美国
证券交易委员会
华盛顿，DC 20549
表格
截至季度结束日期的财务报告
或者
过渡期从____________到____________
委托文件号码：
（按其宪章规定的注册人名称）
| （成立或组织所在的州或其他司法管辖区） | （税务主管机关雇主识别号码） |
| ，（主要行政办公地址） | (邮政编码) |
(
（如自上次报告以来名称或地址有所更改，请注明前名称或前地址）
不适用
(如自上次报告以来发生变更的前名称或前地址及前财政年度， )
在法案第12(b)条的规定下注册的证券：
| 每种类别的证券 | 交易代码 | 名称为每个注册的交易所: |
| The |
请在检查标记旁边选择以下方框：（1）在过去12个月内（或对于注册人要求提交此等报告的较短期间），是否已根据1934年证券交易法第13或15（d）节的规定提交了所有已提交的报告，并（2）在过去90天内是否已受到此等报告提交要求的约束。
请勾选以下项目以获取准确信息：
是否已通过电子提交每个交互式数据文件，该文件根据Regulation S-T第405条规定必须提交（在本章第232.405节规定）在过去12个月内或在注册人被要求提交此类文件的较短期间内提交；
请用勾号指示注册申报人是大型加速文件提交者、加速文件提交者、非加速文件提交者、较小的报告公司还是新兴成长公司。请参阅《交易所法》第120亿.2条中“大型加速文件提交者”、“加速文件提交者”、“较小的报告公司”和“新兴成长公司”的定义：
| 大型加速提交者 ☐ | ☐ 加速报告人 |
| 小型报告公司 | |
| 新兴成长型企业 |
如果是新兴成长型公司，请勾选此项，以说明注册公司是否选择不使用符合《证交法》第13(a)条规定，即符合任何新的或修改后的财务会计准则的延长过渡期的方法进行合规性遵循。 ☐
请用复选标记表示注册者是否为壳公司（如《交易所法》第120亿.2条规定）。是 ☐ 否
截至2024年11月7日，注册人的普通股已发行股数为每股面值为0.0001美元。 .
SONOMA PHARMACEUTICALS，INC。
指数
| 第一部分 - 财务信息 | ||
| 项目1。 | 未经审计的基本财务报表 | 3 |
| 汇编的综合资产负债表 | 3 | |
| 压缩综合损失陈述 | 4 | |
| 简明的综合现金流量表 | 5 | |
| 董事股东权益变动简明合并财务报表 | 6 | |
| 简明合并财务报表注释 | 7 | |
| 事项二 | 分销计划 | 16 |
| 第3项。 | 有关市场风险的定量和定性披露 | 27 |
| 事项4。 | 控制和程序 | 27 |
| 第二部分-其他信息 | ||
| 项目1。 | 法律诉讼 | 29 |
| 项目1A。 | 风险因素 | 29 |
| 事项二 | 未注册的股票股权销售和筹款用途 | 29 |
| 第3项。 | 对优先证券的违约 | 29 |
| 事项4。 | 矿山安全披露 （不适用。） | 29 |
| 项目5。 | 其他信息 | 29 |
| 项目6。 | 展示资料 | 30 |
| 签名 | 3 | |
| 2 |
第一部分 - 财务信息
| 项目1。 | 基本报表 |
sonoma pharmaceuticals, INC.及其子公司
汇编的综合资产负债表
（单位：千元，股份数量除外）
九月三十日, 2024 | 3月31号 2024 | |||||||
| (未经审计) | ||||||||
| 资产 | ||||||||
| 流动资产： | ||||||||
| 现金及现金等价物 | $ | $ | ||||||
| 2,687,823 | ||||||||
| 净存货 | ||||||||
| 预付费用和其他流动资产 | ||||||||
| Current portion of deferred consideration, net of discount | ||||||||
| 总流动资产 | ||||||||
| 资产和设备，净值 | ||||||||
| 经营租赁权益资产 | ||||||||
| 递延税款资产 | ||||||||
| 延期支付款项，减去折扣，扣除当前部分 | ||||||||
| 其他 | ||||||||
| 资产总额 | $ | $ | ||||||
| 负债和股东权益 | ||||||||
| 流动负债: | ||||||||
| 应付账款 | $ | $ | ||||||
| 应计费用及其他流动负债 | ||||||||
| 递延收入，当期部分 | ||||||||
| 短期债务 | ||||||||
| 经营租赁负债，当前部分 | ||||||||
| 流动负债合计 | ||||||||
| 递延收入，减去当前部分净额 | ||||||||
| 应交预提所得税 | ||||||||
| 租赁负债，除去当前部分 | ||||||||
| 负债合计 | ||||||||
| 委托和担保（注5） | ||||||||
| 股东权益： | ||||||||
| 可转换优先股，每股面值$每股面值; 在2024年9月30日和2024年3月31日分别核准的股份 在2024年9月30日和2024年3月31日分别发行和流通的股份 | ||||||||
| 普通股，每股面值为 $0.0001；每股面值; 和 在2024年9月30日和2024年3月31日分别核准的股份 和 于2024年9月30日和2024年3月31日分别发行并流通股数（附注1）（附注7） | ||||||||
| 额外实收资本 | ||||||||
| 累积赤字 | ( | ) | ( | ) | ||||
| 累计其他综合损失 | ( | ) | ( | ) | ||||
| 股东权益总额 | ||||||||
| 负债和股东权益总额 | $ | $ | ||||||
附注是这些未经审计的基本报表的一部分。
| 3 |
sonoma pharmaceuticals, INC.及其子公司
简明合并综合损失表
2024年4月27日
(未经审计)
三个月已结束 九月三十日 | 六个月已结束 九月三十日 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 收入 | $ | $ | $ | $ | ||||||||||||
| 收入成本 | ||||||||||||||||
| 毛利润 | ||||||||||||||||
| 运营费用 | ||||||||||||||||
| 研究和开发 | ||||||||||||||||
| 销售、一般和管理 | ||||||||||||||||
| 运营费用总额 | ||||||||||||||||
| 运营损失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他收入（支出），净额 | ( | ) | ( | ) | ||||||||||||
| 所得税前运营亏损 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 所得税支出 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 净亏损 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 每股净亏损：基本亏损和摊薄亏损 | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| 加权平均股数：基本股和摊薄股票 | ||||||||||||||||
| 其他综合损失 | ||||||||||||||||
| 净亏损 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 外币折算调整 | ( | ) | ( | ) | ( | ) | ||||||||||
| 综合损失 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
附注是这些未经审计的基本报表的一部分。
| 4 |
sonoma pharmaceuticals, INC.及其子公司
简明的综合现金流量表
（以千为单位）
(未经审计)
| 销售额最高的六个月 | ||||||||
| 九月三十日, | ||||||||
| 2024 | 2023 | |||||||
| 经营活动现金流量： | ||||||||
| 净损失 | $ | ( | ) | $ | ( | ) | ||
| 调整为净损失到经营活动现金流量净使用： | ||||||||
| 折旧和摊销 | ||||||||
| 股票补偿 | ||||||||
| 延迟所得税 | ||||||||
| 经营性资产和负债变动: | ||||||||
| 2,687,823 | ( | ) | ||||||
| 净存货 | ( | ) | ||||||
| 预付费用和其他流动资产 | ||||||||
| 递延考虑 | ||||||||
| 营业租赁，使用权资产。 | ||||||||
| 应付账款 | ||||||||
| 应计费用及其他流动负债 | ( | ) | ||||||
| 递延收入 | ( | ) | ( | ) | ||||
| 应交预提所得税 | ||||||||
| 经营租赁负债 | ( | ) | ( | ) | ||||
| 经营活动使用的净现金流量 | ( | ) | ( | ) | ||||
| 投资活动现金流量： | ||||||||
| 购买固定资产 | ( | ) | ( | ) | ||||
| 投资活动产生的净现金流出 | ( | ) | ( | ) | ||||
| 筹集资金的现金流量： | ||||||||
| 普通股发行收入(费用)，减去发行费用 | ( | ) | ||||||
| 行使员工期权收到的款项 | ||||||||
| 支付与进行逆向分拆相关的碎股 | ( | ) | ||||||
| 短期债务本金偿还 | ( | ) | ( | ) | ||||
| 筹集资金的净现金流量 | ( | ) | ||||||
| 汇率对现金及现金等价物的影响 | ( | ) | ||||||
| 现金及现金等价物的净增加（减少） | ( | ) | ||||||
| 现金及现金等价物期初余额 | ||||||||
| 现金及现金等价物期末余额 | $ | $ | ||||||
| 现金流量补充披露： | ||||||||
| 支付的利息现金 | $ | $ | ||||||
附注是这些未经审计的基本报表的一部分。
| 5 |
sonoma pharmaceuticals, INC.及其子公司
综合变更股东权益表
截至2024年9月30日和2023年的六个月
（单位：千元，股份数量除外）
(未经审计)
| 普通股 （面值$0.0001） | 额外的 已付 | 累积的 | 累计其他综合收益 | |||||||||||||||||||||
| 股份 | 金额 | 资本 | $ | 损失 | 总计 | |||||||||||||||||||
| 2024 年 3 月 31 日余额 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| 普通股市场销售收入，减去发行费用 | ||||||||||||||||||||||||
| 员工股票期权行使收入 | ||||||||||||||||||||||||
| 员工股权补偿费用 | ||||||||||||||||||||||||
| 外币翻译调整 | – | ( | ) | ( | ) | |||||||||||||||||||
| 净损失 | – | ( | ) | ( | ) | |||||||||||||||||||
