Sonoma Pharmaceuticals, Inc.
For the period ended Mar 31, 2025. Filed Jun 17, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Jun 17, 2025
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-K
Period ended 2024-03-31; filed 2024-06-17.
0001683168-24-004275
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-03-31; filed 2025-06-17.
0001683168-25-004546
Item 7. 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 56 previous paragraphs and 54 current paragraphs.
29 unchanged; 17 reworded; 7 added; 10 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 7 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 (7)
Current report
The increase in Latin America revenue for the year ended March 31, 2025 of $1,236,000 was primarily due to an increase in manufacturing orders.
Current report
The gross profit margin of 38% for the year ended March 31, 2025 was consistent with the prior year.
Current report
Other Income (Expense), net
Current report
Other income (expense), net for the year ended March 31, 2025 was $803,000 compared to $(330,000) for the year ended March 31, 2024. The change in other income (expense), net primarily relates to exchange rate fluctuations and to a lesser extent income of $245,000 for employee retention credits approved from calendar year 2020. In fiscal 2026 we expect to recognize income of approximately $350,000 related to approved calendar year 2021 employee retention credits.
Current report
Income Tax (Expense) Benefit
Current report
Income tax (expense) benefit for the years ended March 31, 2025 and 2024 was $(550,000) and $196,000, 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, an increase in our deferred tax asset in Netherlands. The benefit for the prior year was related to our Mexico deferred tax asset.
Current report
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.
Removed paragraphs (10)
Previous report
The decrease in Latin America revenue for the year ended March 31, 2024 of $657,000 was primarily due to a one-time event in the prior year related to the sale of machinery to a customer. We recorded $750,000 of service revenue in the prior year in connection with this transaction.
Previous report
The increase in gross profit margin of $268,000 for the year ended March 31, 2024, as compared to the prior year, was primarily due to overall product mix, redeployment of labor to research and development projects in the current year and higher costs of materials and transportation in the prior year.
Previous report
Other Expense, net
Previous report
Other expense, net for the year ended March 31, 2024 was $330,000 compared to $614,000 for the year ended March 31, 2023. The changes in other expense, net primarily relate to exchange rate fluctuations.
Previous report
Income Tax Benefit
Previous report
Income tax benefit for the year ended March 31, 2024 and 2023 was $196,000 and $33,000, respectively. The increase is primarily related to the release of our valuation allowance on deferred tax assets in Europe.
Previous report
Net cash used in operating activities during the year ended March 31, 2023 was $6,152,000, primarily due to net loss of $5,151,000 and a decline in deferred revenue.
Previous report
We expect revenues to fluctuate and may incur losses in the foreseeable future and may need to raise additional capital to pursue our product development initiatives, to penetrate markets for the sale of our products and continue as a going concern. We cannot provide any assurances that we will be able to raise additional capital.
Previous report
We are exposed to risk from decline in foreign currency for both the Euro and the Mexico Peso versus the US dollar. Most recently there has been a sharp decline in the Euro versus the U.S. Dollar which has impacted our financial results.
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 (17)
Previous wording
On an ongoing basis, we evaluate our estimates and judgments. Areas in which we exercise significant judgment include, but are not necessarily limited to, our valuation of accounts receivable, inventory, income taxes, equity transactions (compensatory and financing) and contingencies.
Current wording
On an ongoing basis, we evaluate our estimates and judgments. Areas in which we exercise significant judgment include, but are not necessarily limited to, our valuation of accounts receivable, inventory, income taxes, and equity transactions (compensatory and financing).
Previous wording
The decrease in United States revenue of $370,000 for the year ended March 31, 2024, was primarily the result of fluctuations in over-the-counter animal health care sales.
Current wording
The decrease in United States revenue of $447,000 for the year ended March 31, 2025, was primarily the result of fluctuations in demand for over-the-counter animal health care products.
Previous wording
The increase in Europe revenue for the year ended March 31, 2024 of $730,000 was the result of a general increase in demand for our products and, more specifically, an increase in demand for our wound care products from our customer in Poland due to recent world events.
Current wording
The increase in Europe revenue for the year ended March 31, 2025 of $742,000 was the result of a general increase in demand for our products and, more specifically, an increase in demand for our wound care products due to recent world events.
Previous wording
The decrease in Asia revenue of $153,000 for the year ended March 31, 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 $19,000 for the year ended March 31, 2025 was primarily due to timing of customer orders.
Previous wording
The decrease in Rest of World revenue for the year ended March 31, 2024 of $87,000 was primarily due to timing of customer orders.
Current wording
The increase in Rest of World revenue for the year ended March 31, 2025 of $3,000 was primarily due to timing of customer orders.
Previous wording
Increases in research and development expenses for the year ended March 31, 2024 of $1,664,000 was primarily due to increased product development and expanded regulatory efforts in the U.S. and Europe to support new product releases.
Current wording
Decrease in research and development expenses for the year ended March 31, 2025 of $57,000 was primarily due to decreased product development expenses in the U.S. in the current period and decreased regulatory efforts in Europe following the successful transition to MDR.
Previous wording
The decline in selling, general and administrative expenses for the year ended March 31, 2024 of $1,265,000 was the result of ongoing efforts to contain expenses across all parts of the company.
Current wording
The decrease in selling, general and administrative expenses for the year ended March 31, 2025 of $214,000 was the result of ongoing efforts to contain expenses across all parts of the company.
Previous wording
We reported a net loss of $4,835,000 and $5,151,000 for the years ended March 31, 2024 and 2023, respectively. At March 31, 2024 and 2023, our accumulated deficit amounted to $194,349,000 and $189,514,000, respectively. As of March 31, 2024 and 2023, we had cash and cash equivalents of $3,128,000 and $3,820,000, respectively. 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.
Current wording
We reported a net loss of $3,457,000 and $4,835,000 for the years ended March 31, 2025 and 2024, respectively. At March 31, 2025 and 2024, our accumulated deficit amounted to $197,806,000 and $194,349,000, respectively. As of March 31, 2025 and 2024, we had cash and cash equivalents of $5,374,000 and $3,128,000, respectively. 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.
Previous wording
Since April 1, 2023, substantially all of our operations have been financed through cash on hand and the following transactions:
Current wording
Since April 1, 2024, substantially all of our operations have been financed through cash on hand and proceeds of $3,079,000, net of offering expenses, from the sale of common stock during the fiscal year ended March 31, 2025.
Previous wording
The following table presents a summary of our consolidated cash flows for operating, investing and financing activities for the years ended March 31, 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 years ended March 31, 2025 and 2024 as well as balances of cash and cash equivalents and working capital:
Previous wording
As of March 31, 2024 and 2023, we had cash and cash equivalents of $3,128,000 and $3,820,000, respectively.
Current wording
As of March 31, 2025 and 2024, we had cash and cash equivalents of $5,374,000 and $3,128,000, respectively.
Previous wording
Net cash used in investing activities for the year ended March 31, 2023 was $258,000, primarily related to the purchase of capital property and equipment.
Current wording
Net cash used in investing activities for the year ended March 31, 2025 was $80,000, primarily related to the purchase of capital property and equipment.
Previous wording
Net cash provided by financing activities for the year ended March 31, 2023 was $2,489,000 primarily related to proceeds of $2,868,000 from the sale of common stock, proceeds of $515,000 from short-term notes, offset by payments on our PPP loan and short-term notes.
Current wording
Net cash provided by financing activities for the year ended March 31, 2025 was $3,030,000, primarily related to proceeds of $3,079,000 from the sale of common stock.
Previous wording
Management believes that we have access to capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other means; however, we cannot provide any assurance that new financing will be available on commercially acceptable terms, if at all. If the economic climate in the U.S. deteriorates, our ability to raise additional capital could be negatively impacted. If we are unable to secure additional capital, we may be required to take additional measures to reduce costs in order to conserve our cash in amounts sufficient to sustain operations and meet our obligations. These measures could cause significant delays in our continued efforts to commercialize our products, which is critical to the realization of our business plan and our future operations. These matters raise substantial doubt about our ability to continue as a going concern.
Current wording
We believe that we have access to additional capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other means; however, we cannot provide any assurance that new financings will be available on commercially acceptable terms, if needed. If the economic climate in the U.S. deteriorates, our ability to raise additional capital could be negatively impacted. If we are unable to secure additional capital, we may be required to take additional measures to reduce costs in order to conserve our cash in amounts sufficient to sustain operations and meet our obligations. These measures could cause significant delays in our continued efforts to commercialize our products, which is critical to the realization of our plan and future operations. This uncertainty along with our history of losses indicates that there is substantial doubt about our ability to continue as a going concern within one year after the date that our financial statements are issued. The accompanying consolidated financial statements do not include any adjustments that may be necessary should we be unable to continue as a going concern.
Previous wording
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 the Company’s 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 the Company.
Current wording
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 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.
Previous wording
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.
Current wording
We also closely monitor global economic conditions, including the risk of economic downturn or recession, the prospect of new or increased tariffs, as well as overall consumer sentiment, any of which may impact our financial results.
Previous wording
The preparation of 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 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 recoverability of long-lived assets, the valuation allowance related to our deferred tax assets, valuation of equity and derivative instruments, debt discounts, valuation of investments and the estimated amortization periods of upfront product licensing fees received from customers.
Current wording
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 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 the Company’s deferred tax assets, and the valuation of equity.. Periodically, the Company evaluates and adjusts estimates accordingly.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Net cash used in operating activities during the year ended March 31, 2025 was $88,000, primarily due to our net loss of $3,457,000, offset by stock compensation of $224,000, a decrease in accounts receivable of $434,000, a decrease in prepaid expenses of $1,086,000 and an increase in accounts payable of $416,000.