UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~FORM 10-Q~~

~~(Mark One)~~

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

FOR THE QUARTERLY PERIOD ~~ENDED JUNE 30, 2018~~ENDED March 31, 2023

☐

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.)

~~150 Allen Road,~~200 Forge Way, Suite ~~201, Basking Ridge,~~ 205, Rockaway, NJ ~~07920~~ 07866

(Address of principal executive offices, including zip code)

~~(973)~~ (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 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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T ~~(232.405~~(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). 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	☒	~~(Do not check if a smaller reporting company)~~	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 ~~August 6, 2018,~~April 27, 2023 the registrant had ~~29,450,034~~4,749,221 shares of common stock outstanding.

	PART I. FINANCIAL INFORMATION	Page Number
	~~Page~~

	Cautionary Note Regarding Forward-Looking Statements		3
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as ~~June 30, 2018~~of March 31, 2023 (unaudited) and December 31, ~~2017~~2022		4
	Condensed Consolidated Statements of Operations for the Three ~~and Six~~ Months Ended ~~June 30, 2018~~March 31, 2023 and ~~2017~~2022 (Unaudited)		5
	Condensed Consolidated Statements of Comprehensive Loss for the Three ~~and Six~~ Months Ended ~~June 30, 2018~~March 31, 2023 and ~~2017~~2022 (Unaudited)		6
	Condensed Consolidated Statements of ~~Changes in Convertible Preferred Units, Members’ (Deficit) and Stockholders’~~ Equity for the ~~Year Ended December 31, 2017 and the Six~~Three Months Ended ~~June 30, 2018~~March 31, 2023 and 2022 (Unaudited)		7
	Condensed Consolidated Statements of Cash ~~Flow~~Flows for the ~~Six~~Three Months Ended ~~June 30, 2018~~March 31, 2023 and ~~2017~~2022 (Unaudited)		8
	Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~(unaudited)		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22 19
	~~Components of Our Results of Operations~~		23
	~~Results of Operations for the Three Months Ended June 30, 2018 and 2017~~		26
	~~Results of Operations for the Six Months Ended June 30, 2018 and 2017~~		28
	~~Liquidity and Capital Resources~~		29
	~~Contractual Obligations~~		30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		31 24
Item 4.	Controls and Procedures		31 24
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		33 25
Item 1A.	Risk Factors		33 25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		33 25
Item 3.	Defaults Upon Senior Securities		33 25
Item 4.	Mine Safety Disclosures		33 25
Item 5.	Other Information		33 25
Item 6.	Exhibits		34 26
	Signatures	27	35

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” ~~following the date of the Corporate Conversion (June 21, 2018)~~ refer to electroCore, Inc. a Delaware corporation and its subsidiaries and affiliate; references to the “Company,” “electroCore,” “we,” “us” and “our” prior to the date of the Corporate Conversion refer to ElectroCore, LLC, a Delaware limited liability company, and its subsidiaries and affiliate; and references to the “Corporate Conversion” or “corporate conversion” refer to all of the transactions related to the statutory conversion of ElectroCore, LLC from a Delaware limited liability company to a Delaware corporation and the change of its name to electroCore, Inc., effected on June 21, 2018. 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, ~~(the “Securities Act”),~~or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, ~~(the “Exchange Act”).~~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 ~~management.~~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 ~~those~~risks and uncertainties included in our ~~prospectus dated June 21, 2018, filed~~Form 10-Qs, our Annual Report on Form 10-K for the year ended December 31, 2022, in our other filings with the ~~SEC described under “Risk Factors”~~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 ~~this Quarterly Report and elsewhere~~such filings. Furthermore, any such forward-looking statements in this Quarterly Report ~~on Form 10-Q. Furthermore, such forward-looking statements~~ 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~~electroCore logo, gammaCore, ~~and~~ Truvaga, TAC-STIM, and other ~~trademarks~~trademarks of electroCore, Inc. appearing in this Quarterly Report ~~on Form 10-Q~~ are the property of electroCore, Inc. All other trademarks, service marks and trade names in this Quarterly Report ~~on Form 10-Q~~ are the property of their respective owners. We have omitted the ® and ™ designations, as applicable, for the trademarks used in this Quarterly ~~Report on Form 10-Q.~~Report.

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

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share data)

June 30,

December 31,

2018

2017

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$
88,357,844

$
13,224,194

Debt securities and other investments available for sale

7,468,710

23,950,566

Accounts receivable, net

298,237

103,209

Inventories

751,949

327,787

Prepaid expenses and other current assets

2,857,358

570,755

Deferred financing costs

—

856,895

Total current assets

99,734,098

39,033,406

Property and equipment – net

377,357

168,646

Security deposits

30,604

30,604

Total assets

$
100,142,059

$
39,232,656

Liabilities, Convertible Preferred Units and Stockholders' and Members’ Equity/(Deficit)

Current liabilities:

Accounts payable and accrued expenses

$
6,885,486

$
3,879,775

Warrant liability

��

2,239,544

Other current liabilities

28,341

—

Total current liabilities

6,913,827

6,119,319

Noncurrent liabilities:

Deferred rent

279,362

306,886

Total liabilities

7,193,189

6,426,205

Commitments and contingencies (Note 17)

Convertible preferred units:

Series A Preferred Units, 0 Units authorized at June 30, 2018 and 71,050,860 at December 31,
   2017; 0 Units issued and outstanding at June 30, 2018 and 70,918,506 at December 31, 2017

—

53,518,463

Series B Preferred Units, 0 Units authorized at June 30, 2018 and 123,000,000 at
   December 31, 2017; 0 Units issued and outstanding at June 30, 2018 and
   105,186,020 at December 31, 2017

—

68,755,544

Series B-1 Preferred Units, 0 Units authorized at June 30, 2018 and December 31, 2017;
   0 Units issued and outstanding at June 30, 2018 and December 31, 2017

—

—

Total convertible preferred units

—

122,274,007

Stockholders'/members’ equity/(deficit):

Common Units, 0 Units authorized at June 30, 2018 and 600,000,000 December 31, 2017;
   0 Units issued and outstanding at June 30, 2018 and 218,982,140 December 31, 2017

—

40,180,619

Preferred Stock, par value $0.001 per share; 10,000,000 shares authorized at
   June 30, 2018, 0 shares authorized at December 31, 2017; 0 shares issued and
   outstanding at June 30, 2018 and December 31, 2017

—

—

Common stock, par value $0.001 per share; 500,000,000 shares authorized at
   June 30, 2018, 0 shares authorized at December 31, 2017; 29,450,034 shares issued
   and outstanding at June 30, 2018 and 0 at December 31, 2017

29,450

—

Additional paid-in capital

102,033,462

22,596,485

Accumulated deficit

(9,791,391
)

(152,928,928
)
Accumulated other comprehensive income

41,740

80,213

Total equity/(deficit) attributable to electroCore, Inc., subsidiaries and affiliate

92,313,261

(90,071,611
)
Noncontrolling interest

635,609

604,055

Total stockholders' equity/members’ /(deficit)

92,948,870

(89,467,556
)
Total liabilities, convertible preferred units and stockholders' equity/members' equity

$
100,142,059

$
39,232,656

	March 31,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	11,908		$	17,712
Restricted cash		250			250
Accounts receivable, net		213			401
Inventories, net		2,478			1,982
Prepaid expenses and other current assets		525			828
Total current assets		15,374			21,173
Inventories, noncurrent		1,451			2,194
Property and equipment, net		34			50
Operating lease right of use assets, net		550			565
Other assets, net		891			774
Total assets	$	18,300		$	24,756
Liabilities and Equity
Current liabilities:
Accounts payable	$	2,001		$	2,129
Accrued expenses and other current liabilities		3,770			4,842
Current portion of operating lease liabilities		77			74
Total current liabilities		5,848			7,045
Noncurrent liabilities:
Operating lease liabilities, noncurrent		605			625
Total liabilities		6,453			7,670
Commitments and contingencies		—			—
Mezzanine Equity:
Preferred Stock, par value $0.001 per share; 10,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 0 shares issued and outstanding at March 31, 2023 and 71,173 issued and outstanding at December 31, 2022 ($0.001 per share liquidation value)		—			—
Stockholders' equity:
Common Stock, par value $0.001 per share; 500,000,000 shares authorized at March 31, 2023 and December 31, 2022; 4,745,781 shares issued and outstanding at March 31, 2023 and 4,744,886 shares issued and outstanding at December 31, 2022		5			5
Additional paid-in capital		164,092			163,520
Accumulated deficit		(152,237	)		(146,370	)
Accumulated other comprehensive (loss) income		(13	)		(69	)
Total equity		11,847			17,086
Total liabilities and equity	$	18,300		$	24,756

See accompanying notes to unaudited condensed consolidated financial statements.

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

Condensed Consolidated Statements of Operations

(unaudited)

~~(Unaudited)~~(in thousands, except per share data)

Three months ended
June 30,

Six months ended
June 30,

2018

2017

2018

2017

Net sales

$
393,226

$
176,555

$
474,413

$
293,488

Cost of goods sold

240,488

38,749

289,435

111,495

Gross profit

152,738

137,806

184,978

181,993

Operating expenses:

Research and development

4,367,070

2,771,439

6,673,405

4,497,996

Selling, general and administrative

12,007,206

4,797,604

18,832,020

7,856,866

Total operating expenses

16,374,276

7,569,043

25,505,425

12,354,862

Loss from operations

(16,221,538
)

(7,431,237
)

(25,320,447
)

(12,172,869
)
Other expense/(income)

Interest expense

—

3,433,663

—

4,473,756

Amortization of debt issuance costs

—

293,375

—

562,537

Change in fair value of warrant liability

1,625,069

196,678

1,870,923

374,654

Change in fair value of derivative instrument related to
   convertible bridge notes

—

220,100

—

348,163

Interest and other income, net

(115,327
)

(3,222
)

(224,610
)

(3,222
)
Other expense

50,818

2,185

258,871

2,185

Total other expense/(income)

1,560,560

4,142,779

1,905,184

5,758,073

Net loss

(17,782,098
)

(11,574,016
)

(27,225,631
)

(17,930,942
)
Less: Net income/(loss) attributable to noncontrolling
   interest

—

(6,045
)

55,005

(6,045
)
Total net loss attributable to Electrocore LLC and
   electroCore, Inc.

$
(17,782,098
)

$
(11,567,971
)

$
(27,280,636
)

$
(17,924,897
)
Net loss attributable to Electrocore, LLC
   subsidiaries and affiliate

$
(11,619,799
)

$
(11,567,971
)

$
(21,118,337
)

$
(17,924,897
)
Net loss attributable to electroCore, Inc.
   subsidiaries and affiliate

$
(6,162,299
)

$
—

$
(6,162,299
)

$
—

Net loss per share of common stock - Basic and Diluted
   (see Note 11)

$
(0.21
)

$
—

$
(0.21
)

$
—

Weighted average and potential shares outstanding - Basic
   and Diluted (see Note 11)

29,261,942

—

29,261,942

—

	Three months ended March 31,
	2023			2022
Net sales	$	2,780		$	1,899
Cost of goods sold		458			360
Gross profit		2,322			1,539
Operating expenses
Research and development		1,809			934
Selling, general and administrative		6,710			6,186
Total operating expenses		8,519			7,120
Loss from operations		(6,197	)		(5,581	)
Other (income) expense
Interest and other income		(119	)		(4	)
Other expense		—			5
Total other (income) expense		(119	)		1
Loss before income taxes		(6,078	)		(5,582	)
Benefit from income taxes (see Note 10)		211			—
Net loss	$	(5,867	)	$	(5,582	)
Net loss per share of common stock - Basic and Diluted (see Note 9)	$	(1.24	)	$	(1.20	)
Weighted average common shares outstanding - Basic and Diluted (see Note 9)		4,743			4,652

See accompanying notes to unaudited condensed consolidated financial statements.

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

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

~~(Unaudited)~~(in thousands)

Three months ended
June 30,

Six months ended
June 30,

2018

2017

2018

2017

Net loss

(17,782,098
)

(11,574,016
)

$
(27,225,631
)

$
(17,930,942
)
Other comprehensive (loss) income:

Foreign currency translation adjustment

61,680

(54,682
)

(52,649
)

(40,915
)
Amount reclassed from accumulated OCI

11,025

—

11,025

—

Unrealized gains on securities, net of taxes as applicable

28,083

—

3,151

—

Other comprehensive (loss) income

100,788

(54,682
)

(38,473
)

(40,915
)
Comprehensive loss

(17,681,310
)

(11,628,698
)

(27,264,104
)

(17,971,857
)
Less: Net comprehensive (loss)/income attributable to
   noncontrolling interest

—

(3,399
)

5,085

4,535

Comprehensive loss attributable to electroCore, Inc.
   subsidiaries and affiliates

$
(17,681,310
)

$
(11,625,299
)

$
(27,269,189
)

$
(17,976,392
)
Comprehensive loss attributable to
   Electrocore, LLC subsidiaries and affiliate

(11,530,087
)

(11,625,299
)

(21,118,056
)

(17,976,392
)
Comprehensive loss attributable to
   electroCore, Inc. subsidiaries and affiliate

(6,151,223
)

—

(6,151,133
)

—

	Three months ended March 31,
	2023			2022
Net loss	$	(5,867	)	$	(5,582	)
Other comprehensive (loss) income:
Foreign currency translation adjustment		56			(27	)
Other comprehensive (loss) income		56			(27	)
Comprehensive loss	$	(5,811	)	$	(5,609	)

See accompanying notes to unaudited condensed consolidated financial statements.

ELECTROCORE, INC. AND SUBSIDIARIES

~~ELECTROCORE, INC. SUBSIDIARIES AND AFFILIATE~~

Condensed Consolidated Statements of ~~Changes~~ Equity

(unaudited)

(in ~~Convertible Preferred Units, Members’ (Deficit) and Stockholders’ Equity~~

~~(Unaudited)~~

thousands)

Convertible Preferred Units

Electrocore LLC at December 31, 2017 and electroCore, Inc. at June 30, 2018

Deficit

attributable to

Total

Accumulated

electroCore,

stockholders'/

Series A

Series B

Common

Common

Additional

other

Inc.

members’

Preferred Units

Preferred Units

Units

Stock

paid-in

Accumulated

comprehensive

subsidiaries

Noncontrolling

equity/

Units

Amount

Units

Amount

Units

Amount

Shares

Amount

capital

deficit

income

and affiliates

interest

(deficit)

Balances as of January 1, 2017

70,918,506

$
53,518,463

—

$
—

90,711,018

$
30,912,091

—

$
—

$
8,126,416

$
(100,706,419
)

$
214,006

$
(61,453,906
)

$
400,421

$
(61,053,485
)
Net loss

—

—

—

—

(35,792,423
)

—

(35,792,423
)

(236,358
)

(36,028,781
)
Other comprehensive income

—

—

—

—

—

—

—

—

—

—

(133,793
)

(133,793
)

—

(133,793
)
Issuance of Series B Preferred Units, net

—

—

105,186,020

68,755,544

18,340,000

4,074,447

—

—

(2,012,611
)

—

—

2,061,836

—

2,061,836

Noncontrolling interest contributions

—

—

—

—

—

—

—

—

—

—

—

—

439,992

439,992

Unit-based compensation

—

—

—

—

—

—

—

462,329

—

—

462,329

—

462,329

Common Units issued in connection
   with convertible bridge notes, net

—

—

—

—

36,565,948

5,194,081

—

—

(409,735
)

—

—

4,784,346

—

4,784,346

Common Units issued in exchange for
   elimination of preference

—

—

—

—

73,365,174

—

—

—

—

—

—

—

—

—

Common Units issued for initial
   funding of Series B Preferred Units

—

—

—

—

—

—

—

—

16,430,086

(16,430,086
)

—

—

—

—

Balances as of December 31, 2017

70,918,506

$
53,518,463

105,186,020

$
68,755,544

218,982,140

$
40,180,619

—

$
—

$
22,596,485

$
(152,928,928
)

$
80,213

$
(90,071,611
)

$
604,055

$
(89,467,556
)
Net loss attributable to Electrocore, LLC
   subsidiaries and affiliates

—

—

—

—

—

—

—

—

—

(21,118,337
)

(5,085
)

(21,123,422
)

60,090

(21,063,332
)
Reclass of accumulated deficit to APIC

—

—

—

—

—

—

—

—

(174,047,265
)

174,047,265

—

—

—

—

Other comprehensive income

—

—

—

—

—

—

—

—

(33,388
)

(33,388
)

(5,085
)

(38,473
)
Conversion of Series A preferred units
   to common stock

(70,918,506
)

(53,518,463
)

—

—

—

—

3,939,917

3,940

53,514,523

—

—

53,518,463

—

53,518,463

Conversion of Series B preferred units
   to common stock

—

—

(105,186,020
)

(68,755,544
)

—

—

5,843,668

5,844

68,749,700

—

—

68,755,544

—

68,755,544

Conversion of members common units
   to common stock

—

—

—

—

(218,982,140
)

(40,180,619
)

12,099,280

12,099

40,168,520

—

—

—

—

—

Stock dividend issued to Series A
   preferred holders

—

—

—

—

—

—

241,939

242

3,628,850

(3,629,092
)

—

—

—

—

Common stock issued related to initial
   public offering

—

—

—

—

—

—

5,980,000

5,980

89,692,675

—

—

89,698,655

—

89,698,655

Issuance costs related to initial public
   offering

—

—

—

—

—

—

—

—

(12,012,086
)

—

—

(12,012,086
)

—

(12,012,086
)
Reclass of warrant liability to equity

—

—

—

—

—

—

—

—

4,110,467

—

—

4,110,467

—

4,110,467

Noncontrolling interest distributions

—

—

—

—

—

—

—

—

—

—

—

—

(23,451
)

(23,451
)
Stock issued upon conversion of profit
   interests

—

—

—

—

—

—

1,345,230

1,345

—

—

—

1,345

—

1,345

Stock and Unit-based compensation

—

—

—

—

—

—

—

—

5,631,593

—

—

5,631,593

—

5,631,593

Net loss attributable to electroCore, Inc.
   subsidiaries and affiliates

—

—

—

—

—

—

—

—

—

(6,162,299
)

