Encision Reports Second Quarter Fiscal Year 2021 Results

BOULDER, Colo., Nov. 5, 2020 /PRNewswire/ -- Encision Inc. (PK: ECIA), a medical device company owning patented Active Electrode Monitoring (AEM®) Technology that prevents dangerous stray electrosurgical burns in minimally invasive surgery, today announced financial results for its fiscal 2021 second quarter that ended September 30, 2020.

The Company posted quarterly net revenue of $1.88 million for a quarterly net income of $9 thousand, or $0.00 per diluted share. These results compare to net revenue of $1.92 million for a quarterly net income of $30 thousand, or $0.00 per diluted share, in the year-ago quarter. Gross margin on net revenue was 52.5% in the fiscal 2021 second quarter and 54.5% in the fiscal 2020 second quarter.

The Company posted six months net revenue of $3.23 million for a six months net loss of $131 thousand, or $(0.01) per diluted share. These results compare to net revenue of $3.85 million for a six months net loss of $152 thousand, or $(0.01) per diluted share, in the year-ago six months. Gross margin on net revenue was 51% in the fiscal 2021 and fiscal 2020 six months.

"As a result of COVID-19 limiting surgical procedures, product revenue for our second quarter of fiscal 2021 decreased 7% from our second quarter of last year," said Gregory Trudel, President and CEO of Encision Inc. "In October, we saw an increase in procedures and a corresponding uptick in sales revenue. With the current increases of Covid-19 cases, we remain watchful of the state of surgery and will do all we can to support our customers."

"We entered into a Master Services Agreement with Auris Health, Inc. ("Auris Health") in April. Auris Health is a part of the Johnson & Johnson family of companies. Under the agreement, we will collaborate on the integration of AEM technology into monopolar instrumentation produced by Auris Health for advanced surgical applications. This work is ongoing and is reported separately, as service revenue, in our Statement of Operations."

"At the end of our second quarter, we began to sell our AEM 2X enTouch® Scissors ("2X Scissors"). 2X Scissors bring new levels of performance and economy to the surgical scissor market by combining the best in class performance of our enTouch Disposable Scissors with the value and economy of a multi-use device. 2X Scissors are a game-changing product that will have a significant impact on the disposable laparoscopic scissor market. Our enTouch Disposable Scissors have long been the surgeon preferred product because of their sharpness and micro-serrations. Our new 2X Scissors provide all those benefits at half the cost per use and reduce hospital waste and the impact on the environment as well. The new thermochromic technology integrated into 2X Scissors lets the hospital know when to replace the scissors with new ones and makes tracking their use simple and easy. Superior performance, superior value, easy to use, and easy on the environment – that's what customers want in a disposable scissor. It is the way that everything is going. We expect 2X Scissors to gain an attractive sales trajectory and to become a significant part of our portfolio of products. 2X Scissors work perfectly with hot AEM dissection and are priced to be used for cold dissection as well. 2X Scissors will open new use segments for us and create an opportunity for customers to standardize on our entire portfolio of Active Electrode Monitoring (AEM®) products. We are delighted to launch 2X Scissors and look forward to delivering other high performance/ high customer value product innovations going forward."

"In April, we entered into an unsecured promissory note under the Paycheck Protection Program (the "PPP") for a principal amount of $598,567. Under the terms of the CARES Act, a PPP loan recipient may apply for, and be granted, forgiveness for all or a portion of loans granted under the PPP. Such forgiveness will be determined based upon the use of loan proceeds for payroll costs, rent and utility costs, and the maintenance of employee and compensation levels. In our third quarter, we will apply for loan forgiveness and, since we achieved the requirements for forgiveness, believe that all of the $598,567 will be forgiven."

"On August 4, we received $150,000 in loan funding from the U.S. Small Business Administration ("SBA") under the Economic Injury Disaster Loan ("EIDL") program administered by the SBA, which program was expanded pursuant to the CARES Act. The EIDL is evidenced by a promissory note, dated August 1 in the original principal amount of $150,000 with the SBA, the lender. The EIDL note term is for thirty years."

Encision Inc. designs and markets a portfolio of high-performance surgical instrumentation that delivers advances in patient safety with AEM technology, surgical performance, and value to hospitals across a broad range of minimally invasive surgical procedures. Based in Boulder, Colorado, the company pioneered the development and deployment of Active Electrode Monitoring, AEM technology, to eliminate dangerous stray energy burns during minimally invasive procedures. For additional information about all our products, please visit www.encision.com.

In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company notes that statements in this press release and elsewhere that look forward in time, which include everything other than historical information, involve risks and uncertainties that may cause actual results to differ materially from those indicated by the forward-looking statements. Factors that could cause the Company's actual results to differ materially include, among others, its ability to develop new or enhanced products and have such products accepted in the market, its ability to increase net sales through the Company's distribution channels, its ability to compete successfully against other manufacturers of surgical instruments, insufficient quantity of new account conversions, insufficient cash to fund operations, delay in developing new products and receiving FDA approval for such new products and other factors discussed in the Company's filings with the Securities and Exchange Commission. Readers are encouraged to review the risk factors and other disclosures appearing in the Company's Annual Report on Form 10-K for the year ended March 31 2020 and subsequent filings with the Securities and Exchange Commission. We do not undertake any obligation to update publicly any forward-looking statements, whether as a result of the receipt of new information, future events, or otherwise.

