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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD EN DED March 31, 2021

☐ |  | 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 Registr ant as specified in its charter)

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

200 Forge Way, Suite 205, Rockaway, NJ 07866

(Address of principal executive offices, including zip code)

(973) 290-0097

(Registrant’s telephone number, including area code)

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

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter p eriod that the registrant was required to submit 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 com pany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard s 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 April 30, 2021 the registrant had 48,544,384 shares of common stock outstanding.

1

​

2

REFERENCES TO ELECTROCORE

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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to them. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, (i) risks and uncertainties related to the impact of the COVID-19 pandemic on general political and economic conditions, including as a result of efforts by governmental authorities to mitigate the COVID-19 pandemic, such as travel bans, shelter in place orders and third-party business closures and resource allocations, manufacturing and supply chains and patient access to commercial products; our ability to execute our operational and budget plans in light of the COVID-19 pandemic, and (ii) those included in our Annual Report on Form 10-K for the year ended December 31, 2020 and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report and elsewhere herein. 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 any forward-looking statements to reflect events or circumstances after the date of such statements.

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

3

ELECTROCORE, INC., SUBSIDIARIES AND AFFILIATE

Condensed Consolidated Balance Sheets
(Unaudited)

|  | March 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Assets |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 9,064,385 |  |  | $ | 4,241,937 |
Marketable securities |  |  | 16,388,339 |  |  |  | 18,386,160 |
Accounts receivable, net |  |  | 259,319 |  |  |  | 270,546 |
Inventories, net |  |  | 944,715 |  |  |  | 876,436 |
Prepaid expenses and other current assets |  |  | 936,080 |  |  |  | 1,288,588 |
Total current assets |  |  | 27,592,838 |  |  |  | 25,063,667 |
Inventories, noncurrent |  |  | 4,678,013 |  |  |  | 4,865,181 |
Property and equipment, net |  |  | 220,307 |  |  |  | 244,047 |
Operating lease right of use assets |  |  | 502,108 |  |  |  | 517,257 |
Other assets, net |  |  | 756,953 |  |  |  | 828,011 |
Total assets |  | $ | 33,750,219 |  |  | $ | 31,518,163 |
Liabilities and Equity |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable |  | $ | 2,110,288 |  |  | $ | 2,078,699 |
Accrued expenses |  |  | 2,152,152 |  |  |  | 2,800,820 |
Note payable, current |  |  | 545,551 |  |  |  | 476,236 |
Current portion of operating lease liabilities |  |  | 537,002 |  |  |  | 534,547 |
Total current liabilities |  |  | 5,344,993 |  |  |  | 5,890,302 |
Noncurrent liabilities: |  |  |  |  |  |  |  |
Operating lease liabilities, noncurrent |  |  | 874,003 |  |  |  | 885,333 |
Note payable, noncurrent |  |  | 863,799 |  |  |  | 1,097,946 |
Total liabilities |  |  | 7,082,795 |  |  |  | 7,873,581 |
Commitments and contingencies (Note 14) |  |  |  |  |  |  |  |
Stockholders' equity: |  |  |  |  |  |  |  |
Preferred Stock, par value $0.001 per share; 10,000,000 shares authorized at March 31, 2021 and December 31, 2020; 0 shares issued and outstanding at March 31, 2021 and December 31, 2020 |  |  | — |  |  |  | — |
Common Stock, par value $0.001 per share; 500,000,000 shares authorized at March 31, 2021 and December 31, 2020; 48,492,777 shares issued and outstanding at March 31, 2021 and 45,559,765 shares issued and outstanding at December 31, 2020 |  |  | 48,493 |  |  |  | 45,560 |
Additional paid-in capital |  |  | 138,464,624 |  |  |  | 130,205,027 |
Accumulated deficit |  |  | (112,373,980) |  |  |  | (106,990,148) |
Accumulated other comprehensive loss |  |  | (107,323) |  |  |  | (251,467) |
Total stockholders' equity |  |  | 26,031,814 |  |  |  | 23,008,972 |
Noncontrolling interest |  |  | 635,610 |  |  |  | 635,610 |
Total equity |  |  | 26,667,424 |  |  |  | 23,644,582 |
Total liabilities and equity |  | $ | 33,750,219 |  |  | $ | 31,518,163 |

See accompanying notes to unaudited condensed consolidated financial statements.

4

ELECTROCORE, INC., SUBSIDIARIES AND AFFILIATE

Condensed Consolidated Statements of Operations

(Unaudited)

|  | Three months ended March 31, |
|  | 2021 |  |  | 2020 |
Net sales |  | $ | 1,203,844 |  |  | $ | 733,771 |
Cost of goods sold |  |  | 363,987 |  |  |  | 298,115 |
Gross profit |  |  | 839,857 |  |  |  | 435,656 |
Operating expenses: |  |  |  |  |  |  |  |
Research and development |  |  | 498,965 |  |  |  | 1,523,114 |
Selling, general and administrative |  |  | 5,724,588 |  |  |  | 6,560,726 |
Restructuring and other severance related charges |  |  | — |  |  |  | 365,000 |
Total operating expenses |  |  | 6,223,553 |  |  |  | 8,448,840 |
Loss from operations |  |  | (5,383,696 | ) |  |  | (8,013,184 | )
Other (income)/expense |  |  |  |  |  |  |  |
Interest and other income |  |  | (3,386 | ) |  |  | (62,976 | )
Other expense |  |  | 3,522 |  |  |  | 9,141 |
Total other (income)/expense |  |  | 136 |  |  |  | (53,835 | )
Net loss |  | $ | (5,383,832 | ) |  | $ | (7,959,349 | )
Net loss per share of common stock - Basic and Diluted (see Note 12) |  | $ | (0.11 | ) |  | $ | (0.27 | )
Weighted average common shares outstanding - Basic and Diluted (see Note 12) |  |  | 47,653,202 |  |  |  | 29,774,226 |

See accompanying notes to unaudited condensed consolidated financial statements.

5

ELECTROCORE, INC., SUBSIDIARIES AND AFFILIATE

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

|  | Three months ended March 31, |
|  | 2021 |  |  | 2020 |
Net loss |  | $ | (5,383,832 | ) |  | $ | (7,959,349 | )
Other comprehensive income: |  |  |  |  |  |  |  |
Foreign currency translation adjustment |  |  | 141,381 |  |  |  | 45,322 |
Unrealized gain on securities, net of taxes as applicable |  |  | 2,763 |  |  |  | 5,826 |
Other comprehensive income |  |  | 144,144 |  |  |  | 51,148 |
Comprehensive loss |  | $ | (5,239,688 | ) |  | $ | (7,908,201 | )

See accompanying notes to unaudited condensed consolidated financial statements.

6

ELECTROCORE, INC., SUBSIDIARIES AND AFFILIATE

Condensed Consolidated Statements of Equity

(Unaudited)

| Common |  |  | Additional |  |  |  |  |  |  | Accumulated other |  |  | Total electroCore, Inc. |  |  |  |  |  |  |  |
| Stock |  |  | paid-in |  |  | Accumulated |  |  | comprehensive |  |  | stockholders' |  |  | Noncontrolling |  | Total |
| Shares |  |  | Amount |  |  | capital |  |  | deficit |  |  | income |  |  | equity |  |  | interest |  | equity |
Balances as of January 1, 2021 |  | 45,559,765 |  |  | $ | 45,560 |  |  | $ | 130,205,027 |  |  | $ | (106,990,148 | ) |  | $ | (251,467 | ) |  | $ | 23,008,972 |  |  | $ | 635,610 |  | $ | 23,644,582 |
Net loss |  | — |  |  |  | — |  |  |  | — |  |  |  | (5,383,832 | ) |  |  | — |  |  |  | (5,383,832 | ) |  |  | — |  |  | (5,383,832 | )
Other comprehensive income |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 144,144 |  |  |  | 144,144 |  |  |  | — |  |  | 144,144 |
Issuance of stock (see Note 11) |  | 2,750,000 |  |  |  | 2,750 |  |  |  | 6,917,600 |  |  |  | — |  |  |  | — |  |  |  | 6,920,350 |  |  |  | — |  |  | 6,920,350 |
Issuance of stock related to employee compensation plans, net of forfeitures |  | 17,599 |  |  |  | 18 |  |  |  | (18 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  | — |
Settlement of accrued bonus |  | 165,413 |  |  |  | 165 |  |  |  | 399,832 |  |  |  | — |  |  |  | — |  |  |  | 399,997 |  |  |  | — |  |  | 399,997 |
Share based compensation |  | — |  |  |  | — |  |  |  | 942,183 |  |  |  | — |  |  |  | — |  |  |  | 942,183 |  |  |  | — |  |  | 942,183 |
Balances as of March 31, 2021 |  | 48,492,777 |  |  | $ | 48,493 |  |  | $ | 138,464,624 |  |  | $ | (112,373,980 | ) |  | $ | (107,323 | ) |  | $ | 26,031,814 |  |  | $ | 635,610 |  | $ | 26,667,424 |
Balances as of January 1, 2020 |  | 29,835,183 |  |  | $ | 29,835 |  |  | $ | 107,752,066 |  |  | $ | (83,479,098 | ) |  | $ | (41,295 | ) |  | $ | 24,261,508 |  |  | $ | 635,610 |  | $ | 24,897,118 |
Net loss |  | — |  |  |  | — |  |  |  | — |  |  |  | (7,959,349 | ) |  |  | — |  |  |  | (7,959,349 | ) |  |  | — |  |  | (7,959,349 | )
Other comprehensive income |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 51,148 |  |  |  | 51,148 |  |  |  | — |  |  | 51,148 |
Equity financing commitment fee* |  | 461,676 |  |  |  | 462 |  |  |  | (462 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  | — |
Issuance of stock related to employee compensation plans, net of forfeitures |  | 124,568 |  |  |  | 125 |  |  |  | (125 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  | — |
Share based compensation |  | — |  |  |  | — |  |  |  | 744,865 |  |  |  | — |  |  |  | — |  |  |  | 744,865 |  |  |  | — |  |  | 744,865 |
Balances as of March 31, 2020 |  | 30,421,427 |  |  | $ | 30,422 |  |  | $ | 108,496,344 |  |  | $ | (91,438,447 | ) |  | $ | 9,853 |  |  | $ | 17,098,172 |  |  | $ | 635,610 |  | $ | 17,733,782 |
* Reflects commitment shares issued in accordance with the Company's equity facility purchase agreement with Lincoln Park Capital. For additional information see Note 11. Lincoln Park Stock Purchase Agreement. |

See accompanying notes to unaudited condensed consolidated financial statements

7

ELECTROCORE, INC., SUBSIDIARIES AND AFFILIATE

Condensed Consolidated Statements of Cash Flows

(Unaudited)

|  | Three months ended March 31, |
|  | 2021 |  |  | 2020 |
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net loss |  | $ | (5,383,832 | ) |  | $ | (7,959,349 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |
Stock-based compensation |  |  | 942,183 |  |  |  | 744,865 |
Depreciation and amortization |  |  | 95,680 |  |  |  | 97,419 |
Amortization of marketable securities discount |  |  | 54,278 |  |  |  | 1,176 |
Net noncash lease expense |  |  | 15,149 |  |  |  | 87,000 |
Other |  |  | — |  |  |  | 10,937 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable, net |  |  | 11,227 |  |  |  | 224,096 |
Inventories |  |  | 118,889 |  |  |  | (638 | )
Prepaid expenses and other current assets |  |  | 381,543 |  |  |  | 238,376 |
Accounts payable |  |  | 31,589 |  |  |  | (1,562,615 | )
Accrued expenses and other current liabilities |  |  | (413,503 | ) |  |  | (262,933 | )
Operating lease liabilities |  |  | (8,875 | ) |  |  | (108,581 | )
Net cash used in operating activities |  |  | (4,155,672 | ) |  |  | (8,490,247 | )
Cash flows from investing activities: |  |  |  |  |  |  |  |
Purchase of marketable securities |  |  | (5,082,730 | ) |  |  | — |
Proceeds from maturities of marketable securities |  |  | 7,000,000 |  |  |  | 10,500,000 |
Net cash provided by investing activities |  |  | 1,917,270 |  |  |  | 10,500,000 |
Cash flows from financing activities: |  |  |  |  |  |  |  |
Proceeds from shares issued |  |  | 6,920,350 |  |  |  | — |
Net cash provided by financing activities |  |  | 6,920,350 |  |  |  | — |
Effect of changes in exchange rates on cash and cash equivalents |  |  | 140,500 |  |  |  | 46,952 |
Net increase in cash and cash equivalents |  |  | 4,822,448 |  |  |  | 2,056,705 |
Cash and cash equivalents – beginning of period |  |  | 4,241,937 |  |  |  | 13,563,791 |
Cash and cash equivalents – end of period |  | $ | 9,064,385 |  |  | $ | 15,620,496 |
Supplemental cash flows disclosures: |  |  |  |  |  |  |  |
Interest paid |  | $ | 3,522 |  |  | $ | 4,623 |
Supplemental schedule of noncash activity: |  |  |  |  |  |  |  |
2020 Accrued bonus awarded in equity |  | $ | 399,997 |  |  | $ | — |

See accompanying notes to unaudited condensed consolidated financial statements.

8

ELECTROCORE, INC., SUBSIDIARIES AND AFFILIATE

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. The Company

electroCore, Inc. (“electroCore” or the “Company”) is a medical device company, engaged in the commercialization and development of a platform non-invasive Vagus Nerve Stimulation (“nVNS”) therapy that can be self-administered by patients. electroCore was founded in 2005 and has primarily focused on headache conditions (migraine and cluster headache).

electroCore, headquartered in New Jersey, has two wholly owned subsidiaries: electroCore Germany GmbH, and electroCore UK Ltd. The Company has ceased its operations in Germany, although sales to Germany are still supported by electroCore UK Ltd. In addition, an affiliate, electroCore (Aust) Pty Limited (“electroCore Australia”), is subject to electroCore’s control on a basis other than voting interests and is a variable interest entity (“VIE”), for which electroCore is the primary beneficiary. As of May 2017, the VIE ceased operations.

Note 2. Summary of Significant Accounting Policies

(a) | Basis of Presentation

The accompanying condensed consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and with instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. In the opinion of management, the Company has made all necessary adjustments, which include normal recurring adjustments necessary for a fair presentation of the Company’s condensed consolidated financial position and results of operations for the interim periods presented. Certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 11, 2021. The results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for a full year, any other interim periods or any future year or period.

(b) | Principles of Consolidation

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

(c) | Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of these condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, trade credits, rebates, co-payment assistance and sales returns, valuation of inventory, stock compensation, and contingencies.

