Notes payable-related parties consisted of the following:

(a) Note payable-Kopple

In fiscals 2013 through 2018, the Company issued notes payable to Robert Kopple and associated entities (collectively “Kopple”) in the aggregate of $6,107. Beginning in 2017, Kopple brought suit against the Company for repayment of the notes. On March 14, 2022, the Company reached an agreement with Kopple to resolve all remaining litigation between them, including all amounts owed to Kopple under the notes. Under the terms of the settlement, the Company agreed to issue a new note and pay Kopple an aggregate amount of $10,000 to be paid in installments, of which, $3,000 was due in June 2022, and the remaining $7,000 to be paid over seven years at $1,000 per year. Additionally, the settlement agreement granted Kopple warrants exercisable into 3,331,664 shares of the Company’s common stock at a price of $0.85 per share.

In June 2022, the first installment of $3,000 became due, of which only $150 was paid. Subsequently, the note was amended several times to extend the payment date of the remaining balance of $2,850 of the initial payment, and the Company incurred extension and forbearance fees totaling $335 that was recorded as part of interest expense. In January 2023, pursuant to the terms of the amended note payable, the Company started accruing interest on the outstanding note balance at a rate of 6% per annum, compounded annually. As of February 29, 2024, the outstanding principal balance amounted to $10,915. 

In March 2024, the Company and Kopple again amended the note payable and the Company accounted for the amended terms of the note payable as a debt extinguishment and the net carrying amount of the existing note payable and accrued interest of $12,164 was derecognized, and the amended note payable is now classified as a convertible note payable-related party (see Note 7).

(b) Note payable-Gagerman

Melvin Gagerman, the Company’s former CEO and CFO whose employment was permanently terminated in July 2019, claimed that in April 2014 the Company issued an unsecured demand promissory note to him in the amount of $82 that bears interest at a rate of 10% per annum. Gagerman claimed that this note has not been repaid. In June 2022, Gagerman brought suit against the Company for repayment of this alleged note. Although the Company disputed Gagerman’s claims, under the guidance of ASC 450 – Contingencies, the Company had recorded the claimed note payable $82 and corresponding accrued interest.

On October 1, 2024, the Company and Gagerman agreed to a settlement. As part of the settlement, Gagerman released any and all claims against the Company, including those related to the note payable of $82 and corresponding accrued interest. As a result, the Company recorded a gain on debt settlement of $179 for the year ended February 28, 2025, representing the derecognition of the note payable balance of $82 and the corresponding accrued interest balance of $97. 

(c) Jiangsu Shengfeng Note

On November 20, 2019, the Company owned 49% of a Chinese joint venture named Jiangsu Shengfeng. The Joint venture advanced Aura $700 in prior years for products that the Company failed to deliver to the joint venture. The Company reached an agreement with the joint venture regarding the return of $700 that had been advanced to the Company in prior years provided the joint venture remains as an operating company. As a result, in November 2019, the Company issued a non-interest-bearing promissory note for $700 to the joint venture to be paid over an 11-month period beginning March 15, 2020, through February 15, 2021. The joint venture stopped operations in 2020 as a result of COVID-19 and never resumed or restarted operations. In early fiscal 2024 the joint venture was dissolved and liquidated without filing any demands or claims for payments. As of February 28, 2025 and February 29, 2024, the outstanding balance of this note payable amounted to $733.