What changed in this filing

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Item 1A. Risk Factors

2024-03-13 compared with 2023-03-08 · 447 added, 282 removed, 1370 unchanged (35% of the section changed)

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Risk Related to our Financial Position, Oper ating Results and N eed for Additional Capital

We recently launched new cash pay initiatives, including our gConcierge and g CDirect programs, as well as our direct-to-consumer business channel and patients and providers or consumers may be slow to adopt these programs or their pricing which could adversely impact our business and financial results.

We currently have a cash-pay business channel for our gConcierge and gCDirect programs, and intend to expand our direct-to-consumer business channel through the recently launched ecommerce websites by increasing our advertising and promotional activities in 2023.

We will be required to obtain additional funds in the future, and these funds may not be available on acceptable terms or at all.

Our operations have consumed substantial amounts of cash since inception, and we anticipate this continuing for at least the next 12 months from the date the financial statements included in this Annual Report are made available as we continue seeking to invest in our business.

We believe that our growth will depend, in part, on our ability to fund our commercial efforts for our nVNS platform technology, and to opportunistically pursue research and development activities for additional indications for our gammaCore therapy.

If our revenue continues to grow, it is likely we will have increased working capital needs in connection with increased inventory purchases and accounts receivable.

Our ability to collect our accounts receivable on a timely basis is dependent on the intent and ability of our customers to pay on a timely basis.

There is no assurance that we will have sufficient cash flow and liquidity to fund our planned activities.

As a result, we will need to seek additional funds in the future or curtail or forgo some or all of such activities.

If we seek to and are unable to raise funds on favorable terms, or at all, we may not be able to support our commercialization efforts or increase our research and development activities, and the growth of our business may be negatively impacted.

As a result, we may be unable to compete effectively.

There is no assurance that we will generate sufficient funds through our operating results or financing activity thereby raising substantial doubt about our ability to continue as a going concern within one year of the date the financial statements included in this Annual Report.

Changes, including those relating to the payor and competitive landscape, our commercialization strategy, our development activities, and regulatory matters, may occur beyond our control that would cause us to consume our available capital more quickly.

Our future capital requirements will depend on many factors, including:

the outcome, timing of, and costs involved with negotiating, obtaining, maintaining, and enhancing payor coverage;

the outcome, timing of, and costs involved with our plan to potentially expand our direct-to-consumer, cash-pay business channel;

the scope and timing of our investment in our U.S.

and UK commercial infrastructure and sales force;

the costs of commercialization activities including sales, marketing, manufacturing and distribution;

the costs incurred in defending against pending securities class-action litigations and other potential litigation, as well as the costs of any potential judgements or settlements;

the degree and rate of payor , physician, patient, and market acceptance of our prescription gammaCore therapy;

the degree and rate of consumer adoption of our non-prescription, general wellness product offerings;

the outcome, timing of, and costs involved in, seeking and obtaining clearances or approvals from the FDA and other regulatory authorities, including the potential for the FDA and other regulatory authorities to require that we perform more studies, clinical trials, or tests on our prescription gammaCore therapy than we currently expect;

the research and development activities we may undertake to expand our headache indications and enhancements to our prescription gammaCore therapy;

the costs of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights;

the need for us and third parties, including payors and service providers, to potentially implement new or revised policies, infrastructure, and internal systems;

the lead times, order quantities, and payment terms needed to purchase inventory;

our ability to collect accounts receivable on a timely basis;

our ability to hire additional personnel to support our various functions and operations;

the emergence and acceptance of competing therapies or other adverse market developments.

To finance our activities, we may seek funds through borrowings or through additional rounds of financing, including public or private equity or debt offerings and collaborative arrangements with corporate partners.

We may be unable to raise funds on favorable terms, if at all.

We do not currently have any agreements or understandings with respect to any potential financing.

Our stock price, market capitalization trading volume, and other macroeconomic factors may affect our ability to raise funds and the terms on which we will be able to raise funds.

Our failure to obtain additional necessary financing could impair our ability to conduct our operations, and any such failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to (i) pursue our business plans and strategies and (ii) maintain our listing on the Nasdaq Stock Market.

In addition, our auditors report for our 2023 financial statements contains a statement concerning our ability to continue as a “going concern”.

Our lack of sufficient liquidity could make it more difficult for us to secure additional financing terms acceptable to us, if at all, and may materially and adversely affect the terms of any financing that we may obtain and our stock price generally.

Our ability to continue our operations depends upon, among other things, our ability to increase revenue, reduce operating expenses, and obtain additional funding through the sale of equity and/or debt securities, debt financing, strategic transactions, or otherwise.

However, there are significant risks and uncertainties as to our ability to achieve these goals or to obtain required funding on commercially reasonable terms or at all, including as a result of the potential adverse impact on our business from macro-economic conditions.

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.

The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders.

If we borrow additional funds or issue debt securities, lenders or security holders could have rights superior to holders of our common stock, and such indebtedness could contain covenants that will restrict our operations.

We might have to obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to our technologies, therapeutic candidates, or products that we otherwise would not relinquish.

If we do not obtain additional resources, our ability to capitalize on business opportunities will be limited and we may be unable to compete effectively, and the growth of our business would be materially and adversely harmed.

We recently launched new cash pay initiatives, including our gConcierge and g CDirect programs, as well as our direct-to-consumer business channel and patients, providers or consumers may be slow to adopt these programs or their pricing which could adversely impact our business and financial results.

We currently have a cash-pay business channel for our prescription gConcierge and gCDirect programs and direct-to-consumer business channel through our ecommerce websites.

We intend to expand our direct-to-consumer business channel by continuing to increase our advertising and promotional activities in 2024.

This will require significant investment and expansion of our sales and marketing capabilities and further development by us relating to this business channel.

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We cannot provide assurance that data we or others may generate in the future will be consistent with data observed in our existing clinical studies, and we cannot provide similar assurance that our current or future published clinical evidence will be sufficient to obtain adequate coverage and reimbursement for gammaCore.

Moreover, if we cannot obtain adequate coverage for and reimbursement of the cost of gammaCore, we cannot provide assurance that patients will be willing to incur the full cost of our gammaCore therapy.

Access to adequate coverage and reimbursement by third-party payors for our gammaCore therapy or the willingness of patients to bear the entire cost of our therapy is essential in the acceptance of our gammaCore by physicians, patients, and other customers for our therapy.

Access to adequate coverage and reimbursement by third-party payors for our prescription gammaCore therapy or the willingness of patients to bear the entire cost of our therapy is essential in the acceptance of our gammaCore by physicians, patients, and other customers for our therapy.

Third-party payors, whether foreign or domestic, or governmental or commerci al, are developing increasingly sophisticated methods of controlling healthcare costs.

In addition, in the United States, no uniform policy of coverage and reimbursement for our gammaCore therapy exists among third-party payors.

Therefore, coverage and reimbursement for our gammaCore therapy can differ significantly from payor to payor.

In addition, in the United States, no uniform policy of coverage and reimbursement for our prescription gammaCore therapy exists among third-party payors.

Therefore, coverage and reimbursement for our prescription gammaCore therapy can differ significantly from payor to payor.

In addition, payors continually review new technologies for possible coverage and can, without notice, deny coverage for these new products and procedures.

As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our gammaCore therapy to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained or maintained if obtained.

As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our prescription gammaCore therapy to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained or maintained if obtained.

Reimbursement systems in international markets vary significantly by country and by region within some countries, and reimbursement approvals must be obtained on a country-by-country basis.

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If sufficient and timely coverage and reimbursement are not available for our current or future gammaCore products, or if reimbursement rates change, in either the United States or internationally, the demand for our gammaCore product and our revenues would be adversely affected.

We have a limited history commercializing our VNS platform technology, including through direct-to-consumer channels, and commercial success is uncertain.

Moreover, we have limited experience engaging in direct-to-consumer commercial activities and limited established relationships with marketing agencies, analytic platforms, and social media following, all of which are becoming increasingly important to direct-to-consumer initiatives.

We have a limited history commercializing our nVNS platform technology, including through direct-to-consumer channels, and commercial success is uncertain.

We have limited experience engaging in direct-to-consumer commercial activities and limited established relationships with marketing agencies, analytic platforms, and social media following, all of which are becoming increasingly important to direct-to-consumer initiatives.

We may be unable to gain broader market acceptance for our nVNS platform technology in our sales channels and markets, including direct-to-consumer channels in the United States or abroad, for a number of reasons, including:

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the introduction and market acceptance of new, more effective or less expensive competing products and technologies in relevant geographic and product markets.

We have a limited history commercializing our wellness and human performance products in the United States for which market acceptance and commercial success are uncertain.

As a small company with a limited history of selling our wellness and human performance products, we have limited experience engaging in commercial activities and limited established relationships and experience with direct-to-consumer channels and third-party suppliers on whom we depend for the manufacture of our product components.

We have a limited history commercializing our general wellness and human performance products in the United States for which market acceptance and commercial success are uncertain.

As a small company with a limited history of selling our general wellness and human performance products, we have limited experience engaging in commercial activities and limited established relationships and experience with direct-to-consumer channels and third-party suppliers on whom we depend for the manufacture of our product components.

In addition, as a general matter, we may fail to adapt our existing or future technology to patient and customer requirements or emerging treatment standards in our relevant geographic and product markets.

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Moreover, if we face material delays in introducing our products and new technology, we may fail to attract new customers in part due to diminished brand awareness and ineffective implementation of marketing and promotion strategy.

Specifically, we may be unable to successfully commercialize our wellness and human performance products in the United States for a number of reasons, including:

Specifically, we may be unable to successfully commercialize our general wellness and human performance products in the United States for a number of reasons, including:

established competitors with relatively more mature relationships with their customers and third-party suppliers;

limitations in our ability to demonstrate differentiation and advantages of our product compared to similar, competing products and the relative safety, efficacy and ease of use of our product;

the limited brand awareness of our Truvaga and TAC-STIM brands, which are our two recently launched non-prescription, wellness and human performance products;

the limited brand awareness of our Truvaga and TAC-STIM brands, which are our two recently launched non-prescription, general wellness and human performance products;

the limited size of our marketing budget to assess and increase customer demand levels;

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the introduction, and market acceptance, of new, relatively more effective, or less expensive, competing products and technologies.

We recently launched our Truvaga and TAC-STIM branded products for wellness and human performance.

Commercialization of these products may be very expensive, time consuming and may not generate favorable financial results.

We recently launched our business for wellness and human performance for our Truvaga and TAC-STIM branded products.

We have limited experience in this area and our initiatives may require significant investment to develop our sales and marketing capabilities for this business channel.

If we are unsuccessful in executing our commercialization efforts in this business channel and do not achieve the sales levels that we expect at all or within the time frames we have forecast, we may need to obtain additional financing on terms that may be dilutive or disadvantageous and we may be unable to recover these investments.

We intend to launch our next generation app-enabled consumer wellness product under the brand Truvaga and there can be no assurance that the new product will be well received or adopted, which may impact our financial results.

Our next generation app-enabled consumer wellness product has a new form factor and will be operated by a companion application.

We have limited experience in launching app-enabled devices which is important to our direct-to-consumer initiatives.

We may be unable to gain broader market acceptance for our new next generation app-enabled consumer wellness product in our direct-to-consumer channels in the United States or abroad, for a number of reasons, including:

established competitors with strong relationships with customers, including ecommerce and app-enabled devices, systems, marketing agencies and a critical mass of existing patients;

limitations in our ability to demonstrate differentiation and advantages of our product compared to our own products and competing products and the relative safety, efficacy and ease of use of our product;

the limited size of our marketing team and the learning curve required to gain experience selling our product direct-to-consumer;

limited brand awareness;

insufficient financial or other resources to support our commercialization efforts necessary to reach profitability;

the introduction and market acceptance of new, more effective or less expensive competing products and technologies in relevant geographic and product markets.

Our next generation app-enabled consumer wellness product may require modifications and improvements, which may cause added expense and negatively impact our financial results.

If our next generation app-enabled consumer wellness product is not well received, we may need to make modifications or improvements including software updates, which may require additional research and development expense, or stop selling the new device all together which would negatively impact our financial results.

Undiscovered vulnerabilities in our app-enabled wellness product could expose us or consumers to hackers or other unscrupulous third parties who develop and deploy viruses and other malicious software programs that could attack our products.

Actual or perceived security vulnerabilities in our products could harm our reputation and lead some customers to return products, to reduce or delay future purchases, or use competing products.

In addition, to the extent a competitor were to develop app-software that competes with ours, customers may choose not to purchase our wellness product.

We generate sales of TAC-STIM branded products to active-duty military and accordingly, military budgetary cuts or government strikes could negatively impact our financial results.

We recently launched our TAC-STIM branded products for human performance within the active-duty military channel.

Funding for purchases of TAC-STIM product is subject to governmental budgetary decisions and any spending cuts may negatively impact the timing or amounts of sales to these customers, which could result in lost sales and harm our business and operation results.

We have limited operating experience at our current scale of operations.

If we are unable to manage our growth effectively, our brand, company culture, and financial performance may suffer.

Implementation of our growth strategy for our gammaCore and human performance and wellness products may require greater overall planned capital expenditures, and we cannot guarantee that any such increased expenditures will bring forth corresponding, offsetting revenue growth.

Implementation of our growth strategy for our gammaCore and human performance and general wellness products may require greater overall planned capital expenditures, and we cannot guarantee that any such increased expenditures will bring forth corresponding, offsetting revenue growth.

Because we have a relatively limited history operating our business at its current and evolving scale, it is difficult for us to evaluate our present and future business prospects, including our ability to plan for, and model, future growth scenarios.

Our limited operating experience at this scale, combined with the rapidly evolving customer demand and other market structure properties of the health and wellness geographic and product markets in which we operate and other economic factors beyond our control, reduces our ability to accurately forecast quarterly or annual revenue.

In particular, our ability to accurately forecast customer demand could be affected by myriad factors, including, without limitation, changes in customer demand levels for our products, changes in demand levels for the products of our competitors, the relative pace of acceptance of personalized health and wellness recommendations, unanticipated weakening of various macroeconomic conditions, and capricious shifts in consumer confidence in future macroeconomic stability and/or the public capital markets.

Our limited operating experience at this scale, combined with the rapidly evolving customer demand and other market structure properties of the health and general wellness geographic and product markets in which we operate and other economic factors beyond our control, reduces our ability to accurately forecast quarterly or annual revenue.

In particular, our ability to accurately forecast customer demand could be affected by myriad factors, including, without limitation, changes in customer demand levels for our products, changes in demand levels for the products of our competitors, the relative pace of acceptance of personalized health and general wellness recommendations, unanticipated weakening of various macroeconomic conditions, and capricious shifts in consumer confidence in future macroeconomic stability and/or the public capital markets.

Failure to manage our future growth plans effectively could have an adverse effect on our financial condition and operating results.

Any significant disruption to our ecommerce business could result in lost sales.

In early 2022, we launched new cash pay initiatives for our gammaCore therapy, including our ecommerce websites in both the United States and United Kingdom.

We recently launched new cash pay initiatives for our Truvaga consumer product and prescription gammaCore therapy, including our ecommerce websites in both the United States and United Kingdom.

Online sales are subject to a number of risks.

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Our failure to become and remain profitable could negatively impact the results of our operations as well as your investment.

We have experienced significant net losses, and we expect to continue to incur losses for the foreseeable future while we operate our sales and marketing infrastructure, endeavor to increase acceptance of our gammaCore therapy and launch our human performance and wellness product line in relevant markets, fund our various research and development activities, and obtain regulatory clearance or approval for other products or indications in the United States and internationally.

We have experienced significant net losses, and we expect to continue to incur losses for the foreseeable future while we operate our sales and marketing infrastructure, endeavor to increase acceptance of our prescription gammaCore therapy and develop our human performance and general wellness product line in relevant markets, fund our various research and development activities, and obtain regulatory clearance or approval for other products or indications in the United States and internationally.