(d) | Reclass of Statement of Cash Flows Activity

In order to reflect certain activity for the three months ended March 31, 2020 consistent with the March 31, 2021 presentation, this activity as reflected in the accompanying Condensed Consolidated Statements of Cash Flows was reclassed for presentation purposes only. The repayments of note payable of $111,878, included under the caption Cash flows from financing activities for the three months ended March 31, 2020 was reclassed to Net cash used in operating activities on the line Accrued expense and other current liabilities within the accompanying Condensed Consolidated Statements of Cash Flows. Additionally, the decrease in operating lease liabilities of $108,581 included on the line Net noncash lease expense for the three months ended March 31, 2020 was reclassed to Operating lease liabilities within the accompanying Condensed Consolidated Statements of Cash Flows.

(e) | Recent Accounting Standards Not Yet Adopted

In December 2019, the FASB issued an update to simplify the accounting for income taxes and improve consistent application by clarifying or amending existing guidance. This guidance is effective for the year ended December 31, 2021. The Company does not expect this guidance to have a material impact on its consolidated financial statements upon adoption.

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Note 3. Significant Risks and Uncertainties

Going Concern

The Company is subject to risks common to emerging medical device companies, including uncertainties related to commercialization of products and failing to secure additional funding.

The Company has experienced significant net losses, and it expects to continue to incur losses for the near future as it works to increase market acceptance of its gammaCore therapy for the acute treatment of episodic cluster headache (“eCH”), the prevention of cluster headache, and the preventive and acute treatment of migraine. The Company has never been profitable and has incurred net losses in each year since its inception.

The Company incurred net losses of $5.4 million and $8.0 million for the three months ended March 31, 2021 and 2020, respectively.

The Company’s expected cash requirements for the next 12 months and beyond are largely based on the commercial success of its products. There are significant risks and uncertainties as to its ability to achieve these operating results, including as a result of the adverse impact on its headache business from the COVID-19 pandemic. Due to these risks and uncertainties, the Company may need to reduce its activities significantly more than in its current operating plan and cash flow projections assume in order to fund its operations beyond one year of the date the accompanying financial statements are issued. There can be no assurance that the Company will have sufficient cash flow and liquidity to fund its planned activities, which could force it to significantly reduce or curtail its activities and ultimately, potentially cease operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

There is no assurance that the Company will generate sufficient funding through its operating results or financing activity, raising substantial doubt about the Company’s ability to 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 Department of Defense pursuant to its qualifying contract under the Federal Supply Schedule and open market sales to individual Department of Veterans Affairs facilities and (ii) in the United Kingdom from the National Health Service. In total, net sales from these two channels represented 81.3% and 93.9% of the Company’s net sales for three months ended March 31, 2021, and 2020 respectively.

Each of these two channels accounted for 10% or more of the Company's net sales as summarized below:

| Three months ended March 31, |
| 2021 |  |  | 2020 |
Revenue channel: |  |  |  |  |  |  |
Department of Veterans Affairs and Department of Defense |  | 55.5 | % |  |  | 61.9 | %
National Health Service |  | 25.8 | % |  |  | 32.0 | %

During the three months ended March 31, 2021, five specific VA/DoD facilities represented approximately 55.2% of the Company’s revenue from this channel, and two of those facilities each accounted for more than 10% individually.

Foreign Currency Exchange

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

COVID-19 Risks and Uncertainties

The Company continues to monitor the impact of the COVID-19 pandemic on all aspects of its business and geographies, including how it will impact business partners. While the Company experienced disruptions during the three months ended March 31, 2021 and 2020 from the COVID-19 pandemic, it is unable to predict the full impact that the COVID-19 pandemic may have on its financial condition, results of operations and cash flows due to numerous uncertainties. These uncertainties include the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others. COVID-19 has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. Depending upon the duration and severity of the pandemic, the continuing effect on the Company's results and outlook over the long term remains uncertain.

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Note 4. Revenue Recognition

Geographical Net Sales

The following table presents net sales disaggregated by geographic area:

| Three months ended March 31, |
| 2021 |  |  | 2020 |
Geographic Market |  |  |  |  |  |  |
United States | $ | 823,976 |  |  | $ | 457,559 |
United Kingdom |  | 316,993 |  |  |  | 245,466 |
Other |  | 62,875 |  |  |  | 30,746 |
Total Net Sales | $ | 1,203,844 |  |  | $ | 733,771 |

Performance Obligations

Revenue, net of discounts, vouchers, rebates, returns, and co-payment assistance is solely generated from the sales of the gammaCore products. 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, rebates, and co-payment assistance. The per-unit price is based on the Company’s 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 are estimated based on historical experience. For the three months ended March 31, 2021 and 2020, trade credits and discounts were immaterial.

Reimbursement for co-payments made by patients under the co-payment assistance program is considered variable consideration. Effective March 1, 2020, the amount of monthly co-payment assistance was reduced to a maximum of $100 per prescription. For the three months ended March 31, 2021 and 2020, net sales reflect a reduction for the reduced cost of therapy under the co-payment assistance program. The calculation of the accrual is based on an estimate of claims and the cost per claim that the Company expects to incur associated with inventory that exists in the distribution channel at period end.

Managed care rebates represent our estimated obligations to pharmacy benefit managers. Rebate accruals are recognized in the same period the related revenue is recognized. Gross to net accruals based on estimated rebates were determined to be de minimis.

Contract Balances

The Company generally invoices the customer and recognizes revenue once its performance obligations are satisfied, at which point payment is unconditional. Accordingly, under ASC 606, the Company’s contracts with customers did not give rise to contract assets or liabilities during the three months ended March 31, 2021 and 2020.

Agreed upon payment terms with customers are within 120 days of shipment. Accordingly, contracts with customers do not include a significant financing component.

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Note 5. Cash, Cash Equivalents and Marketable Securities

The following tables summarize the Company’s cash, cash equivalents and marketable securities as of March 31, 2021 and December 31, 2020.

As of March 31, 2021 |
|  | Amortized Cost |  |  | Unrealized Gain |  |  | Unrealized (Loss) |  |  | Fair Value |
Cash and cash equivalents |  | $ | 9,064,385 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,064,385 |
U.S. Treasury Bonds |  | $ | 16,388,386 |  |  | $ | — |  |  | $ | (47 | ) |  | $ | 16,388,339 |
Total marketable securities |  | $ | 16,388,386 |  |  | $ | — |  |  | $ | (47 | ) |  | $ | 16,388,339 |
Total cash, cash equivalents, and marketable securities |  | $ | 25,452,771 |  |  | $ | — |  |  | $ | (47 | ) |  | $ | 25,452,724 |

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

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Note 6. Fair Value Measurements

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

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

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

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

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

|  |  |  |  |  | Fair Value Hierarchy |
March 31, 2021 |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 9,064,385 |  |  | $ | 9,064,385 |  |  | $ | — |  |  | $ | — |
Marketable Securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury bonds |  |  | 16,388,339 |  |  |  | 16,388,339 |  |  |  | — |  |  |  | — |
Total |  | $ | 25,452,724 |  |  | $ | 25,452,724 |  |  | $ | — |  |  | $ | — |

|  |  |  |  |  | Fair Value Hierarchy |
December 31, 2020 |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 4,241,937 |  |  | $ | 4,241,937 |  |  | $ | — |  |  | $ | — |
Marketable Securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. treasury bonds |  |  | 18,386,160 |  |  |  | 18,386,160 |  |  |  | — |  |  |  | — |
Total |  | $ | 22,628,097 |  |  | $ | 22,628,097 |  |  | $ | — |  |  | $ | — |

The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the hierarchy during the three months ended March 31, 2021 and year ended December 31, 2020. The carrying amount of the Company’s receivables and payables approximate their fair values due to their short maturities.

