Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2019 | Aug. 09, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Sonoma Pharmaceuticals, Inc. | |
Entity Central Index Key | 0001367083 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 1,329,726 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Interactive data current | Yes | |
Entity File Number | 001-33216 | |
Entity Incorporation State Country Code | DE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 4,284 | $ 3,689 |
Accounts receivable, net | 4,315 | 3,481 |
Inventories | 3,368 | 3,409 |
Prepaid expenses and other current assets | 1,641 | 1,694 |
Current portion of deferred consideration, net of discount | 226 | 223 |
Total current assets | 13,834 | 12,496 |
Operating lease right-of-use assets | 1,316 | 0 |
Property and equipment, net | 564 | 727 |
Deferred consideration, net of discount, less current portion | 1,081 | 1,103 |
Other assets | 123 | 122 |
Total assets | 16,918 | 14,448 |
Current liabilities: | ||
Accounts payable | 1,518 | 1,255 |
Accrued expenses and other current liabilities | 1,414 | 1,501 |
Deferred revenue | 228 | 47 |
Deferred revenue Invekra | 56 | 55 |
Operating lease liabilities | 438 | 0 |
Current portion of long-term debt | 211 | 322 |
Current portions of capital leases | 0 | 141 |
Common stock liability | 270 | 270 |
Total current liabilities | 4,135 | 3,591 |
Operating lease liabilities - non-current | 933 | 0 |
Long-term deferred revenue Invekra | 346 | 356 |
Long-term debt, less current portion | 0 | 12 |
Total liabilities | 5,414 | 3,959 |
Commitments and Contingencies (Note 6) | ||
Stockholders' Equity | ||
Convertible preferred stock, $0.0001 par value; 714,286 shares authorized at June 30, 2019 and March 31, 2019, respectively, 1.55 shares issued and outstanding at June 30, 2019 and March 31, 2019 | 0 | 0 |
Common stock, $0.0001 par value; 24,000,000 shares authorized at June 30, 2019 and March 31, 2019, 1,317,170 and 1,316,335 shares issued and outstanding at June 30, 2019 and March 31, 2019, respectively | 2 | 2 |
Additional paid-in capital | 184,366 | 184,074 |
Accumulated deficit | (168,582) | (169,238) |
Accumulated other comprehensive loss | (4,282) | (4,349) |
Total stockholders' equity | 11,504 | 10,489 |
Total liabilities and stockholders' equity | $ 16,918 | $ 14,448 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2019 | Mar. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Convertible preferred stock par value | $ 0.0001 | $ 0.0001 |
Convertible preferred stock shares authorized | 714,286 | 714,286 |
Convertible preferred stock shares issued | 2 | 0 |
Convertible preferred stock shares outstanding | 2 | 0 |
Common stock par value | $ .0001 | $ 0.0001 |
Common stock shares authorized | 24,000,000 | 12,000,000 |
Common stock shares issued | 1,317,170 | 1,316,335 |
Common stock shares outstanding | 1,317,170 | 1,316,335 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Total revenues | $ 4,711 | $ 4,369 |
Total cost of revenues | 2,344 | 2,638 |
Gross profit | 2,367 | 1,731 |
Operating expenses | ||
Research and development | 338 | 350 |
Selling, general and administrative | 3,759 | 4,933 |
Total operating expenses | 4,097 | 5,283 |
Loss from operations | (1,730) | (3,552) |
Interest expense | (10) | (12) |
Interest income | 42 | 55 |
Other income (expense), net | (59) | 51 |
Gain on sale of assets (Note 4) | 2,472 | 0 |
Net income (loss) | $ 715 | $ (3,458) |
Net income (loss) per share: basic | $ 0.54 | $ (4.99) |
Net income (loss) per share: diluted | $ 0.54 | $ (4.99) |
Weighted-average number of shares used in per share calculations: basic | 1,316 | 693 |
Weighted-average number of shares used in per share calculations: diluted | 1,336 | 693 |
Other comprehensive income (loss) | ||
Net income (loss) | $ 715 | $ (3,458) |
Foreign currency translation adjustments | 67 | (502) |
Comprehensive income (loss) | 782 | (3,960) |
Product [Member] | ||
Total revenues | 4,385 | 4,095 |
Total cost of revenues | 2,202 | 2,424 |
Service [Member] | ||
Total revenues | 326 | 274 |
Total cost of revenues | $ 142 | $ 214 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities | ||
Net income (loss) | $ 715 | $ (3,458) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 76 | 121 |
Stock-based compensation | 292 | 347 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (814) | (738) |
Inventories | 73 | 106 |
Deferred consideration | 35 | 0 |
Prepaid expenses and other current assets | 41 | 249 |
Operating lease right-of-use assets | 127 | 0 |
Accounts payable | 252 | 95 |
Accrued expenses and other current liabilities | (90) | 237 |
Operating lease liabilities | (132) | 0 |
Deferred revenue | 163 | (19) |
Net cash used in operating activities | 738 | (3,060) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (12) | (27) |
Deposits | 0 | 12 |
Net cash used in investing activities | (12) | (15) |
Cash flows from financing activities: | ||
Net proceeds from sale of common stock | 0 | 916 |
Principal payments on capital leases | (13) | (35) |
Principal payments on long-term debt | (123) | (87) |
Net cash (used in) provided by financing activities | (136) | 794 |
Effect of exchange rate on cash and cash equivalents | 5 | (100) |
Net decrease in cash and cash equivalents | 595 | (2,381) |
Cash and cash equivalents, beginning of period | 3,689 | 10,066 |
Cash and cash equivalents, end of period | 4,284 | 7,685 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 10 | $ 12 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Other Comprehensive Income / Loss | Total |
Beginning balance, shares at Mar. 31, 2018 | 685,747 | ||||
Beginning balance, value at Mar. 31, 2018 | $ 1,000 | $ 176,740,000 | $ (157,440,000) | $ (3,975,000) | $ 15,326,000 |
Issuance of common stock, net of commissions, expenses and other offering costs, shares | 27,240 | 916 | 916 | ||
Stock based compensation related to issuance of common stock restricted stock grants, shares | 1,764 | ||||
Stock based compensation related to issuance of common stock restricted stock grants, value | $ 45,000 | $ 45,000 | |||
Stock-based compensation expense, net of forfeitures | 302,000 | 302,000 | |||
Foreign currency translation adjustment | (502,000) | (502,000) | |||
Net income (loss) | (3,458,000) | (3,458,000) | |||
Ending balance, shares at Jun. 30, 2018 | 714,751 | ||||
