8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): June 13, 2007 (June 7, 2007)

Hemcure, Inc.

(Exact name of registrant as specified in Charter)

Nevada	000-51543	20-5573204
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(IRS Employee Identification No.)

11839 East Smith Avenue

Santa Fe Springs, California 90670

(Address of Principal Executive Offices)

(562) 447-1780

(Issuer Telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2 below).

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

[ ] Pre-commencement communications pursuant to Rule 13e-4© under the Exchange Act (17 CFR 240.13(e)-4(c))

This Form 8-K and other reports filed by Hemcure, Inc. from time to time with the Securities and Exchange Commission (the “Commission”) (collectively the “Filings”) contain forward looking statements and information that are based upon beliefs of, and information currently available to, our management as well as estimates and assumptions made by our management. When used in the Filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative if these terms and similar expressions as they relate to us or our management identify forward looking statements. Such statements reflect our current view with respect to future events and are subject to risks, uncertainties, assumptions and other factors relating to our industry, operations and results of operations and any businesses that we may acquired. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

The following discussion provides only a brief description of the documents described below. The discussion is qualified in its entirety by the full text of the agreements, which are attached as exhibits to this Current Report.

On June 7, 2007, AuraSound, Inc. (“AuraSound”) and its shareholders, on the one hand, and Hemcure, Inc., Bartly J. Loethen and Synergy Business Consulting LLC acting as indemnitors, on the other hand, entered into an Amended and Restated Agreement and Plan of Share Exchange (referred to in this Current Report as the “Agreement”) pursuant to which Hemcure, Inc. acquired all of the issued and outstanding shares of AuraSound, Inc. In exchange, Hemcure, Inc. issued to the shareholders of AuraSound, Inc. one share of $0.01 par value common stock for every share of AuraSound, Inc. common stock acquired. This transaction is referred to as the “Merger” in this Current Report. The Agreement amends and restates in its entirety the Agreement and Plan of Share Exchange attached as an Exhibit to the Current Report of Hemcure, Inc. filed with the Commission on February 23, 2007. Following the Merger, the former shareholders of AuraSound, Inc. own approximately 24.2% of the issued and outstanding common stock of Hemcure, Inc.

Pursuant to the Agreement, Hemcure, Inc. is obligated to issue to the placement agent for the Offering a warrant to purchase 245,000 shares of common stock at an exercise price of $0.80 per share, and is obligated to issue to certain bridge lenders of AuraSound, Inc. warrants to purchase an aggregate of 3,200,000 shares of our common stock at an exercise price of $1.00 per share. These warrants will be in form and substance reasonably acceptable to the Company and as prescribed by the applicable bridge financing documents of AuraSound, but such warrant forms have not yet been prepared.

As a condition to the completion of the Merger, Hemcure, Inc. was required to, among other things, raise a minimum amount of $10,000,000 and a maximum amount of $12,000,000 from the sale of up to 12,000,000 “Investment Units,” at the price of $1.00 per Investment Unit. Hemcure, Inc. reserved the right, in its sole discretion, to accept subscription agreements totaling more than $12,000,000. Each Investment Unit is comprised of (i) one common share and (ii) one five year non-callable warrant to purchase one common share, at an exercise price of $1.50 per share (an “Investor Warrant”). The Investor Warrant has a term of five years. In addition, each investor in the Offering that purchased at least $3,000,000 of Investment Units will receive the option, for a period of twelve months from the closing date of the Merger, to purchase additional Investment Units up to 50% of the dollar amount invested by such investor in the Offering at a price of $1.35 per Investment Unit, provided that the additional Investor Warrants included in such additional Investment Units will not be subject to cashless exercise (the “Additional Investment Option”).

Hemcure, Inc. was required, as a condition of the Merger, to procure the resignation of Hemcure, Inc.’s sole officer and director, Bartley J. Loethen. As of the date of the initial closing of the Offering on June 7, 2007 Hemcure, Inc. had raised gross proceeds totaling $12,722,500 and obtained the required resignation of Mr. Loethen, provided, however, that Mr. Loethen’s resignation as sole director is subject to Hemcure’s Inc.’s compliance with Rule 14f-1 of the Exchange Act. The names and biographies of Hemcure Inc.’s new officers and director designees are set forth in Item 2.01 of this Current Report. The Merger was completed on June 7, 2007.

2

Although the Investment Units were being offered in reliance upon the availability of an exemption from the registration provisions of the Securities Act and applicable state securities laws for transactions not involving a public offering by an issuer, Hemcure is required pursuant to the terms of the form of Subscription Agreement attached to this Current Report as an exhibit to use reasonable best efforts to file with the SEC, pursuant to Rule 415(a)(1) of the Securities Act (“Rule 415”), within 60 days following the closing date of the Merger, a registration statement covering (i) the resale by investors of all the shares of Hemcure’s common stock purchased in the Offering and the shares of common stock issuable upon exercise of the Investor Warrants (but not any of the shares of common stock underlying the additional Investment Units issuable in connection with the Additional Investment Option), (ii) 3,200,000 shares of common stock issuable upon exercise of warrants issued to certain bridge lenders of AuraSound, (iii) 1,048,805 shares of common stock held by Next Stage Investments, Inc., an affiliate of the placement agent for the Offering and the majority shareholder of Hemcure prior to the Merger, and (iii) 800,000 shares of common stock held by Synergy Business Consulting, LLC, an entity controlled by Bartley J. Loethen that is the former majority shareholder of Hemcure(the “Registration Statement”).

ITEM 2.01COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

Because the business operations of AuraSound became the sole business operations of Hemcure upon the consummation of the Merger, unless the context indicates otherwise, the words “we,” “us” “our” or the “Company” refer to AuraSound before the closing of the Merger or to Hemcure and AuraSound as a combined company after the closing of the Merger.

Description of business

General

Founded in 1987, AuraSound develops, manufactures and markets premium audio products. AuraSound specializes in the production of high sound pressure level (“SPL”), bass-rich, low distortion sound from compact acoustic transducers (speakers). AuraSound has invested in the development of innovative audio technologies for use in ultra high end home and professional audio products. We recently expanded our product line to the micro-audio market. Specifically, AuraSound has developed and is currently marketing undersized speakers that will deliver sound quality to devices such as laptops, flat-panel televisions and displays and mobile phones that we believe is far superior to the currently sound quality found in these devices. We have commitments to deliver or we are currently delivering our micro-audio products to electronics industry leaders such as Quanta, Compal, NEC, Toshiba, Amtran, Epson and Acer. We are based in Santa Fe Springs, California.

Historically, we have provided our products to the ultra high end home and professional audio markets. Our products for this market start at $100 and reach upwards of $1,000. Until recently, the extremely low annual unit sales volumes that characterize the high end home and professional audio markets limited our ability to accelerate our growth. However, we believe that the following recent developments have created an opportunity for more rapid expansion.

After completing the development and commercialization of our micro-audio product line, we began the process of testing and validating these products with major electronics manufacturers. In the first quarter of 2006, following an extensive evaluation process, NEC was the first major manufacturer to use our micro-audio technology to differentiate its laptop computers from competitors. NEC notified its OEM manufacturer, Quanta, a leading manufacturer of laptop computers, that it would like to incorporate our speakers into NEC’s laptops. Since then, Quanta has decided to incorporate our micro-speaker technology into other laptop computers in order to reduce weight and improve sound quality. In the second quarter of 2006 NEC expanded the use of NRT to its desktop computers and monitors.

3

Following the decisions of NEC and Quanta to incorporate our micro-speaker technology into their products, we began aggressively targeting additional large electronics manufacturers. As a result of these efforts, several leading electronics manufacturers including Compal, Toshiba, Amtran, Epson and Acer have made the decision to incorporate our technology into their products. We now have a significant backlog of orders which we have begun to produce and deliver.

Our goal is to continue to rapidly expand our sales pipeline by expanding our customer base to include additional OEM electronics manufacturers in existing product categories, expanding our product line to include micro-audio products designed for additional applications such as mobile phones and PDAs and incorporating our micro-technology into a larger number of models and products with existing OEM customers.

Technology

Neo-Radial Technology (NRT)

We have developed an unconventional audio technology that creates unsurpassed efficiency and performance. We believe our neo-radial technology provides us with a significant competitive advantage over those in our industry who use traditional speaker designs.

In a traditional speaker design, a speaker’s voicecoil moves up and down in a piston like manner as a result of motion generated by opposing magnetic fields created when positive and negative electric charges are administered to the magnets in a speaker. The up and down motion of the voicecoil vibrates the diaphragm, which then creates sound waves by vibrating the surrounding air.

The voice coil length, magnet design and the quality of the material in the speaker influence the quality of the sound that is produced. Speaker quality is generally assessed based on four criteria:

1. Sound pressure level (SPL) - measure of pressure of a noise (volume)

2. Excursion - the linear movement range of a speaker

3. Frequency range - the range from the lowest note to the highest note that a speaker can reproduce

4

4. Distortion - the presence of unwanted noise that was not present in the original sound signal

As a result of the inherent limitations of conventional speaker design, the performance of a conventional speaker in one performance category often must be compromised in order to generate the desired level of performance in another category. For example, when SPL is maximized, a conventional speaker will create significant distortion and will be unable to create adequate amounts of bass. Likewise, when a conventional speaker is designed to minimize distortion and increase bass performance, SPL and high frequency performance will suffer. Our NRT overcomes such limitations through the use of our propriety magnetic technology and design.

As illustrated below, the NRT design utilizes an “underhung” voice coil configuration in which the voice coil is always located within the magnetic field. This creates less distortion, less power compression, superior bass performance and greater acoustical output. Additionally, the NRT system utilizes a neodymium magnet, as opposed to a ceramic magnet typically used in conventional speakers. The neodymium magnet is much more powerful than ceramic magnets, allowing for a significantly smaller and lighter magnet to be utilized, which contributes to the compact design of the NRT system. In addition to significantly improved audio performance, the NRT design eliminates stray magnetic flux that can create significant interference issues in a variety of electronics applications and has improved cooling and venting characteristic, greatly improving product integration abilities.

Conventional Speaker Design

Voice coil and magnetic design compromise performance and create stray flux

AuraSound NRT Speaker Design

Light weight magnet, smaller voice coil and “underhung” design increase quality and performance while preventing stray flux

5

Whisper Technology

AuraSound’s Whisper technology is a specialized application of the NRT transducer design to small, high power drivers. The technology is fully scaleable from speakers smaller than 1” to larger 3”, 200W drivers and was designed to specifically address the severe performance limitations of conventional micro-audio products.

Similar to larger speakers that are made using standard designs, conventionally designed small speakers are subject to an innate set of performance limitations. For example, as a speaker’s size decreases it becomes increasingly difficult to allow the necessary amounts of speaker excursion to provide adequate low frequency response. Likewise, when conventional designs incorporate adequate excursion capabilities to allow for increased low frequency response, high frequency response will decrease significantly. In addition to these issues, conventionally designed small speakers typically have very limited power handling capability, thereby limiting the volume of sound they are able to reproduce. The result of these limitations is a quiet speaker that reproduces sound in a limited frequency range.

Conventionally designed small speakers also suffer from severe integration issues as a result of poor venting abilities. As a speaker moves in and out in a piston-like motion air is pushed forward, creating sound, and subsequently pushed backward as the speaker retracts. Traditional designs have the magnets located behind the voice coil, trapping the air under the diaphragm and thus requiring the air to be vented or pushed out of the sides of the driver. In small speakers and extremely compact integration scenarios (e.g. a laptop or cell phone) this air becomes trapped and inadvertently vibrates the speaker cone, causing significant distortion and requiring that the area around the speaker be left open, thus limiting the compactness of the design.

AuraSound’s patented Whisper driver addresses the issues that plague traditional small speaker designs by utilizing an NRT-like design with the following features:

Extended Low Frequency Response - Whisper drivers create more bass by utilizing a high excursion design due to a short voice coil in a long magnetic gap (underhung magnet structure) and large suspension elements to allow movement.

Extended High Frequency Response - Whisper drivers provide extended high frequency response by minimizing moving mass and driver inductance by utilizing a short voice coil.

Higher Power Handling and SPL - Whisper drivers maximize power handling and SPL by utilizing a long excursion, larger diameter, underhung voice coil, providing a maximum level of excursion and good thermal dissipation to eliminate heat and allow more power input.

Easy Product Integration and Low Resonance Frequency - Whisper drivers utilize an innovative rear venting design which eliminates trapped air and allows for increased SPL with minimal distortion and does not require the area around the driver to be kept open.

6

AuraSound Whisper Speaker Design

Products

Whisper Micro-Audio Products

We provide standardized and custom developed micro-audio speakers ranging in size from less than 1” to 3”. Our Whisper speakers can be easily integrated into various products that require compact and light, high performance speakers. We believe that our Whisper products have a significant competitive advantage over other micro speakers that are based upon conventional design parameters. We believe that our micro OEM speakers are not only lighter and more compact than any other loudspeaker currently available in their class, but that they are also more powerful and provide significantly improved frequency response at the same price point as competitive technologies. In addition, we believe that our Whisper products provide significant advantages for integration in electronics products relative to competing products as a result of their favorable venting characteristics and natural ability to minimize electronic interference that results from stray magnetic flux. 

Speaker Component Products

We provide standardized and custom design drivers based upon NRT technology to leading ultra-high end home audio manufacturers including such notable names as McIntosh and MDesign. We believe that our component loudspeaker transducers are considered by many audio enthusiasts and specialty loudspeaker manufacturers to be the best available. We produce components ranging from less than 1” to 18” and 800 Watts. From the miniature NSW1Cougar to the enormous NS18 woofer to the low profile NSFB woofer, all feature our patented NRT magnet structure for maximum fidelity with life-like dynamics and minimal distortion. 

7

Home and Pro Audio Products
We believe that our home audio systems are elegantly designed and provide a dynamic acoustic experience. The home audio line features three series, the Whisper Ensemble, the Baby Grand and the Concert Series, all of which utilize the NRT and/or Whisper platforms. The Whisper Ensemble is an ultra compact home theater system that maintains the quality and performance of a larger speaker system. The Baby Grand is the mid sized system and has excellent bandwidth, powerful dynamics and precise stereo imaging. The Concert Series is the largest system, providing the greatest range, lowest distortion and most bass while maintaining the same accurate spatial sound field and focused coverage of the other systems. All three of the systems have a sophisticated style with the cabinets having a beautiful black or white high-gloss lacquer finish. Additionally, the grills are held in place magnetically allowing the consumer the choice of displaying the system with or without the grill. 

Our Pro Audio products are an extension of our component business and consist primarily of the NRT 18-8 Subwoofer. The NRT 18-8 18" is an 800-Watt high-output subwoofer with a high-temperature neodymium ring magnet, unique magnet geometry with underhung 4" edgewound aluminum voice coil, dual over-size spiders and tough epoxy cone. With a 20 - 200 Hz frequency response the 18-8 delivers deeper bass, enhances overall performance and is designed to move using a minimal amount of power, thereby maximizing motor efficiency. The NRT 18-8 has appeared on-stage and on-tour with artists such as Rod Stewart and features AuraSound's patented NRT technology. 

Automotive Products   We produce automotive competition-grade speaker and component systems. Our automotive division designs and manufactures amplifiers, loudspeakers and subwoofers. The subwoofer line features the NRT platform and is designed for extremely low throw and high output, yielding unsurpassed linearity and exceptionally low distortion. Our automotive loudspeakers, built with coaxial high quality components, are available in a full range of products from easy-to-install budget systems to top of the line competition grade systems. The line is competitively priced and has recently been completely redesigned with a new industrial style, improved performance and other unique features. Our line of competition-grade amplifiers are built with performance enhancing features that include gold-plated speaker and power connections, modular internal design for improved separation and a high efficiency dual heat sink which eliminates the need for noisy, power consuming fans. 

Bass Shaker Products   Our Bass Shaker products are transducers that can be mounted to a fixed surface to transmit vibration creating the “sensation of sound” or very low bass, providing impact for music, sounds and special effects. The Bass Shaker Plus and Bass Shaker add the impact of bass sub woofers without excessive volume or the space required by traditional subwoofers. Our patented technology enhances the sound pressure levels so there's no distortion while amplifying the bass energy delivered from the stereo.  

8

Research and Development and Product Manufacturing

We employ a skilled research and development team based in our California headquarters that is responsible for identifying and creating new products and applications along with improving and enhancing existing products. Recently, we added an additional research and development team in China. We outsource all product manufacturing and some testing and development functions to Strong Electronics Co., LTD. The manufacturing facility of Strong Electronics is located in Dongguan, China, and consists of 120,000 square feet under roof with 20 production lines (with plans for an additional 10) representing a total production capacity of 5,000,000 speakers per month. The plant is also ISO-9002, ISO-9001 and QS-9000 certified. The Dongguan research and development facility consists of 20,000 square feet and has a full range of testing facilities including China’s largest anechoic chamber used for loudspeaker design, research labs for magnetics, cone materials, vibrations, speaker systems design, an engineering library, office space and a demo and show room. The facility also has a 35,000 square foot warehouse and full staff accommodations for up to 1,448 employees.

Market Overview

The consumer electronics industry has experienced steady growth in the past five years. According to the market research group iSuppli, the global consumer electronics industry has maintained a compound annual growth rate (sometimes referred to in this discussion as “CAGR”) of 9% between 2001 and 2005, with factory revenues expected to total $311 billion in 2006. There are many manufacturers, large and small, domestic and international, which offer products that vary widely in price and quality and are distributed through a variety of channels. The primary industry growth drivers have been increased portability and miniaturization, sophisticated technological innovations and a dramatic reduction in market prices.

A major component of the consumer electronics market is the personal and professional audio manufacturing industry, which is mature, fragmented and highly competitive. Cutting edge technologies are noted to have a short life in an industry that is defined by research and development. The audio industry is dominated by large domestic and international manufacturers that include Harman International, Bose Corporation, Polk Audio, Alpine Electronics, Sony Corporation, Boston Acoustics, Altec Lansing Technologies, Kenwood Corp., LOUD Technologies, JBL Incorporated, Panasonic Corporation, Pioneer, Rockford Corp. and Yamaha Corp. Additionally, there are numerous small, niche companies that attract consumers based upon specialty product offerings. Industry participants compete based on acoustic quality, technology, price, reliability, brand recognition and reputation.

Although the audio industry as a whole is relatively mature and is dominated by large players, the micro-audio segment remains a relatively new niche market. Despite significant technological innovations in hardware categories such as display technologies, laptops, portable music players and mobile phones, the auditory capabilities of these devices has stagnated or been significantly reduced as a result of efforts to minimize size to achieve increased portability. This reduction in audio quality has occurred despite a massive increase in media usage, particularly audio, on devices such as laptop computers, portable music players and mobile phones and we believe this has led to significant consumer dissatisfaction with currently available products. We believe that the micro-audio market currently lacks a true leader with an economical, easy to integrate audio product capable of delivering high quality acoustics in an ultra-compact format.

9

The rapid consumer acceptance of flat-panel televisions and displays demonstrates the overwhelming consumer demand for sleeker and increasingly more compact electronics. According to the market research firm DisplaySearch, between 2005 and 2007, worldwide LCD and plasma TV sales will grow 57% and 35%, respectively. Additionally, the Company believes that by 2008, flat-panel TVs will make up about 50% of all TVs sold, up from 30% in 2005. According to the Consumer Electronics Association (CEA), in 2005 worldwide 3.9 million LCD units and 2 million plasma units were sold, totaling $6.9 billion in combined revenue. These figures are all up from 2004, in which 1.8 million LCD units and 870 thousand plasma units were sold worldwide, representing $3.9 billion in revenue. This represents growth in unit sales of 117% for LCD units and 130% for plasma units from 2004 to 2005, and 77% growth in total revenue over the same period. The growth in unit and revenue sales can be partially attributed to the fact that LCD and plasma televisions are becoming more affordable for the consumer. From 2004 to 2005, the average price for an LCD unit decreased from $857 to $754, while the average price of a plasma unit decreased from $2,698 to $1,953 in the same period. The slenderness of these products requires ultra compact speakers and we believe that consumers are increasingly expecting the audio performance of their televisions and displays to be comparable to the visual quality of the televisions or displays.

We also believe that the recent growth of the laptop computer market is also a clear indicator that the demand for high quality micro speakers is going to increase. According to Marketresearch.com and IDC, since 2000 the global laptop market has experienced a CAGR of 20%, with 2005 being a particularly strong year with a sales increase of 28.8% to 59.4 million units sold. This growth is expected to continue with consumer laptop sales expected to maintain a 20% CAGR between 2005 and 2010 and corporate sales trailing slightly behind with a CAGR of 15% over the same period. While in 2005 laptops made up 40% of computer sales, they are expected to outsell desktops for the first time in 2008 according to NPD Group. Signs of this trend became visible in 2005 when for the first time ever sales of laptop computers outsold desktops in a one month period. There are indications from one of our largest customers that total laptop unit shipments could be greater than 90 million in 2007 following the launch of Microsoft Vista. As with the flat-panel television market, a decrease in product pricing has contributed to the increase in unit sales. According to the Wall Street Journal, in 2005 the average price of a laptop computer was $1000 compared to $1250 in 2004 and $1640 in 2001. As other features of laptops, such as processing power and weight, have improved dramatically in recent years, laptop audio performance has evolved very little. We believe that the increased use of laptop computers for music and multimedia purposes will drive the need for improved audio equipment in laptop computers.

We also believe that the expanding portable device market, including devices such as portable DVD players, MP3 and portable music devices and mobile phones, will drive rapid growth in high quality ultra compact speaker sales. The increase in flashed-based and hard disk drive audio player sales has been significant in recent years. According to CEA, in 2005 the sales of such devices more than quadrupled from the previous year with unit sales of 140 million and 35 million, respectively. The market is expected to continue to experience strong growth with approximately 286 million units sold annually by 2010. Revenue from sales of MP3 players totaled $3 billion in 2005, an increase of 200% over 2004 sales figures. Total sales for 2006 are expected to be approximately $4.5 billion. In addition to preferring an ultra-compact design, it is likely that consumers will choose those devices that provide increased multimedia features. We believe that the integration of high-level audio capabilities provides device makers with an additional product differentiator.

Like the expanding markets for portable devices and laptop computers, we believe that the changing face of the mobile phone industry is also going to give rise to a demand for higher quality micro-audio products. According to Gartner Research, in 2005 there were 778 million mobile phone devices sold and the number of units is expected to increase to 1 billion by 2009. The mobile phone industry has a high product turnover with customers upgrading devices approximately every two years. Nokia estimates that there will be 3 billion total subscribers by 2008, and it is estimated that these numbers will continue to increase dramatically as mobile phone usage grows in emerging markets. In addition to the rapid growth in the number of mobile phone subscribers, the manner in which mobile devices are utilized is changing dramatically. Users of mobile phones can now listen to music, watch streaming video and navigate the Internet. In addition, subscribers are increasingly customizing their devices with auditory features such as ringtones and ringbacks. According to BMI the U.S. ringtone sale revenue totaled $600 million in 2005, up from $245 million in 2004 and $68 million in 2003 and it is expected to grow to $1 billion by 2008.

10

Competition

We compete in the traditional audio and micro-audio market segments.

In the traditional audio market we provide component speakers to ultra high-end manufacturers and sell our own line of home and mobile audio products. Several well established companies participate in the mid to high-end of the traditional home and pro audio markets. Among these companies are Bose Corporation, Boston Acoustics, Inc., Harman International Industries, Inc., Polk Audio, Inc., Alpine Electronics, Inc., Bang & Olufsen Holding A/S and Clarion Co. Ltd.

In the micro-audio market we provide component speakers incorporating our Whisper technology to OEM manufacturers of electronics such as laptop computers and televisions and displays. Companies that have developed micro-audio products include NXT, Plc, AAC Acoustic Technologies Holdings, Inc., Tymphany Corporation, SLS International, Inc. and American Technology Corporation. However, not all of these companies target the laptop computer or mobile device markets.

The markets for traditional audio and micro-audio speakers are competitive and subject to continuous technological innovation. Our competitiveness depends on our ability to offer high-quality products that meet our customers’ needs on a timely basis. The principal competitive factors of our products are time to market, quality, price and breadth of product line. Many of our competitors have significant advantages over us such as far greater name recognition and financial resources than we have. At this time we do not represent a significant competitive presence in our industry.

Intellectual Property and Proprietary Rights

We try to protect our intellectual property through existing laws and regulations and by contractual restrictions. We rely upon trademark, patent and copyright law, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to help us protect our intellectual property.

We currently have twenty-nine issued US patents covering the design and technical innovations found in our audio products. The granting of any patent involves complex legal and factual questions. The scope of allowable claims is often uncertain. As a result, we cannot be sure that any patent application filed by us will result in a patent being issued, nor that any patents issued will afford adequate protection against competitors with similar technology, nor can we provide assurance that patents issued to us will not be infringed upon or designed around by others.

We also own seven trademarks. We believe that these trademarks significantly strengthen consumer awareness of the AuraSound brand.

11

Property

We share office space with InSeat Solution, LLC, an entity under the control of Mr. Arthur Liu and have agreed to pay 40% of the rent commitment. For the years ended March 31, 2006 and 2005, these amounts totaled $49,542 and $48,094, respectively. For the eleven months ended February 28, 2007, we have accrued an additional $45,641 in rent. We have not paid any portion of the rent accrual. This entity currently leases approximately 21,355 square feet of office, warehouse and research and development space which is located at 11839 East Smith Avenue, Santa Fe Springs, California. The lease will expire on August 31, 2008.

Employees

As of June 1, 2007, AuraSound had 6 full-time employees. Since inception, we have never had a work stoppage. Our employees are not represented by labor unions. We consider our relationships with our employees to be good.

Legal Proceedings

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of our business. Neither AuraSound nor Hemcure, Inc. are currently parties to any legal proceedings, the adverse outcome of which, in their respective management’s opinion, individually or in the aggregate, would have a material adverse effect on their results of operations or financial position.

RISK FACTORS

RISKS RELATING TO OUR BUSINESS

We have a history of losses and may not be profitable in the future.

Our independent auditor has noted in its report concerning our financial statements as of March 31, 2006 that we have incurred substantial losses and had negative cash flow in operating activities for the last two fiscal years, which, along with our accumulated deficit of $2,976,873 raises substantial doubt about our ability to continue as a going concern.

We sustained a net loss of $942,940 for the fiscal year ended March 31, 2006 and a net loss of $1,829,429 for the eleven months ended February 28, 2007. We cannot assure you that we will generate sufficient cash flow to meet our obligations or achieve operating profits in the future.

We experience variability in quarterly operating results.

Our operating results tend to vary from quarter to quarter. Revenue in each quarter is substantially dependent on orders received within that quarter. Conversely, our expenditures are based on investment plans and estimates of future revenues. We may, therefore, be unable to quickly reduce spending if revenues decline in a given quarter. As a result, operating results for such quarters would be adversely impaired. Results of operations for any one quarter are not necessarily indicative of results for any future period. Other factors which may cause quarterly results to fluctuate or to be adversely impacted include:

· increased competition in niche markets;

· timing of new product announcements;

· product releases and pricing changes by us or our competitors;  

12

· market acceptance or delays in the introduction of new products;

· production constraints;

· the timing of significant orders;

· customers’ budgets; and

· foreign currency exchange rates.

We will need to raise additional capital in order to implement our long-term business plan.