Note 7. Inventories

As of March 31, 2021 and December 31, 2020, inventories consisted of the following:

|  | March 31, 2021 |  |  | December 31, 2020 |
Raw materials |  | $ | 981,452 |  |  | $ | 1,008,653 |
Work in process |  |  | 4,367,610 |  |  |  | 4,304,415 |
Finished goods |  |  | 273,666 |  |  |  | 428,549 |
Total inventory |  |  | 5,622,728 |  |  |  | 5,741,617 |
Less: noncurrent |  |  | 4,678,013 |  |  |  | 4,865,181 |
Total - current |  | $ | 944,715 |  |  | $ | 876,436 |

The reserve for obsolete inventory was $721,426 as of March 31, 2021 and December 31, 2020. The Company records charges for obsolete inventory in cost of goods sold. As of March 31, 2021 and December 31, 2020, noncurrent inventory was comprised of approximately $0.8 million and $0.7 million of raw materials, respectively, and $3.9 million and $4.2 million of work in process, respectively.

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Note 8. Leases

For the three months ended March 31, 2021 and 2020 the Company recognized lease expense of $40,304 and $119,650, respectively. This expense does not include non-lease components associated with the lease agreements as the Company elected not to include such charges as part of the lease expense.

The tables below provide the details of the right of use assets and lease liabilities:

Supplemental Balance Sheet Information for Operating Leases

|  | March 31, 2021 |  |  | December 31, 2020 |
Operating leases: |  |  |  |  |  |  |  |
Operating lease right of use assets |  | $ | 502,108 |  |  | $ | 517,257 |
Operating lease liabilities: |  |  |  |  |  |  |  |
Current portion of operating lease liabilities |  |  | 537,002 |  |  |  | 534,547 |
Noncurrent operating lease liabilities |  |  | 874,003 |  |  |  | 885,333 |
Total operating lease liabilities |  | $ | 1,411,005 |  |  | $ | 1,419,880 |
Weighted average remaining lease term (in years) |  |  | 5.7 |  |  |  | 5.7 |
Weighted average discount rate |  |  | 13.75 | % |  |  | 13.75 | %

Future minimum lease payments under non-cancellable operating leases as of March 31, 2021:

Remainder of 2021 |  | $ | 750,778 |
2022 |  |  | 337,254 |
2023 |  |  | 142,892 |
2024 |  |  | 146,044 |
2025 and there after |  |  | 676,260 |
Total future minimum lease payments |  |  | 2,053,228 |
Less: Amounts representing interest |  |  | (642,223 | )
Total |  | $ | 1,411,005 |

Note 9. Accrued Expenses and Other Current Liabilities

Accrued expenses as of March 31, 2021 and December 31, 2020 consisted of the following:

|  | March 31, 2021 |  |  | December 31, 2020 |
Accrued professional fees |  | $ | 233,544 |  |  | $ | 270,543 |
Accrued bonuses |  |  | 709,445 |  |  |  | 1,424,878 |
Other employee related expenses |  |  | 424,953 |  |  |  | 371,033 |
Other |  |  | 784,210 |  |  |  | 734,366 |
|  | $ | 2,152,152 |  |  | $ | 2,800,820 |

Note 10. Notes Payable

Loan Under the PPP

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

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The interest rate on the Loan is 1.0% per annum. The Note matures on February 2, 2023. On September 2, 2021 (the “First Payment Date”), the Company is required to pay all accrued interest under the Loan that is not forgiven in accordance with the terms of the PPP. Additionally, on the First Payment Date and on the second day of each month thereafter until February 2, 2023, the Company must make equal monthly payments of the amount of principal under the Loan that is not forgiven in accordance with the terms of the PPP and related accrued interest thereon. The Note contains events of default and other conditions customary for a Note of this type.

Under the terms of the CARES Act, PPP loan recipients can be granted forgiveness for all or a portion of the loan granted under the PPP, with such forgiveness to be determined, subject to limitations, based on the use of the loan proceeds for payment of Qualifying Expenses and the recipient maintaining its payroll levels over certain required thresholds under the PPP. The terms of any forgiveness also may be subject to further requirements in any regulations and guidelines the SBA may adopt. No assurance can be provided that the Company will obtain forgiveness of the Note in whole or in part. Official guidance and interpretations of the requirements of the program have been limited and have been changing over time. Despite the Company’s good-faith belief that it properly satisfied all eligibility requirements for the PPP loan, there has been increasing scrutiny of public companies that received loans, and there can be no assurance that the Company will not become subject to regulatory or other scrutiny, including a request or requirement for repayment of some or all of the loan.

On March 24, 2021, the Company applied for loan forgiveness with the Lender under the guidelines of the SBA. If approved, the Company would not be required to repay all, or a part, of the loan.

The Company has accounted for the Loan in accordance with FASB ASC Topic 470, Debt. Accordingly, the Loan is reflected as a liability on its Condensed Consolidated Balance Sheet as of March 31, 2021. As of March 31, 2021, $0.5 million was included under the caption Current liabilities and $0.9 million was included under the caption Noncurrent liabilities. The Company will record a gain if the Loan is forgiven.

Finance and Security Agreement

On July 1, 2020, the Company entered into a Commercial Insurance Premium Finance and Security Agreement (“the Agreement”). The Agreement provides for a single borrowing by the Company of $1.2 million, with a seven-month term and an annual interest rate of 2.18%. The proceeds from this transaction were used to partially fund the premiums due under some of the Company’s insurance policies. The amounts payable are secured by the Company’s rights under such policies. The Company is required to pay monthly installments of approximately $164,800 beginning in July 2020. All borrowings were fully repaid as of March 31, 2021.

Note 11. Stockholders’ Equity

Lincoln Park Purchase Agreement

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

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

During 2020, the Company sold 10,179,676 shares of its common stock under the Purchase Agreement, resulting in aggregate proceeds of approximately $15.5 million to the Company. During the three months ended March 31, 2021, the Company sold an additional 2,750,000 shares of its common stock under the Purchase Agreement, resulting in aggregate proceeds of approximately $6.9 million to the Company. The Company expects to use the proceeds from this agreement for general corporate purposes and working capital. On March 11, 2021, the Company terminated the Purchase Agreement and, accordingly, the Company will not sell any further shares of its common stock to Lincoln Park under the Purchase Agreement.

Settlement of Accrued Bonus

During the three months ended March 31, 2021, the Company issued 165,413 shares of its common stock in payment of certain executive accrued 2020 incentive bonuses.

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Note 12. Net Loss Per Share

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

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

|  | Three months ended March 31,
|  | 2021 |  |  | 2020
Outstanding stock options |  |  | 4,905,585 |  |  |  | 3,808,563
Nonvested restricted stock and unit awards |  |  | 1,216,455 |  |  |  | 1,094,825
Stock purchase warrants |  |  | 715,199 |  |  |  | 715,199
|  |  | 6,837,239 |  |  |  | 5,618,587

Note 13. Stock Based Compensation

The following table presents a summary of activity related to stock options during the three months ended March 31, 2021:

| Number of Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (Years) |  |  | Aggregate Intrinsic Value
Outstanding, January 1, 2021 |  | 3,815,585 |  |  | $ | 5.56 |  |  |  | 8.9 |  | $ | 342,551
Granted |  | 1,090,000 |  |  |  | 2.05 |  |  |  |  |  |  | 218,950
Exercised |  | — |  |  |  | — |  |  |  |  |  |  | —
Cancelled |  | — |  |  |  | — |  |  |  |  |  |  | —
Outstanding, March 31, 2021 |  | 4,905,585 |  |  | $ | 4.78 |  |  |  | 8.7 |  | $ | 1,396,195
Exercisable, March 31, 2021 |  | 1,597,409 |  |  | $ | 8.38 |  |  |  | 8.0 |  | $ | 223,339

The intrinsic value is calculated as the difference between the fair market value at March 31, 2021 and the exercise price per share of the stock options. The options granted to employees generally vest over a four-year period.

The following table presents a summary of activity related to restricted stock awards (“RSAs”) granted during the three months ended March 31, 2021:

|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |  |
Nonvested, January 1, 2021 |  |  | 25,645 |  |  | $ | 10.07 |  |
Granted |  |  | 165,413 |  |  |  | 2.42 |  |
Vested |  |  | (120,051 | ) |  |  | 3.33 |  |
Cancelled |  |  | — |  |  |  | — |  |
Nonvested, March 31, 2021 |  |  | 71,007 |  |  | $ | 4.74 |  |

In general, RSAs granted to employees vest over a four-year period.

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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, 2021:

|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |
Nonvested, January 1, 2021 |  |  | 1,014,123 |  |  | $ | 1.50 |
Granted |  |  | 147,000 |  |  |  | 2.83 |
Vested |  |  | (15,675 | ) |  |  | 1.83 |
Cancelled |  |  | — |  |  |  | — |
Nonvested, March 31, 2021 |  |  | 1,145,448 |  |  | $ | 1.67 |

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

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

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

| Three months ended March 31, |
| 2021 |  |  | 2020 |
Selling, general and administrative | $ | 809,547 |  |  | $ | 547,090 |
Research and development |  | 112,986 |  |  |  | 186,599 |
Cost of goods sold |  | 19,650 |  |  |  | 11,176 |
Total expense | $ | 942,183 |  |  | $ | 744,865 |

Total unrecognized compensation cost related to unvested awards as of March 31, 2021 was $6.0 million and is expected to be recognized over the next 2.6 years.

Valuation Information for Stock-Based Compensation

The fair value of each stock option award during the three months ended March 31, 2021 and 2020 was estimated on the date of grant using the Black-Scholes model. For the three months ended March 31, 2021, expected volatility was based on historical common stock volatility of the Company’s peers. Expected volatility for the three months ended March 31, 2020, was based on historical volatility of the Company’s common stock. The risk-free interest rate was based on the average U.S. Treasury rate that most closely resembled the expected life of the related award. The expected term of the award was calculated using the simplified method. No dividend was assumed as the Company does not pay regular dividends on its common stock and does not anticipate paying any dividends in the foreseeable future.

The weighted average assumptions used in the Black-Scholes option pricing model in valuing stock options granted in the three months ended March 31, 2021 and 2020 are summarized in the table below.

| Three months ended March 31, 2021 |  |  | Three months ended March 31, 2020 |
Fair value at grant date | $ | 1.39 |  | $ | 1.27 |
Expected volatility | 79.9 | % |  | 113.4 | %
Risk-free interest rate | 0.6 | % |  | 1.4 | %
Expected holding period, in years | 6.1 |  |  | 6.1 |
Dividend yield |  | — | % |  | — | %

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Note 14. Commitments and Contingencies

Stockholders Litigation

On July 8, 2019 and August 1, 2019, purported stockholders of the Company served putative class action lawsuits in the Superior Court of New Jersey for Somerset County, captioned Paul Kuehl vs. electroCore, Inc., et al., Docket No. SOM-L 000876-19 and Shirley Stone vs. electroCore, Inc., et al., Docket No. SOM-L 001007-19, respectively. In addition to the Company, the defendants included present and past directors and officers, Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities LLC and BTIG, LLC, the underwriters for its IPO; and two of the Company’s stockholders. On August 15, 2019, the Superior Court entered an order consolidating the Kuehl and Stone actions, which proceeded under Docket No. SOM-L 000876-19. Each plaintiff was appointed a co-lead plaintiff. The plaintiffs filed a consolidated amended complaint, which sought certification of a class of stockholders who purchased common stock in the IPO or whose purchases are traceable to that offering. The consolidated amended complaint alleged that the defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act with respect to the registration statement and related prospectus for the IPO. The complaint sought unspecified compensatory damages, interest, costs and attorneys’ fees. On October 31, 2019, the Company and the other defendants filed a motion to dismiss the complaint or in the alternative to stay the action in favor of the pending federal action (discussed below).

On February 21, 2020 the court granted the defendants’ motion to dismiss the consolidated amended complaint with prejudice. On March 2, 2020 the court entered an amended order dismissing the consolidated amended complaint with prejudice. On March 27, 2020, the plaintiffs filed a notice of appeal with the N.J. Superior Court – Appellate Division. The appeal was fully briefed as of July 17, 2020. The date for argument of the appeal has not yet been set.

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

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 claim against the Company and the underwriters for violating Section 12(a)(2) of the Securities Act. On September 15, 2020, the Company and the other defendants filed a motion to dismiss the amended complaint for failure to state a claim. On November 6, 2020, the plaintiffs filed their opposition to the motion to dismiss. The Company and the other defendants filed reply papers in support of the motion on December 7, 2020. Argument on the motion to dismiss has not yet been scheduled. The parties have agreed to a non-binding mediation with JAMS. A session with the JAMS mediator occurred on March 30, 2021.

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

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On March 4, 2021, purported stockholder Richard Martz brought a purported stockholder derivative action in the United States District Court for the District of New Jersey. The action is captioned Richard Maltz, derivatively on behalf of electroCore, Inc., vs. Francis R. Amato, et al., Case 3:21-cv-04135. The defendants include present and past directors and officers of the Company. The plaintiff purports to pursue derivative claims on behalf of the Company in connection with the IPO and actions occurring between the IPO and September 25, 2019. The complaint alleges that demand on the board of directors is excused. The complaint purports to allege claims against the defendants for violating Section 14(a) of the Exchange Act, breaching fiduciary duties, unjust enrichment and waste of corporate assets. The complaint also purports to allege claims for contribution in connection with the Turnofsky case described above, pursuant to Section 11(f) of the Securities Act and Sections 10(b) and 21D of the Exchange Act. The complaint seeks unspecified compensatory damages, interest, costs and attorneys’ fees; declaratory relief; and an order requiring changes to corporate governance and internal procedures and a vote on proposed amendments to the Bylaws and Certificate of Incorporation. On March 8, 2021, purported stockholder Erin Yuson brought a purported stockholder derivative action in the United States District Court for the District of New Jersey. The action is captioned Erwin Yuson, derivatively on behalf of electroCore, Inc., vs. Francis R. Amato, et al., Case 3:21-cv-04481. The defendants include present and past directors and officers of the Company. The plaintiff purports to pursue derivative claims on behalf of the Company in connection with a 2019 proxy statement and actions occurring from the IPO through September 25, 2019. The complaint alleges that demand on the board of directors is excused. The complaint purports to allege claims against the defendants for violating Section 14(a) of the Exchange Act and breaching fiduciary duties. The complaint seeks unspecified compensatory damages, interest, costs and attorneys’ fees; declaratory relief; and an order requiring changes to corporate governance and internal procedures and a vote on proposed amendments to the Bylaws and Certificate of Incorporation.

