This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Aura Systems, Inc. (the “Company”, “Aura”, “we”, “us” or “our”) for the Annual Meeting of Shareholders to be held on October 27, 2011 (the “Annual Meeting”) and any postponements or adjournments thereof.  Any shareholder giving a proxy may revoke it before or at the meeting by providing a proxy bearing a later date or by attending the meeting and expressing a desire to vote in person.

All proxies will be voted as directed by the shareholder on the proxy card; and, if no choice is specified, they will be voted:

Your cooperation in promptly returning the enclosed proxy card will reduce our expenses and enable management and employees to continue their normal duties for your benefit with minimum interruption for follow-up proxy solicitation.

Only shareholders of record at the close of business on September 14, 2011 (the “record date”), are entitled to receive notice of and to vote at the Annual Meeting.  On that date, we had outstanding 69,983,542 shares of common stock.  The shares of common stock vote as a single class.  Holders of shares of common stock on the record date are entitled to one vote for each share held.  The presence at the Annual Meeting, either in person or by proxy, of the holders of a majority of the shares of common stock issued, outstanding and entitled to vote is necessary to constitute a quorum for the transaction of business.

In accordance with Delaware law, abstentions and “broker nonvotes” (i.e. proxies from brokers or nominees indicating that such persons have not received instructions from the beneficial owners or other persons entitled to vote shares as to a matter with respect to which brokers or nominees do not have discretionary power to vote) will be treated as present for purposes of determining the presence of a quorum.  For purposes of determining approval of a matter presented at the Annual Meeting, abstentions will be deemed present and entitled to vote and will, therefore, have the same legal effect as a vote “against” a matter presented at the meeting.  Broker nonvotes will be deemed not entitled to vote on the matter as to which the nonvote is indicated and will, therefore, have no legal effect on the vote on such matter.

This proxy statement and the accompanying Notice of Annual Meeting and form of proxy are being mailed or delivered to shareholders on or about October 3, 2011.

In the event that sufficient votes in favor of the proposals are not received by the date of the Annual Meeting, the persons named as proxies may propose one or more adjournments of the Annual Meeting to permit

further solicitations of proxies.  Any such adjournment will require the affirmative vote of the holders of a majority of the shares of common stock present in person or by proxy at the Annual Meeting.  The persons named as proxies will vote in favor of such adjournment or adjournments.

The cost of preparing, assembling, printing, and mailing the materials, the Notice and the enclosed form of proxy, as well as the cost of soliciting proxies relating to the Annual Meeting, will be borne by us.  We will request banks, brokers, dealers, and voting trustees or other nominees to forward solicitation materials to their customers who are beneficial owners of shares, and will reimburse them for the reasonable out-of-pocket expenses of such solicitations.  The original solicitation of proxies by mail may be supplemented by telephone, telegram, personal solicitation or other means by officers and other regular employees or agents of the Company, but no additional compensation will be paid to such individuals on account of such activities.

Our By-Laws provide for a Board of no less than five Directors.  Consequently, at the Annual Meeting, five Directors will be elected to serve until the next Annual Meeting and until their successors are elected and qualified.  Proxies may not be voted for more than five persons.  We have nominated for election as Directors the five persons named below.  Each of these nominees has indicated that they are able and willing to serve as a Director.

Unless otherwise instructed, the proxy holders intend to vote the shares of common stock represented by the proxies in favor of the election of these nominees.  If for any reason any of these nominees will be unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the election of the balance of those named and such other person or persons as the Board of Directors may recommend.  The Board of Directors has no reason to believe that any such nominee will be unable or unwilling to serve.  Directors are elected by a plurality of the votes cast.

The table below sets forth the names of the nominees, together with their ages, principal occupations, the offices they hold and the year in which each became a Director.

Company as a senior scientist.  Dr. Schwartz provides the Board with a clear understanding of the technical issues and challenges as well as an understanding of the technical merits of our IP.  In addition he is instrumental in helping the Board understand the research and development budgets necessary to achieve our technical objectives.

A shareholder may contact one or more of the members of the Board of Directors in writing by sending such communication to the Secretary at our address.  The Secretary will forward shareholder communications to the appropriate director or directors for review.  Anyone who has a concern about the Company’s conduct or about our accounting, internal accounting controls or auditing matters, may communicate that concern to the Secretary, the Chairman of the Board or any member of the Board of Directors at our address.

We encourage individual directors to attend the Annual Meeting.  All of our directors attended last year’s Annual Meeting.

