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Encision Reports Third Quarter Fiscal Year 2019 Results

BOULDER, Colo., Feb. 7, 2019 /PRNewswire/ -- Encision Inc. (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,
2018


December 31,
2017


December 31,
2018


December 31,
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,
2018


March 31,  
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,
2018


   December 31,
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
     period


139


95

Cash, cash equivalents, and restricted cash, end of period


$    602


$ 238







 

Cision

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