Electromedical Technologies Announces Financial and Operational Highlights for the Three and Six Months Ended June 30, 2022

August 18, 2022 |

11 min read

Electromedical Technologies, Inc. (OTCQB: EMED) (“Electromedical” or the “Company”), is pleased to provide its Financial and Operational Highlights for the three and six months ended June 30, 2022.

SCOTTSDALE, Ariz., Aug. 18, 2022 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

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SOURCE Electromedical Technologies, Inc

Company Codes: OTC-QB:EMED, OTC-BB:EMED

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