Officer is the most effective leadership structure for the Company and in the best interests of its shareholders.  It serves to promote strong and consistent leadership, allowing management to speak with a single voice and delineate primary responsibility for management of the Company.  The Board believes that Mr. Gagerman is best suited to serve as Chairman because, as Chief Executive Officer, he is most knowledgeable regarding the Company’s business, can best identify strategic priorities and opportunities, and thus lead discussion at the Board level to execute the Company’s strategy.  The Board also believes that the combined role of Chairman and Chief Executive Officer facilitates the flow of information between the Board and executive management.  In considering its leadership structure, the Board believes that the majority of independent directors serving on the Board appropriately balance the combined roles of Chairman and Chief Executive Officer.  The Board has not designated a lead independent director.

The Board’s committees also assist the Board in overseeing the management of risks within the areas delegated to that committee, which in turn report to the full Board, as appropriate.  The Audit Committee, which is comprised solely of independent directors, is responsible for risks relating to its review of our financial statements and financial reporting processes, the evaluation of the effectiveness of internal control over financial reporting, compliance with legal and regulatory requirements, and reviewing related party transactions.  The Compensation Committee is responsible for monitoring risks associated with our compensation programs.  Each committee has full access to management.

Our Board of Directors held 21 meetings during the year ended February 28, 2011.  Each Director whose term is expected to continue attended more than 75% of the Board meetings and committee meetings of which he was a member during fiscal 2011.

Our Board is comprised of a majority of independent directors under the listing standards of The Nasdaq Stock Market.  Assuming the election of our director-nominees, our independent directors will be Messrs. Diaz-Verson, Breslow and Simmons.

There are no family relationships among our executive officers and directors.

The Board maintains the following committees to assist it in discharging its oversight responsibilities.  The current membership of each committee is indicated in the table above which sets forth the names of the Directors.

• Audit Committee - The Audit Committee does not have a formal charter but is responsible primarily for overseeing the services performed by our independent registered public accounting firm, evaluating our accounting policies and system of internal controls, and reviewing our annual and quarterly reports before filing with the Securities and Exchange Commission.  During the 2011 fiscal year, Dr. Maurice Zeitlin was a member of the Audit Committee.  Assuming the election of our director-nominees, the members of the Audit Committee will be Mr. Warren Breslow, (Chairperson), Mr. James Simmons and Mr. Salvador Diaz-Verson.  Our Board has determined that all of the members of the Audit Committee will be “independent” under the listing standards of The Nasdaq Stock Market.  Our Board has also determined that Mr. Breslow is an “audit committee financial expert”.  The Audit Committee held 4 meetings during the 2011 fiscal year.

• Compensation Committee - The Compensation Committee does not have a formal charter however the

committee reviews and recommends to the full Board the amounts and types of compensation to be paid to the Chairman and Chief Executive Officer; reviews and approves the amounts and types of compensation to be paid to our other executive officers and the non-employee directors; reviews and approves, on behalf of the Board, salary, bonus and equity guidelines for our other employees; and administers our 2006 Stock Option Plan.  During the 2011 fiscal year, Dr. Maurice Zeitlin was a member of the Compensation Committee.  Assuming the election of our director-nominees, the members of the Compensation Committee will be comprised of Mr. Diaz-Verson. (Chairperson), Mr. Breslow and Mr. Simmons.

• Nominating Committee - The Nominating Committee does not have formal charter but assists the Board in identifying qualified individuals to become directors, determines the composition of the Board and its committees, monitors the process to assess the Board’s effectiveness and helps develop and implement our corporate governance guidelines.  The Nominating Committee also considers nominees proposed by shareholders.  A shareholder’s proposal must follow the following procedures; (i) the shareholder must have no less than 5% holdings of the common shares of the Company,(ii) the shareholder must communicate in writing with any of the Nominating Committee members no less than 60 days prior to the end of the fiscal year his desire to nominate a candidate to the Board of Directors for the next fiscal year, (iii) no less than 30 days prior to the end of the fiscal year, the shareholder must provide a written resume and qualifications of the proposed nominee.  The resume should include as a minimum, education, business, investments or technical experience, and experience dealing with small public companies, (iv) the Committee may request an interview with the nominee to take place no less than 10 days before the end of the fiscal year.  The Committee will then evaluate the nomine, and present its recommendation to the Board of Directors no later than the day after the end of the fiscal year.  Once a decision is made, the shareholder will be notified in writing as to the Board’s decision in regard to the nominee. The Nominating Committee is committed to actively seeking out highly qualified individuals to include in the pool from which Board nominees are chosen.  The Nominating Committee has recommended to the Board the nomination of Mr. James Simmons, a long time shareholder of the Company, to be added to the Board of Directors.  The Nominating Committee considered Mr. Simmons considerable experience in valuation of small public and private companies, his extensive knowledge of the financial markets and how they operate as well as his experience in capital structure and formation.  During the 2011 fiscal year, Dr. Maurice Zeitlin was a member of the Nominating Committee.  Assuming the election of our director-nominees, the members of the Nominating Committee will be Mr. Simmons (Chairperson), Mr. Breslow and Mr. Diaz-Verson.

