AP NEWS
Press release content from PR Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from PR Newswire
Press release content from PR Newswire. The AP news staff was not involved in its creation.

Encision Reports Second Quarter Fiscal Year 2020 Results

November 6, 2019

BOULDER, Colo., Nov. 6, 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 2020 second quarter that ended September 30, 2019.

The Company posted quarterly net revenue of $1.92 million for a quarterly net income of $30 thousand, or $0.00 per diluted share. These results compare to net revenue of $2.20 million for a quarterly net income of $12 thousand, or $0.00 per diluted share, in the year-ago quarter. Gross margin on net revenue was 55% in the fiscal 2019 and 2018 second quarters.

The Company posted six months net revenue of $3.85 million for a six months net loss of $152 thousand, or $(0.01) per diluted share. These results compare to net revenue of $4.601 million for a six months net income of $31 thousand, or $0.00 per diluted share, in the year-ago six months. Gross margin on net revenue was 51% in the fiscal 2019 six months and 54% in the fiscal 2018 six months. Gross margin on net revenue was lower in the fiscal 2019 six months as compared to the fiscal 2018 six months primarily as a result of significantly higher material costs, especially as a result of tariffs on our material costs and higher labor and overhead costs, per unit of inventory.

During the quarter, we entered into a loan and security agreement with Crestmark Bank. The loan is due on demand and has no financial covenants. Under the agreement, we were provided with a line of credit that is not to exceed the lesser of $1,000,000 or 85% of eligible accounts receivable. The interest rate is prime rate plus 1.5%, with a floor of 6.75%, plus a monthly maintenance fee of 0.4%, based on the average monthly loan balance. Interest is charged on a minimum loan balance of $500,000, a loan fee of 1% annually, and an exit fee of 3%, 2% and 1% during years one, two and three, respectively.

“For this fiscal year’s second quarter, net revenue declined 12%. Although this is a disappointment, it was an improvement over the 20% decline of this fiscal year’s first quarter,” said Greg Trudel, President and CEO of Encision Inc. “Because of the significantly higher material costs that were a result of the U.S. tariffs and the resulting loss, during the quarter we implemented a reduction of personnel and departmental spending in excess of $1 million annualized. We expect that the reductions will return us to profitability. The return to profitability started in the second quarter, and we expect this to continue. Our confidence in our strategy to drive top line growth through new product introductions and channel expansion is unwavering.”

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

Six Months Ended



September 30,
2019


September 30,
2018


September 30,
2019


September 30,
2018

Net revenue


$1,924


$2,197


$3,853


$4,601

Cost of revenue


875


992


1,871


2,095

Gross profit


1,049


1,205


1,982


2,506

Operating expenses:









Sales and marketing


537


656


1,067


1,432

General and administrative


304


322


650


642

Research and development


173


187


409


353

Total operating expenses


1,014


1,165


2,126


2,427

Operating income (loss)


35


40


(144)


79

Interest expense and other expense, net


(5)


(28)


(8)


(48)

Income (loss) before provision for income

taxes


30


12


(152)


31

Provision for income taxes


––


––


––


––

Net income (loss)


$ 30


$ 12


$(152)


$ 31

Net income (loss) per share—basic and

diluted


$ 0.00


$0.00


$(0.01)


$0.00

Weighted average number of shares—

basic


11,558


10,683


11,558


10,683

Weighted average number of shares—

diluted


11,592


10,718


11,558


10,711

Encision Inc.

Unaudited Condensed Balance Sheets

(in thousands)




September 30,
2019


March 31,
2019

ASSETS





Cash and cash equivalents


$ 142


$ 273

Restricted cash


––


25

Accounts receivable, net


968


1,009

Inventories, net


1,343


1,473

Prepaid expenses


80


130

Total current assets


2,533


2,910

Equipment, net


226


250

Patents, net


239


249

Right of use asset


1,131


––

Other assets


19


19

Total assets


$ 4,148


$ 3,428

LIABILITIES AND SHAREHOLDERS' EQUITY





Accounts payable


$ 313


$ 579

Accrued compensation


201


296

Other accrued liabilities


100


126

Line of credit


93


––

Accrued lease liability


209


––

Total current liabilities


916


1,001

Accrued lease liability


1,017


––

Deferred rent


––


75

Total liabilities


1,933


1,076

Common stock and additional paid-in capital


24,217


24,202

Accumulated (deficit)


(22,002)


(21,850)

Total shareholders' equity


2,215


2,352

Total liabilities and shareholders' equity


$ 4,148


$ 3,428

Encision Inc.

Unaudited Condensed Statements of Cash Flows

(in thousands)




Six Months Ended



September 30,
2019


September 30,
2018

Operating activities:





Net income (loss)


$ (152)


$ 31

Adjustments to reconcile net income (loss) to cash

generated by (used in) operating activities:





Depreciation and amortization


80


92

Share-based compensation expense


15


26

(Recovery from) doubtful accounts, net


(1)


(1)

(Recovery from) provision for inventory obsolescence, net


(12)


4

Changes in operating assets and liabilities:





Right of use asset


20


––

Accounts receivable


42


(143)

Inventories


142


65

Prepaid expenses and other assets


50


(24)

Accounts payable


(265)


103

Accrued compensation and other accrued liabilities


(122)


(90)

Net cash generated by (used in) operating activities


(203)


63






Investing activities:





Acquisition of property and equipment


(43)


(10)

Patent costs


(3)


(5)

Net cash (used in) investing activities


(46)


(15)






Financing activities:





Borrowings from credit facility, net change


93


––

Net cash generated by financing activities


93


––






Net increase (decrease) in cash, cash equivalents and

restricted cash


(156)


48

Cash, cash equivalents and restricted cash, beginning of

period


298


139

Cash, cash equivalents and restricted cash, end of period


$ 142


$ 187







View original content: http://www.prnewswire.com/news-releases/encision-reports-second-quarter-fiscal-year-2020-results-300952365.html

SOURCE Encision Inc.