We have never been profitable and have incurred net losses in each year since our inception.

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developing commercial-scale manufacturing processes;

managing various risks associated with the design, manufacture, marketing, and sale of human performance, wellness product offerings, including compliance risk stemming from inadequate monitoring and analysis of applicable FDA and other relevant guidance as well as applicable consumer protection laws, rules, and regulations, ineffective initial and periodic assessment of claims and intended uses of such offerings, and inadequate government affairs, regulatory change management, or other corporate compliance functions that typically identify and remediate nonconformance with administrative law requirements, whether U.S.

managing various risks associated with the design, manufacture, marketing, and sale of human performance, general wellness product offerings, including compliance risk stemming from inadequate monitoring and analysis of applicable FDA and other relevant guidance as well as applicable consumer protection laws, rules, and regulations, ineffective initial and periodic assessment of claims and intended uses of such offerings, and inadequate government affairs, regulatory change management, or other corporate compliance functions that typically identify and remediate nonconformance with administrative law requirements, whether U.S.

federal, state, or otherwise, and execute regulatory compliance processes more broadly;

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satisfying any post-marketing requirements;

and developing the marketing and promotional expertise necessary to succeed in an integrative, well-funded direct-to-consumer approach through the sale of our wellness and human performance product offerings.

and developing the marketing and promotional expertise necessary to succeed in an integrative, well-funded direct-to-consumer approach through the sale of our general wellness and human performance product offerings.

Because of the numerous risks and uncertainties associated with our commercialization efforts as well as our research and clinical development activities, we are unable to predict the timing or amount of increased expenses, or when, if ever, we will be able to achieve or maintain profitability.

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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 may be forced to further reduce, or ultimately terminate, our operations.

As of December 31, 2022, we had cash and cash equivalents and marketable securities of $ 18.0 million.

As of December 31, 2023, we had cash, cash equivalents and restricted cash of $ 10.6 million.

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Accordingly, a decline in the market value of our company could cause you to lose all or part of your investment.

Our plans to expand our direct-to-consumer cash-pay business channel may not be able to generate significant revenues.

We currently have a small direct-to-consumer cash-pay business channel, which we are planning to expand in 2023 and beyond.

This will require significant investment in, and expansion of, our sales and marketing capabilities and use of our own ecommerce platform, as stated previously.

If we are unsuccessful in executing our commercialization efforts in this business channel and do not achieve the sales levels that we expect in light of our current plans and forecasts, we may be unable to recover these investments.

Additionally, there is a risk that expanding our direct-to-consumer cash-pay business channel could erode demand for our prescription products, depress pricing with third-party payors and, therefore, have an adverse impact on our results of operations.

We must successfully attract, hire, train, and retain qualified professionals to service our direct-to-consumer sales channels, and we must productively deploy our professionals to become profitable.

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Macroeconomic conditions may result in increased costs for manufacturing and outsourced services and cause additional pressure to reduce the prices for our products if a recession or depression occurs, and people are unable to afford our products.

We cannot predict the ultimate impact that the ongoing COVID-19 pandemic and its effects and macro-economic conditions could have on our business operations and financial condition.

Any increased or unexpected pricing pressures, costs, delays, or failures to achieve cost savings, and unexpected risks we encounter in our business, including those caused by factors outside our control, could adversely affect our business, results of operations, financial condition and cash flows.

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.

The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, bank failures, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates and uncertainty about economic stability.

For example, the COVID-19 pandemic resulted in widespread unemployment, economic slowdown and extreme volatility in the global capital markets.

Similarly, the current Russia-Ukraine war, and other conflicts including military activities in the Red Sea and Persian Gulf as well as those relating to the Gaza Strip and Israel, may exacerbate volatility in the global capital markets or disrupt the global supply chain and energy markets.

Any such volatility and disruptions may have adverse consequences on us or the third parties on whom we rely.

If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive.

Inflation can adversely affect us by increasing our costs, including personnel costs.

Any significant increases in inflation and related increase in interest rates could have a material adverse effect on our business, results of operations and financial condition.

Future acquisitions, strategic investments, or alliances could disrupt our business and harm our business, financial condition, and operating results.

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Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses or the impairment of goodwill, any of which could harm our business, financial condition, and operating results.

We will be required to obtain additional funds in the future, and these funds may not be available on acceptable terms or at all.

We believe that our growth will depend, in part, on our ability to fund our commercial efforts for our VNS platform technology, and to opportunistically pursue research and development activities for additional indications for our gammaCore therapy.

There is no assurance that we will have sufficient cash flow and liquidity to fund our planned activities.

As a result, we will need to seek additional funds in the future or curtail or forgo some or all of such activities.

As a result, we may be unable to compete effectively.

Our future capital requirements will depend on many factors, including:

• the outcome, timing of, and costs involved with negotiating, obtaining, maintaining, and enhancing payor coverage;

• the outcome, timing of, and costs involved with our plan to potentially expand our direct-to-consumer, cash-pay business channel;

the scope and timing of our investment in our U.S.

and UK commercial infrastructure and sales force;

the costs of commercialization activities including sales, marketing, manufacturing and distribution;

the costs incurred in defending against pending securities class-action litigations and other potential litigation, as well as the costs of any potential judgements or settlements;

the degree and rate of payor, physician, patient, and market acceptance of our gammaCore therapy;

• the degree and rate of consumer adoption of our non-prescription, wellness product offerings;

the research and development activities we may undertake to expand our headache indications and enhancements to our gammaCore therapy;

the costs of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights;

the need for us and third parties, including payors and service providers, to potentially implement new or revised policies, infrastructure, and internal systems;

our ability to hire additional personnel to support our various functions and operations;

the emergence and acceptance of competing therapies or other adverse market developments.

We may be unable to raise funds on favorable terms, if at all.

We do not currently have any agreements or understandings with respect to any potential financing.

Our stock price, market capitalization trading volume, and other macroeconomic factors may affect our ability to raise funds and the terms on which we will be able to raise funds.

In addition, our auditors report for our 2022 financial statements contains a statement concerning our ability to continue as a "going concern".

However, there are significant risks and uncertainties as to our ability to achieve these goals or to obtain required funding on commercially reasonable terms or at all, including as a result of the adverse impact on our business from the ongoing COVID-19 pandemic and other macro-economic conditions.

The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders.

Risks Related to Our Business and the Development of Our gammaCore Therapy

Risks Related to Our Business

Regulatory requirements and changes to payors’ prescription benefit plans and medical pathway plans could adversely impact our business and financial results.

While we have ongoing discussions with the Centers for Medicare and Medicaid Services, our products are not currently covered by Medicare and Medicaid.

Applicable Medicare Part D regulations and federal and state laws will impose additional requirements on us upon execution of our commercialization strategy.

Our commercialization strategy, including our planned reimbursement approach with respect to our gammaCore therapy, is likely to subject us to additional audit oversight requirements, and if material contractual or regulatory non-compliance were to be identified, applicable sanctions and/or monetary penalties may be imposed, which could have an adverse effect on our financial position, results of operations, or cash flows.

In time, changes in payor prescription benefit plans or medical pathway plans could have the effect of rendering existing pharmacy benefit plans or medical pathway plans less valuable to beneficiaries and reduce the total market for our gammaCore therapy.

In addition, some payors could decide to discontinue providing full or partial coverage to their members for our gammaCore therapy, which could have an adverse effect on our financial position, results of operations, or cash flows.

Our commercialization strategy, including our planned reimbursement approach with respect to our prescription gammaCore therapy, is likely to subject us to additional audit oversight requirements, and if material contractual or regulatory non-compliance were to be identified, applicable sanctions and/or monetary penalties may be imposed, which could have an adverse effect on our financial position, results of operations, or cash flows.

In addition, some payors could decide to discontinue providing full or partial coverage to their members for our prescription gammaCore therapy, which could have an adverse effect on our financial position, results of operations, or cash flows.

Our commercialization strategy of gammaCore may expose us to increased billing, cash application, and credit risks.

Our commercialization strategy may involve funding for our gammaCore therapy through medical benefit coverage, the majority of which is provided by private insurers, as well as reimbursement by government agencies.

Our commercialization strategy may involve funding for our prescription gammaCore therapy through medical benefit coverage, the majority of which is provided by private insurers, as well as reimbursement by government agencies.

Such claims are generally for very high-priced medicines, and collection of payments from insurance companies, patients, and other payors generally takes substantially longer than for those claims administered through a pharmacy benefit manager.

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In addition, possible sales in our EUA business channel to hospitals may involve higher credit risks than sales to other payors.

Revenues from the sale of our gammaCore therapy partially depend on the continued availability of reimbursement by government and private insurance plans.

Revenues from the sale of our prescription gammaCore therapy partially depend on the continued availability of reimbursement by government and private insurance plans.

The government’s Medicare regulations are complex, and, as a result, the billing and collection process is time-consuming and typically involves the submission of claims to multiple payors whose payment of claims may be contingent upon the payment of another payor.

Because of the coordination with multiple payors, and the complexity in determining reimbursable amounts, these accounts receivable have higher risk in collecting the full amounts due and applying the associated payments.

Our gammaCore therapy commercialization strategy may require premium payments from members for the ongoing benefit as well as amounts due from insurers and government-sponsored or national health insurance programs.

Our prescription gammaCore therapy commercialization strategy may require premium payments from members for the ongoing benefit as well as amounts due from insurers and government-sponsored or national health insurance programs.

As a result of the demographics of the consumers covered under these programs, and the complexity of the calculations as well as the potential magnitude and timing of settlement for amounts due from insurers and government-sponsored or national health insurance programs, these accounts receivable may be subject to billing and realization risk.

We expect a portion of our 2024 sales will be made pursuant to the distribution agreement with Lovell Government Services (“Lovell”) and their contract vehicles.

As a result of this relationship an increasing portion of gammaCore therapy sales in the government channel will be processed through Lovell and payment made to us by Lovell according to the terms of the Lovell distribution agreement.

Additionally, we may be subject to increased credit risk associated with state and local government agencies experiencing increased fiscal challenges.

As a result of the aforementioned risks, our commercialization strategy, even if successful, may involve recordation of bad debt expenses potentially impacting our results of operations and liquidity.

As a result of the aforementioned risks, our commercialization strategy, even if successful, may involve the incurrence of bad debt expenses potentially impacting our results of operations and liquidity.

Any payment delays or disputes in our relationship with Lovell could have an adverse effect on our results of operations and financial condition.

Third-party payors have been resistant to cover gammaCore through pharmacy benefit plans, which has hindered our commercialization strategy and required changes to our existing business that could delay and negatively impact our ability to generate revenue.

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While this would provide coverage for the therapy under a patient’s medical insurance, patients may be unwilling to pay out of pocket for deductibles and co-pays for the therapy.

Any determination by commercial payors to provide coverage for gammaCore through the medical benefit pathway and not through pharmacy benefit pathway will further delay or pose more risks to our commercial plan for gammaCore therapy since additional medical device codes are required, and we may incur additional direct and indirect expenses in assisting patients with their co-pay or other costs emergent from the determination by payors to not cover gammaCore under the pharmacy benefit pathway.

Coverage by commercial payors through the medical benefit pathway or other decisions by commercial payors that have the effect of making patients personally responsible for the costs of, or costs associated with, our gammaCore therapy could adversely impact our results of operations and financial condition.

Any determination by commercial payors to provide coverage for gammaCore through the medical benefit pathway and not through pharmacy benefit pathway will further delay or pose more risks to our commercial plan for prescription gammaCore therapy since additional medical device codes are required, and we may incur additional direct and indirect expenses in assisting patients with their co-pay or other costs emergent from the determination by payors to not cover gammaCore under the pharmacy benefit pathway.

Coverage by commercial payors through the medical benefit pathway or other decisions by commercial payors that have the effect of making patients personally responsible for the costs of, or costs associated with, our prescription gammaCore therapy could adversely impact our results of operations and financial condition.

These potential changes may entail numerous risks, including increased operating expenses, requirements to comply with healthcare regulatory laws, the loss of or delay in obtaining revenue, and uncertainty in our ability to successfully implement the modifications.

The failure to obtain recognition by third-party payors under the pharmacy benefit model has required us to modify our commercialization strategy, our distribution model, our pricing, and our operations, any of which could have a material adverse effect on the sales of gammaCore and the results of our operations and financial condition.

We must demonstrate to patients, physicians, and third-party payors the medical and economic benefits of our gammaCore therapy compared to those of our competitors or other available therapies, and such comparisons may not be realizable.

We must demonstrate to patients, physicians, and third-party payors the medical and economic benefits of our prescription gammaCore therapy compared to those of our competitors or other available therapies, and such comparisons may not be realizable.

Physicians play a significant role in determining the course of a patient’ s treatment and, as a result, the type of product that will be used to treat a patient.

As a result, our success depends, in large part, on effectively marketing our gammaCore therapy to physicians.

We have received several 510(k) clearances from the FDA for gammaCore therapy;

As a result, our success depends, in large part, on effectively marketing our prescription gammaCore therapy to physicians.

We have received several 510 (k) clearances from the FDA for prescription gammaCore therapy;

however, such clearances do not necessitate adoption by physicians.

In order for our gammaCore therapy to gain widespread adoption, we must successfully demonstrate to physicians the medical and economic benefits of our gammaCore therapy compared to competitors’ products, including (i) BOTOX marketed by Allergan plc, (ii) CGRP receptor agonists marketed by Amgen Inc.

In order for our prescription gammaCore therapy to gain widespread adoption, we must successfully demonstrate to physicians the medical and economic benefits of our prescription gammaCore therapy compared to competitors’ products, including (i) BOTOX marketed by Allergan plc, (ii) CGRP receptor agonists marketed by Amgen Inc.

(with a co-marketing arrangement with Novartis International AG), Allergan plc, Eli Lilly and Company, Teva Pharmaceutical Industries Ltd., and Pfizer Inc., (iii) lasmiditan, marketed by Eli Lilly, (iv) Vycpti, an intravenous preventive treatment for migraine marketed by H.

Lundbeck A/S, and (v) neuromodulation devices that have been marketed for the acute treatment and/or prevention of migraine, including the Cefaly and Nerivio devices.

Lundbeck A/S, and (v) neuromodulation devices that have been marketed for the acute treatment and/or prevention of migraine, including the Cefaly, Nerivio, and Savi Dual devices.

We also may face challenges because noninvasive VNS, or nVNS, is relatively new compared to existing traditional treatments for cluster and migraine headaches.

Acceptance of our gammaCore therapy depends on educating patients and physicians as to the distinctive characteristics, perceived benefits, safety, ease of use, and cost-effectiveness of our gammaCore therapy relative to our competitors’ products and communicating to physicians the proper use of our gammaCore therapy.

If we are not successful in convincing patients and physicians of the merits of our gammaCore therapy or educating them on the benefits of our gammaCore therapy, they may not seek a prescription or prescribe our gammaCore therapy, and we may be unable to increase our sales, sustain our growth, or achieve profitability.

Acceptance of our prescription gammaCore therapy depends on educating patients and physicians as to the distinctive characteristics, perceived benefits, safety, ease of use, and cost-effectiveness of our prescription gammaCore therapy relative to our competitors’ products and communicating to physicians the proper use of our prescription gammaCore therapy.

If we are not successful in convincing patients and physicians of the merits of our prescription gammaCore therapy or educating them on the benefits of our prescription gammaCore therapy, they may not seek a prescription or prescribe our prescription gammaCore therapy, and we may be unable to increase our sales, sustain our growth, or achieve profitability.

In addition, we believe support of our products by physicians is essential for market acceptance and adoption.

If we do not receive support from physicians, or long-term data do not show the benefits of using our gammaCore therapy, patients and physicians may not use it.

If we do not receive support from physicians, or long-term data do not show the benefits of using our prescription gammaCore therapy, patients and physicians may not use it.

