UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| (Mark One) | ||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
FOR
THE QUARTERLY PERIOD ENDED
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
Commission
File Number
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
| ☒ | Smaller reporting company | ||||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
As of August 5, 2025, the registrant had shares of common stock outstanding.
| 2 |
REFERENCES TO ELECTROCORE
In this Quarterly Report on Form 10-Q (this “Quarterly Report”), unless otherwise stated or the context otherwise requires, references to the “Company,” “electroCore,” “we,” “us” and “our” refer to electroCore, Inc. a Delaware corporation and its subsidiaries.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. The statements contained in this Quarterly Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to them. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to risks and uncertainties included in our Form 10-Qs, our annual report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”), in our other filings with the U.S. Securities and Exchange Commission (the “SEC”) or in materials incorporated by reference therein, including the information in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in such filings. Furthermore, any such forward-looking statements in this Quarterly Report speak only as of the date of this Quarterly Report. Except as required by law, we undertake no obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of such statements.
The electroCore logo, gammaCore, Truvaga, TAC-STIM, NeuroMetrix, Quell, names, logos, and other trademarks of electroCore, Inc. appearing in this Quarterly Report are the property of electroCore, Inc. All other trademarks, service marks and trade names in this Quarterly Report are the property of their respective owners. We have omitted the ® and ™ designations, as applicable, for the trademarks used in this Quarterly Report.
| 3 |
ELECTROCORE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands, except share data)
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Marketable securities | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right of use assets, net | ||||||||
| Other assets, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Noncurrent liabilities: | ||||||||
| Operating lease liabilities, noncurrent | ||||||||
| Total liabilities | ||||||||
| Contingencies (see Note 14) | ||||||||
| Stockholders’ equity: | ||||||||
| Common Stock, par value $ per share; shares authorized at June 30, 2025 and December 31, 2024; shares issued and outstanding at June 30, 2025 and shares issued and outstanding at December 31, 2024 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ( | ) | ||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 4 |
ELECTROCORE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (income) expense | ||||||||||||||||
| Interest and other income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expense | ||||||||||||||||
| Total other expense (income) | ( | ) | ||||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Benefit from income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share of common stock – Basic and Diluted | ) | ) | ) | ) | ||||||||||||
| Weighted average common shares outstanding – Basic and Diluted (see Note 12) | ||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 5 |
ELECTROCORE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
(unaudited)
(in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive (loss) income: | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||
| Other comprehensive (loss) income | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 6 |
ELECTROCORE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Equity
For the Six Months Ended June 30, 2025 and 2024
(unaudited)
(in thousands)
| Stockholders’ Equity | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
Common Stock | Additional paid-in | Accumulated | other comprehensive | Total stockholders’ | ||||||||||||||||||||
| Shares | Amount | capital | deficit | income (loss) | equity | |||||||||||||||||||
| Balances as of January 1, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive income | — | ( | ) | ( | ) | |||||||||||||||||||
| Sale of common stock | ||||||||||||||||||||||||
| Financing fees | — | ( | ) | ( | ) | |||||||||||||||||||
| Proceeds from the exercise of warrants | ||||||||||||||||||||||||
| Issuance of stock related to employee compensation, net | ||||||||||||||||||||||||
| Share based compensation | — | |||||||||||||||||||||||
| Balances as of March 31, 2025 | $ | $ | ( | ) | $ | $ | ||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive income | — | ( | ) | ( | ) | |||||||||||||||||||
| Options exercised | ||||||||||||||||||||||||
| Financing fees | — | ( | ) | ( | ) | |||||||||||||||||||
| Issuance of stock related to employee compensation, net | ||||||||||||||||||||||||
| Share based compensation | — | |||||||||||||||||||||||
| Balances as of June 30, 2025 | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Balances as of January 1, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive income | — | |||||||||||||||||||||||
| Issuance of stock related to employee compensation plan, net of forfeitures | ||||||||||||||||||||||||
| Share based compensation | — | |||||||||||||||||||||||
| Balances as of March 31, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive income | — | |||||||||||||||||||||||
| Sale of common stock and warrants | ||||||||||||||||||||||||
| Financing Fees | — | ( | ) | ( | ) | |||||||||||||||||||
| Issuance of stock related to employee compensation plan, net of forfeitures | ||||||||||||||||||||||||
| Share based compensation | — | |||||||||||||||||||||||
| Balances as of June 30, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 7 |
ELECTROCORE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
| Six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of right of use assets | ||||||||
| Amortization of operating lease liability | ||||||||
| Increase (decrease) in provision for credit losses | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued expenses and other current liabilities | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Sale (purchase) of marketable securities | ( | ) | ||||||
| Purchase of equipment | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Sale of common stock and warrants | ||||||||
| Financing fees | ( | ) | ( | ) | ||||
| Proceeds from the exercise of options | ||||||||
| Proceeds from exercise of warrants | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of changes in exchange rates on cash and cash equivalents | ||||||||
| Net decrease in cash and cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents, and restricted cash – beginning of period | ||||||||
| Cash, cash equivalents, and restricted cash – end of period | $ | $ | ||||||
| Supplemental cash flows disclosures: | ||||||||
| Proceeds from sale of state net operating losses | $ | |||||||
| Interest paid | $ | $ | ||||||
| Supplemental schedule of noncash activity: | ||||||||
| Accounts payable paid through issuance of common stock and warrants | $ | $ | ||||||
| Right-of-use asset and liability | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 8 |
ELECTROCORE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
Note 1. The Company
electroCore, Inc. and its subsidiaries (“electroCore” or the “Company”) is a commercial stage bioelectronic technology company whose mission is to improve health and quality of life through innovative non-invasive bioelectronic technologies.
electroCore,
headquartered in Rockaway, NJ, has
Note 2. Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying condensed consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. In the opinion of management, the Company has made all necessary adjustments, which include normal recurring adjustments necessary for a fair presentation of the Company’s condensed consolidated financial position and results of operations for the interim periods presented. Certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 12, 2025. The results for the three and six months ended June 30, 2025, are not necessarily indicative of the results to be expected for a full year, any other interim periods or any future year or period.
(b) Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of electroCore and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
(c) Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include revenue, licensed products and loss contingencies.
(d) Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash to the balance reflected on the Condensed Consolidated Statement of Cash Flows at June 30, 2025 and December 31, 2024:
| (in thousands) | June 30, 2025 | December 31, 2024 | ||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | ||||||
As of June 30, 2025, cash equivalents represented funds held in an interest-bearing demand deposit account, U.S. treasury bills, and a money market account.
The Company’s restricted cash consists of cash that the Company is contractually obligated to maintain in accordance with the terms of its corporate credit card arrangement with Citibank, N.A.
(e) Marketable Securities
Marketable
securities are carried at fair value, with unrealized gains and losses reported as accumulated other comprehensive income, except for
losses from impairments which are determined to be other than temporary. Realized gains and losses and declines in value judged to be
other-than-temporary are included in the determination of net loss and are included in interest and other income net. Fair values are
based on quoted market prices at the reporting date. Interest and dividends on available-for-sale securities are included in Interest
and other income. As of June 30, 2025, marketable securities amounted to $
| 9 |
ELECTROCORE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
(f) Recent Accounting Standards Pronouncements
In December 2023, the FASB issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures which will require companies to make additional income tax disclosures. The pronouncement is effective for annual filings for the year ended December 31, 2025. The Company is still assessing the impact of the adoption of this standard but does not expect it to have a material impact on its results of operations, financial position or cash flows.
On November 2024, the FASB issued Accounting Standards Update (ASU) No. 2024-03, Income Statement (Topic 220): Reporting Comprehensive Income - Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses, which requires public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the financial statements. The amendments in this pronouncement will be effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. The Company is currently assessing the potential impacts of adoption on its consolidated financial statements and related disclosures.
Note 3. Liquidity, Significant Risks and Uncertainties
Liquidity
The
Company has experienced significant net losses, and it expects to continue to incur net losses for the near future as it works to
increase market acceptance of its prescription (Rx) products and general wellness and human performance products. The Company has
never been profitable and has incurred net losses and negative cash used in operations each year since its inception. The Company
incurred net losses of $
The
Company has historically funded its operations from the sale of its securities. During the six months ended June 30, 2025, the Company
received net proceeds of approximately $
On
July 24, 2025, our Form S-3 registration statement (File No. 333-284477), or the 2025 Shelf Registration Statement, was declared effective
by the SEC. The 2025 Shelf Registration Statement relates to the potential offering and issuance from time to time of common stock, preferred
stock, warrants, rights, debt securities and units, up to an aggregate amount of $
On
November 29, 2024, we entered into an At The Market Offering Agreement (the “Sales Agreement”) with H.C. Wainwright &
Co., LLC (“Wainwright”), whereby the Company may offer and sell shares of its common stock from time to time having an aggregate
offering price of up to $
On August 4, 2025 (the “LSA Closing Date”), we, and our wholly
owned subsidiary, NURO, each as borrowers, entered into a Loan and Security Agreement (the “Loan and Security Agreement”),
with Avenue Venture Opportunities Fund II, L.P. (“Avenue”), as administrative agent and collateral agent, and as lender, that
is secured by a lien on substantially all of our assets, including a negative pledge on intellectual property, subject to limited exceptions,
pursuant to the Loan and Security Agreement. The Loan and Security Agreement provides for term loans in an aggregate principal amount
of up to $
In the second half of 2025, we intend to continue to make targeted investments in sales and marketing to continue driving commercial activities. We have historically funded our operations from the sale of our common stock, and most recently the convertible debt financing with Avenue, and may continue to do so through utilization of the at-the-market facility or other equity or debt transactions if needed. As of the date of this Quarterly Report, the Company had approximately $ million of common stock remaining available for issuance under the Sales Agreement pursuant to the 2025 Shelf Registration Statement.
