Company: ECIA
Filing Date: 2025-07-10
Form Type: 10-K
Source: 0001079973-25-001132
Chunk: 46

Company: ENCISION INC
Filing Date: 2025-07-10
Form: 10-K
Item: Item 1
Chunk 46
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 of 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. Should we achieve sufficient, sustained income in the future, we
may conclude that some or all of the valuation allowance should be reversed (Note 5).

ASC 740 prescribes a comprehensive model for
how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected
to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely
than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be
measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the
tax authority assuming full knowledge of the position and relevant facts.

There are open statutes of limitations for taxing
authorities in federal and state jurisdictions to audit the Company’s tax returns from fiscal year ended March 31, 2003 through
the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the statements of
operations. There have been no income tax related interest or penalties assessed or recorded. The Company has provided a full valuation
allowance on all of its deferred tax assets.

Revenue Recognition. 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. As presented on the Statement of Operations
our revenue is disaggregated between product revenue and service revenue. As it relates specifically to