere
herein.



ITEM 2        Changes in Securities

     During the second  quarter ended August 31, 2002,  the Company  conducted a
private  offering to a group of  accredited  investors for the sale of 5,357,718
shares of common stock for total gross proceeds of approximately  $390,000.  The
Company also issued  $1,000,000 of convertible  notes.  These  convertible notes
payable  are due at six  month  maturity  dates in  January  to  February  2003.
Interest  accrues at 8% simple interest due in arrears.  If Aura receives equity
funding for an amount of at least $2 million prior to maturity  date,  the notes
will convert mandatorily into common stock either at the contractual  conversion
rates of $0.07 - $0.11 per share, respectively, or the average of the new equity
sale rate, whichever is less.

     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:

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

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

b) Reports on Form 8-K:

     During the quarter ended August 31, 2002 the Company did not file a current
     report on Form 8-K.


                                   SIGNATURES

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



                                               AURA SYSTEMS, INC.
                                                 (Registrant)



Date:  October 15, 2002             By:    /s/ Steven M. Burdick
                                          ------------------------
                                              Steven M. Burdick
                                            Senior Vice President
                                           Chief Financial Officer
                                 (Principal Financial and Accounting Officer
                                         and Duly Authorized Officer)




                                  CERTIFICATION

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

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

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

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

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

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

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

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

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

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

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

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

                                               /s/ Neal F. Meehan
                                              ---------------------
                                                 Neal F. Meehan
                                        Chairman & Chief Executive Officer
                                                October 15, 2002



                                  CERTIFICATION

     I,   Steven M. Burdick,  Chief  Financial  Officer of Aura  Systems,  Inc.,
          certify that:

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

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

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

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

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

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

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

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

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

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

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

                                                    /s/ Steven M. Burdick
                                                    ----------------------
                                                      Steven M. Burdick
                                                   Chief Financial Officer
                                                       October 15, 2002


EXHIBIT 99.1

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

     In  connection  with  the  Quarterly  Report  of Aura  Systems,  Inc.  (the
     "Company") on Form 10-Q for the period ending August 31, 2002 as filed with
     the Securities and Exchange  Commission on the date hereof (the  "Report"),
     I, Neal F.  Meehan,  Chairman and Chief  Executive  Officer of the Company,
     certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
     906 of the Sarbanes-Oxley Act of 2002, to my knowledge:

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

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

                                                     /s/ Neal F. Meehan
                                                     --------------------
                                                       Neal F. Meehan
                                             Chairman & Chief Executive Officer
                                                      October 15, 2002



EXHIBIT 99.2

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

     In  connection  with  the  Quarterly  Report  of Aura  Systems,  Inc.  (the
     "Company") on Form 10-Q for the period ending August 31, 2002 as filed with
     the Securities and Exchange  Commission on the date hereof (the  "Report"),
     I, Steven M.  Burdick,  Chief  Financial  Officer of the Company,  certify,
     pursuant to 18 U.S.C.  Section 1350, as adopted  pursuant to Section 906 of
     the Sarbanes-Oxley Act of 2002, to my knowledge:

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

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

                                                /s/ Steven M. Burdick
                                                ----------------------
                                                   Steven M. Burdick
                                                Chief Financial Officer
                                                   October 15, 2002