What changed in this filing

/stocks — the workspaceLOADING

Item 3. Legal Proceedings

2023-05-26 compared with 2022-06-21 · 76 added, 82 removed, 5 unchanged (97% 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.

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.

In 2017, the Company’s former COO was

awarded approximately $238,000 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 $330,000, representing the principal award plus accrued

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.

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

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.

In 2017, the Company’s

former COO was awarded approximately $238,000 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 $330,000, representing the principal award plus accrued

As of the time of this filing, the Company has paid approximately $271,600 toward the settlement amount.

The remaining

balance of approximately $221,600 is to be paid no later than September 1, 2022, and accrues interest of 10% per annum

Since July 2017 the Company has been engaged in

litigation with a former director, Robert Kopple, relating to more than $13 million 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 resolves 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, we have agreed to pay an aggregate amount of $10 million over a period of seven years;

$3 million of which is to be

paid on or before June 8, 2022, after which, interest will accrue on the unpaid balance at a rate of 6%, compounded annually.

including all accrued interest, 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 approximately 3.3 million 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 June 8, 2022 and

the date of this report, the Company has not yet paid the $3,000,000 installment due to Kopple.

Pursuant to the agreement, the Company

has 60 days to cure the nonpayment of the $3,000,000 default.

(See Part IV, Item 15, Note 19 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, 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.

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.

The remaining balance

of approximately $58,400 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 million 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 million over a period

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

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

payment of $2.85 million was extended to May 29, 2023, In exchange for the extension, the Company was required to pay $165,000 in extension

and forbearance fees in cash and $430,000 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 approximately 3.3 million 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 $3,000,000 installment

due to Kopple, having made an initial payment of $150,000 in June 2022.

(See Part IV, Item 15, Note 9 and Note 17 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.

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.

On 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

In January 2017, the Company entered into an agreement with all secured creditors other than Mr.

Abdou and Mr.

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 February 28, 2022 the outstanding principal balance was zero and remaining interest was approximately $18,000.

of the date of this filing, all amounts have been paid and no principal or interest remains outstanding.

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.

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 $82,000 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.

MINE SAFETY DISCLOSURES

1 unchanged sentence

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-K

Item 3. Legal Proceedings