The plaintiffs in the Maltz and Yuson derivative actions have agreed to consolidate and stay those actions. The actions shall be stayed until and through the resolution of any motion for summary judgement in the Turnofsky federal securities class action. 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 plantiffs on April 14, 2021 and ordered by the court on April 30, 2021.

The Company intends to continue to vigorously defend itself in these matters. However, in light of, among other things, the preliminary stage of these litigation matters, the Company is unable to determine the reasonable probability of loss or a range of potential loss. Accordingly, the Company has not established an accrual for potential losses, if any, that could result from any unfavorable outcome, and there can be no assurance that these litigation matters will not result in substantial defense costs and/or judgments or settlements that could adversely affect the Company’s financial condition.

The Company expenses associated legal fees in the period they are incurred.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

You should read this section in conjunction with our unaudited interim condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2020 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC. As discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements,” the following 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 expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those under the caption "Risk Factors" in the aforementioned Annual Report.

Overview

We are a commercial-stage medical device company with a proprietary non-invasive vagus nerve stimulation, or nVNS, therapy. nVNS is a platform bioelectronic medical therapy that modulates neurotransmitters and immune function through its effects on both the peripheral and central nervous systems. We are initially focused on neurology, and our therapy, gammaCore, is cleared by the FDA for use by adults for the following four neurology indications: the acute treatment of pain associated with each of migraine and eCH, the preventive treatment of migraine headache and adjunctive use for the preventive treatment of cluster headaches, or CH. Recently, the FDA cleared the use of gammaCore for acute and preventive treatment of migraine in adolescents. We are also considering the potential for several additional indications for our nVNS technology, which is being studied through a number of investigator-initiated studies. These indications include COVID-19 respiratory symptoms, stroke, mild traumatic brain injury, post-traumatic stress disorder, opioid use disorders and post-operative ileus.

Following our initial FDA clearance in early 2017, our commercial strategy was to establish gammaCore as a first-line treatment option for the acute treatment of episodic CH in adult patients, who have few alternative treatment options available to them. This strategy was supported by a product registry conducted from July 2017 through June 2018 to build advocacy among key opinion leaders in leading headache centers in the United States, and to generate patient demand in the form of prescriptions submitted to payers. With an earlier-than-anticipated FDA clearance for our acute treatment of migraine indication, we leveraged this advocacy during the registry period as we expanded into migraine and prepared for a full commercial launch of gammaCore and gammaCore Sapphire for the acute treatment of pain associated with eCH and migraine in adult patients, which was accomplished in the third quarter of 2018. With the clearance of adjunctive use for the prevention of CH in December 2018, we continued to build upon our existing base of advocacy and patient support. In March 2020, the FDA cleared gammaCore for the preventive treatment of migraine headache in adult patients. In February 2021, gammaCore was cleared by the FDA for the acute and preventive treatment of migraine in adolescents between 12 and 17 years of age.

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

We continue to evaluate strategies to expand commercial adoption of gammaCore, including the potential use of telemedicine and cash pay, direct to consumer approaches. We are unable to predict the impact these strategies will have on our financial condition, results of operations and cash flows due to numerous uncertainties.

Recently, we have announced agreements with several new distributors to make gammaCore Sapphire available beyond the U.S. and United Kingdom, including in multiple European countries, Australia, Canada, and Qatar.

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Impact of COVID-19

We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it will impact business partners. In particular, the pandemic has resulted in a significant reduction in non-essential contact between patients and healthcare providers, shifting of focus by healthcare providers to the acute treatment of COVID-19 related illness regardless of specialty. We believe these restrictions have limited our sales force’s ability to generate additional interest in the Company’s products. We are unable to predict the impact that the COVID-19 pandemic may have on our financial condition, results of operations and cash flows due to numerous uncertainties. These uncertainties include the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the development, rollout and availability of effective treatments and vaccines, and the direct and indirect economic effects of the pandemic and containment measures, among others. The COVID-19 pandemic in many countries, including the United States, has significantly adversely impacted global economic activity. The global impact of the pandemic has been rapidly evolving and many countries have reacted by instituting quarantines, mandating business and school closures and restricting travel. Certain states and cities, including those where our principal place of business is located and sales force seeks to operate, have also reacted by instituting quarantines, restrictions on travel, “shelter in place” rules, and restrictions on types of business that may continue to operate. We cannot predict if additional states and cities will implement similar restrictions or when restrictions currently in place will expire. As a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly, including industries in which we operate. Further, the impacts of a potential worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets, consumer spending as well as other unanticipated consequences remain unknown.

Because the COVID-19 pandemic affected, among other things, our access to prescribing physicians and their access to headache patients, we believe that our results for the three months ended March 31, 2021 and 2020 reflect a negative impact from, among other things, the global pandemic. Moreover, our expectations for at least the beginning of 2021 have also been adversely affected by both the uncertainty and potential negative impact of the global pandemic. Depending upon the duration and severity of the pandemic, the continuing effect on our results and outlook over the long term remains uncertain.

In July 2020, the Company received an EUA for use of its gammaCore Sapphire CV nVNS therapy for the acute treatment of asthma exacerbations in known or suspected COVID-19 patients. This EUA is expected to remain in effect for the duration of the COVID-19 pandemic justifying emergency use of these devices unless terminated or revoked by the FDA (after which products may no longer be used). The length of the effective period of this EUA is uncertain. We did not recognize material revenue from the sales of gammaCore Sapphire CV during the three months ended March 31, 2021 and we do not expect to recognize material revenue from the sales of gammaCore Sapphire CV.

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Results of Operations

Comparison of the three months ended March 31, 2021 to the three months ended March 31, 2020

The following table sets forth amounts from our condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020:

|  | For the three months ended March 31, |  |  |  |  |
|  | 2021 |  |  | 2020 |  |  | Change |
|  | (in thousands) |
Consolidated statements of operations: |  |  |  |  |  |  |  |  |  |  |  |
Net sales |  | $ | 1,203.8 |  |  | $ | 733.7 |  |  | $ | 470.1 |
Cost of goods sold |  |  | 364.0 |  |  |  | 298.1 |  |  |  | 65.9 |
Gross profit |  |  | 839.8 |  |  |  | 435.6 |  |  |  | 404.2 |
Operating expenses |  |  |  |  |  |  |  |  |  |  |  |
Research and development |  |  | 499.0 |  |  |  | 1,523.1 |  |  |  | (1,024.1 | )
Selling, general and administrative |  |  | 5,724.5 |  |  |  | 6,560.7 |  |  |  | (836.2 | )
Restructuring and other severance related charges |  |  | — |  |  |  | 365.0 |  |  |  | (365.0 | )
Total operating expenses |  |  | 6,223.5 |  |  |  | 8,448.8 |  |  |  | (2,225.3 | )
Loss from operations |  |  | (5,383.7 | ) |  |  | (8,013.2 | ) |  |  | 2,629.5 |
Other (income)/expense |  |  |  |  |  |  |  |  |  |  |  |
Interest and other income |  |  | (3.4 | ) |  |  | (63.0 | ) |  |  | 59.6 |
Other expense |  |  | 3.5 |  |  |  | 9.1 |  |  |  | (5.6 | )
Total other (income)/expense |  |  | 0.1 |  |  |  | (53.9) |  |  |  | 54.0 |
Net loss |  | $ | (5,383.8 | ) |  | $ | (7,959.3 | ) |  | $ | 2,575.5 |

Net Sales

Net sales increased 64% for the three months ended March 31, 2021 compared to the prior year period. The increase of $470.1 thousand is due to increased sales across all major channels including Commercial, the Department of Veteran Affairs, and in the United Kingdom. For the remainder of our 2021 fiscal year, we expect revenue from the Department of Veterans Affairs and United Kingdom to continue to be a majority of our revenue.

