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 UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 WASHINGTON, D.C. 20549

 FORM 10-K

 (Mark One)

 x ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended March 31, 2025

 OR

 o TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from ____ to ____

 Commission File No.: 0-28604

 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) (Zip Code)

 Registrant's
telephone number, including area code: ( 303) 444-2600

 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 by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes o No

 Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act. Yes o No

 Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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
No o

 Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted 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 such files). Yes No

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

 Large accelerated filer o

 Accelerated filer o

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company o

 If
an emerging growth company, indicate by check mark if the registrant has elected 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. o

 Indicate by check mark whether the registrant has filed a report on and
attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b)
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes No

 If securities are registered pursuant to Section 12(b) of the Act, indicate
by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously
issued financial statements.

 Indicate by check mark whether any of those error corrections are restatements
that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during
the relevant recovery period pursuant to § 240.10D-1(b).

 Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes o No

 As of September 30, 2024, the aggregate market value of the shares of
common stock held by non-affiliates of the issuer on such date was $ 2,722,196. This figure is based on the average bid
and asked price of $0.36 per share of the issuer's common stock on September 30, 2022 as quoted on the OTC Bulletin Board.

 The number of shares outstanding of each of the issuer's classes
of common equity, as of the last practicable date.

 Common Stock, no par value

 (Class)

 (Outstanding at June 25, 2025)

 Documents Incorporated by Reference: Definitive Proxy Statement for the
2025 Annual Shareholders' Meeting to be filed with the Securities and Exchange Commission and incorporated by reference as described in
Part III. The 2025 Proxy Statement will be filed within 120 days after the end of the fiscal year ended March 31, 2025.

 Item
 1.
 Business

 Item
 1A.
 Risk Factors

 Item
 1B.
 Unresolved Staff Comments

 Item
 1C.
 Cybersecurity

 Item
 2.
 Properties

 Item
 3.
 Legal Proceedings

 Item
 4.
 Mine Safety Disclosures

 PART
 II

 Item
 5.
 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item
 6.
 [ Reserved ]

 Item
 7.
 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A.
 Quantitative and Qualitative Disclosures About Market Risk

 Item
 8.
 Financial Statements and Supplementary Data

 Item
 9.
 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item
 9A.
 Controls and Procedures

 Item
 9B.
 Other Information

 Item
 9C.
 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 PART
 III

 Item
 10.
 Directors, Executive Officers and Corporate Governance

 Item
 11.
 Executive Compensation

 Item
 12.
 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 13.
 Certain Relationships and Related Transactions, and Director Independence

 Item
 14.
 Principal Accounting Fees and Services

 PART
 IV

 Item
 15.
 Exhibits, Financial Statement Schedules

 Item
 16.
 Form 10-K Summary

 Forward-Looking Statements

 Statements contained in this Annual Report on
Form 10-K include 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 Annual Report on Form 10-K, including statements about our strategies, expectations about new and existing
products, market demand, acceptance of new and existing products, technologies and opportunities, market size and growth, and return on
investments in products and market, are based on information available to us on the date of this document, and we assume no obligation
to update such forward looking statements. In some cases, you can identify forward looking statements by terminology such as "may",
"will", "should", "could", "expects", "plans", "intends", "anticipates",
"believes", "estimates", "predicts", "potential", or "continue" or the negative
of such terms or other comparable terminology. Readers of this Annual Report on Form 10-K are strongly encouraged to review the section
entitled "Risk Factors".

 Item 1. Business

 Company
Overview

 Encision Inc. ("Encision", "we",
"us", "our" or the "Company"), 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) Surgical Instruments are changing the marketplace for electrosurgical devices and laparoscopic
instruments by providing a solution to a well-documented hazard unique to laparoscopic surgery.

 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. The risk of unintended
electrosurgical burn injury to the patient in laparoscopic surgery has been well documented. This risk threatens patient safety, including
the risk of death, and creates liability exposure for surgeons and hospitals, and increases preventable readmissions. Our technology helps
to reduce hospital risk and liability.

 Our patented AEM technology provides surgeons
with the desired tissue effects of cutting and coagulating tissue in laparoscopic procedures, while preventing stray electrosurgical energy
that can cause complications and even death. AEM Surgical Instruments are equivalent to conventional instruments in size, shape, ergonomics,
and functionality, but they incorporate a proprietary shield and electrically connect to an Active Electrode Monitor to dynamically and
continuously monitor the flow of electrosurgical current, thereby preventing patient injury from stray monopolar energy. With our "shielded
and monitored" instruments, surgeons are able to perform electrosurgical procedures more safely, effectively, and economically than
is possible using conventional instruments.

 AEM technology has been recommended and endorsed
by sources from 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. In May 2020, the Food and Drug Administration issued
a Safety Communication that stated, "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."

 Business
Highlights

 Proprietary, Patented Technology

 We have developed and launched patented AEM Surgical
Instruments and Monitors that enhance patient safety and patient outcomes in laparoscopic surgical procedures. We have been issued 21
unexpired patents relating to AEM technology from the United States Patent and Trademark Office, each encompassing multiple claims, and
which have between one and twenty years remaining. We also have patents on AEM technology in Europe, Japan, Canada, and Australia.

 Technology Solves a Well-Documented Risk
in Minimally Invasive Surgery

 MIS significantly benefits patients by reducing
trauma, hospital stays, recovery times, and medical costs. However, these benefits would not have been achieved without the emergence
of new risks. The risk of unintended tissue damage from stray electrosurgical energy has been well documented. Such injuries can be especially
troubling given that often these injuries are out of the field of view, can go unrecognized at the time of surgery, and can lead to a
cascade of adverse events, including death. Our patented AEM technology eliminates the risk of stray electrosurgical burns in MIS while
providing surgeons with the desired tissue effects.

 Product Line has been Developed and Launched.

 Our AEM Surgical Instruments and Monitors 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 a full range of instrument sizes, types, and styles favored by surgeons. While always
quality-centric, we added a new level of customer-centricity with increased marketing focus on our reposable AEM EndoShield 2 Burn
Protection System ("EndoShield 2"). The EndoShield 2 can be used for a number of surgical procedures without reprocessing,
can easily be used in any OR room with all prevalent electrosurgical generators, and eliminates a significant barrier to adoption. Thus,
hospitals can make a complete and smooth conversion to our product line, thereby advancing patient safety in MIS.

 Emerging as a Standard of Care

 We believe that AEM technology is following a
similar path as previous technological developments in surgery. Throughout the history of electrosurgery, companies that have developed
significant technological breakthroughs in patient safety have seen their technologies become widely used. As with "Isolated"
electrosurgical generators in the 1970s and with "REM" technology in the 1980s, AEM technology is receiving the broad endorsements
that drove these previous new technologies to becoming a standard of care. We believe that it is possible to follow a course similar to
that of pulse oximetry in becoming a standard of care. Our proprietary AEM technology enhances patient safety in MIS, especially in light
of laparoscopic instruments being in closer proximity with single-port and reduced-port approaches. As a result, knowledgeable clinicians
are now advocating AEM technology's use.

 Developing a Distribution Network is Advancing
Utilization of AEM Technology

 Our AEM technology, in the hands of a sales network
with broad access to the surgery marketplace, will help to increase utilization and market share. Historically, our sales and marketing
efforts have been hindered by our small size and limited distribution channels. While these limitations continue, we improved our sales
network, which provided new hospital accounts with AEM technology in our fiscal year ended March 31, 2025. Our supplier agreements with
Group Purchasing Organizations ("GPOs") and other key hospital systems are beginning to expose more hospitals to the benefits
of our AEM technology. During the year ended March 31, 2020, our proprietary patient safety technology was recognized by the U.S. Department
of Veterans Affairs, and provides us with the opportunity to market our instruments and monitors in VA medical centers. The VA is the
largest medical system in the U.S., providing services to more than nine million veterans across more than 1,200 facilities. Also, during
the year ended March 31, 2020, we were awarded a prestigious Vizient Innovative Technology Contract for monopolar surgical instruments
and monitors. Vizient represents a diverse membership base that includes academic medical centers, pediatric facilities, community hospitals,
integrated health delivery networks, and non-acute health care providers.

 Market
Overview

 We believe that our patented AEM technology provides
us with marketing leverage toward gaining an increased share, both in terms of penetrations, as well as increasing our impact per procedure
with AEM instrumentation.

 In the 1990s, surgeons began widespread use of
minimally invasive surgical techniques. The benefits of MIS are substantial and include reduced trauma for the patient, reduced hospital
stay, shorter recovery time and lower medical costs. With improvements in the surgical laparoscopic camera and in the variety of available
instruments, laparoscopic surgery became popular among general surgeons, gynecologic surgeons and other specialties. Laparoscopy now accounts
for a large percentage of all surgical procedures performed in the United States. Approximately 75% of surgeons employ monopolar electrosurgery
for laparoscopy according to Interactive Surveys. There are over 4.4 million laparoscopic procedures performed annually in the United
States, and this number is increasing annually. (Note: except as otherwise stated, market estimates in this section are as reported by
Patient Safety & Quality Healthcare).

 A component of the endoscopic surgery products
market includes laparoscopic hand instruments, including scissors, graspers, dissectors, forceps, suction/irrigation devices, clip appliers
and other surgical instruments of various designs, which provide a variety of tissue effects. Among the laparoscopic hand instruments,
approximately $500 million in sales annually are derived from instruments designed for "monopolar" electrosurgical utility.
This market for laparoscopic monopolar electrosurgical instruments is the market we are targeting with our innovative AEM Surgical Instruments.
Our proprietary AEM product line supplants the conventional "non-shielded, non-monitored" electrosurgical instruments commonly
used in laparoscopic surgery.

 When a hospital decides to use our AEM technology,
we make recurring sales to such hospitals for replacement instruments. Sales from reusable and disposable AEM products in hospitals represented
over 90% of our sales in the fiscal year ended March 31, 2025, and we expect this sales stream to grow as new hospitals increasingly adopt
AEM technology and existing hospitals increase usage of AEM instrumentation. We also expect to increase the value per procedure delivered
to our customers and, therefore, expect the dollars per procedure to increase. AEM Instruments are competitively priced compared to conventional
laparoscopic instruments.

 We aim to further develop the market by continuing
to educate healthcare professionals about the benefits of AEM technology to advance patient safety. We are developing new devices that
integrate AEM technology, which we believe will have high surgeon appeal. We are also working to improve the reach of our sales network
to key decision makers who purchase or recommend the purchase of laparoscopic instruments and electrosurgical devices. We are also pursuing
relationships with selected GPOs, hospital systems, and integrated delivery networks to assist in promoting the benefits of AEM technology.
We are seeking to increase international opportunities for AEM technology sales. We estimate sales outside the U.S. to be at least as
large as those of the U.S. market. We are growing our presence in Australia and New Zealand and are seeking a new presence in the Middle
East and Europe. As decisions are made at a system level, we intend to highlight the clinical, economic, and safety benefits of AEM technology.

 The Technology

 Stray Electrosurgical Burn Injury to the
Patient

 Electrosurgical technology is a valuable and
prevalent resource for surgeons. Since its introduction in the 1930s, electrosurgical technology has continually evolved and is estimated
to be used in over 75% of all surgeries.

 The primary form of electrosurgery, monopolar
electrosurgery, is a standard tool for general surgeons throughout the world. In monopolar electrosurgery, the surgeon uses an instrument
(typically scissors, grasper/dissectors, spatula blades or suction-irrigation electrodes) to deliver electrical current to patient tissue.
This "active electrode" provides the surgeon with the ability to cut, coagulate or ablate tissue as needed during the surgery.
With the advent of MIS procedures, surgeons have continued using monopolar electrosurgery as a primary tool for hemostatic incision, coagulation
of bleeding tissues, excision and ablation. Unfortunately, conventional laparoscopic electrosurgical instruments from competing manufacturers
are susceptible to emitting stray electrical currents during the procedure. This risk is exacerbated by the fact that laparoscopic camera
systems limit the surgical field of view. Ninety percent of the instrument may be outside the surgeon's field of view at any given time
during the surgery.

 The dangers of stray energy are twofold. Not
only is there the danger created by the burn injury itself, but there is the compounding danger that the burn will go unnoticed during
the surgery and be allowed to manifest post-operatively as fecal peritonitis or other potentially deadly and devastating outcomes. In
many cases, the surgeon cannot detect stray electrosurgical burns at the time of the procedure because it is out of their field of visualization.
The resulting complication usually presents itself days later in the form of a severe infection or sepsis, which often results in a hospital
readmission and a difficult course of remedial surgeries and prolonged hospital recovery for the patient. This situation has even resulted
in fatalities.

 Stray electrosurgical burn injury can result
from two causes – instrument insulation failure and capacitive coupling. Instrument insulation failure can be a common occurrence
with laparoscopic instruments. Conventional active electrodes for laparoscopic surgery are designed with the same basic construction –
a single conductive element and an outer insulation coating. This insulation can fail during the course of normal use during surgery.
One university study found insulation defects in new disposable instruments before they were used or after limited surgical use. It is
also possible for instrument insulation to become flawed during the handling, cleaning and sterilization process. This common insulation
failure can allow electrical currents to "spark" from the instrument to unintended and unseen tissue with potentially serious
consequences for the patient, such as bowel perforations. Four different studies indicate that the insulation failure rate in reusable
instruments can be as high as one in five. Capacitive coupling is another way stray electrosurgical energy can cause unintended burns
during laparoscopy. Capacitive coupling is an electrical phenomenon that occurs when current is induced from the instrument to nearby
tissue or another instrument despite intact insulation. This potential for capacitive coupling is present in all laparoscopic surgeries
that utilize monopolar electrosurgery devices and are likely to occur outside the surgeon's field of view.