In such circumstances, our results of operations would be materially and adversely affected.

We must demonstrate to customers the benefits of nVNS platform technology for general wellbeing and human performance compared to those of our competitors and such comparisons may not be realizable.

Consumer sentiments play a significant, and increasing, role in determining customer adoption of certain wellness products.

In general, our success depends on the continued willingness of consumers to use health and wellness products and services and to place value in the primacy of scientific evidence in the marketing of wellness products and services.

We must demonstrate to customers the benefits of nVNS platform technology for general wellness and human performance compared to those of our competitors and such comparisons may not be realizable.

Consumer sentiments play a significant, and increasing, role in determining customer adoption of certain general wellness products.

In general, our success depends on the continued willingness of consumers to use health and general wellness products and services and to place value in the primacy of scientific evidence in the marketing of general wellness products and services.

To be successful, we will need to continue to significantly invest in educating consumers about our products.

This need is elevated in the light of the health and wellness market’s particular characteristics.

The market is heavily saturated, and the expected future demand for and market acceptance of innovative products and services in the market are uncertain.

While we believe it is reasonable to predict that the overall health and wellness market will continue to grow, it is difficult to predict the future growth rates, if any, of certain sectors that intersect with comparable and substitution products relevant to our business.

This need is elevated in the light of the health and general wellness market’s particular characteristics.

The market is heavily saturated, and the expected future demand for and market acceptance of innovative products and services in the market is uncertain.

While we believe it is reasonable to predict that the overall health and general wellness market will continue to grow, it is difficult to predict the future growth rates, if any, of certain sectors that intersect with comparable and substitution products relevant to our business.

As a result, if our market does not further develop, or develops more slowly than expected, or becomes saturated with competitors with greater financial or other resources, or if our products do not achieve sufficient adoption in accordance with present and future business plans, our financial condition, and operating results could be materially and adversely affected.

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For our nVNS platform technology to gain widespread adoption, we must successfully demonstrate to consumers the relative benefits of our nVNS platform technology compared to competitors’ products.

We also may face challenges because nVNS is relatively new compared to existing wellness products across a multitude of price points.

Further, the competitive landscape for wellness products is crowded and continues to rapidly evolve.

Therefore, our wellness business line faces a diverse set of challenges that may have a significant effect on your investment.

We also may face challenges because nVNS is relatively new compared to existing general wellness products across a multitude of price points.

Further, the competitive landscape for general wellness products is crowded and continues to rapidly evolve.

Therefore, our general wellness business line faces a diverse set of challenges that may have a significant effect on your investment.

Stimulating therapeutically relevant fibers in the vagus nerve by a proprietary high-frequency burst waveform that passes through the skin cells represents a novel approach to treating pain, and we must overcome significant challenges to successfully develop, commercialize, and manufacture our product.

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Our quarterly revenue and results of operations may fluctuate from quarter to quarter due to, among others, the following reasons:

physician and payor acceptance of our gammaCore therapy;

• patients' acceptance of our nVNS platform technology gammaCore therapy;

• customer acceptance of our wellness and performance products;

physician and payor acceptance of our prescription gammaCore therapy;

patients' acceptance of our nVNS platform technology;

customer acceptance of our general wellness and human performance products;

the timing and amount of TAC-STIM sales;

payor adoption;

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the productivity of our field sales function;

supplier, manufacturing, or quality problems with our products;

supplier, manufacturing, or quality issues with our products;

the timing of stocking orders from our distributors;

changes in our pricing policies or in the pricing policies of our competitors or suppliers;

timing of working capital requirements;

adverse developments in coverage amounts, benefit pathway, or government and third-party payors’ reimbursement policies;

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In addition, we believe our limited commercial history has, in part, made our seasonal patterns more difficult to discern, making it more difficult to predict future seasonal patterns.

We derive a material portion of our revenue made pursuant to our qualifying contract under the Federal Supply Schedule or FSS, as well as open market sales to individual facilities within the government channels.

While we have submitted a follow-on offer application for a new contract, there can be no assurance our application will be accepted which could adversely impact our business, results of operations, and financial condition.

The majority of our 2023 sales were made pursuant to our qualifying contract under the Federal Supply Schedule or FSS, which was secured by us in December 2018, as well as open market sales to individual facilities within the government channels.

The initial term of our FSS contract was scheduled to expire on January 15, 2024.

On January 5, 2024, we obtained a modification to the initial contract, temporarily extending the term from January 15, 2024, to March 14, 2024, and subsequently extended to June 14, 2024.

Although we continue to work with the appropriate government personnel to obtain a follow-on FSS contract, there can be no assurance that the VA/DoD will accept our follow-on application and replace our contract which may limit or eliminate our ability to sell certain gammaCore products into the government channel pursuant to our qualifying FSS contract or individual facilities that utilize our FSS contract number for open market purchases.

The delay in contract replacement or loss of our FSS contract altogether could adversely affect our business, results of operations, and financial condition.

In August 2023, we signed a non-exclusive distribution agreement with Lovell Government Services (Lovell) providing Lovell the right to list and distribute certain gammaCore products into the federal market.

The gammaCore products offered through Lovell provide government customers with similar product configuration options to those currently sold through our existing FSS contract and open market sales made directly to individual VA/DoD facilities.

Between November 2023 and January 2024, certain gammaCore products were added to the FSS, the VA/DoD’s 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/DoD.

We expect a significant portion of our 2024 sales to continue in the government channel broadly pursuant to our FSS contract if extended and / or through our relationship with Lovell and its qualifying FSS, GSA, DAPA, ECAT contracts for which gammaCore has been added.

There can be no assurance that government channel customers will adopt the new ordering process through Lovell and its qualifying FSS, GSA, DAPA, ECAT contracts, which could adversely affect our business, results of operations, and financial condition.

We derive a material portion of our revenue from a limited number of customers, and the loss of one or more of these customers could adversely impact our business, results of operations, and financial condition.

Our c ustomer base is concentrated.

During the years ended December 31, 2022 and 2021, revenue from Department of Veteran Affairs and Department of Defense (VA/DoD) facilities pursuant to the terms and conditions of our qualifying contract under the Federal Supply Schedule and open market sales represented 60.8 % and 59.8 % of our total revenue, respectively.

In 2022, five specific VA/DoD facilities represented approximately 52.8 % of our revenue from this channel, and one of those facilities accounted for more than 10% individually.

If we were to lose one or more of our significant customers, our revenue may significantly decline.

Our customer base is concentrated.

During the years ended December 31, 2023 and 2022, revenue from VA/DoD facilities pursuant to the terms and conditions of our qualifying contract under the FSS and open market sales represented 60.1% and 59.3% of our total revenue, respectively.

In 2023, eight specific VA/DoD facilities represented approximately 63.8% of our revenue from this channel, and two of those facilities accounted for more than 10% individually.

If we were to lose one or more of our significant customers, our revenue may be adversely affected.

The loss of one or more of our significant customers could adversely affect our business, results of operations, and financial condition.

Because of these and other factors, it is likely that, in some future period, our operating results will not meet investor expectations or those of public market analysts.

Any unanticipated change in revenues or operating results is likely to cause our stock price to fluctuate.

New information may cause investors and analysts to revalue our business, which could cause a decline in our stock price.

We expect an increasing portion of our 2024 sales will be made pursuant to the distribution agreement with Lovell and its contract vehicles, concentrating our customer base even further as revenue generated from the VA/DoD facilities pursuant to the terms and conditions of our qualifying contract under the FSS and open market sales is partially shifted to sales under our agreement with Lovell.

Any delay in payments by our customers as well as any disagreement, disagreement or change in relationship status with Lovell or other customers could adversely affect our business, results of operations, and financial condition.

Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business and operating results.

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If the price of our common stock is low or volatile, we may be unable to consummate any acquisitions, investments, or strategic alliances using our stock as consideration.

If serious adverse events or other undesirable side effects are identified during the use of our gammaCore therapy in clinical trials or IITs (collectively and unless the context requires otherwise, “clinical trials”) , it may adversely affect our development of such product candidates.

Undesirable side effects caused by our gammaCore therapy could cause us or regulatory authorities to interrupt, delay, or halt nonclinical studies and future clinical trials or could make it more difficult for us to enroll patients in clinical trials and could, if injuries occur, result in product liability litigation.

If serious adverse events or other undesirable side effects or unexpected characteristics of our gammaCore therapy are observed in investigator-sponsored trials, further clinical development of such product candidate may be delayed or we may not be able to continue development of such product candidate at all, and the occurrence of these events could have a material adverse effect on our business.

Undesirable side effects caused by our gammaCore therapy could also result in the delay or denial of regulatory clearance or approval by the FDA or other regulatory authorities or in more restrictive labels than we desire.

Commercialization of our gammaCore Sapphire therapy for additional conditions may require c linical trials, which are very expensive, take a long time to complete, and are difficult to design and implement and involve uncertain outcomes.

If serious adverse events or other undesirable side effects are identified during the use of our prescription gammaCore therapy in clinical trials or IITs (collectively and unless the context requires otherwise, “clinical trials”) , it may adversely affect our development of such product candidates.

Undesirable side effects caused by our prescription gammaCore therapy could cause us or regulatory authorities to interrupt, delay, or halt nonclinical studies and future clinical trials or could make it more difficult for us to enroll patients in clinical trials and could, if injuries occur, result in product liability litigation.

If serious adverse events or other undesirable side effects or unexpected characteristics of our prescription gammaCore therapy are observed in investigator-sponsored trials, further clinical development of such product candidate may be delayed or we may not be able to continue development of such product candidate at all, and the occurrence of these events could have a material adverse effect on our business.

Undesirable side effects caused by our prescription gammaCore therapy could also result in the delay or denial of regulatory clearance or approval by the FDA or other regulatory authorities or in more restrictive labels than we desire.

Commercialization of our prescription gammaCore Sapphire therapy for additional conditions may require c linical trials, which are very expensive, take a long time to complete, and are difficult to design and implement and involve uncertain outcomes.

Furthermore, results of earlier preclinical studies and clinical trials may not be predictive of results of future preclinical studies, clinical trials, or commercial success.

The risk of failure for our gammaCore therapy in additional treatment areas is high.

The risk of failure for our prescription gammaCore therapy in additional treatment areas is high.

It is difficult if not impossible to predict when or if any of our product candidates will receive regulatory clearance or approval in additional areas of indication.

To obtain the requisite regulatory clearance or approvals to market and sell our gammaCore therapy in additional indications, we must demonstrate through extensive preclinical studies and clinical trials that it is safe and effective in humans for use in each additional target indication.

To obtain the requisite regulatory clearance or approvals to market and sell our prescription gammaCore therapy in additional indications, we must demonstrate through extensive preclinical studies and clinical trials that it is safe and effective in humans for use in each additional target indication.

Clinical testing is expensive and can take many years to complete, and the outcome is inherently uncertain.

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In addition, the results of preclinical studies and early clinical trials may not be predictive of the results of later-stage preclinical studies or clinical trials.

The results generated to date in preclinical studies or clinical trials for our gammaCore therapy in cluster and migraine headaches do not ensure that later preclinical studies or clinical trials will demonstrate similar results in other therapeutic indications, and it should be noted that we did not achieve the primary endpoints in our pivotal trials for cluster and migraine headaches.

The results generated to date in preclinical studies or clinical trials for our prescription gammaCore therapy in cluster and migraine headaches do not ensure that later preclinical studies or clinical trials will demonstrate similar results in other therapeutic indications, and it should be noted that we did not achieve the primary endpoints in our pivotal trials for cluster and migraine headaches.

There can be no assurance that the FDA and other regulatory authorities will be satisfied by data from clinical trials for other treatment indications, even where we believe such data to be compelling.

Our gammaCore therapy may fail to show the desired safety and efficacy traits in additional areas of indication in future clinical trials despite having progressed through preclinical and earlier stage clinical trials.

Our prescription gammaCore therapy may fail to show the desired safety and efficacy traits in additional areas of indication in future clinical trials despite having progressed through preclinical and earlier stage clinical trials.

Many companies in the pharmaceutical and medical device industries have suffered significant setbacks in later-stage clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials, and we cannot be certain that we will not face similar setbacks.

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Among other factors, the faster recruitment of patients overseas and completion of trials in a FCT may represent considerable cost savings that we would forego in conducting clinical trials within the United States.

These and other costs from conducting any clinical trial for our gammaCore therapy instead of a FCT may negatively impact our financial condition and our business.

These and other costs from conducting any clinical trial for our prescription gammaCore therapy instead of a FCT may negatively impact our financial condition and our business.

In addition, a FCT may offer other non-financial benefits, such as a larger potential population of qualified patients to participate in clinical trials compared against the potential enrollee population in the United States where clinical trials may compete for a limited number of the same potential patients.

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If we are unable to enroll patients in future clinical trials, our research and development efforts could be adversely affected.

Identifying and qualifying patients to participate in future clinical trials for our gammaCore therapy in additional areas of indications are critical to our success.

Identifying and qualifying patients to participate in future clinical trials for our prescription gammaCore therapy in additional areas of indications are critical to our success.

Successful and timely completion of future clinical trials will require that we enroll a sufficient number of patients who remain in the study until conclusion.

If we are unable to enroll a sufficient number of patients in our future clinical trials, our timelines for recruiting patients, conducting clinical trials, and obtaining regulatory clearance or approval of our gammaCore therapy in additional areas of indication may be delayed.

If we are unable to enroll a sufficient number of patients in our future clinical trials, our timelines for recruiting patients, conducting clinical trials, and obtaining regulatory clearance or approval of our prescription gammaCore therapy in additional areas of indication may be delayed.

These delays could result in increased costs, delays in advancing our product development, delays in testing the effectiveness of our technology, or termination of clinical trials altogether.

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In addition, our clinical trials will compete with other clinical trials that are in the same therapeutic areas as we are targeting, and this competition will reduce the number and types of patients available to us because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors.

Delays in the completion of any clinical trial of our gammaCore therapy will increase our costs, slow down our expansion into additional treatment indications and approval process, and delay or potentially jeopardize our ability to commence product sales and generate future revenue.

Delays in the completion of any clinical trial of our prescription gammaCore therapy will increase our costs, slow down our expansion into additional treatment indications and approval process, and delay or potentially jeopardize our ability to commence product sales and generate future revenue.

We have recently reduced resources in research and development which may delay our receipt of regulatory approvals for additional indications.

In addition, many of the factors that may lead to a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory clearance or approval of our gammaCore therapy in additional treatment indications.

Clinical trials may be delayed, suspended, or terminated for many reasons, which will increase our expenses and delay the time it takes to develop and expand our gammaCore therapy in additional treatment indications.

In addition, many of the factors that may lead to a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory clearance or approval of our prescription gammaCore therapy in additional treatment indications.

Clinical trials may be delayed, suspended, or terminated for many reasons, which will increase our expenses and delay the time it takes to develop and expand our prescription gammaCore therapy in additional treatment indications.

We may experience delays in our ongoing or future preclinical studies or clinical trials, and we do not know whether future preclinical studies or clinical trials will begin on time, need to be redesigned, will enroll an adequate number of patients on time or be completed on schedule, if at all.

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delays or failure to reach agreement on acceptable terms with prospective clinical research organizations (or CROs) and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

delays in patient enrollment, due to COVID-19 or other factors, and variability in the number and types of patients available for clinical trials;

delays in patient enrollment and variability in the number and types of patients available for clinical trials;

the inability to enroll a sufficient number of patients in trials, particularly in orphan indications, to observe statistically significant treatment effects in the trial;

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the quality of the product candidate falling below acceptable standards;

the inability to manufacture sufficient quantities of our gammaCore therapy to commence or complete clinical trials;

the inability to manufacture sufficient quantities of our prescription gammaCore therapy to commence or complete clinical trials;

exceeding budgeted costs due to difficulty in accurately predicting costs associated with clinical trials.

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Any such delay or rejection could prevent us from commercializing any of our products currently in development.