The following table sets forth the aggregate fees billed to us by Kabani & Co. for the years ended February 28, 2011, and February 28, 2010:

We have retained Kabani & Co. to continue to provide professional services to us during the current fiscal year.  A representative of Kabani & Co will attend the shareholders meeting and will be available to answer questions or comments from any shareholder of record at the meeting.

The Audit Committee pre-approves all audit and permissible non-audit services provided by our independent auditors.  These services may include audit services, audit-related services, tax and other services.  Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget.  The independent auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date.  The Audit Committee may also pre-approve particular services on a case-by-case basis. During fiscal 2011 and 2010 all services provided by Kabani & Co. were pre-approved by the Audit Committee in accordance with this policy.

The Audit Committee has, in the course of its duties, reviewed and discussed with management the audited financial statements, and has discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards  No. 61.  The Audit Committee has also received the appropriate auditors disclosures regarding the auditors’ independence as required by Independence Standards Board Standard No. 1 and discussed with them its independence.  Based on the foregoing, the Audit Committee, as it was constituted on June 14, 2011, recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2011.

The following sets forth certain information regarding executive officers of the Company.  Information

Our policy in compensating executive officers, including the executive officers named in the Summary Compensation Table appearing below (the “named executive officers”), is to establish methods and levels of compensation that will

To achieve these policies we follow the basic principles that annual compensation should be competitive with similar companies and long term compensation should generally be linked to the Company’s return to shareholders.

We also believe that compensation for individual executives should be aligned to the performance of areas of the business over which the executive has the most control.

Executive compensation policies are implemented through a combination of annual and long-term methods of compensation.  Compensation for the named executive officers includes

These primary components are available for flexible use by our company in a manner that will effectively implement our stated objectives with respect to compensation arrangements for each of the executive officers.  Each of these components is discussed in more detail below.  When setting the compensation arrangements for each executive officer, the Compensation Committee considers these components individually, as well as on an aggregate (total compensation) basis.  There is no pre-determined relationship between base salary of our executives and any of the other principal components of compensation.  Each element of compensation is considered both individually and in terms of total overall compensation.

The base salaries of our executive officers are set by the Compensation Committee after consideration of a number of factors, including the executive’s position, level of responsibility, tenure and performance.  The Compensation Committee also considers the compensation levels of executives in comparable companies, along with the executive compensation recommendations made by our Chief Executive Officer.  In addition, the Compensation Committee evaluates whether the base salary levels of our executives are appropriate relative to our size and financial performance compared with the other companies reviewed.  Relying primarily on these factors, the Compensation Committee sets the base salaries of our executive officers at levels designed to meet its objective of attracting and retaining highly qualified individuals.  The Compensation Committee also believes that the continuity of leadership derived from the retention of well-qualified executive officers is in the best interests of our shareholders.  The base salaries of our executive officers are not set at any specific level as compared to the compensation levels of companies reviewed and the Compensation Committee does not assign relative weights or importance to any specific measure of the company’s financial performance.

In September, 2006, our Board of Directors adopted the Aura Systems, Inc. 2006 Stock Option Plan, subject to shareholder approval, which was obtained at a special shareholders meeting.  Under the Plan, we may grant options for up to the greater of 3,000,000 shares or 10% of the number of shares of our common stock from time to time outstanding.  The exercise price of each option must be at least equal to the fair market value of such shares on the date of grant.  The term of the options may not be greater than ten years, and they typically vest over a three year period.

During the fiscal year ended February 28, 2011, the Board of Directors determined that, in order to provide incentives to its employees, it was in the best interests of the Company to re-price the outstanding employee options

that had been granted.  Accordingly, the outstanding options were re-priced to an exercise price of $0.75 with all other terms remaining the same.

Also during the year ended February 28, 2011, the Company granted 424,000 options to certain employees. These options vest over three years, have an exercise price of $1.50, and have a five-year life. In December 2010, these options were re-priced to $0.75.

We provide all eligible employees, including executive officers, with certain benefits, including health and dental coverage, Company-paid term life insurance coverage, disability insurance, 401(k) plan, paid time off and paid holiday programs.  Other perquisites and personal benefits, such as automobile allowances and country club dues, are considered on a case-by-case basis.  Executive perquisites and benefits are provided to ensure overall compensation for named executive officers is adequate.

Our executive officers are eligible to participate in our 401(k) plan, and we do not presently maintain any other deferred compensation or retirement plans.

We provide the foregoing benefit programs to provide executive officers with benefits that are competitive with those in the marketplace without incurring substantial cost to the Company.