Our ability to implement our long-term strategy and expand our operations largely depends on our access to capital. To implement our long-term strategy, we plan to make ongoing expenditures for the expansion and improvement of our product line and the promotion of our products. We may also wish to make expenditures to acquire other businesses. To date, we have financed our operations primarily through sales of equity and the issuance of notes. If we were to attempt to expand our business at a faster pace than currently contemplated, or if we were to identify an acquisition target, we would need to raise additional capital through the sale of our equity securities or debt instruments. However, additional capital may not be available on terms acceptable to us. Our failure to obtain sufficient additional capital could curtail or alter our long-term growth strategy or delay needed capital expenditures.

We may not be able to effectively manage our growth.

Our strategy envisions growing our business. We plan to continue to develop our technology and to hire additional sales, administrative and marketing personnel. Any growth in or expansion of our business is likely to place a strain on our management and administrative resources, infrastructure and systems. In order to expand our business, we may be required to purchase or lease additional machinery and equipment, hire, train and supervise additional personnel and make significant outlays of capital. These measures are time consuming and expensive, will increase management’s responsibilities and will divert management’s attention from our day-to-day operations. We cannot assure you that we will be able to:

· expand our systems effectively or efficiently or in a timely manner;

· allocate our human resources optimally;

· meet our capital needs;

· identify and hire qualified employees or retain valued employees; or

· incorporate effectively the components of any business or product line that we may acquire in our effort to achieve growth.

Our inability or failure to manage our growth effectively could harm our business and materially and adversely affect our operating results and financial condition.

If we fail to manage our inventory effectively, our results of operations could be adversely affected.

Our customers have many brands to choose from when they decide to order products. If we cannot deliver products quickly and reliably, customers will order from a competitor. We must stock enough inventory to fill orders promptly, which increases our financing requirements and the risk of inventory obsolescence. Competition may force us to shorten our product life cycles and more rapidly introduce new and enhanced products. This, too, could leave us with obsolete inventory. If we do not manage our inventory successfully, it could have a material adverse effect on our results of operations.

Our products are subject to liability concerns.

Some of our products, such as amplifiers, speakers and our Bass Shaker devices are electronically powered and carry a risk of electrical shock or fire. If our products caused electrical shock or fire, the damaged party could bring claims for property damage, physical injury or death. These types of legal actions, if threatened or brought, may be costly to defend, may distract management’s attention from operating our business and may result in large damage awards.

13

Our products are manufactured in China. A change in China’s trade status could adversely affect our results of operations.

Our ability to import products from China at current tariff levels could be materially and adversely affected if the “normal trade relations” (“NTR”, formerly “most favored nation”) status the United States government has granted to China for trade and tariff purposes is terminated. As a result of its NTR status, China receives the same favorable tariff treatment that the United States extends to its other “normal” trading partners. China’s NTR status, coupled with its membership in the World Trade Organization, could eventually reduce barriers to manufacturing products in and exporting products from China. However, we cannot provide any assurance that China’s WTO membership or NTR status will not change. If China were to lose its NTR status, the increase in tariffs could adversely affect our results of operations.

Some of our important customers are located outside the United States.

Historically, about 28.16% of our net sales are made to customers outside the United States. We believe that international sales will continue to represent a significant portion of our revenues. Our revenues from international sales may fluctuate due to various factors, including:

· changes in regulatory requirements;

· changes to tariffs and taxes;

· increases in freight costs, or damage or loss in shipment;

· difficulties in hiring and managing foreign sales personnel;

· longer average payment cycles and difficulty in collecting accounts receivable;

· fluctuations in foreign currency exchange rates;

· product safety and other certification requirements; and

· political and economic instability, wars and terrorist activity.

If international sales declined significantly or if any of the above factors adversely impacted the revenues we earn from international sales, there may be a material adverse effect on our results of operations.

Our products are subject to regulations. If we fail to obtain regulatory approval to sell our products, it could have a material adverse effect on our business and results of operations.

In the United States, our products must comply with various regulations and standards defined by the Federal Communications Commission, the Consumer Products Safety Commission and Underwriters’ Laboratories. Internationally, our products may be required to comply with regulations or standards established by authorities in the countries into which we sell our products, as well as various multinational or extranational bodies. The European Union, or EU, has issued a directive on the restriction of certain hazardous substances in electronic and electrical equipment, known as RoHs, and has enacted the Waste Electrical and Electronic Equipment directive, or WEEE, applicable to persons who import electrical or electronic equipment into Europe. Although neither of these directives is currently applicable to our products , both are expected to become effective and at that time they would apply to our products. We are currently implementing measures to comply with each of these directives as individual EU nations adopt their implementation guidelines. Although we believe our products are currently in compliance with domestic and international standards and regulations in countries to which we export, we can offer no assurances that our existing and future product offerings will remain compliant with evolving standards and regulations. If we fail to obtain timely domestic or foreign regulatory approvals or certification, we may be unable to sell our products into jurisdictions to which these standards apply. This would have a material adverse effect on our business and results of operations.

14

We depend on key customers.

In the past, a significant portion of our revenue was attributed to a small number of customers and this may continue. During the fiscal year ended March 31, 2006, one customer was responsible for about 47% of our revenues. Furthermore, none of our customers have continuing obligations to purchase products from us. If our relationships with our largest customer deteriorated for any reason we could lose a substantial portion of our net sales revenues, which would have a material adverse impact on our results of operations, liquidity and financial condition.

We may not be able to adequately protect our intellectual property rights.

We try to protect our intellectual property in a number of different ways. We rely in part on patent, trade secret, unfair competition and trademark law to protect our rights to certain aspects of our products, including product designs, proprietary manufacturing processes and technologies, product research and concepts and recognized trademarks, all of which we believe are important to the success of our products and our competitive position. There can be no assurance that any of our pending patent or trademark applications will result in the issuance of a registered patent or trademark, or that any patent or trademark granted will be effective in thwarting competition or be held valid if subsequently challenged. In addition, there can be no assurance that the actions taken by us to protect our proprietary rights will be adequate to prevent imitation of our products, that our proprietary information will not become known to competitors, that we can meaningfully protect our rights to unpatented proprietary information or that others will not independently develop substantially equivalent or better products that do not infringe on our intellectual property rights. We could be required to devote substantial resources to enforce our patents and protect our intellectual property, which could divert our resources and result in increased expenses. In addition, an adverse determination in litigation could subject us to the loss of our rights to a particular patent or other intellectual property, could require us to obtain from or grant licenses to third parties, could prevent us from manufacturing, selling or using certain aspects of our products or could subject us to substantial liability, any of which could harm our business.

We may become subject to litigation for infringing the intellectual property rights of others.

Others may initiate claims against us for infringing on their intellectual property rights. We may be subject to costly litigation relating to such infringement claims and we may be required to pay compensatory and punitive damages or license fees if we settle or are found culpable in such litigation. In addition, we may be precluded from offering products that rely on intellectual property that is found to have been infringed by us. We also may be required to cease offering the affected products while a determination as to infringement is considered. These developments could cause a decrease in our operating income and reduce our available cash flow, which could harm our business.

We may be unable to attract and retain qualified, experienced, highly skilled personnel, which could adversely affect the implementation of our business plan.

Our success depends to a significant degree upon our ability to attract, retain and motivate skilled and qualified personnel. If we fail to attract, train and retain sufficient numbers of these qualified people, our prospects, business, financial condition and results of operations will be materially and adversely affected. In particular, we are heavily dependent on the continued services of Mr. Arthur Liu, our Chief Executive Officer, and the other members of our senior management team. We do not have long-term employment agreements with any of the members of our senior management team, each of whom may voluntarily terminate his employment with us at any time. Following any termination of employment, these employees would not be subject to any non-competition covenants. The loss of any key employee, including members of our senior management team, and our inability to attract highly skilled personnel with sufficient experience in our industry could harm our business.

15

RISKS RELATED TO OUR INDUSTRY

Our products may become obsolete due to rapid technological change within the industry.

Product technology evolves rapidly, making timely product innovation essential to success in the marketplace. The introduction of products with improved technologies or features may render our existing products obsolete and unmarketable. If we cannot develop products in a timely manner in response to industry changes, or if our products do not perform well, our business and financial condition will be adversely affected.

Our Whisper driver technology may not gain market acceptance.

Our future financial performance will depend on market acceptance of our Whisper driver technology and products. To date, we have had limited sales of products containing our new Whisper drivers. If our Whisper driver technology and product line do not gain sufficient positive market acceptance, we may not achieve anticipated revenue, profits or continued viability.

In the audio market, we are subject to intense competition.

The market for sound enhancement products in general is intensely competitive and sensitive to new product introductions or enhancements and marketing efforts by our competitors. The market is affected by ongoing technological developments, frequent new product announcements and introductions, evolving industry standards and changing customer requirements. We face competition from a number of well-known brands including Bose, NXT, and Bang & Olufsen. Many of our competitors are substantially better capitalized and have substantially stronger market presence than we have. Although we have attempted to design our home audio systems to compete favorably with other products in the market, we may not be able to establish and maintain our competitive position against current or potential competitors. Competition may have the effect of reducing the prices we can charge for our products, increasing marketing costs associated with developing and maintaining our market niche, or reducing the demand for our products. If we fail to compete successfully, either now or in the future, our profitability and financial performance will likely be materially adversely affected. We do not currently represent a significant presence in the sound enhancement products market.

We are susceptible to general economic conditions, and a downturn in our industry or a reduction in spending by consumers could adversely affect our operating results.

The electronics industry in general has historically been characterized by a high degree of volatility and is subject to substantial and unpredictable variations resulting from changing business cycles. Our operating results will be subject to fluctuations based on general economic conditions, in particular conditions that impact discretionary consumer spending. A downturn in the electronics sector in particular or in the economy in general could directly and negatively impact sales of audio products, which would adversely impact our revenues and results of operations.

16

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

The information contained in this section should be read in conjunction with our consolidated financial statements and related notes and the information contained elsewhere in this Current Report under the captions "Risk Factors," and "Business .

Overview

We are a southern California based developer, manufacturer and marketer of premium audio products. Since our business began in 1987, we have focused on the development of innovative and revolutionary magnetic speaker motor designs to deliver high-end audio products to the OEM, home and professional audio markets. We have developed a proprietary portfolio of unique audio speaker technologies as a result of this emphasis on research & development, which we believe has led to strong brand recognition among audiophiles, sound engineers, electronics manufacturers and premium audio manufacturers.

During the last two years, the Company has focused it’s research and development efforts on the development of new product lines for the micro-audio market. Specifically, the Company has developed miniaturized speakers that our tests indicate will deliver sound quality to devices such as laptop computers, flat-panel tv’s, display screens, and cell and other mobil phones which we believe to be superior to the speakers currently utilized by such devices. Our micro-audio products have been tested and approved by NEC, Quanta, Compal, Toshiba, Amtran, Epson and Acer, with NEC and Quanta already designing our speakers into their new products. We believe that the market for micro-audio products is significant and expect continual rapid growth as devices such as mobile telephones, computers, televisions and personal digital assistants continue their rapid growth. While we expect that micro-audio revenue will soon exceed revenue from our premium audio products, we intend to continue making our premium speakers in addition to our micro-audio speakers for the forseable future.

While most of the Research and Revelopment is done in Santa Fe Springs, California, our products are manufactured in a 120,000 square foot manufacturing facility in Dongguan China under a long-term agreement with Granford Holdings Limited.

Our sales are made primarily on an OEM basis to manufacturers of high end speakers and sound systems. Historically, about 28.16% of our net sales are made to customers outside the United States. We believe that international sales will continue to represent a significant portion of our revenues.

On June 7, 2007, in order to provide the resources necessary for the ramp-up of production of our micro-audio products to meet demand, we completed the initial closing on a $12.0 million securities offering . The net proceeds from this offering are expected to be about $10.7 million and we will use these funds primarily for: the purchase of inventory, repayment of certain debt and for working capital. Concurrent with the closing of the securities offering, the Company negotiated a $10.0 one-year Accounts Receivable credit facility and a one year $2.0 million Letter of Credit facility with Bank SinoPac in order to insure resource availability.

General

Net sales are comprised of gross sales less returns and cash discounts. Our operating results may be seasonal, with a greater percentage of net sales being earned in the third and fourth quarters of our fiscal year due to the fall and winter selling seasons.

17

Cost of goods sold consists primarily of material costs, direct labor, direct overhead, inbound freight and duty costs, warranty costs, sales commission and a reserve for inventory obsolescence.

Research and development costs consist primarily of costs related to new product commercialization including product research, development and testing.

Our selling, general and administrative expenses consist primarily of non-marketing payroll and related costs and corporate infrastructure costs.

Results of Operations

Eleven Months Ended February 28, 2007 Compared with Eleven Months Ended February 28, 2006

Net Salesincreased $940,342, or 76%, to $2,178,471 for the eleven months ended February 28, 2007 from $1,238,129 for the corresponding period in 2006. This increase was primarily due to the addition of new customers.

Gross Profitincreased $279,036 to $527,507 for the eleven months ended February 28, 2007 from $248,471 for the corresponding period in 2006. Gross profit as a percentage of net sales increased 4.1% to 24.2% for the eleven months ended February 28, 2007 from 20.1% for the corresponding period in 2006.

Research and Development Expensesincreased $413,370, or 111%, to $785,851 for the eleven months ended February 28, 2007 from $372,481 for the corresponding period in 2006. This increase was primarily due to an increase in new model development. As a percentage of net sales Research and Development costs increased 6.0% to 36.1% of net sales for the eleven months ended February 28, 2007 from 30.1% of net sales for the corresponding period in 2006.

General and Administrative Expenses increased $674,446, or 191%, to $1,028,191 for the eleven months ended February 28, 2007 from $353,745 for the corresponding period in 2006. This increase was attributable primarily to an increase in non-marketing payroll and related costs and corporate infrastructure costs. As a percentage of net sales, general and administrative expenses increased 18.6% to 47.2% for the eleven months ended February 28, 2007 from 28.6% for the corresponding period in 2006.

Loss from Operationsincreased $808,780, or 169%, to ($1,286,535) for the eleven months ended February 28, 2007 from ($477,755) for the corresponding period in 2006. Loss from operations as a percentage of net sales increased to (59.1%) for the eleven months ended February 28, 2007 from (38.6%) for the corresponding period in 2006. This was primarily the result of increases in Research and Development and General and Administrative expenses partially offset by an increase sales and improved profit margins.

Interest Expenseincreased $130,344 to $286,031 for the eleven months ended February 28, 2007 from $155,687 for the corresponding period in 2006. The increase was primarily due to an increase in debt.

Other Expense increased $32,844 to $256,863 for the eleven months ended February 28, 2007 from $224,019 for the corresponding period in 2006.

18

Net Lossincreased $971,968 to $1,829,429 for the eleven months ended February 28, 2007 from $857,461 for the corresponding period in 2006, as a result of the combination of each of the factors discussed above.

Year Ended March 31, 2006 Compared with Year Ended March 31, 2005

Net Sales increased $348,924, or 26.2%, to $1,680,813 in the year ended March 31, 2006 (“Fiscal 2006”) from $1,331,889 in the year ended March 31, 2005 (“Fiscal 2005”). The increase was primarily due to orders from new customers.

Gross Profitincreased $41,740 to $430,548 in Fiscal 2006 from $388,808 in Fiscal 2005 due to the sales increase noted above. Gross margin decreased to 25.6% in 2006 from 29.2% in 2005.

General and Administrative Expensesdecreased $132,734, or 21.5%, to $485,314 in Fiscal 2006 from $618,048 in 2005. General and administrative expenses, as a percentage of net sales, decreased by 17.5% to 28.9% in 2006 from 46.4% in Fiscal 2005. This decrease was a direct result of a downsizing of the administrative function and outsourcing of certain of the administrative processes.

Research and Developmentcosts increased $56,657 to $451,534 from $394,877. Research and development costs, as a percentage of net sales, decreased 2.8% to 26.9% in Fiscal 2006 from 29.6% in Fiscal 2005 as the Company focused limited resources on production activities..

Loss from Operationsdecreased $117,817 or 18.9%, to ($506,300) in 2006 from ($624,117) in Fiscal 2005. The loss from operations as a percentage of net sales decreased to (30.1%) in Fiscal 2006 from (46.9%) in Fiscal 2005. This decrease was a result of an increase in net sales and a slower increase in overhead.

Interest Expenseincreased $40,644 to $191,620 in Fiscal 2006 from $150,976 in Fiscal 2005. The increase in interest expense was attributable to higher levels of debt.

Other Income (Expense)increased $29,289 to $245,020 in Fiscal 2006 as compared with $215,731 in Fiscal 2005.

Net Lossdecreased $47,884 to ($942,940) in Fiscal 2006 from ($990,824) in Fiscal 2005, as a result of the factors described above.

Seasonality and Quarterly Results

Our working capital, at any particular time, reflects the seasonality of our business. We expect inventory, accounts payable and accrued expenses to be higher in the third and fourth quarters in preparation for our winter selling season.

Liquidity and Capital Resources

Our cash requirements are principally for working capital. Our need for working capital is seasonal, with the greatest requirements from July through the end of November each year as a result of our inventory build-up during this period for our fall and winter selling seasons.

In Fiscal 2006, cash used in operating activities was $37,680 and consisted of a net loss of $942,940. Operating assets and liabilities consisted primarily of increases in accounts receivable of $204,185, in inventory of $74,031 and increases in accounts payable and accrued expenses of $516,814.

In Fiscal 2005, cash used in operating activities was $26,188 and consisted of a net loss of $990,824. Operating assets and liabilities consisted primarily of increases in accounts receivable of $120,671, decreases in inventory of $51,754, partially offset by a net decrease in accounts payable and accrued expenses of $45,515.

19

For the eleven months ended February 28, 2007, cash used in operating activities was $3,367,308 and consisted mainly of a net loss of $1,829,429, a net advance to vendors of $2,177,509, a $222,063 decrease in accounts payable, and an increases in inventory, partially offset by an increase in accrued expenses and an advance from a customer.

For the eleven months ended February 28, 2006, cash generated by operating activities was $16,996, which consisted primarily of increases in accounts payable and accrued expenses mostly offset by a net loss of $857,461 and a $163,281 increase in inventory.

Investing activities.We did not have any capital expenditures for Fiscal 2005 and 2006, or during the eleven months ended February 28, 2007.

Financing activitiesduring Fiscal 2006 consisted of our borrowing $38,000 pursuant to a note payable from a related party. No financing activity occurred during Fiscal 2005. For the eleven months ended February 28, 2007, financing activities consisted of our borrowing $745,864 pursuant notes payable to related parties and $2,638,000 pursuant to various bridge notes. For the eleven months ended February 28, 2006, financing activities consisted of our borrowing $12,253 pursuant to a note payable to a related party.

We believe that our cash flows from operations and the net proceeds from the offering which had an initial closing on June 7, 2007 will be adequate to meet our liquidity needs and capital expenditure requirements for the next 12 months, however, the rapid growth expected by management could result in negative cash flow which may require additional financing. Any such financing may take the form of debt or equity offerings.

Our ability to access sources of liquidity may be negatively impacted by a decrease in demand for our products as well as the other factors described in "Risk Factors."

Notes Payable

As of February 28, 2007, short term bridge notes payable outstanding totaled $2,638,000 with an additional $8,000 due to a related party. The bridge notes are secured, bear interest at 12% and are due on various dates in 2007. The related party note bears interest at 9% and does not include a stated due date.

As of February 28, 2007, long term notes payable totaled $3,414,905 and consists of notes to an entity under common ownership bearing interest at 8% per annum, with principal and interest due on March 31, 2009.

Off-Balance Sheet Arrangements

We currently do not have any off-balance sheet arrangements or financing activities with special purpose entities.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. To prepare these financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities. These estimates also affect our reported revenues and expenses. On an ongoing basis, management evaluates its estimates and judgment, including those related to revenue recognition, accrued expenses, financing operations and contingencies and litigation. Management bases its estimates and judgment on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements are set forth in Note 1 to our audited financial statements.

20

New Accounting Pronouncements

Note 1 to our financial statements for Fiscal 2005 and Fiscal 2006, and the eleven month periods ended February 28, 2007 and February 28, 2006, set forth certain accounting pronouncements that are applicable to our financial statements.

Qualitative and Quantitative Disclosures About Market Risk

Interest Rates

We are not being exposed to market risks relating to changes in interest rates because all outstanding debt bears interest at a fixed rate. We currently do not engage in any interest rate hedging activity and have no intention of doing so in the foreseeable future.

Foreign Exchange

We currently generate approximately 28% of our sales internationally. The reporting currency for our financial statements is the U.S. Dollar. To date, we have not been impacted materially by changes in exchange rates and do not expect to be impacted materially for the foreseeable future. However, as our net sales generated outside of the United States increase, and should future sales be generated in foreign currencies, our results of operations could be adversely impacted by changes in exchange rates. For example, if we recognize international sales in local foreign currencies, as the U.S. Dollar strengthens it would have a negative impact on our international results upon translation of those results into U.S. Dollars upon consolidation. We do not currently hedge foreign currency fluctuations and do not intend to do so for the foreseeable future.

Inflation

Inflationary factors such as increases in the cost of our product and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of net sales if the selling prices of our products do not increase with these increased costs.

Security Ownership of Certain Beneficial Owners and Management

The following table presents information regarding the beneficial ownership of our common stock upon the closing of the Merger, with respect to:

each of our executive officers listed in the summary compensation table;

each of our directors and director designees;

all of our directors, director designees and executive officers as a group; and

each stockholder known by us to be the beneficial owner of more than 5% of our common stock.

21

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Shares of our common stock subject to options or warrants that are currently exercisable or that will be issued and exercisable within 60 days of the closing of the Merger, are deemed to be outstanding and to be beneficially owned by the person holding the options or warrants for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

The information presented in this table is based on 25,505,305 shares of common stock of Hemcure, Inc. issued and outstanding on June 7, 2007.Unless otherwise indicated, the address of each of the executive officers, directors, director designees and 5% or more stockholders named below is AuraSound, Inc., 11839 East Smith Avenue, Santa Fe Springs, California 90670.

Security Ownership Table

Name of Beneficial Owner	Number of Shares Beneficially Owned	Percentage of Shares Outstanding (1)
Executive Officers and Directors:
Arthur Liu Director Designee, Chief Executive Officer	10,603,303	40.0%
Donald North Vice President of Engineering	0	0.0%
Amy Liu Director Designee	0	0.0%
Celia Cheng Director Designee	0	0.0%
Robert Pearson Director Designee	12,333,333	37.0%
Bartley J. Loethen Director	800,000	3.1%
Directors and officers as a group (5 persons)	23,736,636	68.8%
5% Stockholders:
Vision Opportunity Master Fund Ltd.	20,555,556	53.3%
RENN Capital or its affiliated investment vehicles	12,333,333	37.0%

*Less than 1%

(1) The numbers in this column represent percentage ownership of common stock on a fully diluted basis on June 7, 2007

22

Directors and Executive Officers, Promoters and Control Persons

The following table sets forth the name, age and position of each of Hemcure Inc.’s current officers, director designees who will take office subject to Hemcure Inc.’s compliance with Rule 14f-1 of the Exchange Act and key management team members.

Name	Age	Position
Bartley J. Loethen	43	Sole Director
Arthur Liu	67	Chairman of the Board Designee and Chief Executive Officer
Amy Liu	31	Director Designee
Celia Cheng	63	Director Designee
Donald North	33	Vice President of Engineering
Robert Pearson	71	Director Designee

Arthur Liu, Chairman Designee, Chief Executive Officer

Mr. Liu has served as the Chairman of AuraSound’s Board of Directors and as its Chief Executive Officer since 1999. Mr. Liu moved to the U.S. in 1991 and subsequently purchased and developed three companies: AuraSound, Alaris, a company engaged in developing computer video technologies, and InSeat Solutions, a company that develops and manufactures massage and heat components for chairs and sofas. Mr. Liu is currently operating AuraSound and InSeat and has since sold Alaris. Prior to moving to U.S., Mr. Liu jointly purchased Universal Appliance Limited, a Hong Kong-based company where he served as the owner and general manager. Mr. Liu took the company public in 1987 and sold his shares in 1990. Prior to his purchase of Universal Appliance Limited, Mr. Liu served as the Director of Engineering at an electronics company in Hong Kong. Mr. Liu began his career as a mechanical engineer at an automotive and electronics company in Taiwan. Mr. Liu is a graduate of the Navy Academy in Taiwan where he majored in mechanical engineering. Mr. Liu is Ms. Amy Liu’s father.

Amy Liu, Director Designee

Ms. Liu has served as a member of AuraSound’s Board of Directors since 1999. Ms. Liu is a Senior Art Director at BLT & Associates in Los Angeles, California, a creative design agency where she oversees marketing projects for clients such as Paramount, Sony Pictures, Warner Bros and Universal. Ms. Liu graduated from the Art Center College of Design in Pasadena, California in 2000. Ms. Liu is the daughter of Arthur Liu.

Celia Cheng, Director Designee

Ms. Cheng founded Qing Cheng Enterprises Ltd. in 1982. Qing Cheng Enterprises Ltd. was acquired by Solomon Group (Taiwan), in 1995 and Ms. Cheng has served as Managing Director since that date. For the last 25 years, Qing Cheng Enterprises has been Motorola Semiconductor’s (now ON Semiconductor) Southern region (including Hong Kong, Taiwan, and southern China) chief distributor.

Donald North, Vice President of Engineering

Mr. North has served as AuraSound’s Engineering Director since 2005. Prior to his current position at AuraSound, Mr. North was a Loudspeaker Design Engineer at Harman International from 1999 to 2000 and served as a Transducer Engineer at AuraSound from 1995 to 1999. Mr. North began his career as an engineer for Boston Acoustics in 1995. Mr. North is the inventor of the patented Whisper transducer and has served as the lead project engineer and project manager for the R&D teams responsible for the creation of several AuraSound product lines including the Mobile Reference series of woofers and Monster Cable’s M Design series of home theater loudspeakers. Mr. North graduated from California Institute of Technology in 1994 with a B.S. in Engineering and Applied Science.

23

Robert Pearson, Director Designee

Mr. Pearson has served as Vice President of Renn Capital Group since April 1997. He joined Renn Capital Group in April 1997 and is Senior Vice-President - Investments. Mr. Pearson brought more than thirty years of experience to Renn Capital Group’s corporate finance function. From May 1994 to May 1997, Mr. Pearson was an independent financial management consultant. From May 1990 to May 1994, he served as Chief Financial Officer and Executive Vice-President of Thomas Group, Inc., a management consulting firm, where he was instrumental in moving a small privately held company from a start-up to a public company with more than $40 million in revenues. Prior to 1990, Mr. Pearson was responsible for all administrative activities for the Superconducting Super Collider Laboratory. In addition, from 1960 to 1985, Mr. Pearson served in a variety of positions at Texas Instruments in financial planning and analysis, holding such positions as Vice-President - Controller and Vice-President - Finance. Mr. Pearson holds a BS in Business from the University of Maryland and was a W.A. Paton Scholar with an MBA from the University of Michigan. He is a director of eOriginal, Inc., CaminoSoft Corp., Information Intellect, and Simtek Corporation.

