20 unchanged sentences
Other Information
+Added: Annual Meeting Matters
+Added: On March 3, 2023, our Board of Directors determined that the date of our 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”) will be Monday, August 4, 2023.
+Added: The 2023 Annual Meeting is expected to be a virtual-only meeting conducted via remote communications.
+Added: The record date, time, and meeting website information for the 2023 Annual Meeting will be set forth in a proxy statement for the 2023 Annual Meeting, which will be filed prior to the 2023 Annual Meeting with the Securities and Exchange Commission.
+Added: Due to the fact that the meeting date for the 2023 Annual Meeting is advanced more than 30 days prior to the anniversary of our 2022 Annual Meeting which was held on December 2, 2022, we are providing the timelines for stockholder proposals and director nominations for the 2023 Annual Meeting.
+Added: • For stockholder proposals to be presented for inclusion in the Company’s proxy materials for the 2023 Annual Meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (the “Exchange Act”), they must be received not later than March 22, 2023;
+Added: • For stockholder proposals not for inclusion in the Company’s proxy materials for the 2023 Annual Meeting, they must be received between April 6, 2023 and May 5, 2023;
+Added: • For director nominations by stockholders not soliciting proxies, they must be received between April 6, 2023 and May 5, 2023;
+Added: • For director nominations by stockholders soliciting proxies, they must be received no later than June 5, 2023.
+Added: Any of the foregoing proposals or nominations must be delivered to, or mailed and received by, the Company’s Corporate Secretary at the principal executive offices of the Company at 200 Forge Way, Suite 205, Rockaway, NJ 07866, in writing and in proper form, and must set forth the information required by the Company’s amended and restated bylaws and applicable requirements under the Exchange Act rules.
+Added: Elimination of Series A Preferred Stock.
+Added: On March 6, 2023 , we filed a certificate of elimination (the “Certificate of Elimination”), with the Secretary of State of the State of Delaware with respect to the Series A Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”), that had been authorized and designated for issuance by our board on December 2, 2022.
+Added: At the time of filing of the Certificate of Elimination, no shares of Series A Preferred Stock were outstanding.
+Added: All previously issued shares of Series A Preferred Stock were redeemed pursuant to their terms on February 13, 2023.
+Added: The Certificate of Elimination eliminated the previous designation of 80,000 shares of Series A Preferred Stock from our certificate of incorporation, and caused such previously designated shares to resume their status as authorized but unissued and non-designated shares of preferred stock.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
14 unchanged sentences
(1) Financial Statements:
−Removed: Report of Independent Registered Public Accounting Firm PCAOB ID # 688
−Removed: Consolidated Balance Sheets
−Removed: Consolidated Statements of Operations
−Removed: Consolidated Statements of Comprehensive Loss
−Removed: Consolidated Statements of Equity
−Removed: Consolidated Statements of Cash Flows
−Removed: Notes to Consolidated Financial Statements
+Added: Report of Independent Registered Public Accounting Firm (PCAOB ID # 688) F-2
+Added: Consolidated Balance Sheets F-3
+Added: Consolidated Statements of Operations F-4
+Added: Consolidated Statements of Comprehensive Loss F-5
+Added: Consolidated Statements of Equity F-6
+Added: Consolidated Statements of Cash Flows F-7
+Added: Notes to Consolidated Financial Statements F-8
(2) Financial Statement Schedules:
4 unchanged sentences
Form 10-K Summary
+Added: Not applicable.
Certificate of Incorporation of electroCore, Inc .
Amended and Restated Bylaws of electroCore, Inc .
+Added: Certificate of Designation of the Series A Preferred Stock of the Company
+Added: Certificate of Elimination of the Series A Preferred Stock of the Company, dated March 3, 2023
+Added: Certificate of Amendment to the Certificate of Incorporation, filed February 13, 2023
Registration Rights Agreement, dated March 27, 2020, between electroCore, Inc.
55 unchanged sentences
****** Incorporated by reference to the Company's Current Report on Form 8-K as filed with Commission on December 23, 2021
+Added: ******* Incorporated by reference to the Company's Current Report on Form 8-K as filed with the Commission on December 27, 2022.
+Added: ******** Incorporated by reference to the Company's Current Report on Form 8-K as filed with the Commission on February 14, 2023.
Indicates management agreement
12 unchanged sentences
March 8, 2023
−Removed: /s/ Michael G.
March 8, 2023
11 unchanged sentences
March 8, 2023
+Added: /s/ Patricia Wilber
+Added: March 8, 2023
+Added: Patricia Wilber
/s/ Trevor J.
1 unchanged sentence
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Report of Independent Registered Public Accounting Firm PCAOB ID # 688
−Removed: Consolidated Balance Sheets as of December 31, 2021 and 2020
+Added: Report of Independent Registered Public Accounting Firm (PCAOB ID # 688 ) F-2
+Added: Consolidated Balance Sheets as of December 31, 2022 and 2021 F-3
Consolidated Statements of Operations for the Years ended December 31, 2022 and 2021
−Removed: Consolidated Statements of Comprehensive Loss for the Years ended December 31, 2021 and 2020
−Removed: Consolidated Statements of Equity for the Years ended December 31, 2021 and 2020
−Removed: Consolidated Statements of Cash Flows for the Years ended December 31, 2021 and 2020
−Removed: Notes to Consolidated Financial Statements
+Added: Consolidated Statements of Comprehensive Loss for the Years ended December 31, 2022 and 2021 F-5
+Added: Consolidated Statements of Equity for the Years ended December 31, 2022 and 2021 F-6
+Added: Consolidated Statements of Cash Flows for the Years ended December 31, 2022 and 2021 F-7
+Added: Notes to Consolidated Financial Statements F-8
Report of Independent Registered Public Accounting Firm
3 unchanged sentences
We have audited the accompanying consolidated balance sheets of electroCore, Inc.
−Removed: and Subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, equity and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).
+Added: (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss , equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
+Added: Explanatory Paragraph – Going Concern
+Added: The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
+Added: As more fully described in Note 3, the Company has experienced significant losses and cash used in operations and expects to continue to incur net losses.
+Added: These conditions raise substantial doubt about the Company's ability to continue as a going concern.
+Added: Management's plans in regard to these matters are also described in Note 3.
+Added: The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
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Consolidated Balance Sheets
+Added: (in thousands, except share data)
Current assets:
Cash and cash equivalents
−Removed: Marketable securities
+Added: Restricted cash
Accounts receivable, net
10 unchanged sentences
Accrued expenses and other current liabilities
−Removed: Note payable, current
Current portion of operating lease liabilities
Total current liabilities
+Added: Noncurrent liabilities:
Operating lease liabilities, noncurrent
−Removed: Note payable, noncurrent
Total liabilities
−Removed: Commitments and contingencies (Note 17)
−Removed: Stockholders' equity:
+Added: Commitments and contingencies (see Note 13)
+Added: Mezzanine equity:
Preferred Stock, par value $ 0.001 per share;
10,000,000 shares authorized as of December 31, 2022 and December 31, 2021;
−Removed: 0 shares issued and outstanding as of both December 31, 2021 and December 31, 2020
+Added: 71,173 shares issued and outstanding at December 31, 2022 ($ 0.001 per share liquidation value) and 0 shares issued and outstanding at December 31, 2021
+Added: Stockholders' equity:
Common Stock, par value $ 0.001 per share;
3 unchanged sentences
Accumulated deficit
−Removed: ( 124,208,218
−Removed: ( 106,990,148
−Removed: Accumulated other comprehensive income (loss)
−Removed: Total stockholders' equity
−Removed: Noncontrolling interest
+Added: Accumulated other comprehensive (loss) income
Total liabilities and equity
3 unchanged sentences
Consolidated Statements of Operations
+Added: (in thousands, except per share data)
Years ended December 31,
3 unchanged sentences
Selling, general and administrative
−Removed: Restructuring and other severance related charges
Total operating expenses
8 unchanged sentences
Benefit from income taxes
+Added: Preferred stock dividend
+Added: Net loss available for common shareholders
Net loss per share of common stock - Basic and Diluted (see Note 9)
4 unchanged sentences
Consolidated Statements of Comprehensive Loss
+Added: (in thousands)
Years ended December 31,
2 unchanged sentences
Foreign currency translation adjustment - deconsolidation
−Removed: Unrealized gain (loss) on marketable securities, net of taxes as applicable
−Removed: Other comprehensive income (loss)
−Removed: Comprehensive loss
+Added: Unrealized gain on marketable securities, net of taxes as applicable
+Added: Other comprehensive (loss) income
+Added: Preferred dividend
+Added: Comprehensive loss available to common shareholders
See accompanying notes to consolidated financial statements.
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Consolidated Statements of Equity
−Removed: For the Years Ended December 31, 2021 and 2020
+Added: (in thousands)
+Added: Mezzanine Equity
+Added: Stockholders' Equity
Accumulated other
−Removed: Total electroCore, Inc.,
+Added: Total electroCore
+Added: Preferred Stock
comprehensive
−Removed: stockholders'
Noncontrolling
income (loss)
−Removed: Balances as of December 31, 2019
−Removed: Other comprehensive income
−Removed: Issuance of stock (see Note 12 )
−Removed: Equity financing commitment fee*
−Removed: Financing fees
−Removed: Issuance of common stock in connection with
−Removed: employee stock plans, net of forfeitures
−Removed: Share based compensation
−Removed: Balances as of December 31, 2020
−Removed: ( 106,990,148
+Added: Balances as of January 1, 2021
Other comprehensive income
1 unchanged sentence
Issuance of stock to satisfy certain obligations (see Note 8)
−Removed: Issuance of common stock in connection with
−Removed: employee stock plans, net of forfeitures
+Added: Issuance of common stock in connection with employee stock plans, net of forfeitures
Settlement of accrued bonus
Share based compensation
+Added: Reverse stock split
Termination of joint venture
+Added: Balances as of January 1, 2022
+Added: Other comprehensive loss
+Added: Issuance of common stock in connection with employee stock plans, net of forfeitures
+Added: Dividend preferred (see Note 8)
+Added: Share based compensation
Balances as of December 31, 2022
$ ( 146,370 )
−Removed: * Reflects commitment shares issued in accordance with the Company's equity facility purchase agreement with Lincoln Park Capital.
−Removed: For additional information see Note 12.
−Removed: Stockholders' Equity, Lincoln Park Purchase Agreement.
See accompan ying notes to the c onsolidated financial statements.
2 unchanged sentences
Consolidated Statements of Cash Flows
+Added: (in thousands)
Year ended December 31,
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Inventory reserve charge
−Removed: Write-off of right of use operating lease asset
Changes in operating assets and liabilities:
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Proceeds from maturities of marketable securities
−Removed: Net cash provided by (used in) investing activities
+Added: Net cash provided by investing activities
Cash flows from financing activities:
Proceeds from shares issued, net of related expenses
−Removed: Proceeds from note issued
Net cash provided by financing activities
Effect of changes in exchange rates on cash and cash equivalents
−Removed: Net increase (decrease) in cash and cash equivalents
+Added: Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents – beginning of year
−Removed: Cash and cash equivalents – end of year
+Added: Cash and cash equivalents, and restricted cash – end of year
Supplemental cash flows disclosures:
3 unchanged sentences
Supplemental schedule of noncash activity:
+Added: Insurance premium financing
Settlement of certain obligations through issuance of common stock
4 unchanged sentences
Notes to Consolidated Financial Statements
−Removed: electroCore is commercial stage medical device company with a proprietary non-invasive vagus nerve stimulation, or nVNS, therapy, called gammaCore.
−Removed: nVNS is a platform bioelectronic medical therapy that modulates neurotransmitters and immune function through its effects on both the peripheral and central nervous systems.
−Removed: The Company is initially focused on utilizing gammaCore in the management and treatment of primary headache conditions.
−Removed: electroCore, headquartered in Rockaway, New Jersey, has two wholly owned subsidiaries:
−Removed: electroCore Germany GmbH, and electroCore UK Ltd.
−Removed: The Company has ceased its operations in Germany, although sales to Germany are still supported by electroCore UK Ltd.
+Added: electroCore , Inc .
+Added: and its subsidiaries (“ electroCore ” or the “Company”) is a commercial stage bioelectronic medicine and wellness company dedicated to improving health through its non-invasive vagus nerve stimulation (“ nVNS ”) technology platform.
+Added: The Company’s focus is the commercialization of medical devices for the management and treatment of certain medical conditions and consumer product offerings utilizing nVNS to promote general wellbeing and human performance in the United States and select overseas markets.
+Added: electroCore, headquartered in Rockaway, NJ, has two wholly owned subsidiaries:
+Added: electroCore UK Ltd and electroCore Germany GmbH.
+Added: The Company has paused operations in Germany, with sales into the country and the rest of Europe being managed by electroCore UK Ltd.
On November 2, 2021, the Company formally terminated its agreement with electroCore ( Aust ) Pty Limited (“ electroCore Australia”).
5 unchanged sentences
The accompanying consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.
−Removed: GAAP”), and the rules and regulations of the Securities and Exchange Commission ("SEC").
−Removed: ELECTROCORE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements — Continued
−Removed: (b) Principles of Consolidation
+Added: GAAP”), and the rules and the regulations of the Securities and Exchange Commission ("SEC").
+Added: At a special stockholders meeting held on February 13, 2023, the Company's stockholders approved an amendment to the Company's certificate of incorporation to effect of a reverse stock split of the Company's common stock at a ratio between 1-for-5 to 1-for-50 in order to achieve a minimum bid price of $ 1.00 per share for a minimum of 10 consecutive trading days, as required for continuing listing of the common stock on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2).
+Added: The board of directors authorize d a 1-for-15 ratio for the reverse stock split, which became effectiv e on February 15, 2023.
+Added: T he accompanying consolidated financial statements and notes to consolidated financial statements give retroactive effect to the reverse stock split for all periods presented.
+Added: (b) Principles of Consolida tion
The accompanying consolidated financial statements include the accounts of electroCore and its wholly owned subsidiaries.
−Removed: electroCore Australia wa s consolidated with the non-controlled equity presented as non-controlling interest in the Company's consolidated financial statements for the year ended December 31, 2020.
−Removed: As described in Note 1, the Company terminated its affiliation with electroCore Australia on November 2, 2021 and, as such, this dormant entity was not included in the Company's consolidated financial statements for the year ended December 31, 2021.
+Added: electroCore Australia was consolidated with the non-controlled equity presented as non-controlling interest in the Company's consolidated financial statements for the year ended December 31, 2020.
+Added: As described in Note 1, the Company terminated its affiliation with electroCore Australia on November 2, 2021 and, as such, this dormant entity was not included in the Company's subsequent consolidated financial statements.
All intercompany balances and transactions have been eliminated in consolidation.
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Actual results could differ from those estimates.
−Removed: Significant items subject to such estimates and assumptions include allowances for doubtful accounts, trade credits, rebates, co-payment assistance and sales returns, valuation of inventory , stock compensation, incremental borrowing rate and contingencies.
+Added: Significant items subject to such estimates and assumptions include allowances for doubtful accounts, trade credits, rebates, co-payment assistance and sales returns, valuation of inventory , estimated useful life of licensed product and cloud computing arrangements, stock compensation, incremental borrowing rate and contingencies.
+Added: ELECTROCORE, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements — Continued
(d) Revenue Recognition
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A cash refund is allowed under specific circumstances for undamaged and non-defective returned products.
−Removed: (e) Cash and Cash Equivalents
−Removed: Cash and cash equivalents include all highly liquid investments with a maturity of three months or less when purchased.
−Removed: The Company’s accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 per financial institution in the United States, and up to £ 85,000 by the Financial Services Compensation Scheme (“FSCS”) per financial institution in the United Kingdom.
−Removed: (f) Marketable Securities
−Removed: Marketable securities, all of which are available-for-sale, consist of corporate debt securities, U.S.
−Removed: bonds and U.S.
−Removed: sponsored agencies.
−Removed: 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.
−Removed: 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.
−Removed: Fair values are based on quoted market prices at the reporting date.
−Removed: Interest and dividends on available-for-sale securities are included in Interest and other income.
+Added: For the years ended December 31, 2022 and 2021 , trade credits and discounts were immaterial.
+Added: (e) Cash, Cash Equivalents and Restricted Cash
+Added: Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less when purchased.
+Added: The following table provides a reconciliation of cash, cash equivalents and restricted cash to the balance reflected on the Consolidated Statement of Cash Flow for the year ended December 31, 2022:
+Added: (in thousands) Year Ended
+Added: December 31, 2022
+Added: Cash and cash equivalents $ 17,712
+Added: Restricted cash
+Added: Total cash, cash equivalents and restricted cash $ 17,962
+Added: (f) Restricted Cash
+Added: 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.
ELECTROCORE, INC.
2 unchanged sentences
(g) Concentration of Credit Risk
−Removed: Cash, cash equivalents and marketable securities are financial instruments that potentially subject the Company to concentration of credit risk.
−Removed: As of December 31, 2021, the Company's cash equivalents and marketable securities were largely comprised of money market funds.
+Added: Cash equivalents are financial instruments that potentially subject the Company to concentration of credit risk.
+Added: As of December 31, 2022, the Company's cash equivalents securities were largely comprised of money market funds.
The Company has established guidelines relative to diversification and maturities that are designed to help ensure safety and liquidity.
These guidelines are periodically reviewed to take advantage of trends in yields and interest rates.
−Removed: As of December 31, 2021 , approximately 99.2 % of the Company’s cash, cas h equivalents and marketable securities was denominated in U.S.
+Added: As of December 31, 2022 , 95 % of the Company’s cas h and cash equivalents were denominated in U.S.
Dollars, the balance is subject to foreign exchange risk.
+Added: The Company’s accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 per financial institution in the United States, and up to £ 85,000 by the Financial Services Compensation Scheme (“FSCS”) per financial institution in the United Kingdom.
(h) Accounts Receivable
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In addition, the Company’s product is subject to strict quality control and monitoring which the Company performs throughout the manufacturing process.
−Removed: If certain units of product no longer meet quality specification or become obsolete, the Company records a charge to cost of sales sold to write down such unmarketable inventory to zero.
+Added: If certain units of product no longer meet quality specification or become obsolete, the Company records a charge to cost of goods sold to write down such unmarketable inventory to zero .
(j) Property and Equipment
13 unchanged sentences
For each lease, the lease term is determined at the commencement date and includes renewal options and termination options when it is reasonably certain that the Company will exercise that option.
−Removed: Operating leases with the lease terms greater than one year are included in operating lease right-of-use (“ROU”) assets and current and long-term operating lease liabilities in the Company’s consolidated balance sheets.
+Added: Operating leases with lease terms greater than one year are included in operating lease right-of-use (“ROU”) assets and current and long-term operating lease liabilities in the Company’s consolidated balance sheets.
Operating lease ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease.
10 unchanged sentences
The capitalized costs are included as a component of other assets.
−Removed: (m) Impairment of Long-Lived Assets
−Removed: Long lived assets, such as property, plant, and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
+Added: The accompanying Consolidated balance sheet as of December 31, 2022 includes a total of $ 1.2 million of such capitalized costs and the corresponding net amortized asset totaled $ 235,000 .
+Added: (m) Licensed Products
+Added: The Company licenses a portion of its devices through its cash pay channels.
+Added: The cost of these licensed devices is capitalized and included in Other Assets in the accompanying Consolidated Balance Sheets at December 31, 2022 and 2021, and is being recognized as cost of goods sold on the straight-line method over the estimated 12 - 36 month useful life of the devices.
+Added: I f certain licensed devices are returned and no longer meet quality specifications or the carrying amount of certain licensed devices are no longer deemed to be recoverable, the Company records a charge to cost of goods sold to write down such licensed devices t o zero .
+Added: During the year ended December 31, 2022, the Company recorded a charge to costs of goods sold of $ 239,000 related to such assets.
+Added: The accompanying Consolidated balance sheet as of December 31, 2022 includes a total of $ 931,000 of capitalized licensed device costs and the corresponding net amortized assets totaled $ 538,000 .
+Added: Cash flows from licensed devices are included in Inventory in the accompanying Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021.
+Added: (n) Impairment of Long-Lived Assets
+Added: Long lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount.
1 unchanged sentence
Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary.
−Removed: (n) Stock-based Compensation
+Added: (o) Stock-based Compensation
The Company accounts for stock-based compensation in accordance with the ASC Topic 718, Compensation – Stock Compensation .
5 unchanged sentences
Notes to Consolidated Financial Statements — Continued
−Removed: (o) Income Taxes
+Added: (p) Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, "Income Taxes." Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases.
5 unchanged sentences
The Company is currently not aware of any issues under review that could result in significant payments, accruals or deviation from its position during the next twelve months.
−Removed: (p) Research and Development
+Added: (q) Research and Development
Research and development costs are expensed as incurred.
These costs include, but are not limited to, costs related to clinical trials, and compensation and related overhead for employees and consultants involved in research and development activities.
−Removed: (q) Foreign Currency Translation and Transactions
+Added: (r) Foreign Currency Translation and Transactions
The functional currency of the Company’s international operations has been determined to be the respective local currency.
4 unchanged sentences
Foreign currency transaction gains and losses related to assets and liabilities that are denominated in a currency other than the functional currency are reported in the Consolidated Statements of Operations in the period they occur.
−Removed: (r) Segment Information
+Added: (s) Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance.
The Company views its operations and manages its business as one operating segment.
−Removed: (s) Revision of Statement of Cash Flows Activity
−Removed: In preparation of its financial statements for the quarter ended March 31, 2021, the Company realized that proceeds from its July 1, 2020 Commercial Insurance Premium Finance and Security Agreement should have been treated as a noncash activity instead of grossed up on the accompanying consolidated statement of cash flows.
−Removed: Even though the amount was not considered material, the financial statements have been revised.
−Removed: As a result, net cash used in operating and provided by financing activities for the year ended December 31, 2020, decreased by approximately $ 52,000 .
(t) Prior year presentation
1 unchanged sentence
(u) Recently Adopted Accounting Standards
−Removed: In August 2018, the FASB issued guidance which modified the disclosure requirements for fair value measurements.
−Removed: The guidance is effective for the year ended December 31, 2020.
−Removed: The Company adopted this guidance, and it was properly reflected in the consolidated financial statements.
−Removed: The impact on the consolidated financial statements was immaterial.
−Removed: I n June 2016, the FASB issued ASU 2016-13 , Financial Instruments – Credit Losses (Topic 326 );
−Removed: Measurement of Credit Losses on Financial Instruments, ASU 2016-13 changes the impairment model for most financial assets, including trade and other receivables, from an incurred loss method to a new forward looking approach based on expected losses.
−Removed: The new approach includes the consideration of historical experience, current conditions, and reasonable and supportable forecasts.
−Removed: The Company adopted this guidance and determined the impact on the consolidated financial statements was immaterial.
−Removed: In December 2019, the FASB issued an update to simplify the accounting for income taxes and improve consistent application by clarifying or amending existing guidance.
−Removed: This guidance is effective for the year ended December 31, 2021.
−Removed: The Company adopted this guidance and determined the impact on the consolidated financial statements was immaterial.
+Added: There are no recent accounting pronouncements that are expected to have a material impact on the Company’s consolidated financial statements or related disclosures.
