electroCore (ECOR) risk factors, FY2025 10-K

Risk Related to our Financial Position, Operating Results and Need for Additional Capital

1. 01We may be required to obtain additional funds in the future, and these funds may not be available on acceptable terms or at all
2. 02To finance our activities, we may seek funds through borrowings or through additional rounds of financing, including public or private equity or debt offerings and collaborative arrangements with corporate partners. We may be unable to raise funds on favorable terms, if at allNew
3. 03We recently began selling the Quell platform and patients, providers or consumers may be slow to adopt these programs or their pricing which could adversely impact our business and financial resultsNew
4. 04If third-party payors do not provide adequate coverage and reimbursement for the use of our medical devices, it may affect our ability to generate significant revenues63% rewritten
5. 05We have a limited history commercializing our Quell platform in the United States for which market acceptance and commercial success are uncertainNew
6. 06We have a limited history commercializing our general wellness and human performance products in the United States for which market acceptance and commercial success are uncertain
7. 07Risks of doing business through ecommerce marketplacesNew
8. 08We recently launched our next generation prescription gammaCore device under the brand gammaCore Emerald, and there can be no assurance that the new device will be well received or adopted, which may impact our financial results70% rewritten
9. 09Our app-enabled products may require modifications and improvements, which may cause added expense and negatively impact our financial results26% rewritten
10. 10We recently acquired the Quell platform as part of the merger with NURO which comes with a companion application and may require modifications, maintenance, and improvements, which may cause added expense and negatively impact our financial resultsNew
11. 11We generate sales of TAC-STIM branded products to active-duty military and accordingly, military budgetary cuts or government shutdowns or strikes could negatively impact our financial results20% rewritten
12. 12Our potential revenue in the United Kingdom is substantially dependent on government funding arrangements, and changes in governmental policy for such arrangements could cause material harm to our business22% rewritten
13. 13We derive a material portion of our revenue made pursuant to our qualifying contract under the Federal Supply Schedule or FSS, as well as open market sales to individual facilities within the government channelsNew
14. 14Unfavorable global economic conditions and government regulations could adversely affect our business, financial condition or results of operations25% rewritten

Risks related to recent U.S. tariff announcements

1. 15We have limited operating experience at our current scale of operations. If we are unable to manage our growth effectively, our brand, company culture, and financial performance may suffer
2. 16Any significant disruption to our ecommerce business could result in lost sales
3. 17We are subject to increasing operating costs and inflation risks, which may adversely affect our performance
4. 18We must successfully attract, hire, train, and retain qualified professionals to service our direct-to-consumer sales channels, and we must productively deploy our professionals to become profitable
5. 19Our consultants and certain of our sales force are classified as independent contractors, and we can face consequences if it is determined that they are misclassified as such
6. 20If we experience price fluctuations for our products, and we are unable to reduce our expenses, including the per unit cost of producing our products, there may be a material adverse effect on our business, results of operations, and financial condition
7. 21Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price
8. 22Future acquisitions, strategic investments, or alliances could disrupt our business and harm our business, financial condition, and operating results36% rewritten
9. 23Unanticipated costs relating to our acquisition of NURO could have an adverse impact on our business, financial condition, and operating results71% rewritten
10. 24We may not be able to fully realize the benefits from the NURO Transaction
11. 25Litigation may arise in connection with our acquisition of NURO, which could be costly, prevent consummation of the transaction, divert management’s attention, and otherwise harm our business, financial condition, and results of operations76% rewritten

Risks Related to Our Business

1. 26Regulatory requirements and changes to payors’ prescription benefit plans and medical pathway plans could adversely impact our business and financial results
2. 27Our commercialization strategy of prescription devices may expose us to increased billing, cash application, and credit risks24% rewritten
3. 28We must demonstrate to patients, physicians, and third-party payors the medical and economic benefits of our prescription therapies compared to those of our competitors or other available therapies, and such comparisons may not be realizable37% rewritten
4. 29We must demonstrate to customers the benefits of bioelectronic technology for general wellness and human performance compared to those of our competitors and such comparisons may not be realizable21% rewritten
5. 30Stimulating therapeutically relevant fibers in the vagus nerve by a proprietary high-frequency burst waveform that passes through the skin cells represents a novel approach to treating pain, and we must overcome significant challenges to successfully develop, commercialize, and manufacture our product
6. 31The Quell platform is categorized as a TENS unit, and we must overcome significant challenges to successfully develop, commercialize, manufacture, and differentiate our productNew
7. 32Our operating results may vary significantly from quarter to quarter because of seasonality, bulk orders, shipments to distributors, or otherwise46% rewritten
8. 33We currently generate a small portion of our revenue through distribution of other manufacturers products through our government sales channel, and any issue arising from these products may impact our relationship with the Veterans Administration resulting in negative impact to our business
9. 34We currently distribute products manufactured by other companies. Any disruption in our supply chain, or our failure to successfully manage our relationships with our suppliers could harm our business
10. 35Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business and operating results
11. 36We may engage in future acquisitions that increase our capital requirements, dilute our stockholders, cause us to incur debt, or assume contingent liabilities that subject us to other risks
12. 37Any clinical trial we conduct in the United States may subject us to additional costs and detriments compared to a foreign clinical trial, which may negatively impact our financial condition and our business
13. 38If we are unable to enroll patients in future clinical trials, our research and development efforts could be adversely affected40% rewritten
14. 39Clinical trials may be delayed, suspended, or terminated for many reasons, which will increase our expenses and delay the time it takes to develop and expand in additional treatment indications
15. 40Consistent with recent years, we continue not to invest in certain clinical trials in indications that are more exploratory in nature
16. 41Our cost-control efforts might not assure profitability and may affect morale and make it difficult to retain employees, independent contractors, or attract new ones
17. 42We have outsourced certain finance and accounting functions and may outsource other back-office functions, which will make us more dependent upon third parties
18. 43If we fail to properly manage our anticipated growth, our business could suffer
19. 44Future growth will also impose significant added responsibilities on management, including the need to identify, recruit, train, or integrate new businesses and additional employees. In addition, rapid and significant growth will place a strain on our administrative and operational infrastructure
20. 45If we fail to continue to develop and retain an effective sales force, our business could suffer
21. 46If our competitors are better able to develop and market chronic pain treatments that are safer, more effective, less costly, easier to use, or otherwise more attractive than our therapies, our business and business prospects will be adversely impacted49% rewritten
22. 47Many of our competitors are large, well-established companies with substantially greater resources than us and have a long history of competing in the chronic pain and consumer wellness markets
23. 48We may expend our limited resources to pursue a particular product candidate or disease and fail to capitalize on product candidates or diseases that may be more profitable or for which there is a greater likelihood of success
24. 49Our international operations subject us to certain operating and compliance risks, which could adversely impact our results of operations and financial condition
25. 50Our results may be impacted by changes in foreign currency exchange rates
26. 51We may not be able to establish, strengthen or protect our brands23% rewritten
27. 52We may face product liability claims that could result in costly litigation and significant liabilities61% rewritten
28. 53Our operating results and profitability may be adversely affected by increases in reserves for product returns, doubtful accounts receivable, and inventory
29. 54If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, or if third-party payors were to deny claims, additional provisions for doubtful accounts may be required
30. 55If we fail to retain our key executives or recruit and hire new employees, our operations and financial results may be adversely affected while we attract other highly qualified personnel32% rewritten
31. 56If we are unable to develop and retain an effective sales force, including the retention of independent contractors, or if we are unable to attract additional independent contractors, our sales efforts may be adversely impacted
32. 57We may be held responsible for certain taxes or assessments and other obligations relating to the activities of our independent contractors, which could harm our financial condition and operating results
33. 58Our future success depends on our leadership development and succession planning
34. 59Our employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs, and vendors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements
35. 60The increasing use of social media could give rise to liability