BartlyJ. Loethen, Outgoing SoleDirector

Prior to the Merger, Mr. Loethen was the sole officer and director of Hemcure. In connection with the Merger, Mr. Loethen resigned from all of his positions at Hemcure and has tendered his resignation as a director, subject to Hemcure’s compliance with Rule 14f-1 of the Exchange Act. Mr. Loethen is an attorney and founding partner of Synergy Law Group, L.L.C. He practices corporate law. Mr. Loethen’s experience includes working with privately-held companies, public companies, mergers and acquisitions, private placement investments, financing transactions, and licensing matters, as well as general corporate matters. Prior to the practice of law, Mr. Loethen was a Revenue Agent with the Internal Revenue Service. Mr. Loethen holds a B.S./B.A. in Accounting from the University of Missouri (1986), is a certified public accountant, and received his J.D. from the University of Illinois College of Law (1994).

Committees of the Board of Directors

We do not currently have a compensation committee, audit committee, or nominating and corporate governance committee. The functions customarily delegated to these committees have been performed by the board of directors. Because our company has been controlled by Mr. Bartley J. Loethen, who currently acts as the sole director, we believe that it is appropriate that our Board function without these committees.

Corporate Governance and Other Matters

None of our director designees has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. To the best of our knowledge, none of our director designees has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past five years, except for matters that were dismissed without sanction or settlement, that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. While our Common Shares are not traded on any exchange, we have used Section 121A of the Rules of the American Stock Exchange to determine if our director designees are “independent”. Using the definition of “independent” as set forth in Section 121A, we have determined that Robert Pearson will be our sole “independent director”. We believe that Robert Pearson has the qualifications of an audit committee financial expert.

Immediately prior to the closing of the Merger, we were a controlled company in that Next Stage Investments, Inc., an affiliate of the placement agent for the Offering, controlled over 50% of the voting power of our issued and outstanding Common Shares. Because we were a controlled company, nominations to our Board of Directors in connection with the Merger were not made by either a nominating committee comprised solely of independent directors or by a majority of independent directors. Instead, nominees to the Board of Directors were nominated only by Mr. Loethen. To date, due to our status as a controlled company, our Board of Directors has no policy with regard to the consideration of director-candidates recommended by stockholders.

We do not have specific minimum qualifications that a person must meet in order to serve on our Board of Directors. We sought out individuals who would be able to guide our new operations based on a number of traits including, but not limited to, business experience, knowledge of our industry, education and familiarity with operating a public company. To date, we have not paid any third parties to assist us in finding suitable candidates to serve as directors. We have not received a director-nominee recommendation from any stockholder, other than Mr. Loethen who controls one of our minority stockholders.

During the last fiscal year Mr. Loethen was our sole director. During the last fiscal year, there were no meetings of the Board of Directors. We currently have no policy regarding the attendance of directors at an annual meeting of stockholders.

As noted below in the discussion titled “Committees of the Board of Directors”, we do not have a standing compensation committee because we have not paid compensation to our officers or directors.

The Board of Directors has not established a formal process for stockholders to send communications to its members. Any stockholder may send a communication to any member of the Board of Directors in care of our new address below:

Hemcure, Inc.

11839 East Smith Avenue

Santa Fe Springs, CA 90670

If a communication is sent to our address, we will forward any such communication to the Board member. If the stockholder would like the communication to be confidential, it should be so marked.

24

Executive Compensation

The following table sets forth information concerning all compensation paid to AuraSound’s Executive Officers for services to AuraSound in all capacities for each of the three fiscal years of AuraSound, Inc. ended March 31 indicated below.

Summary Compensation Table

			Annual Compensation						Long-Term Compensation Awards
Name and Principal Position	Fiscal Year Ended March 31,		Salary		Bonus		Other Annual Compensation		Number of Securities Underlying Options
Arthur Liu		2006		--		--		--		--
Chief Executive Officer,		2005		--		--		--		--
Chairman of the Board		2004		--		--		--		--

Compensation of Directors

The Directors do not currently receive compensation for their services as directors, but are reimbursed for expenses incurred in attending board meetings. In addition, there have been no options granted to any directors.

Employment Contracts

The Company has no employment agreements with any of its executive officers. In addition, there have been no options granted to any executive officers.

Transactions with Officers and Directors

On March 3, 2006 we received a non-interest bearing loan of $38,000 from Mr. Arthur Liu, our Chief Executive Officer, Chairman of our Board of Directors and our largest shareholder. The loan is unsecured and due on demand. This loan is one of the affiliate loans to be paid out of the net proceeds of the Offering.

On March 31, 2005 we received a loan of $1,650,948 from InSeat Solutions, LLC an entity that is also controlled by Mr. Liu. The loan bears interest at 8% per year, with the principal and interest due to be paid on March 31, 2008.

On March 31, 2006 we received a loan of $731,873 from InSeat Solutions, LLC an entity that is also controlled by Mr. Liu. The loan bears interest at 8% per year, with the principal and interest due to be paid on March 31, 2009.

On September 30, 2006 we received a loan of $995,115 from InSeat Solutions, LLC an entity that is also controlled by Mr. Liu. The loan bears interest at 8% per year, with the principal and interest due to be paid on December 31, 2008.

On January 1, 2000, we hired David Liu, who is related to Mr. Arthur Liu. During each of the years ended March 31, 2006 and 2005, we paid $48,000 as compensation to him.

25

We have a management contract withInSeat Solution, LLC, an entity under the control of Mr. Arthur Liu. We have accrued a total management fee of $240,000 for services provided to us by this entity during the fiscal years ended March 31, 2006 and 2005. To date, no part of this fee has been paid. We also share office space with this entity and have agreed to pay 40% of the rent commitment. For the years ended March 31, 2006 and 2005, these amounts totaled $49,542 and $48,094, respectively. For the six months ended September 30, 2006, we have accrued an additional $24,895 in rent. We have not paid any portion of the rent accrual.

Purchase of Hemcure, Inc. Shares

On February 20, 2007 Next Stage Investments, LLC, an affiliate of the placement agent for the Offering, purchased 1,229,476 shares of common stock of Hemcure, Inc. at a price of $0.01 per share.

On February 20, 2007 Synergy Business Consulting, Inc., an entity controlled by Bartley J. Loethen, purchased 206,829 shares of common stock of Hemcure, Inc. at a price of $0.01 per share.

Management Lock-Up Agreement

At the closing of the initial Offering, Arthur Liu, AuraSound’s majority shareholder and Chief Executive Officer, entered into a Lock-Up Agreement pursuant to which he agreed not to sell any Common Shares held by him for a period of twelve (12) months from the effectiveness date of the Registration Statement, except as charitable gifts or for estate planning purposes, without the written consent of investors who purchased at least 60% of the Investment Units issued in the Offering.

Description of Our Capital Stock

The information set forth below is a general summary of our capital stock structure, on a pro forma basis, after giving effect to the Merger and the sale and issuance of 12,000,000 Investment Units. As a summary, this section is qualified by, and not a substitute for, the provisions of our amended and restated Articles of Incorporation and amended and restated Bylaws.

Authorized Capital Stock

Our authorized capital stock consists of 120,000,000 shares, par value $0.01 per share, consisting of 100,000,000 shares of common stock (“Common Shares”) and 20,000,000 shares of preferred stock.

Common Stock

The Company has 25,505,305 Common Shares issued and outstanding. In addition, the Company has reserved 24,333,888 Common Shares for issuance in respect of:

· 5-year warrants to purchase 12,000,000 Common Shares at an exercise price of $1.50 per share.

· 5-year warrants to purchase 3,200,000 Common Shares at an exercise price of $1.00 per share.

· 5-year warrants to purchase 245,000 Common Shares at an exercise price of $0.80 per share.

· Options to purchase additional Investment Units by investors of $3,000,000 or more in the Offering. It is expected that two investors will qualify, which will result in reserving 8,888,888 Common Shares.

26

Dividend Rights

Subject to the rights of the holders of preferred stock, as discussed below, the holders of outstanding Common Shares of the Company are entitled to receive dividends out of funds legally available at the times and in the amounts that the Board of Directors may determine. We have never paid a cash dividend on our common stock and we have no present intention to declare or pay cash dividends on our common stock in the foreseeable future. We intend to retain any earnings which we may realize in the foreseeable future to finance our operations. Future dividends, if any, will depend on earnings, financing requirements and other factors.

Voting Rights

Each holder of Common Shares is entitled to one vote for each Common Share held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for in our Articles of Incorporation, which means that the holders of a majority of the voting shares voted can elect all of the directors then standing for election.

No Preemptive or Similar Rights

Holders of our Common Shares do not have preemptive rights, and the Common Shares are not convertible or redeemable.

Right to Receive Liquidation Distributions

Subject to the rights of the holders of preferred stock, as discussed below, upon our dissolution, liquidation or winding-up, our assets legally available for distribution to our stockholders are distributable ratably among the holders of Common Shares.

Preferred Stock

We do not have shares of preferred stock issued or outstanding. Our Board of Directors, without obtaining the approval of our stockholders, may issue shares of preferred stock from time to time in one or more series and with such designations, preferences, rights, qualifications, limitations and restrictions as the Board approves. These designations, preferences, rights, qualifications, limitations and restrictions may include, but are not limited to, the power to determine

· the redemption and liquidation preferences,

· the rate of dividends payable, the time for and the priority of payment of the dividends, and whether or not the dividends will be cumulative,

· the terms of conversion of the preferred stock into Common Stock, and

· the voting power of the preferred stock.

We do not currently have plans to issue shares of preferred stock.

27

Anti-Takeover Provisions

Sections 78.411 through 78.444 of the Nevada Revised Statutes are designed to afford stockholders of public corporations in Nevada protection against acquisitions in which a person, entity or group seeks to gain voting control. With enumerated exceptions, the statute provides that shares acquired within certain specific ranges will not possess voting rights in the election of directors unless the voting rights are approved by a majority vote of the public corporation’s disinterested stockholders. Disinterested shares are shares other than those owned by the acquiring person or by a member of a group with respect to a control share acquisition, or by any officer of the corporation or any employee of the corporation who is also a director. The specific acquisition ranges that trigger the statute are: acquisitions of shares possessing one-fifth or more but less than one-third of all voting power; acquisitions of shares possessing one-third or more but less than a majority of all voting power; or acquisitions of shares possessing a majority or more of all voting power. Our Articles of Incorporation specifically provide that the corporation will not be governed by the provisions of NRS 78.411 through 78.444.

The authorized but unissued Common Shares and preferred stock are available for future issuance without stockholder approval. The existence of authorized but unissued Common Shares may enable our Board of Directors to issue shares of stock to persons friendly to existing management, thereby making it more difficult and more expensive for an independent party to obtain voting control.

Transfer Agent and Registrar

Our transfer agent and registrar for our Common Shares is Computershare Trust Company, Inc.

Market Price of and Dividends on Common Equity and Related Shareholder Matters.

The Company’s Common Shares are currently quoted on the Over-The-Counter Bulletin Board under the trading symbol “HMCU”. As soon as practicable under applicable federal securities laws the Company’s trading symbol will be changed concurrent with a planned change of our corporate name from Hemcure, Inc. to AuraSound, Inc.

We have never paid a cash dividend on our common stock and we have no present intention to declare or pay cash dividends on our common stock in the foreseeable future. We intend to retain any earnings which we may realize in the foreseeable future to finance our operations. Future dividends, if any, will depend on earnings, financing requirements and other factors.

The following table sets forth, for the periods indicated, the high and low bid price per share of our common stock as reported by the Over-The-Counter Bulletin Board. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

2005 (OTC Bulletin Board)	High Bid		Low Bid
First quarter ended June 30, 2005		$	$
Second quarter ended September 30, 2005
Third quarter ended December 31, 2005
Fourth quarter ended March 31, 2006		5.25		2.63
2006 (OTC Bulletin Board)		High Bid		Low Bid
First quarter ended June 30, 2006	$	4.73	$	1.75
Second quarter to ended September 30, 2006		4.38		.10
Third quarter ended December 31, 2006		.30		.20
Fourth quarter ended March 31, 2007		3.00		.25
2007 (OTC Bulletin Board)		High Bid		Low Bid
First quarter through June 7, 2007	$	1.02	$	.33

28

As of June 7, 2007 there were approximately 240 holders of record of our common stock. This number does not include an indeterminate number of shareholders whose shares are held by brokers in street name.

As of March 31, 2007, there were approximately 212 holders of record of Hemcure, Inc. Common Shares. This number does not include an indeterminate number of stockholders whose shares are held by brokerage houses in “street name”.

We have never paid a cash dividend on our common stock and we have no present intention to declare or pay cash dividends on our common stock in the foreseeable future. We intend to retain any earnings which we may realize in the foreseeable future to finance our operations. Future dividends, if any, will depend on earnings, financing requirements and other factors.

The Company considers its Common Shares to be “thinly traded” and any reported sale prices may not be a true market-based valuation of it Common Shares. Some of the bid quotations from the OTC Bulletin Board set forth below may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Legal Proceedings

From time to time we may be involved in litigation relating to claims arising out of our operations in the normal course of our business. We are not currently parties to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on our results of operations or financial position.

Changes in and Disagreements with Accountants

Schumacher & Associates, Inc., the independent accountant whom we had engaged as our principal accountant to audit our financial statements, was dismissed effective June 12, 2007. Our sole director, Bartley J. Loethen, has approved the engagement of Kabani & Company, Inc., Certified Public Accountants, as the new principal independent accountant to audit our financial statements for the fiscal year ending June 30, 2007.

The report of Schumacher & Associates, Inc. on our financial statements as of and for the fiscal years ended June 30, 2006 and June 30, 2005 did not contain an adverse opinion, or a disclaimer of opinion, however the report issued on the financial statements for the fiscal years ended June 30, 2006 and June 30, 2005 was qualified as to our ability to continue as a going concern. During the fiscal years ended June 30, 2005 and June 30, 2006 and the interim period from July 1, 2006 through the date of dismissal, we did not have any disagreements with Schumacher & Associates, Inc. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Schumacher & Associates, Inc., would have caused it to make a reference to the subject matter of the disagreements in connection with its reports.

Prior to engaging Kabani & Company, Inc. we had not consulted Kabani & Company, Inc. regarding the application of accounting principles to a specified transaction, completed or proposed, or the type of audit opinion that might be rendered on the financial statements of the combined companies.

29

Recent Sales of Unregistered Securities

On February 20, 2007 Synergy Business Consulting, LLC, an entity controlled by Mr. Bartly J. Loethen, purchased 206,829 shares of our common stock at a price of $0.01 per share, for a total investment of $2,068. The shares were issued in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended. The common stock was issued without any form of general solicitation or general advertising and the offeree occupied an insider status relative to us that afforded him effective access to the information registration would otherwise provide.

On February 20, 2007 Next Stage Investments, LLC, an affiliate of the placement agent for the Offering, purchased 1,229,476 Common Shares of Hemcure, Inc. at a price of $0.01 per share, for a total investment of $12,295.

On June 7, 2007, in conjunction with the Merger, Hemcure, Inc. issued to the former shareholders of AuraSound, Inc. 11,505,305 shares of our common stock, $0.01 par value, in exchange for 100% of the issued and outstanding shares of capital stock of AuraSound, Inc. The value of our common stock on the date it was issued was $1.00 per share. The shares were issued in reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended. The common stock was issued without any form of general solicitation or general advertising and the offerees provided information to us verifying that they were accredited investors.

In conjunction with the Merger, on June 7, 2007, we completed the sale and issuance of 12,000,000 Investment Units at a price of $1.00 per unit. Each Investment Unit consisted of one share of our common stock and a warrant to purchase one share of our common stock at an exercise price of $1.50.

Indemnification of Directors and Executive Officers and Limitation of Liability

Hemcure, Inc. is a Nevada Corporation. The Nevada Revised Statutes and certain provisions of our Articles of Incorporation provide for indemnification of our officers, directors and controlling persons against liabilities which they may incur in such capacities. A summary of the circumstances in which indemnification is provided is discussed below, but this description is qualified in its entirety by reference to our Articles of Incorporation and to the statutory provisions.

Section 78.7502 of the Nevada Revised Statutes permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he:

(a)Is not liable pursuant to Nevada Revised Statute 78.138 (a breach of fiduciary duty involving intentional misconduct, fraud, or knowing violation of the law); or

(b)Acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

30

In addition, Section 78.7502 permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he:

(a)Is not liable pursuant to Nevada Revised Statute 78.138; or

(b)Acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation.

To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter, the corporation is required to indemnify him against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.

Section 78.752 of the Nevada Revised Statutes allows a corporation to purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses.

Other financial arrangements made by the corporation pursuant to Section 78.752 may include the following:

· the creation of a trust fund.

· the establishment of a program of self-insurance.

· the securing of its obligation of indemnification by granting a security interest or other lien on any assets of the corporation.

· the establishment of a letter of credit, guaranty or surety.

No financial arrangement made pursuant to Section 78.752 may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals, to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses or indemnification ordered by a court.

Any discretionary indemnification pursuant to NRS 78.7502, unless ordered by a court or advanced pursuant to an undertaking to repay the amount if it is determined by a court that the indemnified party is not entitled to be indemnified by the corporation, may be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made:

(a) By the stockholders;

(b) By the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;

31

(c) If a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion; or

(d) If a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.

Article XI of our Articles of Incorporation requires us to indemnify all of our directors, officers, employees and agents to the fullest extent permitted by Nevada law as provided within NRS 78.7502 and NRS 78.751 or any other law then in effect or as it may hereafter be amended. Pursuant to our Articles of Incorporation, we must indemnify each present and future director, officer, employee or agent who becomes a party or is threatened to be made a party to any suit or proceeding, whether pending, completed or merely threatened, and whether said suit or proceeding is civil, criminal, administrative, investigative, or otherwise, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of we or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses, including, but not limited to, attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suite, proceeding or settlement, provided such person acted in good faith and in a manner which he reasonably believed to be in or not opposed to our best interest of and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The expenses of our directors, officers, employees or agents of incurred in defending a civil or criminal action, suit or proceeding may be paid by us as they are incurred and in advance of the final disposition of the action if the director, officer, employee or agent undertakes to repay the expenses to us if it is ultimately determined by a court, after exhaustion of all appeals, that he is not entitled to be indemnified. No indemnification shall be provided and any advancement of expenses to or on behalf of any director, officer, employee or agent must be returned to us if a final adjudication establishes that the person’s acts or omissions involved a breach of any fiduciary duties and, if applicable, intentional misconduct, fraud or knowing violation of the law which was material to the cause of action.

Neither Hemcure nor AuraSound has any indemnification agreements with any of their respective directors and executive officers, although either may do so in the future.

A stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees regarding which indemnification by us is sought, norare we aware of any threatened litigation that may result in claims for indemnification.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

ITEM 3.02UNREGISTERED SALES OF EQUITY SECURITIES

Please refer to the information included in Item 2.01 above.

ITEM 4.01CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT

32

As a result of the Merger, our certifying accountant changed. Please refer to the information included in Item 2.01 above.

ITEM 5.01CHANGES IN CONTROL OF THE REGISTRANT

As a result of the Merger, control of our company changed. Please refer to the information included in Item 2.01 above.

ITEM 5.02APPOINTMENT OF PRINCIPAL OFFICERS

As a result of the Merger, our sole director, Bartley J. Loethen, appointed new officers effective June 7, 2007 and appointed director designees to take office upon the Company’s compliance with Rule 14f-1 under the Exchange Act.. Please refer to the information included in Item 2.01 above.

ITEM 5.06CHANGE IN SHELL COMPANY STATUS

As a result of the Merger, we ceased to be a shell company as defined in Rule 12b-2 of the United States Securities Exchange Act of 1934, as amended. Please refer to Item 2.01 above for a detailed description of the Merger and our business following the consummation of the Merger.

ITEM 8.01OTHER MATTERS

Subject to compliance with applicable federal securities laws, as soon as practicable following the Company will change its name to “AuraSound, Inc.” and procure a new trading symbol which bears a closer resemblance to our new name. We will also change our address and telephone number to 11839 East Smith Avenue, Santa Fe Springs, California 90670, (562) 447-1780.

ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS

The following financial statements are filed with this Current Report:

(a)Audited financial statements of AuraSound, Inc. for the fiscal years ended March 31, 2006 and March 31, 2005.

(b)Unaudited Interim financial statements of AuraSound, Inc. for the eleven month periods ended February 28, 2007 and February 28, 2006.

(c)The registrant’s unaudited pro forma combined financial statements as of February 28, 2007.

(d) The following exhibits are filed with this Current Report:

33

Exhibit Index

Exhibit No.	Description
2	Amended and Restated Agreement and Plan of Share Exchange dated June 7, 2007 among AuraSound, Inc. and the shareholders of AuraSound, Inc. on the one hand, and Hemcure, Inc., Bartly J. Loethen and Synergy Business Consulting LLC, on the other hand.
3.1	Amended and Restated Articles of Incorporation of Hemcure, Inc.(1)
3.2	Bylaws of Hemcure, Inc.*
10.1	Lock-up Agreement dated June 7, 2007 executed by Arthur Liu*
10.2	Form of Subscription Agreement for Unit Offering*
10.3	Form of Warrant to Purchase Common Stock received by investors in Unit Offering*
16	Letter re: change in certifying accountant*

* Filed herewith.

(1) Incorporated by reference from the registrant’s Annual Report on Form 10-KSB for the period ended June 30, 2000 filed with the Securities and Exchange Commission on July 6, 2005.

34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: June 13, 2007

AURASOUND, INC.
By:	/s/ Arthur Liu
	Arthur Liu, Chief Executive Officer

35

AURA SOUND, Inc

FINANCIAL STATEMENTS

As of February 28, 2007 and For the Eleven Months Ended

February 28, 2007 and 2006

36

Index to Financial Statements

Financial Statements of AuraSound, Inc.:
Unaudited Balance Sheet - February 28, 2007	F-2
Unaudited Statements of Operations - Eleven months ended February 28, 2007 and 2006	F-3
Unaudited Statements of Cash Flows - Eleven months ended February 28, 2007 and 2006	F-4
Notes to Unaudited Financial Statements	F-5

37

AURASOUND, INC.
BALANCE SHEET
February 28, 2007
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	19,952
Accounts receivable, net		305,335
Inventories		178,656
Advances to vendors		2,177,509
Total Assets	$	2,681,452
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities
Accounts payable	$	477,173
Accrued expenses		713,677
Notes payable		2,638,000
Other current liabilities		200,000
Note payable - related party		8,000
Total Current Liabilities		4,036,850
Note payable-related party		3,414,905
Total Liabilities		7,451,755
Stockholder's Deficit
Common stock, $0.001 par value, authorized shares
100,000,000; issued and outstanding 12,652,076		12,652
Paid-in capital		23,349
Accumulated deficit		(4,806,304	)
Total Stockholder's deficit		(4,770,303	)
Total Liabilities and Stockholder's Deficit	$	2,681,452

Theaccompanying notes are an integral part of these unaudited financial statements

38

AURASOUND, INC.
STATEMENTS OF OPERATIONS
FOR THE ELEVEN MONTH PERIODS ENDED FEBRUARY 28, 2007 AND 2006
(Unaudited)
	2007			2006
Net Revenue	$	2,178,471		$	1,238,129
Cost of sales		1,650,964			989,658
Gross profit		527,507			248,471
Operating expenses
Research & development		785,851			372,481
General and administrative expenses		1,028,191			353,745
Total operating expenses		1,814,042			726,226
Loss from operations		(1,286,535	)		(477,755	)
Other Expense
Interest expense		286,031			155,687
Other expenses		256,863			224,019
Total Other Expense		542,894			379,706
Net Loss	$	(1,829,429	)	$	(857,461	)
Basic & diluted net loss per share	$	(0.25	)	$	(0.08	)
Weighted average shares of share capital outstanding
- basic & diluted		7,318,799			10,647,071
Weighted average of dilutive securities has not been taken since the effect of
dilutive securities is anti dilutive

Theaccompanying notes are an integral part of these unaudited financial statements

39

AURASOUND, INC.
STATEMENTS OF CASH FLOWS
FOR THE ELEVEN MONTH PERIODS ENDED FEBRUARY 28, 2007 AND 2006
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES	2007			2006
Net loss	$	(1,829,429	)	$	(857,461	)
Adjustments to reconcile loss to net cash
used in operating activities:
Stock issued as compensation		36,000			-
(Increase) / decrease in assets:
Accounts receivable		7,712			(16,927	)
Inventories		(33,709	)		(163,281	)
Advance to vendors		(2,177,509	)		10,000
Increase / (decrease) in liabilities:
Accounts payable		(222,063	)		522,994
Accrued expenses		651,690			461,671
Other liabilities		200,000			-
Advance from customer		-			60,000
Net cash used in operations		(3,367,308	)		16,996
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on note		2,638,000			-
Proceeds on loan from a related party		745,864			12,253
Net cash provided by financing activities		3,383,864			12,253
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		16,556			29,249
CASH AND CASH EQUIVALENTS, BEGINNING BALANCE		3,396			3,076
CASH AND CASH EQUIVALENTS, ENDING BALANCE	$	19,952		$	32,325
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Interest paid	$	-		$	-
Income tax paid	$	-		$	-

The accompanying notes are an integral part of these unaudited financial statements

40

NOTE 1 - ORGANIZATION AND OPERATIONS

General

Algo Sound, Inc., dba, Aura Sound, ("Aura" or the "Company") a California corporation, was founded on July 28, 1999 to engage in the development, commercialization, and sales of products, systems, and components, using its patented and proprietary electromagnetic technology.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Information

The accompanying unaudited financial statements have been prepared by the Company in conformity with generally accepted accounting principles for interim financial reporting. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company’s Annual Report. The results of the eleven month period ended February 28, 2007 are not necessarily indicative of the results to be expected for the full years ending March 31, 2007.

Use Of Estimates

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 amounts reported in the combined financial statements and disclosures made in the accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of depoaits and all highly liquid debt instruments with original maturity of three months or less. .

Accounts Receivable

The company maintains an allowance for uncollectible accounts receivable to estimate the risk of extending credit to customers and distributors. The allowance is estimated based on the customer or distributor's compliance with our credit terms, the financial condition of the customer or distributor and collection history where applicable. Additional allowances could be required if the financial condition of our customers or distributors were to be impaired beyond our estimates. As of February 28, 2007 and 2006, the allowance for doubtful debts amounted to $143,293 and $10,216, respectively

Inventories

Inventories are valued at the lower of cost (first-in, first-out) or market.

41

Property, Plant, and Equipment

Property, plant, and equipment, including leasehold improvements, are recorded at cost, less accumulated depreciation and amortization. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets as follows:

Buildings	40 years
Machinery and equipment	5 to 10 years
Furniture and fixtures	7 years

Improvements to leased property are amortized over the lesser of the life of the lease or the life of the improvements. Amortization expense on assets acquired under capital leases is included with depreciation and amortization expense on owned assets. The Company did not have any property, plant and equipment as of February 2007 and 2006, as the Company utilizes the facility owned by a related party.

Maintenance and minor replacements are charged to expense as incurred. Gains and losses on disposals are included in the results of operations.

Revenue Recognition

The Company’s revenue recognition policies are in compliance with Staff accounting bulletin (SAB) 104. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectibility is reasonably assured.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. Our management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed

Basic and diluted net loss per share

In accordance with SFAS No. 128, “Earnings Per Share,” the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. At February 28, 2007 and 2006, the Company had no potential dilutive securities outstanding (See Note 5).

42

Stock-based compensation

Effective January 1, 2006, the Company adopted Statement No. 123R, Share-Based Payment (SFAS 123R), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is being applied on the modified prospective basis. Prior to the adoption of SFAS 123R, the Company accounted for its stock-based compensation plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, and accordingly, recognized no compensation expense related to the stock-based plans. Under the modified prospective approach, SFAS 123R applies to new awards and to awards that were outstanding on January 1, 2006 that are subsequently modified, repurchased or cancelled.