Ending balance, value at Jun. 30, 2018 | $ 1,000 | 178,003,000 | (160,898,000) | (4,477,000) | 12,629,000 |
Beginning balance, shares at Mar. 31, 2019 | 1,316,335 | ||||
Beginning balance, value at Mar. 31, 2019 | $ 2,000 | 184,074,000 | (169,238,000) | (4,349,000) | 10,489,000 |
Cumulative adjustment resulting from adoption of ASU at Jun. 30, 2019 | (59,000) | (59,000) | |||
Stock based compensation related to issuance of common stock restricted stock grants, shares | 835 | ||||
Stock based compensation related to issuance of common stock restricted stock grants, value | 20,000 | 20,000 | |||
Stock-based compensation expense, net of forfeitures | 272,000 | 272,000 | |||
Foreign currency translation adjustment | 67,000 | 67,000 | |||
Net income (loss) | 715,000 | 715,000 | |||
Ending balance, shares at Jun. 30, 2019 | 1,317,170 | ||||
Ending balance, value at Jun. 30, 2019 | $ 2,000 | $ 184,366,000 | $ (168,582,000) | $ (4,282,000) | $ 11,504,000 |
1. Organization and Recent Deve
1. Organization and Recent Developments | 3 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Recent Developments | Note 1. Organization and Recent Developments Organization Sonoma Pharmaceuticals, Inc. (the “Company”) was incorporated under the laws of the State of California in April 1999 and was reincorporated under the laws of the State of Delaware in December 2006. The Company’s principal office is located in Petaluma, California. The Company is a specialty pharmaceutical company dedicated to identifying, developing and commercializing unique, differentiated therapies to patients living with chronic skin conditions. The Company believes its products, which are sold throughout the United States and internationally, have improved patient outcomes by treating and reducing certain skin diseases including acne, atopic dermatitis, scarring, infections, itch, pain and harmful inflammatory responses. Reverse Stock Split Effective June 19, 2019, the Company effected a reverse stock split of its common stock, par value $0.0001 per share. Every nine shares of common stock were reclassified and combined into one share of common stock. No fractional shares were issued as a result of the reverse stock split. Instead, each resulting fractional share of common stock was down to one whole share and each fractional share settled with cash. The reverse stock split reduced the number of shares of the Company’s common stock outstanding from 11,972,328 to 1,328,891. The total number of authorized shares of common stock was not proportionally decreased and the par value per share of the common stock continues to be $0.0001. All common shares and per share amounts contained in the condensed consolidated financial statements and accompanying footnotes have been retroactively adjusted to reflect a 1-for-9 reverse stock split. Basis of Presentation The accompanying unaudited condensed consolidated financial statements as of June 30, 2019 and for the three months then ended have been prepared in accordance with the accounting principles generally accepted in the United States of America for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. The condensed consolidated balance sheet as of June 30, 2019, the condensed consolidated statements of comprehensive income (loss) for the three months ended June 30, 2019 and 2018,the cash flows for the three months ended June 30, 2019 and 2018 are unaudited and condensed consolidated statement of stockholders’ equity for the three months ended June 30, 2019 and 2018 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the consolidated financial position, operating results and cash flows for the periods presented. The results for the three months ended June 30, 2019 are not necessarily indicative of results to be expected for the year ending March 31, 2020 or for any future interim period. The condensed consolidated balance sheet at March 31, 2019 has been derived from audited consolidated financial statements. These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended March 31, 2019, and notes thereto included in the Company’s annual report on Form 10-K, which was filed with the SEC on July 1, 2019. |
2. Liquidity and Financial Cond
2. Liquidity and Financial Condition | 3 Months Ended |
Jun. 30, 2019 | |
Liquidity And Financial Condition | |
Liquidity and Financial Condition | Note 2. Liquidity and Financial Condition The Company reported a net income of $715,000 for the three months ended June 30, 2019. At June 30, 2019 and March 31, 2019, the Company’s accumulated deficit amounted to $168,582,000 and $169,238,000, respectively. The Company had working capital of $9,699,000 and $8,905,000 as of June 30, 2019 and March 31, 2019, respectively. On May 20, 2019, the Company closed on an asset purchase agreement for the sale of certain animal health product rights and assets for the Asian and European markets to Petagon, Limited, an international importer and distributor of quality pet food and products. The purchase price for the assets was $2,700,000. The Company agreed that it will continue to supply products to Petagon for five years at certain agreed upon transfer prices. The sale involves certain Asian patents and trademarks and the exclusive right to distribute animal health care products in Asia and Europe. The Company expects to continue incurring losses for the foreseeable future and will need to raise additional capital to pursue its product development initiatives, to penetrate markets for the sale of its products and continue as a going concern. The Company cannot provide any assurances that it will be able to raise additional capital. Management believes that the Company has access to additional capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other means; however, the Company cannot provide any assurance that other new financings will be available on commercially acceptable terms, if needed. If the economic climate in the U.S. deteriorates, the Company’s ability to raise additional capital could be negatively impacted. If the Company is unable to secure additional capital, it may be required take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These measures could cause significant delays in the Company’s continued efforts to commercialize its products, which is critical to the realization of its business plan and the future operations of the Company. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. |