—

(6,162,299
)

—

(6,162,299
)
Balances as of June 30, 2018

—

$
—

—

$
—

—

—

29,450,034

$
29,450

$
102,033,462

$
(9,791,391
)

$
41,740

$
92,313,261

$
635,609

$
92,948,870

	Mezzanine Equity					Stockholders' Equity
						Common				Additional					Accumulated other
	Preferred Stock					Stock				paid-in		Accumulated			comprehensive			Total
	Shares			Amount		Shares		Amount		capital		deficit			income (loss)			equity
Balances as of January 1, 2023		71		$	—		4,745	$	5	$	163,520	$	(146,370	)	$	(69	)	$	17,086
Net loss		—			—		—		—		—		(5,867	)		—			(5,867	)
Other comprehensive income		—			—		—		—		—		—			56			56
Issuance of stock related to employee compensation plans, net of forfeitures		—			—		1		—		—		—			—			—
Preferred stock redemption		(71	)		—		—		—		—		—			—			—
Share based compensation		—			—		—		—		572		—			—			572
Balances as of March 31, 2023		—		$	—		4,746	$	5	$	164,092	$	(152,237	)	$	(13	)	$	11,847

Balances as of January 1, 2022		—		$	—		4,714	$	5	$	160,772	$	(124,208	)	$	13		$	36,582
Net loss		—			—		—		—		—		(5,582	)		—			(5,582	)
Other comprehensive income		—			—		—		—		—		—			(27	)		(27	)
Issuance of stock related to employee compensation plan, net of forfeitures		—			—		1		—		—		—			—			—
Share based compensation		—			—		—		—		777		—			—			777
Balances as of March 31, 2022		—		$	—		4,715	$	5	$	161,549	$	(129,790	)	$	(14	)	$	31,750

~~See accompanying notes to consolidated financial statements~~

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

Condensed Consolidated Statements of Cash Flows

(unaudited)

~~(Unaudited)~~(in thousands)

Six months ended
June 30,

2018

2017

Cash flows from operating activities:

Net loss

$
(27,225,631
)

$
(17,930,942
)
Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of debt discount and debt issuance costs

—

4,328,900

Change in fair value of warrants and embedded derivative

1,870,923

722,817

Non-cash interest expense on convertible bridge notes

—

707,393

Stock/unit-based compensation

5,631,593

116,574

Depreciation and amortization

21,064

14,718

Other

19,062

(47,556
)
Changes in operating assets and liabilities:

Accounts receivable, net

(195,028
)

(144,344
)
Inventories

(424,162
)

(239,243
)
Prepaid expenses and other current assets

(2,286,602
)

(60,291
)
Accounts payable and accrued expenses

1,647,468

1,833,146

Deferred rent

(27,524
)

(21,315
)
Net cash used in operating activities

(20,968,837
)

(10,720,143
)
Cash flows from investing activities:

Purchase of debt securities and other investments available for sale

(10,434,519
)

—

Proceeds from maturities of debt securities and other investments available for
sale

26,916,375

—

Purchases of property and equipment

(229,774
)

(61,737
)
Net cash provided by (used in) investing activities

16,252,082

(61,737
)
Cash flows from financing activities:

Sale of common stock, net of related expenses

79,895,818

—

Proceeds from issuance of convertible bridge notes

—

19,965,692

Financing costs related to the issuance of convertible bridge notes

—

(1,030,490
)
Net cash provided by financing activities

79,895,818

18,935,202

Effect of changes in exchange rates on cash and cash equivalents

(45,413
)

(5,602
)
Net increase in cash and cash equivalents

75,133,650

8,147,720

Cash and cash equivalents – beginning of period

13,224,194

416,336

Cash and cash equivalents – end of period

$
88,357,844

$
8,564,056

Supplemental schedule of noncash financing activity:

Series A preferred units converted to common stock

$
53,518,463

$
—

Series B preferred units converted to common stock

68,755,544

—

Members common units converted to common stock

40,180,619

—

Reclass of warrant liability to additional paid in capital

4,110,467

—

Reclass of deferred financing costs to additional paid in capital

856,985

—

Deferred financing costs included in accounts payable and accrued expenses

1,358,244

—

Stock dividend distribution in connection with IPO

3,629,092

—

Series B warrants issued in connection with convertible bridge notes

—

2,620,681

Debt issuance cost included in accounts payable

—

140,459

Common units issued in connection with convertible bridge notes

—

5,194,081

	Three months ended March 31,
	2023			2022
Cash flows from operating activities:
Net loss	$	(5,867	)	$	(5,582	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		572			777
Depreciation and amortization		122			106
Net noncash lease expense		15			13
Inventory reserve charge		75			—
Changes in operating assets and liabilities:
Accounts receivable, net		188			75
Inventories		(51	)		399
Prepaid expenses and other current assets		303			252
Accounts payable		(128	)		692
Accrued expenses and other current liabilities		(1,072	)		(1,497	)
Operating lease liabilities		(17	)		(15	)
Net cash used in operating activities		(5,860	)		(4,780	)
Cash flows from investing activities:
Net cash provided by investing activities		—			—
Cash flows from financing activities:
Net cash provided by financing activities		—			—
Effect of changes in exchange rates on cash and cash equivalents		56			(27	)
Net decrease in cash and cash equivalents and restricted cash		(5,804	)		(4,807	)
Cash and cash equivalents and restricted cash – beginning of period		17,962			34,689
Cash and cash equivalents and restricted cash – end of period	$	12,158		$	29,882
Supplemental cash flows disclosures:
Proceeds from sale of state net operating losses	$	211		$	—
Interest paid	$	2		$	2

See accompanying notes to unaudited condensed consolidated financial ~~statements~~.statements.

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

Notes to Condensed Consolidated Financial Statements

(unaudited)

~~(Unaudited)~~

Note ~~1. Corporate Organization and~~1. The Company ~~Overview~~

~~Company Overview~~

electroCore, Inc. and its subsidiaries (“electroCore” or the “Company”) is a commercial stage bioelectronic medicine and wellness company ~~engaged~~ indedicated to improving health through its non-invasive vagus nerve stimulation (“nVNS”) technology platform. The Company’s focus is the commercialization ~~and~~ ~~development~~ of ~~a range of~~ ~~patient-administerednon-invasiveVagus~~ ~~Nerve~~ ~~Stimulation~~ ~~(“nVNS”) therapies initially focused on~~medical devices for the management and treatment of ~~multiple~~certain medical conditions and consumer product offerings utilizing nVNS to promote general wellbeing and human performance in ~~neurology,~~ ~~rheumatology~~ ~~and~~ ~~other fields. electroCore was founded in 2005~~ ~~and~~ ~~its~~ ~~focus~~ ~~currently~~ ~~is on~~ ~~primary~~ ~~headache~~ ~~(migraine~~the United States and ~~cluster~~ ~~headache),~~ ~~with trials continuing in~~ ~~other neurological~~ ~~and inflammatory disorders.~~select overseas markets.

electroCore, headquartered in ~~New Jersey,~~Rockaway, NJ, has two wholly owned ~~subsidiaries which include:~~subsidiaries: electroCore ~~Bermuda, Ltd.,~~UK Ltd and electroCore Germany ~~GmbH,~~GmbH. The Company has paused operations in Germany, with sales into the country and the rest of Europe being managed by electroCore UK Ltd. In addition, an affiliate, electroCore (Aust) Pty Limited, is subject to electroCore’s control on bases other than voting interests and is a variable interest entity (“VIE”), for which electroCore is the primary beneficiary.

Note 2. Summary of Significant Accounting Policies

In January 2018, the U.S. Food and Drug Administration ("FDA") released the use of gammaCore, the Company's first generation disposable non-invasive vagus nerve stimulator therapy for the treatment of pain associated with migraine headache in adult patients. Previously in April 2017, the FDA released the use of gammaCore for the acute treatment of pain associated with episodic cluster headache in adult patients. In December 2017, gammaCore’s successor, Sapphire was FDA released. gammaCore Sapphire is a rechargeable and reloadable version of our product for multi-year use. Effective August 1, 2018, the Company announced gammaCore Sapphire was available in the United States. In general, the Company will no longer market the disposable version of gammaCore in markets where the gammaCore Sapphire has launched.

~~Corporate Conversion and Initial Public Offering~~

Effective June 21, 2018, the Company converted into a Delaware corporation pursuant to a statutory conversion and changed its name to electroCore, Inc. Previously, the Company operated as a Delaware limited liability company under the name Electrocore, LLC. As a result of the corporate conversion, the holders of the different series of units of Electrocore, LLC, or Units, became holders of common stock and options to purchase common stock of electroCore, Inc. Warrants to purchase Units were converted to warrants to purchase common stock of electroCore, Inc. The number of shares of common stock, options to purchase common stock, and warrants to purchase common stock that holders of Units and warrants to purchase Units were entitled to receive in the corporate conversion was determined in accordance with a plan of conversion, which was based upon the terms of the Third Amended and Restated Limited Liability Company Agreement, dated November 21, 2017 (the “Operating Agreement”), and varied depending on which class and series of Units a holder owned, and the terms of the applicable warrants. See “Corporate Conversion and Equity, Note 12.”

In June 2018, the Company completed its initial public offering ("IPO") and issued 5,980,000 shares of common stock, including the underwriter’s exercise of their right to purchase additional shares, at an initial offering price to the public of $15.00. We received net proceeds from the IPO of approximately $77.7 million, after deducting underwriting discounts and commissions and offering costs of approximately $12.0 million. The underwriters were Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities. LLC, and BTIG, LLC.

Shares of common stock began trading on the Nasdaq Global Market on June 22, 2018, and began trading on the Nasdaq Global Select Market on June 25, 2018, under the symbol "ECOR". The shares were registered under the Securities Act, on a registration statement on Form S-1, which was declared effective by the Securities and Exchange Commission ("SEC"), on June 21, 2018.

The Company expects to use the proceeds from the IPO (i) to hire additional territory business managers and expand marketing programs to prepare for the full commercial launch of the gammaCore products; (ii) to fund the research and development of gammaCore products for other indications in headache and rheumatology; (iii) to fund the build out of a specialty distribution channel for the launch of gammaCore Sapphire in the third quarter of 2018; and (iv) the remainder to fund working capital and general corporate purposes.

(a)	Basis of Presentation

~~Note 2. Basis~~ ~~of Presentation~~

The accompanying ~~unaudited~~condensed consolidated financial statements were prepared in conformity with ~~U.S.~~accounting principles generally accepted ~~accounting principles~~in the the United States (“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 ~~financial reporting. In compliance with those rules, certain~~periods presented. Certain information and ~~footnote~~ 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 ~~Company’s~~ audited consolidated financial statements and ~~related~~accompanying notes for the ~~fiscal~~ year ended December 31, ~~2017~~2022 included in ~~our prospectus dated June 21, 2018~~the Company’s Annual Report on Form 10-K filed with the ~~SEC, pursuant to Rule 424(b) under~~Securities and Exchange Commission on March 8, 2023. The results for the ~~Securities Act. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement~~three months ended March 31, 2023 are not necessarily indicative of the results ofto be expected for a full year, any other interim periods ~~have been included.~~or any future year or period.

At a special stockholders meeting held on February 13, 2023, the Company's stockholders approved an amendment to the Company's certificate of incorporation to effect of a reverse stock split of the Company's common stock at a ratio between 1-for-5 to 1-for-50 in order to achieve a minimum bid price of $1.00 per share for a minimum of 10 consecutive trading days, as required for continued listing of the common stock on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). The ~~results~~board of ~~operations and cash flows reported in these~~directors authorized a 1-for-15 ratio for the reverse stock split, which became effective on February 15, 2023. The accompanying condensed consolidated financial statements ~~should not be regarded as necessarily indicative of results that may be expected~~and notes to condensed consolidated financial statements give retroactive effect to the reverse stock split for ~~the entire fiscal year.~~all prior periods presented.

~~Note 3. Summary of Significant Accounting Policies~~

~~(a)~~(b)

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of electroCore ~~Inc.~~ and its wholly owned subsidiaries. ~~electroCore (Aust) Pty Limited, a VIE for which electroCore is the primary beneficiary, is also consolidated with the non-controlled equity presented as non-controlling interest.~~ All intercompany balances and transactions have been eliminated in consolidation.

~~(b)~~(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~~the condensed 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 ~~the useful lives of fixed assets,~~ allowances for doubtful accounts, trade credits, rebates, co-payment assistance and sales returns, valuation of inventory, ~~warrants,~~estimated useful life of licensed products and cloud computing arrangements, stock compensation, ~~vouchers for gammaCore, valuation of deferred taxes,~~incremental borrowing rate and contingencies.

~~(c)~~(d)

~~Recently Adopted Accounting Pronouncements~~Cash, Cash Equivalents and Restricted Cash

~~In May 2014, the FASB issued Accounting Standard Update (ASU) 2014-09, Revenue from Contracts with Customers (“ASC 606”). ASC 606~~The following table provides a ~~comprehensive framework under which revenue is recognized when an entity transfers promised goods~~reconciliation of cash, cash equivalents and ~~services~~restricted cash to ~~a customer in an amount that reflects~~ the consideration an entity is entitled to receive in exchange for those goods and services. Furthermore, ASC 606 contains expanded disclosure requirements to enable users of the financial statements to better understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

~~The Company adopted ASC 606 effective January 1, 2018, using the full retrospective method. The adoption of ASC 606 did not have a material impact~~balance reflected on the ~~consolidated balance sheet, statements~~Condensed Consolidated Statement of ~~operations, or cash flows~~Cash Flows for the three ~~and six~~ months ended ~~June 30, 2017.~~ March 31, 2023:

(in thousands)	March 31, 2023
Cash and cash equivalents	$	11,908
Restricted cash		250
Total cash, cash equivalents and restricted cash	$	12,158

As of March 31, 2023 and December 31, 2022, cash equivalents represented funds held in a money market account.

(e)	Restricted Cash

The ~~primary impact~~Company's restricted cash consists of ~~adoption related~~cash that the Company is contractually obligated to maintain in accordance with the ~~enhancement~~terms of its new corporate credit card arrangement with Citibank,N.A.

(f)	Licensed Products

The Company licenses a portion of its devices through its cash pay channels. The cost of these licensed devices is capitalized and included in Other Assets in the accompanying Condensed Consolidated Balance Sheets at March 31, 2023 and December 31, 2022, and is being recognized as cost of goods sold on the straight-line method over the estimated 12-36 month useful life of the ~~disclosures is provided in Note 5 – Revenue Recognition.~~

~~In June 2018,~~devices. If certain licensed devices are returned and no longer meet quality specifications or the ~~FASB issued ASU 2018-07, Compensation-Stock Compensation, Topic 718. The amendments in this Update expand the scope~~carrying amount of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or servicescertain licensed devices are no longer deemed to be ~~used or consumed in~~recoverable, the Company records a ~~grantor’s own operations by issuing share-based payment awards.~~charge to cost of goods sold to write down such licensed devices to zero. The ~~Company adopted this guidance~~net book value of these licensed devices at March 31, 2023 and December 31, 2022 was $725,000 and $538,000, respectively. Changes in the ~~second quarter~~value of ~~2018, which had no material impact~~these licensed devices in Other Assets is captured on the ~~balance sheet, statement of operations or cash flows.~~

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10). The ASU revises the measurement and presentation of investments in certain financial assets and liabilities and enhances disclosures about those investments. The Company adopted this guidance on January 1, 2018, which had no material impact on the balance sheet, statement of operations or cash flows.

~~In August 2016, the FASB issued ASU No. 2016-15,~~ Statement of Cash ~~Flows: Classification of Certain Cash Receipts~~Flows within Inventories.

Note 3. Significant Risks and ~~Cash Payments, (Topic 230). This ASU makes eight targeted changes to how cash receipts~~Uncertainties

Going Concern

The Company has experienced significant net losses and cash ~~payments are presented~~used in operations, and ~~classified~~it expects to continue to incur net losses and cash used in operations for the ~~statement~~near future as it works to increase market acceptance of ~~cash flows.~~its medical devices and wellness products. The Company ~~adopted this guidance~~has never been profitable and has incurred net losses and cash used in operations in each year since its inception.

The United States Department of Veteran Affairs comprised 64.5% of the Company's revenue during the three months ended March 31, 2023. The Company expects that a majority of our remaining 2023 sales will be made pursuant to its qualifying contract under the Federal Supply Schedule, or FSS, which was secured by the Company in December 2018, as well as open market sales to individual facilities within the government channels. The FSS is scheduled to expire on January ~~1, 2018, which had no material impact on the statement of cash flows.~~

~~(d)~~

~~Recent Accounting Pronouncements Not Yet Adopted~~

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on the balance sheet. The provisions of this guidance are effective for annual periods beginning after December 15, ~~2018, and interim periods within those years, with early adoption permitted.~~2024. The Company intends to request an extension of the FSS from the United States Department of Veteran Affairs, but there is ~~assessing ASU No. 2016-02’s impact and~~no assurance the FSS will ~~adopt it when effective.~~be renewed, if at all, or renewed at terms favorable to the Company.

