electroCore, Inc.: Form 10-Q for the period ended Jun 30, 2026

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

Overview

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

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

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

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

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

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

Additionally, we may choose to relaunch our FDA cleared Quell 2.0 product for lower extremity pain in the direct-to-consumer business channel in the future.

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

The United States Department of Veteran Affairs comprised 75.8% and 75.3% of our revenue during the three and six months ended June 30, 2026, respectively. Our prescription gammaCore and Quell Fibromyalgia devices are also made available to the government channel through our relationship with Lovell and its qualifying FSS, GSA Advantage (GSA), the VA Distribution and Pricing Agreement (DAPA), and Defense Logistics Agency’s ECAT system procurement portals through the Lovell contract vehicles (ECAT). The majority of our second quarter 2026 sales were made pursuant to our qualifying Federal Supply Schedule, or FSS, contract which has an expiry date of June 14, 2030, as well as open market sales to individual facilities within the government channels, and our relationship with Lovell. During the remainder of 2026, we intend to generate the majority of our sales in the VA channel through our agreement with Lovell.

Demand for prescription devices in the U.S. is driven by clinical data and our increased presence in the field. Our sales efforts are primarily in the government channel broadly, and specifically to our largest customer, the VA, pursuant to our FSS contract and/or through our relationship with Lovell and its qualifying FSS, GSA, DAPA, and ECAT contracts. Our sales force is comprised of an internal sales team and outside commission only sales agents and sub reps. In addition, we have a small team of dedicated resources seeking to accelerate adoption in managed care systems. Sales to the NHS in the United Kingdom made under the U.K. MedTech Funding Mandate, or MTFM, for cluster headache (CH) comprised 4.0% and 3.9% of our revenue during the three and six months ended June 30, 2026, respectively. We plan on continuing to use this program during the remainder of 2026, and potentially in years to come.

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

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

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

Truvaga and TAC-STIM are intended for general wellness in compliance with the FDA guidance document entitled “General Wellness: Policy for Low-Risk Devices; Guidance for Industry and FDA Staff, issued on September 27, 2019” and updated in January 2026. Truvaga and TAC-STIM handsets are not intended to diagnose, treat, cure, or prevent any disease or medical condition.

Quell 2.0 is a wearable neuromodulation technology FDA cleared for Over the Counter (OTC) sales direct-to-consumer for chronic lower extremity pain. Quell 2.0 is no longer commercially available; however, replacement electrodes continue to be sold to existing Quell 2.0 customers. Although we may choose to relaunch the Quell 2.0 product in the direct-to-consumer business channel in the future, there can be no assurance that we will do so successfully, or at all.

We face a variety of challenges and risks that we will need to address and manage as we pursue our strategies, including our ability to develop and retain an effective sales force, achieve market acceptance of our medical devices among clinicians, patients, and third-party payers, expand the use of our bioelectronic technology for additional therapeutic indications, and to develop our nascent wellness and human performance business including the continued commercialization of Truvaga Plus, our app-enabled device under the Truvaga brand, and the possible relaunch of our direct-to-consumer Quell 2.0.

As we seek to execute on our strategic plans, we are also managing an executive leadership transition following recent changes to our senior management. We believe the transition provides an opportunity to strengthen operational execution, bring additional experience and perspectives to our commercial and product strategies, and enhance organizational focus as we pursue our near- and long-term objectives. However, leadership transitions can introduce operational and strategic challenges, and new leadership may implement shifts in priorities, management style, or organizational structure. These changes could result in temporary inefficiencies, delays in decision-making, or periods of misalignment across departments as roles and processes evolve. In addition, uncertainty during a transition may affect employee morale and retention, including among key personnel, and there is a risk that institutional knowledge is lost during the leadership change, which could impact our ability to manage ongoing projects, maintain customer relationships, and achieve our strategic objectives. We intend to remain focused on continuity of execution and disciplined prioritization as we navigate this transition, while continuing to evaluate the opportunities and challenges that may affect our business, results of operations, and financial condition.

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

Our expected cash requirements for the next 12 months and beyond are based on the commercial success of our products. There are significant risks and uncertainties as to our ability to achieve these operating results. Due to these risks and uncertainties, we may need to reduce our activities significantly more than our current operating plan and cash flow projections assume in order to fund operations for the next 12 months. There can be no assurance that we will have sufficient cash flow and liquidity to fund our planned activities, which could force us to significantly reduce or curtail our activities and, ultimately, potentially cease operations. See also “Liquidity Outlook.”

Capital Activities

On July 24, 2025, our Form S-3 registration statement (File No. 333-284477), or the 2025 Shelf Registration Statement, was declared effective by the SEC. The 2025 Shelf Registration Statement relates to the potential offering and issuance from time to time of common stock, preferred stock, warrants, rights, debt securities and units, up to an aggregate amount of $100.0 million. The proposed maximum offering price per unit and the proposed maximum aggregate offering price per class of security in any future offering under the 2025 Shelf Registration Statement will be determined from time to time by us in connection with the issuance by us of the securities registered under the 2025 Shelf Registration Statement. As of July 31, 2026, we have $95.9 million remaining for potential issuance under the 2025 Shelf Registration Statement (including $15.7 million under the Sales Agreement (as defined below)). If we raise additional funds by issuing equity or debt securities, either through the sale of securities pursuant to a registration statement or by other means, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders.

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

On November 29, 2024, we entered into the Sales Agreement with Wainwright. Under the Sales Agreement, the Company may offer and sell shares of its common stock, par value $0.001 per share, from time to time having an aggregate offering price of up to $20 million (the “ATM Shares”) during the term of the Sales Agreement through Wainwright, acting as sales agent. The Company has filed a prospectus supplement relating to the offer and sale of the Shares pursuant to the Sales Agreement. The ATM Shares were registered under the Company’s previously filed and effective Registration Statement on Form S-3 (File No. 333-262223) (the “2022 Shelf Registration Statement”), which was initially filed with the Securities and Exchange Commission (the “SEC”) on January 18, 2022 and declared effective on January 25, 2022. As of the date hereof, the 2022 Shelf Registration Statement has expired, and any sales of ATM Shares will be made pursuant to the 2025 Shelf Registration Statement. The Company intends to use the net proceeds from any offering pursuant to the Sales Agreement to continue to fund sales and marketing, working capital and for other general corporate purposes.

For the three and six months ended June 30, 2026, the Company sold 494,601 shares of its common stock at a weighted average price of $8.17 per share, net of issuance costs for approximately $3.9 million in net proceeds, pursuant to the Sales Agreement. Subsequent to June 30, 2026, the Company sold 10,745 shares of its common stock at a weighted average price of $8.35 per share, net of issuance costs, for approximately $86,200 in net proceeds, pursuant to the Sales Agreement. No sales were made pursuant to the Sales Agreement during the three months ended March 31, 2026. As of July 31, 2026, the Company had approximately $15.7 million of ATM Shares remaining available for issuance under the Sales Agreement. Additionally, during the three and six months ended June 30, 2026, the Company received net proceeds of approximately $0.9 million and $1.1 million, respectively, from the exercise of warrants and options.

FDA Update

On May 5, 2026, FDA personnel visited our facility in Rockaway, New Jersey, to inspect matters relating to our wholly-owned subsidiary, NURO, through which we acquired the Quell product line in May 2025.

On May 27, 2026, the FDA concluded its inspection and issued the Company a FDA Form 483 letter, citing four observations and two discussion points regarding the Company’s processes for addressing and documenting patient complaints. On June 15, 2026, the Company submitted a written response letter to the FDA describing four corrective action records initiated to address the observations and one discussion point, as well as one preventative action initiated to address the other discussion point. As of the filing of this Quarterly Report, the Company has not received any comments, follow-up questions, or other response from the FDA regarding the Company’s response letter.

Critical Accounting Estimates

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

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

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

Results of Operations

Comparison of the three months ended June 30, 2026 and June 30, 2025

The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025 with the changes in those items in dollars.

(in thousands)

24

Net Sales

Net sales for the three months ended June 30, 2026 increased 28% to $9.5 million as compared to the three months ended June 30, 2025. The increase of $2.1 million is primarily due to an increase in net sales of Quell Fibromyalgia products and prescription (Rx) gammaCore, which are sold to the VA through our United States – Rx channel, and revenue from the sales of our nonprescription general wellness Truvaga products. We acquired the Quell Fibromyalgia product from NURO in May 2025. We expect that the majority of 2026 fiscal year revenue will continue to come from sales of our Rx products to the VA.

