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Subsequent Events
3 Months Ended
May 31, 2015
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 14 – SUBSEQUENT EVENTS:

 

On January 24, 2017 the Company entered into a Debt Refinancing Agreement with Mr. Breslow, a Director of the Company. Pursuant to the agreement, both Mr. Breslow and the Company acknowledged that total debt owed to Mr. Breslow was $23,872,614 including $8,890,574 of accrued interest. Mr. Breslow agreed to cancel and forgive all interest due, waive all events of default and sign a new five year convertible note in the amount of $14,930,041 providing for no interest for six months and interest of 5% per annum thereafter payable monthly in arrears. The note also provides various default provisions. The agreement further provides that $11,982,041 of the note will be converted into 7,403,705 shares of common stock concurrent with the stockholders approving a 1 for 7 reverse stock split within one year of entering this agreement and the remaining may be converted at any time thereafter post reverse split. In the absence of the approval within one year, this agreement will become null and void. The Company has elected to continue to accrue interest on this agreement until such time as the 1 for 7 reverse stock split has been approved.

 

On January 30, 2017, the Company entered into an agreement with five of our secured creditors (the “Secured Creditors”), pursuant to which a Securities Purchase Agreement dated May 6, 2013 (the “2013 Purchase Agreement”) among the Company, the Secured Creditors, and two other parties was amended (the “Amended Agreement”). As part of the 2013 transaction, we entered into a security agreement with the Secured Creditors and two other parties (collectively the “Buyers”) pursuant to which the Buyers were granted a security interest in all of Company’s assets except for its patents and other intellectual properties. The Secured Creditors have the right to amend the 2013 Purchase Agreement on behalf of all Buyers. The Amended Agreement amends the 2013 Purchase Agreement and the original security agreement, replaces the convertible notes with “Amended Notes” and replaces the warrants with “Amended Warrants.” The Amended Notes provide that all accrued and unpaid interest on the original notes through October 31, 2016 be added to the principal amount of the Amended Notes. The Amended Notes bear interest at the rate of 0% until May 1, 2017 and 5% per annum thereafter, subject to reduction to comply with applicable law, and mature in 60 months from the effective date of a 1 for 7 reverse stock split. Upon certain financings, the Company is obligated to make a payment to the holders of the Amended Notes in the amount of 20% of the outstanding Notes. Immediately upon the effectiveness of a 1 for 7 reverse stock split, 80% of the then-unpaid principal of and all of the then accrued but unpaid interest on the Amended Notes is automatically converted. In addition, the Amended Agreement waives any and all events of default under the 2013 Purchase Agreement and related transaction documents existing on or prior to January 30, 2017 and amends the defaults and remedies section of the 2013 Purchase Agreement. Two Buyers, who together represent less than 3% of the Company’s common stock issuable upon conversion of the original notes and exercise of the original warrants, did not sign the amendment and have named the Company and the Company’s Chief Executive Officer among several defendants in a lawsuit demanding repayment of loans totaling $125,000 plus accrued interest and exemplary damages. Management believes that the two plaintiffs have no valid claim against the Company or our Chief Executive Officer. In March 2017, plaintiffs moved for partial summary adjudication against the Company and our Chief Executive Officer; however, the Court denied plaintiffs’ motion. Both the Company and Mr. Gagerman have filed demurrers seeking dismissal of this action, which remain pending at this time.

 

On January 27, 2017, the Company entered into a joint venture (JV) agreement with a Chinese company to manufacture, market and distribute certain mobile power products based on Aura's patented technology solely for the Peoples Republic of China territories. The JV will be owned 49% by the Company and 51% by the Chinese company who will also contribute $9,750,000 to the JV. The Company is required to contribute $250,000 and a license to specific technology. In addition, the Chinese company will invest $2,000,000 in Aura at $0.20 per share for a total of 10,000,000 shares of common stock and purchase a minimum of $1,250,000 of product supported by letters of credit for distribution until the JV factory is built, equipped, and staffed. Aura has also committed to supply training and technical personnel to the JV for six months at no cost other than reimbursement for travel, room and board. The agreement was subject to the approval of the Chinese Government which was received in April, 2017.

 

The Company is presently engaged in a dispute with one of its directors, Robert Kopple, relating to approximately $5.4 million and approximately 22 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 Directors Mr. Gagerman and Mr. Diaz-Verson together with former Directors Mr. Breslow and Mr. Howsmon in connection with these allegations. The Company believes that it has valid defenses in these matters and intends to vigorously defend against these claims.