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Item 7. Management’s Discussion and Analysis

2026-03-19 compared with 2025-03-12 · 276 added, 287 removed, 24 unchanged (96% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report.

In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors.

We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this Annual Report, including those set forth under Item 1 A.

“Risk Factors” and under “Forward-Looking Statements” in this Annual Report.

Information concerning the shares of our common stock and related share prices in this Item 7 has been adjusted to reflect the 1 -for- 15 reverse split of our common stock that was made effective on February 15, 2023.

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

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.

Our nVNS treatment is delivered through a proprietary high-frequency burst waveform that safely and comfortably passes through the skin and stimulates therapeutically relevant fibers in the vagus nerve.

Various scientific publications suggest that nVNS works through a variety of mechanistic pathways including the modulation of neurotransmitters.

Historically, vagus nerve stimulation or VNS, required an invasive surgical procedure to implant a costly medical device.

This has generally limited VNS from being used by anyone other than the most severe patients.

Our non-invasive 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, electromechanical assembly, fulfillment, and customer support.

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

should read the following discussion and analysis of our financial condition and results of operations together with our consolidated

financial statements and related notes appearing elsewhere in this Annual Report.

In addition to historical information, this discussion

and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

Our actual results may differ materially

from those anticipated in these forward-looking statements as a result of certain factors.

We discuss factors that we believe could cause

or contribute to these differences below and elsewhere in this Annual Report, including those set forth under Item 1A.

“Risk Factors”

and under “Forward-Looking Statements” in this Annual Report.

is a bioelectronic technology company whose mission is to improve health and quality of life through innovative non-invasive bioelectronic

technologies.

Our two leading commercial products are gammaCore non-invasive vagus nerve stimulation, or nVNS, and Quell Fibromyalgia,

We also sell our Truvaga and TAC-STIM products, which are handheld, personal-use consumer products, developed to promote general

wellness and human performance.

believe that our proprietary nVNS technology, which works through a variety of mechanistic pathways including the modulation of neurotransmitters,

and Quell for chronic pain are designed to address many of the limitations of traditional non-invasive approaches.

business generates revenues from the sale of prescription medical devices and non-prescription wellness products in the United States

and select overseas markets.

We have two principal product categories:

Handheld, personal use medical devices for the management and treatment of certain medical conditions such as primary headache;

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

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.

use prescription medical devices for the management and treatment of certain medical conditions such as primary headache and fibromyalgia;

use consumer products that promote general wellness and human performance.

goal is to be a leader in non-invasive bioelectronic technologies delivering better health.

To achieve this, we offer multiple propositions:

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

medical devices for the treatment of certain FDA cleared medical conditions such as gammaCore for primary headache and Quell Fibromyalgia

for fibromyalgia;

Nonprescription

Truvaga for the support of general health and wellbeing;

Non-prescription

TAC-STIM for human performance.

Our flagship gammaCore Sapphire is a prescription medical device that is FDA cleared for a variety of primary headache conditions.

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

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

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

We offer two versions of our 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 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 , 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 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 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.

Lovell is a Service-Disabled Veteran-Owned Small Business (SDVOSB) offering medical and pharmaceutical goods and services to federal healthcare providers.

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

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

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 handsets.

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, there may be uncertainty regarding our ability to achieve or maintain profitability.

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

Our expected cash requirements for the next 12 months and beyond are based on the commercial success of our products and our ability to control operating expenses.

cleared Quell OTC for lower extremity pain.

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, both utilizing prescription products under qualifying agreements.

United States Department of Veteran Affairs comprised 71.2% of our revenue during the year ended December 31, 2025.

The majority of our

2025 sales were made pursuant to our qualifying Federal Supply Schedule, or FSS, contract which has an expiry date of June 14, 2030,

as well as open market sales to individual facilities within the government channels.

Our prescription gammaCore and Quell Fibromyalgia

devices are also made available to the government channel through our relationship with Lovell and its qualifying FSS, GSA, DAPA, and

ECAT contract.

for prescription devices in the U.S.

is driven by clinical data and our increased presence in the field.

Our sales efforts are primarily

in the government channel broadly, and specifically to our largest customer, the VA, pursuant to our FSS contract and/or through our

relationship with Lovell and its qualifying FSS, GSA, DAPA, and ECAT contracts.

Our sales force is comprised of an internal sales team

of territory business managers who manage outside commission only sales agents and sub reps.

In addition, we have a small team of dedicated

resources seeking to accelerate adoption in managed care systems.

to the NHS in the United Kingdom are made under the U.K.

MedTech Funding Mandate, or MTFM, for cluster headache (CH) and comprised 4.4%

of our revenue during the year ended December 31, 2025.

In 2026, we plan on continuing to use this program.

for prescription devices outside the U.S.

is driven by similar factors, including the strength of our clinical and health economic data.

Our sales efforts are primarily focused on headache specialists, and specifically, for cluster headache patients.

sell our general wellness products direct-to-consumer through our ecommerce site, www.truvaga.com, and through select Truvaga retail

and marketplace partners, including Best Buy and Rehabmart.

We also partner with organizations such as Ben Greenfield Life, Perks at

Work, True Medicine and a growing number of affiliates and influencers who promote Truvaga and support awareness and customer acquisition

through promotional partnerships.

sell the TAC-STIM handset for human performance as a COtS solution to active duty military and professional organizations.

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.

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

for Low-Risk Devices;

Guidance for Industry and FDA Staff, issued on September 27, 2019.” Truvaga and TAC-STIM handsets are not

intended to diagnose, treat, cure, or prevent any disease or medical condition.

OTC is a wearable neuromodulation technology FDA cleared for Over the Counter (OTC) sales direct-to-consumer for chronic lower extremity

Quell OTC is no longer commercially available;

however, replacement electrodes continue to be sold to existing Quell OTC customers.

Although we may choose to relaunch the Quell OTC product in the direct-to-consumer business channel in the future, there can be no assurance

that we will do so successfully, or at all.

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 medical devices among clinicians, patients, and third-party

payers, expand the use of our bioelectronic technology to additional therapeutic indications, and to develop our nascent wellness and

human performance business including the continued commercialization of Truvaga Plus, our app-enabled device under the Truvaga brand,

and direct-to-consumer Quell OTC, a non-prescription product for lower extremity pain.

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.

expected cash requirements for the next 12 months and beyond are based on the commercial success of our products and our ability to control

operating expenses.

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

Due to these risks and uncertainties, we may need to reduce our activities significantly more than our current operating plan and cash flow projections assume in order to fund operations for the next 12 months.

There can be no assurance that we will have sufficient cash flow and liquidity to fund our planned activities, which could force us to significantly reduce or curtail our activities and, ultimately, potentially cease operations.

risks and uncertainties, we may need to reduce our activities significantly more than our current operating plan and cash flow projections

assume in order to fund operations for the next 12 months.

There can be no assurance that we will have sufficient cash flow and liquidity

to fund our planned activities, which could force us to significantly reduce or curtail our activities and, ultimately, potentially cease

See also “Liquidity Outlook.”

Capital Activities

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.

September 30, 2025, we entered into securities purchase agreements with certain institutional and accredited investors (the “Private

Agreements”), which collectively provided for the sale by us of 360,737 shares (the “Private Shares”) of common stock

of the Company, par value $0.001 per share.

The Private Shares were issued at a price of $5.145 per share in satisfaction of an aggregate

of approximately $1.856 million of legal services rendered or to be rendered to the Company by the investors.

We did not receive cash

proceeds in connection with the issuance of these shares.

offerings described above closed on October 2, 2025.

The Private Shares were issued in reliance on the exemptions from registration provided

by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder, for transactions not involving a public offering.

On October 3, 2025, the Company filed a registration statement on Form S-3 (File No.

333-290713) with the SEC to cover the resale of

the Private Shares, which registration statement became effective on October 22, 2025.

July 24, 2025, our Form S-3 registration statement (File No.

333-284477), or the 2025 Shelf Registration Statement, was declared effective

The 2025 Shelf Registration Statement relates to the potential offering and issuance from time to time of common stock, preferred

stock, warrants, rights, debt securities and units, up to an aggregate amount of $100.0 million.

The proposed maximum offering price

per unit and the proposed maximum aggregate offering price per class of security in any future offering under the 2025 Shelf 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 Statement.

As of the date of this Annual Report, we have $100.0 million remaining for potential issuance under the

2025 Shelf Registration Statement (including $19.8 million under the Sales Agreement (as defined below)).

As of the date of this Annual

Report on Form 10-K,, the aggregate market value of our securities held by non-affiliates may be below $75 million, and 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 us in any given 12-calendar month period pursuant the 2025 Shelf Registration Statement may not exceed

one-third of the aggregate market value of our securities held by non-affiliates, and thus may be limited.

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.