The following table summarizes all compensation earned for the fiscal years ended February 28, 2011 and 2010, to the individual who served as our Chief Executive Officer during fiscal 2011, and the two other most highly compensated executive officers who were serving in such capacity as of February 28, 2011 (the “named executive officers”).  No other executive officer earned compensation in excess of $100,000 in fiscal 2011.

No bonuses or stock awards were granted to the above individuals for the 2011 or 2010 fiscal years.

The following table summarizes certain information regarding the number and value of all options to purchase our common stock held by the individuals named in the Summary Compensation Table at February 28, 2011.  No stock awards or equity incentive plan awards were issued or outstanding during fiscal 2011.

Effective November 1, 2006, we entered into a written employment agreement with Melvin Gagerman (the “Gagerman Agreement”) regarding the terms and conditions of his employment as Chief Executive Officer.  The Gagerman Agreement originally was in effect through February 28, 2010, and, commencing March 1, 2007, is automatically extended by an additional year at the beginning of each fiscal year unless we give prior notice of our intent not to extend the agreement.  Accordingly, the Gagerman Agreement is currently in effect until February 28, 2014.  The agreement may be terminated before its stated expiration by either of the parties under specified terms and conditions.  Following are the material terms of the Gagerman Agreement.

Mr. Gagerman is entitled to a base salary of $360,000 per year.  The Gagerman Agreement also provides for an annual bonus to be approved by the Board of Directors of up to $100,000 based on objective and subjective milestones and, in the case of the 2007 fiscal year, provided the Company has the available cash, and an additional annual bonus at the discretion of the Board of Directors of up to $100,000 for achievements in excess of expected milestones.  The initial qualitative milestones and their quantitative relative weight were specified in the Gagerman Agreement for fiscal 2007, fiscal 2008 and fiscal 2009, and relate to achievement of specified business, financial and organizational performance goals.  The Company may change both the qualitative goals and relative weight of the goals by giving notice to Mr. Gagerman prior to the fiscal quarter that the change will take effect.  In addition, we retain the discretion under the Gagerman Agreement to pay an annual bonus regardless of whether the stated milestones are achieved.  Bonuses are payable within 45 days after the end of the applicable fiscal year.

The Gagerman Agreement provides the Mr. Gagerman will receive options to purchase 300,000 shares of common stock at an exercise price of $2.00 per share, of which 50,000 options are designated for tax purposes as “incentive stock options” and the remaining options are non-qualified options.  The Gagerman Agreement originally provided for an option term of three years, which was subsequently extended to five years.  The options vest at the rate of 25,000 per month.  Unvested options vest if the Gagerman Agreement is terminated by either party under specified circumstances.  All of these options vested as of November 2007.  In addition to the 300,000 options granted under the Gagerman Agreement, Mr. Gagerman has been granted an additional 700,000 options and warrants and remains eligible for future equity compensation awards.  In June of 2009, all outstanding options granted to Mr. Gagerman were cancelled with his agreement, and 1,400,000 new five year options exercisable at $1.50 were granted.  As the table above indicates, the right to purchase all 1,400,000 shares of common stock is vested.

The Gagerman Agreement requires us to pay life insurance premiums on Mr. Gagerman’s private life insurance policy, up to $7,500 per year.  Mr. Gagerman is also entitled to receive $2,000 per month as an automobile allowance and reimbursement of a country club initiation fee of up to $8,000, which was a one-time fee that was paid in 2007.

In addition to health and dental insurance generally available to all of our employees, Mr. Gagerman is also entitled to receive reimbursement of up to $15,000 per year for all non-covered medical and dental expenses for himself and his spouse, including deductibles and co-payments.  His agreement also entitles him to reimbursement for the cost of long term care insurance.

Other than the benefits provided for in the Gagerman Employment Agreement, which are described above, none of the named executive officers are entitled to any payments or benefits upon termination, whether by change in control or otherwise, other than benefits available generally to all employees.

Upon the occurrence of a severance payment event for Mr. Gagerman, assuming he were terminated as of February 28, 2011, he would have been entitled to a severance payment of $1,080,000, payable within 45 days of the date of his termination.  Subsequent to year-end, as of August 31, 2011, Mr. Gagerman converted all of his

unpaid salary and bonuses into equity therefore, upon the occurrence of a severance payment event, he would be entitled to receive a severance payment of $360,000 plus any accrued and unpaid past due salary, vacation, etc. rather than the sum of $1,080,000.

The mailing address for the officers and directors is c/o Aura Systems, Inc., 1310 E. Grand Ave., El Segundo, CA 90245.

Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors, and beneficial owners of more than ten percent of the common stock, to file with the Securities and Exchange Commission reports of ownership and changes in ownership of the common stock.  Based solely upon a review of Forms 3, 4 and 5 furnished to the Company covering its 2011 fiscal year filed under Section 16(a) of the Securities Exchange Act of

1934, the following officers and directors failed to timely comply with the reporting requirements under Section 16(a) for the 2011 fiscal year.

During the year ended February 28, 2011, Warren Breslow, a Director, was granted options to purchase 50,000 shares of common stock for which he failed to file a Form 4, Maurice Zeitlin, a Director, was granted options to purchase 50,000 shares of common stock for which he failed to file a Form 4, Salvador Diaz-Verson, a Director, was granted options to purchase 50,000 shares of common stock for which he failed to file a Form 4, Melvin Gagerman, a Director and our Chief Executive Officer, was granted options to purchase 50,000 shares of common stock for which he failed to file a Form 4, and Arthur Schwartz, a Director, was granted 250,000 options for which he failed to file a Form 4.

The following describes all transactions since March 1, 2009 and all proposed transactions in which we are, or we will be, a participant and the amount involved exceeds an amount that is the lesser of $120,000 or 1% of the average of our total assets as of year-end for the last two completed fiscal years, other than compensation arrangements that are otherwise required to be described under “Executive Compensation.”

Mr. Breslow, a Director and one of our founders, routinely makes temporary advances to us.  Currently, we owe to Mr. Breslow $9,975,000 in principal and $1,642,068 in interest.  During the period from March 1, 2009 to the present, the highest outstanding amount of principal we owed to Mr. Breslow was $9,975,000.  Interest on the advances accrues at a rate of 10% per annum.  A payment of $200,000 was made to Mr. Breslow on November 22, 2010.  Of this amount, $200,000 was applied to the principal amount and $0 was applied to interest.

On March 12, 2010, Mr. Gagerman, our Chief Executive Officer, loaned us $360,000, with interest at the rate of 10%, convertible into shares of our common stock at $0.75 per share.  In May 2011, he converted the entire principal amount and all accrued interest totaling $45,496.47 into 540,661 shares of our common stock.

On June 18, 2009, Dr. Macleod, our former President, loaned us $50,000 with an interest rate of 10%, for a period of 180 days, convertible into shares of our common stock at $0.75 per share.  In August 2011, Dr. Macleod converted the principal amount and all accrued interest totaling $11,331.37 into 81,775 shares of our common stock.

Dr. Macleod was appointed as President, effective April 27, 2009. Pursuant to a two-year employment agreement between the Company and Dr. Macleod, dated April 20, 2009, Dr. Macleod was entitled to (1) an annual salary of $300,000; (2) an option to purchase up to 400,000 shares of our common stock at a price of $1.50 per share, including a provision for cashless exercise of the options; (3) relocation and recruiting expense reimbursement and; (4) participation in all benefit and bonus programs established by the Company for its executive officers.  The stock options granted to Dr. Macleod under his employment agreement vested monthly over a three-year period with 1/36th of the shares vesting monthly until all shares were vested, and provided for earlier vesting under certain circumstances, including upon termination by the Company of Dr. Macleod’s employment other than for cause or by Dr. Macleod without good reason.  The stock options had a term of up to five years, subject to earlier termination in the event of the termination of his employment prior to the expiration of the options.  Dr. Macleod resigned his position on August 5, 2011.  On that date, the expiration date of Mr. Macleod’s vested options was extended to August 5, 2012 and the options that were not yet vested expired.

Our Audit Committee is responsible for the review and approval of all related party transactions.  This procedure has been established by our Board of Directors in order to serve the interests of our shareholders.  Related party transactions are reviewed and approved by the Audit Committee on a case-by-case basis.  Under existing, unwritten policy no related party transaction can be approved by the Audit Committee unless it is first determined that the terms of such transaction is on terms no less favorable to us than could be obtained from an unaffiliated third party on an arms-length basis and is otherwise in our best interest.

The Board has nominated Messrs. Gagerman, Simmons, Breslow, Schwartz and Diaz-Verson to be elected to serve until the next annual meeting of shareholders and until their successors are duly elected and qualified.  At the Annual Meeting, proxies cannot be voted for a greater number of individuals than the five nominees named in this Proxy Statement.  Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the proxy card or, if no direction is made, for the election of the Board’s five nominees.  If any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxy holders will vote for a nominee designated by the present Board to fill the vacancy.

Directors are elected by a plurality of votes, meaning that the five nominees receiving the highest number of affirmative votes of the shares entitled to be voted will be elected as directors to serve until the next annual meeting of shareholders and until their successors are duly elected and qualified.

