What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-12 compared with 2024-03-13 · 215 added, 168 removed, 96 unchanged (80% of the section changed)

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(See, “Item 8 – Notes to consolidated financial statements – Note 2 - Basis of Presentation”).

We are a commercial stage bioelectronic medicine and wellness company dedicated to improving health and quality of life through our propriety non-invasive vagus nerve stimulation (“nVNS”) technology platform.

electroCore is a bioelectronic medicine and general wellness company dedicated to improving health and quality of life through our proprietary non-invasive vagus nerve stimulation (“nVNS”) technology platform and related product offerings.

nVNS modulates neurotransmitters through its effects on both the peripheral and central nervous systems.

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Our non-invasive medical devices and general wellness products are self-administered and intended for regular or intermittent use over many years.

Our capabilities include product development, regulatory affairs and compliance, sales and marketing, product testing, assembly, fulfillment, and customer support.

Our capabilities include product development, regulatory affairs and compliance, sales and marketing, product testing, electromechanical assembly, fulfillment, and customer support.

We derive revenues from the sale of products in the United States and select overseas markets.

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Handheld, personal use consumer products utilizing nVNS technology to promote general wellness and human performance.

We believe our nVNS treatment may be used in the future to effectively treat additional medical conditions.

Our goal is to be a leader in non-invasive neuromodulation by using our proprietary nVNS platform technology to deliver better health.

We believe our nVNS products may be used in the future to effectively treat additional medical conditions.

Our goal is to be a leader in non-invasive neuromodulation to deliver better health.

To achieve this, we offer multiple propositions:

Prescription gammaCore medical devices for the treatment of certain medical conditions such as primary headache;

Prescription gammaCore medical devices for the treatment of certain prescription FDA cleared medical conditions such as primary headache;

Truvaga for the support of general health and wellbeing;

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gammaCore is available by prescription only and Sapphire is a portable, reusable, rechargeable and reloadable personal use option for patients to use at home or on the go.

Prescriptions are written by a health care provider and dispensed from a specialty pharmacy, through the patient’s healthcare system, or shipped directly to certain patients in the United States directly from our facility in Rockaway, NJ.

After the initial prescription is filled, access to additional therapy can be refilled for certain of our gammaCore products through the input of a prescription-only authorization.

Truvaga is a personal use consumer electronics general wellness product that does not require a prescription and is available direct-to-consumer from electroCore at www.truvaga.com.

TAC-STIM product is a form of nVNS for human performance and has been developed in collaboration with the United States Department of Defense Biotech Optimized for Operational Solutions and Tactics, or BOOST program.

TAC-STIM products are available as a Commercial Off the Shelf (COtS) solution to professional organizations and are the subject of ongoing research and evaluation within the United States Air Force Special Operations Command, the United States Army Special Operations Command and at the United States Air Force Research Laboratory.

We offer two versions of our Truvaga products for the support of general health and wellbeing.

Truvaga 350 is a personal use consumer electronics general wellness product and Truvaga Plus, which was launched in April 2024, is our next generation, app-enabled general wellness product.

Neither product requires a prescription and is available direct-to-consumer from electroCore at www.truvaga.com or through online retailers such as Amazon.com.

TAC-STIM handset is a form of nVNS for human performance and has been developed in collaboration with the United States Department of Defense Biotech Optimized for Operational Solutions and Tactics, or BOOST program.

TAC-STIM handsets are available as a Commercial Off the Shelf (COtS) solution to professional organizations and are the subject of ongoing research and evaluation within the United States Air Force Special Operations Command, the United States Army Special Operations Command and at the United States Air Force Research Laboratory.

Truvaga and TAC-STIM are intended for general wellness in compliance with the FDA guidance document entitled “General Wellness:

Policy for Low-Risk Devices;

Guidance for Industry and FDA Staff, issued on September 27, 2019.” Truvaga and TAC-STIM products are not intended to diagnose, treat, cure, or prevent any disease or medical condition.

We are exploring strategies to make our TAC-STIM product available to other branches of the active-duty military and certain human performance professionals in the United States and abroad.

Guidance for Industry and FDA Staff, issued on September 27, 2019.” Truvaga and TAC-STIM handsets are not intended to diagnose, treat, cure, or prevent any disease or medical condition.

We are exploring strategies to make our TAC-STIM product available to other branches of the active-duty military, first responders, elite athletes and certain human performance professionals in the United States and abroad.

Our TAC-STIM product is not a medical device and is not intended to diagnose, cure, mitigate, prevent, or treat a disease or condition.

Our two largest customers by revenue are the United States Department of Veterans Affairs and United States Department of Defense, or VA/DoD, and the United Kingdom National Health Service or NHS utilizing our FDA cleared and CE marked product, gammaCore.

Our two largest customers by revenue are the United States Department of Veterans Affairs and United States Department of Defense, or VA , and the United Kingdom National Health Service or NHS utilizing our FDA cleared and CE marked product, gammaCore .

The VA comprised 70.6 % of our revenue during the year ended December 31, 2024 .

The majority of our 2023 sales were made through open market sales to individual facilities within the VA Hospital system and a smaller amount pursuant to our qualifying contract under the Federal Supply Schedule, or FSS, which was secured by us in December 2018.

The majority of our 2024 sales were made pursuant to our qualifying contract under the 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 replace our existing FSS contract, there can be no assurance that the VA/DoD will accept our application 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.

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 the term to June 14, 2025, while the U.S.

Department of Veteran Affairs VA Federal Supply Schedule Service reviews our follow-on offer application for a replacement contract.

Although we continue to work with the appropriate government personnel to replace our FSS contract, there can be no assurance that the VA will accept our follow-on application to 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.

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

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Listing products with Lovell is intended to streamline the sales process to a variety of government procurement channels through Lovell’s compliance with contracting regulations and its provision of logistical solutions connected directly into government contracting portals, all of which are intended to help government agencies meet their SDVOSB procurement goals.

Customers for these vehicles are federal healthcare systems such as the Veterans Health Administration (VHA, which includes the VA/DoD), the Military Health System (MHS), and Indian Health Services (IHS), which we believe serve up to approximately 21 million patients combined.

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

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.

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

Sales under the Med Tech Funding Mandate, or MTFM, program for cluster headache in the UK comprised 7.5 % and 15.1 % of our revenue during the years ended December 31, 2023 and 2022, respectively .

In October 2023, we were notified by NHS Supply Chain that it intends to continue to include the gammaCore device within their framework agreement, commencing March 2024 through March 2026 with our option to extend for a further two years.

In 2024, we expect NICE to review the guidance document and any changes in recommendation or pricing may adversely impact our ability to work with NHS England on the MTFM program.

Customers for these vehicles are federal healthcare systems such as the Veterans Health Administration (VHA, which includes the VA), the Military Health System (MHS), and Indian Health Services (IHS), which we believe serve up to approximately 21 million patients combined.

Between November 2023 and January 2024, certain gammaCore products

were added to the FSS, the 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.

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 facilities.

We expect a portion of our U.S.

sales of gammaCore to continue to be made pursuant to qualifying FSS, GSA,

DAPA, ECAT contracts and open market sales to individual VA facilities.

Our sales function in this channel is

comprised of employees and an increasing number of independent contractors.

Sales under the UK Med Tech Funding Mandate, or MTFM, for CH in the UK comprised 6.6 % of our revenue during the year ended December 31, 2024 .

2025, we plan on continued use of this program.

In 2023, NHS granted

a two-year extension in which our prescription gammaCore therapy will continue

to be listed in the NHS catalogue.

This extension is through March 17,

2026, with an option for us to extend an additional two

In 2025, we expect NICE to review the guidance document and any changes

in recommendation or pricing may adversely impact our ability to work with NHS

England on the MTFM program and could have an adverse impact on our financial

We continue to utilize distribution partners to commercialize our nVNS

technology in selected territories outside the United States and United Kingdom.

We believe there may be significant opportunities beyond these two areas.

Specifically, we believe there may be a large commercial opportunity for our gammaCore medical device with additional insurance covered lives, cash pay, physician dispense, and direct-to consumer approaches, along with wellness and human performance propositions through our Truvaga and TAC-STIM products.

Therefore, we will continue our investments to expand our efforts in these channels and markets in 2025 .

On December 17, 2024, we entered into a definitive agreement to acquire NURO.

NURO is a commercial stage healthcare company that develops and commercializes neurotechnology devices to address unmet needs in the chronic pain market through its Quell® platform:

a wearable, app and cloud-enabled neuromodulation platform that is indicated for the treatment of fibromyalgia symptoms (Quell Fibromyalgia) and lower-extremity chronic pain (Quell 2.0).

The transaction does not include NURO’s Japan-related DPNCheck® technology and business, which are expected to be divested by NURO prior to closing of the transaction.

Consummation of the transaction is subject to approval by holders of at least a majority of the outstanding shares of NURO common stock entitled to vote on the merger, and the filing with the SEC of NURO’s Form 10-K with respect to the fiscal year ended December 31, 2024, in addition to other closing conditions.