If we experience delays in the commencement or completion of any clinical trial of our product candidates, or if any of our future clinical trials are terminated, the commercial prospects of our gammaCore therapy may be harmed, and our ability to generate revenue from sales may be delayed or materially diminished.

If we experience delays in the commencement or completion of any clinical trial of our product candidates, or if any of our future clinical trials are terminated, the commercial prospects of our prescription gammaCore therapy may be harmed, and our ability to generate revenue from sales may be delayed or materially diminished.

We do not know whether any of our future preclinical studies or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all.

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Our cost-control efforts might not assure profitability and may affect morale and make it difficult to retain employees or attract new ones.

We have previously implemented reductions in force affecting a large portion of our workforce, redeployed resources across our organization, and taken other measures to reduce our operating expenses.

We have from time to time previously implemented reductions in force affecting a large portion of our workforce, redeployed resources across our organization, and taken other measures to reduce our operating expenses.

These efforts do not assure profitability.

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In the future, we may experience difficulties with manufacturing, quality control, component supply, inventory, distribution, and shortages of qualified personnel, among other problems.

These problems could result in delays in availability of our gammaCore therapy and increases in expenses.

Any such delay or increased expense could adversely affect our ability to generate our revenue.

These problems could result in delays in availability of our prescription gammaCore therapy or general wellness products and increases in expenses.

Any such delay or increased expense could adversely affect our ability to generate revenue.

Future growth will also impose significant added responsibilities on management, including the need to identify, recruit, train, or integrate additional employees.

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If we fail to develop and retain an effective sales force, our business could suffer.

In order to continue to market and sell our nVNS platform technology, we may in the future need to substantially expand our direct sales force.

In order to continue to market and sell our nVNS platform technology, we may in the future need to substantially expand our sales force.

There is significant competition for such personnel.

Once hired, the training process is lengthy because it requires significant education for new territory business managers to achieve the level of clinical competency with our products expected by physicians.

Once hired, the training process is lengthy because it requires significant education for new sales personnel to achieve the level of clinical competency with our products expected by physicians.

Upon completion of the training, our territory business managers typically require "lead time" in the field to grow their network of accounts and achieve the productivity levels we expect them to reach.

Furthermore, the use of our products often requires or benefits from direct support from us.

If we are unable to attract, motivate, develop, and retain a sufficient number of qualified sales personnel, and if our territory business managers do not achieve the productivity levels, we expect them to reach, our revenue will not grow at the rate we expect and, our financial performance will suffer.

If we are unable to attract, motivate, develop, and retain a sufficient number of qualified sales personnel, and if our sales personnel do not achieve the productivity levels, we expect them to reach, our revenue will not grow at the rate we expect and, our financial performance will suffer.

Also, to the extent we hire personnel from our competitors, we may have to wait until applicable non-competition provisions have expired before deploying such personnel in restricted territories or incur costs to relocate personnel outside of such territories, and, in the past, we have been subject to, and may, in the future, be subject to, allegations that these new hires have been improperly solicited, or that they have divulged to us proprietary or other confidential information of their former employers.

Any of these risks may adversely affect our business.

We have limited history of commercializing wellness products withing the United States or abroad.

We have limited history of commercializing general wellness products within the United States or abroad.

We have limited established relationships with stakeholders and experience in direct-to-consumer channels and limited relationships with third-party suppliers on whom we depend for the manufacture of our product components.

If our competitors are better able to develop and market primary headache treatments that are safer, more effective, less costly, easier to use, or otherwise more attractive than our gammaCore therapy, our business and business prospects will be adversely impacted.

If our competitors are better able to develop and market primary headache treatments that are safer, more effective, less costly, easier to use, or otherwise more attractive than our prescription gammaCore therapy, our business and business prospects will be adversely impacted.

The pharmaceutical and medical device industries are highly competitive and subject to rapid innovation and change.

Our success depends, in part, upon our ability to establish a competitive position in the cluster and migraine markets by securing broad market acceptance of our gammaCore therapy.

Our success depends, in part, upon our ability to establish a competitive position in the cluster and migraine markets by securing broad market acceptance of our prescription gammaCore therapy.

We believe that the primary competitive factors in the primary headache markets including those for CH and migraine headache are cost, demonstrated clinical effectiveness, product safety, reliability and durability, ease of use, product support and service, minimal side effects, and sales force experience and relationships.

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If our competitors are more successful than us in these matters, our business may be harmed.

Many of our primary headache competitors are large, well-established companies with substantially greater resources than us and have a long history of competing in the migraine or wellness markets.

Many of our competitors are large, well-established companies with substantially greater resources than us and have a long history of competing in the migraine or general wellness markets.

Many of our current and potential primary headache competitors are publicly traded, or are divisions of publicly traded, major pharmaceutical and medical device companies that have substantially greater financial, technical, sales and marketing resources than we do.

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Lundbeck A/S, Novartis International AG, Teva Pharmaceutical Industries Ltd., Pfizer Inc., and Eli Lilly and Company, among other established and potential competitors that may be better capitalized and have a history of commercializing products around the world.

Also, several neuromodulation devices are approved for the treatment and/or prevention of migraine, including Cefaly, Nerivo, or any other neuromodulation devices that may be marketed for use in treating pain associated with primary headache.

Also, several neuromodulation devices are approved for the treatment and/or prevention of migraine, including Cefaly, Nerivo, Savi Dual, or any other neuromodulation devices that may be marketed for use in treating pain associated with primary headache.

Cefaly has been granted an OTC clearance allowing it to be sold without a prescription, and the impact of this clearance on the competitive landscape remains to be seen.

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The results of these trials may be equivalent to, or potentially better than, the results of our clinical trials, which could have a material adverse effect on us.

The completion of our competitors’ clinical trials with respect to their headache products could negatively impact the perception of us or our gammaCore therapy.

In addition, perception by physicians, payors, or patients that a competitor’s product is superior to our gammaCore therapy or offers comparable benefits at a lower cost or lower incidence of undesirable side effects as compared against our gammaCore therapy, among other perception-driven outcomes in the market following competitors’ completion of their clinical trials, could have a material adverse effect on us.

Given our nascent entry into the diverse human performance and wellness market, we expect that the barriers of entry and competitive effects may be significant factors impacting our success in the research and development, advertising, marketing, promotion, distribution, and sale of our general wellness products, Truvaga and TAC-STIM, respectively.

The completion of our competitors’ clinical trials with respect to their headache products could negatively impact the perception of us or our prescription gammaCore therapy.

In addition, perception by physicians, payors, or patients that a competitor’s product is superior to our prescription gammaCore therapy or offers comparable benefits at a lower cost or lower incidence of undesirable side effects as compared against our prescription gammaCore therapy, among other perception-driven outcomes in the market following competitors’ completion of their clinical trials, could have a material adverse effect on us.

Given our nascent entry into the diverse human performance and general wellness market, we expect that the barriers of entry and competitive effects may be significant factors impacting our success in the research and development, advertising, marketing, promotion, distribution, and sale of our general wellness products, Truvaga and TAC-STIM branded products, respectively.

We expect to continue to perform, or engage with consultants to perform, where appropriate, extensive market research and other economic analysis to appropriately understand market participants’ product offerings and contextualize various empirical and conjectural properties of market structure, including pricing patterns, competitive or anticompetitive tendencies, collaborative ventures and synergies, and cross-market product substitutions and other consumer behavior inferences, among other factors.

To effectively compete with more established marker participants in the wellness industry, we may need to expand our product offerings and distribution channels, which, in the interim, could increase our research and development costs and decrease our operating margins, thereby adversely impacting our business, financial condition, and results of operations.

Some of the world’s largest technology companies that have not historically operated in the wellness and/or medical device spaces, such as Alphabet Inc., Amazon.com, Inc., Apple Inc., Samsung Electronics Co., Ltd., and others have notably developed or may in the future develop products and technologies that may compete with our current or future products and technologies.

To effectively compete with more established marker participants in the general wellness industry, we may need to expand our product offerings and distribution channels, which, in the interim, could increase our research and development costs and decrease our operating margins, thereby adversely impacting our business, financial condition, and results of operations.

Some of the world’s largest technology companies that have not historically operated in the general wellness and/or medical device spaces, such as Alphabet Inc., Amazon.com, Inc., Apple Inc., Samsung Electronics Co., Ltd., and others have notably developed or may in the future develop products and technologies that may compete with our current or future products and technologies.

Such companies have substantially greater capital, research and development, and sales resources than we have.

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Adverse publicity could arise even if the unfavorable effects associated with our general wellness products resulted from the user’s failure to use such products appropriately.

Traditional products used to treat CH and migraine have been available for decades, while our gammaCore therapy has only been commercially available in Europe for several years, and for approximately four years in the United States, and, as a result, we have a limited track record compared to our competitors.

Traditional products used to treat CH and migraine have been commercially available for decades, while we only began commercializing our gammaCore therapy in Europe to treat CH and migraine several years ago and within the past four years in the United States.

Because we have a limited commercial track record compared to our competitors, and our gammaCore therapy generally has been utilized by patients for less time than other headache therapies, physicians and patients may be slower to adopt or recommend our gammaCore therapy.

In addition, while we believe our international commercial experience and our clinical trials support the safety and effectiveness of our gammaCore therapy for the acute treatment of eCH and prevention of CH and migraine headache, future studies or patient experience over a longer period of time may indicate that treatment with gammaCore is less attractive than treatment with competitive products, or that our gammaCore therapy causes unexpected or serious complications or other unforeseen negative effects.

Such results would likely slow the adoption of our gammaCore therapy and significantly reduce our sales, which would harm our business and adversely affect our results of operations.

Furthermore, if patients with traditional or other headache products were to experience unexpected or serious complications or other unforeseen effects, the market for our gammaCore therapy may be adversely affected, even if such effects are not directly attributable to our gammaCore therapy.

We may expend our limited resources to pursue a particular product candidate or disease and fail to capitalize on product candidates or diseases that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we focus our research programs and product candidates on specific conditions.

As a result, we may forego or delay pursuit of opportunities with other product candidates or other diseases or conditions that may later prove to have greater commercial potential.

As a result, we may forego or delay the pursuit of opportunities with other product candidates or other diseases or conditions that may later prove to have greater commercial potential.

Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.

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Our international operations subject us to certain operating and compliance risks, which could adversely impact our results of operations and financial condition.

Sales of gammaCore outside of the United States represent a substantial portion of our net sales.

In 2012, commercial operations began in the United Kingdom and Germany, and we now sell gammaCore throughout Europe from our UK based subsidiary and via two distribution partners based in Belgium and Lithuania.

Outside of Europe, we have a network of 8 distribution partners tasked with selling gammaCore to patients in Canada, Australia, New Zealand, United Arab Emirates, Bahrain, Oman, Saudi Arabia, Cyprus, China, Taiwan, Indonesia, Malaysia and Singapore.

The sale and shipment of gammaCore across international borders and the purchase of components from international sources subjects us to U.S.

Sales of prescription gammaCore therapy outside of the United States represent a substantial portion of our net sales.

In 2012, commercial operations began in the United Kingdom and Germany, and we now sell our prescription gammaCore therapy in Europe from our UK based subsidiary and via distribution partners.

Outside of Europe, we have a network of distribution partners tasked with selling our prescription gammaCore therapy to patients in select global markets.

The sale and shipment of our prescription gammaCore therapy across international borders and the purchase of components from international sources subjects us to U.S.

and foreign governmental trade and customs regulations and laws.

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It is therefore our policy to implement safeguards to educate our employees and agents on these legal requirements and discourage improper practices.

] However, our existing safeguards and any future improvements may prove to be less than effective, and our employees, contractors or consultants, partners, sales agents, or distributors may engage in conduct for which we might be held ultimately responsible as principal.

Ho wever, our existing safeguards and any future improvements may prove to be less than effective, and our employees, contractors or consultants, partners, sales agents, or distributors may engage in conduct for which we might be held ultimately responsible as principal.

Specifically, we can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors or consultants, partners, and sales agents, or distributors, even if we do not explicitly authorize such activities.

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We source a significant amount of the components used in gammaCore from Chinese sources, so any tariffs or other trade restrictions impacting the import of these components from China could have a material adverse impact on us.

In addition, the ongoing COVID- 19 pandemic has caused many countries to restrict certain manufacturing activities and has severely disrupted the movement of certain goods.

As a result, our distributors, agents, and suppliers may not have the materials, capacity, or capability to operate as our business ordinarily requires.

Additionally, our international operations expose us and our distributors to risks inherent in operating in foreign jurisdictions.

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We believe that establishing and strengthening the electroCore, gammaCore, Truvaga, and TAC-STIM brands are critical to achieving widespread acceptance of our nVNS platform technology.

We believe that brand awareness considerations are particularly significant in light of the highly competitive nature of the burgeoning markets for headache therapies and wellness products.

We believe that brand awareness considerations are particularly significant in light of the highly competitive nature of the burgeoning markets for headache therapies and general wellness products.

Promoting and positioning our brand will depend largely on the success of our marketing efforts, our direct-to-consumer initiatives, and our ability to provide physicians, patients, and consumers with a reliable product.

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We may face product liability claims that could result in costly litigation and significant liabilities.

Manufacturing and marketing of our nVNS platform technology and clinical testing of our gammaCore therapy may expose us to individual product liability claims, class action lawsuits or actions, and other individual or mass tort claims.

Manufacturing and marketing of our nVNS platform technology and clinical testing of our prescription gammaCore therapy may expose us to individual product liability claims, class action lawsuits or actions, and other individual or mass tort claims.

Regardless of the merits or eventual outcome, liability claims may result in any of the following:

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Any significant increase in damaged or defective products or expected returns could have a material adverse effect on our operating results for the period or periods in which such returns materialize.

Additionally, damaged or defective products could (i) adversely affect our reputation and our end customers’ willingness to buy products from us, (ii) adversely affect market acceptance or perception of our products, (iii) increase our service costs, (iv) cause us to lose significant end-customers, and (v) subject us to liability for damages and divert our resources from other tasks, any of which could materially and adversely affect our business, asset valuations, results of operations, and financial condition.

Additionally, damaged or defective products could (i) adversely affect our reputation and our end customers’ willingness to buy products from us, (ii) adversely affect market acceptance or perception of our products, (iii) increase our service costs, (iv) cause us to lose significant end-customers, (v) result in punitive actions from regulatory bodies and (vi) subject us to liability for damages and divert our resources from other tasks, any of which could materially and adversely affect our business, asset valuations, results of operations, and financial condition.

If we fail to retain our key executives or recruit and hire new employees, our operations and financial results may be adversely affected while we attract other highly qualified personnel.

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The replacement of any of our key personnel likely would involve significant time and costs, may significantly delay or prevent the achievement of our business objectives, and may harm our business.

In particular, our potential revenue in the United Kingdom is dependent on a small number of certain key UK personnel.

In addition, many of our employees have unvested equity awards in a substantial amount of stock or stock options that have lost significant value since they were granted.

Our employees may be more likely to leave us if the shares they own or the shares underlying unvested options have significantly depreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or if the exercise prices of the options that they hold are significantly above the market price of our common stock.

Further, our employees’ ability to exercise those options and sell their stock in a public market may result in a higher-than-normal turnover rate.

In addition, our financial condition may preclude us from giving additional cash compensation to militate against this risk.

Many executive officers and employees in the pharmaceutical and medical device industries are subject to strict non-compete or confidentiality agreements with their employers, which may include our main competitors.

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It is likely that we will experience similar aggressive lawsuit tactics by our competitors while they seek to protect their market position, particularly as we prepare to expand in new or existing markets.

If we are unable to retain the independent consultants in our sales force or attract independent consultants, our sales efforts may be adversely impacted.

The independent consultants in our sales force may terminate their services at any time.

We have experienced and are likely to continue to experience turnover among independent consultants.

The departure for any reason of any of our independent consultants could have a negative impact on our sales and operating results.