In compliance with FAS No. 148, for the fiscal year 2005, the Company elected to continue to follow the intrinsic value method in accounting for its stock-based employee compensation plan as defined by APB No. 25.

The Company did not grant any options during the eleven month periods ended February 28, 2007 and 2006. At February 28, 2007 and 2006, there were no options outstanding; therefore the pro forma disclosure to be presented in accordance with SFAS No. 123 is not applicable.

New Accounting Pronouncements

In September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R)’ This Statement improves financial reporting by requiring an employer to recognize the over funded or under funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. An employer without publicly traded equity securities is required to recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after June 15, 2007. However, an employer without publicly traded equity securities is required to disclose the following information in the notes to financial statements for a fiscal year ending after December 15, 2006, but before June 16, 2007, unless it has applied the recognition provisions of this Statement in preparing those financial statements:

* A brief description of the provisions of this Statement

* The date that adoption is required

* The date the employer plans to adopt the recognition provisions of this Statement, if earlier.

* The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. The management is currently evaluating the effect of this pronouncement on financial statements.

In February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. FASB 159 is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted subject to specific requirements outlined in the new Statement. Therefore, calendar-year companies may be able to adopt FASB 159 for their first quarter 2007 financial statements.

43

The new Statement allows entities to choose, at specified election dates, to measure eligible financial assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an eligible item, changes in that item's fair value in subsequent reporting periods must be recognized in current earnings. FASB 159 also establishes presentation and disclosure requirements designed to draw comparison between entities that elect different measurement attributes for similar assets and liabilities. The management is currently evaluating the effect of this pronouncement on financial statements.

In March 2007, the Emerging Issues Task Force (“EITF”) reached a consensus on issue number 06-10, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life Insurance Arrangements,” (“EITF 06-10”). EITF 06-10 provides guidance to help companies determine whether a liability for the postretirement benefit associated with a collateral assignment split-dollar life insurance arrangement should be recorded in accordance with either SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions” (if, in substance, a postretirement benefit plan exists), or Accounting Principles Board Opinion No. 12 (if the arrangement is, in substance, an individual deferred compensation contract). EITF 06-10 also provides guidance on how a company should recognize and measure the asset in a collateral assignment split-dollar life insurance contract. EITF 06-10 is effective for fiscal years beginning after December 15, 2007 (Novell’s fiscal 2008), though early adoption is permitted. The management is currently evaluating the effect of this pronouncement on financial statements.

NOTE 2 - INVENTORIES

Inventories at February 28, 2007 and 2006 consisted of the following:

	2007
Raw materials	$	23,023
Finished goods		155,633
Total	$	178,656

NOTE 3- ADVANCE TO VENDORS

The Company’s primary vendor is located in Guangdong China. During the eleven months ended February 28, 2007 and 2006, the Company participated in various transactions with the vendor including: receipt of commissions on certain third party purchases from the vendor; purchasing and consigning to the vendor certain parts and supplies not available in China; trade account purchases; and, advance payments on certain manufactured products. Advances to vendors amounted to $2,177,509 as of February 28, 2007.

NOTE 4- NOTES PAYABLE-RELATED PARTY

Note payable of $8,000 as of February 28, 2007 and $38,000 as of February 28, 2006 consists of a payable to the sole shareholder of the Company. The note bears interest at 8%, is unsecured & due on March 31, 2009. Interest expense for the eleven month periods ended February 28, 2007 and 2006 was $2,653 and $507, respectively.

The Long term note payable at February 28, 2007 and 2006 consists of various notes to an entity under common ownership bearing interest at 8% per annum, with principal and interest due on March 31, 2009. The Company accrued interest of $253,882 and $155,180 during the eleven month periods ended February 28, 2007 and 2006, respectively.

44

NOTE 5- NOTES PAYABLE

During the eleven months ended February 28, 2007, the Company raised notes payables of $688,000 payable to certain investors. The notes are secured against the assets of the Company pursuant to a security agreement. All the notes bear interest at the rate of 9% per annum with the principal and interest due on demand. The Company accrued interest of $37,811 on these notes during the eleven month period ended February 28, 2007. During the period January 2007 through February 2007, the Company raised bridge financing from four lendors totaling $1,950,000. These notes bear interest at 12% and are due at various dates in 2007. In conjunction with these notes, the Company agreed to cause the merger agreement with a Public Company to include a covenant of the Public Company that it will issue to the Lender at the closing of the Merger a common stock purchase warrant in the form and substance reasonably acceptable to the Lender and the Company. The warrants shall be issued five-year warrants to purchase 2,450,000 common shares at $1.00. The Company accrued interest of $28,548 during the period ended February 28, 2007.

NOTE 6- STOCKHOLDERS' EQUITY

Common Stock

At December 31, 2005, the Company had 1,000 shares of $0.001 par value common stock authorized, issued and outstanding. In November 2006, the Company increased the total authorized shares to 100,000,000. In that connection,, the Board of Directors authorized the cancellation of prior certificates held by the Founder and the issuance of 10,647,071 replacement shares at par value, effectuating a forward split of 1:10,647. All per share data including earnings per share has been retroactively restated to reflect the effect of issuance of replacement shares. In November 2006, the Company issued to certain consultants 2,005,005 shares of common stock as full compensation for their services. The fair value of the services rendered was $36,000.

NOTE 7- GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the financial statements, during the eleven month periods ended February 28, 2007 and 2006, the Company incurred losses of $1,792,429 and $857,461, respectively. The Company had an accumulated deficit of $4,806,304 as of February 28, 2007. If the Company is unable to generate profits and unable to continue to obtain financing for its working capital requirements, it may have to curtail its business sharply or cease business altogether.

The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to retain its current financing, to obtain additional financing, and ultimately to attain profitability.

The Company is in the process of completing a reverse merger into a public entity. The Company anticipates finalizing this transaction on June 7, 2007, and expects to raise in excess of $12 million which will be used to repay certain bridge financing and to fund the Company’s working capital needs. The Company believes this will be sufficient to allow the Company to execute its business plan and begin to generate sufficient positive cash flow to fund its ongoing operations.

45

NOTE 8- RELATED PARTY

During each of the eleven month periods ended February 28, 2007 and 2006, the company paid $44,000 as compensation to an employee related to the sole shareholder of the company.

Also, the company accrued $220,000, as management fee, for each of the two eleven month periods ended February 28, 2007 and 2006 to an entity under common ownership for the services provided by them. The Company also accrued $45,641 and $44,706 during the eleven month periods ended February 28, 2007 and 2006 to the same entity for rent as they shared the office space with the related entity. The rent allocation is 40% of the rent payable by the related entity to its landlord, which has the following rent commitment:

Years ended
December31, 2007	$	130,418
December 31, 2008	$	77,392

The lease will expire on July 31, 2008.

NOTE 9- SUBSEQUENT EVENTS

On April 2, 2007, we entered into a bridge loan agreement whereby we borrowed $500,000 from one lender as a short-term bridge loan. Bridge loans totaling $2,450,000 plus accrued interest were repaid on June 7, 2007.

On June 7, 2007, the Company completed its merger with Hemcure, Inc. whereby all issued and outstanding shares of the Company prior to the merger were acquired in a stock for stock exchange and the Company became a wholly-owned subsidiary of Hemcure, Inc. Concurrently therewith, the Company completed the initial closing on a $12 million securities offering.

46

ALGO SOUND, INC. dba AURA SOUND

FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, 2006 & 2005

47

Index to Audited Financial Statements

Report of Independent Registered Public Accounting Firm	1
Financial Statements of AuraSound, Inc. (formerly, Algo Sound, Inc.):
Balance Sheets as of March 31, 2006 and 2005	2
Statements of Operations for years ended March 31, 2006 and 2005	3
Statements of Stockholders’ Deficit as of March 31, 2006 and 2005	4
Statements of Cash Flows for the years ended March 31, 2006 and 2005	5
Notes to Financial Statements	6 to 14

48

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Algo Sound, Inc.

We have audited the accompanying balance sheets of Algo Sound, Inc. (a California corporation) as of March 31, 2006 and March 31, 2005, and related statements of operations, stockholder’s deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Algo Sound, Inc. as of March 31, 2006 and 2005, and the related statements of operations, stockholder’s deficit, and cash flows for the years ended March 31, 2006 and 2005 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. During the year ended March 31, 2006 and 2005, the Company incurred net losses of $942,940 and $990,824, respectively. In addition, the Company had negative cash flow in operating activities amounting $37,680 and $26,188, respectively in the years ended March 31, 2006 and 2005. These factors, among others, as discussed in Note 7 to the consolidated financial statements, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 7. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Kabani & Company, Inc.

Certified Public Accountants

Los Angeles, California

August 29, 2006

49

ALGO SOUND, INC. DBA AURA SOUND
BALANCE SHEETS
MARCH 31, 2006 AND 2005
ASSETS
	2006			2005
Current Assets
Cash and cash equivalents	$	3,396		$	3,076
Accounts receivable, net		313,047			166,617
Inventories		144,947			70,916
Total Assets	$	461,390		$	240,609
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities
Accounts payable	$	699,236		$	200,068
Accrued expenses		61,584			43,938
Total Current Liabilities		760,820			244,006
Note payable-related party		2,677,442			2,030,535
Total Liabilities		3,438,262			2,274,541
Stockholder's Deficit
Common stock, $0.001 par value, 1,000 shares		1			1
authorized, issued and outstanding
Accumulated deficit		(2,976,873	)		(2,033,933	)
Total Stockholder's deficit		(2,976,872	)		(2,033,932	)
Total Liabilities and Stockholder's Deficit	$	461,390		$	240,609

Theaccompanying notes are an integral part of these financial statements.

50

ALGO SOUND, INC. DBA AURA SOUND
ALGO SOUND, INC. DBA AURA SOUND
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 2006 AND 2005
	2006			2005
Net Revenue	$	1,680,813		$	1,331,889
Cost of sales		1,250,265			943,081
Gross profit		430,548			388,808
Operating expenses
Research & development		451,534			394,877
General and administrative expenses		485,314			618,048
Total operating expenses		936,848			1,012,925
Loss from operations		(506,300	)		(624,117	)
Other Expense
Other income
Interest expense		191,620			150,976
Other expenses		245,020			215,731
Total Other Expense		436,640			366,707
Net Loss	$	(942,940	)	$	(990,824	)
Basic & diluted net income (loss) per share	$	(942.94	)	$	(990.82	)
Weighted average shares of share capital outstanding
- basic & diluted		1,000			1,000
Weighted average of dilutive securities has not been taken since the effect of dilutive securities is
anti dilutive

Theaccompanying notes are an integral part of these financial statements

51

ALGO SOUND, INC. DBA AURA SOUND
STATEMENT OF STOCKHOLDER'S DEFICIT
FOR THE FISCAL YEARS ENDED MARCH 31, 2006 AND 2005
								Total
			Capital Stock		Accumulated			Stockholder's
	Shares		Amount		Deficit			Deficit
Balance April 1, 2005		1,000	$	1	$	(1,043,109	)	$	(1,043,108	)
Net loss for the fiscal year ended March 31, 2005				-		(990,824	)		(990,824	)
Balance March 31, 2005		1,000		1		(2,033,933	)		(2,033,932	)
Net loss for the fiscal year ended March 31, 2006				-		(942,940	)		(942,940	)
Balance March 31, 2006		1,000	$	1	$	(2,976,873	)	$	(2,976,872	)

Theaccompanying notes are an integral part of these financial statements

52

ALGO SOUND, INC. DBA AURA SOUND
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 2006 AND 2005
CASH FLOWS FROM OPERATING ACTIVITIES	2006			2005
Net loss	$	(942,940	)	$	(990,824	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Bad debts		57,755			10,216
Expenses paid by note		608,907			1,068,852
(Increase) / decrease in assets:
Accounts receivable		(204,185	)		(120,671	)
Inventories		(74,031	)		51,754
Increase / (decrease) in liabilities:
Accounts payable		499,168			(48,939	)
Accrued expenses		17,646			3,424
Net cash used in operations		(37,680	)		(26,188	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on loan from a related party		38,000			-
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		320			(26,188	)
CASH AND CASH EQUIVALENTS, BEGINNING BALANCE		3,076			29,264
CASH AND CASH EQUIVALENTS, ENDING BALANCE	$	3,396		$	3,076
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Interest paid	$	-		$	-
Income tax paid	$	-		$	-

Theaccompanying notes are an integral part of these financial statements

53

NOTE 1 - ORGANIZATION AND OPERATIONS

General

Algo Sound, Inc., dba, Aura Sound, ("Aura" or the "Company") a California corporation, was founded on July 28, 1999 to engage in the development, commercialization, and sales of products, systems, and components, using its patented and proprietary electromagnetic technology.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Use Of Estimates

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 amounts reported in the combined financial statements and disclosures made in the accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Accounts Receivable

The company maintains an allowance for uncollectible accounts receivable to estimate the risk of extending credit to customers and distributors. The allowance is estimated based on the customer or distributor's compliance with our credit terms, the financial condition of the customer or distributor and collection history where applicable. Additional allowances could be required if the financial condition of our customers or distributors were to be impaired beyond our estimates. As of March 31, 2006 and 2005, the allowance for doubtful debts amounted to $67,971 and $10,216, respectively.

Inventories

Inventories are valued at the lower of cost (first-in, first-out) or market. Appropriate consideration is given to deterioration, obsolescence and other factors in evaluating net realizable value.

Property, Plant, and Equipment

Property, plant, and equipment, including leasehold improvements, are recorded at cost, less accumulated depreciation and amortization. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets as follows:

Buildings	40 years
Machinery and equipment	5 to 10 years
Furniture and fixtures	7 years

Improvements to leased property are amortized over the lesser of the life of the lease or the life of the improvements. Amortization expense on assets acquired under capital leases is included with depreciation and amortization expense on owned assets. The Company did not have any property, plant and equipment as of March 31, 2006 and 2005, as the Company utilizes the facility leased by a related party.

Maintenance and minor replacements are charged to expense as incurred. Gains and losses on disposals are included in the results of operations.

54

Valuation of Long-Lived Assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from our normal business activities. We place our cash in what we believe to be credit-worthy financial institutions. We have a diversified customer base. We control credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

Revenue Recognition

The Company’s revenue recognition policies are in compliance with Staff accounting bulletin (SAB) 104. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectibility is reasonably assured.

Comprehensive Income

The Company utilizes Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." This statement establishes standards for reporting comprehensive income and its components in a financial statement. Comprehensive income as defined includes all changes in equity (net assets) during a period from non-owner sources. Examples of items to be included in comprehensive income, which are excluded from net income, include foreign currency translation adjustments and unrealized gains and losses on available-for-sale securities. Comprehensive income is not presented in the Company's financial statements since the Company did not have any of the items of comprehensive income in any period presented.

Advertising Expense

Advertising costs are charged to expense as incurred and were immaterial for the years ended March 31, 2006 and 2005.

Research and Development

Research and development costs are expensed as incurred.

Income Taxes

The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

55

The Company has significant income tax net operating losses; however, due to the uncertainty of the realizability of the related deferred tax asset, a reserve equal to the amount of deferred income taxes has been established at March 31, 2006 and 2005.

Fair Value of Financial Instruments

Statement of financial accounting standard No. 107, Disclosures about fair value of financial instruments, requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for assets and liabilities qualifying as financial instruments are a reasonable estimate of fair value.

Segment Reporting

Statement of Financial Accounting Standards No. 131 (“SFAS 131”), “Disclosure About Segments of an Enterprise and Related Information” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. SFAS 131 has no effect on the Company’s financial statements as the Company consists of one reportable business segment as of March 31, 2006 and 2005.

Risks and Uncertainties

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history and the volatility of public markets.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. Our management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed

Basic and diluted net loss per share

In accordance with SFAS No. 128, “Earnings Per Share,” the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. At September 30, 2005 and 2004, the Company had no potential dilutive securities outstanding.

56

Stock-based compensation

SFAS No. 123, “Accounting for Stock-Based Compensation,” establishes and encourages the use of the fair value based method of accounting for stock-based compensation arrangements under which compensation cost is determined using the fair value of stock-based compensation determined as of the date of grant and is recognized over the periods in which the related services are rendered. The statement also permits companies to elect to continue using the current intrinsic value accounting method specified in Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” to account for stock-based compensation. The Company has elected to use the intrinsic value based method and has disclosed the pro forma effect of using the fair value based method to account for its stock-based compensation issued to employees. For options granted to employees where the exercise price is less than the fair value of the stock at the date of grant, the Company recognizes an expense in accordance with APB 25.

For non-employee stock based compensation the Company recognizes an expense in accordance with SFAS No. 123 and values the equity securities based on the fair value of the security on the date of grant or the value of services, whichever is more determinable. For stock-based awards the value is based on the market value for the stock on the date of grant and if the stock has restrictions as to transferability a discount is provided for lack of tradability. Stock option awards are valued using the Black-Scholes option-pricing model.

At March 31, 2006 and 2005, there were no options outstanding; therefore the pro forma disclosure to be presented in accordance with SFAS No. 123 is not applicable.

New Accounting Pronouncements

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment, an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires companies to recognize in the statement of operations the grant- date fair value of stock options and other equity-based compensation issued to employees. FAS No. 123R is effective beginning in the Company's second quarter of fiscal 2006. The Company does not expect the adoption of FAS No. 123R to have a material impact on its financial position, results of operations or cash flows.

In May 2005, the FASB issued FASB Statement No. 154, "Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3". This statement replaces APB Opinion No. 20, "Accounting Changes", and FASB Statement No. 3, "Reporting Accounting Changes in Interim Financial Statements", and changes the requirements for the accounting for and reporting of a change in accounting principle. This statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. This statement is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. Management believes the adoption of this pronouncement will not have a material effect on our financial statements.

In June 2005, the FASB ratified the EITF consensus to amend EITF No. 96-16, "Investor's Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholders Have Certain Approval or Veto Rights". The EITF agreed to amend the Protective Rights section of this consensus, as well as Example of Exhibit 96-16A, to be consistent with the consensus reached in Issue No. 04-5, "Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similarly Entity When the Limited Partners Have Certain Rights." The provisions of this amendment should be applied prospectively to new investments and to investment agreements that are modified after June 29, 2005. Management believes the adoption of this pronouncement will not have a material effect on our financial statements.

In June 2005, the EITF reached consensus on Issue No. 05-6, Determining the Amortization Period for Leasehold Improvements ("EITF 05-6.") EITF 05-6 provides guidance on determining the amortization period for leasehold improvements acquired in a business combination or acquired subsequent to lease inception. The guidance in EITF 05-6 will be applied prospectively and is effective for periods beginning after June 29, 2005. EITF 05-6 is not expected to have a material effect on its financial position or results of operations.

57

In February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for Derivative Instruments and Hedging Activities", and SFAF No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". SFAS No. 155, permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interest in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and amends SFAS No. 140 to eliminate the prohibition on the qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This statement is effective for all financial instruments acquired or issued after the beginning of the Company's first fiscal year that begins after September 15, 2006. The Company has not evaluated the impact of this pronouncement its financial statements.

In March 2006 FASB issued SFAS 156 'Accounting for Servicing of Financial Assets' this Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. This Statement:

1. Requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract.

2. Requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable.

3. Permits an entity to choose 'Amortization method' or Fair value measurement method' for each class of separately recognized servicing assets and servicing liabilities.

4. At its initial adoption, permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in some manner as offsetting the entity's exposure to changes in fair value of servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value.

5. Requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities. An entity should adopt this Statement as of the beginning of its first fiscal year that begins after September 15, 2006. Management believes that this statement will not have a significant impact on the financial statement.

In September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The management is currently evaluating the effect of this pronouncement on financial statements.

In September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R)’ This Statement improves financial reporting by requiring an employer to recognize the over funded or under funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. An employer without publicly traded equity securities is required to recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after June 15, 2007. However, an employer without publicly traded equity securities is required to disclose the following information in the notes to financial statements for a fiscal year ending after December 15, 2006, but before June 16, 2007, unless it has applied the recognition provisions of this Statement in preparing those financial statements:

58

A brief description of the provisions of this Statement

* The date that adoption is required

* The date the employer plans to adopt the recognition provisions of this Statement, if earlier.

* The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year- end statement of financial position is effective for fiscal years ending after December 15, 2008. The management is currently evaluating the effect of this pronouncement on financial statements.

NOTE 3 - INVENTORIES

Inventories at March 31, 2006 and 2005 consisted of the following:

	2006		2005
Raw materials	$	7,291	$	4,740
Finished goods		137,656		66,176
Total	$	144,947	$	70,916

NOTE 4- NOTES PAYABLE -RELATED PARTY

Note payable of $38,000 as of March 31, 2006 consists of payable to the sole shareholder of the Company. The note bears interest at 8%, is unsecured & due on March 31, 2009. Interest expense for the year ended March 31, 2006 was $1,520.

Long term note payable at March 31, 2006 and 2005 consists of notes to an entity under common ownership bearing interest at 8% per annum, with principal and interest due on March 31, 2009. Interest expense for the years ended March 31, 2006 and 2005 amounted to $190,100 and $150,976, respectively.

NOTE 5- STOCKHOLDERS' EQUITY

Common Stock

At March 31, 2006 and 2005, the Company had 1,000 shares of par value $0.001 common stock authorized, issued and outstanding.

NOTE 6- INCOME TAXES

The Company has not incurred any income tax expense since inception. The actual tax benefit differs from the expected tax benefit computed by applying the United States corporate tax rate of 40% to loss before income taxes as follows for the years ended March 31, 2006 and 2005:

	2006			2005
Expected tax benefit		34.0	%		34.0	%
State income taxes, net of federal benefit		6.0			6.0
Changes in valuation allowance		(40.0	)		(40.0	)
Total		-	%		-	%

59

The following table summarizes the significant components of the Company's deferred tax asset at March 31, 2006, and 2005:

	2006			2005
Deferred tax asset:
Net operating loss carryforward	$	8,191,060		$	7,813,900
Valuation allowance		(8,191,060	)		(7,813,900	)
Net deferred tax asset	$	--		$	--

The Company recorded an allowance of 100% for its net operating loss carryforward due to the uncertainty of its realization.

A provision for income taxes has not been provided in these financial statements due to the net loss. At March 31, 2006, the Company had net operating loss carryforwards of approximately $20,477,000, which expire through March 31, 2021.

NOTE 7- GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the financial statements, during the years ended March 31, 2006 and 2005, the Company incurred losses of $942,940 and 990,824, respectively. The Company had an accumulated deficit of $2,976,873 as of March 31, 2006. If the Company is unable to generate profits and unable to continue to obtain financing for its working capital requirements, it may have to curtail its business sharply or cease business altogether.

The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to retain its current financing, to obtain additional financing, and ultimately to attain profitability.

The Company is in the process of completing a reverse merger into a public entity. The Company anticipates finalizing this transaction prior to December 31, 2006, and expects to raise in excess of $10 million which will be used to fund the Company’s working capital needs. The Company believes this will be sufficient to allow the Company to execute its business plan and begin to generate sufficient cash flow to fund its ongoing operations.

NOTE 8- RELATED PARTY

During each of the years ended March 31, 2006 and 2005, the company paid $48,000 as compensation to an employee related to the sole shareholder of the company.

Also, the company accrued $240,000, as management fee, for each of the two years ended March 31, 2006 and 2005 to an entity under common ownership for the services provided by them. The Company also accrued $49,542 and $48,094 during the two years ended March 31, 2006 and 2005 to the same entity for rent as they shared the office space with the related entity. The rent allocation is 40% of the rent payable by the related entity to its landlord, which has the following rent commitment:

Year ended
March 31, 2007	$	127,560
March 31, 2008		131,384
March 31, 2009	$	44,224

The lease will expire on August 31, 2008.

60

NOTE 9- MAJOR CUSTOMERS AND MAJOR VENDORS

There was one major customer of the Company during the year ended March 31, 2006 which accounted for 47% of the sales. The receivable due from the Customer as of March 31, 2006 was $201,840. There was one major vendor of the Company during the year ended March 31, 2006 which accounted for 96% of the purchases of the Company. As of March 31, 2006, there was no payable due to the vendor.

There was one major customer of the Company during the year ended March 31, 2005 which accounted for 37% of the sales. There was no receivable due from the customer as of March 31, 2005. There was one major vendor of the Company during the year ended March 31, 2005 which accounted for 96% of the purchases of the Company. As of March 31, 2005, there was $959,561 payable due to the vendor

61

EX-10.1

June 7, 2007

[INVESTOR NAMES]

Dear Investors:

Reference is made to that certain Amended and Restated Confidential Private Placement Memorandum, dated June 7, 2007, in connection with the reverse merger of Hemcure, Inc., a publicly traded Nevada corporation (“HMCU”), and AuraSound, Inc., a California corporation (“AuraSound”) (the “PPM”). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the PPM.

As an inducement to the investors who purchase Securities pursuant to the PPM, the undersigned hereby agrees that from the date hereof and continuing until the 24 month anniversary of the effectiveness date of the Initial Registration Statement (the “Lock-Up Period”), the undersigned will not (A) offer, sell, contract to sell, pledge, hypothecate, transfer or otherwise dispose of, directly or indirectly, any shares of capital stock or other equity securities of HMCU (including without limitation any shares of capital stock or other equity securities issued or issuable to the undersigned as the result of any stock split, stock dividend or distribution on such securities) and any options, warrants or other rights to purchase or acquire shares of capital stock of HMCU, in each case whether now owned or hereafter acquired (the “Lock-Up Shares”), (B) enter into any agreement or transaction that would have the same effect, (C) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Lock-Up Shares, whether any such aforementioned transaction is to be settled by delivery of the Lock-Up Shares, in cash or otherwise, or (D) publicly disclose the intention to make any such offer, sale, pledge or disposition, without, in each case, the prior written consent of investors who purchased at least 60% of the Units issued under the PPM.

Notwithstanding the foregoing, the undersigned may transfer Lock-Up shares (i) as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound by the restrictions set forth herein, (ii) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that the trustee of the trust agrees to be bound by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, or (iii) in transactions relating to shares of common stock of HMCU acquired by the undersigned in open market transactions after the completion of the transactions contemplated by the PPM. For purposes of this Agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.

In furtherance of the foregoing, HMCU shall, and shall cause its transfer agent and registrar to, decline to make any transfer of the Lock-Up Shares if such transfer would constitute a violation or breach of this letter agreement.

Each of the signatories hereto and AuraSound acknowledges that each of the investors who purchased Securities pursuant to the PPM are third party beneficiaries of this agreement and this agreement may not be modified or changed without the prior written consent of the investors who purchased at least sixty (60) percent of the Units under the PPM.

This letter agreement shall be binding on the undersigned and the successors, heirs, personal representatives and assigns of the undersigned. This letter agreement or the rights hereunder may not be assigned by the investors named above, except to their respective partners and affiliates to which they transfer all or any portion of the Securities in accordance with applicable law or regulation.

Very truly yours,
Signature:
Print Name:	Arthur Liu

ACKNOWLEDGED AND AGREED:

HEMCURE, INC.