We face a variety of challenges and risks that we will need to address and manage as we pursue our strategies, including our ability to develop and retain an effective sales force, achieve market acceptance of our gammaCore medical device among clinicians, patients, and third-party payers, expand the use of our gammaCore medical device to additional therapeutic indications, and to develop our nascent wellness and human performance business including the planned launch of Truvaga Plus, our next generation app-enabled device under the Truvaga brand.

Because of the numerous risks and uncertainties associated with our commercialization efforts, as well as research and product 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.

Even if we are able to increase sales of our products, we may not become profitable.

Because of the numerous risks and uncertainties associated with our commercialization efforts, as well as research and product development activities, there may be uncertainty regarding our ability to achieve or maintain profitability.

If we fail to become profitable or are unable to sustain profitability, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

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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.

These conditions raise substantial doubt about our ability to continue as a going concern.

See “Liquidity Outlook.”

See also “Liquidity Outlook.”

Capital Activities

In connection with a registered direct offering and concurrent private placement with certain institutional and accredited investors, on August 2, 2023, we issued and sold an aggregate of 1,062,600 shares of common stock, 613,314 pre-funded common stock purchase warrants that were exercisable upon issuance, and warrants to purchase up to an aggregate of 837,955 shares of common stock.

Pursuant to a private placement on the same date with six of the Company’s officers and directors, we issued and sold 169,968 shares of common stock and warrants to purchase up to an aggregate of 84,982 shares of common stock.

The combined effective offering price of the securities sold pursuant to these transactions was $4.4125 per share of common stock and related warrant to purchase one-half of a share of common stock.

The common stock purchase warrants are exercisable as of February 2, 2024 at a price of $4.35 per share and will expire five years after they become exercised.

The net proceeds to the Company resulting from the registered direct offering and concurrent private placements was approximately $7.5 million, after deducting the placement agent fees and expenses, and other offering expenses payable by the Company, and excluding the proceeds, if any, from the potential exercise of the common stock purchase warrants sold in the concurrent private placements.

The 922,937 common stock purchase warrants that were issued to certain institutional and accredited investors, and certain of our officers and directors, and 169,968 shares of common stock issued to such officers and directors were registered for resale on Form S-1 (File No.:

33274199) filed with the Securities Exchange Commission on August 24, 2023 and declared effective on August 31, 2023.

On January 18, 2022, we filed a Form S-3 registration statement, or the 2022 Shelf Registration Statement, with the SEC, for the issuance of common stock, preferred stock, warrants, rights, debt securities and units, up to an aggregate amount of $75 million.

The 2022 Shelf Registration Statement was declared effective on January 25, 2022.

The proposed maximum offering price per unit and the proposed maximum aggregate offering price per class of security will be determined from time to time by us in connection with the issuance by us of the securities registered under the 2022 Shelf Registration Statement.

As of December 31, 2023, we have approximately $67.7 million remaining for potential issuance under the 2022 Shelf Registration Statement.

Until such time as the aggregate market value of our securities held by non-affiliates equals or exceeds $75 million, the aggregate maximum offering price of all securities issued by the us in any given 12-calendar month period pursuant the 2022 Shelf Registration Statement may not exceed one-third of the aggregate market value of our securities held by non-affiliates.

If we raise additional funds by issuing equity or debt securities, either through the sale of securities pursuant to a registration statement or by other means, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders.

Critical Accounting Policies and Estimates

The significant accounting policies and basis of presentation of our consolidated financial statements are described in Note 2 “Summary of Significant Accounting Policies” of the consolidated financial statements included with the annual report on Form 10-K.

The preparation of our financial statements is in accordance with U.S.

Generally Accepted Accounting Principles, or GAAP, and we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and other related disclosures.

While we believe our estimates, assumptions and judgments are reasonable, they are based on information presently available.

Actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material impact on our financial position and results of operations.

Several of our accounting policies involve significant estimates and judgements:

Licensed Products;

Income Taxes;

Stock-based Compensation;

Loss Contingencies.

Revenue Recognition

Our principal source of revenue is product sales.

Our contracts with customers generally contain a single performance obligation and we recognize revenue from product sales when or as we have satisfied our performance obligation by transferring control of the product to our customers.

Control of the product generally transfers to the customer upon delivery.

Revenue is recognized at the amount to which we expect to be entitled in exchange for the sale of our products.

Variability in the transaction price for our products pursuant to our contract with customers primarily arises from discounts and rebates.

We offer discounts and rebates to certain distributors and customers under our arrangements.

In many cases, these amounts are fixed at the time of sale and the transaction price is reduced accordingly.

We have a standardized approach to estimate the amount of consideration that we expect to be entitled to, including the impact of discounts and rebates.