While we take steps to help train, motivate, and retain independent consultants, we cannot accurately predict the number or sales productivity of our independent consultants.

Our operating results will be harmed if we and the independent consultants in our sales force do not generate sufficient interest in our products to retain such consultants and attract new consultants.

The number and sales productivity of the consultants could be harmed by several factors, including:

any adverse publicity regarding us, our products, our distribution channel, or our competitors;

non-compliance by our independent consultants with applicable legal requirements or our policies and procedures;

lack of interest in existing or new products or their failure to achieve desired sales results;

lack of a compelling business opportunity sufficient to generate the interest and commitment of new independent consultants;

any changes we might make to our independent consultant sales compensation plan;

any negative public perception of our company or our products;

any negative public perception of our independent consultants;

our actions to enforce our policies and procedures;

any efforts to sell our products through competitive channels;

any regulatory actions or charges against us or others in our industry;

general economic and business conditions.

We may be held responsible for certain taxes or asses sments and other obligations relating to the activities of our independent consultants, which could harm our financial condition and operating results.

Our independent consultants are subject to taxation, and in some instances, legislation or governmental agencies impose an obligation on us to collect or withhold taxes, such as value added taxes or income taxes, and to maintain appropriate records.

In the event that local laws and regulations or the interpretation of local laws and regulations change to require us to treat our independent consultants as employees, or that our independent consultants are deemed by local regulatory authorities in one or more of the jurisdictions in which we operate to be our employees rather than independent contractors under existing laws and interpretations, or our independent consultants are deemed to be conducting business in countries outside of the country in which they are authorized to do business, we may be held responsible for social security, income, and other related taxes in those jurisdictions, plus any related assessments and penalties, which could harm our financial condition and operating results.

If our independent consultants were deemed to be employees rather than independent contractors, we may be obligated to pay certain employee benefits, such as workers compensation and unemployment insurance.

Further, if our independent consultants are misclassified as employees, we would also face the threat of increased vicarious liability for their actions.

Our future success depends on our leadership development and succession planning.

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Our employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs, and vendors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements.

We are exposed to the risk that our employees, independent contractors, independent contractor influences, other content creators, consultants, commercial collaborators, principal investigators, CROs, and vendors may engage in fraudulent conduct or other illegal activity.

We are exposed to the risk that our employees, independent contractors, independent contractor influencers, other content creators, consultants, commercial collaborators, principal investigators, CROs, and vendors may engage in fraudulent conduct or other illegal activity.

Possible misconduct by these parties, including intentional, reckless, or negligent conduct or otherwise unauthorized activities, that violates the ( 1 ) laws and regulations of the FDA, FTC, and other similar regulatory authorities, including those laws requiring the reporting of true, complete, and accurate information to such authorities, ( 2 ) manufacturing standards, ( 3 ) federal and state data privacy, security, fraud, and abuse and other healthcare laws and regulations in the United States and abroad, such as the General Data Protection Regulation in the European Union, and ( 4 ) laws that require the true, complete, and accurate reporting of financial information or data.

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The increasing use of social media could give rise to liability.

Social media, including Instagram, Snapchat, TikTok, Facebook, and Twitter, are increasingly being used to communicate about our products, clinical development programs, and, at present, the conditions our gammaCore therapy is being developed to treat.

We are engaging in what we believe is appropriate social media usage in connection with our commercialization efforts for indications for which our therapy has been approved.

Social media, including Instagram, Snapchat, TikTok, Facebook, LinkedIn and X, the social media platform formerly known as and Twitter, are increasingly being used to communicate about our products, clinical development programs, and, at present, the conditions our prescription gammaCore therapy is being developed to treat and potential general wellness improvements.

We are engaging in what we believe is appropriate social media usage in connection with our commercialization efforts for indications for which our therapy has been approved and for potential general wellness improvements .

We intend to do the same for any future indications or products, if approved.

Social media practices in the medical device and wellness industries continue to evolve, and regulations and regulatory guidance relating to such practices are mutable and unclear at times.

Social media practices in the medical device and general wellness industries continue to evolve, and regulations and regulatory guidance relating to such practices are mutable and unclear at times.

This evolution creates uncertainty and elevated risk of non-compliance with regulations applicable to our business, which can result in potential regulatory actions against us or potential litigation related to “off-label” marketing or other prohibited activities.

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If any of the aforesaid events were to occur, or we otherwise fail to comply with applicable regulations, we could incur liability, face regulatory actions, or cause other injury to our business and stockholders.

Risks Related to COVID-19

The ongoing coronavirus pandemic could have a significant negative impact on our business, revenues, financial condition, results of operations, and cash flow, and other epidemics or outbreaks of infectious diseases may have a similar impact.

The ongoing coronavirus pandemic has impacted, and may continue to impact, our headquarters, manufacturing, and warehousing and ecommerce facilities, as well as those of our third-party vendors, including through the effects of facility closures, employee furloughs, reductions in operating hours, staggered shifts and other social distancing efforts, labor shortages, decreased productivity, and unavailability of materials or components.

The ongoing coronavirus pandemic may also impact our ability to sell our product, ship our product on a timely basis, and may increase our costs.

The spread of coronavirus caused us to modify certain of our business practices (including social distancing practices, requiring non-essential production related team members to work remotely where possible, restricting business travel, cancelling certain events, and limiting visitor access to our facilities), and we may relax, extend, modify, or take further actions that may be required by government authorities or that we determine are necessary or advisable.

Work-from-home and other measures introduce additional operational risks, including cybersecurity risks, and have affected the way we conduct our business, which could have an adverse effect on our operations.

There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and illness and workforce disruptions could lead to unavailability of key personnel and harm our ability to perform critical functions.

In addition, work-from-home and related business practice modifications present significant challenges to maintaining our corporate culture, including employee engagement and productivity, both during the ongoing pandemic crisis and as we make additional adjustments in the eventual transition from it.

Implementing new business practices to protect employees, vendors, and other parties with whom we interact may result in increased costs.

Furthermore, even if we follow what we believe to be best practices, there can be no assurance that our measures will prevent the transmission of COVID-19 between employees.

Any incidents of actual or perceived transmission may expose us to liability claims, adversely impact employee productivity and morale, and result in negative publicity and reputational harm.

Additionally, our sales and marketing efforts are, and may from time to time be, adversely affected by protocols for screening and restricting outside visitors and vendors that have been adopted by the Department of Veterans Affairs, commercial prescribers, and other third parties.

Officially imposed quarantines and self-quarantines could also interfere with patients’ ability to see a health care provider and obtain our gammaCore therapy.

The degree to which coronavirus impacts our results will continue to depend on future developments that are highly uncertain and cannot be predicted, including, without limitation, the timing, extent, trajectory, and duration of the pandemic;

the development, rollout, and availability of effective treatments and vaccines;

the imposition of protective public safety measures;

vaccine mandates;

the transmissibility and effects of new coronavirus variants;

and how quickly and to what extent normal economic and operating conditions resume, if at all.

These uncertainties may result in delays or modifications to our plans, initiatives and results.

For the reasons set forth above and any other reasons that may come to light as the coronavirus pandemic continues and associated protective or preventative measures transpire, we are unable to reasonably estimate coronavirus’ impact to our business, revenues, financial condition, and results of operations.

We are similarly unable to predict the degree to which the ongoing pandemic impacts our customers, suppliers, vendors, and other partners, and their financial conditions, but a material effect on any of these parties could also adversely affect us.

The impact of coronavirus could also exacerbate other risks discussed below, which could in turn have a material adverse effect on us.

Developments related to coronavirus have been rapidly changing, and additional impacts and risks may arise that we are not aware of or able to appropriately respond to currently.

More generally, in the future, our business, financial results, and financial condition may be negatively impacted by the effects of other disease outbreaks, epidemics, pandemics, or similar widespread public health concerns.

Risk Related to our Dependence on Third Parties

Risks Related to our Dependence on Third Parties

We have signed a distribution agreement with Lovell to sell certain gammaCore products throughout the government channel through Lovell’s contract vehicles, and we may therefore be dependent on Lovell.

Between November 2023 and January 2024, certain gammaCore products were added to the FSS, the DAPA, GSA Advantage, and Defense Logistics Agency’s ECAT system procurement portals through the Lovell contract vehicles.

We expect an increasing portion of our 2024 sales will be made pursuant to the distribution agreement with Lovell and its contract vehicles.

Furthermore, we have submitted a follow-on offer application to replace our existing FSS contract which is set to expire on June 14, 2024.

If our follow-on offer application for renewal is not accepted, our sales within the government channel will be largely dependent on the Lovell contract vehicles.

Any delay in payments by our customers as well as any disagreement disruption or change in the status of the relationship with Lovell or other customers or Lovell’s ability to execute orders could negatively impact our business, results of operations, and financial condition.

We are offering products to government customers through two different contracting vehicles, which may cause confusion for purchasing agents and result in frustration by customers.

Beginning in November 2023, gammaCore products have been available to government customers directly through our existing FSS contract, via open market purchases for individual VA/DoD facilities, and through Lovell.

Offering different products at different price points may cause confusion for purchasing agents, which may result in loss or delay of sales to customers.

Furthermore, we have submitted a follow-on offer application to replace our existing FSS contract which is set to expire on June 14, 2024.

The replacement contract, if granted, will have a different contract number than what was previously used for purchases by customers.

Any frustration or confusion by customers associated with gammaCore offerings through multiple procurement contracts or contract identifiers may adversely impact our business, results of operations, and financial condition .

We have signed a distribution agreement with Joerns Healthcare (“Joerns”) to sell certain gammaCore products throughout certain managed healthcare systems through the Joerns contract vehicles which puts a significant dependence on Joerns.

In October 2022, certain gammaCore products were added to the Joerns DME catalog for distribution throughout certain managed care healthcare systems.

We expect a portion of our 2024 sales will be made pursuant to the distribution agreement with Joerns and their contract vehicles.

Any change in the status of the relationship or Joerns’ ability to execute orders could negatively impact our business.

Our new app-enabled consumer product relies on third-party vendor for application development and management which puts a significant dependency on the third-party vendor.

We intend to launch our next generation app-enabled consumer product under the Truvaga brand in 2024.

The customer-facing application was developed by a third-party vendor on their proprietary platform.

We depend on our technology vendors to manage “up-time” of the front-end customer-facing application, device connectivity, and back-end administration portals.

Any failure on the part of our third-party application developer, or in our ability to transition third-party services effectively, could result in lost sales and harm our business.

The third-party application developer information technology systems, some of which are managed by third parties, and the information technology systems of third parties may be susceptible to damage, disruptions, or shutdowns due to computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors, or catastrophic events.

Despite the precautionary measures we and third parties have taken to prevent breakdowns in information technology systems, if these systems are breached or suffer severe damage, disruption, or shutdown, and we are unable to effectively resolve the issues in a timely manner, our business and operating results may suffer.

We have relied upon primary, secondary, and sole source third-party suppliers located in China and elsewhere for components and packaging of our gammaCore products, which suppliers have paused delivery at our request , thereby making us vulnerable to supply shortages, price fluctuations, and an inability to reactivate supply chains, if necessary, all of which could harm our business.

A number of the critical components used in gammaCore are supplied to us from either a primary, or secondary manufacturer, and multiple suppliers of high-demand consumer electronic components, and in certain cases sole-source, suppliers.

Our manufacturers and suppliers may encounter problems during manufacturing for a variety of reasons, including, for example, disruptions caused by COVID- 19 , failure to follow specific protocols and procedures, failure to comply with applicable legal and regulatory requirements, equipment malfunction and environmental factors, failure to properly conduct their own business affairs, and infringement of third-party intellectual property rights, any of which could delay or impede their ability to meet our requirements.

Our manufacturers and suppliers may encounter problems during manufacturing for a variety of reasons , failure to follow specific protocols and procedures, failure to comply with applicable legal and regulatory requirements, equipment malfunction and environmental factors, failure to properly conduct their own business affairs, and infringement of third-party intellectual property rights, any of which could delay or impede their ability to meet our requirements.

Our ability to supply gammaCore commercially depends, in part, on our ability to obtain a supply of these components that has been manufactured in accordance with regulatory requirements and in sufficient quantities for commercialization and clinical testing.

We have not entered into manufacturing, supply or quality agreements with suppliers of consumer electronic components, some of which supply components critical to our products.

Although we believe that long-term agreements with these suppliers are not necessary as all the components in our products are either high-volume, non-custom commodity components or are readily available from multiple vendors, there can be no assurance that our multiple-source or sole-source suppliers will be able to meet our demand for their products and services, either because of the informal nature of our arrangements with those suppliers, or our limited experience with those suppliers, due to our relative importance as a customer to those suppliers, or due to supply chain disruptions that may arise such as those relating to COVID- 19 and the coronavirus pandemic, the armed conflict between Russia and Ukraine, trade sanctions, and similar events.

Although we believe that long-term agreements with these suppliers are not necessary as all the components in our products are either high-volume, non-custom commodity components or are readily available from multiple vendors, there can be no assurance that our multiple-source or sole-source suppliers will be able to meet our demand for their products and services, either because of the informal nature of our arrangements with those suppliers, or our limited experience with those suppliers, due to our relative importance as a customer to those suppliers, or due to supply chain disruptions that may arise such as those relating to the armed conflict between Russia and Ukraine, trade sanctions, and similar events.

It may be difficult for us to assess the ability of our suppliers to timely meet our demand in the future based on past performance.

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Establishing additional or replacement suppliers for the components or processes used in gammaCore, if required, may not be accomplished quickly.

If we are able to find a replacement supplier, such replacement supplier would need to be qualified and may require additional regulatory authority approval, which could result in further delay.

If we are able to find a replacement supplier, such a replacement supplier would need to be qualified and may require additional regulatory authority approval, which could result in further delay.

While we seek to maintain adequate inventory of the single-source or sole-source components and materials used in our products, any interruption or delay in the supply of components or materials, or our inability to obtain components or materials from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to cancel orders.

If our third-party suppliers fail to deliver the required commercial quantities of materials, or the level of services we require, on a timely basis and at commercially reasonable prices, and we are unable to find one or more replacement suppliers capable of production at a substantially equivalent cost in substantially equivalent volumes and quality and on a timely basis, the continued commercialization of gammaCore would be impeded, delayed, limited, or prevented, which could harm our business, results of operations, financial condition, and prospects.

In Europe, we rely on a single third-party distributor to effectively distribute the majority of our products.

We depend in part on a single third-party distributor for the warehousing and shipment of our products in certain territories in Europe.

We have limited experience with the supply chain of the new product we intend to launch, our next generation app-enabled consumer wellness product under the brand Truvaga, and are dependent on third parties for related software development.

Many of the critical components that will be used in our next generation app-enabled consumer wellness product that we plan to launch under the brand name Truvaga are supplied to us from either a primary, or secondary manufacturer, as well as multiple suppliers of high-demand consumer electronic components, certain of whom are sole-source suppliers.

We also have limited experience in selling an app-enabled consumer wellness product, and therefore we may be unable to reliably forecast the demand and inventory requirements for this type of product, which could directly or indirectly have an adverse effect on our business, results of operations and financial condition.

In addition, we rely entirely on third-party software developers for the design and development of the software for this next generation product.

If our third-party suppliers fail to deliver the required commercial quantities of materials, or our software developers fail to deliver or the level and quality of services, we require, on a timely basis and at commercially reasonable prices, and we are unable to find one or more replacement suppliers or developers capable of production or development at a substantially equivalent cost in substantially equivalent volumes and quality and on a timely basis, the continued commercialization of this product would be impeded, delayed, limited, or prevented, which could have an adverse effect on our business, results of operations, financial condition and prospects.

Outside the United States, we rely on a single third-party distributor to effectively distribute the majority of our products.

We depend in part on a single third-party distributor for the warehousing and shipment of our products in certain territories in outside the United States.

We depend on this distributor’s efforts;

however, we are unable to control its efforts completely.

