Aura Releases Message to Shareholders.

Business Editors

EL SEGUNDO, Calif.--(BUSINESS WIRE)--Jan. 17, 2003

Aura Systems, Inc. (OTCBB:AURA) has made available a message to the shareholders from Neal Meehan, Chairman and CEO, regarding its results for the third quarter of Fiscal 2003.

Dear Shareholders:

I am pleased to report on our FY '03 third quarter performance.

The upward quarterly revenue trend of Fiscal 2003 continues. Net revenues for the third quarter of Fiscal 2003 were over $400,000, increasing from approximately $300,000 in the second quarter and approximately $200,000 in the first quarter. Sales to our major distributors were low early in this fiscal year as they continued to reduce their inventory levels. The third quarter saw the establishment of a new distributorship for sales in Mexico and some reordering from the established distributors. We anticipate further increases in sales in the fourth quarter of Fiscal 2003 and into Fiscal 2004.

This growth in revenues has been accomplished with reduced costs throughout the Company. Operating expenses in the third quarter of Fiscal 2003 were approximately $2,500,000; 17% below second quarter of Fiscal 2003 operating expense of approximately $3,000,000, after eliminating the $2,300,000 charge we recognized for the impairment on the real estate, and 38% lower than the approximately $4,000,000 of operating expenses in the third quarter of Fiscal 2002. The continuing focus on supporting growing sales, while reducing costs, should produce further reductions in operating expenses in the upcoming quarters. Although Aura's focus on revenue growth will require some increased spending for sales and marketing activities, we will continue to reduce expenses, as appropriate, to optimize the company's operations in line with production levels.

The cost reductions that have favorably impacted Fiscal 2003 operating expenses have had a similarly positive impact on operating income. Aura's loss from operations for the first nine months of Fiscal 2003 improved to approximately $10,800,000 from $12,500,000 for the same period in Fiscal 2002; a 14% improvement. If you exclude the one-time $2,300,000 charge in Fiscal 2003 for the impairment to the value of the real estate, Aura's net loss would have been $8,500,000; a 32% improvement from Fiscal 2002.

The Aura team has made significant strides in implementing key strategies to increase revenues. Aura has recently expanded its sales and marketing team through the hiring of three new Regional Sales Managers, as well as a Director of Marketing. In addition, a new marketing communications agency was engaged this quarter. The investments in new sales and marketing capabilities are already having a positive impact as witnessed by the increased pace of public relations activity and the initiation of projects to deploy new sales tools including a new Web site and sales collateral. The Company continues to forge strategic alliances and focus its resources towards efforts that will result in increased future revenues. This past quarter we announced the following:

-- Ford's Modified Vehicle Engineering group approved the AuraGen(R) for use on its Super Duty F-Series trucks. This approval now allows any Ford commercial truck dealer worldwide to order the AuraGen(R) installed through the Louisville Truck Equipment facility or the Fort Wayne Fleet Equipment Company.

-- Luverne Fire Apparatus, a wholly owned subsidiary of Spartan Motors, began offering the AuraGen(R) mobile power-generating system as an option on all its fire trucks and rescue vehicles.

-- The AuraGen(R) was showcased in three General Motors vehicles at this year's 2002 Specialty Equipment Market Association (SEMA) show, November 5-8 at the Las Vegas Convention Center. GM's exhibit featured the AuraGen in the GMC Savana Installer Pro van, the GMC Yukon XL Outdoor Living Pro, and the Chevrolet Express Ultimate Ski van. The on-board AuraGen Power System was included to provide remote power wherever these vehicles traveled.

-- The Meridian CT Group, Inc. was announced as the newest distributor for the AuraGen. Meridian, a Texas Corporation, provides a sales, marketing and distribution network for equipment used in the transportation industries. Meridian will provide sales, marketing, and all needed customer service and support for the AuraGen for Mexico.

-- GSA Awards, Inc. and Aura Systems, Inc. entered into a joint marketing agreement to increase the penetration of the AuraGen into the Government Services Administration (GSA) market. The Government Services Administration (GSA) is responsible for supplies, space and other services to all Federal Government branches, agencies and designated State and other entities. GSA has an annual budget of $16 billion and influences almost $66 billion in government financial transactions, including a GSA standing fleet in excess of 500,000 vehicles and over 50,000 new vehicle purchases per year.

Finally, just as I welcome suggestions and new innovations from my staff and employees, I continue to welcome your input as well. Thanks again to you, our shareholders, employees, customers and suppliers.

Very truly yours,

Neal F. Meehan

Chairman and Chief Executive Officer

ABOUT AURA SYSTEMS

Aura Systems Inc., a technology leader in mobile power, develops and sells AuraGen(R) mobile induction power systems to the industrial, commercial and defense mobile power generation markets. The Company's unique and patented energy solution is the only proven, commercially available pure sine wave power system that can continuously provide thousands of watts of power at low engine speed, and is fully integrated under the vehicle hood. The AuraGen(R) is capable of generating full power up to 8500 watts at all engine speeds including enhanced engine idle speed for gasoline engines and at idle speed for bigger diesel engines. The AuraGen(R) combines sophisticated mechanical and electronics design, advanced engineering and break-through electromagnetic technology to produce a highly reliable and flexible mobile power generating system that creates alternating current (AC) and direct current (DC) electricity, both with and without the engine on. For more information about the Company's AuraGen(R) product visit the company's website at http://www.aurasystems.com.

This press release contains certain forward-looking statements and information based on the beliefs of Aura's management as well as assumptions made by, and information currently available to Aura's management. Such statements reflect the current views of Aura with respect to future events and are subject to certain risks, uncertainties, and assumptions, including risk factors identified in Aura's 10-K and other SEC filings. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Aura undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

AURA and AuraGen are registered trademarks of Aura Systems, Inc. Other marks and brands may be claimed as the property of others.