Company: ECIA
Filing Date: 2025-07-10
Form Type: 10-K
Source: 0001079973-25-001132
Chunk: 27

Company: ENCISION INC
Filing Date: 2025-07-10
Form: 10-K
Item: Item 1
Chunk 27
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 Working capital was $1,036,850 at March 31, 2025 compared to $1,357,937 at March 31, 2024. The decrease
in working capital was primarily caused by the FY25 net loss, which resulted in increased utilization of the Pathward line of credit,
a current liability. Current liabilities were $1,575,915 at March 31, 2025 compared to $1,068,337 at March 31, 2024.

On November 2, 2022, we entered into a loan and security
agreement with Pathward, N.A. 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
0.5%, 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 $300,000, a loan fee of 0.5% at closing and annually, and an exit fee of 3%, 2% and 1% during years one, two
and three, respectively. The balance under the line of credit is fully collateralized by invoices included in our accounts receivable.

We believe that the unique performance of AEM
technology and our breadth of independent endorsements provide an opportunity for market share growth. We believe that the market awareness
of AEM technology and its endorsements is continually improving and that this will benefit revenue efforts in FY 26. We believe that we
enter FY 26 having achieved improvements in the clinical credibility of our technology. Our FY 26 operating plan is focused on growing
revenue, increasing gross profits, increasing research and development costs while increasing profits and positive cash flows. We cannot
predict with certainty the expected revenue, gross profit, net income or loss and usage of cash, cash equivalents and restricted cash
for FY 26. We believe that cash resources and borrowing capacity will be sufficient to fund our operations for at least the next twelve
months under our current operating plan. If we are unable to manage business operations in line with our budget expectations, it could
have a material adverse effect on business viability, financial position, results of operations and cash flows. Further, if we are not
successful in sustaining profitability and remaining at