electroCore, Inc. Commitments Disclosure

Note 16. Commitments and Contingencies

 

The Company may be a party to various legal proceedings and claims arising out of the ordinary course of its business. Although the final results of all such matters and claims cannot be predicted with certainty, the Company currently believes that there are no current proceedings or claims pending against it the ultimate resolution of which would have a material adverse effect on its financial condition or results of operations. However, should the Company fail to prevail in any legal matter, including the Pulsetto litigation referenced in “Note 17 – Legal Proceedings”, or should several legal matters be resolved against the Company in the same reporting period, such matters could have a material adverse effect on the Company’s operating results and cash flows for that particular period. In all cases, at each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, “Contingencies.” Legal costs are expensed as incurred.

 

 

ELECTROCORE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — Continued

 

Purchase Commitments

 

The Company enters into contracts in the normal course of business with contract research organizations for its clinical trials, contract manufacturing organizations for the manufacture and supply of its clinical and commercial product needs and other vendors for other research and development and commercial activities, as well as services and products for operating purposes. The Company’s agreements generally provide for termination with notice. Such agreements that are cancelable contracts are not included as purchase commitments. The Company has included as purchase obligations its commitments under agreements to the extent they are quantifiable and are not cancelable. The Company has no material purchase obligations as of December 31, 2025.

 

2025 CVR Agreement

 

On May 1, 2025 (the “NURO Closing Date”), the Company completed its previously announced acquisition of NURO (following consummation of the Merger, the “Surviving Corporation”), pursuant to the terms of the Agreement and Plan of Merger dated as of December 17, 2024 (the “Merger Agreement”) by and among the Company, NURO, and Nexus Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”).

 

Pursuant to the Merger Agreement, on the NURO Closing Date, Merger Sub merged with and into NURO, with NURO surviving as a wholly-owned subsidiary of the Company (the “Merger”).

 

Immediately prior to the effective time (the “Effective Time”) of the Merger, the Company entered into a contingent value rights agreement (the “CVR Agreement”) with a rights agent (the “Rights Agent”), pursuant to which the holders (each, a “Holder”) of (i) shares of common stock, par value $0.0001 per share, of NURO (the “NURO Common Stock”) outstanding immediately prior to the Effective Time, (ii) outstanding awards of restricted stock with respect to shares of NURO Common Stock, outstanding at the Effective Time, (iii) NURO restricted stock units outstanding at the Effective Time, (iv) all issued and outstanding shares of NURO’s preferred stock, par value $0.001 per share, outstanding at the Effective Time, and (v) each stock option granted by NURO to purchase NURO Common Stock, outstanding immediately prior to the Effective Time, may become entitled to contingent cash payments (each, a “Contingent Payment”) that net of certain transaction expenses, will equal (1) 8% of the Quell Net Sales (as defined in the CVR Agreement) during the first 12-month period after the NURO Closing Date, in an amount up to $500,000 (the “First Quell Net Sales Payment”), but if 8% of the Quell Net Sales during such period is less than $25,000, the First Quell Net Sales Payment shall be zero; (2) 6% of the Quell Net Sales during the second 12-month period after the NURO Closing Date, an amount up to $500,000 minus the amount of the First Quell Net Sales Payment (the “Second Quell Net Sales Payment”), but if 6% of the Quell Net Sales during such second period is less than $25,000, the Second Quell Net Sales Payment shall be zero; (3) the amounts received by the Company after the Effective Time pursuant to any Disposition Agreement (as defined in the CVR Agreement) signed prior to the Effective Time with respect to the disposition of NURO’s DPNCheck® Business; (4) an amount equal to $125,000 less any funds used by the Company as of July 1, 2025 out of a reserve of $250,000 for payment of potential expenses of the Company that were reserved against NURO’s net cash balance (as determined pursuant to the Merger Agreement); and (5) the balance of the funds remaining in the reserve as of May 1, 2027.

 

In October 2025, after giving effect to a deduction for certain transaction expenses of the Rights Agent, the Company distributed approximately $0.105 per contingent value right to the former holders of common stock of NURO, representing an aggregate distribution of approximately $221,000. In addition, the Company distributed approximately $22,000 to the former holders of NURO restricted stock units and participants in the NURO’s management incentive rights plan, in accordance with the terms of the CVR Agreement.

 

Under the CVR Agreement, the Rights Agent has, and Holders of at least 20% of the CVRs then-outstanding have, certain rights to audit and enforcement on behalf of all Holders of the CVRs. The Company shall cause NURO to use commercially reasonable efforts to consummate transactions contemplated by any Disposition Agreement, as such efforts are further described in the CVR Agreement.

 

 

ELECTROCORE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — Continued

 

The CVR Agreement has a term commencing on the Effective Date and ending on the earlier of (a) December 31 of the calendar year in which Company shall have caused to be paid to the Holders pursuant to the terms of the CVR Agreement all Distributions (as defined in the CVR Agreement) with respect to all payments (including any contingent payments) contemplated to be made by the applicable buyer pursuant to any Disposition Agreement, and (b) December 31, 2030.

 

See “Note 18 – Acquisitions” for additional information about the Merger.