The following table sets forth our net sales by channel:

Gross Profit

Gross profit increased by $1.7 million to $8.2 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase in gross profit is primarily attributable to the increased net sales. Gross margin decreased to 86.5% for the three months ended June 30, 2026, compared to 87.3% for the three months ended June 30, 2025. The decrease in gross margin was primarily due to an increase in our inventory reserve.

Research and Development

Research and development expense of $0.8 million for the three months ended June 30, 2026, increased by $307,000 compared to the prior year. This increase was primarily due to increased studies and grants, higher stock-based compensation and initial costs to develop enhancements to our Truvaga mobile application.

Selling, General and Administrative

Selling, general and administrative expense was $10.1 million for the three months ended June 30, 2026 which increased by $0.7 million compared to the previous year. Sales and marketing increased $1.4 million from the prior year. The increase in sales and marketing was primarily driven by $0.9 million of variable selling expenses, which contributed to a $2.1 million increase in sales. General and administrative expense decreased $0.7 million from the prior year. The decrease was primarily attributable to $0.5 million in bad debt expense recorded in the three months ended June 30, 2025 (associated with a TAC-STIM receivable) that did not recur, as well as a reduction in professional fees in the three months ended June 30, 2026.

Other (Income) Expense

Other (income) expense was $0.3 million for the three months ended June 30, 2026, an increase of $0.1 million as compared to the three months ended June 30, 2025. The increase was primarily attributable to interest associated with the convertible term debt financing with Avenue. Other expense for the three months ended June 30, 2025 of approximately $0.2 million consisted primarily of non-recurring acquisition expenses.

Comparison of the six months ended June 30, 2026 and June 30, 2025

The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025 with the changes in those items in dollars.

(in thousands)

Net Sales

Net sales for the six months ended June 30, 2026 increased 35% to $19.0 million as compared to the six months ended June 30, 2025. The increase of $5.0 million is primarily due to an increase in net sales of Rx gammaCore to the VA, sales of Quell Fibromyalgia products, which were acquired from NURO in May 2025 and are also sold to the VA, and revenue from the sales of our nonprescription general wellness Truvaga products. We expect that the majority of 2026 fiscal year revenue will continue to come from sales of our Rx products to the VA.

The following table sets forth our net sales by channel:

Gross Profit

Gross profit increased by $4.4 million to $16.5 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase in gross profit is primarily attributable to the increased net sales. Gross margin increased to 86.9% for the six months ended June 30, 2026 compared to 86.8% for the six months ended June 30, 2025.

Research and Development

Research and development expense of $1.6 million for the six months ended June 30, 2026, increased by $0.4 million compared to the prior year. This increase was primarily due to increased studies and grants, higher stock based compensation and initial costs to develop enhancements to our Truvaga mobile application.

Selling, General and Administrative

Selling, general and administrative expense was $23.1 million for the six months ended June 30, 2026 which increased by $4.7 million compared to the previous year. Sales and marketing increased $3.2 million from the prior year. The increase in sales and marketing was primarily driven by $2.5 million of variable selling expenses, which contributed to a $4.9 million increase in sales. General and administrative expense increased $1.5 million from the prior year. This increase was primarily driven by $1.2 million of severance and $0.5 million of stock compensation expense associated with the former CEO’s retirement, $0.3 million in legal fees associated with the senior management changes, and $0.4 million in legal fees associated with ongoing litigation, partially offset by $0.5 million bad debt expense recorded in the three months ended June 30, 2025 (associated with a TAC-STIM receivable) that did not recur.

Other (Income) Expense

Other (income) expense was $0.6 million for the six months ended June 30, 2026, an increase of $0.3 million as compared to the six months ended June 30, 2025. The increase was primarily attributable to interest associated with the convertible term debt financing with Avenue. Other expense for the six months ended June 30, 2025 of approximately $0.2 million consisted primarily of non-recurring acquisition expenses.

Benefit from Income Taxes

The Company may be eligible, from time to time, to receive cash from the sale of our net operating losses under New Jersey’s Department of the Treasury - Division of Taxation NOL Transfer Program. During the six months ended June 30, 2026 and 2025, we received net cash payments of $321,000 and $48,000 from the sale of our New Jersey state net operating losses, respectively.

Liquidity and Capital Resources

At June 30, 2026, our cash, cash equivalents, and marketable securities was $10.0 million compared to $11.6 million at December 31, 2025.