August 4, 2025 (the “LSA Closing Date”), we, and our wholly owned subsidiary, NURO, each as borrowers, entered into a Loan

and Security Agreement (the “Loan and Security Agreement”), with Avenue Venture Opportunities Fund II, L.P.

as administrative agent and collateral agent, and as lender, that is secured by a lien on substantially all of our assets, including

a negative pledge on intellectual property, subject to limited exceptions, pursuant to the Loan and Security Agreement.

Security Agreement provides for term loans in an aggregate principal amount of up to $12.0 million (the “Loan Amount”) to

be delivered in two tranches (the “Term Loans”).

The tranches consist of (i) a term loan advanced to the Company on the LSA

Closing Date in an aggregate principal amount of $7.5 million (“Tranche 1”), and (ii) subject to the achievement of certain

performance milestones set forth in the Loan and Security Agreement, a right of the Company to request that Avenue make additional term

loan advances to the Company in an aggregate principal amount of up to $4.5 million (“Tranche 2”), which right expired on

December 31, 2025.

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 agent.

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

which was initially filed with the Securities and Exchange Commission (the “SEC”) on January 18, 2022 and declared effective

on January 25, 2022.

The 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 13, 2026, the Company had approximately $19.8

million of ATM Shares remaining available for issuance under the Sales Agreement.

Accounting Estimates

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 information.

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

Comparison of the years ended December 31, 2024 and 2023

The following table summarizes our results of operations for the years ended December 31, 2024 and 2023 with the changes in those items in dollars.

Years ended December 31,

(in thousands)

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.

there are items within our financial statements that require management to make accounting estimates, we do not believe them to be critical,

as defined above.

of Operations

of the years ended December 31, 2025 and 2024

following table summarizes our results of operations for the years ended December 31, 2025 and 2024 with the changes in those items in

ended December 31,

Cost of goods sold

1 unchanged sentence

Research and development

Selling, general and administrative

Total operating expenses

general and administrative

operating expenses

Loss from operations

1 unchanged sentence

Interest and other income

Other expense

Total other (income) expense

Interest expense

other (income) expense

Loss before income taxes

benefit from income taxes

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

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.

sales for the year ended December 31, 2025 increased 27% to $32.0 million as compared to the year ended December 31, 2024.

of $6.9 million is primarily due to an increase in net sales of prescription (Rx) gammaCore and Quell Fibromyalgia products sold to

the VA and revenue from the sales of our nonprescription general wellness Truvaga products.

We expect that the majority of 2026 fiscal

year revenue will continue to come from the U.S.

Department of Veterans Affairs.

See above Overview for discussion regarding the Federal Supply Schedule.

The following table sets forth our channel net sales:

(in thousands)

Years ended December 31,

Rx gammaCore - U.S.

Department of Veteran Affairs

Rx gammaCore - U.S.

See above Overview for discussion regarding the

Federal Supply Schedule.

following table sets forth our net sales by channel:

year ended December 31,

United States - Rx

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 .

Research and Development

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 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

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.

In-License / Other

General Wellness

Total Net Sales

profit increased $6.4 million to $27.8 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.

increase in gross profit is attributable to the increased net sales and favorable product mix.

and Development

and development expense of $2.7 million for the year ended December 31, 2025, increased by $0.4 million compared to the prior year.

increase was primarily due to an increase in development costs associated with our gammaCore Emerald and next generation mobile application.

General and Administrative

general and administrative expense of $38.2 million for the year ended December 31, 2025 increased by $7.0 million compared to $31.2

million for the previous year.

Sales and marketing increased $4.3 million from the prior year.

The increase in sales and marketing

was primarily driven by $3.8 million of variable expenses, which contributed to a $6.9 million increase in sales.

administrative expense increased $2.7 million from the prior year.

This increase was primarily driven by $0.8 million in legal fees

primarily associated with business development activities, $0.5 million in bad debt expense associated with one customer, $0.3

million investment in IT systems, and $0.2 million of increased transaction fees associated with increased sales.

(Income) Expense

(income) expense of $0.8 million for the year ended December 31, 2025 increased $1.0 million as compared to the full year ended December

The increase was primarily attributable to non-recurring expenses, including a $0.5 million change in estimated liability payable

to pre-closing shareholders of NURO pursuant to the CVR Agreement entered into in connection with our acquisition of NURO, and interest

associated with the convertible term debt financing with Avenue.

Other income for the year ended December 31, 2024 of $0.2 million consisted

primarily of interest income.

Benefit from Income Taxes

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, 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)

Net cash (used in) provided by

Operating activities

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, 2025 and 2024, we received net cash

payments of $48,000 and $0.1 million from the sale of our New Jersey state net operating losses, respectively.

and Capital Resources

December 31, 2025, our cash, cash equivalents, and marketable securities was $11.6 million compared to $12.2 million at December 31,

Net cash (used in) provided

Investing activities

Financing activities

Operating Activities

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 $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.

cash used in operating activities was $8.2 million and $6.9 million for the years ended December 31, 2025 and 2024, respectively.

increase of $1.3 million is primarily due to the increase in our net loss, partially offset by higher accounts payable.

cash provided by investing activities was $3.9 million and $8.5 million for the years ended December 31, 2025 and 2024, respectively.

During the year ended December 31, 2025, cash used in investing activities was related to the proceeds from the sale of marketable securities.

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.

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

cash provided by financing activities for the year ended December 31, 2025 was $7.6 million which was primarily attributable to the net

proceeds from the convertible term debt financing with Avenue.

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

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.

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

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 the accompanying financial statements are issued.

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.

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

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not have any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Impact of Recently Issued Accounting Standards

In the normal course of business, we evaluate all new accounting pronouncements issued by the FASB, SEC, or other authoritative accounting bodies to determine the potential impact they may have on our Consolidated Financial Statements.

See Note 2 “Basis of Presentation” of the notes to our consolidated financial statements in this Annual Report for additional information about these recently issued accounting standards and their potential impact on our financial condition or results of operations.

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 stock.

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.

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 issuance.

The pre-funded warrants became exercisable immediately upon issuance at a price of $0.001 per share.

have experienced significant net losses, and we expect to continue to incur net losses for the near future as we work to increase market

acceptance of our products.

We have never been profitable and we have incurred net losses and negative cash used in operations in each

year since our inception.

We incurred net losses of $14.0 million and $11.9 million, and used cash in our operations of $8.2 million

and $6.9 million for the years ended December 31, 2025 and 2024, respectively.

have historically funded our operations with the proceeds of equity and debt financings.

During the year ended December 31, 2025, we

received net proceeds of approximately $0.2 million from sales of equity securities pursuant to the Sales Agreement and $7.5 million

which was advanced by Avenue pursuant to the Loan and Security Agreement.

In addition, we entered into securities purchase agreements

with certain institutional and accredited investors, which collectively provided for the sale by the Company of 360,737 shares of common

stock of the Company.

The shares were issued at a price of $5.15 per share in satisfaction of an aggregate of approximately $1.9

million of legal services rendered or to be rendered to the Company by the investors.

The Company did not receive cash proceeds in connection

with the issuance of these shares.

of December 31, 2025, our cash, cash equivalents and marketable securities totaled $11.6 million.

the year ended December 31, 2025, we sold 14,265 shares of our common stock at a weighted average price of $15.20 per share, net of issuance

costs for $0.2 million in net proceeds, pursuant to the Sales Agreement.

Principal repayments under the Loan and Security Agreement are

scheduled for $2.5 million in 2027, $3.0 million in 2028 and $2.3 million in 2029 (inclusive of a final payment fee of 3.5% of the loan

See Note 10 – Long-Term Debt in the consolidated financial statements for additional details of our long-term

Company’s expected cash requirements for the next 12 months from the date these financial statements are issued and beyond are

largely based on the commercial success of its products.

Notwithstanding the expected cash flow from operations and expected access

to capital from existing and/or future debt and equity sources, the Company’s currently forecasted cash is less than the

requirements to fund its operating expenses and capital expenditure requirements, as currently planned, for at least the next 12

months from the date the accompanying consolidated financial statements are issued.

These factors raise substantial doubt regarding

the Company’s ability to continue as a going concern.

There remain significant risks and uncertainties regarding the

Company’s business, financial condition and results of operations.

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.

The accompanying consolidated financial statements

do not include any adjustment that might result from the outcome of this uncertainty.

Sheet Arrangements

did not have during the periods presented, and we do not have any off-balance sheet arrangements, as defined in the rules and regulations

of Recently Issued Accounting Standards

the normal course of business, we evaluate all new accounting pronouncements issued by the FASB, SEC, or other authoritative accounting

bodies to determine the potential impact they may have on our Consolidated Financial Statements.

See Note 2 “Basis of Presentation”

of the notes to our consolidated financial statements in this Annual Report for additional information about these recently issued accounting

standards and their potential impact on our financial condition or results of operations.

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 7. Management’s Discussion and Analysis