| 2024年6月30日结余 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| 来自市场售出普通股票的收益，减去发行费用 | ||||||||||||||||||||||||
| 来自员工股票期权行使的收益 | ||||||||||||||||||||||||
| 购买与公司股票倒数关系的碎股的付款 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| 员工股票激励支出 | – | |||||||||||||||||||||||
| 外币翻译调整 | – | ( | ) | ( | ) | |||||||||||||||||||
| 净损失 | – | ( | ) | ( | ) | |||||||||||||||||||
| 2024年9月30日余额 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| 普通股 （面值$0.0001） | 额外的 支付 中 | 累积的 | 累计其他综合收益 | |||||||||||||||||||||
| 股份 | 金额 | 资本 | $ | 损失 | 总计 | |||||||||||||||||||
| 2023年3月31日的结存 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| 与ATM相关的费用 | – | ( | ) | ( | ) | |||||||||||||||||||
| 员工股票为基础的补偿 费用 | ||||||||||||||||||||||||
| 外币翻译调整 | – | |||||||||||||||||||||||
| 净损失 | – | ( | ) | ( | ) | |||||||||||||||||||
| 2023年6月30日，余额 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| 员工股票激励 支出 | ||||||||||||||||||||||||
| 外币翻译调整 | – | ( | ) | ( | ) | |||||||||||||||||||
| 净损失 | – | ( | ) | ( | ) | |||||||||||||||||||
| 2023年9月30日余额 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
附注是这些未经审计的基本报表的一部分。
| 6 |
SONOMA PHARMACEUTICALS, INC. 及其附属公司
基本报表注记
（四舍五入至最接近的千位，除非有指定）
(未经查核)
| 备注1。 | 组织和最新发展 |
组织
Sonoma Pharmaceuticals, Inc.（以下简称「公司」）于1999年4月依据加利福尼亚州法律设立，并于2006年12月依德拉瓦州法律重新设立。公司在2020年6月将总部从加利福尼亚州的Petaluma迁至乔治亚州的Woodstock，并于2022年10月迁至科罗拉多州的Boulder。公司是一家全球医疗保健领导者，专门开发和生产稳定次氯酸（HOCl）产品，适用于包括伤口护理、眼部、口腔和鼻腔护理、皮肤状况、足病学、动物医疗保健以及作为无毒消毒剂在内的广泛应用。公司的产品经临床证实，可安全减轻瘙痒、疼痛、疤痕和刺激，并且不会损伤健康组织。HOCl的体外和临床研究显示它可安全管理皮肤磨损、擦伤、轻微刺激、割伤和完整皮肤。公司在全球55个国家直接销售产品，或通过合作伙伴销售。
股票合并倒数
截至2024年8月29日生效，该公司实施了一项普通股逆向股票合并，每20股普通股被重新分类并合并成1股普通股。由于逆向股票合并，未发行任何碎股。相反，每股碎股都以现金解决。
报告基础
附带的未经查核的简明综合基本报表已按照美国通过的会计准则（“GAAP”）为中期基本报表准备，并采用证券交易委员会（“SEC”）在Form 10-Q和Regulation S-X的第10-01条规定的形式呈现。附带的简明综合基本报表反映了为了公允陈述公司财务状况、营运成果和现金流量所需的所有调整，包括一切正常和经常性调整。所有重要的公司内部帐目和交易在合并中已予以剔除。附带的简明综合基本报表应与2024年3月31日结束的年度合并基本报表和附注一同阅读，这些内容包含在公司于2024年6月17日向SEC提交的Form 10-K年度报告中。
| 7 |
| 附注2。 | 流动性和财务状况 |
公司报告该季度的净亏损为$
管理层相信公司可以透过可能的公开或私人股权募集、债务融资、企业合作或其他方式获得额外的资本资源；然而，公司无法保证其他新的融资若需要时将以商业上可接受的条件提供。如果美国的经济情况恶化，公司筹集额外资本的能力可能会受到负面影响。如果公司无法取得额外资本，可能需要采取额外措施降低成本，以便保留足够维持运营并履行债务的现金。这些措施可能导致公司继续努力商业化产品的努力遭遇重大延迟，这对于实现其业务计划和公司未来运营至关重要。由于这种不确定性以及公司过去的亏损历史表明，关于公司的能力在财务报表发布后一年内继续作为一个持续关注的主题存在重大怀疑。附带的简明综合财务报表不包括可能会需要的任何调整，倘若公司无法继续维持营运作为一个持续关注的主题。
| 注意事项3。 | 重要会计政策摘要 |
估计的使用
根据GAAP的要求，依从管理层需就综合财务基本报表进行折叠的准备工作，并给出影响资产和负债金额以及披露财务报表日期、收入和费用金额的估计和假设。实际结果可能与这些估计有所不同。重要的估计和假设包括与应收款项和存货有关的储备和减损、公司递延税资产相关的扣备、股权估值以及从客户收到的首期产品许可费的预估摊销期限。公司定期评估并相应调整估计。
公司通过将每股可供普通股股东的净损除以期间内普通股平均流通股数来计算基本每股净损，并排除任何具潜在稀释效应的证券的影响。如有，摊薄每股收益将包括将所有具有潜在稀释效应的证券通过「库存股」和/或「如果换算」方法转化为普通股时将发生的稀释。
以下表格提供了每个期间的净亏损，以及基本和稀释每股净损的计算：
三个月结束了 九月三十日， | 六个月结束 九月三十日， | |||||||||||||||
| (以千为单位，除每股数据外) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| 分子: | ||||||||||||||||
| 净损失 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 分母: | ||||||||||||||||
| 基本和稀释后的普通股权重平均数：基本和稀释 | ||||||||||||||||
| 每股净损：基本和稀释 | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| 8 |
截至2024年9月30日和2023年，三个月和六个月基本每股亏损的计算不包括下表中总结的具潜在发挥性的证券，因为若包括这些证券将是反稀释性的。
三个月结束了 九月三十日， | 六个月结束 九月三十日， | |||||||||||||||
| (以千为单位) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| 加权平均行使价 | ||||||||||||||||
| 认股证 | ||||||||||||||||
| 普通股单位（1） | ||||||||||||||||
| (1) |
营收认证
公司根据《会计标准裁定》（“ASC”）第606号主题《与客户合同的营业收入（“主题606”）》来确认营业收入。当公司将承诺的商品或服务转交给客户时，将确认营业收入，金额应反映公司期待为那些商品或服务而收到的交换。在确定要确认的收入金额时，当公司履行协议下的义务时，公司执行以下步骤：（i）识别合同中承诺的商品或服务；（ii）确定承诺的商品或服务是否履行义务，包括在合同环境中它们是否是独立的；（iii）测量交易价格，包括变量收入的限制；（iv）将交易价格分配给履行义务；和（v）当（或在）公司满足每个履行义务时确认营业收入。公司仅在可能收取应得的对价以交换为客户转让的商品或服务时，将五步骤模型应用于合同。
该公司主要通过向最终用户和分销商直接销售产品来获得大部分的营业收入。该公司还向包括医院、医疗中心、医生、药房、分销商和批发商在内的客户群体销售产品。该公司还已经达成协议，将其科技和产品进行许可。
公司考虑客户购买订单，在某些情况下可能受主要销售协议约束，视为与客户之间的合同。对于每份合同，公司认为承诺转移产品，每个都是不同的，被视为确定的履约义务。在判断交易价格时，公司评估价格是否应退款或调整，以确定净考虑的金额，预期自己有权获得。
对于所有公司对非寄售分销渠道的销售，当产品的控制转移给客户时（即当履行义务时），即认定为营业收入，通常在货物转交客户时，即货物所有权转移给客户时发生，但根据与客户协议的条款，货物送达客户时也可能发生。对于产品销售给增值再销商、非存货分销商和最终用户客户，公司向客户提供退换货特权，由于公司与客户有著长期的合作历史，公司能够估计将被退回的产品数量。
公司已进入寄售安排，其中商品存留在另一方手中以供销售。随著产品从客户转售给第三方，公司根据固定价格的变量百分比确认营业收入。根据保险是否涵盖病人，公司确认的收入有所不同。此外，公司可能因使用公司的折扣计划而产生营业收入扣除。
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与分销商进行的销售是根据固定价格和有限退货权（即所谓的“库存轮换”）的条款进行的，公司产品存货中的营业收入。对分销商的销售收入在将控制权转移给分销商时确认。
公司评估新客户的信用资格，并监控现有客户的信用资格，以判断是否有事件或其财务状况的变化会对在销售时收款的可收回性产生疑虑。销售的付款条件通常为30至90天。
公司对与Invekra签订的技术支援合同中承诺的商品和服务进行评估，认为在十年期间，这是Invekra可以单独受惠的独立服务，并可分辨地与合同内的其他承诺有所区分。鉴于独立服务并非与Invekra合同内的其他商品和服务基本相同，公司将其视为履约义务。
应收帐款
应收帐款交易记录已扣减允许的现金折扣、有疑虑的帐款和销售退货的零头。对现金折扣和销售退货的估计是基于合约条款和历史趋势的分析。
本公司的政策是保留不可领取的
根据其现有应收帐款中可能的信贷损失金额最佳估计的账户。本公司定期
根据过期的分析，审查其应收帐款，以判断是否需要支付有疑帐款的津贴
账户和其他可能表明账户实现可能存在疑问的因素。公司考虑的其他因素
包括其现有合约义务、客户的历史付款模式和个别客户情况，分析
按客户和地理地区划分的最佳销售日数，以及对当地经济环境及其潜在影响的回顾
政府资助和补偿措施。被视为不可追收的账户余额在一切情况下将被扣除至津贴
收集数量已耗尽，恢复潜力被视为远程。本公司认为没有必要记录
对于二零二四年九月三十日及二零二四年三月三十一日的可能信贷损失的可疑帐目的津贴。此外，在九月三十日，
2024 年及二零二四年三月三十一日，公司拥有美元的津贴
Inventories
Inventories are stated at the lower of cost, cost being determined on a standard cost basis (which approximates actual cost on a first-in, first-out basis), or net realizable value.