Our historical collection is an integral part of the estimation process related to revenues and receivables.

Further adjustments to the allowances, based on actual receipts, may be recorded upon settlement.

Revenue from the Veterans Administration and the Department of Defense

Revenue from sales of our products is recognized under the terms of qualifying FSS, GSA, DAPA, ECAT contracts through a distributor who purchases our products on behalf of federal healthcare providers, as well as purchase orders for open market sales to individual VA sites.

Sales to the VA and DoD are at a fixed price and are usually recognized at the time of delivery.

A cash refund is allowed under specific circumstances for undamaged and non-defective products.

Damaged or defective products are replaced at no charge.

United Kingdom Revenue

In the United Kingdom, an award from the Innovation Technology Payment program of the NHS and evidence-based recommendations published in December 2022 by NICE offer the potential for us to generate revenue from the treatment of CH.

This is the primary commercial channel from which our United Kingdom revenue is derived.

The first 93 days of therapy is free under this program.

The cost to produce the free therapy in the 93 -day period is recorded as promotional expense within selling, general and administrative expenses.

Effective April 1, 2021, gammaCore Sapphire was included in the new MTFM long-term reimbursement policy which supports commissioners and providers in the use of selected NICE approved, clinically effective and cost-saving medical devices, diagnostics and digital technologies that will improve patient health.

In 2023, the United Kingdom National Health Service or NHS granted a two-year extension in which our gammaCore therapy will continue to be listed in the NHS catalogue.

This extension is through March 17, 2026, with an option for us to extend an additional two years.

Sales in the United Kingdom are primarily in increments of 93 -day therapy at a fixed price and are paid within 30 days.

United States Commercial Revenue Outside of Veterans Administration and the Department of Defense

Revenue from our cash pay models through direct-to-physician, TAC-STIM, direct-to-consumer and our ecommerce channels are usually recognized at the time of product shipment or delivery dependent on specific contractual terms, less any discounts or rebates.

We expect to receive payment on all of our customer receivables within one year and therefore classify all receivables as current assets.

In accordance with our policy, damaged or defective products are replaced at no charge under our standard warranty.

A cash refund is allowed in our discretion under specific circumstances for undamaged and non-defective returned product.

We expense the cost, as incurred, of product damaged as a result of shipping.

This expense, historically, has been immaterial.

Accounts receivable are net of an allowance for doubtful accounts, which are accounts from which payment is not expected to be received although product was provided, and revenue was earned.

Receivables are written off when deemed uncollectible.

Recoveries of receivables previously written off are recorded when received.

We value inventory at the lower of cost or net realizable value.

Cost is determined on a first in first out basis.

This policy requires us to make estimates regarding the net realizable value of our inventory, including an assessment of excess or obsolete inventory.

We evaluate inventory for excess quantities and obsolescence based on an estimate of the future demand for our product within a specified timeframe and record an allowance to reduce the carrying value of inventory as determined necessary.

The estimates we use for demand are also used for near-term capacity planning and inventory purchasing and are consistent with our revenue forecasts.

We evaluate inventory with respect to our operating cycle and classify inventory as either current or long-term on our balance sheet.

We further consider inventory shelf life in our estimates regarding the net realizable value of our inventory.

If our actual demand is less than our forecast demand, we may be required to take additional excess inventory charges, which would decrease gross margin and adversely impact net operating results in the future.

Licensed Products

We license a portion of our devices through our cash pay channels.

The cost of these licensed devices is capitalized and included in Other Assets in our Balance Sheet at December 31, 2023 and 2022 , and is being recognized as cost of goods sold over the estimated useful life of the device.

I f certain licensed devices are returned and no longer meet quality specifications or the carrying amount of certain licensed devices are no longer deemed to be recoverable, we record a charge to cost of goods sold to write down such licensed devices to zero.

We routinely assess whether a valuation allowance should be established against our deferred tax assets based on consideration of all available evidence, both positive and negative, using a more likely than not standard.

The assessment of the realizability of deferred tax assets requires management to make numerous estimates and assumptions.

Factors that are considered in this assessment include the nature, frequency, and severity of recent losses;

a forecast of future profitability;

the duration of statutory carryback and carryforward periods;

our experience with tax attributes expiring unused;

and tax planning alternatives.

Stock-based Compensation

We recognize compensation expense associated with the issuance of equity instruments to employees and non-employees for their services.

Compensation expense is determined based on the grant date fair value and is expensed over the vesting period.

The grant date fair value of stock options is measured using the Black-Scholes option valuation model.

The input assumptions used in determining the fair value of options are expected life, expected volatility, risk-free interest rate and expected dividend yield.

These input assumptions are based on management’s estimates, and these estimates are evaluated periodically for reasonability.

The expected life of the option represents the period the stock-based awards are expected to be outstanding.

We use the simplified method for estimating the expected life of the options.

The fair value of each stock option award granted was estimated on the date of grant using the Black-Scholes model.

Effective July 1, 2023, expected volatility was based on 100% of the Company's historical common stock volatility.

For the periods prior to July 1, 2023, expected volatility was based on a composite comprising of 50% of the Company's historical common stock volatility;

the remaining 50% was based on historical volatility of its peers.

This composite rate was utilized as our common stock was not publicly traded until June 2018 and there was insufficient volatility data available.

Since we currently do not intend to pay dividends on our common stock, we estimate the dividend yield percentage to be zero.

We base the risk-free interest rate on the U.S.

Treasury constant maturity interest rate whose term is consistent with the expected life of the stock options being valued.

Loss Contingencies

We are subject to claims and lawsuits in the ordinary course of business, including claims by employees or former employees, with respect to our products and involving commercial disputes, or shareholder actions.

We accrue for loss contingencies when it is deemed probable that a loss has been incurred and the loss is estimable.

The amounts accrued are based on the full amount of the estimated loss considering insurance proceeds, if applicable, and do not include legal fees expected to be incurred in connection with the loss contingency.

The process of analyzing, assessing, and establishing reserve estimates relative to legal proceedings involves a high degree of judgment.

Our consolidated financial statements do not reflect any material amounts related to unfavorable outcomes of claims and lawsuits to which we are currently a party because we currently believe that such claims and lawsuits are not expected to result in a material adverse effect on our financial condition.

Management estimates that its current insurance coverage is sufficient to meet the potential liabilities of pending legal proceedings.

Changes in facts and circumstances related to such proceedings could lead to significant adjustments to reserve estimates for such matters and could have a material impact on our results of operations, cash flows and financial condition in the period that reserve estimates are adjusted or paid.

Emerging Growth Company Status

We ceased to be an emerging growth company on December 31, 2023, the last day of the fiscal year following the fifth anniversary of our IPO, and therefore are no longer able to take advantage of the reduced regulatory and reporting requirements of emerging growth companies.

On January 24, 2025, we filed a Form S-3 registration

statement (with an amendment filed on January 31, 2025), or the 2025 Shelf

Registration Statement, with the SEC, for the potential offering and issuance

from time to time of common stock, preferred stock, warrants, rights, debt

securities and units, up to an aggregate amount of $100 million.

The 2025 Shelf

Registration Statement is currently under review by the SEC.

maximum offering price per unit and the proposed maximum aggregate offering price

per class of security in any future offering under the 2025 Registration

Statement will be determined from time to time by us in connection with the

issuance by us of the securities registered under the 2025 Shelf Registration

As of December 31, 2024, we have approximately $46.2 million

remaining for potential issuance under the 2022 Shelf Registration Statement

(as defined below).

If we raise additional funds by issuing equity or debt

securities, either through the sale of securities pursuant to a registration

statement or by other means, our existing stockholders may experience dilution,

and the new equity or debt securities may have rights, preferences and

privileges senior to those of our existing stockholders.

The 2022 Shelf Registration

Statement expires on the earlier of July 24, 2025 and the effectiveness under

the Securities Act of the 2025 Registration Statement.

On November 29, 2024, we entered into the Sales Agreement

with Wainwright.

Under the Sales Agreement, the Company may offer and sell

shares of its common stock, par value $0.001 per share, from time to time

having an aggregate offering price of up to $20 million (the “ATM Shares”)

during the term of the Sales Agreement through Wainwright, acting as sales

The Company has filed a prospectus supplement relating to the offer and

sale of the Shares pursuant to the Sales Agreement.

The ATM Shares will be issued

pursuant to the Company’s previously filed and effective Registration Statement

on Form S-3 (File No.

333-262223) (the “2022 Shelf Registration Statement”),

which was initially filed with the Securities and Exchange Commission (the

“SEC”) on January 18, 2022 and declared effective on January 25, 2022.

Company intends to use the net proceeds from any offering pursuant to the Sales

Agreement to continue to fund sales and marketing, working capital and for

other general corporate purposes.

As of March 6, 2025, the

Company had approximately $19.78 million of ATM Shares remaining available for

issuance under the Sales Agreement.

On June 5, 2024, in connection with a registered direct

offering and concurrent private placement with an institutional and accredited

investor, we issued and sold pre-funded warrants to purchase up to 225,000

shares of common stock, and warrants to purchase up to 112,500 shares of common

Each pre-funded warrant was sold together with one-half of one warrant

to purchase one share of common stock, at a combined offering price of $6.4925

per pre-funded warrant and related one-half of one warrant.

Additionally, on June 5, 2024, in a separate concurrent

private placement with certain institutional and accredited investors and six

of the Company's officers and directors, we issued and sold 438,191 shares of

common stock, pre-funded warrants to purchase up to 770,119 shares of common

stock, and warrants to purchase up to an aggregate of 604,150 shares of common

Each share of common stock was sold together with one-half of one

warrant to purchase one share of common stock, at a combined offering price of

$6.4925 per share of common stock and related one-half of one warrant.

pre-funded warrant was sold together with one-half of one warrant to purchase

one share of common stock, at a combined offering price of $6.4925 per

pre-funded warrant and related one-half of one warrant.

The common stock purchase warrants became exercisable

immediately upon issuance at an exercise price of $6.43 per share and will

expire five years after the date of issuance.

Each pre-funded warrant became

immediately exercisable upon issuance at an exercise price of $0.001 per share.

The net proceeds to the Company resulting from the

registered direct offering and concurrent private placements was approximately

$9.0 million, after deducting the placement agent fees and expenses, and other

offering expenses payable by the Company, and excluding the proceeds, if any,

from the potential exercise of the common stock purchase warrants sold in the

concurrent private placements.

The registered pre-funded warrants were offered

and sold by the Company pursuant the 2022 Shelf Registration Statement.

In connection with a registered direct offering and

concurrent private placement with certain institutional and accredited

investors, on July 31, 2023, we issued and sold an aggregate of 1,062,600

shares of common stock, 613,314 pre-funded common stock purchase warrants that

were exercisable upon issuance and warrants to purchase up to an aggregate of

837,955 shares of common stock.

Pursuant to a private placement on the same

date with six of the Company’s officers and directors, we issued and sold 169,968

shares of common stock and warrants to purchase up to an aggregate of 84,982

shares of common stock.

The combined effective offering price of the securities

sold pursuant to these transactions was $4.4125 per share of common stock and

related warrant to purchase one-half of a share of common stock.

stock purchase warrants became exercisable as of February 2, 2024, at a price of

$4.35 per share and will expire five years after they become exercised.

proceeds to the Company resulting from the registered direct offering and

concurrent private placements was approximately $7.5 million, after deducting

the placement agent fees and expenses, and other offering expenses payable by

the Company, and excluding the proceeds, if any, from the potential exercise of

the common stock purchase warrants sold in the concurrent private placements.

Critical Accounting Estimates

We prepare our consolidated financial statements in

accordance with U.S.

generally accepted accounting principles, which require

our management to make estimates that affect the reported amounts of assets,

liabilities and disclosures of contingent assets and liabilities at the balance

sheet dates, as well as the reported amounts of revenues and expenses during

the reporting periods.

To the extent that there are material differences

between these estimates and actual results, our financial condition or results

of operations would be affected.

We base our estimates on our own historical

experience and other assumptions that we believe are reasonable after taking

account of our circumstances and expectations for the future based on available

We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to be critical if:

(1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

Although there are items within our financial statements that require management to make accounting estimates, we do not believe them to be critical, as def ined abo ve.

Results of Operations

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Net sales for the year ended December 31, 2024 increased 57% as compared to the year ended December 31, 2023 .

The increase of $ 7.4 million is due to an increase in net sales across major channels including our prescription gammaCore medical devices sold in the U.S.

and revenue from the sales of our nonprescription general wellness and human performance Truvaga and TAC-STIM products.

The increase of $ 9.2 million is due to an increase in net sales in prescription (Rx) - Department of Veteran Affairs and Truvaga channels.

We expect that the majority of 2025 fiscal year revenue will continue to come from the U.S.

Department of Veterans Affairs.

See above Overview for discussion regarding our Federal Supply Schedule.

See above Overview for discussion regarding the Federal Supply Schedule.

The following table sets forth our channel net sales:

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Years ended December 31,

Rx gammaCore - Department of Veteran Affairs and Department of Defense

Rx gammaCore - U.S.

Department of Veteran Affairs

Rx gammaCore - U.S.

Outside the United States

Gross profit in creased $ 8.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 .

The increase in gross profit was primarily driven by the increase in net sales.

Gross margin was 85% and 83% for the years ended December 31, 2024 and 2023 , respectively .

For the years ended December 31, 2023 and 2022, we recorded inventory charges to Cost of goods sold which totaled $ 0.7 million and $ 0.2 million, respectively.

Excluding these inventory charges, gross margin was 86.8% and 83.5% for the years ended December 31, 2023 and 2022, respectively.

In 2023, we sold an increasing amount of longer duration therapy, resulting in a higher average selling price, as well as selling an increased number of refill kits with a lower cost of goods.

These factors, as well as revenue recognized from the A2PEX program, contributed to the increase in gross margin.

Gross profit and gross margin in 2024 will be largely dependent on revenue levels, product mix, and any changes in the estimated useful lives of licensed devices.

Research and Development

Research and development expense of $ 5.3 m illion for the year ended December 31, 2023 decreased by $ 0.2 million.

This decrease in research and development expense was due to a decrease in compensation associated with cost cutting measures effected April 1, 2023 and offset by targeted investments to support the future iterations of our therapy delivery platform, including the use of our intellectual property around the delivery of smart phone-integrated and smart phone-connected non-invasive therapies.

We expect our research and development expense to decrease in 2024 with the launch of our next generation therapies.

Research and development expense of $ 2.4 m illion for the year ended December 31, 2024 decreased by $ 3.0 million compared to the prior year.

This decrease was primarily due to a significant reduction in investments associated with the development of Truvaga Plus.

Selling, General and Administrative

Selling, general and administrative expense of $ 31.2 million for the year ended December 31, 2024 increased by $ 4.0 million compared to $ 27.2 million for the previous year.

This increase was due to severance charges totaling $ 464,000 , as well as our greater variable selling and marketing costs consistent with our increase in sales.

continuing targeted investments in sales and marketing to support our commercial efforts, and offset by decreases in insurance and stock-based compensation expenses.

This increase was primarily due to our greater variable selling and marketing costs consistent with our increase in sales.

In 2025 , we plan on continuing to make targeted investments in sales and marketing to support our commercial efforts, particularly around sales and marketing efforts across all major U.S.

Other (Income) Expense

Interest and other income of $ 433,000 for the year ended December 31, 2023 increased $ 146,000 primarily due to rising interest rates and an increased cash balance due to our July 2023 financing activities.

Other expense for the year ended December 31, 2023 primarily represents a casualty loss of $173,000, net of insurance recovery.

Subsequent to December 31, 2023, we recovered an additional $123,000 of proceeds related to this casualty loss.

This additional recovery will be recognized as other income during the three month period ending March 31, 2024.

Other (income) expense of $ 183,000 for the year ended December 31, 2024 increased by $ 66,000 from prior year due to increased interest income offset by non-recurring expenses associated with the termination of a financing agreement and transaction expenses with the NURO transaction.

Benefit from Income Taxes

We may be eligible, from time to time, to receive cash from the sale of our net operating losses under New Jersey's Department of the Treasury - Division of Taxation NOL Transfer Program.

During the years ended December 31, 2023 and 2022, we received a payment of $ 0.2 million and $ 0.4 million from the sale of our New Jersey state net operating losses, respectively.

The Company may be eligible, from time to time, to receive cash from the sale of our net operating losses under New Jersey's Department of the Treasury - Division of Taxation NOL Transfer Program.

During the years ended December 31, 2024 and 2023 , we received net cash payments of $0.1 million and $0.2 million from the sale of our New Jersey state net operating losses, respectively.

Liquidity and Capital Resources

At December 31, 2023 , our cash, cash equivalents, and restricted cash was $ 10.6 million compared to $18.0 million at December 31, 2022 .

At December 31, 2024 , our cash, cash equivalents, restricted cash and marketable securities was $ 12.2 million compared to $ 10.6 million at December 31, 2023 .

(in thousands)

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Net cash used in operating activities was $ 6.9 million and $ 14.7 million for the years ended December 31, 2024 and 2023 , respectively.

The decrease of $ 2.0 million is primarily due to the decrease in our net loss from operations as adjusted for non-cash expense items.

The decrease of $7.7 million is primarily due to the increase in net sales and resulting decrease in our net loss from operations as adjusted for non-cash expense items.

Investing Activities

Net cash used in investing activities was $ 8.5 million and $ 0.2 million for the years ended December 31, 2024 and 2023 , respectively.

During the year ended December 31, 2024 , cash used in investing activities was related to the purchase of marketable securities.

During the year ended December 31, 2023 , cash used in investing activities was related to equipment purchases.

No cash was provided by investing activities during the year ended December 31, 2022.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2024 was $ 8.4 million which was attributable to the Company entering into a registered direct offering and concurrent private placements, each of which closed on

June 5, 2024, and proceeds from the exercise of warrants.

Pursuant to a registered direct offering with

an institutional and accredited investor, we issued and sold pre-funded

warrants to purchase up to 225,000 shares of common stock.

