EMED - Electromedical Technologies Announces 2021 Annual Financial Results

April, 07 2022 09:01 AM Electromedical Technologies Inc

PR Newswire

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: 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

SOURCE Electromedical Technologies, Inc.

Company Name:	Electromedical Technologies Inc
Stock Symbol:	EMED
Market:	OTC
Website:	electromedtech.com

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