ELECTROCORE, INC.
2 unchanged sentences
Significant Risks and Uncertainties
−Removed: The Company has experienced significant net losses and cash used in operations, and it expects to continue to incur net losses and cash used in operations for the near future as it works to increase market acceptance of its gammaCore.
+Added: Going Concern
+Added: The Company has experienced significant net losses and cash used in operations, and it expects to continue to incur net losses and cash used in operations for the near future as it works to increase market acceptance of its medical devices and wellness products.
The Company has never been profitable and has incurred net losses and cash used in operations in each year since its inception.
−Removed: The Company incurred net losses of $ 17.2 million and $ 23.5 million for the years ended December 31, 2021 and 2020, respectively.
−Removed: Cash used in operating activities was $ 13.6 million and $ 20.1 million for the years ended December 31, 2021 and 2020, respectively.
+Added: The United States Department of Veteran Affairs comprised 60.8 % of the Company's revenue during the year ended December 31, 2022.
+Added: The Company expects that a majority of our 2023 sales will be made pursuant to its qualifying contract under the Federal Supply Schedule, or FSS, which was secured by the Company in December 2018, as well as open market sales to individual facilities within the government channels.
+Added: The FSS is scheduled to expire on January 15, 2024.
+Added: The Company intends to request an extension of the FSS from the United States Department of Veteran Affairs, but there is no assurance the FSS will be renewed, and if at all renewed at terms favorable to the Company.
+Added: The Company's sales function in this channel is comprised of employees and independent contractors.
The Company’s expected cash requirements for the next 12 months and beyond are largely based on the commercial success of its products.
−Removed: There are significant risks and uncertainties as to its ability to achieve these operating results, including as a result of the adverse impact on its headache business from the ongoing COVID-19 pandemic.
+Added: There are significant risks and uncertainties as to its ability to achieve these operating results.
+Added: Due to the risks and uncertainties, the Company may need to reduce its activities significantly more than its current operating plan and cash flow projections assume in order to fund its operations beyond one year of the date the accompanying financial statements are issued.
+Added: There can be no assurance that the Company will have sufficient cash flow and liquidity to fund its planned activities, which could force it to significantly reduce or curtail its activities and, ultimately, potentially cease operations.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
−Removed: The Company has historically funded its operations from the sale of its common stock.
−Removed: During the year ended December 31, 2021, the Company received net proceeds of approximately $ 25.7 million from such sales and as of December 31, 2021, the Company’s cash, cash equivalents and marketable securities totaled $ 34.7 million.
−Removed: The Company believes that the substantial doubt of its ability to continue as a going concern is alleviated based on proceeds received from its common stock offerings.
−Removed: The Company believes its cash and marketable securities 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.
+Added: There is no assurance that the Company will generate sufficient funds through its operating results or financing activity raising substantial doubt about the Company’s ability to continue as a going concern within one year of the date of the accompanying financial statements are issued.
+Added: The accompanying financial statements do not include any adjustment that might result from the outcome of this uncertainty.
Concentration of Revenue Risks
The Company earns a significant amount of its revenue (i) in the United States from the Department of Veterans Affairs and Department of Defense ("VA/ DoD ") pursuant to its qualifying contract under the Federal Supply Schedule and open market sales to individual Department of Veterans Affairs facilities, and (ii) in the United Kingdom from the National Health Service.
−Removed: Each of these two channels accounted for 10 % or more of the Company's net sales in the years ended December 31, 2021 and 2020.
−Removed: The following table reflects the respective concentration as a percentage of the Company's total net sales:
+Added: The VA/ DoD and National Health Service were the Company’s sole customers accounting for 10 % or more of total net sales during the years ended December 31, 2022 and 2021.
+Added: The following table reflects the respective concentration as a percentage of the Company's net sales:
Years ended December 31,
1 unchanged sentence
National Health Service
−Removed: The following table reflects the Company's net sales concentration within the VA/DoD :
−Removed: Years ended December 31,
−Removed: Number of VA/DoD facilities
−Removed: VA/DoD net sales concentration
−Removed: Number of VA/DoD facilities accounting for more than 10 % of VA/DoD net sales
−Removed: ELECTROCORE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements — Continued
−Removed: During these periods, no other customer accounted for 10 % or more of the Company's net sales.
+Added: During the years ended December 30, 2022 and 2021, one and two facilities accounted for more than 10 % of total VA/DOD net sales, respectively.
+Added: During the years ended December 31, 2022 and 2 021, one facilit y accounted for more than 10 % of net sales from the National Health Service.
Foreign Currenc y Exchang e Risks
2 unchanged sentences
COVID- 19 Risks and Uncertainties
−Removed: The Company continues to monitor the impact of the coronavirus pandemic on all aspects of its business and geographies, including how it will impact business partners, customers and the global supply chain.
+Added: ELECTROCORE, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements — Continued
+Added: The Company continues to monitor the impact of the ongoing coronavirus pandemic on all aspects of its business and geographies, including how it will impact business partners, customers, and the global supply chain.
While the Company experienced disruptions during the years ended December 31, 2022 and 2021 from the coronavirus pandemic, it is unable to predict the full impact that the coronavirus pandemic may have on its financial condition, results of operations and cash flows due to numerous uncertainties.
−Removed: These uncertainties include the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others.
+Added: These uncertainties include the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the ongoing pandemic and containment measures, the emergence of new viral strains that are not responsive to the vaccines, among others.
The coronavirus pandemic has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets.
4 unchanged sentences
Years ended December 31,
−Removed: Geographic Market
+Added: (in thousands)
+Added: Product revenue
United States
United Kingdom
+Added: License revenue
Total Net Sales
−Removed: Performance Obligations
−Removed: Revenue, net of discounts, vouchers, rebates, returns, and co-payment assistance is solely generated from the sales of the gammaCore products.
−Removed: Revenue is recognized when delivery of the product is completed.
−Removed: The Company deems control to have transferred upon the completion of delivery because that is the point in which (1) it has a present right to payment for the product, (2) it has transferred the physical possession of the product, (3) the customer has legal title to the product, (4) the customer has risks and rewards of ownership and (5) the customer has accepted the product.
−Removed: After the products have been delivered and control has transferred, the Company has no remaining unsatisfied performance obligations.
−Removed: Revenue is measured based on the consideration that the Company expects to receive in exchange for gammaCore, which represents the transaction price.
−Removed: The transaction price includes the fixed per-unit price of the product and variable consideration in the form of trade credits, rebates, and co-payment assistance.
−Removed: The per-unit price is based on the Company’s established wholesale acquisition cost less a contractually agreed upon distributor discount with the customer.
−Removed: Trade credits are discounts that are contingent upon a timely remittance of payment and are estimated based on historical experience.
−Removed: For the years ended December 31, 2021 and 2020, trade credits and discounts were immaterial.
Contract Balances
The Company generally invoices the customer and recognizes revenue once its performance obligations are satisfied, at which point payment is unconditional.
−Removed: Accordingly, under ASC 606, the Company’s contracts with customers did not give rise to contract assets or liabilities during the year ended December 31, 2021 and 2020.
+Added: In March 2022, the Company entered into an agreement with Teijin Limited (Teijin), to license certain exclusive rights to its nVNS technology for commercialization in Japan for a range of primary headache disorders.
+Added: Under the agreement, the Company received a non-refundable, upfront payment for the licenses and rights granted to Teijin.
+Added: The Company began to recognize revenue for this upfront payment ratably over a period of one year commencing in the second quarter of 2022.
+Added: As of December 31, 2022, the Company's Consolidated balance sheet included a contract liability related to the Teijin agreement in the amount of $ 152,000 which is included in Accrued expenses and other current liabilities.
+Added: No further contracts with customers gave rise to contract assets or liabilities during the year ended December 31, 2022 and 2021 .
+Added: See Note 7 Accrued Expenses and other current liabilities.
Agreed upon payment terms with customers are within 30 days of shipment.
Accordingly, contracts with customers do not include a significant financing component.
−Removed: ELECTROCORE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements — Continued
−Removed: Cash, Cash Equivalents and Marketable Securities
−Removed: The following tables summarizes the Company’s cash, cash equivalents and marketable securities as of December 31, 2021 and 2020.
−Removed: As of December 31, 2021
−Removed: Amortized Cost
−Removed: Unrealized Gain
−Removed: Unrealized (Loss)
−Removed: Cash and cash equivalents
−Removed: Treasury Bonds
−Removed: Total marketable securities
−Removed: Total cash, cash equivalents and marketable securities
−Removed: As of December 31, 2020
−Removed: Amortized Cost
−Removed: Unrealized Gain
−Removed: Unrealized (Loss)
−Removed: Cash and cash equivalents
−Removed: Treasury Bonds
−Removed: Total marketable securities
−Removed: Total cash, cash equivalents and marketable securities
−Removed: The Company’s U.S.
−Removed: treasury bonds mature within one year.
−Removed: Fair Value Measurements
−Removed: Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three levels of the fair value hierarchy:
−Removed: Level 1—Quoted prices in active markets for identical assets or liabilities.
−Removed: 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.
−Removed: 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.
−Removed: ELECTROCORE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements — Continued
−Removed: As of December 31, 2020, the Company's Marketable securities (U.S.
−Removed: treasury bonds) in the amount of $ 18,386,160 were carried at fair value in accordance with Level 1 as described above.
−Removed: The Company had no financial assets or liabilities as of December 31, 2021 that required valuation in accordance with the Levels described above.
−Removed: The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period.
−Removed: There were no transfers within the hierarchy during the years ended December 31, 2021 and 2020.
−Removed: The carrying amount of the Company’s receivables and payables approximate their fair value due to their maturity.
As of December 31, 2022 and 2021, inventories consisted of the following:
+Added: (in thousands)
Raw materials
5 unchanged sentences
As of December 31, 2022 and 2021, the Company reserved $ 668,000 and $ 821,000 respectively, for obsolete inventory .
+Added: During the year ended December 31, 2022, the Company disposed of $ 110,000 of inventory which was previously reserved against.
The Company records charges for obsolete inventory in cost of goods sold.
−Removed: As of December 31, 2021 and 2020, noncurrent inventory was comprised of approximately $ 0.9 million and $ 0.7 million of raw materials, respectively, and $ 3.0 million and $ 4.2 million of work in process, respectively.
+Added: As of December 31, 2022 and 2021 , noncurrent inventory was comprise d of approximately $ 0.1 million and $ 0.9 million of raw materials, respectively, and $ 2.1 million and $ 3.0 million of work in process, respectively.
Inventory classified under the category Work in process consists of prefabricated assembled product.
2 unchanged sentences
Notes to Consolidated Financial Statements — Continued
−Removed: The Company accounts for leases in accordance with FASB ASU 2016-02, Leases (Topic 842), and its operating leases consist of office space, manufacturing/warehouse space, and office equipment.
+Added: The Company accounts for leases in accordance with FASB ASU 2016-02, Leases (Topic 842), and its operating leases consist of manufacturing/warehouse space and office equipment.
The Company elected not to recognize right of use assets and lease liabilities for short term leases, i.e., leases with a noncancelable period of 12 months or less.
3 unchanged sentences
In December 2020, the Company informed the Basking Ridge landlord of its intention to vacate the Basking Ridge office space on December 31, 2021.
−Removed: On December 31, 2020, the Company wrote off the net book value of the operating lease right of use asset associated with the Basking Ridge office space in the amount of $ 534,493 along with the related asset balances totaling $ 23,050 .
−Removed: This charge is reflected in the Company’s Consolidated Statement of Operations for the year ended December 31, 2020, under selling, general and administrative expense.
On September 27, 2021, the Company entered into the Termination and Settlement Agreement ("Agreement") with the lessor of the Basking Ridge office space.
2 unchanged sentences
As of December 31, 2021, such payments were satisfied by the Company.
−Removed: The Company recorded a gain of $ 57,371 in connection with the termination of the Agreement which is included in the accompanying Consolidated Statements of Operations for the year ended December 31, 2021 under the caption Operating expenses - Selling, general and administrative.
+Added: The Company recorded a gain of $ 57,000 connection with the termination of the Agreement which is included in the accompanying Consolidated Statement of Operations for the year ended December 31, 2021 under the caption Operating expenses - Selling, general and administrative.
For the years ended December 31, 2022 and 2021 , the Company recognized lease expense of $ 153,000 and $ 146,000 , respectively.
1 unchanged sentence
Supplemental Balance Sheet Information for Operating Leases:
+Added: (in thousands)
Operating leases:
7 unchanged sentences
Future minimum lease payments under non-cancellable operating leases as of December 31, 2022:
−Removed: Financial year
+Added: Financial year (in thousands)
2028 and thereafter
4 unchanged sentences
Notes to Consolidated Financial Statements — Continued
−Removed: Cloud Computing Arrangement
−Removed: In 2018, the Company entered into a contract to obtain a cloud computing arrangement (“CCA”).
−Removed: In accordance with ASU 2018-15, the implementation costs incurred in the CCA were deferred and recognized as other assets and are being amortized to expense over the noncancelable term of the arrangement.
−Removed: The implementation of this CCA was completed on June 30, 2019.
−Removed: Beginning July 1, 2019, the Company went live with the cloud computing Enterprise Resource Planning system and all future related costs are expensed as incurre d.
−Removed: In July 2019, the Company began amortizing the related deferred costs over the remaining period of the noncancelable arrangement.
−Removed: Amortization costs for the years ended December 31, 2021 and 2020 were $ 282,074 and $ 282,074 , respectively.
−Removed: As of December 31, 2021, the remaining term of the lease is approximately two years .
−Removed: The CCA is included in the accompanying Consolidated Balance Sheet for the years ended December 31, 2021 and 2020 under the caption Other assets, net, and is summarized below :
−Removed: Cloud Computing Arrangement
−Removed: accumulated amortization
−Removed: Cloud Computing Arrangement, net
Accrued Expenses and Other Current Liabilities
Accrued expenses as of December 31, 2022 and 2021 consisted of the following:
+Added: (in thousands)
Accrued professional fees
Accrued bonuses and incentive compensation
+Added: Accrued litigation legal fees expense
Accrued insurance expense
−Removed: Other employee related expenses
−Removed: Miscellaneous taxes payable
+Added: Accrued vacation and other employee related expenses
+Added: Accrued valued-added tax
+Added: Deferred Revenue
Finance and Security Agreements
On July 5, 2022, the Company entered into a Commercial Insurance Premium Finance and Security Agreement (“the 2022 Agreement”).
−Removed: The 2021 Agreement provides for a single borrowing by the Company of $ 1.2 million, with a ten -month term and an annual interest rate of 1.55 %.
−Removed: The proceeds from this transaction were used to partially fund the premiums due under some of the Company’s insurance policies.
+Added: The 2022 Agreement provides for a single borrowing by the Company of approximately $ 783,000 with a nine -month term and an annual interest rate of 2.49 %.
+Added: The proceeds from this transaction were used to partially fund the premiums due under certain of the Company’s insurance policies.
The amounts payable are secured by the Company’s rights under such policies.
2 unchanged sentences
On July 2, 2021, the Company entered into a Commercial Insurance Premium Finance and Security Agreement (“the 2021 Agreement”).
−Removed: The 2020 Agreement provides for a single borrowing by the Company of $ 1.2 million, with a seven -month term and an annual interest rate of 2.18 %.
+Added: The 2021 Agreement provides for a single borrowing by the Company of $ 1.2 million, with a ten -month term and an annual interest rate of 1.55 %.
The proceeds from this transaction were used to partially fund the premiums due under some of the Company’s insurance policies.
