Electromedical Technologies, Inc. Reports Third Quarter 2021 Financial Results

• Q3 2021 revenue increased $95,307, a roughly 46% increase over Q3 2020.
• $1.6M of variable convertible debt converted and settled in the nine months ended September 30, 2021.

SCOTTSDALE, Ariz., Nov. 18, 2021 /PRNewswire/ -- Electromedical Technologies, Inc. (OTCQB: EMED) (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 that it recorded positive results for the third quarter of 2021, ending September 30, as compared to the same period in 2020. The Company's Form 10-Q may be viewed on the Company's SEC Edgar page located here: https://www.sec.gov/ix?doc=/Archives/edgar/data/1715819/000141057821000301/elcq-20210930x10q.htm.

Matthew Wolfson, Founder and CEO of EMED, noted, "We are pleased with our positive operating results for the third quarter of 2021. Implementation of our new sales and marketing initiatives are starting to pay off, as indicated by the increases in both unit sales and revenue. We will continue to emphasize these initiatives going forward, which could provide an enhanced foundation for our outreach efforts, potentially resulting in repeat orders from our partners and distributors."

"Separately, as year-end approaches, we plan to update shareholders regarding our progress with the development of the WellnessPro POD, which is a critical pending milestone for EMED." Wearable technology has been rapidly developing in recent years. This is because more people are becoming conscious of their health and are pursuing a healthier drug free, pain free lifestyle. The WellnessPro POD will fit that criteria perfectly. In addition, it will be more affordable, which will help reach a larger segment of the population in need of chronic pain relief."

Third Quarter 2021 (Q3) Financial Highlights

• Revenue increased to $301,157, up from $205,850, a roughly 46% increase over Q3 2020 due primarily to increased unit sales.
• Gross margin increased to 78% in Q3 2021 as compared to 72% in Q3 2020.
• Selling, general, and administrative expenses declined by approximately $1.8M, to $0.4M, down 80% from the $2.2M recorded in Q3 2020.  Included in Q3 2020 expenses was stock-based compensation expense of $1.8M.  Excluding the stock -based compensation expense, our selling, general and administrative expenses remained flat at approximately $0.4M.
• Net loss from operations was ($0.2M) versus ($2.1M) in Q3 2020.
• Net loss increased to ($3.3M) in Q3 2021 as compared to a net loss of ($2.2M) in Q3 2020.  Excluding an increase in interest expense related to the amortization of debt discount of $1.0M and an increase in the value of derivative liabilities of $2.0M, Q3 2021 net loss is ($0.3M).

Nine-Months ended September 30, 2021 Financial Highlights

• Revenue increased to $670,551, up from $557,476, a roughly 20% increase over the nine months ended September 30, 2020 due primarily to increased unit sales.
• Gross margin was 76% and 75% for the nine months ended September 30, 2021 and 2020, respectively.
• Selling, general, and administrative expenses declined by approximately $1.0M, to $2.8M, down 26% from the $3.8M recorded in the nine months ended September 30, 2020.  Included in selling, general, and administrative expenses for the nine months ended September 30, 2021 and 2020 is stock-based compensation expense of $1.4M and $2.8M, respectively. Excluding the stock -based compensation expense, selling, general and administrative expenses increased by $0.4M, reflecting increased product development efforts, headcount, and public company expenses.
• Net loss from operations was ($2.3M) versus ($3.4M) in the nine months ended September 30, 2020.

Net loss increased to ($6.6M) for the nine months ended September 30, 2021 as compared to a net loss of ($3.5M) in the 2020 period.  Excluding an increase in interest expense related to the amortization of debt discount of $2.8, and an increase in the value of derivative liabilities of $1.4M, the net loss is ($2.4M) for the nine months ended September 30, 2021.

Cash Flows and Balance Sheet Highlights

During the nine months ended September 30, 2021, lenders converted principal totaling $1,549,800 plus accrued interest into 43,316,791 shares of common stock. The remaining principal outstanding of $972,353 includes $772,353 for which a forbearance agreement was entered into on September 3, 2021 with a lender, and $150,000, which was separately converted by another lender into shares of common stock in October 2021.

On October 14, 2021, the Company entered into two financing contracts: one with Mast Hill Fund, L.P., a Delaware limited partnership ("Mast Hill"), in the principal amount of $500,000; and another with Talos Victory Fund, LLC, a Delaware limited liability company ("Talos") in the principal amount of $250,000.

On November 10, 2021, the Company entered into a Common Stock Purchase Agreement with a third party to invest up to $5,000,000 to purchase the Company's common stock. Concurrently, the Company entered into a Registration Rights Agreement, as an inducement to the investor to execute and deliver the Common Stock Purchase Agreement, whereby the Company agreed to provide certain registration rights under the Securities Act of 1933. The Company also entered into a non-exclusive placement agency agreement in connection with the offering and sale under the Common Stock Purchase Agreement, subject to market conditions and negotiations between the Company, the placement agent and the prospective investor.

Matthew Wolfson, Founder and CEO of EMED, "Since I founded this Company, my goals were to provide a safe drug free solution for pain management, strengthen the Company's financial performance, implement supply chain efficiencies, produce premium products, and provide a culture that will generate an increase in sales and distribution around the globe. I am delighted with the outcome of settling our variably convertible notes. We anticipate this substantial reduction in convertible debt will allow us to better utilize our financial resources to expand our production capacity, strengthen our balance sheet and enhance our bottom line, as well as provide protection for market dilution to preserve shareholder value."

"We are making every effort to retire the remaining balance of fixed price convertible notes prior to conversion with money raised from an S-1 registration statement that we intend to file with the Securities & Exchange Commission. EMED is now moving forward with the anticipation of raising funds without the use of dilutive convertible debt financing. We are also happy that we were able to negotiate the settlement of warrants at a fixed price without reset provisions. This will serve us well as we seek to uplist to a more senior and reputable exchange next year."

Over the remaining part of Q4 leading to the end of fiscal 2021, the Company intends to be making numerous positive changes. This has already commenced with the increase in authorized shares to 250 million common shares on October 14, 2021. This increase should allow the Company to strengthen its financial metrics on a consolidated basis. The Company is also planning on appointing independent directors in the near future to help with oversight and management and growth of the Company.

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 .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 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

SOURCE Electromedical Technologies, Inc.