 Conventional, "non-shielded, non-monitored"
laparoscopic instruments are susceptible to causing unintended, unseen burn injuries to the patient in MIS. Instrument insulation failure
and capacitive coupling are the primary causes of stray electrosurgical burns in laparoscopy and are the two events over which the surgical
team has traditionally had no control. Although alternative forms to monopolar electrosurgery energy exist, these alternative energies
tend to be less effective, take longer to achieve the desired surgical effect and are costlier.

 Encision's AEM Surgical Instruments

 AEM technology eliminates the risk of stray electrical
energy caused by instrument insulation failure and capacitive coupling, and thus prevents unintended burn injuries to patients.

 AEM Surgical Instruments are an innovative solution
to stray electrosurgical burns in laparoscopic surgery and are designed with the same look, feel and functionality as conventional instruments.
They direct electrosurgical energy where the surgeon desires, while continuously monitoring the current flow to prevent stray electrosurgical
energy from instrument insulation failure or capacitive coupling.

 Whereas conventional instruments are simply a
conductive element with a layer of insulation coating, AEM Surgical Instruments have a patented, multi-layered design with a built-in
"shield," a concept much like the third-wire ground in standard electrical cords. The shield in these instruments is electrically
connected and referenced back to an AEM Monitor at the electrosurgical generator. In the event of a harmful level of stray electrical
energy, the monitor shuts down the power at the source, assuring patient safety. If instrument insulation failure should occur, the AEM
system, while continually monitoring the instrument, immediately interrupts monopolar output from the electrosurgical generator and alerts
the surgical staff. The AEM system protects against capacitive coupling by providing a neutral return path for "capacitive"
electrical energy. Capacitive energy is continually drained away from the instrument and away from the patient through the protective
shield built into all AEM instruments and the connected AEM Monitor.

 The AEM system comprises shielded 5mm AEM Instruments
and an AEM monitor. The AEM Instruments are designed to function identically to the conventional 5mm instruments that surgeons are familiar
with, but with the added benefit of enhanced patient safety. Our entire line of laparoscopic instruments has the integrated AEM design
and includes the full range of instruments common in laparoscopic surgery today. The AEM monitor is compatible with most electrosurgical
generators and can be adapted for robotic systems. AEM Surgical Instruments provide enhanced patient safety, require no change in surgeon
techniques, and are cost-competitive. Thus, conversion to AEM Surgical Instruments is easy and economical.

 Historical
Perspective

 We were
organized as a Colorado corporation in 1991 and spent several years developing the AEM monitoring system and protective sheaths to adapt
to conventional electrosurgical instruments. During this period, we conducted product trials and applied for patents with the United States
Patent and Trademark Office and International patent agencies. Our patents relate to
the basic shielding and monitoring technologies we incorporate into our AEM products. As of March 31, 2025, we have 21 unexpired United
States patents relating to specific implementations of shielding and monitoring in instruments, and we continue to add patents as we further
develop our proprietary technology and its applications.

 As we evolved, it was clear to us that our "active
electrode monitoring" technology needed to be integrated into the standard laparoscopic instrument design. As the development program
proceeded, it also became apparent that the merging of electrical and mechanical engineering skills in the instrument development process
for our patented, integrated electrosurgical instruments was a complex and difficult task. As a result, instruments with integrated AEM
technology were not completed for several years. Prior to offering a full range of laparoscopic electrosurgical instrumentation, it was
difficult for hospitals to commit to the AEM solution, as we did not have adequate comparable surgical instrument options to match surgeon
demand.

 With the
broad array of AEM instruments now available, the surgeon has a wide choice of instrument options and does not have to change surgical
technique to use our AEM products. Since c onversion to AEM technology is transparent to the surgeon, hospitals
can now universally convert to AEM technology, thus providing all of their laparoscopic surgery patients a higher level of safety. This
development coincides with the continued expansion of independent endorsements for AEM technology. Recommendations from the malpractice
insurance and medicolegal communities complement the broad clinical endorsements that AEM technology has garnered over the past few years,
leading to better awareness for the benefits of the technology.

 Products

 We produce and market a full line of AEM Instruments,
which are "shielded and monitored" to prevent stray electrosurgical burns from insulation failure and capacitive coupling.
Our product line includes a broad range of endo-mechanical instruments (scissors, graspers and dissectors), fixed-tip electrodes and suction-irrigation
electrodes. These AEM Instruments are available in a wide array of reusable and disposable options. Also, we have a line of handles that
are used for advanced laparoscopic procedures that incorporate stiffer shafts and ergonomic features. In addition, we market an AEM monitor
product line that is used in conjunction with AEM Instruments. Our AEM EndoShield 2 Burn Protection System can be used for a number
of surgical procedures without reprocessing, reduces the customer's cost per use significantly, and eliminates a significant barrier
to adoption. Thus, hospitals can make a complete and smooth conversion to our product line, thereby advancing patient safety in MIS. The
EndoShield 2 integrates our patented AEM technology into a disposable smart cord and eliminates the need for a separate AEM monitor. It
is changing the marketplace for electrosurgical devices and laparoscopic instruments by providing a solution to a well-documented hazard
unique to laparoscopic surgery.

 The introduction of our AEM 2X enTouch
Scissors ("2X Scissors") brought new levels of performance and economy to the surgical scissor market by combining the
best-in-class performance of our enTouch Disposable Scissors with the value and economy of a multi-use device. We believe that our 2X Scissors
will have a significant impact on the disposable laparoscopic scissor market. Our enTouch Disposable Scissors have long been the surgeon
preferred product because of their sharpness and micro-serrations. Our 2X Scissors provide all those benefits at half the cost per
use and reduce hospital waste and the impact on the environment as well. The thermochromic technology integrated into 2X Scissors
lets the hospital know when to replace the scissors with new ones and makes tracking their use simple and easy. 2X Scissors work
with hot AEM dissection and have a price point that makes them suitable for cold dissection as well. 2X Scissors should open new
use segments for us and create an opportunity for customers to standardize on our entire portfolio of Active Electrode Monitoring (AEM)
products.

 Services

 In February 2023, we signed a Proof-of-Concept Services
Agreement with Vicarious Surgical Inc. ("Vicarious"). The Vicarious robot design intends to maximize visualization, precision,
and control of instruments in robotic-assisted minimally invasive surgery.

 Sales
and Marketing Overview

 We believe that AEM technology can become the
standard of care in laparoscopic surgery worldwide. Our marketing efforts are focused on building awareness by providing technical education
for healthcare providers on the dangers of stray electrosurgical energy and clinical and economic evidence to substantiate the value of
AEM technology to hospitals, their staff, and their patients. We also leverage relationships with prominent hospitals and surgeons where
AEM Technology has increased their level of patient care and improved their overall surgical outcomes.

 In addition, there is increasing public interest
in the reduction of medical errors and the advancement of patient safety. For example, the National Quality Forum and CMS (Centers for
Medicare and Medicaid Services) recognize "patient death or serious disability associated with a burn incurred from any source while
being cared for in a healthcare facility" as a "never-event". We believe that the credibility and importance of our
technology is complemented by this expanding public interest in advancing patient safety in new CMS Hospital Quality Metrics.

 To cost-effectively expand market coverage, we
focus on optimizing our distribution network, comprised of direct and independent sales representatives who are managed and directed by
our regional sales managers throughout the United States. In some instances, customers have recognized the patient safety risks inherent
in monopolar electrosurgery and have accepted AEM technology as the way to eliminate those risks. In other instances, we have found selling
the concept behind AEM technology more difficult. This difficulty is due to several factors, including the necessity to make surgeons,
nurses, and hospital risk managers aware of the potential for unintended electrosurgical burns (which exists when conventional instruments
are used during laparoscopic monopolar electrosurgery) and the resulting increased patient injury and medicolegal liability exposure.
Additionally, we must contend with the overall lack of single purchasing points in the industry (surgeons, hospital personnel, and value
analysis committees have to be in substantial agreement as to the benefits of new technology), and the resulting need to make multiple
sales calls on personnel with the authority to commit to hospital expenditures. Other challenges include the fact that many hospitals
have exclusive contractual agreements with manufacturers of competing surgical instruments.

 Our goal is to optimize a network that has experience
selling into the hospital operating room environment. We believe that improvement in this network offers us the best opportunity to cost-effectively
broaden acceptance of our product line and generate increased and recurring sales. Additionally, we are pursuing supplier agreements with
the major selected GPOs, hospital systems, and integrated delivery networks.

 In addition to the efforts to broaden market
acceptance in the United States, we have contracted with independent distributors in Australia and New Zealand to market our products
internationally. We have achieved Conformit Europ ene ("CE") marking for our products so that we may sell into
the European marketplace. The CE marking indicates that a manufacturer has conformed to all of the obligations imposed by European health,
safety and environmental legislation. While CE certification opens up incremental markets in Europe, our distribution options in the European
marketplace are developing, and sales in international markets are small.

 We believe that the expanding awareness for AEM
technology through education and the improved sales network of independent representatives will provide the basis for increased sales
and continuing profitable operations. However, these measures, or any others that we may adopt, may not result in increased sales or profitable
operations.

 Research
and Development

 We aim to continually expand our AEM Instrument
product line to satisfy the evolving needs of surgeons. For AEM technology to fully become a standard of care, we must satisfy surgeons'
preferred instrument shapes, sizes, styles, and functionality with integrated AEM technology. This commitment includes expanding the styles
of electrosurgical instruments available for MIS applications so that the conversion to AEM technology is transparent to surgeons and
does not require a significant change in their current surgical techniques. We employ full-time engineers and use independent contractors
from time to time in our research and product development efforts. This group continuously explores ways to broaden and enhance the product
line. Current research and development efforts are focused primarily on line-extension projects to further expand our AEM Instrument product
offering to increase surgeons' choices and options in laparoscopic surgery. Our research and development expenses were $593,152
in fiscal year 2025 and $621,894 in fiscal year 2024. We expense research and development costs for products and processes as incurred.
Costs that are included in research and development expenses include direct salaries, contractor fees, materials, facility costs and administrative
expenses that relate to research and development.

 Manufacturing,
Regulatory Affairs and Quality Assurance

 We engage in various manufacturing and assembly
activities at our leased facility in Boulder, Colorado. These operations include disposable scissor inserts manufacturing and assembly
of our AEM Instrument system as well as fabrication, assembly and test operations for instruments, monitors and accessories. We also have
relationships with a number of outside suppliers. Three vendors accounted for approximately 54% of our inventory purchases.

 We believe that the use of both internal and
external manufacturing capabilities allows for increased flexibility in meeting our customer delivery requirements and significantly reduces
the need for investment in specialized capital equipment. We have developed multiple sources of supply where possible. Our relationship
with our suppliers is generally limited to individual purchase order agreements supplemented, as appropriate, by contractual relationships
to help ensure the availability and low cost of certain products. All components, materials and sub-assemblies used in our products, whether
produced in-house or obtained from others, are inspected to ensure compliance with our specifications. All finished products are subject
to our quality assurance and performance testing procedures.

 As discussed in the section on Government Regulation,
we are subject to the rules and regulations of the United States Food and Drug Administration ("FDA"). Our leased facility
of 28,696 square feet contains approximately 15,100 square feet of manufacturing, regulatory affairs and quality assurance space. The
facility is designed to comply with the Quality System Regulation ("QSR"), as specified in published FDA regulations. Our
latest inspection by the FDA occurred in October 2015.

 We achieved CE marking in August 2000, which
required prior certification of our quality system and product documentation. Maintenance of the CE marking status requires periodic audits
of the quality system and technical documentation by our European Notified Body, TUV Rheinland. The most recent audit was completed in
February 2023.

 Patents,
Patent Applications and Intellectual Proprietary Rights

 We have invested heavily in an effort to protect
our valuable technology, and, as a result of this effort, we have been issued 26 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. As of March 31, 2025, we have 21 unexpired United States patents relating to specific implementations of shielding and monitoring
in instruments. As of March 31, 2025, there are between one and twenty years remaining on our AEM patents. We have four patent applications
in process, and we have four trademarks.

 Our technical progress depends to a significant
degree on our ability to maintain patent protection for products and processes, to preserve our trade secrets, and to operate without
infringing the proprietary rights of third parties. Our policy is to attempt to protect our technology by, among other things, filing
patent applications for technology that we consider important to the development of our business. The validity and breadth of claims covered
in medical technology patents involve complex legal and factual questions and, therefore, may be highly uncertain. Even though we hold
patented technology, others might copy our technology or otherwise incorporate our technology into their products.

 We require our employees to execute non-disclosure
agreements upon commencement of employment. These agreements generally provide that all confidential information developed or made known
to the individual by us during the course of the individual's employment is our property and is to be kept confidential and not to be
disclosed to third parties.

 Competition

 The electrosurgical device market is intensely
competitive and tends to be dominated by a relatively small group of large and well-financed companies. We compete directly for customers
with those companies that currently make conventional electrosurgical instruments. Larger competitors include Advanced Surgical Technologies
Group (a division of Medtronic plc) and Ethicon Endo-Surgery (a division of Johnson & Johnson). While we know of no competitor (including
those referenced above) that can provide a continuous solution to stray electrosurgical burns, the manufacturers of conventional (non-monitored,
non-shielded) instruments will resist any loss of market share resulting from the presence of our products in the marketplace. What clearly
differentiates us from the competition is that while competitive technologies may somewhat reduce the risk of stray energy burns, only
AEM Technology completely eliminates it.