Due to changing market conditions, estimated future
requirements, age of the inventories on hand and production of new products, the Company regularly reviews inventory quantities on hand
and records a provision to write down excess and obsolete inventory to its estimated net realizable value. At September 30, 2024 and March
31, 2024, the Company recorded provisions to reduce the carrying amounts of inventories to their net realizable value in the amounts of
$
Recent Accounting Standards
Accounting standards that have been issued or proposed by the FASB, the SEC or other standard setting bodies that do not require adoption until a future date are not expected to have a material impact on the condensed consolidated financial statements upon adoption.
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| Note 4. | Condensed Consolidated Balance Sheet |
Inventories, net
Inventories, net consist of the following:
| September 30, | March 31, | |||||||
| 2024 | 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Inventories, gross | ||||||||
| Less: allowance for obsolete and excess inventory | ( | ) | ( | ) | ||||
| Total inventories, net | $ | $ | ||||||
Leases
The Company’s operating leases are comprised primarily of facility leases. Balance sheet information related to the Company’s leases is presented below:
| September 30, | March 31, | |||||||
| 2024 | 2024 | |||||||
| Operating leases: | ||||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Operating lease liabilities – current | ||||||||
| Operating lease liabilities – non-current | ||||||||
Other information related to leases is presented below:
| Six Months Ended September 30, 2024 | ||||
| Operating lease cost | $ | |||
| Other information: | ||||
| Operating cash flows from operating leases | ( | ) | ||
| Weighted-average remaining lease term – operating leases (in months) | ||||
| Weighted-average discount rate – operating leases | ||||
As of September 30, 2024, the annual minimum lease payments of our operating lease liabilities were as follows:
| For Years Ending March 31, | ||||
| 2025 (excluding the six months ended September 30, 2024) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total future minimum lease payments, undiscounted | ||||
| Less: imputed interest | ( | ) | ||
| Present value of future minimum lease payments | $ | |||
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| Note 5. | Commitments and Contingencies |
Legal Matters
The Company may be involved in legal matters arising in the ordinary course of business including matters involving proprietary technology from time to time. While management believes that such matters are currently insignificant, matters arising in the ordinary course of business for which the Company is or could become involved in litigation may have a material adverse effect on its business and financial condition of comprehensive loss.
Employment Matters
The Company has employment agreements in place with two of its key executives. These executive employment agreements provide, among other things, for the payment of up to eighteen months of severance compensation for terminations under certain circumstances.
As of September 30, 2024, with respect to these agreements,
aggregated annual salaries was $
| Note 6. | Debt |
Financing of Insurance Premiums
On February 6, 2024, the Company entered into a note
agreement for $
| Note 7. | Stockholders’ Equity |
Authorized Capital
Effective August 29, 2024, the Company increased its authorized shares from to shares of common stock with a par value of $ per share. Additionally, the Company is authorized to issue shares of convertible preferred stock with a par value of $ per share.
Sale of Common Stock
In connection with the Equity Distribution Agreement
that the Company entered into on December 15, 2023 with Maxim Group LLC (“Maxim”), as amended, from May 13, 2024 to September
18, 2024 the Company sold shares of its common stock for gross proceeds of $
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| Note 8. | Stock-Based Compensation |
For the three months ended September 30, 2024 and 2023, the Company incurred $ and $ of stock-based compensation expense, respectively. For the six months ended September 30, 2024 and 2023, the Company incurred $ and $ of stock-based compensation expense, respectively. All stock-based compensation incurred is included in selling, general and administrative expense in the accompanying condensed consolidated statements of comprehensive loss.
At September 30, 2024, there was unrecognized compensation costs of $ related to stock options which is expected to be recognized over a weighted-average amortization period of years.
Stock options award activity is as follows:
| Number of Shares | Weighted- Average Exercise Price | |||||||
| Outstanding at April 1, 2024 | $ | |||||||
| Options exercised | ( | ) | ||||||
| Options forfeited | ( | ) | ||||||
| Options expired | ( | ) | ||||||
| Outstanding at September 30, 2024 | $ | |||||||
| Exercisable at September 30, 2024 | $ | |||||||
The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the underlying stock options and the fair value of the Company’s common stock, or $ per share at September 30, 2024.
Restricted stock award activity is as follows:
Number of Shares | Weighted Average Award Date Fair Value per Share | |||||||
| Unvested restricted stock awards outstanding at April 1, 2024 | $ | |||||||
| Restricted stock awards granted | ||||||||
| Restricted stock awards vested | ( | ) | ||||||
| Unvested restricted stock awards outstanding at September 30, 2024 | $ | |||||||
The Company issues new shares of common stock upon exercise of stock options or release of restricted stock awards.
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| Note 9. | Income Taxes |
At the end of each interim reporting period, the Company determines the income tax provision by using an estimate of the annual effective tax rate, adjusted for discrete items occurring in the quarter.
Our effective tax rate for the three and six months
ended September 30, 2024 was (
Judgment is required in determining whether deferred tax assets will be realized in full or in part. Management assesses the available positive and negative evidence on a jurisdictional basis to estimate if deferred tax assets will be recognized and when it is more likely than not that all or some deferred tax assets will not be realized, and a valuation allowance must be established. As of September 30, 2024, the Company continues to maintain a valuation allowance in the U.S.
| Note 10. | Revenue Disaggregation |
The Company generates product revenues from products which are sold into the human and animal healthcare markets, and the Company generates service revenues from laboratory testing services which are provided to medical device manufacturers.
The following table presents the Company’s disaggregated revenues by revenue source:
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Human Care | $ | $ | $ | $ | ||||||||||||
| Animal Care | ||||||||||||||||
| Service and Royalty | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
The following table shows the Company’s revenues by geographic region:
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||
| Europe | ||||||||||||||||
| Asia | ||||||||||||||||
| Latin America | ||||||||||||||||
| Rest of the World | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
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| Note 11. | Significant Customer Concentrations |
The following table shows major customers revenues as a percentage of net revenue:
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Customer A | *% | *% | ||||||||||||||
| Customer B | ||||||||||||||||
| Customer C | ||||||||||||||||
| Customer D | *% | *% | *% | |||||||||||||
The following table shows major customers accounts receivable balances as a percentage of net accounts receivables:
| September 30, | ||||||||
| 2024 | 2023 | |||||||
| Customer A | ||||||||
| Customer C | ||||||||
| Customer D | ||||||||
| * |
| Note 12. | Subsequent Events |
Management has evaluated subsequent events or transactions occurring through the date the condensed consolidated financial statements were issued. The Company does not have subsequent events to report.
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q as of September 30, 2024 and our audited consolidated financial statements for the year ended March 31, 2024 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on June 17, 2024.
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this report, the words “anticipate,” “suggest,” “estimate,” “plan,” “aim,” “seek,” “project,” “continue,” “ongoing,” “potential,” “expect,” “predict,” “believe,” “intend,” “may,” “will,” “should,” “could,” “would,” “likely,” “proposal,” and similar expressions are intended to identify forward-looking statements.
Forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to the risks described in our Annual Report on Form 10-K including: our ability to become profitable; our dependence on third-party distributors; certain tax impacts of inter-company loans between us and our Mexican subsidiary; the progress and timing of our development programs and regulatory approvals for our products; the benefits and effectiveness of our products; the ability of our products to meet existing or future regulatory standards; the progress and timing of clinical trials and physician studies; our expectations and capabilities relating to the sales and marketing of our current products and our product candidates; our ability to compete with other companies that are developing or selling products that are competitive with our products; the establishment of strategic partnerships for the development or sale of products; the risk our research and development efforts do not lead to new products; the timing of commercializing our products; our ability to penetrate markets through our sales force, distribution network, and strategic business partners to gain a foothold in the market and generate attractive margins; the ability to attain specified revenue goals within a specified time frame, if at all, or to reduce costs; the outcome of discussions with the U.S. Food and Drug Administration, or FDA, and other regulatory agencies; the content and timing of submissions to, and decisions made by, the FDA and other regulatory agencies, including demonstrating to the satisfaction of the FDA the safety and efficacy of our products; our ability to manufacture sufficient amounts of our products for commercialization activities; our ability to protect our intellectual property and operate our business without infringing on the intellectual property of others; our ability to continue to expand our intellectual property portfolio; the risk we may need to indemnify our distributors or other third parties; risks attendant with conducting a significant portion of our business outside the United States; our ability to comply with complex federal and state fraud and abuse laws, including state and federal anti-kickback laws; risks associated with changes to health care laws; our ability to attract and retain qualified directors, officers and employees; our expectations relating to the concentration of our revenue from international sales; our ability to expand to and commercialize products in markets outside the wound care market; our ability to protect our information technology and infrastructure; and the impact of any future changes in accounting regulations or practices in general with respect to public companies. These forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as required by law.
Our Business
We are a global healthcare leader for developing and producing stabilized hypochlorous acid, or HOCl, products for a wide range of applications, including wound care, eye care, oral care, dermatological conditions, podiatry, animal health care and non-toxic disinfectants. Our products are clinically proven to reduce itch, pain, scarring, and irritation safely and without damaging healthy tissue. In-vitro and clinical studies of HOCl show it to safely manage skin abrasions, lacerations, minor irritations, cuts, and intact skin. We sell our products either directly or via partners in 55 countries worldwide.
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Business Channels
Our core market differentiation is based on being the leading developer and producer of stabilized hypochlorous acid, or HOCl, solutions. We have been in business for over 20 years, and in that time, we have developed significant scientific knowledge of how best to develop and manufacture HOCl products backed by decades of studies and data collection. HOCl is known to be among the safest and most-effective ways to relieve itch, inflammation and burns while stimulating natural healing through increased oxygenation and eliminating persistent microorganisms and biofilms.
We sell our products into many markets both in the U.S. and internationally. In international markets, we ship a variety of products to 55 countries. Our core strategy is to work with partners both in the United States and around the world to market and distribute our products. In some cases, we market and sell our own products.
Dermatology
We have developed unique, differentiated, prescription-strength and safe dermatologic products that support paths to healing among various key dermatologic conditions. Our products are primarily targeted at the treatment of redness and irritation, the management of scars and symptoms of eczema/atopic dermatitis. We are strategically focused on introducing innovative new products that are supported by human clinical data with applications that address specific dermatological procedures currently in demand. In addition, we look for markets where we can provide effective product line extensions and pricing to new product families.
In the United States, we sell our prescription and office dispense dermatology products through a distributor, including Epicyn® Facial Cleanser, Levicyn® Antimicrobial Dermal Spray, Levicyn® Gel, Levicyn® Spray Gel, Celacyn® Scar Management Gel, Lasercyn® Dermal Spray and Lasercyn Gel®.
In October 2022, we launched two new over-the-counter dermatology products in the United States, Reliefacyn® Advanced Itch-Burn-Rash-Pain Relief Hydrogel for the alleviation of red bumps, rashes, shallow skin fissures, peeling, and symptoms of eczema/atopic dermatitis, and Rejuvacyn® Advanced Skin Repair Cooling Mist for management of minor skin irritations following cosmetic procedures as well as daily skin health and hydration.
In June 2022, the Natural Products Association certified Rejuvacyn Advanced as a Natural Personal Care Product. Reliefacyn Advanced received the National Eczema Association Seal of AcceptanceTM in 2023.
In January 2023, we launched a line of office dispense products exclusively for skin care professionals, including two new prescription strength dermatology products, Reliefacyn Plus Advanced Itch-Burn-Rash-Pain Relief Hydrogel and Rejuvacyn Plus Skin Repair Cooling Mist. These products, along with Regenacyn Plus Scar Gel, are marketed and sold directly to dermatology practices and medical spas.
In January 2024, we launched LumacynTM Clarifying Mist, a direct-to-consumer skin care product in the United States. Lumacyn is an all-natural daily toner to soothe skin, reduce redness and irritation, and manage blemishes by reducing infection.
Our consumer products are available through Amazon.com, our online store and third-party distributors.
We sell dermatology products in Europe and Asia through distributors. In these international markets, we have a network of partners, ranging from country specific distributors to large pharmaceutical companies to full-service sales and marketing companies. We work with our international partners to create products they can market in their home country. Some products we develop and manufacture are custom label while others use branding we have already developed. We have created or co-developed a wide range of products for international markets using our core HOCl technology.
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First Aid and Wound Care
Our HOCl-based wound care products are intended for the treatment of acute and chronic wounds as well as first- and second-degree burns, and as an intraoperative irrigation treatment. They work by first removing foreign material and debris from the skin surface and moistening the skin, thereby improving wound healing. Secondly, our HOCl products assist in the wound healing process by removing microorganisms. HOCl is an important constituent of our innate immune system, formed and released by the macrophages during phagocytosis. Highly organized cell structures such as human tissue can tolerate the action of our wound care solution while single-celled microorganisms cannot, making our products advantageous to other wound-irrigation and antiseptic solutions. Due to its unique chemistry, our wound treatment solution is also much more stable than similar products on the market and therefore maintains much higher levels of hypochlorous acid over its shelf life.
In the United States, we sell our wound care products directly to hospitals, physicians, nurses, and other healthcare practitioners and indirectly through non-exclusive distribution arrangements. In Europe, the Middle East and Asia, we sell our wound care products through a diverse network of distributors.
In March 2021, we received approval to market and use our HOCl products as biocides under Article 95 of the European Biocidal Products Regulation in France, Germany and Portugal. The approval applies to our products MucoClyns™ for human hygiene to be marketed and commercialized by us, MicrocynAH® for animal heath marketed and commercialized through our partner, Petagon Limited, and MicroSafe for disinfectant use to be marketed and commercialized through our partner, MicroSafe Group DMCC.
In June 2022, the Natural Products Association certified Microcyn OTC as a Natural Personal Care Product in the United States.
In June 2023, we announced a new application of our HOCl technology for intraoperative pulse lavage irrigation treatment, which can replace commonly used IV bags in a variety of surgical procedures. The intraoperative pulse lavage container is designed to be used in combination with a pulse lavage irrigation device, or flush gun, for abdominal, laparoscopic, orthopedic, and periprosthetic procedures. It is in trial use by hospitals in Europe and launched in the U.S. in November 2023.
In April 2024, we announced expansion of our Microcyn Negative Pressure Wound Therapy Solution products line, now available in 250mL, 450mL and 990mL sizes to meet the diverse needs of healthcare professionals and patients.
In July 2024, we announced an expansion of our distributor base in Europe through a new partnership with Smart Healthcare Company (SHC) s.r.o. for the distribution of Microdacyn60® wound care products into Ukraine.
In August, 2024, we entered into a distribution agreement with Medline Industries, LP, for the marketing and distribution of our wound care products in the United States. The agreement is for an initial term of five years, subject to automatic one-year renewal periods. In October 2024, we entered into an amendment to the agreement which allows Medline to also sell our wound care products in Canada, as well as to sell additional over-the-counter wound care products to retailers in both countries.
Eye Care
In September 2021, we launched Ocucyn® Eyelid & Eyelash Cleanser, which is sold directly to consumers on Amazon.com, through our online store, and through third party distributors. Ocucyn Eyelid & Eyelash Cleanser, designed for everyday use, is a safe, gentle, and effective solution for good eyelid and eyelash hygiene.
Our prescription product Acuicyn® Eyelid & Eyelash Cleanser is a prescription solution for symptoms of blepharitis and the daily hygiene of eyelids and lashes and helps manage red, itchy, crusty and inflamed eyes. It is strong enough to kill the bacteria that causes discomfort, fast enough to provide near instant relief, and gentle enough to use as often as needed.