This distributor typically performs the same services for a variety of other non-competing products that may limit the resources it dedicates to our gammaCore therapy.

This distributor typically performs the same services for a variety of other non-competing products that may limit the resources it dedicates to our prescription gammaCore therapy.

If our distributor fails to effectively distribute gammaCore in full compliance with applicable laws, our operating results and business may suffer.

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If we fail to maintain positive relationships with our distributor, fail to develop new relationships with other distributors (including in new markets), fail to manage, train, or incentivize our existing distributor effectively, or fail to strike agreements with attractive terms, or if our distributor is not successful in its businesses, our revenue may decrease, and our operating results, reputation, and business may be harmed.

Our status as a federal contractor subjects us to a wide variety of regulatory compliance, pricing, and contract-based requirements.

Our status as a supplier to the federal government subjects us to a wide variety of regulatory compliance, pricing, and contract-based requirements.

Failure to comply with these requirements could adversely impact our ability to obtain future federal contracts, which could negatively impact us and our business.

We expect that a majority of our 2023 U.S.

sales of gammaCore will be made pursuant to our qualifying contract on the FSS and open market sales to individual VA facilities.

We expect that a portion of our 2024 U.S.

sales of gammaCore will be made pursuant to qualifying FSS, GSA, DAPA, and ECAT contracts, and open market sales to individual VA facilities.

Our status as a contractor on FSS means that we are obligated to comply with a variety of federal procurement laws, regulations, and contract terms that require commercial price disclosures, commercial-to-federal price indexing, and compliance with various federal programs.

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Armed Forces could involve various significant compliance requirements as regards applicable laws and regulations and certain contract law covenants and conditions that collectively regulate our affairs in the ordinary course of business as a result of our status as a federal contractor.

The recent Biden administration's executive order requiring all on-site and remote federal employees, contractors, and sub-contractors to be vaccinated against COVID- 19 or receive an approved medical or religious exemption by December 8, 2021 may apply to us because of our Federal Supply Schedule Medical Equipment and Supply contract.

Failure to comply with the executive order could lead to loss of the contract, which could have a material adverse effect on our business, revenues, financial condition, and result of operations.

In light of the executive order, we implemented a mandatory COVID-19 vaccination policy for all employees subject to religious and medical exemptions.

There are, however, ongoing challenges in the federal courts regarding the validity of the executive order, which could lead to future changes to our own policies depending on the outcome of those cases.

For now, the cost of maintaining compliance with these requirements could adversely impact us and our business, and complying with these requirements could divert managerial and financial resources.

The cost of maintaining compliance with these requirements could adversely impact us and our business, and complying with these requirements could divert managerial and financial resources.

Additionally, failure to comply could result in us being excluded from the opportunity to renew existing federal contracts or to bid on federal future contracts for a period of time lasting up to several years.

Our qualifying contract on the FSS is scheduled to expire on January 15, 2024.

We intend to request an extension of the FSS from the United States Department of Veterans Affair, but there is no assurance the FSS contract will be renewed, if at all on terms favorable to us.

Any of these contingencies could have a material adverse effect on our business, financial condition, and results of operations.

Our potential revenue in the United Kingdom is substantially dependent on government funding arrangements, and changes in governmental policy for such arrangements could cause material harm to our business.

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Any performance failure on the part of our existing or future distributors could delay clinical development or regulatory clearance or approval of our product candidates or commercialization of our products, producing additional losses and depriving us of potential product revenues.

If we do not successfully enter into future collaborations for the development, regulatory clearance, and commercialization of our gammaCore therapy in international markets, our business may be harmed.

We may choose to enter into collaboration agreements with third parties with respect to development, regulatory clearance, and commercialization of our gammaCore therapy in international markets.

We will have limited control over the amount and timing of resources that our collaborators dedicate to the development, regulatory clearance, or commercialization of our gammaCore therapy.

If we do not successfully enter into future collaborations for the development, regulatory clearance, and commercialization of our prescription gammaCore therapy in international markets, our business may be harmed.

We may choose to enter into collaboration agreements with third parties with respect to development, regulatory clearance, and commercialization of our prescription gammaCore therapy in international markets.

We will have limited control over the amount and timing of resources that our collaborators dedicate to the development, regulatory clearance, or commercialization of our prescription gammaCore therapy.

Our ability to generate revenues from these arrangements will depend in part on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.

Despite carefully written collaboration agreements, collaborations involving our gammaCore therapy are subject to numerous risks, which may include the following:

Despite carefully written collaboration agreements, collaborations involving our prescription gammaCore therapy are subject to numerous risks, which may include the following:

collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration;

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In addition, any changes to manufacturing processes may trigger the need for submissions or notifications to, and in some cases advance approval from, the FDA or other regulatory authorities because of the potential impact of changes on previously cleared, approved, and/or authorized devices.

Our facilities are subject to inspections by the FDA and corresponding state agencies on an ongoing basis, and thus, we must comply with Good Manufacturing Practices, which generally require us to maintain compliant processes, controls, and record keeping, and to comply with FDA Quality System Regulations (or QSR), and applicable state-law requirements.

Our facilities are subject to inspections by the FDA and corresponding state and international agencies on an ongoing basis, and thus, we must comply with Good Manufacturing Practices, which generally require us to maintain compliant processes, controls, and record keeping, and to comply with FDA Quality System Regulations (or QSR), and applicable state-law requirements.

We may be unable to adequately maintain, develop, and expand our manufacturing process and operations or maintain compliance with FDA and state agency requirements, and manufacturing issues could impact our cleared and approved products.

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If we, or any of our manufacturers, are unable to successfully sustain, or further scale-up manufacturing in sufficient quality and quantity, the development, testing, and clinical trials, if appropriate, of our nVNS technology platform may be delayed or infeasible, and regulatory clearance, approval, or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.

If we are unable to obtain or maintain third-party manufacturing for commercial supply of our product candidates, or to do so on commercially reasonable terms, we may not be able to develop and commercialize our gammaCore therapy successfully.

We are required to maintain high levels of inventory due to lead times with single-source consumer electronic components vendors, which could consume a significant amount of our resources, reduce our cash flows, and lead to inventory impairment charges.

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In addition, as of December 31, 2023, we had approximately $ 2.8 million of inventory.

Our inventory significantly exceeds current demand for the nVNS technology platform, which also could result in an increased risk of adverse financial impact from inventory obsolescence.

There are, however, risks that growth in our business, including our recently launched non-prescription, human performance and wellness offerings, may result in demand that could outstrip our current inventory, in which case we would be subject to various supply chain, manufacturing, and operational risks.

There are risks that growth in our business, including our recently launched non-prescription, human performance and general wellness offerings, may result in demand that could outstrip our current inventory, in which case we would be subject to various supply chain, manufacturing, and operational risks.

If not mitigated fully, this could negatively impact our ability to commercialize our products and have a material adverse effect on our brands, revenues, expenses, results of operations, and financial condition.

Moreover, we have limited experience in selling the new app-enabled consumer wellness product, and we may be unable to forecast the demand and inventory requirement.

This could negatively impact our ability to commercialize our products and have a material adverse effect on our brands, revenues, expenses, results of operations, and financial condition.

Risks Related to Intellectual Property

Our product development initiatives may be delayed or fail to succeed and could also lead to challenging intellectual property rights issues.

We may seek to develop new products and technologies, including enhancements of our existing products for nVNS.

We may seek to develop new products, software applications and technologies, including enhancements of our existing products for nVNS.

Developing new products and improving our existing products to meet the needs of current and future patients and consumers require significant investment in research and development.

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Our success depends in large part on our ability to secure effective patent protection for our products and processes in the United States and internationally.

We have filed, and intend to continue to file, patent applications for various aspects of our technology and trademark applications to protect our brands and business and copyright applications to protect our software , digital devices and related software applications, and certain User Manuals, Guides and Instructions for Use for some of our commercial products .

We seek to obtain and maintain patents and other intellectual property rights to restrict the ability of others to market products or services that misappropriate our technology and work product and/or infringe our intellectual property to compete with our products and services.

However, we face the risks that:

We may fail to secure necessary patents, potentially permitting competitors to market competing products and services and make, use, or sell products or offer services that are substantially the same as ours without incurring the sizeable development costs that we have incurred, which would adversely affect our ability to compete.

We may fail to secure necessary patents, potentially permitting competitors to market competing products, related software applications and services and make, use, or sell products or offer services that are substantially the same as ours without incurring the sizeable development costs that we have incurred, which would adversely affect our ability to compete.

Patents may not issue from currently pending or future patent applications.

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Our competitors may also independently develop similar technology.

Any inability to meaningfully protect our intellectual property could result in competitors offering products that incorporate our product features, which could reduce demand for our gammaCore therapy.

In addition, we may need to defend our patents from third-party challenges, including interferences, derivation proceedings, re-examination proceedings, post-grant review, inter partes review, third-party submissions, oppositions, nullity actions, or other patent proceedings.

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If we need to use our intellectual property to enter such cross-license agreements, it may compromise the value of our intellectual property due to the fact that our competitors may be able to manufacture, use, sell, offer for sale, import and/or export our patented technology.

We rely on third-party software to develop our products and significant increases in licensing costs or defects in third-party software could harm our business.

We rely on software licensed from third parties to develop our products.

In addition, we may need to obtain future licenses from third parties to use software or other intellectual property associated with our products.

There can be no assurance that these licenses will be available to us on acceptable terms, without significant price increases or at all.

Any loss of the right to use any such software or other intellectual property required for the development and maintenance of our products could significantly increase our expenses and result in delays in the production of our products until equivalent technology is either developed by us, or, if available from others, is identified, obtained, and integrated, which could harm our business.

Any errors or defects in third-party software could result in errors or a failure of our products, which could harm our business.

We rely on a variety of intellectual property rights, and if we are unable to maintain or protect our intellectual property, our business and results of operations will be harmed.

Our commercial success will depend, in part, on our ability to obtain and maintain intellectual property protection for our products, processes, and related technologies in the United States, Europe and elsewhere, successfully defend our intellectual property rights against third-party challenges, and successfully enforce our intellectual property rights to prevent third-party infringement.

Our commercial success will depend, in part, on our ability to obtain and maintain intellectual property protection for our products and related software applications, processes, and related technologies in the United States, Europe and elsewhere, successfully defend our intellectual property rights against third-party challenges, and successfully enforce our intellectual property rights to prevent third-party infringement.

While we rely primarily upon a combination of patents, copyrights, trademarks, and trade secret protection, as well as nondisclosure, confidentiality, and other contractual agreements to protect the intellectual property related to our brands, products, and other proprietary technologies, protection derived from patents is relatively limited.

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Third parties may have blocking patents that could prevent us from marketing our products or practicing our own patented technology.

We may introduce products that include related software applications.

Software is generally ineligible for patent protection in the United States and other countries.

We may not be able to obtain patent claims that adequately cover our software applications.

In the event that we do obtain such protection, it may be difficult to enforce any such patents as certain types of software patents are vulnerable to invalidity proceedings in the USPTO and foreign counterparts.

Software innovations are often implemented as method patents, which have unique enforcement requirements and restrictions that may make them difficult to enforce against third parties.

In addition, it may be difficult to ascertain whether third parties are implementing software that infringes our patents.

The patent positions of pharmaceutical and medical device companies can be highly uncertain and involve complex legal, scientific, and factual questions for which important legal principles remain unresolved.

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it is possible that our pending patent applications will not lead to issued patents;

it is possible that our pending patent applications may not adequately cover our software applications;

issued patents that we own or have exclusively licensed may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors;

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Many of the risks associated with the use of open-source software cannot be eliminated and could negatively affect our business.

Cyber-security incidents, including data security breaches or computer viruses, could harm our business by disrupting our delivery of services, damaging our reputation, or exposing us to liability.

Cybersecurity incidents, including data security breaches or computer viruses, could harm our business by disrupting our delivery of services, damaging our reputation, or exposing us to liability.

We receive, process, store, and transmit, often electronically, data of our customers and others which may be confidential.

Unauthorized access to our computer systems or stored data could result in the theft or improper disclosure of confidential information, the deletion or modification of records, or could cause interruptions in our operations.

These cyber-security risks increase when we transmit information from one location to another, including transmissions over the Internet or other electronic networks.

Despite implemented security measures, our facilities, systems, and procedures, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism, software viruses, misplaced or lost data, programming and/or human errors, or other similar events which may disrupt our delivery of services or expose the confidential information of our customers and others.

These cybersecurity risks increase when we transmit information from one location to another, including transmissions over the Internet or other electronic networks.

Despite implemented security measures, our facilities, systems, and procedures, and those of our third-party service providers, may be vulnerable to security breaches, phishing scams, acts of vandalism, software viruses, misplaced or lost data, programming and/or human errors, or other similar events which may disrupt our delivery of services or expose the confidential information of the Company, our customers and others.

Any security breach involving the misappropriation, loss, or other unauthorized disclosure or use of confidential information of our customers or others, whether by us or a third party, could:

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The regulatory environment governing information, cybersecurity, and privacy is increasingly demanding and continues to evolve.

Personal privacy and data security have become significant issues in the U.S., Europe, and many other jurisdictions where we offer our products.

The regulatory framework for privacy and security issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future.

As a result of a new SEC rule on cybersecurity disclosure, we are required to disclose, pursuant to new Item 1.05 of SEC Form 8-K, any cybersecurity incident that we determine to be material and describe the material aspects of the nature, scope, and timing of the incident, as well as the material impact or reasonably likely material impact of the incident on us, including our financial condition and results of operations.

We will also be required to describe, on a periodic basis, our processes, if any, for the assessment, identification, and management of material risks from cybersecurity threats, and describe whether any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition, our board’s oversight of risks from cybersecurity threats and management’s role in assessing and managing material risks from cybersecurity threats .

While any insurance that we may have that covers a specific cybersecurity incident may help to prevent our realizing a significant loss from the incident, it would not protect us from the effects of adverse regulatory actions that may result from the incident or a finding that we had inadequate cybersecurity controls, including the reputational harm that could result from such regulatory actions.

Such insurance can be expensive and difficult to procure, and may also be limited and subject to policy terms and significant self-insured retentions.

Any such insurance also may be insufficient to cover all losses or all types of claims that may arise.

We have incurred significant costs in an effort to detect and prevent security breaches and incidents, and we may face increased costs and requirements to expend substantial resources in the event of an actual or perceived security breach or incident and to comply with this new SEC cyber security rule.

and foreign laws, such as the federal Health Insurance Portability and Accountability Act of 1996 (or HIPAA), govern the transmission, security, and privacy of individually identifiable information and sensitive health and other personal information that we may obtain or have access to in connection with the operation of our business, including the conduct of clinical research trials or other research studies that may provide us with access to this information.

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In addition, our internal control policies and procedures may not always protect us from reckless, intentional and/or criminal acts committed by our employees or agents.

Cybersecurity risks and cyber incidents could result in the compromise of confidential data or critical data systems and give rise to potential harm to customers, remediation and other expenses, expose us to liability under HIPAA, consumer protection laws, or other common law theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business and operations.

There are numerous and evolving risks to our cybersecurity and privacy from cyber threat actors.

These cyber threat actors, whether internal or external to our company, are becoming more frequent, sophisticated and coordinated in their attempts to access data, including third parties with whom we conduct business through, without limitation, malicious software;

data privacy breaches by employees, insiders or others with authorized access;

cyber or phishing-attacks;

attempts to gain unauthorized access to our data and systems;

and other electronic security breaches.

In the ordinary course of business, we collect and store sensitive information on our network, including intellectual property, proprietary business information and personally identifiable information of individuals, such as our customers and employees.

The secure maintenance of this information and technology is critical to our business operations.

We are consistently implementing new security measures and technologies to protect the confidentiality, integrity and availability of this data and the systems and devices that store and transmit such data.

Although our defenses are monitored and routinely tested internally and by external parties.