 We also believe that manufacturers of products
based on alternative technology to monopolar electrosurgery are our competitors. These alternative technologies include other "advanced
energy" technologies such as bipolar electrosurgery, laser surgery and ultrasonic dissector sealers. Leading manufacturers in these
areas include Advanced Surgical Technologies Group, Gyrus/ACMI (a division of Olympus Corporation and a leader in bi-polar electrosurgery),
Lumenis (laser surgery) and Ethicon Endo-Surgery (a division of Johnson and Johnson, manufacturers of the harmonic scalpel). We believe
that monopolar electrosurgery offers substantial competitive, functional and financial advantages over these alternative energy technologies
and will remain the primary tool for the surgeon, as it has been for decades. However, the risk exists that these alternative technologies
may gain greater market share and that new competitive techniques may be developed and introduced.

 As mentioned in the Sales and Marketing discussion,
the competitive issues involved in selling our AEM product line do not primarily revolve around a comparison of cost or features, but
rather involve generating an awareness of the inherent hazards of electrosurgery and the potential for injury to the patient. This involves
conceptual selling, rather than just product selling, which results in a longer sales cycle and generally higher sales costs. Independent
endorsements of AEM technology have greatly enhanced the credibility of AEM Instruments. However, our efforts to increase market awareness
of this technology may not be successful, and our competitors may develop alternative strategies and/or products to counter our marketing
efforts.

 Many of our competitors
and potential competitors have widely-used products and significantly greater financial, technical, product development, marketing and
other resources. In addition to our direct sales force, we utilize a network of independent distributor representatives in selected areas.
In some cases, our options for independent distribution have conflicting and competing product interests which compromise our ability
to make market advances in certain areas. We may not be able to compete successfully against current and future competitors, and competitive
pressures faced by us may have a material adverse impact on our business, operating results and financial condition.

 Government
Regulation

 Government regulation in the United States and
other countries is a significant factor in the development and marketing of our products and in our ongoing manufacturing, research, and
development activities. The FDA regulates us and our products under a number of statutes, including the Federal Food, Drug, and Cosmetics
Act (the "FDC Act"). Under the FDC Act, medical devices are classified as Class I, II, or III based on the controls deemed
necessary to reasonably ensure their safety and effectiveness. Class I devices are subject to the least extensive controls, as their safety
and effectiveness can be reasonably assured through general controls (e.g., labeling, pre-market notification, and adherence to QSR).
For Class II devices, safety and effectiveness can be assured using special controls (e.g., performance standards, post-market surveillance,
patient registries, and FDA guidelines). Class III devices (e.g., life-sustaining or life-supporting implantable devices or new devices
which have been found not to be substantially equivalent to legally marketed devices) require the highest level of control, generally
requiring pre-market approval by the FDA to ensure their safety and effectiveness. Our products are Class II devices.

 If a manufacturer or distributor of medical devices
can establish that a proposed device is "substantially equivalent" to a legally marketed Class I or Class II medical device
or to a Class III medical device for which the FDA has not required a pre-market approval application, the manufacturer or distributor
may seek FDA marketing clearance for the device by filing a 510(k) pre-market notification. Following submission of the 510(k) notification,
the manufacturer or distributor may not place the device into commercial distribution in the United States until an order has been issued
by the FDA. The FDA's target for issuing such orders is within 90 days of submission, but the process can take significantly longer. The
order may declare the FDA's determination that the device is "substantially equivalent" to another legally marketed device and
allow the proposed device to be marketed in the United States. The FDA may, however, determine that the proposed device is not substantially
equivalent or may require further information, such as additional test data, before deciding regarding substantial equivalence. Any adverse
determination or request for additional information could delay market introduction and have a material adverse effect on our continued
operations. We have received a favorable 510(k) notification for our AEM monitors and AEM Instruments, all of which are designated as
Class II medical devices.

 Labeling and promotional activities are subject
to scrutiny by the FDA and, in certain instances, by the Federal Trade Commission. The FDA also imposes post-marketing controls on us
and our products, and registration, listing, medical device reporting, post-market surveillance, device tracking and other requirements
on medical devices. Failure to meet these pervasive FDA requirements or adverse FDA determinations regarding our clinical and preclinical
trials could subject us and/or our employees to injunction, prosecution, civil fines, seizure or recall of products, prohibition of sales
or suspension or withdrawal of any previously granted approvals, which could lead to a material adverse impact on our financial position
and results of operations.

 The FDA regulates our quality control and manufacturing
procedures by requiring us and our contract manufacturers to demonstrate compliance with the QSR as specified in published FDA regulations.
The FDA requires manufacturers to register with the FDA, which subjects them to periodic FDA inspections of manufacturing facilities.
If violations of applicable regulations are noted during FDA inspections of our manufacturing facilities or the facilities of our contract
manufacturers, the continued marketing of our products may be adversely affected. Such regulations are subject to change and depend heavily
on administrative interpretations. In October 2015, the FDA conducted a QSR inspection of our facilities. We believe that we have the
internal resources and processes in place to be reasonably assured that we are in compliance with all applicable United States regulations
regarding the manufacture and sale of medical devices. However, if we were found not to be in compliance with the QSR, in the future,
such findings could result in a material adverse impact on our financial condition, results of operations and cash flows.

 Sales of medical devices outside of the United
States are subject to United States export requirements and foreign regulatory requirements. Legal restrictions on the sale of imported
medical devices vary from country to country. The time required to obtain approval by a foreign country may be longer or shorter than
that required for FDA approval and the requirements may differ. Our Certificate of Export from the United States Department of Health
and Human Services has expired and we will seek to renew it. However, a specific foreign country in which we wish to sell our products
may not accept or continue to accept the Certificate of Export. Entry into the European Economic Area market also requires prior certification
of our quality system and product documentation. We achieved CE marking in August 2000, allowing a launch into the European marketplace.
Maintenance of the CE marking status requires annual audits of the quality system and technical documentation by our European Notified
Body, TUV Rheinland. The most recent audit was completed in February 2023.

 A Safety Communication was released by the FDA
on May 29, 2020. It is on the FDA's website at:

 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 units (ESU) is used: Do not activate when near or in contact with
other instruments."

 Environmental
Laws and Regulations

 From time to time we receive materials returned
from customers, sales representatives and other sources which are potentially biologically hazardous. These materials are segregated,
and disposed of in accordance with specific procedures that minimize potential exposure to employees. The costs of compliance with these
procedures are not significant. Our operations, in general, do not involve the use of environmentally sensitive materials.

 Insurance

 We are covered under comprehensive general liability
insurance policies, which have per occurrence and aggregate limits of $1 million and $2 million, respectively, and a $10 million umbrella
policy. We maintain customary property and casualty, workers' compensation, employer liability and other commercial insurance policies.

 Employees

 As of March 31, 2025, we employed 22 full-time
and 2 part-time individuals, of which 3 full-time and 1 part-time are engaged directly in research, development, and regulatory activities,
6 full-time and 1 part time in manufacturing/operations, 6 full-time in marketing and sales, and 7 full-time time in administrative positions.
None of our employees are covered by a collective bargaining agreement, and we consider our relations with our employees to be good.

 Available information

 Our internet address is www.encision.com. We
are not including the information contained in our website as part of, or incorporating it by reference into, this document. We make available,
free of charge, through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments
to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after
we electronically file such materials with, or furnish such materials to, the SEC.

 Item 1A. Risk Factors

 You should carefully consider the risk factors
described below. If any of the following risk factors actually occur, our business, prospects, financial condition or results of operations
would likely suffer. In such case, the trading price of our common stock could fall, resulting in the loss of all or part of your investment.
You should look at all these risk factors in total. Some risk factors may stand on their own. Some risk factors may affect (or be affected
by) other risk factors. You should not assume we have identified these connections. You should not assume that we will always update these
and future risk factors in a timely manner. We are not undertaking any obligation to update these risk factors to reflect events or circumstances
after the date of this report or to reflect the occurrence of unanticipated events.

 Among the factors that could cause future results
and financial condition to be materially different from expectations are:

 Our products may not be accepted by the market.
The success of our products and our financial condition depends on the acceptance of AEM products by the medical community in commercially
viable quantities during fiscal year 2026 and beyond. We cannot predict how quickly or how broadly AEM products will be accepted by the
medical community. We need to continually educate the marketplace about the potential hazards involved in the use of conventional electrosurgical
products during MIS procedures and the expected benefits associated with the use of AEM products. If we are unsuccessful in educating
the marketplace about our technology and the hazards of conventional instruments, we will not create sufficient demand by hospitals and
surgeons for AEM products and our financial condition, results of operations and cash flows could be adversely affected.

 We need to continually develop and train our
network of direct and independent sales representatives and expand our distribution efforts in order to be successful. Our attempts
to develop and train a network of direct and independent sales representatives in the U.S. and to expand our international distribution
efforts may take longer than expected and may result in considerable amounts of retraining effort as the direct and independent sales
representatives change their product lines, product focus and personnel. We may not be able to obtain full coverage of the U.S. by direct
and independent sales representatives as quickly as anticipated. The independent sales representative network has inherent flaws and inefficiencies,
which can include conflicts of interest and competing products. Optimizing the quality of the network and the performance of direct and
independent sales representatives in the U.S. is an ongoing challenge. We may also encounter difficulties in developing our international
presence due to regulatory issues and our ability to successfully develop international distribution options. Our inability to expand
our network of direct and independent sales representatives and optimize their performance could adversely affect our financial results.

 We may need additional funding to support
our operations. We were formed in 1991 and have incurred losses of approximately $23 million since that date. We have primarily financed
research, development and operational activities with issuances of our common stock and warrants, the exercise of stock options to purchase
our common stock, loans, and, in some years, by operating profits. For the fiscal year ended March 31, 2025, our cash used in operations
was $54,948. At March 31, 2025, we had cash and equivalents of $257,433. If we are unable to maintain cash flows sufficient to support
ongoing operations, we will need to seek additional financing. There is no assurance that we will be able to raise additional capital
on acceptable terms or at all. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage
ownership of our existing stockholders could be diluted, and these newly issued securities may have rights, preferences or privileges
senior to those of existing stockholders. If we raise additional funds through debt financing, which may involve restrictive covenants,
our ability to operate our business may be restricted. If adequate funds are not available or are not available on acceptable terms, if
and when needed, our ability to fund our operations, our business, results of operations and financial condition could be materially and
adversely affected.

 We may not be able to compete successfully
against current manufacturers of conventional ("unshielded, unmonitored") electrosurgical instruments or against competitors
who manufacture products that are based on surgical technologies that are alternatives to monopolar electrosurgery. The electrosurgical
products market is intensely competitive. We expect that manufacturers of "unshielded, unmonitored" electrosurgical instruments
will resist any loss of market share that might result from the presence of our "shielded and monitored" instruments in the
marketplace. We also believe that manufacturers of products that are based upon surgical technologies that are alternatives to monopolar
electrosurgery are our competitors. These technologies include bipolar electrosurgery, the harmonic scalpel and lasers. The alternative
technologies may gain market share and new competitive technologies may be developed and introduced. Most of our competitors and potential
competitors have significantly greater financial, technical, product development, marketing and other resources than we do. Most of our
competitors also currently have substantial customer bases in the medical products market and have significantly greater market recognition
than we have. As a result of these factors, our competitors may be able to respond more quickly to new or emerging technologies and changes
in customer requirements or to devote greater resources to the development, promotion and sale of their products. It is possible that
new competitors or new alliances among competitors may emerge and rapidly acquire significant market share. The competitive pressures
we face may materially adversely affect our financial position, results of operations and cash flows, and this may hinder our ability
to respond to competitive threats.

 If we do not continually enhance our products
and keep pace with rapid technological changes, we may not be able to attract and retain customers. Our future success and financial
performance will depend in part on our ability to meet the increasingly sophisticated needs of customers through the timely development
and successful introduction of product upgrades, enhancements and new products. These upgrades, enhancements and new products are subject
to significant technological risks. The medical device market is subject to rapid technological change, resulting in frequent new product
introductions and enhancements of existing products, as well as the risk of product obsolescence. While we are currently developing new
products and enhancing our existing product lines, we may not be successful in completing the development of new products or enhancements.
In addition, we must respond effectively to technological changes by continuing to enhance our existing products to incorporate emerging
or evolving standards. We may not be successful in developing and marketing product enhancements or new products that respond to technological
changes or evolving industry standards. We may experience difficulties that could delay or prevent the successful development, introduction
and marketing of those products, and our new products and product enhancements may not adequately meet the requirements of the marketplace
and achieve commercially viable levels of market acceptance. If any potential new products, upgrades, or enhancements are delayed, or
if any potential new products, upgrades, or enhancements experience quality problems or do not achieve market acceptance, or if new products
make our existing products obsolete, our financial position, results of operations and cash flows would be materially adversely affected.

 If government regulations change or if we
fail to comply with existing and/or new regulations, we might miss market opportunities and experience increased costs and limited growth.
 The research, development, manufacturing, marketing and distribution of our products in the United States and other countries are
subject to extensive regulation by numerous governmental authorities including, but not limited to, the Food and Drug Administration.
Under the Federal Food, Drug and Cosmetic Act, medical devices must receive clearance from the Food and Drug Administration through the
Section 510(k) pre-market notification process or through the lengthier pre-market approval process before they can be sold in the United
States. The process of obtaining required regulatory approvals is lengthy and has required the expenditure of substantial resources. There
can be no assurance that we will be able to continue to obtain the necessary approvals. As part of our strategy, we also intend to pursue
commercialization of our products in international markets. Our products are subject to regulations that vary from country to country.
The process of obtaining foreign regulatory approvals in certain countries can be lengthy and require the expenditure of substantial resources.
We may not be able to obtain necessary regulatory approvals or clearances on a timely basis or at all, and delays in receipt of or failure
to receive such approvals or clearances, or failure to comply with existing or future regulatory requirements would have a material adverse
effect on our financial position, results of operations and cash flows. Tariffs may increase our material costs and, if they are fully
absorbed by us, then they will negatively affect our gross profit margins.

