What changed in this filing

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Item 1. Legal Proceedings

2023-10-18 compared with 2023-07-24 · 79 added, 77 removed, 4 unchanged (98% of the section changed)

Legal Proceedings

We are subject

to the legal proceedings and claims discussed below as well as certain other legal proceedings and claims that have not been fully resolved

and that have arisen in the ordinary course of business.

Our management evaluates our exposure to these claims and proceedings individually

and in the aggregate and evaluates potential losses on such litigation if the amount of the loss is estimable and the loss is probable.

However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty.

Although management

considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company for

amounts in excess of management’s expectations, the Company’s financial statements for that reporting period could be materially

adversely affected.

In 2017, the Company’s

former COO was awarded approximately $238 in accrued salary and related charges by the California labor board.

In August 2021, the Company

reached a settlement by which the Company agreed to pay approximately $330, representing the principal award plus accrued interest.

of the time of this filing, the Company has paid approximately $277 toward the settlement amount.

The remaining balance of approximately $53

is to be paid no later than September 1, 2023 and accrues interest of 10% per annum until paid.

Between July 2017

and March 2022, the Company was engaged in litigation with a former director, Robert Kopple, relating to more than $13,000 and the current

equivalent of the approximately 23 million warrants, exercisable for seven years at a price of $0.10 per share, which Mr.

his affiliated entities (collectively the “Kopple Parties”) claimed should have been originally issued to them pursuant to

various agreements with the Company entered to between 2013-2016.

In March 2022, the Company reached a settlement with the Kopple Parties

that resolved all claims asserted against the Company without any admission, concession or finding of any fault, liability or wrongdoing

on the part of the Company.

Under the terms of the settlement, the Company agreed to pay an aggregate amount of $10,000 over a period

of seven years, including $3,000 initial payment to be paid in June 2022.

$150 was paid in June 2022, and the balance of the initial

payment of $2,850 was extended to August 1, 2023, In exchange for the extension, the Company was required to pay $195 in extension and

forbearance fees in cash and $530 in accrued forbearance fees.

Beginning in January 2023, interest accrues on the unpaid balance at a

rate of 6%, compounded annually.

All amounts, including all accrued interest and deferred fees, are to be paid no later than eight years

from the date of the initial payment.

The Kopple Parties have also received seven-year warrants to purchase up to an aggregate of 3,331,664

shares of our common stock at a price of $0.85 per share.

The settlement also provides for standard mutual general release provisions

and includes customary representations, warranties, and covenants, including certain increases in the amount payable to the Kopple Parties

and the right of such parties to enter judgment against the Company if the Company remains in uncured default in its payment obligations

under the settlement.

As of the date of this report, the Company has not yet paid the full $3,000 installment due to Kopple, having made

an initial payment of $150 in June 2022.

(See Part I, Note 5 to the Financial Statements).

We are subject to the legal proceedings and claims

discussed below as well as certain other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary

course of business.

Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and evaluates

potential losses on such litigation if the amount of the loss is estimable and the loss is probable.

However, the outcome of legal proceedings

and claims brought against the Company is subject to significant uncertainty.

Although management considers the likelihood of such an

outcome to be remote, if one or more of these legal matters were resolved against the Company for amounts in excess of management’s

expectations, the Company’s financial statements for that reporting period could be materially adversely affected.

In 2017, the Company’s former COO was awarded

approximately $238 in accrued salary and related charges by the California labor board.

In August 2021, the Company reached a settlement

by which the Company agreed to pay approximately $330, representing the principal award plus accrued interest.

As of the time of this

filing, the Company has paid approximately $292 toward the settlement amount.

The remaining balance of approximately $38 is to be

paid no later than December 31, 2023 and accrues interest of 10% per annum until paid.

Between July 2017 and March 2022, the Company

was engaged in litigation with a former director, Robert Kopple, relating to more than $13,000 and the current equivalent of the approximately

23 million warrants, exercisable for seven years at a price of $0.10 per share, which Mr.

Kopple and his affiliated entities (collectively

the “Kopple Parties”) claimed should have been originally issued to them pursuant to various agreements with the Company entered

to between 2013-2016.

In March 2022, the Company reached a settlement with the Kopple Parties that resolved all claims asserted against

the Company without any admission, concession or finding of any fault, liability or wrongdoing on the part of the Company.

Under the terms

of the settlement, the Company agreed to pay an aggregate amount of $10,000 over a period of seven years, including $3,000 initial payment

to be paid in June 2022.

$150 was paid in June 2022, and the balance of the initial payment of $2,850 was extended to August 1, 2023,

In exchange for the extension, the Company was required to pay $195 in extension and forbearance fees in cash and $530 in accrued forbearance

Beginning in January 2023, interest accrues on the unpaid balance at a rate of 6%, compounded annually.

All amounts, including all

accrued interest and deferred fees, are to be paid no later than eight years from the date of the initial payment.

The Kopple Parties

have also received seven-year warrants to purchase up to an aggregate of 3,331,664 shares of our common stock at a price of $0.85 per

The settlement also provides for standard mutual general release provisions and includes customary representations, warranties,

and covenants, including certain increases in the amount payable to the Kopple Parties and the right of such parties to enter judgment

against the Company if the Company remains in uncured default in its payment obligations under the settlement.

As of the date of this

report, the Company has not yet paid the full $3,000 installment due to Kopple, having made an initial payment of $150 in June 2022.

Company and Koppel have agreed in principle to another extension of the deadlines for payments owed by Aura to Plaintiffs and intend to

memorialize such an agreement in writing on or before October 31, 2023.

