Encision Reports Third Quarter Fiscal Year 2017 Results; Sequential Quarterly Revenue Grows 4 Percent

BOULDER, Colo., Feb. 8, 2017

The Company posted quarterly net revenue of $2.23 million for a quarterly net loss of $274 thousand, or $(0.03) per share. These results compare to net revenue of $2.29 million for a net loss of $200 thousand, or $(0.02) per share, in the year-ago quarter. Gross margin on net revenue was 48 percent in the fiscal 2017 third quarter and 51 percent in the fiscal 2016 third quarter. Gross margin on net revenue was lower in the fiscal 2017 third quarter principally as a result of applying higher overhead costs on inventories that have a faster turnover. This overhead change was a result of a change in estimate and affected gross margin by approximately 6 percent.

Quarterly net revenue of $2.23 million represented a 4 percent increase over quarterly net revenue for the quarter ended September 30, 2016 of $2.15 million.

The Company posted nine months net revenue of $6.66 million for a nine months net loss of $612 thousand, or $(0.06) per share. These results compare to net revenue of $7.05 million for a net loss of $598 thousand, or $(0.06) per share, in the year-ago quarter. Gross margin on net revenue was 49 percent and 50 percent in the fiscal 2017 and 2016 nine months, respectively. Gross margin on net revenue was lower in the fiscal 2017 nine months principally as a result of applying higher overhead costs on inventories that have a faster turnover. This overhead change affected gross margin by approximately 3 percent.

"We are pleased that our sequential quarterly revenue grew by 4 percent," said Greg Trudel, President and CEO. "Our gross margin was negatively impacted by the earlier recognition of inventory costs, but that decrease should reach equilibrium by the end of the March 31, 2017 quarter. The earlier recognition of inventory costs does not affect cash because the overhead change reduces inventories by the amount of the earlier recognition of inventory costs."

"Our general and administrative costs increased from last year's quarter. The increase was principally the result of legal fees incurred in connection with a lawsuit that the Company is not a party to. While we are not a party to the lawsuit, we incurred these expenses while responding to subpoenas which were issued by the plaintiff and defendant in this case."

"Encision continues to fine tune our operations as we roll out new products that promise to enhance market adoption of AEM® Technology and drive higher top and bottom line results. We continue to have good success to date with our AEM EndoShield®2 and are looking forward to the release of our new AEM® Burn Protection Cable that will offer new user features and will enhance revenues and profitability. All of this, combined with a new durable monitor, will make AEM® Safety adoption even more attractive for our customers and drive new levels of performance and growth. We expect to release the AEM® Burn Protection Cable and the durable monitor during our fourth fiscal quarter that ends March 31, 2017."