Encision Reports Second Quarter Fiscal Year 2025 Results

Rhea-AI Summary

Encision Inc. (OTC PINK:ECIA) reported financial results for Q2 FY2025 ending September 30, 2024. Total net revenue was $1.75 million, down from $1.83 million in Q2 FY2024, with a quarterly net loss of $170,000 ($(0.01) per share). Product net revenue decreased to $1.65 million from $1.75 million year-over-year, while service revenue increased to $101,000. The company maintained a 47% gross margin on product revenue. For the six-month period, total revenue was $3.39 million with a net loss of $148,000. Performance was impacted by reduced surgical procedures due to hurricanes in the southeast and saline availability issues. The company plans to launch a new ENT market product in early FY2026.

Positive

• Service revenue increased to $101,000 from $74,000 year-over-year
• Six-month gross margin improved to 52% from 49.3% year-over-year

Negative

• Q2 total revenue declined to $1.75M from $1.83M year-over-year
• Quarterly net loss increased to $170,000 from $8,000 year-over-year
• Product net revenue decreased to $1.65M from $1.75M year-over-year
• Six-month total revenue declined to $3.39M from $3.48M year-over-year

BOULDER, CO / ACCESSWIRE / November 15, 2024 / 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 2025 second quarter that ended September 30, 2024.

The Company posted quarterly product net revenue of $1.65 million and service net revenue of $101 thousand, or total net revenue of $1.75 million for a quarterly net loss of $170 thousand, or $(0.01) per diluted share. These results compare to product net revenue of $1.75 million and service net revenue of $74 thousand, or total net revenue of $1.83 million for a quarterly net loss of $8 thousand, or $(0.00) per diluted share, in the year-ago quarter. Gross margin on product net revenue was 47% in the fiscal 2025 second quarter and 47% in the fiscal 2024 second quarter.

The Company posted six months product net revenue of $3.25 million and service net revenue of $140 thousand, or total net revenue of $3.39 million for a six month net loss of $148 thousand, or $(0.01) per diluted share. These results compare to product net revenue of $3.37 million and service net revenue of $113.8 thousand, or total net revenue of $3.48 million for a six months net loss of $148 thousand, or $(0.01) per diluted share, in the year-ago six months. Gross margin on product net revenue was 52% in the fiscal 2025 six months and 49.3% in the fiscal 2024 six months.

"We were disappointed to finish short of objectives for the second quarter," said Gregory Trudel, President & CEO. "Surgical procedures were down as a ripple effect of the hurricanes that hit the southeast, reduction in Saline availability, and we were unsuccessful in closing several new accounts that we had anticipated. The good news is that our customers affected by the hurricanes are coming back online and we look forward to bringing that new business home this quarter. We continue our internal efforts to drive improved margins and look forward to launching a new product into the ENT market in early fiscal 2026."

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, 2024 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: Brandon Shepard, Encision Inc., 303-444-2600, bshepard@encision.com

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

		Three Months Ended								Six Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
NET REVENUE:
Product		$	1,653,820			$	1,752,413			$	3,245,779			$	3,365,965
Service			101,568				73,978				140,539				113,809
Total revenue			1,755,388				1,826,391				3,386,318				3,479,774
COST OF REVENUE:
Product			882,886				926,455				1,550,520				1,696,493
Service			44,020				37,327				64,653				57,947
Total cost of revenue			926,906				963,782				1,615,173				1,754,440
GROSS PROFIT			828,482				862,609				1,771,145				1,725,334
OPERATING EXPENSES:
Sales and marketing			458,480				389,342				881,716				822,778
General and administrative			373,405				366,377				725,310				755,133
Research and development			155,515				100,854				294,695				269,274
Total operating expenses			987,400				856,573				1,901,721				1,847,185
OPERATING INCOME (LOSS)			(158,918	)			6,036				(130,576	)			(121,851	)
Interest expense, net			(10,598	)			(16,851	)			(16,967	)			(31,083	)
Other income (expense), net			(746	)			3,286				(679	)			4,951
Interest expense and other income (expense), net			(11,344	)			(13,565	)			(17,646	)			(26,132	)
(LOSS) BEFORE PROVISION FOR INCOME TAXES			(170,262	)			(7,529	)			(148,222	)			(147,983	)
Provision for income taxes			--				--				--				--
NET (LOSS)		$	(170,262	)		$	(7,529	)		$	(148,222	)		$	(147,983	)
Net (loss) per share-basic and diluted		$	(0.01	)		$	0.00			$	(0.01	)		$	(0.01	)
Weighted average shares-basic and diluted			11,875,145				11,769,543				11,875,145				11,769,543

Encision Inc.
Unaudited Condensed Balance Sheets
(in thousands)

		September 30, 2024 Unaudited				March 31, 2024 Audited
ASSETS
Current assets:
Cash		$	230,014			$	42,509
Accounts receivable			817,002				891,129
Inventories			1,164,666				1,402,338
Prepaid expenses			70,628				90,298
Total current assets			2,282,310				2,426,274
Equipment:
Furniture, fixtures and equipment, at cost			2,668,544				2,627,726
Accumulated depreciation			(2,402,419	)			(2,373,722	)
Equipment, net			266,125				254,004
Right of use asset			736,850				900,787
Patents, net			169,283				164,010
Other assets			69,376				65,641
TOTAL ASSETS		$	3,523,944			$	3,810,716
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	319,371			$	346,049
Line of credit			78,851				156,685
Secured notes			43,041				42,194
Accrued compensation			192,810				184,913
Other accrued liabilities			91,145				119,804
Accrued lease liability			414,730				370,377
Total current liabilities			1,139,948				1,220,022
Long-term liability:
Secured notes			200,496				67,336
Accrued lease liability			481,411				696,610
Total liabilities			1,821,855				1,983,968
Commitments and contingencies (Note 4)
Shareholders' equity:
Preferred stock, no par value: 10,000,000 shares authorized; none issued and outstanding			--				--
Common stock and additional paid-in capital, no par value: 100,000,000 shares authorized; 11,875,145 and 11,858,627 issued and outstanding at September 30, 2024 and March 31, 2024, respectively			24,395,358				24,371,795
Accumulated (deficit)			(22,693,269	)			(22,545,047	)
Total shareholders' equity			1,702,089				1,826,748
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	3,523,944			$	3,810,716

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

Six Months Ended		September 30, 2024				September 30, 2023
Cash flows (used in) operating activities:
Net (loss)		$	(148,222	)		$	(147,983	)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Depreciation and amortization			42,525				43,775
Stock-based compensation expense related to stock options			25,011				26,149
Provision for potential inventory obsolescence			83,152				64,000
Change in operating assets and liabilities:
Right of use asset, net			(6,909	)			(97,490	)
Accounts receivable			74,127				(103,629	)
Inventories			154,520				193,079
Prepaid expenses and other assets			15,935				54,630
Accounts payable			(26,678	)			47,198
Accrued compensation and other accrued liabilities			(20,762	)			(82,732	)
Net cash provided by (used in) operating activities			192,699				(3,003	)
Cash flows (used in) investing activities:
Acquisition of property and equipment			(42,559	)			(122	)
Patent costs			(17,359	)			(16,727	)
Net cash (used in) investing activities			(59,918	)			(16,849	)
Cash flows from financing activities:
(Paydown) of line of credit			(77,834	)			--
(Payments) from options exercised			(1,449	)			--
Borrowing from secured notes			134,007				136,887
			54,724				136,887
Net increase in cash			187,505				117,035
Cash, beginning of fiscal year			42,509				188,966
Cash, end of six months		$	230,014			$	306,001
Supplemental disclosures of cash flow information:
Cash paid during the year for interest		$	16,967			$	31,083

SOURCE: Encision, Inc.

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FAQ

What was Encision's (ECIA) Q2 FY2025 total revenue?

Encision reported total net revenue of $1.75 million for Q2 FY2025, which ended September 30, 2024.

What factors affected Encision's (ECIA) Q2 FY2025 performance?

Performance was impacted by reduced surgical procedures due to hurricanes in the southeast, reduction in saline availability, and unsuccessful closure of anticipated new accounts.

What was Encision's (ECIA) gross margin on product revenue in Q2 FY2025?

Encision maintained a 47% gross margin on product revenue in Q2 FY2025, unchanged from Q2 FY2024.

What is Encision's (ECIA) planned product launch for FY2026?

Encision plans to launch a new product for the ENT market in early fiscal year 2026.