Electromedical Technologies Announces 2021 Annual Financial Results

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Apr 07, 2022, 09:01 ET

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 Technologies
Headquartered 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 Statement
This 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 International
Tel: 1.888.880.7888
Email: [email protected]
https://electromedtech.com

Public Relations:
EDM Media, LLC
https://edm.media

ELECTROMEDICAL TECHNOLOGIES, INC. BALANCE SHEETS DECEMBER 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 OPERATIONS THE 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 FLOWS YEARS 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