Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this Annual Report, including those set forth under Item 1A. "Risk Factors" and under "Forward-Looking Statements" in this Annual Report.

Overview

electroCore is a bioelectronic technology company whose mission is to improve health and quality of life through innovative non-invasive bioelectronic technologies. Our two leading commercial products are gammaCore non-invasive vagus nerve stimulation, or nVNS, and Quell Fibromyalgia, or Quell. We also sell our Truvaga and TAC-STIM products, which are handheld, personal-use consumer products, developed to promote general wellness and human performance.

We believe that our proprietary nVNS technology, which works through a variety of mechanistic pathways including the modulation of neurotransmitters, and Quell for chronic pain are designed to address many of the limitations of traditional non-invasive approaches.

Our business generates revenues from the sale of prescription medical devices and non-prescription wellness products in the United States and select overseas markets. We have two principal product categories:

	●	Personal use prescription medical devices for the management and treatment of certain medical conditions such as primary headache and fibromyalgia; and
	●	Personal use consumer products that promote general wellness and human performance.

Our goal is to be a leader in non-invasive bioelectronic technologies delivering better health. To achieve this, we offer multiple propositions:

	●	Prescription medical devices for the treatment of certain FDA cleared medical conditions such as gammaCore for primary headache and Quell Fibromyalgia for fibromyalgia;
	●	Nonprescription Truvaga for the support of general health and wellbeing; and
	●	Non-prescription TAC-STIM for human performance.
	●	FDA cleared Quell OTC for lower extremity pain.

Our two largest customers by revenue are the United States Department of Veterans Affairs and United States Department of Defense, or VA, and the United Kingdom National Health Service or NHS, both utilizing prescription products under qualifying agreements.

The United States Department of Veteran Affairs comprised 71.2% of our revenue during the year ended December 31, 2025. The majority of our 2025 sales were made pursuant to our qualifying Federal Supply Schedule, or FSS, contract which has an expiry date of June 14, 2030, as well as open market sales to individual facilities within the government channels. Our prescription gammaCore and Quell Fibromyalgia devices are also made available to the government channel through our relationship with Lovell and its qualifying FSS, GSA, DAPA, and ECAT contract.

Demand for prescription devices in the U.S. is driven by clinical data and our increased presence in the field. Our sales efforts are primarily in the government channel broadly, and specifically to our largest customer, the VA, pursuant to our FSS contract and/or through our relationship with Lovell and its qualifying FSS, GSA, DAPA, and ECAT contracts. Our sales force is comprised of an internal sales team of territory business managers who manage outside commission only sales agents and sub reps. In addition, we have a small team of dedicated resources seeking to accelerate adoption in managed care systems.

Sales to the NHS in the United Kingdom are made under the U.K. MedTech Funding Mandate, or MTFM, for cluster headache (CH) and comprised 4.4% of our revenue during the year ended December 31, 2025. In 2026, we plan on continuing to use this program.

Demand for prescription devices outside the U.S. is driven by similar factors, including the strength of our clinical and health economic data. Our sales efforts are primarily focused on headache specialists, and specifically, for cluster headache patients.

We sell our general wellness products direct-to-consumer through our ecommerce site, www.truvaga.com, and through select Truvaga retail and marketplace partners, including Best Buy and Rehabmart. We also partner with organizations such as Ben Greenfield Life, Perks at Work, True Medicine and a growing number of affiliates and influencers who promote Truvaga and support awareness and customer acquisition through promotional partnerships.

We sell the TAC-STIM handset for human performance as a COtS solution to active duty military and professional organizations. We are exploring strategies to make our TAC-STIM product available to other branches of the active-duty military, first responders, elite athletes and certain human performance professionals in the United States and abroad.

Truvaga and TAC-STIM are intended for general wellness in compliance with the FDA guidance document entitled "General Wellness: Policy for Low-Risk Devices; Guidance for Industry and FDA Staff, issued on September 27, 2019." Truvaga and TAC-STIM handsets are not intended to diagnose, treat, cure, or prevent any disease or medical condition.

Quell OTC is a wearable neuromodulation technology FDA cleared for Over the Counter (OTC) sales direct-to-consumer for chronic lower extremity pain. Quell OTC is no longer commercially available; however, replacement electrodes continue to be sold to existing Quell OTC customers. Although we may choose to relaunch the Quell OTC product in the direct-to-consumer business channel in the future, there can be no assurance that we will do so successfully, or at all.

