-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MWCbk2NweNoU2NUExlP0PiOJsh9shO7RT+JG4lUYS6R1NLuzUnQ56YTj2S/q80pO /U7aJSTYNheh26P3HUXQeQ== 0000826253-01-500021.txt : 20010516 0000826253-01-500021.hdr.sgml : 20010516 ACCESSION NUMBER: 0000826253-01-500021 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000831 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AURA SYSTEMS INC CENTRAL INDEX KEY: 0000826253 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 954106894 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-17249 FILM NUMBER: 1634716 BUSINESS ADDRESS: STREET 1: 2335 ALASKA AVE CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3106435300 MAIL ADDRESS: STREET 1: 2335 ALASKA AVE CITY: EL SEGUNDO STATE: CA ZIP: 90245 10-Q/A 1 aug10qa.txt AUG 2000 10Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q/A QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended August 31, 2000 Commission File Number 0-17249 AURA SYSTEMS, INC. (Exact name of Registrant as specified in its charter) Delaware 95-4106894 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 2335 Alaska Ave. El Segundo, California 90245 (Address of principal executive offices) Registrant's telephone number, including area code: (310) 643-5300 Former name, former address and former fiscal year, if changed since last report: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at October 12, 2000 Common Stock, par value 280,588,674 Shares $.005 per share
AURA SYSTEMS, INC. AND SUBSIDIARIES INDEX Page No. PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Statement Regarding Financial Information 2 Condensed Consolidated Balance Sheets as of August 31, 2000 3 and February 29, 2000 Condensed Consolidated Statement of Operations for the Three Months and Six 4 Months Ended August 31, 2000 and 1999 Condensed Consolidated Statements of Cash Flows for the Six Months Ended 5 August 31, 2000 and 1999 Notes to Condensed Consolidated Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of 7 Operations PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 10 ITEM 2. Changes in Securities 10 ITEM 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12
AURA SYSTEMS, INC. AND SUBSIDIARIES QUARTER ENDED AUGUST 31, 2000 PART I. FINANCIAL INFORMATION The financial statements included herein have been prepared by Aura Systems, Inc. (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). As contemplated by the SEC under Rule 10-01 of Regulation S-X, the accompanying financial statements and footnotes have been condensed and therefore do not contain all disclosures required by generally accepted accounting principles. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K for the year ended February 29, 2000 as filed with the SEC (file number 0-17249).
AURA SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) August 31, February 29, Assets 2000 2000* - ------ ------------- --------------- Current assets: Cash and equivalents $ 558,891 $ 260,437 Receivables-net 330,693 2,459,200 Inventories 9,846,519 11,189,227 Notes receivable 2,535,732 3,557,007 Other current assets 757,589 360,177 --------------- --------------- Total current assets 14,029,424 17,826,048 ---------- ---------- Property and equipment, at cost 41,112,318 42,219,417 Less accumulated depreciation and amortization (17,799,788) (15,184,362) ---------------- ---------------- Net property and equipment 23,312,530 27,035,055 Long term investments 2,123,835 2,123,835 Long term receivables 3,845,810 1,250,000 Patents and trademarks- net 4,492,031 4,615,769 Other assets 3,272,471 3,271,831 --------------- --------------- Total $ 51,076,101 $ 56,122,538 =============== =============== Liabilities and Stockholder's Equity Current liabilities: Notes payable $ 8,745,615 $ 9,899,531 Accounts payable 4,161,928 4,216,004 Accrued expenses 1,362,760 1,634,300 Convertible note-unsecured 125,000 1,250,000 --------------- -------------- Total current liabilities 14,395,303 16,999,835 ---------- ---------- Notes payable and other liabilities 36,222,161 37,606,695 --------------- --------------- COMMITMENTS AND CONTINGENCIES Stockholders' equity Common stock par value $.005 per share and additional paid in capital. Issued and outstanding 261,296,741 and 196,975,392 shares respectively. 251,608,081 234,196,092 Common stock not issued - 9,132,774 Cumulative currency translation adjustment (CTA) (365,932) (365,932) Accumulated deficit (250,783,512) (241,446,926) ------------- ---------------- Total stockholders' equity 458,637 1,516,008 --------------- --------------- Total $ 51,076,101 $ 56,122,538 =============== ===============
See accompanying notes to condensed consolidated financial statements. * Amounts at February 29, 2000 have been derived from audited financial statements
