electroCore, Inc.

Note 1. The Company

electroCore, Inc. and its subsidiaries (“electroCore” or the “Company”) is a commercial stage bioelectronic technology company whose mission is to improve health and quality of life through innovative non-invasive bioelectronic technologies.

electroCore, headquartered in Rockaway, NJ, hasthree wholly owned subsidiaries: electroCore UK Ltd, electroCore Germany GmbH and NeuroMetrix, Inc. (“NURO”). The Company has paused operations in Germany, with sales into the country and the rest of Europe being managed by electroCore UK Ltd.

Note 2. Summary of Significant Accounting Policies

The accompanying condensed consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. In the opinion of management, the Company has made all necessary adjustments, which include normal recurring adjustments necessary for a fair presentation of the Company’s condensed consolidated financial position and results of operations for the interim periods presented. Certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 12, 2025. The results for the three months ended March 31, 2025, are not necessarily indicative of the results to be expected for a full year, any other interim periods or any future year or period.

The accompanying condensed consolidated financial statements include the accounts of electroCore and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include revenue, licensed products and loss contingencies.

The following table provides a reconciliation of cash, cash equivalents and restricted cash to the balance reflected on the Condensed Consolidated Statement of Cash Flows at March 31, 2025 and December 31, 2024:

As of March 31, 2025, cash equivalents represented funds held in an interest-bearing demand deposit account, U.S. treasury bills, and a money market account.

The Company’s restricted cash consists of cash that the Company is contractually obligated to maintain in accordance with the terms of its corporate credit card arrangement with Citibank, N.A.

Marketable securities are carried at fair value, with unrealized gains and losses reported as accumulated other comprehensive income, except for losses from impairments which are determined to be other than temporary. Realized gains and losses and declines in value judged to be other-than-temporary are included in the determination of net loss and are included in interest and other income net. Fair values are based on quoted market prices at the reporting date. Interest and dividends on available-for-sale securities are included in Interest and other income. As of March 31, 2025, marketable securities amounted to $4.0 million and consist of U.S. treasury bills. The Company held $8.5 million of marketable securities at December 31, 2024.

In December 2023, the FASB issued Accounting Standards Update (ASU) No. 2023-09,Income Taxes (Topic 740),Improvements to Income Tax Disclosures which will require companies to make additional income tax disclosures. The pronouncement is effective for annual filings for the year ended December 31, 2025. The Company is still assessing the impact of the adoption of this standard but does not expect it to have a material impact on its results of operations, financial position or cash flows.

On November 2024, the FASB issued Accounting Standards Update (ASU) No. 2024-03,Income Statement (Topic 220): Reporting Comprehensive Income - Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses, which requires public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the financial statements. The amendments in this pronouncement will be effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. The Company is currently assessing the potential impacts of adoption on its consolidated financial statements and related disclosures.

Note 3. Liquidity, Significant Risks and Uncertainties

Liquidity

The Company has experienced significant net losses, and it expects to continue to incur net losses for the near future as it works to increase market acceptance of its gammaCore therapy and general wellness and human performance products. The Company has never been profitable and has incurred net losses and negative cash used in operations each year since its inception. The Company incurred net losses of $3.9 million and $3.5 million and used cash in its operations of $4.4 million and $2.6 million for the three months ended March 31, 2025 and 2024, respectively.

The Company has historically funded its operations from the sale of its securities. During the three months ended March 31, 2025, the Company received net proceeds of approximately $0.2 million from such sales and as of March 31, 2025, the Company’s cash, cash equivalents, restricted cash and marketable securities totaled $8.0 million (“Cash Position”).

On November 29, 2024, we entered into an At The Market Offering Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), whereby the Company may offer and sell shares of its common stock from time to time having an aggregate offering price of up to $20 million by any method deemed to be an “at-the-market” offering as defined in Rule 415 of the Securities Act, or any other method specified in the Sales Agreement.

In 2025, we intend to continue to make targeted investments in sales and marketing to continue driving commercial activities. We have historically funded our operations from the sale of our common stock and may continue to do so through utilization of the at-the-market facility or other equity or debt transactions if needed. As of May 2, 2025, the Company had approximately $19.8 million shares of common stock remaining available for issuance under the Sales Agreement.

The Company’s expected cash requirements for the next 12 months from the date these financial statements are issued and beyond are largely based on the commercial success of its products. Based on its current assessment, the Company believes its Cash Position, and expected cash flow from operations, will enable it to fund its 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. There remain significant risks and uncertainties regarding the Company’s business, financial condition and results of operations. The Company’s future capital requirements are difficult to forecast and will depend on many factors that are out of its control. If the Company is unable to achieve its planned operating results or maintain sufficient financial resources, including through potential positive cash flow from operations or supplemental access to third-party debt, equity or hybrid capital, its business, financial condition and results of operations may be materially and adversely affected.

Concentration of Revenue Risks

The Company earns a significant amount of its revenue in the United States from the United States Department of Veterans Affairs and United State Department of Defense, or VA, pursuant to its qualifying contract under the Federal Supply Schedule, or FSS, and open market sales to individual VA facilities. For the three months ended March 31, 2025 and 2024, sales to the VA accounted for 70.3% and 71.2% of net sales, respectively.

For the three months ended March 31, 2025 and 2024, Lovell Government Services, or Lovell, accounted for more than 10% of our VA net sales. During the three months ended March 31, 2025, sales associated with no single facility accounted for more than 10% of the total VA net sales. One facility accounted for more than 10% of the total VA net sales during the three months ended March 31, 2024. During the three months ended March 31, 2025 and 2024, one facility accounted for more than 10% of net sales from the United Kingdom National Health Service (“NHS”).

Foreign Currency Exchange

The Company has foreign currency exchange risks related to revenue and operating expenses in currencies other than the local currencies in which it operates. The Company is exposed to currency risk from the potential changes in the functional currency values of its assets, liabilities, and cash flows denominated in foreign currencies.

Note 4. Revenue

The following tables present product net sales disaggregated by Channel and Geographic Market (in thousands):

The Company generally invoices the customer and recognizes revenue once its performance obligations are satisfied, at which point payment is unconditional. Agreed upon payment terms with customers are within 30 days of shipment. Accordingly, contracts with customers do not include a significant financing component.

Note 5. Cash, Cash Equivalents, Restricted Cash and Marketable Securities

The following tables summarize the Company’s cash, cash equivalents, restricted cash and marketable securities as of March 31, 2025 and December 31, 2024.

Note 6. Fair Value Measurements

Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three levels of the fair value hierarchy:

A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows:

As of March 31, 2025, the Company’s Marketable securities in the amount of $4.0 million were carried at fair value in accordance with Level 1 as described above. As of March 31, 2025 and December 31, 2024, the Company had no financial assets or liabilities that required valuation in accordance with the levels described above. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the hierarchy during the three months ended March 31, 2025, and year ended December 31, 2024. The carrying amount of the Company’s receivables and payables approximate their fair value due to their maturity.

Note 7. Inventories

As of March 31, 2025 and December 31, 2024, inventories consisted of the following:

The reserve for obsolete inventory was $0.5 million and $0.6 million as of March 31, 2025 and December 31, 2024, respectively. The Company records charges for obsolete inventory in cost of goods sold. Inventory classified under the category “Work in process” consists of prefabricated assembled product.

Note 8. Leases

For the three months ended March 31, 2025 and 2024, the Company recognized lease expenses of approximately $178,000 and $38,000, respectively. This expense does not include non-lease components associated with the lease agreements as the Company elected not to include such charges as part of the lease expense.

On February 6, 2024, the Company entered into The First Amendment to 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. The increase in the term of the lease for the existing leased property was accounted for as a lease modification, therefore, the associated operating lease right of use assets and operating lease liabilities for the existing space were remeasured as of February 6, 2024. The Rockaway Amendment also includes the expansion of leased property from 13,643 square feet to 22,557 square feet. The Company has accounted for the expansion space as an increase in lease right of use assets effective with the Rockaway Amendment commencement date of June 1, 2024.

Supplemental Balance Sheet Information for Operating Leases:

Future lease payments as of March 31, 2025:

Note 9. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities as of March 31, 2025 and December 31, 2024 consisted of the following:

Finance and Security Agreement

On July 2, 2024, the Company entered into a Commercial Insurance Premium Finance and Security Agreement (the “2024 Agreement”). The 2024 Agreement provides for a single borrowing of approximately $493,000 with a ten-month term and an annual interest rate of 8.75%. The proceeds from this transaction were used to partially fund the premiums due under certain of the Company’s insurance policies. The amounts payable are secured by the Company’s rights under such policies. Beginning July 2024, the Company began paying monthly installments of approximately $51,000.

During the three months ended March 31, 2025 and 2024, the Company recognized $5,000 and $4,200 in aggregate interest expense related to the Company’s finance and security agreements, respectively.

**Note 10. Shareholders’ Equity **

At-the-Market Facility

On November 29, 2024, we entered into the Sales Agreement with Wainwright. Under the Sales Agreement, the Company may offer and sell shares of its common stock, par value $0.001 per share, from time to time having an aggregate offering price of up to $20 million during the term of the Sales Agreement through Wainwright, acting as sales agent. The Company intends to use the net proceeds from any offering pursuant to the Sales Agreement to continue to fund sales and marketing, working capital and for other general corporate purposes. During the three months ended March 31, 2025 the company sold 14,265 shares of common stock for gross proceeds of approximately $217,000. This amount has been offset by financing fees of approximately $37,000.

Stock Purchase Warrants

The following table presents a summary of stock purchase warrants outstanding as of March 31, 2025.

A total of 883,433 pre-funded warrants were excluded from this table. During the three months ended March 31, 2025 investors exercised 725,000 pre-funded warrants.

**Note 11. Net Loss Per Share **

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding adjusted to give effect to potentially dilutive securities. Due to their nominal exercise price of $0.001 per share,883,433 pre-funded warrants are considered common stock equivalents and are included in weighted average shares outstanding in the accompanying condensed consolidated statement of operations as of the applicable purchase date. Stock unit awards, stock options, and warrants (other than the pre-funded warrants) have not been included in the diluted loss per share calculation as their inclusion would have had an anti-dilutive effect.

The potential common stock equivalents that have been excluded from the computation of diluted loss per share consist of the following:

Note 12. Income Taxes

The Company may be eligible, from time to time, to receive cash from the sale of its net operating losses under New Jersey’s Department of the Treasury - Division of Taxation NOL Transfer Program. For the three months ended March 31, 2025 and 2024, the Company received net cash payments of $48,000 and $122,000, respectively from the sale of its New Jersey state net operating losses.

**Note 13. Stock Based Compensation **

There were no stock options granted, exercised or cancelled during the three months ended March 31, 2025. The following table presents a summary of outstanding stock options as of March 31, 2025.

The intrinsic value is calculated as the difference between the fair market value at March 31, 2025 and the exercise price per share of the stock option. The options granted to employees generally vest over a three year period.

The following table presents a summary of activity related to restricted and deferred stock units (“Stock Units”) granted during the three months ended March 31, 2025:

In general, Stock Units granted to employees vest over two to four-year periods.

Immediately following the Company’s annual meeting of stockholders, the Company generally grants each non-employee director an equity award that vests over a 12-month period. Upon a non-employee director’s initial appointment or election to the board of directors, the Company grants such non-employee director an equity award subject to vesting as determined by the board of directors.

The Company recognized stock compensation expense for its equity awards as follows:

Total unrecognized compensation cost related to unvested awards as of March 31, 2025 was $2.8 million and is expected to be recognized over the nexttwo years.

**Note 14. Commitments and Contingencies **

The Company may be a party to various legal proceedings and claims arising out of the ordinary course of its business. Although the final results of all such matters and claims cannot be predicted with certainty, the Company currently believes that there are no current proceedings or claims pending against it the ultimate resolution of which would have a material adverse effect on its financial condition or results of operations. However, should the Company fail to prevail in any legal matter or should several legal matters be resolved against the Company in the same reporting period, such matters could have a material adverse effect on the Company’s operating results and cash flows for that particular period. In all cases, at each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable underASC 450, “Contingencies.” Legal costs are expensed as incurred.

**Note 15. Related Party Transactions **

In 2023, an executive of the Company co-founded the Vagus Nerve Society, a society dedicated to the ongoing education and training of scientists and clinicians and the power of the vagus nerve and its application in a broad spectrum of health-related conditions. During the first quarter of 2025, the Company incurred aggregate expenses of $60,000 for unrestricted and directed educational grants to the Vagus Nerve Society.

Note 16. Segment Reporting

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker (CODM), or decision-making group, in deciding how to allocate resources and in assessing performance. electroCore is a commercial stage bioelectronic technology company whose mission is to improve health and quality of life through innovative non-invasive bioelectronic technologies. The Company views its operations and manages its business as one operating segment: Bioelectronic Innovations. The accounting policies of the Bioelectronic Innovations segment are the same as those described in Note 2. Summary of Significant Accounting Policies.

Our CODM is our Chief Executive Officer. The CODM uses loss from operations, as reported on our Consolidated Statements of Operations, in evaluating the performance of the Bioelectronic Innovations segment and in determining how to allocate resources to the Company as a whole, The CODM does not review assets in evaluating the results of the Bioelectronic Innovations segment, and therefore, such information is not presented below.

The following table provides the non-GAAP operating financial results of the Bioelectronic Innovations segment:

Note 17. Subsequent Events

On May 1, 2025 (the “Closing Date”), the Company completed its previously announced acquisition of NURO (following consummation of the Merger (as defined below), the “Surviving Corporation”), pursuant to the terms of the Agreement and Plan of Merger, dated as of December 17, 2024 (the “Merger Agreement”), by and among the Company, NURO, and Nexus Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”).

Pursuant to the Merger Agreement, on the Closing Date, Merger Sub merged with and into NURO, with NURO surviving as a wholly-owned subsidiary of the Company (the “Merger”).

At the effective time (the “Effective Time”) of the Merger, each share of common stock, par value $0.0001 per share, of NURO (the “NURO Common Stock”) outstanding immediately prior to the Effective Time (including each share of NURO Common Stock underlying a NURO RSA or NURO RSU (as such terms are defined below)), was canceled and converted into the right to receive from the Surviving Corporation (i) an amount in cash equal to $4.49 per share of NURO Common Stock (the “Per Share Cash Consideration”) and (ii) one contingent value right (a “CVR”), representing the right to receive certain contingent payments, subject to the terms and conditions set forth in the CVR Agreement dated May 1, 2025, by and between the Company and Equiniti Trust Company, LLC (the “CVR Agreement”) (the consideration contemplated by (i) and (ii), together, the “Merger Consideration”). Any shares of NURO Common Stock held by NURO as treasury stock or owned by the Company, Merger Sub, or any other subsidiary of the Company or NURO immediately prior to the Effective Time, were canceled, and no payment was made with respect thereto.

The foregoing description of the CVR Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the CVR Agreement.

All issued and outstanding shares of NURO’s preferred stock, par value $0.001 per share (the “NURO Preferred Stock”) outstanding immediately prior to the Effective Time will continue to be outstanding after the Effective Time, except that thereafter, such shares of NURO Preferred Stock will, in accordance with their own terms, no longer be convertible into NURO Common Stock, but will instead be convertible into the right to receive from the Surviving Corporation the Merger Consideration payable in respect of the shares of NURO Common Stock into which such shares of NURO Preferred Stock would have been convertible immediately prior to the Effective Time.

At the Effective Time, outstanding awards of restricted stock with respect to shares of NURO Common Stock (each, a “NURO RSA”), that were outstanding and unvested immediately prior to the Effective Time, were converted into the right to receive consideration as follows (notwithstanding any vesting conditions, restrictions or risk of forfeiture): (i) each NURO RSA for which the holder thereof made a timely and valid election (an “83(b) Election”) under Section 83(b) of the Internal Revenue Code of 1986, as amended, was canceled and converted into the right to receive the Merger Consideration with respect to each share of NURO Common Stock subject to such NURO RSA in accordance with the Merger Agreement and the CVR Agreement; and (ii) each NURO RSA for which the holder thereof did not make a timely and valid 83(b) Election was canceled and converted into the right to receive (a) an amount in cash (without interest and subject to deduction for any required withholding as contemplated by the Merger Agreement) equal to: (A) the total number of shares of such NURO RSAs multiplied by (B) the Per Share Cash Consideration, without any interest thereon, and (b) one CVR with respect to each share of NURO Common Stock subject to such NURO RSAs immediately prior to the Effective Time.

At the Effective Time, each stock option granted by NURO to purchase NURO Common Stock (each, a “NURO Option”) that was outstanding and unvested immediately prior to the Effective Time (whether time- or performance-based) fully vested and became exercisable, and (i) each NURO Option that was then outstanding and unexercised immediately prior to the Effective Time, and which had a per share exercise price that was less than the Per Share Cash Consideration, was canceled and converted into the right to receive the sum of an amount in cash (without interest and subject to deduction for any required withholding as contemplated in the Merger Agreement) equal to: (a) the excess, if any, of the Per Share Cash Consideration over the exercise price per share of such NURO Option; multiplied by the number of shares of NURO Common Stock underlying such NURO Option and (b) one CVR, and (ii) each NURO Option that was then outstanding and unexercised immediately prior to the Effective Time, and which had a per share exercise price that was equal to or greater than the Per Share Cash Consideration, was canceled with no consideration payable in respect thereof.

At the Effective Time, each NURO restricted stock unit (“NURO RSU”) that was outstanding immediately prior to the Effective Time, was automatically canceled and converted into the right to receive (i) an amount in cash equal to the product of (A) the number of shares of NURO Common Stock then underlying such NURO RSU multiplied by (B) the Per Share Cash Consideration, without any interest thereon and (ii) one CVR with respect to each share of NURO Common Stock subject to such NURO RSU.

At the Effective Time, subject to NURO’s Amended and Restated Management Retention and Incentive Plan (the “MRIP”) and subject to NURO’s receipt of an executed general release of claims, each eligible participant in the MRIP (a “Participant”) received the right to receive from the Surviving Corporation: (a) an amount in cash equal to (i) such Participant’s percentage interest set forth in the MRIP, multiplied by (ii) the aggregate cash consideration payable pursuant to the Merger Agreement; and (b) upon the making of any Distributions (as defined in the CVR Agreement) pursuant to the CVR Agreement, such amounts in cash equal to (i) such Participant’s percentage interest set forth in the MRIP, multiplied by (ii) the Pre-MRIP Adjusted Proceeds in respect of the applicable Distribution Period (as each such term is defined in the CVR Agreement).

The foregoing description of the Merger does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Merger Agreement.