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In international markets we rely on distribution partners to sell our eye products. In May 2020, we entered into an expanded license and distribution agreement with our existing partner, Brill International S.L., for our Microdacyn60® Eye Care HOCl-based product. Under the license and distribution agreement, Brill has the right to market and distribute our eye care product under the private label Ocudox in Italy, Germany, Spain, Portugal, France, and the United Kingdom for a period of 10 years, subject to meeting annual minimum sales quantities. In return, Brill paid us a one-time fee, and the agreed upon supply prices. In parts of Asia, Dyamed Biotech markets our eye product under the private label Ocucyn.
Oral, Dental and Nasal Care
We sell a variety of oral, dental, and nasal products around the world.
In international markets, our product Microdacyn60 Oral Care treats mouth and throat infections and thrush. Microdacyn60 assists in reducing inflammation and pain, provides soothing cough relief and does not contain any harmful chemicals. It does not stain teeth, is non-irritating, non-sensitizing, has no contraindications and is ready for use with no mixing or dilution.
Our international nasal care product Sinudox™ based on our HOCl technology is an electrolyzed solution intended for nasal irrigation. Sinudox clears and cleans stuffy, runny noses and blocked or inflamed sinuses by ancillary ingredients that may have a local antimicrobial effect. Sinudox is currently sold through Amazon in Europe. In other parts of the world, we partner with distributors to sell Sinudox.
Podiatry
Our HOCl-based wound care products are also indicated for the treatment of diabetic foot ulcers. In the United States, we sell our wound care products directly to podiatrists as well as hospitals, nurses, and other healthcare practitioners and indirectly through non-exclusive distribution arrangements. In Europe, we sell our wound care products for podiatric use through a diverse network of distributors.
In April 2023, we launched PodiacynTM Advanced Everyday Foot Care direct to consumers for over-the-counter use in the United States, intended for management of foot odors, infections, and irritations, as well as daily foot health and hygiene. Podiacyn is available through Amazon.com, our online store and third-party distributors.
Animal Health Care
MicrocynAH® is an HOCl-based topical product that cleans, debrides and treats a wide spectrum of animal wounds and infections. It is intended for the safe and rapid treatment of a variety of animal afflictions including cuts, burns, lacerations, rashes, hot spots, rain rot, post-surgical sites, pink eye symptoms and wounds to the outer ear.
For our animal health products sold in the U.S. and Canada, we partner with Compana Pet Brands. Compana distributes non-prescription products to national pet-store retail chains and farm animal specialty stores, such as PetSmart, Tractor Supply, Cabela’s, PetExpress, Bass Pro Shops, and Menards. In August 2022, we announced the launch of a MicrocynVS® line of products exclusively for veterinarians for the management of wound, skin, ear and eye afflictions in all animal species.
For the Asian and European markets, in May 2019 we partnered with Petagon an international importer and distributor of quality pet food and products for an initial term of five years. We supply Petagon with all MicrocynAH products sold by Petagon. In August 2020, Petagon received a license from the People’s Republic of China for the import of veterinary drug products manufactured by us. This is the highest classification Petagon and Sonoma can receive for animal health products in China.
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Surface Disinfectants
Our HOCl technology has been formulated as a disinfectant and sanitizer solution for our partner MicroSafe and is sold in numerous countries. It is designed to be used to spray in aerosol format in areas and environments likely to serve as a breeding ground for the spread of infectious disease, which could result in epidemics or pandemics. The medical-grade surface disinfectant solution is used in hospitals worldwide to protect doctors and patients. In May 2020, Nanocyn® Disinfectant & Sanitizer received approval to be entered into the Australian Register of Therapeutic Goods, or ARTG for use against the coronavirus SARS-CoV-2, or COVID-19, and was also authorized in Canada for use against COVID-19. Nanocyn has also met the stringent environmental health and social/ethical criteria of Good Environmental Choice Australia, or GECA, becoming one of the very few eco-certified, all-natural disinfectant solutions in Australia.
Through our partner MicroSafe, we sell hard surface disinfectant products into Europe, the Middle East and Australia.
In July 2021, we granted MicroSafe the non-exclusive right to sell and distribute Nanocyn in the United States provided that MicroSafe secure U.S. EPA approval. In April of 2022, MicroSafe secured the EPA approval for Nanocyn® Disinfectant & Sanitizer, meaning that it can now be sold in the United States as a surface disinfectant, and it was subsequently added to the EPA’s list N for use against COVID-19. In June 2022, the EPA added Nanocyn to List Q as a disinfectant for Emerging Viral Pathogens, including Ebola virus, Mpox, and SARS-CoV-2, and in March 2023 the EPA added Nanocyn to Lists G and H, for use against Methicillin Resistant Staphylococcus Aureus (MRSA), Salmonella, Norovirus, Poliovirus, and as a fungicide. Nanocyn also received the Green Seal® Certification after surpassing a series of rigorous standards that measure environmental health, sustainability and product performance. Nanocyn is currently sold by MicroSafe in Europe, the Middle East and Australia.
In August 2024, we announced that the Australian TGA approved extended claims for Nanocyn for use against Candida auris (C. auris) and Clostritium Difficile (C. diff.) in ten minutes.
Additional Information
Investors and others should note that we announce material financial information using our company website (www.sonomapharma.com), our investor relations website (ir.sonomapharma.com), SEC filings, press releases, public conference calls and webcasts. The information on, or accessible through, our websites is not incorporated by reference in this Quarterly Report on Form 10-Q.
Results of Operations
Comparison of the Three Months Ended September 30, 2024 and 2023
Revenue
The following table shows our consolidated total revenue and revenue by geographic region for the three months ended September 30, 2024 and 2023:
Three Months Ended September 30, | ||||||||||||||||
| (In thousands) | 2024 | 2023 | $ Change | % Change | ||||||||||||
| United States | $ | 675 | $ | 590 | $ | 85 | 14% | |||||||||
| Europe | 1,506 | 1,201 | 305 | 25% | ||||||||||||
| Asia | 776 | 346 | 430 | 124% | ||||||||||||
| Latin America | 465 | 260 | 205 | 79% | ||||||||||||
| Rest of the World | 157 | 334 | (177 | ) | (53% | ) | ||||||||||
| Total | $ | 3,579 | $ | 2,731 | $ | 848 | 31% | |||||||||
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The increase in United States revenue of $85,000 for the three months ended September 30, 2024 was primarily due to increases in eye care and dermatology revenue.
The increase in Europe revenue for the three months ended September 30, 2024 of $305,000 was the result of a general increase in demand for our products.
The increase in Latin America revenue for the three months ended September 30, 2024 of $205,000 was primarily due to an increase in manufacturing orders.
The increase in Asia revenue of $430,000 for the three months ended September 30, 2024 was primarily due to timing of customer orders. The decrease in Rest of World revenue for the three months ended September 30, 2024 of $177,000 was primarily due to timing of customer orders. Revenues from these regions tend to be choppy when viewed on a quarterly basis due to customers placing larger, but less frequent, orders to benefit from quantity discounts and reduced shipping costs when ordering larger quantities.
Cost of Revenue and Gross Profit
The cost of revenue and gross profit metrics for the three months ended September 30, 2024 and 2023 are as follows:
Three Months Ended September 30, | ||||||||||||||||
| (In thousands, except for percentages) | 2024 | 2023 | $ Change | % Change | ||||||||||||
| Cost of Revenues | $ | 2,218 | $ | 1,741 | $ | 477 | 27% | |||||||||
| Cost of Revenue as a % of Revenues | 62% | 64% | ||||||||||||||
| Gross Profit | $ | 1,361 | $ | 990 | $ | 371 | 37% | |||||||||
| Gross Profit as a % of Revenues | 38% | 36% | ||||||||||||||
The increase in gross profit of $371,000 for the three months ended September 30, 2024 was primarily due to an increase in revenue as compared to the prior period.
Research and Development Expense
The research and development expense metrics for the three months ended September 30, 2024 and 2023 are as follows:
Three Months Ended September 30, | ||||||||||||||||
| (In thousands, except for percentages) | 2024 | 2023 | $ Change | % Change | ||||||||||||
| Research and Development Expense | $ | 506 | $ | 536 | $ | (30 | ) | (6% | ) | |||||||
| Research and Development Expense as a % of Revenues | 14% | 20% | ||||||||||||||
Decreases in research and development expenses for the three months ended September 30, 2024 of $30,000 was primarily due to the timing of product development and regulatory efforts.
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Selling, General and Administrative Expense
The selling, general and administrative expense metrics for the three months ended September 30, 2024 and 2023 are as follows:
Three Months Ended September 30, | ||||||||||||||||
| (In thousands, except for percentages) | 2024 | 2023 | Change | % Change | ||||||||||||
| Selling, General and Administrative Expense | $ | 1,705 | $ | 1,662 | $ | 43 | 3% | |||||||||
| Selling, General and Administrative Expense as a % of Revenues | 48% | 61% | ||||||||||||||
The increase in selling, general and administrative expenses for the three months ended September 30, 2024 of $43,000 was the result of fluctuations in timing of corporate spending.
Other Income (Expense), net
Other income (expense), net for the three months ended September 30, 2024 was $387,000 compared to other income (expense), net of $(90,000) for the three months ended September 30, 2023. The change in other income (expense), net primarily relates to exchange rate fluctuations.
Income Tax Expense
Income tax expense for the three months ended September 30, 2024 and 2023 was $147,000 and $186,000, respectively. The expense for each period is primarily related to the use of our deferred tax asset in Mexico and, to a lesser extent, our deferred tax asset in Netherlands.
Net Loss
The following table provides the net loss for each period along with the computation of basic and diluted net loss per share:
| Three Months Ended September 30, | ||||||||
| (In thousands, except per share data) | 2024 | 2023 | ||||||
| Net loss | $ | (610 | ) | $ | (1,484 | ) | ||
| Weighted-average shares outstanding: basic and diluted | 1,034 | 258 | ||||||
| Net loss per share: basic and diluted | $ | (0.59 | ) | $ | (5.75 | ) | ||
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Comparison of the Six Months Ended September 30, 2024 and 2023
Revenue
The following table shows our consolidated total revenue and revenue by geographic region for the six months ended September 30, 2024 and 2023:
Six Months Ended September 30, | ||||||||||||||||
| (In thousands) | 2024 | 2023 | $ Change | % Change | ||||||||||||
| United States | $ | 1,317 | $ | 1,396 | $ | (79 | ) | (6% | ) | |||||||
| Europe | 2,794 | 2,271 | 523 | 23% | ||||||||||||
| Asia | 1,253 | 1,208 | 45 | 4% | ||||||||||||
| Latin America | 1,345 | 747 | 598 | 80% | ||||||||||||
| Rest of the World | 261 | 536 | (275 | ) | (51% | ) | ||||||||||
| Total | $ | 6,970 | $ | 6,158 | $ | 812 | 13% | |||||||||
The decrease in United States revenue of $79,000 for the six months ended September 30, 2024 was primarily the result of fluctuations in timing of orders of over-the-counter animal health care products.
The increase in Europe revenue for the six months ended September 30, 2024 of $523,000 was the result of a general increase in demand for our products.
The increase in Latin America revenue for the six months ended September 30, 2024 of $598,000 was primarily due to an increase in manufacturing orders.
The increase in Asia revenue of $45,000 for the six months ended September 30, 2024 was primarily due to timing of customer orders. The decrease in Rest of World revenue for the six months ended September 30, 2024 of $275,000 was primarily due to timing of customer orders. Revenues from these regions tend to be choppy when viewed on a quarterly basis due to customers placing larger, but less frequent, orders to benefit from quantity discounts and reduced shipping costs when ordering larger quantities.
Cost of Revenue and Gross Profit
The cost of revenue and gross profit metrics for the six months ended September 30, 2024 and 2023 are as follows:
Six Months Ended September 30, | ||||||||||||||||
| (In thousands, except for percentages) | 2024 | 2023 | $ Change | % Change | ||||||||||||
| Cost of Revenues | $ | 4,303 | $ | 3,964 | $ | 339 | 9% | |||||||||
| Cost of Revenue as a % of Revenues | 62% | 64% | ||||||||||||||
| Gross Profit | $ | 2,667 | $ | 2,194 | $ | 473 | 22% | |||||||||
| Gross Profit as a % of Revenues | 38% | 36% | ||||||||||||||
The increase in gross profit of $473,000 for the six months ended September 30, 2024 was primarily due to an increase in revenue, overall product mix, volume as compared to the prior period and transportation in the prior period.
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Research and Development Expense
The research and development expense metrics for the six months ended September 30, 2024 and 2023 are as follows:
Six Months Ended September 30, | ||||||||||||||||
| (In thousands, except for percentages) | 2024 | 2023 | $ Change | % Change | ||||||||||||
| Research and Development Expense | $ | 976 | $ | 861 | $ | 115 | 13% | |||||||||
| Research and Development Expense as a % of Revenues | 14% | 14% | ||||||||||||||
Increases in research and development expenses for the six months ended September 30, 2024 of $115,000 was primarily due to increased product development and expanded regulatory efforts in the U.S. and Europe to support new product releases and increases in regulatory demands in Europe.
Selling, General and Administrative Expense
The selling, general and administrative expense metrics for the six months ended September 30, 2024 and 2023 are as follows:
Six Months Ended September 30, | ||||||||||||||||
| (In thousands, except for percentages) | 2024 | 2023 | Change | % Change | ||||||||||||
| Selling, General and Administrative Expense | $ | 3,714 | $ | 3,781 | $ | (67 | ) | (2% | ) | |||||||
| Selling, General and Administrative Expense as a % of Revenues | 53% | 61% | ||||||||||||||
The decline in selling, general and administrative expenses for the six months ended September 30, 2024 of $67,000 was the result of ongoing efforts to contain expenses across all parts of the company.
Other Income (Expense), net
Other income (expense), net for the six months ended September 30, 2024 was $563,000 compared to other income (expense), net of $(301,000) for the six months ended September 30, 2023. The change in other income (expense), net primarily relates to exchange rate fluctuations.
Income Tax Expense
Income tax expense for the six months ended September 30, 2024 and 2023 was $293,000 and $153,000, respectively. The expense for each period is primarily related to the use of our deferred tax asset in Mexico and, to a lesser extent, our deferred tax asset in Netherlands.
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Net Loss
The following table provides the net loss for each period along with the computation of basic and diluted net loss per share:
| Six Months Ended September 30, | ||||||||
| (In thousands, except per share data) | 2024 | 2023 | ||||||
| Net loss | $ | (1,753 | ) | $ | (2,902 | ) | ||
| Weighted-average shares outstanding: basic and diluted | 943 | 253 | ||||||
| Net loss per share: basic and diluted | $ | (1.86 | ) | $ | (11.47 | ) | ||
Liquidity and Capital Resources
We reported a net loss of $610,000 and $1,484,000 for the three months ended September 30, 2024 and 2023, respectively, and $1,753,000 and $2,902,000 for the six months ended September 30, 2024 and 2023, respectively. At September 30, 2024 and March 31, 2024, our accumulated deficit amounted to $196,102,000 and $194,349,000, respectively. At September 30, 2024 and March 31, 2024, we had cash and cash equivalents of $4,078,000 and $3,128,000, respectively. At September 30, 2024 and March 31, 2024, we had working capital of $8,912,000 and $8,829,000, respectively.
Sources of Liquidity
Since our inception, substantially all of our operations have been financed through sales of equity securities. Other sources of financing that we have used to date include our revenues, as well as various loans and the sale of certain assets to customers.
Since October 1, 2023, substantially all of our operations have been financed through cash on hand and the following transactions:
| · | Proceeds of $1,446,000, net of offering expenses, from the sale of common stock on October 26, 2023. | |
| · | Proceeds of $343,000, net of offering expenses, from the sale of common stock on January 11, 2024. | |
| · | Proceeds of $2,289,000, net of offering expenses, from the sale of common stock in the six months ended September 30, 2024. |
Cash Flows
The following table presents a summary of our consolidated cash flows for operating, investing and financing activities for the six months ended September 30, 2024 and 2023 as well balances of cash and cash equivalents and working capital:
| Six Months Ended September 30, | ||||||||
| (In thousands) | 2024 | 2023 | ||||||
| Net cash provided by (used in): | ||||||||
| Operating activities | $ | (558 | ) | $ | (1,446 | ) | ||
| Investing activities | (31 | ) | (19 | ) | ||||
| Financing activities | 2,080 | (264 | ) | |||||
| Effect of exchange rates on cash | (541 | ) | 46 | |||||
| Net change in cash and cash equivalents | 950 | (1,683 | ) | |||||
| Cash and cash equivalents, beginning of the period | 3,128 | 3,820 | ||||||
| Cash and cash equivalents, end of the period | $ | 4,078 | $ | 2,137 | ||||
| Working capital (1), end of period | $ | 8,912 | $ | 8,277 | ||||
| (1) | Defined as current assets minus current liabilities. |
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Net cash used in operating activities during the six months ended September 30, 2024 was $558,000, primarily due to a net loss of $1,753,000 offset by decrease in prepaid expenses of $1,134,000.
Net cash used in operating activities during the six months ended September 30, 2023 was $1,446,000, primarily due to a net loss of $2,902,000, offset by a decrease in accounts receivables of $375,000, a decrease in inventory of $403,000 and stock compensation of $307,000.
Net cash used in investing activities was $31,000 for six months ended September 30, 2024, primarily related to the purchase of equipment.
Net cash used in investing activities was $19,000 for the six months ended September 30, 2023, primarily related to purchases of equipment.
Net cash provided by financing activities was $2,080,000 for the six months ended September 30, 2024, primarily due to net proceeds from the sale of common stock of $2,289,000 offset by $241,000 of principal payments on a short-term loan related to financing of insurance premiums.
Net cash used in financing activities was $264,000 for the six months ended September 30, 2023, primarily due to principal payments on short-term debt.
Material Trends and Uncertainties
We rely on certain key customers for a significant portion of our revenues. In the future, a small number of customers may continue to represent a significant portion of our total revenues in any given period. These customers may not consistently purchase our products at a particular rate over any subsequent period.
We are exposed to risk from foreign currency devaluation for both the Mexico Peso and the Euro versus the US dollar. Risk related to foreign currency valuation tends to be unpredictable and can be affected by various factors outside of our control.
We face a substantial Mexico tax liability, intercompany debt, unpaid technical assistance charges and accrued interest. These amounts are due in 2027. At this time, management believes there are sufficient assets on the balance sheet to more than cover any tax obligation without interrupting our operations or business. We have engaged tax professionals to review all options to limit our exposure to these amounts and to proceed in a manner that is most advantageous to us.
We also closely monitor overall economic conditions and consumer sentiment and the prospect of a recession in the United States which may impact our financial results.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. Significant estimates and assumptions include reserves and write-downs related to receivables and inventories, the valuation allowance relating to our deferred tax assets, valuation of equity and the estimated amortization periods of upfront product licensing fees received from customers. Periodically, we evaluate and adjust estimates accordingly.
Off-Balance Sheet Transactions
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.
| Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of our most recent fiscal quarter. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2024 due to the fact that material weaknesses in our internal controls over financial reporting exist at period end.
Notwithstanding our ineffective disclosure controls and procedures, management believes the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. generally accepted accounting principles.
Evaluation of Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rule 13a-15(f) and 15d-15(f). Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in the 2013 Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation, our management concluded that our internal control over financial reporting was not effective as of September 30, 2024. We determined that there was a lack of separation of duties with preparation and review of the reported numbers, among other things. We believe we have taken steps to correct this, but the controls are currently being tested and have not been working for a sufficient period of time to remove this weakness.
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Management’s Remediation Measures
Management, with oversight from the Audit Committee of our Board of Directors, is actively engaged in remediation efforts to address the material weaknesses identified in the management’s evaluation of internal controls and procedures. Management has taken a number of actions to remediate the material weaknesses described above, including the following:
| · | Improved monitoring and risk assessment activities to address these control deficiencies. | |
| · | Hired an experienced Chief Financial Officer and Controller in 2023. | |
| · | Separated the preparation of the financial reports from review of the financial reports. | |
| · | Developed and delivered further internal controls training to individuals associated with these control deficiencies and enhanced training provided to all personnel who have financial reporting or internal control responsibilities in these areas. The training includes a review of individual roles and responsibilities related to internal controls, proper oversight and reemphasizes the importance of completing the control procedures. |
These improvements are targeted at strengthening our internal control over financial reporting and remediating the material weaknesses. We remain committed to an effective internal control environment, and management believes that these actions and the improvements management expects to achieve as a result will effectively remediate the material weaknesses. However, the material weaknesses in our internal control over financial reporting will not be considered remediated until the controls operate for a sufficient period of time and management has concluded, through testing that these controls operate effectively. As of the date of filing this Quarterly Report on Form 10-Q, management is in the process of testing and evaluating these additional controls to determine whether they are operating effectively. We have hired appropriate accounting staff to establish effective internal controls and processes.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not finished testing our controls and sufficient time has not elapsed to make the determination these controls are operating effectively.
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PART II - OTHER INFORMATION
| Item 1. | Legal Proceedings |
On occasion, we may be involved in legal matters arising in the ordinary course of our business including matters involving proprietary technology. While management believes that such matters are currently insignificant, matters arising in the ordinary course of business for which we are or could become involved in litigation may have a material adverse effect on our business, financial condition or results of comprehensive loss.
| Item 1A. | Risk Factors |
There have been no material changes from risk factors previously disclosed in our annual report on Form 10-K for the fiscal year ended March 31, 2024, as filed with the SEC June 17, 2024.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
We did not issue any unregistered securities during the quarter ended September 30, 2024 and through November 7, 2024.
| Item 3. | Default Upon Senior Securities |
We did not default upon any senior securities during the quarter ended September 30, 2024.
| Item 4. | Mine Safety Disclosures |
Not applicable.
| Item 5. | Other Information |
During the quarter ended September 30, 2024, no director
or officer
Amendment to Code of Business Conduct
On November 5, 2024, our Board of Directors adopted changes to our Code of Business Conduct (the “Code”). The Code governs the conduct of all our employees, directors and officers, including our management. The changes to the Code were made to update the Code to current best practices. In addition to some clerical changes, the Code now explicitly reflects the definition of “code of ethics” in Item 406 of Regulation S-K. The Code also updates reporting procedures, including updates to our anonymous reporting hotline. No waivers have been granted under the Code to date.
A copy of the Code of Business Conduct of Sonoma Pharmaceuticals, Inc., as adopted by the Board of Directors on November 5, 2024, is filed as Exhibit 14.1 to this Quarterly Report on Form 10-Q.
Bonus Award to Executive Vice President and Chief Operating Officer
On November 5, 2024, the Compensation Committee of our Board of Directors approved a one-time cash bonus of $7,500 to Bruce Thornton, Executive Vice President and Chief Operating Officer of the Company, for contributions in obtaining a new 510(k) clearance for the Company’s products.
Approval of Tax Gross-Up
On June 16, 2023, the Compensation Committee approved an equity award of 100,000 shares of the Company’s common stock to each of Ms. Trombly and Mr. Thornton, to be issued on June 30, 2023, at a valuation based on the five day weighted-average stock price on the date of grant. In addition, the Compensation Committee approved a one-time cash payment by the Company as reimbursement for estimated taxes payable with respect to such equity awards. On November 5, 2024, the Compensation Committee approved an additional tax payment in the amount of $8,411 to of Ms. Trombly and $10,925 to Mr. Thornton to make up a deficiency in the prior reimbursement.
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| Item 6. | Exhibits |
Exhibit Index
| Exhibit No. | Description |
| 3.1 | Restated Certificate of Incorporation of Oculus Innovative Sciences, Inc., effective January 30, 2006 (included as exhibit 3.1 of the Company’s Annual Report on Form 10-K filed June 20, 2007, and incorporated herein by reference). |
| 3.2 | Certificate of Amendment of Restated Certificate of Incorporation of Oculus Innovative Sciences, Inc., effective October 22, 2008 (included as exhibit A in the Company’s Definitive Proxy Statement on Schedule 14A filed July 21, 2008, and incorporated herein by reference). |
| 3.4 | Certificate of Amendment of Restated Certificate of Incorporation of Oculus Innovative Sciences, Inc., as amended, effective March 29, 2013 (included as exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 22, 2013, and incorporated herein by reference). |
| 3.5 | Certificate of Amendment of Restated Certificate of Incorporation of Oculus Innovative Sciences, Inc., as amended, effective December 4, 2014 (included as exhibit 3.1 to the Company’s Current Report on Form 8-K filed December 8, 2014, and incorporated herein by reference). |
| 3.6 | Certificate of Amendment of Restated Certificate of Incorporation of Oculus Innovative Sciences, Inc., as amended, effective October 22, 2015 (included as exhibit 3.1 to the Company’s Current Report on Form 8-K filed October 27, 2015, and incorporated herein by reference). |
| 3.7 | Certificate of Amendment of Restated Certificate of Incorporation of Oculus Innovative Sciences, Inc., as amended, effective June 24, 2016 (included as exhibit 3.1 to the Company’s Current Report on Form 8-K filed June 28, 2016, and incorporated herein by reference). |
| 3.8 | Certificate of Amendment of Restated Certificate of Incorporation of Sonoma Pharmaceuticals, Inc., as amended, effective December 6, 2016 (included as exhibit 3.1 to the Company’s Current Report on Form 8-K filed December 7, 2016, and incorporated herein by reference). |
