Encision Reports Third Quarter Fiscal Year 2022 Results

BOULDER, CO / ACCESSWIRE / February 10, 2022 / Encision Inc. (OTC PINK: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 third quarter that ended December 31, 2021.

The Company posted quarterly net revenue of $1.94 million for a quarterly net loss of $16 thousand, or $0.00 per diluted share. These results compare to net revenue of $2.16 million for a quarterly net income of $599 thousand, or $0.05 per diluted share, in the year-ago quarter. Net income in last year's quarter included $599 thousand of extinguishment of debt income. Gross margin on net revenue was 52% in the fiscal 2022 third quarter and 51% in the fiscal 2021 third quarter.

The Company posted nine months net revenue of $6.07 million for a nine months net income of $337 thousand, or $0.03 per diluted share. Net income included extinguishment of debt income. These results compare to nine months net revenue of $5.39 million for a nine months net income of $469 thousand, or $0.04 per diluted share, in the year-ago nine months. Net income included extinguishment of debt income. Gross margin on net revenue was 49% in the fiscal 2022 nine months and 51% in the fiscal 2021 nine months. Gross margin in the fiscal 2022 nine months was lower due to higher material costs.

"Total revenue, which included service revenue, decreased 10% from our third quarter revenue of last year," said Gregory Trudel, President and CEO of Encision Inc. "COVID reduced total surgical procedures and our revenues suffered as a result. We continue to be positive as we assess and navigate the ups and downs of the pandemic market and continuously look for opportunities to serve our customers and to drive adoption. Our sales and marketing efforts are yielding new customers for our EnTouchâ 2X Scissors and we look forward to their contributions as the market bounces back."

"Service revenue for our third 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. During the term of the agreement, 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."

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.

Encision Inc.
Unaudited Condensed Statements of Operations
(in thousands, except per share information)

    Three Months Ended     Nine Months Ended  
    December 31, 2021     December 31, 2020     December 31, 2021     December 31, 2020  
Product revenue
  $ 1,734     $ 1,999     $ 5,348     $ 5,093  
Service revenue
    210       164       718       298  
Total revenue
    1,944       2,163       6,066       5,391  
                                 
Product cost of revenue
    828       976       2,729       2,501  
Service cost of revenue
    106       81       356       150  
Total cost of revenue
    934       1,057       3,085       2,651  
                                 
Gross profit
    1,010       1,106       2,981       2,740  
Operating expenses:
                               
Sales and marketing
    505       581       1,595       1,513  
General and administrative
    327       373       994       999  
Research and development
    194       139       584       443  
Total operating expenses
    1,026       1,093       3,173       2,955  
Operating (loss) income
    (16 )     13       (192 )     (215 )
Interest expense, extinguishment of debt income and other income, net
    --       586       529       684  
(Loss) income before provision for income taxes
    (16 )     599       337       469  
Provision for income taxes
    --       --       --       --  
Net (loss) income
  $ (16 )   $ 599     $ 337     $ 469  
Net (loss) income per share-basic and diluted
  $ 0.00     $ 0.05     $ 0.03     $ 0.04  
Weighted average number of basic shares
    11,678       11,583       11,599       11,583  
Weighted average number of diluted shares
    11,678       11,709       12,045       11,750  

Encision Inc.
Unaudited Condensed Balance Sheets
(in thousands)

    December 31,
2021
    March 31,
2021
 
ASSETS
           
Cash
  $ 1,424     $ 1,474  
Accounts receivable, net
    1,029       1,024  
Inventories, net
    1,406       1,446  
Prepaid expenses and other assets
    149       154  
Total current assets
    4,008       4,098  
Equipment, net
    235       266  
Right of use asset
    856       1,061  
Patents, net
    189       213  
Other assets
    31       21  
Total assets
  $ 5,319     $ 5,659  
LIABILITIES AND SHAREHOLDERS' EQUITY
               
Accounts payable
  $ 531     $ 390  
Secured notes
    18       20  
Accrued compensation
    238       182  
Other accrued liabilities
    138       282  
Accrued lease liability
    357       303  
Total current liabilities
    1,282       1,177  
Secured notes
    212       220  
Accrued lease liability
    648       927  
Unsecured promissory note
    --       533  
Total liabilities
    2,142       2,857  
Common stock and additional paid-in capital
    24,304       24,265  
Accumulated (deficit)
    (21,127 )     (21,463 )
Total shareholders' equity
    3,177       2,802  
Total liabilities and shareholders' equity
  $ 5,319     $ 5,659  

Encision Inc.
Unaudited Condensed Statements of Cash Flows
(in thousands)

    Nine Months Ended  
    December 31,
2021
    December 31,
2020
 
Operating activities:
           
Net income
  $ 337     $ 469  
Adjustments to reconcile net income to cash (used in) provided by operating activities:
                       
Extinguishment of debt income
    (533 )     (599 )
Depreciation and amortization
    86       68  
Share-based compensation expense
    30       25  
Other income from release of accounts payable
    --       (56 )
(Recovery from) doubtful accounts, net
    (35 )     (31 )
(Recovery from) provision for inventory obsolescence, net
    (28 )     24  
Changes in operating assets and liabilities:
                       
Right of use asset, net
    (20 )     68  
Accounts receivable
    30       (130 )
Inventories
    67       80  
Prepaid expenses and other assets
    (5 )     (108 )
Accounts payable
    142       87  
Accrued compensation and other accrued liabilities
    (88 )     212  
Net cash (used in) provided by operating activities
    (17 )     109  
                         
Investing activities:
                       
Acquisition of property and equipment
    (18 )     (4 )
Patent costs
    (13 )     (16 )
Net cash (used in) investing activities
    (31 )     (20 )
                         
Financing activities:
                       
Net proceeds from options exercised
    8       --  
(Paydown of) credit facility, net change
    --       (371 )
(Paydown of) secured notes
    (10 )     --  
EIDL loan
    --       152  
Unsecured promissory note
    --       599  
      (2 )     380  
                         
Net (decrease) increase in cash
    (50 )     469  
Cash, beginning of period
    1,474       385  
Cash, end of period
  $ 1,424     $ 854  
                         

CONTACT:

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

SOURCE: Encision Inc.


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