ecor-20210331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED 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 Registrant as specified in its charter)

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

200 Forge Way, Suite 205, Rockaway, NJ 07866

(Address of principal executive offices, including zip code)

(973) 290-0097

(Registrant’s telephone number, including area code)

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


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

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

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

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

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

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

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

As of April 30, 2021 the registrant had 48,544,384 shares of common stock outstanding.

	PART I. FINANCIAL INFORMATION	Page Number
	Cautionary Note Regarding Forward-Looking Statements	3
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020	4
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020 (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2021 and 2020 (Unaudited)	6
	Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2021 and 2020 (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
	Signatures	30

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.

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.

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.

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.

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

PART I. FINANCIAL INFORMATION

Page Number

SEC Form 10-Q filed by electroCore, Inc.