3. Summary of Significant Accou
3. Summary of Significant Accounting Policies | 3 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Use of Estimates The preparation of condensed 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 recoverability of long-lived assets, the valuation allowance relating to the Company’s deferred tax assets, valuation of equity and derivative instruments, fair value allocation of assets sold to Invekra, Petagon and the estimated amortization periods of upfront product licensing fees received from customers. Periodically, the Company evaluates and adjusts estimates accordingly. Net Loss per Share The Company computes basic net loss per share by dividing net loss per share available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. Three Months Ended June 30, 2019 2018 Numerator: Net income (loss) $ 715,000 $ (3,458,000 ) Denominator: Weighted-average number of common shares outstanding: basic 1,316,000 693,000 Restricted stock units 3,000 – Conversion of Series C 17,000 – Weighted-average number of common shares outstanding: diluted 1,336,000 693,000 Net income (loss) per share: basic $ 0.54 $ (4.99 ) Net income (loss) per share: diluted $ 0.54 $ (4.99 ) The computation of basic loss per share for the three months ended June 30, 2019 and 2018 excludes the potentially dilutive securities summarized in the table below because their inclusion would be anti-dilutive. June 30, 2019 2018 Common stock to be issued upon vesting of restricted stock units – 4,000 Common stock to be issued upon exercise of options 155,000 155,000 Common stock to be issued upon exercise of warrants 446,000 153,000 Common stock to be issued upon exercise of common stock units (1) 46,000 – 647,000 312,000 (1) Consists of 30,668 restricted stock units and warrants to purchase 15,332 shares of common stock Revenue Recognition On April 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers Topic 606” (“Topic 606”) using the modified retrospective method. There was no impact to the Company upon the adoption of Topic 606. Revenue is recognized when the entity transfers promised goods or services to the customer, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under the agreement, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. The Company derives the majority of its revenue sales of its products to a customer base including hospitals, medical centers, doctors, pharmacies, distributors and wholesalers. The Company sells products directly to end users and to distributors. The Company also has entered into agreements to license its technology and products. The Company also provides regulatory compliance testing and quality assurance services to medical device and pharmaceutical companies. The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which it expects to be entitled. For all of its sales to non-consignment distribution channels, revenue is recognized when control of the product is transferred to the customer (i.e. when our performance obligation is satisfied), which typically occurs when title passes to the customer upon shipment but could occur when the customer receives the product based on the terms of the agreement with the customer. For product sales to its value-added resellers, non-stocking distributors and end-user customers, the Company grants return privileges to its customers and the Company has a long history with its customers and is able to estimate the amount of product that will be returned. Sales incentives and other programs that the Company may make available to these customers are considered to be a form of variable consideration and the Company maintains estimated accruals and allowances using the expected value method. The Company has entered into consignment arrangements in which goods are left in the possession of another party to sell. As products are sold from the customer to third parties, the Company recognizes revenue based on a variable percentage of a fixed price. Revenue recognized varies based on if a patient is covered by insurance or is not covered by insurance. In addition, the Company may incur a revenue deduction related to the use of the Company’s rebate program. Sales to stocking distributors are made under terms with fixed pricing and limited rights of return (known as “stock rotation”) of the Company’s products held in their inventory. Revenue from sales to distributors is recognized upon the transfer of control to the distributor. The Company assessed the promised goods and services in the technical support to Invekra for a ten-year period as being a distinct service that Invekra can benefit from on its own and is separately identifiable from any other promises within the contract. Given that the distinct service is not substantially the same as other goods and services within the Invekra contract, the Company accounted for the distinct service as a performance obligation. Revenue from testing contracts is recognized as tests are completed and a final report is sent to the customer. Disaggregation of Revenue The following table presents the Company’s disaggregated revenues by revenue source: Three Months Ended June 30, Product 2019 2018 Human Skin Care $ 3,962,000 $ 3,554,000 Animal Skin Care 423,000 541,000 4,385,000 4,095,000 Service 326,000 274,000 Total $ 4,711,000 $ 4,369,000 Accounts Receivable Trade accounts receivable are recorded net of allowances for cash discounts for prompt payment, doubtful accounts, and sales returns. Estimates for cash discounts and sales returns are based on analysis of contractual terms and historical trends. The Company’s policy is to reserve for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance for doubtful accounts is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Other factors that the Company considers include its existing contractual obligations, historical payment patterns of its customers and individual customer circumstances, an analysis of days sales outstanding by customer and geographic region, and a review of the local economic environment and its potential impact on government funding and reimbursement practices. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for doubtful accounts represents probable credit losses of $33,000 and $24,000 at June 30, 2019 and March 31, 2019, respectively. Additionally, at June 30, 2019 and March 31, 2019 the Company has allowances of $439,000 and $443,000, respectively, related to potential discounts, returns, distributor fees and rebates. The allowances are included in Accounts Receivable, net in the accompanying condensed consolidated balance sheets. 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. The Company recorded a provision to reduce the carrying amounts of inventories to their net realizable value in the amount of $81,000 and $184,000 at June 30, 2019 and March 31, 2019, respectively, which is included in cost of product revenues on the Company’s accompanying condensed consolidated statements of comprehensive income (loss). Subsequent Events Management has evaluated subsequent events or transactions occurring through the date the condensed consolidated financial statements were issued. Adoption of Recent Accounting Standards Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 840) Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments Reporting Comprehensive Income In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income Stock Compensation In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting 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 consolidated financial statements upon adoption. |
4. Sale of Assets to Petagon Li
4. Sale of Assets to Petagon Limited | 3 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Sale of Assets to Petagon Limited | Note 4. Sale of Assets to Petagon Limited On May 20, 2019, the Company closed on an Asset Purchase Agreement for the sale of certain animal health product rights and assets for the Asian and European markets to Petagon, Limited, (“Petagon”) an international importer and distributor of quality pet food and products. The purchase price for the assets was $2,700,000. The Company agreed that it will continue to supply products to Petagon for five years at certain agreed upon transfer prices. The sale involves certain Asian patents and trademarks, the exclusive right to distribute animal health care products in Asia and Europe and production equipment. The Company determined that there were two separate performance obligations under the Asset Purchase Agreement. These performance obligations were the delivery of production equipment to Petagon and the transfer of the intellectual property and territory rights. The Company estimated the value of the production equipment by determining the cost and applying a mark up to the selling price at a market participant margin. The Company then applied the residual approach to derive the fair value of the intellectual property and territory rights. The Company will provide product under a reduced price from its prior list price, while Petagon builds its own manufacturing line. At the conclusion of the transition period, the Company will cease to be a supplier of product to Petagon. The Company is uncertain as to the duration of the transition period or when Petagon will complete the build out of its manufacturing line. The Company will incur costs of approximately $163,000 to fulfill its obligations to deliver certain production equipment to Petagon. The proceeds from the sale were allocated to the components of the sale utilizing the residual approach as follows: Total proceeds $ 2,700,000 Less - Production equipment 228,000 Residual attributable to the intellectual property and territory rights $ 2,472,000 The proceeds related to the production equipment were included in deferred revenue and will be recognized upon delivery of the equipment. The proceeds related to the intellectual property and territory rights were included in gain on sale on the closing date. In connection with the Asset Purchase Agreement the Company agreed to continue to supply product to Petagon for a five-year transition period from the date of sale, subject to mutual extension (“Supply Agreement”). During the three months ended June 30, 2019, the Company reported $155,000 of product revenue related to the Supply Agreement with Petagon. For a certain period after closing, Petagon shall have first refusal rights to acquire certain marketing territories. |
5. Condensed Consolidated Balan
5. Condensed Consolidated Balance Sheets | 3 Months Ended |
Jun. 30, 2019 | |
Disclosure Text Block Supplement [Abstract] | |
Condensed Consolidated Balance Sheets | Note 5. Condensed Consolidated Balance Sheets Inventories Inventories consist of the following: June 30, March 31, 2019 2019 Raw materials $ 1,810,000 $ 1,766,000 Finished goods 1,558,000 1,643,000 $ 3,368,000 $ 3,409,000 Leases Sonoma has entered into operating and finance leases as the lessee for office space, manufacturing facilities, R&D laboratories, warehouses, vehicles and equipment. On April 1, 2019 (“Effective Date”), the Company adopted FASB Accounting Standards Codification, or ASC, Topic 842, Leases ("ASC 842"), which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities. The new guidance requires the recognition of the right-of-use ("ROU") assets and related operating and finance lease liabilities on the balance sheet. The Company adopted the new guidance using the modified retrospective approach with a cumulative-effect adjustment recorded on April 1, 2019. As a result, the consolidated balance sheet as of March 31, 2019 was not restated and is not comparative. The adoption of ASC 842 resulted in the recognition of ROU assets of $1,443,000, lease liabilities for operating leases of $1,502,000 on the Company's condensed consolidated balance sheet as of April 1, 2019, and a cumulative-effect adjustment of $59,000 to the Company’s accumulated deficit, with no material impact to its condensed consolidated statements of operations. The difference between the ROU assets and the operating lease liability represents the effect of previously unrecognized deferred rent balances. The Company's accounting for finance leases remained substantially unchanged from its accounting for capital leases in prior periods. Finance leases are not material to the Company’s condensed consolidated statements of comprehensive loss, condensed consolidated balance sheets, or condensed consolidated statement of cash flows. The Company elected the package of practical expedients permitted within the standard, which allow an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs. Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient to allow the Company to not have to separate lease and non-lease components. The Company has also elected the short-term lease accounting policy under which the Company would not recognize a lease liability or ROU asset for any lease that at the commencement date has a lease term of twelve months or less and does not include a purchase option that Sonoma is more than reasonably certain to exercise. For contracts entered into on or after the Effective Date, at the inception of a contract the Company will assess whether the contract is, or contains, a lease. The Company's assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset. Leases entered into prior to April 1, 2019, which were accounted for under ASC 840, were not reassessed for classification. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases, and is subsequently presented at amortized cost using the effective interest method. The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The present value of the lease payments is calculated using the incremental borrowing rate for operating and finance leases, which was determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The lease term for all of the Company’s leases includes the noncancelable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. All ROU assets are reviewed for impairment. Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term. Lease expense for finance leases consists of the amortization of the asset on a straight-line basis over the shorter of the lease term or its useful life and interest expense determined on an amortized cost basis, with the lease payments allocated between a reduction of the lease liability and interest expense. The Company's operating leases are comprised primarily of facility leases. Finance leases are comprised primarily of vehicle leases. Balance sheet information related to our leases is presented below: June 30, April 1, March 31, 2019 2019 2019 Operating leases: Operating lease right-of-use assets $ 1,316,000 $ 1,442,000 $ – Operating lease liabilities – current 438,000 497,000 – Operating lease liabilities – non- current 933,000 1,005,000 – Finance leases: Property, plant and equipment – 95,000 95,000 Current portion of capital leases – 141,000 141,000 Other information related to leases is presented below: Three Months Ended June 30, 2019 Operating lease cost $ 150,000 Other information: Operating cash flows from operating leases 155,000 Weighted-average remaining lease term – operating leases (in months) 49.9 Weighted-average discount rate – operating leases 6.0% As of June 30, 2019, the annual minimum lease payments of our operating lease liabilities were as follows: For Years Ending March 31, 2020 (excluding the three months ended June 30, 2019) $ 419,000 2021 309,000 2022 271,000 2023 248,000 2024 223,000 Thereafter 83,000 Total future minimum lease payments, undiscounted 1,553,000 Less: imputed interest 183,000 Present value of future minimum lease payments $ 1,370,000 |
6. Commitments and Contingencie
6. Commitments and Contingencies | 3 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 6. 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. 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 Agreements As of March 31, 2019, the Company had employment agreements in place with three of its key executives. Two of the agreements provide, among other things, for the payment of up to twelve months of severance compensation for terminations under certain circumstances. At June 30, 2019, potential severance payments to key executives would be $454,000, if triggered. |
7. Stockholders' Equity
7. Stockholders' Equity | 3 Months Ended |
Jun. 30, 2019 | |
Stockholders' Equity | |
Stockholders' Equity | Note 7. Stockholders’ Equity Authorized Capital The Company is authorized to issue up to 24,000,000 shares of common stock with a par value of $0.0001 per share and 714,286 shares of convertible preferred stock with a par value of $0.0001 per share. |
8. Stock-Based Compensation
8. Stock-Based Compensation | 3 Months Ended |
Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | |
Stock-Based Compensation | Note 8. Stock-Based Compensation Share-based awards compensation expense is as follows: Three Months Ended June 30, 2019 2018 Cost of revenues $ 17,000 $ 35,000 Research and development 22,000 32,000 Selling, general and administrative 253,000 280,000 Total stock-based compensation $ 292,000 $ 347,000 At June 30, 2019, there were unrecognized compensation costs of $444,000 related to stock options which is expected to be recognized over a weighted-average amortization period of 0.90 years. At June 30, 2019, there were unrecognized compensation costs of $35,000 related to restricted stock which is expected to be recognized over a weighted-average amortization period of 1.73 years. Stock options award activity is as follows: Number of Weighted- Weighted- Aggregate Outstanding at April 1, 2019 165,000 $ 72.88 Options granted – – Options exercised – – Options forfeited (2,000 ) 57.91 Options expired (8,000 ) 127.10 Outstanding at June 30, 2019 155,000 $ 70.33 7.27 $ 77,000 Exercisable at June 30, 2019 84,000 $ 115.33 5.67 $ – 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 $7.92 per share at June 30, 2019. 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, 2019 4,000 $ 27.96 Restricted stock awards granted – – Restricted stock awards vested (1,000 ) 53.38 Restricted stock awards forfeited – – Unvested restricted stock awards outstanding at June 30, 2019 3,000 $ 48.15 The Company did not capitalize any cost associated with stock-based compensation. The Company issues new shares of common stock upon exercise of stock options or release of restricted stock awards. The Company issues new shares of common stock upon exercise of stock-based awards. No income tax benefit has been recognized relating to stock-based compensation expense and no tax benefits have been realized from exercised stock options. |
9. Income Taxes
9. Income Taxes | 3 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9. Income Taxes The Company has completed a study to assess whether a change in control has occurred or whether there have been multiple changes of control since the Company’s formation through March 31, 2019. The Company determined, based on the results of the study, no change in control occurred for purposes of Internal Revenue Code Section 382. The Company, after considering all available evidence, fully reserved for these and its other deferred tax assets since it is more likely than not such benefits will not be realized in future periods. The Company has incurred losses for both financial reporting and income tax purposes for the year ended March 31, 2019. Accordingly, the Company is continuing to fully reserve for its deferred tax assets. The Company will continue to evaluate its deferred tax assets to determine whether any changes in circumstances could affect the realization of their future benefit. If it is determined in future periods that portions of the Company’s deferred income tax assets satisfy the realization standards, the valuation allowance will be reduced accordingly. The Company only recognizes tax benefits from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. To date, the Company has not recognized such tax benefits in its consolidated financial statements. The Company may also be affected by certain other aspects of the Tax Act, including, without limitation, provisions regarding repatriation of accumulated foreign earnings and deductibility of capital expenditures. However, these assessments are based on preliminary review and analysis of the Tax Act and are subject to change as the Company continues to evaluate these highly complex rules as additional interpretive guidance is issued. The Company is also in the process of determining the impacts of the new Global Intangibles Low-Taxed Income (“GILTI”) tax law and has not yet included any potential GILTI tax or elected any related accounting policy. The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized tax benefits will increase or decrease within twelve months of March 31, 2019. The unrecognized tax benefits may increase or change during the next year for items that arise in the ordinary course of business. |
10. Segment and Geographic Info
10. Segment and Geographic Information | 3 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Note 10. Segment and Geographic Information 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 shows the Company’s product revenues by geographic region: Three Months Ended June 30, 2019 2018 United States $ 2,487,000 $ 1,971,000 Latin America 654,000 1,079,000 Europe and Rest of the World 1,244,000 1,045,000 Total $ 4,385,000 $ 4,095,000 The Company’s service revenues amounted to $326,000 and $274,000 for the three months ended June 30, 2019 and 2018, respectively. |
11. Significant Customer Concen
11. Significant Customer Concentrations | 3 Months Ended |
Jun. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Significant Customer Concentrations | Note 11. Significant Customer Concentrations For the three months ended June 30, 2019, one customer represented 14% of net revenue. For the three months ended June 30, 2018, one customer represented 25% of net revenue and one customer represented 14% of net revenue. At June 30, 2019 and March 31, 2019, no customer represented more than 10% of the net accounts receivable balance. |
3. Summary of Significant Acc_2
3. Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of condensed 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 recoverability of long-lived assets, the valuation allowance relating to the Company’s deferred tax assets, valuation of equity and derivative instruments, fair value allocation of assets sold to Invekra, Petagon and the estimated amortization periods of upfront product licensing fees received from customers. Periodically, the Company evaluates and adjusts estimates accordingly. |
Net Loss per Share | Net Loss per Share The Company computes basic net loss per share by dividing net loss per share available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. Three Months Ended June 30, 2019 2018 Numerator: Net income (loss) $ 715,000 $ (3,458,000 ) Denominator: Weighted-average number of common shares outstanding: basic 1,316,000 693,000 Restricted stock units 3,000 – Conversion of Series C 17,000 – Weighted-average number of common shares outstanding: diluted 1,336,000 693,000 Net income (loss) per share: basic $ 0.54 $ (4.99 ) Net income (loss) per share: diluted $ 0.54 $ (4.99 ) The computation of basic loss per share for the three months ended June 30, 2019 and 2018 excludes the potentially dilutive securities summarized in the table below because their inclusion would be anti-dilutive. June 30, 2019 2018 Common stock to be issued upon vesting of restricted stock units – 4,000 Common stock to be issued upon exercise of options 155,000 155,000 Common stock to be issued upon exercise of warrants 446,000 153,000 Common stock to be issued upon exercise of common stock units (1) 46,000 – 647,000 312,000 (1) Consists of 30,668 restricted stock units and warrants to purchase 15,332 shares of common stock |
Revenue Recognition | Revenue Recognition On April 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers Topic 606” (“Topic 606”) using the modified retrospective method. There was no impact to the Company upon the adoption of Topic 606. Revenue is recognized when the entity transfers promised goods or services to the customer, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under the agreement, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. The Company derives the majority of its revenue sales of its products to a customer base including hospitals, medical centers, doctors, pharmacies, distributors and wholesalers. The Company sells products directly to end users and to distributors. The Company also has entered into agreements to license its technology and products. The Company also provides regulatory compliance testing and quality assurance services to medical device and pharmaceutical companies. The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which it expects to be entitled. For all of its sales to non-consignment distribution channels, revenue is recognized when control of the product is transferred to the customer (i.e. when our performance obligation is satisfied), which typically occurs when title passes to the customer upon shipment but could occur when the customer receives the product based on the terms of the agreement with the customer. For product sales to its value-added resellers, non-stocking distributors and end-user customers, the Company grants return privileges to its customers and the Company has a long history with its customers and is able to estimate the amount of product that will be returned. Sales incentives and other programs that the Company may make available to these customers are considered to be a form of variable consideration and the Company maintains estimated accruals and allowances using the expected value method. The Company has entered into consignment arrangements in which goods are left in the possession of another party to sell. As products are sold from the customer to third parties, the Company recognizes revenue based on a variable percentage of a fixed price. Revenue recognized varies based on if a patient is covered by insurance or is not covered by insurance. In addition, the Company may incur a revenue deduction related to the use of the Company’s rebate program. Sales to stocking distributors are made under terms with fixed pricing and limited rights of return (known as “stock rotation”) of the Company’s products held in their inventory. Revenue from sales to distributors is recognized upon the transfer of control to the distributor. The Company assessed the promised goods and services in the technical support to Invekra for a ten-year period as being a distinct service that Invekra can benefit from on its own and is separately identifiable from any other promises within the contract. Given that the distinct service is not substantially the same as other goods and services within the Invekra contract, the Company accounted for the distinct service as a performance obligation. Revenue from testing contracts is recognized as tests are completed and a final report is sent to the customer. Disaggregation of Revenue The following table presents the Company’s disaggregated revenues by revenue source: Three Months Ended June 30, Product 2019 2018 Human Skin Care $ 3,962,000 $ 3,554,000 Animal Skin Care 423,000 541,000 4,385,000 4,095,000 Service 326,000 274,000 Total $ 4,711,000 $ 4,369,000 |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded net of allowances for cash discounts for prompt payment, doubtful accounts, and sales returns. Estimates for cash discounts and sales returns are based on analysis of contractual terms and historical trends. The Company’s policy is to reserve for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance for doubtful accounts is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Other factors that the Company considers include its existing contractual obligations, historical payment patterns of its customers and individual customer circumstances, an analysis of days sales outstanding by customer and geographic region, and a review of the local economic environment and its potential impact on government funding and reimbursement practices. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for doubtful accounts represents probable credit losses of $33,000 and $24,000 at June 30, 2019 and March 31, 2019, respectively. Additionally, at June 30, 2019 and March 31, 2019 the Company has allowances of $439,000 and $443,000, respectively, related to potential discounts, returns, distributor fees and rebates. The allowances are included in Accounts Receivable, net in the accompanying condensed consolidated balance sheets. |
Inventories | 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. The Company recorded a provision to reduce the carrying amounts of inventories to their net realizable value in the amount of $81,000 and $184,000 at June 30, 2019 and March 31, 2019, respectively, which is included in cost of product revenues on the Company’s accompanying condensed consolidated statements of comprehensive income (loss). |
Subsequent Events | Subsequent Events Management has evaluated subsequent events or transactions occurring through the date the condensed consolidated financial statements were issued. |
Recent Accounting Standards | Adoption of Recent Accounting Standards Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 840) Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments Reporting Comprehensive Income In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income Stock Compensation In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting 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 consolidated financial statements upon adoption. |
3. Summary of Significant Acc_3
3. Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Computation of earnings per share | Three Months Ended June 30, 2019 2018 Numerator: Net income (loss) $ 715,000 $ (3,458,000 ) Denominator: Weighted-average number of common shares outstanding: basic 1,316,000 693,000 Restricted stock units 3,000 – Conversion of Series C 17,000 – Weighted-average number of common shares outstanding: diluted 1,336,000 693,000 Net income (loss) per share: basic $ 0.54 $ (4.99 ) Net income (loss) per share: diluted $ 0.54 $ (4.99 ) |
Schedule of antidilutive shares | June 30, 2019 2018 Common stock to be issued upon vesting of restricted stock units – 4,000 Common stock to be issued upon exercise of options 155,000 155,000 Common stock to be issued upon exercise of warrants 446,000 153,000 Common stock to be issued upon exercise of common stock units (1) 46,000 – 647,000 312,000 |
Disaggregated Revenue by Source | Three Months Ended June 30, Product 2019 2018 Human Skin Care $ 3,962,000 $ 3,554,000 Animal Skin Care 423,000 541,000 4,385,000 4,095,000 Service 326,000 274,000 Total $ 4,711,000 $ 4,369,000 |
4. Sale of Assets to Petagon _2
4. Sale of Assets to Petagon Limited (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Components of sale | Total proceeds $ 2,700,000 Less - Production equipment 228,000 Residual attributable to the intellectual property and territory rights $ 2,472,000 |
5. Condensed Consolidated Bal_2
5. Condensed Consolidated Balance Sheets (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | June 30, March 31, 2019 2019 Raw materials $ 1,810,000 $ 1,766,000 Finished goods 1,558,000 1,643,000 $ 3,368,000 $ 3,409,000 |