We face a variety of challenges and risks that we will need to address and manage as we pursue our strategies, including our ability to develop and retain an effective sales force, achieve market acceptance of our medical devices among clinicians, patients, and third-party payers, expand the use of our bioelectronic technology to additional therapeutic indications, and to develop our nascent wellness and human performance business including the continued commercialization of Truvaga Plus, our app-enabled device under the Truvaga brand, and direct-to-consumer Quell OTC, a non-prescription product for lower extremity pain.

Because of the numerous risks and uncertainties associated with our commercialization efforts, as well as research and product development activities, there may be uncertainty regarding our ability to achieve or maintain profitability. If we fail to become profitable or are unable to sustain profitability, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

Our expected cash requirements for the next 12 months and beyond are based on the commercial success of our products and our ability to control operating expenses. There are significant risks and uncertainties as to our ability to achieve these operating results. Due to these risks and uncertainties, we may need to reduce our activities significantly more than our current operating plan and cash flow projections assume in order to fund operations for the next 12 months. 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. See also "Liquidity Outlook."

Capital Activities

On September 30, 2025, we entered into securities purchase agreements with certain institutional and accredited investors (the "Private Agreements"), which collectively provided for the sale by us of 360,737 shares (the "Private Shares") of common stock of the Company, par value $0.001 per share. The Private Shares were issued at a price of $5.145 per share in satisfaction of an aggregate of approximately $1.856 million of legal services rendered or to be rendered to the Company by the investors. We did not receive cash proceeds in connection with the issuance of these shares.

The offerings described above closed on October 2, 2025. The Private Shares were issued in reliance on the exemptions from registration provided by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder, for transactions not involving a public offering. On October 3, 2025, the Company filed a registration statement on Form S-3 (File No. 333-290713) with the SEC to cover the resale of the Private Shares, which registration statement became effective on October 22, 2025.

On July 24, 2025, our Form S-3 registration statement (File No. 333-284477), or the 2025 Shelf Registration Statement, was declared effective by the SEC. The 2025 Shelf Registration Statement relates to the potential offering and issuance from time to time of common stock, preferred stock, warrants, rights, debt securities and units, up to an aggregate amount of $100.0 million. The proposed maximum offering price per unit and the proposed maximum aggregate offering price per class of security in any future offering under the 2025 Shelf Registration Statement will be determined from time to time by us in connection with the issuance by us of the securities registered under the 2025 Shelf Registration Statement. As of the date of this Annual Report, we have $100.0 million remaining for potential issuance under the 2025 Shelf Registration Statement (including $19.8 million under the Sales Agreement (as defined below)). As of the date of this Annual Report on Form 10-K,, the aggregate market value of our securities held by non-affiliates may be below $75 million, and until such time as the aggregate market value of our securities held by non-affiliates equals or exceeds $75 million, the aggregate maximum offering price of all securities issued by us in any given 12-calendar month period pursuant the 2025 Shelf Registration Statement may not exceed one-third of the aggregate market value of our securities held by non-affiliates, and thus may be limited. If we raise additional funds by issuing equity or debt securities, either through the sale of securities pursuant to a registration statement or by other means, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders.

On August 4, 2025 (the "LSA Closing Date"), we, and our wholly owned subsidiary, NURO, each as borrowers, entered into a Loan and Security Agreement (the "Loan and Security Agreement"), with Avenue Venture Opportunities Fund II, L.P. ("Avenue"), as administrative agent and collateral agent, and as lender, that is secured by a lien on substantially all of our assets, including a negative pledge on intellectual property, subject to limited exceptions, pursuant to the Loan and Security Agreement. The Loan and Security Agreement provides for term loans in an aggregate principal amount of up to $12.0 million (the "Loan Amount") to be delivered in two tranches (the "Term Loans"). The tranches consist of (i) a term loan advanced to the Company on the LSA Closing Date in an aggregate principal amount of $7.5 million ("Tranche 1"), and (ii) subject to the achievement of certain performance milestones set forth in the Loan and Security Agreement, a right of the Company to request that Avenue make additional term loan advances to the Company in an aggregate principal amount of up to $4.5 million ("Tranche 2"), which right expired on December 31, 2025.

On November 29, 2024, we entered into the Sales Agreement with Wainwright. Under the Sales Agreement, the Company may offer and sell shares of its common stock, par value $0.001 per share, from time to time having an aggregate offering price of up to $20 million (the "ATM Shares") during the term of the Sales Agreement through Wainwright, acting as sales agent. The Company has filed a prospectus supplement relating to the offer and sale of the Shares pursuant to the Sales Agreement. The ATM Shares will be issued pursuant to the Company's previously filed and effective Registration Statement on Form S-3 (File No. 333-262223) (the "2022 Shelf Registration Statement"), which was initially filed with the Securities and Exchange Commission (the "SEC") on January 18, 2022 and declared effective on January 25, 2022. The Company intends to use the net proceeds from any offering pursuant to the Sales Agreement to continue to fund sales and marketing, working capital and for other general corporate purposes. As of March 13, 2026, the Company had approximately $19.8 million of ATM Shares remaining available for issuance under the Sales Agreement.

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

Although there are items within our financial statements that require management to make accounting estimates, we do not believe them to be critical, as defined above.

Results of Operations

Comparison of the years ended December 31, 2025 and 2024

The following table summarizes our results of operations for the years ended December 31, 2025 and 2024 with the changes in those items in dollars.

		Years ended December 31,
(in thousands)		2025				2024				Change
Net sales		$	32,032			$	25,182			$	6,850
Cost of goods sold			4,244				3,785				459
Gross profit			27,788				21,397				6,391
Gross margin			87	%			85	%
Operating expenses:
Research and development			2,735				2,360				375
Selling, general and administrative			38,206				31,199				7,007
Total operating expenses			40,941				33,559				7,382
Loss from operations			(13,153	)			(12,162	)			(991	)
Other (income) expense:
Interest and other income			(298	)			(572	)			274
Interest expense			590				389				201
Other expense			518				-				518
Total other (income) expense			810				(183	)			993
Loss before income taxes			(13,963	)			(11,979	)			(1,984	)
(Provision) benefit from income taxes			(3	)			93				(96	)
Net loss		$	(13,966	)		$	(11,886	)		$	(2,080	)

Net Sales

Net sales for the year ended December 31, 2025 increased 27% to $32.0 million as compared to the year ended December 31, 2024. The increase of $6.9 million is primarily due to an increase in net sales of prescription (Rx) gammaCore and Quell Fibromyalgia products sold to the VA and revenue from the sales of our nonprescription general wellness Truvaga products. We expect that the majority of 2026 fiscal year revenue will continue to come from the U.S. Department of Veterans Affairs. See above Overview for discussion regarding the Federal Supply Schedule.

The following table sets forth our net sales by channel:

		Full year ended December 31,
Channel:		2025				2024
United States - Rx		$	24,073			$	19,307
TAC-STIM			422				1,197
Outside the United States			1,892				1,785
In-License / Other			96				82
General Wellness			5,549				2,811
Total Net Sales		$	32,032			$	25,182

Gross Profit

Gross profit increased $6.4 million to $27.8 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase in gross profit is attributable to the increased net sales and favorable product mix.

Research and Development

Research and development expense of $2.7 million for the year ended December 31, 2025, increased by $0.4 million compared to the prior year. This increase was primarily due to an increase in development costs associated with our gammaCore Emerald and next generation mobile application.

Selling, General and Administrative

Selling, general and administrative expense of $38.2 million for the year ended December 31, 2025 increased by $7.0 million compared to $31.2 million for the previous year. Sales and marketing increased $4.3 million from the prior year. The increase in sales and marketing was primarily driven by $3.8 million of variable expenses, which contributed to a $6.9 million increase in sales. General and administrative expense increased $2.7 million from the prior year. This increase was primarily driven by $0.8 million in legal fees primarily associated with business development activities, $0.5 million in bad debt expense associated with one customer, $0.3 million investment in IT systems, and $0.2 million of increased transaction fees associated with increased sales.

Other (Income) Expense

Other (income) expense of $0.8 million for the year ended December 31, 2025 increased $1.0 million as compared to the full year ended December 31, 2024. The increase was primarily attributable to non-recurring expenses, including a $0.5 million change in estimated liability payable to pre-closing shareholders of NURO pursuant to the CVR Agreement entered into in connection with our acquisition of NURO, and interest associated with the convertible term debt financing with Avenue. Other income for the year ended December 31, 2024 of $0.2 million consisted primarily of interest income.

(Provision) Benefit from Income Taxes

The Company may be eligible, from time to time, to receive cash from the sale of our net operating losses under New Jersey's Department of the Treasury - Division of Taxation NOL Transfer Program. During the years ended December 31, 2025 and 2024, we received net cash payments of $48,000 and $0.1 million from the sale of our New Jersey state net operating losses, respectively.

Liquidity and Capital Resources

At December 31, 2025, our cash, cash equivalents, and marketable securities was $11.6 million compared to $12.2 million at December 31, 2024.

		December 31,
(in thousands)		2025				2024
Net cash (used in) provided by
Operating activities		$	(8,187	)		$	(6,948	)
Investing activities		$	3,877			$	(8,519	)
Financing activities		$	7,627			$	8,439

Operating Activities

Net cash used in operating activities was $8.2 million and $6.9 million for the years ended December 31, 2025 and 2024, respectively. The increase of $1.3 million is primarily due to the increase in our net loss, partially offset by higher accounts payable.