Such further amendment will also indicate that by such extension

Aura is not in default on the Binding Term Sheet (See Part I, Note 5 to the Financial Statements).On March 26, 2019, various stockholders

of the Company controlling a combined total of more than 27.5 million shares delivered a signed written consent to the Company removing

Ronald Buschur as a member of the Company’s Board and electing Cipora Lavut as a director of the Company.

On March 27, 2019,

various stockholders of the Company controlling a combined total of more than 27.5 million shares delivered a signed written consent

to the Company removing Ronald Buschur as a member of the Company’s Board and electing Cipora Lavut as a director of the Company.

On March 27, 2019, those same stockholders delivered a further signed written consent to the Company removing William Anderson and Si

Ryong Yu as members of the Company’s Board and electing Robert Lempert and David Mann as directors of the Company.

These written

consents represented a majority of the outstanding shares of the Company’s common stock as of March 26, 2019, and March 27,

2019, respectively.

Because of Aura’s refusal to recognize the legal effectiveness of the consents, on April 8, 2019, the

stockholders filed suit in the Court of Chancery of the State of Delaware pursuant to Section 225 of the Delaware General Corporations

Law, seeking an order confirming the validity of the consents and declaring that Aura’s Board consists of Ms.

those same stockholders delivered a further signed written consent to the Company removing William Anderson and Si Ryong Yu as members

of the Company’s Board and electing Robert Lempert and David Mann as directors of the Company.

These written consents represented

a majority of the outstanding shares of the Company’s common stock as of March 26, 2019, and March 27, 2019, respectively.

Because of Aura’s refusal to recognize the legal effectiveness of the consents, on April 8, 2019, the stockholders filed suit

in the Court of Chancery of the State of Delaware pursuant to Section 225 of the Delaware General Corporations Law, seeking an order

confirming the validity of the consents and declaring that Aura’s Board consists of Ms.

Douglas and Mr.

Diaz-Versón, Jr.

On July 8, 2019 the Court of Chancery entered final judgment

in favor of the stockholder plaintiffs, confirming that (a) Ronald Buschur, Si Ryong Yu and William Anderson had been validly removed

by the holders of a majority of the Company’s outstanding stock acting by written consent (b) Ms.

had been validly elected by the holders of a majority of the Company’s outstanding stock acting by written consent, and (c) the

Company’s Board of Directors validly consists of Cipora Lavut, David Mann, Robert Lempert, Gary Douglas and Salvador Diaz-Versón,

As a result of prior management’s unsuccessful opposition to this stockholders’ action filed in the Court of Chancery,

such stockholders may be potentially entitled to recoup their litigation costs from the Company under Delaware’s corporate benefit

doctrine and/or other legal provisions.

To date, no final determination has been made as to the amount of recoupment, if any, to which

such stockholders may be entitled.

In June 2022, Melvin

Gagerman, the Company’s former CEO and CFO whose employment with Aura was permanently terminated in July 2019, brought suit against

the Company for repayment of an allegedly unsecured demand promissory note in the principal amount of $82 which he claims was entered

into in April 2014 and bears interest at a rate of 10% per annum.

Despite the fact that, based on Gagerman’s allegations, the note

was issued during a period when he was the Company’s CEO, CFO, Corporate Secretary and Chairman of Aura’s Board of Directors,

Gagerman has stated that he does not possess a copy of the alleged promissory note.

The Company disputes that any amount is presently

owed to Gagerman and has filed a cross-complaint against him for, among things, conversion, violation of California Business& Professions

Code §17200, and various breaches of fiduciary duty that the Company believes Gagerman committed against Aura, including without

limitation, Gagerman’s actions in opposing the valid 2019 stockholder consent action.

In addition to

the other information set forth in this report, you should carefully consider the risk factors disclosed in Item 1A, “Risk Factors,”

of the Company’s Fiscal 2023 Annual Report on Form 10-K issued on May 26, 2023.

On July 8, 2019 the Court of Chancery entered final judgment in favor of the

stockholder plaintiffs, confirming that (a) Ronald Buschur, Si Ryong Yu and William Anderson had been validly removed by the holders of

a majority of the Company’s outstanding stock acting by written consent (b) Ms.

Lempert had been validly

elected by the holders of a majority of the Company’s outstanding stock acting by written consent, and (c) the Company’s Board

of Directors validly consists of Cipora Lavut, David Mann, Robert Lempert, Gary Douglas and Salvador Diaz-Versón, Jr.

of prior management’s unsuccessful opposition to this stockholders’ action filed in the Court of Chancery, such stockholders

may be potentially entitled to recoup their litigation costs from the Company under Delaware’s corporate benefit doctrine and/or

other legal provisions.

To date, no final determination has been made as to the amount of recoupment, if any, to which such stockholders

may be entitled.

In June 2022, Melvin Gagerman, the Company’s

former CEO and CFO whose employment with Aura was permanently terminated in July 2019, brought suit against the Company for repayment

of an allegedly unsecured demand promissory note in the principal amount of $82 which he claims was entered into in April 2014 and bears

interest at a rate of 10% per annum.

Despite the fact that, based on Gagerman’s allegations, the note was issued during a period

when he was the Company’s CEO, CFO, Corporate Secretary and Chairman of Aura’s Board of Directors, Gagerman has stated that

he does not possess a copy of the alleged promissory note.

The Company disputes that any amount is presently owed to Gagerman and has

filed a cross-complaint against him for, among things, conversion, violation of California Business& Professions Code §17200,

and various breaches of fiduciary duty that the Company believes Gagerman committed against Aura, including without limitation, Gagerman’s

actions in opposing the valid 2019 stockholder consent action.

In addition to the other information set forth

in this report, you should carefully consider the risk factors disclosed in Item 1A, “Risk Factors,” of the Company’s

Fiscal 2023 Annual Report on Form 10-K issued on May 26, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings