What changed in electroCore, Inc.'s 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of electroCore, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+471 added−446 removedSource: 10-K (2025-03-12) vs 10-K (2023-12-31)
Top changes in electroCore, Inc.'s 2024 10-K
471 paragraphs added · 446 removed · 340 edited across 2 sections
- Item 1. Business+356 / −312 · 266 edited
- Item 1C. Cybersecurity+115 / −134 · 74 edited
Item 1. Business
Business — how the company describes what it does
266 edited+90 added−46 removed808 unchanged
Item 1. Business
Business — how the company describes what it does
266 edited+90 added−46 removed808 unchanged
2023 filing
2024 filing
Biggest changeThese include: • the FDA’s QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other good manufacturing practice and quality assurance procedures during all aspects of the manufacturing process (unless a device category is exempt from this requirement by the FDA, such as in the case of many Class I devices); • the FDA’s QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other good manufacturing practice and quality assurance procedures during all aspects of the manufacturing process (unless a device category is exempt from this requirement by the FDA, such as in the case of many Class I devices); • the FDA’s QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other good manufacturing practice and quality assurance procedures during all aspects of the manufacturing process (unless a device category is exempt from this requirement by the FDA, such as in the case of many Class I devices); • correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and device recalls or removals if undertaken to reduce a risk to health by the device or to remedy a violation of the FDA caused by the device that may present a risk to health; • post-market surveillance regulations, which apply to Class II or III devices if the FDA has issued a post-market surveillance order and the failure of the device would be reasonably likely to have serious adverse health consequences, the device is expected to have significant use in the pediatric population, the device is intended to be implanted in the human body for more than one year, or the device is intended to be used to support or sustain life and to be used outside a user facility; • regular and for-cause inspections by FDA to review a manufacturer’s facility and its compliance with applicable FDA requirements; • the FDA’s recall authority, whereby it can ask, or order, device manufacturers to recall from the market a product that is in violation of applicable laws and regulations; and • the guidance document entitled “ General Wellness: Policy for Low-Risk Devices; Guidance for Industry and FDA Staff, issued on September 27, 2019” under which Truvaga and TAC-STIM are marketed under as general wellness devices.
Biggest changeThese include: • the FDA’s QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other good manufacturing practice and quality assurance procedures during all aspects of the manufacturing process (unless a device category is exempt from this requirement by the FDA, such as in the case of many Class I devices); • correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and device recalls or removals if undertaken to reduce a risk to health by the device or to remedy a violation of the FDA caused by the device that may present a risk to health; • post-market surveillance regulations, which apply to Class II or III devices if the FDA has issued a post-market surveillance order and the failure of the device would be reasonably likely to have serious adverse health consequences, the device is expected to have significant use in the pediatric population, the device is intended to be implanted in the human body for more than one year, or the device is intended to be used to support or sustain life and to be used outside a user facility; • regular and for-cause inspections by FDA to review a manufacturer’s facility and its compliance with applicable FDA requirements; • the FDA’s recall authority, whereby it can ask, or order, device manufacturers to recall from the market a product that is in violation of applicable laws and regulations; and • the guidance document entitled “ General Wellness: Policy for Low-Risk Devices; Guidance for Industry and FDA Staff, issued on September 27, 2019” under which Truvaga and TAC-STIM are marketed under as general wellness devices.
The market f or the treatment and prevention of migraine is highly competitive with most migraine patients managing their conditions with over-the-counter therapies. The prescription triptan drug class is the generally considered first line therapy for the acute treatment of migraine. There are many additional pharmaceutical approaches currently marketed and under development by third parties.
The market f or the treatment and prevention of migraine is highly competitive with most migraine patients managing their conditions with over-the-counter therapies. The prescription triptan drug class is generally considered first line therapy for the acute treatment of migraine. There are many additional pharmaceutical approaches currently marketed and under development by third parties.
These measures include purchasing what we consider to be a sufficient advanced supply of key components to reasonably assure that no component shortages will interrupt our ability to manufacture and deliver our products to patients on a timely basis. All the electronic components used in our products are either high-volume, non-custom commodity components, or alternate components are available.
These measures include purchasing what we consider to be sufficient advanced supply of key components to reasonably assure that no component shortages will interrupt our ability to manufacture and deliver our products to patients on a timely basis. All the electronic components used in our products are either high-volume, non-custom commodity components, or alternate components are available.
Implementation of our growth strategy for our gammaCore and human performance and general wellness products may require greater overall planned capital expenditures, and we cannot guarantee that any such increased expenditures will bring forth corresponding, offsetting revenue growth.
Implementation of our growth strategy for our gammaCore, general wellness and human performance products may require greater overall planned capital expenditures, and we cannot guarantee that any such increased expenditures will bring forth corresponding, offsetting revenue growth.
In the event that local laws and regulations or the interpretation of local laws and regulations change to require us to treat our independent consultants as employees, or that our independent consultants are deemed by local regulatory authorities in one or more of the jurisdictions in which we operate to be our employees rather than independent contractors under existing laws and interpretations, or our independent consultants are deemed to be conducting business in countries outside of the country in which they are authorized to do business, we may be held responsible for social security, income, and other related taxes in those jurisdictions, plus any related assessments and penalties, which could harm our financial condition and operating results.
In the event that local laws and regulations or the interpretation of local laws and regulations change to require us to treat our independent consultants as employees, or that our independent consultants are deemed by local regulatory authorities in one or more of the jurisdictions in which we operate to be our employees rather than independent contractors under existing laws and interpretations, or our independent contractors are deemed to be conducting business in countries outside of the country in which they are authorized to do business, we may be held responsible for social security, income, and other related taxes in those jurisdictions, plus any related assessments and penalties, which could harm our financial condition and operating results.
Social media, including Instagram, Snapchat, TikTok, Facebook, LinkedIn and X, the social media platform formerly known as and Twitter, are increasingly being used to communicate about our products, clinical development programs, and, at present, the conditions our prescription gammaCore therapy is being developed to treat and potential general wellness improvements.
Social media, including Instagram, Snapchat, TikTok, Facebook, LinkedIn and X, the social media platform formerly known as Twitter, are increasingly being used to communicate about our products, clinical development programs, and, at present, the conditions our prescription gammaCore therapy is being developed to treat and potential general wellness improvements.
Outside the United States, we rely on a single third-party distributor to effectively distribute the majority of our products. We depend in part on a single third-party distributor for the warehousing and shipment of our products in certain territories in outside the United States. We depend on this distributor’s efforts; however, we are unable to control its efforts completely.
Outside the United States, we rely on a single third-party distributor to effectively distribute the majority of our products. We depend in part on a single third-party distributor for the warehousing and shipment of our products in certain territories outside the United States. We depend on this distributor’s efforts; however, we are unable to control its efforts completely.
Our future revenue may depend in part on the number of customers using our app in connection with our next generation consumer product in fulfilling their wellness needs. Unavailability of our app in connection with the use of our next generation consumer product could materially and adversely affect consumer perception of our brand.
Our future revenue may depend in part on the number of customers using our app in connection with our next generation consumer product in fulfilling their wellness needs. The unavailability of our app in connection with the use of our next generation consumer product could materially and adversely affect consumer perception of our brand.
Compliance with these requirements is a prerequisite to be able to affix the CE mark to gammaCore, without which they cannot be marketed or sold in the EEA.
Compliance with these requirements is a prerequisite to be able to affix the CE mark to gammaCore, without which they cannot be marketed or sold in the EEA.
To demonstrate compliance with the Essential Requirements and obtain the right to affix the CE Mark medical devices manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification.
To demonstrate compliance with the Essential Requirements and obtain the right to affix the CE Mark medical devices manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification.
Depending on the relevant conformity assessment procedure, the notified body would audit and examine the technical documentation and the quality system for the manufacture, design and final inspection of the medical devices.
Depending on the relevant conformity assessment procedure, the notified body would audit and examine the technical documentation and the quality system for the manufacture, design and final inspection of the medical devices.
This assessment must be based on clinical data, which can be obtained from ( 1 ) clinical studies conducted on the devices being assessed, ( 2 ) scientific literature from similar devices whose equivalence with the assessed device can be demonstrated or ( 3 ) both clinical studies and scientific literature. gammaCore is a Class IIa medical device in the EU.
This assessment must be based on clinical data, which can be obtained from ( 1 ) clinical studies conducted on the devices being assessed, ( 2 ) scientific literature from similar devices whose equivalence with the assessed device can be demonstrated or ( 3 ) both clinical studies and scientific literature. gammaCore is a Class IIa medical device in the EU.
The conduct of clinical studies in the EEA is governed by detailed regulatory obligations. These may include the requirement of prior authorization by the competent authorities of the country in which the study takes place and the requirement to obtain a positive opinion from a competent ethics committee. This process can be expensive and time-consuming.
The conduct of clinical studies in the EEA is governed by detailed regulatory obligations. These may include the requirement of prior authorization by the competent authorities of the country in which the study takes place and the requirement to obtain a positive opinion from a competent ethics committee. This process can be expensive and time-consuming.
Moreover, in May 2017, the EU Medical Devices Regulation 2017 / 745 , or MDR was adopted. The MDR repeals and replaces the EU Medical Devices Directive.
Moreover, in May 2017, the EU Medical Devices Regulation 2017 / 745 , or MDR was adopted. The MDR repeals and replaces the EU Medical Devices Directive.
Unlike directives, which must be implemented into the national laws of the EEA member states, the regulations would be directly applicable, i.e., without the need for adoption of EEA Member State laws implementing them, in all EEA member states and are intended to eliminate current differences in the regulation of medical devices among EEA member states.
Unlike directives, which must be implemented into the national laws of the EEA member states, the regulations would be directly applicable, i.e., without the need for adoption of EEA Member State laws implementing them, in all EEA member states and are intended to eliminate current differences in the regulation of medical devices among EEA member states.
The MDR, among other things, is intended to establish a uniform, transparent, predictable, and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while supporting innovation. The MDR became applicable on May 26, 2021, with the transition period intended to end on May 26, 2024.
The MDR, among other things, is intended to establish a uniform, transparent, predictable, and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while supporting innovation. The MDR became applicable on May 26, 2021, with the transition period intended to end on May 26, 2024.
Many of the companies developing or marketing competing products enjoy several advantages over us, including: • more experienced and larger sales forces; • greater name recognition; • more established sales and marketing programs and distribution networks; • earlier regulatory clearance or approval; • long-established relationships with physicians and hospitals; • significant patent portfolios, including issued US and foreign patents and pending patent applications, as well as the resources to enforce patents against us or any of our third-party suppliers and distributors; • the ability to acquire and integrate our competitors and/or their technology; • demonstrated ability to develop product enhancements and new product offerings; • established history of product reliability, safety, and durability; • the ability to offer rebates or bundle multiple product offerings to offer greater discounts or incentives; • greater financial and human resources for product development, sales, and marketing; and • greater experience in and resources for conducting research and development, clinical studies, manufacturing, preparing regulatory submissions, obtaining regulatory clearance or approval for products and marketing approved products.
Many of the companies developing or marketing competing products enjoy several advantages over us, including: 33 • more experienced and larger sales forces; • greater name recognition; • more established sales and marketing programs and distribution networks; • earlier regulatory clearance or approval; • long-established relationships with physicians and hospitals; • significant patent portfolios, including issued US and foreign patents and pending patent applications, as well as the resources to enforce patents against us or any of our third-party suppliers and distributors; • the ability to acquire and integrate our competitors and/or their technology; • demonstrated ability to develop product enhancements and new product offerings; • established history of product reliability, safety, and durability; • the ability to offer rebates or bundle multiple product offerings to offer greater discounts or incentives; • greater financial and human resources for product development, sales, and marketing; and • greater experience in and resources for conducting research and development, clinical studies, manufacturing, preparing regulatory submissions, obtaining regulatory clearance or approval for products and marketing approved products.
P otential and completed acquisitions, strategic investments, licenses, and other alliances involve numerous risks, including: • difficulty assimilating or integrating acquired or licensed technologies, products, or business operations; • issues maintaining uniform standards, procedures, controls, and policies; • unanticipated costs associated with acquisitions or strategic alliances, including the assumption of unknown or contingent liabilities and the incurrence of debt or future write-offs of intangible assets or goodwill; • diversion of management's attention from our core business and disruption of ongoing operations; • adverse effects on existing business relationships with suppliers, distributors, and customers; • risks associated with entering new markets in which we have limited or no experience; • potential losses related to investments in other companies; • potential loss of key employees of the acquired business; and • increased legal and accounting compliance costs.
P otential and completed acquisitions, strategic investments, licenses, and other alliances involve numerous risks, including: • difficulty assimilating or integrating acquired or licensed technologies, products, or business operations; • issues maintaining uniform standards, procedures, controls, and policies; • unanticipated costs associated with acquisitions or strategic alliances, including the assumption of unknown or contingent liabilities and the incurrence of debt or future write-offs of intangible assets or goodwill; • diversion of management's attention from our core business and disruption of ongoing operations; • adverse effects on existing business relationships with suppliers, distributors, and customers; • risks associated with entering new markets in which we have limited or no experience; • potential losses related to investments in other companies; • potential loss of key employees of the acquired business; and • increased transaction, legal and accounting compliance costs.
Despite carefully written collaboration agreements, collaborations involving our prescription gammaCore therapy are subject to numerous risks, which may include the following: • collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration; • collaborators may not pursue development, regulatory clearance, and commercialization of our product candidates, or may elect not to continue or renew development, regulatory clearance, or commercialization programs based on clinical trial results, changes in their strategic focus due to the acquisition of competitive products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates; • a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to their marketing and distribution; 41 • collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; • disputes may arise between us and a collaborator that cause the delay or termination of the research, development, or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates; and • collaborators may own or co-own intellectual property covering our products that result from our collaborating with them, and in such cases, we would not have the exclusive right to commercialize such intellectual property.
Despite carefully written collaboration agreements, collaborations involving our prescription gammaCore therapy are subject to numerous risks, which may include the following: • collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration; • collaborators may not pursue development, regulatory clearance, and commercialization of our product candidates, or may elect not to continue or renew development, regulatory clearance, or commercialization programs based on clinical trial results, changes in their strategic focus due to the acquisition of competitive products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates; • a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to their marketing and distribution; 44 • collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; • disputes may arise between us and a collaborator that cause the delay or termination of the research, development, or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates; and • collaborators may own or co-own intellectual property covering our products that result from our collaborating with them, and in such cases, we would not have the exclusive right to commercialize such intellectual property.
Once applicable, the new regulations will among other things: • strengthen the rules on placing devices on the market and reinforce surveillance once they are available; • establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; • set up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and • strengthened rules for the assessment of certain high-risk devices which may have to undergo an additional check by experts before they are placed on the market.
Once applicable, the new regulations will among other things: • strengthen the rules on placing devices on the market and reinforce surveillance once they are available; • establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; • set up a central database to provide patients, healthcare professionals, and the public with comprehensive information on products available in the EU; and • strengthen rules for the assessment of certain high-risk devices which may have to undergo an additional check by experts before they are placed on the market.
The provisions in our charter documents include the following: • a classified board of directors with three -year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the required approval of at least 66 2 / 3 % of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause; • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our bylaws without obtaining stockholder approval; 77 • the required approval of at least 66 2 / 3 % of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer, the president, or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors, or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors, or otherwise attempting to obtain control of us.
The provisions in our charter documents include the following: • a classified board of directors with three -year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the required approval of at least 66 2 / 3 % of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause; • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our bylaws without obtaining stockholder approval; 80 • the required approval of at least 66 2 / 3 % of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer, the president, or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors, or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors, or otherwise attempting to obtain control of us.
The following examples are illustrative: 51 • others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology, but that are not covered by the claims of the patents that we own or control, assuming such patents have issued or do issue; • we or our licensors or any future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by the issued patents or pending patent applications that we own or have exclusively licensed; • we or our licensors or any future strategic partners might not have been the first to file patent applications covering certain of our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • it is possible that our pending patent applications may not adequately cover our software applications; • issued patents that we own or have exclusively licensed may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • third parties performing manufacturing or testing for the use of our products or technologies could use the intellectual property of others without obtaining a proper license; • parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights over that intellectual property; • we may not develop or in-license additional proprietary technologies that are patentable; • we may not be able to obtain and maintain necessary licenses on commercially reasonable terms, or at all; and • the patents of others may have an adverse effect on our business.
The following examples are illustrative: 54 • others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology, but that are not covered by the claims of the patents that we own or control, assuming such patents have issued or do issue; • we or our licensors or any future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by the issued patents or pending patent applications that we own or have exclusively licensed; • we or our licensors or any future strategic partners might not have been the first to file patent applications covering certain of our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • it is possible that our pending patent applications may not adequately cover our software applications; • issued patents that we own or have exclusively licensed may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • third parties performing manufacturing or testing for the use of our products or technologies could use the intellectual property of others without obtaining a proper license; • parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights over that intellectual property; • we may not develop or in-license additional proprietary technologies that are patentable; • we may not be able to obtain and maintain necessary licenses on commercially reasonable terms, or at all; and • the patents of others may have an adverse effect on our business.
The types of situations in which we may become a party to such litigation or proceedings include: • we or our collaborators may initiate litigation or other proceedings against third parties seeking to invalidate the patents held by those third parties, or to obtain a judgment that our products or processes do not infringe those third parties’ patents; • we or our collaborators may participate at substantial cost in International Trade Commission proceedings to abate importation of products that would compete unfairly with our products; • if our competitors file patent applications that claim technology also claimed by us or our licensors, we or our licensors may be required to participate in interference, derivation, or opposition proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially provide a third party with a dominant patent position; • if third parties initiate litigation claiming that our processes or products infringe their patent or other intellectual property rights, we and our collaborators will need to defend against such proceedings; • if third parties initiate litigation or other proceedings seeking to invalidate patents owned by or licensed to us or to obtain a declaratory judgment that their products, services, or technologies do not infringe our patents or patents licensed to us, we will need to defend against such proceedings; • we may be subject to ownership disputes relating to intellectual property, including disputes arising from conflicting obligations of consultants or others who are involved in developing our products; and • if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our processes or products infringe or misappropriate its patent or other intellectual property rights, and/or that we breached our obligations under the license agreement, and we and our collaborators would need to defend against such proceedings. 47 These lawsuits and proceedings, regardless of merit, are time-consuming and expensive to initiate, maintain, defend, or settle, and could divert the time and attention of managerial and technical personnel, which could materially and adversely affect our business.
The types of situations in which we may become a party to such litigation or proceedings include: • we or our collaborators may initiate litigation or other proceedings against third parties seeking to invalidate the patents held by those third parties, or to obtain a judgment that our products or processes do not infringe those third parties’ patents; • we or our collaborators may participate at substantial cost in International Trade Commission proceedings to abate importation of products that would compete unfairly with our products; • if our competitors file patent applications that claim technology also claimed by us or our licensors, we or our licensors may be required to participate in interference, derivation, or opposition proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially provide a third party with a dominant patent position; • if third parties initiate litigation claiming that our processes or products infringe their patent or other intellectual property rights, we and our collaborators will need to defend against such proceedings; • if third parties initiate litigation or other proceedings seeking to invalidate patents owned by or licensed to us or to obtain a declaratory judgment that their products, services, or technologies do not infringe our patents or patents licensed to us, we will need to defend against such proceedings; • we may be subject to ownership disputes relating to intellectual property, including disputes arising from conflicting obligations of consultants or others who are involved in developing our products; and • if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our processes or products infringe or misappropriate its patent or other intellectual property rights, and/or that we breached our obligations under the license agreement, and we and our collaborators would need to defend against such proceedings. 50 These lawsuits and proceedings, regardless of merit, are time-consuming and expensive to initiate, maintain, defend, or settle, and could divert the time and attention of managerial and technical personnel, which could materially and adversely affect our business.
If our systems are breached or suffer severe damage, disruption or shutdown and we are unable to effectively resolve the issues in a timely manner, our business and operating results may significantly suffer and we may be subject to litigation, government enforcement actions and other actions for which we could face financial liability and other adverse consequences which may include: • additional government oversight of our operations; • loss of existing customers; • difficulty in attracting new customers; • problems in determining product cost estimates and establishing appropriate pricing; • difficulty in preventing, detecting, and controlling fraud; • disputes with customers, physicians, and other health care professionals; • increases in operating expenses, incurrence of expense, including notification and remediation costs; • regulatory fines or penalties; • individual actions or class actions for damages; • loss of revenues (including through loss of coverage or reimbursement); • product development delays; • disruption of key business operations; and • diversion of attention of management and key information technology resources. 58 Risks Related to Regulation of our Industry Our business is subject to extensive governmental regulation that makes it expensive and time consuming for us to bring our prescription gammaCore therapy and our general wellness products, Truvaga and TAC-STIM to market in the United States and to expand the use of our prescription gammaCore therapy to additional therapeutic indications, and to expand the reach of our general wellness initiatives.
If our systems are breached or suffer severe damage, disruption or shutdown and we are unable to effectively resolve the issues in a timely manner, our business and operating results may significantly suffer and we may be subject to litigation, government enforcement actions and other actions for which we could face financial liability and other adverse consequences which may include: • additional government oversight of our operations; • loss of existing customers; • difficulty in attracting new customers; • problems in determining product cost estimates and establishing appropriate pricing; • difficulty in preventing, detecting, and controlling fraud; • disputes with customers, physicians, and other health care professionals; • increases in operating expenses, incurrence of expense, including notification and remediation costs; • regulatory fines or penalties; • individual actions or class actions for damages; • loss of revenues (including through loss of coverage or reimbursement); • product development delays; • disruption of key business operations; and • diversion of attention of management and key information technology resources. 61 Risks Related to Regulation of our Industry Our business is subject to extensive governmental regulation that makes it expensive and time consuming for us to bring our prescription gammaCore therapy and our general wellness products, Truvaga and TAC-STIM to market in the United States and to expand the use of our prescription gammaCore therapy to additional therapeutic indications, and to expand the reach of our general wellness initiatives.
Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful; • we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law; • we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification; • we will not be obligated pursuant to our amended and restated bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnitees, except with respect to proceedings authorized by our board of directors or brought to enforce a right to indemnification; • we may not retroactively amend our amended and restated bylaw provisions to reduce our indemnification obligations to directors, officers, employees, and agents. 78 We do not currently intend to pay dividends on our common stock, and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.
Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful; • we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law; • we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification; • we will not be obligated pursuant to our amended and restated bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnitees, except with respect to proceedings authorized by our board of directors or brought to enforce a right to indemnification; • we may not retroactively amend our amended and restated bylaw provisions to reduce our indemnification obligations to directors, officers, employees, and agents. 81 We do not currently intend to pay dividends on our common stock, and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.
Except for low risk medical devices (Class I with no measuring function and which are not sterile), where the manufacturer can issue an EC Declaration of Conformity based on a self-assessment of the conformity of its products with the Essential Requirements, a conformity assessment procedure that requires the intervention of a notified body, which is an organization designated by a competent authority of an EEA country to conduct conformity assessments.
Except for low-risk medical devices (Class I with no measuring function and which are not sterile) where the manufacturer can issue an EC Declaration of Conformity based on a self-assessment of the conformity of its products with the Essential Requirements, a conformity assessment procedure requires the intervention of a notified body, which is an organization designated by a competent authority of an EEA country to conduct conformity assessments.
With regard to QSR administration, the FDA may enforce this regulation through announced (through prior notification) or unannounced inspections that pertain to several facets of our methods and documentation processes of the design, testing, production, control, selection, and oversight of suppliers or contractors; quality assurance; labeling; packaging; storage; complaint handling; shipping; and servicing of our products. 67 The misuse or off-label use of our gammaCore therapy may harm our image in the marketplace, result in injuries that lead to product liability suits, which could be costly to our business, or result in costly investigations and sanctions from the FDA and other regulatory bodies if we are deemed to have engaged in off-label promotion. gammaCore has been CE Marked in the EEA and cleared by the FDA for the acute treatment of eCH in adults, CH prevention, the preventive and acute treatment of migraine headache in the United States in adults and adolescents, and the treatment of Paroxysmal Hemicrania, or HC, in adults.
With regard to QSR administration, the FDA may enforce this regulation through announced (through prior notification) or unannounced inspections that pertain to several facets of our methods and documentation processes of the design, testing, production, control, selection, and oversight of suppliers or contractors; quality assurance; labeling; packaging; storage; complaint handling; shipping; and servicing of our products. 70 The misuse or off-label use of our gammaCore therapy may harm our image in the marketplace, result in injuries that lead to product liability suits, which could be costly to our business, or result in costly investigations and sanctions from the FDA and other regulatory bodies if we are deemed to have engaged in off-label promotion. gammaCore has been CE Marked in the EEA and cleared by the FDA for the acute treatment of eCH in adults, CH prevention, the preventive and acute treatment of migraine headache in the United States in adults and adolescents, and the treatment of Paroxysmal Hemicrania, or HC, in adults.
Although we continue to work with the appropriate government personnel to obtain a follow-on FSS contract, there can be no assurance that the VA/DoD will accept our follow-on application and replace our contract which may limit or eliminate our ability to sell certain gammaCore products into the government channel pursuant to our qualifying FSS contract or individual facilities that utilize our FSS contract number for open market purchases.
Although we continue to work with the appropriate government personnel to obtain a follow-on FSS contract, there can be no assurance that the VA will accept our follow-on application and replace our contract which may limit or eliminate our ability to sell certain gammaCore products into the government channel pursuant to our qualifying FSS contract or individual facilities that utilize our FSS contract number for open market purchases.
Specifically, we may be unable to successfully commercialize our general wellness and human performance products in the United States for a number of reasons, including: 13 • established competitors with relatively more mature relationships with their customers and third-party suppliers; • limitations in our ability to demonstrate differentiation and advantages of our product compared to similar, competing products and the relative safety, efficacy and ease of use of our product; • the limited brand awareness of our Truvaga and TAC-STIM brands, which are our two recently launched non-prescription, general wellness and human performance products; • the limited size of our marketing budget to assess and increase customer demand levels; • the inability to obtain sufficient supply of the product components for our wellness products from our primary and secondary manufacturers and suppliers; • insufficient financial or other resources to support our commercialization efforts necessary to realize profitability; and • the introduction, and market acceptance, of new, relatively more effective, or less expensive, competing products and technologies.
Specifically, we may be unable to successfully commercialize our general wellness and human performance products in the United States for a number of reasons, including: 14 • established competitors with relatively more mature relationships with their customers and third-party suppliers; • limitations in our ability to demonstrate differentiation and advantages of our product compared to similar, competing products and the relative safety, efficacy and ease of use of our product; • the limited brand awareness of our Truvaga and TAC-STIM brands, which are our two recently launched non-prescription, general wellness and human performance products; • the limited size of our marketing budget to assess and increase customer demand levels; • the inability to obtain sufficient supply of the product components for our wellness products from our primary and secondary manufacturers and suppliers; • insufficient financial or other resources to support our commercialization efforts necessary to realize profitability; and • the introduction, and market acceptance, of new, relatively more effective, or less expensive, competing products and technologies.
The FDA, FTC, and other U.S., EEA, and foreign governmental agencies and authorities regulate and oversee, among other things, with respect to medical devices: 61 • design, development, and manufacturing; • testing, labeling, content and language of instructions for use and storage; • clinical trials; • product safety; • risk assessment, and management; • marketing, sales and distribution; • pre-market regulatory clearance and approval; • conformity assessment procedures; • record-keeping procedures; • advertising and promotion; • recalls and other field safety corrective actions, and in the case of the FDA, for example, if the FDA subsequently determines that a report was required for such recall or other field correction action that was not submitted, any subsequent related enforcement actions; • post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; • post-market studies; and • product import and export.
The FDA, FTC, and other U.S., EEA, and foreign governmental agencies and authorities regulate and oversee, among other things, with respect to medical devices: 64 • design, development, and manufacturing; • testing, labeling, content and language of instructions for use and storage; • clinical trials; • product safety; • risk assessment, and management; • marketing, sales and distribution; • pre-market regulatory clearance and approval; • conformity assessment procedures; • record-keeping procedures; • advertising and promotion; • recalls and other field safety corrective actions, and in the case of the FDA, for example, if the FDA subsequently determines that a report was required for such recall or other field correction action that was not submitted, any subsequent related enforcement actions; • post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; • post-market studies; and • product import and export.
Although we continue to work with the appropriate government personnel to replace our FSS contract, there can be no assurance that the VA/DoD 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. .
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.
NHS England awarded gammaCore a place on the Innovation Technology Payment, or ITP, program for treatment of patients with refractory (severe) cluster headache, a reimbursement pathway that opened in April 2019. Effective April 1, 2021, gammaCore was listed on the MTFM Policy. gammaCore is still listed in the policy, which requires commissioners fund the therapy from their existing allocations.
NHS England awarded gammaCore a place on the Innovation Technology Payment, or ITP, program for treatment of patients with refractory (severe) cluster headache, a reimbursement pathway that opened in April 2019. Effective April 1, 2021, gammaCore was listed on the MTFM Policy. gammaCore is still listed in the policy, which requires commissioners to fund the therapy from their existing allocations.
Failure to manage our future growth plans effectively could have an adverse effect on our financial condition and operating results. Any significant disruption to our ecommerce business could result in lost sales. We recently launched new cash pay initiatives for our Truvaga consumer product and prescription gammaCore therapy, including our ecommerce websites in both the United States and United Kingdom.
Failure to manage our future growth plans effectively could have an adverse effect on our financial condition and operating results. Any significant disruption to our ecommerce business could result in lost sales. We launched new cash pay initiatives for our Truvaga consumer product and prescription gammaCore therapy, including our ecommerce websites in both the United States and United Kingdom.
Those three classes are: • Class I, the lowest risk products, which require compliance with medical device general controls, including labeling, establishment registration, device product listing, adverse event reporting and, for some products, adherence to good manufacturing practices through the FDA’s quality system regulations; • Class II, comprising moderate-risk devices, which also require compliance with general controls and in some cases, so-called special controls that may include performance standards, particular labeling requirements, or post-market surveillance obligations; typically a Class II device also requires pre-market review and clearance by FDA of a pre-market notification (also referred to as a “510(k) application”) as well as adherence to the quality system regulations/good manufacturing practices for devices; and • Class III, high-risk devices that are often implantable or life-sustaining, which also require compliance with the medical device general controls and quality system regulations, but which generally must be approved by FDA before entering the market, through a more-lengthy pre-market approval (PMA) application.
These three classes are: • Class I, the lowest risk products, which require compliance with medical device general controls, including labeling, establishment registration, device product listing, adverse event reporting and, for some products, adherence to good manufacturing practices through the FDA’s quality system regulations; • Class II, comprising moderate-risk devices, which also require compliance with general controls and in some cases, so-called special controls that may include performance standards, particular labeling requirements, or post-market surveillance obligations; typically a Class II device also requires pre-market review and clearance by FDA of a pre-market notification (also referred to as a “510(k) application”) as well as adherence to the quality system regulations/good manufacturing practices for devices; and • Class III, high-risk devices that are often implantable or life-sustaining, which also require compliance with the medical device general controls and quality system regulations, but which generally must be approved by FDA before entering the market, through a more-lengthy pre-market approval (PMA) application.
In the most extreme cases, criminal sanctions or closure of our manufacturing facilities are possible. If any of these risks materialize, our business would be adversely affected. 62 gammaCore is also subject to extensive governmental regulation in foreign jurisdictions, such as Europe, and our failure to comply with applicable requirements could cause our business to suffer.
In the most extreme cases, criminal sanctions or closure of our manufacturing facilities are possible. If any of these risks materialize, our business would be adversely affected. gammaCore is also subject to extensive governmental regulation in foreign jurisdictions, such as Europe, and our failure to comply with applicable requirements could cause our business to suffer.
State attorneys general can also bring a civil action to enjoin a HIPAA violation or to obtain statutory damages on behalf of residents of his or her state; 71 • the federal Physician Payments Sunshine Act, implemented as the Open Payments program, which requires certain applicable manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, or CHIP, to report annually to CMS information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), teaching hospitals, and, beginning in 2022 , physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives; teaching hospitals, and ownership and investment interests held by physicians and their immediate family members.
State attorneys general can also bring a civil action to enjoin a HIPAA violation or to obtain statutory damages on behalf of residents of his or her state; 74 • the federal Physician Payments Sunshine Act, implemented as the Open Payments program, which requires certain applicable manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, or CHIP, to report annually to CMS information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), teaching hospitals, and, beginning in 2022 , physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives; teaching hospitals, and ownership and investment interests held by physicians and their immediate family members.
The Company has ceased its operations in Germany, although sales to Germany are still supported by electroCore UK Ltd. Our Internet website address is www.electrocore.com. We also maintain websites at www.gammacore.com , www.gammacore.co.uk, www.truvaga.com, and www.tac-stim.com . The content reflected on our websites are not incorporated by reference herein unless expressly noted.
The Company has ceased its operations in Germany, although sales to Germany are still supported by electroCore UK Ltd. Our primary Internet website address is www.electrocore.com. We also maintain websites at www.gammacore.com , www.gammacore.co.uk, www.truvaga.com, and www.tac-stim.com . The content reflected on our websites is not incorporated by reference herein unless expressly noted.
Factors affecting the aggregate level of spending for such customers possibly include current macroeconomic conditions, including inflation, consumer confidence in future macroeconomic conditions, fears of recession, the availability and cost of customer credit, rates of employment, and tax rates, which are factors that would adversely impact demand for our products. We have a history of significant losses.
Factors affecting the aggregate level of spending for such customers possibly include current macroeconomic conditions, including inflation, consumer confidence in future macroeconomic conditions, fears of recession, the availability and cost of customer credit, rates of employment, and tax rates, which are factors that would adversely impact demand for our products. 17 We have a history of significant losses.
Notably, global enforcement of anti-corruption and anti-bribery laws, which are typically interpreted broadly to prohibit generally companies, their employees, and their third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector, has increased substantially in recent years, which has in part led to more frequent voluntary self-disclosures by companies, aggressive investigations and enforcement proceedings by U.S. and foreign governmental agencies, and assessment of significant fines and penalties against companies and individuals in various cases. 31 Thus, our international operations create the risk of unauthorized payments or offers of payments by one of our employees, consultants, sales agents, or distributors because these parties are not always subject to our direct oversight and control.
Notably, global enforcement of anti-corruption and anti-bribery laws, which are typically interpreted broadly to prohibit generally companies, their employees, and their third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector, has increased substantially in recent years, which has in part led to more frequent voluntary self-disclosures by companies, aggressive investigations and enforcement proceedings by U.S. and foreign governmental agencies, and assessment of significant fines and penalties against companies and individuals in various cases. 35 Thus, our international operations create the risk of unauthorized payments or offers of payments by one of our employees, consultants, sales agents, or distributors because these parties are not always subject to our direct oversight and control.
One or more successful claims brought against us may have a material adverse effect on our business and results of operations. Even successful defense would require significant financial and management resources. 34 Our operating results and profitability may be adversely affected by increases in reserves for product returns, doubtful accounts receivable, and inventory.
One or more successful claims brought against us may have a material adverse effect on our business and results of operations. Even successful defense would require significant financial and management resources. Our operating results and profitability may be adversely affected by increases in reserves for product returns, doubtful accounts receivable, and inventory.
Between November 2023 and January 2024, certain gammaCore products were added to the FSS, the DAPA, GSA Advantage, and Defense Logistics Agency’s ECAT system procurement portals through the Lovell contract vehicles. We expect an increasing portion of our 2024 sales will be made pursuant to the distribution agreement with Lovell and its contract vehicles.
Between November 2023 and January 2024, certain gammaCore products were added to the FSS, the DAPA, GSA Advantage, and Defense Logistics Agency’s ECAT system procurement portals through the Lovell contract vehicles. We expect an increasing portion of our 2025 sales will be made pursuant to the distribution agreement with Lovell and its contract vehicles.
We are offering products to government customers through two different contracting vehicles, which may cause confusion for purchasing agents and result in frustration by customers. Beginning in November 2023, gammaCore products have been available to government customers directly through our existing FSS contract, via open market purchases for individual VA/DoD facilities, and through Lovell.
We are offering products to government customers through two different contracting vehicles, which may cause confusion for purchasing agents and result in frustration by customers. Beginning in November 2023, gammaCore products have been available to government customers directly through our existing FSS contract, via open market purchases for individual VA facilities, and through Lovell.
The occurrence of any of these events could result in: • harm to customers and consumers; • business interruptions and delays; • the loss, misappropriation, corruption or unauthorized access of data, confidential information or intellectual property; • litigation, including potential class action litigation, and potential liability under privacy, security and consumer protection laws or other applicable laws; • reputational damage; • significant remediation costs, including liability for stolen customer or employee information, repairing system damage, or providing benefit to affected customers or employees; • increase to insurance premiums; and • foreign, federal and state governmental inquires, violations or sanctions, any of which could have a material, adverse effect on our financial position and results of operations. 56 Any significant interruptions or delays in third-party service and access could result in limited capacity, reduced demand, and loss of customers and adversely affect our business.
The occurrence of any of these events could result in: • harm to customers and consumers; • business interruptions and delays; • the loss, misappropriation, corruption or unauthorized access of data, confidential information or intellectual property; • litigation, including potential class action litigation, and potential liability under privacy, security and consumer protection laws or other applicable laws; • reputational damage; • significant remediation costs, including liability for stolen customer or employee information, repairing system damage, or providing benefit to affected customers or employees; • increase to insurance premiums; and • foreign, federal and state governmental inquires, violations or sanctions, any of which could have a material, adverse effect on our financial position and results of operations. 59 Any significant interruptions or delays in third-party service and access could result in limited capacity, reduced demand, and loss of customers and adversely affect our business.
The majority of our 2023 sales were made pursuant to our qualifying contract under the Federal Supply Schedule or FSS, which was secured by us in December 2018, as well as open market sales to individual facilities within the government channels. The initial term of our FSS contract was scheduled to expire on January 15, 2024.
The majority of our 2024 sales were made pursuant to our qualifying contract under the Federal Supply Schedule or FSS, which was secured by us in December 2018, 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.
We and our legal advisors strive to regularly keep abreast of all relevant developments in the statutory, administrative, and decisional laws, on federal and, where applicable, state levels, that which influence or inform our general wellness products-related development, marketing, promotion, distribution, and sale, among other activities.
We and our legal advisors strive to regularly keep abreast of all relevant developments in the statutory, administrative, and decisional laws, on federal and, where applicable, state levels, that influence or inform our general wellness products-related development, marketing, promotion, distribution, and sale, among other activities.
Based on information currently available, we are unable to determine the reasonable probability of loss or a range of potential loss, and accordingly, we have not established an accrual for potential losses, if any, that could result from any unfavorable outcome, and there can be no assurance that these litigation matters, as well as any other lawsuits that might be brought by stockholders, will not result in substantial defense costs and/or judgments or settlements that could have a materially adverse impact on our financial position, results of operations and cash flows. 75 We have broad discretion to determine how to use most of our financial resources and may use them in ways that may not enhance our operating results or the price of our common stock.
Based on information currently available, we are unable to determine the reasonable probability of loss or a range of potential loss, and accordingly, we have not established an accrual for potential losses, if any, that could result from any unfavorable outcome, and there can be no assurance that these litigation matters, as well as any other lawsuits that might be brought by stockholders, will not result in substantial defense costs and/or judgments or settlements that could have a materially adverse impact on our financial position, results of operations and cash flows. 78 We have broad discretion to determine how to use most of our financial resources and may use them in ways that may not enhance our operating results or the price of our common stock.
The number and sales productivity of the consultants could be harmed by several factors, including: • any adverse publicity regarding us, our products, our distribution channel, or our competitors; • non-compliance by our independent consultants with applicable legal requirements or our policies and procedures; • lack of interest in existing or new products or their failure to achieve desired sales results; • lack of a compelling business opportunity sufficient to generate the interest and commitment of new independent consultants; • any changes we might make to our independent consultant sales compensation plan; • any negative public perception of our company or our products; • any negative public perception of our independent consultants; • our actions to enforce our policies and procedures; • any efforts to sell our products through competitive channels; • any regulatory actions or charges against us or others in our industry; and • general economic and business conditions.
The number and sales productivity of the contractors could be harmed by several factors, including: • any adverse publicity regarding us, our products, our distribution channel, or our competitors; • non-compliance by our independent consultants with applicable legal requirements or our policies and procedures; • lack of interest in existing or new products or their failure to achieve desired sales results; • lack of a compelling business opportunity sufficient to generate the interest and commitment of new independent contractors; • any changes we might make to our independent contractors sales compensation plan; • any negative public perception of our company or our products; • any negative public perception of our independent contractors; • our actions to enforce our policies and procedures; • any efforts to sell our products through competitive channels; • any regulatory actions or charges against us or others in our industry; and • general economic and business conditions.
We have incurred significant costs in an effort to detect and prevent security breaches and incidents, and we may face increased costs and requirements to expend substantial resources in the event of an actual or perceived security breach or incident and to comply with this new SEC cyber security rule. 54 Certain U.S. and foreign laws, such as the federal Health Insurance Portability and Accountability Act of 1996 (or HIPAA), govern the transmission, security, and privacy of individually identifiable information and sensitive health and other personal information that we may obtain or have access to in connection with the operation of our business, including the conduct of clinical research trials or other research studies that may provide us with access to this information.
We have incurred significant costs in an effort to detect and prevent security breaches and incidents, and we may face increased costs and requirements to expend substantial resources in the event of an actual or perceived security breach or incident and to comply with this new SEC cyber security rule. 57 Certain U.S. and foreign laws, such as the federal Health Insurance Portability and Accountability Act of 1996 (or HIPAA), govern the transmission, security, and privacy of individually identifiable information and sensitive health and other personal information that we may obtain or have access to in connection with the operation of our business, including the conduct of clinical research trials or other research studies that may provide us with access to this information.
We recently launched new cash pay initiatives, including our gConcierge and g CDirect programs, as well as our direct-to-consumer business channel and patients, providers or consumers may be slow to adopt these programs or their pricing which could adversely impact our business and financial results.
We launched new cash pay initiatives, including our gConcierge and g CDirect programs, as well as our direct-to-consumer business channel and patients, providers or consumers may be slow to adopt these programs or their pricing which could adversely impact our business and financial results.
Specifically, we may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations, or that are not covered by the terms and conditions of our insurance policies, and we may not have, or be able to obtain, sufficient capital to pay such amounts.
Specifically, we may have to pay any amount awarded by a court or negotiated in a settlement that exceed our coverage limitations, or that are not covered by the terms and conditions of our insurance policies, and we may not have, or be able to obtain, sufficient capital to pay such amounts.
Separate and apart from our legal and compliance functions and external advisors, we maintain internal controls and policies and procedures that militate against compliance risk in our general wellness line of business and train and educate our sales agents and other personnel on subject matter pertinent to compliance with relevant law in various jurisdictions. 65 Our failure to comply with U.S. federal, state, and foreign governmental regulations could lead to the issuance of warning letters or untitled letters, the imposition of injunctions, suspensions or loss of regulatory clearance or approvals, product recalls, termination of distribution, product seizures, or civil penalties.
Separate and apart from our legal and compliance functions and external advisors, we maintain internal controls and policies and procedures that militate against compliance risk in our general wellness line of business and train and educate our sales agents and other personnel on subject matter pertinent to compliance with relevant law in various jurisdictions. 68 Our failure to comply with U.S. federal, state, and foreign governmental regulations could lead to the issuance of warning letters or untitled letters, the imposition of injunctions, suspensions or loss of regulatory clearance or approvals, product recalls, termination of distribution, product seizures, or civil penalties.
Approved PMAs can include post-approval conditions and post-market surveillance requirements, analogous to some of the special controls that may be imposed on Class II devices. 5 Before being introduced into the U.S. market, our medical devices must obtain marketing clearance or approval from FDA through the 510(k) pre-market notification process, the de novo classification process (summarized below under De Novo Classification Process), or the PMA process, unless they are determined to be Class I devices or to otherwise qualify for an exemption from one of these available forms of pre-market review and authorization by the FDA.
Approved PMAs can include post-approval conditions and post-market surveillance requirements, analogous to some of the special controls that may be imposed on Class II devices. 6 Before being introduced into the U.S. market, our medical devices must obtain marketing clearance or approval from FDA through the 510(k) pre-market notification process, the de novo classification process (summarized below under De Novo Classification Process), or the PMA process, unless they are determined to be Class I devices or to otherwise qualify for an exemption from one of these available forms of pre-market review and authorization by the FDA.
Additionally, advancing this novel platform creates significant challenges for us, including: 21 • training a sufficient number of medical personnel on how to properly administer our product; • enrolling sufficient numbers of patients in future clinical trials; • manufacturing our products on a large scale and in a cost-effective manner; • submitting applications for and obtaining regulatory approval, as the FDA and other regulatory authorities have limited experience with commercial development of our product platform for treating pain; and • establishing sales and marketing capabilities as well as developing a manufacturing process and distribution network to support the commercialization of any approved products.
Additionally, advancing this novel platform creates significant challenges for us, including: 24 • training a sufficient number of medical personnel on how to properly administer our product; • enrolling sufficient numbers of patients in future clinical trials; • manufacturing our products on a large scale and in a cost-effective manner; • submitting applications for and obtaining regulatory approval, as the FDA and other regulatory authorities have limited experience with commercial development of our product platform for treating pain; and • establishing sales and marketing capabilities as well as developing a manufacturing process and distribution network to support the commercialization of any approved products.
Regulatory Clearances Prescription gammaCore, which is our prescription only, handheld device intended for regular or intermittent use over many years, is cleared by the FDA for use in the following indications: • The acute treatment of pain associated with episodic cluster headache ; • The acute treatment of pain associated with migraine headache; • Adjunctive use for the preventive treatment of cluster headache in adult patients; • The preventive treatment of migraine headache in adult patients; • The use of gammaCore by adolescent patients (between 12 and 17 years of age); and • Treatment of h emicrania c ontinua and paroxysmal hemicrania in adult patients. 3 The FDA clearances of our prescription gammaCore therapy to treat headache were facilitated by the FDA's creation of a new regulatory category: External Vagus Nerve Stimulator for Headache (21 CFR 882-5892).
Regulatory Clearances Prescription gammaCore, which is our prescription only, handheld device intended for regular or intermittent use over many years, is cleared by the FDA for use in the following indications: • The acute treatment of pain associated with episodic cluster headache ; • The acute treatment of pain associated with migraine headache; • Adjunctive use for the preventive treatment of cluster headache in adult patients; • The preventive treatment of migraine headache in adult patients; • The use of gammaCore by adolescent patients (between 12 and 17 years of age); and • Treatment of h emicrania c ontinua and paroxysmal hemicrania in adult patients. 4 The FDA clearances of our prescription gammaCore therapy to treat headache were facilitated by the FDA's creation of a new regulatory category: External Vagus Nerve Stimulator for Headache (21 CFR 882-5892).
There is no assurance that we will have sufficient cash flow and liquidity to fund our planned activities. As a result, we will need to seek additional funds in the future or curtail or forgo some or all of such activities.
There is no assurance that we will have sufficient cash flow and liquidity to fund our planned activities. As a result, we may need to seek additional funds in the future or curtail or forgo some or all of such activities.
Other Regulations We may also be subject to healthcare fraud and abuse regulation in the jurisdictions in which we will conduct our business. These laws include, without limitation, applicable anti-kickback, false claims, transparency and patient privacy and security laws and regulations.
Other Regulations We may also be subject to healthcare fraud and abuse regulation in the jurisdictions in which we conduct our business. These laws include, without limitation, applicable anti-kickback, false claims, transparency and patient privacy and security laws and regulations.
Our lack of sufficient liquidity could make it more difficult for us to secure additional financing terms acceptable to us, if at all, and may materially and adversely affect the terms of any financing that we may obtain and our stock price generally.
Our lack of consistent sufficient liquidity could make it more difficult for us to secure additional financing terms acceptable to us, if at all, and may materially and adversely affect the terms of any financing that we may obtain and our stock price generally.
For example: • others may be able to develop products that are similar to, or better than, ours in a way that is not covered by the claims of our patents; • we might not have been the first to conceive of or reduce to practice the inventions covered by our patents or pending patent applications; • we might not have been the first to file patent applications for our inventions; • any patents that we obtain may not provide us with any competitive advantages or may ultimately be found invalid or unenforceable; or • we may not develop additional proprietary technologies that are patentable. 46 We may become involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming, and unsuccessful.
For example: • others may be able to develop products that are similar to, or better than, ours in a way that is not covered by the claims of our patents; • we might not have been the first to conceive of or reduce to practice the inventions covered by our patents or pending patent applications; • we might not have been the first to file patent applications for our inventions; • any patents that we obtain may not provide us with any competitive advantages or may ultimately be found invalid or unenforceable; or • we may not develop additional proprietary technologies that are patentable. 49 We may become involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming, and unsuccessful.
We are cooperating with a variety of Investigator Initiated Trials (“IIT”) to evaluate additional indications and/or markets for our products. If successful, we believe these trials will provide marketing support for future expansion of our business to new indications and markets.
We are cooperating with a variety of Investigator Initiated Trials (“IIT”) to evaluate additional indications and/or markets for our products. If successful, we believe these trials will provide marketing support for future expansion of our business into new indications and markets.
These and other foregone benefits of a FCT may negatively impact our financial condition and our business. If we are unable to enroll patients in future clinical trials, our research and development efforts could be adversely affected.
These and other foregone benefits of a FCT may negatively impact our financial condition and our business. 29 If we are unable to enroll patients in future clinical trials, our research and development efforts could be adversely affected.
These delays could result in increased costs, delays in advancing our product development, delays in testing the effectiveness of our technology, or termination of clinical trials altogether. 25 We cannot predict how successful we will be at enrolling patients in future clinical trials.
These delays could result in increased costs, delays in advancing our product development, delays in testing the effectiveness of our technology, or termination of clinical trials altogether. We cannot predict how successful we will be at enrolling patients in future clinical trials.
As described in Item 3 . Legal Proceedings, we and certain of our present and past directors and officers have been named in putative securities class action lawsuits alleging violations of the Securities Act of 1933 ( “ Securities Act ” ) and the Securities Exchange Act of 1934 ( “ Exchange Act ” ).
As described in Item 3 . Legal Proceedings, we and certain of our present and past directors and officers have been named in putative securities class action lawsuits alleging violations of the Securities Act of 1933 ( “ Securities Act ” ) and the Securities Exchange Act of 1934, as amended ( “ Exchange Act ” ).
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.
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.
The TCJA, as amended by the CARES Act, also provides that NOLs from tax years that began after December 31, 2017 may offset no more than 80% of current taxable income annually for taxable years beginning after December 31, 2020. 74 Risks Related to Our Common Stock Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common stock and our ability to access the capital markets.
The TCJA, as amended by the CARES Act, also provides that NOLs from tax years that began after December 31, 2017 may offset no more than 80% of current taxable income annually for taxable years beginning after December 31, 2020. 77 Risks Related to Our Common Stock Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common stock and our ability to access the capital markets.
Our capabilities include product development, regulatory affairs and compliance, sales and marketing, product testing, assembly, fulfillment, and customer support. We derive revenues from the sale of products in the United States and select overseas markets.
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.
Continuing to develop or enhance commercial-scale manufacturing facilities could require the investment of substantial additional funds and the hiring and retention of additional management, quality assurance, quality control, and technical personnel who have the necessary manufacturing experience. 42 The scaling of manufacturing capacity is subject to numerous risks and uncertainties and may lead to variability in product quality or reliability and increased construction timelines and resources required to design, install, and maintain manufacturing equipment, among others, all of which can lead to unexpected delays in manufacturing output.
Continuing to develop or enhance commercial-scale manufacturing facilities could require the investment of substantial additional funds and the hiring and retention of additional management, quality assurance, quality control, and technical personnel who have the necessary manufacturing experience. 45 The scaling of manufacturing capacity is subject to numerous risks and uncertainties and may lead to variability in product quality or reliability and increased construction timelines and resources required to design, install, and maintain manufacturing equipment, among others, all of which can lead to unexpected delays in manufacturing output.
If any such event were to occur, our medical devices and wellness products, including the launch and use our next generation Truvaga app-enabled consumer product, could be impaired and our business, financial condition and results of operations may be materially and adversely affected. 57 Failure to protect our information technology infrastructure against cyber attacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business and operating results.
If any such event were to occur, our medical devices and wellness products, including the launch and use our next generation Truvaga app-enabled consumer product, could be impaired and our business, financial condition and results of operations may be materially and adversely affected. 60 Failure to protect our information technology infrastructure against cyber attacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business and operating results.
Delays could occur based on a number of issues, including the need to investigate third party patents and potential infringement matters, which could impair our development and commercialization efforts. 43 We may in the future become involved in lawsuits to protect or enforce our intellectual property, which could be expensive and time consuming, and ultimately unsuccessful, and could result in the diversion of significant resources, thereby hindering our ability to effectively commercialize our existing or future products.
Delays could occur based on a number of issues, including the need to investigate third party patents and potential infringement matters, which could impair our development and commercialization efforts. 46 We may in the future become involved in lawsuits to protect or enforce our intellectual property, which could be expensive and time consuming, and ultimately unsuccessful, and could result in the diversion of significant resources, thereby hindering our ability to effectively commercialize our existing or future products.
Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, we may be unable to anticipate these incidents or techniques, timely discover them, or implement adequate preventative measures. 55 Additionally, in response to the onset of the COVID-19 pandemic, we modified our business practices to adopt hybrid and remote workplace models for many of our employees.
Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, we may be unable to anticipate these incidents or techniques, timely discover them, or implement adequate preventative measures. 58 Additionally, in response to the onset of the COVID-19 pandemic, we modified our business practices to adopt hybrid and remote workplace models for many of our employees.
The loss of our “ emerging growth company ” status and compliance with these additional internal control and auditor attestation requirements will require management to expend additional time while also condensing the time frame available to comply with SEC reporting requirements, which may further increase our legal and financial compliance costs. 79 Our stock price may be volatile, and you may not be able to resell shares of our common stock at or above the price you paid.
The loss of our “ emerging growth company ” status and compliance with these additional internal control and auditor attestation requirements will require management to expend additional time while also condensing the time frame available to comply with SEC reporting requirements, which may further increase our legal and financial compliance costs. 82 Our stock price may be volatile, and you may not be able to resell shares of our common stock at or above the price you paid.
We have experienced significant net losses, and we expect to continue to incur losses for the foreseeable future while we operate our sales and marketing infrastructure, endeavor to increase acceptance of our prescription gammaCore therapy and develop our human performance and general wellness product line in relevant markets, fund our various research and development activities, and obtain regulatory clearance or approval for other products or indications in the United States and internationally.
We have experienced significant net losses, and we may continue to incur losses for the foreseeable future while we operate our sales and marketing infrastructure, endeavor to increase acceptance of our prescription gammaCore therapy and develop our general wellness and human performance product line in relevant markets, fund our various research and development activities, and obtain regulatory clearance or approval for other products or indications in the United States and internationally.
Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories in which we have patent protection that may not be sufficient to terminate infringing activities. 45 Furthermore, we cannot guarantee that any patents will be issued from any pending or future owned or licensed patent applications, or that any current or future patents will provide us with any meaningful protection or competitive advantage.
Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories in which we have patent protection that may not be sufficient to terminate infringing activities. 48 Furthermore, we cannot guarantee that any patents will be issued from any pending or future owned or licensed patent applications, or that any current or future patents will provide us with any meaningful protection or competitive advantage.
If we cannot obtain all necessary licenses on commercially reasonable terms, our customers may be forced to stop using our products or services. 48 Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
If we cannot obtain all necessary licenses on commercially reasonable terms, our customers may be forced to stop using our products or services. 51 Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
Thus, we may not be able to stop a competitor from marketing and selling in foreign countries products and services that are the same as or similar to our products and services, and our competitive position in the international market would be harmed. 50 We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our products.
Thus, we may not be able to stop a competitor from marketing and selling products and services in foreign countries that are the same as or similar to our products and services, and our competitive position in the international market would be harmed. 53 We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our products.
Failure to receive clearance or approval for our new products would have an adverse effect on our ability to expand our business. 66 Even if our products are cleared or approved by regulatory authorities, if we or our manufacturers, or suppliers fail to comply with ongoing FDA or other foreign regulatory authority requirements, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market.
Failure to receive clearance or approval for our new products would have an adverse effect on our ability to expand our business. 69 Even if our products are cleared or approved by regulatory authorities, if we or our manufacturers, or suppliers fail to comply with ongoing FDA or other foreign regulatory authority requirements, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market.
The content reflected on any website reflected in this Form 10-K is not incorporated by reference herein unless expressly noted. 10 Item 1 A. Risk Factors.
The content reflected on any website reflected in this Form 10-K is not incorporated by reference herein unless expressly noted. 11 Item 1 A. Risk Factors.
Any payment delays or disputes in our relationship with Lovell could have an adverse effect on our results of operations and financial condition. 19 Third-party payors have been resistant to cover gammaCore through pharmacy benefit plans, which has hindered our commercialization strategy and required changes to our existing business that could delay and negatively impact our ability to generate revenue.
Any payment delays or disputes in our relationship with Lovell could have an adverse effect on our results of operations and financial condition. 22 Third-party payors have been resistant to cover gammaCore through pharmacy benefit plans, which has hindered our commercialization strategy and required changes to our existing business that could delay and negatively impact our ability to generate revenue.
While this would provide coverage for the therapy under a patient’s medical insurance, patients may be unwilling to pay out of pocket for deductibles and co-pays for the therapy.
While this would provide coverage for the therapy under a patient’s medical insurance, patients may be unwilling to pay out of pocket for deductibles and co-pay for the therapy.
If we fail to successfully promote, expand, and maintain our brands, or if we incur substantial expenses in an unsuccessful attempt to promote, expand, and maintain our brands, nVNS platform technology may not be accepted by physicians and consumers, which would adversely affect our business, results of operations, and financial condition. 33 We may face product liability claims that could result in costly litigation and significant liabilities.
If we fail to successfully promote, expand, and maintain our brands, or if we incur substantial expenses in an unsuccessful attempt to promote, expand, and maintain our brands, nVNS platform technology may not be accepted by physicians and consumers, which would adversely affect our business, results of operations, and financial condition. 37 We may face product liability claims that could result in costly litigation and significant liabilities.
We recently launched our TAC-STIM branded products for human performance within the active-duty military channel. Funding for purchases of TAC-STIM product is subject to governmental budgetary decisions and any spending cuts may negatively impact the timing or amounts of sales to these customers, which could result in lost sales and harm our business and operation results.
We recently launched our TAC-STIM branded products for human performance within the active-duty military channel. Funding for purchases of TAC-STIM product is subject to governmental budgetary decisions and any spending cuts or government policies may negatively impact the timing or amounts of sales to these customers, which could result in lost sales and harm our business and operation results.
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Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
74 edited+41 added−60 removed59 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
74 edited+41 added−60 removed59 unchanged
2023 filing
2024 filing
Biggest changeEmerging 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. 90 Results of Operations Comparison of the years ended December 31, 2023 and 2022 The following table summarizes our results of operations for the years ended December 31, 2023 and 2022 with the changes in those items in dollars.
Biggest changeResults 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.
We have two principal product categories: • Handheld, personal use medical devices for the management and treatment of certain medical conditions such as primary headache; and • 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.
We have two principal product categories: • Handheld, personal use medical devices for the management and treatment of certain medical conditions such as primary headache; and • 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.
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.
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.
Financing Activities 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.
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.
See “Risk Factors — Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business strategy and operating results.” As cybersecurity threats become more frequent, sophisticated, and coordinated, it is reasonably likely that we may expend greater resources to continue to modify and enhance protective measures against such security risks.
See also “Risk Factors — Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business strategy and operating results.” As cybersecurity threats become more frequent, sophisticated, and coordinated, it is reasonably likely that we may expend greater resources to continue to modify and enhance protective measures against such security risks.
The complaint purports to allege claims against the defendants for violating Section 14 (a) of the Exchange Act and breaching fiduciary duties. The complaint seeks unspecified compensatory damages, interest, costs and attorneys’ fees; declaratory relief; and an order requiring changes to corporate governance and internal procedures and a vote on proposed amendments to the Bylaws and Certificate of Incorporation.
The complaint purports to allege claims against the defendants for violating Section 14 (a) of the Exchange Act and breaching fiduciary duties. The complaint seeks unspecified compensatory damages, interest, costs and attorneys’ fees; declaratory relief; and an order requiring changes to corporate governance and internal procedures and a vote on proposed amendments to our Bylaws and Certificate of Incorporation.
The Priewe case was voluntarily dismissed on February 19, 2020. 83 In the Turnofsky case, on November 25, 2019, several plaintiffs and their counsel moved to be selected as lead plaintiff and lead plaintiff’s counsel. On April 24, 2020, the Court granted the motion of Carole Tibbs and the firm Bragar, Eagel & Squire, P.C.
The Priewe case was voluntarily dismissed on February 19, 2020. In the Turnofsky case, on November 25, 2019, several plaintiffs and their counsel moved to be selected as lead plaintiff and lead plaintiff’s counsel. On April 24, 2020, the Court granted the motion of Carole Tibbs and the firm Bragar, Eagel & Squire, P.C.
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.
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.
The complaint seeks unspecified compensatory damages, interest, costs and attorneys’ fees; declaratory relief; and an order requiring changes to corporate governance and internal procedures and a vote on proposed amendments to the Bylaws and Certificate of Incorporation.
The complaint seeks unspecified compensatory damages, interest, costs and attorneys’ fees; declaratory relief; and an order requiring changes to corporate governance and internal procedures and a vote on proposed amendments to our Bylaws and Certificate of Incorporation.
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.
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.
Our capabilities include product development, regulatory affairs and compliance, sales and marketing, product testing, assembly, fulfillment, and customer support. We derive revenues from the sale of products in the United States and select overseas markets.
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.
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.
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.
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. 94 Item 7 A. Quantitative and Qualitative Disclosures About Market Risk .
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. 95 Item 7 A. Quantitative and Qualitative Disclosures About Market Risk .
We are subject to fluctuations in foreign currency rates in connection with these agreements. We do not hedge our foreign currency exchange rate risk. All of the potential changes noted above are based on sensitivity analyses performed on our financial position as of December 31, 2023. Item 8 . Financial Statements and Supplementary Data.
We are subject to fluctuations in foreign currency rates in connection with these agreements. We do not hedge our foreign currency exchange rate risk. All of the potential changes noted above are based on sensitivity analyses performed on our financial position as of December 31, 2024 . Item 8 . Financial Statements and Supplementary Data.
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 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 will expire five years after they become exercised.
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.
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.
As required by Rule 13 a- 15 (b) of the Exchange Act, an evaluation as of December 31, 2023 , was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13 a- 15 (e) under the Exchange Act).
As required by Rule 13 a- 15 (b) of the Exchange Act, an evaluation as of December 31, 2024 , was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13 a- 15 (e) under the Exchange Act).
We may in the future add new facilities or expand or relinquish existing facilities as our needs evolve, and we believe that should the need arise, suitable additional or substitute space will be available as needed to accommodate any expansion of our operations. Item 3 .
We may in the future add new facilities or expand or relinquish existing facilities as our needs evolve, and we believe that should the need arise, suitable additional or substitute space will be available as needed to accommodate any expansion of our operations.
The financial statements required to be filed pursuant to this Item 8 are appended to this Annual Report. An index of those financial statements is found in Item 15 . Item 9 . Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 95 Item 9 A.
The financial statements required to be filed pursuant to this Item 8 are appended to this Annual Report. An index of those financial statements is found in Item 15 . Item 9 . Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 96 Item 9 A.
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.
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.
The Company expenses associated legal fees including those relating to the stockholder litigation described in this Item 3 in the period they are incurred. Item 4 . Mine Safety Disclosures Not applicable. 84 PAR T II Item 5 .
The Company expenses associated legal fees including those relating to the stockholder litigation described in this Item 3 in the period they are incurred. Item 4 . Mine Safety Disclosures Not applicable. 87 PAR T II Item 5 .
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 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.
As of December 31, 2023, our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework ( 2013 ).
As of December 31, 2024 , our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework ( 2013 ).
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.
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.
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 2024.
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 .
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.
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.
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 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.
If the U.S. dollar uniformly increased or decreased in strength by 10% relative to the foreign currencies in which our sales were denominated, our net income would have correspondingly increased or decreased by an immaterial amount for the year ended December 31, 2023 .
If the U.S. dollar uniformly increased or decreased in strength by 15 % relative to the foreign currencies in which our sales were denominated, our net income would have correspondingly increased or decreased by an immaterial amount for the year ended December 31, 2024 .
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.
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 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.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the Nasdaq Market under the symbol “ECOR.” Stockholders As of March 1, 2024 , there were 346 stockholders of record, which excludes stockholders whose shares are held in nominee or street name by brokers.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the Nasdaq Capital Market under the symbol “ECOR.” Stockholders As of March 6, 2025 , there were 404 stockholders of record, which excludes stockholders whose shares are held in nominee or street name by brokers.
Our goal is to be a leader in non-invasive neuromodulation by using our proprietary nVNS platform technology 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; • Truvaga for the support of general health and wellbeing; and • TAC-STIM for human performance.
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 prescription FDA cleared medical conditions such as primary headache; • Truvaga for the support of general health and wellbeing; and • TAC-STIM for human performance.
Item 1C. Cybersecurity Risk management and strategy Managing Material Risks & Integrated Overall Risk Management We are developing processes, including those intended to follow an internal Information Technology (IT) Security Policy, which seek to assess, identify, and manage material risks from cybersecurity threats to the IT systems and information that we create, use, transmit, receive, and maintain.
Cybersecurity Risk management and strategy Managing Material Risks & Integrated Overall Risk Management We have developed and continue to develop processes , including those intended to follow an internal Information Technology (IT) Security Policy, which seek to assess, identify, and manage material risks from cybersecurity threats to the IT systems and information that we create, use, transmit, receive, and maintain.
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.
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 years.
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 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.
See “Liquidity Outlook.” 87 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.
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.
(See, “Item 8 – Notes to consolidated financial statements – Note 2 - Basis of Presentation”). 85 Overview 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. nVNS modulates neurotransmitters through its effects on both the peripheral and central nervous systems.
(See, “Item 8 – Notes to consolidated financial statements – Note 2 - Basis of Presentation”). 88 Overview 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.
The following table sets forth our channel net sales: (in thousands) Years ended December 31, Channel 2023 2022 Rx gammaCore - Department of Veteran Affairs and Department of Defense $ 9,636 $ 5,099 Rx gammaCore - U.S.
The following table sets forth our channel net sales: (in thousands) Years ended December 31, Channel 2024 2023 Rx gammaCore - U.S. Department of Veteran Affairs $ 17,788 $ 9,636 Rx gammaCore - U.S.
Changes in Internal Control over Financial Reporting Except for our remediation efforts describes above, there was no change in our internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the three months ended December 31, 2023 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting as such term is defined in Rules 13 a- 15 (f) and 15 d- 15 (f) under the Exchange Act, that occurred during the three months ended December 31, 2024 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
December 31, (in thousands) 2023 2022 Net cash (used in) provided by Operating activities $ ( 14,668 ) $ ( 16,645 ) Investing activities $ ( 206 ) $ — Financing activities $ 7,487 $ — Operating Activities Net cash used in operating activities was $ 14.7 million and $ 16.6 million for the years ended December 31, 2023 and 2022 , respectively.
December 31, (in thousands) 2024 2023 Net cash (used in) provided by Operating activities $ ( 6,948 ) $ ( 14,668 ) Investing activities $ ( 8,519 ) $ ( 206 ) Financing activities $ 8,439 $ 7,487 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.
A stipulation to that effect was filed by the plaintiffs on April 14, 2021, and ordered by the court on April 30, 2021. On June 9, 2023, the cases were administratively dismissed without prejudice. We intend to continue to vigorously defend itself in these matters.
A stipulation to that effect was filed by the plaintiffs on April 14, 2021, and ordered by the court on April 30, 2021. On June 9, 2023, the cases were administratively dismissed without prejudice. The Company has and intends to the extent necessary to continue to vigorously defend itself if these matters are revived.
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.
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.
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. 92 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 .
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. 93 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 .
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of December 31, 2023 , were not effective for the reasons stated below.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of December 31, 2024 , were effective.
As of December 31, 2023, we have approximately $67.7 million remaining for potential issuance under the 2022 Shelf Registration Statement.
As of December 31, 2024, we have approximately $46.2 million remaining for potential issuance under the 2022 Shelf Registration Statement (as defined below).
Based on this evaluation, our management concluded that, as of December 31, 2023 our internal control over financial reporting was not effective for the reason stated in the following paragraph.
Based on this evaluation, our management concluded that, as of December 31, 2024 our internal control over financial reporting was effective.
In 2024, we plan on continuing to make targeted investments in sales and marketing to support our commercial efforts, particularly around sales and marketing efforts across all major U.S. channels.
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. channels.
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. Investing Activities 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.
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.
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. We believe there may be significant opportunities beyond these two areas.
In 2025, we expect NICE to review the guidance document and any changes in recommendation or pricing may adversely impact our ability to work with NHS England on the MTFM program and could have an adverse impact on our financial results.
Research and Development Research and development expense of $ 5.3 m illion for the year ended December 31, 2023 decreased by $ 0.2 million.
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.
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.
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 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.
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.
We expect that the majority of 2024 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.
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 the Federal Supply Schedule.
The Audit Committee reports to the Board as necessary with respect to its activities, including making such reports and recommendations to the Board as it deems necessary and appropriate. 82 Management’s Role Managing Risk The role of the Chief Information Security Officer (CISO) has been assigned to our VP, Information Technology, who has 20 years of IT experience and reports to the CFO.
Management’s Role Managing Risk The role of the Chief Information Security Officer (CISO) has been assigned to our VP, Information Technology, who has more than 20 years of IT experience and reports to the CFO. The CISO and the CFO inform the Audit Committee on cybersecurity risks.
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.
See also “Liquidity Outlook.” 90 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.
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.
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.
The plaintiffs each seek to represent a class of stockholders who (i) purchased the Company’s common stock in the IPO or whose purchases are traceable to the IPO, or (ii) who purchased common stock between the IPO and September 25, 2019.
In addition to the Company, the defendants include present and past directors and officers, and Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities LLC and BTIG, LLC, the underwriters for the IPO. 86 The plaintiffs each seek to represent a class of stockholders who (i) purchased the Company’s common stock in the IPO or whose purchases are traceable to the IPO, or (ii) who purchased common stock between the IPO and September 25, 2019.
Even if we are able to increase sales of our products, we may not become profitable. 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.
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.
Years ended December 31, (in thousands) 2023 2022 Change Net sales $ 16,030 $ 8,592 $ 7,438 Cost of goods sold 2,804 1,616 1,188 Gross profit 13,226 6,976 6,250 Gross margin 83% 81% Operating expenses: Research and development 5,321 5,520 ( 199 ) Selling, general and administrative 27,174 24,330 2,844 Total operating expenses 32,495 29,850 2,645 Loss from operations ( 19,269 ) ( 22,874 ) 3,605 Other (income) expense: Interest and other income ( 433 ) ( 287 ) ( 146 ) Other expense 184 6 178 Total other (income) expense ( 249 ) ( 281 ) 32 Loss before income taxes ( 19,020 ) ( 22,593 ) 3,573 Benefit from income taxes 186 431 ( 245 ) Net loss $ ( 18,834 ) $ ( 22,162 ) $ 3,328 Net Sales Net sales for the year ended December 31, 2023 increased 87% as compared to the year ended December 31, 2022 .
Years ended December 31, (in thousands) 2024 2023 Change Net sales $ 25,182 $ 16,030 $ 9,152 Cost of goods sold 3,785 2,804 981 Gross profit 21,397 13,226 8,171 Gross margin 85% 83% Operating expenses: Research and development 2,360 5,321 ( 2,961 ) Selling, general and administrative 31,199 27,174 4,025 Total operating expenses 33,559 32,495 1,064 Loss from operations ( 12,162 ) ( 19,269 ) 7,107 Other (income) expense: Interest and other income ( 572 ) ( 433 ) ( 139 ) Other expense 389 184 205 Total other (income) expense ( 183 ) ( 249 ) 66 Loss before income taxes ( 11,979 ) ( 19,020 ) 7,041 Benefit from income taxes 93 186 ( 93 ) Net loss $ ( 11,886 ) $ ( 18,834 ) $ 6,948 Net Sales Net sales for the year ended December 31, 2024 increased 57% as compared to the year ended December 31, 2023 .
Commercial 1,797 1,735 Outside the United States 1,821 1,618 Truvaga 1,027 15 TAC-STIM 1,749 125 $ 16,030 $ 8,592 91 Gross Profit Gross profit in creased $ 6.3 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 .
Commercial 1,536 1,797 Outside the United States 1,850 1,821 Truvaga 2,811 1,027 TAC-STIM 1,197 1,749 $ 25,182 $ 16,030 92 Gross Profit 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.
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.
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.
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.
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.
The CISO and the CFO inform the Audit Committee on cybersecurity risks. They provide briefings to the Audit Committee on no less than an annual basis or on an ad hoc basis when needed.
They provide briefings to the Audit Committee on no less than an annual basis or on an ad hoc basis when needed. These briefings encompass: • Evaluation of existing cybersecurity risks; • Status of ongoing cybersecurity initiatives and strategies from the cybersecurity roadmap ; and • Incident reports and learnings from cybersecurity events. Item 2 .
Our TAC-STIM product is not a medical device and is not intended to diagnose, cure, mitigate, prevent, or treat a disease or condition. 86 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 . 89 The VA comprised 70.6 % of our revenue during the year ended December 31, 2024 .
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.
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.
Furthermore, significant cybersecurity matters, and strategic risk management decisions are escalated to the Board of Directors, which has oversight and may provide guidance on critical cybersecurity issues. Item 2 . Properties Our principal office is approximately 22,557 square feet of office, warehouse and assembly space in Rockaway, New Jersey pursuant to a lease that expires in 2034 .
Furthermore, significant cybersecurity matters, and strategic risk management decisions are escalated to the Board of Directors, which has oversight and may provide guidance on critical cybersecurity issues.
We expect our research and development expense to decrease in 2024 with the launch of our next generation therapies. Selling, General and Administrative Selling, general and administrative expense of $ 27.2 million for the year ended December 31, 2023 increased by $ 2.8 million compared to $ 24.3 million for the previous 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.
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 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.
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.
Since the spring of 2020 , most of our employees have conducted business remotely. Management believes our facilities in Rockaway are currently suitable for their intended use.
Properties Our principal office is approximately 22,557 square feet of office, warehouse and assembly space in Rockaway, New Jersey pursuant to a lease that expires in 2034 . Since the spring of 2020 , many of our employees have conducted business remotely. Management believes our facilities in Rockaway are currently suitable for their intended use.
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 .
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 . In 2025, we plan on continued use of this program.
The VA comprised 60.1% of our revenue during the year ended December 31, 2023. 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.
These briefings encompass: • Evaluation of existing cybersecurity risks; • Status of ongoing cybersecurity initiatives and strategies from the cybersecurity roadmap; and • Incident reports and learnings from cybersecurity events. Risk Management Personnel Management’s role in assessing, monitoring and managing our material cybersecurity risks is primarily the responsibility of our CISO, reporting to our CFO.
The Audit Committee reports to the Board as necessary with respect to its activities, including making such reports and recommendations to the Board as it deems necessary and appropriate. 85 Risk Management Personnel Management’s role in assessing, monitoring and managing our material cybersecurity risks is primarily the responsibility of our CISO, reporting to our CFO.
The appellees’ brief was filed on February 15, 2024, and appellant’s reply brief is due on or before March 15, 2024. Argument of the motion has not yet been scheduled. On March 4, 2021, purported stockholder Richard Maltz brought a purported stockholder derivative action in the United States District Court for the District of New Jersey.
The Plaintiffs did not move for rehearing, and the mandate of the Court of Appeals has issued. The plaintiffs did not pursue any further appeal and the time to do has now expired. On March 4, 2021, purported stockholder Richard Maltz brought a purported stockholder derivative action in the United States District Court for the District of New Jersey.
Our expected cash requirements for the next 12 months and beyond are based on the commercial success of our products and our ability to control operating expenses. There are significant risks and uncertainties as to our ability to achieve these operating results.
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.
Item 9 B. Other Information On March 8, 2024, the Board appointed Charles S. Theofilos, M.D., to serve as a member of the Compensation Committee and the Nominating and Governance Committee. Item 9 C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 97 PAR T III
Item 9 C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 97 PAR T III
Removed
In addition to the Company, the defendants include present and past directors and officers, and Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities LLC and BTIG, LLC, the underwriters for the IPO.
Added
On February 6, 2024, the Company entered into an amendment to the lease agreement (the"Rockaway Amendment") to extend its Rockaway, New Jersey lease for an additional 10 years . The Rockaway Amendment was effective May 1, 2024 , and expires on July 31, 2034 , with a tenant option to renew for an additional five years .
Removed
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.
Added
The increase in the term of the lease for the existing leased property was accounted for as a lease modification, and therefore, the associated operating lease right of use assets and operating lease liabilities for the existing space were remeasured as of February 6, 2024.
Removed
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.
Added
The Rockaway Amendment also includes the expansion of leased property from 13,643 square feet to 22,557 square feet. Item 3 .
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