Investing Activities

Net cash provided by investing activities was $3.9 million and $8.5 million for the years ended December 31, 2025 and 2024, respectively. During the year ended December 31, 2025, cash used in investing activities was related to the proceeds from the sale of marketable securities. During the year ended December 31, 2024, cash used in investing activities was related to the purchase of marketable securities.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was $7.6 million which was primarily attributable to the net proceeds from the convertible term debt financing with Avenue.

Net cash provided by financing activities for the year ended December 31, 2024 was $8.4 million which was attributable to the Company entering into a registered direct offering and concurrent private placements, each of which closed on June 5, 2024, and proceeds from the exercise of warrants. Pursuant to a registered direct offering with an institutional and accredited investor, we issued and sold pre-funded warrants to purchase up to 225,000 shares of common stock. In a concurrent private placement, we issued and sold to the institutional and accredited investor warrants to purchase up to 112,500 shares of common stock. In a separate concurrent private placement with certain institutional and accredited investors and six of the Company's officers and directors, we issued and sold 438,191 shares of common stock, pre-funded warrants to purchase up to 770,119 shares of common stock, and warrants to purchase up to an aggregate of 604,150 shares of common stock. Each share of common stock was sold together with one-half of one warrant to purchase one share of common stock, at a combined offering price of $6.4925 per share of common stock and related one-half of one warrant. Each pre-funded warrant was sold together with one-half of one warrant to purchase one share of common stock, at a combined offering price of $6.4925 per pre-funded warrant and related one-half of one warrant. The common stock purchase warrants became exercisable immediately upon issuance at a price of $6.43 per share and expire five years from the date of issuance. The pre-funded warrants became exercisable immediately upon issuance at a price of $0.001 per share.

Liquidity Outlook

We have experienced significant net losses, and we expect to continue to incur net losses for the near future as we work to increase market acceptance of our products. We have never been profitable and we have incurred net losses and negative cash used in operations in each year since our inception. We incurred net losses of $14.0 million and $11.9 million, and used cash in our operations of $8.2 million and $6.9 million for the years ended December 31, 2025 and 2024, respectively.

We have historically funded our operations with the proceeds of equity and debt financings. During the year ended December 31, 2025, we received net proceeds of approximately $0.2 million from sales of equity securities pursuant to the Sales Agreement and $7.5 million which was advanced by Avenue pursuant to the Loan and Security Agreement. In addition, we entered into securities purchase agreements with certain institutional and accredited investors, which collectively provided for the sale by the Company of 360,737 shares of common stock of the Company. The shares were issued at a price of $5.15 per share in satisfaction of an aggregate of approximately $1.9 million of legal services rendered or to be rendered to the Company by the investors. The Company did not receive cash proceeds in connection with the issuance of these shares.

As of December 31, 2025, our cash, cash equivalents and marketable securities totaled $11.6 million.

During the year ended December 31, 2025, we sold 14,265 shares of our common stock at a weighted average price of $15.20 per share, net of issuance costs for $0.2 million in net proceeds, pursuant to the Sales Agreement. Principal repayments under the Loan and Security Agreement are scheduled for $2.5 million in 2027, $3.0 million in 2028 and $2.3 million in 2029 (inclusive of a final payment fee of 3.5% of the loan amount). See Note 10 - Long-Term Debt in the consolidated financial statements for additional details of our long-term debt.

The Company's expected cash requirements for the next 12 months from the date these financial statements are issued and beyond are largely based on the commercial success of its products. Notwithstanding the expected cash flow from operations and expected access to capital from existing and/or future debt and equity sources, the Company's currently forecasted cash is less than the requirements to fund its operating expenses and capital expenditure requirements, as currently planned, for at least the next 12 months from the date the accompanying consolidated financial statements are issued. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. There remain significant risks and uncertainties regarding the Company's business, financial condition and results of operations. Due to these risks and uncertainties, there can be no assurance that we will have sufficient cash flow and liquidity to fund our planned activities, which could force us to significantly reduce or curtail our activities and, ultimately, potentially cease operations. The accompanying consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

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.

Impact of Recently Issued Accounting Standards

In the normal course of business, we evaluate all new accounting pronouncements issued by the FASB, SEC, or other authoritative accounting bodies to determine the potential impact they may have on our Consolidated Financial Statements. See Note 2 "Basis of Presentation" of the notes to our consolidated financial statements in this Annual Report for additional information about these recently issued accounting standards and their potential impact on our financial condition or results of operations.