In a concurrent

private placement, we issued and sold to the institutional and accredited

investor warrants to purchase up to 112,500 shares of common stock.

separate concurrent private placement

with certain institutional and accredited investors and six of the Company’s

officers and directors, we issued and sold 438,191 shares of common stock,

pre-funded warrants to purchase up to 770,119 shares of common stock, and

warrants to purchase up to an aggregate of 604,150 shares of common stock.

share of common stock was sold together with one-half of one warrant to

purchase one share of common stock, at a combined offering price of $6.4925 per

share of common stock and related one-half of one warrant.

Each pre-funded

warrant was sold together with one-half of one warrant to purchase one share of

common stock, at a combined offering price of $6.4925 per pre-funded warrant

and related one-half of one warrant.

The common stock purchase warrants

became exercisable immediately upon

issuance at a price of $6.43 per share and expire five years from the date of

The pre-funded warrants became exercisable immediately upon issuance

at a price of $0.001 per share.

Net cash provided by financing activities for the year ended December 31, 2023 was $ 7.5 million which was attributable to (i) a registered direct offering and concurrent private placement closed on August 2, 2023 with certain institutional and accredited investors pursuant to which we issued and sold an aggregate of 1,062,600 shares of common stock, 613,314 pre-funded common stock purchase warrants that are exercisable upon issuance, and warrants to purchase up to an aggregate of 837,955 shares of common stock and (ii) a concurrent private placement closed on August 2, 2023 with certain of the Company's officers and directors pursuant to which we issued and sold 169,968 shares of common stock and warrants to purchase up to an aggregate of 84,982 shares of common stock.

No cash was provided by financing activities for the year ended December 31, 2022.

The combined effective offering price of the securities sold pursuant to these transactions was $4.4125 per share of common

stock and related warrant to purchase one-half of a share of common stock.

The common stock purchase warrants became exercisable

as of February 2, 2024 at a price of $4.35 per share and expire five years from the date of issuance.

Liquidity Outlook

In 2024, we expect to continue to incur substantial negative cash flows from operations.

We intend to continue to make targeted investments in sales and marketing, as well as the next generation of our therapy delivery platform.

Please see Overview above for a discussion concerning our Federal Supply Schedule.

We have historically funded our operations from the sale of our common stock.

We entered into a registered direct offering with certain institutional and accredited investors, and concurrent private placements with such investors and certain of our officers and directors which closed on August 2, 2023, resulting in net proceeds of approximately $7.5 million after deducting the placement agent fees and expenses, and other offering expenses payable by us.

On November 29, 2024, we entered into the Sales Agreement with Wainwright, whereby the Company may offer and sell shares of its common stock from time to time having an aggregate offering price of up to $20 million during the term.

In 2024, we did not raise money pursuant to the ATM Facility.

In 2025, we intend to continue to make targeted investments in sales and marketing to continue driving commercial activities.

We have historically funded our operations from the sale of our common stock and may continue through utilization of the ATM facility orother equity or debt transactions if needed.

As of March 6, 2025, the Company had approximately $19.78 million of ATM Shares remaining available for issuance under the Sales Agreement.

Our expected cash requirements for the next 12 months and beyond are largely based on the commercial success of our products.

We believe our cash and cash equivalents will enable us to fund our operating expenses, working capital, and capital expenditure requirements, as currently planned, through 12 months from the date of the accompanying financial statements.

There are significant risks and uncertainties as to our ability to achieve these operating results.

Due to these risks and uncertainties, 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.

These conditions raise substantial doubt about our ability to continue as a going concern within one year of the date these accompanying financial statements are issued.

The accompanying financial statements do not include any adjustment that might result from the outcome of this uncertainty.

The 2022 Shelf Registration Statement was declared effective on January 25, 2022.

Until such time as the aggregate market value of our securities held by non-affiliates equals or exceeds $75.0 million, the aggregate maximum offering price of all securities issued by us in any given 12-calendar month period pursuant to the 2022 Shelf Registration Statement may not exceed one-third of the aggregate market value of our securities held by non-affiliates.

Approximately $7.3 million of the securities issued or issuable pursuant to our July 31, 2023 registered direct financing were issued pursuant to the 2022 Shelf Registration Statement and accordingly, as of December 31, 2023, we have approximately $67.7 million remaining for potential issuance under the 2022 Shelf Registration Statement.

We have also agreed generally not to effect or enter into an agreement to effect any issuance of our securities involving a variable rate transaction until August 2, 2024.

Off-Balance Sheet Arrangements

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What changed 10-K

Item 7. Management’s Discussion and Analysis