Company: ECIA
Filing Date: 2025-08-15
Form Type: 10-Q
Source: 0001079973-25-001326
Chunk: 21

Company: ENCISION INC
Filing Date: 2025-08-15
Form: 10-Q
Item: Item 8
Chunk 21
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 2026 operating plan is focused on
increasing new accounts, retaining existing customers, growing revenue, increasing gross profits, and conserving cash. We are investing
in research and development efforts to develop next-generation versions of the AEM product line. We have invested in manufacturing property
and equipment to manufacture disposable scissors inserts internally and to reduce our cost of product revenue. We cannot predict with
certainty the expected revenue, gross profit, net income or loss, and usage of cash for fiscal year 2026. If we are unable to manage our
business operations in line with budget expectations, it could have a material adverse effect on our business viability, financial position,
results of operations, and cash flows.

Income Taxes

 As of June 30, 2025, net operating loss
carryforwards totaling approximately $8.2 million are available to reduce taxable income in the future. The net operating loss carryforwards
expire, if not previously utilized, at various dates beginning in the fiscal year ending March 31, 2025. We have not paid income taxes
since our inception. The Tax Reform Act of 1986 and other income tax regulations contain provisions that may limit the net operating loss
carryforwards available to be used in any given year if certain events occur, including changes in ownership interests. We have established
a valuation allowance for the entire amount of our deferred tax assets since inception due to our history of losses. Should we achieve
sufficient, sustained income in the future, we may conclude that some or all the valuation allowance should be reversed. If some or all
of the valuation allowance were reversed, then, to the extent of the reversal, a tax benefit would be recognized, which would result in
an increase in net income.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition
and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, sales and expenses, and related disclosure of contingent assets and liabilities. On an ongoing
basis, we evaluate our estimates, including those related to bad debts, inventories, sales returns, contingencies, and litigation. We
base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities