Company: ECIA
Filing Date: 2025-07-10
Form Type: 10-K
Source: 0001079973-25-001132
Chunk: 42

Company: ENCISION INC
Filing Date: 2025-07-10
Form: 10-K
Item: Item 1
Chunk 42
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there is little or no market data, which require the reporting entity to develop its own assumptions.

Assets and liabilities are classified based on
the lowest level of input that is significant to the fair value measurements.

Concentration of Credit Risk. Financial
instruments, which potentially subject us to concentrations of credit risk, consist of cash and cash equivalents, and accounts receivable.
The carrying value of all financial instruments approximates fair value. The amount of cash on deposit with financial institutions occasionally
exceeds the $250,000 federally insured limit at March 31, 2025. However, we believe that cash on deposit that exceeds $250,000 in the
financial institutions is financially sound and the risk of loss is minimal.

We have no off-balance sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. We maintain the majority of our
cash balances with one financial institution in the form of demand deposits.

Accounts receivable are typically unsecured and are
derived from transactions with and from entities in the healthcare industry primarily located in the United States. Accordingly, we may
be exposed to credit risk generally associated with the healthcare industry. We maintain allowances for doubtful accounts for estimated
losses resulting from the inability of our customers to make required payments. We charge interest
on past due accounts on a case-by-case basis. The accounts receivable balance at March 31, 2025 of $786,471
 included no more than 9% from any one customer. The accounts receivable balance at March 31, 2024 of
$891,129 included
no more than 11% from any one customer.

Warranty Accrual. We
provide for the estimated cost of product warranties at the time sales are recognized. While we engage in extensive product quality programs
and processes, including actively monitoring and evaluating the quality of our component suppliers, our warranty obligation is based upon
historical experience and is also affected by product failure rates and material usage incurred in
correcting a product failure. Should actual product failure rates or material usage costs differ from our estimates, revisions to the
estimated warranty liability would be required. There was no warranty accrual at March 31, 2025.

Inventories.  Inventories
are stated at the lower of cost (first-in, first-out basis) or net realizable value. We reduce inventory for estimated obsolete or unmarketable
inventory equal to the difference between the cost of inventory and the