UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~September~~June 30, ~~2021~~2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ______________ TO ______________

Commission File Number 001-38538

electroCore, Inc.

(Exact name of Registrant as specified in its charter)

Delaware		20-3454976
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

200 Forge Way, Suite 205, Rockaway, NJ 07866

(Address of principal executive offices, including zip code)

(973) 290-0097

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	ECOR	The Nasdaq ~~Global Select~~Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ~~Yes~~ Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of ~~November~~August 1, ~~2021~~2022 the registrant had ~~70,697,680~~71,121,078 shares of common stock outstanding.

	PART I. FINANCIAL INFORMATION	Page Number
	Cautionary Note Regarding Forward-Looking Statements	3
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2021~~2022 (unaudited) and December 31, ~~2020~~2021	4
	Condensed Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Loss for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ (Unaudited)	6
	Condensed Consolidated Statements of Equity for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ (Unaudited)	9
	Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~(unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2219
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2825
Item 4.	Controls and Procedures	2825
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	2926
Item 1A.	Risk Factors	3126
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3226
Item 3.	Defaults Upon Senior Securities	3226
Item 4.	Mine Safety Disclosures	3226
Item 5.	Other Information	3226
Item 6.	Exhibits	3327
	Signatures	3428

REFERENCES TO ELECTROCORE

In this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise requires, references to the “Company,” “electroCore,” “we,” “us” and “our” refer to electroCore, Inc. a Delaware corporation and its ~~subsidiaries and affiliate.~~subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to them. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, (i) risks and uncertainties related to the impact of the COVID-19 pandemic on general political and economic conditions, including as a result of efforts by governmental authorities to mitigate the COVID-19 pandemic, such as travel bans, vaccine mandates, shelter in place orders and third-party business closures and resource allocations, manufacturing and supply chains and patient access to commercial products; our ability to execute our operational and budget plans in light of the COVID-19 pandemic, and (ii) those included in our Form 10-Qs, our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, in our other filings with the U.S. Securities and Exchange Commission or in materials incorporated by reference therein, including the information in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in such filings. Furthermore, any such forward-looking statements in this Quarterly Report speak only as of the date of this report. Except as required by law, we undertake no obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of such statements.

The electroCore logo, gammaCore and other trademarks of electroCore, Inc. appearing in this Quarterly Report are the property of electroCore, Inc. All other trademarks, service marks and trade names in this Quarterly Report are the property of their respective owners. We have omitted the ® and ™ designations, as applicable, for the trademarks used in this Quarterly Report.

ELECTROCORE, INC., AND SUBSIDIARIES ~~AND AFFILIATE~~

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share data)

~~(Unaudited)~~

	September 30,			December 31,			June 30,			December 31,
	2021			2020			2022			2021
Assets
Current assets:
Cash and cash equivalents	$	37,995,008		$	4,241,937		$	26,330		$	34,689
Marketable securities		1,001,080			18,386,160
Restricted cash								250			0—
Accounts receivable, net		329,778			270,546			575			438
Inventories, net		1,082,325			876,436			1,739			1,361
Prepaid expenses and other current assets		1,476,348			1,288,588			230			1,053
Total current assets		41,884,539			25,063,667			29,124			37,541
Inventories, noncurrent		4,349,009			4,865,181			2,905			3,941
Property and equipment, net		171,028			244,047			99			147
Operating lease right of use assets		539,728			517,257
Operating lease right of use assets, net								592			613
Other assets, net		626,445			828,011			761			591
Total assets	$	47,570,749		$	31,518,163		$	33,481		$	42,833
Liabilities and Equity
Current liabilities:
Accounts payable	$	1,250,534		$	2,078,699		$	2,053		$	938
Accrued expenses and other current liabilities		4,429,843			2,965,702			3,523			4,486
Note payable, current		0—			311,354
Current portion of operating lease liabilities		58,482			534,547			68			61
Total current liabilities		5,738,859			5,890,302			5,644			5,485
Noncurrent liabilities:
Operating lease liabilities, noncurrent		715,530			885,333			664			700
Note payable, noncurrent		0—			1,097,946
Total liabilities		6,454,389			7,873,581			6,308			6,185
Commitments and contingencies		0—			0—			0—			0—
Stockholders' equity:
Preferred Stock, par value $0.001 per share; 10,000,000 shares authorized at September 30, 2021 and December 31, 2020; 0 shares issued and outstanding at September 30, 2021 and December 31, 2020		0—			0—
Common Stock, par value $0.001 per share; 500,000,000 shares authorized at September 30, 2021 and December 31, 2020; 70,442,309 shares issued and outstanding at September 30, 2021 and 45,559,765 shares issued and outstanding at December 31, 2020		70,442			45,560
Preferred Stock, par value $0.001 per share; 10,000,000 shares authorized at June 30, 2022 and December 31, 2021; 0 shares issued and outstanding at June 30, 2022 and December 31, 2021								0—			0—
Common Stock, par value $0.001 per share; 500,000,000 shares authorized at June 30, 2022 and December 31, 2021; 71,119,471 shares issued and outstanding at June 30, 2022 and 70,704,123 shares issued and outstanding at December 31, 2021								71			71
Additional paid-in capital		159,796,442			130,205,027			162,301			160,772
Accumulated deficit		(119,261,417	)		(106,990,148	)		(135,127	)		(124,208	)
Accumulated other comprehensive loss		(124,717	)		(251,467	)		(72	)		13
Total stockholders' equity		40,480,750			23,008,972
Noncontrolling interest		635,610			635,610
Total equity		41,116,360			23,644,582			27,173			36,648
Total liabilities and equity	$	47,570,749		$	31,518,163		$	33,481		$	42,833

See accompanying notes to unaudited condensed consolidated financial statements.

ELECTROCORE, INC., AND SUBSIDIARIES ~~AND AFFILIATE~~

Condensed Consolidated Statements of Operations

~~(Unaudited)~~(unaudited)

(in thousands, except per share data)

	Three months ended September 30,						Nine months ended September 30,						Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Net sales	$	1,487,093		$	1,080,841		$	3,960,401		$	2,567,567		$	2,157		$	1,269		$	4,056		$	2,473
Cost of goods sold		355,046			347,504			1,093,304			918,605			358			374			718			738
Gross profit		1,132,047			733,337			2,867,097			1,648,962			1,799			895			3,338			1,735
Operating expenses
Research and development		470,275			629,002			1,794,146			3,182,646			1,341			825			2,275			1,324
Selling, general and administrative		4,646,815			4,592,936			15,644,324			16,426,991			6,278			5,272			12,464			10,997
Restructuring and other severance related charges		0—			0—			0—			464,606
Total operating expenses		5,117,090			5,221,938			17,438,470			20,074,243			7,619			6,097			14,739			12,321
Loss from operations		(3,985,043	)		(4,488,601	)		(14,571,373	)		(18,425,281	)		(5,820	)		(5,202	)		(11,401	)		(10,586	)
Other (income) expense
Gain on extinguishment of debt		0—			0—			(1,422,214	)		0—			0—			(1,422	)		0—			(1,422	)
Interest and other income		(3,834	)		(5,719	)		(8,493	)		(80,460	)		(38	)		(1)			(42	)		(1	)
Other expense		3,771			3,522			7,293			13,350			0—			0—			5			0—
Total other (income) expense		(63	)		(2,197	)		(1,423,414	)		(67,110	)		(38	)		(1,423	)		(37	)		(1,423	)
Loss before income taxes		(3,984,980	)		(4,486,404	)		(13,147,959	)		(18,358,171	)		(5,782	)		(3,779	)		(11,364	)		(9,163	)
(Provision) benefit from income taxes (see Note 14)		(8,705	)		0—			876,690			1,170,890
Benefit from income taxes														445			885			445			885
Net loss	$	(3,993,685	)	$	(4,486,404	)	$	(12,271,269	)	$	(17,187,281	)	$	(5,337	)	$	(2,894	)	$	(10,919	)	$	(8,278	)
Net loss per share of common stock - Basic and Diluted (see Note 12)	$	(0.06	)	$	(0.10	)	$	(0.22	)	$	(0.47	)
Weighted average common shares outstanding - Basic and Diluted (see Note 12)		69,511,498			44,030,685			55,308,381			36,847,548
Net loss per share of common stock - Basic and Diluted (see Note 8)													$	(0.08	)	$	(0.06	)	$	(0.15	)	$	(0.17	)
Weighted average common shares outstanding - Basic and Diluted (see Note 8)														70,816			48,520			70,744			48,089

See accompanying notes to unaudited condensed consolidated financial statements.

ELECTROCORE, INC., AND SUBSIDIARIES ~~AND AFFILIATE~~

Condensed Consolidated Statements of Comprehensive Loss

~~(Unaudited)~~(unaudited)

(in thousands)

	Three months ended September 30,						Nine months ended September 30,						Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Net loss	$	(3,993,685	)	$	(4,486,404	)	$	(12,271,269	)	$	(17,187,281	)	$	(5,337	)	$	(2,894	)	$	(10,919	)	$	(8,278	)
Other comprehensive (loss) income:
Foreign currency translation adjustment		(22,282	)		(81,602	)		124,366			(145,617	)		(58	)		5			(85	)		147
Unrealized gain (loss) on securities, net of taxes as applicable		27			(2,210	)		2,384			(3,443	)		0—			0—			0—			2
Other comprehensive (loss) income		(22,255	)		(83,812	)		126,750			(149,060	)		(58	)		5			(85	)		149
Comprehensive loss	$	(4,015,940	)	$	(4,570,216	)	$	(12,144,519	)	$	(17,336,341	)	$	(5,395	)	$	(2,889	)	$	(11,004	)	$	(8,129	)

ELECTROCORE, INC., AND SUBSIDIARIES ~~AND AFFILIATE~~

Condensed Consolidated Statements of Equity

(unaudited)

~~(Unaudited)~~(in thousands)

	Common				Additional						Accumulated other			Total electroCore, Inc.								Common				Additional					Accumulated other
	Stock				paid-in			Accumulated			comprehensive			stockholders'			Noncontrolling		Total			Stock				paid-in		Accumulated			comprehensive			Total
	Shares		Amount		capital			deficit			income (loss)			equity			interest		equity			Shares		Amount		capital		deficit			income (loss)			equity
Balances as of January 1, 2021		45,559,765	$	45,560	$	130,205,027		$	(106,990,148	)	$	(251,467	)	$	23,008,972		$	635,610	$	23,644,582
Balance, January 1, 2022																							70,704	$	71	$	160,772	$	(124,208	)	$	13		$	36,648
Net loss		—		0—		0—			(5,383,832	)		0—			(5,383,832	)		0—		(5,383,832	)		—		0—		0—		(5,582	)		0—			(5,582	)
Other comprehensive income		—		0—		0—			0—			144,144			144,144			0—		144,144
Issuance of stock (see Note 11)		2,750,000		2,750		6,917,600			0—			0—			6,920,350			0—		6,920,350
Other comprehensive loss																							—		0—		0—		0—			(27	)		(27	)
Issuance of stock related to employee compensation plans, net of forfeitures		17,599		18		(18	)		0—			0—			0—			0—		0—			14		0—		0—		0—			0—			0—
Settlement of accrued bonus		165,413		165		399,832			0—			0—			399,997			0—		399,997
Share based compensation		—		0—		942,183			0—			0—			942,183			0—		942,183			—		0—		777		0—			0—			777
Balances as of March 31, 2021		48,492,777	$	48,493	$	138,464,624		$	(112,373,980	)	$	(107,323	)	$	26,031,814		$	635,610	$	26,667,424
Balance, March 31, 2022																							70,718	$	71	$	161,549	$	(129,790	)	$	(14	)	$	31,816
Net loss		—		0—		0—			(2,893,752	)		0—			(2,893,752	)		0—		(2,893,752	)		—		0—		0—		(5,337	)		0—			(5,337	)
Other comprehensive income		—		0—		0—			0—			4,861			4,861			0—		4,861			—		0—		0—		0—			(58	)		(58	)
Issuance of stock related to employee compensation plans, net of forfeitures		197,647		197		(197	)		0—			0—			0—			0—		0—			401		0—		0—		0—			0—			0—
Share based compensation		—		0—		837,973			0—			0—			837,973			0—		837,973			—		0—		752		0—			0—			752
Balances as of June 30, 2021		48,690,424	$	48,690	$	139,302,400		$	(115,267,732	)	$	(102,462	)	$	23,980,896		$	635,610	$	24,616,506
Net loss		—		0—		0—			(3,993,685	)		0—			(3,993,685	)		0—		(3,993,685	)
Other comprehensive income		—		0—		0—			0—			(22,255	)		(22,255	)		0—		(22,255	)
Issuance of stock, net of related expenses (see Note 11)		20,700,000		20,700		18,744,182			0—			0—			18,764,882			0—		18,764,882
Issuance of stock to satisfy legal fee obligation (see Note 11)		952,380		952		989,523			0—			0—			990,475			0—		990,475
Issuance of stock related to employee compensation plan, net of forfeitures		99,505		100		(100	)		0—			0—			0—			0—		0—
Share based compensation		—		0—		760,437			0—			0—			760,437			0—		760,437
Balances as of September 30, 2021		70,442,309	$	70,442	$	159,796,442		$	(119,261,417	)	$	(124,717	)	$	40,480,750		$	635,610	$	41,116,360
Balance, June 30, 2022																							71,119	$	71	$	162,301	$	(135,127	)	$	(72	)	$	27,173

Condensed Consolidated Statements of Equity

Common

Additional

Accumulated other

Total electroCore, Inc.

