electroCore(ECOR) - 2022 Q1 - Quarterly Report

Financial Performance - Net sales for Q1 2022 were $1,899,000, representing a 57.7% increase from $1,204,000 in Q1 2021[15] - Gross profit for Q1 2022 was $1,539,000, compared to $840,000 in Q1 2021, indicating an increase of 83.3%[15] - The net loss for Q1 2022 was $5,582,000, slightly higher than the net loss of $5,384,000 in Q1 2021[15] - The net loss per share for Q1 2022 was $0.08, compared to $0.11 in Q1 2021[15] - The company reported a net loss of $5.582 million for the three months ended March 31, 2022, compared to a net loss of $5.384 million for the same period in 2021, indicating a slight increase in losses[33] - The net loss for March 2022 was $5,582,000, compared to a net loss of $5,384,000 in March 2021, showing a slight increase in loss of 3.7%[15] Expenses - Research and development expenses rose to $934,000 in Q1 2022, up from $499,000 in Q1 2021, reflecting an increase of 87.1%[15] - Total operating expenses increased to $7,120,000 in Q1 2022, compared to $6,224,000 in Q1 2021, marking a rise of 14.4%[15] - Cash used in operating activities was $4.780 million for the three months ended March 31, 2022, compared to $4.156 million for the same period in 2021, reflecting increased operational expenses[24] - Total accrued expenses as of March 31, 2022, amounted to $2,384,000, a decrease from $3,881,000 as of December 31, 2021[52] - The company recognized lease expenses of $38,000 for the three months ended March 31, 2022, compared to $40,000 in the same period of 2021[49] Assets and Liabilities - Total current assets decreased to $32,494,000 as of March 31, 2022, down from $37,541,000 at the end of 2021, a decline of 13.5%[13] - Total assets decreased to $37,181,000 as of March 31, 2022, from $42,833,000 at the end of 2021, a decrease of 13.2%[13] - Total liabilities decreased to $5,365,000 as of March 31, 2022, down from $6,185,000 at the end of 2021, a reduction of 13.2%[13] - Stockholders' equity decreased to $31,816,000 as of March 31, 2022, from $36,648,000 at the end of 2021, a decline of 13.3%[13] - Cash and cash equivalents decreased to $29,882,000 as of March 31, 2022, down from $34,689,000 at the end of 2021, a decline of 13.5%[13] Revenue Sources - The company experienced significant revenue concentration, with five VA/DoD facilities accounting for approximately 62.4% of total VA/DoD net sales during the three months ended March 31, 2022[36] - Revenue from the VA/DoD channel accounted for 66.4% of total revenue, up from 55.5% in the prior year, while revenue from the National Health Service decreased to 13.0% from 25.8%[38] Inventory and Compensation - As of March 31, 2022, the company reported current inventories of $1,577,000, an increase from $1,361,000 as of December 31, 2021[48] - The reserve for obsolete inventory decreased to $711,000 as of March 31, 2022, down from $821,000 at the end of 2021, due to the disposal of previously reserved inventory[48] - Total stock-based compensation expense for the three months ended March 31, 2022, was $777,000, down from $942,000 in 2021[59] - Total unrecognized compensation cost related to unvested awards was $4.3 million, expected to be recognized over the next 2.1 years[59] Legal and Regulatory Matters - The Company is involved in multiple stockholder litigation cases, including class action lawsuits related to its IPO, which could result in substantial defense costs[64][66][69] - The Company intends to vigorously defend itself in ongoing litigation matters, but cannot determine the reasonable probability of loss at this time[72] - The Company has not established an accrual for potential losses from litigation, indicating uncertainty in financial impact[72] Market and Operational Risks - The company has significant foreign currency exchange risk related to revenue and operating expenses in currencies other than its local currencies[36] - The company continues to face risks and uncertainties related to the impact of the COVID-19 pandemic on its operations and financial condition[10] - The company expects to continue incurring net losses and cash used in operations as it works to increase market acceptance of its gammaCore therapy[33] Licensing and Agreements - The company entered into a licensing agreement with Teijin Limited for its nVNS technology, which includes non-refundable upfront payments and milestone payments based on commercialization decisions[45][46]