Company: ECIA
Filing Date: 2025-07-10
Form Type: 10-K
Source: 0001079973-25-001132
Chunk: 31

Company: ENCISION INC
Filing Date: 2025-07-10
Form: 10-K
Item: Item 1
Chunk 31
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 of our financial statements.

We record
revenue at a single point in time, when control is transferred to the customer, which is consistent with past practice. We will continue
to apply our current business processes, policies, systems and controls to support recognition and disclosure. Our shipping policy is
FOB Shipping Point. We recognize revenue from sales to stocking distributors when there is no right of return, other than for normal warranty
claims. We have no ongoing obligations related to product sales, except for normal warranty obligations. We evaluated the requirement
to disaggregate product revenue, and concluded that substantially all of its revenue comes from multiple products within a line of medical
devices. Our engineering service contracts are billed on a time and materials basis and revenue is recognized over time as the services
are performed.

18 

We maintain
allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the
financial condition of our customers were to deteriorate, resulting in an impairment of their
ability to make payments, additional allowances would be required, which would increase our expenses during the periods in which any such
allowances were made. The amount recorded as a provision for bad debts in each period is based upon our assessment of the likelihood that
we will be paid on our outstanding receivables, based on customer-specific as well as general considerations. To the extent that our estimates
prove to be too high, and we ultimately collect a receivable previously determined to be impaired, we may record a reversal of the provision
in the period of such determination.

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,
we have experienced some costs related to warranty. The warranty accrual is based upon historical experience and is adjusted based on
current experience. Should actual warranty experience differ from our estimates, revisions to the estimated warranty liability would be
required. 

We reduce
inventory for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the estimated market
value based upon assumptions about future demand and market conditions. If actual market conditions
are less favorable than those projected by management, additional inventory write-downs may be required. Any write-downs of inventory
would reduce our reported net income during the period in which such write-downs were applied.

We recognize deferred income tax assets and liabilities
for the expected future income tax consequences,