The Company’s expected cash requirements for the next 12 months from the date these financial statements are issued and beyond are largely based on the commercial success of its products. Based on its current assessment, the Company believes its cash, cash equivalents, restricted cash, and marketable securities, plus the net proceeds from and expected cash flow from operations and access to capital through use of the ATM and Tranche 2 of the Term Loan, will enable it to fund its operating expenses and capital expenditure requirements, as currently planned, for at least the next 12 months from the date the accompanying financial statements are issued. There remain significant risks and uncertainties regarding the Company’s business, financial condition and results of operations. The Company’s future capital requirements are difficult to forecast and will depend on many factors that are out of its control. If the Company is unable to achieve its planned operating results or maintain sufficient financial resources, including through potential positive cash flow from operations or supplemental access to third-party debt, equity or hybrid capital, its business, financial condition and results of operations may be materially and adversely affected.
Concentration of Revenue Risks
The
Company earns a significant amount of its revenue in the United States from the United States Department of Veterans Affairs and United
State Department of Defense, or VA, pursuant to its qualifying contract under the Federal Supply Schedule, or FSS, and open market sales
to individual VA facilities. For the three months ended June 30, 2025 and 2024, sales to the VA accounted for
For
the three and six months ended June 30, 2025 and 2024, Lovell Government Services, or Lovell, accounted
for more than
Foreign Currency Exchange
The Company has foreign currency exchange risks related to revenue and operating expenses in currencies other than the local currencies in which it operates. The Company is exposed to currency risk from the potential changes in the functional currency values of its assets, liabilities, and cash flows denominated in foreign currencies.
| 10 |
ELECTROCORE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
Note 4. Revenue
The following tables present product net sales disaggregated by Channel and Geographic Market (in thousands):
| Three months ended June 30, | ||||||||
| Channel: | 2025 | 2024 | ||||||
| Rx gammaCore – VA | $ | $ | ||||||
| Rx gammaCore - U.S. Commercial | ||||||||
| Rx Quell – VA | ||||||||
| Quell – U.S. Commercial | ||||||||
| Outside the United States | ||||||||
| Truvaga | ||||||||
| Total before TAC-STIM | ||||||||
| TAC-STIM | ||||||||
| Total Net Sales | $ | $ | ||||||
| Six months ended June 30, | ||||||||
| Channel: | 2025 | 2024 | ||||||
| Rx gammaCore – VA | $ | $ | ||||||
| Rx gammaCore - U.S. Commercial | ||||||||
| Rx Quell – VA | ||||||||
| Quell – U.S. Commercial | ||||||||
| Outside the United States | ||||||||
| Truvaga | ||||||||
| Total before TAC-STIM | ||||||||
| TAC-STIM | ||||||||
| Total Net Sales | $ | $ | ||||||
| Geographic Market: | Three months ended June 30, | |||||||
| Product revenue | 2025 | 2024 | ||||||
| United States | $ | $ | ||||||
| United Kingdom | ||||||||
| Other | ||||||||
| License revenue | ||||||||
| Japan | ||||||||
| Total Net Sales | $ | $ | ||||||
| Geographic Market: | Six months ended June 30, | |||||||
| Product revenue | 2025 | 2024 | ||||||
| United States | $ | $ | ||||||
| United Kingdom | ||||||||
| Other | ||||||||
| License revenue | ||||||||
| Japan | ||||||||
| Total Net Sales | $ | $ | ||||||
The Company generally invoices the customer and recognizes revenue once its performance obligations are satisfied, at which point payment is unconditional. Agreed upon payment terms with customers are within 30 days of shipment. Accordingly, contracts with customers do not include a significant financing component.
Note 5. Cash, Cash Equivalents, Restricted Cash and Marketable Securities
The following tables summarize the Company’s cash, cash equivalents, restricted cash and marketable securities as of June 30, 2025 and December 31, 2024.
As of June 30, 2025
| Amortized Cost | Unrealized Gain | Unrealized (Loss) | Fair Value | |||||||||||||
| Cash, cash equivalents and restricted cash | $ | $ | $ | $ | ||||||||||||
| Marketable Securities: | ||||||||||||||||
| U.S. Treasury Bills | ||||||||||||||||
| Total marketable securities | ||||||||||||||||
| Total cash, cash equivalents, restricted cash and marketable securities | $ | $ | $ | $ | ||||||||||||
As of December 31, 2024
| Amortized Cost | Unrealized Gain | Unrealized (Loss) | Fair Value | |||||||||||||
| Cash, cash equivalents and restricted cash | $ | $ | $ | $ | ||||||||||||
| Marketable Securities: | ||||||||||||||||
| U.S. Treasury Bills | ||||||||||||||||
| Total marketable securities | ||||||||||||||||
| Total cash, cash equivalents, restricted cash and marketable securities | $ | $ | $ | $ | ||||||||||||
| 11 |
ELECTROCORE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
Note 6. Fair Value Measurements
Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three levels of the fair value hierarchy:
| ● | Level 1—Quoted prices in active markets for identical assets or liabilities. | |
| ● | Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. | |
| ● | Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. |
A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows:
| Fair Value Hierarchy | ||||||||||||||||
| June 30, 2025 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets | ||||||||||||||||
| Cash, cash equivalents and restricted cash | $ | $ | $ | $ | ||||||||||||
| Marketable Securities: | ||||||||||||||||
| U.S. treasury bills | ||||||||||||||||
| Total cash, cash equivalents, restricted cash and marketable securities | $ | $ | $ | $ | ||||||||||||
| Fair Value Hierarchy | ||||||||||||||||
| December 31, 2024 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets | ||||||||||||||||
| Cash, cash equivalents and restricted cash | $ | $ | $ | $ | ||||||||||||
| Marketable Securities: | ||||||||||||||||
| U.S. treasury bills | ||||||||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | $ | $ | ||||||||||||
As
of June 30, 2025, the Company’s Marketable securities in the amount of $
Note 7. Inventories
As of June 30, 2025 and December 31, 2024, inventories consisted of the following:
| (in thousands) | June 30, 2025 | December 31, 2024 | ||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Total inventories | $ | $ | ||||||
The
reserve for obsolete inventory was $
Note 8. Leases
For
the three and six months ended June 30, 2025, the Company recognized lease expenses of approximately $
On
February 6, 2024, the Company entered into The First Amendment to Lease Agreement (the “Rockaway Amendment”) to extend its
Rockaway, New Jersey lease for an additional
On May 1, 2025, the Company completed the acquisition of NURO, pursuant to the terms of the Agreement and Plan of Merger dated as of December 17, 2024 (the “Merger Agreement”), with NURO surviving as a wholly-owned subsidiary of the Company. On July 14, 2025, NURO entered into the Amendment to Lease #1 to a lease with Cummings Properties, LLC providing for early termination of NURO’s Woburn, Massachusetts lease on July 30, 2025, which otherwise would have expired on September 15, 2025.
| 12 |
ELECTROCORE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
Supplemental Balance Sheet Information for Operating Leases:
| (in thousands) | June 30, 2025 | December 31, 2024 | ||||||
| Operating leases: | ||||||||
| Operating lease right of use assets | $ | $ | ||||||
| Operating lease liabilities: | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Noncurrent operating lease liabilities | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Weighted average remaining lease term (in years) | ||||||||
| Weighted average discount rate | % | % | ||||||
Future lease payments as of June 30, 2025:
| (in thousands) | ||||
| Remainder of 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 and thereafter | ||||
| Total future lease payments | ||||
| Less: Amounts representing interest | ( | ) | ||
| Total | $ | |||
Note 9. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities as of June 30, 2025 and December 31, 2024 consisted of the following:
| (in thousands) | June 30, 2025 | December 31, 2024 | ||||||
| Accrued professional fees | $ | $ | ||||||
| Accrued bonuses and incentive compensation | ||||||||
| Accrued litigation legal fees | ||||||||
| Accrued insurance expense | ||||||||
| Accrued research and development expenses | ||||||||
| Accrued vacation and other employee related expenses | ||||||||
| Accrued tax expenses | ||||||||
| Deferred revenue | ||||||||
| Accrued acquisition related expenses | ||||||||
| Other | ||||||||
| $ | $ | |||||||
Finance and Security Agreement
On
July 2, 2024, the Company entered into a Commercial Insurance Premium Finance and Security Agreement (the “2024 Agreement”).
