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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023.

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______.

Commission File Number 000-56192

Graphic

ELECTROMEDICAL TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of
Incorporation)

5047
(Primary Standard Industrial
Classification Code Number)

82-2619815
(I.R.S. Employer
Identification No.)

16561 N. 92nd Street, Ste. 101

 

Scottsdale, AZ

85260

(Address of principal executive offices)

(Zip Code)

888-880-7888

(Registrant’s telephone number, including area code)

Securities Registered pursuant to Section 12(g) of the Act

Title of Each Class

    

Trading Symbol(s)

    

Name of each Exchange on which Registered

Common Stock

EMED

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation ST (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

On November 20, 2023, 463,115,311 shares of common stock were outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

 

 

 

Item 1.

UNAUDITED FINANCIAL STATEMENTS:

3

 

 

 

BALANCE SHEETS AS OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022

3

 

 

 

STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

4

 

 

 

STATEMENTS OF IN STOCKHOLDERS’ DEFICIT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

6

 

 

 

STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

7

 

 

 

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

8

 

 

 

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

20

 

 

 

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

24

 

 

 

Item 4.

CONTROLS AND PROCEDURES

25

 

 

 

PART II. OTHER INFORMATION

26

 

 

 

Item 1.

LEGAL PROCEEDINGS

26

 

 

 

Item 1A.

RISK FACTORS

26

 

 

 

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

26

 

 

 

Item 3.

DEFAULTS UPON SENIOR SECURITIES

42

 

 

 

Item 4.

MINE SAFETY DISCLOSURE

42

 

 

 

Item 5.

OTHER INFORMATION

42

 

 

 

Item 6.

EXHIBITS

43

 

 

 

SIGNATURES

46

2

ITEM 1. FINANCIAL STATEMENTS

ELECTROMEDICAL TECHNOLOGIES, INC.

BALANCE SHEETS

(UNAUDITED)

    

September 30, 2023

    

December 31, 2022

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

138,477

$

368,425

Accounts receivable

 

9,200

 

9,444

Inventories

 

131,310

 

62,061

Prepaid expenses and other current assets

 

264,017

 

207,872

Total current assets

 

543,004

 

647,802

Right of use asset

160,694

Property and equipment, net

 

149,705

 

705,469

Total assets

$

853,403

$

1,353,271

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

277,714

$

266,744

Credit cards payable

 

27,130

 

37,633

Accrued expenses and other current liabilities

 

739,889

 

1,065,483

Customer deposits

 

130,100

 

217,588

Convertible promissory notes, net of discount of $0 and $375,865, respectively

 

1,393,601

 

1,304,909

Long term debt, current portion

 

 

31,818

Lease liability, current portion

46,788

Derivative liabilities- convertible promissory notes

475,613

Total current liabilities

 

3,090,835

 

2,924,175

Long-term liabilities:

 

  

 

  

Bank debt, net of current portion

 

 

489,707

Government debt, net of current portion

 

150,000

 

150,000

Lease liability, net of current portion

 

119,318

 

Other liabilities

 

9,174

 

10,234

Total liabilities

 

3,369,327

 

3,574,116

Commitments and contingencies (Note 10)

 

 

Stockholders’ deficit

 

  

 

  

Series A Preferred Stock, $.00001 par value, 1,000,000 shares authorized and outstanding

 

365,000

 

365,000

Series B Preferred Stock, $.00001 par value, 1 share authorized and 1 and 0 shares outstanding at September 30, 2023 and December 31, 2022, respectively

400,000

Common stock, $.00001 par value, 1,999,000,000 and 999,000,000 shares authorized; 471,495,856 and 189,784,529 shares outstanding at September 30, 2023 and December 31, 2022, respectively

 

4,713

 

1,896

Additional paid-in-capital

 

23,835,454

 

22,237,300

Accumulated deficit

 

(27,121,091)

 

(24,825,041)

Total stockholders’ deficit

 

(2,515,924)

 

(2,220,845)

Total liabilities and stockholders’ deficit

$

853,403

$

1,353,271

The accompanying notes are an integral part of these financial statements

3

ELECTROMEDICAL TECHNOLOGIES, INC.

STATEMENTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30,

NINE MONTHS ENDED SEPTEMBER 30,

    

2023

    

2022

    

2023

    

2022

Net sales

$

323,613

$

279,551

$

997,213

$

726,696

Cost of sales

 

72,437

58,008

222,652

 

170,984

Gross profit

 

251,176

221,543

774,561

 

555,712

Selling, general and administrative expenses

 

490,205

558,919

2,616,531

 

1,901,908

Loss from operations

 

(239,029)

(337,376)

(1,841,970)

 

(1,346,196)

Other income (expense)

 

 

Interest expense

 

(162,121)

(160,570)

(834,809)

 

(510,417)

Gain on sale of fixed asset

1,193,676

Change in fair value of derivative liabilities

63,069

(63,889)

Gain (loss) on derivative liabilities

11,361

(355,597)

Other expense

(50,000)

