Electromedical Technologies Announces 2021 Annual Financial Results

Apr 7th, 2022 9:01 EST

SCOTTSDALE, Ariz., April 7, 2022 /PRNewswire/ — Electromedical Technologies, Inc. (OTCQB: EMED) (“Electromedical” or the “Company”), a pioneer in the development and production of bioelectronic devices designed to relieve chronic, intractable, and acute pain by using frequencies and electro-modulation, is pleased to announce its results for the year ended December 31, 2021.

“We are very pleased with our 2021 operating results, which featured strong topline growth, better margins, and key investments that have started to bear fruit as we plan to scale up in 2022 and beyond,” noted Matthew Wolfson, Founder and CEO of Electromedical. “Our newly implemented sales and marketing initiatives are starting to pay off, as indicated by improved growth in both unit sales volume and revenue. We will continue to emphasize these initiatives going forward to provide an enhanced foundation for our outreach efforts, driving potential repeat orders from partners and distributors.”

Wolfson continued, “We also continue to invest toward our upcoming WellnessProPlus POD launch. We have made significant progress on the development side, and we look forward to presenting a more comprehensive update soon as we approach key milestones ahead.”

Financial Performance Highlights for the Twelve Months Ended Dec 31, 2021

  • Revenue increased $169,404 to $907,362, up 23% year over year primarily due to unit sales volume growth.
  • Gross margin increased to 78% in 2021 from 74% in 2020 due to efficiency gains in shipping and distribution costs.
  • Selling, general, and administrative expenses increased 21% year over year to $4.5M due primarily to stock-based compensation, progress in the Company’s product development efforts, and payroll related items.
  • Incurred approximately $1.7M in additional convertible debt while lenders converted principal totaling $1.7M plus accrued interest into 49,334,051 shares of common stock.
  • Working capital deficit improved to ($767,402) from ($1,371,966) at the end of 2020.

Operational Highlights for the Twelve Months Ended Dec 31, 2021

  • Achieved critical development milestones for WellnessProPlus POD prototype. Now in functionality testing stage. Completion of related milestones in 2022 has the potential to drive results.
  • Onboarded 110 new independent sales representatives.
  • Completed online medical representative training program to improve and expedite the training process
  • Strengthened financial position by obtaining an equity line capable of providing necessary capital to drive product R&D, with terms that are more favorable than past financings.

“This is an extremely exciting time for the Company,” added Wolfson. “Last year was critical to laying a foundation for future growth through key investments in personnel and product development. Looking ahead, our progress toward the market for our POD design is our most important objective. However, we are also driving toward gains in governance and logistics as we plan for operations on an expanding scale.”

About Electromedical TechnologiesHeadquartered in Scottsdale, Arizona, Electromedical Technologies, Inc. is a commercial stage, FDA cleared, bioelectronic medical device manufacturing company initially focused on the treatment of various chronic, acute, intractable, and post-operative pain conditions. Through University collaboration agreements, the Company is working to develop a comprehensive research program in defining the effects of electro-modulation on the human body. By studying the impacts of electrical fields in cell signaling and effects on virus assembly and immune responses, the Company’s goal is to reduce pain and improve overall human wellbeing. The Company’s current FDA cleared product indications are for chronic acute post traumatic and post-operative, intractable pain relief. 

For more information, please visit www.electromedtech.com.

Note: Nonhuman preliminary studies that we are planning to start in the near future and their applications are not related to our current product in any way and are currently not cleared in the US.

Safe Harbor StatementThis release contains forward-looking statements that are based upon current expectations or beliefs, as well as a number of assumptions about future events. Although we believe that the expectations reflected in the forward-looking statements and the assumptions upon which they are based are reasonable, we can give no assurance or guarantee that such expectations and assumptions will prove to have been correct. Forward-looking statements are generally identifiable by the use of words like “may,” “will,” “should,” “could,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties, including but not limited to: adverse economic conditions, competition, adverse federal, state and local government regulation, international governmental regulation, inadequate capital, inability to carry out research, development and commercialization plans, loss or retirement of key executives and other specific risks. To the extent that statements in this press release are not strictly historical, including statements as to revenue projections, business strategy, outlook, objectives, future milestones, plans, intentions, goals, future financial conditions, events conditioned on stockholder or other approval, or otherwise as to future events, such statements are forward-looking, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained in this release are subject to certain risks and uncertainties that could cause actual results to differ materially from the statements made.

Corporate Contact:Electromedical Technologies, Inc.Hanover InternationalTel: 1.888.880.7888Email: [email protected]https://electromedtech.com 

Public Relations:EDM Media, LLChttps://edm.media

ELECTROMEDICAL TECHNOLOGIES, INC.BALANCE SHEETSDECEMBER 31,

2021

2020

ASSETS

Current assets:

    Cash and cash equivalents

$

383,170

$

264,913

    Accounts receivable

35,085

17,694

    Inventories

218,510

78,712

    Prepaid expenses and other current assets

38,002

285,860

         Total current assets

674,767

647,179

Other assets

20,601

Property and equipment, net

727,344

749,219

    Total assets

$

1,402,111

$

1,416,999

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

    Accounts payable

$

214,785

$

262,614

    Credit cards payable

11,283

23,710

    Accrued expenses and other current liabilities

317,037

201,814

    Customer deposits

28,651

    Convertible promissory notes, net of discount of $723,166     and $1,277,255, respectively

811,687

257,398

    Related party notes payable

57,875

332,500

    PPP loan

39,500

    Notes payable

12,846

    Long term debt, current portion

29,502

28,260

    Derivative liabilities- convertible promissory notes

831,852

        Total current liabilities

1,442,169

2,019,145

Long-term liabilities:

    Bank debt, net of current portion

518,849

546,552

    Government debt, net of current portion

154,429

154,302

    Other liabilities

9,167

15,603

        Total liabilities

2,124,614

2,735,602

Commitments and contingencies (Note 11)

Stockholders’ deficit

    Series A Preferred Stock, 1,000,000 shares authorized and     500,000 outstanding

355,000

355,000

    Series B Preferred Stock, 1 share authorized and 0     outstanding

    Common stock, $.00001 par value, 125,000,000 shares     authorized; 87,725,842 and 27,175,800 shares outstanding at     December 31, 2021 and 2020, respectively

876

269

    Additional paid-in-capital

20,804,333

7,957,860

    Accumulated deficit

(21,882,712)

(9,631,732)

    Total stockholders’ deficit

(722,503)

(1,318,603)

        Total liabilities and stockholders’ deficit

$

1,402,111

$

1,416,999

ELECTROMEDICAL TECHNOLOGIES, INC.STATEMENTS OF OPERATIONSTHE YEARS ENDED DECEMBER 31,

2021

2020

Net sales

$

907,362

$

737,958

Cost of sales

199,234

194,384

Gross profit

708,128

543,574

Selling, general and administrative expenses

4,508,391

3,710,262

Loss from operations

(3,800,263)

(3,166,688)

Other income (expense)

    Interest expense

(3,313,852)

(769,591)

    Change in excess fair value of KISS liability – related party

(7,784)

    Change in fair market value of derivative liabilities

(1,415,685)

71,413

    Other income (expense)

(432)

926

    Forgiveness of debt

50,083

    Total other expense

(4,679,886)

(705,036)

Net loss

$

(8,480,149)

$

(3,871,724)

    Deemed dividend related to warrant resets

(3,770,831)

(507,307)

Net loss attributable to common stockholders

(12,250,980)

(4,379,031)

Weighted average shares outstanding – basic and diluted

50,992,414

22,300,579

Weighted average loss per share – basic and diluted

$

(0.24)

$

(0.20)

ELECTROMEDICAL TECHNOLOGIES, INC.STATEMENTS OF CASH FLOWSYEARS ENDED DECEMBER 31,

2021

2020

Cash flows from operating activities:

Net loss

$

(8,480,149)

$

(3,871,724)

Adjustments to reconcile net loss to net cash used in operating activities:

    Provision for allowance for doubtful accounts

3,765

    Stock-based compensation expense

2,630,144

2,222,856

    Depreciation and amortization

21,875

21,875

    Forgiveness of debt

(50,083)

    Change in excess fair value of KISS liability- related party

7,784

    Amortization of debt discount and day 1 derivative loss

3,036,792

684,901

    Change in fair value of derivative liabilities- convertible     promissory notes

1,415,685

(71,413)

    Other

2,839

    Change in operating assets and liabilities:

        Accounts receivable

(17,391)

(5,792)

        Inventories

(139,798)

(54,018)

        Prepaid expenses and other current assets

285,860

(205,029)

        Other assets

(17,401)

4,979

        Accounts payable

(40,529)

11,452

        Credit cards payable

(12,427)

(7,300)

        Accrued expenses and other current liabilities

205,982

(71,824)

        Customer deposits

(28,651)

(11,469)

        Other liabilities

(6,436)

4,297

            Net cash used in operating activities

(1,193,688)

(1,336,660)

Cash flows from financing activities:

Short-term financing

(40,307)

Proceeds from PPP loan

39,500

Proceeds from government debt

155,900

Repayments on bank debt

(26,334)

(18,787)

Related party notes payable-net

(158,875)

(500)

Issuance of convertible promissory notes

1,510,000

1,458,200

Repayments on notes payable

(12,846)

(6,000)

Issuance of common stock for cash- net

13,567

    Net cash provided by financing activities

1,311,945

1,601,573

Net increase in cash and cash equivalents

118,257

264,913

Cash and cash equivalents, beginning of year

264,913

Cash and cash equivalents, end of year

$

383,170

$

264,913

Supplemental disclosures of cash flow information:

    Cash paid during the year for:

    Interest

$

154,081

$

48,660

    Income taxes

$

$

Non-cash investing and financing activities:

    Inventory deposits converted to related party notes payable

$

$

15,000

    Shares issued in conjunction with vendor settlement

$

$

7,352

    Warrants, common stock and beneficial conversion feature     issued in conjunction with convertible promissory notes

$

1,095,096

$

922,438

    Derivative liabilities issued in conjunction with convertible     promissory notes

$

1,197,607

$

903,265

    Conversion of convertible promissory note and accrued interest     into shares of common stock

$

5,223,235

$

118,800

    Conversion of KISS liability-related party into common stock

$

$

1,452,545

SOURCE Electromedical Technologies, Inc.

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