~~The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a material impact on the financial statements.~~

~~Note 4. Risks and Uncertainties~~

The Company’s ~~budgeted~~expected cash requirements for ~~2018~~the next 12 months and beyond ~~include expenses related to continuing development and clinical evaluation~~are largely based on the commercial success of its ~~products~~products. There are significant risks and ~~therapies,~~uncertainties as ~~well as preparing for related commercialization of our products.~~ ~~As of June 30, 2018~~to its ability to achieve these operating results. Due to the risks and ~~December 31, 2017, we had working capital (current assets less current liabilities) of $92.8 million and $32.9 million, respectively.~~

~~On June 21, 2018,~~uncertainties, the Company closed the IPO of 5,980,000 shares of common stock at a price of $15.00 per share with net proceeds of $77.7 million, net of underwriting discount and other offering expenses. As a public company, additional future liquidity needs will include costsmay need to ~~comply with the requirements of a public company and tax payments to Federal and State governments.~~

~~The Company believes that~~reduce its ~~sales~~activities significantly more than its current operating plan and cash ~~on hand~~flow projections assume in order to fund its operations beyond one year of the date the accompanying financial statements are adequate to meet its operating, investing, and financing needs for at least the next twelve months. To the extent additional funds are necessary to meet long-term liquidity needs as the Company continues to execute its business strategy, the Company anticipates that they willissued. There can be ~~obtained through the incurrence of indebtedness, equity financings or a combination of these potential sources of funds, although the Company can provide~~ no assurance that ~~these sources of funding will be available on reasonable terms.~~

~~In addition to the FDA release received by the Company for two indications (see Note 1), the Company is seeking approvals and clearances by the FDA for additional indications. In connection therewith,~~ the Company will ~~incur additional time~~have sufficient cash flow and ~~costs~~liquidity to fund its planned activities, which could force it to significantly reduce or curtail its activities and, ultimately, potentially cease operations.

There is no assurance that the Company will ~~require additional funding~~generate sufficient funds through its operating results or financing activities, and accordingly, these conditions raise substantial doubt about the Company’s ability to ~~obtain such approvals~~continue as a going concern within one year of the date the accompanying financial statements are issued. The accompanying financial statements do not include any adjustment that might result from the outcome of this uncertainty.

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 ~~clearances.~~ Department of Defense ("VA/DoD") pursuant to its qualifying contract under the FSS and open market sales to individual Department of Veterans Affairs facilities, and (ii) in the United Kingdom from the National Health Service. The ~~additional time, costs,~~VA/DoD and ~~funding is expected to be substantial.~~National Health Service comprise those customers of the Company that each account for 10% or more of total net sales during the three months ended March 31, 2023 and 2022. The following table reflects the respective concentration as a percentage of the Company's net sales:

	Three months ended March 31,
	2023		2022
Revenue channel:
VA/DoD	64.5	%	66.4	%
National Health Service	10.1	%	13.0	%

During the three months ended March 31, 2023 and 2022, one and two facilities, respectively, accounted for more than 10% of total VA/DoD net sales. During the three months ended March 31, 2023 and 2022, one facility accounted for more than 10% of net sales from the National Health Service.

Foreign Currency Exchange

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

The Company deals primarily with one specialty pharmaceutical distributor in the United States. At June 30, 2018 and December 31, 2017, the accounts receivable related to this distributor was $185,150 and $31,740, respectively.

Note 4. Revenue

~~Note 5. Revenue Recognition~~

~~Performance Obligations~~

Revenue, net of specialty pharmaceutical distribution discounts, vouchers, rebates, and co-payments assistance is solely generated from the sales of the gammaCore product. Sales are made to a specialty pharmaceutical distributor (“customer”) and revenue is recognized when delivery of the product is completed. The Company deems control to have transferred upon the completion of delivery because that is the point in which (1) it has a present right to payment for the product, (2) it has transferred the physical possession of the product, (3) the customer has legal title to the product, (4) the customer has risks and rewards of ownership and (5) the customer has accepted the product. After the products have been delivered and control has transferred, the Company has no remaining unsatisfied performance obligations.

Revenue is measured based on the consideration that the Company expects to receive in exchange for gammaCore, which represents the transaction price. The transaction price includes the fixed per-unit price of the product and variable

~~consideration in the form of trade credits, vouchers, rebates, and co-payment assistance.~~ The per-unit price is based on the Company established wholesale acquisition cost less a contractually agreed upon distributor discount with the customer. Trade credits are discounts that are contingent upon a timely remittance of payment and is estimated based on historical experience. Vouchers are redeemable by select new patients for an initial 31-day therapy (i.e. one gammaCore device) free of charge. For the three months ended June 30, 2018, the Company recognized actual vouchers redeemed as contra-revenue. The transaction price of the devices estimated to be redeemed through vouchers was also recognized as contra-revenue. All other costs for units related to the voucher program and any other redemption costs due to the specialty pharmacy were included as promotional expenses in selling, general and administrative expense. Subsequent to June 30, 2018, units designated for the voucher program are provided to the distributor at no cost and we will not recognize revenue for the free product. Any vouchers redeemed after June 30, 2018 will utilize inventory designated for voucher redemption. All costs for the free units, including any processing fees, will be included as promotional expenses in selling, general and administrative expense.

For the three and six months ended June 30, 2018, contra-revenue and promotional expenses related to the vouchers redeemed and estimated to be redeemed were $939,780 and $1,263,780, respectively. In addition, reimbursement for co-payments made by patients is also considered variable consideration. For the three and six months ended June 30, 2018, net sales reflect a reduction of $10,518 and $39,725 for payments made in conjunction with the co-payment program. For the three and six months periods ended June 30, 2017, the reimbursement for co-payments was not considered material.

In accordance with Company policy, allowance for product returns has been provided. Damaged or defective products are replaced at no charge under the Company’s standard warranty. For the three and six months ended June 30, 2018 and 2017, the replacement costs were immaterial.

Payment for products is due in accordance with the terms agreed upon with customers, generally within 31 days of shipment to the customer. Accordingly, contracts with customers do not include a significant financing component.

~~Disaggregation of~~Geographical Net Sales

The following table ~~provides additional information pertaining to~~presents net sales disaggregated by geographic ~~market for the three and six months ended June 30, 2018 and 2017:~~market:

	For the three months ended June 30,				For the six months ended June 30,				Three months ended March 31,
	2018		2017		2018		2017
Geographic Market
(in thousands)										2023		2022
Product revenue
United States	$	320,242	$	1,580	$	329,848	$	3,795	$	2,370	$	1,594
United Kingdom		50,781		57,350		115,763		122,306		321		266
Germany		16,654		108,036		17,459		152,459
Other		5,549		9,589		11,343		14,928		43		39
License revenue
Japan										46		—
Total Net Sales	$	393,226	$	176,555	$	474,413	$	293,488	$	2,780	$	1,899

~~Contract Balances~~

The Company generally invoices the customer and recognizes revenue once its performance obligations are satisfied, at which point payment is unconditional. Agreed upon payment terms with customers are within 30 days of shipment. Accordingly, ~~under ASC 606, the~~ contracts with customers do not ~~give rise to contract assets or liabilities.~~include a significant financing component.

Note ~~6. Cash, Cash Equivalents, Debt Securities and other Investments Available for Sale~~5. Inventories

~~The following tables summarizes the Company’s cash, cash equivalents and debt securities and other investments available for sale as~~As of ~~June 30, 2018~~ March 31, 2023and December 31, ~~2017.~~2022, inventories consisted of the following:

As of June 30, 2018

Amortized
Cost

Unrealized
Gain

Unrealized (Loss)

Fair
Value

Cash and cash equivalents

$
88,357,844

$
—

$
—

$
88,357,844

Corporate Debt Securities

$
1,499,091

$
—

$
(1,101
)

$
1,497,990

Commercial Paper

1,982,833

—

(2,343
)

1,980,490

U.S. Government Sponsored Agencies

2,995,715

—

(2,265
)

2,993,450

U.S. Treasury Bonds

997,196

—

(416
)

996,780

Total debt securities and other investments
   available for sale

$
7,474,835

$
—

$
(6,125
)

$
7,468,710

Total cash, cash equivalents, debt securities
   and other investments available
   for sale

$
95,832,679

$
—

$
(6,125
)

$
95,826,554

(in thousands)	March 31, 2023		December 31, 2022
Raw materials	$	871	$	944
Work in process		2,480		2,879
Finished goods		578		353
Total inventories, net		3,929		4,176
Less: noncurrent inventories		1,451		2,194
Current inventories	$	2,478	$	1,982

The reserve for obsolete inventory was $738,000 and $668,000 as of March 31, 2023 and December 31, 2022, respectively. The Company records charges for obsolete inventory in cost of goods sold. As of March 31, 2023 and December 31, 2022, noncurrent inventory was comprised of approximately $0.5 million and $0.1 million in raw materials and $1.0 million and $2.1 million of work in process, respectively. Inventory classified under the category work in process consists of prefabricated assembled product.

As of December 31, 2017

Amortized
Cost

Unrealized
Gain

Unrealized (Loss)

Fair
Value

Cash and cash equivalents

$
13,224,280

$
—

$
(86
)

$
13,224,194

Corporate Debt Securities

$
19,014,590

$
923

$
(17,827
)

$
18,997,686

Commercial Paper

2,979,367

—

(1,227
)

2,978,140

U.S. Government Sponsored Agencies

1,496,824

—

(2,029
)

1,494,795

Certificate of Deposits

480,000

—

(55
)

479,945

Total debt securities and other investments
available for sale

$
23,970,781

$
923

$
(21,138
)

$
23,950,566

Total cash, cash equivalents, debt securities
and other investments available for sale

$
37,195,061

$
923

$
(21,224
)

$
37,174,760

~~The Company’s debt securities, commercial paper, corporate debt securities~~Note 6. Leases

For each of the three months ended March 31, 2023 and ~~U.S. government sponsored agency securities have~~ 2022 the ~~following maturities:~~

Fair Value At

June 30,

December 31,

2018

2017

Due within one year
$
7,468,710

$
23,950,566

Due after one year through five years

—

—

$
7,468,710

$
23,950,566

~~Note 7. Fair Value Measurements~~

~~Certain assets and liabilities are reported on a recurring basis at fair value. Fair value is defined~~Company recognized lease expense of $38,000. This expense does not include non-lease components associated with the lease agreements as the ~~exchange price that would be received~~Company elected not to include such charges as part of the lease expense.

Supplemental Balance Sheet Information for Operating Leases:

(in thousands)	March 31, 2023			December 31, 2022
Operating leases:
Operating lease right of use assets	$	550		$	565
Operating lease liabilities:
Current portion of operating lease liabilities		77			74
Noncurrent operating lease liabilities		605			625
Total operating lease liabilities	$	682		$	699
Weighted average remaining lease term (in years)		5.9			6.1
Weighted average discount rate		13.8	%		13.8	%

Future minimum lease payments under non-cancellable operating leases as of March 31, 2023:

(in thousands)
Remainder of 2023	$	123
2024		168
2025		171
2026		161
2027		157
2028 and thereafter		216
Total future minimum lease payments		996
Less: Amounts representing interest		(314	)
Total	$	682

Note 7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities as of March 31, 2023 and December 31, 2022 consisted of the following:

(in thousands)	March 31, 2023		December 31, 2022
Accrued professional fees	$	610	$	524
Accrued bonuses and incentive compensation		880		2,042
Accrued litigation legal fees expense		1,001		1,001
Accrued insurance expense		—		264
Accrued vacation and other employee related expenses		534		534
Accrued severance and other related charges		301		—
Accrued valued-added tax		162		133
Deferred revenue		17		152
Other		265		192
	$	3,770	$	4,842

Finance and Security Agreement

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 with a nine-month term and an ~~asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly~~annual interest rate of 2.49%. The proceeds from this transaction ~~between market participants on the measurement date. Valuation techniques~~were used to ~~measure fair value must maximize~~partially fund the ~~use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one~~premiums due under certain of the ~~following~~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. All borrowings were fully repaid as of March 31, 2023. During the three ~~levels~~months ended March 31, 2023, the Company recognized $2,035 in interest expense.

Note 8. Shareholders' Equity

Dividend Preferred

On December 2, 2022, the Company's board of directors declared a dividend of one one-thousandth of a share of Series A Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”), for each outstanding share of the ~~fair value hierarchy,~~Company’s common stock, to stockholders of ~~which~~record on December 19, 2022.

Each share of Series A Preferred Stock entitled the ~~first two are considered observable~~holder thereof to 1,000,000 votes per share, and each fraction of a share of Series A Preferred Stock had a ratable number of votes. Thus, each one-thousandth of a share of Series A Preferred Stock was entitled to 1,000 votes. The outstanding shares of Series A Preferred Stock voted together with the ~~last is considered unobservable:~~

~~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~~outstanding shares of the ~~assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.~~

~~A summary~~Company's common stock as a single class exclusively with respect to the proposal to adopt an amendment to the Company’s Certificate of Incorporation, as amended, to reclassify the outstanding shares of the ~~assets and liabilities carried~~Company's Common Stock into a smaller number of shares of common stock at ~~fair value~~a ratio specified in or determined in accordance with the ~~hierarchy~~terms of such amendment (the “Reverse Stock Split”).

The Company was not solely in control of the redemption of the shares of Series A Preferred Stock since the holders had the option of deciding whether to vote in respect of the above described Reverse Stock Split, which determined whether a given holder’s shares of Series A Preferred Stock were redeemed in the Initial Redemption or the Subsequent Redemption (as defined ~~above is as follows:~~

Fair Value Hierarchy

June 30, 2018

Total

(Level 1)

(Level 2)

(Level 3)

Assets

Cash and cash equivalents

$
88,357,844

$
88,357,844

$
—

$
—

Debt Securities and other Investments Available for
Sale:

Corporate Debt Securities

1,497,990

1,497,990

—

—

Commercial Paper

1,980,490

1,980,490

—

—

U.S. Government Sponsored Agencies

2,993,450

2,993,450

—

—

U.S. Treasury Bonds

996,780

996,780

—

—

Total

$
95,826,554

$
95,826,554

$
—

$
—

December 31, 2017

Assets

Cash and cash equivalents

$
13,224,194

$
13,224,194

$
—

$
—

Debt Securities and other Investments Available for
Sale:

Corporate Debt Securities

18,997,686

18,997,686

—

—

Commercial Paper

2,978,140

2,978,140

—

—

U.S. Government Sponsored Agencies

1,494,795

1,494,795

—

—

Certificate of Deposits

479,945

479,945

—

—

Total

$
37,174,760

$
37,174,760

$
—

$
—

Liabilities

Warrant liabilities

$
2,239,544

$
—

$
—

$
2,239,544

~~During~~below). Since the ~~periods ended June 30, 2018 and December 31, 2017,~~redemption of the Series A Preferred Stock was not solely in the control of the Company, ~~has not changed~~ the ~~manner~~shares of Series A Preferred Stock were classified within mezzanine equity in ~~which it values assets and liabilities that are~~the Company’s Condensed Consolidated Balance Sheets. The shares of Series A Preferred Stock were measured at ~~fair value using Level 3 inputs.~~redemption value. 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 six months ended June 30, 2018 and 2017.

Cash and cash equivalents consisted of cash in bank checking and savings accounts, money market funds and U.S. treasury notes and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

Marketable securities classified as debt securities available for sale consist of investments in corporate debt securities, commercial paper, U.S. government sponsored agencies and certificate of deposits. The Company’s marketable securities are valued using quoted prices in active markets and therefore these securities were classified as Level 1.

The warrant liability was recorded at fair value until the initial public offering on June 21, 2018 at which time it was determined that the warrant should be reclassified to equity as the warrant no longer met the criterion to be recognized as a liability. Until June 20, 2018, the Company determined the fair value of the ~~liability by using~~shares of Series A Preferred Stock as of December 31, 2022 was $0. As noted below, all outstanding shares of Series A Preferred Stock were redeemed as of February 13, 2023.

Reverse Stock Split

On February 13, 2023, the ~~probability weighted expected return method and option pricing models. This method~~Company held a special meeting (the “Special Meeting”) of ~~valuation involved using inputs such as~~stockholders of the ~~fair value~~Company. At the Special Meeting, the Company’s shareholders voted to approve an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split of the Company’s ~~Common Units, unit price volatility,~~common stock at a ratio between 1-for-5 and 1-for-50.

Following the ~~contractual term~~Special Meeting, the board of directors of the ~~warrant, risk free interest rates and dividend yields. Due to~~Company approved a 1-for-15 Reverse Stock Split. The Reverse Stock Split became effective on February 15, 2023.

Upon the ~~nature of these inputs, the valuation~~effectiveness of the ~~warrant liability was considered a Level 3 measurement.~~

AsReverse Stock Split, every 15 shares of ~~June 20, 2018~~common stock were automatically combined and ~~December 31, 2017, the estimated fair values~~converted into one share of common stock. Appropriate adjustments were also made to all outstanding derivative securities of the ~~warrant liability~~Company, including all outstanding equity awards and warrants.

No fractional shares were ~~computed using~~issued in connection with the ~~following assumptions:~~

June 20,

December 31,

2018

2017

Stock price volatility

67.8%

65.3%

Risk-free interest rates

2.68%

1.59%

Annual dividend yield

0%

0%

Expected life (years)

3.09

0.65

~~A roll-forward of~~Reverse Stock Split. Instead, all fractional shares received a cash payment based on the ~~recurring fair value measurements of~~closing sales price on the ~~liabilities categorized with Level 3 inputs are as follows:~~

Warrant
liabilities

Opening Balance as of January 1, 2017

$
480,636

Additions

2,620,681

Settlements

—

Changes in fair value recognized

(861,773
)
Closing Balance as of December 31, 2017

2,239,544

Additions

—

Settlements

—

Changes in fair value recognized

1,870,923

Reclassed to equity

(4,110,467
)
Closing Balance as of June 30, 2018

$
—

~~During the period ended June 30, 2018, the warrant liability increased due to the change in fair value of the warrants and was subsequently reclassed to equity as addressed above.~~

~~The carrying amount~~Nasdaq Capital Market of the Company’s ~~receivables~~common stock on February 14, 2023.

