Encision Reports Second Quarter Fiscal Year 2022 Results

Rhea-AI Summary

Encision Inc. (PK:ECIA) reported financial results for Q2 FY2022, posting net revenue of $2.11 million and a net income of $360,000 or $0.03 per diluted share, compared to $1.88 million in revenue and $9,000 in net income from the previous year. The gross margin decreased to 45%, down from 53% due to increased material costs. For the six months ending September 30, 2021, revenue of $4.12 million led to a net income of $353,000. Encision has secured a three-year Supply Agreement with Auris Health and achieved loan forgiveness of $533,118.

Positive

• Net revenue increased to $2.11 million from $1.88 million year-over-year.
• Net income grew to $360,000 from $9,000 year-over-year.
• Secured a three-year supply agreement with Auris Health for AEM Technology products.
• Achieved forgiveness of a $533,118 PPP loan.

Negative

• Gross margin decreased to 45% from 53% due to higher material costs.

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

 

 

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

SOURCE Encision Inc.

FAQ

What were Encision Inc.'s Q2 FY2022 earnings results?

Encision Inc. reported Q2 FY2022 net revenue of $2.11 million and net income of $360,000.

How did Encision Inc.'s financial performance compare year-over-year?

Compared to the same quarter last year, Encision's net revenue increased from $1.88 million to $2.11 million.

What is the significance of the agreement with Auris Health?

The agreement allows Auris Health to purchase AEM Technology products exclusively from Encision for three years.

How much was the PPP loan forgiven for Encision Inc.?

Encision Inc. achieved forgiveness for a PPP loan totaling $533,118.

What is the current gross margin for Encision Inc.?

The gross margin for Q2 FY2022 was 45%, down from 53% in the previous year.