Risks Related to our Dependence on Third Parties

1. 61We have signed a License Agreement with a Chinese company giving them access to develop products based on certain patents associated with our nVNS technology and success of this agreement and protection of the patents will be dependent on the third-partyNew
2. 62We have signed a distribution agreement with Lovell to sell certain electroCore products throughout the government channel through Lovell’s contract vehicles, and we may therefore be dependent on Lovell49% rewritten
3. 63We are offering products to government customers through two different contracting vehicles, which may cause confusion for purchasing agents and result in frustration by customers34% rewritten
4. 64We have signed a distribution agreement with Joerns Healthcare (“Joerns”) to sell certain gammaCore products throughout certain managed healthcare systems through the Joerns contract vehicles which puts a significant dependence on Joerns
5. 65Our app-enabled products rely on third-party vendors for application development and management, resulting in a significant dependency on such vendors78% rewritten
6. 66Our supply chains are subject to disruption, unfavorable changes to prices or terms, or quality problemsNew
7. 67We have limited experience with the supply chain of our app-enabled products, including our human performance product, and we are dependent on third parties for related software development44% rewritten
8. 68Outside the United States, we rely on a single third-party distributor to effectively distribute the majority of our products
9. 69Our status as a supplier to the federal government subjects us to a wide variety of regulatory compliance, pricing, and contract-based requirements. Failure to comply with these requirements could adversely impact our ability to obtain future federal contracts, which could negatively impact us and our business
10. 70We rely on third parties to conduct and support clinical trials and investigator - initiated trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials
11. 71Additionally, patient enrollment is affected by many factors beyond our control and the control of the third parties upon whom we rely to conduct IITs. As a result, we cannot predict how successful our IITs will be at enrolling patients
12. 72If we do not successfully enter into future collaborations for the development, regulatory clearance, and commercialization of our prescription gammaCore therapy in international markets, our business may be harmed
13. 73If we are not able to establish or maintain collaborations, we may have to alter some of our future development, regulatory clearance, and commercialization plans
14. 74In order to commercialize products, we, or our manufacturers, will need to manufacture products in large quantities
15. 75Our bioelectronic technology platforms consist of a substantial number of individual components. In order to market and sell effectively, we often must maintain high levels of inventory of the product and its components22% rewritten

Risks Related to Intellectual Property

1. 76Our product development initiatives may be delayed or fail to succeed and could also lead to challenging intellectual property rights issues22% rewritten
2. 77Our ongoing disputes with UAB Pulsetto (“Pulsetto”) may be costly, time consuming and, if adversely determined against us, could have a material adverse effect on our financial position and business operationsNew
3. 78The markets in which we compete and expect to compete are subject to rapid technological change and frequent litigation regarding patent and other intellectual property rights. It is possible that our patents or licenses may not withstand challenges made by others or protect our rights adequately87% rewritten
4. 79We rely on third-party software to develop our products and significant increases in licensing costs or defects in third-party software could harm our business
5. 80We rely on a variety of intellectual property rights, and if we are unable to maintain or protect our intellectual property, our business and results of operations will be harmed
6. 81Our commercial success depends significantly on our ability to operate without infringing upon the intellectual property rights of third parties29% rewritten
7. 82If we are unable to protect the confidentiality of our trade secrets, our business and competitive position may be harmed
8. 83Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our existing and future products and processes
9. 84Obtaining and maintaining patent protection depend on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
10. 85If our trademarks and trade names are not adequately protected, then, we may not be able to build name recognition in our markets of interest and our business may be adversely affected
11. 86If we cannot show access and copying, then, our copyrights may not provide protection for our software and our business may be adversely affected
12. 87We may not be able to adequately protect our intellectual property rights throughout the world
13. 88We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our products
14. 89Patent terms may be inadequate to protect our competitive position on our products for an adequate amount of time
15. 90Intellectual property rights do not necessarily address all potential threats to our business
16. 91We may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of their former employers or other third parties
17. 92Our intellectual property agreements with third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology
18. 93We may not be successful in obtaining necessary intellectual property rights to future products through acquisitions and in-licenses
19. 94Our platform utilizes open-source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business
20. 95Cybersecurity incidents, including data security breaches or computer viruses, could harm our business by disrupting our delivery of services, damaging our reputation, or exposing us to liability
21. 96The regulatory environment governing information, cybersecurity, and privacy is increasingly demanding and continues to evolve
22. 97Any significant interruptions or delays in third-party service and access could result in limited capacity, reduced demand, and loss of customers and adversely affect our business
23. 98Failure to protect our information technology infrastructure against cyber attacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business and operating results50% rewritten