By:

Name:

Title:

EX-10.2

SUBSCRIPTION AGREEMENT

SUBSCRIPTION AGREEMENT (“Agreement”) made as of this __ day of ___________, 2007, by and among Hemcure, Inc., a Nevada corporation (the “Company”), AuraSound, Inc., a California corporation and upon the Closing Date (as defined below) a wholly owned subsidiary of the Company (“AuraSound”), and the undersigned subscriber of securities of the Company (the “Subscriber”).

WHEREAS, the Company, AuraSound and the shareholders of AuraSound are parties to a certain Amended and Restated Agreement and Plan of Share Exchange dated as of June 7, 2007 (the “Share Exchange Agreement”), pursuant to which the Company will acquire 100% of the issued and outstanding Common Shares of AuraSound and in exchange the Company will issue to the AuraSound shareholders one (1) share of the Company’s $0.01 par value common stock for every share of AuraSound common stock acquired, AuraSound will become a wholly owned subsidiary of the Company, and the AuraSound shareholders will obtain majority ownership and control of the Company (the “Share Exchange”).

WHEREAS, subject to compliance with applicable federal securities laws, as soon as practicable following the closing date of the Share Exchange (the “Exchange Closing Date”), the Company intends to change its name to AuraSound, Inc.

WHEREAS, as a condition to the closing of the Share Exchange, the Company intends to obtain subscriptions for the purchase and sale, in a private placement transaction (the “Offering”) pursuant to Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”), of Units (the “Units”) consisting of (i) one (1) share of the Company’s common stock, par value $0.01 per share (“Common Stock”), and (ii) a five (5) year warrant to purchase one (1) share of the Company’s Common Stock at an initial exercise price of $1.50 per share (the “Warrants” and the Common Stock issuable upon the exercise of the Warrants are referred to herein as the “Warrant Shares”), on the terms and conditions hereinafter set forth, and the Subscriber desires to acquire that number of Units set forth on the signature page hereof. The Units, the Common Stock, the Warrants and the Warrant Shares are sometimes collectively referred to herein as “Securities”.

NOW, THEREFORE, for and in consideration of the promises and the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows:

1.Subscription Procedure

1.1Subject to the terms and conditions hereinafter set forth, the Subscriber hereby subscribes for and agrees to purchase from the Company such number of Units as is set forth upon the signature page hereof at a price of $1.00 per Unit (the “Purchase Price”). The Company agrees to sell such Units to the Subscriber for the Purchase Price.

1.2The subscription period will begin as of June 7, 2007 and will terminate at 5:00 PM Eastern Standard Time on June 15, 2007, unless terminated earlier or extended by the Company and AuraSound for up to an additional 30 days (the “Termination Date”). The Units will be offered on a “best efforts” basis as more particularly set forth in the Amended and Restated Confidential Private Placement Memorandum dated June 7, 2007 and any supplements thereto (including all exhibits, schedules and attachments thereto, the “Offering Memorandum”). The minimum dollar amount of Units that may be purchased by the Subscriber is $50,000 unless AuraSound and the Company waive the requirement. The consummation of the Offering is subject to the satisfaction of the closing conditions set forth in Section 6 of this Agreement.

1

1.3Placement of Units will be made by GP Group, LLC (the “Placement Agent”), which will receive certain compensation therefor as described in the Offering Memorandum.

1.4The Purchase Price will be placed in escrow pursuant to an escrow agreement by and among the Placement Agent, AuraSound and City National Bank, as escrow agent (the “Escrow Agreement”), and shall be paid over to the Company at the closing of the purchase of the Units in the Offering pursuant to this Agreement (the “Subscription Closing”) to occur on or after the Exchange Closing Date (the closing date of the purchase and sale of the Units pursuant to this Agreement is referred to herein as the “Subscription Closing Date”).

1.5The certificates for the Common Stock together with the accompanying Warrants bearing the name of the Subscriber will be delivered by the Company no later than ten (10) days following the final closing date of the Offering. The Subscriber hereby authorizes and directs the Company to deliver the securities to be issued to the Subscriber pursuant to this Agreement to the residential or business address indicated in the Investor Questionnaire.

1.6The Purchase Price for the Units purchased hereunder shall be paid by certified check, payable to AuraSound, Inc., or by wire transfer to AuraSound, Inc. account pursuant to the following instructions:

Bank Name: CITY NATIONAL BANK

LOS ANGELES FED ABA#: 122 016 066

C/O CITY NATIONAL INVESTMENTS #101281469

(SWIFT#CINAUS6L FOR FOREIGN WIRES)

ATTN: SUE BEHNING

FOR FURTHER CREDIT TO:

ACCT NAME:  AURASOUND, INC

ACCT NUMBER: ESC07564

1.7The Company and/or AuraSound may, in their sole discretion, reject any subscription, in whole or in part, or terminate or withdraw the Offering in its entirety at any time prior to a closing in relation thereto. Neither the Company nor the Placement Agent shall be required to allocate among investors on a pro rata basis in the event of an over-subscription.

2.Representations and Covenants of Subscriber.

2.1The Subscriber recognizes that the purchase of Units involves a high degree of risk in that (i) the Company will need additional capital but has no assurance of additional necessary capital; (ii) an investment in the Company is highly speculative and only investors who can afford the loss of their entire investment should consider investing in the Company and the Units; (iii) an investor may not be able to liquidate his or her investment; (iv) transferability of the securities comprising the Units is extremely limited; (v) an investor could sustain the loss of his or her entire investment; and (vi) the Company is and will be subject to numerous other risks and uncertainties, including without limitation, significant and material risks relating to the Company’s business and the business and operations of AuraSound, and the industries and markets in which the Company will compete, as well as risks associated with the Offering, the Share Exchange and the other transactions contemplated herein, in the Offering Memorandum and in the Share Exchange Agreement, all as more fully set forth herein and in the Offering Memorandum. For the avoidance of doubt, all references to the Company in this Section 2.1 include the Company’s business and operations after it acquires the business and operations of AuraSound through the Share Exchange.

2

2.2The Subscriber represents that he or she is an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the Act, as indicated by his or her responses to the Investor Questionnaire, the form of which is attached hereto as Exhibit A, and that he or she is able to bear the economic risk of an investment in the Units. The Subscriber must complete the Investor Questionnaire to enable the Company and AuraSound to access the Subscriber’s eligibility for the Offering.

2.3The Subscriber acknowledges that he or she has prior investment experience, including without limitation, investment in non-listed and non-registered securities, or he or she has employed the services of an investment advisor, attorney or accountant to read all of the documents furnished or made available by the Company or AuraSound both to him or her and to evaluate the merits and risks of such an investment on his or her behalf, and that he or she recognizes the highly speculative nature of this investment.

2.4The Subscriber acknowledges receipt and careful review of the Offering Memorandum, this Agreement, the Common Stock Purchase Warrant and any other attachments hereto and thereto (collectively, the “Offering Documents”) and hereby represents that he or she has been furnished or given access by the Company or AuraSound during the course of this Offering with or to all information regarding the Company and AuraSound and their respective financial conditions and results of operations which he or she had requested or desired to know; that all documents which could be reasonably provided have been made available for his or her inspection and review; that he or she has been afforded the opportunity to ask questions of and receive answers from duly authorized representatives of the Company and AuraSound concerning the terms and conditions of the Offering, and any additional information which he or she had requested. The Subscriber further represents and acknowledges that the Subscriber has not seen or received any advertisement or general solicitation with respect to the sale of any of the securities of the Company, including, without limitation, the Units.

2.5The Subscriber acknowledges that this Offering of Units may involve tax consequences, and that the contents of the Offering Documents do not contain tax advice or information. The Subscriber acknowledges that he or she must retain his or her own professional advisors to evaluate the tax and other consequences of an investment in the Units.

2.6The Subscriber acknowledges that this Offering of Units has not been reviewed or approved by the United States Securities and Exchange Commission (“SEC”) because the Offering is intended to be a nonpublic offering pursuant to Section 4(2) of the Act. The Subscriber represents that the Units are being purchased for his or her own account, for investment and not for distribution or resale to others. The Subscriber agrees that he or she will not sell or otherwise transfer any of the securities comprising the Units unless they are registered under the Act or unless an exemption from such registration is available and, upon the Company’s request, the Company receives an opinion of counsel reasonably satisfactory to the Company confirming that an exemption from such registration is available for such sale or transfer.

2.7The Subscriber understands that the Units have not been registered under the Act by reason of a claimed exemption under the provisions of the Act which depends, in part, upon his or her investment intention. The Subscriber realizes that, in the view of the SEC, a purchase now with the intention to distribute would represent a purchase with an intention inconsistent with his or her representation to the Company, and the SEC might regard such a distribution as a deferred sale to which such exemption is not available.

3

2.8The Subscriber understands that Rule 144 (the “Rule”) promulgated under the Act requires, among other conditions, a one year holding period prior to the resale (in limited amounts) of securities acquired in a non-public offering, such as the Offering, without having to satisfy the registration requirements under the Act. The Subscriber consents that the Company may, if it desires, permit the transfer of the Common Stock included in the Units or issuable upon the exercise of the Warrants out of his or her name only when his or her request for transfer is accompanied by an opinion of counsel reasonably satisfactory to the Company that neither the sale nor the proposed transfer results in a violation of the Act, any applicable state “blue sky” laws or any applicable securities laws of any other country, province or jurisdiction (collectively, “Securities Laws”). The Subscriber agrees to hold the Company, AuraSound and their respective directors, officers and controlling persons and their respective heirs, representatives, successors and assigns harmless and to indemnify them against all liabilities, costs and expenses incurred by them as a result of any misrepresentation made by him contained herein or in the Investor Questionnaire.

2.9The Subscriber consents to the placement of one or more legends on any certificate or other document evidencing his or her Units and the Common Stock or Warrants included in the Units or issuable upon the exercise of the Warrants stating that they have not been registered under the Act and are subject to the terms of this Agreement, and setting forth or referring to the restrictions on the transferability and sale thereof.

2.10The Subscriber understands that the Company and AuraSound will review this Agreement and the Investor Questionnaire and the Company and AuraSound reserve the unrestricted right to reject or limit any subscription and to close the offer at any time.

2.11The Subscriber hereby represents that the address of Subscriber furnished by him at the end of this Agreement and in the Investor Questionnaire is the undersigned's principal residence if he or she is an individual or its principal business address if it is a corporation or other entity.

2.12The Subscriber acknowledges that if the Subscriber is a Registered Representative of a National Association of Securities Dealers, Inc. (“NASD”) member firm, he or she must give such firm the notice required by the NASD Conduct Rules, or any applicable successor rules of the NASD, receipt of which must be acknowledged by such firm on the signature page hereof. The Subscriber shall also notify the Company if the Subscriber or any affiliate of Subscriber is a registered broker-dealer with the SEC, in which case the Subscriber represents that the Subscriber is purchasing the Units in the ordinary course of business and, at the time of purchase of the Units, has no agreements or understandings, directly or indirectly, with any person to distribute the Units or any portion thereof.

2.13The Subscriber hereby represents that, except as set forth in the Offering Documents, no representations or warranties have been made to the Subscriber by either the Company or AuraSound or their agents, employees or affiliates and in entering into this transaction, the Subscriber is not relying on any information, other than that contained in the Offering Documents and the results of independent investigation by the Subscriber.

2.14The Subscriber agrees that he or she will purchase securities in the Offering only if his or her intent at such time is to make such purchase for investment purposes and not with a view toward resale provided, however, that by making the representations herein the Subscriber does not agree to hold the Securities for any minimum or other specific term and reserves the right to dispose of the Securities in accordance with federal and state securities laws applicable to such transactions.

4

2.15 .If the undersigned Subscriber is a partnership, corporation, trust or other entity, such partnership, corporation, trust or other entity further represents and warrants that: (i) it was not formed for the purpose of investing in the Company; (ii) it is authorized and otherwise duly qualified to purchase and hold the Units; and (iii) that this Agreement has been duly and validly authorized, executed and delivered and constitutes the legal, binding and enforceable obligation of the undersigned.

2.16If the Subscriber is not a United States person, such Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Units or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Units, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Units. Such Subscriber's subscription and payment for, and his or her or her continued beneficial ownership of the Units and of the shares of Common Stock included therein or issuable upon the exercise of the Warrants, will not violate any applicable securities or other laws of the Subscriber's jurisdiction.

2.17The undersigned hereby covenants and agrees that neither it nor any of its affiliates has or will have an open position (e.g., short sale) in the Common Stock or any Warrant Shares prior to any Registration Statement required to be filed hereunder being declared effective by the SEC with the intent of covering such open position with Common Stock or Warrant Shares being registered in such Registration Statement. The undersigned hereby acknowledges and understands that the SEC has taken the position that such an open position would constitute a violation of Section 5 of the Act.

2.18The Subscriber acknowledges that (i) the Offering Memorandum contains material, non-public information concerning the Company within the meaning of Regulation FD promulgated by the SEC, and (ii) the Subscriber is obtaining such material, non-public information solely for the purpose of considering whether to purchase the Units pursuant to a private placement that is exempt from registration under the Act. In accordance with Regulation FD and other applicable provisions of the Securities Laws, the Subscriber agrees to keep such information confidential and not to disclose it to any other person or entity except the Subscriber’s legal counsel, other advisors and other representatives who have agreed (i) to keep such information confidential, (ii) to use such information only for the purpose set forth above, and (iii) to comply with applicable securities laws with respect to such information. In addition, the Subscriber further acknowledges that the Subscriber and such legal counsel, other advisors and other representatives are prohibited from trading in the Company’s securities while in possession of material, non-public information and agrees to refrain from purchasing or selling securities of the Company until such material, non-public information has been publicly disseminated by the Company.

2.19The Subscriber understands and acknowledges that (i) the Units are being offered and sold to Subscriber without registration under the Act in a private placement that is exempt from the registration provisions of the Act under Section 4(2) of the Act and (ii) the availability of such exemption depends in part on, and that the Company will rely upon the accuracy and truthfulness of, the foregoing representations, and such Subscriber hereby consents to such reliance.

3.Representations by the Company and AuraSound

Except as set forth in the reports previously filed by the Company (the “SEC Reports”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or in the Offering Memorandum, each of the Company and, as applicable, AuraSound, jointly and severally represent and warrant to the Subscriber that:

5

3.1Organization and Authority. Each of the Company and AuraSound, and each of their respective subsidiaries, if any (i) is a corporation validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as presently conducted, and (iii) has all requisite corporate power and authority to execute, deliver and perform their obligations under this Agreement and the Offering Documents being executed and delivered by it in connection herewith, and to consummate the transactions contemplated hereby and thereby.

3.2Qualifications. Each of the Company and AuraSound, and each of their respective subsidiaries, if any, is duly qualified to do business as a foreign corporation and is in good standing in all jurisdictions where such qualification is necessary and where failure to so qualify could have a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and its subsidiaries (after the effective time of the Share Exchange), taken as a whole or has the affect of preventing the Company from performing any of its duties or obligations under this Agreement. (a “Material Adverse Effect”).

3.3Capitalization of the Company. Immediately after the effective time of the Share Exchange (but before the initial closing of the Offering), the outstanding capitalization of the Company will consist of 13,505,305 issued and outstanding shares of Common Stock. Except as a result of the purchase and sale of the Units, as contemplated in the Share Exchange Agreement or as disclosed in the Offering Memorandum or the SEC Reports, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any person any right to subscribe for or acquire from the Company, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any subsidiary of the Company (“Subsidiary”) is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. The issuance and sale of the Units will not obligate the Company to issue shares of Common Stock or other securities to any person (other than the Subscriber) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. The shares of the Company’s capital stock outstanding immediately after the effective time of the Share Exchange (but before the closing of the Offering) are or will be duly authorized and validly issued and are or will be fully paid and nonassessable. None of the outstanding shares of Common Stock or options, warrants, or rights or other securities entitling the holders to acquire Common Stock has been issued in violation of the preemptive rights of any security holder of the Company. No holder of any of the Company’s securities has any rights, “demand,” “piggy-back” or otherwise, to have such securities registered by reason of the intention to file, filing or effectiveness of the any Registration Statement required to be filed hereunder, except as contemplated by the Offering Memorandum. The Common Stock and the Warrants to be issued to the Subscriber have been duly authorized, and when issued and paid for in accordance with this Agreement, the Common Stock will be duly and validly issued, fully paid and non-assessable, and the Warrant Shares, when issued upon exercise of the Warrants in exchange for the payment in full of the exercise price for such Warrant Share therein specified, will be duly and validly issued, fully paid and non-assessable. The Common Stock is eligible for quotation on the NASD OTC Bulletin Board, the Company and the Common Stock meets the criteria for continued quotation and trading on the OTC Bulletin Board, and no suspension of trading in the Common Stock is in effect.

6

3.4Corporate Authorization. The Offering Documents have been duly and validly authorized by the Company and AuraSound. This Agreement, assuming due execution and delivery by the Subscriber, and the Warrants, when the Subscription Agreement and the Warrants are executed and delivered by the Company, will be, valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as the enforceability hereof and thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally and general principles of equity, regardless of whether enforcement is considered in a proceeding in equity or at law.

3.5Non-Contravention. The execution and delivery of the Offering Documents by the Company and AuraSound, the issuance of the Units as contemplated by the Offering Documents and the completion by the Company and AuraSound of the other transactions contemplated by the Offering Documents do not and will not, with or without the giving of notice or the lapse of time, or both, (i) result in any violation of any provision of the articles of incorporation or by-laws or similar instruments of the Company or AuraSound or their respective subsidiaries, (ii) conflict with or result in a breach by the Company or AuraSound or their respective subsidiaries of any of the terms or provisions of, or constitute a default under, or result in the modification of, or result in the creation or imposition of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or AuraSound or their respective subsidiaries, pursuant to any agreements, instruments or documents filed as exhibits to the SEC Reports or any indenture, mortgage, deed of trust or other agreement or instrument to which AuraSound or any of its subsidiaries is a party or by which AuraSound or any of its subsidiaries or any of its properties or assets are bound or affected, in any such case which would have a material adverse effect on the business, properties, operations, condition (financial or other), results of operations or prospects of the Company and AuraSound and their respective subsidiaries, taken as a whole, or the validity or enforceability of, or the ability of the Company or AuraSound to perform their obligations under, the Offering Documents, (iii) violate or contravene any applicable law, rule or regulation or any applicable decree, judgment or order of any court, United States federal or state regulatory body, administrative agency or other governmental body having jurisdiction over AuraSound or any of its subsidiaries or any of its respective properties or assets that would, except with respect to violations of federal and state securities laws, have a Material Adverse Effect, or the validity or enforceability of, or the ability of the Company or AuraSound to perform its obligations under, the Offering Documents, (iv) have any material adverse effect on any permit, certification, registration, approval, consent, license or franchise necessary for the Company or its subsidiaries (after the effective time of the Share Exchange) to own or lease and operate any of its properties and to conduct any of its business or the ability of the Company or its subsidiaries to make use thereof or (v) except for applicable requirements of federal securities laws and state securities or blue-sky laws, requiring filing with, or permit, authorization, consent or approval of, any third party, public body or authority.

3.6Information Provided. The Company hereby represents and warrants to the Subscriber that the information set forth in the Offering Memorandum, the SEC Reports and any other document provided by the Company (or the Company’s authorized representatives) to the Subscriber in connection with the transactions contemplated by this Agreement, does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. AuraSound hereby represents and warrants to the Subscriber that the information set forth in the Offering Memorandum and any other document provided by AuraSound (or AuraSound’s authorized representatives) to the Subscriber in connection with the transactions contemplated by this Agreement, does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.

7

3.7SEC Reports. The Company represents and warrants that (i) the SEC Reports constitute all of the documents and reports that the Company was required to file with the SEC pursuant to the Securities Exchange Act of 1934 (“Exchange Act”) and the rules and regulations promulgated thereunder by the SEC since September 30, 2004, (ii) as of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act and/or the Exchange Act, as the case may require, and the rules and regulations promulgated thereunder. The Company and AuraSound, as the case may be represent and warrant that the financial statements of the Company included in the SEC Reports and those of AuraSound included in the Offering Memorandum comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) (except, in the case of unaudited statements, as permitted by the applicable form under the Securities Act or the Exchange Act) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the financial position of the Company and AuraSound, as the case may be; as of the dates thereof and each of their statements of operations, stockholders’ equity and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal and recurring year-end audit adjustments which were and are not expected to have a material adverse effect on the Company or its subsidiaries, or any of their business, financial condition or results of operations after the effective time of the Share Exchange). Except as and to the extent set forth on the balance sheet of the Company as of March 31, 2007 included in the SEC Reports (including the notes thereto) and the balance sheet of AuraSound as of December 31, 2006 included in the Offering Memorandum (including the notes thereto), neither the Company nor AuraSound has any liability or obligation of any nature (whether accrued, absolute, contingent or otherwise and whether required to be reflected on a balance sheet or not).

3.8Events Subsequent. Since December 31, 2006 as to AuraSound and since March 31, 2007 as to the Company, there has not been any of the following that have not been disclosed to the Subscriber:

(a)Any sale, lease, transfer, license or assignment of any assets, tangible or intangible, of the Company or AuraSound;

(b) Any damage, destruction or property loss, whether or not covered by insurance, affecting adversely the properties or business of the Company or AuraSound;

(c) Any declaration or setting aside or payment of any dividend or distribution with respect to the shares of capital stock of the Company or AuraSound or any redemption, purchase or other acquisition of any such shares;

(d) Any subjection to any lien on any of the assets, tangible or intangible, of the Company or AuraSound;

(e) Any incurrence of indebtedness or liability or assumption of obligations by the Company or AuraSound;

(f) Any waiver or release by the Company or AuraSound of any right of any material value;

(g) Any compensation or benefits paid to officers or directors of the Company or AuraSound;

8

(h) Any change made or authorized in the articles of incorporation or bylaws of the Company or AuraSound, except, as to the Company for the change to the articles of incorporation and by-laws made incident to re-domiciling from Minnesota to Nevada;

(i) Any loan to or other transaction with any officer, director or stockholder of the Company or AuraSound giving rise to any claim or right of either Company or AuraSound against any such person or of such person against the Company; or

(j) Any material adverse change in the condition (financial or otherwise) of the respective properties, assets, liabilities or business of either Company or AuraSound, or

.(k)any agreement, written or otherwise, to take any of the foregoing actions.

3.9Liabilities. Except as otherwise disclosed in the SEC Reports or the Offering Memorandum, neither the Company nor AuraSound has any liability or obligation whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise. In addition, the Company represents that upon the Exchange Closing Date, the Company will not have any liability or obligation whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise

3.10Absence of Certain Proceedings. Except as disclosed in the SEC Reports, neither the Company nor AuraSound is aware of any action, suit, proceeding, inquiry or investigation before or by any court, public board or body, or governmental agency pending or threatened against or affecting the Company or AuraSound or any of their respective subsidiaries, in any such case wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect on the transactions contemplated by the Offering Documents or which could adversely affect the validity or enforceability of, or the authority or ability of the Company or AuraSound to perform its obligations under, the Offering Documents; and to the Company’s and AuraSound’s knowledge there is not pending or contemplated any, and there has been no, investigation by the SEC involving the Company or AuraSound or any of their current or former directors or officers.

3.11Compliance with Law. Neither the Company nor AuraSound nor any of their respective subsidiaries is in violation of or has any liability under any statute, law, rule, regulation, ordinance, decision or order of any governmental agency or body or any court, domestic or foreign, except where such violation or liability would not individually or in the aggregate have a Material Adverse Effect and to the knowledge of the Company and AuraSound there is no pending investigation that would reasonably be expected to lead to such a claim.

3.12Tax Matters. The Company has filed all federal, state and local income and franchise tax returns required to be filed and has paid all taxes shown by such returns to be due, and no tax deficiency has been determined adversely to the Company. AuraSound has experienced losses for the last two fiscal years and has consequently not filed all federal, state and local income and franchise tax returns required to be filed and has not paid any taxes for the last two fiscal years. Any tax or filing deficiency arising from the foregoing is not expected to have a Material Adverse Effect.

3.13Consents. Each of the Company and AuraSound has all necessary consents, approvals, authorizations, orders, registrations, qualifications, licenses, filings and permits of, with and from all applicable judicial, regulatory and other legal or governmental agencies and bodies and all third parties, foreign and domestic (collectively, the “Consents”), to own, lease and operate their respective properties and conduct their respective businesses as are now being conducted and as disclosed in the Offering Memorandum, except where the failure to have any such Consent would not have a Material Adverse Effect. Each such Consent is valid and in full force and effect, and neither the Company nor AuraSound has received written notice of any investigation or proceedings which results in or, if decided adversely to the Company or AuraSound, could reasonably be expected to result in, the revocation of, or imposition of a materially burdensome restriction on, any Consent.

9

3.14Property. The Company does not own or lease any real property. AuraSound has good and marketable title to all property and/or assets of all kinds, whether real, personal or mixed, tangible or intangible (including, without limitation, all rights relating thereto) (“Property”) owned by it, in each case free and clear of all liens, except for liens or encumbrances that will not have a Material Adverse Effect. Any Property held under lease by AuraSound is held by it under valid, subsisting and enforceable leases with such exceptions as are not to have a Material Adverse Effect on the use made or proposed to be made of such Property by AuraSound.

3.15Questionable Payments. Neither the Company nor AuraSound, nor any of their respective employees, agents or representatives have, directly or indirectly, made any bribes, kickbacks, illegal payments or illegal political contributions using company funds or made any payments from the Company's or AuraSound’s funds, respectively, to governmental officials for improper purposes or made any illegal payments from the Company's or AuraSound’s funds, respectively, to obtain or retain business.

3.16Intellectual Property. The Company does not own or use any trademarks, trade names, service marks, patents, copyrights or any applications with respect thereto. Neither the Company nor AuraSound has any knowledge of any claim that, or inquiry as to whether, any product, activity or operation of the Company infringes upon or involves, or has resulted in the infringement of, any trademarks, trade-names, service marks, patents, copyrights or other proprietary rights of any other person, corporation or other entity; and no such proceedings have been instituted, are pending or are threatened against the Company. The Company and AuraSound: (i) owns or possesses all rights to use, option and/or license, as the case may be, all patents, patent applications, provisional patents, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses, formulae, mask works, customer lists, internet domain names, know-how and other intellectual property (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures, “Intellectual Property”) necessary for the conduct of their respective businesses as being conducted and as described in the Offering Memorandum and (ii) does not believe that the conduct of their respective businesses does or will conflict with, and have not received any notice of any claim of conflict with, any such right of others, which conflict would have a Material Adverse Effect. All Intellectual Property developed by and belonging to AuraSound (including, without limitation, that which is developed by consultants to AuraSound which has not been patented has been kept confidential so as, among other things, all such information may be deemed proprietary to AuraSound. To AuraSound’s knowledge, there is no infringement by third parties of any Intellectual Property. There are no pending or, to AuraSound’s knowledge, threatened actions, suits, proceedings or claims by others challenging AuraSound’s rights in or to any Intellectual Property, and there are no facts which would form a reasonable basis for any such claim. There is no pending or, to AuraSound’s knowledge, threatened action, suit, proceeding or claim by others that AuraSound infringes or otherwise violates any Intellectual Property rights of others, in each case which would be reasonably likely to have a Material Adverse Effect, and AuraSound is not aware of any other fact which would form a reasonable basis for any such claim.

3.17Insurance. The Company does not have any insurance policies in effect. AuraSound maintains insurance in such amounts and covering such risks as are customary for similarly-sized companies engaged in similar businesses in similar industries, all of which insurance is in full force and effect. There are no material claims by AuraSound under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause. AuraSound reasonably believes that it will be able to renew its existing insurance as and when such coverage expires or will be able to obtain replacement insurance adequate for the conduct of its business.

