Electromedical Technologies Announces Financial
and Operational Highlights for the Three and Six Months Ended June
30, 2022
SCOTTSDALE, AZ -- August 18, 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 provide its Financial and
Operational Highlights for the three and six months ended June 30,
2022.
"We continue to drive toward scalable growth and new
innovations, positioning the Company as an emerging leader in
technologies that offer a drug-free path to a pain-free life,"
noted Matthew Wolfson, Founder and CEO of Electromedical. "Q2
delivered another quarter of robust growth in net sales. And we
made significant progress in board governance and product
development."
Financial Performance Highlights for the Three Months Ended
June 30, 2022
- Net Sales increased 11% over Q2 2021 to $225k primarily due to
increased unit sales.
- Gross Margin increased to 80% as compared to 75% in Q2
2021.
- Loss from operations
was ($283K) versus ($525K) in Q2 2021, an 85%
improvement.
- Net loss was ($536K) versus ($775K) in Q2 2021, a 31%
improvement, reflecting increased gross profit and reductions in
selling, general and administrative expenses and interest.
Financial Performance Highlights for the Six Months Ended June
30, 2022
- Net Sales increased 21% year over the six months ended June
30,2021 to $447K.
- Gross Margin remained at 75% for both six-month periods.
- Loss from operations was ($672K) versus ($1.2M) in the six
months ended June 30, 2021, a 46% improvement.
- Net loss was ($1.7M) versus ($3.3M) in the six months ended
June 30,2021, a 49% improvement, reflecting increased gross profit
and reductions in selling, general and administrative expenses and
interest.
The Company's business model remained resilient during the quarter
ended June 30 despite macro headwinds, including inflation, a
slowdown in consumer spending, and continued global supply chain
concerns. During the quarter, Electromedical was able to achieve
top and bottom-line growth at improved margins, shrinking the
Company's loss from operations by over 50% year over year, moving
the Company closer to EBITDA profitability.
The Company continues to invest in expanding its sales and
marketing resources as well as developing next-generation
technology capable of providing scalable accelerating growth in the
months and quarters ahead.
The Company was also able to shore up its balance sheet during
the quarter by working with one of its most significant
stakeholders to reduce debt carried by the Company by more than
$600k in a debt-to-equity conversion involving restricted
shares.
In addition, the Company added strong talent and experience to
its Board of Directors with the addition of Lee Benson, a proven
leader with an established track record of profound success in
business and the engineering space.
Wolfson added, "We have reduced dilution risk, shored up the
balance sheet, and added proven leadership talent to our board,
building governance and strategic value into the core of the
Company as we move toward scaling the business. We have a number of
updates in the works related to R&D achievements and further
investments in driving expanding sales. I look forward to providing
additional updates soon."
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.
Iconic
Tel: 1.888.880.7888
Email: ir@electromedtech.com
https://electromedtech.com
1)
Public Relations:
EDM Media, LLC
https://edm.media
ELECTROMEDICAL
TECHNOLOGIES, INC.
BALANCE SHEETS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
March
31, 2022
|
|
December 31, 2021
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
170,048
|
|
$
|
383,170
|
|
Accounts
receivable
|
|
|
31,790
|
|
|
35,085
|
|
Inventories
|
|
|
196,924
|
|
|
218,510
|
|
Prepaid expenses and
other current assets
|
|
|
24,930
|
|
|
38,002
|
|
Total current
assets
|
|
|
423,692
|
|
|
674,767
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net
|
|
|
721,875
|
|
|
727,344
|
|
Total assets
|
|
$
|
1,145,567
|
|
$
|
1,402,111
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
274,251
|
|
$
|
214,785
|
|
Credit cards
payable
|
|
|
14,686
|
|
|
11,283
|
|
Accrued expenses and
other current liabilities
|
|
|
539,237
|
|
|
317,037
|
|
Customer
deposits
|
|
|
21,850
|
|
|
—
|
|
Convertible promissory
notes, net of discount of $492,877 and $723,166, respectively
|
|
|
1,289,476
|
|
|
811,687
|
|
Related party notes
payable
|
|
|
—
|
|
|
57,875
|
|
Long term debt, current
portion
|
|
|
30,490
|
|
|
29,502
|
|
Total current
liabilities
|
|
|
2,169,990
|
|
|
1,442,169