AURA SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND SIX MONTHS ENDED AUGUST 31, 2000 AND 1999 (Unaudited) Three Months Six Months 2000 1999 2000 1999 ---- ---- ---- ---- Net Revenues $ 386,885 $2,644,388 $ 768,406 $5,225,081 Cost of goods and overhead 2,556,062 3,622,715 5,070,419 8,268,383 --------- --------- --------- --------- Gross Profit (2,169,177) (978,327) (4,302,013) (3,043,302) Expenses Selling, general and administrative 3,642,773 2,522,474 5,536,478 5,801,765 Research and development 53,903 128,494 85,951 244,621 --------- -------------- ----------- --------------- Total costs and expenses 3,696,676 2,650,968 5,622,429 6,046,386 --------- -------------- --------- -------------- Loss from operations (5,865,853) (3,629,295) (9,924,442) (9,089,688) Other (income) and expense (Gain) loss on sale of subsidiary - - - (877,512) (Gain) loss on disposition of assets - 1,405,049 (1,756,746) 1,405,049 Other (income) (891,227) (110,701) (1,454,628) (22,659) Legal settlements and costs 1,254,685 201,376 1,564,496 219,511 Interest expense-net 497,009 774,350 1,059,022 1,572,172 ------- ------------ --------- ------------- Net loss $(6,726,320) $ (5,899,369) $(9,336,586) $ (11,386,249) ============ ============== ============ ============ Net loss per common share-basic $ (.03) $ (.06) $ (.04) $ (.11) ============== ============== ============== ============== Weighted average shares used to compute net loss per share 250,037,915 107,822,043 243,572,557 107,804,271 ============== ================ =============== ================
See accompanying notes to condensed consolidated financial statements.
AURA SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED AUGUST 31, 2000 AND 1999 (Unaudited) 2000 1999 ----------- ------------- Net cash (used) in operations $(5,820,796) $(6,074,253) ------------ ------------ Cash flows from investing activities: Proceeds from sale of subsidiary and assets 64,311 1,000,000 Additions to property and equipment (5,918) (70,704) Note receivable 1,261,395 1,329,204 -------------- --------------- Net cash provided by (used) in investing Activities 1,319,788 2,258,000 -------------- -------------- Cash flows from financing activities: Net proceeds (repayment) from short-term borrowing (200,000) __- Repayment of debt (1,154,138) (15,757) Net proceeds from sale of stock 6,153,600 Proceeds from exercise of warrants - 9,300 ---------------- ---------------- Net cash provided (used) by financing activities: 4,799,462 (6,457) -------------- --------------- Net increase (decrease) in cash 298,454 (3,822,210) Cash and cash equivalents at beginning of year 260,437 3,822,210 ------- --------------- Cash and cash equivalents at end of period $558,891 $ 0 ======== ================ Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ 997,108 $ 145,188 Income Tax 0 0 ================ ==============
Supplemental disclosure of noncash investing and financing activities: In the six months ended August 31, 2000, $1,125,000 of notes payable plus accrued interest of $10,602.75 was converted into 3,542,411 shares of the Company's common stock. The Company also issued 3,246,724 shares of its common stock to satisfy liabilities in the amount of $990,012.41. Effective March 1, 2000, the Company sold the assets of its Ceramics subsidiary for $3.5 million in the form of a note receivable of $2.5 million, a cash down payment of $64,311, included above, and the payment of $800,000 to third parties in satisfaction of liabilities and an additional $100,000 payment on June 1, 2000. In the six months ended August 31, 1999 the Company sold its MYS subsidiary for $4.2 million in the form of a note receivable in the amount of $3.2 million and a cash down payment of $1 million. The Company also sold the assets of its AuraSound subsidiary for a note receivable of $2 million. The Company also satisfied a liability of $20,000 through the exercise of 40,000 warrants. See accompanying notes to condensed consolidated financial statements. AURA SYSTEMS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1) Management Opinion The condensed consolidated financial statements include the accounts of Aura Systems, Inc. ("the Company") and subsidiaries from the effective dates of acquisition. All material inter-company balances and inter-company transactions have been eliminated. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments (which include only normal recurring adjustments) and reclassifications for comparability necessary to present fairly the financial position and results of operations as of and for the three and six months ended August 31, 2000. 2) Capital In the quarter ended August 31, 2000, common stock outstanding increased by a total of 22,229,676 shares from the quarter ended May 31, 2000 as follows: 542,411 shares were issued upon conversion of a $125,000 note payable, 2,783,761 shares were issued to satisfy liabilities in the amount of $865,000, 117,189 shares were issued as finders fees and 18,786,315 shares were sold for net proceeds of $5,853,600. In the six months ended August 31, 1999, warrants to purchase 70,000 shares of common stock of the Company were exercised. 3) Inventories Inventories, stated at the lower of cost (first in, first out) or market, consist of the following:
August 31 February 28, 2000 2000 ---- ---- Raw materials $ 3,157,540 $ 4,205,828 Finished goods 7,015,915 7,310,335 Reserved for potential product obsolescence (326,936) (326,936) -------------- --------- $ 9,846,519 $ 11,189,227 ========= =============
