electroCore Inc

Previous wording

The VA/DoD comprised 72.9% of our revenue during thesix months ended June 30, 2024. The majority of our 2024 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 and through Lovell Government Services, or Lovell. The initial term of our FSS contract was scheduled to expire on January 15, 2024. We obtained modifications to the initial contract, temporarily extending the term from January 15, 2024 to September 14, 2024, while the VA/DoD Federal Supply Schedule Service reviews our follow-on offer application for a replacement FSS contract. 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.

Current wording

The VA/DoD comprised 72.9% of our revenue during thenine months ended September 30, 2024. The majority of our 2024 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 and through Lovell Government Services, or Lovell. The initial term of our FSS contract was scheduled to expire on January 15, 2024. We obtained modifications to the initial contract, temporarily extending the term from January 15, 2024 to December 14, 2024, while the VA/DoD Federal Supply Schedule Service reviews our follow-on offer application for a replacement FSS contract. 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.

Previous wording

Sales under the Med Tech Funding Mandate, or MTFM, program for cluster headache in the UK comprised 5.5% and 5.6% of our revenue during thethree and six months ended June 30, 2024, respectively. In October 2023, we were notified by NHS Supply Chain that it intends to continue to include the gammaCore device within their framework agreement, commencing March 2024 through March 2026 with our option to extend for a furthertwo years. In 2024, we expect NICE to review the guidance document and any changes in recommendation or pricing may adversely impact our ability to work with NHS England on the MTFM program.

Current wording

Sales under the Med Tech Funding Mandate, or MTFM, program for cluster headache in the UK comprised 5.1% and 5.4% of our revenue during thethree and nine months ended September 30, 2024, respectively. In October 2023, we were notified by NHS Supply Chain that it intends to continue to include the gammaCore device within their framework agreement, commencing March 2024 through March 2026 with our option to extend for a furthertwo years. In 2024, we expect NICE to review the guidance document and any changes in recommendation or pricing may adversely impact our ability to work with NHS England on the MTFM program.

Previous wording

We believe there may be significant opportunities beyond thesetwo areas. Specifically, we believe there may be a large commercial opportunity for our gammaCore medical device with additional insurance covered lives, cash pay, physician dispense, and direct-to consumer approaches, along with general 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 and beyond.

Current wording

We believe there may be large commercial opportunities for our gammaCore medical device with adoption by third-party payors, cash pay and physician dispense models, along with general 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 and beyond.

Previous wording

Netsales for thethree months ended June 30, 2024 increased 73% as compared to thethree months ended June 30, 2023. The increase of $2.6 million is due to an increase innet sales across major channels including our prescription gammaCore medical devices sold in the United States and abroad; and revenue from the sales of our nonprescription general wellness Truvaga products. We expect that the majority of our remaining 2024 fiscal year revenue will continue to come from the VA/DoD. In addition, the amount of revenue we recognize from the sale of our TAC-STIM product, however, may fluctuate significantly from quarter to quarter. See the above Overview for discussion regarding our FSS contract with the VA/DoD.

Current wording

Netsales for thethree months ended September 30, 2024 increased 45% as compared to thethree months ended September 30, 2023. The increase of $2.0 million is due to an increase innet sales across major channels including our prescription gammaCore medical devices sold in the United States and abroad; and revenue from the sales of our nonprescription general wellness Truvaga products. We expect that the majority of our remaining 2024 fiscal year revenue will continue to come from the VA/DoD. In addition, the amount of revenue we recognize from the sale of our TAC-STIM product, however, may fluctuate significantly from quarter to quarter. See the above Overview for discussion regarding our FSS contract with the VA/DoD.

Previous wording

Gross profit increased by $2.3 million for thethree months ended June 30, 2024 compared tothe three months ended June 30, 2023. Gross margin was 86% and 84% for thethree months ended June 30, 2024 and 2023, respectively. Gross profit and gross margin for the remainder of 2024 will be largely dependent on revenue levels, product mix, and any changes in the estimated useful lives of licensed devices.

Current wording

Gross profit increased by $1.6 million for thethree months ended September 30, 2024 compared tothe three months ended September 30, 2023. Gross margin was 84% and 85% for thethree months ended September 30, 2024 and 2023, respectively. Gross profit and gross margin for the remainder of 2024 will be largely dependent on revenue levels, product mix, and any changes in the estimated useful lives of licensed devices.

Previous wording

Research and development expensein the second quarter of 2024 was $0.6 million, as compared to $1.2 million in the second quarter of 2023. This decrease was primarily due to a significant reduction in investments associated with the development of our next generation of smartphone-integrated and smartphone-connected non-invasive therapies. For the remainder of 2024, we expect our research and development expense to continue to be lower than 2023.

Current wording

Research and development expensein the third quarter of 2024 was $0.5 million, as compared to $1.2 million in the third quarter of 2023. This decrease was primarily due to a significant reduction in investments associated with the development of our next generation of smartphone-integrated and smartphone-connected non-invasive therapies. For the remainder of 2024, we expect our research and development expense to continue to be lower than the comparable period in 2023.

Previous wording

Selling, general and administrative expense of $7.3 million for thethree months ended June 30, 2024 increased by $0.5 million, or 7%, as compared to $6.8 million for the previous year period. This increase was primarily due to our greater variable selling and marketing costs consistent with our increase in sales. During the remainder of 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.

Current wording

Selling, general and administrative expense of $7.6 million for thethree months ended September 30, 2024 increased by $0.9 million, or 13%, as compared to $6.7 million for the previous year period. This increase was primarily due to our greater variable selling and marketing costs consistent with our increase in sales. During the remainder of 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.

Previous wording

The following table sets forth amounts from our condensed consolidated statements of operations for thesix months ended June 30, 2024 and 2023:

Current wording

The following table sets forth amounts from our condensed consolidated statements of operations for thenine months ended September 30, 2024 and 2023:

Previous wording

Net sales increased 83% for thesix months ended June 30, 2024 compared to the prior year period. The increase of $5.3 millionis due to an increase in net sales across all major channels including the sale of our prescription gammaCore medical devices in our U.S. Department of Veteran Affairs and U.S. commercial channel, and revenue from the sales of our nonprescription Truvaga products. We expect that the majority of remaining 2024 fiscal year revenue will continue to come from our U.S. channels. The amount of revenue we recognize from the sale of our TAC-STIM product, however, may fluctuate significantly from quarter to quarter.

Current wording

Net sales increased 67% for thenine months ended September 30, 2024 compared to the prior year period. The increase of $7.3 millionis due to an increase in net sales across all major channels including the sale of our prescription gammaCore medical devices in our U.S. Department of Veteran Affairs and U.S. commercial channel, and revenue from the sales of our nonprescription Truvaga products. We expect that the majority of remaining 2024 fiscal year revenue will continue to come from our U.S. channels. The amount of revenue we recognize from the sale of our TAC-STIM product, however, may fluctuate significantly from quarter to quarter.

Previous wording

Gross profit increased $4.6 million for thesix months ended June 30, 2024 compared to the prior year. Gross margin increased to 85% for the six months ended June 30, 2024 compared to 84% for thesix months ended June 30, 2023. In recent quarters, we have sold an increasing number of longer duration therapy, resulting in a higher average selling price. Gross profit and gross margin in the remainder of 2024 will be largely dependent on revenue levels, product mix, and any changes in the estimated useful lives of licensed devices.

Current wording

Gross profit increased $6.2 million for thenine months ended September 30, 2024 compared to the prior year. Gross margin increased to 85% for the nine months ended September 30, 2024 compared to 84% for thenine months ended September 30, 2023. In recent quarters, we have sold an increasing number of longer duration therapy, resulting in a higher average selling price. Gross profit and gross margin in the remainder of 2024 will be largely dependent on revenue levels, product mix, and any changes in the estimated useful lives of licensed devices.

Previous wording

Research and development expense decreased by $1.9 million or 65% for thesix months ended June 30, 2024 compared to the prior year period. This decrease was primarily due to a significant reduction in investments associated with the development of our next generation of smartphone-integrated and smartphone-connected non-invasive therapies. For the remainder of 2024, we expect our research and development expense to continue to be lower than 2023.

Current wording

Research and development expense decreased by $2.7 million or 63% for thenine months ended September 30, 2024 compared to the prior year period. This decrease was primarily due to a significant reduction in investments associated with the development of our next generation of smartphone-integrated and smartphone-connected non-invasive therapies. For the remainder of 2024, we expect our research and development expense to continue to be lower than the comparable period in 2023.

Previous wording

Selling, general and administrative expense of $15.3 million for thesix months ended June 30, 2024 increased by $1.8 million compared to $13.5 million for the previous year period. This increase was primarily due to our greater variable selling and marketing costs consistent with our increase in sales. During the remainder of 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. Selling, general and administrative expense for the six months ended June 30, 2023 included severance charges of $332,000.

Current wording

Selling, general and administrative expense of $22.9 million for thenine months ended September 30, 2024 increased by $2.6 million compared to $20.2 million for the previous year period. This increase was primarily due to our greater variable selling and marketing costs consistent with our increase in sales and recognition of lease expense associated with the lease expansion of our facility in Rockaway, New Jersey. During the remainder of 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. Selling, general and administrative expense for thenine months ended September 30, 2023 included severance charges of $445,000.

Previous wording

The decrease in Other Income of $47,000 isprimarily due toa one time expense associated with termination of an agreement.

Current wording

The decrease in Other Income of $13,000 isprimarily due to increased interest income offset bya one-time expense associated with the termination of an agreement in the current period.

Previous wording

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. On March 6, 2024, the Company received a net cash payment of $122,000 from the sale of its New Jersey state net operating losses, respectively.

Current wording

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. On March 6, 2024, the Company received a net cash payment of $122,000 from the sale of its New Jersey state net operating losses.

Previous wording

Net cash used in operating activities was$4.3 million and $9.2 million forthe six months ended June 30, 2024 and 2023, respectively. This decrease is primarily due to the decrease in our net loss adjusted for non-cash expense items.

Current wording

Net cash used in operating activities was$5.7 million and $11.5 million forthe nine months ended September 30, 2024 and 2023, respectively. This decrease is primarily due to the decrease in our net loss adjusted for non-cash expense items.

Previous wording

During thesix months ended June 30, 2024, net cash provided by financing activities was $8.1 million which was attributable to the entering into a registered direct offering and concurrent private placements, which closed on June 5, 2024. In addition, we received $1 million from the issuance of securities to our legal counsel. Upon issuance of these shares, certain of our financial obligations to our legal counsel were deemed paid and satisfied in full. During the six months ended June 30, 2023, no cash was provided by financing activities.

Current wording

During thenine months ended September 30, 2024, net cash provided by financing activities was $8.1 million which was attributable to the Company entering into a registered direct offering and concurrent private placements, which closed on June 5, 2024. In addition, we received $1.0 million from the issuance of securities to our legal counsel. Upon issuance of these shares, certain of our financial obligations to our legal counsel were deemed paid and satisfied in full. During the nine months ended September 30, 2023 net cash provided by financing activities was $7.5 million which was attributable to the Company entering into a registered direct offering and concurrent private placements, which closed on July 31, 2023.

Previous wording

We have** **experienced significant net losses, and we expect to continue to incur net losses for the near future as we work to increase market acceptance of our gammaCore therapy and general wellness and human performance products. We have never been profitable and we have incurred net losses and negative cash used in operations in each year since our inception. We incurred net losses of $6.2 million and $10.8 million and used cash in our operations of $4.3 million and $9.2 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

We have** **experienced significant net losses, and we expect to continue to incur net losses for the near future as we work to increase market acceptance of our gammaCore therapy and general wellness and human performance products. We have never been profitable and we have incurred net losses and negative cash used in operations in each year since our inception. We incurred net losses of $8.7 million and $14.8 million and used cash in our operations of $5.7 million and $11.5 million for thenine months ended September 30, 2024 and 2023, respectively.

Previous wording

We have historically funded our operations from the sale of our securities. During the six months ended June 30, 2024, we received net proceeds of approximately $9.0 million from such sales and as of June 30, 2024, our cash, cash equivalents and marketable securities totaled $14.2 million.

Current wording

We have historically funded our operations from the sale of our securities. During thenine months ended September 30, 2024, we received net proceeds of approximately $9.0 million from such sales and as of September 30, 2024, our cash, cash equivalents, restricted cash and marketable securities totaled $13.2 million.

Previous wording

Based on our current assessment, we believe we will be able to fund our operating expenses and capital expenditure requirements, as currently planned, for at least the next 12 months from the date the accompanying financial statements are issued. We therefore believe that the previously disclosed substantial doubt about our ability to continue as a going concern is alleviated. There remain significant risks and uncertainties regarding our business, financial condition and results of operations. Our future capital requirements are difficult to forecast and will depend on many factors that are out of our control. If we are unable to achieve our planned operating results or maintain sufficient financial resources, our business, financial condition and results of operations may be materially and adversely affected.

Current wording

Based on our current assessment, reduction in net loss and current cash position, we believe we will be able to fund our operating expenses and capital expenditure requirements, as currently planned, for at least the next 12 months from the date the accompanying financial statements are issued. We therefore believe that the previously disclosed substantial doubt about our ability to continue as a going concern is alleviated. There remain significant risks and uncertainties regarding our business, financial condition and results of operations. Our future capital requirements are difficult to forecast and will depend on many factors that are out of our control. If we are unable to achieve our planned operating results or maintain sufficient financial resources, including through potential cash flow from operations or supplemental access to third-party debt, equity or hybrid capital, our business, financial condition and results of operations may be materially and adversely affected.

Previous wording

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, which we refer to collectively as the Shelf Securities, up to an aggregate amount of $75.0 million. The 2022 Shelf Registration Statement was declared effective on January 25, 2022. The proposed maximum offering price per unit and the proposed maximum aggregate offering price per class of Shelf Security will be determined from time to time by us in connection with the issuance by us of the Shelf Securities. Until such time as the aggregate market value of our securities held by non-affiliates equals or exceeds $75.0 million, the aggregate maximum offering price of all Shelf Securities issued by us in any given 12-calendar month period pursuant to the 2022 Shelf Registration Statement (or any successor registration statement on Form S-3) may not exceedone-third of the aggregate market value of our securities held by non-affiliates. As of June 30, 2024, we had approximately $4.8 million available of unused capacity under the 2022 Shelf Registration Statement, subject to the one-third limit. If our public float increases, we will have additional availability under such limit, and if our public float increases to $75.0 million or more, such one-third limit will terminate. There can be no assurance that our public float will increase. that we will no longer be subject to such limitation, that such limitation may not reapply after termination under applicable SEC rules, or that the 2022 Shelf Registration Statement will allow us to raise additional capital in a timely manner, on acceptable terms, or at all.

Current wording

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, which we refer to collectively as the Shelf Securities, up to an aggregate amount of $75.0 million. The 2022 Shelf Registration Statement was declared effective on January 25, 2022. The proposed maximum offering price per unit and the proposed maximum aggregate offering price per class of Shelf Security will be determined from time to time by us in connection with the issuance by us of the Shelf Securities. Until such time as the aggregate market value of our securities held by non-affiliates equals or exceeds $75.0 million, the aggregate maximum offering price of all Shelf Securities issued by us in any given 12-calendar month period pursuant to the 2022 Shelf Registration Statement (or any successor registration statement on Form S-3) may not exceedone-third of the aggregate market value of our securities held by non-affiliates. As of September 30, 2024, we had approximately $11.6 million available of unused capacity under the 2022 Shelf Registration Statement, subject to the one-third limit. If our public float increases, we will have additional availability under such limit, and if our public float increases to $75.0 million or more, such one-third limit will terminate. There can be no assurance that our public float will increase. that we will no longer be subject to such limitation, that such limitation may not reapply after termination under applicable SEC rules, or that the 2022 Shelf Registration Statement will allow us to raise additional capital in a timely manner, on acceptable terms, or at all.