Encision second quarter net sales decrease 11% to $2.87 million

Encision Inc. (Pink Sheets: ECIA), a medical device company owning patented surgical technology that is emerging as a standard of care in minimally-invasive surgery, reported its financial results for its second fiscal quarter ended September 30, 2010.

Net sales for the second quarter of fiscal year 2011, ended September 30, 2010, totaled $2.87 million, representing an 11% decrease from net sales of $3.22 million for the prior fiscal year's second quarter. The Company recorded a net loss of $145 thousand or $(0.02) per share for the second quarter of fiscal year 2011 compared to net income of $46 thousand or $0.01 per share for the second quarter of fiscal year 2010. Gross profit margin for the second quarter of fiscal year 2011 was 64% as compared to 60.5% for the second quarter of fiscal year 2010. The gross profit margin increase in the second quarter of fiscal year 2011 was the result of an increase, as a percentage of sales, of higher gross margin sales, particularly relating to the Company's disposable scissor inserts, which are manufactured in-house, and the Company's recently added controlled environment room for product packaging that resulted in packaging cost savings.

Net sales for the first six months ended September 30, 2010, totaled $5.78 million, representing a 10% decrease from net sales of $6.39 million for the prior fiscal year's first six months. The Company recorded a net loss of $264 thousand or $(0.04) per share for the first six months ended September 30, 2010 compared to net income of $210 thousand or $0.03 per share for the first six months of fiscal year 2010. Gross profit margin for the first six months ended September 30, 2010 was 63.7% as compared to 62.2% for the first six months of fiscal year 2010. The gross profit margin increase in the first six months of fiscal year 2011 was the result of an increase, as a percentage of sales, of higher gross margin sales.

"In a tough economic environment, we were again challenged by a decrease in our sales growth during our second quarter of fiscal year 2011," said Jack Serino, President and CEO of Encision Inc. "Also in the second quarter, our research and development expenses were $190 thousand higher than last year's second quarter. The expense increase was the result, primarily, of a temporary increase in outside services for the development of future new products."

"At the end of August 2010, in order to align our costs with our reduced sales, we eliminated some personnel and outside services, and reduced executive salaries and board of directors' fees. The result of this cost reduction will be realized starting with our third quarter of fiscal 2011. Also during the third quarter of fiscal 2011, we plan to introduce new products to our disposable and reusable line of products."