Gross Profit

Gross profit increased $404.2 thousand for the three months ended March 31, 2021 compared to the prior year period due to the increase in net sales. Gross margin was 70% and 59% for the three months ended March 31, 2021 and 2020, respectively. The increase in gross margin was largely due to the more favorable absorption of labor and overhead costs, and product mix.

Research and Development

Research and development expense decreased by $1.0 million or 67% for the three months ended March 31, 2021 compared to the prior year period. This reduction was primarily due to significant reductions in near-term investment in research and development, including the early termination of our Premium II clinical trial.

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Selling, General and Administrative

Selling, general and administrative expense was $5.7 million and $6.6 million for the three months ended March 31, 2021 and 2020, respectively. The decrease in expense was due to the cost reduction plan put in place during 2019 and 2020, including the restructuring of the commercial channel. We do not expect a material increase in our selling, general, and administrative expense for the remainder of our 2021 fiscal year, however, we may make targeted expenditures to support our commercial efforts.

Restructuring and Other Severance Related Charges

There were no restructuring and other severance related costs for the three months ended March 31, 2021. Restructuring and other severance related costs for the three months ended March 31, 2020 of $365,000 consists of severance related expenses in connection with personnel changes in the position of Chief Medical Officer.

Interest and Other Income

Interest and other income of $3,386 and $62,976 for the three months ended March 31, 2021 and 2020, respectively, primarily consisted of interest earned on cash, cash equivalents and marketable securities. Interest income was slightly offset by interest expense incurred in the current period related to our loan under the PPP, and financing related to certain of our insurance premiums during both the 2021 and 2020 periods.

Cash Flows

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

|  | For the three months ended March 31, |
|  | 2021 |  |  | 2020 |
|  | (in millions) |
Net cash (used in) provided by |  |  |  |  |  |  |  |
Operating activities |  | $ | (4.2 | ) |  | $ | (8.5 | )
Investing activities |  | $ | 1.9 |  |  | $ | 10.5 |
Financing activities |  | $ | 6.9 |  |  | $ | — |

Operating Activities

Net cash used in operating activities was $4.2 million and $8.5 million for the three months ended March 31, 2021 and 2020, respectively. This decrease is primarily due to (i) a decrease in our net loss from operations, and (ii) less cash being used for working capital components such as inventory and accounts payable.

Investing Activities

Net cash provided by investing activities was $1.9 million for the three months ended March 31, 2021, as compared to $10.5 million for the three months ended March 31, 2020. This decrease reflects the decline in funds received from the maturity of marketable securities, partially offset by a decrease in our purchases of marketable securities.

Financing Activities

Net cash provided by financing activities was $6.9 million for the three months ended March 31, 2021, representing proceeds from the sale of common stock.

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Liquidity Outlook

Because we have had recurring losses, negative cash flows from operating activities, limited cash on hand and expect to continue to incur losses for the near future, the report of our independent auditors with respect to our financial statements as of December 31, 2020 and for the year ended December 31, 2020 contained an explanatory paragraph as to the factors that raise substantial doubt about the Company’s ability to continue as a going concern.

Our financial statements have been prepared assuming we will continue as a going concern. We have experienced recurring losses since our inception. We incurred net losses of $5.4 million and $8.0 million for the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, our cash, cash equivalents and marketable securities totaled $25.5 million.

We expect to continue to incur substantial negative cash flows from operations for at least the next several years as we work to increase market acceptance of our gammaCore therapy for the acute treatment of eCH, the prevention of cluster headache, and the preventive and acute treatment of migraine. We intend to continue to make targeted investments in building our commercial infrastructure.

We may be eligible, from time to time, to receive cash from the sale of our net operating losses under New Jersey's Department of the Treasury - Division of Taxation NOL Transfer Program. On April 30, 2021, documents related to the sale of our New Jersey state net operating losses and research and development tax credits for the years ended December 31, 2019 and 2018 were submitted to the New Jersey Economic Development Authority (“NJEDA”). The NJEDA will review the submitted documents for accuracy and forward approved documents to the New Jersey Division of Taxation. There can be no assurance that such sale will be consummated.

Although we expect that our existing capital resources, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months, this estimate is based on assumptions that may prove to be wrong, and could exhaust our available capital resources sooner than we expect. 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.

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 at least the next 12 months. There is no assurance that we will generate sufficient cash flow and funding through our operating results or the sale of 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 the accompanying financial statements are issued. The inability to generate sufficient cash flow or raise funds through the sources discussed above could have a material adverse effect on our business, results of operations, and financial condition, and could require us to reduce or curtail activities, or cease operations.

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

Even if we are not required to curtail our activities sooner, our ability to execute our operating plan beyond the next 12 months depends on our ability to increase revenue and obtain additional funding through the sale of equity and 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 funding through our operating results or the sale of 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 inability to generate sufficient cash flow or raise funds through the sources discussed above could have a material adverse effect on our business, results of operations, and financial condition, and could require us to reduce or curtail activities, or cease operations.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We develop our products in the United States and sell those products into more than four 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. As our sales in currencies other than the U.S. dollar increase, our exposure to foreign currency fluctuations may increase. In addition, changes in exchange rates also may affect the end-user prices of our products compared to those of our foreign competitors, who may be selling their products based on local currency pricing. These factors may make our products less competitive in some countries.

If the U.S. dollar uniformly increased or decreased in strength by 10% relative to the currencies in which our sales were denominated, our net income would have correspondingly increased or decreased by an immaterial amount for the three months ended March 31, 2021.

Our exposure to market interest rate risk is confined to our cash and cash equivalents and marketable securities. The goals of our investment policy are preservation of capital, fulfillment of liquidity needs and fiduciary control of cash and investments. We also seek to maximize income from our investments without assuming significant risk. To achieve our goals, we may maintain a portfolio of cash equivalents and investments in a variety of securities of high credit quality. The securities in our investment portfolio, if any, are not leveraged, are classified as available for sale and are, due to their very short-term nature, subject to minimal interest rate risk. We currently do not hedge interest rate exposure. Because of the short-term maturities of our cash equivalents, we do not believe that an increase in market rates would have any material negative impact on interest income recognized in our statement of operations. We have no investments denominated in foreign currencies and therefore our investments are not subject to foreign currency exchange risk. We contract with CROs, investigational sites, suppliers and other vendors in Europe and internationally. 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 March 31, 2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

As required by Rule 13a-15(b) of the Exchange Act, an evaluation as of March 31, 2021 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 March 31, 2021 were effective for the purposes stated above.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during the three months ended March 31, 2021 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