 If we fail to comply with the extensive regulatory
requirements governing the manufacturing of our products, we could be subject to fines, suspensions or withdrawals of regulatory approvals,
product recalls, suspension of manufacturing, operating restrictions and/or criminal prosecution. The manufacturing of our products
is subject to extensive regulatory requirements administered by the Food and Drug Administration and other regulatory agencies. Inspection
of our manufacturing facilities and processes can be conducted at any time, without prior notice, by the Food and Drug Administration
and such regulatory agencies. In addition, future changes in regulations or interpretations made by the Food and Drug Administration or
other regulatory agencies, with possible retroactive effect, could adversely affect us. Changes in existing regulations or adoption of
new regulations or policies could prevent us from obtaining, or affect the timing of, future regulatory approvals or clearances. We may
not be able to obtain necessary regulatory approvals or clearances on a timely basis in the future, or at all. Delays in receipt of, failure
to receive such approvals or clearances, and/or failure to comply with existing or future regulatory requirements would have a material
adverse effect on our financial position, results of operations, and cash flows.

 Our current patents, trade secrets and know-how
may not provide a competitive advantage, the pending applications may not result in patents being issued, and our competitors may design
around any patents issued to us. Our success will continue to depend in part on our ability to maintain patent protection for our
products and processes, to preserve our trade secrets and to operate without infringing the proprietary rights of third parties. We have
16 issued U.S. patents on several technologies embodied in our AEM Monitoring system, AEM instruments and related accessories and we have
applied for additional U.S. patents. In addition, we have four issued foreign patents. The validity and breadth of claims coverage in
medical technology patents involve complex legal and factual questions and may be highly uncertain. Also, patents may not protect our
proprietary information and know-how or provide adequate remedies for us in the event of unauthorized use or disclosure of such information,
and others may be able to develop competing technology, independent of such information. There has been substantial litigation regarding
patent and other intellectual property rights in the medical device industry. Litigation may be necessary to enforce patents issued to
us, to protect trade secrets or know-how owned by us, to defend us against claimed infringement of the rights of others or to determine
the ownership, scope or validity of our proprietary rights or those of others. Any such claims may require us to incur substantial litigation
expenses and to divert substantial time and effort of management personnel and could substantially decrease the amount of capital available
for our operations. An adverse determination in litigation involving the proprietary rights of others could subject us to significant
liabilities to third parties, could require us to seek licenses from third parties, and could prevent us from manufacturing, selling or
using our products. The occurrence of any such actual or threatened litigation or the effect on our business of such litigation may materially
adversely affect our financial position, results of operations and cash flows. Additionally, our assessment that a patent is no longer
of value could result in a significant charge against our earnings.

 We depend on single source suppliers for certain
of the key components of our products and sub-contractors to provide much of the materials used in the manufacturing of our products.
The loss of a supplier or limitation in supply from existing suppliers could have a material adverse effect on our ability to manufacture
our products until a new source of supply is located. Although we believe that there are alternative suppliers, any interruption in
the supply of key components could have a material adverse effect on us. A sudden increase in customer demand may create a backorder situation
as lead times for some of our critical materials are in excess of 16 weeks. We rely on subcontractors to provide products, either in the
form of finished goods or sub-assemblies that we then assemble and test. While these sub-contractors reduce our total cost of manufacturing,
they may not be as responsive to increased demand as we would be if we had our manufacturing capacity entirely in-house, which may limit
our growth strategy and sales.

 The potential fluctuation in future quarterly
results may cause our stock price to fluctuate. We expect that our operating results could fluctuate significantly from quarter to
quarter in the future and will depend upon a number of factors, many of which are outside our control. These factors include the extent
to which our AEM technology and related accessories gain market acceptance; our investments in marketing, sales, research and development
and administrative personnel necessary to support growth; our ability to expand our market share; actions of competitors; and, general
economic conditions. The market value of our common stock has dramatically fluctuated in the past and is likely to fluctuate in the future.
Any of these factors, or factors not listed, could have an immediate and significant negative impact on the market price of our stock.

 Our common stock is thinly traded, the prices
at which it trades are volatile and the buying or selling actions of a few shareholders may adversely affect our stock price. As of
May 31, 2025, we had a public float, which is defined as shares outstanding minus shares held by our officers, directors, or beneficial
holders, of greater than 10% of our outstanding common stock, of 7,644,988 shares, or 64% of our outstanding common stock. The average
number of shares traded in any given day over the past year has been relatively small compared to the public float. Thus, the actions
of a few shareholders either buying or selling shares of our common stock may adversely affect the price of the shares. Historically,
thinly traded securities such as our common stock have experienced extreme price and volume fluctuations that do not necessarily relate
to operating performance.

 Product liability claims may exceed our current
insurance coverage. We face an inherent business risk of exposure to product liability claims in the event that the use of our products
is alleged to have resulted in adverse effects to a patient. We maintain a general liability insurance policy up to the amount of $10,000,000
that includes coverage for product liability claims. Liability claims may be excluded from the policy, may exceed the coverage limits
of the policy, or the insurance may not continue to be available on commercially reasonable terms or at all. Consequently, a product liability
claim or other claim with respect to uninsured liabilities or in excess of insured liabilities could have a material adverse effect on
our financial position, results of operations and cash flows.

 We depend on certain key personnel. We
are highly dependent on a limited number of key management personnel, particularly our President and CEO, Gregory J. Trudel. Our loss
of key personnel to death, disability or termination, or our inability to hire and retain qualified personnel, could have a material adverse
effect on our financial position, results of operations and cash flow.

 Any cybersecurity-related attack, significant
data breach or disruption of the information technology systems or networks on which we rely could negatively affect our business. Our
operations rely on information technology systems for the use, storage and transmission of sensitive and confidential information with
respect to our customers, suppliers, employees and other parties. A malicious cybersecurity-related attack, intrusion or disruption by
either an internal or external source or other breach of the systems on which we and our employees conduct business, could lead to unauthorized
access to, use of, loss of or unauthorized disclosure of sensitive and confidential information, disruption of our services, and resulting
regulatory enforcement actions, litigation, indemnity obligations and other possible liabilities, as well as negative publicity, which
could damage our reputation, impair sales and harm our business. Cyberattacks and other malicious internet-based activity continue to
increase. In addition to traditional computer "hackers," malicious code (such as viruses and worms), phishing, employee theft
or misuse and denial-of-service attacks, sophisticated nation-state and nation-state supported actors now engage in attacks (including
advanced persistent threat intrusions). Despite efforts to create security barriers to such threats, it is not feasible, as a practical
matter, for us to entirely mitigate these risks. If our security measures are compromised as a result of third-party action, employee,
customer, or user error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation would be damaged,
our data, information or intellectual property, or those of our customers, may be destroyed, stolen or otherwise compromised, our business
may be harmed and we could incur significant liability.

 Item 1B. Unresolved Staff Comments

 Not required for small reporting companies.

 Item 1C. Cybersecurity

 Cybersecurity Risk Management and Strategy

 We have not
yet developed a cybersecurity risk management program, though we are in the process of assessing the potential risks. As of this time,
we have determined that risks from cybersecurity threats have not materially affected and are not reasonably likely to materially affect
our business strategy, results of operations, or financial condition.

 Cybersecurity
Governance

 Our Board of Directors is responsible for overseeing
our enterprise risk management activities. The Board of Directors receives an update on our risk management process and the risk trends
related to cybersecurity at least annually. Additionally, on a quarterly basis, the Audit Committee will receive updates from Management
on cybersecurity.

 Item 2. Properties

 We lease 28,696 square feet of office and manufacturing
space under non-cancelable lease agreements through October 31, 2026, at 6797 Winchester Circle, Boulder, Colorado. We believe that our
existing facilities are adequate for our current operations.

 Item 3. Legal Proceedings

 From time to time, we are involved in various
disputes, claims, suits, investigations, and legal proceedings arising in the ordinary course of business. We believe that the resolution
of current pending legal matters will not have a material adverse effect on our business, financial condition, results of operations,
or cash flows. Nonetheless, we cannot predict the outcome of these proceedings, as legal matters are subject to inherent uncertainties,
and there exists the possibility that the ultimate resolution of these matters could have a material adverse effect on our business, financial
condition, results of operations, or cash flows.

 Item 4. Mine Safety Disclosures

 None.

 Item 5. Market for Registrant's Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 During our fiscal years 2025 and 2024, our common
stock has been quoted on the Pink tier, operated by the OTC Markets Group, Inc. The ticker symbol "ECIA" has been assigned
to our common stock for over-the-counter quotations.

 We have never paid cash dividends on our common
stock and have no present plans to do so. We presently intend to retain any cash generated from operations in the future for use in our
business. As of March 31, 2025, there were approximately 63 holders of record of our common stock.

 Recent Sales of Unregistered Securities

 During the fiscal year ended March 31, 2025,
there were no sales of unregistered securities by the Company that were not previously reported on a Form 8-K or Form 10-Q.

 Issuer Purchases of Equity Securities

 We did not repurchase any of our equity securities
during the period covered by this Annual Report.

 Item 6. [Reserved]

 Item
7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 Certain statements
contained in this section are not historical facts, including statements about our strategies and expectations about new and existing
products, market demand, acceptance of new and existing products, 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 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-K are
strongly encouraged to review the section entitled "Risk Factors".

 Outlook

 Installed Base of AEM Monitoring Equipment.
We believe that we are gaining more awareness in medico-legal circles and publications and from presentations at medical meetings. We
believe that improvement in the quality of sales representatives carrying our AEM products line, along with increased marketing efforts
and the introduction of new products, may provide the basis for increased sales and continuing profitable operations. However, these measures,
or any others that we may adopt, may not result in either increased sales or continuing profitable operations.

 Possibility of Operating Losses. We have
an accumulated deficit of $22,765,245 at March 31, 2025. We have made significant strides toward improving our operating results. However,
due to the ongoing need to develop new products, the need to develop, optimize and train our sales distribution network 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 in future periods.

 Sales Growth. We expect to generate increased
sales in the U.S. from sales to new hospital customers and to grow AEM instrumentation sales to existing accounts. In fiscal year 2026,
we will focus on growing our AEM franchise through a campaign focused on the clinical, economic and safety benefits of AEM technology,
a medico-legal initiative and our new AEM products. In addition, prior years' efforts in vertical integration have given us three
core competencies – electrosurgery, instrument design, and manufacturing – which we expect will allow us to increase sales
from our strategic partnership initiatives. Our goal is to offer our customers an AEM disposable counterpart for each AEM reusable instrument.

 Gross Margin. We believe that if our fiscal
year 2026 revenues increase, then our fiscal year 2026 gross profit and gross margin, as a percentage of revenue, will increase due to
a higher gross margin on product revenue as a result of an increase in product produced.

 Sales and Marketing Expenses. We continue
our efforts to expand domestic and international distribution capability, and we believe that sales
and marketing expenses will need to be maintained at a healthy level in order to expand our market visibility and optimize the field sales
capability of converting new hospital customers to AEM technology. Sales and marketing expenses
are expected to increase as we increase our marketing efforts to support our direct sales representatives. In fiscal year 2026, we expect
to have five direct sales managers. Each direct sales manager also manages a separate territory.

 Manufacturing.
We believe that we will be able to achieve cost reductions, and provide better control over
quality and consistency, by producing products on our own. We manufacture our own disposable scissor inserts and are exploring other products
that we may manufacture internally.

 Research and Development Expenses. Research
and development expenses are expected to increase to support expansion to our AEM product line, which will further expand the instrument
 options for the surgeon. New refinements to AEM product lines are planned for introduction
in fiscal year 2026.

 Results of Operations

 Net Product
revenue. Net product revenue for the fiscal year ended March 31, 2025 ("FY25")
was $6,217,687, and for the fiscal year ended March 31, 2024 ("FY24"), net revenue was $6,431,969, or a decrease of 3%. Product
revenue for the fiscal year ended March 31, 2025 decreased primarily because of the decrease in non-essential surgical procedures performed
during this period.

 Net Service
revenue. Net service revenue for FY25 was $337,628 and for FY24 net service revenue
was $153,913. Net service revenue for FY24 was for engineering services performed under a Master Services Agreement with Vicarious Surgical
Inc.. Under the agreement, we collaborated on the integration of AEM technology into and provide certain related design services for elements
of Vicarious' robotic surgical system.

 Gross
profit. Gross profit in FY25 was $3,511,286, which represented an increase of $375,324, or 12%, from gross profit in FY24 of $3,135,962.
Gross profit margin was 54% of net product revenue for FY25 and 48% of net product revenue for FY24. Gross profit increased in FY25 from
FY24 due principally to a reduction in material cost on high volume product. In FY25, we had an increase in high-margin service revenue.

 Sales
and marketing expenses. Sales and marketing expenses were $1,689,503 in FY25, an increase of $55,379, or 3%, from $1,634,124 in FY24.
The increase was because of increased commissions and travel expenses.

 General
and administrative expenses. General and administrative expenses were $1,400,611 in FY25, a decrease of $120,116 or 8%, from
$1,520,727 in FY24. The decrease was because of decreased regulatory fees, compensation, and outside service expenses in
FY25.

