Company: ECIA
Filing Date: 2025-08-15
Form Type: 10-Q
Source: 0001079973-25-001326
Chunk: 5

Company: ENCISION INC
Filing Date: 2025-08-15
Form: 10-Q
Item: Item 8
Chunk 5
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 is necessary, as substantially all of the product revenue comes from multiple products
within a line of medical devices. The engineering service contracts are billed on a time and materials basis, and revenue is recognized
over time as the services are performed.

Research and Development Expenses. The Company
expenses research and development costs for products and processes as incurred.

Stock-Based Compensation. Stock-based compensation
is presented in accordance with the guidance of ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”).
Under the provisions of ASC 718, the Company is required to estimate the fair value of share-based payment awards on the date of grant
using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over
the requisite service periods in our statements of operations.

Stock-based compensation expense recognized under
ASC 718 for the three months ended June 30, 2025, and 2024 was $12,119 and $12,374 respectively, which consisted of stock-based compensation
expense related to grants of employee stock options.

Segment Reporting. Effective with the fiscal
year ended March 31, 2025, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards
Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. Adoption
of the amended guidance did not change the Company’s conclusion that it operates two reportable segments, nor did it affect the
Company’s financial position, results of operations, or cash flows. The standard, however, expands required disclosures related
to significant segment expense categories and interim-period information.

Operating segments are defined as components of an
enterprise about which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”)
in deciding how to allocate resources and in assessing operating performance. In consideration of ASC 280, Segment Reporting, the Company
has concluded it operates two business segments, product and service. The Product segment designs, develops, manufactures and markets
patented surgical instruments. The Service segment performs engineering activities for external entities.

Additionally, our CODM (President and Chief Executive
Officer) uses net income or loss, as reported in the Statement of Operations, as the profitability measure in making decisions to evaluate
our performance, which is the same basis on which he communicates our results and performance to our Board of Directors. The CODM bases
all significant decisions regarding