The 2024 Agreement provides for a single borrowing of approximately $
During
the three and six months ended June 30, 2025, the Company recognized $
On
July 7, 2025, the Company and First Insurance Funding entered into a Commercial Insurance Premium Finance Agreement (the “2025
Finance Agreement”). The 2025 Finance Agreement provides for a single borrowing of approximately $
Note 10. Shareholders’ Equity
At-the-Market Facility
On
November 29, 2024, we entered into the Sales Agreement with Wainwright. Under the Sales Agreement, the Company may offer and sell shares
of its common stock, par value $ per share, from time to time having an aggregate offering price of up to $
| 13 |
ELECTROCORE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
Stock Purchase Warrants
The following table presents a summary of stock purchase warrants outstanding as of June 30, 2025:
Number of Warrants (in thousands) | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||
| Outstanding, January 1, 2025 | $ | $ | ||||||||||||||
| Stock purchase warrants granted | — | |||||||||||||||
| Exercised | — | |||||||||||||||
| Expired | — | |||||||||||||||
| Outstanding, June 30, 2025 | $ | $ | ||||||||||||||
| Exercisable, June 30, 2025 | $ | $ | ||||||||||||||
A total of pre-funded warrants were excluded from this table. During the six months ended June 30, 2025 investors exercised pre-funded warrants.
Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding adjusted to give effect to potentially dilutive securities. Due to their nominal exercise price of $ per share, and pre-funded warrants are considered common stock equivalents during the three and six months ended June 30, 2025 and 2024, respectively, and are included in weighted average shares outstanding in the accompanying condensed consolidated statement of operations as of the applicable purchase date. Stock unit awards, stock options, and warrants (other than the pre-funded warrants) have not been included in the diluted loss per share calculation as their inclusion would have had an anti-dilutive effect.
| Three and Six months ended June 30, | ||||||||
| (in thousands) | 2025 | 2024 | ||||||
| Stock options | ||||||||
| Stock units | ||||||||
| Stock purchase warrants | ||||||||
Note 12. Income Taxes
The
Company may be eligible, from time to time, to receive cash from the sale of its net operating losses under New Jersey’s Department
of the Treasury - Division of Taxation NOL Transfer Program. For the six months ended June 30, 2025 and 2024 the Company received net
cash payments of $
| Number of Options (in thousands) | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||
| Outstanding, January 1, 2025 | $ | $ | ||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Cancelled | ( | ) | ||||||||||||||
| Expired | ( | ) | ||||||||||||||
| Outstanding, June 30, 2025 | ||||||||||||||||
| Exercisable, June 30, 2025 | $ | $ | ||||||||||||||
The intrinsic value is calculated as the difference between the fair market value at June 30, 2025 and the exercise price per share of the stock option. The options granted to employees generally vest over a three year period.
| 14 |
ELECTROCORE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
Number of Shares (in thousands) | Weighted Average Grant Date Fair Value | |||||||
| Outstanding, January 1, 2025 | $ | |||||||
| Granted | ||||||||
| Vested and delivered | ( | ) | ||||||
| Cancelled | ( | ) | ||||||
| Outstanding, June 30, 2025 | $ | |||||||
In general, Stock Units granted to employees vest over two to four-year periods.
Immediately following the Company’s annual meeting of stockholders, the Company generally grants each non-employee director an equity award that vests over a -month period. Upon a non-employee director’s initial appointment or election to the board of directors, the Company grants such non-employee director an equity award subject to vesting as determined by the board of directors.
| Three months ended June 30, | ||||||||
| (in thousands) | 2025 | 2024 | ||||||
| Selling, general and administrative | $ | $ | ||||||
| Research and development | ||||||||
| Cost of goods sold | ||||||||
| Total expense | $ | $ | ||||||
| Six months ended June 30, | ||||||||
| (in thousands) | 2025 | 2024 | ||||||
| Selling, general and administrative | $ | $ | ||||||
| Research and development | ||||||||
| Cost of goods sold | ||||||||
| Total expense | $ | $ | ||||||
Total unrecognized compensation cost related to unvested awards as of June 30, 2025 was $ million and is expected to be recognized over the next .
Note 14. 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 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.
2025 CVR Agreement
On May 1, 2025 (the “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 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 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 $ per share, of NURO (the “NURO Common Stock”) outstanding immediately prior
to the Effective Time, outstanding awards of restricted stock with respect to shares of NURO Common Stock, outstanding at the Effective
Time, and each NURO restricted stock unit outstanding at the Effective Time, as well as all issued and outstanding shares of NURO’s
preferred stock, par value $ per share, outstanding at the Effective Time, and each stock option granted by NURO to purchase NURO
Common Stock, outstanding and unvested immediately prior to the Effective Time, if and when applicable under the terms of the Merger
Agreement, may become entitled to contingent cash payments (each, a “Contingent Payment”) that net of, minus certain transaction
expenses, will equal
| 15 |
ELECTROCORE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
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.
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 17 – Acquisition” for additional information about the Merger.
Note 15. Related Party Transactions
In
2023, an executive of the Company co-founded the Vagus Nerve Society, an academic society dedicated to the ongoing education and training
of scientists and clinicians and the power of the vagus nerve and its application in a broad spectrum of health-related conditions. During
the three and six months ended June 30, 2025, the Company incurred aggregate expenses of $
Note 16. Segment Reporting
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker (CODM), or decision-making group, in deciding how to allocate resources and in assessing performance. electroCore is a commercial stage bioelectronic technology company whose mission is to improve health and quality of life through innovative non-invasive bioelectronic technologies. The Company views its operations and manages its business as one operating segment: Bioelectronic Innovations. The accounting policies of the Bioelectronic Innovations segment are the same as those described in Note 2. Summary of Significant Accounting Policies.
Our CODM is our Chief Executive Officer. The CODM uses loss from operations, as reported on our Consolidated Statements of Operations, in evaluating the performance of the Bioelectronic Innovations segment and in determining how to allocate resources to the Company as a whole, The CODM does not review assets in evaluating the results of the Bioelectronic Innovations segment, and therefore, such information is not presented below.
The following table provides the non-GAAP operating financial results of the Bioelectronic Innovations segment:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net sales * | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (income) expense | ||||||||||||||||
| Interest and other income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expense | ||||||||||||||||
| Total other expense (income) | ( | ) | ||||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Benefit from income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| * |
Note 17. Acquisitions
On the Closing Date, the Company completed its previously announced acquisition of NURO, pursuant to the terms of 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.
Pursuant to the Merger Agreement, on the Closing Date, Merger Sub merged with and into NURO, with NURO surviving as a wholly-owned subsidiary of the Company.
See “Note 14 – Commitments and Contingencies” for additional information.
Note 18. Legal Proceedings
UAB Pulsetto v. electroCore, Inc.
On June 11, 2025, UAB Pulsetto (“Pulsetto”) filed a declaratory judgment action against the Company in the United States District Court for the District of New Jersey, captioned UAB Pulsetto v. electroCore, Inc., Civ. No. 25-10036 (D.N.J.), asserting that its non-invasive vagus nerve stimulation product does not infringe the Company’s U.S. Patent No. 11,446,491 (the “491 Patent”).
On July 16, 2025, the Company filed a responsive pleading, answering the complaint and asserting counterclaims, that Pulsetto’s non-invasive vagus nerve stimulation product infringes the ‘491 Patent, as well as the Company’s U.S. Patent Nos. 8,948,873, 9,339,653, 10,874,857, 8,843,210, 9,242,092, 11,623,078, and 10,441,780, as well as claims that Pulsetto’s commercial conduct has infringed and continues to infringe the Company’s Truvaga™ and gammaCore® trademarks, and committed acts of false advertising and unfair competition in violation of state and federal law. The lawsuit is in its early stages as discovery has not begun.
Note 19. Subsequent Events
See “Note 3 – Liquidity, Significant Risks and Uncertainties” and “Item 5. Other Information” for information regarding the Loan and Security Agreement entered into with Avenue on August 4, 2025, and related transactions.
See “Note 18 – Legal Proceedings” for information regarding the Pulsetto action.
| 16 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
You should read this section in conjunction with our unaudited interim condensed consolidated financial statements and related notes included in this Quarterly Report and our Quarterly Report for the period ended March 31, 2025,and our audited consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2024 included in our Annual Report. As discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those under the caption “Risk Factors” in the aforementioned Annual Report and this Quarterly Report.
We are a commercial stage bioelectronic technology company whose mission is to improve health and quality of life through innovative non-invasive bioelectronic technologies. The Company’s two leading prescription products, gammaCore non-invasive vagus nerve stimulation (“nVNS”) and Quell neurostimulator (“Quell”), treat chronic pain syndromes through non-invasive neuromodulation technology Additionally, the Company commercializes its Truvaga products, handheld, personal use nVNS products, utilizing bioelectronic technologies, to promote general wellness and human performance.
nVNS, a form of bioelectronic technology, modulates neurotransmitters through its effects on both the peripheral and central nervous systems. Our nVNS treatment is delivered through a proprietary high-frequency burst waveform that safely and comfortably passes through the skin and stimulates therapeutically relevant fibers in the vagus nerve. Various scientific publications suggest that nVNS works through a variety of mechanistic pathways including the modulation of neurotransmitters.
Historically, vagus nerve stimulation or VNS, required an invasive surgical procedure to implant a costly medical device. This has generally limited VNS from being used by anyone other than the most severe patients. Our non-invasive bioelectronic nVNS technologies are self-administered and intended for regular or intermittent use over many years.
Our capabilities include product development, regulatory affairs and compliance, sales and marketing, product testing, electromechanical assembly, fulfillment, and customer support. We derive revenues from the sale of products in the United States and select overseas markets. We have two principal product categories:
| ● | Handheld, personal use bioelectronic therapies for the management and treatment of certain medical conditions such as primary headache; and | |
| ● | Handheld, personal use consumer products utilizing bioelectronic technologies to promote general wellness and human performance. |
We believe our bioelectronic technologies may be used in the future to effectively treat additional medical conditions.
Our goal is to be a leader in non-invasive neuromodulation to deliver better health. To achieve this, we offer multiple propositions:
| ● | Prescription gammaCore bioelectronic therapy for the treatment of certain prescription U.S. Food and Drug Administration (“FDA”) cleared medical conditions such as primary headache; | |
| ● | Prescription Quell Fibromyalgia authorized to treat the symptoms of fibromyalgia; | |
| ● | Truvaga for the support of general health and wellbeing; and | |
| ● | TAC-STIM for human performance. |
Our flagship gammaCore Sapphire is a prescription medical device using our bioelectronic therapy that is FDA cleared for a variety of primary headache conditions. gammaCore is available by prescription only and Sapphire is a portable, reusable, rechargeable and reloadable personal use option for patients to use at home or on the go. Prescriptions are written by a health care provider and dispensed from a specialty pharmacy, through the patient’s healthcare system, or shipped directly to certain patients in the United States from our facility in Rockaway, NJ. After the initial prescription is filled, access to additional therapy can be refilled for certain of our gammaCore products through the input of a prescription-only authorization.
We offer two versions of our bioelectronic technology to support general health and wellbeing. Truvaga 350 is a personal use consumer electronics general wellness product and Truvaga Plus, which was launched in April 2024, is our next generation, app-enabled general wellness product. Neither product requires a prescription, and are available direct-to-consumer from electroCore at www.truvaga.com or through online retailers.
The TAC-STIM handset is a form of nVNS for human performance and has been developed in collaboration with the United States Department of Defense Biotech Optimized for Operational Solutions and Tactics, or BOOST program. TAC-STIM handsets are available as a Commercial Off the Shelf (COtS) solution to professional organizations and are the subject of ongoing research and evaluation within the United States Air Force Special Operations Command, the United States Army Special Operations Command and at the United States Air Force Research Laboratory.
Truvaga and TAC-STIM are intended for general wellness in compliance with the FDA guidance document entitled “General Wellness: Policy for Low-Risk Devices; Guidance for Industry and FDA Staff, issued on September 27, 2019.” Truvaga and TAC-STIM handsets are not intended to diagnose, treat, cure, or prevent any disease or medical condition.
In 2021, Quell received Breakthrough Device Designation from the FDA for a fibromyalgia indication. A pivotal double-blind, randomized, sham-controlled clinical study of Quell Fibromyalgia was completed, and a, FDA 510(k) de novo marketing authorization was obtained from the FDA in 2022.
| 17 |
See “Item 1 – Business – De Novo Classification Process” and “Item 1.A – Risk Factors” of our Annual Report for additional information on the FDA’s 510(k) de novo classification and marketing authorization processes.
Quell Fibromyalgia is a prescription medical device sold in the United States and indicated for use as an aid for reducing the symptoms of fibromyalgia in adults with high pain sensitivity. Quell is a wearable neuromodulation technology for chronic pain, has been refined with feedback from over 200,000 chronic pain patients and is protected by over 20 U.S. utility patents. Patients control and personalize the technology with a mobile phone app, and their utilization of the devices and certain clinical metrics may be tracked in the Quell Health Cloud. Prescriptions for Quell Fibromyalgia are written by a health care provider and dispensed from a specialty pharmacy, through the patient’s healthcare system, or shipped directly to certain patients in the United States from our facility in Rockaway, NJ. After the initial prescription is filled, access to additional electrodes can be refilled without the need of a prescription. There is also a small legacy customer base utilizing the Quell Relief over-the-counter product for broader pain.
Our two largest customers by revenue are the United States Department of Veterans Affairs and United States Department of Defense, or VA, and the United Kingdom National Health Service, or NHS, utilizing our FDA cleared and CE marked product, gammaCore. We began offering Quell Fibromyalgia to our VA customers in May 2025.
Sales to the VA comprised 71.8% and 71.1% of our revenue during the three and six months ended June 30, 2025, respectively. The majority of our 2024 sales were made pursuant to our qualifying contract under the Federal Supply Schedule, or FSS, which was secured by us in December 2018 (the “Original FSS Contract”), as well as open market sales to individual facilities within the government channel. In March 2025, we entered into a new FSS contract which became effective on June 15, 2025, and runs through June 14, 2030.
In August 2023, we signed a non-exclusive distribution agreement with Lovell providing Lovell the right to list and distribute certain gammaCore products into the federal market. Lovell is a Service-Disabled Veteran-Owned Small Business (SDVOSB) offering medical and pharmaceutical goods and services to federal healthcare providers. Listing products with Lovell is intended to streamline the sales process to a variety of government procurement channels through Lovell’s compliance with contracting regulations and its provision of logistical solutions connected directly into government contracting portals, all of which are intended to help government agencies meet their SDVOSB procurement goals. Customers for these vehicles are federal healthcare systems such as the Veterans Health Administration (VHA, which includes the VA), the Military Health System (MHS), and Indian Health Services (IHS), which we believe serve up to approximately 21 million patients combined. In May 2025, we added Quell Fibromyalgia to the Lovell contracting platform.
Between November 2023 and January 2024, certain gammaCore products were added to the FSS, the VA Distribution and Pricing Agreement (DAPA), GSA Advantage, and Defense Logistics Agency’s ECAT system procurement portals through the Lovell contract vehicles, enabling the purchase of gammaCore products within the government channel and throughout the federal markets, including, but not limited to, the VA. The gammaCore products offered through Lovell provide government customers with similar product configuration options to those currently sold through our existing FSS contract, new FSS contract and open market sales made directly to individual VA facilities. We expect an increasing portion of our 2025 sales will be made pursuant to the distribution agreement with Lovell and its contract vehicles as well as through our new FSS contract, and our sales function in this channel is comprised of employees and an increasing number of independent contractors.
Sales under the UK Med Tech Funding Mandate, or MTFM, for cluster headache in the UK comprised 4.9% and 5.1% of our revenue during the three and six months ended June 30, 2025, respectively. We plan on continuing use of this program. In 2023, NHS granted a two-year extension in which our prescription gammaCore therapy will continue to be listed in the NHS catalog. This extension is through March 17, 2026 with an option for us to extend an additional two years. In 2025, we expect NICE to review the guidance document and any changes in recommendation or pricing may adversely impact our ability to work with NHS England on the MTFM program and could have an adverse impact on our financial results. We continue to utilize distribution partners to commercialize our nVNS technology in selected territories outside the United States and United Kingdom.
We believe there may be significant opportunities beyond these two areas. Specifically, we believe there may be a large commercial opportunity for our gammaCore and Quell bioelectronic therapies with additional insurance covered lives, cash pay, physician dispense, and direct-to-consumer approaches, along with wellness and human performance propositions through our Truvaga and TAC-STIM handsets. Therefore, we will continue our investments to expand our efforts in these channels and markets in 2025.
On May 1, 2025, we acquired NURO. NURO is a commercial stage healthcare company that develops and commercializes neurotechnology devices to address unmet needs in the chronic pain market through its Quell® platform: a wearable, app and cloud-enabled neuromodulation platform that is indicated for the treatment of fibromyalgia symptoms (Quell Fibromyalgia) and lower-extremity chronic pain (Quell 2.0). The transaction closed on May 1, 2025. The transaction excluded NURO’s DPNCheck® technology and business, which was divested by NURO prior to closing of the transaction.
We face a variety of challenges and risks that we will need to address and manage as we pursue our strategies, including our ability to develop and retain an effective sales force, achieve market acceptance of our gammaCore medical device among clinicians, patients, and third-party payers, expand the use of our medical devices to additional therapeutic indications, and to develop our nascent wellness and human performance businesses.
As we continue to pursue opportunities in both U.S. and select international markets, we remain subject to evolving global economic conditions, including uncertainties related to international trade policies, tariffs, and supply chain dynamics. Uncertainties and changes in trade regulations, tariff structures, or logistical constraints could influence the cost, availability, or timing of materials and components used in our manufacturing and assembly processes. We intend to monitor these developments and are actively implementing contingency plans, including alternative sourcing strategies and supplier diversification, to support supply chain continuity, maintain operational efficiency, and help mitigate potential future impacts.
We launched a direct-to-consumer wellness offering, Truvaga, and we remain subject to risks associated with the commercialization of our Truvaga product offering, including those associated with selling Truvaga through ecommerce marketplaces. Selling products through large, well established ecommerce marketplaces presents several risks including inventory management challenges, broader competition, potential account suspensions, and the risk of losing control over brand identity, value perception, and customer relationships. While we intend to monitor commercialization efforts through these marketplaces, there can be no assurance that we can respond adequately to reviews on public forums, or at all on third-party forums, which may cause a loss of control over our brand identity, value perception and customer relationships, and any inability to respond adequately may negatively impact our operating results.
Because of the numerous risks and uncertainties associated with our commercialization efforts, as well as research and product development activities, there may be uncertainty regarding our ability to achieve or maintain profitability. If we fail to become profitable or are unable to sustain profitability, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
Our expected cash requirements for the next 12 months and beyond are based on the commercial success of our products and our ability to control operating expenses. There are significant risks and uncertainties as to our ability to achieve these operating results. Due to these risks and uncertainties, we may need to reduce our activities significantly more than our current operating plan and cash flow projections assume in order to fund operations for the next 12 months. There can be no assurance that we will have sufficient cash flow and liquidity to fund our planned activities, which could force us to significantly reduce or curtail our activities and, ultimately potentially cease operations. See also “Liquidity Outlook.”
| 18 |
Critical Accounting Estimates
The preparation of our financial statements is in accordance with accounting principles generally accepted in the United States of America, or GAAP, which require us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and other related disclosures. While we believe our estimates, assumptions and judgments are reasonable, they are based on information presently available. Actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material impact on our financial position and results of operations.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. The critical accounting estimates, that we believe have the greatest potential impact on the condensed consolidated financial statements are disclosed in the section titled Critical Accounting Policies and Estimates in Part II of our Annual Report.
Results of Operations
Comparison of the three months ended June 30, 2025 to the three months ended June 30, 2024
The following table sets forth amounts from our condensed consolidated statements of operations for the three months ended June 30, 2025 and 2024:
For the three months ended June 30, | ||||||||||||
| 2025 | 2024 | Change | ||||||||||
| (in thousands) | ||||||||||||
| Consolidated statements of operations: | ||||||||||||
| Net sales | $ | 7,381 | $ | 6,139 | $ | 1,242 | ||||||
| Cost of goods sold | 939 | 838 | 101 | |||||||||
| Gross profit | 6,442 | 5,301 | 1,141 | |||||||||
| Gross margin | 87 | % | 86 | % | ||||||||
| Operating expenses | ||||||||||||
| Research and development | 511 | 635 | (124 | ) | ||||||||
| Selling, general and administrative | 9,437 | 7,257 | 2,180 | |||||||||
| Total operating expenses | 9,948 | 7,892 | 2,056 | |||||||||
| Loss from operations | (3,506 | ) | (2,591 | ) | (915 | ) | ||||||
| Other (income) expense | ||||||||||||
| Interest and other income | (68 | ) | (55 | ) | (13 | ) | ||||||
| Other expense | 233 | 119 | 114 | |||||||||
| Total other expense (income) | 165 | 64 | (101 | ) | ||||||||
| Loss before income taxes | (3,671 | ) | (2,655 | ) | (1,016 | ) | ||||||
| Benefit from income taxes | - | - | - | |||||||||
| Net loss | $ | (3,671 | ) | $ | (2,655 | ) | $ | (1,016 | ) | |||
Net Sales
Net sales for the three months ended June 30, 2025 increased 20%, as compared to the three months ended June 30, 2024. The increase of $1.2 million is due to an increase in net sales of prescription products sold into the VA and revenue from the sales of our nonprescription general wellness Truvaga and TAC-STIM products. We expect that the majority of our remaining 2025 fiscal year revenue will continue to come from the prescription products sold into the VA and the Truvaga direct-to-consumer product offering. See the above Overview for discussion regarding our FSS contract with the VA.
| 19 |
The following table sets forth our product net sales:
| (in thousands) | Three months ended June 30, | |||||||
| Product | 2025 | 2024 | ||||||
| Rx gammaCore - VA | $ | 5,185 | $ | 4,572 | ||||
| Rx gammaCore - U.S. Commercial | 394 | 476 | ||||||
| Rx Quell - VA | 114 | - | ||||||
| Quell – U.S. Commercial | 48 | - | ||||||
| Outside the United States | 465 | 464 | ||||||
| Truvaga | 994 | 572 | ||||||
| Total before TAC-STIM | 7,200 | 6,084 | ||||||
| TAC-STIM | 181 | 55 | ||||||
| Total Revenue | $ | 7,381 | $ | 6,139 | ||||
Gross Profit
Gross profit increased by $1.1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Gross margin was 87% and 86% for the three months ended June 30, 2025 and 2024, respectively. The increase in gross profit is attributable to the increased net sales and product mix. Gross profit and gross margin for the remainder of 2025 will be largely dependent on revenue levels, product mix, and any changes in the estimated useful lives of licensed devices.
Research and Development
Research and development expense in the second quarter of 2025 was $0.5 million, as compared to $0.6 million in the second quarter of 2024. This decrease was primarily due to reduced development costs in the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. For the remainder of 2025, we expect our research and development expense to be higher than the comparable periods in 2024.
Selling, General and Administrative
Selling, general and administrative expense of $9.4 million for the three months ended June 30, 2025 increased by $2.1 million, or 30%, as compared to $7.3 million for the previous year period. This increase was primarily due to our greater investment in selling and marketing costs consistent with our increase in sales, $548,000 of bad debt expense associated with a TAC-STIM receivable, increased expenses associated with professional fees, and increased rent expense associated with the lease expansion. For the remainder of 2025, we plan on continuing to make targeted investments in sales and marketing to support our commercial efforts, particularly around sales and marketing efforts across all major U.S. channels.
Other Expense (Income)
Total other expense was $165,000 for the three months ended June 30, 2025, which consisted primarily of non-recurring expenses, including professional fees in connection with the NURO acquisition, as compared to total other expense of $64,000 for the three months ended June 30, 2024, which consisted primarily of a one-time expense associated with termination of an agreement.
Comparison of the six months ended June 30, 2025 to the six months ended June 30, 2024
The following table sets forth amounts from our condensed consolidated statements of operations for the six months ended June 30, 2025 and 2024:
For the six months ended June 30, | ||||||||||||
| 2025 | 2024 | Change | ||||||||||
| (in thousands) | ||||||||||||
| Consolidated statements of operations: | ||||||||||||
| Net sales | $ | 14,100 | $ | 11,582 | $ | 2,518 | ||||||
| Cost of goods sold | 1,952 | 1,726 | 226 | |||||||||
| Gross profit | 12,148 | 9,856 | 2,292 | |||||||||
| Gross margin | 86 | % | 85 | % | ||||||||
| Operating expenses | ||||||||||||
| Research and development | 1,153 | 1,034 | 119 | |||||||||
| Selling, general and administrative | 18,323 | 15,262 | 3,061 | |||||||||
| Total operating expenses | 19,476 | 16,296 | 3,180 | |||||||||
| Loss from operations | (7,328 | ) | (6,440 | ) | (888 | ) | ||||||
| Other (income) expense | ||||||||||||
| Interest and other income | (151 | ) | (280 | ) | 129 | |||||||
| Other expense | 397 | 123 | 274 | |||||||||
| Total other expense (income) | 246 | (157 | ) | 403 | ||||||||
| Loss before income taxes | (7,574 | ) | (6,283 | ) | (1,291 | ) | ||||||
| Benefit from income taxes | 48 | 122 | (74 | ) | ||||||||
| Net loss | $ | (7,526 | ) | $ | (6,161 | ) | $ | (1,365 | ) | |||
Net Sales
Net sales for the six months ended June 30, 2025 increased 22% as compared to the six months ended June 30, 2024. The increase of $2.5 million is due to an increase in net sales of prescription products sold into the VA and outside the United States, and revenue from the sales of our nonprescription general wellness Truvaga products. We expect that the majority of our remaining 2025 fiscal year revenue will continue to come from the prescription products sold into the VA and the Truvaga direct-to-consumer product offering. See the above Overview for discussion regarding our FSS contract with the VA.
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The following table sets forth our product net sales:
| (in thousands) | Six months ended June 30, | |||||||
| Product | 2025 | 2024 | ||||||
| Rx gammaCore - VA | $ | 9,906 | $ | 8,447 | ||||
| Rx gammaCore - U.S. Commercial | 683 | 909 | ||||||
| Rx Quell – V.A. | 114 | - | ||||||
| Quell – U.S. Commercial | 48 | - | ||||||
| Outside the United States | 978 | 913 | ||||||
| Truvaga | 2,100 | 957 | ||||||
| Total before TAC-STIM | 13,829 | 11,226 | ||||||
| TAC-STIM | 271 | 356 | ||||||
| Total Revenue | $ | 14,100 | $ | 11,582 | ||||
Gross Profit
Gross profit increased by $2.3 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Gross margin was 86% and 85% for the six months ended June 30, 2025 and 2024, respectively. The increase in gross profit is attributable to the increased net sales and product mix. Gross profit and gross margin for the remainder of 2025 will be largely dependent on revenue levels, product mix, and any changes in the estimated useful lives of licensed devices.
Research and Development
Research and development expense for the six months ended June 30, 2025 was $1.2 million, as compared to $1.0 million during the six months ended June 30, 2024. This increase was primarily due to an increase in headcount and certain clinical trial activities in the first quarter of 2025 as compared to the first quarter of 2024. For the remainder of 2025, we expect our research and development expense to be higher than the comparable periods in 2024.
Selling, General and Administrative
Selling, general and administrative expense of $18.3 million for the six months ended June 30, 2025 increased by $3.0 million, or 20%, as compared to $15.3 million for the previous year period. This increase was primarily due to our greater investment in selling and marketing costs consistent with our increase in sales, an increase in separation costs associated with select headcount reductions, bad debt expense associated with a TAC-STIM receivable, increased expenses associated with professional fees, and increased rent expense associated with the lease expansion. For the remainder of 2025, we plan on continuing to make targeted investments in sales and marketing to support our commercial efforts, particularly around sales and marketing efforts across all major U.S. channels.
Other Expense (Income)
Total other expense was $246,000 for the six months ended June 30, 2025, which consisted primarily of non-recurring expenses, including professional fees in connection with the NURO acquisition, as compared to total other income of $157,000 for the six months ended June 30, 2024, which consisted primarily of interest income.
Benefit from Income Taxes
We may be eligible, from time to time, to receive cash from the sale of our net operating losses under New Jersey’s Department of the Treasury - Division of Taxation NOL Transfer Program. For the six months ended June 30, 2025 and 2024 the Company received net cash payments of $48,000 and $122,000, respectively, from the sale of its New Jersey state net operating losses.
Cash Flows
The following table sets forth the significant sources and uses of cash for the periods noted below:
| For the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| (in thousands) | ||||||||
| Net cash (used in) provided by | ||||||||
| Operating activities | $ | (4,978 | ) | $ | (4,330 | ) | ||
| Investing activities | $ | 4,685 | $ | (3,928 | ) | |||
| Financing activities | $ | 183 | $ | 8,120 | ||||
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Operating Activities
Net cash used in operating activities was $5.0 million and $4.3 million for the six months ended June 30, 2025 and 2024, respectively. This increase is primarily due to the decrease in our net loss adjusted for non-cash expense items and certain working capital changes consisting primarily of decreases in accrued expenses and operating lease liabilities and increases in inventories and prepaid expenses and other assets.
Investing Activities
Net cash provided by investing activities was $4.7 million and $3.9 million for the six months ended June 30, 2025 and 2024, respectively. This increase is primarily due to proceeds from the sale of marketable securities.
Financing Activities
During the six months ended June 30, 2025, net cash provided by financing activities was $0.2 million attributable to utilization of our at-the-market facility pursuant to the Sales Agreement. During the six months ended June 30, 2024, net cash provided by financing activities was $8.1 million which was attributable to the entering into a registered direct offering and concurrent private placements, which closed on June 5, 2024.
Liquidity Outlook
We have experienced significant net losses, and we expect to continue to incur net losses for the near future as we work to increase market acceptance of our gammaCore therapy and general wellness and human performance products. We have never been profitable and we have incurred net losses and negative cash used in operations in each year since our inception. We incurred net losses of $7.5 million and $6.2 million and used cash in our operations of $5.0 million and $4.3 million for the six months ended June 30, 2025 and 2024, respectively.
We have historically funded our operations from the sale of our securities. During the six months ended June 30, 2025, we received net proceeds of approximately $0.2 million from such sales and as of June 30, 2025, our cash, cash equivalents, restricted cash and marketable securities totaled $7.4 million.
On November 29, 2024, we entered into an At The Market Offering Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), whereby the Company may offer and sell shares of its common stock from time to time having an aggregate offering price of up to $20 million by any method deemed to be an “at-the-market” offering as defined in Rule 415 of the Securities Act, or any other method specified in the Sales Agreement. During the six months ended June 30, 2025, the Company sold 14,265 shares of its common stock at a weighted average price of $15.20 per share, net of issuance costs for $0.2 million in net proceeds, pursuant to the Sales Agreement.
On August 4, 2025, we, and our wholly owned subsidiary, NURO, each as borrowers, entered into the Loan and Security Agreement with Avenue that is secured by a lien on substantially all of our assets, including a negative pledge on intellectual property, subject to limited exceptions, pursuant to the Loan and Security Agreement. The Loan and Security Agreement provides for term loans in an aggregate principal amount of up to $12.0 million (the “Loan Amount”) to be delivered in two tranches (the “Term Loans”). The tranches consist of (i) a term loan advanced to the Company on August 4, 2025 in an aggregate principal amount of $7.5 million (“Tranche 1”), and (ii) subject to the achievement of certain performance milestones set forth in the Loan and Security Agreement, a right of the Company to request that Avenue make additional term loan advances to the Company in an aggregate principal amount of up to $4.5 million (“Tranche 2”) which right expires on December 31, 2025.
In 2025, we intend to continue to make targeted investments in sales and marketing to continue driving commercial activities. We have historically funded our operations from the sale of our common stock, and most recently the convertible debt financing with Avenue, and may continue to do so through utilization of the at-the-market facility or other equity or debt transactions if needed. As of the date of this Quarterly Report, the Company had approximately $19.8 million of common stock remaining available for issuance under the Sales Agreement.
The Company’s expected cash requirements for the next 12 months from the date these financial statements are issued and beyond are largely based on the commercial success of its products. Based on its current assessment, the Company believes its cash, cash equivalents, restricted cash, and marketable securities, plus the net proceeds from Tranche 1 of the Term Loan, and expected cash flow from operations and access to capital through the use of the ATM and Tranche 2 of the Term Loan will enable it to fund its operating expenses and capital expenditure requirements, as currently planned, for at least the next 12 months from the date the accompanying financial statements are issued. There remain significant risks and uncertainties regarding the Company’s business, financial condition and results of operations. The Company’s future capital requirements are difficult to forecast and will depend on many factors that are out of its control. If the Company is unable to achieve its planned operating results or maintain sufficient financial resources, including through potential positive cash flow from operations or supplemental access to third-party debt, equity or hybrid capital, its business, financial condition and results of operations may be materially and adversely affected.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We develop our products in the United States and sell those products into several countries. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. Most of our sales in UK are denominated in British Pound Sterling and our license agreement with Teijin Limited is denominated in Japanese Yen. As our sales in currencies other than the U.S. dollar increase, our exposure to foreign currency fluctuations may increase. In addition, changes in exchange rates also may affect the end-user prices of our products compared to those of our foreign competitors, who may be selling their products based on local currency pricing. These factors may make our products less competitive in some countries.
If the U.S. dollar uniformly increased or decreased in strength by 10% relative to the foreign currencies in which our sales were denominated, our net income would have correspondingly increased or decreased by an immaterial amount for the three and six months ended June 30, 2025.
Our exposure to market interest rate risk is confined to our cash and cash equivalents and marketable securities. The goals of our investment policy are preservation of capital, fulfillment of liquidity needs and fiduciary control of cash and investments. We also seek to maximize income from our investments without assuming significant risk. To achieve our goals, we may maintain a portfolio of cash equivalents and investments in a variety of securities of high credit quality. The securities in our investment portfolio, if any, are not leveraged, are classified as available for sale and are, due to their very short-term nature, subject to minimal interest rate risk. We currently do not hedge interest rate exposure. Because of the short-term maturities of our cash equivalents, we do not believe that an increase in market rates would have any material negative impact on interest income recognized in our statement of operations. We have no investments denominated in foreign currencies and therefore our investments are not subject to foreign currency exchange risk. We contract with investigational sites, suppliers and other vendors in Europe and internationally. In addition, our license agreement requires payments to us to be denominated in Japanese Yen. We are subject to fluctuations in foreign currency rates in connection with these agreements. We do not hedge our foreign currency exchange rate risk.
All of the potential changes noted above are based on sensitivity analyses performed on our financial position as of June 30, 2025.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decision making regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.
As required by Rule 13a-15(b) and 15d-15(f) of the Exchange Act, an evaluation as of June 30, 2025 was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of June 30, 2025 were effective for the purposes stated above.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the six months ended June 30, 2025 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
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PART II— OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The information set forth in Note 18. Legal Proceedings of the condensed consolidated financial statements included in this Quarterly Report is incorporated here by reference to this Part II Item 1.
Item 1A.
RISK FACTORS
You should carefully consider the risk factors included in Item 1A. of the Annual Report, in addition to the following risk factors, and the other information in this Quarterly Report, including the section of this Quarterly Report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. If any of the events described in the Annual Report, the following risk factors and the risks described elsewhere in this Quarterly Report occur, our business, operating results and financial condition could be seriously harmed. This Quarterly Report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described in the Annual Report, below and elsewhere in this Quarterly Report.
The terms of our Loan and Security Agreement with Avenue Venture Opportunities Fund II, L.P. require us to meet certain operating covenants and place certain restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.
On August 4, 2025, we, and our wholly owned subsidiary, NURO, each as borrowers, entered the Loan and Security Agreement with Avenue, as administrative agent and collateral agent, and as lender, that is secured by a lien on substantially all of our assets, including a negative pledge on intellectual property, subject to limited exceptions, pursuant to the Loan and Security Agreement.
The Loan and Security Agreement contains customary affirmative and negative covenants and events of default. We could in the future incur additional indebtedness beyond our borrowings under the Loan and Security Agreement. If we raise any additional debt financing, the terms of such additional debt could further restrict our operating and financial flexibility. These restrictions may include, among other things, limitations on the incurrence of additional debt and specific restrictions on the use of our assets, as well as prohibitions on our ability to create liens, pay dividends, redeem capital stock or make investments. If we default under the terms of the Loan and Security Agreement, Avenue may accelerate all of our repayment obligations and take control of our pledged assets, potentially requiring us to renegotiate our agreement on terms less favorable to us or to immediately cease operations. Further, if we were to be liquidated, Avenue’s rights to repayment would be senior to the rights of the holders of our common stock. Avenue could declare an event of default upon the occurrence of any circumstance or circumstances that could reasonably be expected to have a Material Adverse Effect (as defined under the Loan and Security Agreement). Any declaration by Avenue of an event of default could significantly harm our business and prospects and could cause the price of our common stock to decline.
Our existing or future debt could have significant adverse consequences, including:
| ● | requiring us to dedicate a substantial portion of cash flow from operations or cash on hand to the payment of interest on, and principal of, our debt, which will reduce the amounts available to fund working capital, capital expenditures, product development efforts, and other general corporate purposes; | |
| ● | subjecting us to restrictive covenants that may reduce our ability to take certain corporate actions or obtain further debt or equity financing; and | |
| ● | limiting our flexibility in planning for, or reacting to, changes in our business and our industry; and placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options. |
In order to satisfy our current and future debt service obligations, we will be required to raise funds from external sources. We may be unable to arrange for additional financing to pay the amounts due under our existing debt. Funds from external sources may not be available on acceptable terms, if at all. Our failure to satisfy our current and future debt obligations could adversely affect our financial condition and results of operations.
Risks of doing business through e-commerce marketplaces.
We have recently launched a direct-to-consumer wellness offering, Truvaga, and we remain subject to risks associated with the commercialization of our Truvaga product offering, including those associated with selling Truvaga through e-commerce marketplaces. Selling products through large, well established e-commerce marketplaces presents several risks including inventory management challenges, broader competition, potential account suspensions, and the risk of losing control over brand identity, value perception, and customer relationships. While we intend to monitor commercialization efforts through these marketplaces, there can be no assurance that we can respond adequately to reviews on public forums that may cause a loss of control over our brand identity, value perception and customer relationships, and any inability to respond adequately may negatively impact our financial results. In addition, our business may be adversely affected if online marketplaces, such as has been the case recently with Amazon, remove our products on the basis that they are classified as medical devices requiring FDA clearance or registration. Such removal can significantly disrupt our sales channels, reduce product visibility, and impair revenue generation, particularly if online sales constitute a substantial portion of our sales and marketing strategy. While we intend to appeal Amazon’s decision, the appeals process is uncertain, time-consuming, and may not result in reinstatement. Prolonged or permanent removal could lead to inventory write-downs, loss of market share, reputational harm, and increased compliance costs. Additionally, similar actions by other e-commerce platforms or heightened regulatory scrutiny could further restrict market access, adversely impacting our business, financial condition, and results of operations.
Our failure to meet Nasdaq’s continued listing standards could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common stock and our ability to access the capital markets.
Pursuant to Nasdaq Listing Rule 5550(b), in order to maintain our listing on Nasdaq, we are required to continue to meet one of the following continued listing standards: (i) net income from continuing operations (in the most recently completed fiscal year or in two of the three most recently completed fiscal years) of at least $500,000 (the “Net Income Standard”); (ii) market value of listed securities of at least $35 million (the “Market Value Standard”); or (iii) stockholders’ equity of at least $2.5 million (the “Equity Standard”).
As of June 30, 2025, our stockholders’ equity was less than $2.5 million and therefore less than the Equity Standard. As a result, if Nasdaq determines that we do not meet either of the Net Income Standard or the Market Value Standard, we may receive a deficiency letter from Nasdaq. Upon receipt of such deficiency letter, we will have a period of time to resolve such deficiency and, if necessary, will have the opportunity to present a plan to regain compliance.
There can be no assurance that Nasdaq will accept our plan to regain compliance or that we will meet the Equity Standard during any compliance period, if one is provided to us. If our common stock is de-listed from Nasdaq, it will have material negative impact on the actual and potential liquidity of our securities, as well as material negative impact on our ability to raise future capital.
If, for any reason, Nasdaq should delist our common stock from trading on its exchange and we are unable to obtain listing on another national securities exchange or take action to restore our compliance with the Nasdaq continued listing requirements, a reduction in some or all of the following may occur, each of which could have a material adverse effect on our stockholders:
| ● | the liquidity of our common stock; | |
| ● | the market price of our common stock; | |
| ● | our ability to obtain financing for the continuation of our operations; | |
| ● | the number of institutional and general investors that will consider investing in our common stock; | |
| ● | the number of investors in general that will consider investing in our common stock; | |
| ● | the number of market makers in our common stock; | |
| ● | the availability of information concerning the trading prices and volume of our common stock; and | |
| ● | the number of broker-dealers willing to execute trades in shares of our common stock. |
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
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Item 5. OTHER INFORMATION
(a)
Avenue Loan and Security Agreement
On the LSA Closing Date, we, and our wholly owned subsidiary, NURO, each as borrowers, entered into the Loan and Security Agreement with Avenue as administrative agent and collateral agent, and as lender.
Amount. The Loan and Security Agreement provides for term loans in an aggregate principal amount of up to $12.0 million (the “Loan Amount”) to be delivered in two tranches (the “Term Loans”). The tranches consist of (i) a term loan advanced to the Company on the LSA Closing Date in an aggregate principal amount of $7.5 million (“Tranche 1”), and (ii) subject to the achievement of certain performance milestones set forth in the Loan and Security Agreement, a right of the Company to request that Avenue make additional term loan advances to the Company in an aggregate principal amount of up to $4.5 million (“Tranche 2”), which right expires on December 31, 2025. The Company intends to use the proceeds of the Term Loans for working capital and general corporate purposes.
Maturity. The Term Loans mature on August 1, 2029 (the “Maturity Date”).
Interest Rate and Amortization. The principal balance of the Term Loans bears interest at a variable rate per annum equal to the greater of (i) the sum of 5.0% and the prime rate as reported in The Wall Street Journal, provided that, in the event such prime rate of interest is less than zero, such rate shall be deemed to be zero, and (ii) twelve and one-half percent (12.50%) (the “Interest Rate”). Interest only shall be payable at the Interest Rate during the period following the LSA Closing Date and continuing until the first day of the first full calendar month following the 18 month anniversary of the LSA Closing Date, provided, however, that such period shall be extended for six months if as of the 18 month anniversary of the LSA Closing Date, the Company has achieved certain milestones, as provided in the Supplement to the Loan and Security Agreement dated August 4, 2025, by and among the Company, NURO and Avenue (the “Supplement”); provided, further, however, that the such interest only period shall not exceed 24 months. Thereafter, principal and interest of the Term Loans shall be fully amortized and paid, in equal, monthly principal installments, plus interest at the Interest Rate for such month, through the Maturity Date, subject to the terms and conditions of the Supplement.
Final Payment. The Company will pay final payment at a fee of 3.5% of the Loan Amount, due upon the earlier of the Maturity Date or prepayment in full of the Term Loans.
Prepayment Fee. The Company may, at its option at any time, prepay the Term Loans in their entirety by paying the then outstanding principal balance and all accrued and unpaid interest on the Term Loans, subject to a prepayment fee equal to (i) 3.0% of the principal amount outstanding if the prepayment occurs on or prior to the first anniversary following the LSA Closing Date, (ii) 2.0% of the principal amount outstanding if the prepayment occurs after the first anniversary following the LSA Closing Date, but on or prior to the second anniversary following the LSA Closing Date, and (iii) 1.0% of the principal amount outstanding if the prepayment occurs after the second anniversary following the LSA Closing Date, but on or prior to the Maturity Date.