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
Bank debt, net of current
portion
|
|
|
511,613
|
|
|
518,849
|
|
Government debt, net of
current portion
|
|
|
153,789
|
|
|
154,429
|
|
Other
liabilities
|
|
|
9,204
|
|
|
9,167
|
|
Total
liabilities
|
|
|
2,844,596
|
|
|
2,124,614
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies (Note 9)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficit
|
|
|
|
|
|
|
|
Series A Preferred
Stock, $.00001 par value, 1,000,000 shares authorized and 500,000 outstanding
|
|
|
355,000
|
|
|
355,000
|
|
Series B Preferred
Stock, $.00001 par value, 1 share authorized and 0 outstanding
|
|
|
—
|
|
|
—
|
|
Common stock,
$.00001
par value,
500,000,000
and 250,000,000 shares authorized;
104,955,567
and 87,725,842 shares outstanding at March 31, 2022
and December 31, 2021, respectively
|
|
|
1,048
|
|
|
876
|
|
Additional
paid-in-capital
|
|
|
20,401,493
|
|
|
20,804,333
|
|
Accumulated
deficit
|
|
|
(22,456,570)
|
|
|
(21,882,712)
|
|
Total stockholders'
deficit
|
|
|
(1,699,029)
|
|
|
(722,503)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
1,145,567
|
|
$
|
1,402,111
|
a)
The
accompanying notes are an integral part of these financial
statements
ELECTROMEDICAL
TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
2021
|
|
Net sales
|
|
$
|
221,894
|
|
$
|
166,440
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
67,641
|
|
|
41,951
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
154,253
|
|
|
124,849
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
|
879,810
|
|
|
1,689,383
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
(725,557)
|
|
|
(1,564,534)
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(213,379)
|
|
|
(1,060,302)
|
|
Change in fair market
value of derivative liabilities
|
|
|
—
|
|
|
14,798
|
|
Other income
(expense)
|
|
|
—
|
|
|
(428)
|
|
Loss on extinguishment of
debt
|
|
|
(205,600)
|
|
|
—
|
|
Forgiveness of
debt
|
|
|
—
|
|
|
50,082
|
|
Total other
expense
|
|
|
(418,979)
|
|
|
(995,850)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,144,536)
|
|
$
|
(2,560,384)
|
|
Deemed dividend related
to warrant resets
|
|
|
(63,381)
|
|
|
(510,222)
|
|
Net loss attributable to
common stockholders
|
|
|
(1,207,917)
|
|
|
(3,070,606)
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding - basic and diluted
|
|
|
97,260,915
|
|
|
28,558,027
|
|
Weighted average loss per
share - basic and diluted
|
|
$
|
(0.01)
|
|
$
|
(0.11)
|
b)
The
accompanying notes are an integral part of these financial
statements
ELECTROMEDICAL
TECHNOLOGIES, INC.
STATEMENT OF CHANGES IN
STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED
MARCH 31, 2022
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Series A
Preferred
|
|
Series B
Preferred
|
|
Common Stock
|
|
Paid in
|
|
Accumulated
|
|
Stockholders'
|
|
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Capital
|
|
Deficit
|
|
Deficit
|
|
Balance, December 31,
2021
|
|
$
|
355,000
|
|
500,000
|
|
$
|
—
|
|
—
|
|
$
|
876
|
|
87,725,842
|
|
$
|
20,804,333
|
|
$
|
(21,882,712)
|
|
$
|
(722,503)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for
consulting services
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
106
|
|
10,600,000
|
|
|
356,794
|
|
|
—
|
|
|
356,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued in
conjunction with convertible promissory notes
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
142,996
|
|
|
—
|
|
|
142,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants reset in
conjunction with convertible promissory notes
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
63,381
|
|
|
(63,381)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adoption of ASU
2020-06
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
(1,013,414)
|
|
|
634,059
|
|
|
(379,355)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
for cash
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
15
|
|
1,500,000
|
|
|
42,751
|
|
|
—
|
|
|
42,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cashless warrant
exercises
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
51
|
|
5,129,725
|
|
|
(51)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
4,703
|
|
|
—
|
|
|
4,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
(1,144,536)
|
|
|
(1,144,536)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31,
2022
|
|
$
|
355,000
|
|
500,000
|
|
$
|
—
|
|
—
|
|
|
1,048
|
|
104,955,567
|
|
$
|
20,401,493
|
|
$
|
(22,456,570)
|
|
$
|
(1,699,029)
|
The
accompanying notes are an integral part of these financial
statements
ELECTROMEDICAL
TECHNOLOGIES, INC.
