8-K
ENCISION INC (ECIA)
UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
Washington,D.C. 20549
FORM8-K
CURRENTREPORT
Pursuantto Section 13 OR 15(d)
ofThe Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 19, 2021
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 May 19, 2021 Encision, Inc. issued a press release announcing its fourth quarter financial results for the quarter ended March 31, 2021. 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., May 19, 2021
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: May<br> 19, 2021 | |
| /s/ Mala M Ray | |
| Mala M Ray | |
| Controller | |
| Principal Accounting Officer |
Exhibit 99.1
May 19, 2021
Encision Reports Fourth Quarter Fiscal Year 2021 Results
Boulder, Colorado, May 19, 2021 -- 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 fourth quarter that ended March 31, 2021.
The Company posted quarterly net revenue of $2.15 million for a quarterly net income of $116 thousand, or $0.01 per diluted share. These results compare to net revenue of $1.78 million for a quarterly net loss of $116 thousand, or $(0.01) per diluted share, in the year-ago quarter. Gross margin on net revenue was 54% in the fiscal 2021 fourth quarter and 53% in the fiscal 2020 fourth quarter.
The Company posted twelve months net revenue of $7.54 million for a twelve months net income of $585 thousand, or $0.05 per diluted share. Net income included $599 thousand of extinguishment of debt income. These results compare to net revenue of $7.67 million for a twelve months net loss of $198 thousand, or $(0.02) per diluted share, in the year-ago twelve months. Gross margin on net revenue was 52% in the fiscal 2021 and fiscal 2020 twelve months.
“Product revenue for our fourth quarter of fiscal 2021 had almost rebounded from pre-COVID surgical procedures levels and increased 8% from our fourth quarter of last year. Total revenue, which included service revenue, increased 21% from our fourth quarter of last year,” said Gregory Trudel, President and CEO of Encision Inc. “We continue to be positive as we assess how surgery rebounds from the pandemic. We continue to flex our channel strategy and tactics as we encounter varying degrees of access to our customers.”
“Service revenue for our fourth quarter of fiscal 2021 resulted from services performed under a Master Services Agreement with Auris Health, Inc. (“Auris Health”), a part of the Johnson & Johnson family of companies. Under the agreement, we are collaborating 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.”
“During the fiscal year, we began selling our AEM 2X enTouch® Scissors (“2X Scissors”). 2X Scissors bring new levels of performance and value to the surgical scissor market by combining the best in class performance of our enTouch Disposable Scissors with the 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 a 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. 2X Scissors work perfectly with hot AEM dissection and are also priced to be used for cold dissection. 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.”
“In February, we entered into an unsecured promissory note under the Paycheck Protection Program (“PPP”) for a principal amount of $533,118. 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 expect that we will achieve the requirements for forgiveness of that note.”
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 provisionsof the 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 2020 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, 2021 | March 31, 2020 | March 31, 2021 | March 31, 2020 | |||||||||
| Product revenue | $ | 1,918 | $ | 1,778 | $ | 7,011 | $ | 7,670 | ||||
| Service revenue | 231 | — | 527 | — | ||||||||
| Total revenue | 2,149 | 1,778 | 7,538 | 7,670 | ||||||||
| Product cost of revenue | 874 | 840 | 3,375 | 3,666 | ||||||||
| Service cost of revenue | 108 | — | 258 | — | ||||||||
| Total cost of revenue | 982 | 840 | 3,633 | 3,666 | ||||||||
| Gross profit | 1,167 | 938 | 3,905 | 4,004 | ||||||||
| Operating expenses: | ||||||||||||
| Sales and marketing | 507 | 482 | 2,020 | 2,094 | ||||||||
| General and administrative | 380 | 373 | 1,377 | 1,318 | ||||||||
| Research and development | 126 | 181 | 569 | 748 | ||||||||
| Total operating expenses | 1,013 | 1,036 | 3,966 | 4,160 | ||||||||
| Operating income (loss) | 154 | (98 | ) | (61 | ) | (156 | ) | |||||
| Interest expense, extinguishment of debt income and other income, net | (38 | ) | (18 | ) | 646 | (42 | ) | |||||
| Income (loss) before provision for income taxes | 116 | (116 | ) | 585 | (198 | ) | ||||||
| Provision for income taxes | — | — | — | — | ||||||||
| Net income (loss) | $ | 116 | $ | (116 | ) | $ | 585 | $ | (198 | ) | ||
| Net income (loss) per share—basic and diluted | $ | 0.01 | $ | (0.01 | ) | $ | 0.05 | $ | (0.02 | ) | ||
| Weighted average number of basic shares | 11,583 | 11,583 | 11,583 | 11,573 | ||||||||
| Weighted average number of diluted shares | 11,832 | 11,583 | 11,768 | 11,573 |
Encision Inc.
Unaudited Condensed Balance Sheets
(in thousands)
| March 31, 2021 | March 31, 2020 | |||||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $ | 1,474 | $ | 385 | ||
| Accounts receivable, net | 1,024 | 881 | ||||
| Inventories, net | 1,446 | 1,626 | ||||
| Prepaid expenses and other assets | 154 | 73 | ||||
| Total current assets | 4,098 | 2,965 | ||||
| Equipment, net | 266 | 207 | ||||
| Patents, net | 213 | 228 | ||||
| Right of use asset | 1,061 | 1,317 | ||||
| Other assets | 21 | 20 | ||||
| Total assets | $ | 5,659 | $ | 4,737 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Accounts payable | $ | 390 | $ | 445 | ||
| Line of credit | — | 370 | ||||
| Secured notes | 20 | — | ||||
| Accrued compensation | 182 | 219 | ||||
| Other accrued liabilities | 282 | 96 | ||||
| Accrued lease liability | 303 | 278 | ||||
| Total current liabilities | 1,177 | 1,408 | ||||
| Secured notes | 220 | — | ||||
| Accrued lease liability | 927 | 1,145 | ||||
| Unsecured promissory note | 533 | — | ||||
| Total liabilities | 2,857 | 2,553 | ||||
| Common stock and additional paid-in capital | 24,265 | 24,232 | ||||
| Accumulated (deficit) | (21,463 | ) | (22,048 | ) | ||
| Total shareholders’ equity | 2,802 | 2,184 | ||||
| Total liabilities and shareholders’ equity | $ | 5,659 | $ | 4,737 |
Encision Inc.
Unaudited Condensed Statements of Cash Flows
(in thousands)
| Years Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, 2021 | March 31, 2020 | |||||
| Operating activities: | ||||||
| Net income (loss) | $ | 585 | $ | (198 | ) | |
| Extinguishment of debt income | (599 | ) | — | |||
| Adjustments to reconcile net loss to cash <br>(used in) operating activities: | ||||||
| Depreciation and amortization | 89 | 138 | ||||
| Share-based compensation expense | 33 | 31 | ||||
| (Recovery from) provision for doubtful accounts, net | (23 | ) | 32 | |||
| Provision for (recovery from) inventory obsolescence, net | 31 | (11 | ) | |||
| Other income from release of accounts payable | (56 | ) | — | |||
| Changes in operating assets and liabilities: | ||||||
| Right of use asset, net | 63 | 31 | ||||
| Accounts receivable | (120 | ) | 96 | |||
| Inventories | 150 | (142 | ) | |||
| Prepaid expenses and other assets | (83 | ) | 36 | |||
| Accounts payable | 1 | (134 | ) | |||
| Accrued compensation and other accrued liabilities | 149 | (108 | ) | |||
| Net cash provided by (used in) operating activities | 220 | (229 | ) | |||
| Investing activities: | ||||||
| Acquisition of property and equipment | (30 | ) | (48 | ) | ||
| Patent costs | (15 | ) | (6 | ) | ||
| Net cash (used in) investing activities | (45 | ) | (54 | ) | ||
| Financing activities: | ||||||
| Paydown of credit facility, net change | (371 | ) | 370 | |||
| Proceeds from secured notes | 153 | — | ||||
| Proceeds from PPP loans | 1,132 | — | ||||
| Net cash generated by financing activities | 914 | 370 | ||||
| Net increase in cash | 1,089 | 87 | ||||
| Cash, beginning of period | 385 | 298 | ||||
| Cash, end of period | $ | 1,474 | $ | 385 |