Redemption and ~~payables approximate their fair values due~~Elimination of Series A Preferred Stock

All shares of Series A Preferred Stock that were not present in person or by proxy as of immediately prior to ~~their short maturities.~~

~~Note 8. Inventories~~

~~Inventories are stated~~the opening of the polls at the ~~lower~~Special Meeting were automatically redeemed by the Company (the “Initial Redemption”). Any outstanding shares of ~~cost or net realizable value. Cost is determined on a first-in first-out basis.~~

June 30,

December 31,

2018

2017

Raw materials

$
407,637

$
116,909

Work in process

21,277

17,115

Finished goods

323,035

193,763

$
751,949

$
327,787

~~Note 9. Property~~ ~~and Equipment – Net~~

~~Property and equipment, net as of June 30, 2018 and December 31, 2017 consisted~~Series A Preferred Stock that had not been so redeemed were redeemed automatically upon the approval at the Special Meeting of the ~~following:~~

June 30,

December 31,

2018

2017

Machinery and equipment

$
489,499

$
452,614

Furniture and fixture

268,460

156,512

Computer equipment

112,588

138,534

Construction in process

79,684

—

Property and equipment - gross

950,231

747,660

Less accumulated depreciation and amortization

(572,874
)

(579,014
)
Property and equipment - net

$
377,357

$
168,646

~~During~~Reverse Stock Split (the “Subsequent Redemption”). Each share of Series A Preferred Stock redeemed was entitled to receive an amount equal to $0.01 in cash for each 10 whole shares of Series A Preferred Stock owned immediately prior to the ~~six months ended June 30, 2018, there was~~Redemption.

On March 6, 2023, the Company filed a ~~write-off~~certificate of ~~$27,204 for fully depreciated assets in~~elimination (the “Certificate of Elimination”), with the Secretary of State of the State of Delaware with respect to the Series A Preferred Stock. The Certificate of Elimination (i) eliminated the previous designation of 80,000 shares of Series A Preferred Stock from the Company’s ~~Bermuda and Australian subsidiaries. Depreciation and amortization expense for~~Certificate of Incorporation, none of which were outstanding at the three months ended June 30, 2018 and 2017 was $10,668 and $8,098, respectively. Depreciation and amortization expense for the six months ended June 30, 2018 and June 30, 2017 were $21,064 and $14,718, respectively.

~~Note 10. Accounts Payable and Accrued Expenses~~

~~Accounts payable and accrued expenses as of June 30, 2018 and December 31, 2017 consisted~~time of the ~~following:~~

June 30,

December 31,

2018

2017

Accounts payable

$
1,686,959

$
840,383

Accrued professional fees

2,843,957

2,288,020

Promotional expenses

1,004,859

—

Due to employees

923,698

659,333

Other accrued expenses

426,013

92,039

$
6,885,486

$
3,879,775

filing of the Certificate of Elimination, and (ii) caused such shares of Series A Preferred Stock to resume their status as authorized but unissued and non-designated shares of preferred stock.

Note ~~11.~~9. Net Loss Per Share

Basic ~~earnings/(loss)~~net loss per share is computed by dividing net ~~income (loss) available to electroCore, Inc.~~loss by the weighted-average number of shares of common stock outstanding during the period. Diluted ~~earnings~~loss per share is computed by dividing net ~~income available to electroCore, Inc.~~loss by the weighted-average number of shares of common stock outstanding adjusted to give effect to potentially dilutive securities. ~~Stock~~Restricted stock and unit awards, stock options, and warrants have not been included in the diluted ~~earnings~~loss per share calculation as ~~they~~their inclusion would have had an anti-dilutive effect.

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

Note 10. Income Taxes

The Company may be eligible, from time to ~~be anti-dilutive~~time, to receive cash from the sale of its net operating losses under the treasury stock method. As described in Note 12, Corporate Conversion and Equity, on June 21, 2018, electroCore, Inc. completed a Corporate Conversion as well as its initial public offering to, among other things, provide for a single class of common stock of electroCore Inc., in exchange for the previous Convertible Preferred Units and Common UnitsNew Jersey's Department of the ~~Company. This conversion changed~~Treasury - Division of Taxation NOL Transfer Program. On January 10, 2023, the ~~relative ownership~~Company received a net cash amount of ~~electroCore, Inc. such that retroactive application~~$211,000 from the sale of ~~the conversion to periods prior to the IPO for the purposes of calculating earnings (loss) per share would not be meaningful.~~its New Jersey state net operating losses.

~~Prior to the Corporate Conversion, the Company’s ownership structure included several different types of LLC interests including preferred stock, common units and Profits Interests (see~~

Note ~~12, Corporate Conversion and Equity)~~11. The Company analyzed the calculation of earnings per unit for periods prior to the Corporate Conversion and determined that it resulted in values that would not be meaningful to the users of these consolidated financial statements. Therefore, earnings per share information has not been presented for periods prior to the Corporate Conversion on June 21, 2018. Additionally, net loss attributable to electroCore, Inc. subsidiaries and affiliate shown below includes only the loss attributable to the period from June 21, 2018 to June 30, 2018. In addition, the basic and diluted weighted average shares outstanding calculation is based on the actual days in which the shares were outstanding from June 21, 2018 to June 30, 2018.Stock Based Compensation

The following table ~~sets forth~~presents a summary of activity related to stock options during the ~~numerators~~three months ended March 31, 2023:

	Number of Options (in thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Outstanding, January 1, 2023	$	440		$	55.65		7.5
Granted		3
Exercised		—
Cancelled		(6	)
Outstanding, March 31, 2023	$	437		$	55.74		7.2
Exercisable, March 31, 2023	$	284		$	75.84		6.7

The intrinsic value is calculated as the difference between the fair market value at March 31, 2023 and ~~denominators used to compute basic and diluted earnings~~the exercise price per share of the ~~common stock:~~stock options. As of March 31, 2023, all options outstanding had no material intrinsic value. The options granted to employees generally vest over a three or four-year period.

For the period
from June 21 to

June 30,

2018

Numerator – Basic and Diluted

Net loss attributable to electroCore, Inc. subsidiaries and affiliate
$
(6,162,299
)
Denominator – Basic and Diluted

Weighted average shares of common stock outstanding

29,261,942

Net loss per common share, Basic and Diluted
$
(0.21
)

The following table presents a summary of activity related to restricted and deferred stock units (“Stock Units”) granted during the three months ended March 31, 2023:

~~Note 12. Corporate Conversion and Equity~~

	Number of Shares (in thousands)			Weighted Average Grant Date Fair Value
Nonvested, January 1, 2023		127		$	11.85
Granted		—
Vested		(4	)
Cancelled		—
Nonvested, March 31, 2023		123		$	11.81

~~On June 21, 2018,~~In general, Stock Units granted to employees vest over two to four-year periods.

Immediately following the Company’s annual meeting of stockholders, the Company ~~completed the Corporate Conversion. Pursuant~~generally grants each non-employee director an equity award that vests over a 12-month period. Upon a non-employee director’s initial appointment or election to the ~~certificate~~board of incorporation effected in connection with the Corporate Conversion, the Company’s authorized capital stock consists of 500 million shares of common stock, par value $0.001 per share and 10 million shares of preferred stock, par value $0.001 per share. As of June 30, 2018, 29,450,034 and 0 shares of the common stock and preferred stock, respectively, were issued and outstanding. On June 22, 2018, the common stock began trading on the Nasdaq Global Market and on June 25, 2018 began trading on the Nasdaq Global Select Market under the symbol “ECOR”. ~~Prior to the~~ ~~Corporate Conversion of~~directors, the Company grants such non-employee director an equity award subject to vesting as determined by the ~~Operating Agreement permitted the issuance~~board of ~~four classes of Units - Series A Preferred Units, Series B Preferred Units, Series B-1 Preferred Units and Common Units. Each member was entitled to one vote~~directors.

The Company recognized stock compensation expense for ~~each Unit held and the Units of all classes and series voted together~~its equity awards as ~~a single class on all matters (on an as converted to Common Unit basis).~~follows:

~~Upon the Corporate Conversion, all Units were converted into an aggregate of 23,470,034 shares of our common stock and options to purchase 2,141,748 shares of common stock as follows~~:

holders of common units, or Common Units, other than Common Units that were originally issued as “profits interests” (as such term is used for purposes of the Internal Revenue Code), or Profits Interests, received an aggregate of 12,099,280 shares of common stock;

		Three months ended March 31,
(in thousands)	2023		2022
Selling, general and administrative	$	510	$	705
Research and development		57		66
Cost of goods sold		5		6
Total expense	$	572	$	777

holders of Series A Preferred Units received an aggregate of 4,181,856 shares of common stock, which included 241,939 shares of common stock as payment in full of the approximately $3.6 million accrued and unpaid preferred return that was payable in respect of the Series A Preferred Units;

~~holders of Series B Preferred Units received an aggregate of 5,843,668 shares of common stock;~~

~~holders of Profits Interests received an aggregate of 1,345,230 shares of common stock.~~

~~holders of Profits Interests who were employees or consultants at the time of the corporate conversion received options~~Total unrecognized compensation cost related to ~~purchase an aggregate of 2,141,748 shares of common stock, with an exercise price of $15.00 which was equal to the initial public offering price.~~

~~Additionally, upon the conversion, the accumulated deficit of Electrocore LLC, subsidiaries and affiliates was reclassed to additional paid in capital in accordance with SEC SAB Topic 4B.~~

~~Series A Preferred Units~~

The Series A Preferred Units were entitled to a preference on distributions, ahead of the Common Units but behind Series B Preferred Units, in the amount of $54,923,430 plus the Series A Preferred Return (as described below),unvested awards as of ~~June 20, 2018.~~March 31, 2023 was $23.2 million and is expected to be recognized over the next one and one-half years.

The Series A Preferred Units were entitled to a return in an annual non-compounded amount with respect to each outstanding Series A Preferred Unit equal to the product of the Series A Preferred Return Percentage and the Series A Unreturned Capital ValueValuation Information for each Unit, which accrued to the extent not paid. The Series A Preferred Return Percentage was 4% and could be reduced to 2% if certain requirements were met as outlined in the amended and restated Operating Agreement. Upon an IPO, the payment of the Series A Preferred Return was at the sole discretion of the Board of Managers. As of June 20, 2018, the Series A Preferred Return payable, following the 2017 amendments to the Operating Agreement, upon a public offering of

~~the Company’s common stock was fixed at $3,629,092. This amount was paid with the issuance of 241,939 shares of common stock upon the IPO.~~ Stock-Based Compensation

The Series A Preferred Units were convertible into common stock mandatorily upon the occurrence of an initial public offering as outlined in the amended and restated Operating Agreement, subsequent to an 18:1 stock conversion.

~~As of June 20, 2018, warrants issued in connection with Series A Preferred Units financing rounds have expired and no new warrants related to Series A Preferred Units were issued in 2018.~~

As of June 21, 2018, warrants to purchase 221,766, Series A Preferred Units issued in connection with the term loan that remain outstanding were converted to warrants to purchase common stock at an exercise price of $15.30.

~~Series B Preferred Units~~

In 2017, the Company entered into a Series B Preferred Unit Purchase Agreement with, among others, CV II, Merck GHI and AIH. Under the terms of the Purchase Agreement, as amended, through December 31, 2017, the Company received cash proceeds of $46,911,300 and converted $26,718,910 of Bridge Notes and related accrued and unpaid interest for an aggregate amount of $73,630,210 (inclusive of amounts mentioned in Note 14 related to conversion of Bridge Notes and related accrued and unpaid interest) through the sale of Series B Preferred Units at an initial closing and several additional closings.

Each Series B Preferred Unit was converted into one share of common stock mandatorily upon the occurrence of the Corporate Conversion as outlined in the amended and restated Operating Agreement, subsequent to an 18:1 stock conversion pursuant to the terms of the plan of conversion for the Corporate Conversion. In connection with all Series B Preferred Unit closings, the Company issued warrants for the purchase of 35,452,084 Common Units at an exercise price of $1.25 per Unit, which expired upon the closing of the IPO. The Company also issued warrants to advisors for the purchase of 2,724,549 common units at an exercise price of $0.70 per Unit. The Company also issued 72,000 warrants to purchase common units with an exercise price of $1.25 per Unit, which expired upon the closing of the IPO. The fair value of ~~these warrants to purchase common units were recorded within additional-paid-in-capital. In connection with~~each stock option award during the ~~Corporate Conversion, the 2,724,549 warrants issued to advisors were converted to warrants to purchase common stock at an exercise price of $12.60 per share of common stock.~~

As of June 21, 2018, the Series B warrants that were issued to purchasers of our Bridge Notes were converted to (i) warrants to purchase 429,948 shares of common stock at an exercise price of $12.60 per share (see Note 14) and (ii) the Series B Preferred warrants that were issued to financial advisors were converted to 101,119 warrants to purchase common stock at an exercise price of $12.60 per share.

~~Note 13. Income Taxes~~

~~There is no provision for income taxes for the six~~three months ended June 30, 2018 as the Company has incurred operating losses since inception. Further, prior to the corporate conversion on June 21, 2018, the Company was a limited liability company in the U.S., which is treated as a partnership for FederalMarch 31, 2023 and ~~state income tax purposes. Accordingly, the Company was not subject to U.S. income taxes until its conversion.~~

The Company has evaluated the available evidence supporting the realization of its deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that its net deferred tax assets will not be realized in the U.S. and certain foreign jurisdictions. Due to uncertainties surrounding the realization of the deferred tax assets, the Company maintains a full valuation allowance against substantially all of its net deferred tax assets. When the Company determines that it will be able to realize some portion or all of its deferred tax assets, an adjustment to its valuation allowance on its deferred tax assets would have the effect of increasing net income in the period such determination is made.

As of June 30, 2018, the Company has adopted ASC 740 principles of accounting for uncertain tax positions and has determined that it does not have any uncertain positions that would result in a tax reserve. Accordingly, no interest or penalties related to uncertain tax positions has been accrued. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. The Company is subject to U.S. federal tax authority and U.S. state tax authority examinations for all years with the net operating loss and credit carryforwards.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act, or the Act. The Act amends the Internal Revenue Code of 1986, as amended, or the Code, to reduce tax rates and modify policies, credits and

deductions for individuals and businesses. For businesses, the Act reduces the corporate tax rate from a maximum of 35% to a flat 21% rate. The rate reduction is effective on January 1, 2018, and thus was effective for the Company upon its corporate conversion. The Act also changes various domestic provisions beginning in 2018, which the Company has reviewed and factored into its quarterly tax provision as necessary. The overall impact of the Act on the accounts is zero given the history of pass through tax treatment coupled with current period losses.

On December 22, 2017, Staff Accounting Bulletin No. 118, or SAB 118, was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, additional analysis of the law and the impact to the Company will be performed and any impact will be recorded in the respective quarters, within the available measurement period in 2018.

~~Further to the Act, beginning in 2018 U.S. shareholders are subject to tax on global intangible low-taxed income (GILTI) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5,~~ ~~Accounting for Global Intangible Low-Taxed Income,~~ states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. We are still evaluating the effects of the GILTI provisions and have not yet determined our accounting policy. The impact of the policy election is not expected to have a material effect on the amounts reported for the current year.

~~Note 14. Convertible Bridge Notes~~

~~For the six months ended June 30, 2017, the Company issued Bridge Notes aggregating $19,965,692 including warrant coverage.~~

Since the Bridge Note Warrants entitled the holders to purchase securities in the Qualified Equity Round at the purchase price payable for the related equity securities, the exercise price of the warrants was undetermined at the time of their issuance. Also, because the terms of redemption of the Series B Preferred Units were unknown at the time of their issuance as well as the deemed liquidation terms discussed in Note 12, the warrants were recorded as liabilities. In connection with the Bridge Note closings, at the time of the Qualified Equity Round, the Company issued 7,739,092 Bridge Note Warrants all of which are outstanding as of June 30, 2018. At stated above, these warrants were converted to warrants to purchase common stock at an exercise price of $12.60 and were reclassified to equity upon the determination that they no longer met the criteria to be classified as liabilities.

~~As of December 31, 2017, all Bridge Notes were converted to Series B Preferred Units, see Note 12, Corporate Conversion and Equity.~~

~~Note 15. Stock Based Compensation and Unit‑Based Compensation~~

The granting of common stock and options to purchase common stock to prior holders of Profits Interests in connection with the corporate conversion is accounted for as a type-1 modification of the old awards. Under the previous LLC structure, in connection with employment and service provider agreements, the Company had awarded grantees Units that constitute profits interests for income tax purposes, subject to certain restrictions defined in each Unit forfeiture agreement. The Company maintained a Unit award account for each of the grantees. Generally, the Units vested 25% on the one-year anniversary of the employment start date or agreement date and the balance ratably per quarter thereafter over an additional three-year period. After the restrictions lapsed, the grantees became fully vested in such Units. In 2018, the Company granted 19,447,218 Profits Interests to its employees and had forfeitures of 110,354 Profits Interests.

In connection with the Corporate Conversion, the holders of 62,765,605 Common Units that were issued as "Profits Interests" that were outstanding immediately prior to the IPO were converted, in the aggregate, into (i) 1,345,230 shares of common stock, and (ii) with respect to Profits Interests that were held by current employees and consultants at the time of the conversion, options to purchase 2,141,748 shares of electroCore, Inc. common stock at an initial exercise price of $15.00 per share.

The number of shares of common stock and the number of options issued for the outstanding Profits Interests was determined based upon the appreciation in value of the company after the date of grant of the applicable Profits Interests through the completion of the IPO.

The number of shares of common stock issued for each Profits Interest (the "Conversion Shares") was equal to (x) the percentage of the capital account balance associated with such Profits Interest as it related to the total value of the company as the IPO pre-money valuation (the "PI Capital Account Percentage"), divided by (y) the percentage interest in the company represented by such Profits Interest on a Unit basis based on the total outstanding Units in the company immediately prior to the IPO (the "PI Unit Percentage"), multiplied by (z) the total number of Units represented by the applicable Profits Interest. Of the shares of common stock issued for the Profits Interests, 1,157,138 vested immediately and 188,092 are subject to vesting of 25% on January 1, 2019 and the balance over the next succeeding 10 calendar quarters.

The number of options issued in respect of each Profits Interest (the "Conversion Options") was equal to (i) the total number of Units represented by such Profits Interest prior to the corporate conversion minus (ii) the Conversion Shares issued in respect of such Profits Interest. Of the options issued for the Profit Interests, 228,954 will vest 100% on January 1, 2019 and 1,912,797 will vest 25% on January 1, 2019 and the balance will vest over the next succeeding 14 calendar quarters. The options have an exercise price of $15.00.

