What changed in this filing

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Item 1. Legal Proceedings

2021-07-15 compared with 2021-01-19 · 61 added, 75 removed, 12 unchanged (92% of the section changed)

Legal Proceedings

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.

2017, the Company’s former COO was awarded approximately $238,000 in accrued salary and related charges by the California

The Company believes that this award does not reflect the amount owed which is significantly lower and is exploring

all its options and available remedies and is working toward an offer to settle this matter.

Company is presently engaged in a dispute with one of its former directors, Robert Kopple, relating to approximately $10.9 million

(representing approximately $5.4 million loaned to the Company over the course of 2013 to 2016;

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

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.

The Company settled certain matters subsequent to year end that did not individually or in the

aggregate have a material impact on the Company’s financial condition or operating results.

2017, the Company’s former COO was awarded approximately $238,000 in accrued salary and related charges by the California labor

The Company believes that this award does not reflect the amount owed which is significantly lower and is exploring all its options

and available remedies and is working toward an offer to settle this matter.

Company is presently engaged in a dispute with one of its former directors, Robert Kopple, relating to approximately $11.5 million (representing

approximately $5.4 million loaned to the Company over the course of 2013 to 2016;

approximately $170,000 Mr.

claims to have advanced or paid to third parties on Aura’s behalf;

Kopple claims to have advanced

or paid to third parties on Aura’s behalf;

and approximately $5.9 million Mr.

Kopple claims to be

owed for interest, loan fees and late payment charges) and approximately 3.33 million warrants which Mr.

Kopple claims to be owed

to him and his affiliates by the Company.

Kopple claims to be owed for interest, loan fees

and late payment feess) and approximately 3.33 million warrants which Mr.

Kopple claims to be owed to him and his affiliates by the Company.

In July 2017, Mr.

Kopple filed suit against the Company as well as against current director

Kopple filed suit against the Company as well as against current director Mr.

Diaz-Verson and former directors Mr.

1 unchanged sentence

Howsmon, as well as Mr.

Gagerman, our former CEO and a former director,

in connection with these allegations.

our former CEO and a former director in connection with these allegations.

In 2018, the Court sustained demurrers by Mr.

Diaz-Verson, Mr.

Gagerman and as a result of these successful demurrers;

all four of these defendants have been dismissed from the suit.

the Company believes that it has certain valid defenses in these matters, the Company is currently in settlement discussions with

Howsmon and Mr.

Gagerman, and as a result of these successful demurrers, all four of these defendants have been dismissed

from the suit.

While the Company believes that it has certain valid defenses in these matters, the Company is currently in settlement

discussions with Mr.

However, to-date, no settlement has been reached in large part because Mr.

Kopple continues to demand that as

part of any such settlement, he receive unilateral control over significant aspects of the Company’s financial and management

functions such as, but not limited to, the right to unilaterally direct the Company’s ordinary business expenditures and

requiring the Company to seek his approval for the hiring of nearly all personnel, all to the exclusion of the Company’s

management team and stockholder-elected Board of Directors.

Kopple continues to demand

that as part of any such settlement, he receive unilateral control over significant aspects of the Company’s financial and management

functions such as, but not limited to, the right to unilaterally direct the Company’s ordinary business expenditures and requiring

the Company to seek his approval for the hiring of nearly all personnel, all to the exclusion of the Company’s management team

and stockholder-elected Board of Directors.

The Company believes that allowing Mr.

Kopple such level of operational

control over the Company without any accountability would be highly detrimental to the Company and is incompatible with the Board

of Directors’

Kopple such level of operational control over the

Company without any accountability would be highly detrimental to the Company and is incompatible with the Board of Directors’

duties to shareholders and creditors as a whole.

May 2018, Shelley Scholnick dba JB Transporters brought suit against the Company claiming ongoing fees in excess of $52,000 owed

for the storage of the Company’s property.

Notably, in June 2017, the Company had brought suit against J.B.

Delivery, a business operated and controlled by a relative of Scholnick, Jacob Binstok, for damages suffered by the Company as

a result of the defendant’s improper storage of the Company’s property and improper refusal to return such property.

In 2018, the Company successfully received a judgment against J.B.

Moving & Delivery in the amount of approximately $114,000.

In April 2020, Aura and Scholnick entered into a Confidential Settlement and Release Agreement wherein (i) the 2018 action initiated

by Scholnick against Aura was resolved with no amounts owing by Aura and the complaint and cross-complaint were subsequently dismissed

with prejudice;

and (ii) the amount owing to Aura pursuant to the judgment against J.B.

Moving and Delivery was compromised and

resolved through a single lump-sum payment to Aura.

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, 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.

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, 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.

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.

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.

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

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

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 2020 Annual Report on Form 10-K issued on July 13, 2020.

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.

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.

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 2021 Annual Report on Form 10-K issued on June 1, 2021 .

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