8-K
ENCISION INC (ECIA)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d)
of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June16, 2022
ENCISION, INC.
(Exact name of registrant as specified in its charter)
| Colorado | 001-11789 | 84-1162056 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File<br> Number) | (I.R.S. Employer Identification<br> No.) |
| 6797 Winchester Circle, Boulder, Colorado | 80301 | |
| --- | --- | |
| (Address<br> of principal executive offices) | (Zip Code) | |
| (303) 444-2600 | ||
| --- | ||
| (Registrant’s<br> telephone number, including area code) | ||
| (Former name or former address, if changed since last report.) | ||
| --- | ||
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | ||
| ☐<br> Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
| ☐<br> Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
| ☐<br> Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||
| ☐<br> Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br> <br>Symbol(s) | Name of each exchange<br><br> <br>on which registered |
|---|---|---|
| Common Stock, no par value | ECIA | OTC Bulletin Board |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations
and Financial Condition.
On June 16, 2022, Encision, Inc. issued a press release announcing its fourth quarter financial results for the quarter ended March 31, 2022. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statements
and Exhibits.
(d) Exhibits.
99.1 Press Release issued by Encision, Inc., June 16, 2022
The information included herein and in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ENCISION, INC. | |
|---|---|
| (Registrant) | |
| Date: June<br> 16, 2022 | |
| /s/ Mala M Ray | |
| Mala M Ray | |
| Controller | |
| Principal Accounting Officer |
Exhibit 99.1
June 16, 2022
Encision Reports Fourth Quarter Fiscal Year 2022 Results
Boulder, Colorado, June 16, 2022 -- Encision Inc. (PK:ECIA), a medical device company owning patented Active Electrode Monitoring (AEM®) Technology that prevents dangerous radiant energy burns in minimally invasive surgery, today announced financial results for its fiscal 2022 fourth quarter that ended March 31, 2022.
The Company posted quarterly net revenue of $1.60 million for a quarterly net loss of $402 thousand, or $(0.03) per diluted share. These results compare to net revenue of $2.15 million for a quarterly net income of $116 thousand, or $0.01 per diluted share, in the year-ago quarter. Gross margin on net revenue was 50% in the fiscal 2022 fourth quarter and 54% in the fiscal 2021 fourth quarter. Gross margin decreased in the current year’s fourth quarter compared to last year’s fourth quarter due principally to higher material costs.
The Company posted twelve months net revenue of $7.67 million for a twelve months net loss of $66 thousand, or $(0.01) per diluted share. These results compare to twelve months net revenue of $7.54 million for a twelve months net income of $585 thousand, or $0.05 per diluted share, in the year-ago twelve months. Net income included extinguishment of debt income of $533 thousand in the current year’s twelve months and $599 thousand in the year-ago twelve months. Gross margin on net revenue was 49% in the fiscal 2022 twelve months and 52% in the fiscal 2021 twelve months. Gross margin in the fiscal 2022 twelve months was lower due to higher material costs.
“The fourth quarter presented significant challenges for Encision,” said Gregory Trudel, President and CEO of Encision Inc. “We saw product revenue decrease by 18% and service revenue decrease by 84% compared to the fourth quarter of fiscal year 2021. The COVID wave continues to disrupt surgical procedures and we encountered a downward swing in product revenues. We continue to encounter supply chain issues and work tirelessly to deliver a steady mix of products to our customers who depend on us. Service revenue decreased significantly as we successfully concluded our collaboration with Auris Health, Inc. (“Auris Health”), a part of the Johnson & Johnson family of companies. Encision continues to be positive as we navigate the ups and downs of the pandemic market and the new-normal supply chain turmoil. We continuously look for opportunities to serve our customers with new products, to work smarter, and to drive increased efficiencies. In spite of limited customer access, our sales and marketing efforts are yielding new customers for our EnTouchâ 2X Scissors and we look forward to their contributions as the market bounces back.”
“Service revenue for our fourth quarter of fiscal year 2022 resulted from services performed under a Master Services Agreement with Auris Health. Under the agreement, Encision collaborated on the integration of AEM® Technology into monopolar instrumentation produced by Auris Health for advanced surgical applications. On August 23, 2021, we entered into a Supply Agreement with Auris Health. Towards the end of the fourth quarter business needs took a different direction. On May 5, 2022, the parties mutually agreed to terminate all the agreements. We enjoyed collaborating with the team at J&J and we look forward to future opportunities to work together.”