(in thousands)

Operating Activities

Net cash used in operating activities was $6.5 million and $5.0 million for the six months ended June 30, 2026 and 2025, respectively. The increase of $1.5 million in operating cash used is primarily due to investments in higher inventory levels and the timing in payment of operating expenses.

Investing Activities

Net cash provided by investing activities was $3.0 million and $4.7 million for the six months ended June 30, 2026 and 2025, respectively. During the six months ended June 30, 2026 and June 30, 2025, cash used in investing activities was related to the proceeds from the sale of marketable securities.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2026 was $5.0 million which was attributable to $3.9 million of net proceeds from the sale of ATM Shares pursuant to the Sales Agreement and the exercise of warrants and options in the amount of $0.8 million and $0.3 million, respectively. During the six months ended June 30, 2025, net cash provided by financing activities was $0.2 million which was attributable to sale of ATM Shares pursuant to the Sales Agreement.

Liquidity Outlook

We have experienced significant net losses, and we expect to continue to incur net losses for the near future as we work to increase market acceptance of our products. We have never been profitable and we have incurred net losses and negative cash used in operations in each year since our inception. We incurred net losses of $8.3 million and $7.5 million, and used cash in our operations of $6.5 million and $5.0 million for the six months ended June 30, 2026 and 2025, respectively.

The Company has historically funded its operations with the proceeds of equity and debt financings. As of June 30, 2026, the Company’s cash, cash equivalents and marketable securities totalled $10.0 million.

Principal repayments under the Loan and Security Agreement are scheduled for $2.5 million in 2027, $3.0 million in 2028 and $2.3 million in 2029 (inclusive of a final payment fee of 3.5% of the loan amount). See Note 9 – Long-Term Debt in the condensed consolidated financial statements for additional details of our current and long-term debt.

During the remainder of 2026, we intend to continue to make targeted investments in sales, marketing, and research and development to continue driving commercial activities. We have historically funded our operations from the sale of our common stock and debt financing and may continue to do so through utilization of the at-the-market facility pursuant to the Sales Agreement, or other equity or debt transactions.

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

See also “Capital Activities.”

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not have any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Impact of Recently Issued Accounting Standards

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

We develop our products in the United States and sell those products into several 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 and our license agreement with Teijin is denominated in Japanese Yen. 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 15% relative to the foreign currencies in which our sales were denominated, our net income would have correspondingly increased or decreased by an immaterial amount for the three and six months ended June 30, 2026.

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 investigational sites, suppliers and other vendors in Europe and internationally. In addition, our license agreement requires payments to us to be denominated in Japanese Yen. 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 June 30, 2026.

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 June 30, 2026 was conducted under the supervision and with the participation of our management, including our Interim President 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, the Interim President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2026.

Remediation of Prior Material Weakness

In our Annual Report on Form 10-K for the year ended December 31, 2025, management identified a deficiency in its internal control over financial reporting related to the accuracy of its lease accounting. The Company previously recorded a lease modification in conjunction with the lease expansion of its Rockaway location in the second quarter of 2024. During the fourth quarter of 2025, the Company discovered an error in the lease payments used in the initial calculations in conjunction with the lease modification. While the error did not result in a material misstatement or a restatement of the Company’s consolidated financial statements, management concluded that there was a reasonable possibility that a material misstatement could have occurred without being prevented or detected on a timely basis, and therefore, the control deficiency was deemed to be a material weakness.

As of June 30, 2026, management has completed its remediation measures designed to address the material weakness identified above. These measures included the implementation of an enhanced review control over the accounting for leases and any other significant non-routine transactions, including enhanced management review and approval procedures. In addition, the Company hired a new controller in September 2025 who management believes has the technical accounting skills and breadth of supervisory and review skills necessary to oversee the accounting function.

Changes in Internal Control over Financial Reporting

Except for the changes described above, 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 and six months ended June 30, 2026 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

You should carefully consider the risk factors included in Item 1A. of the Annual Report, the risk factors included in any quarterly report filed subsequent to the Annual Report, and the other information in this Quarterly Report, including the section of this Quarterly Report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, our financial statements and related notes. If any of the events described in the Annual Report, in any quarterly report filed subsequent to the Annual Report, and the risks described elsewhere in this Quarterly Report occur, our business, operating results and financial condition could be seriously harmed. This Quarterly Report 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 factors that are described in the Annual Report, in any quarterly report filed subsequent to the Annual Report, and elsewhere in this Quarterly Report.