10

3.18Contracts. The Company does not have any material contracts, leases, arrangements or commitments (whether oral or written). The Company is not a party to or bound by or affected by any contract, lease, arrangement or commitment (whether oral or written) relating to: (a) the employment of any person; (b) collective bargaining with, or any representation of any employees by, any labor union or association; (c) the acquisition of services, supplies, equipment or other personal property; (d) the purchase or sale of real property; (e) distribution, agency or construction; (f) lease of real or personal property as lessor or lessee or sublessor or sublessee; (g) lending or advancing of funds; (h) borrowing of funds or receipt of credit; (i) incurring any obligation or liability; or (j) the sale of personal property. Except as set forth in the Schedule 3.18, (i) each of AuraSound’s Material Contracts, as defined below, is valid and binding and in full force and effect, (ii) AuraSound and, to the knowledge of AuraSound, each other party to any Material Contract is, and at all times has been, in compliance with all applicable terms and requirements of each Material Contract, except where non-compliance does not have a Material Adverse Effect, and (iii) AuraSound has not given to, or received from, any other party to any Material Contract, any notice or other communication regarding any actual or alleged breach of or default under any Material Contract by AuraSound or any other party to such Material Contract, except where such breach would not be reasonably likely to have a Material Adverse Effect. “Material Contract” shall mean any agreement that would be required pursuant to Item 601 of Regulation S-B promulgated under the Securities Act to be filed as an exhibit to any report, schedule, registration statement or definitive proxy statement filed or required to be filed under the Exchange Act or any rule or regulation promulgated thereunder, assuming such rules and regulations applied to AuraSound.

3.19Litigation. The Company is not subject to any judgment or order of any court or quasijudicial or administrative agency of any jurisdiction, domestic or foreign, nor is there any charge, complaint, lawsuit or governmental investigation pending against the Company. The Company is not a plaintiff in any action, domestic or foreign, judicial or administrative. There are no existing actions, suits, proceedings against or investigations of the Company, and the Company knows of no basis for such actions, suits, proceedings or investigations. There are no unsatisfied judgments, orders, decrees or stipulations affecting the Company or to which the Company is a party. Except for such matters that, individually or in the aggregate, would not have a Material Adverse Effect on the business, operations or financial results of AuraSound (either individually or in the aggregate) there are no claims, actions, suits, investigations or proceedings before or by any arbitrator, court, governmental authority or instrumentality pending or threatened against or affecting AuraSound or involving the properties of AuraSound which might affect the business, properties or financial condition of AuraSound or which might affect the transactions or other acts contemplated by this Agreement or the validity or enforceability of this Agreement;

3.20Employees. The Company does not have any employees. The Company does not owe any compensation of any kind, deferred or otherwise, to any current or previous employees. The Company does not have a written or oral employment agreement with any officer or director of the Company. Neither the Company nor AuraSound is a party to or bound by any collective bargaining agreement. Except as set forth in the SEC Reports or the Offering Memorandum, there are no loans or other obligations payable or owing by either the Company or AuraSound to any stockholder, officer, director or employee of the Company, nor are there any loans or debts payable or owing by any of such persons to the Company or AuraSound or any guarantees by the Company or AuraSound of any loan or obligation of any nature to which any such person is a party. No labor disturbance by the employees of AuraSound currently exists or, to AuraSound’s knowledge, is likely to occur

11

3.21Employee Benefit Plans. The Company does not have any (a) non-qualified deferred or incentive compensation or retirement plans or arrangements, (b) qualified retirement plans or arrangements, (c) other employee compensation, severance or termination pay or welfare benefit plans, programs or arrangements or (d) any related trusts, insurance contracts or other funding arrangements maintained, established or contributed to by the Company. AuraSound has not violated and is not currently in violation of any provisions of: (a) any federal or state environmental law, (b) Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ERISA”), (c) the Bank Secrecy Act, as amended, (d) the Money Laundering Control Act of 1986, as amended, (e) the Foreign Corrupt Practices Act, or (f) the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, and the rules and regulations promulgated under any such law, or any successor law, except for such violations which, singly or in the aggregate, would not have a Material Adverse Effect.

3.22Legal Compliance. To the best knowledge of the Company and AuraSound, after due investigation, no claim has been filed against either the Company or AuraSound alleging a violation of any applicable laws or regulations of foreign, federal, state and local governments and all agencies thereof. Each of the Company and AuraSound holds all of the material permits, licenses, certificates or other authorizations of foreign, federal, state or local governmental agencies required for its respective business as presently conducted.

3.23Internal Accounting Controls. Each of the Company and AuraSound maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s Form 10-KSB or 10-QSB, as the case may be, is being prepared. The Company's certifying officers have evaluated the effectiveness of the Company’s controls and procedures as of end of the filing period prior to the filing date of the Form 10-QSB for the quarter ended March 31, 2007 (such date, the "Evaluation Date"). The Company presented in its most recently filed Form 10-KSB or Form 10-QSB the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the Company's internal controls (as such term is defined in Item 307(b) of Regulation S-K under the Exchange Act) or, to the Company's knowledge, in other factors that could significantly affect the Company's internal controls.

3.24Listing and Maintenance Requirements. The Company’s common stock is currently quoted on the OTC Bulletin Board. The Company has not, since October 1, 2005, received any notice from the OTC Bulletin Board or the NASD or any trading market on which the Company’s common stock is or has been listed or quoted to the effect that the Company is not in compliance with the quoting, listing or maintenance requirements of the OTC Bulletin Board or such other trading market. The Company is, and has no reason to believe that it will not, in the foreseeable future continue to be, in compliance with all such quoting, listing and maintenance requirements.

12

3.25No SEC or NASD Inquiries. Neither the Company nor AuraSound nor any of their past or present officers or directors is, or has ever been, the subject of any formal or informal inquiry or investigation by the SEC or NASD.

3.26Disclosure. The representations and warranties and statements of fact made by the Company and AuraSound in this Agreement are, as applicable, accurate, correct and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained herein not false or misleading. Neither the Company nor AuraSound is and, at all times up to and including consummation of the transactions contemplated by this Agreement, and after giving effect to application of the net proceeds of the Placement, will not be, subject to registration as an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”), and is not and will not be an entity “controlled” by an “investment company” within the meaning of the 1940 Act. The Company and AuraSound will: (i) utilize the proceeds of the Offering for working capital purposes, repayment of certain affiliate loans and bridge loans of AuraSound and payment of expenses (including reasonable attorneys’ fees and costs) in accordance with the “Use of Proceeds” section of the Offering Memorandum and (ii) initially utilize the proceeds of the Offering and all other funds of AuraSound in such a manner so as to cause AuraSound not to be subject to the 1940 Act, and will thereafter use its best efforts to avoid AuraSound’s becoming subject to the 1940 Act.

3.27Anti-takeover Device. Neither the Company or AuraSound, nor any of their respective subsidiaries has any outstanding shareholder rights plan or “poison pill” or any similar arrangement. There are no provisions of any anti-takeover or business combination statute applicable to the Company or AuraSound or their respective Articles of Incorporation or Bylaws which would preclude the issuance and sale of the Securities, the reservation for issuance of the Warrant Shares and the consummation of the other transactions contemplated by this Agreement or any of the other Offering Documents.

3.28No Integrated Offering. Neither the Company or AuraSound, nor any of their respective affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the offering of the Securities pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the Act which would prevent the Company from selling the Securities pursuant to Regulation D and Rule 506 thereof under the Act, or any applicable exchange-related stockholder approval provisions, nor will the Company, AuraSound nor any of their respective affiliates or subsidiaries take any action or steps that would cause the offering of the Securities to be integrated with other offerings if such other offering, if integrated, would cause the offer and sale of the Securities not to be exempt from registration pursuant to Regulation D and Rule 506 thereof under the Act. The Company does not have any registration statement pending before the SEC or currently under the SEC’s review.

3.29Sarbanes-Oxley Act. The Company is in compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the rules and regulations promulgated thereunder, that are effective and for which compliance by the Company is required as of the date hereof and intends to comply with other applicable provisions of the Sarbanes-Oxley Act, and the rules and regulations promulgated thereunder, upon the effectiveness of such provisions or the date by which compliance therewith by the Company is required.

13

3.30Securities Law Compliance. Subject to the accuracy and completeness of the representations and warranties of the Subscriber contained in this Agreement, the Company and AuraSound have complied and will comply with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Securities hereunder. Neither the Company nor anyone acting on its behalf, directly or indirectly, has or will sell, offer to sell or solicit offers to buy any of the Securities or similar securities to, or solicit offers with respect thereto from, or enter into any negotiations relating thereto with, any person, or has taken or will take any action so as to bring the issuance and sale of any of the Securities under the registration provisions of the Act and applicable state securities laws, and neither the Company nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Act) in connection with the offer or sale of any of the Securities.

4.Covenants of the Company

The Company covenants with the Subscriber as follows, which covenants are for the benefit of the Subscriber and its, his or her permitted assignees.

4.1Securities Compliance. The Company shall notify the SEC in accordance with its rules and regulations, of the transactions contemplated by any of Offering Documents and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Securities to the Subscriber, or their respective subsequent holders.

4.2Registration and Listing. The Company shall cause its Common Stock to continue to be registered under Sections 12(b) or 12(g) of the Exchange Act, to comply in all respects with its reporting and filing obligations under the Exchange Act, to comply with all requirements related to any registration statement filed pursuant to this Agreement, and to not take any action or file any document (whether or not permitted by the Act or the rules promulgated thereunder) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under the Exchange Act or Act, except as permitted herein. The Company will take all action necessary to continue the quotation of its Common Stock on the OTC Bulletin Board or any successor market. Subject to the terms of Offering Documents, the Company further covenants that it will take such further action as the Subscriber may reasonably request, all to the extent required from time to time to enable the Subscriber to sell the Securities without registration under the Act within the limitation of the exemptions provided by Rule 144 promulgated under the Act. Upon the request of the Subscriber, the Company shall deliver to the Subscriber a written certification of a duly authorized officer as to whether it has complied with such requirements.

4.3Compliance with Laws. The Company shall comply, and cause each Subsidiary to comply, with all applicable laws, rules, regulations and orders, noncompliance with which would be reasonably likely to have a Material Adverse Effect.

4.4Keeping of Records and Books of Account. The Company shall keep and cause each Subsidiary to keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied, reflecting all financial transactions of the Company and its Subsidiaries.

14

4.5Reporting Requirements. If the Company ceases to file its periodic reports with the SEC, or if the SEC ceases making these periodic reports available via the Internet without charge, then the Company shall, promptly after filing with the SEC, furnish the following to the Subscriber so long as the Subscriber shall be obligated hereunder to purchase the Securities or shall beneficially own Securities:

 (a) Quarterly Reports filed with the SEC on Form 10-QSB;

 (b) Annual Reports filed with the SEC on Form 10-KSB; and

(c) Copies of all notices, information and proxy statements in connection with any meetings, that are, in each case, provided to holders of shares of Common Stock, contemporaneously with the delivery of such notices or information to such holders of Common Stock.

4.6Other Agreements. The Company shall not enter into any agreement in which the terms of such agreement would restrict or impair the right or ability of the Company or any Subsidiary to perform its obligations under any Offering Documents.

4.7Use of Proceeds. The Company will use the net proceeds from the sale of the Securities for the purposes set forth in the Offering Memorandum under the section titled “Use of Proceeds”.

4.8Reporting Status. So long as the Subscriber beneficially owns any of the Securities, the Company shall timely file all reports required to be filed with the SEC pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such termination.

4.9Disclosure of Transaction. The Company shall issue a press release describing the material terms of the transactions contemplated hereby (the “Press Release”) as soon as practicable after the Exchange Closing Date but in no event later than four (4) Trading Days following the Exchange Closing Date. The Company shall also file with the SEC a Current Report on Form 8-K (the “Form 8-K”) describing the material terms of the transactions contemplated hereby (and attaching as exhibits thereto this Agreement, the Lock-Up Agreement, the form of Warrant and the Press Release) as soon as practicable following the date hereof but in no event more than four (4) Trading Days following the Exchange Closing Date. “Trading Day” means any day during which the OTC Bulletin Board (or other principal exchange on which the Common Stock is traded) shall be open for trading.

4.10Disclosure of Material Information. The Company covenants and agrees that neither it nor any other person acting on its behalf has provided or will provide the Subscriber or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto the Subscriber shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that the Subscriber shall be relying on the foregoing representations in effecting transactions in securities of the Company.

4.11Form D. The Company agrees to file a Form D with respect to the Securities as required by Rule 506 under Regulation D and to provide a copy thereof to the Subscriber promptly after such filing.

4.12No Integrated Offerings. The Company shall not make any offers or sales of any security (other than the Securities being offered or sold hereunder) under circumstances that would require registration of the Securities being offered or sold hereunder under the Act.

15

4.13Pledge of Securities. The Company acknowledges and agrees that the Securities may be pledged by the Subscriber in connection with a bonafide margin agreement or other loan or financing arrangement that is secured by the Common Stock. The pledge of Common Stock shall not be deemed to be a transfer, sale or assignment of the Common Stock hereunder, and no Subscriber effecting a pledge of Common Stock shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or the Warrants; provided that the Subscriber and its pledgee shall be required to comply with the provisions of Section 5.13 hereof in order to effect a sale, transfer or assignment of Common Stock to such pledgee. At the Subscriber' expense, the Company hereby agrees to execute and deliver such documentation as a pledgee of the Common Stock may reasonably request in connection with a pledge of the Common Stock to such pledgee by the Subscriber.

4.14Confidentiality. The Subscriber agrees that it will not disclose and it will cause its officers, directors, employees, representatives, agents, and advisers not to disclose, any Confidential Information (as hereinafter defined) with respect to the other party furnished, at any time or in any manner, provided that (i) any disclosure of such information may be made to which the Company and Subscriber consent in writing; and (ii) such information may be disclosed if so required by law or regulatory authority. “Confidential Information” means information or knowledge obtained in any due diligence or other investigation relating to the negotiation and execution of this Agreement, information relating to the terms of the transactions contemplated hereby and any information identified as confidential in writing from one party to the other; provided, however, that Confidential Information shall not include information or knowledge that (a) becomes generally available to the public absent any breach of this Section 4.14, (b) was available on a non-confidential basis to a party prior to its disclosure pursuant to this Agreement, or (c) becomes available on a non-confidential basis from a third party who is not bound to keep such information confidential.

4.15Lock-Up Agreement. The Chief Executive Officer of AuraSound, Arthur Liu, shall be subject to the terms and provisions of the Lock-Up Agreement attached as an exhibit to the Offering Memorandum.

4.16Rule 144. As long as the Subscriber owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the Subscription Closing Date pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as the Subscriber owns Securities, if the Company is not required to file reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Subscriber and make publicly available in accordance with Rule 144(c) promulgated under the Act annual and quarterly financial statements, together with a discussion and analysis of such financial statements in form and substance substantially similar to those that would otherwise be required to be included in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as any other information required thereby, in the time period that such filings would have been required to have been made under the Exchange Act. The Company further covenants that it will take such further action as the Subscriber may reasonably request, all to the extent required from time to time to enable the Subscriber to sell the Common Stock and the Warrant Shares without registration under the Act within the limitation of the exemptions provided by Rule 144 promulgated under the Act, including providing any legal opinions relating to such sale pursuant to Rule 144.

16

4.17Company Indemnity. The Company agrees to indemnify and hold harmless the Subscribers (and their respective directors, officers, affiliates, agents, successors and assigns) from and against any and all losses, liabilities, deficiencies, costs, damages and expenses (including, without limitation, reasonable attorneys’ fees, charges and disbursements) incurred by the Subscribers and their directors, officers, affiliates, agents, successors and assigns as a result of any inaccuracy in or breach of the representations, warranties or covenants made by the Company herein.

4.18Affiliate Loan Repayment. The Company may only use the net proceeds from the Offering to repay affiliate loans if aggregate subscriptions under the Offering Memorandum exceed $12,000,000, and the total amount of affiliate loan repayment shall equal the difference between $12,000,000 and the total amount raised, up to a maximum of $1,750,000; provided, however, if the Company is able to obtain a $12 million accounts receivable credit facility, then the amount the Company may use to repay affiliate loans shall be the amount of proceeds received over $10,000,000 up to a maximum of $1,750,000.

5.Registration Rights.

5.1Registration Requirement. Subject to the terms and limitations hereof, the Company shall file an initial Registration Statement on Form SB-2 or other appropriate registration document under the Act (the “Initial Registration Statement”) for resale of all the shares of Common Stock sold and issued to the Subscriber on the Subscription Closing Date and all the Warrant Shares and shall use its reasonable best efforts to maintain the Initial Registration Statement effective for a period of twenty-four (24) months following the Subscription Closing Date at the Company’s expense (the “Effectiveness Period”). The Company shall use reasonable best efforts to file the Initial Registration Statement no later than sixty (60) days after the Exchange Closing Date (the “Registration Filing Date”), and shall use reasonable best efforts to cause the Initial Registration Statement to become effective within two hundred and ten (210) days after the Exchange Closing Date (the “Effectiveness Date”). The Subscriber understands and agrees that the Company shall have no obligation whatsoever to register with the SEC any of the shares of Common Stock issuable in connection with the Additional Investment Option (as hereinafter defined).

5.2Liquidated Damages. If: (i) the Initial Registration Statement is not filed on or prior to the Registration Filing Date, or (ii) the Company fails to file with the SEC a request for acceleration in accordance with Rule 461 promulgated under the Securities Act within three trading days of the date that the Company is notified in writing by the SEC that the Initial Registration Statement will not be “reviewed,” or not subject to further review; or (iii) the Initial Registration Statement is not declared effective by the SEC by the Effectiveness Date; or (iv) the date on which trading in the Company’s Common Stock is suspended for more than three business days in the aggregate (any such failure or breach being referred to as an “Event”, and for purposes of clause (i) or (iii) the date on which such Event occurs, or for purposes of clause (ii) and (iv) the date on which such three trading day period is exceeded, being referred to as an “Event Date”), then on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to the Subscriber an amount in cash, as liquidated damages, equal to 1.5% of the aggregate purchase price paid by the Subscriber hereunder. In no event will the Company be liable for liquidated damages under this Agreement in excess of 1.5% of the Subscriber’s subscription amount in any 30-day period and in no event will the total liquidated damages hereunder exceed 18% of the Subscriber’s subscription amount hereunder. Notwithstanding anything to the contrary contained herein, in no event shall any liquidated damages be payable with respect to the Warrants or the Warrant Shares.

17

Notwithstanding anything to the contrary set forth in this Section 5, in the event the SEC does not permit the Company to register all of the Registrable Securities in the initial Registration Statement because of the SEC’s application of Rule 415, the Company shall register in the initial Registration Statement such number of Registrable Securities as is permitted by the SEC, provided, however, that the number of Registrable Securities to be included in such Registration Statement or any subsequent registration statement shall be determined in the following order: (i) first, the shares of Common Stock issued pursuant to this Agreement and all other Subscription Agreements under the Offering Memorandum, along with all of the shares of Common Stock that the Company is obligated to register on the Initial Registration Statement as set forth in Section 5.8 (i) hereof shall be registered on a pro rata basis among the holders of such Common Stock, and (ii) second, the shares of Common Stock issuable upon exercise of the Warrants shall be registered on a pro rata basis among the holders of the Warrants. In the event the SEC does not permit the Company to register all of the Registrable Securities in the Initial Registration Statement, the Company shall use its best efforts to file subsequent Registration Statements to register the Registrable Securities that were not registered in the Initial Registration Statement as promptly as possible and in a manner permitted by the SEC. The Company shall use its best efforts to file each subsequent Registration Statement by the later of (i) sixty (60) days following the sale of substantially all of the Registrable Securities included in the initial Registration Statement or any subsequent Registration Statement and (ii) six (6) months following the effective date of the initial Registration Statement or any subsequent Registration Statement, as applicable, or such earlier date as permitted by the SEC. The Company shall use its best efforts to obtain effectiveness of each subsequent Registration Statement bythe earlier of (A) the ninetieth (90^th) day following the filing date of such Registration Statement (or in the event such Registration Statement receives a “full review” by the SEC, the one hundred twentieth (120^th) day following such filing date) or (B) the date which is within three (3) business days after the date on which the SEC informs the Company (i) that the SEC will not review such Registration Statement or (ii)that the Company may request the acceleration of the effectiveness of such Registration Statement and the Company makes such request.

5.3Registrable Securities for the Initial Registration Statement Defined. For the purposes of this Agreement, “Registrable Securities” shall mean all unregistered shares of Common Stock and Warrant Shares underlying the Units purchased by the Subscriber hereunder, but none of the shares issuable in connection with the Additional Investment Option, each as defined herein.

5.4Limitation to Registration Requirement. Notwithstanding the foregoing, the Company shall not be obligated to effect any registration of the Registrable Securities or take any other action pursuant to this Section 4: (i) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Act, or (ii) during any period in which the Company suspends the rights of a subscriber after giving the Subscriber written notification of a Potential Material Event (defined below) pursuant to Section 4.6 hereof.

5.5Expenses of Registration. Except as otherwise expressly set forth herein, the Company shall bear all expenses incurred by the Company in compliance with the registration obligations of the Company, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company incurred in connection with any registration, qualification or compliance pursuant to this Agreement and all underwriting discounts, selling commissions and expense allowances applicable to the sale of any securities by the Company for its own account in any registration. All underwriting discounts, selling commissions and expense allowances applicable to the sale by Subscriber of Registrable Securities and all fees and disbursements of counsel for the Subscriber shall be borne by the Subscriber.

18

5.6Indemnification.

(a)To the extent permitted by law the Company will indemnify the Subscriber, each of its officers, directors, agents, employees and partners, and each person controlling the Subscriber, with respect to each registration, qualification or compliance effected pursuant to this Agreement, and each underwriter, if any, and each person who controls any underwriter, and their respective counsel against all claims, losses, damages and liabilities (or actions, proceedings or settlements in respect thereof) arising out of or based on (i) any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document prepared by the Company (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or (ii) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Act or any rule or regulation there-under applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and subject to the provisions of Section 5.7(b) below, will reimburse the Subscriber, each of its officers, directors, agents, employees and partners, and each person controlling the Subscriber, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses as they are reasonably incurred in connection with investigating and defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement (or alleged untrue statement) or omission (or alleged omissions) based upon written information furnished to the Company by (or on behalf of) the Subscriber or underwriter, or if the person asserting any such loss, claim, damage or liability (or action or proceeding in respect thereof did not receive a copy of an amended preliminary prospectus or the final prospectus (or the final prospectus as amended and supplemented) at or before the written confirmation of the sale of such Registrable Securities to the person because of the failure of the Subscriber or underwriter to so provide such amended preliminary or final prospectus (or the final prospectus as amended and supplemented); provided, however, that the indemnity agreement contained in this subsection shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by the Subscriber, any such partner, officer, director, employee, agent or controlling person of such Subscriber, or any such underwriter or any person who controls any such underwriter; provided, however, that the obligations of the Company hereunder shall be limited to an amount equal to the portion of net proceeds represented by the Registrable Securities pursuant to this Agreement.

(b)To the extent permitted by law, the Subscriber will indemnify the Company, and its directors, officers, agents, employees and each underwriter, if any, of the Company’s securities covered by any registration statement required to be filed pursuant to this Agreement, each person who controls the Company or such underwriter within the meaning of the Act and the rules and regulations thereunder, and their respective counsel against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company for any legal or any other expenses as they are reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by the Subscriber; provided, however, that the obligations of the Subscriber hereunder shall be limited to an amount equal to the net proceeds to the Subscriber from Registrable Securities sold under such registration statement, prospectus, offering circular or other document as contemplated herein; provided, further, that the indemnity agreement contained in this subsection shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Subscriber, which consent shall not be unreasonably withheld or delayed.

19

(c)Each party entitled to indemnification under this Section (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense; and provided further that if any Indemnified Party reasonably concludes that there may be one or more legal defenses available to it that are not available to the Indemnifying Party, or that such claim or litigation involves or could have an effect on matters beyond the scope of this Agreement, then the Indemnified Party may retain its own counsel at the expense of the Indemnifying Party; and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless and only to the extent that such failure to give notice results in material prejudice to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting there-from.

(d)If the indemnification provided for in this Section is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage or expense referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

20

5.7Transfer or Assignment of Registration Rights. The Registrable Securities, and any related benefits to the Subscriber hereunder may be transferred or assigned by the Subscriber to a permitted transferee or assignee, provided that the Company is given written notice of such transfer or assignment, stating the name and address of said transferee or assignee and identifying the Registrable Securities with respect to which such registration rights are being transferred or assigned; provided further that the transferee or assignee of such Registrable Securities shall be deemed to have assumed the obligations of the Subscriber under this Agreement by the acceptance of such assignment and shall, upon request from the Company, evidence such assumption by delivery to the Company of a written agreement assuming such obligations of the Subscriber; and provided further, that the transferee or assignee shall not be a competitor (or an affiliate of a competitor) of the Company or any of its subsidiaries and shall not have (and shall not be an affiliate of a person that has) any pending or threatened claim against the Company or any of its subsidiaries.

5.8Registration Procedures. In the case of any registration effected by the Company pursuant to this Agreement, the Company will keep the Subscriber advised in writing as to the initiation of each registration and as to the completion thereof. The Company will:

(a)Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of securities covered by such registration statement;

(b)Respond as promptly as reasonably practicable to any comments received from the SEC with respect to a registration statement or any amendment thereto.

(c)Notify the Subscriber as promptly as reasonably practicable and (if requested by any such person) confirm such notice in writing no later than one trading day following the day (A) when a prospectus or any prospectus supplement or post-effective amendment to a registration statement is proposed to be filed and (B) with respect to a registration statement or any post-effective amendment, when the same has become effective;

(d)Furnish such number of prospectuses and other documents incident thereto, including supplements and amendments, as the Subscriber may reasonably request;

(e)Furnish to the Subscriber, upon request, a copy of all documents filed with and all correspondence from or to the SEC in connection with any such registration statement other than non-substantive cover letters and the like;

(f)Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of a registration statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment; and

(g)Use its reasonable best efforts to comply with all applicable rules and regulations of the SEC.

Notwithstanding the foregoing, if at any time or from time to time after the date hereof, the Company notifies the Subscriber in writing of the existence of an event or circumstance that is not disclosed in the Registration Statement and that may have a material effect on the Company or its business (a “Potential Material Event”), the Subscriber shall not offer or sell any Registrable Securities, or engage in any other transaction involving or relating to the Registrable Securities, from the time of the giving of notice with respect to a Potential Material Event until the Company notifies the Subscriber that such Potential Material Event either has been added to the Registration Statement by amendment or supplement or no longer constitutes a Potential Material Event; provided, that the Company may not so suspend the right of Subscriber for more than 60 days in any twelve month period.

21

(h)File the final prospectus pursuant to Rule 424 of the Securities Act no later than 9:00 am Eastern time on the business day following the date the Registration Statement is declared effective by the SEC.

(i)The Company shall not permit any Securities other than (i) the Registrable Securities, (ii) 3,200,000 shares of Common Stock issuable upon exercise of warrants issued in the Second Bridge Financing (as defined in the Offering Memorandum), (iii) 1,229,476 shares of Common Stock held by Next Stage Investments, Inc., an affiliate of the Placement Agent, and (iv) 619,329 shares of Common Stock held by Synergy Business Consulting, LLC, the former majority shareholder of the Company, to be included in the Initial Registration Statement.

