Sonoma Pharmaceuticals Inc
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
SNOA$1.11+3.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001683168-24-005371
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001683168-24-007708
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 95 previous paragraphs and 113 current paragraphs.
70 unchanged; 18 reworded; 16 added; 6 removed; 1 previous and 9 current paragraphs rearranged.
Tables are not compared: 9 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
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®.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
Income Tax Expense
Current report
Comparison of the Six Months Ended September 30, 2024 and 2023
Current report
Revenue
Current report
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.
Current report
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.
Current report
Research and Development Expense
Current report
Selling, General and Administrative Expense
Current report
Other Income (Expense), net
Current report
Income Tax Expense
Removed paragraphs (6)
Previous report
In the United States, we partner with EMC Pharma, LLC to sell our prescription dermatology products. Pursuant to our March 2021 agreement with EMC Pharma, we manufacture products for EMC Pharma and EMC Pharma has the right to market, sell and distribute them to patients and customers for an initial term of five years, subject to meeting minimum purchase and other requirements.
Previous report
In September 2021, we launched a new over-the-counter product, Regenacyn® Advanced Scar Gel, which is clinically proven to improve the overall appearance of scars while reducing pain, itch and redness. On the same day, we launched Regenacyn Plus, a prescription-strength scar gel which is available as an office dispense product through physician offices.
Previous report
To respond to market demand for our HOCl technology-based products, we launched our first direct to consumer over-the-counter product in the United States in February 2021. Microcyn® OTC Wound and Skin Cleanser is formulated for home use without prescription to help manage and cleanse wounds, minor cuts, and burns, including sunburns and other skin irritations. Microcyn OTC is available without prescription through Amazon.com, our online store and third-party distributors.
Previous report
Income Tax (Expense) Benefit
Previous report
The following table provides the net loss for each period along with the computation of basic and diluted net loss per share:
Previous report
The effects of the recent pandemic continue to impact economies worldwide, and we are closely watching inflation, increased volatility within financial markets, shipping costs, supply chain issues and labor costs. Any impact to our business operations, customer demand and supply chain due to increased shipping costs may ultimately impact sales. We continue to evaluate our end-to-end supply chain and assess opportunities to refine the impact on sales. Currently, most of our customers pay for shipping expenses, including increased shipping costs, if any. We have not yet faced labor shortages however it is possible we may have difficulties retaining and finding qualified employees in a tight labor market in the future. Furthermore, overall inflation tendencies may put pressure on our product pricing and/or costs.
Reworded paragraphs (18)
Previous wording
Our prescription product Acuicyn™ is an antimicrobial prescription solution for the treatment 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. In the United States, our partner EMC Pharma sells Acuicyn through its distribution network.
Current wording
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.
Previous wording
The increase in Europe revenue for the three months ended June 30, 2024 of $218,000 was the result of a general increase in demand for our products.
Current wording
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.
Previous wording
The increase in Latin America revenue for the three months ended June 30, 2024 of $393,000 was primarily due to timing of customer orders for overflow manufacturing.
Current wording
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.
Previous wording
The decrease in Asia revenue of $385,000 for the three months ended June 30, 2024 was primarily due to timing of orders. Revenues from our international distributors tend to fluctuate from period to period due to customer placement of larger but less frequent orders to benefit from quantity discounts and reduced shipping costs.
Current wording
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.
Previous wording
Other income (expense), net for the three months ended June 30, 2024 was $176,000 compared to other income (expense), net of $(211,000) for the three months ended June 30, 2023. The change in other income (expense), net primarily relates to exchange rate fluctuations.
Current wording
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.
Previous wording
Income tax (expense) benefit for the three months ended June 30, 2024 and 2023 was $(146,000) and $33,000, respectively. The expense for the current year is primarily related to the use of our deferred tax asset in Mexico and, to a lesser extent, our deferred tax asset in Netherlands. The benefit for the prior year was related to our Mexico deferred tax asset.
Current wording
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.
Previous wording
The decrease in United States revenue of $164,000 for the three months ended June 30, 2024, was primarily the result of fluctuations in timing of orders of over-the-counter animal health care products.
Current wording
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.
Previous wording
The increase in gross profit of $102,000 for the three months ended June 30, 2024, as compared to the prior period, was primarily due to overall product mix, and higher costs of materials and transportation in the prior period.
Current wording
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.
Previous wording
Increases in research and development expenses for the three months ended June 30, 2024 of $145,000 was primarily due to increased product development and expanded regulatory efforts in the U.S. and Europe to support new product releases.
Current wording
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.
Previous wording
The decline in selling, general and administrative expenses for the three months ended June 30, 2024 of $110,000 was the result of ongoing efforts to contain expenses across all parts of the company.
Current wording
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.
Previous wording
We reported a net loss of $1,143,000 and $1,418,000 for the three months ended June 30, 2024 and June 30, 2023, respectively. At June 30, 2024 and March 31, 2024, our accumulated deficit amounted to $195,492,000 and $194,349,000, respectively. At June 30, 2024 and March 31, 2024, we had cash and cash equivalents of $2,589,000 and $3,128,000, respectively. At June 30, 2024 and March 31, 2024, we had working capital of $8,176,000 and $8,829,000, respectively.
Current wording
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.
Previous wording
The following table presents a summary of our consolidated cash flows for operating, investing and financing activities for the three months ended June 30, 2024 and 2023 as well balances of cash and cash equivalents and working capital:
Current wording
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:
Previous wording
Net cash used by operating activities during the three months ended June 30, 2024 was $912,000, primarily due to a net loss of $1,143,000 offset by stock related compensation expense of $107,000.
Current wording
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.
Previous wording
Net cash used by operating activities during the three months ended June 30, 2023 was $215,000, primarily due to a net loss of $1,418,000 offset by stock related compensation expense of $177,000, decrease in accounts receivable of $191,000, decrease in inventory of $230,000 and a combined increase in accounts payable and accrued liabilities of $394,000.
Current wording
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.
Previous wording
Net cash used in investing activities was $5,000 for three months ended June 30, 2024, primarily related to the purchase of equipment.
Current wording
Net cash used in investing activities was $31,000 for six months ended September 30, 2024, primarily related to the purchase of equipment.
Previous wording
Net cash used in investing activities was $17,000 for three months ended June 30, 2023, primarily related to the purchase of equipment.
Current wording
Net cash used in investing activities was $19,000 for the six months ended September 30, 2023, primarily related to purchases of equipment.
Previous wording
Net cash provided by financing activities was $636,000 for the three months ended June 30, 2024, primarily due to the sale of common stock of $748,000 offset by $119,000 of principal payments on a short-term loan related to financing of insurance premiums.
Current wording
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.
Previous wording
Net cash used in financing activities was $135,000 for the three months ended June 30, 2023, primarily related to principal payments on a short-term loan related to financing of insurance premiums.
Current wording
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.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
The following table shows our consolidated total revenue and revenue by geographic region for the six months ended September 30, 2024 and 2023:
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Cost of Revenue and Gross Profit
Current report — wording carried from elsewhere
The cost of revenue and gross profit metrics for the six months ended September 30, 2024 and 2023 are as follows:
Current report — wording carried from elsewhere
The research and development expense metrics for the six months ended September 30, 2024 and 2023 are as follows:
Current report — wording carried from elsewhere
The selling, general and administrative expense metrics for the six months ended September 30, 2024 and 2023 are as follows:
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The decrease in Rest of World revenue for the three months ended June 30, 2024 of $98,000 was primarily due to timing of customer orders.