We have raised the funds necessary to continue our operations by selling our securities.  In order to save cash resources, we have also made agreements with some of our executive officers and others to accept our securities in lieu of cash payments and with some of our vendors to accept our securities in lieu of cash.  We also wish to reward certain of our employees for exceptional services and, in order to save cash, we have issued common stock or options for the purchase of common stock to them.

Aside from using the additional authorized shares to permit all the holders of our options or warrants to exercise them if they so chose, the increase in authorized shares will provide the Company with greater flexibility with respect to its capital structure and will be available for a number of purposes, including equity financings for working capital and capital expenditures, to fund future expansion, equipment purchases, and production tooling as well as for potential acquisitions and joint ventures.  The additional authorized shares may also be used as

compensation in the event that the Company expands its Board of Directors or adds technical and management staff.

Management believes that it is important that the Company have the flexibility to issue additional shares without further authorization from the shareholders.  If the shareholders approve the Authorized Shares Amendment, the Company does not intend to seek further authorization from the shareholders prior to any issuances of common stock, except as may be required by law, the Company’s Bylaws or applicable rules of any stock exchange.

The increase in our authorized common stock could make any attempt to gain control of our company more difficult, costly or time consuming and the availability of additional authorized and unissued shares might make it more difficult to remove management.  Please see the more detailed discussion below entitled “Effect of the Proposal/Advantages and Disadvantages”.

The Authorized Shares Amendment was not adopted as a result of management’s knowledge of any specific effort to accumulate our securities or to obtain control of our company by means of a merger, tender offer, solicitation in opposition to management or otherwise.  Neither our Amended and Restated Certificate of Incorporation nor our Bylaws contain provisions having an anti-takeover effect, the adoption of the Authorized Shares Amendment is not part of a plan by management to adopt a series of such amendments, and management does not intend to propose other anti-takeover measures.

In the future it is possible that we may wish to raise equity capital, acquire other businesses that are compatible with our business or enter into a joint venture, strategic partnership or other types of working relationships with one or more service providers in our industry.  Any of these types of transactions may include the issuance of securities, including common stock, warrants or convertible promissory notes.  Subject to the provisions of our Bylaws, we want to be able to enter into financing transactions, acquisition transactions or other working relationships when and as we deem it advantageous.  If adequate shares of our common stock are not available when an opportunity presents itself, we may lose the opportunity.  If the Authorized Shares Amendment is not approved, our Board of Directors would be required to obtain approval for each proposed issuance from our shareholders before the securities could be issued.  This would impede the ability of our Board of Directors to act quickly to consummate transactions requiring the issuance of our securities and would greatly increase our costs of doing business.  Furthermore, if the holders of our options and warrants wanted to exercise them, they are not able to do so.  Until we increase our authorized common stock, this will deprive us of the capital that could be raised from the exercise of the options and warrants.

On the other hand, the additional authorized and unissued shares of common stock may be issued by the Board of Directors to make any attempt to gain control of our company more difficult, costly or time consuming or to make it more difficult to remove management, even if it were in the best interests of the shareholders.  Shares of common stock could be issued by our Board of Directors to dilute the percentage of common stock owned by a significant shareholder or a group of significant shareholders, thereby making it difficult or impossible for them to influence the outcome of shareholder voting.  Issuing additional shares of common stock could also increase the costs associated with, or the number of voting shares necessary for, removing management or meeting the voting requirements imposed by Delaware law with respect to a merger, tender offer or proxy contest.  Our Board of Directors currently has no intention to issue shares of our common stock for any of these purposes.

Finally, the issuance of the newly authorized shares of common stock will dilute the percentage ownership of our current shareholders.

Our common stock is traded on the OTC Bulletin Board, which is a quotation service, not an exchange.  The OTC Bulletin Board does not reserve the right to refuse to list or to de-list any stock which has unusual voting

provisions that nullify or restrict voting nor does it have requirements calling for a shareholder vote on issuances of additional shares.

If approved, Article “Fourth” of the Company’s Amended and Restated Certificate of Incorporation would be amended and restated as follows:

Our Board of Directors, in its discretion, may elect to effect any one (but not more than one) of the reverse split ratios between 1 for 2 and 1 for 10 upon receipt of shareholder approval, or none of them if our Board of Directors determines in its discretion not to proceed with the reverse stock split following shareholder approval.  We believe that the availability of a range of reverse split ratios will provide the Company with the flexibility to implement the reverse stock split in a manner designed to maximize the anticipated benefits for the Company and its shareholders.  In determining whether to implement the reverse stock split and which of the reverse stock split ratios to implement, if any, following the receipt of shareholder approval, our Board of Directors may consider, among other things, factors such as:

Reducing the number of outstanding shares of our common stock through the reverse stock split is intended, absent other factors, to increase the per share market price of our common stock.  However, other factors, such as our financial results, market conditions and the market perception of our business may adversely affect the market price of our common stock.  As a result, there can be no assurance that the reverse stock split, if completed, will result in the intended benefits described above, that the market price of our common stock will increase

following the reverse stock split, that the market price of our common stock will not decrease in the future, or that we will otherwise be able to comply with applicable listing requirements.  Moreover, some investors may view the reverse stock split negatively since it reduces the number of shares of common stock available in the public market.

