Company: ECIA
Filing Date: 2025-08-15
Form Type: 10-Q
Source: 0001079973-25-001326
Chunk: 17

Company: ENCISION INC
Filing Date: 2025-08-15
Form: 10-Q
Item: Item 8
Chunk 17
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 surgery centers that have changed to AEM technology, enabling us to grow our
sales. We are exploring overseas markets to assess opportunities for international sales growth. Finally, we intend to explore opportunities
to capitalize on our proven AEM technology via licensing arrangements and strategic alliances. These efforts to generate additional sales
and further the market penetration of our products are longer-term in nature and may not materialize. Even if we are able to successfully
develop next-generation products or identify potential international markets or strategic partners, we may not be able to capitalize on
these opportunities.

Gross Profit and Gross Margins: Gross profit
and gross margins can be expected to fluctuate from quarter to quarter as a result of product sales mix, sales volume, and service revenue.
Gross margins on products manufactured or assembled by us are expected to improve at higher levels of production and sales.

Sales and Marketing Expenses: We continue to
refine our domestic and international distribution capability, and we believe that sales and marketing expenses will decrease as a percentage
of net sales with an increasing sales volume.

Research and Development Expenses: Research
and development expenses are expected to increase to support quality improvement efforts and the development of refinements to our AEM
product line and new products, which will further expand options for surgeons and hospitals.

Results of Operations

For the quarter ended June 30, 2025, compared
to the quarter ended June 30, 2024.

Net Product revenue. Net product revenue
for the quarter ended June 30, 2025 was $1,492,832 compared to $1,591,960 for the quarter ended June 30, 2024, a decrease of 6%. The decrease
in net product revenue is primarily due to a reduction in the sales of disposable products, which suggests a decrease in the number of
procedures performed during this period. This reduction in procedural volume has, in turn, lowered the overall demand for our products.

Net Service revenue. Net service revenue
for the quarter ended June 30, 2025 was $109,896 compared to $38,971 for the quarter ended June 30, 2024.This increase was primarily because
of services performed under a Master Services Agreement with Vicarious Surgical Inc.

Gross profit. Gross profit for the
quarter ended June 30, 2025 of $878,459 represented a decrease of 7% from gross profit of $942,663 for the quarter ended June 30, 2024.
Gross profit on