Encision Reports Third Quarter Fiscal Year 2021 Results
BOULDER, Colo., Feb. 4, 2021 /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 2021 third quarter that ended December 31, 2020.
The Company posted quarterly net revenue of $2.16 million for a quarterly net income of $599 thousand, or $0.05 per diluted share. Net income included $599 thousand of extinguishment of debt income. These results compare to net revenue of $2.04 million for a quarterly net income of $70 thousand, or $0.01 per diluted share, in the year-ago quarter. Gross margin on net revenue was 51% in the fiscal 2021 third quarter and 53% in the fiscal 2020 third quarter.
The Company posted nine months net revenue of $5.39 million for a nine months net income of $469 thousand, or $0.04 per diluted share. Net income included $599 thousand of extinguishment of debt income. These results compare to net revenue of $5.89 million for a nine months net loss of $82 thousand, or $(0.01) per diluted share, in the year-ago nine months. Gross margin on net revenue was 51% in the fiscal 2021 nine months and 52% in the fiscal 2020 nine months.
"As a result of COVID-19 limiting surgical procedures, product revenue for our third quarter of fiscal 2021 decreased 2% from our third quarter of last year. Total revenue, which included service revenue, increased 6% from our third quarter of last year," said Gregory Trudel, President and CEO of Encision Inc. "With the current increases of Covid-19 cases, we remain watchful of the state of surgery and will do all we can to support our customers."
"We entered into a Master Services Agreement with Auris Health, Inc. ("Auris Health") in April 2020. Auris Health is a part of the Johnson & Johnson family of companies. Under the agreement, we will collaborate 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."
"At the end of our second quarter, we began to sell our AEM 2X enTouch® Scissors ("2X Scissors"). 2X Scissors bring new levels of performance and economy to the surgical scissor market by combining the best in class performance of our enTouch Disposable Scissors with the value and economy of a multi-use device. 2X Scissors are a game-changing product that will have a significant impact on the disposable laparoscopic scissor market. Our enTouch Disposable Scissors have long been the surgeon preferred product because of their sharpness and micro-serrations. Our new 2X Scissors provide all those benefits at half the cost per use and reduce hospital waste and the impact on the environment as well. The new thermochromic technology integrated into 2X Scissors lets the hospital know when to replace the scissors with new ones and makes tracking their use simple and easy. Superior performance, superior value, easy to use, and easy on the environment - that's what customers want in a disposable scissor. It is the way that everything is going. We expect 2X Scissors to gain an attractive sales trajectory and to become a significant part of our portfolio of products. 2X Scissors work perfectly with hot AEM dissection and are priced to be used for cold dissection as well. 2X Scissors will open new use segments for us and create an opportunity for customers to standardize on our entire portfolio of Active Electrode Monitoring (AEM®) products. We are delighted to sell 2X Scissors and look forward to delivering other high performance and high customer value product innovations going forward."
"In April, we entered into an unsecured promissory note under the Paycheck Protection Program (the "PPP") for a principal amount of $598,567. 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. In the quarter that ended December 31, 2020, we achieved the requirements for forgiveness, and all of the $598,567 was forgiven. We recognized the forgiveness as extinguishment of debt income of $598,567. In the quarter that ends March 31, 2021, we applied for a second PPP loan.
"On August 4, we received $150,000 in loan funding from the U.S. Small Business Administration ("SBA") under the Economic Injury Disaster Loan ("EIDL") program administered by the SBA, which program was expanded pursuant to the CARES Act. The EIDL is evidenced by a promissory note, dated August 1 in the original principal amount of $150,000 with the SBA, the lender. The EIDL note term is for thirty years."
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 2020 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,
2020 2019 2020 2019
---
Product revenue $1,999 $2,039 $5,093 $5,892
Service revenue 164
-- 298
--
Total revenue 2,163 2,039 5,391 5,892
Product cost of
revenue 976 956 2,501 2,827
Service cost of
revenue 81
-- 150
--
Total cost of
revenue 1,057 956 2,651 2,827
Gross profit 1,106 1,083 2,740 3,065
Operating expenses:
Sales and marketing 581 544 1,513 1,612
General and
administrative 373 294 999 943
Research and
development 139 159 443 568
Total operating
expenses 1,093 997 2,955 3,123
Operating income
(loss) 13 86 (215) (58)
Interest expense
and other expense,
net 586 (16) 684 (24)
Loss before
provision for
income taxes 599 70 469 (82)
Provision for
income taxes
--
--
--
--
---
Net income (loss) $599 $70 $469 $(82)
===
Net income (loss)
per share-basic
and diluted $0.05 $0.01 $0.04 $(0.01)
Weighted average
number of basic
shares 11,583 11,578 11,583 11,565
Weighted average
number of diluted
shares 11,709 11,631 11,750 11,565
Encision Inc.
Unaudited Condensed Balance Sheets
(in thousands)
December 31, March 31,
2020 2020
---
ASSETS
Cash and cash
equivalents $854 $385
Accounts
receivable, net 1,043 881
Inventories, net 1,522 1,626
Prepaid expenses 179 73
Total current
assets 3,598 2,965
Equipment, net 166 207
Patents, net 222 228
Right of use
asset 1,127 1,317
Other assets 20 20
Total assets $5,133 $4,737
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $475 $445
Line of credit
-- 370
Accrued
compensation 233 219
Other accrued
liabilities 294 96
Accrued lease
liability 296 278
Total current
liabilities 1,298 1,408
Accrued lease
liability 1,005 1,145
Economic injury
disaster loan 152
--
Total
liabilities 2,455 2,553
Common stock and
additional
paid-in
capital 24,257 24,232
Accumulated
(deficit) (21,579) (22,048)
Total
shareholders'
equity 2,678 2,184
Total
liabilities and
shareholders'
equity $5,133 $4,737
Encision Inc.
Unaudited Condensed Statements of Cash Flows
(in thousands)
Nine Months Ended
December 31, December
31,
2020 2019
Operating activities:
Net
income
(loss) $469 $(82)
Adjustments to reconcile net loss
to cash
(used in) operating activities:
Extinguishment
of
debt
income (599) --
Depreciation
and
amortization 68 112
Share-
based
compensation
expense 25 22
(Recovery
from)
provision
for
doubtful
accounts,
net (31) 10
Provision
for
(recovery
from)
inventory
obsolescence,
net 24 (9)
Other
income
from
release
of
accounts
payable (56) --
Changes in operating assets and
liabilities:
Right
of
use
asset,
net 68 30
Accounts
receivable (130) (59)
Inventories 80 121
Prepaid
expenses
and
other
assets (108) 11
Accounts
payable 87 (69)
Accrued
compensation
and
other
accrued
liabilities 212 (132)
Net
cash
provided
by
(used
in)
operating
activities 109 (45)
Investing activities:
Acquisition
of
property
and
equipment (4) (53)
Patent
costs (16) (5)
Net
cash
(used
in)
investing
activities (20) (58)
Financing activities:
Paydown
of
credit
facility,
net
change (371) --
EIDL
loan 152 --
Proceeds
from
PPP
loan 599 --
Net
cash
generated
by
financing
activities 380 --
Net
increase
(decrease)
in
cash
and
cash
equivalents 469 (103)
Cash
and
cash
equivalents,
beginning
of
period 385 298
Cash
and
cash
equivalents,
end
of
period $854 $195
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SOURCE Encision Inc.