 Research
and development expenses. Research and development expenses were $ 593,152 in FY25, a decrease
of $28,742 or 5%, from $621,894 in FY24. The decrease was the result of decreased compensation and outside services.

 Other (expense), net. Other (expense), net
of $48,218 for FY25, a decrease of 2,782 or 6%, from 51,000 in FY25. This decrease was
primarily due to reduced interest expenses.

 Net loss. Net loss in FY25 of $220,198 represented
a decrease of $471,585 compared to FY24 net loss of $691,783. The net loss decrease was principally because of higher service revenue,
increased product margins, and decreased operating expenses.

 Liquidity and Capital Resources

 To date, operating funds have been provided primarily
by issuances of our common stock and warrants, the exercise of stock options to purchase our common stock, loans and, in some years, by
operating profits. To date, common stock and additional paid in capital totaled $24,416,347 from our inception through March 31, 2025.
Our operations used $54,948 and provided $144,389 of cash in FY25 and FY24, respectively, on net revenue of $6,555,315 and $6,585,882
in FY25 and FY24, respectively. Working capital was $1,036,850 at March 31, 2025 compared to $1,357,937 at March 31, 2024. The decrease
in working capital was primarily caused by the FY25 net loss, which resulted in increased utilization of the Pathward line of credit,
a current liability. Current liabilities were $1,575,915 at March 31, 2025 compared to $1,068,337 at March 31, 2024.

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

 We believe that the unique performance of AEM
technology and our breadth of independent endorsements provide an opportunity for market share growth. We believe that the market awareness
of AEM technology and its endorsements is continually improving and that this will benefit revenue efforts in FY 26. We believe that we
enter FY 26 having achieved improvements in the clinical credibility of our technology. Our FY 26 operating plan is focused on growing
revenue, increasing gross profits, increasing research and development costs while increasing profits and positive cash flows. We cannot
predict with certainty the expected revenue, gross profit, net income or loss and usage of cash, cash equivalents and restricted cash
for FY 26. We believe that cash resources and borrowing capacity will be sufficient to fund our operations for at least the next twelve
months under our current operating plan. If we are unable to manage business operations in line with our budget expectations, it could
have a material adverse effect on business viability, financial position, results of operations and cash flows. Further, if we are not
successful in sustaining profitability and remaining at least cash flow break-even, additional capital may be required to maintain ongoing
operations.

 We have explored and are continuing to explore
options to provide additional financing to fund future operations as well as other possible courses of action. Such actions include, but
are not limited to, securing a larger credit facility, sales of debt or equity securities (which may result in dilution to existing shareholders),
licensing of technology, strategic alliances and other similar actions. There can be no assurance that we will be able to obtain additional
funding (if needed) through a sale of our common stock or loans from financial institutions or other third parties or through any of the
actions discussed above on terms acceptable to us or at all. If we cannot sustain profitable operations and additional capital is unavailable,
lack of liquidity could have a material adverse effect on our business viability, financial position, results of operations and cash flows.

 Income
Taxes

 As of March 31, 2025, net operating loss carryforwards
totaling approximately $8.2 million were available to reduce taxable income in the future. The net operating loss carryforwards expire,
if not previously utilized, at various dates beginning in fiscal year 2025. 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 our ownership. 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.

 Off-Balance Sheet Financing Arrangements

 We do not utilize variable interest entities
or other off-balance sheet financial arrangements.

 Contractual Obligations

 Effective November 9, 2017, we extended our noncancelable
lease agreement through July 31, 2024, and further extended it through October 31, 2026, for our facilities at 6797 Winchester Circle,
Boulder, Colorado. Lease expense was $384,184 for the fiscal year ended March 31, 2025 and $357,503 for the fiscal year ended March 31,
2024. The minimum future lease payment, by fiscal year, as of March 31, 2025 is as follows:

 2026

 430,398

 2027

 266,212

 Total

 $
 696,610

 On August 4, 2020, we received $150,000 in loan
funding from the U.S. Small Business Administration ("SBA") under the Economic Injury Disaster Loan ("EIDL") program
administered by the SBA, which program was expanded pursuant to the CARES Act. The EIDL is evidenced by a promissory note, dated August
1, 2021 in the original principal amount of $150,000 with the SBA, the lender. Under the terms of the Note, interest accrues on the outstanding
principal at the rate of 3.75% per annum. The term of the Note is thirty years, though it may be payable sooner upon an event of default
under the Note.

 The minimum future EIDL payment, by fiscal year,
as of March 31, 2025 is as follows:

 2026

 $
 5,275

 2027

 5,275

 2028

 5,275

 2029

 5,275

 Thereafter

 129,646

 Total

 $
 150,746

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

 The minimum future U.S. Bank payment, by fiscal
year, as of March 31, 2025 is as follows:

 2026

 Total

 $

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

 The minimum future principal U.S. Bank payment,
by fiscal year, as of March 31, 2025 is as follows:

 2026

 2027

 2028

 7,931

 Total

 $
 55,519

 Payment due by period

 Contractual obligations

 Totals

 Less than 1 year

 1-3
 years

 3-5
 years

 More
 than 5 years

 Lease obligations

 $
 696,610

 $
 430,398

 $
 266,212

 $
 —

 $
 —

 EIDL note

 150,746

 5,275

 10,550

 10,550

 124,371

 U.S. Bank note

 —

 —

 —

 U.S. Bank note

 55,519

 31,725

 —

 —

 Totals

 $
 918,208

 $
 474,800

 $
 308,487

 $
 10,550

 $
 124,371

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

 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, warranty, 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 product revenue, and concluded that substantially all of its revenue comes from multiple products within a line of medical
devices. Our engineering service contracts are billed on a time and materials basis and revenue is recognized over time as the services
are performed.

 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 warranty. The warranty accrual is based upon 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 market
value based upon assumptions about future demand and market conditions. If a ctual 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.

 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 achieve 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 three 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 lives 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.

 Stock-based
compensation is presented in accordance with the guidance of Financial Accounting Standards Board ("FASB") Accounting Standards
Codification ("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 made to employees and
directors including employee stock options based on estimated fair values 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.

 Certain prior
year balances have been reclassified to conform with the current year presentation. In presenting the Company's consolidated
balance sheet at March 31, 2024, the Company presented $156,685 EIDL note payable as a line of credit. In presenting the
Company's consolidated balance sheet at March 31, 2025, the Company has reclassified the balance of $5,000 as part of Secured
notes, a current liability, and the balance of $151,685 is presented as a part of Long-term liability in the accompanying March 31,
2025 financial statements.

 Item 7A. Quantitative and Qualitative Disclosures
About Market Risk

 Not required

 Item 8. Financial Statements and Supplementary
Data

 The following financial
statements are included in this Report:

 Page

 Report
 of Independent Registered Public Accounting Firm for the fiscal year ended March 31, 2025

 Balance Sheets as of March 31, 2025 and 2024

 Statements of Operations for the fiscal years ended March 31, 2025 and 2024

 Statements of Shareholders' Equity for the fiscal years ended March 31, 2025 and 2024

 Statements of Cash Flows for the fiscal years ended March 31, 2025 and 2024

 Notes to Financial Statements

 Report of Independent Registered Public Accounting
Firm

 To the Board of Directors and Shareholders

 of Encision, Inc.

 Opinion on the Financial Statements

 We have audited the accompanying balance sheet
of Encision, Inc. (the Company) as of March 31, 2025, and 2024, and the related statements of operations, shareholders' equity,
and cash flows for the years then ended and the related notes (collectively referred to as the financial statements).

 In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of March 31, 2025, and 2024, and the results of its operations
and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 Basis for Opinion

 These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 Critical Audit Matter

 The
critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated
or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

 Inventory Valuation -
Finished Goods

 The Company's inventories consist of finished
goods and raw materials, which are manufactured or purchased for use in the Company's finished goods. The Company offers several
different products to its customers. The cost of the internally produced inventory is a combination of raw materials, labor to convert
those materials to components of the inventory to finished goods, and an allocation of overhead and related costs. Significant judgment
is exercised by the Company in determining the components of the costs of inventory and includes the determination of which costs to include
at each manufacturing phase, including overhead allocation and materials used for production of finished goods, and monitoring the appropriate
absorption of the overhead cost and correcting the hourly rate when necessary

 How the Critical Audit
Matter Was Addressed in the Audit

 Our principal audit procedures
related to the Company's inventory included the following:

 -
 We evaluated management's significant accounting
policies related to inventory for reasonableness

 -
 We selected a sample of finished goods and raw
materials and performed detailed testing over the items selected, including but not limited to the following:

 o
 Agreed the bill of materials source documents
for each selection, including raw materials value, labor, and overhead allocations, and any other items relevant to price verification.

 o
 Agreed a selection of raw materials to the source
documents, invoices, and any other items relevant to price verification

 o
Tested managements identification and application of the overhead calculation
and labor cost

 July 10, 2025

 We have served as the Company's auditor
since 2024.

 Los Angeles, California

 PCAOB ID Number 6580

 Green Growth CPAs

 Encision Inc.

 Balance Sheets

 ASSETS

 Current assets:

 Cash

 $
 257,433

 $
 42,509

 Accounts receivable

 786,471

 891,129

 Inventories, net

 1,483,182

 1,402,338

 Prepaid expenses

 85,679

 90,298

 Total current assets

 2,612,765

 2,426,274

 Equipment:

 Furniture, fixtures and equipment, at cost

 2,585,446

 2,627,726

 Accumulated depreciation

 ( 2,340,689
)

 ( 2,373,722
)

 Equipment, net

 244,757

 254,004

 Right of use asset

 568,395

 900,787

 Patents, net

 171,890

 164,010

 Other assets

 72,892

 65,641

 TOTAL ASSETS

 $
 3,670,699

 $
 3,810,716

 LIABILITIES AND SHAREHOLDERS' EQUITY

 Current liabilities:

 Accounts payable

 $
 346,900

 $
 346,049

 Line of credit

 395,964

 —

 Secured notes

 44,128

 47,194

 Accrued compensation

 180,850

 184,913

 Deferred Revenue

 17,401

 —

 Other accrued liabilities

 160,274

 119,804

 Accrued lease liability

 430,398

 370,377

 Total current liabilities

 1,575,915

 1,068,337

 Long-term liability:

 Secured notes

 177,470

 219,021

 Accrued lease liability

 266,212

 696,610

 Total liabilities

 2,019,597

 1,983,968

 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; 11,879,645 issued and outstanding at March 31, 2025 and 11,858,627 at March 31, 2024

 24,416,347

 24,371,795

 Accumulated (deficit)

 ( 22,765,245
)

 ( 22,545,047
)

 Total shareholders' equity

 1,651,102

 1,826,748

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 $
 3,670,699

 $
 3,810,716

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

 Encision Inc.

 Statements of Operations

 NET REVENUE:

 Product

 $
 6,217,687

 $
 6,431,969

 Service

 337,628

 153,913

 Total revenue

 6,555,315

 6,585,882

 COST OF REVENUE:

 Product

 2,873,588

 3,370,855

 Service

 170,441

 79,065

 Total cost of revenue

 3,044,029

 3,449,920

 GROSS PROFIT

 3,511,286

 3,135,962

 OPERATING EXPENSES:

 Sales and marketing

 1,689,503

 1,634,124

 General and administrative

 1,400,611

 1,520,727

 Research and development

 593,152

 621,894

 Total operating expenses

 3,683,266

 3,776,745

 OPERATING (LOSS)

 ( 171,980
)

 ( 640,783
)

 OTHER (EXPENSE):

 Interest expense, net

 ( 43,723
)

 ( 62,373
)

 Other income, (expense) net

 ( 4,495
)

 11,373

 Interest expense and other income, expense, net

 ( 48,218
)

 ( 51,000
)

 (LOSS) BEFORE PROVISION FOR INCOME TAXES

)

)

 Provision for income taxes

 —

 —

 NET (LOSS)

 $
)

 $
)

 Net (loss) per share—basic and diluted

 $
 ( 0.02
)

 $
 ( 0.06
)

 Weighted average shares—basic and diluted

 11,770,391

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

 Encision Inc.

 Statements of Shareholders' Equity

 Shares of Common Stock

 Common Stock and Additional
 Paid-in Capital

 Accumulated Deficit

 Total Shareholders'
 Equity

 Balances at March 31 2023

 11,769,543

 $
 24,348,075

 $
 ( 21,853,264
)

 $
 2,494,811

 Net loss

 —

 —

)

)

 Compensation expense related to stock based compensation

 —

 53,552

 —

 53,552

 Options exercised

 89,084

 ( 29,832
)

 —

 ( 29,832
)

 Balances at March 31 2024

 11,858,627

 $
 24,371,795

 $
 ( 22,545,047
)

 $
 1,826,748

 Net loss

 —

 —

)

)

 Compensation expense related to stock based compensation

 —

 46,001

 —

 46,001

 Options exercised

 21,018

 ( 1,449
)

 —

 ( 1,449
)

 Balances at March 31 2025

 $
 24,416,347

 $
 ( 22,765,245
)

 $
 1,651,102

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

 Encision Inc.