−Removed: All borrowings related to the 2020 Agreement were fully repaid as of December 31, 2021.
−Removed: ELECTROCORE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements — Continued
+Added: The amounts payable are secured by the Company’s rights under such policies.
+Added: The Company began to pay monthly installments of approximately $ 124,800 beginning in July 2021.
+Added: As of December 31, 2021 , the remaining balance un der the Agreement was $ 499,000 and during the year ended December 31, 2021, the Company recognized $ 5,000 in interest expense.
Paycheck Protection Program
6 unchanged sentences
Accordingly, the Company was not required to repay the loan.
−Removed: The Company has recorded the loan forgiveness as a gain in the accompanying Consolidated Statements of Operations for the year ended December 31, 2021 under the caption Gain on extinguishment of debt.
+Added: The Company recorded the loan forgiveness as a gain in the accompanying Consolidated Statements of Operations for the year ended December 31, 2021 under the caption Gain on extinguishment of debt.
+Added: ELECTROCORE, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements — Continued
Stockholders’ Equity
+Added: All common stock share and per share data reflects the reverse stock split effective February 15, 2023, as described in Note 14.
+Added: Subsequent Events, Reverse stock split .
+Added: Dividend Preferred
+Added: On December 2, 2022, the Company's board of directors declared a dividend of one one-thousandth of a share of Series A Preferred Stock, par value $ 0.001 per share (“Series A Preferred Stock”), for each outstanding share of the Company’s common stock, to stockholders of record on December 19, 2022.
+Added: Each share of Series A Preferred Stock entitled the holder thereof to 1,000,000 votes per share, and each fraction of a share of Series A Preferred Stock had a ratable number of votes.
+Added: Thus, each one-thousandth of a share of Series A Preferred Stock was entitled to 1,000 votes.
+Added: The outstanding shares of Series A Preferred Stock voted together with the outstanding shares of the Company's common stock as a single class exclusively with respect to the proposal to adopt an amendment to the Company’s Certificate of Incorporation, as amended, to reclassify the outstanding shares of the Company's Common Stock into a smaller number of shares of common stock at a ratio specified in or determined in accordance with the terms of such amendment (the “Reverse Stock Split”).
+Added: The Company was not solely in control of the redemption of the shares of Series A Preferred Stock since the holders had the option of deciding whether to vote in respect of the above described Reverse Stock Split, which determined whether a given holder’s shares of Series A Preferred Stock were redeemed in the Initial Redemption or the Subsequent Redemption.
+Added: Since the redemption of the Series A Preferred Stock was not solely in the control of the Company, the shares of Series A Preferred Stock were classified within mezzanine equity in the Company’s audited consolidated balance sheet.
+Added: The shares of Series A Preferred Stock were measured at redemption value.
+Added: The value of the shares of Series A Preferred Stock as of December 31, 2022 was $ 71 .
+Added: Subsequent Events, Redemption and Elimination of Series A Preferred Stock.
+Added: ELECTROCORE, INC.
+Added: AND SUBSIDIARIES
+Added: Notes to Consolidated Financial Statements — Continued
Public Offering of Common Stock
8 unchanged sentences
In January 2021, the Company issued 11,028 shares of its common stock as payment for certain executive incentive bonuses accrued in 2020.
−Removed: Lincoln Park Purchase Agreement
−Removed: On March 27, 2020, the Company and Lincoln Park entered into an equity facility purchase agreement ("Purchase Agreement") pursuant to which the Company has the right to sell to Lincoln Park shares of common stock having an aggregate value of up to $ 25,000,000 , subject to certain limitations and conditions set forth in the purchase agreement.
−Removed: Upon entering into the Purchase Agreement with Lincoln Park, the Company issued an aggregate of 461,676 shares of common stock to Lincoln Park as a commitment fee.
−Removed: The fair value of these shares on the date of issuance was approximately $ 186,300 .
−Removed: During 2020 , the Company issued an additional 230,838 shares of common stock to Lincoln Park as a further commitment fee based on the first $ 5,000,000 of shares of common stock issued to Lincoln Park under the Purchase Agreement as Purchase Shares (as such term is defined in the Purchase Agreement) .
−Removed: The Company did not receive any cash proceeds from the issuance of any of the foregoing commitment shares.
−Removed: No further commitment fee shares remain issuable under the Purchase Agreement.
−Removed: The net proceeds under the Purchase Agreement to the Company will depend on the frequency and prices at which shares of common stock are sold to Lincoln Park.
−Removed: Actual sales of shares of common stock to Lincoln Park under the Purchase Agreement and the amount of such net proceeds will depend on a variety of factors, including market conditions, the trading price of the common stock and determinations by the Company as to other available and appropriate sources of funding for the Company.
−Removed: The Company has and expects to continue to use the proceeds from this agreement for general corporate purposes and working capital.
−Removed: During 2020 , the Company sold 10,179,676 shares of common stock under the Purchase Agreement, resulting in aggregate proceeds of approximately $ 15.5 million to the Company.
−Removed: In January 2021 , the Company sold an additional 2,750,000 shares of its common stock under the Purchase Agreement, resulting in aggregate proceeds of approximately $ 6.9 million to the Company.
−Removed: On March 11, 2021, the Company terminated the Purchase Agreement and, accordingly, the Company will not sell any further shares of its common stock to Lincoln Park under the Purchase Agreement.
−Removed: ELECTROCORE, INC.
−Removed: AND SUBSIDIARIES
−Removed: Notes to Consolidated Financial Statements — Continued
−Removed: Other 2020 Securities Purchase Agreements
−Removed: On April 14, 2020, the Company entered into a Securities Purchase Agreement (“First SPA”) with certain accredited investors pursuant to which the Company agreed to sell an aggregate of 2,058,822 shares of common stock at a purchase price of $ 0.85 per share for aggregate proceeds to the Company of approximately $ 1.75 million.
−Removed: Each of the purchasers was an affiliate and/or existing shareholder of the Company, including some members of the Company’s board of directors.
−Removed: In addition, the purchasers were granted customary registration rights as further described in the First SPA.
−Removed: On May 14, 2020, the Company entered into a Securities Purchase Agreement (“Second SPA”) with its legal counsel pursuant to which the Company agreed to issue 1,564,345 shares of common stock, at a purchase price of $ 0.99 per share.
−Removed: Upon issuance of the shares, certain outstanding financial obligations of the Company owed to its legal counsel were deemed paid and satisfied in full.
−Removed: In addition, the Company’s legal counsel was granted customary registration rights as further described in the Second SPA.
−Removed: During 2020, the Company recorded a non-cash charge of $ 156,434 in connection with this transaction.
−Removed: On May 18, 2020, the Company entered into a third Securities Purchase Agreement (“Third SPA”) with certain accredited investors pursuant to which the Company agreed to sell an aggregate of 505,205 shares of common stock at a purchase price of $ 0.9178 per share, for aggregate proceeds to the Company of approximately $ 0.45 million.
−Removed: In addition, the purchasers were granted customary registration rights as further described in the Third SPA.
Stock Purchase Warrants
The following table presents a summary of stock purchase warrants outstanding as of December 31, 2022:
−Removed: Number of Warrants
+Added: Number of Warrants (in thousands)
Weighted Average Exercise Price
5 unchanged sentences
Net Loss Per Share
+Added: All common stock share data reflects the reverse stock split effective February 15, 2023, as described in Note 14.
+Added: Subsequent Events, Reverse stock split .
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.
2 unchanged sentences
The potential common stock equivalents that have been excluded from the computation of diluted loss per share consist of the following:
+Added: (in thousands)
Outstanding stock options
11 unchanged sentences
Effective May 2017, the VIE had ceased operations.
−Removed: On November 2, 2021, the Company terminated its interest in electroCoreAustralia and recorded the related a gain of $ 549,254 in the accompanying Consolidated Statement of Operations for the year ended December 31, 2021 under the caption Gain on termination of joint venture.
+Added: On November 2, 2021, the Company terminated its interest in electroCoreAustralia and recorded the related a gain of $ 0.5 million in the accompanying Consolidated Statement of Operations for the year ended December 31, 2021 under the caption Gain on termination of joint venture.
The benefit for income taxes for the years ended December 31, 2022 and 2021 consisted of foreign taxes, state minimum tax and a benefit from the sale of state net operating losses.
Domestic and foreign components of the loss before provision for income taxes is as follows:
−Removed: December 31, 2021
+Added: (in thousands) December 31, 2022
December 31, 2021
−Removed: The income tax provision from continuing operations contains the following components:
+Added: The income tax (benefit)/expense from continuing operations contains the following components:
+Added: (in thousands)
December 31, 2022
December 31, 2021
−Removed: Total current
+Added: Total current (benefit)/expense
Total deferred
−Removed: Total income tax benefit
+Added: Total income tax (benefit)/expense
ELECTROCORE, INC.
7 unchanged sentences
Year ended December 31,
+Added: (in thousands)
Deferred tax assets
2 unchanged sentences
Allowance for bad debt
−Removed: Deferred rent
Charitable contributions
9 unchanged sentences
Deferred tax assets, net
−Removed: A reconciliation of the income tax provision computed at statutory rates to the reported income tax provision for the years ended December 31, 2021 and 2020 is as follows:
+Added: A reconciliation of the income tax expense (benefit) computed at the U.S.
+Added: federal statutory income tax rate of 21 % and the reported income tax expense (benefit) for the years ended December 31, 2022 and 2021 is as follows:
Year ended December 31,
1 unchanged sentence
State tax expected (recovery), net of federal benefit
+Added: State tax rate change 9.5 %
Stock compensation ( 0.2 )%
8 unchanged sentences
Notes to Consolidated Financial Statements — Continued
−Removed: As of December 31, 2021 and 2020 , the Company had accumulated net operating losses totaling $ 103.9 million and $ 87.2 million, respectively, in the U.S.
−Removed: (federal and state), which may be available to carry forward and offset future years' taxable income.
+Added: As of December 31, 2022 and 2021 , the Company had accumulated Federal net operating losses totaling $ 119.7 million and $ 103.9 million, respectively.
+Added: Also, as of December 31, 2022 and 2021, the Company had state post-apportioned net operating losses totaling $ 47.0 million and $ 40.5 million, respectively.
+Added: The net operating losses may be available to carry forward and offset future years' taxable income.
federal losses can be carried forward indefinitely, and state losses expire in various amounts beginning in 2026 .
−Removed: The Company also had accumulated losses totaling $ 3.6 million and $ 3.9 million in Germany which can be carried forward indefinitely.
+Added: The Company also had accumulated losses totaling $ 3.4 million and $ 3.6 million for the years ended December 31, 2022 and 2021, respectively, in Germany which can be carried forward indefinitely.
However, the NOL carryforwards may be, or become subject to, an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three year period in excess of 50 %, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, as well as similar state tax provisions.
16 unchanged sentences
federal and state tax authorities, or examinations by foreign tax authorities until the expiration of the respective statutes of limitation.
+Added: The Company’s U.S.
+Added: federal and state net operating losses have occurred since inception in 2018 and as such, tax years subject to potential tax examinations could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities.
The Company currently has no tax years under examination.
2 unchanged sentences
It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date.
−Removed: Coronavirus Aid, Relief, and Economic Security Act
−Removed: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act, the "CARES Act", was enacted and signed into law, and GAAP requires recognition of the tax effects of new legislation during the reporting period that includes the enactment date.
−Removed: The CARES Act, among other things, includes changes to the tax provisions that benefits business entities and makes certain technical corrections to the 2017 Tax Cuts and Jobs Act, including, permitting net operating losses, or NOLs, carryovers and carrybacks to offset 100 % of taxable income for taxable years beginning before 2021.
−Removed: In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.
−Removed: The CARES Act provides other reliefs and stimulus measures.
−Removed: The Company has evaluated the impact of the CARES Act, and determined that the provisions of the CARES Act did not have an impact on its financial statements or internal controls over financial reporting.
ELECTROCORE, INC.
2 unchanged sentences
Stock Based Compensation
+Added: All common stock share and per share data reflects the reverse stock split effective February 15, 2023, as described in Note 14.
+Added: Subsequent Events, Reverse stock split .
On June 21, 2018, the Company adopted the 2018 Omnibus Equity Incentive Plan (“Plan”).
6 unchanged sentences
Year ended December 31,
+Added: (in thousands)
Selling, general and administrative
3 unchanged sentences
The following table presents a summary of stock option award activity during the year ended December 31, 2022:
−Removed: Number of Options
+Added: Number of Options (in thousands)
Weighted Average Exercise Price
8 unchanged sentences
Exercise Price
−Removed: Options Outstanding (number)
+Added: Options Outstanding (in thousands)
Options Outstanding Weighted Average Remaining Contractual Life (Years)
−Removed: Options Exercisable (number)
+Added: Options Exercisable (in thousands)
$ 0.01 - $ 37.50
4 unchanged sentences
Notes to Consolidated Financial Statements — Continued
−Removed: The following table presents a summary of restricted stock award ("RSA" or "RSAs") activity during the year ended December 31, 2021:
−Removed: Number of Shares
−Removed: Weighted Average Grant Date Fair Value
−Removed: Nonvested, January 1, 2021
−Removed: Nonvested, December 31, 2021
−Removed: In general, RSAs granted to employees vest over a four -year period.
The following table presents a summary of restricted and deferred stock unit (“Unit” or "Units") activity during the year ended December 31, 2022:
−Removed: Number of Shares
+Added: Number of Shares (in thousands)
Weighted Average Grant Date Fair Value
7 unchanged sentences
Expected volatility was based on historical common stock volatility of the Company’s peers.
+Added: Beginning in December 2022, the Company began incorporating its historical common stock volatility at a weighting of 50 % of the total composite volatility rate.
+Added: During 2023, the Company will continue to evaluate the volatility rate used to value stock options.
The risk-free interest rate was based on the average U.S.
8 unchanged sentences
Dividend yield
−Removed: The fair value of RSAs and Units is the market close price of the Company’s common stock on the trading day immediately preceding the date of grant.
+Added: The fair value of Units is the market close price of the Company’s common stock on the trading day immediately preceding the date of grant.
ELECTROCORE, INC.
8 unchanged sentences
SOM-L 001007-19, respectively.
−Removed: In addition to the Company, the defendants included present and past directors and officers, Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities LLC and BTIG, LLC, the underwriters for its IPO;
+Added: In addition to the Company, the defendants include present and past directors and officers, Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities LLC and BTIG, LLC, the underwriters for its IPO;
and two of the Company’s stockholders.
12 unchanged sentences
On October 8, 2021, the Appellate Division issued an order reversing the decision of the Superior Court.
−Removed: The case was remanded to the Superior Court for oral argument on the motion to dismiss.
−Removed: On November 11, 2021 the defendants filed a supplemental motion to dismiss based on the certificate of incorporation’s forum selection clause.
+Added: The case has been remanded to the Superior Court for oral argument on the motion to dismiss.
+Added: On November 11, 2021, the defendants filed a supplemental motion to dismiss based on the forum selection clause in our certificate of incorporation's.
On December 10, 2021, the Superior Court heard argument of the original motion to dismiss and the supplemental motion to dismiss based on the federal forum selection clause.
−Removed: On December 14, 2021, the Superior Court granted both motions in their entirety and dismissed the action without leave to re-plead.
+Added: On December 14, 2021, the Superior Court granted the supplemental motion to dismiss based on the federal forum selection clause with prejudice and granted the original motion to dismiss without prejudice.
On January 27, 2022, the plaintiffs filed a notice of appeal to the Appellate Division.
