coast firm, Aura Systems Inc., for alleged default in the repayment of a convertible debenture.

JNC has filed papers in the US District Court in Delaware, seeking more than $3.5 million, in what it claims is unpaid principal and interest on the $5.3 million that was outstanding when Aura was allegedly found to be in default.

The basis for the lawsuit is a June 27, 1997, securities purchase agreement in which Aura issued and sold a convertible debenture to JNC.

The $3.6 million includes a 15 percent interest penalty for Aura's alleged failure to repay on time on an accelerated schedule after its default, according to court papers.

Aura is a Nasdaq-quoted electronics manufacturer based in El Segundo, California, which just declared a net loss of $11.7 million for the second quarter to August 31 (1997: $486,385 profit) and a near $13.7 million loss for the first half year.

The net loss for the second quarter included a charge for legal settlements and costs of $6.3 million, primarily relating to a class action.

The company reported its balance sheet as of August 31, 1998, showed net working capital in excess of $55 million and shareholder equity of approximately $111 million.

Aura Systems is an audio speaker maker which acknowledged being in default on the June 1997 obligation in a new loan agreement signed last November and attached to the lawsuit. At that time, new payment terms were negotiated.

The suit alleges the new terms required five monthly payments of $1.1 million covering principal and interest, beginning last November. It also calls for 15 percent interest on all late payments.

JNC claims the first payment wasn't made until December 1 and the second payment wasn't paid until January 6.

It alleges the second payment was less than the agreement called for, and the final three payments were never made.

Last month, Aura was also scheduled to repay a $15-million loan from a different lender on which it was paying 43 percent annual interest. On September 16, it said it reached "an agreement in principle'' to restructure that loan. There was no word whether or not a final agreement was reached.

Since going public in June 1986, Aura has lost $96 million. That includes the latest second quarter losses after the multi-million dollar charge to settle a suit alleging it defrauded shareholders by secretly selling discounted stock overseas.

The company said in a SEC filing that it had vigorously defended the suit, but believed it to be in its best interest to effect a settlement to avoid disruptive and expensive litigation.

COURTS CTS