The Company has no present plans, proposals or arrangements to issue the additional authorized shares of its common stock at this time, other than (i) 5,133,334 shares and 5,133,334 shares covered by a warrant reserved for issuance in connection with a $3.5 million convertible note and associated fees, (ii) 25,431,494 shares reserved for issuance in connection with outstanding warrants, and (iii) 6,998,316 shares reserved for issuance under the 2006 Stock Option Plan.

The Board of Directors does not intend to seek shareholder approval of any future issuances of authorized common stock unless required by the laws of Delaware, the Company’s state of incorporation, our Bylaws, or listing requirements of any applicable exchange.

The Board of Directors does not intend to seek shareholder approval of any future issuances of authorized common stock unless required by the laws of Delaware, the Company’s state of incorporation, our Bylaws, or listing requirements of any applicable exchange.

In September 2006, our Board of Directors approved the Aura Systems, Inc. 2006 Stock Option Plan (the “Plan”).  The Plan was subsequently approved by our shareholders on March 17, 2009.  The Plan is intended to allow designated employees, executive officers, directors, consultants, advisors and other corporate and divisional officers of the Company (each a “Participant” and collectively the “Participants”) to receive options to purchase our common stock.  The Plan is administered by the Compensation Committee, which has the authority to, among other things, grant the options, determine the number of options to be granted, determine the time at which the options shall be granted, establish the terms and conditions upon which the options may be exercised and determine any conditions or restrictions which will apply to the options.  The exercise price of the shares of common stock subject to the options must be at least equal to the fair market value of the shares on the date of grant.  The exercise price of incentive stock options must be at least 110% of the fair market value of the shares on the date of grant if the option is awarded to a Participant who owns 10% of the total combined voting power of our stock.  The term of an option granted to a Participant may not be more than 10 years and Participants who are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934 may not exercise an option for a period of at least six months and one day from the date of grant.  A Participant may exercise an option only if he or she remains employed by the Company from the date of grant to the date of exercise.  Upon the termination of employment for any reason (with the exception of retirement, death or disability), all options that are exercisable by the Participant on the date of termination shall remain exercisable for a period of 90 days after the date of termination.  If a

Participant retires, dies or is disabled, all options that are exercisable by the Participant shall remain exercisable through the end of the term.  Unless the stock option agreement indicates otherwise, options granted under the Plan may be transferable only by will or the laws of descent and distribution.  Our Board of Directors may suspend, amend or terminate the Plan.  However, no amendment or modification of the Plan may be adopted without shareholder approval if such amendment or modification would materially increase the benefits accruing to the Participants or materially increase the number of securities which may be issued under the Plan or which would materially modify the requirements as to eligibility for participation in the Plan.  As adopted, the Plan indicates that the number of shares of common stock issued and issuable pursuant to the exercise of stock options granted under the Plan may not exceed the greater of 3,000,000 shares or 10% of the number of shares of our common stock from time to time outstanding.  On the record date we had a total of 69,983,542 shares of common stock outstanding, therefore the maximum number of shares that could be issued or issuable from the Plan on that date was 6,998,354 shares.  As of September 7, 2011, the closing price of a share of our common stock was $0.69.

The table below discloses information about the Plan as of February 28, 2011.

As of the record date, we had authorized, but not issued, the following stock options to the Participants named in the table below.  The total number of option shares covered by the following grants exceed the number of shares currently reserved for issuance under the Plan.  As noted in Proposal No. 2, holders of these options have agreed that they will not exercise the options unless Proposal No. 2 is approved by our shareholders.

As we indicated in our discussion relating to executive compensation, we have placed special emphasis on equity-based compensation, in the form of options and warrants, to preserve our cash for operations.  We believe that long-term equity based compensation awards are an effective incentive for senior management to increase the long-term value of our common stock and that these awards aid us in attracting and retaining senior management.  These awards provide management with a proprietary interest in our continued growth and performance and more closely align their interests with those of our shareholders.  In addition, because options may sometimes terminate when an executive leaves his or her employment, we believe that options are a useful incentive in promoting the retention of executives.

The affirmative vote of a majority of the outstanding shares of common stock on the record date, voting in person or represented by proxy, is required for approval of the amendment to the 2006 Stock Option Plan.

A participant in the DEO Plan may not exercise an option for a period of at least six months and one day from the date of grant.  A participant may exercise an option only if he continues to serve as a Director or remains employed by us from the date of grant to the date of exercise.  Upon termination as a Director or upon termination of employment (for any reason with the exception of retirement, death or disability), all options that are exercisable by the participant on the date of termination shall remain exercisable for a period of 90 days after the date of termination.  If a participant retires, dies or is disabled, all options that are exercisable by the participant shall remain exercisable through the longer of 90 days after the date of termination or the end of the term.  Unless the stock option agreement indicates otherwise, options granted under the DEO Plan may be transferable only by will or the laws of descent and distribution.

The Board may at any time terminate the DEO Plan or modify or amend the DEO Plan as it deems advisable.  The Board may not amend the provisions in the DEO Plan regarding the amount, pricing, and timing for grants more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder.

The issuance of awards is discretionary and, to date, there have been no awards from the DEO Plan that have been allocated to any individual.

The following is a summary of the federal income tax consequences to us and to participants who receive options under the DEO Plan.

Upon a qualifying disposition, the executive officer will recognize long-term capital gain in an amount equal to the excess of (a) the amount realized upon the sale or other disposition of the purchased shares over (b) the exercise price paid for the shares.  If there is a disqualifying disposition of the shares, then the excess of (y) the fair

market value of those shares on the exercise date or (if less) the amount realized upon such sale or disposition over (z) the exercise price paid for the shares will be taxable as ordinary income to the executive officer.  Any additional gain recognized upon the disposition will be a capital gain.  If the executive officer makes a disqualifying disposition of the purchased shares, then we will be entitled to an income tax deduction, for the taxable year in which such disposition occurs, equal to the amount of ordinary income recognized by the executive officer as a result of the disposition.  We will not be entitled to any income tax deduction if the executive officer makes a qualifying disposition of the shares.  The deduction will in general be allowed for our taxable year in which such ordinary income is recognized by the executive officer.

The affirmative vote of a majority of the outstanding shares of common stock on the record date, voting in person or represented by proxy, is required for approval of the adoption of the Aura Systems, Inc. Directors and Executive Officers Stock Option Plan.

Shareholder proposals complying with the applicable rules under the Securities Exchange Act of 1934 intended to be presented at the 2012 Annual Meeting of Shareholders must be received at the offices of the Company by January 1 2012, to be considered for inclusion in the Company’s proxy statement and form of proxy relating to that meeting.  Such proposals should be directed to the attention of the Corporate Secretary, Aura Systems, Inc., 1310 E. Grand Avenue, El Segundo, CA 90245.  Securities and Exchange Commission rules provide that if the date of our 2011 Annual Meeting is advanced or delayed more than 30 days from the date of the 2011 Annual Meeting, shareholder proposals intended to be included in the proxy materials for the 2012 Annual Meeting must be received by us within a reasonable time before we begin to print and mail the proxy materials for the 2012 Annual Meeting.  Upon determination by the Company that the date of the 2012 Annual Meeting will be advanced or delayed by more than 30 days from the date of the 2011 Annual Meeting, we will disclose that change in the earliest possible Quarterly Report on Form 10-Q or as otherwise permitted by Securities and Exchange Commission rules.

Some banks, brokers, and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our Proxy Statement or Annual Report may have been sent to multiple shareholders in your household. We will promptly provide a separate copy of either document to you if you contact us c/o Corporate Secretary, Aura Systems, Inc., 1310 E. Grand Avenue, El Segundo, CA 90245.  If you want to receive separate copies of the annual report and proxy statement in the future or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holders, or you may contact us.

We know of no other matters to be submitted to the shareholders at the Annual Meeting.  If any other matters properly come before the shareholders at the Annual Meeting, it is the intention of the persons named on the proxy to vote the shares represented thereby on such matters in accordance with their best judgment, subject to direction by the Board of Directors.

Aura Systems, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

The Amended and Restated Certificate of Incorporation of the Corporation is hereby amended as follows:

1.           Article Fourth is hereby amended as follows:

Aura Systems, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

The Amended and Restated Certificate of Incorporation of the Corporation is hereby amended as follows:

1.           Article Fourth is hereby amended as follows:

In accordance with paragraph 14 of that certain Aura Systems, Inc. 2006 Stock Option Plan (the “Plan”), the board of directors of Aura Systems, Inc. does hereby amend the Plan by modifying the following sentence of paragraph 4 which states:

In all other respects, the terms and conditions of the Plan shall remain the same.

WHEREFORE, this Amendment dated October ___, 2011 to the Aura Systems, Inc. 2006 Stock Option Plan has been executed in El Segundo, California on October ___, 2011.