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Aura Systems AuraGen®® mobile induction power
systems is finding greater acceptance and use in the U.S. military as well as applications
in the industrial and commercial markets
Electronic Instruments and Controls
Aura Systems, Inc.
2335 Alaska Avenue
El Segundo, CA 90245
President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
January 27, 2004
Aura Systems, Inc.
Raymond Yu was appointed president and chief executive officer of Aura Systems, Inc.
effective Sept. 20, 2004.
Yu, 45, has over twenty years of experience in managing small companies in the high tech
arena. A graduate of the University of California at Berkeley, he is an engineer by
training and built his first high tech company, Alaris, Inc. of Fremont, California, to
over $55 million in sales in 1995. The company was merged with a large China based
manufacturing company in 1998.
The merger leveraged the financial and manufacturing
capabilities of the larger China company with the marketing and development expertise of
U.S. based Alaris. Yu held senior executive positions in the merged company and was
responsible for technology development, licensing, and merger and acquisition activities
for the new company.
At the end of 2002, Yu negotiated the sale of the
Alaris technology to a Japanese high tech company. Since then he has acted as a management
consultant to various companies.
Yu, who is a long time Aura shareholder, is extremely
familiar with Aura Systems, Inc. and the AuraGen®, the firms under the hood power
generating unit that is being developed and marketed to the industrial, commercial and
defense mobile power generation markets.
Yu lives with his wife and children in Fremont,
Aura Systems Inc., an ISO 9001 certified company, is a technology leader in mobile power.
The Company develops and sells AuraGen®® 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®® is capable of
generating full power, up to 8,500 watts, at all engine speeds including enhanced engine
idle speed for gasoline engines and at idle speed for bigger diesel engines. The
AuraGen®® combines sophisticated mechanical and electronics design, advanced engineering
and breakthrough 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.
Yu, what attracted you to the company?
Mr. Yu: "The technology in the company is fantastic. I
have been involved in the company for a number of years and had the opportunity to look at
the technology previously and I was impressed. It has been very exciting to work with the
technology and the people."
you tell us about the technology?
Mr. Yu: "The company has a large number of patents. It
was previously working with the government and the Defense Department in developing
technologies. One technology that the company is currently focused on is an electric motor
generator technology, the AuraGen®. The AuraGen® is a physical device that uses an
electric motor that generates electricity, and an electronic device that works in
conjunction to regulate that energy into clean 120-volt AC power."
are the immediate applications?
Mr. Yu: We are able to fit the AuraGen® under the hood of a
vehicle. It is similar in function to an alternator in a vehicle. It generates much more
power and it generates that power at relatively low rpm. When the engine idles, it
generates the full power. That coupled with electronics, produces a very clean AC power
that can be used for any number of applications and to power the most sensitive electronic
and digital machines and devices. The most successful applications that the company has
had to date have been with the military; in vehicles that require a lot of power for
communications equipment or operations etc. The Army is using the AuraGen® successfully
on vehicles in Iraq and Afghanistan."
you tell us about military purchases?
Mr. Yu: "The company has worked with the military since
the AuraGen® was first introduced. It was clear that this was a very applicable use of
the device. The company has much history with the military and the government in its
development stage, and there has been a lot of testing done by the Army. Currently the
AuraGen® is being purchased by the Navy, the Coast Guard and the Army. It is being looked
at by the Marine Corp. We have been able to successfully demonstrate feasibility and
functionality for the many uses the government and military have for the device."
direction is the company going from the development stage to the commercialization stage
and what are you doing which hasnt been done before?
Mr. Yu: "This is an ongoing process. We are currently in
the testing process with the military to obtain a final product release by the Army. What
that means is that the Army has to put AuraGen® through all of its standard testing and
effectively prove it as a standard product for Army vehicles. Once that happens, a
commander in the field or at a base will say we want a vehicle with the
AuraGen® at which time the AuraGen® essentially becomes a check-box item that
military commanders can just order, as opposed to right now where we are trying to
convince individual commanders to take funds from their budget and allocate it to purchase
this device as an after-market device."
this also available to the public?
