Encision Reports Third Quarter Fiscal Year 2019 Results
BOULDER, Colo., Feb. 7, 2019 /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 2019 third quarter that ended December 31, 2018.
The Company posted quarterly net revenue of $2.12 million for a quarterly net loss of $84 thousand, or $(0.01) per diluted share. These results compare to net revenue of $2.19 million for a quarterly net income of $56 thousand, or $0.01 per diluted share, in the year-ago quarter. Net revenue for last year's quarter included net revenue of $94.5 thousand from an order for non-AEM product. Gross margin on net revenue was 50% in the fiscal 2019 third quarter and 56% in the fiscal 2018 third quarter. Gross margin on net revenue was lower in the current quarter primarily as a result of significantly higher material costs, especially as a result of tariffs on our steel costs and, to a lesser extent, inventory reserve expense and product mix.
The Company posted nine months net revenue of $6.72 million for a nine months net loss of $53 thousand, or $0.00 per diluted share. These results compare to net revenue of $6.72 million for a nine months net income of $354 thousand, or $0.03 per diluted share, in the year-ago nine months. Net revenue for last year's nine months included net revenue of $424 thousand from an order for non-AEM product. Gross margin on net revenue was 53% in the fiscal 2019 nine months and 57% in the fiscal 2018 nine months. Gross margin on net revenue was lower in the current nine months as a result of higher material costs and product mix.
"For this fiscal year's nine months, net revenue on AEM product resulted in a 7% rate of growth, said Greg Trudel, President and CEO of Encision Inc. "During the quarter ended December 31, 2018, we issued 875,000 shares of our common stock to CMED Partners LLLP ("CMED") in exchange for $350,000. We appreciate the continued confidence that CMED has placed in us. Net proceeds from the sale of the shares will be used for general business purposes and, in particular, for greater sales, marketing, and research and development presence. While never satisfied with a loss of any magnitude, our confidence in our strategy to drive top line growth through new product introductions and channel expansion is unwavering. We look forward to both a solid close for our FY2019 and to driving top line growth in FY2020."
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, 2018 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 Nine Months Ended
December 31,
December 31,
December 31,
December 31,
2018 2017 2018 2017
Net revenue $2,117 $2,190 $6,718 $6,716
Cost of revenue 1,055 956 3,149 2,880
Gross profit 1,062 1,234 3,569 3,836
Operating expenses:
Sales and marketing 645 570 2,077 1,745
General and administrative 312 369 954 1,058
Research and development 189 224 543 635
Total operating expenses 1,146 1,163 3,574 3,438
Operating income (loss) (84) 71 (5) 398
Interest expense and other
expense, net
-- (15) (48) (44)
Income (loss) before
provision for income
taxes (84) 56 (53) 354
Provision for income taxes
--
--
--
--
Net income (loss) $(84) $56 $(53) $354
Net income (loss) per
share-basic and diluted $(0.01) $0.01 $0.00 $0.03
Weighted average number of
shares-basic 10,799 10,683 10,722 10,683
Weighted average number of
shares-diluted 10,799 10,708 10,722 10,702
Encision Inc.
Unaudited Condensed Balance Sheets
(in thousands)
December 31, March 31,
2018 2018
ASSETS
Cash and cash
equivalents $577 $114
Restricted cash 25 25
Accounts receivable, net 1,024 963
Inventories, net 1,391 1,437
Prepaid expenses 130 75
Total current assets 3,147 2,614
Equipment, net 239 349
Patents, net 254 270
Other assets 19 19
Total assets $3,659 $3,252
LIABILITIES AND
SHAREHOLDERS' EQUITY
Accounts payable $690 $466
Accrued compensation 258 257
Other accrued
liabilities 100 285
Deferred rent
-- 30
Total current
liabilities 1,048 1,038
Deferred rent 74 10
Total liabilities 1,122 1,048
Common stock and
additional paid-in
capital 24,205 23,818
Accumulated (deficit) (21,668) (21,614)
Total shareholders'
equity 2,537 2,204
Total liabilities and
shareholders' equity $3,659 $3,252
Encision Inc.
Unaudited Condensed Statements of Cash Flows
(in thousands)
Nine Months Ended
December 31, December 31,
2018 2017
Operating activities:
Net income (loss) $(53) $354
Adjustments to reconcile net income (loss) to cash
generated by operating activities:
Depreciation and amortization 141 154
Share-based compensation expense 37 49
(Recovery from) provision for doubtful accounts, net (1) (19)
(Recovery from) inventory obsolescence, net 24 (20)
Changes in operating assets and liabilities:
Accounts receivable (61) 123
Inventories 22 (98)
Prepaid expenses and other assets (55) (83)
Accounts payable 224 119
Accrued compensation and other accrued liabilities (150) (85)
Net cash generated by operating activities 128 494
Investing activities:
Acquisition of property and equipment (10) (41)
Patent costs (5) (35)
Net cash (used in) investing activities (15) (76)
Financing activities:
Paydown of credit facility, net change
-- (275)
Proceeds from the issuance of common stock 350
--
Net cash generated by (used in) financing activities 350 (275)
Net increase in cash, cash equivalents, and restricted cash 463 143
Cash, cash equivalents, and restricted cash, beginning of 139 95
period
Cash, cash equivalents, and restricted cash, end of period $602 $238
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SOURCE Encision Inc.