 Statements of Cash Flows

 Cash flows provided by (used in) operating activities:

 Net (loss)

)

 $
)

 Adjustments to reconcile net (loss) income to net cash (used in) operating activities:

 Depreciation and amortization

 81,393

 85,218

 Stock-based compensation expense related to stock options

 46,001

 53,552

 Provision for inventory obsolescence

 4,920

 12,000

 Change in operating assets and liabilities:

 Right of use asset, net

 ( 37,985
)

 68,710

 Accounts receivable

 104,658

 29,592

 Inventories

 ( 85,764
)

 484,866

 Prepaid expenses and other assets

 ( 2,632
)

 6,728

 Accounts payable

 18,252

 93,092

 Accrued compensation and other accrued liabilities

 36,407

 2,414

 Net cash provided by (used in) operating activities

 ( 54,948
)

 144,389

 Cash flows (used in) investing activities:

 Acquisition of property and equipment

 ( 54,415
)

 ( 12,050
)

 Patent costs

 ( 25,610
)

 ( 24,773
)

 Net cash (used in) investing activities

 ( 80,025
)

 ( 36,823
)

 Cash flows provided by (used in) financing activities:

 Borrowings from (paydown of) credit facility, net change

 395,964

 ( 177,402
)

 Borrowings from (paydown of) secured notes

 ( 44,618
)

 ( 46,788
)

 Net proceeds (payments) from exercise of stock options

 ( 1,449
)

 ( 29,833
)

 Net cash provided by (used in) financing activities

 349,897

 ( 254,023
)

 Net (decrease) in cash

 214,924

 ( 146,457
)

 Cash, beginning of fiscal year

 42,509

 188,966

 Cash, end of fiscal year

 $
 257,433

 $
 42,509

 Supplemental disclosure of non-cash investing activity information:

 Supplemental disclosures of cash flow information:

 Cash paid during the year for interest

 $
 43,723

 $
 62,373

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

 NOTES TO FINANCIAL STATEMENTS

 1. Description
of Business and Basis of Presentation

 Encision Inc. is a medical device company that
designs, develops, manufactures and markets patented surgical instruments that provide greater safety to patients undergoing minimally-invasive
surgery. We believe that our patented AEM surgical instrument technology is changing the marketplace for electrosurgical
devices and instruments by providing a solution to a well-documented risk in laparoscopic surgery. Our sales to date have been made primarily
in the United States. Sales included $ 424,732 from Australia and $ 62,140 from New Zealand.

 We have an accumulated deficit of $ 22,765,245
at March 31, 2025. Operating funds have been provided primarily by issuances of our common stock and warrants, the exercise of stock options
to purchase our common stock, loans, and by operating profits. Our liquidity has diminished because of prior years' operating losses,
and we may be required to seek additional capital in the future.

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

 In February 2024, we signed a Proof-of-Concept Services
Agreement with Vicarious Surgical Inc. ("Vicarious"). The Vicarious robot design intends to maximize visualization, precision,
and control of instruments in robotic-assisted minimally invasive surgery.

 We had net loss available to shareholders of $ 220,198
and $ 691,783
for the fiscal years ended March 31, 2025 and 2024, respectively. At March 31, 2025, we had $ 257,433
in cash available to fund future operations. We increased our pricing on products to mitigate our higher material costs. We have a line
of credit 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 financial statements.

 The accompanying consolidated financial statements
have been prepared assuming that we will continue as a going concern.

 Certain
prior year balances have been reclassified to conform with the current year presentation. In presenting the Company's consolidated
balance sheet at March 31, 2024, the Company presented $ 156,685 EIDL note payable as a line of credit. In presenting the Company's
consolidated balance sheet at March 31, 2025, the Company has reclassified the balance of $ 5,000 as part of Secured notes,a current liability,
and the balance of $ 151,685 is presented as a part of Long-term liability in the accompanying March 31, 2025 financial statements.

 2. Summary
of Significant Accounting Policies

 Use of Estimates in the Preparation of Financial
Statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States
("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.

 Fair Value of Financial Instruments. Our
financial instruments consist of cash, cash equivalents, short-term trade receivables, payables, line of credit, Economic Injury Disaster
Loan ("EIDL") loan and secured notes. The carrying values of cash, cash equivalents, trade receivables, payables, line of
credit approximate their fair value due to their short maturities. The fair values of the EIDL Loan approximates the carrying value based
on estimated discounted future cash flows using the current rates at which similar loans would be made, which is considered a Level 2
as described below.

 The accounting guidance defines fair value, establishes
a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value
on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based
measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a
basis for considering such assumptions, the accounting guidance establishes a three- tier fair value hierarchy, which prioritizes the
inputs used in measuring fair value as follows:

 Level 1: Observable inputs such as
quoted prices in active markets;

 Level 2: Inputs, other than the quoted
prices in active markets, that are observable either directly or indirectly; and

 Level 3: Unobservable inputs in which
there is little or no market data, which require the reporting entity to develop its own assumptions.

 Assets and liabilities are classified based on
the lowest level of input that is significant to the fair value measurements.

 Concentration of Credit Risk. Financial
instruments, which potentially subject us to concentrations of credit risk, consist of cash and cash equivalents, and accounts receivable.
The carrying value of all financial instruments approximates fair value. The amount of cash on deposit with financial institutions occasionally
exceeds the $ 250,000 federally insured limit at March 31, 2025. However, we believe that cash on deposit that exceeds $ 250,000 in the
financial institutions is financially sound and the risk of loss is minimal.

 We have no 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. We charge interest
on past due accounts on a case-by-case basis. The accounts receivable balance at March 31, 2025 of $ 786,471
 included no more than 9% from any one customer. The accounts receivable balance at March 31, 2024 of
$ 891,129 included
no more than 11% from any one customer.

 Warranty Accrual. 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, our warranty obligation is based upon
historical experience and is also affected by product failure rates and material usage incurred in
correcting a product failure. Should actual product failure rates or material usage costs differ from our estimates, revisions to the
estimated warranty liability would be required. There was no warranty accrual at March 31, 2025.

 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 March 31, 2025 and 2024, inventory consisted
of the following:

 Schedule of inventory

 Raw materials

 $
 1,093,530

 $
 1,044,161

 Finished goods

 389,652

 358,177

 Total net inventories

 $
 1,483,182

 $
 1,402,338

 For the fiscal year 2025, Encision added $ 82,606
in additional inventory reserve and wrote off $ 77,687 in inventory. In the fiscal year 2024, Encision added $ 153,511 in additional inventory
reserve and wrote off $ 141,511 in inventory. Total Raw Materials reserve for fiscal year 2025 is $ 47,973, and $ 47,948 for fiscal year 2024. Finished
goods reserve for fiscal year 2025 is $ 19,947 and $ 9,052 in fiscal year 2024.

 Right of Use Assets and Lease Liabilities.
We determine if an arrangement includes a lease at the inception of the agreement and the right-of-use asset and lease liability is determined
at the lease commencement date and is based on the present value of estimated lease payments. Our lease agreements contain both fixed
and variable lease payments, none of which are based on a rate or an index. Fixed lease payments are included in the determination of
the right-of-use asset and lease liability. Variable lease payments that are not based on a rate or index are expensed when incurred.
The present value of estimated lease payments is determined utilizing the rate implicit in the lease agreement if that rate can be determined.
If the implicit rate cannot be determined, the present value of estimated lease payments is determined utilizing our incremental borrowing
rate. The incremental borrowing rate is determined at the lease commencement date and is estimated utilizing similar or collateralized
borrowing instruments adjusted for the terms of leasing arrangement as necessary. Our lease agreements do not contain any material residual
value guarantees or material restrictive covenants. The lease agreement is for our building. The original lease is from June 3, 2004 and
was amended in August 2023 to extend the term until October 31, 2026. The balances as of March 31, 2025 and 2024, for the Right of Use
Asset were $ 568,395 and $ 900,787, respectively. The balances as of March 2025 and 2024 for Lease Liabilities were $ 696,610 and $ 1,066,987,
respectively.

 Property and Equipment. Property and equipment
are stated at cost, with depreciation computed over the estimated useful lives of the assets, generally three 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. Depreciation expense for the years ended March 31, 2025 and 2024 was $ 63,663 and $ 61,322, respectively.
Property and equipment additions for the years ended March 31, 2025 and 2024 were $ 54,415 and $ 12,050, respectively. Property and equipment
is comprised principally of equipment and is depreciated over seven years.

 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. A summary of our patents at March 31, 2025 and 2024 is as follows:

 Summary of patents

 March 31,
 2025

 March 31,
 2024

 Patents issued

 483,810

 436,831

 Accumulated amortization

 ( 346,290
)

 ( 315,530
)

 Patents issued, net of accumulated amortization

 137,520

 121,301

 Patent applications

 36,528

 57,897

 Accumulated amortization

 ( 2,158
)

 ( 15,188
)

 Patent applications, net of accumulated amortization

 34,370

 42,709

 Total net patents and patent applications

 $
 171,890

 $
 164,010

 The expected annual amortization expense related
to patents and patent applications as of March 31, 2025, for the next five fiscal years, is as follows:

 Schedule of expected annual amortization expense

 2025

 $
 21,378

 2026

 20,472

 2027

 19,605

 2028

 17,157

 Thereafter

 93,278

 Total

 $
 171,890

 Other Accrued Liabilities. At March 31,
2025 and 2024, other accrued liabilities consisted of the following:

 Schedule of other accrued liabilities

 March

 March

 Sales commissions

 $
 34,122

 $
 9,794

 Sales and use tax

 8,366

 13,006

 Marketing fees

 9,646

 10,631

 Payroll taxes, payroll

 23,829

 45,172

 Property Taxes

 13,890

 2,007

 Insurance

 41,737

 39,194

 Customer Deposit

 27,370

 —

 Miscellaneous

 1,314

 —

 Total other accrued liabilities

 $
 160,274

 $
 119,804

 Income Taxes. We account for income taxes
under the provisions of 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. Should we achieve sufficient, sustained income in the future, we
may conclude that some or all of the valuation allowance should be reversed (Note 5).

 ASC 740 prescribes a comprehensive model for
how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected
to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely
than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be
measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the
tax authority assuming full knowledge of the position and relevant facts.

 There are open statutes of limitations for taxing
authorities in federal and state jurisdictions to audit the Company's tax returns from fiscal year ended March 31, 2003 through
the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the statements of
operations. There have been no income tax related interest or penalties assessed or recorded. The Company has provided a full valuation
allowance on all of its deferred tax assets.

 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. As presented on the Statement of Operations
our revenue is disaggregated between product revenue and service revenue. As it relates specifically to product revenue, we do not believe
further disaggregation is necessary as substantially all our product revenue comes from multiple products within a line of medical devices.
Our engineering service contracts are billed on a time and materials basis and revenue is recognized over time as the services are performed.

 We determine revenue recognition through the
following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract;
(3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract (where
revenue is allocated on a relative standalone selling price basis by maximizing the use of observable inputs to determine the standalone
selling price for each performance obligation); and (5) recognition of revenue when, or as, we satisfy a performance obligation

 Topic 606 requires the disaggregation of revenue
into broad categories, which we have defined as shown below.

 Schedule of disaggregation revenue

 Product revenue

 $
 6,217,687

 $
 6,431,969

 Service revenue

 337,628

 153,913

 Total revenues

 $
 6,555,315

 $
 6,585,882

 Sales Taxes. We collect sales tax from
customers and remit the entire amount to each respective state. We recognize revenue from product sales net of sales taxes.

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

 Advertising Costs. We expense advertising
costs as incurred. Advertising expense for the years ended March 31, 2025 and 2024 was minimal.

 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.

 ASC 718 requires companies 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 the accompanying statements of operations.

 Stock-based compensation expense recognized during
the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Stock-based
compensation expense recognized in our statements of operations for fiscal years 2024 and 2023 included compensation expense for share-based
payment awards granted prior to, but not yet vested as of March 31, 2025, based on the grant date fair value. Compensation expense for
all share-based payment is recognized using the straight-line, single-option method. As stock-based compensation expense recognized in
the accompanying statements of operations for fiscal years 2025 and 2024 is based on awards ultimately expected to vest, it has been reduced
for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent
periods if actual forfeitures differ from those estimates.

 We used the Black-Scholes option-pricing model
("Black-Scholes model") to determine fair value. Our determination of fair value of share-based payment awards on the date
of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and
subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards,
and actual and projected employee stock option exercise behaviors. Although the fair value of employee stock options is determined in
accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing
seller market transaction.

 Stock-based compensation expense recognized under
ASC 718 for fiscal years 2025 and 2024 was $ 46,001 and $ 53,552, respectively, which consisted of stock-based compensation expense related
to director and employee stock options.

 Stock-based compensation expense related to director
and employee stock options under ASC 718 for fiscal years 2025 and 2024 was allocated as follows:

 Schedule of stock-based compensation expense

 Cost of sales

 $

 $

 Sales and marketing

 5,740

 7,261

 General and administrative

 38,564

 41,180

 Research and development

 4,977

 Stock-based compensation expense

 $
 46,001

 $
 53,552

 Segment
Reporting. Effective with the fiscal year ended March 31, 2025, the Company adopted Financial Accounting
Standards Board ("FASB") Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280):
Improvements to Reportable Segment Disclosures. Adoption of the amended guidance did not change the Company's conclusion that it
operates two reportable segment, nor did it affect the Company's consolidated financial position, results of operations, or cash
flows. The standard, however, expands required disclosures related to significant segment expense categories and interim-period information.
The Company has incorporated the required disclosures for the year ended March 31, 2025, as presented below.

 Operating segments
are defined as components of an enterprise about which discrete financial information is available that is evaluated regularly by the
chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing operating performance. In consideration
of ASC 280, Segment Reporting, the Company has concluded it operates two business segments, product and service. The Product segment designs,
develops, manufactures and markets patented surgical instruments. The Service segment performs engineering activities for external entities.

