Company: ECIA
Filing Date: 2025-08-15
Form Type: 10-Q
Source: 0001079973-25-001326
Chunk: 4

Company: ENCISION INC
Filing Date: 2025-08-15
Form: 10-Q
Item: Item 8
Chunk 4
---
 legal life (20 years from the
date of application in the United States). Capitalized costs are expensed if patents are not issued. The Company reviews the carrying
value of patents periodically to determine whether the patents have continuing value, and such reviews could result in the conclusion
that the recorded amounts have been impaired.

    5 
    ENCISION INC. NOTES TO UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS JUNE 30, 2025(Unaudited)

Income Taxes. The Company accounts for income
taxes under the provisions of FASB Accounting Standards Codification (“ASC”) Topic 740, “Accounting for Income Taxes”
(“ASC 740”). ASC 740 requires recognition of deferred income tax assets and liabilities for the expected future income tax
consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities.
ASC 740 also requires recognition of deferred tax assets for the expected future tax effects of all deductible temporary differences,
loss carryforwards, and tax credit carryforwards. Deferred tax assets are then reduced, if deemed necessary, by a valuation allowance
for the amount of any tax benefits, which, more likely than not based on current circumstances, are not expected to be realized. As a
result, no provision for income tax is reflected in the accompanying statements of operations. Should the Company achieve sufficient,
sustained income in the future, the Company may conclude that some or all of the valuation allowance should be reversed. The Company is
required to make many subjective assumptions and judgments regarding our income tax exposures. At June 30, 2025, the Company had no unrecognized
tax benefits, which would affect the effective tax rate if recognized, and had no accrued interest, or penalties related to uncertain
tax positions.

Revenue Recognition. The Company records revenue
at a single point in time when control is transferred to the customer. The Company will continue to apply the current business processes,
policies, systems, and controls to support recognition and disclosure. The shipping policy is Free On Board (FOB) Shipping Point. The
company recognizes revenue from sales to stocking distributors when there is no right of return other than for normal warranty claims.
The Company has no ongoing obligations related to product sales except for normal warranty obligations. As presented in the Statement
of Operations, revenue is disaggregated between product revenue and service revenue. As it relates specifically to product revenue, the
Company does not believe further disaggregation