Company: ECIA
Filing Date: 2025-08-15
Form Type: 10-Q
Source: 0001079973-25-001326
Chunk: 2

Company: ENCISION INC
Filing Date: 2025-08-15
Form: 10-Q
Item: Item 8
Chunk 2
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. The fair values of the EIDL
loan approximates the carrying value based on estimated discounted future cash flows using the current rates at which similar loans would
be made.

Concentration of Credit Risk. Financial instruments,
which potentially subject the company to concentrations of credit risk, consist of cash and accounts receivable. From time to time, the
amount of cash on deposit with financial institutions may exceed the $250,000 federally insured limit at June 30, 2025. The Company believes
that cash on deposit that exceeds $250,000 with financial institutions is financially sound, and the risk of loss is minimal.

The Company has no off-balance sheet concentrations
of credit risk such as foreign exchange contracts, options contracts, or other foreign hedging arrangements. The Company maintains the
majority of cash balances with one financial institution in the form of demand deposits.

Accounts receivables are typically unsecured and are
derived from transactions with and from entities in the healthcare industry primarily located in the United States. Accordingly, the Company
may be exposed to credit risk generally associated with the healthcare industry. The accounts receivable balance at June 30, 2025, of
$749,426 and at March 31, 2025, of $786,471 included no more than 11% from any one customer.

In July 2025, the FASB issued ASU No. 2025-05, Current
expected credit losses (CECL)(Topic 326) (“ASU 2025-05”). Topic 326, Financial Instruments—Credit Losses, replaces the
incurred-loss model with a forward-looking current expected credit loss model that requires recognition of lifetime expected credit losses
on financial assets measured at amortized cost and certain off-balance-sheet credit exposures (including trade accounts receivable and
contract assets), using historical experience, current conditions, and reasonable and supportable forecasts. The company is evaluating
the impact of adopting Topic 326 on its financial statements and related disclosures.

Inventories. Inventories are stated at the
lower of cost (first-in, first-out basis) or net realizable value. The Company reduces inventory for estimated obsolete or unmarketable
inventory equal to the difference between the cost of inventory and the net realizable value based upon assumptions about future demand
and market conditions. The company increased reserves for potentially obsolete or unmarketable inventory $3,982 during the three ending
June 30, 2025. If actual market conditions are less