 Additionally, our CODM (President and Chief
Executive Officer) uses consolidated net income or loss, as reported in the Consolidated Statement of Operations, as the
profitability measure in making decisions to evaluate our performance, which is the same basis on which he communicates our results
and performance to our Board of Directors. The CODM bases all significant decisions regarding the allocation of our resources on a
consolidated basis. At March 31, 2025, Net long-lived assets totaled $ 416,647 in the United States.

 Schedule
 of operating segments

 Year
 Ended March 31, 2025

 Year
 Ended March 31, 2024

 Product

 Service

 Total

 Product

 Service

 Total

 Net revenue

 $
 6,217,687

 $
 337,628

 $
 6,555,315

 $
 6,431,969

 $
 153,913

 $
 6,585,882

 Cost of revenue

 2,873,588

 170,441

 3,044,029

 3,370,855

 79,065

 3,449,920

 Gross profit

 3,344,099

 167,187

 3,511,286

 3,061,114

 74,848

 3,135,962

 Operating income (loss)

 ( 339,167
)

 167,187

 ( 171,980
)

 ( 715,631
)

 74,848

 ( 640,783
)

 Depreciation and amortization

 81,393

 —

 81,393

 85,218

 —

 85,218

 Capital expenditures

 54,415

 —

 54,415

 12,050

 —

 12,050

 Equipment and patents, net

 $
 416,647

 $
 —

 $
 416,647

 $
 418,014

 $
 —

 $
 418,014

 Basic and Diluted Income per Common Share.
Net income per share is calculated in accordance with ASC Topic 260, "Earnings Per Share" ("ASC 260"). Under the provisions
of ASC 260, basic net income per common share is computed by dividing net income for the period by the weighted average number of common
shares outstanding for the period. Diluted net income per common share is computed by dividing the net income 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.
Because we had a loss in fiscal years 2025 and 2024, the shares used in the calculation of dilutive potential common shares exclude options
to purchase shares.

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

 Schedule of basic and diluted net income (loss) per share

 March

 March

 Net income (loss)

 $
)

 $
)

 Weighted-average shares — basic

 11,770,391

 Effect of dilutive potential common shares

 —

 —

 Weighted-average shares — basic and diluted

 11,770,391

 Net loss per share — basic and diluted

 $
 ( 0.02
)

 $
 ( 0.06
)

 Antidilutive equity units

 1,016,249

 751,000

 Recently Issued Accounting Pronouncements.

 In November 2023, the FASB issued ASU 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, amending reportable segment disclosure requirements to
include disclosure of incremental segment information on an annual and interim basis. Among the disclosure enhancements are new disclosures
regarding significant segment expenses that are regularly provided to the chief operating decision-maker and included within each reported
measure of segment profit or loss, as well as other segment items bridging segment revenue to each reported measure of segment profit
or loss. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and for interim periods within
fiscal years beginning after December 15, 2024, and are applied retrospectively. Early adoption is permitted. See Note 2 for changes to
our reportable segment disclosures.

 In December 2023, the FASB issued ASU 2023-09,
Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate
reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 and
are applied prospectively. Early adoption and retrospective application of the amendments are permitted. We continue to evaluate the impact
of this update on our financial statements, but do not expect any changes to our current reportable segments.

 In November 2024, the FASB issued ASU 2024-03,
Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement
Expenses, which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income
statement. The new disclosure requirements are effective for the Company's annual periods for fiscal years beginning after December 15,
2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, and may be applied either
prospectively or retrospectively. We are currently evaluating the ASU to determine its impact on our consolidated financial statements
and disclosures.

 The Company does not believe that issued, but
not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company's financial statements.

 3. Shareholders' Equity

 Stock Option Plans. We adopted our 2014
Equity Incentive Plan (the "Plan," as summarized below) to promote our and our shareholders' interests by helping us
to attract, retain and motivate our key employees and associates. Under the terms of the Plan, the Board of Directors may grant incentive
and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, and other stock-based
awards. The purchase price of the shares subject to a stock option will be the fair market value of our common stock on the date the stock
option is granted. Generally, vesting of stock options occurs such that 20% becomes exercisable on each anniversary of the date of grant
for each of the five years following the grant date of such option. Generally, all stock options must be exercised within five years from
the date granted. The number of common shares reserved for issuance under the Plan is 1,100,000 shares of common stock, subject to adjustment
for dividend, stock split or other relevant changes in our capitalization.

 Under ASC 718, the value of each employee stock
option was estimated on the date of grant using the Black-Scholes model for the purpose of financial information in accordance with ASC
718. The use of a Black-Scholes model requires the use of actual employee exercise behavior data and the use of a number of assumptions
including expected volatility, risk-free interest rate and expected dividends. Employee stock options for 450,000 and 120,000 shares of
stock were granted during fiscal years 2025 and 2024, respectively.

 As of March 31, 2025, $ 172,841 of total unrecognized
compensation costs related to nonvested stock is expected to be recognized over a period of five years. During the year ended March 31,
2025, various fully vested five-year stock options to purchase 65,000 shares of common stock of us previously granted to board members
and employees expired unexercised.

 The assumptions for employee stock options are
summarized as follows:

 Summary of assumptions for employee stock options

 Year Ended

 Dividend yield

 %

 Expected volatility

 74 % to 88 %

 Risk-free interest rate

 3.9 % to 4.61 %

 Expected life (in years)

 5.0

 Stock price

 $ 0.29 to $ 0.70

 Exercise price

 $ 0.30 to $ 0.48

 Cumulative compensation cost recognized in net
income or loss with respect to options that are forfeited prior to vesting is adjusted as a reduction of compensation expense in the period
of forfeiture. The volatility of the stock is based on the historical volatility for the period that approximates the expected lives of
the options being valued. Fair value computations are highly sensitive to the volatility factor; the greater the volatility, the higher
the computed fair value of options granted.

 The total fair value of options granted was computed
to be approximately $ 110,203 and $ 40,025 for the fiscal years ended March 31, 2025 and 2024, respectively. For disclosure purposes, these
amounts are amortized ratably over the vesting periods of the options. Effects of stock-based compensation, net of the effect of forfeitures,
totaled $ 46,000 and $ 53,552 for fiscal years 2025 and 2024, respectively.

 The Black-Scholes model was developed for use
in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation
models require the use of assumptions, including the expected stock price volatility. Because our employee stock options have characteristics
significantly different than those of traded options, and because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair
value of our employee stock options. A summary of our stock option activity and related information for equity compensation plans approved
by security holders for each of the fiscal years ended March 31, 2025 and 2024 is as follows:

 Summary of stock option activity

 STOCK
 OPTIONS OUTSTANDING

 Number
 Outstanding

 Weighted-Average
 Exercise Price per Share

 BALANCE AT MARCH 31, 2023

 1,049,000

 0.66

 Granted

 120,000

 0.44

 Exercised

 ( 89,084
)

 0.34

 Forfeited/expired

 ( 328,916
)

 0.44

 BALANCE AT MARCH 31, 2024

 751,000

 $
 0.75

 Granted

 450,000

 0.37

 Exercised

 ( 21,018
)

 0.37

 Forfeited/expired

 ( 163,733
)

 0.54

 BALANCE AT MARCH 31, 2025

 1,016,249

 $
 0.63

 The following table summarizes information about employee
stock options outstanding and exercisable at March 31, 2024:

 Schedule of employee stock options outstanding and exercisable

 STOCK
 OPTIONS OUTSTANDING

 STOCK
 OPTIONS EXERCISABLE

 Range
 of Exercise Prices

 Number
 Outstanding

 Weighted-Average
 Remaining Contractual Life (in Years)

 Weighted-Average
 Exercise Price
 per
 Share

 Number
 Exercisable

 Weighted-Average
 Exercise Price
 per
 Share

 $0.30 - $0.39

 430,000

 4.4

 $
 0.36

 6,333

 $
 0.39

 $0.40 - $0.50

 217,499

 2.7

 $
 0.46

 119,055

 $
 0.47

 $0.51 - $1.40

 368,750

 1.9

 $
 1.03

 267,394

 $
 1.05

 1,016,249

 3.1

 $
 0.63

 392,782

 $
 0.86

 The 1,016,249 options outstanding as of March
31, 2025 are nonqualified stock options. The exercise price of all options granted through March 31, 2025 has been equal to or greater
than the fair market value, as determined by our Board of Directors or based upon publicly quoted market values of our common stock on
the date of the grant.

 The following
table sets forth options to acquire shares of our common stock granted to Executive Officers during the fiscal year ended March 31, 2025.

 Schedule of options to acquire shares

 Name

 Grant date

 Number of securities underlying
 options
(#)

 Exercise price of option
 awards
($/Sh)

 Grant date fair value
 of option awards
($) (1)

 Gregory J. Trudel

 05/01/2024

 200,000

 0.37

 48,055

 11/14/2024

 5,000

 0.42

 1,328

 Brian Jackman

 05/01/2024

 40.000

 0.37

 9,611

 11/14/2024

 5.000

 0.42

 1,328

 Brandon Shepard

 08/19/2024

 25,000

 0.32

 5,051

 The following table sets forth certain
information regarding the number and value of exercisable and unexercisable options to purchase shares of common stock held as of March
31, 2025 by Executive Officers.

 Name

 Number of Securities underlying unexercised options (#)exercisable

 Number of Securities underlying unexercised options (#) unexercisable

 Option exercise price ($/Sh)

 Option expiration Date

 Gregory J. Trudel

 9,167

 0.50

 11/12/25

 51,250

 23,750

 1.50

 01/13/27

 44,333

 25,667

 1.35

 04/19/27

 4,667

 5,333

 0.51

 02/09/28

 2,833

 7,167

 0.46

 01/19/29

 —

 200,000

 0.37

 08/01/29

 —

 5,000

 0.42

 02/14/30

 Brian Jackman

 5,000

 0.55

 05/25/25

 9,167

 3,167

 0.50

 11/12/25

 6,833

 8,000

 1.40

 01/13/27

 7,000

 40,000

 0.51

 02/09/28

 —

 5,000

 0.37

 08/01/29

 —

 —

 0.42

 02/14/30

 Brandon Shepard

 —

 25,000

 0.32

 11/19/29

 Jason Johnson

 5,000

 —

 0.55

 05/25/25

 7,167

 2,833

 0.80

 11/11/26

 4,833

 5,167

 0.45

 01/19/28

 4. Commitments
and Contingencies

 We have a noncancelable lease agreement for our
facilities at 6797 Winchester Circle, Boulder, Colorado. The lease expires October 31, 2026.

 On April 1, 2021, we adopted Accounting Standards
Codification ("ASC") ASC 842 "Leases" using the initial date of adoption method, whereby the adoption does not
impact any periods prior to April 1, 2019. ASC Topic 842 retains a distinction between finance leases and operating leases. The classification
criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing
between capital leases and operating leases in the previous leases' guidance. We recorded an operating Right of Use ("ROU")
asset of $ 1,555,150, and an operating lease liability of $ 1,619,842 as of April 1, 2019. The difference between the initial operating
ROU asset and operating lease liability of $ 64,692 is accrued rent previously recorded under ASC 840. We elected to adopt the package
of practical expedients and, accordingly, did not reassess any previously expired or existing arrangements and related classifications
under ASC 840.

 If the rate implicit in the lease is not readily
determinable, we use our incremental borrowing rate as the discount rate. We use our best judgement when determining the incremental borrowing
rate, which is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term to the lease payments.

 Our operating lease includes the use of real
property. We have not identified any material finance leases as of March 31, 2025.

 For the years ended March 31, 2025 and 2024,
we had $ 384,184 and $ 357,503, respectively, for lease expense.

 The following is a maturity analysis of the annual
undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of March 31, 2025:

 Schedule of principal U.S. Bank payment

 2026

 $
 455,543

 2027

 270,666

 Total operating lease payments

 $
 726,209

 Less imputed interest

 ( 29,599
)

 Total operating lease liabilities

 $
 696,610

 Weighted-average remaining lease term

 1.6 years

 Weighted-average discount rate

 5.0
 %

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

 On August 4, 2020, we received $ 150,000 in loan
funding from the U.S. Small Business Administration ("SBA") under the Economic Injury Disaster Loan ("EIDL") program
administered by the SBA, which program was expanded pursuant to the CARES Act. The EIDL is evidenced by a promissory note, dated August
1, 2021 in the original principal amount of $ 150,000 with the SBA, the lender. Under the terms of the Note, interest accrues on the outstanding
principal at the rate of 3.75 % per annum. The term of the Note is thirty years, though it may be payable sooner upon an event of default
under the Note.

 The minimum future EIDL payment, by fiscal year,
as of March 31, 2025 is as follows:

 Schedule of principal U.S. Bank payment

 2026

 $
 5,275

 2027

 5,275

 2028

 5,275

 2029

 5,275

 Thereafter

 129,646

 Total

 $
 150,746

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

 The minimum future U.S. Bank payment, by fiscal
year, as of March 31, 2025 is as follows:

 Schedule of principal U.S. Bank payment

 2026

 Total

 $

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

 The minimum future principal U.S. Bank payment,
by fiscal year, as of March 31, 2025 is as follows:

 Schedule of principal U.S. Bank payment

 2026

 2027

 2028

 7,931

 Total

 $
 55,519

 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 our and their compliance with these regulations. As of March 31, 2024, we believe
we were in substantial compliance with all known regulations. FDA inspections are conducted periodically at the discretion of the FDA.
We were last inspected in October 2019.

 Our obligation with respect to employee severance
benefits is minimized by the "at will" nature of the employee relationships. Our total obligation with respect to contingent
severance benefit obligations was none as of March 31, 2024 and 2023.

 5. Income
Taxes

 We account for income taxes under ASC 740, which
requires the use of the liability method. ASC 740 provides that deferred income tax assets and liabilities are recorded based on the differences
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary
differences. Deferred income tax assets and liabilities at the end of each period are determined using the currently enacted tax rates
applied to taxable income in the periods in which the deferred income tax assets and liabilities are expected to be settled or realized.

 Income tax provision (benefit) for income taxes
is summarized below:

 Schedule of income tax expense (benefit)

 March

 March

 Current:

 Federal

 $

 —

 $

 —

 State

 —

 —

 Total current

 —

 —

 Deferred:

 Federal

 241,000

 22,000

 State

 46,000

 4,000

 Total deferred

 287,000

 26,000

 Valuation allowance

 ( 287,000
)

 ( 26,000
)

 Total

 $
 —

 $
 —

 The following is a reconciliation
between the effective rate and the federal statutory rate:

 Schedule of effective income tax rate reconciliation

 March

 March

 Expected income tax rate

 $
 ( 46,000
)

 $
 ( 145,000
)

 State income taxes, net of federal tax benefit

 ( 9,000
)

 ( 28,000
)

 Other permanent differences

 ( 16,000
)

 ( 10,000
)

 Research credits

 137,000

 ( 8,000
)

 Change in valuation allowance

 ( 66,000
)

 191,000

 Income tax expense

 $
 —

 $
 —

 The components of the net accumulated deferred income
tax asset (liability) are as follows:

 Schedule of deferred income tax asset liability

 March

 March

 Other deferred assets

 $
 17,000

 $
 16,000

 Valuation allowance

 ( 17,000
)

 ( 16,000
)

 Current deferred tax assets

 —

 —

 Credits and net operating loss carryforwards

 2,296,000

 2,616,000

 Valuation allowance

 ( 2,296,000
)

 ( 2,616,000
)

 Long-term deferred tax assets

 —

 —

 Total deferred tax assets

 —

 —

 Valuation allowance

 —

 —

 Long-term deferred tax liabilities

 —

 —

 Total deferred tax liabilities

 —

 —

 Net deferred tax assets (liabilities)

 $
 —

 $
 —

 The primary components of our deferred tax assets
are described below:

 March

 March

 Differences in reporting long-term assets

 $
 17,000

 $
 16,000

 Credits and net operating loss carryforwards

 2,296,000

 2,616,000

 Less valuation allowance

 ( 2,313,000
)

 ( 2,600,000
)

 Total deferred tax assets

 $
 —

 $
 —

 In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which
net operating losses and reversal of timing differences may offset taxable income. Management considers the scheduled reversal of deferred
tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. A valuation allowance is provided
when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Due to our lack of earnings history,
the net deferred tax assets have been fully offset by a valuation allowance.

 As of March 31, 2025, we had approximately $ 8.2
million of net operating loss carryovers for tax purposes. Additionally, we have approximately $ 239,000 of research and development tax
credits available to offset future federal income taxes. The net operating loss and credit carryovers begin to expire in the fiscal year
ended March 31, 2026. In fiscal years ended after March 31, 2025, net operating losses expire at various dates through March 31, 2046.
The Internal Revenue Code contains provisions, which may limit the net operating loss carryforwards available to be used in any given
year if certain events occur, including significant changes in ownership interests.

 6. Major
Customers/Suppliers

 We depend on sales that are generated from hospitals'
ongoing usage of AEM surgical instruments. In fiscal year 2024, we generated sales from over 400 hospitals that have changed to AEM products.
Three vendors accounted for approximately 54 % of our inventory purchases.

 7. Defined
Contribution Employee Benefit Plan

 We have adopted a 401(k) Profit Sharing Plan,
which covers all full-time employees who have completed at least three months of full-time continuous service and are age eighteen or
older. Participants may defer up to 20% of their gross pay up to a maximum limit determined by law. Participants are immediately vested
in their contributions. We may make discretionary contributions based on corporate financial results for the fiscal year. To date, we
have not made contributions to the 401(k) Profit Sharing Plan. Vesting in a contribution account (our contribution) is based on years
of service, with a participant fully vested after five years of credited service.

 8. Related Party Transaction

 The Company engaged Finance Vision Service, Inc., a company owned
by board member Robert Fries, for consulting services. The company paid $ 40,727 and $ 32,032 in fiscal years 2025 and 2024.

 9. Subsequent Events

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

 Item 9. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure.

 On October 17, 2023, we were notified that Gries &
Associates, LLC ("Gries"), our independent registered public accounting firm, had completed a sale of its customers to GreenGrowth
CPAs Inc. ("GreenGrowth CPAs"). As a result of this transaction, Gries resigned its engagement with us immediately.

 On October 18, 2023, upon the approval of our Audit
Committee, we engaged GreenGrowth CPAs as our new independent registered public accounting firm for our fiscal year ending March 31, 2024
and interim periods.

 Gries' reports on our financial statements for
the past two years did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty,
audit scope, or accounting principles. The report had been prepared assuming that we would continue as a going concern and included an
explanatory paragraph regarding our ability to continue as a going concern as result of recurring losses and a deficiency in shareholders'
equity.

 During the year ended March 31, 2023, and the subsequent
period through October 17, 2023, there were (i) no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K and the related
instructions) between us and Gries on any matter of accounting principles or practices, financial statement disclosure, or auditing scope
or procedure, which, if not resolved to Gries' satisfaction, would have caused Gries to make reference thereto in its reports on
the financial statements for such years; and (ii) no "reportable events" within the meaning of Item 304(a)(1)(v) of Regulation
S-K, except that Gries advised us of material weaknesses in its internal control over financial reporting as of March 31, 2023 and 2022.

 Item 9A. Controls and Procedures.

 Evaluation of Disclosure Controls and Procedures

 Under the supervision and with the participation of
our management, including our principal executive officer and principal financial officer, as of March 31, 2025, we conducted an evaluation
of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and principal financial officer have concluded
that, based on the material weaknesses discussed below, our disclosure controls and procedures were not effective as of such date to ensure
that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act were recorded, processed,
summarized, and reported within the time periods specified in the SEC's rules and forms and that our disclosure controls are not
effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities
Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer,
or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 Changes in Internal Control over Financial Reporting

 There have been no changes in our internal control
over financial reporting that occurred during our fourth fiscal quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

 Management's Annual Report on Internal
Control over Financial Reporting

 Management is responsible for establishing and maintaining
adequate internal control over financial reporting. As defined in Rules 13a-15(f) under the Securities Exchange Act of 1934, internal
control over financial reporting is a process designed by, or under the supervision of, the Company's principal executive, principal
operating and principal financial officers, or persons performing similar functions, and effected by the Company's board of directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP.

 Our internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records, that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the Company's assets; (2) provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the Company are being made only in accordance with authorizations of the Company's management and directors; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets
that could have a material effect on the financial statements.

 Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

 Our management, including our principal executive
officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting at March 31, 2025.
In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control—Integrated Framework (2013). Based on that assessment under those criteria, management has determined
that, as of March 31,2025, our internal control over financial reporting was not effective.

 Our internal controls are not effective for the following
reason: (i) there is an inadequate segregation of duties consistent with control objectives as management is comprised of only two persons,
one of which is our principal executive officer and the other is the principal financial officer.

 In order to mitigate the foregoing material weaknesses,
we have engaged an outside accounting consultant with significant experience in the preparation of financial statements in conformity
with GAAP to assist us in the preparation of our financial statements to ensure that these financial statements are prepared in conformity
with GAAP. We will continue to monitor the effectiveness of this action and make any changes that our management deems appropriate.

 We would need to hire additional staff to provide
greater segregation of duties. Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties. Management
will continue to reassess this matter to determine whether improvement in segregation of duty is feasible. In addition, we would need
to expand our board to include independent members.

 Going forward, we intend to evaluate our processes
and procedures and, where practicable and resources permit, implement changes in order to have more effective controls over financial
reporting.

 This Annual Report does not include an attestation
report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not
subject to attestation by our registered public accounting firm pursuant to the exemption provided to issuers that are not "large
accelerated filers" nor "accelerated filers" under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 Item 9B. Other Information

 During the fiscal year ended March
31, 2025, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading
arrangement, as each term is defined in Item 408(a) of Regulation S-K.

 Item 9C. Disclosure Regarding
Foreign Jurisdictions that Prevent Inspections

 Not applicable.

 Item 10. Directors, Executive
Officers and Corporate Governance.

by reference from the registrant's definitive proxy statement for its 2025 Annual Meeting of Shareholders to be filed within 120 days

 Item 11. Executive Compensation.

by reference from the registrant's definitive proxy statement for its 2025 Annual Meeting of Shareholders to be filed within 120 days

 Item 12. Security Ownership
of Certain Beneficial Owners and Management and Related Shareholder Matters.

by reference from the registrant's definitive proxy statement for its 2025 Annual Meeting of Shareholders to be filed within 120 days

 The following table summarizes certain information
regarding our equity compensation plan as of March 31, 2025:

 Plan Category

 Number of securities to
 be issued upon exercise of outstanding equity units

 Weighted-average exercise
 price of equity units

 Number of securities remaining
 available for future issuance under equity units plan

 Equity compensation plans approved by security holders

 1,016,249

 $
 0.63

 83,751

 Item 13. Certain Relationships
and Related Transactions, and Director Independence.

by reference from the registrant's definitive proxy statement for its 2025 Annual Meeting of Shareholders to be filed within 120 days

 Item 14. Principal Accounting
Fees and Services.

by reference from the registrant's definitive proxy statement for its 2025 Annual Meeting of Shareholders to be filed within 120 days

 Item 15. Exhibits, Financial Statement
Schedules.

 (b)
Exhibits - The following exhibits are attached to this report on Form 10-K or are incorporated herein by reference:

 3.1
 Articles of Incorporation of the Company, as amended. (Incorporated by reference from Registration Statement #333-4118-D dated June
25, 1996).

 3.2
 Bylaws of the Company. (Incorporated by reference from Current Report on Form 8-K filed on October 30, 2007).

 3.3
 First Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on May 31, 2017).

 4.1
 Form of certificate for shares of Common Stock. (Incorporated by reference from Registration Statement #333-4118-D dated June 25,
1996).

 4.2
 Description of Capital Stock. (Incorporated by reference from Annual Report on Form 10-K filed on June 14, 2019)

 10.1
 Lease Agreement dated June 3, 2004 between Encision Inc. and DaPuzzo Investment Group, LLC (Incorporated by reference from Quarterly
Report on Form 10-Q filed on August 12, 2004).

 10.2
 Encision Inc. 2007 Stock Option Plan (Incorporated by reference from Proxy Statement dated June 30, 2007).

 10.3
 Encision Inc. First Amended and Restated 2014 Stock Option Plan (Incorporated by reference from Proxy Statement dated July 6, 2020).

 10.4
 Employment Agreement, dated November 14, 2016, between Encision Inc. and Gregory J. Trudel (Incorporated
by reference to Exhibit 10-1 to our Current Report on Form 8-K filed on November 18, 2016).

 10.5
 Fifth Amendment to Office Building Lease dated November 9, 2017 (Incorporated by reference to Exhibit 10.1 to Quarterly Report on
Form 10-Q filed February 12, 2018).

 10.6
 PPP Promissory Note dated as of April 17, 2020 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed
on April 23, 2020).

 10.8
 Economic Injury Disaster Loan dated as of August 1, 2020 (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form
10-Q filed on August 14, 2020).

 10.9
 US Bank Equipment Finance Note dated January 21, 2021 (incorporated by reference to Exhibit 4.3 to our
 Annual Report on Form 10-K filed on June 23, 2021)

 10.10
 PPP Promissory Note dated as of February 8, 2021 (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q
 filed on February 12, 2021).

 10.11
 Supply Agreement dated August 23, 2021 between Auris Health, Inc. and Encision Inc. (incorporated by reference to Exhibit 10.1 to
our Quarterly Report on Form 10-Q filed on November 15, 2021).+

 10.12
 New Line of Credit and Security Agreement with Pathward, N.A. dated November
2, 2022 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on November 17, 2022)

 19.1
 Encision, Inc. Insider Trading Policy **

 23.1
 Consent of Independent Registered Public Accounting Firm **

 31.1
 Section 302 Certification of Principal Executive Officer **

 31.2
 Section 302 Certification of Principal Financial and Accounting Officer **

 32.1
 Section 906 Certifications **

 Inline interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets, (ii) the Statements of Operations, (iii) Statements of Stockholders Equity, (iv) Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements **

 Denotes management contract or compensatory plan or arrangement.

 **
 Filed herewith.

 Item 16. Form 10-K Summary.

 None.

 SIGNATURES

 Pursuant to the requirements of Section 13 or
15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 Dated:
July 10, 2025

 ENCISION INC.

 By:

 /s/ Brandon Shepard

 Brandon Shepard
Controller
Principal Accounting Officer &
 Principal Financial Officer

 Pursuant
to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

 Signature

 Date

 /s/ Brandon
 Shepard

 July 10,
 2025

 Brandon Shepard

 Controller
Principal
Accounting Officer & Principal Financial Officer

 /s/ Patrick
 W. Pace

 July 10,
 2025

 Patrick
 W. Pace

 Director

 /s/ Robert
 H. Fries

 July 10,
 2025

 Robert H. Fries

 Director

 /s/ Vern
 D. Kornelsen

 July 10, 2025

 Vern
 D. Kornelsen

 Director

 /s/ Gregory
 J. Trudel

 July 10, 2025

 Gregory
 J. Trudel
 President
 and CEO
Principal Executive Officer

 Director