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Item 3. Legal Proceedings

2021-03-11 compared with 2020-03-30 · 46 added, 26 removed, 17 unchanged (81% of the section changed)

Legal Proceedings

From time to time, we may become involved in various legal proceedings, including those that may arise in the ordinary course of business.

Although the outcomes of these legal proceedings cannot be predicted with certainty, other than as set forth below, we are not subject to any material legal proceedings.

On July 8, 2019 and August 1, 2019, purported stockholders of our company served putative class action lawsuits in the Superior Court of New Jersey for Somerset County, captioned Paul Kuehl vs.

electroCore, Inc., et al.

electroCore, Inc., et al., Docket No.

SOM-L 000876-19 and Shirley Stone vs.

electroCore, Inc., et al.

electroCore, Inc., et al., Docket No.

SOM-L 001007-19, respectively.

In addition to our company, the defendants include present and past directors and officers, Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities LLC and BTIG, LLC, the underwriters for our IPO;

In addition to our company, the defendants included present and past directors and officers, Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities LLC and BTIG, LLC, the underwriters for our IPO;

and two of our stockholders.

On August 15, 2019, the Superior Court entered an order consolidating the Kuehl and Stone actions, which are proceeding under Docket No.

On August 15, 2019, the Superior Court entered an order consolidating the Kuehl and Stone actions, which proceeded under Docket No.

SOM-L 000876-19.

3 unchanged sentences

The complaint sought unspecified compensatory damages, interest, costs and attorneys’ fees.

On October 31, 2019, we filed a motion to dismiss the complaint or in the alternative to stay the action in favor of the pending federal action (discussed below).

On February 21, 2020 the

court granted the defendants’ motion to dismiss the consolidated amended complaint with prejudice.

On October 31, 2019, the Company and the other defendants filed a motion to dismiss the complaint or in the alternative to stay the action in favor of the pending federal action (discussed below).

On February 21, 2020 the court granted the defendants’ motion to dismiss the consolidated amended complaint with prejudice.

On March 2, 2020 the court entered an amended order dismissing the consolidated amended complaint with prejudice.

On Marc h 27, 2020, the plaintiffs filed a notice of appeal with the N.J.

Superior Court – Ap p ellate Division.

On March 27, 2020, the plaintiffs filed a notice of appeal with the N.J.

Superior Court - Appellate Division.

The appeal was fully briefed as of July 17, 2020.

The date for argument of the appeal has not yet been set.

On September 26, 2019 and October 31, 2019, purported stockholders of our company served putative class action lawsuits in the United States District Court for the District of New Jersey captioned Allyn Turnofsky vs.

electroCore, Inc., et al.

, Case 3:19-cv-18400, and Priewe vs.

electroCore, Inc., et al.

, Case 1:19-cv-19653, respectively.

electroCore, Inc., et al., Case 3:19-cv-18400, and Priewe vs.

electroCore, Inc., et al., Case 1:19-cv-19653, respectively.

In addition to our company, the defendants include present and past directors and officers, and Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities LLC and BTIG, LLC, the underwriters for our IPO.

The plaintiffs each seek to represent a class of stockholders who (i) purchased our common stock in our IPO or whose purchases are traceable to the IPO, or (ii) who purchased common stock between the IPO and September 25, 2019.

The complaints each allege that the defendants violated Sections 11 and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act, with respect to (i) the registration statement and related prospectus for the IPO, and (ii) certain post-IPO disclosures filed with the SEC.

The complaints seek unspecified compensatory damages, interest, costs and attorneys’ fees.

In the Turnofsky case, several plaintiffs and their counsel are engaged in motion practice to select a lead plaintiff and lead plaintiff’s counsel.

Briefing is complete on the motions, but the court has not yet ruled.

On February 19, 2020, the Priewe case was voluntarily dismissed.

The complaints each alleged that the defendants violated Sections 11 and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act, with respect to (i) the registration statement and related prospectus for the IPO, and (ii) certain post-IPO disclosures filed with the SEC.