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PART II— OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On July 8, 2019 and August 1, 2019, purported stockholders of our company served putative class action lawsuits in the Superior Court of New Jersey for Somerset County, captioned Paul Kuehl vs. electroCore, Inc., et al., Docket No. SOM-L 000876-19 and Shirley Stone vs. electroCore, Inc., et al., Docket No. SOM-L 001007-19, respectively. In addition to our company, the defendants included present and past directors and officers, Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities LLC and BTIG, LLC, the underwriters for our IPO; and two of our stockholders. On August 15, 2019, the Superior Court entered an order consolidating the Kuehl and Stone actions, which proceeded under Docket No. SOM-L 000876-19. Each plaintiff was appointed a co-lead plaintiff. The plaintiffs filed a consolidated amended complaint, which sought certification of a class of stockholders who purchased our common stock in our IPO or whose purchases are traceable to that offering. The consolidated amended complaint alleged that the defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act with respect to the registration statement and related prospectus for the IPO. The complaint sought unspecified compensatory damages, interest, costs and attorneys’ fees. On October 31, 2019, the Company and the other defendants filed a motion to dismiss the complaint or in the alternative to stay the action in favor of the pending federal action (discussed below). On February 21, 2020 the court granted the defendants’ motion to dismiss the consolidated amended complaint with prejudice. On March 2, 2020 the court entered an amended order dismissing the consolidated amended complaint with prejudice. On March 27, 2020, the plaintiffs filed a notice of appeal with the N.J. Superior Court - Appellate Division. The appeal was fully briefed as of July 17, 2020. The date for argument of the appeal has not yet been set.
On September 26, 2019 and October 31, 2019, purported stockholders of our company served putative class action lawsuits in the United States District Court for the District of New Jersey captioned Allyn Turnofsky vs. electroCore, Inc., et al., Case 3:19-cv-18400, and Priewe vs. electroCore, Inc., et al., Case 1:19-cv-19653, respectively. In addition to our company, the defendants include present and past directors and officers, and Evercore Group L.L.C., Cantor Fitzgerald & Co., JMP Securities LLC and BTIG, LLC, the underwriters for our IPO. The plaintiffs each seek to represent a class of stockholders who (i) purchased our common stock in our IPO or whose purchases are traceable to the IPO, or (ii) who purchased common stock between the IPO and September 25, 2019. The complaints each alleged that the defendants violated Sections 11 and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act, with respect to (i) the registration statement and related prospectus for the IPO, and (ii) certain post-IPO disclosures filed with the SEC. The complaints sought unspecified compensatory damages, interest, costs and attorneys’ fees.
In the Turnofsky case, on November 25, 2019, several plaintiffs and their counsel moved to be selected as lead plaintiff and lead plaintiff’s counsel. On April 24, 2020, the Court granted the motion of Carole Tibbs and the firm Bragar, Eagel & Squire, P.C. On July 17, 2020 the plaintiffs filed an amended complaint in Turnofsky. In addition to the prior claims, the amended complaint adds an additional director defendant and two investors as defendants, adds a claim against the Company and the underwriters for violating Section 12(a)(2) of the Securities Act. On September 15, 2020, the Company and the other defendants filed a motion to dismiss the amended complaint for failure to state a claim. On November 6, 2020, the plaintiffs filed their opposition to the motion to dismiss. The Company and the other defendants filed reply papers in support of the motion on December 7, 2020. Argument on the motion to dismiss has not yet been scheduled. The parties have agreed to a non-binding mediation with JAMS. A session with the JAMS mediator occurred on March 30, 2021.
The Priewe case was voluntarily dismissed on February 19, 2020.

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On March 4, 2021, purported stockholder Richard Martz brought a purported stockholder derivative action in the United States District Court for the District of New Jersey. The action is captioned Richard Maltz, derivatively on behalf of electroCore, Inc., vs. Francis R. Amato, et al., Case 3:21-cv-04135. The defendants include present and past directors and officers of the Company. The plaintiff purports to pursue derivative claims on behalf of the Company in connection with the IPO and actions occurring between the IPO and September 25, 2019. The complaint alleges that demand on the board of directors is excused. The complaint purports to allege claims against the defendants for violating Section 14(a) of the Exchange Act, breaching fiduciary duties, unjust enrichment and waste of corporate assets. The complaint also purports to allege claims for contribution in connection with the Turnofsky case described above, pursuant to Section 11(f) of the Securities Act and Sections 10(b) and 21D of the Exchange Act. The complaint seeks unspecified compensatory damages, interest, costs and attorneys’ fees; declaratory relief; and an order requiring changes to corporate governance and internal procedures and a vote on proposed amendments to the Bylaws and Certificate of Incorporation.
On March 8, 2021, purported stockholder Erin Yuson brought a purported stockholder derivative action in the United States District Court for the District of New Jersey. The action is captioned Erwin Yuson, derivatively on behalf of electroCore, Inc., vs. Francis R. Amato, et al., Case 3:21-cv-04481. The defendants include present and past directors and officers of the Company. The plaintiff purports to pursue derivative claims on behalf of the Company in connection with a 2019 proxy statement and actions occurring from the IPO through September 25, 2019. The complaint alleges that demand on the board of directors is excused. The complaint purports to allege claims against the defendants for violating Section 14(a) of the Exchange Act and breaching fiduciary duties. The complaint seeks unspecified compensatory damages, interest, costs and attorneys’ fees; declaratory relief; and an order requiring changes to corporate governance and internal procedures and a vote on proposed amendments to the Bylaws and Certificate of Incorporation.
The plaintiffs in the Maltz and Yuson derivative actions have agreed to consolidate and stay those actions. The actions shall be stayed until and through the resolution of any motion for summary judgment in the Turnofsky federal securities class action. 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.
We intend to continue to vigorously defend ourselves in these matters. However, in light of, among other things, the preliminary stage of these litigation matters, we are unable to determine the reasonable probability of loss or a range of potential loss. Accordingly, we have not established an accrual for potential losses, if any, that could result from any unfavorable outcome, and there can be no assurance that these litigation matters will not result in substantial defense costs and/or judgments or settlements that could adversely affect our financial condition.

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Item 1A.
RISK FACTORS

You should carefully consider the risk factors included in Item 1 A. of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 11, 2021. In addition, you should carefully consider the other information in this report on Form 10-Q, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. If any of the events described in our risk factors and the risks described elsewhere in this report on Form 10-Q occur, our business, operating results and financial condition could be seriously harmed. This report on Form 10-Q also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of our risk factors and risks elsewhere in this report, or otherwise.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

(a) Not applicable.

(b) Not applicable.

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Item 6. EXHIBITS

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

Exhibit Number |  | Description
3.1 |  | Certificate of Incorporation of electroCore, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2020 as filed with the Commission on May 15, 2020.)
3.2 |  | Bylaws of electroCore, Inc. (Incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2020 as filed with the Commission on May 15, 2020.
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 |  | Incline 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 |  | Incline XBRL Taxonomy Extension Schema Document
101.CAL |  | Incline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | Incline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  | Incline XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  | Incline XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* | Filed herewith.

** | Furnished herewith.

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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: May 6, 2021 |  | By: | /s/ DANIEL S. GOLDBERGER
|  |  | Daniel S. Goldberger
|  |  | Chief Executive Officer (Principal Executive Officer)
Date: May 6, 2021 |  | By: | /s/ BRIAN M. POSNER
|  |  | Brian M. Posner
|  |  | Chief Financial Officer (Principal Financial and Accounting Officer)

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