Stock

paid-in

Accumulated

comprehensive

stockholders'

Noncontrolling

Total

Shares

Amount

capital

deficit

income (loss)

equity

interest

equity

Balances as of January 1, 2020
29,835,183

$ 29,835

$ 107,752,066

$ (83,479,098 )
$ (41,295 )
$ 24,261,508

$ 635,610

$ 24,897,118
Net loss

—

0—

0—

(7,959,349 )

0—

(7,959,349 )

0—

(7,959,349 )
Other comprehensive income

—

0—

0—

0—

51,148

51,148

0—

51,148
Equity financing commitment fee*

461,676

462

(462 )

0—

0—

0—

0—

0—
Issuance of stock related to employee compensation plans, net of forfeitures

124,568

125

(125 )

0—

0—

0—

0—

0—
Share based compensation

—

0—

744,865

0—

0—

744,865

0—

744,865
Balances as of March 31, 2020
30,421,427

$ 30,422

$ 108,496,344

$ (91,438,447 )
$ 9,853
$ 17,098,172

$ 635,610

$ 17,733,782
Net loss

—

0—

0—

(4,741,528
)

0—

(4,741,528
)

0—

(4,741,528
)
Other comprehensive income

—

0—

0—

0—

(116,396
)

(116,396
)

0—

(116,396
)
Issuance of stock (see Note 11)

8,028,372

8,028

7,823,507

0—

0—

7,831,535

0—

7,831,535

Equity financing commitment fee*

181,273

181

(181
)

0—

0—

0—

0—

0—

Financing fees

—

0—

(167,299 )

0—

0—

(167,299 )

0—

(167,299 )
Issuance of stock related to employee compensation plans, net of forfeitures

184,073

184

(184
)

0—

0—

0—

0—

0—

Share based compensation

—

0—

1,002,758

0—

0—

1,002,758

0—

1,002,758

Balances as of June 30, 2020

38,815,145

$
38,815

$
117,154,945

$
(96,179,975
)

$
(106,543
)

$
20,907,242

$
635,610

$
21,542,852

Net loss

—

0—

0—

(4,486,404
)

0—

(4,486,404
)

0—

(4,486,404
)
Other comprehensive income

—

0—

0—

0—

(83,812
)

(83,812
)

0—

(83,812
)
Issuance of stock (see Note 11)

6,079,676

6,080

11,197,581

0—

0—

11,203,661

0—

11,203,661

Equity financing commitment fee*

49,565

49

(49
)

0—

0—

0—

0—

0—

Financing fees

—

0—

(23,199
)

0—

0—

(23,199
)

0—

(23,199
)
Issuance of stock related to employee compensation plans, net of forfeitures

254,702

255

(255
)

0—

0—

0—

0—

0—

Share based compensation

—

0—

742,928

0—

0—

742,928

0—

742,928

Balances as of September 30, 2020
45,199,088

$
45,199

$
129,071,951

$
(100,666,379
)
$
(190,355
)
$
28,260,416

$
635,610

$
28,896,026

*	~~Reflects commitment shares issued in accordance with the Company's equity facility purchase agreement with Lincoln Park. For additional information see Note~~ 11~~. Lincoln Park Stock Purchase Agreement.~~

	Common				Additional					Accumulated other			Total electroCore, Inc.
	Stock				paid-in		Accumulated			comprehensive			stockholders'			Noncontrolling		Total
	Shares		Amount		capital		deficit			income (loss)			equity			interest		equity
Balances as of January 1, 2021		45,560	$	45	$	130,205	$	(106,990	)	$	(251	)	$	23,009		$	635	$	23,644
Net loss		—		0—		0—		(5,384	)		0—			(5,384	)		0—		(5,384	)
Other comprehensive income		—		0—		0—		0—			144			144			0—		144
Issuance of stock		2,750		3		6,918		0—			0—			6,921			0—		6,921
Issuance of stock related to employee compensation plans, net of forfeitures		18		0—		0—		0—			0—			0—			0—		0—
Settlement of accrued bonus		165		0—		400		0—			0—			400			0—		400
Share based compensation		—		0—		942		0—			0—			942			0—		942
Balances as of March 31, 2021		48,493	$	48	$	138,465	$	(112,374	)	$	(107	)	$	26,032		$	635	$	26,667
Net loss		—		0—		0—		(2,894	)		0—			(2,894	)		0—		(2,894	)
Other comprehensive income		—		0—		0—		0—			5			5			0—		5
Issuance of stock related to employee compensation plans, net of forfeitures		197		0—		0—		0—			0—			0—			0—		0—
Share based compensation		—		0—		838		0—			0—			838			0—		838
Balances as of June 30, 2021		48,690	$	48	$	139,303	$	(115,268	)	$	(102	)	$	23,981		$	635	$	24,616

ELECTROCORE, INC., AND SUBSIDIARIES ~~AND AFFILIATE~~

Condensed Consolidated Statements of Cash Flows

~~(Unaudited)~~(unaudited)

(in thousands)

	Nine months ended September 30,
	2021			2020			Six months ended June 30,
				(revised)			2022			2021
Cash flows from operating activities:
Net loss	$	(12,271,269	)	$	(17,187,281	)	$	(10,919	)	$	(8,278	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		2,540,593			2,490,551			1,529			1,780
Depreciation and amortization		286,448			288,589			247			191
Amortization of marketable securities discount		141,159			23,422			0—			114
Gain on extinguishment of debt		(1,422,214	)		0—			0—			(1,422	)
(Gain) loss on legal fee obligation settled with stock		(9,525	)		156,434
Net noncash lease expense		56,151			273,070			21			41
Inventory reserve charge		39,478			0—			0—			39
Other		0—			14,893
Changes in operating assets and liabilities:
Accounts receivable, net		(59,232	)		320,186			(137	)		(98	)
Inventories		270,805			(15,922	)		658			174
Prepaid expenses and other current assets		703,257			561,248			823			1,082
Accounts payable		171,835			(1,631,839	)		1,115			220
Accrued expenses and other current liabilities		324,316			(1,407,813	)		(963	)		363
Right of use operating leases		(78,622	)		0—			0—			(78	)
Operating lease liabilities		33,277			(355,274	)		(29	)		46
Other assets								(369	)		0—
Net cash used in operating activities		(9,273,543	)		(16,469,736	)		(8,024	)		(5,826	)
Cash flows from investing activities:
Purchase of marketable securities		(5,082,730	)		(22,166,376	)		0—			(5,083	)
Proceeds from maturities of marketable securities		22,300,000			10,500,000			0—			14,300
Net cash provided by (used in) investing activities		17,217,270			(11,666,376	)
Net cash provided by investing activities								0—			9,217
Cash flows from financing activities:
Shares issued, net of related expenses		25,685,232			17,139,563
Proceeds from note issued		0—			1,410,524
Shares issued								0—			6,920
Net cash provided by financing activities		25,685,232			18,550,087			0—			6,920
Effect of changes in exchange rates on cash and cash equivalents		124,112			(145,312	)		(85	)		146
Net increase (decrease) in cash and cash equivalents		33,753,071			(9,731,337	)
Net (decrease) increase in cash and cash equivalents								(8,109	)		10,457
Cash and cash equivalents – beginning of period		4,241,937			13,563,791			34,689			4,242
Cash and cash equivalents – end of period	$	37,995,008		$	3,832,454
Cash and cash equivalents and restricted cash – end of period							$	26,580		$	14,699

Supplemental cash flows disclosures:
Proceeds from sale of state net operating losses	$	1,425,935		$	1,170,890		$	445		$	1,425
Interest paid	$	4,649		$	9,366		$	4		$	0—
Income taxes paid	$	38,622		$	3,254
Supplemental schedule of noncash activity:
2020 Accrued bonus awarded in equity	$	399,997		$	0—		$	0—		$	400
Accounts payable paid through issuance of common stock	$	1,000,000		$	1,548,702

ELECTROCORE, INC., AND SUBSIDIARIES ~~AND AFFILIATE~~

Notes to Condensed Consolidated Financial Statements

~~(Unaudited)~~(unaudited)

Note 1.1. The Company

electroCore ~~Inc. (“electroCore” or the “Company”)~~ isa commercial stage medical device company~~engaged~~ with a proprietary non-invasive vagus nerve stimulation, or nVNS, therapy, called gammaCore. nVNS is a platform bioelectronic medical therapy that modulates neurotransmitters and immune function through its effects on both the peripheral and central nervous systems. The Company is focused on utilizing gammaCore in the ~~commercialization~~management and ~~development~~treatment of ~~a platform~~ ~~non-invasiveVagusNerveStimulation (“nVNS”)therapy that can be self-administered by patients.electroCorewasfoundedin 2005and~~ ~~has primarily focused on~~primary headache ~~conditions(migraineandclusterheadache).~~conditions.

electroCore, headquartered in Rockaway, New Jersey, has ~~two~~2 wholly owned subsidiaries: electroCore Germany GmbH, and electroCore UK Ltd. The Company has ceased its operations in Germany, although sales to Germany are still supported by electroCore UK Ltd.

Note 2. Summary of Significant Accounting Policies

(a)	Basis of Presentation

The accompanying condensed consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“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, ~~2020~~2021 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March ~~11, 2021~~10, 2022. The results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 are not necessarily indicative of the results to be expected for a full year, any other interim periods or any future year or period.

(b)	Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of electroCore and its wholly owned ~~subsidiary.~~subsidiaries. electroCore Australia was consolidated with the non-controlled equity presented as non-controlling interest in the Company's Condensed Consolidated Statement of Equity for the three and six months ended June 30, 2021. The Company terminated its affiliation with electroCore Australia on November 2, 2021 and, as such, this dormant entity was not included in the Company's Condensed Consolidated Statement of Equity for the six months ended June 30, 2022. All intercompany balances and transactions have been eliminated in consolidation.

(c)	Use of Estimates

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 ~~these condensed~~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 allowances for doubtful accounts, trade credits, rebates, co-payment assistance and sales returns, valuation of inventory, stock compensation, incremental borrowing rate and contingencies.

(d)	~~Revision of Statement of~~ Cash, ~~Flows Activity~~ Cash Equivalents and Restricted Cash

~~In preparation~~The following table provides a reconciliation of ~~its financial statements~~cash, cash equivalents and restricted cash to the balance reflected on the Condensed Consolidated Statement of Cash Flows for the quarter ended March 31, 2021, the Company realized that proceeds from its July 1, 2020 Commercial Insurance Premium Finance and Security Agreement should have been treated as a noncash activity instead of grossed up on the accompanying condensed consolidated statement of cash flows. Even though the amount was not considered material, the financial statements have been revised. As a result, cash used in operating and cash provided by financing activities for the ninesix months ended ~~September~~June 30, ~~2020, decreased by approximately $600,000.~~2022:

(in thousands)	Six months ended June 30, 2022
Cash and cash equivalents	$	26,330
Restricted cash		250
Total cash, cash equivalents and restricted cash	$	26,580

(e)	~~Reclassification of Statement of~~Restricted Cash ~~Flows Activity~~

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

(f)	Reclassification of Balance Sheet Item

Certain ~~prior period~~accounts payable amounts reported at December 31, 2021 have been reclassified to conform to current period presentation. ~~The reclassifications did not have an impact~~A total of approximately $605,000 of legal fees accrued at December 31, 2021 were reported on ~~net loss as previously reported.~~the line Accrued expenses and other current liabilities in the accompanying Condensed Consolidated Balance Sheet at December 31, 2021. See Note 7. Accrued Expenses and Other Current Liabilities.

Note 3. Significant Risks and Uncertainties

Liquidity

The Company has experienced significant net losses and cash used in operations, and it expects to continue to incur net losses and cash used in operations for the near future as it works to increase market acceptance of its gammaCore ~~therapy for the acute treatment of episodic cluster headache (“eCH”), the prevention of cluster headache in adults, and the preventive and acute treatment of migraine in adults and adolescents.~~therapy. The Company has never been profitable and has incurred net losses and cash used in operations in each year since its inception. The Company incurred net losses of ~~$12.3 million~~$10.9 and ~~$17.2~~$8.3 million for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, respectively. Net cash used in operating activities for the six months ended June 30, 2022and ~~2020,~~2021was $8.0 million and $5.8 million, respectively.

The Company’s expected cash requirements for the next 12 months and beyond are largely based on the commercial success of its products. There are significant risks and uncertainties as to its ability to achieve these operating results, including as a result of the adverse impact on its headache business from the ongoing COVID-19 pandemic. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

results. The Company has historically funded its operations from the sale of its common stock. During the nine months ended September 30, 2021, the Company received net proceeds of approximately $25.7 million from such sales and as of September 30, 2021, the Company’s cash, cash equivalents and marketable securities totaled $39.0 million. ~~The Company believes that the substantial doubt of its ability to continue as a going concern is alleviated based on proceeds received from its common stock offerings.~~ The Company believes its cash and ~~marketable securities~~cash equivalents on hand 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.

Concentration of Revenue Risks

The Company earns a significant amount of its revenue (i) in the United States from the Department of Veterans Affairs and Department of Defense ("VA/DoD") pursuant to its qualifying contract under the Federal Supply Schedule and open market sales to individual Department of Veterans Affairs facilities, and (ii) in the United Kingdom from the National Health Service. The VA/DoD and National Health Service were the Company’s sole customers accounting for 10%~~Each of these 2 channels accounted for 10%~~ or more of total net sales during the three and six months ended June 30, 2022 and 2021. The following table reflects the respective concentration as a percentage of the Company's net ~~sales as summarized below:~~sales:

Three months ended September 30,

Nine months ended September 30,

2021

2020

2021

2020

Revenue channel:

Department of Veterans Affairs and Department of Defense

63.6%

59.8%

60.7%

59.0%

National Health Service

24.1%

24.2%

25.6%

28.1%

	Three months ended June 30,			Six months ended June 30,
		2022	2021	2022	2021
Revenue channel:
VA/DoD		55.1%	61.3%	60.4%	59.0%
National Health Service		16.4%	27.0%	15.3%	26.4%

During the three months ended ~~September~~June 30, 2022 and 2021, 3 and ~~2020 4 and 5~~ ~~specific~~6 VA/~~DoD~~DOD facilities represented approximately ~~53.9%~~53.1% and ~~58.6%~~64.4%, respectively, of ~~the Company’s revenue from this channel,~~total VA/DOD net sales and 2 facilities accounted for more than 10% ~~individually, respectively.~~ of total VA/DOD net sales in both periods. During the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, 3 and ~~2020~~ 4 ~~and 3 specific~~ VA/~~DoD~~DOD facilities represented approximately ~~52.1%~~51.9% and ~~41.0%~~51.0%, respectively, of ~~the Company’s revenue from this channel,~~total VA/DOD net sales and 3 and 2 facilities accounted for more than 10% ~~individually,~~of total VA/DOD net sales, respectively.

Foreign Currency Exchange

The Company has foreign currency exchange risk 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 functional currency values of its assets, liabilities, and cash flows denominated in foreign currencies.

COVID-19 Risks and Uncertainties

The Company continues to monitor the impact of the coronavirus pandemic on all aspects of its business and geographies, including how it will impact business ~~partners.~~partners, customers, and the global supply chain. While the Company experienced disruptions during the three and ~~nine~~six months ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ from the coronavirus pandemic, it is unable to predict the full impact that the coronavirus pandemic may have on its financial condition, results of operations and cash flows due to numerous uncertainties. These uncertainties include the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others. ~~COVID-19~~The coronavirus pandemic has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. Depending upon the duration and severity of the pandemic, the continuing effect on the Company's results and outlook over the long term remains uncertain.

Note 4.4. Revenue ~~Recognition~~

Geographical Net Sales

The following table presents net sales disaggregated by geographic ~~area:~~
market:

		Three months ended September 30,			Nine months ended September 30,				Three months ended June 30,				Six months ended June 30,
		2021		2020	2021		2020
Geographic Market
(in thousands)										2022		2021		2022		2021
Product revenue
United States	$	1,103,604	$	800,767	$	2,810,152	$	1,759,477	$	1,690	$	882	$	3,284	$	1,706
United Kingdom		366,966		278,340		1,037,908		801,055		355		354		621		671
Other		16,523		1,734		112,341		7,035		64		33		103		96
License revenue
Japan										48		0—		48		0—
Total Net Sales	$	1,487,093	$	1,080,841	$	3,960,401	$	2,567,567	$	2,157	$	1,269	$	4,056	$	2,473

~~Note 5. Cash, Cash Equivalents~~Effective March 29, 2022, the Company entered into an agreement with Teijin Limited (Teijin), to license certain exclusive rights to its nVNS technology for commercialization in Japan for a range of primary headache disorders.

Under the agreement, the Company will receive a non-refundable, upfront payment for the licenses and ~~Marketable Securities~~rights granted to Teijin. The financial terms of the Teijin license agreement contain milestone payments, payable upon the decision by Teijin to commercialize the licensed product for specific indications. The Company also will receive an annual license fee commencing on the first anniversary of the agreement and payable annually until the first commercial sale on any approved indication. Upon favorable regulatory and payor coverage decisions in Japan, the parties plan to enter into an exclusive commercial supply agreement for gammaCore nVNS.

The ~~following tables summarize~~agreement contains customary terms and conditions, including renewal and termination provisions, as well as minimum purchase commitments once a commercial supply agreement is in place. Furthermore, Teijin is responsible for all costs associated with regulatory approval by the ~~Company’s cash, cash equivalents~~Pharmaceuticals and ~~marketable securities as~~Medical Devices Agency (PMDA), the Japanese FDA equivalent. As part of the agreement, Teijin will have the right of first negotiation for a license to additional indications in Japan. The Company began to recognize revenue from the non-refundable upfront payment over the 12-month period from the effective date due to the Company's continuing requirement to supply data under the agreement.~~September 30, 2021~~ ~~and~~ ~~December 31, 2020~~.

As of September 30, 2021

Amortized Cost

Unrealized Gain

Unrealized (Loss)

Fair Value

Cash and cash equivalents

$
37,995,008

$
0—

$
0—

$
37,995,008

Marketable securities:

U.S. Treasury Bonds

1,001,506

0—

(426
)

1,001,080

Total cash, cash equivalents, and marketable securities

$
38,996,514

$
0—

$
(426
)

$
38,996,088

As of December 31, 2020

Amortized Cost

Unrealized Gain

Unrealized (Loss)

Fair Value

Cash and cash equivalents

$
4,241,937

$
0—

$
0—

$
4,241,937

Marketable securities:

U.S. Treasury Bonds

18,388,970

0—

(2,810
)

18,386,160

Total cash, cash equivalents, and marketable securities

$
22,630,907

$
0—

$
(2,810
)

$
22,628,097

1312

Note ~~6. Fair Value Measurements~~5

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

•	~~Level 1—Quoted prices in active markets for identical assets or liabilities.~~

•

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

•	Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

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

Fair Value Hierarchy

September 30, 2021

Total

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents

$
37,995,008

$
37,995,008

$
0—

$
0—

Marketable Securities:

U.S. treasury bonds

1,001,080

1,001,080

0—

0—

Total

$
38,996,088

$
38,996,088

$
0—

$
0—

Fair Value Hierarchy

December 31, 2020

Total

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents

$
4,241,937

$
4,241,937

$
0—

$
0—

Marketable Securities:

U.S. treasury bonds

18,386,160

18,386,160

0—

0—

Total

$
22,628,097

$
22,628,097

$
0—

$
0—

~~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~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and year ended December 31, 2020. The carrying amount of the Company’s receivables and payables approximate their fair values due to their short maturities.~~

~~Note 7.~~. Inventories

As of ~~September~~June 30, ~~2021~~2022and December 31, ~~2020~~2021, inventories consisted of the following:

	September 30, 2021		December 31, 2020
(in thousands)					June 30, 2022		December 31, 2021
Raw materials	$	820,227	$	1,008,653	$	865	$	769
Work in process		4,163,251		4,304,415		3,437		4,072
Finished goods		447,856		428,549		342		461
Total inventories, net		5,431,334		5,741,617		4,644		5,302
Less: noncurrent inventories		4,349,009		4,865,181		2,905		3,941
Current inventories, net	$	1,082,325	$	876,436
Current inventories					$	1,739	$	1,361

Note 8. 6. Leases

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022 the Company recognized lease expense of ~~$52,351~~$38,000 and ~~$139,597,~~$76,000, respectively, and ~~$149,731~~ $47,000 and ~~$422,765~~ $87,000, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~ 2021 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.

Supplemental Balance Sheet Information for Operating Leases:

On September 27, 2021, the Company entered into the Termination and Settlement Agreement ("Agreement") with the lessor associated with its former headquarters located in Basking Ridge, NJ. The Agreement provided for the immediate termination of the Basking Ridge lease in its entirety. In consideration for the lease termination, the Company agreed to pay the lessor a total of $500,000 in cash and issue to the lessor 200,000 shares of its common stock. As of September 30, 2021, the Company paid a total of $398,523 in cash to the lessor and accrued approximately $320,000 for the Company's remaining obligation under the Agreement. On October 4, 2021, the 200,000 shares of stock were issued to the lessor. On October 5, 2021, the Company paid to the lessor the remaining cash payment of $101,477.

~~The tables below provide the details of the right of use assets and lease liabilities as of September 30, 2021 and December 31, 2020:~~

	September 30, 2021			December 31, 2020
(in thousands)							June 30, 2022			December 31, 2021
Operating leases:
Operating lease right of use assets	$	539,728		$	517,257		$	592		$	613
Operating lease liabilities:
Current portion of operating lease liabilities		58,482			534,547			68			61
Noncurrent operating lease liabilities		715,530			885,333			664			700
Total operating lease liabilities	$	774,012		$	1,419,880		$	732		$	761
Weighted average remaining lease term (in years)		7.3			5.7			6.7			6.9
Weighted average discount rate		13.8	%		13.8	%		13.8	%		13.8	%

(in thousands)
Remainder of 2022	$	81
2023		164
2024		168
2025		171
2026		161
2027 and thereafter		373
Total future minimum lease payments		1,118
Less: Amounts representing interest		(386	)
Total	$	732

Remainder of 2021

$
39,414

2022

160,486

2023

163,962

2024

167,524

2025 and thereafter

704,900

Total future minimum lease payments

1,236,286

Less: Amounts representing interest

(462,274
)
Total

$
774,012

Note 9.7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following:

September 30, 2021

December 31, 2020

Accrued professional fees

$
166,050

$
270,543

Accrued bonuses

1,400,403

1,424,878

Accrued insurance expense

873,592

164,832

Other employee related expenses

425,067

371,033
Accrued state taxes

548,705

0—
Lease settlement liability

320,000

0—
Other

696,026

734,416

$
4,429,843

$
2,965,702

(in thousands)	June 30, 2022		December 31, 2021
Accrued professional fees	$	503	$	468
Accrued bonuses and incentive compensation		910		1,849
Accrued legal fees litigation expense		947		605
Accrued insurance expense		0—		499
Accrued vacation and other employee related expenses		642		455
Accrued international taxes		85		263
Other		436		347
	$	3,523	$	4,486

Finance and Security ~~Agreements~~Agreement

On July 2, 2021, the Company entered into a Commercial Insurance Premium Finance and Security Agreement ~~("the~~(the "2021 Agreement"). The 2021 Agreement ~~provides~~provided for a single borrowing by the Company of $1.2 million, with a ~~ten-month~~ten-month term and an annual interest rate of 1.55%. 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. The Company began to pay monthly installments~~All borrowings were repaid as of ~~approximately $124,800 in July 2021. As of September~~June 30, ~~2021, the remaining balance under the Agreement is $873,592 and during the three and nine months ended September 30, 2021, the Company recognized $2,646 in interest expense.~~

2022. On July ~~1, 2020,~~5, 2022, the Company entered into a new Commercial Insurance Premium Finance and Security Agreement (“the 2020 Agreement”). The 2020 Agreement provided for a single borrowing by the Company of $1.2 million, with a seven-month term and an annual interest rate of 2.18%. The proceeds from this transaction were used to partially fund the premiums due under certain of the Company’s insurance policies. All borrowings related to the 2020 Agreement were fully repaid as of September 30, 2021.Agreement. See Note 12. Subsequent Event.

~~Note 10. Notes Payable~~

~~Loan Under the PPP~~

~~On May 4, 2020, the Company received proceeds of $1.4~~ million in connection with a promissory note (the “Note”) entered into with Citibank, N.A. (the “Lender”) evidencing an unsecured loan (the “Loan”) under the Paycheck Protection Program ("PPP"). The PPP is a program of the Small Business Administration ("SBA") established under the CARES Act. Under the PPP, the proceeds of the Loan may be used for payroll and certain covered interest payments, lease payments and utility payments (“Qualifying Expenses”). The Company used the entire Loan amount for Qualifying Expenses under the PPP.

~~On May 18, 2021~~, the Company received notification from the Lender of SBA's approval of the Company's application for loan forgiveness. Accordingly, the Company is not required to repay the loan. The Company has recorded the loan forgiveness as a gain in the accompanying Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021 under the caption Gain on extinguishment of debt.

~~Note 11. Stockholders’ Equity~~

~~Public Offering of Common Stock~~

On July 2, 2021, the Company completed a public offering of 20,700,000 shares of its common stock at a purchase price of $1.00 per share. The net proceeds of the offering to the Company were approximately $18.8 million, after deducting the underwriting discounts, commissions, and other offering expenses. The Company intends to use the net proceeds of the offering for sales and marketing, working capital, and general corporate purposes. While the Company has no current agreements or commitments for any specific acquisitions, in-licenses or investments at this time, it may use a portion of the net proceeds for these purposes.

~~Other Securities Purchase Agreements~~

On August 30, 2021, the Company entered into a Securities Purchase Agreement with its legal counsel pursuant to which the Company issued 952,380 shares of common stock, at a purchase price of $1.05 per share. Upon issuance of the shares, certain of the Company's outstanding financial obligations to its legal counsel were deemed paid and satisfied in full.

~~Lincoln Park Purchase Agreement~~

On March 27, 2020, the Company and Lincoln Park Capital Fund, LLC ("Lincoln Park") entered into an equity facility purchase agreement ("Purchase Agreement") pursuant to which the Company had the right to sell to Lincoln Park shares of its common stock having an aggregate value of up to $25,000,000, subject to certain limitations and conditions set forth in the Purchase Agreement.

~~Upon entering into the Purchase Agreement, the Company issued an aggregate of~~ ~~461,676~~ ~~shares of common stock to Lincoln Park as a commitment fee. The fair value of these shares on the date of issuance was approximately $186,300. During 2020, the Company issued an additional 230,838~~ ~~shares of common stock to Lincoln Park as a further commitment fee based on the first $5,000,000~~ ~~of shares of common stock issued to Lincoln Park under the Purchase Agreement as Purchase Shares (as such term is defined in the Purchase Agreement). The Company did not receive any cash proceeds from the issuance of any of the foregoing commitment shares.~~

~~During 2020, the Company sold~~ ~~10,179,676~~ ~~shares of its common stock under the Purchase Agreement, resulting in aggregate proceeds of approximately $15.5 million to the Company. In January~~ ~~2021~~, the Company sold an additional 2,750,000 shares of its common stock under the Purchase Agreement, resulting in aggregate proceeds of approximately $6.9 million to the Company. The Company expects to use the proceeds from this agreement for general corporate purposes and working capital. On March 11, 2021, the Company terminated the Purchase Agreement and, accordingly, the Company will not sell any further shares of its common stock to Lincoln Park under the Purchase Agreement.

~~Settlement of Accrued Bonus~~

~~In January 2021, the Company issued 165,413 shares of its common stock as payment for certain executive incentive bonuses accrued in 2020.~~

~~Settlement of Lease Liability~~

On September 27, 2021, the Company agreed to issue 200,000 shares of its common stock in connection with the lease termination related to its former headquarters located in Basking Ridge, NJ. As of September 30, 2021, these shares were not issued (see Note 8).

Note 128. 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. Restricted stock and unit awards, stock options, and 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:

Nine months ended September 30,

2021

2020

Outstanding stock options

5,131,263

3,693,943

Nonvested restricted stock and unit awards

1,153,364

1,230,651

Stock purchase warrants

216,944

715,199

6,501,571

5,639,793

~~The following table presents a summary of stock purchase warrants outstanding at September 30, 2021:~~

Number of Warrants
Exercise Price
Expiration Date
22,253
$
5.68
3/30/2022
17,066
$
12.60
6/30/2022
151,364 $ 12.60 8/18/2022
14,286 $
12.60
8/31/2022
11,975 $ 15.30 12/22/2025
216,944

~~During the nine months ended September 30, 2021, a total of 498,255 warrants expired. The exercise price of these warrants ranged between $8.86 and $12.60.~~

	Six months ended June 30,
(in thousands)	2022	2021
Outstanding stock options	6,282	5,070
Nonvested restricted stock and unit awards	947	1,265
Stock purchase warrants	178	217
	7,407	6,552

1714

Note ~~13.~~9. 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. On April 14, 2022, the Company received a net cash amount of approximately $445,000 from the sale of its New Jersey state net operating losses. In 2021, the Company received a net cash amount of approximately $880,000 from the sale of its New Jersey state net operating losses and tax credits. These sale proceeds are included in the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2022 and 2021, under the caption Benefit from income taxes.

Note 10. Stock Based Compensation

The following table presents a summary of activity related to stock options during the ~~nine~~six months ended ~~September~~June 30, ~~2021:~~2022:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)			Aggregate Intrinsic Value	Number of Options (in thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Outstanding, January 1, 2021		3,815,585		$	5.56		8.9	$	342,551
Outstanding, January 1, 2022										$	5,137		$	4.61		8.0
Granted		1,345,136			1.97				21,600		1,238			0.75
Exercised		0—			0—				0—		0—			0—
Cancelled		(29,458	)		5.22				*		(93	)		1.98
Outstanding, September 30, 2021		5,131,263		$	4.62		8.2	$	73,800
Exercisable, September 30, 2021		1,988,192		$	7.67		7.6	$	36,000
Outstanding, June 30, 2022										$	6,282		$	3.88		7.8
Exercisable, June 30, 2022										$	3,083		$	6.17		7.0

Number of Shares

Weighted Average Grant Date Fair Value

Nonvested, January 1, 2021

25,645

$
10.07

Granted

165,413

2.41

Vested

(149,894
)

2.82

Cancelled

(5,687
)

6.38

Nonvested, September 30, 2021

35,477

$
2.82

~~Note~~ 14~~. Income Taxes~~

~~The Company may be eligible, from time to time, to receive cash from the sale of its~~ ~~net operating losses and research and development tax credits under New Jersey's Department of the Treasury - Division of Taxation NOL Transfer Program.~~ ~~On June 7, 2021, the Company received a net cash amount of approximately~~ $~~1.4~~ ~~million from~~ ~~the sale of its New Jersey state net operating lossesand tax credits~~ ~~and recorded a tax benefit of approximately~~ ~~$880,000~~ ~~in connection with this receipt.On September 22, 2021, the Company received notification from the New Jersey's Department of the Treasury - Division of Taxation requesting the return of an overpayment of~~ ~~approximately~~ ~~$549,000~~ ~~related to the June 7, 2021 cash payment.~~ T~~he Company returned this overpayment on October 6, 2021.~~ ~~On May 6, 2020, the Company received a net cash amount of approximately~~ $~~1.2~~ ~~million from the~~ ~~sale of its New Jersey state net operating losses and research and development tax credits related to the year ended December 31, 2018~~. These sale proceeds are included in the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021 and September 30, 2020, under the caption Benefit from income taxes.

Note ~~15.~~11. Commitments and Contingencies

Stockholders Litigation

On July 8, 2019 and August 1, 2019, purported stockholders of the Company served putative class action lawsuits in the Superior Court of New Jersey for Somerset County, captioned Paul Kuehl vs. electroCore, Inc., et al., Docket No. SOM-L 000876-19 and Shirley Stone vs. electroCore, Inc., et al., Docket No. SOM-L 001007-19, respectively. In addition to the Company, the defendants include present and past directors and officers, Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities LLC and BTIG, LLC, the underwriters for its IPO; and two of the Company’s stockholders. On August 15, 2019, the Superior Court entered an order consolidating the Kuehl and Stone actions, which proceeded under Docket No. SOM-L 000876-19. Each plaintiff was appointed a co-lead plaintiff. The plaintiffs filed a consolidated amended complaint, which sought certification of a class of stockholders who purchased common stock in the IPO or whose purchases are traceable to that offering. The consolidated amended complaint alleged that the defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act with respect to the registration statement and related prospectus for the IPO. The complaint sought unspecified compensatory damages, interest, costs and attorneys’ fees.

On October 31, 2019, the Company and the other defendants filed a motion to dismiss the complaint or in the alternative to stay the action in favor of the pending federal action (discussed below). On February 21, 2020, the court granted the defendants’ motion to dismiss the consolidated amended complaint with prejudice. On March 2, 2020 the court entered an amended order dismissing the consolidated amended complaint with prejudice. On March 27, 2020, the plaintiffs filed a notice of appeal with the N.J. Superior Court – Appellate Division. The appeal was argued on September 27, 2021. On October 8, 2021, the Appellate Division issued an order reversing the decision of the Superior Court. The case has been remanded to the Superior Court for oral argument on the motion to dismiss. On November 11, 2021 the defendants filed a supplemental motion to dismiss orbased on the ~~alternative stay.~~forum selection clause in our certificate of incorporation's. On December 10, 2021, the Superior Court heard argument of the original motion to dismiss and the supplemental motion to dismiss based on the federal forum selection clause. On December 14, 2021, the Superior Court granted the supplemental motion to dismiss based on the federal forum selection clause with prejudice and granted the original motion to dismiss without prejudice. On January 27, 2022, the plaintiffs filed a notice of appeal to the Appellate Division. On April 15, 2022 the plaintiffs filed their appeal brief.The brief of defendant-appellees was filed on May 16, 2022. The appeal is fully briefed.No argument date for the appeal has been set.

On September 26, 2019 and October 31, 2019, purported stockholders of the Company served putative class action lawsuits in the United States District Court for the District of New Jersey captioned Allyn Turnofsky vs. electroCore, Inc., et al., Case 3:19-cv-18400, and Priewe vs. electroCore, Inc., et al., Case 1:19-cv-19653, respectively. 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. 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. The complaints each alleged that the defendants violated Sections 11 and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act, with respect to (i) the registration statement and related prospectus for the IPO, and (ii) certain post-IPO disclosures filed with the SEC. The complaints sought unspecified compensatory damages, interest, costs and attorneys’ fees. ThePriewecase 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. On July 17, 2020 the plaintiffs filed an amended complaint in Turnofsky. In addition to the prior claims, the amended complaint added an additional director defendant and 2 investors as defendants and adds a claim against the Company and the underwriters for violating Section 12(a)(2) of the Securities Act. On September 15, 2020, the Company and the other defendants filed a motion to dismiss the amended complaint for failure to state a claim. On November 6, 2020, the plaintiffs filed their opposition to the motion to dismiss. The Company and the other defendants filed reply papers in support of the motion on December 7, 2020. Argument of the motion to dismiss occurred on June 18, 2021. On August 13, 2021, the Court dismissed the amended complaint with leave to re-plead. On October 4, 2021, the plaintiffs filed a second amended ~~complaint. The parties are participating~~complaint in ~~a non-binding mediation with JAMS.A session with~~ the ~~JAMS mediator occurred~~Turnofsky case. Briefing on ~~March 30, 2021.~~the motion was complete on January 7, 2022. On July 5, 2022, the case was reassigned to Judge Zahid N. Quraishi, who has ordered that he will consider the pending motion to dismiss in due course. Argument of the motion has not yet been scheduled.

~~The~~ ~~Priewe~~ ~~case was voluntarily dismissed on February 19, 2020.~~

2017

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 action is captioned Richard Maltz, derivatively on behalf of electroCore, Inc., vs. Francis R. Amato, et al., Case 3:21-cv-04135. The defendants include present and past directors and officers of the Company. The plaintiff purports to pursue derivative claims on behalf of the Company in connection with the IPO and actions occurring between the IPO and September 25, 2019. The complaint alleges that demand on the board of directors is excused. The complaint purports to allege claims against the defendants for violating Section 14(a) of the Exchange Act, breaching fiduciary duties, unjust enrichment and waste of corporate assets. The complaint also purports to allege claims for contribution in connection with the Turnofsky case described above, pursuant to Section 11(f) of the Securities Act and Sections 10(b) and 21D of the Exchange Act. 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.

On March 8, 2021, purported stockholder Erin Yuson brought a purported stockholder derivative action in the United States District Court for the District of New Jersey. The action is captioned Erwin Yuson, derivatively on behalf of electroCore, Inc., vs. Francis R. Amato, et al., Case 3:21-cv-04481. The defendants include present and past directors and officers of the Company. The plaintiff purports to pursue derivative claims on behalf of the Company in connection with a 2019 proxy statement and actions occurring from the IPO through September 25, 2019. The complaint alleges that demand on the board of directors is excused. 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 plaintiffs in the Maltz and Yuson derivative actions agreed to consolidate and stay those actions. The actions are stayed until and through the resolution of any motion for summary judgment in the Turnofsky federal securities class action. A stipulation to that effect was filed by the plaintiffs on April 14, 2021 and ordered by the court on April 30, 2021. These cases also have been re-assigned.

The Company intends to continue to vigorously defend itself in these matters. However, in light of, among other things, the preliminary stage of these litigation matters, the Company is unable to determine the reasonable probability of loss or a range of potential loss. Accordingly, the Company has 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 will not result in substantial defense costs and/or judgments or settlements that could adversely affect the Company’s financial condition.

The Company is subject to various claims, complaints and legal actions in the normal course of business from time to time. The Company is not aware of any further currently pending litigation for which it believes the outcome could have a material adverse effect on its operations or financial position. The Company expenses associated legal fees including those relating to the stockholder litigation described in this Note 11 in the ~~period~~period they are incurred.

Note 12. Subsequent Event

On July 5, 2022, the Company entered into a Commercial Insurance Premium Finance and Security Agreement (the "2022 Agreement"). The 2022 Agreement provides for a single borrowing by the Company of approximately $783,000 thousand with a nine-month term and an annual interest rate of 2.49%. 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. The Company began to pay monthly installments of approximately $87,900 in July 2022.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

You should read this section in conjunction with our unaudited interim condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, ~~2020~~2021 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC. As discussed in the section ~~titled~~titled “Cautionary Note Regarding Forward-Looking Statements,” the following ~~discussion~~discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from ~~those~~those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those under the caption "Risk Factors" in the aforementioned Annual Report and this Form ~~10-Q.~~ 10-Q.

Overview

We are a ~~commercial-stage~~commercial stage medical device company with a proprietary non-invasive vagus nerve stimulation, or nVNS, ~~therapy.~~therapy, called gammaCore. nVNS is a platform bioelectronic medical therapy that modulates neurotransmitters and immune function through its effects on both the peripheral and central nervous systems. We are ~~initially~~ focused on ~~neurology,~~utilizing gammaCore in the management and ~~our~~treatment of primary headache conditions.

Our gammaCore nVNS therapy is the first non-invasive, hand-held medical therapy applied at the neck as an adjunctive therapy to treat migraine and cluster headache through the utilization of a mild electrical stimulation to the vagus nerve that passes through the skin. Designed as a portable, easy-to-use technology, gammaCore is ~~cleared~~self-administered by patients, prophylactically or as needed, without the ~~FDA for use by adults for~~potential side effects associated with commonly prescribed drugs. When placed on a patient ’s neck over the ~~following neurology indications:~~vagus nerve, gammaCore stimulates the ~~acute treatment~~nerve’s afferent fibers, which may lead to a reduction of pain ~~associated with each of migraine and episodic cluster headache, or eCH,~~in patients. gammaCore (nVNS) is FDA cleared in the ~~preventive treatment of migraine headache and~~United States for adjunctive use for the preventive treatment of cluster ~~headaches, or CH.~~ ~~In February 2021, the FDA cleared the use of~~ gammaCore for acute and preventive treatment of migraine in adolescents. In September 2021, the FDA cleared the use of gammaCore for the treatment of Paroxysmal Hemicrania (PH) and Hemicrania Continua (HC) in adults. PH and HC are rare forms of trigeminal autonomic cephalalgias that are typically debilitating and difficult to treat.

~~We are also considering the potential for several additional indications for our~~ ~~nVNS~~ ~~technology, which are being studied through several investigator-initiated studies. These indications include post traumatic~~ headache ~~stroke, traumatic brain injury, post-traumatic stress disorder, opioid use disorders and post-operative ileus.~~

~~Our strategy has been to focus on selling gammaCore to treat different forms of primary headache upon regulatory approval.~~ ~~Following our initial FDA clearance in early 2017, our commercial strategy was to establish gammaCore as a first-line treatment option for the acute treatment of episodic CH~~ in adult patients, who have few alternative treatment options available to them. This strategy was supported by a product registry conducted from July 2017 through June 2018 to build advocacy among key opinion leaders in leading headache centers in the United States, and to generate patient demand in the form of prescriptions submitted to payers. We leveraged this advocacy during the registry period as we expanded into migraine and prepared for a full commercial launch of gammaCore and gammaCore Sapphire for the acute treatment of pain associated with ~~eCH and migraine~~episodic cluster headache in adult patients, which was accomplished in the third quarter of 2018. With the clearance of adjunctive use for the prevention of CH in December 2018, we continued to build upon our existing base of advocacy and patient support. In March 2020, the FDA cleared gammaCore for the preventive treatment of migraine headache in adult patients. In February 2021, gammaCore was cleared by the FDA for the acute and preventive treatment of migraine in ~~adolescents between~~adults and adolescent (ages 12 and ~~17 years~~older) patients, and paroxysmal hemicrania and hemicrania continua in adult patients. gammaCore is CE-marked in the United Kingdom and European Union for the acute and/or prophylactic treatment of ~~age.~~primary headache (Migraine, Cluster Headache, Trigeminal Autonomic Cephalalgias and Hemicrania Continua) and Medication Overuse Headache in adults.

Since May 2019, we have primarily focused our sales efforts in two channels, the U.S. Department of Veterans Affairs and U.S. Department of Defense, and the United Kingdom.

More recently, we began making targeted investments to increase the adoption of our gammaCore therapy in both the United States and abroad. We continue to evaluate strategies to expand commercial adoption of gammaCore, including traditional reimbursement models as well as the potential use of ~~telemedicine~~e-commerce and cash pay ~~direct to physician~~models through direct-to-physician and ~~consumer~~direct-to-consumer approaches. ~~In future quarters, we~~We expect to make continued targeted investments in the evaluation and possible execution of these ~~strategies.~~strategies in future quarters. We are unable to predict the impact these strategies will have on our financial condition, results of operations and cash flows due to numerous uncertainties.

In April 2022, we announced that nVNS was selected for further study under the United States Department of Defense Biotech Optimized for Operational and Tactics (BOOST) research program conducted under the leadership of the 711 Human Performance Wing Performance Optimization Branch of the United States Air Force to provide accelerated training, sustained attention, reduced fatigue, and improved mood. The continued efforts of the BOOST Program may result in adoption by the United States Air Force of a device not intended for primary headache, which may result in the requirement by the Company to provide field devices to the United States Air Force in the future. We are unable to predict the impact the BOOST Program will have on our financial condition, results of operations and cash flows due to numerous uncertainties.

~~Recently,~~In addition, we have announced agreements with new distributors to make gammaCore Sapphire available in several countries beyond the U.S. and United ~~Kingdom.~~Kingdom, as well as a licensing agreement enabling market access activities to begin in Japan.

Capital Activities

On ~~July 2, 2021,~~January 18, 2022, we ~~completed~~filed a ~~public~~Form S-3 registration statement, or the 2022 Shelf Registration Statement, with the SEC, for the issuance of common stock, preferred stock, warrants, rights, debt securities and units, up to an aggregate amount of $75 million. The 2022 Shelf Registration Statement was declared effective on January 25, 2022.The proposed maximum offering price per unit and the proposed maximum aggregate offering price per class of ~~20,700,000 shares~~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. Until such time as the aggregate market value of our ~~common stock at a purchase~~securities held by non-affiliates equals or exceeds $75 million, the aggregate maximum offering price of ~~$1.00 per share. The net proceeds~~all securities issued by the us in any given 12-calendar month period pursuant to this and any of our other registration statements may not exceed one-third of the ~~offering~~aggregate market value of our securities held by non-affiliates.

License Agreement with Teijin Limited

On March 29, 2022, we entered into an agreement with Teijin Limited (Teijin), to ~~us were approximately $18.8 million, after deducting~~license certain exclusive rights to its nVNS technology for commercialization in Japan for a range of primary headache disorders.

Under the ~~underwriting discounts~~agreement, we will receive a non-refundable, upfront payment for the license and ~~commissions and other estimated offering expenses.~~rights granted to Teijin, which we expect to receive in the third quarter of 2022. The Company began to recognize revenue for this upfront payment ratably over a period of one year commencing in the second quarter of 2022. The financial terms contain milestone payments, payable upon the decision by Teijin to commercialize the licensed product for specific indications. We ~~intend to use~~will also receive an annual license fee commencing on the ~~net proceeds~~first anniversary of the ~~offering~~agreement and payable annually until the first commercial sale on any approved indication. Upon favorable regulatory and payor coverage decisions in Japan, the parties plan to enter into an exclusive commercial supply agreement for ~~sales~~gammaCore nVNS.

The agreement contains customary terms and ~~marketing, working capital,~~conditions, including renewal and ~~general corporate purposes. In addition, we believe that opportunities~~termination provisions, as well as minimum purchase commitments once a commercial supply agreement is in place. Furthermore, Teijin is responsible for all costs associated with regulatory approval by the Pharmaceuticals and Medical Devices Agency (PMDA), the Japanese FDA equivalent. As part of the agreement, Teijin will have the right of first negotiation for a license to additional indications in Japan.

Sale of New Jersey Net Operating Losses

We may ~~exist~~be eligible, from time to time, to ~~expand~~receive cash from the sale of our current business through acquisitions or in-licenses of, or investments in, complementary companies, medicines, intellectual property, or technologies. While we have no current agreements or commitments for any specific acquisitions, in-licenses or investments at this time, we may use a portionnet operating losses under New Jersey's Department of the Treasury - Division of Taxation NOL Transfer Program. On April 14, 2022, we received a net ~~proceeds for these purposes.~~

~~On August 30, 2021, we entered into a Securities Purchase Agreement with our legal counsel pursuant to which we issued 952,380 shares~~cash amount of ~~common stock, at a purchase price of $1.05 per share. Upon issuance of~~approximately $445,000 from the ~~shares, certain~~sale of our ~~outstanding financial obligations to our legal counsel were deemed paid and satisfied in full.~~New Jersey state net operating losses.

Impact of ~~COVID-~~19COVID-19

We ~~are closely monitoring~~continue to monitor the impact of the ~~COVID-19~~coronavirus pandemic on all aspects of our business and geographies, including how it will impact business ~~partners. In particular,~~partners, customers and the global supply chain. While we experienced disruptions during the three and six months ended June 30, 2022 and 2021 from the coronaviruspandemic, has resulted in a significant reduction in non-essential contact between patients and healthcare providers, shifting of focus by healthcare providers to the acute treatment of COVID-19 related illness regardless of specialty. We believe these restrictions have limited our sales force’s ability to generate additional interest in the Company’s products. Wewe are unable to predict the full impact that the ~~COVID-19~~coronavirus pandemic may have on our financial condition, results of operations and cash flows due to numerous uncertainties. These uncertainties include the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact ~~the development, rollout and availability of effective treatments and vaccines,~~ and the direct and indirect economic effects of the pandemic and containment measures, among others. The ~~COVID-19~~coronavirus pandemic ~~in many countries, including the United States,~~ has significantly adversely impacted global economic ~~activity. The global impact of the pandemic~~activity and has ~~been rapidly evolving~~contributed to significant volatility and many countries have reacted by instituting quarantines, mandating business and school closures and restricting travel. The federal government, certain states and cities, including those where our principal place of business is located and sales force seeks to operate, have also reacted by instituting quarantines, vaccine mandates, restrictions on travel, “shelternegative pressure in place” rules, and restrictions on types of business that may continue to operate. We cannot predict if the federal government or additional states and cities will implement similar or additional restrictions or when restrictions or mandates currently in place will expire. As a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly, including industries in which we operate. Further, the impacts of a potential worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets, consumer spending as well as other unanticipated consequences remain unknown. See Item 1A. Risk Factors in this Form 10-Q, for discussion of certain risks associated with COVID-19 including the potential adverse effects on our workforce of the proposed U.S. Government vaccine mandate for employees, contractors, and subcontractors that service federal contracts. Additionally, see the section titled Risk Factors in our 2020 Annual Report on Form 10-K for discussion of risks related to COVID-19.

~~Because the COVID-19 pandemic affected, among other things, our access to prescribing physicians and their access to headache patients, we believe that our results for the nine months ended~~ ~~September~~ 30, 2021 and 2020 reflect a negative impact from, among other things, the global pandemic. Moreover, our expectations for at least the remainder of 2021 have also been adversely affected by both the uncertainty and potential negative impact of the global pandemic.markets. Depending upon the duration and severity of the pandemic, the continuing effect on our results and outlook over the long term remains uncertain.

Critical Accounting Policies and Estimates

~~In July 2020, the Company received an EUA for use~~The significant accounting policies and basis of ~~its gammaCore Sapphire CV nVNS therapy for the acute treatment~~presentation of ~~asthma exacerbations~~our condensed consolidated financial statements are described in ~~known or suspected COVID-19 patients. This EUA is expected to remain in effect for the duration~~Note 2 “Summary of Significant Accounting Policies” of the ~~COVID-19 pandemic justifying emergency use~~consolidated financial statements included with the annual report on Form 10-K.included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC on March 10, 2022 ("2021 Annual Report"), and in Note 2 "Summary of ~~these devices unless terminated or revoked by the FDA (after which products may no longer be used). The length~~Significant Accounting Policies" of the ~~effective period of~~condensed consolidated financial statements included within this EUA is uncertain. We did not recognize material revenue from the sales of gammaCore Sapphire CV during the nine months ended September 30, 2021 and we do not expect to recognize material revenue from the sales of gammaCore Sapphire CV in general.quarterly report on Form 10-Q.

The preparation of our financial statements is in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, require us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and other related disclosures. While we believe our estimates, assumptions and judgments are reasonable, they are based on information presently available. Actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material impact on our financial position and results of operations.

The critical accounting policies that we believe, the judgements, estimates, and assumptions associated with such policies, have the greatest potential impact on the condensed consolidated financial statements are disclosed in the section titled Critical Accounting Policies and Estimates in Part II of our 2021 Annual Report.

2320

Results of Operations

Comparison of the three months ended ~~September~~June 30, ~~2021~~2022 to the three months ended ~~September~~June 30, ~~2020~~2021

The following table sets forth amounts from our condensed consolidated statements of operations for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021:

For the three months ended September 30,

2021

2020

Change

(in thousands)

Consolidated statements of operations:

Net sales

$
1,487.1

$
1,080.9

$
406.2
Cost of goods sold

355.0

347.5

7.5
Gross profit

1,132.1

733.4

398.7
Operating expenses

Research and development

470.3

629.1

(158.8
)
Selling, general and administrative

4,646.8

4,592.9

53.9
Total operating expenses

5,117.1

5,222.0

(104.9
)
Loss from operations

(3,985.0
)

(4,488.6
)

503.6

Other (income) expense

Interest and other income

(3.8)

(5.8
)

2.0
Other expense

3.8

3.6

0.2
Total other (income) expense

—

(2.2
)

2.2
Loss before income taxes

(3,985.0 )

(4,486.4 )

501.4
Provision for income taxes

(8.7 )

—

(8.7 )
Net loss

$
(3,993.7
)

$
(4,486.4
)

$
492.7

	For the three months ended June 30,
	2022			2021			Change
	(in thousands)
Consolidated statements of operations:
Net sales	$	2,157		$	1,269		$	888
Cost of goods sold		358			374			(16	)
Gross profit		1,799			895			904
Operating expenses
Research and development		1,341			825			516
Selling, general and administrative		6,278			5,272			1,006
Total operating expenses		7,619			6,097			1,522
Loss from operations		(5,820	)		(5,202	)		(618	)
Other (income) expense
Gain on extinguishment of debt		—			(1,422)			1,422
Interest and other income		(38	)		(1	)		(37	)
Other expense		—			—			—
Total other (income) expense		(38	)		(1,423	)		1,385
Loss before income taxes		(5,782	)		(3,779	)		(2,003	)
Benefit from income taxes		445			885			(440	)
Net loss	$	(5,337	)	$	(2,894	)	$	(2,443	)

Net Sales

Net sales increased ~~38%~~70% for the three months ended ~~September~~June 30, ~~2021~~2022 compared to the comparable prior year period. This increase of ~~$406.2 thousand~~$888,000 is due to ~~increased~~ an increase in net sales across all major channels including ~~Commercial,~~ the U.S. Department of Veteran Affairs, U.S. commercial channel, and sales ~~, and~~from outside the U.S. which includes licensing revenue of $48,000 in the ~~United Kingdom,~~three months ended June 30, 2022. There was no licensing revenue in the comparable prior year. ~~as well as sales~~Revenue from ~~our new distributors~~ outside the U.S. was adversely impacted due to the strengthening of the ~~United States. For~~U.S. dollar during the ~~remainder of our 2021 fiscal year, we~~three months ended June 30, 2022. We expect that the majority of our remaining 2022 fiscal year revenue will continue to come from the U.S. Department of Veterans Affairs and United Kingdom. Additionally, we expect to increase revenue from our commercial channel through cash pay models via direct-to-consumer approaches through our online stores in the U.S. and United Kingdom. We also expect revenues to expand from our cash pay propositions which include direct to physician models for traditional neurology headache specialists, as well as the wide range of medical providers who manage patients' headache conditions including primary care physicians, women's health, pain management, sports medicine, functional and integrative medicine professionals, as well as chiropractors, and PharmDs (Doctors of Pharmacy).

Gross Profit

Gross profit increased ~~$398.7 thousand~~by $904,000 for the three months ended ~~September~~June 30, ~~2021~~2022 compared to the comparable prior year ~~period due to the increase in net sales.~~ period. Gross margin was ~~76%~~83% and ~~68%~~71% for the three months ended ~~September~~June 30, 2022 and 2021, respectively. ~~and~~ ~~2020, respectively.~~Our evolving commercial strategy has resulted in the launch of cash payment models under which we license certain starter devices. The ~~increase~~cost of the licensed starter device is being recognized as cost of goods sold over the estimated useful life of the starter device versus expensing the cost of goods at the time of sale. Moreover, in ~~gross margin~~ ~~was largely due to increased sales~~recent quarters, we have sold an increasing amount of longer duration therapy, resulting in a ~~more~~higher average selling price, as well as selling an increased number of refill kits with a lower cost of goods. These factors, including Teijin license revenue with no associated cost of goods, and favorable absorption of labor and overhead costs associated with the increased number of units sold contributed to the increase in gross margin. Gross profit and gross margin for the remainder of 2022 will be largely dependent on revenue levels, product ~~mix.~~mix, any changes in the estimated useful lives of licensed starter devices, and the pricing levels of our therapy.

Research and Development

Research and development expense ~~decreased~~increased by ~~$158.8 thousand~~$516,000, or ~~25%~~63%, for the three months ended ~~September~~June 30, ~~2021~~2022 compared to the prior year period. This ~~reduction~~increase was primarily due to ~~significant reductions~~ ~~in investment in research and development offset by~~ targeted investments to support the future iterations of our therapy delivery platform, including the use of our intellectual property around the delivery of smartphone-integrated and smartphone-connected non-invasive therapies.

Selling, General and Administrative

Selling, general and administrative expense of $6.3 million for the three months ended June 30, 2022 increased by $1.0 million, or 19%, compared to the comparable prior year period as we continued to make targeted investments to support our commercial efforts.

Other (Income) Expense

Other (income) expense for the three months ended June 30, 2021 primarily represents the gain of $1.4 million recorded by the Company in association with the forgiveness of its Paycheck Protection Program ("PPP") loan. For both the 2022 and 2021 periods, Interest and other income primarily consists of interest earned on cash, cash equivalents and marketable securities.

Benefit from Income Taxes

The Benefit from income taxes of $445,000 and $885,000 for the three months ended June 30, 2022 and 2021, respectively, represent primarily the sale of our 2022 and 2021 state net operating losses and research and development tax credits under the State of New Jersey’s NOL Transfer Program.

Comparison of the six months ended June 30, 2022 to the six months ended June 30, 2021

The following table sets forth amounts from our condensed consolidated statements of operations for the six months ended June 30, 2022 and 2021:

	For the six months ended June 30,
	2022			2021			Change
	(in thousands)
Consolidated statements of operations:
Net sales	$	4,056		$	2,473		$	1,583
Cost of goods sold		718			738			(20	)
Gross profit		3,338			1,735			1,603
Operating expenses
Research and development		2,275			1,324			951
Selling, general and administrative		12,464			10,997			1,467
Total operating expenses		14,739			12,321			2,418
Loss from operations		(11,401	)		(10,586	)		(815	)
Other (income) expense
Gain on extinguishment of debt		—			(1,422	)		1,422
Interest and other income		(42	)		(1	)		(41	)
Other expense		5			—			5
Total other (income) expense		(37	)		(1,423	)		1,386
Loss before income taxes		(11,364	)		(9,163	)		(2,201	)
Benefit for income taxes		445			885			(440	)
Net loss	$	(10,919	)	$	(8,278	)	$	(2,641	)

Net Sales

Net sales increased 64% for the six months ended June 30, 2022 compared to the prior year period. The increase of $1.6 million is due net sales from all major channels including the U.S. Department of Veteran Affairs, U.S. commercial channel, andnet sales from outside the U.S. which include $48,000 of licensing revenue recognized in the six months ending June 30, 2022. Excluding the licensing revenue, net sales from outside the U.S. decreased by $43,000 due principally to the impact of the COVID-19 pandemic on our National Health Service (NHS) channel in the United Kingdom and the strengthening of the U.S. dollar in the six months ended 2022.We expect that the majority of our remaining 2022 fiscal year revenue will continue to come from the U.S. Department of Veterans Affairs and the NHS in the United Kingdom. However, we expect to increase revenue from our commercial channel through cash pay models via direct-to-consumer approaches through our online stores in the U.S. and United Kingdom. We also expect revenues to increase from our cash pay propositions which include direct to physician models for traditional neurology headache specialists, as well as the wide range of medical providers who manage patients' headache conditions including primary care physicians, women's health, pain management, functional and integrative medicine professionals, as well as chiropractors, and PharmDs (Doctors of Pharmacy).

Gross Profit

Gross profit increased $1.6 million for the six months ended June 30, 2022 compared to the prior year. Gross margin increased to 82% for the six months ended June 30, 2022 compared to 70% for the six months ended June 30, 2021. Our evolving commercial strategy has resulted in the launch of cash payment models under which we license certain ~~investigator-initiated trials, scientific publications~~starter devices. The cost of the licensed starter device is being recognized as cost of goods sold over the estimated useful life of the starter device versus expensing the cost of goods at the time of sale. Moreover, in recent quarters, we have sold an increasing amount of longer duration therapy, resulting in a higher average selling price, as well as selling an increased number of refill kits with a lower cost of goods. These factors, including Teijin license revenue with no associated cost of goods and favorable absorption of labor and overhead costs associated with the increased number of units sold contributed to the increase in gross margin. Gross profit and gross margin for the remainder of 2022 will be largely dependent on revenue levels, product ~~development.~~mix, any changes in the estimated useful lives of licensed starter devices, and the pricing levels of our therapy.

Research and Development

Research and development expense increased by $1.0 million or 72% for the six months ended June 30, 2022 compared to the prior year period. This increase was primarily due to targeted investments to support the future iterations of our therapy delivery platform, including the use of our intellectual property around the delivery of smartphone-integrated and smartphone-connected non-invasive therapies.

Selling, General and Administrative

Selling, general and administrative expense was ~~consistent with the prior year period.~~ ~~We expect an increase in our selling, general,~~$12.5 million and ~~administrative expense for the remainder of our 2021 fiscal year as we may make targeted investments to support our commercial efforts.~~

~~Other (Income) Expense~~

~~Interest and other income of $3,834 and $5,719 for the~~ ~~three months ended September 30, 2021~~ ~~and 2020, respectively, primarily consists of interest earned on cash,~~ ~~cash equivalents and marketable securities.~~

~~Comparison of the nine months ended~~ ~~September 30, 2021~~ ~~to the nine months ended September 30, 2020~~

~~The following table sets forth amounts from our consolidated statements of operations for the nine months ended September 30, 2021 and 2020:~~

For the nine months ended September 30,

2021

2020

Change

(in thousands)

Consolidated statements of operations:

Net sales

$
3,960.4

$
2,567.6

$
1,392.8
Cost of goods sold

1,093.3

918.6

174.7
Gross profit

2,867.1

1,649.0

1,218.1
Operating expenses

Research and development

1,794.1

3,182.7

(1,388.6 )
Selling, general and administrative

15,644.3

16,427.0

(782.7 )
Restructuring and other severance related charges

—

464.6

(464.6 )
Total operating expenses

17,438.4

20,074.3

(2,635.9 )
Loss from operations

(14,571.3
)

(18,425.3
)

3,854.0

Other (income) expense

Gain on extinguishment of debt

(1,422.2 )

—

(1,422.2 )
Interest and other income

(8.4
)

(80.5
)

72.1

Other expense

7.3

13.4

(6.1 )
Total other (income) expense

(1,423.3
)

(67.1
)

(1,356.2 )
Loss before income taxes

(13,148.0
)

(18,358.2
)

5,210.2

Benefit from income taxes

876.7

1,170.9

(294.2 )
Net loss

$
(12,271.3
)

$
(17,187.3
)

$
4,916.0

~~Net Sales~~

~~Net sales increased 54% for the nine months ended September 30, 2021 compared to the prior year period. The increase of $1.4 million is due to increased sales across all major channels including~~ ~~Commercial, the U.S. Department of Veteran Affairs, and in the United Kingdom, as well as sales from our new distributors outside of the United States.~~ ~~For the remainder of our 2021 fiscal year, we expect the majority of our revenue will come from the U.S. Department of Veterans Affairs and United Kingdom.~~

~~Gross Profit~~

~~Gross profit increased $1.2~~$11.0 million for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, ~~compared to the prior year. Gross margin increased to 72% for the nine months ended September 30, 2021 compared to 64% for the nine months ended September 30, 2020.~~respectively, ~~These increased gross profits were largely due to increased sales resulting in more favorable absorption of labor and overhead costs and product mix.~~

~~Research and Development~~

Research and development expense decreased by $1.4 million or 44% for the nine months ended September 30, 2021 compared to the prior year period. This reduction was primarily due to significant reductions ~~in investment in research and development~~ ~~including the early termination of our Premium II clinical trial~~, offset by the initial payment for an investigator-initiated study for the treatment of post-traumatic headache, and targeted investments to support certain investigator-initiated trials, scientific publications and product development.

~~Selling, General and Administrative~~

Selling, general and administrative expense was $15.6 million and $16.4 million for the nine months ended September 30, 2021 and 2020, respectively. The $782.7 thousand decrease was primarily due to cost reductions associated with the outbreak of the COVID-19 pandemic, offset by reinvestment in the commercial business as the pandemic began to subside. ~~We expect an increase in our selling, general, and administrative expense for the remainder of our 2021 fiscal year~~ as we ~~may~~continued to make targeted investments to support our commercial efforts.

~~Restructuring and Other Severance Related Charges~~

There were no restructuring and other severance related costs for the nine months ended September 30, 2021. Restructuring and other severance related costs for the nine months ended September 30, 2020 of $464,606 consisted of severance related exp~~enses in connection with personnel changes.~~

Other (Income) Expense

Other (income) expense for the ~~nine~~six months ended ~~September~~June 30, 2021 primarily represents the gain of ~~$1.4~~$1.4 million recorded by the Company in association with the forgiveness of its ~~PPP~~Paycheck Protection Program ("PPP") loan. For both the 2022 and 2021 periods, Interest and other income~~of $8,493 and $80,460 for the nine months ended September 30, 2021 and 2020, respectively,~~ primarily consists of interest earned on cash and cash equivalents and, in the prior year period, marketable securities. Other expense relates to borrowings used to partially fund the premiums due under certain of our insurance policies.

Benefit from Income Taxes

The ~~benefit~~Benefit from income taxes of ~~$0.9 million~~$445,000 and ~~$1.2 million~~$885,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, represent the sale of our 2019 and 2018 state net operating losses and research and development tax credits under the State of New Jersey's NOL Transfer Program.

Cash Flows

The following table sets forth the significant sources and uses of cash for the periods noted below:

	For the nine months ended September 30,						For the six months ended June 30,
	2021			2020			2022			2021
	(in millions)						(in thousands)
Net cash (used in) provided by
Operating activities	$	(9.3	)	$	(16.5	)	$	(8,024	)	$	(5,826	)
Investing activities	$	17.2		$	(11.7	)	$	—		$	9,217
Financing activities	$	25.7		$	18.6		$	—		$	6,920

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We develop our products in the United States and sell those products into several countries. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. Most of our sales in Europe are denominated in British Pound ~~Sterling.~~Sterling and our license agreement with Teijin is denominated in Japanese Yen. As our sales in currencies other than the U.S. dollar increase, our exposure to foreign currency fluctuations may increase. In addition, changes in exchange rates also may affect the end-user prices of our products compared to those of our foreign competitors, who may be selling their products based on local currency pricing. These factors may make our products less competitive in some countries.

If the U.S. dollar uniformly increased or decreased in strength by 10% relative to the currencies in which our sales were denominated, our net income would have correspondingly increased or decreased by an immaterial amount for the ~~nine~~ three months ended ~~September~~June 30, ~~2021~~2022.

Our exposure to market interest rate risk is confined to our cash and cash equivalents and marketable securities. The goals of our investment policy are preservation of capital, fulfillment of liquidity needs and fiduciary control of cash and investments. We also seek to maximize income from our investments without assuming significant risk. To achieve our goals, we may maintain a portfolio of cash equivalents and investments in a variety of securities of high credit quality. The securities in our investment portfolio, if any, are not leveraged, are classified as available for sale and are, due to their very short-term nature, subject to minimal interest rate risk. We currently do not hedge interest rate exposure. Because of the short-term maturities of our cash equivalents, we do not believe that an increase in market rates would have any material negative impact on interest income recognized in our statement of operations. We have no investments denominated in foreign currencies and therefore our investments are not subject to foreign currency exchange risk. We contract with CROs, investigational sites, suppliers and other vendors in Europe and internationally. In addition, our recently announced license agreement requires payments to us to bedenominated in Japanese Yen. 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 ~~September~~June 30, ~~2021.~~2022.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decision making regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.

As required by Rule 13a-15(b) of the Exchange Act, an evaluation as of ~~September~~June 30, ~~2021~~2022 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 13a-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of ~~September~~June 30,~~, 2021~~ 2022 were effective for the purposes stated above.

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 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during the three months ended ~~September~~June 30, ~~2021~~2022 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

2825

PART II— OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

~~On July 8, 2019~~The information set forth in Note 11. Commitments and ~~August 1, 2019, purported stockholders of our company served putative class action lawsuits in the Superior Court of New Jersey for Somerset County, captioned~~ ~~Paul Kuehl vs. electroCore, Inc., et al.~~Contingencies – Stockholders Litigation, Docket No. SOM-L 000876-19 and Shirley Stone vs. electroCore, Inc., et al., Docket No. SOM-L 001007-19, respectively. In addition to our company, the defendants included present and past directors and officers, Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities LLC and BTIG, LLC, the underwriters for our IPO; and two of our stockholders. On August 15, 2019, the Superior Court entered an order consolidating the ~~Kuehl~~ ~~and~~ ~~Stone~~ actions, which proceeded under Docket No. SOM-L 000876-19. Each plaintiff was appointed a co-lead plaintiff. The plaintiffs filed a consolidated amended complaint, which sought certification of a class of stockholders who purchased our common stock in our IPO or whose purchases are traceable to that offering. The consolidated amended complaint alleged that the defendants violated Sections 11, 12(a)(2) and 15 of the ~~Securities Act~~condensed consolidated financial statements included with ~~respect~~our quarterly report on Form 10-Q is incorporated here by reference to the registration statement and related prospectus for the IPO. The complaint sought unspecified compensatory damages, interest, costs and attorneys’ fees. On October 31, 2019, the Company and the other defendants filed a motion to dismiss the complaint or in the alternative to stay the action in favor of the pending federal action (discussed below). On February 21, 2020 the court granted the defendants’ motion to dismiss the consolidated amended complaint with prejudice. On March 2, 2020 the court entered an amended order dismissing the consolidated amended complaint with prejudice. On March 27, 2020, the plaintiffs filed a notice of appeal with the N.J. Superior Court - Appellate Division. The appeal was argued on September 27, 2021. On October 8, 2021, the Appellate Division issued an order reversing the decision of the Superior Court. The case has been remanded to the Superior Court for oral argument on the motion to dismiss or the alternative stay.this Part II Item 1.

~~On September 26, 2019 and October 31, 2019, purported stockholders of our company served putative class action lawsuits in the United States District Court for the District of New Jersey captioned~~ ~~Allyn Turnofsky vs. electroCore, Inc., et al~~., Case 3:19-cv-18400, and Priewe vs. electroCore, Inc., et al., Case 1:19-cv-19653, respectively. In addition to our 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 our IPO. The plaintiffs each seek to represent a class of stockholders who (i) purchased our common stock in our IPO or whose purchases are traceable to the IPO, or (ii) who purchased common stock between the IPO and September 25, 2019. The complaints each alleged that the defendants violated Sections 11 and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act, with respect to (i) the registration statement and related prospectus for the IPO, and (ii) certain post-IPO disclosures filed with the SEC. The complaints sought unspecified compensatory damages, interest, costs and attorneys’ fees.

~~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. On July 17, 2020 the plaintiffs filed an amended complaint in ~~Turnofsky~~. In addition to the prior claims, the amended complaint adds an additional director defendant and two investors as defendants, adds a claim against the Company and the underwriters for violating Section 12(a)(2) of the Securities Act. On September 15, 2020, the Company and the other defendants filed a motion to dismiss the amended complaint for failure to state a claim. On November 6, 2020, the plaintiffs filed their opposition to the motion to dismiss. The Company and the other defendants filed reply papers in support of the motion on December 7, 2020. Argument of the motion to dismiss occurred on June 18, 2021. On August 13, 2021, the Court dismissed the amended complaint with leave to re-plead. On October 4, 2021, the plaintiffs filed a second amended complaint. The parties are participating in a non-binding mediation with JAMS. A session with the JAMS mediator occurred on March 30, 2021.

~~The Priewe case was voluntarily dismissed on February 19, 2020.~~

~~On March 4, 2021, purported stockholder~~ ~~Richard Martz~~ ~~brought a purported stockholder derivative action in the United States District Court for the District of New Jersey. The action is captioned~~ ~~Richard Maltz, derivatively on behalf of electroCore, Inc., vs. Francis R. Amato, et al~~., Case 3:21-cv-04135. The defendants include present and past directors and officers of the Company. The plaintiff purports to pursue derivative claims on behalf of the Company in connection with the IPO and actions occurring between the IPO and September 25, 2019. The complaint alleges that demand on the board of directors is excused. The complaint purports to allege claims against the defendants for violating Section 14(a) of the Exchange Act, breaching fiduciary duties, unjust enrichment and waste of corporate assets. The complaint also purports to allege claims for contribution in connection with the ~~Turnofsky~~ case described above, pursuant to Section 11(f) of the Securities Act and Sections 10(b) and 21D of the Exchange Act. 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.

~~On March 8, 2021, purported stockholder Erin~~ ~~Yuson~~ ~~brought a purported stockholder derivative action in the United States District Court for the District of New Jersey. The action is captioned~~ ~~Erwin~~ ~~Yuson~~, ~~derivatively on behalf of~~ ~~electroCore~~, ~~Inc., vs. Francis R. Amato, et al~~., Case 3:21-cv-04481. The defendants include present and past directors and officers of the Company. The plaintiff purports to pursue derivative claims on behalf of the Company in connection with a 2019 proxy statement and actions occurring from the IPO through September 25, 2019. The complaint alleges that demand on the board of directors is excused. 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 plaintiffs in the~~ ~~Maltz~~ ~~and~~ ~~Yuson~~ ~~derivative actions agreed to consolidate and stay those actions.~~ T~~he actions are stayed until and through the resolution of any motion for summary judgment in the~~ ~~Turnofsky~~ ~~federal securities class action. A stipulation to that effect was filed by the plaintiffs on April 14, 2021 and ordered by the court on April 30, 2021.~~

We intend to continue to vigorously defend ourselves in these matters. However, in light of, among other things, the preliminary stage of these litigation matters, we are unable to determine the reasonable probability of loss or a range of potential loss. 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 will not result in substantial defense costs and/or judgments or settlements that could adversely affect our financial condition.

Item 1A.

RISK FACTORS

You should carefully consider the ~~following~~ risk factorsincluded in Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2021 (Annual Report), which was filed with the SEC on March 10, 2022, in addition to the following risk factor, and the other information in this report on Form 10-Q, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. If any of the events described in our Annual Report, the following risk ~~factors~~factor and the risks described elsewhere in this report on Form 10-Q ~~occurs,~~occur, our business, operating results and financial condition could be seriously harmed. This report on Form 10-Q also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described in our Annual Report, below and elsewhere in this report. ~~The risk factor set forth below contains changes~~

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.

On June 22, 2022, we received approval (the “Approval”) from the Nasdaq Listing Qualifications Department of the Nasdaq Stock Market (the “Nasdaq”) that our application to transfer the listing of our common stock from the Nasdaq Global Select Market to the ~~similarly titled risk factor included~~Nasdaq Capital Market had been approved. The common stock was transferred to the Nasdaq Capital Market at the opening of business on June 23, 2022. The common stock will continue to trade under the symbol “ECOR.” The Nasdaq Capital Market operates in ~~Item 1A~~substantially the same manner as the Nasdaq Global Select Market, and listed companies must meet certain financial requirements and comply with Nasdaq’s corporate governance requirements. On December 20, 2021, we received a letter from Nasdaq indicating that we were not in compliance with Nasdaq Listing Rule 5450(a)(1) because the closing bid price per share for our common stock had closed below $1.00 for the previous 30 consecutive business days (the “Bid Price Rule”). We were given until June 20, 2022, to regain compliance with the rule. In response, we filed an application to transfer the listing of our ~~Annual Report on Form 10-K for~~common stock from the ~~year ended December 31, 2021, which was filed with~~Nasdaq Global Select Market to the ~~SEC on March 11, 2021.~~

~~Risks Related to COVID-19~~

~~The coronavirus pandemic could have a significant negative impact on our business, revenues, financial condition and results of operations.~~

The persistence of the coronavirus pandemic has severely depressed the level of economic activity around the world. Many businesses and governments have taken preventative or protective actions, including mandatory COVID-19 vaccinations for employees, restrictions on travel and business operations, and advising or requiring individuals to limit or forego their time outside of their homes.Nasdaq Capital Market. As a result of ~~those employees who choose not to receive a vaccination, there may be changes in~~ the ~~workforce. Temporary closures of many businesses~~Approval, we have been ~~ordered~~granted an additional 180-day grace period, or until December 19, 2022, to regain compliance with the Bid Price Rule. To regain compliance with the Bid Price Rule and ~~numerous other businesses have temporarily closed voluntarily. Further, individuals' ability~~qualify for continued listing on the Nasdaq Capital Market, the minimum bid price per share of our common stock must be at least $1.00 for at least 10 consecutive business days on or prior to ~~travel has been curtailed through mandated travel restrictions, voluntary or mandated closures~~December 19, 2022. As a condition of ~~travel-related businesses, as well as quarantines, shelter-in-place/stay-at-home and social distancing orders.~~ the Approval imposed by Nasdaq Listing Rule 5810(c)(3)(a)(i), we notified Nasdaq that we intend to affect a reverse stock split, if necessary, to regain compliance with the Bid Price Rule.

~~This coronavirus pandemic has also impacted, and may continue~~If we fail to ~~impact, our headquarters, manufacturing, and warehousing and distribution facilities, as well as those~~regain compliance during the additional compliance period, then Nasdaq will notify us of our third-party vendors, including through the effects of facility closures, employee furloughs, reductions in operating hours, staggered shifts and other social distancing efforts, labor shortages, decreased productivity and unavailability of materials or components. For example, we have limited accessits determination to our New Jersey office as a result of state-imposed restrictions. Furthermore, the recent Biden administration’s executive order requiring all on-site and remote federal employees, contractors and sub-contractors to be vaccinated against COVID-19 or receive an approved medical or religious exemption by December 8, 2021 may apply to us because of ourdelist ~~Federal Supply Schedule Medical Equipment and Supply contract. Failure~~our common stock, at which point we would have an opportunity to ~~comply with~~appeal the executive order could lead to loss of the contract, which could have a material adverse effect on our business, revenues, financial condition and results of operations. In light of the executive order, we have implemented a mandatory COVID-19 vaccination policy for all employees. All of our U.S. employees had to provide proof of vaccination by November 1, 2021, subject to medical and religious exemptions. To the extent an employee qualifies for a medical or religious exemption, we will collaborate with the exempt employee to explore reasonable accommodation options that may permit the employee to perform the essential functions of their job without being vaccinated. We will be unable to accommodate an employee’s exemption request if such accommodation would prevent an employee from performing the essential functions of their job, or would result in undue hardship, which includes, but in not limiteddelisting determination to a risk of harm to others. There can be no assurance that this policy will not have an adverse effect on our recruitment and retention of, and relations with our employees. The coronavirus pandemic may also impact our ability to sell our product, ship our product on a timely basis and may increase our costs.

The spread of coronavirus has also caused us to modify our business practices (including a mandatory COVID-19 vaccine policy, social distancing practices, requiring non-essential production related team members to work remotely where possible, restricting business travel, cancelling certain events, and limiting visitor access to our facilities)Nasdaq Listing Qualifications Panel (the “Panel”), and we may take further actions as may be required by government authorities or that we determine are necessary or advisable. Work-from-home and other measures introduce additional operational risks, including cybersecurity risks, and have affected the way we conduct our business, which could have an adverse effect on our operations. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and illness and workforce disruptions could lead to unavailability of key personnel and harm our ability to perform critical functions. In addition, work-from-home and related business practice modifications present significant challenges to maintaining our corporate culture, including employee engagement and productivity, both during the immediate pandemic crisis and as we make additional adjustments in the eventual transition from it. Implementing new business practices in order to protect employees, vendors and other parties with whom we interact may result in increased costs. Furthermore, even if we follow what we believe to be best practices,but there can be no assurance that the Panel would grant our measures will prevent the transmission of COVID-19 between employees. Any incidents of actual or perceived transmission may expose us to liability claims, adversely impact employee productivity and morale, and result in negative publicity and reputational harm.

request for continued listing.

~~Additionally,~~Such a delisting could have a negative effect on the price of our ~~sales~~common stock, impair the ability of investors to sell or purchase our common stock when they wish to do so, and ~~marketing efforts are, and may~~materially adversely affect our ability to raise capital or pursue strategic, financing or other transactions on acceptable terms, or at all. Delisting from time to time be, adversely affected by protocols for screening and restricting outside visitors and vendors that have been adopted by the Department of Veterans Affairs, commercial prescribers and other third parties. Officially imposed quarantines and self-quarantinesNasdaq could also ~~interfere with patients’ ability to see a health care provider and obtain our gammaCore therapy.~~have other negative results, including the potential loss of institutional investor interest.

The degree to which coronavirus impacts our results will continue to depend on future developments that are highly uncertain and cannot be predicted, including, without limitation, the timing, extent, trajectory and duration of the pandemic, the development, rollout and availability of effective treatments and vaccines, the imposition of protective public safety measures, and how quickly and to what extent normal economic and operating conditions can resume, if at all. These uncertainties may result in delays or modifications to our plans, initiatives and results.

For the reasons set forth above and other reasons that may come to light due to the coronavirus outbreak and any associated protective or preventative measures, we are unable to reasonably estimate coronavirus’ impact to our business, revenues, financial condition and results of operations.We are similarly unable to predict the degree to which the pandemic impacts our customers, suppliers, vendors, capital markets, and other partners, and their financial conditions, but a material effect on these parties could also adversely affect us.

The impact of coronavirus could also exacerbate other risks discussed below, which could in turn have a material adverse effect on us. Developments related to coronavirus have been rapidly changing, and additional impacts and risks may arise that we are not aware of or able to appropriately respond to currently.

Our ability to market gammaCore Sapphire CV under the EUA may be adversely affected to the extent that (i) the coronavirus pandemic subsides, regardless of whether or not the EUA is terminated, revoked or expires, and (ii) other treatments or vaccines for coronavirus are developed and made available. Furthermore, there are a number of preventative vaccines in development with two having received an Emergency Use Authorization approval and others potentially nearing regulatory approval. Additionally, the United States and other countries around the world have recently begun to approve and commence distributing COVID-19 vaccines in their jurisdictions. The broad distribution of COVID-19 vaccines may reduce demand for gammaCore Sapphire CV treatment as it may no longer be considered medically necessary.

More generally, in the future, our business, financial results, and financial condition may be negatively impacted by the effects of other disease outbreaks, epidemics, pandemics, or similar widespread public health concerns.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

(a) Not applicable.

(b) Not applicable.

3226

Item 6. EXHIBITS

~~Furnish the exhibits required by Item 601 of Regulation S-K (§ 229.601 of this chapter).~~

Exhibit Number		Description
10.2†		electroCore, Inc. 2018 Omnibus Equity Incentive Plan, incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q as filed with the Commission on August 14, 2018.

10.3*		Form of electroCore, Inc. Management Severance Plan as amended on June 10, 2022.

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*
Filed herewith.

**	Furnished herewith.
†	Indicates management agreement or compensation plan.

3327

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Company Name

Date: ~~November~~August 4, ~~2021~~2022	By:	/s/ DANIEL S. GOLDBERGER
		Daniel S. Goldberger
		Chief Executive Officer (Principal Executive Officer)

Date: ~~November~~August 4, ~~2021~~2022	By:	/s/ BRIAN M. POSNER
		Brian M. Posner
		Chief Financial Officer (Principal Financial and Accounting Officer)

3428

	Number of Shares			Weighted Average Grant Date Fair Value
Nonvested, January 1, 2021		1,014,123		$	1.50
Granted		438,316			2.07
Vested		(329,198	)		1.67
Cancelled		(5,354	)		1.97
Nonvested, September 30, 2021		1,117,887		$	1.67

	Number of Shares (in thousands)			Weighted Average Grant Date Fair Value
Nonvested, January 1, 2022		1,056		$	1.66
Granted		300			0.50
Vested		(416	)		1.51
Cancelled		(5	)		2.83
Nonvested, June 30, 2022		935		$	1.34

As of September 30, 2021
	Amortized Cost		Unrealized Gain		Unrealized (Loss)			Fair Value
Cash and cash equivalents	$	37,995,008	$	0—	$	0—		$	37,995,008
Marketable securities:
U.S. Treasury Bonds		1,001,506		0—		(426	)		1,001,080
Total cash, cash equivalents, and marketable securities	$	38,996,514	$	0—	$	(426	)	$	38,996,088

As of December 31, 2020
	Amortized Cost		Unrealized Gain		Unrealized (Loss)			Fair Value
Cash and cash equivalents	$	4,241,937	$	0—	$	0—		$	4,241,937
Marketable securities:
U.S. Treasury Bonds		18,388,970		0—		(2,810	)		18,386,160
Total cash, cash equivalents, and marketable securities	$	22,630,907	$	0—	$	(2,810	)	$	22,628,097

			Fair Value Hierarchy
September 30, 2021	Total		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	37,995,008	$	37,995,008	$	0—	$	0—
Marketable Securities:
U.S. treasury bonds		1,001,080		1,001,080		0—		0—
Total	$	38,996,088	$	38,996,088	$	0—	$	0—

Remainder of 2021	$	39,414
2022		160,486
2023		163,962
2024		167,524
2025 and thereafter		704,900
Total future minimum lease payments		1,236,286
Less: Amounts representing interest		(462,274	)
Total	$	774,012

Number of Warrants		Exercise Price	Expiration Date
22,253	$	5.68	3/30/2022
17,066	$	12.60	6/30/2022
151,364	$	12.60	8/18/2022
14,286	$	12.60	8/31/2022
11,975	$	15.30	12/22/2025
216,944

PART I. FINANCIAL INFORMATION

Page Number