0001079973-19-000585.txt : 20191113 0001079973-19-000585.hdr.sgml : 20191113 20191113162741 ACCESSION NUMBER: 0001079973-19-000585 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 41 CONFORMED PERIOD OF REPORT: 20190930 FILED AS OF DATE: 20191113 DATE AS OF CHANGE: 20191113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENCISION INC CENTRAL INDEX KEY: 0000930775 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 841162056 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11789 FILM NUMBER: 191214347 BUSINESS ADDRESS: STREET 1: 6797 WINCHESTER CIRCLE CITY: BOULDER STATE: CO ZIP: 80301 BUSINESS PHONE: 3034442600 MAIL ADDRESS: STREET 1: 6797 WINCHESTER CIRCLE CITY: BOULDER STATE: CO ZIP: 80301 FORMER COMPANY: FORMER CONFORMED NAME: ELECTROSCOPE INC DATE OF NAME CHANGE: 19960502 10-Q 1 encision_10q-093019.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to________

Commission file number: 001-11789

ENCISION INC.

(Exact name of registrant as specified in its charter)

Colorado		84-1162056
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6797 Winchester Circle

Boulder, Colorado 80301

(Address of principal executive offices)

(303) 444-2600

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [_]	Accelerated filer [_]
Non-accelerated filer [_]	Smaller reporting company [X]
(Do not check if a smaller reporting company)	Emerging growth company [_]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	ECIA	OTC Bulletin Board

Securities registered under Section 12(g) of the Act: None

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

Common Stock, no par value	11,582,641 Shares
(Class)	(outstanding at October 31, 2019)

ENCISION INC.

FORM 10-Q

For the Three and Six Months Ended September 30, 2019

INDEX

	Page Number
PART I. FINANCIAL INFORMATION
ITEM 1 - Condensed Interim Financial Statements:
- Condensed Balance Sheets as of September 30, 2019 and March 31, 2019	3
- Condensed Statements of Operations for the Three and Six Months Ended September 30, 2019 and 2018	4
- Condensed Statements of Cash Flows for the Six Months Ended September 30, 2019 and 2018	5
- Notes to Condensed Interim Financial Statements	6

ITEM 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
ITEM 4 - Controls and Procedures	20
PART II. OTHER INFORMATION	21
ITEM 6 - Exhibits	21
SIGNATURE	21

PART I FINANCIAL INFORMATION

ITEM 1 - Condensed Interim Financial Statements

Encision Inc.

Condensed Balance Sheets

(Unaudited)

	September 30, 2019			March 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	141,877		$	273,348
Restricted cash		—			25,000
Accounts receivable, net of allowance for doubtful accounts of $25,000 at September 30, 2019 and $26,000 at March 31, 2019		968,021			1,009,106
Inventories, net of reserve for obsolescence of $38,000 at September 30, 2019 and $50,000 at March 31, 2019		1,342,961			1,472,543
Prepaid expenses		79,936			130,016
Total current assets		2,532,795			2,910,013
Equipment, at cost:
Furniture, fixtures and equipment		3,103,876			3,061,329
Accumulated depreciation		(2,878,483	)		(2,811,761	)
Equipment, net		225,393			249,568
Right of use asset		1,131,125			—
Patents, net of accumulated amortization of $278,444 at September 30, 2019 and $266,028 at March 31, 2019		238,911			248,579
Other assets		19,548			19,548
TOTAL ASSETS	$	4,147,772		$	3,427,708
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	313,212		$	578,956
Accrued compensation		200,829			295,875
Other accrued liabilities		99,634			126,434
Line of credit		93,045			—
Accrued lease liability		208,772			—
Total current liabilities		915,492			1,001,265
Long-term liability:
Accrued lease liability		1,017,302			—
Deferred rent		—			74,821
Total liabilities		1,932,794			1,076,086
Commitments and contingencies (Note 4)
Shareholders’ equity:
Preferred stock, no par value: 10,000,000 shares authorized; none issued and outstanding		—			—
Common stock and additional paid-in capital, no par value: 100,000,000 shares authorized; 11,558,355 shares issued and outstanding at September 30, 2019 and March 31, 2019		24,217,134			24,201,769
Accumulated (deficit)		(22,002,156	)		(21,850,147	)
Total shareholders’ equity		2,214,978			2,351,622
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	4,147,772		$	3,427,708

The accompanying notes to financial statements are an integral part of these condensed statements.

Encision Inc.

Condensed Statements of Operations

(Unaudited)

	Three Months Ended						Six Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
NET REVENUE	$	1,924,434		$	2,196,511		$	3,853,009		$	4,600,804
COST OF REVENUE		875,440			991,463			1,871,043			2,094,641
GROSS PROFIT		1,048,994			1,205,048			1,981,966			2,506,163
OPERATING EXPENSES:
Sales and marketing		536,995			656,436			1,067,501			1,432,221
General and administrative		304,194			321,707			649,795			641,966
Research and development		172,668			186,577			408,811			353,250
Total operating expenses		1,013,857			1,164,720			2,126,107			2,427,437
OPERATING INCOME (LOSS)		35,137			40,328			(144,141	)		78,726
Interest expense, net		(6,211	)		(28,188	)		(8,995	)		(46,639	)
Other income (expense), net		960			172			1,127			(1,192	)
Interest expense and other income (expense), net		(5,251	)		(28,016	)		(7,868	)		(47,831	)
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		29,886			12,312			(152,009	)		30,895
Provision for income taxes		—			—			—			—
NET INCOME (LOSS)	$	29,886		$	12,312		$	(152,009	)	$	30,895
Net income (loss) per share—basic and diluted	$	0.00		$	0.00		$	(0.01	)	$	0.00
Weighted average shares—basic		11,558,355			10,683,355			11,558,355			10,683,355
Weighted average shares—diluted		11,592,074			10,717,547			11,558,355			10,711,441

The accompanying notes to financial statements are an integral part of these condensed statements.

Encision Inc.

Condensed Statements of Cash Flows

(Unaudited)

	Six Months Ended
	September 30, 2019			September 30, 2018
Operating activities:
Net income (loss)	$	(152,009	)	$	30,895
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		79,918			92,320
Share-based compensation expense		15,365			25,744
(Recovery from) doubtful accounts, net		(1,000	)		(1,500	)
(Recovery from) provision for inventory obsolescence, net		(12,000	)		4,000
Changes in operating assets and liabilities:
Right of use asset, net		20,128			—
Accounts receivable		42,085			(143,101	)
Inventories		141,582			65,312
Prepaid expenses and other assets		50,080			(24,242	)
Accounts payable		(265,744	)		103,055
Accrued compensation and other accrued liabilities		(121,846	)		(90,143	)
Net cash generated by (used in) operating activities		(203,221	)		62,340
Investing activities:
Acquisition of property and equipment		(42,547	)		(9,982	)
Patent costs		(3,528	)		(4,865	)
Net cash (used in) investing activities		(46,075	)		(14,847	)
Financing activities:
Borrowings from credit facility, net change		93,045			—
Net cash generated by financing activities		93,045			—
Net increase (decrease) in cash, cash equivalents, and restricted cash		(156,471	)		47,493
Cash, cash equivalents, and restricted cash beginning of period		298,348			139,538
Cash, cash equivalents, and restricted cash end of period	$	141,877		$	187,031

Supplemental disclosure:
Right of use asset	$	1,214,983		$	—
Accrued lease liability	$	1,279,675		$	—

The accompanying notes to financial statements are an integral part of these condensed statements.

ENCISION INC.

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(Unaudited)

Note 1. ORGANIZATION AND NATURE OF BUSINESS

Encision Inc. is a medical device company that designs, develops, manufactures and markets patented surgical instruments that provide greater safety to, and saves lives of, patients undergoing minimally-invasive surgery. We believe that our patented AEM^® (Active Electrode Monitoring) surgical instrument technology is changing the marketplace for electrosurgical devices and instruments by providing a solution to a patient safety risk in laparoscopic surgery. Our sales to date have been made principally in the United States.

We have an accumulated deficit of $22,002,156 at September 30, 2019. A significant portion of our operating funds have been provided by issuances of our common stock and warrants, a line of credit, and the exercise of stock options to purchase our common stock. Shareholders’ equity decreased by $136,644 as a result of our loss of $152,009, and increased as a result of share-based compensation of $15,365. Should our liquidity be diminished in the future because of operating losses, we may be required to seek additional capital.

Our strategic marketing and sales plan is designed to expand the use of our products in surgically active hospitals and surgery centers in the United States.

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. The condensed interim financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to make the information presented not misleading. The condensed interim financial statements and notes thereto should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, filed on September 14, 2019.

The accompanying condensed interim financial statements have been prepared, in all material respects, in conformity with the standards of accounting measurements and reflect, in the opinion of management, all adjustments necessary to summarize fairly the financial position and results of operations for such periods in accordance with GAAP. All adjustments are of a normal recurring nature. The results of operations for the most recent interim period are not necessarily indicative of the results to be expected for the full year.

We had a net income of $29,886 for the fiscal quarter, and a net loss of $152,009 for the six months ended September 30, 2019. At September 30, 2019, we had cash of $141,877, borrowings of $93,045 and $433,730 available under our line of credit. Working capital was $1,617,303, a decrease of $291,445 from March 31, 2019. We used $156,471 of cash in the fiscal six months ended September 30, 2019, primarily as a result of our loss and reduction of accounts payable. The principal reason for our loss for the six months ended September 30, 2019 was higher material costs as a result of the U.S. governmental tariffs. These facts and circumstances were initial indicators that created uncertainty about our ability to continue as a going concern. To address this uncertainty, management developed plans to ensure that we have the working capital necessary to fund operations. In July 2019, we reduced personnel and departmental costs by more than $1 million annualized. We expect that the $1 million annualized cost reductions will return us to profitability and is evidenced by our net income of $29,886 for the quarter ended September 30, 2019. We have a new line of credit (see Note 4), for up to $1 million, restricted by eligible receivables. Management concludes that it is probable that our cash resources and line of credit will be sufficient to meet our cash requirements for twelve months from the issuance of the condensed financial statements. In the event that the governmental tariffs are reduced or eliminated then we expect that the higher material costs that we experienced will be reduced. We are increasing our pricing on products to mitigate somewhat our higher material costs. Therefore, the accompanying condensed financial statements have been prepared assuming that we will continue as a going concern.

Use of Estimates in the Preparation of Financial Statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expense during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents. For purposes of reporting cash flows, we consider all cash and highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash is cash that was deposited to obtain a letter of credit for our importing and exporting activities.

Fair Value of Financial Instruments. Our financial instruments consist of cash, cash equivalents, restricted cash, short-term trade receivables, payables and a line of credit. The carrying values of cash, cash equivalents, restricted cash short-term trade receivables, payables and line of credit approximate their fair value due to their short maturities.

Concentration of Credit Risk. Financial instruments, which potentially subject us to concentrations of credit risk, consist of cash and cash equivalents, accounts receivable and a line of credit. From time to time, the amount of cash on deposit with financial institutions may exceed the $250,000 federally insured limit at September 30, 2019. We believe that cash on deposit that exceeds $250,000 with financial institutions is financially sound and the risk of loss is minimal.

We have no significant off-balance sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. We maintain the majority of our cash balances with one financial institution in the form of demand deposits.

Accounts receivable are typically unsecured and are derived from transactions with and from entities in the healthcare industry primarily located in the United States. Accordingly, we may be exposed to credit risk generally associated with the healthcare industry. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. The net accounts receivable balance at September 30, 2019 of $968,021 and at March 31, 2019 of $1,009,106 included no more than 8% from any one customer.

Inventories. Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value. We reduce 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. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. At September 30, 2019 and March 31, 2019, inventory consisted of the following:

	September 30, 2019			March 31, 2019
Raw materials	$	1,094,827		$	1,063,780
Finished goods		286,134			458,763
Total gross inventories		1,380,961			1,522,543
Less reserve for obsolescence		(38,000	)		(50,000	)
Total net inventories	$	1,342,961		$	1,472,543

Property and Equipment. Property and equipment are stated at cost, with depreciation computed over the estimated useful lives of the assets, generally five to seven years. We use the straight-line method of depreciation for property and equipment. Leasehold improvements are depreciated over the shorter of the remaining lease term or the estimated useful life of the asset. Maintenance and repairs are expensed as incurred and major additions, replacements and improvements are capitalized.

Long-Lived Assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A long-lived asset is considered impaired when estimated future cash flows related to the asset, undiscounted and without interest, are insufficient to recover the carrying amount of the asset. If deemed impaired, the long-lived asset is reduced to its estimated fair value. Long-lived assets to be disposed of are reported at the lower of their carrying amount or estimated fair value less cost to sell.

Patents. The costs of applying for patents are capitalized and amortized on a straight-line basis over the lesser of the patent’s economic or legal life (20 years from the date of application in the United States). Capitalized costs are expensed if patents are not issued. We review the carrying value of our patents periodically to determine whether the patents have continuing value and such reviews could result in the conclusion that the recorded amounts have been impaired.

Income Taxes. We account for income taxes under the provisions of FASB Accounting Standards Codification (“ASC”) Topic 740, “Accounting for Income Taxes” (“ASC 740”). ASC 740 requires recognition of deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities. ASC 740 also requires recognition of deferred tax assets for the expected future tax effects of all deductible temporary differences, loss carryforwards and tax credit carryforwards. Deferred tax assets are then reduced, if deemed necessary, by a valuation allowance for the amount of any tax benefits, which, more likely than not based on current circumstances, are not expected to be realized. As a result, no provision for income tax is reflected in the accompanying statements of operations. Should we achieve sufficient, sustained income in the future, we may conclude that some or all of the valuation allowance should be reversed. We are required to make many subjective assumptions and judgments regarding our income tax exposures. At September 30, 2019, we had no unrecognized tax benefits, which would affect the effective tax rate if recognized and had no accrued interest, or penalties related to uncertain tax positions.

Revenue Recognition. We record revenue at a single point in time, when control is transferred to the customer, which is consistent with past practice. We will continue to apply our current business processes, policies, systems and controls to support recognition and disclosure. Our shipping policy is FOB Shipping Point. We recognize revenue from sales to stocking distributors when there is no right of return, other than for normal warranty claims. We have no ongoing obligations related to product sales, except for normal warranty obligations. We evaluated the requirement to disaggregate revenue, and concluded that substantially all of our revenue comes from multiple products within a line of medical devices.

Research and Development Expenses. We expense research and development costs for products and processes as incurred.

Stock-Based Compensation. Stock-based compensation is presented in accordance with the guidance of ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”). Under the provisions of ASC 718, companies are required to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our statements of operations.

Stock-based compensation expense recognized under ASC 718 for the three and six months ended September 30, 2019 was $7,663 and $15,365, respectively, and for the three and six months ended September 30, 2018 was $13,651 and $25,744, respectively, which consisted of stock-based compensation expense related to grants of employee stock options and restricted stock units (“RSUs”).

Segment Reporting. We have concluded that we have one operating segment.

Recent Accounting Pronouncements. We have reviewed all recently issued accounting pronouncements.

ASU No. 2014-09 (ASC 606), Revenue from Contracts with Customers became effective for us beginning April 1, 2018, and adopted the new accounting standard using the modified retrospective transition approach. We record revenue under ASC 606 at a single point in time, when control is transferred to the customer, which is consistent with past practice. We will continue to apply our current business processes, policies, systems and controls to support recognition and disclosure under the new standard. Based on the results of the evaluation, we have determined that the adoption of the new standard presents no material impact on our financial statements.

Note 3. Basic and Diluted Income and Loss per Common Share

We report both basic and diluted net income (loss) per share. Basic net income or loss per common share is computed by dividing net income or loss for the period by the weighted average number of common shares outstanding for the period. Diluted net income or loss per common share is computed by dividing the net income or loss for the period by the weighted average number of common and potential common shares outstanding during the period if the effect of the potential common shares is dilutive. The shares used in the calculation of dilutive potential common shares exclude options and RSUs to purchase shares where the exercise price was greater than the average market price of common shares for the period.

The following table presents the calculation of basic and diluted net loss per share:

	Three Months Ended				Six Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019			September 30, 2018
Net income (loss)	$	29,886	$	12,312	$	(152,009	)	$	30,895
Weighted-average shares — basic		11,558,355		10,683,355		11,558,355			10,683,355
Effect of dilutive potential common shares		33,719		34,192		—			28,086
Weighted-average shares — diluted		11,592,074		10,717,547		10			10,711,441
Net income (loss) per share — basic	$	0.00	$	0.00	$	(0.01	)	$	0.00
Net income (loss) per share — diluted	$	0.00	$	0.00	$	(0.01	)	$	0.00
Antidilutive employee stock options and RSUs		958,567		975,344		992,286			981,450

Note 4. COMMITMENTS AND CONTINGENCIES

Effective November 9, 2018, we extended our noncancelable lease agreement through July 31, 2024 for our facilities at 6797 Winchester Circle, Boulder, Colorado. The lease includes base rent abatement for the first two months, or $55,583, and $145,000 of leasehold improvements granted by the landlord.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as either finance or operating leases under previous accounting standards and disclosing key information about leasing arrangements. We adopted Topic 842 on April 1, 2019, using the alternative modified transition method, which requires a cumulative effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated. There was no cumulative effect adjustment recorded on April 1, 2019. The primary impact for us was the balance sheet recognition of right-of-use (“ROU”) assets and lease liabilities for operating leases as a lessee.

We determine if an arrangement contains a lease at inception. We currently do not have any finance leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. We use our incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as our leases do not provide an implicit rate. Lease expense is recognized on a straight-line basis over the lease term.

The minimum future lease payment, by fiscal year, as of September 30, 2019 is as follows:

Fiscal Year		Amount
	2020 (6 months remaining)	$	133,275
	2021		343,167
	2022		357,667
	2023		372,167
	2024		386,667
	2025		130,500
	Total	$	1,723,443

On August 9, 2019, we entered into a loan and security agreement with Crestmark Bank. The loan is due on demand, has no financial covenants and is secured by all of our assets. 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 prime rate plus 1.5%, 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 $500,000, a loan fee of 1% annually, and an exit fee of 3%, 2% and 1% during years one, two and three, respectively. We have borrowed $93,045 under the line of credit and have $433,730 available to borrow.

Aside from the operating lease, we do not have any material contractual commitments requiring settlement in the future.

We are subject to regulation by the United States Food and Drug Administration (“FDA”). The FDA provides regulations governing the manufacture and sale of our products and regularly inspects us and other manufacturers to determine compliance with these regulations. We believe that we were in substantial compliance with all known regulations at September 30, 2019. FDA inspections are conducted periodically at the discretion of the FDA. Our latest inspection by the FDA occurred in October 2019.

Note 5. SHARE-BASED COMPENSATION

The provisions of ASC 718-10-55 requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors, including employee stock options and RSUs, based on estimated fair values. The following table summarizes stock-based compensation expense related to employee stock options, RSUs and employee stock purchases for the three and six months ended September 30, 2019 and 2018, which was allocated as follows:

	Three Months Ended				Six Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Cost of sales	$	724	$	714	$	1,405	$	1,315
Sales and marketing		803		1,298		1,593		2,594
General and administrative		5,442		10,922		11,064		20,514
Research and development		694		717		1,303		1,321
Stock-based compensation expense	$	7,663	$	13,651	$	15,365	$	25,744

Share-based compensation cost for stock options is measured at the grant date, based on the fair value as calculated by the Black-Scholes-Merton ("BSM") option-pricing model. The BSM option-pricing model requires the use of actual employee exercise behavior data and the application of a number of assumptions, including expected volatility, risk-free interest rate and expected dividends. There were 45,000 stock options granted and 33,000 stock options forfeited during the three months ended September 30, 2019, and 85,000 stock options granted and 83,000 stock options forfeited during the six months ended September 30, 2019. Share-based compensation cost for RSUs is measured based on the closing fair market value of the Company's common stock on the date of grant.

As of September 30, 2019, $141,000 of total unrecognized compensation costs related to nonvested stock options is expected to be recognized over a period of five years.

Note 6. RELATED PARTY TRANSACTION

We paid consulting fees of $16,500 and $36,594 to an entity owned by one of our directors during the three and six months ended September 30, 2019, respectively, and $14,976 and $35,045 to an entity owned by one of our directors during the three and six months ended September 30, 2018, respectively.

Note 7. SUBSEQUENT EVENTS

We evaluated all of our activity as of the date the condensed interim financial statements were issued and concluded that no subsequent events have occurred that would require recognition in our financial statements or disclosed in the notes to our condensed interim financial statements.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained in this section on Management’s Discussion and Analysis are not historical facts, including statements about our strategies and expectations with respect to new and existing products, market demand, acceptance of new and existing products, marketing efforts, technologies and opportunities, market and industry segment growth, and return on investments in products and markets. These statements are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve substantial risks and uncertainties that may cause actual results to differ materially from those indicated by the forward looking statements. All forward looking statements in this section on Management’s Discussion and Analysis are based on information available to us on the date of this document, and we assume no obligation to update such forward looking statements. Readers of this Form 10-Q are strongly encouraged to review the section entitled “Risk Factors” in our Form 10-K for the fiscal year ended March 31, 2019.

General

Encision Inc., a medical device company based in Boulder, Colorado, has developed and markets innovative technology that provides unprecedented outcomes and patient safety in minimally-invasive surgery. We believe that our patented Active Electrode Monitoring (“AEM®”) AEM EndoShield™ Burn Protection System is changing the marketplace for electrosurgical devices and laparoscopic instruments by providing a solution to a well-documented hazard unique to laparoscopic surgery. The Center for Medicare and Medicaid Services has published its Hospital-Acquired Condition Reduction Program. The program has begun to levy as much as a 1% penalty on Medicare reimbursements to hospitals in the lower quadrant of performance for selected quality indicators, including accidental puncture and laceration (“APL”). Examples of APL include the use of a cautery device (electrosurgery) or scissors to dissect a tissue plane that errantly causes an injury to underlying bowels. A Safety Communication was released by the FDA on May 29, 2018. It is on the FDA's website at: https://www.fda.gov/MedicalDevices/Safety/AlertsandNotices/ucm608637.htm. The Safety Communication states that, "In addition to serving as an ignition source, monopolar energy use can directly result in unintended patient burns from capacitive coupling and intra-operative insulation failure. If a monopolar electrosurgical unit (“ESU”) is used: Do not activate when near or in contact with other instruments.”

We address market opportunities created by the increase in minimally-invasive surgery (“MIS”) and surgeons’ use of electrosurgery devices in these procedures. The product opportunity exists in that monopolar electrosurgery instruments used in laparoscopic procedures provide excellent clinical results, but are also susceptible to causing inadvertent collateral tissue damage outside the surgeon’s field of view due to insulation failure and capacitive coupling. The risk of unintended electrosurgical burn injury to the patient in laparoscopic surgery has been well documented. This risk poses a threat to patient safety, including the risk of death, and creates liability exposure for surgeons and hospitals, as well as increased and preventable readmissions.

Our patented AEM technology provides surgeons with the desired tissue effects, while capturing stray electrosurgical energy that can cause unintended and unseen tissue injury that may result in death. AEM Surgical Instruments are equivalent to conventional instruments in size, shape, ergonomics, functionality and competitive pricing, but they incorporate “Active Electrode Monitoring” technology to dynamically and continuously monitor the flow of electrosurgical current, thereby helping to prevent patient injury. With our “shielded and monitored” instruments, surgeons are able to perform electrosurgical procedures more safely, effectively and economically than is possible using conventional instruments or alternative energy sources.

AEM technology has been recommended and endorsed by many groups involved in MIS. Surgeons, nurses, biomedical engineers, the medicolegal community, malpractice insurance carriers and electrosurgical device manufacturers advocate the use of AEM technology. We have focused our marketing strategies to date on expanding the market awareness of the AEM technology and our broad independent endorsements and have continued efforts to improve and expand the AEM technology penetration.

When a hospital or surgery center changes to AEM technology, we receive recurring revenue from sales of replacement instruments. We believe that there is no directly competing technology to supplant AEM products. The replacement market of reusable and disposable AEM products in hospitals and surgery centers that use our AEM technology represented over 90% of our product revenue during the three and six months ended September 30, 2019. This revenue stream is expected to grow as the base of accounts using AEM technology expands. In addition, we intend to further develop disposable versions of more of our AEM products in order to meet market demands and expand our sales opportunities.

We have an accumulated deficit of $22,002,156 at September 30, 2019. A significant portion of our operating funds have been provided by issuances of our common stock and warrants, a line of credit, and the exercise of stock options to purchase our common stock. Should our liquidity be diminished in the future because of operating losses, we may be required to seek additional capital.

During the six months ended September 30, 2019, we used $203,221 of cash in our operating activities and used $42,547 for investments in property and equipment. As of September 30, 2019, we had $141,877 in cash, cash equivalents and restricted cash available to fund future operations, a decrease of $156,471 from March 31, 2019. Our working capital was $1,617,303 at September 30, 2019 compared to $1,908,748 at March 31, 2019.

Historical Perspective

We were organized in 1991 and spent several years developing the AEM monitoring system and protective sheaths to adapt to conventional electrosurgical instruments. We have invested heavily in an effort to protect our valuable technology, and, as a result of this effort, we have been issued 16 unexpired relevant patents that together form a significant intellectual property position. Our patents relate to the basic shielding and monitoring technologies that we incorporate into our AEM products.

Our AEM Surgical Instruments have been engineered to provide a seamless transition for surgeons switching from conventional laparoscopic instruments. AEM technology has been integrated into instruments that have the same look, feel and functionality as conventional instruments that surgeons have been using for years. The AEM product line encompasses the full range of instrument sizes, types and styles favored by surgeons. Additionally, we continue to improve quality and add to the product line. These additions include more disposable versions, the introduction of hand-activated instruments, our enhanced scissors, our e∙Edge™ scissors, our EM3 AEM Monitor and our AEM EndoShield Burn Protection System. Hospitals can make a complete and smooth conversion to our product line, thereby advancing patient safety in MIS with optimal convenience.

Outlook

Installed Base of AEM Monitoring Equipment: We believe that sales of our installed base of AEM products will increase as the inherent risks associated with monopolar laparoscopic electrosurgery become more widely acknowledged and as we focus on increasing our sales efficiency and continue to enhance our product line. We expect that the replacement sales of electrosurgical instruments and accessories will also increase as additional facilities adopt AEM technology. We anticipate that the efforts to improve the productivity of sales representatives carrying the AEM product line, along with the introduction of next generation products, may provide the basis for increased sales and profitable operations. However, these measures, or any others that we may adopt, may not result in either increased sales or profitable operations.

We believe that the unique performance of the AEM technology and our breadth of independent endorsements provide an opportunity for continued market share growth. In our view, market awareness and awareness of the clinical credibility of the AEM technology, as well as awareness of our endorsements, are improving, and we expect this awareness to benefit our sales efforts for the remainder of fiscal year 2020. Our objectives for the remainder of fiscal year 2020 are to optimize sales execution, to expand market awareness of the AEM technology and to maximize the number of additional hospital and surgery center accounts switching to AEM instruments while retaining existing customers. In addition, acceptance of AEM products depends on surgeons’ preference for our instruments, which depends on factors such as ergonomics, quality and ease of use in addition to the technological and safety advantages of AEM products. If surgeons prefer other instruments to our instruments, our business results will suffer.

Possibility of Operating Losses: We have an accumulated deficit of $22,002,156 at September 30, 2019. A significant portion of our operating funds have been provided by issuances of our common stock and warrants, a line of credit, and the exercise of stock options to purchase our common stock. Should our liquidity be diminished in the future because of operating losses, we may be required to seek additional capital. We have made strides toward improving our operating results but due to the ongoing need to develop, optimize and train our direct sales managers and the independent sales representative network, the need to support the development of refinements to our product line, and the need to increase sustained sales to a level adequate to cover fixed and variable operating costs, we may operate at a net loss. Sustained losses, or our inability to generate sufficient cash flow from operations to fund our obligations, may result in a need to raise additional capital.

Revenue Growth: We expect to generate increased product revenue in the U.S. from sales to new customers and from expanded sales to existing customers as the medical device industry stabilizes and our network of direct and independent sales representatives becomes more efficient. We believe that the visibility and credibility of the independent clinical endorsements for AEM technology will contribute to new accounts and increased product revenue in fiscal year 2020. We also expect to increase market share through promotional programs of placing our AEM monitors at no charge into hospitals that commit to standardize with AEM instruments. However, all of these efforts to increase market share and grow product revenue will depend in part on our ability to expand the efficiency and effective coverage range of our direct and independent sales representatives, as well as maintain and in some cases, improve the quality of our product offerings. Service revenue represents design, development and product supply revenue from our agreements with strategic partners.

We also have longer-term initiatives in place to improve our prospects. We expect that development of next generation versions of our AEM products will better position our products in the marketplace and improve our retention rate at hospitals and surgery centers that have changed to AEM technology, enabling us to grow our sales. We are exploring overseas markets to assess opportunities for sales growth internationally. 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 increasing sales volume.

Research and Development Expenses: Research and development expenses are expected to increase to support quality improvement efforts and 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 September 30, 2019 compared to the quarter ended September 30, 2018.

Net revenue. Net revenue for the quarter ended September 30, 2019 was $1,924,434 compared to $2,196,511 for the quarter ended September 30, 2018, a decrease of 12%. The decrease of AEM product net revenue is attributable to business lost from hospitals that used AEM technology during the quarter.

Gross profit. Gross profit for the quarter ended September 30, 2019 of $1,048,994 represented a decrease of 13% from gross profit of $1,205,048 for the quarter ended September 30, 2018. Gross profit as a percentage of sales (gross margins) was 55% for the quarters ended September 30, 2018 and 2019. Gross margins were lower than expected in the quarters ended September 30, 2019 and 2018 primarily as a result of higher material costs as a result of the U.S. tariffs.

Sales and marketing expenses. Sales and marketing expenses of $536,995 for the quarter ended September 30, 2019 represented a decrease of 18% from sales and marketing expenses of $656,436 for the quarter ended September 30, 2018. The decrease was the result of lower compensation on a decrease to the direct salesforce, lower commissions on reduced revenue, and reduced travel. The reduction was partially offset by higher commissions to general purchasing organizations.

General and administrative expenses. General and administrative expenses of $304,194 for the quarter ended September 30, 2019 represented a decrease of 5% from general and administrative expenses of $321,707 for the quarter ended September 30, 2018. The decrease was the result of a decrease to compensation and bank service charges The reduction was partially offset outside accountants’ fee accrual.

Research and development expenses. Research and development expenses of $172,668 for the quarter ended September 30, 2019 represented a decrease of 7% compared to $186,577 for the quarter ended September 30, 2018. The increase was the result of increased compensation.

Net income. Net income was $29,886 for the quarter ended September 30, 2019 compared to net income of $12,312 for the quarter ended September 30, 2018. The net income increase was principally a result of lower total operating expenses that was partially offset by lower net revenue and gross profit, as explained above.

For the six months ended September 30, 2019 compared to the six months ended September 30, 2018.

Net revenue. Net revenue for the six months ended September 30, 2019 was $3,853,009 compared to $4,600,804 for the six months ended September 30, 2018, a decrease of 16%. The decrease of AEM product net revenue is attributable to business lost from hospitals that used AEM technology during the six months.

Gross profit. Gross profit for the six months ended September 30, 2019 of $1,981,966 represented a decrease of 21% from gross profit of $2,506,163 for the six months ended September 30, 2018. Gross profit as a percentage of sales (gross margins) decreased from 54% for the six months ended September 30, 2018 to 51% for the six months ended September 30, 2019. Gross margins were lower in the six months ended September 30, 2019 compared to last year’s six months primarily as a result of higher material costs as a result of the U.S. tariffs and higher labor and overhead costs, per unit of inventory, as a result of lower revenue.

Sales and marketing expenses. Sales and marketing expenses of $1,067,501 for the six months ended September 30, 2019 represented a decrease of 25% from sales and marketing expenses of $1,432,221 for the six months ended September 30, 2018. The decrease was the result of lower compensation on a decrease to the direct salesforce, lower commissions on reduced revenue, reduced sales samples’ cost and reduced travel. The reduction was partially offset by higher commissions to general purchasing organizations.

General and administrative expenses. General and administrative expenses of $649,795 for the six months ended September 30, 2019 represented an increase of 1% from general and administrative expenses of $641,966 for the six months ended September 30, 2018. The increase was the result of an increase to outside accountants’ fee accrual, outside services and regulatory fees. The increase was partially offset by lower compensation and bank service charges.

Research and development expenses. Research and development expenses of $408,811 for the six months ended September 30, 2019 represented an increase of 16% compared to $353,250 for the six months ended September 30, 2018. The increase was the result of increased compensation. The increase was partially offset by lower outside services.

Net loss. Net loss was $152,009 for the six months ended September 30, 2019 compared to net income of $30,895 for the six months ended September 30, 2018. The net loss increase was principally a result of lower net revenue and lower gross profit that was partially offset by lower total operating expenses, as explained above.

The results of operations for the three and six months ended September 30, 2019 are not indicative of the results of operations for all or any part of the balance of the fiscal year.

Liquidity and Capital Resources

To date, a significant portion of our operating funds have been provided by issuances of our common stock and warrants, a line of credit, and the exercise of stock options to purchase our common stock. Common stock and additional paid in capital totaled $24,217,134 from inception through September 30, 2019.

Our operations used $203,221 of cash during the six months ended September 30, 2019 on net revenue of $3,853,009. Cash was principally used by the net loss, accounts payable, accrued compensation and other accrued liabilities and increased by inventories. The amounts of cash used by operations for the six months ended September 30, 2019 are not indicative of the expected amounts of cash to be generated from or used in operations in fiscal year 2020. To reduce our costs and cash usage, we have implemented a reduction of personnel and departmental spending in excess of $1 million annualized. At September 30, 2019, we had $141,877 in cash, cash equivalents and restricted cash available to fund future operations. Our working capital was $1,617,303 at September 30, 2019 compared to $1,908,748 at March 31, 2019. The decrease of working capital at September 30, 2019 was the result of our loss and a decrease to inventories. The decrease was partially offset by a decrease to accounts payable. Current liabilities were $915,492 at September 30, 2019 compared to $1,001,265 at March 31, 2019.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. Within the opening balances for the fiscal year beginning April 1, 2019, we recognized leased assets and corresponding liabilities in other long-term assets of $1,214,983. The primary impact for us was the balance sheet recognition of right-of-use (“ROU”) assets and lease liabilities for operating leases as a lessee.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. We use our incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as our leases do not provide an implicit rate. Lease expense is recognized on a straight-line basis over the lease term.

The minimum future lease payment, by fiscal year, as of September 30, 2019 is as follows:

Fiscal Year		Amount
	2020 (6 months remaining)	$	133,275
	2021		343,167
	2022		357,667
	2023		372,167
	2024		386,667
	2025		130,500
	Total	$	1,723,443

Aside from the operating lease, we do not have any material contractual commitments requiring settlement in the future.

As of September 30, 2019, the following table shows our contractual obligations for the periods presented:

	Payment due by period
Contractual obligations	Totals		Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating lease obligations	$	1,723,443	$	304,859	$	715,335	$	638,000	$	65,249
Line of credit		93,045		93,045		—		—		—
Totals	$	1,816,488	$	397,904	$	715,335	$	638,000	$	65,249

Our fiscal year 2020 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, cash equivalents or restricted cash for fiscal year 2020. 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 March 31, 2019, net operating loss carryforwards totaling approximately $10 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, 2020. We have not paid income taxes since our inception. The Tax Reform Act of 1986 and other income tax regulations contain provisions which 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 asset since inception due to our history of losses. Should we achieve sufficient, sustained income in the future, we may conclude that some or all of 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 to 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 on-going 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 that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements.

We record revenue at a single point in time, when control is transferred to the customer, which is consistent with past practice. We will continue to apply our current business processes, policies, systems and controls to support recognition and disclosure. Our shipping policy is FOB Shipping Point. We recognize revenue from sales to stocking distributors when there is no right of return, other than for normal warranty claims. We have no ongoing obligations related to product sales, except for normal warranty obligations. We evaluated the requirement to disaggregate revenue, and concluded that substantially all of its revenue comes from multiple products within a line of medical devices.

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances would be required, which would increase our expenses during the periods in which any such allowances were made. The amount recorded as a provision for bad debts in each period is based upon our assessment of the likelihood that we will be paid on our outstanding receivables, based on customer-specific as well as general considerations. To the extent that our estimates prove to be too high, and we ultimately collect a receivable previously determined to be impaired, we may record a reversal of the provision in the period of such determination.

We provide for the estimated cost of product warranties at the time sales are recognized. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers, we have experienced some costs related to warranties. The warranty accrual is based on historical experience and is adjusted based on current experience. Should actual warranty experience differ from our estimates, revisions to the estimated warranty liability would be required.

We reduce inventory for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the estimated realizable value based on assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Any write-downs of inventory would reduce our reported net income during the period in which such write-downs were applied. To the extent that our estimates prove to be too high, and we ultimately utilize or sell inventory previously determined to be impaired, we may record a reversal of the provision in the period of such determination.

We recognize deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets are then reduced, if deemed necessary, by a valuation allowance for the amount of any tax benefits, which, more likely than not based on current circumstances, are not expected to be realized. Should we maintain sufficient, sustained income in the future, we may conclude that all or some of the valuation allowance should be reversed.

Property and equipment are stated at cost, with depreciation computed over the estimated useful lives of the assets, generally five to seven years. We use the straight-line method of depreciation for property and equipment. Leasehold improvements are depreciated over the shorter of the remaining lease term or the estimated useful life of the asset. Maintenance and repairs are expensed as incurred and major additions, replacements and improvements are capitalized.

We amortize our patent costs over their estimated useful lives, which is typically the remaining statutory life. From time to time, we may be required to adjust these useful lives of our patents based on advances in technology, competitor actions, and the like. We review the recorded amounts of patents at each period end to determine if their carrying amount is still recoverable based on our expectations regarding sales of related products. Such an assessment, in the future, may result in a conclusion that the assets are impaired, with a corresponding charge against earnings.

We currently estimate forfeitures for stock-based compensation expense related to employee stock options and RSUs at 40% and evaluate the forfeiture rate quarterly. Other assumptions that are used in calculating stock-based compensation expense include risk-free interest rate, expected life, expected volatility and expected dividend.

ITEM 4

- Controls and procedures

(a) We have carried out an evaluation under the supervision and with the participation of our management, including our President and CEO and Principal Accounting and Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934 (the "Exchange Act")). Based upon that evaluation, the President and CEO and the Principal Accounting and Financial Officer concluded that, as of September 30, 2019, our disclosure controls and procedures were effective.

(b) During the quarter ended September 30, 2019, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 6. Exhibits

The following exhibits are filed with this report on Form 10-Q or are incorporated by reference:

10.1

Loan and Security Agreement between Encision Inc. and Crestmark Bank received August 9, 2019 (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on August 14, 2019).

31.1

Certification of President and CEO under Rule 13a-14(a) of the Exchange Act (filed herewith).

31.2

Certification of Principal Financial and Accounting Officer under Rule 13a-14(a) of the Exchange Act (filed herewith).

32.1

Certifications of President and CEO and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

101

The following materials from Encision Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) the unaudited Condensed Balance Sheets, (ii) the unaudited Condensed Statements of Income, (iii) the unaudited Condensed Statements of Cash Flows, and (iv) Notes to Condensed Financial Statements, tagged at Level I.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ENCISION INC.
Dated: November 13, 2019
	By:	/s/ Mala Ray
		Mala Ray Controller Principal Accounting Officer & Principal Financial Officer

EX-31.1 2 ex31x1.htm EXHIBIT 31.1

Exhibit 31.1

CERTIFICATIONS

I, Gregory Trudel, certify that:

I have reviewed this quarterly report on Form 10-Q of Encision Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and,

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 13, 2019

/s/ Gregory Trudel

Gregory Trudel

President and CEO

EX-31.2 3 ex31x2.htm EXHIBIT 31.2

Exhibit 31.2

CERTIFICATIONS

I, Mala Ray, certify that:

I have reviewed this quarterly report on Form 10-Q of Encision Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 13, 2019

/s/ Mala Ray

Mala Ray

Controller, Principal Accounting Officer and

Principal Financial Officer

EX-32.1 4 ex32x1.htm EXHIBIT 32.1

Exhibit 32.1

CERTIFICATIONS OF PERIODIC REPORT

I, Gregory Trudel, President and CEO of Encision Inc. (the “Company”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

•

the Quarterly Report on Form 10-Q of the Company for the three months ended September 30, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

•

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by the Report.

Dated: November 13, 2019

/s/ Gregory Trudel

Gregory Trudel

President and CEO

I, Mala Ray, Controller and Principal Accounting Officer of Encision Inc. (the “Company”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

•

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by the Report.

Dated: November 13, 2019

/s/ Mala Ray

Mala Ray

Controller, Principal Accounting Officer and

Principal Financial Officer

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We entered into a loan and security agreement with Crestmark Bank. The loan is due on demand, has no financial covenants and is secured by all of our assets. 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 prime rate plus 1.5%, 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 $500,000, a loan fee of 1% annually, and an exit fee of 3%, 2% and 1% during years one, two and three, respectively.

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Note 1.	ORGANIZATION AND NATURE OF BUSINESS   Encision Inc. is a medical device company that designs, develops, manufactures and markets patented surgical instruments that provide greater safety to, and saves lives of, patients undergoing minimally-invasive surgery. We believe that our patented AEM® (Active Electrode Monitoring) surgical instrument technology is changing the marketplace for electrosurgical devices and instruments by providing a solution to a patient safety risk in laparoscopic surgery. Our sales to date have been made principally in the United States.   We have an accumulated deficit of $22,002,156 at September 30, 2019. A significant portion of our operating funds have been provided by issuances of our common stock and warrants, a line of credit, and the exercise of stock options to purchase our common stock. Shareholders’ equity decreased by $136,644 as a result of our loss of $152,009, and increased as a result of share-based compensation of $15,365. Should our liquidity be diminished in the future because of operating losses, we may be required to seek additional capital.   Our strategic marketing and sales plan is designed to expand the use of our products in surgically active hospitals and surgery centers in the United States.

Note 2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Basis of Presentation. The condensed interim financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to make the information presented not misleading. The condensed interim financial statements and notes thereto should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, filed on September 14, 2019.   The accompanying condensed interim financial statements have been prepared, in all material respects, in conformity with the standards of accounting measurements and reflect, in the opinion of management, all adjustments necessary to summarize fairly the financial position and results of operations for such periods in accordance with GAAP. All adjustments are of a normal recurring nature. The results of operations for the most recent interim period are not necessarily indicative of the results to be expected for the full year.   We had a net income of $29,886 for the fiscal quarter, and a net loss of $152,009 for the six months ended September 30, 2019. At September 30, 2019, we had cash of $141,877, borrowings of $93,045 and $433,730 available under our line of credit. Working capital was $1,617,303, a decrease of $291,445 from March 31, 2019. We used $156,471 of cash in the fiscal six months ended September 30, 2019, primarily as a result of our loss and reduction of accounts payable. The principal reason for our loss for the six months ended September 30, 2019 was higher material costs as a result of the U.S. governmental tariffs. These facts and circumstances were initial indicators that created uncertainty about our ability to continue as a going concern. To address this uncertainty, management developed plans to ensure that we have the working capital necessary to fund operations. In July 2019, we reduced personnel and departmental costs by more than $1 million annualized. We expect that the $1 million annualized cost reductions will return us to profitability and is evidenced by our net income of $29,886 for the quarter ended September 30, 2019. We have a new line of credit (see Note 4), for up to $1 million, restricted by eligible receivables. Management concludes that it is probable that our cash resources and line of credit will be sufficient to meet our cash requirements for twelve months from the issuance of the condensed financial statements. In the event that the governmental tariffs are reduced or eliminated then we expect that the higher material costs that we experienced will be reduced. We are increasing our pricing on products to mitigate somewhat our higher material costs. Therefore, the accompanying condensed financial statements have been prepared assuming that we will continue as a going concern.   Use of Estimates in the Preparation of Financial Statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expense during the reporting period. Actual results could differ from those estimates.   Cash and Cash Equivalents. For purposes of reporting cash flows, we consider all cash and highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash is cash that was deposited to obtain a letter of credit for our importing and exporting activities.   Fair Value of Financial Instruments. Our financial instruments consist of cash, cash equivalents, restricted cash, short-term trade receivables, payables and a line of credit. The carrying values of cash, cash equivalents, restricted cash short-term trade receivables, payables and line of credit approximate their fair value due to their short maturities.   Concentration of Credit Risk. Financial instruments, which potentially subject us to concentrations of credit risk, consist of cash and cash equivalents, accounts receivable and a line of credit. From time to time, the amount of cash on deposit with financial institutions may exceed the $250,000 federally insured limit at September 30, 2019. We believe that cash on deposit that exceeds $250,000 with financial institutions is financially sound and the risk of loss is minimal.   We have no significant off-balance sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. We maintain the majority of our cash balances with one financial institution in the form of demand deposits.   Accounts receivable are typically unsecured and are derived from transactions with and from entities in the healthcare industry primarily located in the United States. Accordingly, we may be exposed to credit risk generally associated with the healthcare industry. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. The net accounts receivable balance at September 30, 2019 of $968,021 and at March 31, 2019 of $1,009,106 included no more than 8% from any one customer.   Inventories. Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value. We reduce inventory for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the net realizable value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. At September 30, 2019 and March 31, 2019, inventory consisted of the following:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-size: 12pt; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September 30, 2019</td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">March 31, 2019</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; text-align: left; padding-left: 5.4pt">Raw materials</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">1,094,827</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">1,063,780</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Finished goods</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">286,134</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">458,763</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 5.4pt">Total gross inventories</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,380,961</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,522,543</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Less reserve for obsolescence</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(38,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(50,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Total net inventories</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,342,961</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,472,543</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> </table>   Property and Equipment. Property and equipment are stated at cost, with depreciation computed over the estimated useful lives of the assets, generally five to seven years. We use the straight-line method of depreciation for property and equipment. Leasehold improvements are depreciated over the shorter of the remaining lease term or the estimated useful life of the asset. Maintenance and repairs are expensed as incurred and major additions, replacements and improvements are capitalized.   Long-Lived Assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A long-lived asset is considered impaired when estimated future cash flows related to the asset, undiscounted and without interest, are insufficient to recover the carrying amount of the asset. If deemed impaired, the long-lived asset is reduced to its estimated fair value. Long-lived assets to be disposed of are reported at the lower of their carrying amount or estimated fair value less cost to sell.   Patents. The costs of applying for patents are capitalized and amortized on a straight-line basis over the lesser of the patent’s economic or legal life (20 years from the date of application in the United States). Capitalized costs are expensed if patents are not issued. We review the carrying value of our patents periodically to determine whether the patents have continuing value and such reviews could result in the conclusion that the recorded amounts have been impaired.   Income Taxes. We account for income taxes under the provisions of FASB Accounting Standards Codification (“ASC”) Topic 740, “Accounting for Income Taxes” (“ASC 740”). ASC 740 requires recognition of deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities. ASC 740 also requires recognition of deferred tax assets for the expected future tax effects of all deductible temporary differences, loss carryforwards and tax credit carryforwards. Deferred tax assets are then reduced, if deemed necessary, by a valuation allowance for the amount of any tax benefits, which, more likely than not based on current circumstances, are not expected to be realized. As a result, no provision for income tax is reflected in the accompanying statements of operations. Should we achieve sufficient, sustained income in the future, we may conclude that some or all of the valuation allowance should be reversed. We are required to make many subjective assumptions and judgments regarding our income tax exposures. At September 30, 2019, we had no unrecognized tax benefits, which would affect the effective tax rate if recognized and had no accrued interest, or penalties related to uncertain tax positions.   Revenue Recognition. We record revenue at a single point in time, when control is transferred to the customer, which is consistent with past practice. We will continue to apply our current business processes, policies, systems and controls to support recognition and disclosure. Our shipping policy is FOB Shipping Point. We recognize revenue from sales to stocking distributors when there is no right of return, other than for normal warranty claims. We have no ongoing obligations related to product sales, except for normal warranty obligations. We evaluated the requirement to disaggregate revenue, and concluded that substantially all of our revenue comes from multiple products within a line of medical devices.   Research and Development Expenses. We expense research and development costs for products and processes as incurred.   Stock-Based Compensation. Stock-based compensation is presented in accordance with the guidance of ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”). Under the provisions of ASC 718, companies are required to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our statements of operations.   Stock-based compensation expense recognized under ASC 718 for the three and six months ended September 30, 2019 was $7,663 and $15,365, respectively, and for the three and six months ended September 30, 2018 was $13,651 and $25,744, respectively, which consisted of stock-based compensation expense related to grants of employee stock options and restricted stock units (“RSUs”).   Segment Reporting. We have concluded that we have one operating segment.   Recent Accounting Pronouncements. We have reviewed all recently issued accounting pronouncements.   ASU No. 2014-09 (ASC 606), Revenue from Contracts with Customers became effective for us beginning April 1, 2018, and adopted the new accounting standard using the modified retrospective transition approach. We record revenue under ASC 606 at a single point in time, when control is transferred to the customer, which is consistent with past practice. We will continue to apply our current business processes, policies, systems and controls to support recognition and disclosure under the new standard. Based on the results of the evaluation, we have determined that the adoption of the new standard presents no material impact on our financial statements.   In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. Within the opening balances for the fiscal year beginning April 1, 2019, we recognized leased assets and corresponding liabilities in other long-term assets of $1,214,983.

Note 3.	Basic and Diluted Income and Loss per Common Share   We report both basic and diluted net income (loss) per share. Basic net income or loss per common share is computed by dividing net income or loss for the period by the weighted average number of common shares outstanding for the period. Diluted net income or loss per common share is computed by dividing the net income or loss for the period by the weighted average number of common and potential common shares outstanding during the period if the effect of the potential common shares is dilutive. The shares used in the calculation of dilutive potential common shares exclude options and RSUs to purchase shares where the exercise price was greater than the average market price of common shares for the period.   The following table presents the calculation of basic and diluted net loss per share:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-size: 12pt; text-align: center; vertical-align: bottom"> </td><td style="font-size: 12pt; padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td> <td colspan="7" style="font-size: 12pt; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">Three Months Ended</td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td> <td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">Six Months Ended</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; vertical-align: bottom"> </td><td style="padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">September 30, 	2019</td><td style="padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">September 30, 	2018</td><td style="padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">September 30, 	2019</td><td style="padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">September 30, 	2018</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net income (loss)</td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</td><td style="width: 12%; border-bottom: Black 1pt solid; text-align: right">29,886</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</td><td style="width: 12%; border-bottom: Black 1pt solid; text-align: right">12,312</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</td><td style="width: 12%; border-bottom: Black 1pt solid; text-align: right">(152,009</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">)</td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</td><td style="width: 12%; border-bottom: Black 1pt solid; text-align: right">30,895</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 5.4pt">Weighted-average shares — basic</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">11,558,355</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">10,683,355</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">11,558,355</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">10,683,355</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Effect of dilutive potential common shares</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">33,719</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">34,192</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">28,086</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt; padding-left: 5.4pt">Weighted-average shares — diluted</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">11,592,074</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">10,717,547</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">10</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">10,711,441</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net income (loss) per share — basic</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0.00</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0.00</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">(0.01</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0.00</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net income (loss) per share — diluted</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0.00</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0.00</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">(0.01</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0.00</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Antidilutive employee stock options and 	RSUs</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">958,567</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">975,344</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="font-size: 12pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: right">992,286</td><td style="padding-bottom: 1pt; font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: right">981,450</td><td style="padding-bottom: 1pt; font-size: 12pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 12pt"> </td><td style="font-size: 12pt"> </td> <td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt"> </td> <td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt"> </td> <td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt"> </td> <td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td></tr></table>

Note 4.	COMMITMENTS AND CONTINGENCIES   Effective November 9, 2018, we extended our noncancelable lease agreement through July 31, 2024 for our facilities at 6797 Winchester Circle, Boulder, Colorado. The lease includes base rent abatement for the first two months, or $55,583, and $145,000 of leasehold improvements granted by the landlord.   In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as either finance or operating leases under previous accounting standards and disclosing key information about leasing arrangements. We adopted Topic 842 on April 1, 2019, using the alternative modified transition method, which requires a cumulative effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated. There was no cumulative effect adjustment recorded on April 1, 2019. The primary impact for us was the balance sheet recognition of right-of-use (“ROU”) assets and lease liabilities for operating leases as a lessee.   We determine if an arrangement contains a lease at inception. We currently do not have any finance leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. We use our incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as our leases do not provide an implicit rate. Lease expense is recognized on a straight-line basis over the lease term.   The minimum future lease payment, by fiscal year, as of September 30, 2019 is as follows:   <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 60%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid; text-align: left; vertical-align: bottom">Fiscal Year</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Amount</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 1%; text-align: left; vertical-align: bottom"> </td><td style="width: 43%; text-align: left; vertical-align: bottom">2020 (6 months remaining)</td><td style="width: 1%; text-align: left; vertical-align: bottom"> </td><td style="width: 10%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 43%; text-align: right">133,275</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; vertical-align: bottom"> </td><td style="text-align: left; vertical-align: bottom">2021</td><td style="text-align: left; vertical-align: bottom"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">343,167</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; vertical-align: bottom"> </td><td style="text-align: left; vertical-align: bottom">2022</td><td style="text-align: left; vertical-align: bottom"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">357,667</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; vertical-align: bottom"> </td><td style="text-align: left; vertical-align: bottom">2023</td><td style="text-align: left; vertical-align: bottom"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">372,167</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; vertical-align: bottom"> </td><td style="text-align: left; vertical-align: bottom">2024</td><td style="text-align: left; vertical-align: bottom"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">386,667</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt; text-align: left; vertical-align: bottom"> </td><td style="padding-bottom: 1pt; text-align: left; vertical-align: bottom">2025</td><td style="padding-bottom: 1pt; text-align: left; vertical-align: bottom"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">130,500</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; text-align: left; vertical-align: bottom"> </td><td style="padding-bottom: 1pt; text-align: left; vertical-align: bottom">Total</td><td style="padding-bottom: 1pt; text-align: left; vertical-align: bottom"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,723,443</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> </table>   On August 9, 2019, we entered into a loan and security agreement with Crestmark Bank. The loan is due on demand, has no financial covenants and is secured by all of our assets. 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 prime rate plus 1.5%, 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 $500,000, a loan fee of 1% annually, and an exit fee of 3%, 2% and 1% during years one, two and three, respectively. We have borrowed $93,045 under the line of credit and have $433,730 available to borrow. Aside from the operating lease, we do not have any material contractual commitments requiring settlement in the future.   We are subject to regulation by the United States Food and Drug Administration (“FDA”). The FDA provides regulations governing the manufacture and sale of our products and regularly inspects us and other manufacturers to determine compliance with these regulations. We believe that we were in substantial compliance with all known regulations at September 30, 2019. FDA inspections are conducted periodically at the discretion of the FDA. Our latest inspection by the FDA occurred in October 2019.

Note 5.	SHARE-BASED COMPENSATION   The provisions of ASC 718-10-55 requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors, including employee stock options and RSUs, based on estimated fair values. The following table summarizes stock-based compensation expense related to employee stock options, RSUs and employee stock purchases for the three and six months ended September 30, 2019 and 2018, which was allocated as follows:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-size: 12pt; text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three Months Ended</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six Months Ended</td></tr> <tr style="vertical-align: bottom"> <td style="font-size: 12pt; text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September 30, 2019</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September 30, 2018</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September 30, 2019</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September 30, 2018</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; text-align: justify; padding-left: 5.4pt">Cost of sales</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">724</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">714</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">1,405</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">1,315</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-left: 5.4pt">Sales and marketing</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">803</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,298</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,593</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">2,594</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-left: 5.4pt">General and administrative</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">5,442</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">10,922</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">11,064</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">20,514</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Research and development</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">694</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">717</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,303</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,321</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Stock-based compensation 	expense</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">7,663</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">13,651</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">15,365</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">25,744</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> </table>   Share-based compensation cost for stock options is measured at the grant date, based on the fair value as calculated by the Black-Scholes-Merton ("BSM") option-pricing model. The BSM option-pricing model requires the use of actual employee exercise behavior data and the application of a number of assumptions, including expected volatility, risk-free interest rate and expected dividends. There were 45,000 stock options granted and 33,000 stock options forfeited during the three months ended September 30, 2019, and 85,000 stock options granted and 83,000 stock options forfeited during the six months ended September 30, 2019. Share-based compensation cost for RSUs is measured based on the closing fair market value of the Company's common stock on the date of grant.   As of September 30, 2019, $141,000 of total unrecognized compensation costs related to nonvested stock options is expected to be recognized over a period of five years.

Note 6.	RELATED PARTY TRANSACTION   We paid consulting fees of $16,500 and $36,594 to an entity owned by one of our directors during the three and six months ended September 30, 2019, respectively, and $14,976 and $35,045 to an entity owned by one of our directors during the three and six months ended September 30, 2018, respectively.

Note 7.	SUBSEQUENT EVENTS   We evaluated all of our activity as of the date the condensed interim financial statements were issued and concluded that no subsequent events have occurred that would require recognition in our financial statements or disclosed in the notes to our condensed interim financial statements.

Basis of Presentation. The condensed interim financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to make the information presented not misleading. The condensed interim financial statements and notes thereto should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019, filed on September 14, 2019.   The accompanying condensed interim financial statements have been prepared, in all material respects, in conformity with the standards of accounting measurements and reflect, in the opinion of management, all adjustments necessary to summarize fairly the financial position and results of operations for such periods in accordance with GAAP. All adjustments are of a normal recurring nature. The results of operations for the most recent interim period are not necessarily indicative of the results to be expected for the full year.   We had a net income of $29,886 for the fiscal quarter, and a net loss of $152,009 for the six months ended September 30, 2019. At September 30, 2019, we had cash of $141,877, borrowings of $93,045 and $433,730 available under our line of credit. Working capital was $1,617,303, a decrease of $291,445 from March 31, 2019. We used $156,471 of cash in the fiscal six months ended September 30, 2019, primarily as a result of our loss and reduction of accounts payable. The principal reason for our loss for the six months ended September 30, 2019 was higher material costs as a result of the U.S. governmental tariffs. These facts and circumstances were initial indicators that created uncertainty about our ability to continue as a going concern. To address this uncertainty, management developed plans to ensure that we have the working capital necessary to fund operations. In July 2019, we reduced personnel and departmental costs by more than $1 million annualized. We expect that the $1 million annualized cost reductions will return us to profitability and is evidenced by our net income of $29,886 for the quarter ended September 30, 2019. We have a new line of credit (see Note 4), for up to $1 million, restricted by eligible receivables. Management concludes that it is probable that our cash resources and line of credit will be sufficient to meet our cash requirements for twelve months from the issuance of the condensed financial statements. In the event that the governmental tariffs are reduced or eliminated then we expect that the higher material costs that we experienced will be reduced. We are increasing our pricing on products to mitigate somewhat our higher material costs. Therefore, the accompanying condensed financial statements have been prepared assuming that we will continue as a going concern.

Use of Estimates in the Preparation of Financial Statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expense during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents. For purposes of reporting cash flows, we consider all cash and highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash is cash that was deposited to obtain a letter of credit for our importing and exporting activities.

Fair Value of Financial Instruments. Our financial instruments consist of cash, cash equivalents, restricted cash, short-term trade receivables, payables and a line of credit. The carrying values of cash, cash equivalents, restricted cash short-term trade receivables, payables and line of credit approximate their fair value due to their short maturities.

Concentration of Credit Risk. Financial instruments, which potentially subject us to concentrations of credit risk, consist of cash and cash equivalents, accounts receivable and a line of credit. From time to time, the amount of cash on deposit with financial institutions may exceed the $250,000 federally insured limit at September 30, 2019. We believe that cash on deposit that exceeds $250,000 with financial institutions is financially sound and the risk of loss is minimal.   We have no significant off-balance sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. We maintain the majority of our cash balances with one financial institution in the form of demand deposits.   Accounts receivable are typically unsecured and are derived from transactions with and from entities in the healthcare industry primarily located in the United States. Accordingly, we may be exposed to credit risk generally associated with the healthcare industry. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. The net accounts receivable balance at September 30, 2019 of $968,021 and at March 31, 2019 of $1,009,106 included no more than 8% from any one customer.

Inventories. Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value. We reduce 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. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. At September 30, 2019 and March 31, 2019, inventory consisted of the following:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-size: 12pt; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September 30, 2019</td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">March 31, 2019</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; text-align: left; padding-left: 5.4pt">Raw materials</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">1,094,827</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">1,063,780</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Finished goods</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">286,134</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">458,763</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 5.4pt">Total gross inventories</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,380,961</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,522,543</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Less reserve for obsolescence</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(38,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(50,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Total net inventories</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,342,961</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,472,543</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr></table>

Property and Equipment. Property and equipment are stated at cost, with depreciation computed over the estimated useful lives of the assets, generally five to seven years. We use the straight-line method of depreciation for property and equipment. Leasehold improvements are depreciated over the shorter of the remaining lease term or the estimated useful life of the asset. Maintenance and repairs are expensed as incurred and major additions, replacements and improvements are capitalized.

Long-Lived Assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A long-lived asset is considered impaired when estimated future cash flows related to the asset, undiscounted and without interest, are insufficient to recover the carrying amount of the asset. If deemed impaired, the long-lived asset is reduced to its estimated fair value. Long-lived assets to be disposed of are reported at the lower of their carrying amount or estimated fair value less cost to sell.

Patents. The costs of applying for patents are capitalized and amortized on a straight-line basis over the lesser of the patent’s economic or legal life (20 years from the date of application in the United States). Capitalized costs are expensed if patents are not issued. We review the carrying value of our patents periodically to determine whether the patents have continuing value and such reviews could result in the conclusion that the recorded amounts have been impaired.

Income Taxes. We account for income taxes under the provisions of FASB Accounting Standards Codification (“ASC”) Topic 740, “Accounting for Income Taxes” (“ASC 740”). ASC 740 requires recognition of deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities. ASC 740 also requires recognition of deferred tax assets for the expected future tax effects of all deductible temporary differences, loss carryforwards and tax credit carryforwards. Deferred tax assets are then reduced, if deemed necessary, by a valuation allowance for the amount of any tax benefits, which, more likely than not based on current circumstances, are not expected to be realized. As a result, no provision for income tax is reflected in the accompanying statements of operations. Should we achieve sufficient, sustained income in the future, we may conclude that some or all of the valuation allowance should be reversed. We are required to make many subjective assumptions and judgments regarding our income tax exposures. At September 30, 2019, we had no unrecognized tax benefits, which would affect the effective tax rate if recognized and had no accrued interest, or penalties related to uncertain tax positions.

Revenue Recognition. We record revenue at a single point in time, when control is transferred to the customer, which is consistent with past practice. We will continue to apply our current business processes, policies, systems and controls to support recognition and disclosure. Our shipping policy is FOB Shipping Point. We recognize revenue from sales to stocking distributors when there is no right of return, other than for normal warranty claims. We have no ongoing obligations related to product sales, except for normal warranty obligations. We evaluated the requirement to disaggregate revenue, and concluded that substantially all of our revenue comes from multiple products within a line of medical devices.

Research and Development Expenses. We expense research and development costs for products and processes as incurred.

Stock-Based Compensation. Stock-based compensation is presented in accordance with the guidance of ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”). Under the provisions of ASC 718, companies are required to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our statements of operations.   Stock-based compensation expense recognized under ASC 718 for the three and six months ended September 30, 2019 was $7,663 and $15,365, respectively, and for the three and six months ended September 30, 2018 was $13,651 and $25,744, respectively, which consisted of stock-based compensation expense related to grants of employee stock options and restricted stock units (“RSUs”).

Segment Reporting. We have concluded that we have one operating segment.

Recent Accounting Pronouncements. We have reviewed all recently issued accounting pronouncements.   ASU No. 2014-09 (ASC 606), Revenue from Contracts with Customers became effective for us beginning April 1, 2018, and adopted the new accounting standard using the modified retrospective transition approach. We record revenue under ASC 606 at a single point in time, when control is transferred to the customer, which is consistent with past practice. We will continue to apply our current business processes, policies, systems and controls to support recognition and disclosure under the new standard. Based on the results of the evaluation, we have determined that the adoption of the new standard presents no material impact on our financial statements.   In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. Within the opening balances for the fiscal year beginning April 1, 2019, we recognized leased assets and corresponding liabilities in other long-term assets of $1,214,983.

At September 30, 2019 and March 31, 2019, inventory consisted of the following:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-size: 12pt; text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September 30, 2019</td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">March 31, 2019</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; text-align: left; padding-left: 5.4pt">Raw materials</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">1,094,827</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">1,063,780</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Finished goods</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">286,134</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">458,763</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 5.4pt">Total gross inventories</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,380,961</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,522,543</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Less reserve for obsolescence</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(38,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(50,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Total net inventories</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,342,961</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,472,543</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr></table>

The following table presents the calculation of basic and diluted net loss per share:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-size: 12pt; text-align: center; vertical-align: bottom"> </td><td style="font-size: 12pt; padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td> <td colspan="7" style="font-size: 12pt; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">Three Months Ended</td><td style="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td> <td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">Six Months Ended</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center; vertical-align: bottom"> </td><td style="padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">September 30, 	2019</td><td style="padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">September 30, 	2018</td><td style="padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">September 30, 	2019</td><td style="padding-bottom: 1pt; text-align: center; vertical-align: bottom"> </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">September 30, 	2018</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net income (loss)</td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</td><td style="width: 12%; border-bottom: Black 1pt solid; text-align: right">29,886</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</td><td style="width: 12%; border-bottom: Black 1pt solid; text-align: right">12,312</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</td><td style="width: 12%; border-bottom: Black 1pt solid; text-align: right">(152,009</td><td style="width: 1%; padding-bottom: 1pt; text-align: left">)</td><td style="width: 2%; padding-bottom: 1pt"> </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</td><td style="width: 12%; border-bottom: Black 1pt solid; text-align: right">30,895</td><td style="width: 1%; padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 5.4pt">Weighted-average shares — basic</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">11,558,355</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">10,683,355</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">11,558,355</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">10,683,355</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Effect of dilutive potential common shares</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">33,719</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">34,192</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">28,086</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt; padding-left: 5.4pt">Weighted-average shares — diluted</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">11,592,074</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">10,717,547</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">10</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">10,711,441</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net income (loss) per share — basic</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0.00</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0.00</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">(0.01</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0.00</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net income (loss) per share — diluted</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0.00</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0.00</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">(0.01</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">0.00</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Antidilutive employee stock options and 	RSUs</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">958,567</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">975,344</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="font-size: 12pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: right">992,286</td><td style="padding-bottom: 1pt; font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font-size: 12pt; text-align: right">981,450</td><td style="padding-bottom: 1pt; font-size: 12pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 12pt"> </td><td style="font-size: 12pt"> </td> <td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt"> </td> <td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt"> </td> <td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt"> </td> <td style="font-size: 12pt; text-align: left"> </td><td style="font-size: 12pt; text-align: right"> </td><td style="font-size: 12pt; text-align: left"> </td></tr></table>

The minimum future lease payment, by fiscal year, as of September 30, 2019 is as follows:   <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 60%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid; text-align: left; vertical-align: bottom">Fiscal Year</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Amount</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 1%; text-align: left; vertical-align: bottom"> </td><td style="width: 43%; text-align: left; vertical-align: bottom">2020 (6 months remaining)</td><td style="width: 1%; text-align: left; vertical-align: bottom"> </td><td style="width: 10%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 43%; text-align: right">133,275</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; vertical-align: bottom"> </td><td style="text-align: left; vertical-align: bottom">2021</td><td style="text-align: left; vertical-align: bottom"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">343,167</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; vertical-align: bottom"> </td><td style="text-align: left; vertical-align: bottom">2022</td><td style="text-align: left; vertical-align: bottom"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">357,667</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; vertical-align: bottom"> </td><td style="text-align: left; vertical-align: bottom">2023</td><td style="text-align: left; vertical-align: bottom"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">372,167</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; vertical-align: bottom"> </td><td style="text-align: left; vertical-align: bottom">2024</td><td style="text-align: left; vertical-align: bottom"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">386,667</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt; text-align: left; vertical-align: bottom"> </td><td style="padding-bottom: 1pt; text-align: left; vertical-align: bottom">2025</td><td style="padding-bottom: 1pt; text-align: left; vertical-align: bottom"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">130,500</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1pt; text-align: left; vertical-align: bottom"> </td><td style="padding-bottom: 1pt; text-align: left; vertical-align: bottom">Total</td><td style="padding-bottom: 1pt; text-align: left; vertical-align: bottom"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,723,443</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr></table>

The following table summarizes stock-based compensation expense related to employee stock options, RSUs and employee stock purchases for the three and six months ended September 30, 2019 and 2018, which was allocated as follows:   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-size: 12pt; text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three Months Ended</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="7" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six Months Ended</td></tr> <tr style="vertical-align: bottom"> <td style="font-size: 12pt; text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September 30, 2019</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September 30, 2018</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September 30, 2019</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September 30, 2018</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; text-align: justify; padding-left: 5.4pt">Cost of sales</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">724</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">714</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">1,405</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">1,315</td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-left: 5.4pt">Sales and marketing</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">803</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,298</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,593</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">2,594</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-left: 5.4pt">General and administrative</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">5,442</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">10,922</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">11,064</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">20,514</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-bottom: 1pt; padding-left: 5.4pt">Research and development</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">694</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">717</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,303</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,321</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Stock-based compensation 	expense</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">7,663</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">13,651</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">15,365</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">25,744</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr></table>

2532795

2910013

79936

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Disclosure - RELATED PARTY TRANSACTION (Details Narrative) link:presentationLink link:calculationLink link:definitionLink EX-101.CAL 7 ecia-20190930_cal.xml XBRL CALCULATION FILE EX-101.DEF 8 ecia-20190930_def.xml XBRL DEFINITION FILE EX-101.LAB 9 ecia-20190930_lab.xml XBRL LABEL FILE Range [Axis] Minimum [Member] Maximum [Member] Income Statement Location [Axis] Cost Of Sales [Member] Selling And Marketing Expense [Member] Research And Development Expense [Member] General And Administrative Expense [Member] Related Party [Axis] Director [Member] Document and Entity Information Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Entity's Reporting Status Current Entity Filer Category Entity Emerging Growth Company Entity Small Business Entity Shell company Entity File Number Entity Incorporation, State Country Code Entity Interactive Data Current Entity Common Stock, Shares Outstanding Document Fiscal Year Focus Document Fiscal Period Focus Statement of Financial Position [Abstract] ASSETS Current assets: Cash and cash equivalents Restricted cash Accounts receivable, net of allowance for doubtful accounts of $25,000 at September 30, 2019 and $26,000 at March 31, 2019 Inventories, net of reserve for obsolescence of $38,000 at September 30, 2019 and $50,000 at March 31, 2019 Prepaid expenses Total current assets Equipment, at cost: Furniture, fixtures and equipment Accumulated depreciation Equipment, net Right of use asset Patents, net of accumulated amortization of $278,444 at September 30, 2019 and $266,028 at March 31, 2019 Other assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable Accrued compensation Other accrued liabilities Line of credit Accrued lease liability Total current liabilities Long-term liability: Accrued lease liability Deferred rent Total liabilities Commitments and contingencies (Note 4) Shareholders' equity: Preferred stock, no par value: 10,000,000 shares authorized; none issued and outstanding Common stock and additional paid-in capital, no par value: 100,000,000 shares authorized; 11,558,355 shares issued and outstanding at September 30, 2019 and March 31, 2019 Accumulated (deficit) Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY Accounts receivable, allowance for doubtful accounts (in dollars) Inventories, reserve for obsolescence (in dollars) Accumulated amortization Preferred stock, par value Preferred stock, shares authorized Preferred stock, shares issued Preferred stock, shares outstanding Common stock and additional paid-in capital, par value Common stock and additional paid-in capital, shares authorized Common stock and additional paid-in capital, shares issued Common stock and additional paid-in capital, shares outstanding Income Statement [Abstract] NET REVENUE COST OF REVENUE GROSS PROFIT OPERATING EXPENSES: Sales and marketing General and administrative Research and development Total operating expenses OPERATING INCOME (LOSS) Interest expense, net Other income (expense), net Interest expense and other income (expense), net INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES Provision for income taxes NET INCOME (LOSS) Net income (loss) per share - 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BASIC AND DILUTED INCOME AND LOSS PER COMMON SHARE

6 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

BASIC AND DILUTED INCOME AND LOSS PER COMMON SHARE

Note 3. Basic and Diluted Income and Loss per Common Share

The following table presents the calculation of basic and diluted net loss per share:

	Three Months Ended				Six Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019			September 30, 2018
Net income (loss)	$	29,886	$	12,312	$	(152,009	)	$	30,895
Weighted-average shares — basic		11,558,355		10,683,355		11,558,355			10,683,355
Effect of dilutive potential common shares		33,719		34,192		—			28,086
Weighted-average shares — diluted		11,592,074		10,717,547		10			10,711,441
Net income (loss) per share — basic	$	0.00	$	0.00	$	(0.01	)	$	0.00
Net income (loss) per share — diluted	$	0.00	$	0.00	$	(0.01	)	$	0.00
Antidilutive employee stock options and RSUs		958,567		975,344		992,286			981,450

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Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Statement [Abstract]
NET REVENUE	$ 1,924,434	$ 2,196,511	$ 3,853,009	$ 4,600,804
COST OF REVENUE	875,440	991,463	1,871,043	2,094,641
GROSS PROFIT	1,048,994	1,205,048	1,981,966	2,506,163
OPERATING EXPENSES:
Sales and marketing	536,995	656,436	1,067,501	1,432,221
General and administrative	304,194	321,707	649,795	641,966
Research and development	172,668	186,577	408,811	353,250
Total operating expenses	1,013,857	1,164,720	2,126,107	2,427,437
OPERATING INCOME (LOSS)	35,137	40,328	(144,141)	78,726
Interest expense, net	(6,211)	(28,188)	(8,995)	(46,639)
Other income (expense), net	960	172	1,127	(1,192)
Interest expense and other income (expense), net	(5,251)	(28,016)	(7,868)	(47,831)
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES	29,886	12,312	(152,009)	30,895
Provision for income taxes	0	0	0	0
NET INCOME (LOSS)	$ 29,886	$ 12,312	$ (152,009)	$ 30,895
Net income (loss) per share - basic and Diluted	$ 0.00	$ 0.00	$ (0.01)	$ 0.00
Weighted average shares - basic	11,558,355	10,683,355	11,558,355	10,683,355
Weighted average shares - diluted	11,592,074	10,717,547	11,558,355	10,711,441

XML 13 R13.htm IDEA: XBRL DOCUMENT

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

Use of Estimates in the Preparation of Financial Statements

Cash and Cash Equivalents

Fair Value of Financial Instruments

Concentration of Credit Risk

Inventories

	September 30, 2019			March 31, 2019
Raw materials	$	1,094,827		$	1,063,780
Finished goods		286,134			458,763
Total gross inventories		1,380,961			1,522,543
Less reserve for obsolescence		(38,000	)		(50,000	)
Total net inventories	$	1,342,961		$	1,472,543

Property and Equipment

Research and Development Expenses

Research and Development Expenses. We expense research and development costs for products and processes as incurred.

Stock-Based Compensation

Segment Reporting

Segment Reporting. We have concluded that we have one operating segment.

Recent Accounting Pronouncements

Recent Accounting Pronouncements. We have reviewed all recently issued accounting pronouncements.

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SHARE-BASED COMPENSATION (Tables)

6 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Schedule of stock-based compensation expense related to employee stock options

The following table summarizes stock-based compensation expense related to employee stock options, RSUs and employee stock purchases for the three and six months ended September 30, 2019 and 2018, which was allocated as follows:

	Three Months Ended				Six Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Cost of sales	$	724	$	714	$	1,405	$	1,315
Sales and marketing		803		1,298		1,593		2,594
General and administrative		5,442		10,922		11,064		20,514
Research and development		694		717		1,303		1,321
Stock-based compensation expense	$	7,663	$	13,651	$	15,365	$	25,744

XML 16 R21.htm IDEA: XBRL DOCUMENT

BASIC AND DILUTED INCOME AND LOSS PER COMMON SHARE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share [Abstract]
Net income (loss)	$ 29,886	$ 12,312	$ (152,009)	$ 30,895
Weighted-average shares - basic	11,558,355	10,683,355	11,558,355	10,683,355
Effect of dilutive potential common shares	33,719	34,192	10	28,086
Weighted-average shares - diluted	11,592,074	10,717,547	11,558,355	10,711,441
Net income (loss) per share-basic	$ .00	$ .00	$ (0.01)	$ 0
Net income (loss) per share-diluted	$ 0.00	$ 0.00	$ (0.01)	$ 0
Antidilutive employee stock options and RSUs	958,567	975,344	992,286	981,450

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

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+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

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+ Details

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SHARE-BASED COMPENSATION (Details Narrative)	3 Months Ended	6 Months Ended
SHARE-BASED COMPENSATION (Details Narrative)	Sep. 30, 2019 USD ($) shares	Sep. 30, 2019 USD ($) shares
Share-based Compensation Details Narrative
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants	45,000	85,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited	33,000	83,000
Unrecognized compensation costs related to nonvested stock options \| $	$ 141,000	$ 141,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended

Sep. 30, 2019

Sep. 30, 2018

Sep. 30, 2019

Sep. 30, 2018

Apr. 02, 2019

Mar. 31, 2019

Property, Plant and Equipment [Line Items]

Net income (loss) $ 29,886 $ 12,312 $ (152,009) $ 30,895

Cash 141,877 141,877

Amount of borrowings 93,045 93,045

Amount available to borrow 433,730 433,730

Working capital 1,617,303

Net cash provided by (used in) operating activities (203,221) 62,340

Federally insured limit 250,000 250,000

Accounts Receivable 968,021 968,021 $ 1,009,106

Stock-based compensation expense 7,663 $ 13,651 15,365 $ 25,744

Unrecognized tax benefits $ 0 $ 0

Other long-term assets $ 1,214,983

Minimum [Member]

Property, Plant and Equipment [Line Items]

Estimated useful lives of assets 5 years

Maximum [Member]

Property, Plant and Equipment [Line Items]

Estimated useful lives of assets 7 years

SHARE-BASED COMPENSATION (Details) - USD ($)	3 Months Ended		6 Months Ended
SHARE-BASED COMPENSATION (Details) - USD ($)	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 7,663	$ 13,651	$ 15,365	$ 25,744
Cost Of Sales [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	724	714	1,405	1,315
Selling And Marketing Expense [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	803	1,298	1,593	2,594
General And Administrative Expense [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	5,442	10,922	11,064	20,514
Research And Development Expense [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 694	$ 717	$ 1,303	$ 1,321

Condensed Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Operating activities:
Net income (loss)	$ (152,009)	$ 30,895
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	79,918	92,320
Share-based compensation expense	15,365	25,744
(Recovery from) doubtful accounts, net	(1,000)	(1,500)
(Recovery from) provision for inventory obsolescence, net	(12,000)	4,000
Changes in operating assets and liabilities:
Right of use asset, net	20,128	0
Accounts receivable	42,085	(143,101)
Inventories	141,582	65,312
Prepaid expenses and other assets	50,080	(24,242)
Accounts payable	(265,744)	103,055
Accrued compensation and other accrued liabilities	(121,846)	(90,143)
Net cash generated by (used in) operating activities	(203,221)	62,340
Investing activities:
Acquisition of property and equipment	(42,547)	(9,982)
Patent costs	(3,528)	(4,865)
Net cash (used in) investing activities	(46,075)	(14,847)
Financing activities:
Borrowings from credit facility, net change	93,045	0
Net cash generated by financing activities	93,045	0
Net increase (decrease) in cash, cash equivalents, and restricted cash	(156,471)	47,493
Cash, cash equivalents, and restricted cash beginning of period	298,348	139,538
Cash, cash equivalents, and restricted cash end of period	141,877	187,031
Supplemental disclosure:
Right of use asset	1,214,983	0
Accrued lease liability	$ 1,279,675	$ 0

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Sep. 30, 2019	Oct. 31, 2019
Document and Entity Information
Entity Registrant Name	ENCISION INC
Entity Central Index Key	0000930775
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Entity's Reporting Status Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell company	false
Entity File Number	001-11789
Entity Incorporation, State Country Code	CO
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding		11,582,641
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2

COMMITMENTS AND CONTINGENCIES (Details)	Sep. 30, 2019 USD ($)
Minimum future lease payments, by fiscal year
2020 (6 months remaining)	$ 133,275
2021	343,167
2022	357,667
2023	372,167
2024	386,667
2025	130,500
Total	$ 1,723,443

RELATED PARTY TRANSACTION (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
RELATED PARTY TRANSACTION (Details Narrative) - USD ($)	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Director [Member]
Related Party Transaction [Line Items]
Consulting fees paid	$ 16,500	$ 36,594	$ 14,976	$ 35,045

Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2019	Mar. 31, 2019
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 25,000	$ 26,000
Inventories, reserve for obsolescence (in dollars)	38,000	50,000
Accumulated amortization	$ 278,444	$ 266,028
Preferred stock, par value	$ 0	$ 0
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock and additional paid-in capital, par value	$ 0	$ 0
Common stock and additional paid-in capital, shares authorized	100,000,000	100,000,000
Common stock and additional paid-in capital, shares issued	11,558,355	11,558,355
Common stock and additional paid-in capital, shares outstanding	11,558,355	11,558,355

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Sep. 30, 2019	Mar. 31, 2019
Inventories
Raw materials	$ 1,094,827	$ 1,063,780
Finished goods	286,134	458,763
Total gross inventories	1,380,961	1,522,543
Less reserve for obsolescence	(38,000)	(50,000)
Total net inventories	$ 1,342,961	$ 1,472,543

Condensed Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2019	Mar. 31, 2019
Current assets:
Cash and cash equivalents	$ 141,877	$ 273,348
Restricted cash	0	25,000
Accounts receivable, net of allowance for doubtful accounts of $25,000 at September 30, 2019 and $26,000 at March 31, 2019	968,021	1,009,106
Inventories, net of reserve for obsolescence of $38,000 at September 30, 2019 and $50,000 at March 31, 2019	1,342,961	1,472,543
Prepaid expenses	79,936	130,016
Total current assets	2,532,795	2,910,013
Equipment, at cost:
Furniture, fixtures and equipment	3,103,876	3,061,329
Accumulated depreciation	(2,878,483)	(2,811,761)
Equipment, net	225,393	249,568
Right of use asset	1,131,125	0
Patents, net of accumulated amortization of $278,444 at September 30, 2019 and $266,028 at March 31, 2019	238,911	248,579
Other assets	19,548	19,548
TOTAL ASSETS	4,147,772	3,427,708
Current liabilities:
Accounts payable	313,212	578,956
Accrued compensation	200,829	295,875
Other accrued liabilities	99,634	126,434
Line of credit	93,045	0
Accrued lease liability	208,772	0
Total current liabilities	915,492	1,001,265
Long-term liability:
Accrued lease liability	1,017,302	0
Deferred rent	0	74,821
Total liabilities	1,932,794	1,076,086
Shareholders' equity:
Preferred stock, no par value: 10,000,000 shares authorized; none issued and outstanding	0	0
Common stock and additional paid-in capital, no par value: 100,000,000 shares authorized; 11,558,355 shares issued and outstanding at September 30, 2019 and March 31, 2019	24,217,134	24,201,769
Accumulated (deficit)	(22,002,156)	(21,850,147)
Total shareholders' equity	2,214,978	2,351,622
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 4,147,772	$ 3,427,708

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	Aug. 09, 2019	Sep. 30, 2019
Commitments And Contingencies Details Narrative
Amount of borrowings		$ 93,045
Amount available to borrow		$ 433,730
Loan description	We entered into a loan and security agreement with Crestmark Bank. The loan is due on demand, has no financial covenants and is secured by all of our assets. 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 prime rate plus 1.5%, 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 $500,000, a loan fee of 1% annually, and an exit fee of 3%, 2% and 1% during years one, two and three, respectively.