Security. The Loan and Security Agreement is collateralized by substantially all of the Company’s assets in which Avenue is granted a senior secured lien. The Company also grants Avenue a negative pledge on the Company’s intellectual property, subject to limited exceptions, pursuant to the Loan and Security Agreement.
Covenants; Representations and Warranties; Other Provisions. The Loan and Security Agreement contains customary representations, warranties and covenants, including covenants by the Company limiting certain additional indebtedness, liens (including a negative pledge on intellectual property and other assets, subject to limited exceptions), guaranties, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes.
Default Provisions. The Loan and Security Agreement provides for events of default customary for term loans of this type, including but not limited to non-payment, breaches or defaults in the performance of covenants, insolvency, bankruptcy and the occurrence of a material adverse effect on the Company. After the occurrence of an event of default, Avenue may (i) accelerate payment of all obligations, impose an increased rate of interest, and terminate Avenue commitments under the Loan and Security Agreement and (ii) exercise any other right or remedy provided by contract or applicable law.
Conversion Right. Additionally, subject to certain exceptions, Avenue has the right to convert (the “Conversion Right”) an aggregate amount of up to $2.5 million of the outstanding Loan Amount into shares of the Company’s common stock at a conversion price per share equal to $8.4625, representing 125% of the lower of (i) the five-day volume-weighted average price of Company’s common stock as calculated on the day prior to the LSA Closing Date, or (ii) the closing price of Company’s common stock on the date prior to the LSA Closing Date ($6.77). In the event the Company elects to prepay the Term Loans in full, the Company shall provide no less than five business days’ prior written notice to Avenue; provided, however, if Avenue has not yet exercised the Conversion Right, the Company shall provide written notice of prepayment at least 10 days in advance of the proposed prepayment date and Avenue shall have the option, with respect to the Conversion Right, to exercise the Conversion Right by delivering written notice to the Company at least two business days in advance of the proposed prepayment date.
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Right to Invest. Avenue shall have the right, but not the obligation, to invest up to an aggregate of $1 million in equity securities of the Company on the same terms, conditions, and pricing offered by the Company to other investors in connection with any offering of the Company’s equity securities to third party investors for capital raising purposes occurring after the Closing Date, on the terms and conditions set forth in the Supplement.
The foregoing summary of the Loan and Security Agreement and the Supplement do not purport to be complete and are qualified in their entirety by reference to the full text of Loan and Security Agreement and the Supplement, which are filed herewith as Exhibits 10.1 and 10.2, and are incorporated by reference herein. The representations, warranties and covenants in the Loan and Security Agreement and the Supplement were made only for purposes of such agreement and as of specific dates and were solely for the benefit of the parties to such agreements.
Avenue Subscription Agreement
In connection with the entry into the Loan and Security Agreement, the Company entered into a Subscription Agreement (the “Subscription Agreement”) between the Company and Avenue, pursuant to which the Company issued 106,351 shares (the “Subscription Shares”) of the Company’s common stock to Avenue for no additional consideration. The issuance of the Subscription Shares was made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D thereunder, because the offer and sale of such securities does not involve a “public offering” as defined in Section 4(a)(2) of the Securities Act, and other applicable requirements are met.
Pursuant to the Subscription Agreement, the Company shall use its commercially reasonable efforts to prepare and file with the SEC within 60 days of the LSA Closing Date a registration statement on Form S-3, or if the Company is not then eligible to register for resale securities on Form S-3, on another appropriate form of registration statement, registering the resale of the Subscription Shares, and the shares of the Company’s common stock issuable upon the Conversion Right pursuant to the Loan and Security Agreement.
The foregoing summary of the Subscription Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of Subscription Agreement, which is filed herewith as Exhibit 10.3 and is incorporated by reference herein. The representations, warranties and covenants Subscription Agreement were made only for purposes of such agreement and as of specific dates and were solely for the benefit of the parties to such agreement.
Appointment of New Director
On August 1, 2025, the Company’s Board of Directors (the “Board”) appointed James C. Theofilos as a new Class II member of the Board. The term of each Class II director lasts until the Company’s 2026 annual meeting of stockholders. In connection with the appointment of Mr. Theofilos to the Board, the size of the Board was increased by resolution of the Board from seven members to eight members on August 1, 2025.
James C. Theofilos, 30, has been a Senior Finance Manager within the Azure and artificial intelligence division of Microsoft Corporation (“Microsoft”) since October 2023. In this role, Mr. Theofilos is the Go-to-Market (“GTM”) Finance Lead across Microsoft’s AI Apps & Agents team, which includes all of Microsoft’s AI models, GitHub Copilot, Copilot Studio, and other products that aim to deliver the full value of AI & Agents. Previously, Mr. Theofilos held various finance positions at Microsoft including his position as the Finance Lead for Microsoft’s Global Healthcare & Life Sciences Sales team, which included exposure to the Health Providers, Payors, Pharma and Med Tech industry verticals. Prior to that, Mr. Theofilos consulted as a Group Project Manager at VICI Properties Inc., a publicly traded Real Estate Investment Trust primarily engaged in the business of owning and acquiring gaming, hospitality, wellness, entertainment, and leisure destinations, based in New York City. Mr. Theofilos holds an M.S. in Finance and a B.S.B.A. in Finance from Washington University in Saint Louis. The Board believes that Mr. Theofilos’ business experience, and his knowledge of the finance and technology industries, qualify him to serve on the Board.
There are no arrangements or understandings between Mr. Theofilos and any other persons pursuant to which he was selected as a director of the Company. As required to be disclosed under Item 404(a) of Regulation S-K, Happy Holstein Management, LLC (“Happy Holstein”), of which Mr. Theofilos’ mother, Kathryn Theofilos, is the manager, participated as an investor in the Company’s June 2024 private placement. Happy Holstein purchased (i) warrants to purchase up to 385,059 shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”), and (ii) and pre-funded warrants to purchase 770,119 shares of Common Stock, in the private placement, the terms of which were described in a registration statement on Form S-1, originally filed by the Company with the SEC on July 10, 2024. The registration statement on Form S-1 covers the resale of certain securities issuable in connection with the private placement, and was declared effective by the SEC on July 22, 2024.
In connection with his appointment to the Board, Mr. Theofilos will receive the Company’s standard non-employee director compensation, and has been granted an inaugural equity award effective August 1, 2025, pursuant to the Company’s Non-Employee Director Compensation Policy, a copy of which was filed with the SEC as Exhibit 10.13 to the Company’s Registration Statement on Form S-1 on August 24, 2023. Additionally, Mr. Theofilos and the Company will enter into the Company’s standard indemnification agreement for directors and executive officers, the form of which was filed with the SEC as Exhibit 10.14 to the Company’s Registration Statement on Form S-1/A on May 21, 2018.
Resignation and Reappointment of a Director
Consistent with the amended and restated certificate of incorporation and amended and restated bylaws of the Company, and in order to achieve a more equal balance of membership among the three classes of members of the Board, the Board has determined that one of the Class II directors with a term expiring at the Company’s 2026 annual meeting of stockholders should move to Class III with a term expiring at the Company’s 2027 annual meeting of stockholders. Accordingly, on August 1, 2025, Thomas M. Patton resigned as a Class II director with a term expiring at the Company’s 2026 annual meeting of stockholders, and was immediately reappointed to the Board as a Class III director with a term expiring at the Company’s 2027 annual meeting of stockholders. The resignation and reappointment of Mr. Patton was not due to any disagreement with the Company, the Board or the management of the Company. For all other purposes, including equity award vesting and other compensation matters, Mr. Patton’s service on the Board is deemed to have continued uninterrupted. Mr. Patton will continue as the Chair of the Audit Committee of the Board.
(b) Not applicable.
(c) Trading Plans.
During
the quarter ended June 30, 2025, no director or Section 16 officer
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Item 6. EXHIBITS
| * | Filed herewith.
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| ** | The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report are not deemed filed with the SEC and are not to be incorporated by reference into any filing of electroCore, Inc. under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date of this Annual Report, irrespective of any general incorporation language contained in such filing. |
| # | Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules and exhibits to this exhibit have been omitted from this Quarterly Report on Form 10-Q and will be furnished to the Securities and Exchange Commission supplementally upon request. |
| ^ | Certain confidential portions of this exhibit have been redacted from the publicly filed document because such portions are (i) not material and (ii) would be competitively harmful of publicly disclosed. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned thereunto duly authorized.
| Company Name | ||
| Date: August 6, 2025 | By: | /s/ DANIEL S. GOLDBERGER |
| Daniel S. Goldberger | ||
Chief Executive Officer (Principal Executive Officer) | ||
| Date: August 6, 2025 | By: | /s/ JOSHUA S. LEV |
| Joshua S. Lev | ||
Chief Financial Officer (Principal Financial and Accounting Officer) | ||
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