Mr. Yu: "Yes, we do have many commercial applications
for the device. We have a number of different companies that we are working with. In many
instances companies are using gen-sets, which are stand-alone generators with their own
fuel systems. Gen-set users have to go through procedures of setting up their gen-sets and
then begin generating power for whatever applications they need the electricity to
operate. With the AuraGen® device, users have the device under the hood of their vehicle.
There is nothing to set up, and the power is immediately available whenever they get to
their work location. We have a company, for example, that essentially equips a large
utility truck for scanning the contents of cargo containers.
The scanning units need mobile power because they have to drive to specific locations,
such as sea ports. Setting up a generator would take time, and the generator would be a
separate service with maintenance issues. In this instance, we put the generator under the
hood for them, and they have power available right away. They just leave the engine of
their vehicle running and the AuraGen® enables them to do all of their imaging and
produce whatever results they need. The maintenance issues are also eliminated because you
dont have a separate generator or a separate gas tank. In other situations, we
have had tremendous success with vehicles that need emergency power or power in emergency
situations. For example, if you have a natural disaster such as a hurricane in Florida,
vehicles that are equipped with the AuraGen® can go out in the field and assist people
who have lost electrical power. We have units that generate 5000 or 8000 watts. They can
go out there without worrying about separate maintenance issues."
costly is it for a company to use your device?
Mr. Yu: "It isnt really at any additional cost.
Our product actually saves customers money. We are not expensive compared to existing
CEOCFOinterviews: How do
you encourage people to learn about your product and how will you in the future?
Mr. Yu: "We are reaching our customers through publicity
and a concerted marketing effort, including advertising and attendance at the tradeshows
in the industry that we are trying to address."
CEOCFOinterviews: How do you get this going, with whom and
what is the timeline?
Mr. Yu: "I think it has been a problem previously. Our
attention and focus was not targeted. We tried to do too many things and didnt have
a thought-out process as far as the different steps that we would need to take to achieve
the success that we were looking for. I have been with the company for six weeks and we
are trying to put together a business plan that will make sense. We are going to focus on
specific applications. Our number-one priority is to continue our support of the military.
That includes, the Army, Marine Corp, Navy, Coast Guard and Air Force. We have units all
over the world already. AuraGen® equipped vehicles have been in Afghanistan and Iraq. We
have units on naval boats. Further, we are going to focus specifically on certain
customers on the commercial side. The company that I mentioned previously is one that we
would very much like to focus on and replicate throughout the country. As it turns out, we
dont need to have tremendous amounts of customers to get to our first plateau as far
as break-even profitability."
CEOCFOinterviews: Do you
need an inventory?
Mr. Yu: "We have a large inventory. Prior management was
optimistic and built up a sizeable inventory. We assemble the products here in El Segundo
and do the final testing here. The AuraGen® product consists of a device, which we call
the generator device, which contains copper windings, a casing and rotor. It is relatively
simple to assemble. The other part of the device, a separate box, contains electronics
that control the generator and produce the electrical output."
CEOCFOinterviews: Do you
have competition or is this a new approach?
Mr. Yu: "It is a different approach. The primary
competitors are high out-put alternators and gen-sets. Both of them have their drawbacks
but no one that we have seen right now in the market has a comparable solution that does
everything that we are doing at the price levels that we offer."
there applications in the future for the average consumer?
Mr. Yu: "I believe that our product, which is covered by
a strong patent, has applications outside of the generator market. The AuraGen® is
basically an electric motor, which has characteristics and configurations that produce
specific advantages over existing technology. The AuraGen® has potential applications in
appliances and devices in the home and industry that use electrical motors."
CEOCFOinterviews: Do you
have the funding you need to go forward?
Mr. Yu: "We have a current set of investors that have
committed to finance the company through the first half of next year. I am comfortable
with that funding. We have many things we have to accomplish between now and then but I
believe that if we can do all of those things then reaching our break-even level will be
achieved in short order."
closing, what would you like to say to potential investors and what should they know that
they might not realize when they first look at the company?
Mr. Yu: "I think the company has struggled in the past.
It was not able to realize its true potential. I am looking forward to our ability to
execute specific plans and activities that will bring us to the next level without the
burden of some of the financial difficulties that have plagued the company in the past. We
have a plan that will allow us to get from where we have been the last few years to a
financial position that is stable, secure and properly presented to the public."
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