What changed in this filing

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Item 1. Legal Proceedings

2021-10-14 compared with 2021-07-15 · 65 added, 48 removed, 25 unchanged (82% of the section changed)

6 unchanged sentences

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.

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

In August 2021, the Company reached a settlement by which the Company agreed to pay approximately $330,000, representing the principal

award plus accrued interest.

As of the time of this filing, the Company has paid approximately $79,000 toward the settlement amount.

The remaining balance of approximately $251,000 is to be paid no later than September 1, 2022 and accrues interest of 10% per

annum until paid.

Company is presently engaged in a dispute with one of its former directors, Robert Kopple, relating to approximately $11.7 million (representing

2 unchanged sentences

Kopple claims to have advanced

or paid to third parties on Aura’s behalf;

and approximately $6.1 million Mr.

Kopple claims to be owed for interest, loan fees

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

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

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

4 unchanged sentences

Howsmon, as well as Mr.

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

In 2018, the Court sustained demurrers by Mr.

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

the Court sustained demurrers by Mr.

Diaz-Verson, Mr.

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.

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.

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’

duties to shareholders and creditors as a whole.

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.

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

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.

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 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 .

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

to which such stockholders may be entitled.

June 20, 2013, the Company entered into an agreement with two individuals, Mr.

Abdou and Mr.

Abdou, for the sale of $125,000 of

secured convertible notes payable (the “Notes”) and warrants.

In 2016, the Company and the Company’s former Chief Executive

Officer, Melvin Gagerman, were named among several other defendants in a lawsuit filed by the Messrs.

Abdou demanding repayment of loans

totaling $125,000 plus accrued interest and exemplary damages.

In January 2017, the Company entered into an agreement with all secured

creditors other than Mr.

Abdou and Mr.

In September 2018 the court entered a judgment of approximately $235,000 plus legal

fees in favor of the Messrs.

The Company subsequently appealed this judgment and, in September 2019, reached a settlement agreement

with the Messrs.

Abdou to implement a payment plan in accordance with the 2018 judgment.

As of August 31, 2021 the outstanding balance

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 July 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