(390,000)

Loss on extinguishment of debt

(460,000)

(781,800)

Total other expense

(137,691)

(620,570)

(450,619)

(1,292,217)

Net loss

$

(376,720)

$

(957,946)

$

(2,292,589)

$

(2,638,413)

Deemed dividend related to warrant resets

(19,780)

(3,461)

(83,161)

Net loss attributable to common stockholders

$

(376,720)

$

(977,726)

$

(2,296,050)

$

(2,721,574)

Weighted average shares outstanding - basic and diluted

466,219,492

146,993,139

348,089,518

 

119,799,025

Weighted average loss per share - basic and diluted

$

(0.00)

$

(0.01)

$

(0.01)

$

(0.02)

The accompanying notes are an integral part of these financial statements

4

ELECTROMEDICAL TECHNOLOGIES, INC.

STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022

(UNAUDITED)

Total

Preferred Stock

Common Stock

Paid in

Accumulated

Stockholders’

    

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)

Adoption of ASU2020-06

 

(1,013,414)

 

634,059

 

(379,355)

 

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)

Cashless warrant exercises

51

5,129,725

(51)

Issuance of common stock for cash

15

1,500,000

42,751

42,766

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)

Shares issued for consulting services

30

3,000,000

44,970

45,000

Shares issued in conjunction with forbearance of convertible promissory notes

40

4,000,000

142,760

142,800

Convertible promissory notes payable settlement

267

26,734,801

668,103

668,370

Warrants issued in conjunction with debt extinguishment

65,000

65,000

Cashless warrant exercises

35

3,550,162

(35)

Net loss

(535,931)

(535,931)

Balance, June 30, 2022

$

355,000

500,000

$

1,420

142,240,530

$

21,322,291

$

(22,992,501)

$

(1,313,790)

Warrants issued in conjunction with convertible promissory notes

 

302,978

 

302,978

Warrants reset in conjunction with convertible promissory notes

19,780

 

(19,780)

Cashless warrant exercises

 

 

27

2,710,000

(27)

Convertible promissory note conversions

62

6,200,000

 

154,938

 

 

155,000

Shares issued for consulting services

68

6,800,000

67,932

68,000

Stock based compensation

10,000

500,000

10,000

Net loss

(957,946)

(957,946)

Balance, September 30, 2022

$

365,000

1,000,000

$

1,577

157,950,530

$

21,867,892

$

(23,970,227)

$

(1,735,758)

The accompanying notes are an integral part of these financial statements

5

ELECTROMEDICAL TECHNOLOGIES, INC.

STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

(UNAUDITED)

Total

Series A Preferred Stock

Series B Preferred Stock

Common Stock

Paid in

Accumulated

Stockholders’

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Capital

    

Deficit

    

Deficit

Balance, December 31, 2022

$

365,000

1,000,000

$

$

1,896

189,784,529

$

22,237,300

$

(24,825,041)

$

(2,220,845)

Shares issued for consulting services

 

 

 

 

 

350

 

35,000,000

 

314,650

 

 

315,000

Share issued as CEO compensation

400,000

1

400,000

Shares issued in conjunction with settlement reset

 

 

 

 

 

461

 

46,102,156

 

697,539

 

 

698,000

Cashless warrant exercises

 

 

 

 

 

180

 

18,000,000

 

(180)

 

 

Trigger warrants issued

 

 

 

 

 

 

 

160,000

 

 

160,000

Conversion of convertible promissory note

 

 

 

 

 

50

 

5,000,000

 

49,950

 

 

50,000

Settlement of stock -based compensation liabilities

30

3,000,000

20,970

21,000

Net loss

 

 

 

 

 

 

 

 

(456,063)

 

(456,063)

Balance, March 31, 2023

$

365,000

 

1,000,000

$

400,000

 

1

$

2,967

 

296,886,685

$

23,480,229

$

(25,281,104)

$

(1,032,908)

Conversion of convertible promissory notes

 

 

 

 

 

1,315

 

131,532,211

 

209,376

 

 

210,691

Conversion true-up

 

41

4,075,000

(41)

Warrant reset

 

3,461

(3,461)

Net loss

 

(1,459,806)

(1,459,806)

Balance, June 30, 2023

$

365,000

 

1,000,000

$

400,000

 

1

$

4,323

 

432,493,896

$

23,693,025

$

(26,744,371)

$

(2,282,023)

Conversion of convertible promissory notes payable

 

 

 

 

 

390

 

39,001,960

 

38,953

 

 

39,343

 Valuation of trigger warrants

 

 

 

 

 

 

 

103,476

 

 

103,476

 Net loss

 

 

 

 

 

 

 

 

(376,720)

 

(376,720)

 Balance, September 30, 2023

$

365,000

 

1,000,000

$

400,000

 

1

$

4,713

 

471,495,856

$

23,835,454

$

(27,121,091)

$

(2,515,924)

6

ELECTROMEDICAL TECHNOLOGIES, INC.

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

(UNAUDITED)