The complaints sought unspecified compensatory damages, interest, costs and attorneys’ fees.

In the Turnofsky case, on November 25, 2019, several plaintiffs and their counsel moved to be selected as lead plaintiff and lead plaintiff’s counsel.

On April 24, 2020, the Court granted the motion of Carole Tibbs and the firm Bragar, Eagel & Squire, P.C.

On July 17, 2020 the plaintiffs filed an amended complaint in Turnofsky.

In addition to the prior claims, the amended complaint adds an additional director defendant and two investors as defendants, adds a claim against the Company and the underwriters for violating Section 12(a)(2) of the Securities Act.

On September 15, 2020, the Company and the other defendants filed a motion to dismiss the amended complaint for failure to state a claim.

On November 6, 2020, the plaintiffs filed their opposition to the motion to dismiss.

The Company and the other defendants filed reply papers in support of the motion on December 7, 2020.

Argument on the motion to dismiss has not yet been scheduled.

The parties have agreed to a non-binding mediation with JAMS, which will occur on March 30, 2021.

The Priewe case was voluntarily dismissed on February 19, 2020.

On March 4, 2021, purported stockholder Richard Martz brought a purported stockholder derivative action in the United States District Court for the District of New Jersey.

The action is captioned Richard Maltz, derivatively on behalf of electroCore, Inc., vs.

Amato, et al., Case 3:21-cv-04135.

The defendants include present and past directors and officers of the Company.

The plaintiff purports to pursue derivative claims on behalf of the Company in connection with the IPO and actions occurring between the IPO and September 25, 2019.

The complaint alleges that demand on the board of directors is excused.

The complaint purports to allege claims against the defendants for violating Section 14(a) of the Exchange Act, breaching fiduciary duties, unjust enrichment and waste of corporate assets.

The complaint also purports to allege claims for contribution in connection with the Turnofsky case described above, pursuant to Section 11(f) of the Securities Act and Sections 10(b) and 21D of the Exchange Act.

The complaint seeks unspecified compensatory damages, interest, costs and attorneys’ fees;

declaratory relief;

and an order requiring changes to corporate governance and internal procedures and a vote on proposed amendments to the Bylaws and Certificate of Incorporation.

On March 8, 2021, purported stockholder Erin Yuson brought a purported stockholder derivative action in the United States District Court for the District of New Jersey.

The action is captioned Erwin Yuson, derivatively on behalf of electroCore, Inc., vs.

Amato, et al., Case 3:21-cv-04481.

The defendants include present and past directors and officers of the Company.

The plaintiff purports to pursue derivative claims on behalf of the Company in connection with a 2019 proxy statement and actions occurring from the IPO through September 25, 2019.

The complaint alleges that demand on the board of directors is excused.

The complaint purports to allege claims against the defendants for violating Section 14(a) of the Exchange Act and breaching fiduciary duties.

The complaint seeks unspecified compensatory damages, interest, costs and attorneys’ fees;

declaratory relief;

and an order requiring changes to corporate governance and internal procedures and a vote on proposed amendments to the Bylaws and Certificate of Incorporation.

We intend to continue to vigorously defend ourselves in these matters.

1 unchanged sentence

Accordingly, we have not established an accrual for potential losses, if any, that could result from any unfavorable outcome, and there can be no assurance that these litigation matters will not result in substantial defense costs and/or judgments or settlements that could adversely affect our financial condition.

In January 2019, we settled a dispute with one of our former advisors, Madison Global Partners, who had filed a complaint against us in the Supreme Court of the State of New York, County of New York (Index No.

652329/2018) as previously reported.

As part of that settlement, we paid Madison Global $325,000 and issued to Madison Global and its representatives warrants to purchase in the aggregate 62,181 shares of our common stock at prices ranging from $5.68 per share to $12.60 per share.

Substantially all such amounts were accrued in prior accounting periods.

(See Note 20 “Commitments and Contingencies” of the notes to our consolidated financial statements in this Annual Report.

Mine S afety Disclosures

Mine Safety Disclosures

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