Threats from malicious persons and groups, new vulnerabilities and advanced new attacks against information systems create enhanced risks of cybersecurity incidents.

These incidents can include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption.

Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, we may be unable to anticipate these incidents or techniques, timely discover them, or implement adequate preventative measures.

Additionally, in response to the onset of the COVID-19 pandemic, we modified our business practices to adopt hybrid and remote workplace models for many of our employees.

The hybrid and remote workplace models do, however, introduce additional operational risk, including increased cybersecurity risk.

These cyber risks include, among other risks, increased phishing, malware, and other cybersecurity attacks, vulnerability to, or disruptions of, our information technology infrastructure and systems to support remote operations, increased risk of unauthorized access, use or dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a security breach resulting in destruction, alteration or misuse of valuable information, including proprietary business information and personally identifiable information of individuals, all of which could expose us to risks of data or financial loss, litigation and liability.

These threats can come from a variety of sources, including criminal hackers, state-sponsored intrusions, industrial espionage and malfeasance by employees, contractors, or other insiders.

Cyber threats may be generic, or they may be custom-crafted against our information systems or particular personnel.

Over the past several years, cyber attacks have become more prevalent and much harder to detect and defend against.

These threat actors may be able to penetrate our security measures, breach our information technology systems, misappropriate or compromise confidential and proprietary information of our company and our customers, cause system disruptions and shutdowns, or introduce ransomware, malware, or vulnerabilities into our products, systems, and networks or those of our customers and partners.

Our network and storage applications, as well as those of our contractors, may be vulnerable to cyber attack, malicious intrusion, malfeasance, loss of data privacy or other significant disruption and may be subject to unauthorized access by hackers, employees, consultants or other service providers.

In addition, products, hardware, software or applications we develop, or which we procure from third parties, may contain defects in design or manufacture, security flaws, or other problems that could unexpectedly compromise information security or the operation of our products.

Our third-party vendors may experience security incidents of varying severity, including but not limited to increased ransomware attacks, network intrusions, and unauthorized data exfiltration.

Targeted cyber-attacks or those that may result from a security incident directed at a third-party vendor could compromise our services and internal systems, resulting in interruptions, delays, or cessation of service that could disrupt business operations for us and our customers.

Our proactive measures and remediation efforts may not be successful or timely.

Unauthorized parties may also attempt to gain access to our systems or facilities through fraud, trickery or other forms of deceiving our employees, contractors and temporary staff.

For example, as disclosed in our Form 10-Q for the quarterly period ended September 30, 2023, it was determined that our internal controls over vendor management, as designed, would not have timely prevented an unauthorized payment based on incorrect vendor information from occurring.

As such, we concluded that a material weakness exists in our internal controls over financial reporting.

This material weakness did not result in any identified misstatement, and there were no changes to previously reported financial results .

Our efforts to remediate this weakness are ongoing, but there can be no assurance that such remediation will succeed nor that our controls will prevent or detect any deceptive practices or the harm stemming there from.

We are and may continue to be subject to cybersecurity incidents that bypass our security measures.

Such incidents may impact the integrity, availability or privacy of personal health information or other data subject to privacy laws or disrupt our information systems, devices or business, including our ability to deliver products and services to our customers.

As a result, cybersecurity, physical security and the continued development and enhancement of our controls, processes and practices designed to protect our enterprise, information systems and data from attack, damage or unauthorized access remain a priority for us but there can be no assurance that our efforts will prevent or mitigate the risks.

Moreover, as cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any cybersecurity vulnerabilities.

The occurrence of any of these events could result in:

harm to customers and consumers;

business interruptions and delays;

the loss, misappropriation, corruption or unauthorized access of data, confidential information or intellectual property;

litigation, including potential class action litigation, and potential liability under privacy, security and consumer protection laws or other applicable laws;

reputational damage;

significant remediation costs, including liability for stolen customer or employee information, repairing system damage, or providing benefit to affected customers or employees;

increase to insurance premiums;

foreign, federal and state governmental inquires, violations or sanctions, any of which could have a material, adverse effect on our financial position and results of operations.

Any significant interruptions or delays in third-party service and access could result in limited capacity, reduced demand, and loss of customers and adversely affect our business.

We rely upon third-parties as service data storage providers, including cloud storage solution providers, for the development, availability or functionality of our medical devices and wellness products, including our next generation Truvaga app-enabled consumer product.

Nearly all of our data storage and analytics are conducted on, and the data and content we create associated with sales on our apps and websites are processed through servers hosted by these providers.

If our third-party vendors are unable or unwilling to provide the services necessary to support, or if our agreements with such vendors are terminated, our medical devices and wellness products, including the launch and use of our next generation Truvaga app-enabled consumer product, could be significantly affected.

Some of our vendor agreements may be unilaterally terminated by the licensor for convenience, and if such agreements are terminated, we may not be able to enter into similar relationships in the future on reasonable terms or at all.

Any damage to, or failure of, our systems or the systems of our third-party data centers or our other third-party providers that we may use could result in interruptions to the development, availability or functionality of our medical devices and wellness products, including the launch of our next generation Truvaga app-enabled consumer product.

As a result, we could lose consumer data and miss opportunities to acquire and retain consumers, which could potentially result in decreased revenue.

If for any reason our arrangements with our data centers or third-party providers are terminated or interrupted, such termination or interruption could adversely affect our business, financial condition, and results of operations.

We exercise little control over third-party providers, which increases our vulnerability to problems with the services they provide.

We could experience additional expense in arranging for new facilities, technology, services and support.

In addition, the failure of third-party data centers or any other third-party providers to meet our requirements could result in interruption in the development, availability or functionality of our medical devices and wellness products, including the launch and use of our next generation Truvaga app-enabled consumer product.

The satisfactory performance, reliability, development and availability of our next generation Truvaga app-enabled consumer product is critical to our reputation and our ability to acquire and retain customers, as well as to maintain adequate customer service levels.

If the interface of our next generation app is not considered user friendly by our customers or our app does not function correctly, our customers may become frustrated and not order any existing or new wellness products.

Our future revenue may depend in part on the number of customers using our app in connection with our next generation consumer product in fulfilling their wellness needs.

Unavailability of our app in connection with the use of our next generation consumer product could materially and adversely affect consumer perception of our brand.

The occurrence of a natural disaster, power loss, telecommunications failure, data loss, computer virus, an act of terrorism, cyberattack, vandalism or sabotage, act of war or any similar event, or a decision to close our third-party data centers on which we normally operate or the facilities of any other third-party provider without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions and affect the launch and use of our next generation Truvaga app-enabled consumer product.

Cloud computing, in particular, is dependent upon having access to an internet connection in order to retrieve data.

If a natural disaster, blackout or other unforeseen event were to occur that disrupted the ability to obtain an internet connection, we may experience a slowdown or delay in the development, availability or functionality of our medical devices and wellness products, including the launch and use of our next generation Truvaga app-enabled consumer product.

While we have disaster recovery arrangements in place, our preparations may not be adequate to account for disasters or similar events that may occur in the future and may not effectively permit consumers to use our medical devices and wellness products, including our next generation Truvaga app-enabled product after launch, in the event of any problems with respect to our systems or those of our third-party data centers or any other third-party facilities.

Our disaster recovery and data redundancy plans may be inadequate, and our business interruption insurance may not be sufficient to compensate us for the losses that could occur.

If any such event were to occur, our medical devices and wellness products, including the launch and use our next generation Truvaga app-enabled consumer product, could be impaired and our business, financial condition and results of operations may be materially and adversely affected.

Failure to protect our information technology infrastructure against cyber attacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business and operating results.

We rely on information technology and telephone networks and systems, including the internet, to process and transmit sensitive electronic information and to manage or support a variety of business processes and activities, including sales, billing, customer service, procurement and supply chain, research and development, product assembly, and distribution.

We use enterprise information technology systems to record, process, and summarize financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal, and tax requirements.

System failures or outages, including any potential disruptions due to significantly increased global demand on certain cloud-based systems, or failures to adequately scale our data platforms and architectures could compromise our ability to perform these functions in a timely manner, which could harm our ability to conduct business or delay our financial reporting.

Such failures could materially adversely affect our operating results and financial condition.

Our information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns due to computer viruses, denial-of-service attacks, phishing attacks, ransomware or other malware, attacks by computer hackers (including nation states or state-sponsored organizations), failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors, natural disasters, terrorist attacks, the outbreak of wars or other armed conflicts, or catastrophic events.

Although we are developing systems and processes that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third-party vendor, such measures cannot provide absolute security.

In addition, certain countries have implemented or may implement legislative and technological actions that either do or can effectively regulate access to the internet, including the ability of internet service providers to limit access to specific websites or content.

Other countries have attempted or are attempting to change or limit the legal protections available to businesses that depend on the internet for the delivery of their services.

If our systems are breached or suffer severe damage, disruption or shutdown and we are unable to effectively resolve the issues in a timely manner, our business and operating results may significantly suffer and we may be subject to litigation, government enforcement actions and other actions for which we could face financial liability and other adverse consequences which may include:

additional government oversight of our operations;

loss of existing customers;

difficulty in attracting new customers;

problems in determining product cost estimates and establishing appropriate pricing;

difficulty in preventing, detecting, and controlling fraud;

disputes with customers, physicians, and other health care professionals;

increases in operating expenses, incurrence of expense, including notification and remediation costs;

regulatory fines or penalties;

individual actions or class actions for damages;

loss of revenues (including through loss of coverage or reimbursement);

product development delays;

disruption of key business operations;

diversion of attention of management and key information technology resources.

Risks Related to Regulation of our Industry

Our business is subject to extensive governmental regulation that makes it expensive and time consuming for us to bring our gammaCore therapy and our general wellness products, Truvaga and TAC-STIM to market in the United States and to expand the use of our gammaCore therapy to additional therapeutic indications, and to expand the reach of our wellness initiatives.

Our gammaCore therapy must comply with regulatory requirements imposed by the FDA in the United States and by similar agencies in foreign jurisdictions.

Our business is subject to extensive governmental regulation that makes it expensive and time consuming for us to bring our prescription gammaCore therapy and our general wellness products, Truvaga and TAC-STIM to market in the United States and to expand the use of our prescription gammaCore therapy to additional therapeutic indications, and to expand the reach of our general wellness initiatives.

Our prescription gammaCore therapy must comply with regulatory requirements imposed by the FDA in the United States and by similar agencies in foreign jurisdictions.

These requirements involve lengthy and detailed laboratory and clinical testing procedures, sampling activities, extensive agency review processes, and other costly and time-consuming procedures.

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Government regulation also could delay our marketing of new products for a considerable period of time and impose costly procedures on our activities.

For instance, the FDA and other regulatory agencies may not clear or approve our gammaCore therapy in additional therapeutic areas that we may pursue, on a timely basis, if at all.

For instance, the FDA and other regulatory agencies may not clear or approve our prescription gammaCore therapy in additional therapeutic areas that we may pursue, on a timely basis, if at all.

We have recently reduced resources in research and development which may delay our receipt of regulatory approvals for additional indications.

Any delay in obtaining, or failure to obtain, such clearances or approvals could negatively impact our marketing of our gammaCore therapy and impede our ability to bring future products to market.

Moreover, any reclassification, redesignation, or new regulatory treatment of our existing general wellness products in light of applicable law, nonbinding recommendations or other inferences resulting from complex legal analysis and interpretation of the existing regulatory framework governing wellness products and their relational position in the larger FDA scheme of enforcement may negatively impact our marketing and other activities in respect to our wellness and human performance products, Truvaga and TAC-STIM, respectively, and other future marketing and other activities in respect to future wellness business ventures.

Even though 510 (k) clearance from the FDA has been received to expand the label for gammaCore therapy for several indications, our gammaCore therapy will remain subject to strict regulatory controls on manufacturing, marketing, and use.

Any delay in obtaining, or failure to obtain, such clearances or approvals could negatively impact our marketing of our prescription gammaCore therapy and impede our ability to bring future products to market.

Moreover, any reclassification, redesignation, or new regulatory treatment of our existing general wellness products in light of applicable law, nonbinding recommendations or other inferences resulting from complex legal analysis and interpretation of the existing regulatory framework governing wellness products and their relational position in the larger FDA scheme of enforcement may negatively impact our marketing and other activities in respect to our general wellness and human brands, Truvaga and TAC-STIM, respectively, and other future marketing and other activities in respect to future general wellness business ventures.

Even though 510 (k) clearance from the FDA has been received to expand the label for prescription gammaCore therapy for several indications, our prescription gammaCore therapy will remain subject to strict regulatory controls on manufacturing, marketing, and use.

We may be forced to modify or recall a product after release in response to regulatory action or unanticipated difficulties encountered in general use.

Any such action could have a material effect on the reputation of our gammaCore therapy and on our competitive and financial position.

Any such action could have a material effect on the reputation of our prescription gammaCore therapy and on our competitive and financial position.

The advertising, marketing, and labeling of medical devices are highly regulated by the FDA and FTC.

Our efforts to promote our gammaCore therapy, including via direct-to-consumer marketing or social media initiatives, could subject us to additional scrutiny of our communication of risk information, benefits or claims, by the FDA, FTC, or both agencies.

Our efforts to promote our prescription gammaCore therapy, including via direct-to-consumer marketing or social media initiatives, could subject us to additional scrutiny of our communication of risk information, benefits or claims, by the FDA, FTC, or both agencies.

Our general wellness product activity is also subject to similar marketing and promotion risk.

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It is uncertain how potential changes to FDA regulatory approval standards and processes may impact our ability to gain clearance or approval from FDA for our products in the future.

We depend hea vily on revenue from the Department of Defense and the Department of Veterans Affairs for a substantial portion of our business.

Changes in the U.S.

Government's priorities, or delays or reductions in spending could have a material adverse effect on our business.

Approximately 60.8% of our revenues from operations in fiscal 2022 were from sales directly or indirectly to the programs with the U.S.

Department of Defense, primarily the Department of Veterans Af fairs , and to a lesser extent the U.S.

Cost cutting including through consolidation and elimination of duplicative organizations and insurance has become a major initiative for Department of Defense.

The funding of our programs may be subject to the overall U.S.

government budget and appropriation decisions and processes which are driven by numerous factors, including geo-political events and macroeconomic conditions.

Spending levels by government authorities we do business with can be increasingly difficult to predict and are expected to be affected by numerous factors.

Such factors include priorities of the Biden administration and the Congress, and the overall health of the U.S.

and world economies and the state of governmental finances.

We expect that budgetary constraints and concerns related to spending and the national debt will continue to place pressure government spending levels, which could adversely impact funding for purchase of certain of our products, our operations, financial results and growth p rospects.

Our future success in part depends on our ability to develop, receive regulatory clearance or approval for, and introduce new products or product enhancements that will be accepted by the market in a timely manner.

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We further acknowledge that the Center for Devices and Radiological Health’s general wellness policy applies only to general wellness products that are deemed to be low risk.

In considering whether a product of ours is low risk for purposes of the aforementioned FDA guidance, the FDA recommends the due consideration of whether the Center for Devices and Radiological Health actively regulates products of the same type as the product in question, and this consideration is important to our current and future wellness market engagement.

Our business activities involving general wellness products, Truvaga and TAC-STIM may be subject to significant and possibly material and adverse consequences if revisions to FDA guidance or other guidance modify our reasoned beliefs and opinions regarding classification, other legal questions, and compliance with all applicable rules and regulations that apply to our business activities in various ways.

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We and our legal advisors strive to regularly keep abreast of all relevant developments in the statutory, administrative, and decisional laws, on federal and, where applicable, state levels, that which influence or inform our general wellness products-related development, marketing, promotion, distribution, and sale, among other activities.