5.9Statement of Beneficial Ownership. The Company may require the Subscriber to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by the Subscriber and the controlling person thereof and any other such information regarding the Subscriber, the Registrable Securities held by the Subscriber and the intended method of disposition of such securities as shall be reasonably required with respect to the registration of the Subscriber’s Registrable Securities. The Subscriber hereby understands and agrees that the Company may, in its sole discretion, exclude the Subscriber’s shares of Common Stock (including such shares into which the Warrants are exercisable) from any Registration Statement required to be filed hereunder in the event that the Subscriber fails to provide such information requested by the Company within the time period reasonably specified by the Company or is required to do so by law or the SEC.

5.10Compliance. The Subscriber covenants and agrees that the Subscriber will comply with the prospectus delivery requirements of the Act as applicable to such Subscriber in connection with any resale of Registrable Securities pursuant to a Registration Statement required to be filed hereunder.

5.11Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the SEC a Registration Statement other than as required hereunder relating to an offering for its own account or the account of others under the Act of any of its Common Stock, other than an offering of securities issued pursuant to a Strategic Issuance (as defined below) and other than a Form S-4 or Form S-8 Registration Statement (each as promulgated under the Act or their then equivalents relating to equity securities to be issued solely in connection with any business combination transaction, acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans), then the Company shall send to the Subscriber (together with any other holders of its Common Stock or Warrants possessing “piggyback registration rights” comparable to those granted to the Subscriber hereunder (“Rights holders”)) written notice of such determination and, if within fifteen (15) days after receipt of such notice, the Subscriber shall so request in writing, the Company shall include in such Registration Statement all or any part of such Registrable Securities such Subscriber requests to be registered; provided that the Company shall not be required to register any Registrable Securities pursuant to this Section that are eligible for resale pursuant to Rule 144(k) promulgated under the Act; and provided further that the Company may, without the consent of the Subscriber, withdraw such registration statement before its becoming effective if the Company or other stockholders have elected to abandon the proposal to register the securities proposed to be registered thereunder. If the registration statement is being filed for an underwritten public offering, the Subscriber must timely execute and deliver the usual and customary agreement among the Company, the Subscriber and the underwriters relating to the registration. If the Registration Statement is being filed for an underwritten offer and sale by the Company of securities for its own account and the managing underwriters advise the Company in writing that in their opinion the offering contemplated by the Registration Statement cannot be successfully completed if the Company were to also register the Registrable Securities of the Subscriber requested to be included in such Registration Statement, then the Company will include in the registration: (i) first, any securities the Company proposes to sell, (ii) second, any securities of any person whose securities are being registered as a result of the exercise of a demand registration right, and (iii) third, that portion of the aggregate number of shares being requested for inclusion in the Registration Statement by (X) the Subscriber and (Y) all other Rights holders, which in the opinion of such managing underwriters can successfully be sold, such number of shares to be taken pro rata from the Rights holders on the basis of the total number of shares being requested for inclusion in the Registration Statement by each Rights holder. “Strategic Issuance” shall mean an issuance of securities: (i) in connection with a “corporate partnering” transaction or a “strategic alliance” (as determined by the Board of Directors of the Company in good faith); (ii) in connection with any financing transaction in respect of which the Company is a borrower; or (iii) to a vendor, lessor, lender, or customer of the Company, or a research, manufacturing or other commercial collaborator of the Company, in a transaction approved by the Board of Directors, provided in any case, that such issuance is not being made primarily for the purpose of avoiding compliance with this Agreement.

22

5.12Legend. Each certificate representing the Securities shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required by applicable state securities or “blue sky” laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR HEMCURE, INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

The Company agrees to reissue certificates representing any of the Common Stock and the Warrant Shares, without the legend set forth above if at such time, prior to making any transfer of any such Common Stock or Warrant Shares, such holder thereof shall give written notice to the Company describing the manner and terms of such transfer and removal as the Company may reasonably request. Such proposed transfer and removal will not be effected until: (a) either (i) the Company has received an opinion of counsel reasonably satisfactory to the Company, to the effect that the registration of the Common Stock or Warrant Shares under the Act is not required in connection with such proposed transfer, (ii) a registration statement under the Act covering such proposed disposition has been filed by the Company with the SEC and has become and remains effective under the Act, (iii) the Company has received other evidence reasonably satisfactory to the Company that such registration and qualification under the Act and state securities laws are not required, or (iv) the holder provides the Company with reasonable assurances that such security can be sold pursuant to Rule 144 under the Act; and (b) either (i) the Company has received an opinion of counsel reasonably satisfactory to the Company, to the effect that registration or qualification under the securities or “blue sky” laws of any state is not required in connection with such proposed disposition, or (ii) compliance with applicable state securities or “blue sky” laws has been effected or a valid exemption exists with respect thereto. The Company will respond to any such notice from a holder within five (5) business days. In the case of any proposed transfer under this Section 5.13, the Company will use reasonable efforts to comply with any such applicable state securities or “blue sky” laws, but shall in no event be required, (x) to qualify to do business in any state where it is not then qualified, or (y) to take any action that would subject it to tax or to the general service of process in any state where it is not then subject. The restrictions on transfer contained in this Section 5.13 shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other section of this Agreement. Whenever a certificate representing the Common Stock or Warrant Shares is required to be issued to the Subscriber without a legend, in lieu of delivering physical certificates representing the Common Stock or Warrant Shares, provided the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, the Company shall use its reasonable best efforts to cause its transfer agent to electronically transmit the Common Stock or Warrant Shares to a Subscriber by crediting the account of such Subscriber’s Prime Broker with DTC through its Deposit Withdrawal Agent SEC (“DWAC”) system (to the extent not inconsistent with any provisions of this Agreement).

23

6.Subsequent Equity Sales.

6.1If the Company at any time after the Subscription Closing Date consummates a sale of any Common Stock for cash at a price per share less than the $1.00 or consummates a sale of any securities exercisable for or convertible into Common Stock (“Common Stock Equivalents”) having an exercise or conversion price per share less than the Purchase Price (such lower price, the “Base Share Price” and each such issuance, a “Dilutive Issuance”), then the Company shall upon each Dilutive Issuance issue to the Subscriber a number of additional shares of Common Stock in accordance with the following formula:

ACS	= SA          minus ONS
	BSP

Where
ACS	=	The number of additional shares of Common Stock to be issued pursuant to this Section 6(a).
SA	=	The aggregate Purchase Price paid by the Subscriber pursuant to this Agreement.
BSP	=	The Base Share Price.
ONS	=	The original number of shares of Common Stock issued to the Subscriber pursuant to this Agreement (not including any Warrant Shares).

Notwithstanding the foregoing, no adjustments shall be made under this Section 6(a) in respect of an Exempt Issuance (as defined below).

24

6.2“Exempt Issuance” means (i) shares of Common Stock issued pursuant to an equity incentive plan duly adopted by the Company’s board of directors, provided that during the first twelve months following the Exchange Closing Date the number of securities so issued shall not exceed, during such twelve (12) month period, twelve and one-half percent (12.5%) of the outstanding shares of Common Stock on a fully diluted basis as of the Exchange Closing Date after giving effect to the sale and issuance of all the Units purchased as of such date; and provided further that such fully diluted calculation shall include all Units issued pursuant to the Offering Memorandum from and after the Exchange Closing Date through the termination of the Offering, (ii) shares of Common Stock issued upon exercise of any options or warrants of the Company outstanding on the Exchange Closing Date, (iii) shares of Common Stock issued upon exercise of warrants to be issued pursuant to Section 7.1(f) of the Amended and Restated Agreement and Plan of Share Exchange, dated as of June 7, 2007, between the Company and AuraSound (the “Share Exchange Agreement”), and (iv) shares of Common Stock issued to the shareholders of AuraSound pursuant to the Share Exchange Agreement (including, without limitation, shares issued in connection with the Share Cancellation and the Debt Conversion (as defined in the Offering Memorandum).

6.3If the Company at any time after the Subscription Closing Date shall split, subdivide or combine its outstanding shares of Common Stock into a different number of shares, then, for the purposes of this Section 6, the Purchase Price shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination.

7.Closing Conditions

7.1Conditions Precedent to the Obligation of the Company to Close and to Sell the Securities. The obligation hereunder of the Company to close and issue and sell the Securities to the Subscriber at the Subscription Closing Date is subject to the satisfaction or waiver, at or before the Subscription Closing of the conditions set forth below. These conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion.

(a)Accuracy of the Subscriber’s Representations and Warranties. The representations and warranties of the Subscriber shall be true and correct in all material respects as of the date when made and as of the Subscription Closing Date as though made at that time, except for representations and warranties that are expressly made as of a particular date, which shall be true and correct in all material respects as of such date.

(b)Performance by the Subscriber. The Subscriber shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Subscriber at or prior to the Subscription Closing Date.

(c)No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

(d)Delivery of Purchase Price. The Subscriber shall have delivered to the Company the purchase price for the Securities to be purchased by the Subscriber.

25

(e)Delivery of this Agreement and the Warrants. This Agreement and the Warrants shall have been duly executed and delivered by the Subscriber and, with respect to the Escrow Agreement, the escrow agent, to the Company.

7.2Conditions Precedent to the Obligation of the Subscriber to Close and to Purchase the Securities. The obligation hereunder of the Subscriber to purchase the Securities and consummate the transactions contemplated by this Agreement is subject to the satisfaction or waiver, at or before the Subscription Closing Date, of each of the conditions set forth below. These conditions are for the Subscriber’s sole benefit and may be waived by the Subscriber at any time in its sole discretion.

(a)Accuracy of the Company's Representations and Warranties. Each of the representations and warranties of the Company in this Agreement and the Registration Rights Agreement shall be true and correct in all respects as of the Subscription Closing Date, except for representations and warranties that speak as of a particular date, which shall be true and correct in all material respects as of such date.

(b)Performance by the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Subscription Closing Date.

(c)No Suspension, Etc. Trading in the Common Stock shall not have been suspended by the SEC or the OTC Bulletin Board (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, at any time prior to the Subscription Closing Date, trading in securities generally as reported by Bloomberg Financial Markets (“Bloomberg”) shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by Bloomberg, or on the New York Stock Exchange, nor shall a banking moratorium have been declared either by the United States or New York State authorities.

(d)No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

(e)No Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any governmental authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Company or any Subsidiary, or any of the officers, directors or affiliates of the Company or any Subsidiary seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in connection with such transactions.

(f)Opinion of Counsel. The Subscriber shall have received an opinion of counsel to the Company, dated the Subscription Closing Date, in the form attached to the Offering Memorandum as Exhibit F.

(g)Shares and Warrants. At or prior to the Subscription Closing, the Company shall have delivered to the Subscriber the Warrants (in such denominations as each Subscriber may request) duly executed by the Company. In addition, the Company shall provide for the delivery to the Subscriber of certificates representing the Common Stock (in such denominations as the Subscriber may request) in a reasonable period of time after the close, not to exceed five (5) days.

26

(h)Secretary's Certificate. The Company shall have delivered to the Subscriber a secretary's certificate, dated as of the Subscription Closing Date, as to (i) the resolutions adopted by the Board of Directors approving the transactions contemplated hereby, (ii) the Articles, (iii) the Bylaws, each as in effect at the Closing, and (iv) the authority and incumbency of the officers of the Company executing the Offering Documents and any other documents required to be executed or delivered in connection therewith.

(i)Officer's Certificate. On the Subscription Closing Date, the Company shall have delivered to the Subscriber a certificate signed by an executive officer on behalf of the Company, dated as of the Subscription Closing Date, confirming the accuracy of the Company's representations, warranties and its compliance with covenants as of the Subscription Closing Date and confirming the compliance by the Company with the conditions precedent set forth in this Section 7 as of the Subscription Closing Date.

(j)Material Adverse Effect. No Material Adverse Effect shall have occurred at or before the Subscription Closing Date.

(k)Minimum Investment Amount. The Company shall have in escrow pursuant to the Offering Memorandum at least $10,000,000.

(l)Credit Facility. The Company shall have written approval from a lender to provide receivables financing in an amount of at least $10,000,000 independent of the amount raised under the Offering Memorandum and such receivables financing agreement must have an initial term of twelve months.

8.Additional Investment Option.  If the Subscriber’s aggregate Purchase Price paid pursuant to this Subscription Agreement equals or exceeds $3,000,000, then for a period of twelve (12) months from the Closing Date the Subscriber will have the right but not the obligation to purchase additional Units up to 50% of the dollar amount invested by such investor in the Offering at a price of $1.35 per Unit, provided that the additional Warrants included in such additional Investment Units shall not be subject to cashless exercise (“the Additional Investment Option”). For example, if the investor invested $4,000,000 in the Offering, then for a period of 12 months from the Closing Date, such investor shall have the option to purchase an additional $2,000,000 in Units except that the price per Unit shall be $1.35 and the Warrants included in such additional Units shall not be subject to cashless exercise. For purposes of this Additional Investment Option, all investments managed by the same Investment Advisor shall be aggregated and deemed to be as one.

9.Miscellaneous.

9.1In connection with the Additional Investment Option, the Subscriber will provide the Company with a written notice stating the number of additional Units the Subscriber desires to purchase and a written representation and warranty, in form and substance reasonably acceptable to the Company, that the Subscriber continues to be an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Act.  The Company and the Subscriber will use their best efforts, cooperate in good faith and provide each other such additional documentation and instructions as each may reasonably request in order to consummate such additional purchase and sale within 10 trading days of the Company’s receipt of the Subscriber’s notice hereunder.  The Subscriber understands and agrees that the shares of Common Stock underlying the additional Units, including warrant shares, will not be registered in the Initial Registration Statement.

27

9.2Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, addressed to the Company (or to Arthur Liu for the purposes of Section 4.11), at AuraSound, Inc., 11839 East Smith Avenue, Santa Fe Springs, CA 90670, Attention: Arthur Liu, Chief Executive Officer, with a copy to (which shall not constitute notice) Richardson & Patel LLP, 405 Lexington Avenue, 26^th Floor, New York, NY 10174, Attention: Kevin Friedman, Esq., and to the Subscriber at the address indicated on the signature page of this Agreement. Notices shall be deemed to have been given three (3) business days after the date of mailing, except notices of change of address, which shall be deemed to have been given when received.

9.3This Agreement may be amended through a written instrument signed by the Subscriber, AuraSound and the Company; provided, however, that the terms of Section 4 of this Agreement may be amended without the consent or approval of the Subscriber so long as such amendment applies in the same fashion to the subscription agreements of all of the other subscribers for Units in the Offering and at least holders of a majority of the Units sold in the Offering have given their approval of such amendment, which approval shall be binding on all holders of Units.

9.4This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.

9.5Notwithstanding the place where this Agreement may be executed by any of the parties hereto, the parties expressly agree that all the terms and provisions hereof shall be construed in accordance with and governed by the laws of the State of Nevada.

9.6This Agreement may be executed in counterparts. It shall not be binding upon the Company and AuraSound unless and until it is accepted by the Company and AuraSound. Upon the execution and delivery of this Agreement by the Subscriber, this Agreement shall become a binding obligation of the Subscriber with respect to the purchase of Units as herein provided; subject, however, to the right hereby reserved to the Company to enter into the same agreements with other subscribers and to add and/or to delete other persons as subscribers.

9.7The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect.

9.8It is agreed that a waiver by either party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of any subsequent breach by that same party.

9.9The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

9.10The Company agrees not to disclose the names, addresses or any other information about the Subscriber, except as required by law, provided that the Company may provide information relating to the Subscriber as required in any registration statement under the Act that may be filed by the Company pursuant to the requirements of this Agreement.

28

9.11Specific Performance. The Company and the Subscriber acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement or the other Offering Documents are not performed in accordance with their specific terms or are otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement or the other Offering Documents and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.

9.12Survival. The representations and warranties of the Company and the Subscriber shall survive the execution and delivery hereof and the Subscription Closing until the second anniversary of the Subscription Closing Date.

9.13The obligation of the Subscriber hereunder is several and not joint with the obligations of any other subscribers for the purchase of Units in the Offering (the “Other Subscribers”), and the Subscriber shall not be responsible in any way for the performance of the obligations of any Other Subscribers. Nothing contained herein or in any other agreement or document delivered at the Closing, and no action taken by the Subscriber pursuant hereto, shall be deemed to constitute the Subscriber and the Other Subscribers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Subscriber and the Other Subscribers are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. The Subscriber shall be entitled to protect and enforce the Subscriber’s rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any Other Subscriber to be joined as an additional party in any proceeding for such purpose. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. The Subscriber is not acting as part of a “group” (as that term is used in Section 13(d) of the 1934 Act) in negotiating and entering into this Agreement or purchasing the Units or acquiring, disposing of or voting any of the underlying Common Shares or the Warrant Shares. The Company hereby confirms that it understands and agrees that the Subscriber is not acting as part of any such group.

[SIGNATURE PAGE FOLLOWS]

29

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

Full Legal Name of Subscriber (Please print) Full Legal Name of Co-Subscriber (if applicable)

Signature of (or on behalf of) Subscriber	Signature of or on behalf of Co-Subscriber
Name:	(if applicable)
Title:

Address of Subscriber Address of Co-Subscriber (if applicable)

Social Security or Taxpayer	Social Security or Taxpayer Identification
Identification Number of Subscriber	Number of Co-Subscriber (if applicable)

Number of Units Subscribed For

Subscription Agreed to and Accepted
HEMCURE, INC., a Nevada corporation		AuraSound, Inc., a California corporation
By:		By:
Name:	Bartley J. Loethen	Name:	Arthur Liu
Title:	Chief Executive Officer	Title:	Chief Executive Officer

30

Exhibit A-1

Corporate Investor Questionnaire

Name:

IMPORTANT:

Please Complete

CORPORATE INVESTOR QUESTIONNAIRE

HEMCURE, INC.

AuraSound, Inc.

Hemcure, Inc. and AuraSound, Inc.

c/o AuraSound, Inc.

11839 East Smith Avenue

Santa Fe Springs, CA 90670

Attn: Arthur Liu

The information contained in this Corporate Investor Questionnaire is being furnished in order to determine whether the undersigned Corporation’s subscription to purchase Units (“Units”) each Unit consisting of one share of common stock and warrants to purchase one (1) share of Common Stock of AuraSound, Inc. and Hemcure, Inc. (the “Company”) may proceed.

This Questionnaire should be completed, signed, dated and a copy should be sent to GP Group, LLC (the “Placement Agent”) via facsimile at (310) 696-4007 or electronic format (e.g., PDF) to njohnson@geminipartners.net and the original delivered to GP Group, LLC, 10880 Wilshire Boulevard, Suite 500, Los Angeles, California 90024, Attention: Nathan Johnson. Please keep a copy for your files.

A-1 (1)

ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY. The undersigned Corporation understands, however, that the Company may present this Questionnaire to such parties as it deems appropriate if called upon to establish that the proposed offer and sale of the Units in the Companyis exempt from registration under the Securities Act of 1933,as amended, or meets the requirements of applicable state securities or “blue sky” laws. Further, the undersigned Corporation understands that the offering required to be reported to the Securities and Exchange Commission and to various state securities or “blue sky” regulators.

I.PLEASE CHECK ANY OF STATEMENTS 1-3 BELOW THAT APPLY TOTHE CORPORATION.

¨ 1. Each of the shareholders of the undersigned Corporation is able to certify that such shareholder meets at least one of the following two conditions:

(a)            The shareholder is a natural person whose individual net worth* or joint net worth with his or her spouse exceeds $1,000,000; or

(b)           The shareholder is a natural person who had an individual income* in excess of $200,000 in each of the previous two years and who reasonably expects an individual income in excess of $200,000 this year.

¨ 2. Each of the shareholders of the undersigned Corporation is able to certify that such shareholder is a natural person who, together with his or her spouse, has had a joint income in excess of $300,000 in each of the previous two years and who reasonably expects a joint income in excess of $300,000 this year.

¨ 3. The undersigned Corporation: (a) was not formed for the specific purpose of acquiring the Units; and (b) has total assets in excess of $5,000,000.

* For purposes of this Questionnaire, the term “net worth” means the excess of total assets over total liabilities. In determining income, an investor should add to his or her adjusted gross income any amounts attributable to tax-exempt income received, losses claimed as a limited partner in any limited partnership, deductions claimed for depletion, contributions to IRA or Keogh retirement plans, alimony payments and any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income.

A-1 (2)

IF YOU CHECKED STATEMENT 1 OR STATEMENT 2 IN SECTION I, ABOVE, AND DID NOT CHECK STATEMENT 3, YOU MUST PROVIDE A LETTER SIGNED BY AN OFFICER OF THE UNDERSIGNED CORPORATION LISTING THE NAME OF EACH SHAREHOLDER AND THE REASON (UNDER STATEMENT 1 OR STATEMENT 2) WHY SUCH SHAREHOLDER QUALIFIES AS AN ACCREDITED INVESTOR (ON THE BASIS OF NET WORTH, INDIVIDUAL INCOME OR JOINT INCOME), OR EACH SHAREHOLDER MUST PROVIDE A COMPLETED INDIVIDUAL INVESTOR QUESTIONNAIRE (PAGES A-1 (2) TO A-1 (6)). 

II. OTHER CERTIFICATIONS

By signing the Signature Page, the undersigned certifies the following:

(a)   that the Corporation’s purchase of Units will be solely for the Corporation’s own account and not for the account of any other person or entity;

(b)   that the Corporation’s name, address of principal office, place of incorporation and taxpayer identification number as set forth in this Questionnaire are true, correct and complete; and

(c) that one of the following is true and correct (check one):

¨ (i) the Corporation is a corporation organized in or under the laws of the United States or any political subdivision thereof.

 ¨ (ii) the Corporation is a corporation which is neither created nor organized in or under the United States or any political subdivision thereof, but which has made an election under either Section 897(1) or 897(k) of the United States Internal Revenue Code of 1986, as amended, to be treated as a domestic corporation for certain purposes of United States federal income taxation (A COPY OF THE INTERNAL REVENUE SERVICE ACKNOWLEDGMENT OF THE UNDERSIGNED’S ELECTION MUST BE ATTACHED TO THIS QUESTIONNAIRE IF THIS PROVISION IS APPLICABLE).

¨ (iii) neither (1) nor (ii) above is true.

® (i)

A-1 (3)

III. GENERAL INFORMATION

(a)PROSPECTIVE PURCHASER (THE CORPORATION)

Name:

Principal Place of Business:
	(Number and Street)

(City) (State) (Zip Code)

Address for Correspondence (if different):
	(Number and Street)

(City) (State) (Zip Code)

Telephone Number:
	(Area Code)	(Number)

Facsimile Number:
	(Area Code)	(Number)

State of Incorporation:

Date of Formation:

Taxpayer Identification Number:

NASD Affiliation or Association of the Corporation, if any:

If none, check here    o

Number of Shareholders:

(b)   INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE CORPORATION

Name:

Position or Title:

 

A-1 (4)

IV. BENEFICIAL, OWNERSHIP

List the name, address, title, phone number and email address of the natural person or persons who will possess voting and investment power over the Units subscribed for herein:

Name of Natural Person(s):

Address:

Title (if any):

 

Phone:

Email address(if any):

V. SIGNATURE

The Signature Page to this Questionnaire is contained on page A-1 (6), entitled Corporation Signature Page.

A-1 (5)

Corporation Signature Page

HEMCURE, INC.

AURASOUND, INC.

1.The undersigned Corporation represents that (a) the information contained in this Questionnaire is complete and accurate and (b) the Corporation will immediately notify (i) GP Group, LLC, 10880 Wilshire Boulevard, Suite 500, Los Angeles, California 90024, Attention: Nathan Johnson, phone number (310) 696-4000, facsimile (310) 696-4007 and (ii) Thomas J. Poletti, Esq., counsel to GP Group, LLC, at Kirkpatrick & Lockhart Preston Gates Ellis LLP, 10100 Santa Monica Blvd., 7th Floor, Los Angeles, California 90067, phone number (310) 552-5000, facsimile (310) 552-5001 if any material change in any of the information occurs prior to the acceptance of the undersigned Corporation’s subscription and will promptly send the foregoing written confirmation of such change.

2.The undersigned Corporation hereby represents and warrants that the person signing this Questionnaire on behalf of the Corporation has been duly authorized by all requisite action on the part of the Corporation to acquire the Units and sign this Questionnaire and this Agreement on behalf of the Corporation and, further, that the undersigned Corporation has all requisite authority to purchase the Units and enter into the Subscription Agreement.

Date	Name of Corporation	(Please Type or Print)
	By:
	Signature
	Name:
	(Please Type or Print)
	Title:
	(PleaseType or Print)

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL HAS BEEN DELIVERED TO THE EFFECT THAT REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.

A-1 (6)

Exhibit A-2

Individual Investor Questionnaire

 Name: _________________________

IMPORTANT:

Please Complete

INDIVIDUAL INVESTOR QUESTIONNAIRE

HEMCURE, INC.

AURASOUND, INC.

Hemcure, Inc. and AuraSound, Inc.

c/o AuraSound, Inc.

11839 East Smith Avenue

Santa Fe Springs, CA 90670

Attn: Arthur Liu

The information contained in this Corporate Investor Questionnaire is being furnished in order to determine whether the undersigned Corporation’s subscription to purchase Units (“Units”) each Unit consisting of one share of common stock and warrants to purchase one (1) share of Common Stock of AuraSound, Inc. and Hemcure, Inc. (the “Company”) may proceed.

This Questionnaire should be completed, signed, dated and a copy should be sent to GP Group, LLC (the “Placement Agent”) via facsimile at (310) 696-4007 or electronic format (e.g., PDF) to njohnson@geminipartners.net and the original delivered to GP Group, LLC, 10880 Wilshire Boulevard, Suite 500, Los Angeles, California 90024, Attention: Nathan Johnson. Please keep a copy for your files.

ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY. The undersigned Corporation understands, however, that the Company may present this Questionnaire to such parties as it deems appropriate if called upon to establish that the proposed offer and sale of the Units in the Companyis exempt from registration under the Securities Act of 1933,as amended, or meets the requirements of applicable state securities or “blue sky” laws. Further, the undersigned Corporation understands that the offering required to be reported to the Securities and Exchange Commission and to various state securities or “blue sky” regulators.

IF YOU ARE PURCHASING UNITS WITH YOUR SPOUSE, YOU MUST BOTH SIGN THE SIGNATURE PAGE (PAGE A-2 (5)).

IF YOU ARE PURCHASING UNITS WITH ANOTHER PERSON NOT YOUR SPOUSE, YOU MUST EACH FILL OUT A SEPARATE QUESTIONNAIRE. Please make a photocopy of pages A-2 (1) to A-2 (5) and return both completed Questionnaires to G P Group, LLC in the same envelope.

I. PLEASE INDICATE DESIRED TYPE OF OWNERSHIP OF SHARES:

¨Individual

¨Joint Tenants (rights of survivorship)

A-2 (1)

¨Tenants in Common (no rights of survivorship)

II. PLEASE CHECK ANY OF STATEMENTS 1-4 BELOW THAT APPLY TO YOU.

¨ 1. I have an individual net worth* or joint net worth with my spouse in excess of $1,000,000.

