Company: ECIA
Filing Date: 2025-08-15
Form Type: 10-Q
Source: 0001079973-25-001326
Chunk: 19

Company: ENCISION INC
Filing Date: 2025-08-15
Form: 10-Q
Item: Item 8
Chunk 19
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the original principal amount of $150,000 with the SBA, the lender. Under the terms of the Note, interest accrues on the outstanding principle
at the rate of 3.75% per annum. The term of the Note is thirty years, though it may be payable sooner upon an event of default under the
Note.

During September 2020, we entered into a note agreement
with U.S. Bank for $92,000. The note is for five years at a 5% interest rate and the proceeds were used to purchase equipment. The note
is secured by the equipment.

During July 2022, we entered into a note agreement
with U.S. Bank for $118,970. The note is for five years at a 6% interest rate and the proceeds were used to purchase equipment. The note
is secured by the equipment.

On November 2, 2022, we entered into a loan and security
agreement with Pathward, N.A. (formerly Crestmark Bank). The loan is due on demand and has no financial covenants. Under the agreement,
we were provided with a line of credit that is not to exceed the lesser of $1,000,000 or 85% of eligible accounts receivable. The interest
rate is the prime rate plus 0.5%, with a floor of 6.75%, plus a monthly maintenance fee of 0.4%, based on the average monthly loan balance.
Interest is charged on a minimum loan balance of $300,000, a loan fee of 0.5% at closing and annually, and an exit fee of 3%, 2%, and
1% during years one, two, and three, respectively. The balance under the line of credit is fully collateralized by invoices included in
our accounts receivable.

Our operations used $115,508 of cash during the three
months ending June 30, 2025, on net revenue of $1,602,728. The amounts of cash used by operations for the three months ending June 30,
2025, are not necessarily indicative of the expected amounts of cash to be generated from or used in operations in fiscal year 2026. At
June 30, 2025, we had $47,918 in cash available to fund future operations and a line of credit for up to $679,560, restricted by eligible
account receivables. Our working capital was $1,