In light of the substantial complexity in such laws as well as their potential actual interactive Ness, or perceived overlap or conflict, with the application of the FDA’s existing regulatory approval or clearance processes for medical device products as a result of either official agency changes to applicable wellness guidance, our subsequent legal review of such guidance that differs substantially from earlier legal review of such guidance, or the FDA’s disagreement with our determination regarding the regulatory status of our general wellness products, we may experience adverse and possibly material effects on our ability to commercialize our general wellness products, which could impact our financial condition, operating results, and prospects for growth.

Separate and apart from our legal and compliance functions and external advisors, we maintain internal controls and policies and procedures that militate against compliance risk in our wellness line of business and train and educate our sales agents and other personnel on subject matter pertinent to compliance with relevant law in various jurisdictions.

In light of the substantial complexity in such laws as well as their potential actual interactive Ness, or perceived overlap or conflict, with the application of the FDA’s existing regulatory approval or clearance processes for medical device products as a result of either official agency changes to applicable general wellness guidance, our subsequent legal review of such guidance that differs substantially from earlier legal review of such guidance, or the FDA’s disagreement with our determination regarding the regulatory status of our general wellness products, we may experience adverse and possibly material effects on our ability to commercialize our general wellness products, which could impact our financial condition, operating results, and prospects for growth.

Separate and apart from our legal and compliance functions and external advisors, we maintain internal controls and policies and procedures that militate against compliance risk in our general wellness line of business and train and educate our sales agents and other personnel on subject matter pertinent to compliance with relevant law in various jurisdictions.

Our failure to comply with U.S.

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Modifications to our products may require new regulatory clearances or approvals or may require us to recall or cease marketing our products until clearances or approvals are obtained.

Modifications to or expansion of our indications for use of our gammaCore products may require new regulatory approvals or clearances, including 510(k) clearances or PMA approvals, or require us to recall or cease marketing the modified devices until these clearances or approvals are obtained.

Modifications to or expansion of our indications for use of our prescription gammaCore products may require new regulatory approvals or clearances, including 510 (k) clearances or PMA approvals, or require us to recall or cease marketing the modified devices until these clearances or approvals are obtained.

The FDA requires device manufacturers to initially make and document a determination of whether or not a modification requires a new approval, supplement, or clearance.

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If a manufacturer determines that a modification to an FDA-cleared device could significantly affect its safety or efficacy or would constitute a major change in its intended use, then, the manufacturer must file for a new 510 (k) clearance or possibly a PMA application.

Where we determine that modifications to our products require a new 510(k) clearance or PMA application, we may not be able to obtain those additional clearances or approvals for the modifications or additional indications in a timely manner, or at all.

When we determine that modifications to our products require a new 510 (k) clearance or PMA application, we may not be able to obtain those additional clearances or approvals for the modifications or additional indications in a timely manner, or at all.

For those products sold in the EU, we must notify our notified body if significant changes are made to the products, or if there are substantial changes to our quality assurance systems affecting those products.

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As a result, we may not be able to file for regulatory approvals or marketing authorizations and may not receive necessary approvals or authorizations to commercialize our products in any market outside the United States on a timely basis, or at all.

gammaCore may in the future be subject to notifications, recalls, or voluntary market withdrawals that could harm our reputation, business and financial results.

Our products may in the future be subject to notifications, recalls, or voluntary market withdrawals that could harm our reputation, business and financial results.

The FDA, EEA authorities and similar foreign governmental authorities have the authority to request or require the recall of commercialized products in the event of regulatory non-compliance or material deficiencies or defects in design or manufacture that could affect patient safety.

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Manufacturers can also expect prioritized review of their submission.

While our gammaCore nVNS device has received Breakthrough Designation from the FDA for the treatment of posttraumatic stress disorder, or PTSD, we may not experience a faster development process, review or approval compared to conventional FDA procedures.

While our prescription gammaCore nVNS device has received Breakthrough Designation from the FDA for the treatment of posttraumatic stress disorder, or PTSD, we may not experience a faster development process, review or approval compared to conventional FDA procedures.

In addition, the FDA may withdraw Breakthrough Device designation if it believes that the Designation is no longer supported by data from our clinical development program.

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Any of these possible results could adversely and materially harm our reputation or have a materially significant effect on our business, financial condition, or operating results.

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations which could subject our business to higher tax liability.

Our ability to use our net operating losses, or NOLs, to offset future taxable income may be subject to certain limitations which could subject our business to higher tax liability.

We may be limited in the portion of NOL carryforwards that we can use in the future to offset taxable income for U.S.

federal and state income tax purposes, and federal tax credits to offset federal tax liabilities.

Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state law provisions, limit the use of NOLs and tax credits after a cumulative change in corporate ownership of more than 50% occurs within a three-year period.

The statutes limit how much NOLs and tax credits a corporation can use in a tax year after a change in ownership.

Avoiding an ownership change is generally beyond our control and even where within our control we may choose to experience an ownership change in connection with a financing or other transaction that might limit our use of NOLs and tax credits in the future.

In addition, realization of deferred tax assets, including net operating loss carryforwards, depends upon our future earnings in applicable tax jurisdictions.

If we have insufficient future taxable income in the applicable tax jurisdiction for any reason, including any future corporate reorganization or restructuring activities, we may be limited in our ability to utilize some or all of our net operating losses to offset such income and reduce our tax liability in that jurisdiction.

See Note 10 “Income Taxes” to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

There is also a risk that due to regulatory changes or changes to federal or state law, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable either in whole or in part to offset future income tax liabilities.

For example, under the Coronavirus Aid, Relief, and Economic Security Act of 2020, or CARES Act, which amended certain provisions of the Tax Cuts and Jobs Act of 2017, or TCJA, NOLs arising in taxable years beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five taxable years preceding the tax year of such loss, but NOLs arising in taxable years beginning after December 31, 2020 may not be carried back.

The TCJA, as amended by the CARES Act, also provides that NOLs from tax years that began after December 31, 2017 may offset no more than 80% of current taxable income annually for taxable years beginning after December 31, 2020.

Risks Related to Our Common Stock

Our failure to meet the continued listing requirements of Nasdaq 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.

On February 13, 2023, we held a special meeting of stockholders at which the stockholders approved an amendment to the Company’s certificate of incorporation to implement a reverse split of our common stock (the “Reverse Stock Split”) which became effective February 15, 2023.

The purpose of the Reverse Stock Split was to seek to increase the price of the common stock and thereby to regain compliance with the minimum closing bid price of $1.00 per share for 10 consecutive trading days as required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5450 (a)( 1 ) (the “ Bid Price Rule”).

On March 6, 2023, we received a letter from Nasdaq confirming that our common stock had regained compliance with the Bid Price Rule, and as a result, our common stock will continue to be listed on the Nasdaq Capital Market.

Any Nasdaq action relating to a delisting could have a negative effect on the price of our common stock, impair the ability to sell or purchase our common stock when persons wish to do so, and any such delisting action may materially adversely affect our ability to raise capital or pursue strategic restructuring, refinancing or other transactions on acceptable terms, or at all.

Delisting from the Nasdaq Capital Market could also have other negative results, including the potential loss of institutional investor interest and fewer business development opportunities.

In the event of any delisting or potential delisting, we may attempt to take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to remain listed or be re-listed, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Bid Price Rule or prevent future non-compliance with Nasdaq’s listing requirements.

Any Nasdaq action relating to failure to comply with Nasdaq’s continued listing requirement including a formal delisting could have a negative effect on the price of our common stock, impair the ability to sell or purchase our common stock when persons wish to do so, and any such delisting action may materially adversely affect our ability to raise capital or pursue strategic restructuring, refinancing or other transactions on acceptable terms, or at all.

Delisting or potential delisting from the Nasdaq Capital Market could also have other negative results, including the potential loss of institutional investor interest and fewer business development opportunities.

In the event of any delisting or potential delisting, we may attempt to take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to remain listed or be re-listed, stabilize the market price or improve the liquidity of our common stock, maintain a minimum closing bid price of $1.00 per share as required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5450(a)(1) or prevent future non-compliance with Nasdaq’s listing requirements.

If Nasdaq delists our shares of Common Stock from trading on its exchange for failure to meet Nasdaq’s listing standards, we and our stockholders could face significant material adverse consequences including:

a limited availability of market quotations for our securities;

reduced liquidity for our securities;

a determination that our Common Stock is a “penny stock” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

a limited amount of news and analyst coverage;

a decreased ability to issue additional securities or obtain additional financing in the future.

In addition, the stock market in general, and the Nasdaq Capital Market, and biopharmaceutical companies in particular, frequently experiences extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies.

Broad market and industry factors, including potentially worsening economic conditions and other adverse effects or developments may negatively affect the market price of our common stock, regardless of our actual operating performance.

The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and negative impact on the market price of our common stock.

We are currently subject to securities class action lawsuits against us, which could result in adverse outcomes.

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We also have certain contractual indemnification obligations to the underwriters of our initial public offering, or IPO, regarding the securities class action lawsuits.

While a certain amount of insurance coverage may be available for expenses or losses associated with these lawsuits, this coverage may not be sufficient.

While a certain amount of insurance coverage may be available for certain expenses or losses associated with these lawsuits, this coverage will not cover all such expenses or losses and may not be sufficient.

Although we plan to defend the lawsuits vigorously, there can be no assurances that favorable final outcomes will be obtained.

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The above factors could adversely affect the value of our common stock and cause you to lose all or part of your investment.

We are an “emerging growth company, ” and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 ( “ Sarbanes-Oxley Act ” ), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions.

If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.

We may take advantage of these reporting exemptions until we are no longer an emerging growth company.

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO (December 31, 2023) , (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our common stock could be adversely affected.

As a public company, we are required to implement and maintain internal control over financial reporting and to report any material weaknesses in such internal control.

We have identified a material weakness in our internal control over financial reporting and determined that our disclosure controls were not effective.

If we are unable to remediate this material weakness, or if we experience additional material weaknesses in the future, we may not be able to accurately or timely report our financial condition or results of operations and investors may lose confidence in our financial reports and the market price of our common stock could be adversely affected.

As a public company, we are required to maintain effective disclosure controls and procedures and implement and maintain internal control over financial reporting and to report any material weaknesses in such internal control.

Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting.

Beginning with our second annual report following our IPO, for our fiscal year ended December 31, 2020, management provided a report on internal control over financial reporting.

The Sarbanes-Oxley Act also requires that our management report on internal control over financial reporting be attested to by our independent registered public accounting firm, to the extent we (i) are no longer an “emerging growth company,” as defined by the JOBS Act, and (ii) pursuant to new SEC rules, have annual revenues greater than $100 million in the most recent fiscal year for which audited financial statements are available.

We do not expect to have our independent registered public accounting firm attest to our management report on internal control over financial reporting for so long as we are an emerging growth company or have annual revenues under $100 million.

If we have to design and implement the internal control over financial reporting required to comply with this obligation, such process will be time consuming, costly, and complicated.

Beginning with our second annual report following our IPO, for our fiscal year ended December 31, 2020, management has provided a report on internal control over financial reporting.

The Sarbanes-Oxley Act also requires that our management report on internal control over financial reporting be attested to by our independent registered public accounting firm, to the extent we have annual revenues greater than $ 100 million in the most recent fiscal year for which audited financial statements are available.

We do not expect to have our independent registered public accounting firm attest to our management report on internal control over financial reporting for so long as we have annual revenues under $ 100 million.

If and when we have to design and implement the internal control over financial reporting required to comply with this obligation, such process will be time consuming, costly, and complicated.

In preparation of our condensed consolidated financial statements for our Quarterly Report for the period ended September 30, 2023, we determined that a material weakness in our internal control over financial reporting existed relating to payment security controls and procedures, which weakness did not result in any identified material misstatement, nor any change to previously reported financial results.

Management also determined that our disclosure controls were ineffective as of September 30, 2023 due to the existence of this material weakness.

In preparing our audited financial statements for the fiscal year ended December 31, 2023, we determined that the material weakness still exists in the Company’s internal controls over financial reporting and our disclosure controls were ineffective.

Management is committed to the remediation of the material weakness.

Management is actively engaged in the implementation of remediation efforts, as described above, to address the material weakness.

To remediate this material weakness, we have undertaken efforts that include but are not limited to, (a) enhancing processes and procedures around payment security, (b) verifying changes to vendor information on a timely basis, and (c) using alternate channels to verify changes to vendor payment information.

For more details of the corrective actions, please refer to Item 9A Controls and Procedures.

The material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that controls are operating effectively.

We can give no assurance that this implementation will remediate this material weakness in our internal control or that material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future.

If we are unable to remediate this material weakness, or if we experience additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations and investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be adversely affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources to identify, assess and correct any additional material weakness in disclosure or internal control and to otherwise comply with the internal and disclosure controls rules under Section 404 of the Sarbanes-Oxley Act, when applicable.

Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management.

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Failure to comply with these public company requirements could subject us to enforcement actions by the SEC, divert management’s attention, damage our reputation, and adversely affect our business, results of operations, or financial condition.

In particular, if our independent registered public accounting firm is not able to render the attestation report on our internal control over financial reporting in future annual reports on Form 10-K when required under Section 404 of the Sarbanes-Oxley Act, it could result in a loss of investor confidence in the accuracy, reliability, and completeness of our financial reports.

We expect that the future loss of our “ emerging growth company ” status and compliance with these additional internal control and auditor attestation requirements will require management to expend additional time while also condensing the time frame available to comply with SEC reporting requirements, which may further increase our legal and financial compliance costs.

In particular, if our independent registered public accounting firm is not able to render the attestation report on our internal control over financial reporting in future annual reports on Form 10-K when required under Section 404 of the Sarbanes-Oxley Act, or if we are unable to remediate any weakness in our internal control over financial reporting, it could result in a loss of investor confidence in the accuracy, reliability, and completeness of our financial reports.

The loss of our “ emerging growth company ” status and compliance with these additional internal control and auditor attestation requirements will require management to expend additional time while also condensing the time frame available to comply with SEC reporting requirements, which may further increase our legal and financial compliance costs.

Our stock price may be volatile, and you may not be able to resell shares of our common stock at or above the price you paid.

The trading price of our common stock could be highly volatile and could be subject to wide fluctuations in response to various factors, including factors which are beyond our control.

The trading price of our common stock is highly volatile and could be subject to wide fluctuations in response to various factors, including factors which are beyond our control.

These factors include those discussed in the other “Risk Factors” section of this Annual Report and others, such as:

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results from, or any delays in, clinical trial programs relating to our product candidates;

announcements of new products by us or our competitors;

announcements by us or our competitors of new products;

adverse actions taken by regulatory agencies with respect to our clinical trials, manufacturing supply chain, or sales and marketing activities for our products;

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any intellectual property infringement actions in which we may become involved;

announcements concerning our competitors or the medical device and wellness industries in general;

announcements concerning our competitors or the medical device and general wellness industries in general;

achievement of expected product sales and profitability;

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sales of our common stock by us, our executive officers, directors, or stockholders;

general economic and market conditions and overall fluctuations in the U.S.

general economic, industry, political and market conditions including inflation, rising interest rates, new or ongoing health crises and geopolitical events such as the war between Ukraine and Russia, and the war in Israel and the Gaza strip, and overall fluctuations in the U.S.

equity markets;

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If these additional shares of common stock are sold pursuant to the applicable exemptions from such restrictions, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.

Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant influence control over matters subject to stockholder approval.

As of December 31, 2023 our executive officers, directors, and holders of 5% or more of our capital stock and their respective affiliates beneficially owned approximately 24.4% of our outstanding common stock.

As a result, these stockholders will continue to have a significant influence over all matters requiring stockholder approval.

For example, these stockholders may be able to influence elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets or other major corporate transaction.

This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders.

The interests of this group of stockholders may not always coincide with your interests or the interests of other stockholders and they may act in a manner that advances their best interests and not necessarily those of other stockholders, including seeking a premium value for their common stock, and might affect the prevailing market price for our common stock.

Comprehensive U.S.

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In addition, actions such as those described above could cause significant fluctuations in our stock price based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors