Electromedical Technologies
Announces 2021 Annual Financial Results
SCOTTSDALE, AZ -- April 7,
2022 -- InvestorsHub NewsWire -- 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:
ir@electromedtech.com
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
|