STATEMENT OF CHANGES IN
STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED
MARCH 31, 2021
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Paid
in
|
|
Accumulated
|
|
Stockholders'
|
|
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Capital
|
|
Deficit
|
|
Deficit
|
|
Balance,
December 31, 2020
|
|
$
|
355,000
|
|
500,000
|
|
$
|
269
|
|
27,175,800
|
|
$
|
7,957,860
|
|
$
|
(9,631,732)
|
|
$
|
(1,318,603)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for
consulting services
|
|
|
—
|
|
—
|
|
|
11
|
|
1,084,120
|
|
|
693,815
|
|
|
—
|
|
|
693,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant issued in
conjunction with convertible promissory note
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
420,096
|
|
|
—
|
|
|
420,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants reset in
conjunction with convertible promissory notes
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
510,222
|
|
|
(510,222)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible
promissory notes
|
|
|
—
|
|
—
|
|
|
10
|
|
1,019,113
|
|
|
380,093
|
|
|
—
|
|
|
380,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
—
|
|
—
|
|
|
11
|
|
1,100,000
|
|
|
604,890
|
|
|
—
|
|
|
604,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
(2,560,384)
|
|
|
(2,560,384)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31,
2021
|
|
$
|
355,000
|
|
500,000
|
|
|
301
|
|
30,379,033
|
|
$
|
10,566,976
|
|
$
|
(12,702,338)
|
|
$
|
(1,780,061)
|
The accompanying notes are an integral part of these financial
statements
ELECTROMEDICAL
TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
2021
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,144,536)
|
|
$
|
(2,560,384)
|
|
Adjustments to reconcile
net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
Stock-based compensation
expense
|
|
|
361,603
|
|
|
1,298,727
|
|
Depreciation and
amortization
|
|
|
5,469
|
|
|
5,469
|
|
Forgiveness of
debt
|
|
|
—
|
|
|
(49,783)
|
|
Loss on extinguishment of
debt
|
|
|
205,600
|
|
|
—
|
|
Amortization of debt
discount and day one derivative loss and warrant expense
|
|
|
164,710
|
|
|
1,010,601
|
|
Change in fair value of
derivative liabilities- convertible promissory notes
|
|
|
—
|
|
|
(14,798)
|
|
Change in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
3,295
|
|
|
(4,178)
|
|
Inventories
|
|
|
21,586
|
|
|
(129,791)
|
|
Prepaid expenses and
other current assets
|
|
|
13,072
|
|
|
161,990
|
|
Other assets
|
|
|
—
|
|
|
7,000
|
|
Accounts
payable
|
|
|
59,466
|
|
|
(42,284)
|
|
Credit cards
payable
|
|
|
3,403
|
|
|
(1,057)
|
|
Accrued expenses and
other current liabilities
|
|
|
(33,400)
|
|
|
9,817
|
|
Customer
deposits
|
|
|
21,850
|
|
|
(18,301)
|
|
Other
liabilities
|
|
|
37
|
|
|
(265)
|
|
Net cash used in
operating activities
|
|
|
(317,845)
|
|
|
(327,237)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
|
Repayments on bank
debt
|
|
|
(6,888)
|
|
|
(6,556)
|
|
Related party notes
payable-net
|
|
|
(57,875)
|
|
|
(50,000)
|
|
Issuance of convertible
promissory notes
|
|
|
494,220
|
|
|
712,500
|
|
Repayments on convertible
promissory notes
|
|
|
(367,500)
|
|
|
—
|
|
Repayments on notes
payable
|
|
|
—
|
|
|
(12,846)
|
|
Issuance of common stock
for cash - net
|
|
|
42,766
|
|
|
—
|
|
Net cash provided by
financing activities
|
|
|
104,723
|
|
|
643,098
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase
in cash and cash equivalents
|
|
|
(213,122)
|
|
|
315,861
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
|
383,170
|
|
|
264,913
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
$
|
170,048
|
|
$
|
580,774
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures
of cash flow information:
|
|
|
|
|
|
|
|
Cash paid during the
period for:
|
|
|
|
|
|
|
|
Interest
|
|
$
|
72,308
|
|
$
|
16,356
|
|
Income taxes
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Non-cash investing and
financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1,2022 adoption
of ASU2020-06
|
|
$
|
379,355
|
|
$
|
—
|
|
Warrants, common stock
and beneficial conversion feature issued in conjunction with
convertible promissory notes
|
|
$
|
192,996
|
|
$
|
420,096
|
|
Derivative liabilities
issued in conjunction with convertible promissory notes
|
|
$
|
—
|
|
$
|
974,931
|
|
Conversion of convertible
promissory notes, derivative liabilities and accrued interest into
shares of common stock
|
|
$
|
—
|
|
$
|
380,103
|