−Removed: A briefing schedule has been set by the Appellate Division for the appeal but an argument date has not been set.
+Added: On April 15, 2022, the plantiffs filed their appeal brief.
+Added: The brief of defendant-appellees was filed on May 16, 2022.
+Added: The appeal is fully briefed.
+Added: Oral argument is scheduled for April 19, 2023.
On September 26, 2019, and October 31, 2019, purported stockholders of the Company served putative class action lawsuits in the United States District Court for the District of New Jersey captioned Allyn Turnofsky vs.
7 unchanged sentences
The complaints sought unspecified compensatory damages, interest, costs and attorneys’ fees.
+Added: The Priewe case was voluntarily dismissed on February 19, 2020.
In the Turnofsky case, on November 25, 2019, several plaintiffs and their counsel moved to be selected as lead plaintiff and lead plaintiff’s counsel.
−Removed: On April 24, 2020.
−Removed: the Court granted the motion of Carole Tibbs and the firm Bragar, Eagel & Squire, P.C.
+Added: On April 24, 2020, the Court granted the motion of Carole Tibbs and the firm Bragar, Eagel & Squire, P.C.
On July 17, 2020, the plaintiffs filed an amended complaint in Turnofsky .
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On August 13, 2021, the Court dismissed the amended complaint with leave to re-plead.
−Removed: On October 4, 2021, the plaintiffs filed a second amended complaint.
−Removed: On November 17, 2021, the defendants moved to dismiss the new complaint.
−Removed: Briefing on the motion is now complete.
+Added: On October 4, 2021, the plaintiffs filed a second amended complaint in the Turnofsky case.
+Added: The defendants have moved to dismiss.
+Added: Briefing on the motion was complete on January 7, 2022.
+Added: On July 5, 2022, the case was reassigned to Judge Zahid N.
+Added: Quraishi, who has ordered that he will consider the pending motion to dismiss in due course.
Argument of the motion has not yet been scheduled.
2 unchanged sentences
Notes to Consolidated Financial Statements — Continued
−Removed: The Priewe case was voluntarily dismissed on February 19, 2020.
−Removed: On March 4, 2021, purported stockholder Richard Martz brought a purported stockholder derivative action in the United States District Court for the District of New Jersey.
+Added: On March 4, 2021, purported stockholder Richard Maltz brought a purported stockholder derivative action in the United States District Court for the District of New Jersey.
The action is captioned Richard Maltz, derivatively on behalf of electroCore, Inc., vs.
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and an order requiring changes to corporate governance and internal procedures and a vote on proposed amendments to the Bylaws and Certificate of Incorporation.
−Removed: On March 8, 2021, purported stockholder Ewrin Yuson brought a purported stockholder derivative action in the United States District Court for the District of New Jersey.
−Removed: The action is captioned Erwin Yuson, derivatively on behalf of electroCore, Inc., vs.
+Added: On March 8, 2021, purported stockholder Erin Yuson brought a purported stockholder derivative action in the United States District Court for the District of New Jersey.
+Added: The action is captioned Erin Yuson, derivatively on behalf of electroCore, Inc., vs.
Amato, et al ., Case 3:21-cv-04481.
6 unchanged sentences
and an order requiring changes to corporate governance and internal procedures and a vote on proposed amendments to the Bylaws and Certificate of Incorporation.
+Added: The plaintiffs in the Maltz and Yuson derivative actions agreed to consolidate and stay those actions.
+Added: The actions are stayed until and through the resolution of any motion for summary judgment in the Turnofsky federal securities class action.
+Added: A stipulation to that effect was filed by the plaintiffs on April 14, 2021, and ordered by the court on April 30, 2021.
+Added: These cases also have been re-assigned to Judge Quraishi.
The Company intends to continue to vigorously defend itself in these matters.
1 unchanged sentence
Accordingly, the Company has not established an accrual for potential losses, if any, that could result from any unfavorable outcome, and there can be no assurance that these litigation matters will not result in substantial defense costs and/or judgments or settlements that could adversely affect the Company’s financial condition.
−Removed: The Company expenses associated legal fees in the period they are incurred.
+Added: The Company is subject to various claims, complaints and legal actions in the normal course of business from time to time.
+Added: The Company is not aware of any further currently pending litigation for which it believes the outcome could have a material adverse effect on its operations or financial position.
+Added: The Company expenses associated legal fees including those relating to the stockholder litigation described in this Note 13 in the period they are incurred.
Purchase Commitments
3 unchanged sentences
The Company has included as purchase obligations its commitments under agreements to the extent they are quantifiable and are not cancelable.
−Removed: The Company has purchase obligations of approximate ly $ 1.3 million as of December 31, 2021 .
+Added: The Company has no material purchase obligations as of December 31, 2022.
ELECTROCORE, INC.
1 unchanged sentence
Notes to Consolidated Financial Statements — Continued
−Removed: Restructuring Charges and Other Related Charges
−Removed: The following table provides a summary of the Company’s restructuring and other related charges for the year end December 31, 2020 :
−Removed: Year ended December 31, 2020
−Removed: Employee separation costs
−Removed: Payment in lieu of severance
−Removed: Other restructuring costs
−Removed: In January 2020, the Company entered into a separation agreement with a former officer which agreement required an aggregate severance payment of $ 190,000 over a six -month period.
−Removed: In January 2020, the Company also entered into an agreement with a new employee that required the unconditional payment of $ 175,000 , in lieu of future severance to be paid in equal monthly installments over a fourteen -month period.
−Removed: As of December 31, 2021 , the Company has no payable in connection with the above described charges.
+Added: Subsequent events
+Added: Reverse stock split
+Added: On February 13, 2023, the Company held a special meeting (the “ Special Meeting ”) of stockholders of the Company .
+Added: At the Special Meeting, the Company’s shareholders voted to approve an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split of the Company’s common stock (the “Reverse Stock Split”) at a ratio between 1-for-5 and 1-for-50 .
+Added: Following the Special Meeting, the board of directors of the Company approved a 1-for-15 Reverse Stock Split.
+Added: The Reverse Stock Split became effective on February 15, 2023.
+Added: Upon the effectiveness of the Reverse Stock Split, every 15 shares of common stock were automatically combined and converted into one share of common stock.
+Added: Appropriate adjustments were also made to all outstanding derivative securities of the Company, including all outstanding equity awards and warrants.
+Added: No fractional shares were issued in connection with the Reverse Stock Split.
+Added: Instead, all fractional shares received a cash payment based on the closing sales price on the Nasdaq Capital Market of the Company’s common stock on February 14, 2023.
+Added: Redemption and Elimination of Series A Preferred Stock
+Added: All shares of Series A Preferred Stock that were not present in person or by proxy as of immediately prior to the opening of the polls at the Special Meeting were automatically redeemed by the Company (the “Initial Redemption”).
+Added: Any outstanding shares of Series A Preferred Stock that had not been so redeemed were redeemed automatically upon the approval at the Special Meeting of the Reverse Stock Split (the “Subsequent Redemption”).
+Added: Each share of Series A Preferred Stock redeemed was entitled to receive an amount equal to $ 0.01 in cash for each 10 whole shares of Series A Preferred Stock owned immediately prior to the Redemption.
+Added: O n March 6, 2023 , the Company filed a certificate of elimination (the “Certificate of Elimination”), with the Secretary of State of the State of Delaware with respect to the Series A Preferred Stock.
+Added: The Certificate of Elimination (i) eliminated the previous designation of 80,000 shares of Series A Preferred Stock from the Company’s Certificate of Incorporation, none of which were outstanding at the time of the filing of the Certificate of Elimination, and (ii) caused such shares of Series A Preferred Stock to resume their status as authorized but unissued and non-designated shares of preferred stock.
+Added: Sales of net operating losses
+Added: 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.
+Added: On January 10, 2023, the Company received a net cash amount of approximately $ 211,000 from the sale of its New Jersey state net operating losses.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.