Stock compensation expense for the Profits Interests not recognized prior to the conversion was $2.8 million. This expense was allocated to the common stock and options to purchase common stock awards based on their relative fair value on the date of the IPO. For the common stock awards that vest at the time of issuance, the Company recognized $1.2 million immediately. For the common stock awards and the options to purchase common stock that did not vest immediately, the Company will recognize $0.2 million and $1.5 million, respectively, using graded vesting over their respective vesting periods.

The incremental stock compensation expense to be recognized was $7.8 million. This expense was allocated to the common stock and the options to purchase common stock based on their fair value on the date of the awards. For the common stock that vested at the time of issuance, the Company recognized $3.8 million. For the common stock awards and the options to purchase common stock that did not vest immediately, the Company will recognize $0.3 million and $3.7 million, respectively, over their respective vesting periods.

For the three and six months ended June 30, 2018, stock compensation expense reported as a component of selling, general and administrative was $2.7 million and $2.8 million, respectively. For the same period, stock compensation expense reported as a component of research and development expense was $2.3 million and $2.4 million, respectively. For both the three and six months ended June 30, 2018, stock compensation expense reported as a component of cost of goods sold was $0.2 million and included in inventory was $0.2 million.

~~The Company utilized the Black Scholes option pricing model for estimating the fair value of the options to purchase common stock. The fair value of the options~~2022 was estimated on the date of grant using the ~~grant.~~

~~The assumptions for the determination~~Black-Scholes model. Expected volatility was based on historical common stock volatility of the ~~fair value~~Company’s peers. Beginning in December 2022, the Company began incorporating its historical common stock volatility at a weighting of 50% of the ~~options issued upon~~total composite volatility rate. During the ~~corporate conversion are provided in~~remainder of 2023, the ~~following table:~~

Options vesting on
January 1, 2019

Options vesting 25%
on January 1, 2019,
remaining vesting over
the next 14 quarters

Valuation assumptions:

Expected dividend yield

0%

0%

Expected volatility

74.80%

74.30%

Expected term (years)

5.25

6.00

Risk-free interest rate

2.77%

2.82%

Company will continue to evaluate the volatility rate used to value stock options. The risk-free interest rate iswas based on the average U.S. Treasury rate ~~with a term~~ that most closely ~~resembles~~resembled the expected life of the related award. The expected term of the award was calculated using the simplified method. ~~For volatility,~~No dividend was assumed as the ~~Company uses comparable public companies as a basis for its expected volatility. The~~ Company does not pay regular dividends on its common stock and does not anticipate paying any dividends in the foreseeable future.

~~Note 16. Variable Interest Entity~~

As discussed in Note 1, electroCore is the primary beneficiary of electroCore (Aust) Pty Limited. electroCore has contributed certain intellectual property rights, all rights to distribute, market and sell specified products in Australia and New Zealand,

~~and other rights outlined~~The weighted average assumptions used in the ~~shareholders’ deed of electroCore (Aust) Pty Limited~~Black-Scholes option pricing model in ~~return for 50%~~valuing stock options granted in the three months ended March 31, 2023 and 2022 are summarized in the table below.

	Three months ended March 31,
	2023				2022
Fair value at grant date	$	3.46		$	8.10
Expected volatility	114.0		%		84.0	%
Risk-free interest rate	3.9		%		1.6	%
Expected holding period, in years	6.0				6.0
Dividend yield		—	%		—	%

Note 12. Commitments and Contingencies

Stockholders Litigation

On July 8, 2019, and August 1, 2019, purported stockholders of the ~~shares~~Company served putative class action lawsuits in the Superior Court of ~~such entity.~~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 ~~electroCore can also appoint~~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 ~~four directors~~Company’s stockholders. On August 15, 2019, the Superior Court entered an order consolidating the Kuehl and ~~can exercise significant influence. This along~~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 ~~fact that electroCore is electroCore (Aust) Pty Limited’s only supplier causes electroCore, for accounting purposes, to be~~N.J. Superior Court – Appellate Division. The appeal was argued on September 27, 2021. On October 8, 2021, the ~~primary beneficiary~~Appellate Division issued an order reversing the decision of ~~electroCore (Aust) Pty Limited.~~the Superior Court. The ~~activities related to electroCore (Aust) Pty Limited are not material~~case has been remanded to the ~~consolidated financial statements.~~

~~Note 17. Commitments~~Superior Court for oral argument on the motion to dismiss. On November 11, 2021, the defendants filed a supplemental motion to dismiss based on the 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 ~~Contingencies~~

~~(a)~~

~~Operating Lease~~

~~The Company leases office space under operating leases through April 2022. For~~ the ~~three~~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 ~~six months ended June 30, 2018, rental expense related~~granted the original motion to dismiss without prejudice. On January 27, 2022, the plaintiffs filed a notice of appeal to the ~~leases for each period~~Appellate Division. On April 15, 2022, the plaintiffs filed their appeal brief. The brief of defendant-appellees was ~~$125,102~~filed on May 16, 2022. The appeal was fully briefed and ~~$247,920, respectively.~~oral argument was heard on April 19, 2023.

~~(b)~~

~~Legal Proceedings~~

~~From time to time,~~On September 26, 2019, and October 31, 2019, purported stockholders of the Company ~~may become involved in various legal proceedings, including those that may arise~~served putative class action lawsuits in the ~~ordinary course~~United States District Court for the District of ~~business. Although the outcomes of these legal proceedings cannot be predicted with certainty, other than as set forth below, the Company is not subject to any material legal proceedings.~~

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 ~~May 2018, a former financial advisor~~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. The Priewe case was voluntarily dismissed on February 19, 2020.

In the Turnofsky case, on November 25, 2019, several plaintiffs and their counsel moved to be selected as lead plaintiff and lead plaintiff’s counsel. On April 24, 2020, the Court granted the motion of Carole Tibbs and the firm Bragar, Eagel & Squire, P.C. 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 two investors as defendants and adds a ~~complaint~~claim against the Company ~~seeking additional compensation~~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 in the Turnofsky case. The defendants have moved to dismiss. Briefing on 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.

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 ~~Company's 2017 Series B Preferred Unit financing (See Note 12).~~ 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 Erin 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 to Judge Quraishi.

The Company ~~believes that it has substantial legal and factual defenses~~intends to ~~the claims in such lawsuit and intends~~continue to vigorously defend itself in these matters. However, in light of, among other things, the ~~case. Based on our best estimate~~preliminary stage of ~~this matter, we have~~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 ~~a legal reserve relative to this matter.~~ 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 ~~does~~is subject to various claims, complaints and legal actions in the normal course of business from time to time. The Company is not ~~believe resolution~~aware of ~~this matter would~~any further currently pending litigation for which it believes the outcome could have a material adverse effect on its operations or financial ~~position or operations.~~position. The Company expenses associated legal fees including those relating to the stockholder litigation described in this Note 12 in the period they are incurred.

Note 13. Severance and other related charges

In the first quarter of 2023, the Company entered into separation agreements with two former employees which agreements required an aggregate of payments of $332,000. The charge for these payments is included in Selling, general and administrative expense in the accompanying Condensed Statement of Operations for the three months ended March 31, 2023. As of March 31, 2023, the Company has an outstanding payable of $301,000 in connection with these charges. This outstanding payable is included in Accrued expenses and other current liabilities in the accompanying Condensed Consolidated Balance Sheet as of March 31, 2023 (see Note 7).

~~Management’s~~

Item 2. Management's Discussion andand 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 ~~Part I. Item 1 of~~ 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 ~~years~~year ended December 31, ~~2017 and 2016~~2022 included in our ~~prospectus dated June 21, 2018,~~Annual Report on Form 10-K, filed with the ~~SEC, pursuant to Rule 424(b) under the~~ Securities ~~Act.~~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 ~~prospectus.~~Annual Report and this Form 10-Q.

~~Overview~~

Note: Information concerning the shares of our common stock and related share prices in this Item 2 has been adjusted to reflect the 1- for-15 reverse split of our common stock that was made effective on February 15, 2023. (See Note 2 - "Basis of Presentation” to the accompanying condensed consolidated financial statements).

Overview

We are a ~~commercial-stage~~commercial stage bioelectronic medicine and wellness company ~~with a platform~~dedicated to improving health through our non-invasive vagus nerve stimulation ~~therapy initially focused~~(“nVNS”) technology platform. Our focus is the commercialization of medical devices for the management and treatment of certain medical conditions and the development and commercialization of consumer product offerings utilizing nVNS to promote general wellbeing and human performance in the United States and select overseas markets.

nVNS is a platform bioelectronic technology that modulates neurotransmitters and immune function through its effects on ~~neurology and rheumatology. Our therapy, gammaCore, has pharmacologic effects on~~both the peripheral and central nervous ~~systems, which modulate neurotransmitters~~systems. Our nVNS treatment is delivered through a proprietary high-frequency burst waveform that safely and ~~immune function. gammaCore is FDA-cleared for~~comfortably passes through the ~~acute treatment~~skin and stimulates therapeutically relevant fibers in the vagus nerve. Various scientific publications suggest that nVNS works through several mechanistic pathways including the modulation of pain associated with migraine and episodic cluster headache. Based on our clinical data, we are pursuing label expansions for the prevention of migraine, migraine in adolescents and post-traumatic headache, and are also engaging in clinical development for potential new labeling claims in rheumatology, including Sjôgren’s syndrome and rheumatoid arthritis.neurotransmitters.

~~Since our inception in 2005, we have devoted substantially all of our resources to the development of~~Historically, vagus nerve stimulation or VNS, required an invasive surgical procedure to implant a costly medical device. This limitation has generally limited VNS from being used by anyone other than the most severe patients. Our medical devices and ~~the commercialization of our gammaCore therapy. Following our initial FDA clearance, our commercial strategy has been to establish gammaCore as a first-line treatment option~~wellness products are self-administered and intended for ~~episodic cluster headache patients, who have few alternative treatment options available to them. This strategy~~regular or intermittent use over many years.

Our business is supported by aour in-house capabilities spanning research and development, regulatory affairs and compliance, sales and marketing, product ~~registry initiated in July 2017 to build advocacy among key opinion leaders in 55 leading headache centers~~testing, assembly, fulfillment, and customer support. We derive revenues from the sale of medical devices and wellness products in the United States and select overseas markets. We have two principal product categories:

• Handheld, personal use medical devices for the management and treatment of certain medical conditions; and

• Handheld, personal use consumer product offerings utilizing nVNS technology to ~~generate patient demand~~promote general wellbeing and human performance.

We believe our nVNS treatment may be used in the future to effectively treat additional medical conditions, promote general wellbeing, or improve human performance.

Our goal is to be a leader in non-invasive neuromodulation by using our proprietary nVNS platform technology to deliver better health. To achieve this, we offer multiple propositions:

• gammaCore for the treatment of certain medical conditions such as primary headache;

• Truvaga for the support of general health and wellbeing; and

• TAC-STIM for human performance as defined by the United States Air Force Research Laboratory.

gammaCore is a prescription medical device currently FDA cleared for a variety of primary headache conditions. gammaCore is available by prescription only and our flagship model, gammaCore Sapphire is a portable, reusable, rechargeable and reloadable personal use option for patients to use at home or on the go. Prescriptions are written by a health care provider and dispensed from a specialty pharmacy, through the patient’s healthcare provider or fulfilled directly to certain patients directly from our facility in Rockaway, NJ. After the initial prescription is filled, access to additional therapy can be refilled for certain of our gammaCore products periodically through the input of a prescription-only authorization.

Truvaga is a personal use consumer electronics wellness product that does not require a prescription and is available direct-to-consumer from electroCore at www.truvaga.com. Truvaga is not intended for medical use. TAC-STIM is a form of ~~prescriptions submitted~~nVNS for human performance and has been developed in collaboration with the United States Department of Defense Biotech Optimized for Operational Solutions and Tactics, or "BOOST" program. We are exploring strategies to ~~payors.~~make this product offering available to other branches of the active-duty military and certain human performance professionals in the United States and abroad.

TAC-STIM is available to professional organizations and is the subject of ongoing research at the United States Air Force Research Laboratory. TAC-STIM is not a medical device and is not intended to diagnose, cure, mitigate, prevent, or treat a disease or condition.

Until 2021, we generally focused most of our historical sales efforts in two channels, the United States Department of Veterans Affairs and United States Department of Defense, or VA/DoD, and the United Kingdom utilizing our FDA cleared and CE marked product, gammaCore.

The United States Department of Veteran Affairs comprised 64.5% of our revenue during the three months ended March 31, 2023. We expect that a majority of our 2023 sales will be made pursuant to our qualifying contract under the Federal Supply Schedule or FSS, which was secured by us in December 2018, as well as open market sales to individual facilities within the government channels. The FSS is scheduled to expire on January 15, 2024. We intend to ~~leverage~~request an extension of the FSS from the United States Department of Veteran Affairs, but there is no assurance the FSS will be renewed, and if at all renewed at terms favorable to us. Our sales function in this ~~advocacy as we expand into~~channel is comprised of electroCore employees and independent contractors.

Sales under the ~~broader headache market~~Med Tech Funding Mandate, or MTFM, program for ~~both migraine and~~ cluster headache in the ~~future. We anticipate a full commercial launch~~ UK comprised 9.4% of ~~gammaCore for~~our revenue during the ~~acute treatment of pain associated with episodic cluster headache and migraine in adult patients in the third quarter of 2018.~~

~~We have never been profitable and have incurred net losses in each year since our inception. Our net loss for the six~~three months ended ~~June 30, 2018 and 2017 was $27.3 million and $17.9 million, respectively. As of June 30, 2018, our accumulated deficit was $9.8 million. We expect to~~March 31, 2023. In 2023, we plan on continued expansion under this program, as well as continue to ~~incur substantial net losses~~utilize distribution partners to commercialize our nVNS technology in territories outside the United States and ~~negative~~United Kingdom. In 2023, we expect NICE to review the guidance document and any changes in recommendation or pricing may adversely impact our ability to work with NHS England on the MTFM program.

We believe there may be significant opportunities beyond these two areas. Specifically, we believe there is a large commercial opportunity for gammaCore with cash ~~flows from operations for at least the next several years as~~pay, physician dispense, and direct-to-consumer approaches, along with wellness and human performance propositions through Truvaga and TAC-STIM. Therefore, in 2023, we ~~commercialize gammaCore for the acute treatment of pain associated with migraine and episodic cluster headache in adults. We intend to make a significant investment in building~~will continue our ~~U.S. commercial infrastructure and in recruiting and training our territory business managers. We also intend to continue to make significant~~ investments ~~in research and development~~ to expand ~~our gammaCore therapy for the treatment of other indications, including additional headache conditions~~these channels and ~~rheumatology.~~markets.

We face a variety of challenges and risks ~~which~~that we will need to address and manage as we pursue our ~~strategy,~~strategies, including our ability to develop and retain an effective sales force, achieve market acceptance of gammaCore among physicians, patients, and third-party ~~payors, and~~payers, expand the use of gammaCore to additional therapeutic ~~indications.~~indications, and to develop our nascent wellness and human performance business.

Because of the numerous risks and uncertainties associated with our commercialization efforts, as well as research and clinical development activities, we are unable to predict the timing or amount of increased expenses, or when, if ever, we will be able to achieve or maintain profitability. Even if we are able to increase sales of ~~gammaCore,~~our products, we may not become profitable. If we fail to become profitable or are unable to sustain profitability, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

AsOur expected cash requirements for the next 12 months and beyond are based on the commercialization success of ~~June 30, 2018,~~our products and our ability to control operating expenses. There are significant risks and uncertainties as to our ability to achieve these operating results. Due to these risks and uncertainties, we ~~had cash~~may need to reduce our activities significantly more than our current operating plan and cash ~~equivalents, debt securities and other investments available for sale, of $95.8 million. Our current cash resources will enable us~~flow projections assume in order to fund ~~our operating expenses and capital expenditure requirements~~operations for ~~at least~~ the next 12 months. There can be no assurance that we will have sufficient cash flow and liquidity to fund our planned activities, which could force us to significantly reduce or curtail our activities and, ultimately, potentially cease operations. These conditions raise substantial doubt about our ability to continue as a going concern. See ~~“—Liquidity and Capital Resources.~~“Liquidity Outlook.”

Critical Accounting Policies and Estimates

The ~~Company's~~ significant accounting policies and basis of presentation of our condensed consolidated financial statements are described in Note 12 “Summary of Significant Accounting Policies” of the ~~Company’s~~ consolidated financial statements included ~~elsewhere~~ in ~~this filing~~our Annual Report on Form 10-K, filed with the Securities and ~~our audited~~Exchange Commission, or SEC on March 8, 2023 ("2022 Annual Report"), and in Note 2 "Summary of Significant Accounting Policies" of the condensed consolidated financial statements ~~and related notes thereto for the years ended December 31, 2017 and 2016~~ included inwithin this quarterly report on Form 10-Q.

The preparation of our ~~prospectus dated June 21, 2018. The Company’s consolidated~~ financial statements is in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, which 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 ~~prepared~~reasonable, they are based on information presently available. Actual results may differ significantly from these estimates due to changes in ~~conformity with accounting principles generally accepted in the United States. Certain accounting policies involve significant~~ judgments, assumptions and ~~estimates by management that~~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, and the ~~carrying value of certain assets~~judgements, estimates, and ~~liabilities and disclosure of contingent assets and liabilities at~~assumptions associated with such policies, that we believe have the ~~date of~~greatest potential impact on the condensed consolidated financial statements ~~and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.~~

~~Recent Developments~~

~~Initial Public Offering~~

~~As discussed more fully in Note 1~~are disclosed in the ~~accompanying Notes to the Consolidated Financial Statements contained~~section titled Critical Accounting Policies and Estimates in ~~Item 1, we completed~~Part II of our ~~IPO in June 2018, in which we sold 5,980,000 shares~~2022 Annual Report.

Results of ~~common stock to the public at a price of $15.00 per share. We received net proceeds of $77.7 million, net of underwriting discount and other offering expenses.~~ Operations

~~Corporate Conversion~~

Effective June 21, 2018, we converted into a Delaware corporation pursuant to a statutory conversion and changed our name to electroCore, Inc. Previously, we operated as a Delaware limited liability company under the name Electrocore, LLC. ~~As a result~~Comparison of the Corporate Conversion, the holders of the different classes and series of units of Electrocore, LLC became holders of common stock and options to purchase common stock of electroCore, Inc. Our Common Units, other than Common Units issued as profits interests under the Code, or Profits Interests, Series A Preferred Units and Series B Preferred Units converted into shares of our common stock on a one-for-one basis in the Corporate Conversion. Our Profits Interests converted into (i) shares of our common stock, and (ii) with respect to Profits Interests that are held by our current employees and consultants at the time of the Corporate Conversion, options to purchase our common stock. The number of shares of common stock and the number of options issued in respect of the Profits Interests was determined based upon the appreciation in the value of the Company after the date of grant of the applicable Profits Interest through the completion of the IPO. The exercise price of these options was equal to our IPO price of $15.00. All of the conversions were subject to an 18:1 stock conversion. Other than warrants that expired in connection with the IPO, holders of warrants to purchase units of ElectroCore, LLC became holders of warrants to purchase shares of common stock of electroCore, Inc.

The purpose of the Corporate Conversion was to reorganize our corporate structure so that the entity that offered our common stock to the public would be a corporation rather than a limited liability company and so that our existing investors would own our common stock rather than equity interests in a limited liability company.

~~Our conversion from a Delaware limited liability company to a Delaware corporation did not have a material effect on our consolidated financial statements at the time of the Corporate Conversion.~~

~~Components of Our Results of Operations~~

~~Net Sales~~

We expect to generate the majority of our net sales in the United States. In April 2017, we received FDA clearance for gammaCore for the acute treatment of pain associated with episodic cluster headache. In July 2017, we began a product registry for episodic cluster headache in the United States and as a result generated our first U.S. revenue relative to this FDA clearance. Through this registry, we are seeking to establish a base of advocacy among key opinion leaders in the headache field and to generate patient demand through prescriptions submitted to the payors. We believe that choosing to enter the market with a targeted product registry that prioritized early development of advocacy and reimbursement best positioned us for commercial launch in the United States in the third quarter of 2018. In January 2018, we received FDA clearance for gammaCore for the acute treatment of pain associated with migraine headaches. In July 2017, we implemented a co-payment assistance program whereby we assumed responsibility for a fixed amount of copayment for the patient. Costs for this program were immaterial for the year ended 2017. For the three and six months ended June 30, 2018 costs for this program are reflected as a reduction of the transaction price of units sold within our net sales.

In February 2018 we began a formal physician training program highlighting the clinical evidence and benefits of gammaCore for the acute treatment of pain associated with migraine and episodic cluster headache. Concurrently, we began a

voucher program for trained physicians to provide new patients with a one-time 31-day therapy at no charge to the patient. While the voucher program has increased demand for gammaCore, the transaction price is reduced by the 31-day therapy at no charge which offsets the increased demand. Our revenue reflects only gammaCore units sold either for new patients, or existing patients refills, that are not related to our voucher program. For the three months ended June 30, 2018, the Company recognized actual vouchers redeemed as contra-revenue. Any vouchers redeemed after June 30, 3018 would utilize inventory designated for voucher redemption. The transaction price of the devices estimated to be redeemed through vouchers was recognized as contra-revenue. All other costs for units relatedMarch 31, 2023 to the voucher program and any other redemption costs due to the specialty pharmacy were included as promotional expenses in selling, general and administrative expense. All costs for the free units, including any processing fees, will be included as promotional expenses in selling, general and administrative expense.

Prior to December 31, 2017, we generated the majority of our revenue from the European CE Mark approval for gammaCore that we obtained in 2011 for five different indications, including primary headache. This allowed us to commercialize gammaCore in the European Economic Area and other countries that recognize the European CE Mark. Following receipt of our CE marks beginning in 2011 and prior to receipt of our FDA clearance in the United States, we limited our commercialization effort outside the United States to Germany and the United Kingdom. Revenue, however, was minimal primarily due to limited published pivotal clinical data to support reimbursement in these countries. Now that our pivotal trials (ACT 1, ACT 2 and PRESTO) have been completed, our PRESTO data has been published. The published data will be provided to reimbursement authorities in Germany and the United Kingdom for review for reimbursement consideration. We intend to explore select international markets to commercialize our gammaCore therapy based on reimbursement outcomes and as our resources permit, using direct, dealer and distributor sales models as the targeted market best dictates.

We expect net sales of gammaCore to increase in the future as a result of new FDA clearances for indications for our therapy and as we expand our sales, marketing and distribution capabilities to support growth in the United States and in select markets internationally.

~~Cost of Goods Sold~~

Cost of goods sold consists primarily of direct material, direct labor and overhead costs. A significant portion of our cost of goods sold consists of overhead costs such as quality assurance, warehousing and shipment, facilities, depreciation on equipment and operations supervision and management. Due to our relatively low production volumes compared to our available assembling capacity, a large portion of our costs for our gammaCore therapy consists of overhead expense. If our production volumes increase as expected in the future, we anticipate that our per unit production costs will decrease.

~~Research and Development~~

Since our inception, we have focused significant resources on our research and development activities, including preclinical studies and clinical trials, activities related to regulatory filings, and manufacturing development efforts. Significant expenses also included in research and development are personnel costs, which includes compensation, benefits and stock-based compensation. We expense research and development costs as they are incurred.

~~Selling, General and Administrative~~

Our selling, general and administrative expenses consist primarily of personnel related costs (including compensation, benefits, and stock based compensation) for executive, finance, administrative and field based personnel, costs for commercial related infrastructure, and market development. As a result of clearance from the FDA and commencement of commercial sales in the United States, we incurred a significant increase in compensation costs as additional personnel were hired to oversee the execution of the commercial plan in the United States and Europe. Significant expenses include costs associated with marketing and advertising, salesforce, professional fees for legal services, including legal services associated with our efforts to obtain and maintain broad protection for the intellectual property related to our products, rent, compliance, payor reimbursement development, accounting services, and consulting fees.

We expect selling, general and administrative expenses to continue to grow as we seek to execute our commercial and research and development plans. We also expect other non-employee-related costs, including outside services and accounting and legal costs to increase. The timing of these increased expenditures and their magnitude are primarily dependent on the commercial success and sales growth of gammaCore and gammaCore Sapphire. In addition, we expect to incur increased selling, general and administrative expenses in connection with being a public company, which may further increase when we are no longer able to rely on certain “emerging growth company” exemptions we are afforded under the JOBS Act.

~~Amortization of Debt Issuance Costs~~

Amortization of debt issuance costs consisted primarily of the amortization of costs, including cash, warrants and common units issued to advisors and bankers, in conjunction with our issuance of Bridge Notes. These items were recorded as a discount on the Bridge Notes and were amortized on a straight-line basis over the term of the Bridge Notes until their conversion to Series B Preferred Units in August 2017.

~~Interest Expense~~

Interest expense consisted of interest on our term loans and Bridge Notes. Interest includes both the stated fixed rate of interest on the term loans and Bridge Notes, as well as the amortization of debt discount over the term of the Bridge Notes. The debt discount relates to the warrants, embedded derivative, and Common Units issued in conjunction with our Bridge Notes.

~~Change in Fair Value of Warrant Liability and Derivative Instrument related to Convertible Bridge Notes~~

~~The change in fair value of the warrant liability and derivative instrument is based on revaluation of those instruments occurring during the six and~~ three months ~~ended June 30, 2018 and 2017.~~ended March 31, 2022

~~Income Taxes~~

We use the asset and liability method of accounting for income taxes. Under this method, deferred taxes are recognized based on the differences between financial statement and income tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. We provide a full valuation allowance on substantially all deferred tax assets. The provision for income taxes represents the current tax payable for the period and the change during the period in deferred tax assets and liabilities. We anticipate an immaterial provision given we are reporting losses in all our taxable jurisdictions and are recording a full valuation allowance on the net deferred tax asset. We recognize the effect of an income tax position only if, based on its merits, the position is more likely than not to be sustained on audit by the taxing authorities. Interest and penalties related to uncertain tax positions are recorded as income tax expense.

~~Net Income (Loss) Attributable to Non-Controlling Interest~~

From our inception through June 30, 2018, we consolidated the financial results of our affiliate, electroCore (Aust) Pty Limited. Although we did not have a controlling ownership interest in electroCore (Aust) Pty Limited during that period, we determined that electroCore (Aust) Pty Limited was a variable interest entity, of which we were the primary beneficiary.

~~Results~~ ~~of Operations~~

~~Comparison of the three months ended June 30, 2018 to three months ended June 30, 2017~~

~~The following table sets forth amounts from our consolidated statements of operations for the three months ended June 30, 2018 and 2017 with the changes in those items in dollars.~~

Three months ended June 30,

2018

2017

Change

(in thousands)

Consolidated statements of operations:

Net sales

$
393.2

$
176.6

$
216.7

Cost of goods sold

240.5

��

38.7

201.7

Gross profit

152.7

137.8

14.9

Operating expenses

Research and development

4,367.1

2,771.4

1,595.6

Selling, general and administrative

12,007.2

4,797.6

7,209.6

Total operating expenses

16,374.3

7,569.0

8,805.2

Loss from operations

(16,221.5
)

(7,431.2
)

(8,790.3
)

Interest expense

—

3,433.7

(3,433.7
)

Amortization of debt issuance costs

—

293.4

(293.4
)

Change in fair value of warrant liability

1,625.1

196.7

1,428.4

Change in fair value of derivative instrument related to
convertible bridge notes

—

220.1

(220.1
)

Interest and other income, net

(115.3
)

(3.2
)

(112.1
)

Other

50.8

2.2

48.6

Total other expense/(income)

1,560.6

4,142.8

(2,582.22
)

Net loss

(17,782.1
)

(11,574.0
)

(6,208.1
)

Less: Net income/(loss) attributable to noncontrolling interest

—

(6.0
)

6.0

Total net loss attributable to Electrocore LLC and electroCore, Inc.

$
(17,782.1
)

$
(11,568.0
)

$
(6,214.1
)

~~Net Sales~~

Net sales were approximately $393.2 thousand and $176.6 thousand for three months ended June 30, 2018 and 2017, respectively. The increase of $216.7 thousand is due increased selling efforts following FDA releases of our product for the acute treatment of pain associated with episodic cluster headache in adult patients. Part of our increased selling efforts was to use a new distributor to sell our product in the United States (an increase of $313.0 thousand), discontinued use of a distributor for our product in Germany (a decrease of $106.0 thousand) and implementing a voucher program and rebate program to encourage patient use of gammaCore. Although the sales of our product under the voucher program are netted against the cost of the product distributed under the program, we believe that the use of this program and other programs such as additional rebates and co-payment assistance programs will continue to result in additional sales increases.

~~Costs of Goods Sold~~

Cost of goods sold was approximately $240.5 thousand and $38.7 thousand for the three months ended June 30, 2018 and 2017, respectively. This increase of $201.7 thousand was the result of an increase in stock compensation expense as a result of the corporate conversion of $167.1 thousand and the remainder of $34.7 thousand is consistent with the increase in sales for the comparable periods.

~~Research and Development~~

Research and development expense was approximately $4.4 million and $2.8 million for three months ended June 30, 2018 and 2017, respectively. The increase of $1.6 million was the result of an increase in stock compensation expense as a result of the corporate conversion of $2.3 million, increase in headcount and increased personnel costs of $0.2 million, offset by decreases in consulting fees of $0.5 million and clinical studies of $0.5 million and a decrease in other related expenses.

~~Selling, General and Administrative~~

Selling, general and administrative expense was approximately $12.0 million and $4.8 million for three months ended June 30, 2018 and 2017, respectively. The increase of $7.2 million is a result of an increase in costs related to newly hired personnel of $1.7 million, increase in stock compensation expense as a result of the corporate conversion of $2.6 million, increase in professional fees of $0.2 million, increase in marketing related costs of $2.1 million, increase in travel and entertainment costs of $0.3 million, and increase in other related expenses of $0.3 million.

~~Interest Expense~~

Interest expense was approximately $0 and $3.4 million for the three months ended June 30, 2018 and 2017, respectively. We had no debt outstanding during the three months ended June 30, 2018 as a result of the conversion of the Bridge Notes into Series B Preferred Units in August 2017.

~~Amortization of Debt Issuance Costs~~

Amortization of debt issuance costs, which relate to the Bridge Notes issued during 2017 and 2016, was approximately $0 and $293.4 thousand for three months ended June 30, 2018 and 2017, respectively. There was no amortization of debt issuance costs for the three months ended June 30, 2018 as a result of the conversion of the Bridge Notes into Series B Preferred Units in August 2017.

~~Change in Fair Value of Warrant Liability and Derivative Instrument related to Convertible Bridge Notes~~

The change in fair value of the warrant liability is based on revaluation of the warrants during the three months ended June 30, 2018. The effect of the revaluation of the warrant liability through June 20, 2018 was an increase of $1.4 million compared to the three months ended June 30, 2017. The effect of the revaluation of the embedded derivative liability was $0.2 million for the three months ended June 30, 2017. There was no embedded derivative liability as of June 30, 2018 as a result of the conversion of the related Bridge Notes into Series B Preferred Units in August 2017.

~~Interest and Other Income, Net~~

Interest and other income, net was $115.3 thousand and $3.2 thousand for the three months ended June 30, 2018 and 2017, respectively, which resulted from returns on our debt securities and other investments available for sale.

~~Net Income/(Loss) Attributable to Non-Controlling Interest~~

Net loss attributable to non-controlling interest was $0 and $6.0 thousand for the three months ended June 30, 2018 and 2017, respectively. This was due to the loss related to our joint venture entity in Australia.

~~Comparison of the six months ended June 30, 2018to six months ended June 30, 2017~~

The following table sets forth amounts from our condensed consolidated statements of operations for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2023 and ~~2017 with the changes in those items in dollars:~~2022:

	Six Months ended June 30,									For the three months ended March 31,
	2018			2017			Change			2023			2022			Change
	(in thousands)
(in thousands)
Consolidated statements of operations:
Net sales	$	474.4		$	293.5		$	180.9		$	2,780		$	1,899		$	881
Cost of goods sold		289.4			111.5			177.9			458			360			98
Gross profit		185.0			182.0			3.0			2,322			1,539			783
Operating expenses
Research and development		6,673.4			4,498.0			2,175.4			1,809			934			875
Selling, general and administrative		18,832.0			7,856.9			10,975.2			6,710			6,186			524
Total operating expenses		25,505.4			12,354.9			13,150.6			8,519			7,120			1,399
Loss from operations		(25,320.4	)		(12,172.9	)		(13,147.6	)		(6,197	)		(5,581	)		(616	)
Interest expense		—			4,473.8			(4,473.8	)
Amortization of debt issuance costs		—			562.5			(562.5	)
Change in fair value of warrant liability		1,870.9			374.7			1,496.3
Change in fair value of derivative instrument related to convertible bridge notes		—			348.2			(348.2	)
Interest and other income, net		(224.6	)		(3.2	)		(221.4	)
Other		258.9			2.2			256.7
Total other expense/(income)		1,905.2			5,758.1			(3,852.9	)
Other (income) expense
Interest and other income											(119	)		(4	)		(115	)
Other expense											—			5			(5	)
Total other (income) expense											(119	)		1			(120	)
Loss before income taxes											(6,078	)		(5,582	)		(496	)
Benefit from income taxes											211			—			211
Net loss		(27,225.6	)		(17,930.9	)		(9,294.7	)	$	(5,867	)	$	(5,582	)	$	(285	)
Less: Net income/(loss) attributable to noncontrolling interest		55.0			(6.0	)		61.1
Total net loss attributable to Electrocore LLC and electroCore, Inc.	$	(27,280.6	)	$	(17,924.9	)		(9,355.7	)

Net Sales

Net sales ~~were approximately $474.4 thousand and $293.5 thousand~~ for the ~~six~~three months ended ~~June 30, 2018 and 2017, respectively.~~March 31, 2023 increased 46% as compared to the three months ended March 31, 2022. The increase of ~~$180.9 thousand was~~$881,000 is due to ~~increased selling efforts following FDA releases~~an increase in net sales across all major channels including the U.S. Department of Veteran Affairs, U.S. commercial channel, and sales from outside the U.S. which includes licensing revenue of $46,000. There was no licensing revenue in the comparable prior year period. We expect that the majority of remaining 2023 fiscal year revenue will continue to come from the U.S. Department of Veterans Affairs Additionally, we 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). In addition, we expect to generate additional revenue from sales of our ~~product~~Truvaga and TAC-STIM products.

Gross Profit

Gross profit increased by $783,000 for the ~~acute treatment~~three months ended March 31, 2023 compared to the three months ended March 31, 2022. Gross margin was 84% and 81% for the three months ended March 31, 2023 and 2022, respectively. Our evolving commercial strategy has resulted in the launch of ~~pain~~cash payment models under which we license a portion of our devices. The cost of the licensed device is being recognized as cost of goods sold over the estimated useful life of the device. The incremental increase in gross margin associated with ~~episodic cluster headache~~the licensing of a portion of our devices was 6.7% and 6.9% in ~~adult patients~~the three months ended March 31, 2023 and 2022, respectively. In recent quarters, we have sold an increasing amount of ~~$318.0 thousand, offset by $147.0 thousand~~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. In addition, 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 in the remainder of 2023 will be largely dependent on revenue levels, product mix, and any changes in the estimated useful lives of licensed devices.

Research and Development

Research and development expense for the ~~discontinued use~~three months ended March 31, 2023 of ~~a distributor in Germany and implementing new programs~~$1.8 million increased by $875,000 compared to ~~encourage patient~~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 ~~product. Although~~intellectual property around the ~~sales~~delivery of smart phone-integrated and smart phone-connected non-invasive therapies. In the remainder of 2023, we plan to continue to invest in the next generation of our ~~product under the voucher program are netted against the cost~~therapy delivery platform.

Selling, General and Administrative

Selling, general and administration expense of the product under the program, we believe the use of this program and other programs such as additional rebates and co-payment assistance programs will continue to result in additional sales increases.

~~Costs of Goods Sold~~

Cost of goods sold was approximately $289.4 thousand and $111.5 thousand for the six months ended June 30, 2018 and 2017, respectively. The increase of $177.9 thousand was the result of an increase in stock compensation expense as a result of the corporate conversion of $167.1 thousand and the remainder reflects the increase in sales for the comparable six-month period.

~~Research and Development~~

~~Research and development expenses was approximately~~ $6.7 ~~million and $4.5~~ million for the ~~six~~three months ended ~~June 30, 2018 and 2017, respectively. The $2.2 million increase was the result of an increase in stock compensation expense~~March 31, 2023 increased by $524,000 as ~~a result of the corporate conversion of $2.4 million, an increase in in headcount and compensation expenses related~~compared to ~~personnel of $0.7 million offset by a decrease in consulting fees of $0.7 million and clinical site costs of $0.5 million.~~

~~Selling, General and Administrative~~

~~Selling, general and administrative expense was approximately $18.8 million and $7.8~~$6.2 million for the six months ended June 30, 2018 and 2017, respectively. The $11.0 million increase is a result of increased personnel costs of $2.6 million related to newly hired personnel, an increase in stock compensation expense as a result of the corporate conversion of $2.7 million, increase in consulting fees of $2.4 million, an increase in legal and compliance costs of $0.7 million, an increase in market preparation, medical education, materials, samples, and studies of $0.8 million, costs for the voucher program of $0.4 million and increased travel related expenses of $0.6 million.

~~Interest Expense~~

~~Interest expense decreased to $0 for the six months ended June 30, 2018 from $4.5 million for the six months ended June 30, 2017.~~previous year period. This ~~decrease is due to the Bridge Notes and any related accrued interest being converted to Series B Preferred Units in August 2017.~~

~~Amortization of Debt Issuance Costs~~

~~Amortization of debt issuance costs, which relate to the Bridge Notes issued during 2017 and 2016 was written off as a result of the conversion of the debt to Series B Preferred Units in August 2017.~~

~~Change in Fair Value of Warrant Liability and Derivative Instrument related to Convertible Bridge Notes~~

The change in the fair value of the warrant liability is based on the revaluation of the warrants during the six months ended June 30, 2018. The effect of the revaluation through June 30, 2018 was an increase of $1.5 million compared to the six months ended June 30, 2017. The effect of the revaluation of the embedded derivative liability was $0.3 million for the six months ended June 30, 2017. There was no embedded derivative liability as of June 30, 2018 as a result of the conversion of the related Bridge Notes into Series B Preferred Units in August 2017.

~~Interest and Other Income, Net~~

Interest and other income, net was $224.6 thousand and $3.2 thousand for the six months ended June 30, 2018 and 2017, respectively, which resulted from returns on our debt securities and other investments available for sale. The increase was due to severance charges of $332,000, as well as our continuing targeted investments in sales and marketing to support our commercial efforts, offset by decreases in insurance and stock-based compensation expense. In the remainder of 2023, we plan on continuing to make targeted investments in sales and marketing to support our commercial efforts, particularly around sales and marketing efforts for our cash pay propositions which include ecommerce stores, 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).

Other (Income) Expense

The increase in ~~investments and debt securities during the six months ended June 30, 2018.~~

~~Net Income/(Loss) Attributable to Non-Controlling Interest~~

Net income attributable to non-controlling interest increased by $61.0 thousand to $55.0 thousand for the six months ended June 30, 2018 when compared to a loss of $6.0 thousand for the six months ended June 30, 2017. The changeOther (Income) Expense is primarily due to rising interest rates.

Benefit From Income Taxes

We may be eligible, from time to time, to receive cash from the ~~write-off~~sale of our net operating losses under New Jersey's Department of the ~~previous liability from our joint venture entity in Australia.~~

~~Liquidity and Capital Resources~~

~~Historically, our primary sources~~Treasury - Division of ~~liquidity have been from borrowings and equity contributions. As of June 30, 2018 and December 31, 2017, our~~Taxation NOL Transfer Program. On January 10, 2023, we received a net cash ~~and cash equivalents were $88.4 million and $13.2 million respectively. As of June 30, 2018, we had no outstanding debt.~~

In June 2018, we closed our IPO of 5,980,000 shares of common stock at a price of $15.00 per share with net proceeds of $77.7 million, after underwriting discount and other offering expenses. As a public company, additional future liquidity needs will include costs to comply with the requirements of a public company and tax payments to Federal and State governments.

We believe that our investing and financing cash flows and cash on hand will be adequate to meet our operating, investing, and financing needs for at least the next 12 months. To the extent additional funds are necessary to meet long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds, although we can provide no assurance that these sources of funding will be available on reasonable terms.

~~Until we can generate a sufficient~~ amount of ~~cash~~approximately $211,000 from operations, we expect to finance future cash needs through public or private equity or debt offerings. Additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly scale back our operations

~~or delay, scale back or discontinue~~ the continuing development of gammaCore. If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing stockholders and increased fixed payment obligations, and these securities may have rights senior to thosesale of our common stock. If we incur indebtedness, we could become subject to covenants that would restrict our operations, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and otherNew Jersey state net operating ~~restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.~~losses.

Cash Flows

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

	Six months ended June 30,						For the three months ended March 31,
	2018			2017			2023			2022
	(in millions)
(in thousands)
Net cash (used in) provided by
Operating activities	$	(21.0	)	$	(10.7	)	$	(5,860	)	$	(4,780	)
Investing activities		16.3			(0.1	)	$	—		$	—
Financing activities		79.9			18.9		$	—		$	—

Operating Activities

Net cash used in operating activities was ~~$21.0~~$5.9 million and $4.8 million for the ~~six~~three months ended ~~June 30, 2018 compared to $10.7 million for the six months ended June 30, 2017.~~ March 31, 2023 and 2022, respectively. This increase is primarily due to the increase in ~~net cash used in operating activities of $10.3 million was associated with net changes in~~our working capital ~~of $2.7 million, an increase in~~and net loss of $9.3 million, which was primarily the result of a $11.0 million increase in expenditures for selling, general and administrative items and an increase in research and development costs of $2.2 million.from operations.

Investing Activities

~~Net~~No cash was provided by investing activities ~~was $16.3 million for~~during the ~~six~~three months ended ~~June 30, 2018 compared to $0.1 million used in investing~~March 31, 2023 and 2022.

Financing Activities

No cash was provided by financing activities ~~for~~during the ~~six~~three months ended ~~June 30, 2017~~March 31, 2023 and ~~primarily reflects~~2022.

Liquidity Outlook

In the ~~net proceeds~~remainder of 2023, we expect to continue to incur substantial negative cash flows from operations. We intend to continue to make targeted investments in sales and marketing, as well as the next generation of our therapy delivery platform.

As a result, we will need to seek additional funds in the future or curtail or forgo some or all such activities. If we seek to and are unable to raise funds on favorable terms, or at all, we may not be able to support our commercialization efforts or research and development activities, and the growth of our business may be negatively impacted. As a result, we may be unable to compete effectively.

We expect that a majority of our remaining 2023 sales will be made pursuant to our qualifying contract under the Federal Supply Schedule, or FSS, as well as open market sales to individual facilities within the government channels. The FSS is scheduled to expire on January 15, 2024. We intend to request an extension of the FSS from the ~~purchase,~~United States Department of Veteran Affairs, but there is no assurance the FSS agreement will be renewed, if at all, or at terms favorable to us. In addition, other possible changes including those relating to the payer and competitive landscape, our commercialization strategy, our development activities, and regulatory matters, may occur beyond our control that would cause us to consume our available capital more quickly.

Even if we are not required to curtail our activities sooner, our ability to execute our operating plan beyond the next 12 months from the date these financial statements are issued depends on our ability to increase revenue, control operating expenses and obtain additional funding from the sale of equity and ~~maturities of~~or debt securities, a strategic transaction or otherwise. However, these alternatives may not be available to us on attractive terms, or at all. There is no assurance that we will generate sufficient cash flow and ~~other investments held for~~funding through our operating results or the sale of ~~$16.5 million.~~securities or from a strategic transaction or otherwise, raising substantial doubt about our ability to continue as a going concern within one year of the date these financial statements are issued. The accompanying Financial Statements do not include any adjustment that might occur from the outcome of this uncertainty.

~~Financing Activities~~

~~Net cash from financing activities was $79.9 million~~On January 18, 2022, we filed a Form S-3 registration statement, or the 2022 Shelf Registration Statement, with the SEC, for ~~the six months ended June 30, 2018, which was the result of~~ the issuance of common stock, preferred stock, warrants, rights, debt securities and units, which we refer to collectively as the Shelf Securities, up to an aggregate amount of ~~$79.9 million, net~~$75.0 million. The 2022 Shelf Registration Statement was declared effective on January 25, 2022. The proposed maximum offering price per unit and the proposed maximum aggregate offering price per class of ~~underwriting discount and other offering expenses,~~security will be determined from time to time by us in connection with ~~our initial public offering. Net cash from financing activities was $18.9 million for~~ the ~~six months ended June 30, 2017, which was the result~~issuance by us of the ~~issuance~~securities registered under the 2022 Shelf Registration Statement. Until such time as the aggregate market value of ~~convertible bridge notes, net~~our securities held by non-affiliates equals or exceeds $75.0 million, the aggregate maximum offering price of ~~financing costs.~~all securities issued by 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 aggregate market value of our securities held by non-affiliates.

~~Future Funding Requirements~~

~~Contractual Obligations~~On February 13, 2023, we held a special meeting (the “Special Meeting”) of our stockholders. At the Special Meeting, our shareholders voted to approve an amendment to our Certificate of Incorporation as amended to effect a Reverse Stock Split of our ordinary shares (the “Reverse Stock Split”) at a ratio of not less than 1-for 5 and ~~Commitments~~

Innot more than 1-for-50, with such ratio and the ~~normal course~~implementation and timing of ~~business,~~the Reverse Stock Split to be determined by our board of directors in its sole discretion. Following the Special Meeting, our board of directors approved a 1-for-15 Reverse Stock Split and our Certificate of Incorporation, as amended was amended accordingly. The Reverse Stock Split became effective on February 15, 2023. The purpose of the Reverse Stock Split was to increase the per share trading price of our common stock on the Nasdaq Capital Market to regain compliance with the Bid Price Rule. On March 6, 2023, we ~~enter into obligations~~received a letter from Nasdaq confirming that our common stock had regained compliance with the Bid Price Rule, and ~~commitments that require future contractual payments. The commitments~~as a result, ~~primarily from lease for office space and leased equipment. The Company has also entered into commitments for~~our common stock continues to trade on the ~~purchase of component parts of inventory related to its gammaCore Sapphire launch as well as additional marketing related initiatives.~~

Our operating lease commitment relates to the facility leased for our corporate headquarters in Basking Ridge, New Jersey. There are no material changes to the contractual obligations and commercial commitments that were disclosedNasdaq Capital Market. If in the ~~December 31, 2017 audited consolidated financial statements.~~future we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the $1 Minimum Bid Price Rule, Nasdaq may take steps to delist our common stock.

The Reverse Stock Split of our common stock had the effect of reducing the number of shares of common stock outstanding. There can be no assurance that the value and liquidity of our common stock will not be adversely affected by the Reverse Stock Split, which in turn could have a material adverse effect on our ability to raise the additional capital that we may require or increase the dilutive impact of any such financing.

Item 3. Quantitative and ~~Qualitative~~Qualitative Disclosures About Market Risk

~~Off-Balance Sheet Arrangements~~

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

~~Foreign Currency Exchange Risk~~

We develop our products in the United ~~States~~States and sell those products ~~into more than four~~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 and our license agreement with Teijin is denominated in ~~the U.S. dollar and Euro.~~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 foreign currencies in which our sales were denominated, our net income would have correspondingly increased or decreased by an immaterial amount for the three ~~and six~~ months ended ~~June 30, 2018.~~

March 31, 2023.

Our exposure to market interest rate risk is confined to our cash and cash equivalents and debt securities and other investments available for sales. As of June 30, 2018, we had cash and cash equivalents of $88.4 million, and debt securities and other investments available for sale of $7.5 million.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 ~~either~~ available for sale ~~or held-to-maturity~~ and are, due to their very short-term nature, subject to minimal interest rate risk. We currently do not hedge interest rate ~~exposure.~~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 investigational sites, suppliers and other vendors in Europe and internationally. In addition, our 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 ~~June 30, 2018.~~

March 31, 2023.

Item 4:4. 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 ~~decisions~~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 ~~necessarily were required to~~ 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 ~~June 30, 2018~~March 31, 2023 was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 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 ~~June 30, 2018,~~March 31, 2023 were effective for the purposes stated above.

Changes in Internal Control ~~Over~~over Financial Reporting

~~Due to a transition period established by SEC rules applicable to newly public companies, our management is not required to evaluate the effectiveness of~~There was no change in our internal control over financial reporting ~~until after~~as such term is defined in Rules 13a-15(f) and 15d-15(f) under the ~~filing~~ Exchange Act, that occurred during the three months ended March 31, 2023 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II— OTHER INFORMATION

Item1.LEGAL PROCEEDINGS

The information set forth in Note 12. Commitments and Contingencies of ~~our Annual Report~~the condensed consolidated financial statements included with this quarterly report on Form ~~10-K for the year ended December 31, 2018. As a result,~~10-Q is incorporated here by reference to this Part II Item 1.

Item 1A.

RISK FACTORS

The risks described in "Risk Factors" within our 2022 Annual Report and this Quarterly Report on Form 10-Q, ~~does not address whether there have been any changes in our internal control over financial reporting.~~

~~Notwithstanding the foregoing, electroCore’s management continues to remediate the material weakness related to its inter~~nal control over financial reporting related to accounting for complex transactions that was disclosed in our prospectus dated June 21, 2018, filed with the SEC, pursuant to Rule 424(b) under the Securities Act and expects full remediation by the year end 2018.

~~Inherent Limitation on Effectiveness of Controls~~

~~Our management,~~ including the ~~Chief Executive Officer~~risk factor set forth in this Item 1A below, could materially and ~~Chief Financial Officer, believe that any disclosure controls~~adversely affect our business, financial condition, and ~~procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives~~results of ~~the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints,~~operations, and the ~~benefits~~trading price of ~~controls must be considered relative to their costs. Because of~~our common stock could decline. The Risk Factors section in the ~~inherent limitations~~2022 Annual Report, as updated in this Quarterly Report on Form 10-Q remain current in all ~~control systems, they cannot provide absolute assurance~~material respects. These risk factors do not identify all risks that ~~all control issues~~we face. Our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and ~~instances of fraud, if any, within electroCore have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty,~~uncertainties, known and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur andunknown, our past financial results may not be ~~detected.~~a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. Refer also to the other information set forth in this Form 10-Q, including in the Forward-Looking Statements, MD&A, and Condensed Consolidated Financial Statements sections.

~~Emerging Growth Company Status~~

~~In April 2012,~~Adverse developments affecting the ~~JOBS Act~~ financial services industry, including events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our business, financial condition, or results of operations.

Events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, transactional counterparties, or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. Most recently, on March 10, 2023, Silicon Valley Bankwas ~~enacted~~closed by the ~~federal government. Section 107~~California Department of Financial Protection and Innovation, which appointed the JOBS Act provides that an emerging growth company can take advantage of the extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected to “opt out” of this provision and,Federal Deposit Insurance Corporation as a ~~result,~~receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. Later in March 2023, Credit Suisse was acquired by UBS following the intervention of Swiss regulatory authorities, and on May 1, 2023, First Republic Bank was closed by the California Department of Financial Protection and Innovation. Although we ~~will comply~~are not a borrower or party to any such instruments with ~~new~~these or ~~revised accounting standards when they are required~~any other financial institution currently in receivership, if we were to borrow money in the future and if any of our lenders or counterparties to any such instruments were to be ~~adopted by public companies that are not emerging growth companies.~~placed into receivership, we may be unable to access such funds.

~~For so long~~

Although we assess our banking and customer relationships as we ~~are an emerging growth company,~~believe necessary or appropriate, our access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our current and projected future business operations and product development could be significantly impaired by factors that affect us, the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit, or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry.

In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and stricter financial and operating covenants, or limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations, result in breaches of our financial and/or contractual obligations or result in violations of federal or state wage and hour laws if, for example, we ~~will~~were unable to obtain access to deposits used for payroll. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not ~~be required to provide an auditor’s attestation report~~described above, could have material adverse impacts on our ~~internal control over~~liquidity and our current and/or projected business operations and financial ~~reporting in future annual reports on Form 10-K as otherwise required by Section 404(b)~~condition and results of ~~the Sarbanes-Oxley Act.~~operations.

~~PART II — OTHER INFORMATION~~

~~Item 1. LEGAL PROCEEDINGS~~

In May 2018, Madison Global Partners, a division of Trident Partners, Ltd., or Madison Global, filed a complaint against the Company in the Supreme Court of the State of New York, County of New York (Index No. 652329/2018). The Company is a party to an engagement letter, as amended, with Madison Global pursuant to which it acted as the Company’s non-exclusive financial advisor. Madison Global has claimed that under the terms of the engagement letter, as amended, it is owed $575,000 plus warrants to purchase additional shares of capital stock beyond those the Company agreed to issue to it. The Company believes it has paid all amounts due to Madison Global under the terms of the engagement letter, as amended. The Company filed counterclaims against Madison Global, alleging that among other things it breached the terms of the engagement letter. Discovery in the case is ongoing. While the Company believes that it has substantial legal and factual defenses to the claims in this lawsuit and intends to vigorously defend the case and prosecute its counterclaims against Madison Global, the outcome of the litigation is difficult to predict and quantify at this time.

~~Item 1A.~~ ~~RISK FACTORS~~

There have been no material changes during the three months ended June 30, 2018 to the risk factors discussed in our prospectus dated June 21, 2018, filed with the SEC, pursuant to Rule 424(b) under the Securities Act.

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

In June 2018, we completed our IPO and issued 5,980,000 shares of our common stock, including pursuant to the underwriter’s exercise of their right to purchase additional shares, at an initial offering price to the public of $15.00. We received net proceeds from the IPO of approximately $77.7 million, after deducting underwriting discounts, commissions and offering costs of approximately $12.0 million. The underwriters for the IPO were Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities. LLC, and BTIG, LLC.

~~The shares were registered under the Securities Act (File Nos. 333-225084 and 333-225804), on a registration statement on Form S-1, which was declared effective by the SEC, on June 21, 2018.~~

We expect to use the proceeds from the IPO (i) to hire additional territory business managers and expand marketing programs to prepare for the full commercial launch of our gammaCore products; (ii) to fund the research and development of our gammaCore products for other indications in headache and rheumatology; (iii) to fund the build out of a specialty distribution channel for the launch of gammaCore Sapphire in the third quarter of 2018; and (iv) the remainder to fund working capital and general corporate purposes.

None.

Item 3.3. DEFAULTS UPON SENIOR SECURITIES

None.

~~None.~~

Item 4.4.MINE SAFETY DISCLOSURES

Not applicable.

Item 5.5. OTHER INFORMATION

(a) Not applicable.

(b) Not applicable.

~~(a)~~

~~None.~~

~~(b)~~

~~Not applicable.~~

Item 6.EXHIBITS~~EXHIBITS~~

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

Exhibit Number		Description
3.1***		Certificate of Elimination of the Series A Preferred Stock of the Company, dated March 3, 2023.
3.1*
3.2***		Certificate of Amendment to the Certificate of Incorporation, ~~of electroCore, Inc. effective June 21, 2018~~filed February 13, 2023.

3.2* 10.1*		~~Bylaws of electroCore, Inc. effective June 21, 2018~~

~~10.7~~†*		electroCore, Inc. 2018 Omnibus Equity Incentive Plan ~~effective June 21, 2018~~

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

*	~~Filed herewith.~~

†	~~Indicates management compensatory plan~~.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*	Filed herewith.

**	Furnished herewith.
***	Incorporated by reference to the Company's Current Report on Form 10-K as filed with the Commission on March 8, 2023

SIGNATURES

** Furnished herewith.

~~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: ~~August 14, 2018~~May 3, 2023	By:	/s/ ~~FRANCIS R. AMATO~~DANIEL S. GOLDBERGER
		~~Francis R. Amato~~Daniel S. Goldberger
		Chief Executive Officer (Principal Executive Officer)

Date: ~~August 14, 2018~~May 3, 2023	By:	/s/ ~~GLENN S. VRANIAK~~BRIAN M. POSNER
		~~Glenn S. Vraniak~~Brian M. Posner
		Chief Financial Officer (Principal Financial and Accounting Officer)

	June 30,			December 31,
	2018			2017
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	88,357,844		$	13,224,194
Debt securities and other investments available for sale		7,468,710			23,950,566
Accounts receivable, net		298,237			103,209
Inventories		751,949			327,787
Prepaid expenses and other current assets		2,857,358			570,755
Deferred financing costs		—			856,895
Total current assets		99,734,098			39,033,406

Property and equipment – net		377,357			168,646
Security deposits		30,604			30,604
Total assets	$	100,142,059		$	39,232,656
Liabilities, Convertible Preferred Units and Stockholders' and Members’ Equity/(Deficit)
Current liabilities:
Accounts payable and accrued expenses	$	6,885,486		$	3,879,775
Warrant liability		��			2,239,544
Other current liabilities		28,341			—
Total current liabilities		6,913,827			6,119,319
Noncurrent liabilities:
Deferred rent		279,362			306,886
Total liabilities		7,193,189			6,426,205
Commitments and contingencies (Note 17)
Convertible preferred units:
Series A Preferred Units, 0 Units authorized at June 30, 2018 and 71,050,860 at December 31, 2017; 0 Units issued and outstanding at June 30, 2018 and 70,918,506 at December 31, 2017		—			53,518,463
Series B Preferred Units, 0 Units authorized at June 30, 2018 and 123,000,000 at December 31, 2017; 0 Units issued and outstanding at June 30, 2018 and 105,186,020 at December 31, 2017		—			68,755,544
Series B-1 Preferred Units, 0 Units authorized at June 30, 2018 and December 31, 2017; 0 Units issued and outstanding at June 30, 2018 and December 31, 2017		—			—
Total convertible preferred units		—			122,274,007
Stockholders'/members’ equity/(deficit):
Common Units, 0 Units authorized at June 30, 2018 and 600,000,000 December 31, 2017; 0 Units issued and outstanding at June 30, 2018 and 218,982,140 December 31, 2017		—			40,180,619
Preferred Stock, par value $0.001 per share; 10,000,000 shares authorized at June 30, 2018, 0 shares authorized at December 31, 2017; 0 shares issued and outstanding at June 30, 2018 and December 31, 2017		—			—
Common stock, par value $0.001 per share; 500,000,000 shares authorized at June 30, 2018, 0 shares authorized at December 31, 2017; 29,450,034 shares issued and outstanding at June 30, 2018 and 0 at December 31, 2017		29,450			—
Additional paid-in capital		102,033,462			22,596,485
Accumulated deficit		(9,791,391	)		(152,928,928	)
Accumulated other comprehensive income		41,740			80,213
Total equity/(deficit) attributable to electroCore, Inc., subsidiaries and affiliate		92,313,261			(90,071,611	)
Noncontrolling interest		635,609			604,055
Total stockholders' equity/members’ /(deficit)		92,948,870			(89,467,556	)
Total liabilities, convertible preferred units and stockholders' equity/members' equity	$	100,142,059		$	39,232,656

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
Net sales	$	393,226		$	176,555		$	474,413		$	293,488
Cost of goods sold		240,488			38,749			289,435			111,495
Gross profit		152,738			137,806			184,978			181,993
Operating expenses:
Research and development		4,367,070			2,771,439			6,673,405			4,497,996
Selling, general and administrative		12,007,206			4,797,604			18,832,020			7,856,866
Total operating expenses		16,374,276			7,569,043			25,505,425			12,354,862
Loss from operations		(16,221,538	)		(7,431,237	)		(25,320,447	)		(12,172,869	)
Other expense/(income)
Interest expense		—			3,433,663			—			4,473,756
Amortization of debt issuance costs		—			293,375			—			562,537
Change in fair value of warrant liability		1,625,069			196,678			1,870,923			374,654
Change in fair value of derivative instrument related to convertible bridge notes		—			220,100			—			348,163
Interest and other income, net		(115,327	)		(3,222	)		(224,610	)		(3,222	)
Other expense		50,818			2,185			258,871			2,185
Total other expense/(income)		1,560,560			4,142,779			1,905,184			5,758,073
Net loss		(17,782,098	)		(11,574,016	)		(27,225,631	)		(17,930,942	)
Less: Net income/(loss) attributable to noncontrolling interest		—			(6,045	)		55,005			(6,045	)
Total net loss attributable to Electrocore LLC and electroCore, Inc.	$	(17,782,098	)	$	(11,567,971	)	$	(27,280,636	)	$	(17,924,897	)
Net loss attributable to Electrocore, LLC subsidiaries and affiliate	$	(11,619,799	)	$	(11,567,971	)	$	(21,118,337	)	$	(17,924,897	)
Net loss attributable to electroCore, Inc. subsidiaries and affiliate	$	(6,162,299	)	$	—		$	(6,162,299	)	$	—
Net loss per share of common stock - Basic and Diluted (see Note 11)	$	(0.21	)	$	—		$	(0.21	)	$	—
Weighted average and potential shares outstanding - Basic and Diluted (see Note 11)		29,261,942			—			29,261,942			—

	Convertible Preferred Units												Electrocore LLC at December 31, 2017 and electroCore, Inc. at June 30, 2018
																																Deficit
																																attributable to						Total
																													Accumulated			electroCore,						stockholders'/
	Series A						Series B						Common						Common				Additional						other			Inc.						members’
	Preferred Units						Preferred Units						Units						Stock				paid-in			Accumulated			comprehensive			subsidiaries			Noncontrolling			equity/
	Units			Amount			Units			Amount			Units			Amount			Shares		Amount		capital			deficit			income			and affiliates			interest			(deficit)
Balances as of January 1, 2017		70,918,506		$	53,518,463			—		$	—			90,711,018		$	30,912,091			—	$	—	$	8,126,416		$	(100,706,419	)	$	214,006		$	(61,453,906	)	$	400,421		$	(61,053,485	)
Net loss																	—			—		—		—			(35,792,423	)		—			(35,792,423	)		(236,358	)		(36,028,781	)
Other comprehensive income		—			—			—			—			—			—			—		—		—			—			(133,793	)		(133,793	)		—			(133,793	)
Issuance of Series B Preferred Units, net		—			—			105,186,020			68,755,544			18,340,000			4,074,447			—		—		(2,012,611	)		—			—			2,061,836			—			2,061,836
Noncontrolling interest contributions		—			—			—			—			—			—			—		—		—			—			—			—			439,992			439,992
Unit-based compensation		—			—			—			—			—			—			—				462,329			—			—			462,329			—			462,329
Common Units issued in connection with convertible bridge notes, net		—			—			—			—			36,565,948			5,194,081			—		—		(409,735	)		—			—			4,784,346			—			4,784,346
Common Units issued in exchange for elimination of preference		—			—			—			—			73,365,174			—			—		—		—			—			—			—			—			—
Common Units issued for initial funding of Series B Preferred Units		—			—			—			—			—			—			—		—		16,430,086			(16,430,086	)		—			—			—			—
Balances as of December 31, 2017		70,918,506		$	53,518,463			105,186,020		$	68,755,544			218,982,140		$	40,180,619			—	$	—	$	22,596,485		$	(152,928,928	)	$	80,213		$	(90,071,611	)	$	604,055		$	(89,467,556	)
Net loss attributable to Electrocore, LLC subsidiaries and affiliates		—			—			—			—			—			—			—		—		—			(21,118,337	)		(5,085	)		(21,123,422	)		60,090			(21,063,332	)
Reclass of accumulated deficit to APIC		—			—			—			—			—			—			—		—		(174,047,265	)		174,047,265			—			—			—			—
Other comprehensive income		—			—			—			—			—			—							—			—			(33,388	)		(33,388	)		(5,085	)		(38,473	)
Conversion of Series A preferred units to common stock		(70,918,506	)		(53,518,463	)		—			—			—			—			3,939,917		3,940		53,514,523			—			—			53,518,463			—			53,518,463
Conversion of Series B preferred units to common stock		—			—			(105,186,020	)		(68,755,544	)		—			—			5,843,668		5,844		68,749,700			—			—			68,755,544			—			68,755,544
Conversion of members common units to common stock		—			—			—			—			(218,982,140	)		(40,180,619	)		12,099,280		12,099		40,168,520			—			—			—			—			—
Stock dividend issued to Series A preferred holders		—			—			—			—			—			—			241,939		242		3,628,850			(3,629,092	)		—			—			—			—
Common stock issued related to initial public offering		—			—			—			—			—			—			5,980,000		5,980		89,692,675			—			—			89,698,655			—			89,698,655
Issuance costs related to initial public offering		—			—			—			—			—			—			—		—		(12,012,086	)		—			—			(12,012,086	)		—			(12,012,086	)
Reclass of warrant liability to equity		—			—			—			—			—			—			—		—		4,110,467			—			—			4,110,467			—			4,110,467
Noncontrolling interest distributions		—			—			—			—			—			—			—		—		—			—			—			—			(23,451	)		(23,451	)
Stock issued upon conversion of profit interests		—			—			—			—			—			—			1,345,230		1,345		—			—			—			1,345			—			1,345
Stock and Unit-based compensation		—			—			—			—			—			—			—		—		5,631,593			—			—			5,631,593			—			5,631,593
Net loss attributable to electroCore, Inc. subsidiaries and affiliates		—			—			—			—			—			—			—		—		—			(6,162,299	)		—			(6,162,299	)		—			(6,162,299	)
Balances as of June 30, 2018		—		$	—			—		$	—			—			—			29,450,034	$	29,450	$	102,033,462		$	(9,791,391	)	$	41,740		$	92,313,261		$	635,609		$	92,948,870

As of June 30, 2018
	Amortized Cost		Unrealized Gain		Unrealized (Loss)			Fair Value
Cash and cash equivalents	$	88,357,844	$	—	$	—		$	88,357,844

Corporate Debt Securities	$	1,499,091	$	—	$	(1,101	)	$	1,497,990
Commercial Paper		1,982,833		—		(2,343	)		1,980,490
U.S. Government Sponsored Agencies		2,995,715		—		(2,265	)		2,993,450
U.S. Treasury Bonds		997,196		—		(416	)		996,780
Total debt securities and other investments available for sale	$	7,474,835	$	—	$	(6,125	)	$	7,468,710

Total cash, cash equivalents, debt securities and other investments available for sale	$	95,832,679	$	—	$	(6,125	)	$	95,826,554

As of December 31, 2017
	Amortized Cost		Unrealized Gain		Unrealized (Loss)			Fair Value
Cash and cash equivalents	$	13,224,280	$	—	$	(86	)	$	13,224,194

Corporate Debt Securities	$	19,014,590	$	923	$	(17,827	)	$	18,997,686
Commercial Paper		2,979,367		—		(1,227	)		2,978,140
U.S. Government Sponsored Agencies		1,496,824		—		(2,029	)		1,494,795
Certificate of Deposits		480,000		—		(55	)		479,945
Total debt securities and other investments available for sale	$	23,970,781	$	923	$	(21,138	)	$	23,950,566

Total cash, cash equivalents, debt securities and other investments available for sale	$	37,195,061	$	923	$	(21,224	)	$	37,174,760

	Fair Value At
	June 30,		December 31,
	2018		2017
Due within one year	$	7,468,710	$	23,950,566
Due after one year through five years		—		—
	$	7,468,710	$	23,950,566

			Fair Value Hierarchy
June 30, 2018	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Cash and cash equivalents	$	88,357,844	$	88,357,844	$	—	$	—
Debt Securities and other Investments Available for Sale:
Corporate Debt Securities		1,497,990		1,497,990		—		—
Commercial Paper		1,980,490		1,980,490		—		—
U.S. Government Sponsored Agencies		2,993,450		2,993,450		—		—
U.S. Treasury Bonds		996,780		996,780		—		—
Total	$	95,826,554	$	95,826,554	$	—	$	—

December 31, 2017
Assets
Cash and cash equivalents	$	13,224,194	$	13,224,194	$	—	$	—
Debt Securities and other Investments Available for Sale:
Corporate Debt Securities		18,997,686		18,997,686		—		—
Commercial Paper		2,978,140		2,978,140		—		—
U.S. Government Sponsored Agencies		1,494,795		1,494,795		—		—
Certificate of Deposits		479,945		479,945		—		—
Total	$	37,174,760	$	37,174,760	$	—	$	—
Liabilities
Warrant liabilities	$	2,239,544	$	—	$	—	$	2,239,544

	June 20,		December 31,
	2018		2017
Stock price volatility	67.8%		65.3%
Risk-free interest rates	2.68%		1.59%
Annual dividend yield	0%		0%
Expected life (years)		3.09		0.65

	Warrant liabilities
Opening Balance as of January 1, 2017	$	480,636
Additions		2,620,681
Settlements	—
Changes in fair value recognized		(861,773	)
Closing Balance as of December 31, 2017		2,239,544
Additions		—
Settlements	—
Changes in fair value recognized		1,870,923
Reclassed to equity		(4,110,467	)
Closing Balance as of June 30, 2018	$	—

	For the period from June 21 to
	June 30,
	2018
Numerator – Basic and Diluted
Net loss attributable to electroCore, Inc. subsidiaries and affiliate	$	(6,162,299	)
Denominator – Basic and Diluted
Weighted average shares of common stock outstanding		29,261,942
Net loss per common share, Basic and Diluted	$	(0.21	)

	Options vesting on January 1, 2019		Options vesting 25% on January 1, 2019, remaining vesting over the next 14 quarters
Valuation assumptions:
Expected dividend yield	0%		0%
Expected volatility	74.80%		74.30%
Expected term (years)		5.25		6.00
Risk-free interest rate	2.77%		2.82%

	Three months ended June 30,
	2018				2017			Change
	(in thousands)
Consolidated statements of operations:
Net sales	$	393.2			$	176.6		$	216.7
Cost of goods sold		240.5		��		38.7			201.7
Gross profit		152.7				137.8			14.9
Operating expenses
Research and development		4,367.1				2,771.4			1,595.6
Selling, general and administrative		12,007.2				4,797.6			7,209.6
Total operating expenses		16,374.3				7,569.0			8,805.2
Loss from operations		(16,221.5	)			(7,431.2	)		(8,790.3	)
Interest expense		—				3,433.7			(3,433.7	)
Amortization of debt issuance costs		—				293.4			(293.4	)
Change in fair value of warrant liability		1,625.1				196.7			1,428.4
Change in fair value of derivative instrument related to convertible bridge notes		—				220.1			(220.1	)
Interest and other income, net		(115.3	)			(3.2	)		(112.1	)
Other		50.8				2.2			48.6
Total other expense/(income)		1,560.6				4,142.8			(2,582.22	)
Net loss		(17,782.1	)			(11,574.0	)		(6,208.1	)
Less: Net income/(loss) attributable to noncontrolling interest		—				(6.0	)		6.0
Total net loss attributable to Electrocore LLC and electroCore, Inc.	$	(17,782.1	)		$	(11,568.0	)	$	(6,214.1	)

Three months ended March 31,

(in thousands)

Outstanding stock options

Nonvested restricted stock and unit awards

Stock purchase warrants