Encision Reports Second Quarter Fiscal Year 2022 Results

BOULDER, Colo., Nov. 10, 2021 /PRNewswire/ -- Encision Inc. (PK:ECIA), a medical device company owning patented Active Electrode Monitoring (AEM®) Technology that prevents dangerous radiant energy burns in minimally invasive surgery, today announced financial results for its fiscal 2022 second quarter that ended September 30, 2021.

The Company posted quarterly net revenue of $2.11 million for a quarterly net income of $360 thousand, or $0.03 per diluted share. Net income included extinguishment of debt income. These results compare to net revenue of $1.88 million for a quarterly net income of $9 thousand, or $0.00 per diluted share, in the year-ago quarter. Gross margin on net revenue was 45% in the fiscal 2022 second quarter and 53% in the fiscal 2021 second quarter. Gross margin in the fiscal 2022 second quarter was lower due to higher material costs.

The Company posted six months net revenue of $4.12 million for a six months net income of $353 thousand, or $0.03 per diluted share. Net income included extinguishment of debt income. These results compare to six months net revenue of $3.23 million for a six months net loss of $131 thousand, or $(0.01) per diluted share, in the year-ago six months. Gross margin on net revenue was 48% in the fiscal 2022 six months and 51% in the fiscal 2021 six months. Gross margin in the fiscal 2022 six months was lower due to higher material costs.

"Total revenue, which included service revenue, increased 12% from our COVID impacted second quarter revenue of last year," said Gregory Trudel, President and CEO of Encision Inc. "We continue to be positive as we assess and react to how surgical pocedures rebound from the pandemic. We have learned to flex our sales tactics as the market reacts to waves of COVID and we encounter varying degrees of direct access to our customers."

"Service revenue for our second quarter of fiscal 2022 resulted from services performed under a Master Services Agreement with Auris Health, Inc. ("Auris Health"), a part of the Johnson & Johnson family of companies. Under the agreement, we are collaborating 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."

"In August 2021, we signed a Supply Agreement with Auris Health. The agreement has an initial term of three years. During the term, Auris has agreed to buy certain AEM® Technology enabled products exclusively from us. We are proud of being awarded this agreement and look forward to our continued relationship with Auris."

"In February 2021, we entered into an unsecured promissory note under the Paycheck Protection Program ("PPP") for a principal amount of $533,118. 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. During the quarter that ended September 30, 2021, we achieved the requirements for forgiveness and recognized the forgiveness as extinguishment of debt income of $533,118."

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, 2021 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,
2021

 

September 30,
2020

 

September 30,
2021

 

September 30,
2020

Product revenue

 

$1,895

 

$1,782

 

$3,613

 

$3,094

Service revenue

 

218

 

99

 

508

 

134

Total revenue

 

2,113

 

1,881

 

4,121

 

3,228

                 

Product cost of revenue

 

1,062

 

841

 

1,900

 

1,525

Service cost of revenue

 

106

 

52

 

250

 

69

Total cost of revenue

 

1,168

 

893

 

2,150

 

1,594

                 

Gross profit

 

945

 

988

 

1,971

 

1,634

Operating expenses:

               

Sales and marketing

 

562

 

565

 

1,090

 

932

General and administrative

 

340

 

339

 

667

 

626

Research and development

 

213

 

162

 

390

 

304

Total operating expenses

 

1,115

 

1,066

 

2,147

 

1,862

Operating (loss)

 

(170)

 

(78)

 

(176)

 

(228)

Interest expense, extinguishment of debt
income and other income, net

 

530

 

87

 

529

 

97

Income (loss) before provision for income
taxes

 

360

 

9

 

353

 

(131)

Provision for income taxes

 

––

 

––

 

––

 

––

Net income (loss)

 

$ 360

 

$ 9

 

$ 353

 

$ (131)

Net income (loss) per share—basic and
diluted

 

$ 0.03

 

$ 0.00

 

$ 0.03

 

$ (0.01)

Weighted average number of basic shares

 

11,611

 

11,583

 

11,595

 

11,583

Weighted average number of diluted
shares

 

11,820

 

11,745

 

11,776

 

11,583

Encision Inc.

Unaudited Condensed Balance Sheets

(in thousands)

 
   

September 30,
2021

 

March 31,
2021

ASSETS

       

Cash

 

$1,605

 

$1,474

Accounts receivable, net

 

1,052

 

1,024

Inventories, net

 

1,521

 

1,446

Prepaid expenses and other assets

 

96

 

154

Total current assets

 

4,274

 

4,098

Equipment, net

 

247

 

266

Patents, net

 

198

 

213

Right of use asset

 

926

 

1,061

Other assets

 

26

 

21

Total assets

 

$ 5,671

 

$ 5,659

         

LIABILITIES AND SHAREHOLDERS'
EQUITY

       

Accounts payable

 

$ 528

 

$ 390

Secured notes

 

18

 

20

Accrued compensation

 

205

 

182

Other accrued liabilities

 

442

 

282

Accrued lease liability

 

318

 

303

Total current liabilities

 

1,511

 

1,177

Secured notes

 

216

 

220

Accrued lease liability

 

765

 

927

Unsecured promissory note

 

––

 

533

Total liabilities

 

2,492

 

2,857

Common stock and additional paid-in capital

 

24,290

 

24,265

Accumulated (deficit)

 

(21,111)

 

(21,463)

Total shareholders' equity

 

3,179

 

2,802

Total liabilities and shareholders' equity

 

$ 5,671

 

$ 5,659

Encision Inc.

Unaudited Condensed Statements of Cash Flows

(in thousands)

 
   

Six Months Ended

   

September 30,
2021

 

September 30,
2020

Operating activities:

       

Net income (loss)

 

$ 353

 

$ (131)

Adjustments to reconcile net income (loss) to cash

provided by (used in) operating activities:

       

Extinguishment of debt income

 

(533)

 

––

Depreciation and amortization

 

53

 

47

Share-based compensation expense

 

16

 

16

Other income from release of accounts payable

 

––

 

(57)

(Recovery from) provision for doubtful accounts, net

 

(35)

 

(31)

Provision for (recovery from) inventory obsolescence, net

 

(31)

 

23

Changes in operating assets and liabilities:

       

Right of use asset, net

 

(12)

 

73

Accounts receivable

 

7

 

(126)

Inventories

 

(45)

 

46

Prepaid expenses and other assets

 

53

 

1

Accounts payable

 

139

 

(91)

Accrued compensation and other accrued liabilities

 

183

 

67

Net cash provided by (used in) operating activities

 

148

 

(163)

         

Investing activities:

       

Acquisition of property and equipment

 

(11)

 

––

Patent costs

 

(8)

 

(10)

Net cash (used in) investing activities

 

(19)

 

(10)

         

Financing activities:

       

Net proceeds from options exercised

 

9

 

––

Borrowings from credit facility, net change

 

––

 

46

(Paydown of) secured notes

 

(7)

 

––

EIDL loan

 

––

 

150

Unsecured promissory note

 

––

 

599

Net cash generated by financing activities

 

2

 

795

         

Net increase in cash

 

131

 

622

Cash, beginning of period

 

1,474

 

385

Cash, end of period

 

$1,605

 

$1,007

           

Cision View original content:https://www.prnewswire.com/news-releases/encision-reports-second-quarter-fiscal-year-2022-results-301420335.html

SOURCE Encision Inc.


Company Codes: OTC-PINK:ECIA

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