Encision Reports Fourth Quarter Fiscal Year 2020 Results

BOULDER, Colo., May 14, 2020 /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 2020 fourth quarter that ended March 31, 2020.

The Company posted quarterly net revenue of $1.78 million for a quarterly net loss of $116 thousand, or $(0.01) per diluted share. These results compare to net revenue of $2.09 million for a quarterly net loss of $183 thousand, or $(0.02) per diluted share, in the year-ago quarter. Gross margin on net revenue was 53% in the fiscal 2020 and fiscal 2019 fourth quarters.

The Company posted twelve months net revenue of $7.67 million for a twelve months net loss of $198 thousand, or $(0.02) per diluted share. These results compare to net revenue of $8.80 million for a twelve months net loss of $236 thousand, or $(0.02) per diluted share, in the year-ago twelve months. Gross margin on net revenue was 52% in the fiscal 2020 twelve months and 53% in the fiscal 2019 twelve months. Gross margin on net revenue was lower in the fiscal 2020 twelve months as compared to the fiscal 2019 twelve months primarily as a result of higher labor and overhead costs, per unit of inventory.

"Starting in mid-February 2020, and through the end of March, we had a sudden decrease in revenue due to the COVID-19 Pandemic," said Gregory Trudel, President and CEO of Encision Inc. "Revenue for April was half of last year's April revenue. As of the beginning of May, we are just starting to see the flow of non-essential procedures recommence and a corresponding uptick in sales revenue."

In April, Encision entered into an unsecured promissory note under the Paycheck Protection Program (the "PPP") for a principal amount of $598,567. The PPP was established under the recently congressionally approved Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). The term of the PPP loan is for two years with an interest rate of 1.0% per year, which will be deferred for the first six months of the term of the loan. After the initial six-month deferral period, the loan requires monthly payments of principal and interest until maturity with respect to any portion of the PPP loan which is not forgiven. 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. Such forgiveness will be determined based upon the use of loan proceeds for payroll costs, rent and utility costs, and the maintenance of employee and compensation levels. "We're pleased to have received the PPP funding" said Trudel. "This enabled us to maintain internal momentum in manufacturing, engineering innovation, and new AEM Technology products introduction."

Trudel continued, "Encision entered into a Master Services Agreement with Auris Health, Inc. ("Auris Health") in April. Auris Health is a part of the Johnson & Johnson family of companies. Under the agreement, Encision will collaborate on the integration of AEM technology into monopolar instrumentation produced by Auris Health for advanced surgical applications."

"We are also looking forward to a new product introduction in the current fiscal year that will open new account opportunities, enable customers to reduce procedural costs, and drive revenue growth."

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, 2019 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  
              Years Ended

       March 31, 2020                                        
     March 31, 2019    
     March 31, 2020     
     March 31, 2019

     Net revenue                                                             $1,778                                                           $2,085                 $7,670                  $8,803

     Cost of revenue                                                            840                                                              982                  3,666                   4,131

     Gross profit                                                               938                                                            1,103                  4,004                   4,672

     Operating expenses:

         Sales and marketing                                                    482                                                              686                  2,094                   2,763

         General and administrative                                             374                                                              361                  1,318                   1,315

         Research and development                                               181                                                              237                    748                     780

             Total operating expenses                                         1,036                                                            1,284                  4,160                   4,858

     Operating loss                                                            (98)                                                           (181)                 (156)                  (186)

     Interest expense and other expense, net                                   (18)                                                             (2)                  (42)                   (50)

     Loss before provision for income taxes                                   (116)                                                           (183)                 (198)                  (236)

     Provision for income taxes                                         

     Net loss                                                                $(116)                                                          $(183)                $(198)                 $(236)

     Net loss per share-basic and diluted                                   $(0.01)                                                         $(0.02)               $(0.02)                $(0.02)

     Weighted average number of shares-    basic and diluted                 11,583                                                           11,558                 11,573                  10,933

               Encision Inc.

        Unaudited Condensed Balance Sheets

                (in thousands)

                                                     March 31, 2020       March 31, 2019


      Cash and cash
       equivalents                                             $385                  $273

      Restricted cash                                 
              --                   25

       receivable, net                                          881                 1,009

      Inventories, net                                        1,626                 1,473

      Prepaid expenses                                           73                   130

          Total current
           assets                                             2,965                 2,910

      Equipment, net                                            207                   250

      Patents, net                                              229                   249

      Right of use asset                                      1,317         

      Other assets                                               19                    19

          Total assets                                       $4,737                $3,428


      Accounts payable                                         $445                  $579

      Line of credit                                            370         

       compensation                                             219                   296

      Other accrued
       liabilities                                               96                   126

      Accrued lease
       liability                                                278         

          Total current
           liabilities                                        1,408                 1,001

      Accrued lease
       liability                                              1,145         

      Deferred rent                                   
              --                   75

          Total liabilities                                   2,553                 1,076

      Common stock and
       additional paid-
       in capital                                            24,232                24,202

       (deficit)                                           (22,048)             (21,850)

          Total shareholders'
           equity                                             2,184                 2,352

          Total liabilities
           and shareholders'
           equity                                            $4,737                $3,428

                Encision Inc.

            Unaudited Condensed Statements of Cash Flows

                 (in thousands)

               Years Ended

               March 31, 2020                       March 31, 2019

      Operating activities:

         Net loss                                                         $(198)                               $(236)

          Adjustments to reconcile net
           loss to cash

              (used in) operating

          Depreciation and
           amortization                                                       138                                   182

          Share-based compensation
           expense                                                             31                                    37

          Provision for doubtful
           accounts, net                                                       32                                     6

          (Recovery from) provision
           for inventory obsolescence,
           net                                                               (11)                                   29

          Changes in operating assets
           and liabilities:

              Right of use asset, net                                          31                         

              Accounts receivable                                              96                                  (52)

              Inventories                                                   (142)                                 (64)

              Prepaid expenses and other
               assets                                                          36                                  (56)

              Accounts payable                                              (134)                                  111

              Accrued compensation and
               other accrued liabilities                                    (108)                                 (85)

                  Net cash (used in) operating
                   activities                                               (229)                                (128)

      Investing activities:

          Acquisition of property and
           equipment                                                         (48)                                 (55)

         Patent costs                                                        (6)                                  (6)

                  Net cash (used in) investing
                   activities                                                (54)                                 (61)

      Financing activities:

          Borrowings from credit
           facility, net change                                               370                         

          Net proceeds from the
           issuance of common stock                                 
              --                                  347

                  Net cash generated by
                   financing activities                                       370                                   347

      Net increase in cash, cash
       equivalents and restricted
       cash                                                                    87                                   158

      Cash, cash equivalents and
       restricted cash, beginning
       of period                                                              298                                   140

      Cash, cash equivalents and
       restricted cash, end of
       period                                                                $385                                  $298

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SOURCE Encision Inc.