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 ofthe Private Securities Litigation Reform Act of 1995, the Company notes that statements in this press release and elsewhere that lookforward in time, which include everything other than historical information, involve risks and uncertainties that may cause actual resultsto differ materially from those indicated by the forward-looking statements. Factors that could cause the Company’s actual resultsto 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 othermanufacturers of surgical instruments, insufficient quantity of new account conversions, insufficient cash to fund operations, delay indeveloping new products and receiving FDA approval for such new products and other factors discussed in the Company’s filings withthe Securities and Exchange Commission. Readers are encouraged to review the risk factors and other disclosures appearing in the Company’sAnnual Report on Form 10-K for the year ended March 31, 2021 and subsequent filings with the Securities and Exchange Commission. We donot 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, <br><br>2022 | March 31, <br><br>2021 | March 31, <br><br>2022 | March 31, <br><br>2021 | |||||||||
| Product revenue | $ | 1,568 | $ | 1,918 | $ | 6,914 | $ | 7,011 | ||||
| Service revenue | 36 | 231 | 754 | 527 | ||||||||
| Total revenue | 1,604 | 2,149 | 7,668 | 7,538 | ||||||||
| Product cost of revenue | 781 | 874 | 3,509 | 3,375 | ||||||||
| Service cost of revenue | 15 | 108 | 371 | 258 | ||||||||
| Total cost of revenue | 796 | 982 | 3,880 | 3,633 | ||||||||
| Gross profit | 808 | 1,167 | 3,788 | 3,905 | ||||||||
| Operating expenses: | ||||||||||||
| Sales and marketing | 490 | 507 | 2,084 | 2,020 | ||||||||
| General and administrative | 387 | 380 | 1,381 | 1,377 | ||||||||
| Research and development | 334 | 126 | 918 | 569 | ||||||||
| Total operating expenses | 1,211 | 1,013 | 4,383 | 3,966 | ||||||||
| Operating (loss) income | (403 | ) | 154 | (595 | ) | (61 | ) | |||||
| Interest expense, extinguishment of debt income and other income, net | — | (38 | ) | 529 | 646 | |||||||
| (Loss) income before provision for income taxes | 1 | 116 | (66 | ) | 585 | |||||||
| Provision for income taxes | — | — | — | — | ||||||||
| Net (loss) income | $ | (402 | ) | $ | 116 | $ | (66 | ) | $ | 585 | ||
| Net (loss) income per share—basic and diluted | $ | (0.03 | ) | $ | 0.01 | $ | (0.01 | ) | $ | 0.05 | ||
| Weighted average number of basic shares | 11,683 | 11,583 | 11,625 | 11,583 | ||||||||
| Weighted average number of diluted shares | 11,683 | 11,832 | 11,625 | 11,768 |
Encision Inc.
Unaudited Condensed Balance Sheets
(in thousands)
| March 31, <br><br>2022 | March 31, <br><br>2021 | |||||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $ | 950 | $ | 1,474 | ||
| Accounts receivable, net | 948 | 1,024 | ||||
| Inventories, net | 1,584 | 1,446 | ||||
| Prepaid expenses and other assets | 120 | 154 | ||||
| Total current assets | 3,602 | 4,098 | ||||
| Equipment, net | 189 | 266 | ||||
| Right of use asset | 786 | 1,061 | ||||
| Patents, net | 181 | 213 | ||||
| Other assets | 34 | 21 | ||||
| Total assets | $ | 4,792 | $ | 5,659 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Accounts payable | $ | 576 | $ | 390 | ||
| Secured notes | 22 | 20 | ||||
| Accrued compensation | 191 | 182 | ||||
| Other accrued liabilities | 125 | 282 | ||||
| Accrued lease liability | 362 | 303 | ||||
| Total current liabilities | 1,276 | 1,177 | ||||
| Secured notes | 206 | 220 | ||||
| Accrued lease liability | 564 | 927 | ||||
| Unsecured promissory note | — | 533 | ||||
| Total liabilities | 2,046 | 2,857 | ||||
| Common stock and additional paid-in capital | 24,275 | 24,265 | ||||
| Accumulated (deficit) | (21,529 | ) | (21,463 | ) | ||
| Total shareholders’ equity | 2,746 | 2,802 | ||||
| Total liabilities and shareholders’ equity | $ | 4,792 | $ | 5,659 |
Encision Inc.
Unaudited Condensed Statements of Cash Flows
(in thousands)
| Years Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, <br> 2022 | March 31, <br> 2021 | |||||
| Operating activities: | ||||||
| Net (loss) income | $ | (66 | ) | $ | 585 | |
| Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities: | ||||||
| Extinguishment of debt income | (533 | ) | (599 | ) | ||
| Write-off of tooling | 31 | — | ||||
| Depreciation and amortization | 113 | 89 | ||||
| Share-based compensation expense | 41 | 33 | ||||
| Other income from release of accounts payable | — | (56 | ) | |||
| (Recovery from) doubtful accounts, net | (35 | ) | (23 | ) | ||
| Provision for (recovery from) inventory obsolescence, net | (34 | ) | 31 | |||
| Changes in operating assets and liabilities: | ||||||
| Right of use asset, net | (28 | ) | 63 | |||
| Accounts receivable | 163 | (120 | ) | |||
| Inventories | (105 | ) | 150 | |||
| Prepaid expenses and other assets | (31 | ) | (83 | ) | ||
| Accounts payable | 187 | 1 | ||||
| Accrued compensation and other accrued liabilities | (147 | ) | 149 | |||
| Net cash (used in) provided by operating activities | (444 | ) | 220 | |||
| Investing activities: | ||||||
| Acquisition of property and equipment | (18 | ) | (30 | ) | ||
| Patent costs | (18 | ) | (15 | ) | ||
| Net cash (used in) investing activities | (36 | ) | (45 | ) | ||
| Financing activities: | ||||||
| Net payments from exercise of stock options | (31 | ) | — | |||
| Paydown of credit facility, net change | — | (371 | ) | |||
| Paydown of secured notes | (13 | ) | — | |||
| EIDL loan | — | 153 | ||||
| Unsecured promissory note | — | 1,132 | ||||
| Net cash (used in) provided by financing activities | (44 | ) | 914 | |||
| Net (decrease) increase in cash | (524 | ) | 1,089 | |||
| Cash, beginning of period | 1,474 | 385 | ||||
| Cash, end of period | $ | 950 | $ | 1,474 |