¨ 2. I have had an individual income* in excess of $200,000 in each of the previous two years and I reasonably expect an individual income in excess of $200,000 this year. NOTE: IF YOU ARE BUYING JOINTLY WITH YOUR SPOUSE, YOU MUST EACH HAVE AN INDIVIDUAL INCOME IN EXCESS OF $200,000 IN EACH OF THESE YEARS IN ORDER TO CHECK THIS BOX.

¨ 3. My spouse and I have had a joint income* in excess of $300,000 in each of the previous two years and I reasonably expect a joint income in excess of $300,000 this year.

¨ 4. I am a director and/or an executive officer of Company as such terms are defined in Regulation D promulgated under the Securities Act of1933, as amended.

* For purposes of this Questionnaire, the term “net worth” means the excess of total assets over total liabilities. In determining income, an investor should add to his or her adjusted gross income any amounts attributable to tax-exempt income received, losses claimed as a limited partner in any limited partnership, deductions claimed for depletion, contributions to IRA or Keogh retirement plans,alimony payments and any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income.

A-2 (2)

III. OTHER CERTIFICATIONS

By signing the Signature Page, I certify the following (or, if I am purchasing Units with my spouse as co-owner, each of us certifies the following):

(a) that I am at least 21 years of age;

(b) that my purchase of Units will be solely for my own account and not for the account of any other person (other than my spouse, if co-owner);

(c) that the name, home address and social security number or taxpayer identification number as set forth in this Questionnaire are true, correct and complete; and

(d) that one of the following is true and correct (check one):

Spouse, if Co-owner

¨ ¨(i)I am a United States citizen or resident of the United States for United States federal income tax purposes.

¨ ¨ (ii)I am neither a United States citizen nor a resident of the United States for United States federal income tax purposes.

IV. GENERAL INFORMATION

(a) PERSONAL INFORMATION

Name:

Social Security or Taxpayer Identification Number:

Residence Address:
	(Number and Street)

(City) (State) (Zip Code)

Residence Telephone Number:
	(Area Code)  (Number) Residence

Facsimile Number:
	(Area Code)  (Number)

Name of Business:

BusinessAddress:
	(Number and Street)

(City) (State) (Zip Code)

A-2 (3)

BusinessTelephone Number:
	(Area Code)  (Number)

BusinessTelephone Number:
	(Area Code)  (Number)

I prefer to have correspondence sent to:¨Residence¨ Business

NASD Affiliation or Association, if any:

If none, check here ¨

Spouse, if Potential Co-owner

Name:

Social Security or Taxpayer Identification Number:

Residence Address:
	(Number and Street)

(City) (State) (Zip Code)

Residence Telephone Number:

Name of Business:

BusinessAddress:
	(Number and Street)

(City) (State)

I prefer to have correspondence sent to:¨Residence ¨Business

NASD Affiliation or Association, if any:

If none, check here ¨

V. SIGNATURE

The Signature Page to this Questionnaire is contained on page A-2 (5), entitled Individual Signature Page.

A-2 (4)

INDIVIDUAL SIGNATURE PAGE

HEMCURE, INC.

AURASOUND, INC.

1.The undersigned represents that (a) the information contained in this Questionnaire is complete and accurate, and (b) he/she/it will immediately notify (i) GP Group, LLC, 10880 Wilshire Boulevard, Suite 500, Los Angeles, California 90024, Attention: Nathan Johnson, phone number (310) 696-4000, facsimile (310) 696-4007 and (ii) Thomas J. Poletti, Esq., counsel to GP Group, LLC, at Kirkpatrick & Lockhart Preston Gates Ellis LLP, 10100 Santa Monica Blvd., 7th Floor, Los Angeles, California 90067, phone number (310) 552-5000, facsimile (310) 552-5001 if any material change in any of the information occurs prior to the acceptance of the undersigned’s subscription and will promptly send the foregoing written confirmation of such change.

Date:	Name (Please Type or Print)
	Signature
	Name of Spouse if Co-owner (Please Type or Print)
	Signatureof Spouse if Co-owner

IF YOU ARE PURCHASING UNITS WITH YOUR SPOUSE, YOU MUST BOTH SIGN THIS SIGNATURE PAGE (PAGE A-2 (5)). IF YOU ARE PURCHASING UNITS WITH ANOTHER PERSON NOT YOUR SPOUSE, YOU MUST EACH FILL OUT A SEPARATE QUESTIONNAIRE. Please make a photocopy of pages A-2 (1) to A-2 (5) and return both completed Questionnaires to G P Group, LLC in the same envelope.

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL HAS BEEN DELIVERED TO THE EFFECT THAT REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.

A-2 (5)

Exhibit A-3

Limited Partnership Investor Questionnaire

Name:

IMPORTANT: Please Complete:

LIMITED PARTNERSHIP INVESTOR QUESTIONNAIRE

HEMCURE, INC.

AURASOUND, INC.

Hemcure, Inc. and AuraSound, Inc.

c/o AuraSound, Inc.

11839 East Smith Avenue

Santa Fe Springs, CA 90670

Attn: Arthur Liu

The information contained in this Corporate Investor Questionnaire is being furnished in order to determine whether the undersigned Corporation’s subscription to purchase Units (“Units”) each Unit consisting of one share of common stock and warrants to purchase one (1) share of Common Stock of AuraSound, Inc. and Hemcure, Inc. (the “Company”) may proceed.

This Questionnaire should be completed, signed, dated and a copy should be sent to GP Group, LLC (the “Placement Agent”) via facsimile at (310) 696-4007 or electronic format (e.g., PDF) to njohnson@geminipartners.net and the original delivered to GP Group, LLC, 10880 Wilshire Boulevard, Suite 500, Los Angeles, California 90024, Attention: Nathan Johnson. Please keep a copy for your files.

A-3 (1)

ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY. The undersigned Limited Partnership understands, however, that the Company may present this Questionnaire to such parties as it deems appropriate if called upon to establish that the proposed offer and sale of the Units in the Company is exempt from registration under the Securities Act of 1933, as amended, or meets the requirements of applicable state securities or “blue sky” laws. Further, the undersigned Limited Partnership understands that the offering required to be reported to the Securities and Exchange Commission and to various state securities or “blue sky” regulators.

I. PLEASE CHECK THE STATEMENT BELOW, IF IT APPLIES TO THE LP.

¨ The undersigned Limited Partnership: (a) was not formed for the specific purpose of acquiring the Units, and (b) has total assets in excess of $5,000.000.

II.OTHER CERTIFICATIONS

By signing the Signature Page, the undersigned certifies that the Limited Partnership’s name, address of principal office, place of organization and taxpayer identification number as set forth in this Questionnaire are true, correct and complete; and

III. GENERAL INFORMATION

(a) PROSPECTIVE PURCHASER (THE LIMITED PARTNERSHIP)

Name:

Principal Place of Business:
	(Number and Street)

(City) (State) (Zip Code)

Address for Correspondence (if different):
	(Number and Street)

(City) (State) (Zip Code)

Telephone Number:
	(Area Code)  (Number)

Facsimile Number:
	(Area Code)  (Number)

State of Formation:

Date of Formation:

Taxpayer Identification Number:

NASD Affiliation or Association of the Corporation, if any:
	(Number)

A-3 (2)

If none, check here¨

(c) INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE LIMITED PARTNERSHIP

Name:

Position or Title:

IV. SIGNATURE

The Signature Page to this Questionnaire is contained on page A-3 (4), entitled Limited Partnership Signature Page.

A-3 (3)

Limited Partnership Signature Page

HEMCURE, INC.

AURASOUND, INC.

1.The undersigned Corporation represents that (a) the information contained in this Questionnaire is complete and accurate and (b) the Corporation will immediately notify (i) GP Group, LLC, 10880 Wilshire Boulevard, Suite 500, Los Angeles, California 90024, Attention: Nathan Johnson, phone number (310) 696-4000, facsimile (310) 696-4007 and (ii) Thomas J. Poletti, Esq., counsel to GP Group, LLC, at Kirkpatrick & Lockhart Preston Gates Ellis LLP, 10100 Santa Monica Blvd., 7th Floor, Los Angeles, California 90067, phone number (310) 552-5000, facsimile (310) 552-5001 if any material change in any of the information occurs prior to the acceptance of the undersigned Corporation’s subscription and will promptly send the foregoing written confirmation of such change.

2.The undersigned Limited Partnership hereby represents and warrants that the person or entity signing this Questionnaire on behalf of the Limited Partnership has been duly authorized by all requisite action on the part of the Limited Partnership to acquire the Shares and to sign this Questionnaire and this Agreement on behalf of the Limited Partnership and, further, that the undersigned Limited Partnership has all requisite authority to purchase the Shares and enter into the Units Agreement.

 

Date	Name of Limited Partnership (Please Type or Print)
	By: Signature
	Name:
	(Please Type or Print)
	Title: (PleaseType or Print)

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL HAS BEEN DELIVERED TO THE EFFECT THAT REGISTRATION OF SUCH SECURITIES IS NOT REQUIRED.

A-3 (4)

EX-10.3

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH ACT AND APPLICABLE LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

Certificate No. WC-___	Warrant to Purchase ___________ Shares of
Dated ___________, 2007	Common Stock (subject to adjustment)

WARRANT TO PURCHASE COMMON STOCK

of

HEMCURE, INC.

This certifies that, for value received, ______________, or registered assigns (“Holder”) is entitled, subject to the terms set forth below, to purchase from Hemcure, Inc., a Nevada corporation (the “Company”), ______________ shares of the Common Stock, par value $0.01 per share, of the Company (the “Common Stock”), as constituted on the date hereof (the “Warrant Issue Date”), upon surrender hereof, at the principal office of the Company referred to below, with the subscription form attached hereto duly executed, and simultaneous payment therefor in lawful money of the United States or otherwise as hereinafter provided, at the Exercise Price as set forth in Section 2 below. The number and character of such shares of Common Stock and the Exercise Price are subject to adjustment as provided below. The term “Warrant” as used herein shall include this Warrant any warrants delivered in substitution or exchange therefor as provided herein. This Warrant is being issued pursuant to the Amended and Restated Confidential Private Placement Memorandum, dated June 7, 2007, in connection with the reverse merger of the Company and AuraSound, Inc., a California corporation (the “Offering Memorandum”).

1.Term of Warrant. Subject to the terms and conditions set forth herein, this Warrant shall be exercisable, in whole or in part, during the term commencing on the Warrant Issue Date and ending at 5:00 p.m., Eastern Standard Time, on the fifth anniversary of the Warrant Issue Date, and shall be void thereafter.

2.Exercise Price. The exercise price at which this Warrant may be exercised shall be $1.50 per share of Common Stock (the “Exercise Price”), as such Exercise Price may be adjusted from time to time pursuant to Section 11 hereof.

3.Exercise of Warrant.

(a)Method of Exercise. The purchase rights represented by this Warrant are exercisable by the Holder in whole or in part, at any time, or from time to time, during the term hereof as described in Section 1 above, by the surrender of this Warrant and the Notice of Exercise annexed hereto duly completed and executed on behalf of the Holder, at the principal office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company), upon (i) payment in cash or by check acceptable to the Company, or (ii) a net issue exercise as provided in Section 3(c) below.

(b)Issuance of Shares. This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such shares as of the close of business on such date. As promptly as practicable on or after such date and in any event the Company will use its best efforts to ensure that shares are issued within three (3) trading days thereafter (the “Delivery Date”), the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of shares issuable upon such exercise. In the event that this Warrant is exercised in part, the Company at its expense will execute and deliver a new Warrant of like tenor exercisable for the number of shares for which this Warrant may then be exercised.

So long as a registration statement under the Act providing for the resale of the shares issuable upon exercise of this Warrant is then in effect, the Company shall use best efforts to ensure the issuance and delivery to the Depository Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal Agent SEC System (“DWAC”) within a reasonable time, not exceeding three (3) Trading Days after such exercise, and the Holder hereof shall be deemed for all purposes to be the holder of the shares of shares so purchased as of the date of such exercise. Notwithstanding the foregoing to the contrary, the Company or its transfer agent shall only be obligated to issue and deliver the shares to the DTC on a holder’s behalf via DWAC if such exercise is in connection with a sale and the Company and its transfer agent are participating in DTC through the DWAC system.

(c)Cashless Exercise. If at any time after eighteen (18) months from the Warrant Issue Date there is no effective registration statement registering, or no current prospectus available for, the resale of the shares issuable upon exercise hereof, then this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of shares of Common Stock equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the volume weighted average price as reported by Bloomberg LP on the trading day immediately preceding the date of such election;

(B) = the Exercise Price of this Warrant, as adjusted; and

(X) = the number of shares of Common Stock issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

This provision (c) does not apply to warrants issued pursuant to the Additional Investment Option.

(d)Holder’s Restriction on Exercise. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(c) or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, such Holder (together with such Holder’s Affiliates (as defined below), and any other person or entity acting as a group together with such Holder or any of such Holder’s Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon exercise of the remaining, nonexercised portion of this Warrant beneficially owned by such Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 3(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by a Holder that the Company is not representing to such Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and such Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 3(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder together with any Affiliates) and of which a portion of this Warrant is exercisable shall be in the sole discretion of a Holder, and the submission of a Notice of Exercise shall be deemed to be each Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 3(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two trading days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 19.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. “Affiliate” means any person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a person, as such terms are used in and construed under Rule 144 under the Act. With respect to a Holder, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Holder will be deemed to be an Affiliate of such Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 3(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. [THIS PROVISION WILL ONLY BE INCLUDED IF REQUESTED BY THE HOLDER IN WRITING BY EMAIL TO AURASOUND’S LEGAL COUNSEL PRIOR TO ISSUANCE. REQUESTS FOR SUCH INCLUSION SHOULD BE DIRECTED TO kfriedmann@richardsonpatel.com.]

(e)Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the shares issuable upon exercise of this Warrant pursuant to an exercise on or before the Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the shares issuable upon exercise of this Warrant which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares issuable upon exercise of this Warrant that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of shares issuable upon exercise of this Warrant for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant as required pursuant to the terms hereof.

4.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional share to which the Holder would otherwise be entitled (after aggregating all shares that are being issued upon such exercise), the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction.

5.Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

6.Rights of Stockholders. Subject to Sections 9 and 11 of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of Common Stock or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant shall have been exercised as provided herein.

7.Transfer of Warrant.

(a)Warrant Register. The Company will maintain a register (the “Warrant Register”) containing the names and addresses of the Holder or Holders. Any Holder of this Warrant or any portion thereof may change its address as shown on the Warrant Register by written notice to the Company requesting such change. Any notice or written communication required or permitted to be given to the Holder may be delivered or given by mail to such Holder as shown on the Warrant Register and at the address shown on the Warrant Register. Until this Warrant is transferred on the Warrant Register of the Company, the Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary.

(b)Warrant Agent. The Company may, by written notice to the Holder, appoint an agent for the purpose of maintaining the Warrant Register referred to in Section 7(a) above, issuing the Common Stock or other securities then issuable upon the exercise of this Warrant, exchanging this Warrant, replacing this Warrant, or any or all of the foregoing (the “Warrant Agent”). Thereafter, any such registration, issuance, exchange or replacement, as the case may be, shall be made at the office of the Warrant Agent.

(c)Transferability and Negotiability of Warrant. This Warrant may not be transferred or assigned in whole or in part without compliance with all applicable federal and state securities laws by the transferor and the transferee (including the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, if such are requested by the Company). Subject to the provisions of this Warrant with respect to compliance with the Securities Act of 1933, as amended (the “Act”), title to this Warrant may be transferred by endorsement (by the Holder executing the Assignment Form annexed hereto) and delivery in the same manner as a negotiable instrument transferable by endorsement and delivery.

(d)Exchange of Warrant Upon a Transfer. On surrender of this Warrant for exchange, properly endorsed on the Assignment Form and subject to the provisions of this Warrant with respect to compliance with the Act and with the limitations on assignments and transfers contained in this Section 7, the Company at its expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof.

(e)Compliance with Securities Laws.

(i)The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the hares of Common Stock to be issued upon exercise hereof are being acquired for investment, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Common Stock to be issued upon exercise hereof except under circumstances that will not result in a violation of the Act or any state securities laws.

(ii)This Warrant and all shares of Common Stock issued upon exercise hereof or conversion thereof shall be stamped or imprinted with a legend in substantially the following form (in addition to any legend required by state securities laws):

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH ACT AND APPLICABLE LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

(iii)The Company agrees to reissue this Warrant or certificates representing any of the shares issuable upon exercise hereof, without the legend set forth above if at such time, prior to making any transfer of any such securities, the Holder shall give written notice to the Company describing the manner and terms of such transfer. Such proposed transfer will not be effected until: (a) either (i) the Company has received an opinion of counsel reasonably satisfactory to the Company, to the effect that the registration of such securities under the Act is not required in connection with such proposed transfer, (ii) a registration statement under the Act covering such proposed disposition has been filed by the Company with the Securities and Exchange Commission and has become effective under the Act and the Holder has represented that the shares issuable upon exercise hereof have been or will be sold, (iii) the Company has received other evidence reasonably satisfactory to the Company that such registration and qualification under the Act and state securities laws are not required, or (iv) the Holder provides the Company with reasonable assurances that such security can be sold pursuant to Rule 144 under the Act; and (b) either (i) the Company has received an opinion of counsel reasonably satisfactory to the Company, to the effect that registration or qualification under the securities or "blue sky" laws of any state is not required in connection with such proposed disposition, or (ii) compliance with applicable state securities or "blue sky" laws has been effected or a valid exemption exists with respect thereto. The Company will respond to any such notice from a holder within three (3) Trading Days. In the case of any proposed transfer under this Section 2(h), the Company will use reasonable efforts to comply with any such applicable state securities or "blue sky" laws, but shall in no event be required, (x) to qualify to do business in any state where it is not then qualified, (y) to take any action that would subject it to tax or to the general service of process in any state where it is not then subject, or (z) to comply with state securities or “blue sky” laws of any state for which registration by coordination is unavailable to the Company. The restrictions on transfer contained in this Section 7(e)(iii) shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other section of this Warrant. Whenever a certificate representing the shares issuable upon exercise hereof is required to be issued to a the Holder without a legend, in lieu of delivering physical certificates representing the shares issuable upon exercise hereof, the Company shall use its reasonable best efforts to cause its transfer agent to electronically transmit the shares issuable upon exercise hereof to the Holder by crediting the account of the Holder's Prime Broker with DTC through its DWAC system (to the extent not inconsistent with any provisions of this Warrant or the Subscription Agreement). Notwithstanding the foregoing to the contrary, the Company or its transfer agent shall only be obligated to issue and deliver the shares to the DTC on a holder’s behalf via DWAC if such exercise is in connection with a sale and the Company and its transfer agent are participating in DTC through the DWAC system.

8.Reservation of Stock. The Company covenants that during the term this Warrant is exercisable, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of this Warrant and, from time to time, will take all steps necessary to amend its Certificate or Articles of Incorporation (the “Certificate”) to provide sufficient reserves of shares of Common Stock issuable upon exercise of this Warrant. The Company further covenants that all shares of Common Stock that may be issued upon the exercise of rights represented by this Warrant and payment of the Exercise Price, all as set forth herein will be duly and validly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously therewith). The Company agrees that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the exercise of this Warrant.

9.Notices.

(a)Whenever the Exercise Price or the shares purchasable hereunder shall be adjusted pursuant to Section 11 hereof, the Company shall issue a certificate signed by its Chief Financial Officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Exercise Price and the shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such certificate to be mailed (by first-class mail, postage prepaid) to the Holder of this Warrant.

(b)In case:

(i)the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, or

(ii)of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another corporation or entity, or any conveyance of all or substantially all of the assets of the Company to another corporation or entity, or

(iii)of any voluntary or involuntary dissolution, liquidation or winding-up of the Company,

then, and in each such case, the Company will mail or cause to be mailed to the Holder or Holders a notice specifying, as the case may be, (A) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (B) the date on which such reorganization, reclassification, consolidation, merger, con-veyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be mailed at least 10 days prior to the record date specified in (A) above or 20 days prior to the date specified in (B) above.

10.Amendments and Waivers.

(a)Except as provided in Section 10(b) below, this Warrant, or any provision hereof, may be amended, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought.

(b)Any term or condition of this Warrant may be amended with the written consent of the Company and the Holder. Any amendment effected in accordance with this Section 10(b) shall be binding upon the Holder and each future holder of this Warrant and the Company.

(c)No waivers of, or exceptions to, any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

11.Adjustments. The Exercise Price and the shares purchasable hereunder are subject to adjustment from time to time as follows:

(a)Merger, Sale of Assets, etc. If at any time while this Warrant is outstanding and unexpired there shall be (i) a reorganization (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity, or a reverse triangular merger in which the Company is the surviving entity but the shares of the Company’s capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (iii) a sale or transfer of the Company’s properties and assets as, or substantially as, an entirety to any other corporation or other entity, then, as a part of such reorganization, merger, consolidation, sale or transfer, lawful provision shall be made so that the holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, the number of shares of stock or other securities or property of the successor corporation or other entity resulting from such reorganization, merger, consolidation, merger, sale or transfer that a holder of the shares deliverable upon exercise of this Warrant would have been entitled to receive in such reorganization, consolidation, merger, sale or transfer if this Warrant had been exercised immediately before such reorganization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 11. The foregoing provision of this Section 11(a) shall similarly apply to successive reorganizations, consolidations, mergers, sales and transfers and to the stock or securities of any other corporation or other entity that are at the time receivable upon the exercise of this Warrant. If the per-share consideration payable to the Holder for shares in connection with any such transaction is in a form other than cash or marketable securities, then the fair market value of such consideration shall be determined in accordance with the paragraph below. In all events, appropriate adjustment (as determined in good faith by the Company’s Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.

For purposes of the above calculation, fair market value of one share of Common Stock shall be determined by the Company’s Board of Directors in good faith; provided, however, that where there exists a public market for the Common Stock at the time of such exercise, the fair market value of one share of Common Stock shall be the average of the closing bid and asked prices of the Common Stock quoted in the Over-The-Counter Market Summary or the last reported sale price of the Common Stock or the closing price quoted on the NASDAQ Capital Market or on any exchange on which the Common Stock is listed, whichever is applicable, as published by Bloomberg LP for the five (5) trading days prior to the date of determination of fair market value.

(b)Reclassification, etc. If the Company, at any time while this Warrant remains outstanding and unexpired, by reclassification of securities or otherwise, shall change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 11.

(c)Split, Subdivision or Combination of Shares. If the Company at any time while this Warrant remains outstanding and unexpired shall split, subdivide or combine the securities as to which purchase rights under this Warrant exist, into a different number of securities of the same class, the Exercise Price for such securities shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination and the number of such securities shall be proportionately increased in the case of a split or subdivision or proportionately decreased in the case of a combination.

(d)Adjustments for Dividends in Stock or other Securities or Property. If while this Warrant remains outstanding and unexpired, the holders of the securities as to which purchase rights under this Warrant exist (including without limitation securities into which such securities may be converted) at the time shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of the security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Company that such holder would hold on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant (or upon such conversion) on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 11.

(e)Subsequent Equity Sales.

(i)If the Company at any time during the term of this Warrant consummates a sale of any Common Stock for cash at a price per share less than the then Exercise Price or issues securities convertible into or exercisable for Common Stock at a conversion or exercise price less than the then Exercise Price (such lower price, the “Base Share Price” and each such issuance, a “Dilutive Issuance”), then the Exercise Price shall be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made each time a Dilutive Issuance occurs. Notwithstanding the foregoing, no adjustments shall be made under this Section 11(e)(i) in respect of an Exempt Issuance (as defined below).

(ii)“Exempt Issuance” means (i) shares of Common Stock issued pursuant to an equity incentive plan duly adopted by the Company’s board of directors, (ii) shares of Common Stock issued upon exercise of any options or warrants of the Company outstanding on the Warrant Issue Date, (iii) shares of Common Stock issued upon exercise of warrants to be issued pursuant to Section 7.1(f) of the Amended and Restated Agreement and Plan of Share Exchange, dated as of June 7, 2007, between the Company and AuraSound, Inc., a California corporation (the “Share Exchange Agreement”), and (iv) shares of Common Stock issued to the shareholders of AuraSound, Inc. pursuant to the Share Exchange Agreement (including, without limitation, shares issued in connection with the Share Cancellation and the Debt Conversion (as defined in the Offering Memorandum).

(f)Other Adjustments. In case any event shall occur as to which the other provisions of this Section 11 are not strictly applicable but as to which failure to make any adjustment would not fairly protect the exercise rights represented by this Section 11 in accordance with the essential intent and principles hereof then, in each such case, the Holder may appoint a firm of independent public accountants of recognized national standing reasonably acceptable to the Company, which shall give their opinion as to the adjustment, if any, on a basis consistent with the essential intent and principles established herein, necessary to preserve the exercise rights represented herein. Upon receipt of such opinion, the Company will promptly mail a copy thereof to the Holder and shall make the adjustments described therein. The fees and expenses of such independent public accountants shall be borne by the Company.

(g)Calculations. All calculations under this Section 11 shall be made to the nearest four decimal points.

(h)No Impairment. The Company shall not, by amendment of its Certificate or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but will at all times in good faith assist in the carrying out of all the provisions of this Section 11 and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against dilution or other impairment.

12.Saturdays, Sundays and Holidays. If the last or appointed day for the taking of any action or the expiration of any right granted herein shall be a Saturday, Sunday or legal holiday, then (notwithstanding anything herein to the contrary) such action may be taken or such right may be exercised on the next succeeding day that is not a Saturday, Sunday or legal holiday.

13.Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Nevada applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

14.Binding Effect. The terms of this Warrant shall be binding upon and inure to the benefit of the Company and the Holder and their respective successors and assigns.

IN WITNESS WHEREOF, AURASOUND, INC. (FORMERLY HEMCURE, INC.) has caused this Warrant to be executed by its officers thereunto duly authorized.

Dated:
HOLDER:	HEMCURE, INC.
By:  Name: Its:	By: Arthur Liu Its: Chief Executive Officer

NOTICE OF EXERCISE

(1)The undersigned hereby (A) elects to purchase _______ shares of Common Stock of HEMCURE, INC., pursuant to the provisions of Section 3(a) of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full or (B) elects to exercise this Warrant for the purchase of_______ shares of Common Stock, pursuant to the provisions of Section 3(c) of the attached Warrant.

(2)In exercising this Warrant, the undersigned hereby confirms and ac-knowledges that the shares of Common Stock to be issued upon exercise hereof are being acquired for investment, and that the undersigned will not offer, sell or otherwise dispose of any such shares of Common Stock except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any applicable state securities laws.

(3)Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

(Name)

  (Name)

(4)Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below:

		(Name)
(Date)	(Signature)

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under the within Warrant, with respect to the number of shares of Common Stock set forth below:

Name of Assignee Address No. of Shares

and does hereby irrevocably constitute and appoint ____________________________ Attorney to make such transfer on the books of AURASOUND, INC. (FORMERLY HEMCURE, INC.), maintained for the purpose, with full power of substitution in the premises.

The undersigned also represents that, by assignment hereof, the Assignee acknowledges that this Warrant and the shares of stock to be issued upon exercise hereof are being acquired for investment, and that the Assignee will not offer, sell or otherwise dispose of this Warrant or any shares of stock to be issued upon exercise hereof except under circumstances which will not result in a violation of the Securities Act of 1933, as amended, or any applicable state securities laws.

Dated: ____________
	Signature of Holder

EX-16