| 3.9 | Amended and Restated Bylaws, as amended, of Sonoma Pharmaceuticals, Inc., effective December 6, 2016 (included as exhibit 3.2 to the Company’s Current Report on Form 8-K filed December 7, 2016, and incorporated herein by reference). |
| 3.10 | Amendment No. 1 to Amended and Restated Bylaws, as amended, of Sonoma Pharmaceuticals, Inc., effective June 14, 2024 (included as exhibit 3.10 to the Company’s Annual Report on Form 10-K filed June 17, 2024, and incorporated herein by reference). |
| 3.11 | Certificate of Designation of Preferences, Rights and Limitations of Series A 0% Convertible Preferred Stock, filed with the Delaware Secretary of State on April 24, 2012 (included as exhibit 4.2 to the Company’s Current Report on Form 8-K, filed April 25, 2012, and incorporated herein by reference). |
| 3.12 | Certificate of Designation of Series B Preferred Stock, effective October 18, 2016 (included as exhibit 3.1 to the Company’s Current Report on Form 8-K filed October 21, 2016, and incorporated herein by references). |
| 3.13 | Certificate of Amendment of Restated Certificate of Incorporation of Sonoma Pharmaceuticals, Inc., as amended, effective June 19, 2019 (included as exhibit 3.1 to the Company’s Current Report on Form 8-K filed June 19, 2019, and incorporated herein by reference). |
| 4.1 | Specimen Common Stock Certificate (included as exhibit 4.1 to the Company’s Annual Report on Form 10-K filed June 28, 2017, and incorporated herein by reference). |
| 4.2 | Section 382 Rights Agreement, dated as of October 18, 2016, between Oculus Innovative Sciences, Inc. and Computershare Inc., which includes the Form of Certificate of Designation of Series B Preferred Stock as Exhibit A, the Form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Stock as Exhibit C (included as exhibit 4.1 to the Company’s Current Report on Form 8-K filed October 21, 2016, and incorporated herein by reference). |
| 10.1 | Form of Indemnification Agreement between Oculus Innovative Sciences, Inc. and its officers and directors (included as exhibit 10.1 to the Company’s Registration Statement on Form S-1 (File No. 333-135584), as amended, declared effective on January 24, 2007, and incorporated herein by reference). |
| 10.2 | Office Lease Agreement, dated May 18, 2006, between Oculus Technologies of Mexico, S.A. de C.V. and Antonio Sergio Arturo Fernandez Valenzuela (translated from Spanish) (included as exhibit 10.10 to the Company’s Registration Statement on Form S-1 (File No. 333-135584), as amended, declared effective on January 24, 2007, and incorporated herein by reference). |
| 10.3 | Office Lease Agreement, dated July 2003, between Oculus Innovative Sciences, B.V. and Artikona Holding B.V. (translated from Dutch) (included as exhibit 10.11 to the Company’s Registration Statement on Form S-1 (File No. 333-135584), as amended, declared effective on January 24, 2007, and incorporated herein by reference). |
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| 10.4 | Form of Director Agreement (included as exhibit 10.20 to the Company’s Registration Statement on Form S-1 (File No. 333-135584), as amended, declared effective on January 24, 2007, and incorporated herein by reference). |
| 10.5 | Amendment to Office Lease Agreement, effective February 15, 2008, by and between Oculus Innovative Sciences Netherlands B.V. and Artikona Holding B.V. (translated from Dutch) (included as exhibit 10.44 to the Company’s Annual Report on Form 10-K filed June 13, 2008, and incorporated herein by reference). |
| 10.6† | Exclusive Sales and Distribution Agreement, dated November 6, 2015, by and between Oculus Innovative Sciences, Inc. and Manna Pro Products, LLC (included as exhibit 10.1 to the Company’s 8-K filed March 23, 2016 and incorporated herein by reference). |
| 10.7† | Asset Purchase Agreement dated October 27, 2016, between Oculus Innovative Sciences, Inc. and Invekra, S.A.P.I de C.V. (included as exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 31, 2016, and incorporated herein by reference). |
| 10.8† | Amendment Agreement to Acquisition Option dated October 27, 2016, by and between More Pharma Corporation S. de R.L. de C.V. and Oculus Technologies of Mexico, S.A. de C.V. (included as exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 31, 2016, and incorporated herein by reference). |
| 10.9 | 2016 Equity Incentive Plan (included as exhibit A to the Company’s Definitive Proxy Statement on Schedule 14A filed July 29, 2016, and incorporated herein by reference). |
| 10.10⸸+ | Asset Purchase Agreement dated May 14, 2019, between Sonoma Pharmaceuticals, Inc. and Petagon, Ltd. (included as exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 22, 2019, and incorporated herein by reference). |
| 10.11⸸+ | Asset Purchase Agreement dated February 21, 2020, between Sonoma Pharmaceuticals, Inc. and MicroSafe Group, DMCC (included as exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 27, 2020, and incorporated herein by reference.) |
| 10.12⸸+ | License, Distribution and Supply Agreement by and between Sonoma Pharmaceuticals, Inc. and Brill International, S.L. dated May 19, 2020 (included as exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 26, 2020, and incorporated herein by reference.) |
| 10.13⸸ | Licensing Agreement between Sonoma Pharmaceuticals, Inc. and MicroSafe Group, effective July 27, 2020 (included as exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 6, 2020, and incorporated herein by reference). |
| 10.14⸸ | Exclusive Supply and Distribution Agreement between the Company and EMC Pharma, LLC, dated March 26, 2021 (included as exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 31, 2021, and incorporated herein by reference). |
| 10.15 | 2021 Equity Incentive Plan (included as appendix on the Company’s Definitive Proxy Statement on Schedule 14A filed July 29, 2021 and incorporated herein by reference). |
| 10.16+⸸ | Exclusive License and Distribution Agreement between the Company and Dyamed Biotech Pte Ltd., dated November 4, 2021 (included as exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 9, 2021, and incorporated herein by reference). |
| 10.17+⸸ | Exclusive License and Distribution Agreement between Sonoma Pharmaceuticals, Inc. and Anlicare International dated January 18, 2022 (included as exhibit 10.2 to the Company’s Current Report on Form 8-K filed January 20, 2022, and incorporated herein by reference). |
| 10.18 | Sonoma Pharmaceuticals, Inc. Non-Employee Director Compensation Program and Stock Ownership Guidelines, revised by the Board of Directors on December 29, 2022 (included as exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 30, 2022, and incorporated herein by reference). |
| 10.19 | Amended and Restated Employment Agreement by and between the Company and Amy Trombly, dated June 16, 2023 (included as exhibit 10.38 to the Company’s Annual Report on Form 10-K filed June 21, 2023, and incorporated herein by reference). |
| 10.20 | Amended and Restated Employment Agreement by and between the Company and Bruce Thornton, dated June 16, 2023 (included as exhibit 10.39 to the Company’s Annual Report on Form 10-K filed June 21, 2023, and incorporated herein by reference). |
| 10.21 | First Amendment to the Lease between the Company and Westland Development Services, Inc., dated June 21, 2023 (included as exhibit 10.38 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2023, and incorporated herein by reference). |
| 10.22 | Equity Distribution Agreement, by and between Sonoma Pharmaceuticals, Inc. and Maxim Group LLC, dated December 15, 2023 (included as exhibit 1.1 to the Company’s Current Report on Form 8-K filed December 15, 2023, and incorporated herein by reference). |
| 10.23 | Offer letter to Jerome Dvonch dated February 7, 2024 (included as exhibit 10.41 to the Company’s Quarterly Report on Form 10-Q filed February 8, 2024, and incorporated herein by reference). |
| 10.24 | Offer letter to John Dal Poggetto dated February 7, 2024 (included as exhibit 10.42 to the Company’s Quarterly Report on Form 10-Q filed February 8, 2024 and incorporated herein by reference). |
| 31 |
| 10.25 | Amendment No. 1 to Equity Distribution Agreement, by and between Sonoma Pharmaceuticals, Inc. and Maxim Group LLC., dated March 8, 2024 (included as exhibit 1.1 to the Company’s Current Report on Form 8-K filed March 8, 2024, and incorporated herein by reference). |
| 10.26⸸+ | Distribution Agreement, dated August 19, 2024, by and between Sonoma Pharmaceuticals, Inc. and Medline Industries, LP (included as exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 21, 2024, and incorporated herein by reference). |
| 10.27+ | Amendment No. 1 to Distribution Agreement, dated October 17, 2024, by and between Sonoma Pharmaceuticals, Inc. and Medline Industries, LP (included as exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 22, 2024, and incorporated herein by reference). |
| 14.1* | Code of Business Conduct, as revised and adopted on November 5, 2024. |
| 21.1 | List of Subsidiaries (included as exhibit 21.1 to the Company’s Annual Report on Form 10-K June 28, 2017, and incorporated herein by reference). |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1* | Certification of Officers pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted in inline XBRL, and included in exhibit 101). |
| * | Filed herewith. |
| † | Confidential treatment has been granted with respect to certain portions of this agreement. |
| ⸸ | Certain portions of the exhibit have been omitted to preserve the confidentiality of such information. The Company will furnish copies of any such information to the SEC upon request. |
| + | The schedules to the exhibit have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish copies of any such schedules to the SEC upon request. |
Copies of above exhibits not contained herein are available to any stockholder, upon payment of a reasonable per page fee, upon written request to: Chief Financial Officer, Sonoma Pharmaceuticals, Inc., 5445 Conestoga Court, Suite 150, Boulder, Colorado 80301.
| 32 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: November 7, 2024 | By: | /s/ Amy Trombly | |
|
Amy Trombly President and Chief Executive Officer, (Principal Executive Officer) |
|||
| Date: November 7, 2024 | By: | /s/ Jerome Dvonch | |
| Jerome Dvonch | |||
| Chief Financial Officer | |||
|
(Principal Financial and Principal Accounting Officer) |
| 33 |