Inventories consist primarily of components and completed units for the Company's AuraGen product. The reserve for potential product obsolescence consists solely of parts for the Company's actuator products. 4) Contingencies The Company is engaged in various legal actions See the Company's Form 10-K, Item 3 - Legal Proceedings, for the year ended February 29, 2000 as filed with the SEC (file number 0-17249) for a description of the legal actions. To the extent that judgment has been rendered, appropriate provision has been made in the financial statements. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Report may contain forward-looking statements which involve risks and uncertainties. The Company's actual results may differ materially from the results discussed in such statements. Certain factors could also cause actual results to differ materially from those discussed in such forward-looking statements, including factors discussed in the Company's Form 10-K for the period ended February 29, 2000, and factors discussed in this Report. Results of Operations Revenue for the three and six month periods ended August 31, 2000 decreased by $2,257,503 and $4,456,675 to $386,885 and $768,406 from the corresponding periods in the prior year. The decrease in revenue is primarily attributable to the sale of the Company's wholly owned subsidiary Aura Ceramics, which accounted for approximately $1.5 million or 29% of revenues for the six month period, and the discontinuation of the AuraSound business. The prior year period included revenues of $1.5 million in license fees pertaining to sound patents. Revenues in the current year period are solely related to the AuraGen. Cost of goods and overhead for the three and six months ended August 31, 2000 decreased by $1,066,653 and $3,197,964 in comparison with the corresponding periods in the prior year as a result of the decrease in sales discussed above. Selling, general and administrative costs increased for the three months and decreased for the six months by $1,120,299 and $265,287 respectively, due primarily to the reserving of $1.3 million of receivables associated with lines of business the Company is no longer engaged in. While the Company intends to continue its collection efforts on these receivables, the Company has elected to fully reserve for the balance of these receivables. Included in cost of goods and overhead and selling, general and administrative costs for the three and six months ended August 31, 2000, is depreciation and amortization of $1.7 million and $3.3 million, respectively. Research and development costs for the three and six months ended August 31, 2000 decreased by $74,591 and $158,670 as the Company continued to focus its reduced resources on marketing and sales of the Company's product, the AuraGen. In the six months ended August 31, 2000, the Company recorded a gain of $1,756,746 on the sale of the assets of its ceramics facility. In the prior year period the Company recorded a loss of $1,405,049 on the disposition of assets of its AuraSound subsidiary and a gain of $877,512 on the sale of MYS. Other income for the six months ended August 31, 2000 consists primarily of forgiveness of debt of approximately $1.1 million, reimbursement of prior period legal expenses of approximately $180,000, and insurance claims and refunds of approximately $90,000. Legal costs and settlements for the three and six months ended August 31, 2000 increased to $1,254,685 and $1,564,496, respectively from $201,376 and $219,511 in the prior year like periods. These costs can vary substantially from quarter to quarter depending on when settlements are arrived at and the level of ongoing legal activity associated with the litigation that the Company is involved in. Net interest expense decreased by $277,341 to $479,009 and $513,150 to $1,059,022 in the three and six months ended August 31, 2000. Liquidity and Capital Resources At August 31, 2000, the Company had cash of $558,891 as compared to a cash balance of $260,437 at February 29, 2000. Accounts payable and accrued expenses decreased by $325,616 from February 29, 2000. Inventories decreased by $1,342,708, and accounts receivable decreased by $2,128,507. These changes were primarily a result of the disposition of assets of the Company's ceramics subsidiary. Cash flows used in operations decreased by $253,457 compared to the prior year six months. Working capital was a negative $365,879 at August 31, 2000 compared to $826,213 at the Fiscal year ended February 29, 2000, with the current ratio declining to .97:1 from 1.05:1 at February 29, 2000. In the six months ended August 31, 2000, the Company received net proceeds of $6,153,600 from the sale of its common stock. In the six months ended August 31, 1999, the Company received proceeds of $9,300 from the exercise of warrants. In the past the Company's cash flow generated from operations has not been sufficient to completely fund its working capital needs. Accordingly, the Company has also relied upon external sources of financing to maintain its liquidity. In order to finance its existing operations it will be necessary for the Company to obtain additional working capital from external sources. The Company is presently seeking additional sources of financing, including bank and equity financing. No assurances can be provided that these funding sources will be available at the times and in the amounts required. The inability of the Company to obtain sufficient working capital at the times and in the amounts required would have a material adverse effect on the Company's business and operations. For additional information regarding the Company's financial condition, see the Company's Form 10-K, Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended February 29, 2000 as filed with the SEC (file number 0-17249). Forward Looking Statements The Company wishes to caution readers that important factors, in some cases, have affected, and in the future could affect, the Company's actual results and could cause the Company's actual consolidated results for the third quarter of Fiscal 2001, and beyond, to differ materially from those expressed in any forward-looking statements made by, or on behalf of the Company. Such factors include, but are not limited to, the following risks and contingencies: changed business conditions in the automotive industry and the overall economy; increased marketing and manufacturing competition and accompanying prices pressures; contingencies in initiating production at new factories along with their potential underutilization, resulting in production inefficiencies and higher costs and start-up expenses and; inefficiencies, delays and increased depreciation costs in connection with the start of production in new plants and expansions. Relating to the above are potential difficulties or delays in the development, production, testing and marketing of products, including, but not limited to, a failure to ship new products and technologies when anticipated. There might exist a difficulty in obtaining raw materials, supplies, power and natural resources and any other items needed for the production of Company and another products, creating capacity constraints limiting the amounts of orders for certain products and thereby causing effects on the Company's ability to ship its products. Manufacturing economies may fail to develop when planned, products may be defective and/or customers may fail to accept them in the consumer marketplace. In addition to the above, risks and contingencies may exist as to the amount and rate of growth in the Company's selling, general and administrative expenses, and the impact of unusual items resulting from the Company's ongoing evaluation of its business strategies, asset valuations and organizational structures. Furthermore, any financing or other financial incentives by the Company under or related to major infrastructure contracts could result in increased bad debt or other expenses or fluctuation of profit margins from period to period. The focus by some of the Company's businesses on any large system order could entail fluctuating results from quarter to quarter. The effects of, and changes in, trade, monetary and fiscal policies, laws and regulations, other activities of governments, agencies and similar organizations, and social and economic conditions, such as trade restrictions impose yet other constraints on any company statements. The cost and other effects of legal and administrative cases and proceedings present another factor which may or may not have an impact. PART II - OTHER INFORMATION ITEM 1 Legal Proceedings For information regarding pending legal proceedings, see Note 4 to the Company's Condensed Consolidated Financial Statements appearing elsewhere herein. ITEM 2 Changes in Securities Private Placement of Units Subsequent to the end of Fiscal 2000 the Company conducted a private offering to a group of accredited investors for the sale of approximately 19 million shares of Common Stock with one-half warrant to purchase a share of Common Stock at $0.48 per share for each share sold, for total net proceeds of approximately $5.8 million. The offering was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 as the offering was a private placement to a limited number of accredited investors. Common Stock Private Placement Subsequent to the end of Fiscal 2000 the Company conducted a private offering to a group of accredited investors for the sale of 2,175,000 shares of Common Stock for total gross proceeds of approximately $1.6 million. The offering was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 as the offering was a private placement to a limited number of accredited investors. Private Placement for Debt Conversion Subsequent to the end of Fiscal 2000 the Company conducted a private offering to a group of accredited investors whereby the Company converted or exchanged approximately $5.2 million of outstanding indebtedness for 5,809,427 shares of Common Stock The offering was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 as the offering was a private placement to a limited number of accredited investors. Settlement of Court-Approved Class Action Subsequent to the end of Fiscal 2000 the Company issued 14,687,972 shares of Common Stock and 3,500,000 warrants to purchase Common Stock at $2.25 per share as part of a court-approved settlement of a class action lawsuit against the Company. The offering was exempt from registration pursuant to Section 3(a)(10) of the Securities Act of 1933 as the offering was the same as the terms that were approved by the U.S. District Court after a duly noticed hearing as to the fairness of such settlement. Other Issuances During the second quarter of Fiscal 2001 542,411 shares of Common Stock were issued to a single person in conversion of a $125,000 note payable. During the second quarter of Fiscal 2001 an aggregate of 117,189 shares of Common Stock were issued to two persons as finders fees for a private placement. All of the foregoing transactions were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 as these offerings were a private placement to a limited number of accredited investors ITEM 6 Exhibits and Reports on Form 8-K a) Exhibits: See Exhibit Index b) Reports On Form 8-K: On August 30, 2000, the Company filed a report on Form 8-K regarding the resignation of the Company's Independent Accountants. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AURA SYSTEMS, INC. ------------------------------------------------ (Registrant) Date: May 14, 2001 By: /s/Steven C. Veen ------------------------------ ---------------------- Steven C. Veen Senior Vice President Chief Financial Officer (Principal Financial and Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----