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

Company: ENCISION INC
Filing Date: 2025-07-10
Form: 10-K
Item: Item 1
Chunk 25
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 to increase sales
from our strategic partnership initiatives. Our goal is to offer our customers an AEM disposable counterpart for each AEM reusable instrument.

Gross Margin. We believe that if our fiscal
year 2026 revenues increase, then our fiscal year 2026 gross profit and gross margin, as a percentage of revenue, will increase due to
a higher gross margin on product revenue as a result of an increase in product produced.

Sales and Marketing Expenses.  We continue
our efforts to expand domestic and international distribution capability, and we believe that sales
and marketing expenses will need to be maintained at a healthy level in order to expand our market visibility and optimize the field sales
capability of converting new hospital customers to AEM technology. Sales and marketing expenses
are expected to increase as we increase our marketing efforts to support our direct sales representatives. In fiscal year 2026, we expect
to have five direct sales managers. Each direct sales manager also manages a separate territory.

Manufacturing.
We believe that we will be able to achieve cost reductions, and provide better control over
quality and consistency, by producing products on our own. We manufacture our own disposable scissor inserts and are exploring other products
that we may manufacture internally.

Research and Development Expenses. Research
and development expenses are expected to increase to support expansion to our AEM product line, which will further expand the instrument
options for the surgeon. New refinements to AEM product lines are planned for introduction
in fiscal year 2026.

15 

Results of Operations

Net Product
revenue. Net product revenue for the fiscal year ended March 31, 2025 (“FY25”)
was $6,217,687, and for the fiscal year ended March 31, 2024 (“FY24”), net revenue was $6,431,969, or a decrease of 3%. Product
revenue for the fiscal year ended March 31, 2025 decreased primarily because of the decrease in non-essential surgical procedures performed
during this period.

Net Service
revenue. Net service revenue for FY25 was $337,628 and for FY24 net service revenue
was $153,913. Net service revenue for FY24 was for engineering services performed under a Master Services Agreement with Vicarious Surgical
Inc.. Under the agreement, we collaborated on the integration of AEM technology into and provide certain related design services for elements
of Vicarious’ robotic surgical system.

Gross
profit. Gross profit in FY25