Risks Related to Regulation of our Industry

1. 99Our future success in part depends on our ability to develop, receive regulatory clearance or approval for, and introduce new products or product enhancements that will be accepted by the market in a timely manner23% rewritten
2. 100Our prescription therapies are subject to extensive government regulation, and our failure to comply with applicable requirements could cause our business to suffer
3. 101The laws and regulations to which we are subject are complex and have tended to become more stringent over time. Legislative or regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs, or lower than anticipated sales
4. 102gammaCore is also subject to extensive governmental regulation in foreign jurisdictions, such as Europe, and our failure to comply with applicable requirements could cause our business to suffer99% rewritten
5. 103The proposal will undergo the ordinary legislative procedure and be examined by the European Parliament and the Council, which may introduce amendments to the text proposed by the ECNew
6. 104For novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device, the FDA may determine that the “de novo” process is the appropriate route to market. The “de novo” process is more costly, time consuming, and uncertain than the traditional 510(k) process
7. 105Modifications to our products may require new regulatory clearances or approvals or may require us to recall or cease marketing our products until clearances or approvals are obtained
8. 106There is no guarantee that the FDA will grant 510(k) clearance or PMA approval of our future products, and failure to obtain necessary clearances or approvals for any such future products would adversely affect our overall ability to grow our business
9. 107In some instances, in our advertising and promotion, we may make claims regarding our products relative to competing products, which may subject us to heightened regulatory scrutiny, enforcement risk, and litigation risks
10. 108Our products may in the future be subject to notifications, recalls, or voluntary market withdrawals that could harm our reputation, business and financial results
11. 109We are required to report certain malfunctions, deaths, and serious injuries associated with our products, which can result in voluntary corrective actions or agency enforcement actions
12. 110Legislative or regulatory reforms may make it more difficult and costly for us to obtain regulatory clearance of our product candidates and to manufacture, market, and distribute our products after clearance is obtained
13. 111We are subject to federal, state, and foreign healthcare laws and regulations, and a finding of failure to comply with such laws and regulations could have a material adverse effect on our business84% rewritten
14. 112Breakthrough Designation from the FDA may not actually lead to a faster development or regulatory review or approval process and does not assure FDA approval of our devices
15. 113Healthcare legislative reform measures may have a material adverse effect on us
16. 114ESG matters, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition, and operating results and may damage our reputation
17. 115We are subject to an active FTC Consent Order that remains in effect and is monitored by the FTCNew
18. 116Currently, replacement electrodes for our Quell OTC product are available over-the-counter which adds risks and significant considerations associated with design, labeling, and useNew
19. 117Any future U.S. federal government shutdown or any lapses in appropriations or related disruptions, could materially and adversely affect our sales, collections, operations, product development and regulatory timelinesNew

Risks Related to Our Common Stock

1. 118Failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common stock and our ability to access the capital markets
2. 119Failure to meet Nasdaq’s continued listing standards could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common stock and our ability to access the capital marketsNew
3. 120We have broad discretion to determine how to use most of our financial resources and may use them in ways that may not enhance our operating results or the price of our common stock
4. 121An active, liquid and orderly market for our common stock may not continue to be sustained, and our stockholders may not be able to resell their shares at a desired market price and could lose all or part of their investment36% rewritten
5. 122Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management
6. 123In addition, these provisions would apply even if we were to receive an offer that some stockholders may consider beneficial
7. 124Our certificate of incorporation and bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law
8. 125We do not currently intend to pay dividends on our common stock, and, consequently, your ability to achieve a return on your investment will depend on the price of our common stock58% rewritten
9. 126The requirements of being a publicly traded company may strain our resources and divert management’s attention
10. 127Our stock price may be volatile, and you may not be able to resell shares of our common stock at or above the price you paid36% rewritten
11. 128As a public company, we are subject to securities class action litigation, we would incur substantial costs and diversion of management’s attentionNew
12. 129If securities or industry analysts cease publishing regular research or reports about our business or issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline
13. 130Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall
14. 131Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant influence control over matters subject to stockholder approval
15. 132Comprehensive U.S. federal income tax reform could adversely affect us77% rewritten
16. 133This Annual Report does not discuss any such tax legislation or the manner in which it might affect purchasers of our common stock. We urge our stockholders to consult with their legal and tax advisors with respect to such legislation and the potential tax consequences of investing in our common stockNew
17. 134Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations which could subject our business to higher tax liability
18. 135Our business and stock price could be negatively affected as a result of actions of activist stockholders, and such activism could impact the trading value of our securities
19. 136The terms of our Loan and Security Agreement with Avenue require us to meet certain operating covenants and place certain restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our businessNew
20. 137As a publicly traded company, we are subject to activist investorsNew