CONTACT: Mala Ray, Encision Inc., 303-444-2600, mray@encision.com

Encision Inc.

Unaudited Condensed Statements of Operations

(in thousands, except per share information)

 
   

Three Months Ended

Six Months Ended

   

September 30,
2020

 

September 30,
2019

 

September 30,
2020

 

September 30,
2019

Product revenue

 

$1,782

 

$1,924

 

$3,094

 

$3,853

Service revenue

 

99

 

––

 

134

 

––

Total revenue

 

1,881

 

1,924

 

3,228

 

3,853

                 

Product cost of revenue

 

841

 

875

 

1,525

 

1,871

Service cost of revenue

 

52

 

––

 

69

 

––

Total cost of revenue

 

893

 

875

 

1,594

 

1,871

                 

Gross profit

 

988

 

1,049

 

1,634

 

1,982

Operating expenses:

               

Sales and marketing

 

565

 

537

 

932

 

1,067

General and administrative

 

339

 

304

 

626

 

650

Research and development

 

162

 

173

 

304

 

409

Total operating expenses

 

1,066

 

1,014

 

1,862

 

2,126

Operating income (loss)

 

(78)

 

35

 

(228)

 

(144)

Interest expense and other expense, net

 

87

 

(5)

 

97

 

(8)

Loss before provision for income taxes

 

9

 

30

 

(131)

 

(152)

Provision for income taxes

 

––

 

––

 

––

 

––

Net income (loss)

 

$ 9

 

$ 30

 

$(131)

 

$ (152)

Net income (loss) per share—basic and
diluted

 

$ 0.00

 

$ 0.00

 

$(0.01)

 

$ (0.01)

Weighted average number of basic shares

 

11,583

 

11,558

 

11,583

 

11,558

Weighted average number of diluted
shares

 

11,745

 

11,592

 

11,583

 

11,558

Encision Inc.

Unaudited Condensed Balance Sheets

(in thousands)

 
   

September 30,
2020

 

March 31, 2020

ASSETS

       

Cash and cash equivalents

 

$1,007

 

$ 385

Accounts receivable, net

 

1,038

 

881

Inventories, net

 

1,558

 

1,626

Prepaid expenses

 

71

 

73

Total current assets

 

3,674

 

2,965

Equipment, net

 

175

 

207

Patents, net

 

223

 

228

Right of use asset

 

1,193

 

1,317

Other assets

 

20

 

20

Total assets

 

$ 5,285

 

$ 4,737

         

LIABILITIES AND SHAREHOLDERS'
EQUITY

       

Accounts payable

 

$ 297

 

$ 445

Line of credit

 

417

 

370

Accrued compensation

 

194

 

219

Other accrued liabilities

 

187

 

96

Accrued lease liability

 

288

 

278

Total current liabilities

 

1,383

 

1,408

Accrued lease liability

 

1,083

 

1,145

Economic injury disaster loan

 

150

 

––

Unsecured promissory note

 

599

 

––

Total liabilities

 

3,215

 

2,553

Common stock and additional paid-in capital

 

24,249

 

24,232

Accumulated (deficit)

 

(22,179)

 

(22,048)

Total shareholders' equity

 

2,070

 

2,184

Total liabilities and shareholders' equity

 

$ 5,285

 

$ 4,737

Encision Inc.

Unaudited Condensed Statements of Cash Flows

(in thousands)

 
   

Six Months Ended

   

September 30,
2020

 

September 30,
2019

Operating activities:

       

Net loss

 

$ (131)

 

$ (152)

Adjustments to reconcile net loss to cash

(used in) operating activities:

       

Depreciation and amortization

 

47

 

80

Share-based compensation expense

 

16

 

15

Other income from release of accounts payable

 

(57)

 

––

Changes in operating assets and liabilities:

       

Right of use asset, net

 

73

 

20

Accounts receivable, net

 

(157)

 

41

Inventories, net

 

69

 

130

Prepaid expenses and other assets

 

1

 

50

Accounts payable

 

(91)

 

(265)

Accrued compensation and other accrued liabilities

 

67

 

(122)

Net cash (used in) operating activities

 

(163)

 

(203)

         

Investing activities:

       

Acquisition of property and equipment

 

––

 

(43)

Patent costs

 

(10)

 

(3)

Net cash (used in) investing activities

 

(10)

 

(46)

         

Financing activities:

       

Borrowings from credit facility, net change

 

46

 

93

Unsecured promissory note

 

599

 

––

EIDL loan

 

150

 

––

Net cash generated by financing activities

 

795

 

93

         

Net increase in cash, cash equivalents and restricted cash

 

622

 

(156)

Cash, cash equivalents and restricted cash, beginning of
period

 

385

 

298

Cash, cash equivalents and restricted cash, end of period

 

$1,007

 

$ 142

View original content:http://www.prnewswire.com/news-releases/encision-reports-second-quarter-fiscal-year-2021-results-301166107.html

SOURCE Encision Inc.


Company Codes: OTC-BB:ECIA, OTC-PINK:ECIA

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