Schedule of leases | June 30, April 1, March 31, 2019 2019 2019 Operating leases: Operating lease right-of-use assets $ 1,316,000 $ 1,442,000 $ – Operating lease liabilities – current 438,000 497,000 – Operating lease liabilities – non- current 933,000 1,005,000 – Finance leases: Property, plant and equipment – 95,000 95,000 Current portion of capital leases – 141,000 141,000 Other information related to leases is presented below: Three Months Ended June 30, 2019 Operating lease cost $ 150,000 Other information: Operating cash flows from operating leases 155,000 Weighted-average remaining lease term – operating leases (in months) 49.9 Weighted-average discount rate – operating leases 6.0% |
Schedule of annual minimum lease payments | For Years Ending March 31, 2020 (excluding the three months ended June 30, 2019) $ 419,000 2021 309,000 2022 271,000 2023 248,000 2024 223,000 Thereafter 83,000 Total future minimum lease payments, undiscounted 1,553,000 Less: imputed interest 183,000 Present value of future minimum lease payments $ 1,370,000 |
8. Stock-Based Compensation (Ta
8. Stock-Based Compensation (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | |
Share-based compensation expense | Three Months Ended June 30, 2019 2018 Cost of revenues $ 17,000 $ 35,000 Research and development 22,000 32,000 Selling, general and administrative 253,000 280,000 Total stock-based compensation $ 292,000 $ 347,000 |
Schedule of option activity | Number of Weighted- Weighted- Aggregate Outstanding at April 1, 2019 165,000 $ 72.88 Options granted – – Options exercised – – Options forfeited (2,000 ) 57.91 Options expired (8,000 ) 127.10 Outstanding at June 30, 2019 155,000 $ 70.33 7.27 $ 77,000 Exercisable at June 30, 2019 84,000 $ 115.33 5.67 $ – |
Restricted Stock Award Activity | Number of Shares Weighted Average Award Date Fair Value per Share Unvested restricted stock awards outstanding at April 1, 2019 4,000 $ 27.96 Restricted stock awards granted – – Restricted stock awards vested (1,000 ) 53.38 Restricted stock awards forfeited – – Unvested restricted stock awards outstanding at June 30, 2019 3,000 $ 48.15 |
10. Segment and Geographic In_2
10. Segment and Geographic Information (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Three Months Ended June 30, 2019 2018 United States $ 2,487,000 $ 1,971,000 Latin America 654,000 1,079,000 Europe and Rest of the World 1,244,000 1,045,000 Total $ 4,385,000 $ 4,095,000 |
1. Organization and Recent De_2
1. Organization and Recent Developments (Details Narrative) | 3 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reverse stock split | Effective June 19, 2019, the Company effected a reverse stock split of its common stock, par value $0.0001 per share. Every nine shares of common stock were reclassified and combined into one share of common stock |
2. Liquidity and Financial Co_2
2. Liquidity and Financial Condition (Details Narrative) - USD ($) | 3 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Mar. 31, 2019 | |
Liquidity And Financial Condition | |||
Net income (loss) | $ 715,000 | $ (3,458,000) | |
Accumulated deficit | (168,582,000) | $ (169,238,000) | |
Working capital | $ 9,699,000 | $ 8,905,000 |
3. Summary of Significant Acc_4
3. Summary of Significant Accounting Policies (Details - Earnings per share) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Numerator: | ||
Net income (loss) | $ 715 | $ (3,458) |
Denominator: | ||
Weighted-average number of common shares outstanding: basic | 1,316,000 | 693,000 |
Restricted stock units | 3,000 | 0 |
Conversion of Series C | 17,000 | 0 |
Weighted-average number of common shares outstanding: diluted | 1,336,000 | 693,000 |
Net income (loss) per share: basic | $ 0.54 | $ (4.99) |
Net income (loss) per share: diluted | $ 0.54 | $ (4.99) |
3. Summary of Significant Acc_5
3. Summary of Significant Accounting Policies (Details - Antidilutive shares) - shares | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Antidilutive shares | 647,000 | 312,000 |
Restricted Stock Units (RSUs) [Member] | ||
Antidilutive shares | 0 | 4,000 |
Stock Options [Member] | ||
Antidilutive shares | 155,000 | 155,000 |
Warrants [Member] | ||
Antidilutive shares | 446,000 | 153,000 |
Common Stock Unit [Member] | ||
Antidilutive shares | 46,000 | 0 |
3. Summary of Significant Acc_6
3. Summary of Significant Accounting Policies (Details - Disaggregated Revenues) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | $ 4,711,000 | $ 4,369,000 |
Human Skin Care [Member] | ||
Revenues | 3,962,000 | 3,554,000 |
Animal Skin Care [Member] | ||
Revenues | 423,000 | 541,000 |
Service [Member] | ||
Revenues | $ 326,000 | $ 274,000 |
3. Summary of Significant Acc_7
3. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
Accounting Policies [Abstract] | ||
Allowance for doubtful accounts | $ 33,000 | $ 24,000 |
Allowance for potential discounts, returns, distributor fees and rebates | 439,000 | 443,000 |
Inventory reserves | $ 81,000 | $ 184,000 |
4. Sale of Assets to Petagon _3
4. Sale of Assets to Petagon Limited (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Residual attributable to the intellectual property and territory rights | $ 2,472,000 | $ 0 |
Discontinued Operations Held For Sale Or Disposed Of By Sale [Member] | ||
Total proceeds | 2,700,000 | |
Less: production equipment | 228,000 | |
Residual attributable to the intellectual property and territory rights | $ 2,472,000 |
4. Sale of Assets to Petagon _4
4. Sale of Assets to Petagon Limited (Details Narrative) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | $ 4,711,000 | $ 4,369,000 |
Product [Member] | ||
Revenue | 4,385,000 | $ 4,095,000 |
Discontinued Operations Held For Sale Or Disposed Of By Sale [Member] | Product [Member] | ||
Revenue | $ 155,000 |
5. Condensed Consolidated Bal_3
5. Condensed Consolidated Balance Sheets (Details - Inventories) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
Inventories Details | ||
Raw materials, net | $ 1,810,000 | $ 1,766,000 |
Finished goods, net | 1,558,000 | 1,643,000 |
Inventories, net | $ 3,368,000 | $ 3,409,000 |
5. Condensed Consolidated Bal_4
5. Condensed Consolidated Balance Sheets (Details - Operating lease information) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
Operating lease right-of-use assets | $ 1,316,000 | $ 0 |
Operating lease liabilities – current | 438,000 | 0 |
Operating lease liabilities – non- current | 933,000 | 0 |
Property, plant and equipment | 0 | 95,000 |
Current portion of capital leases | $ 0 | 141,000 |
New Accounting Pronouncement [Member] | ||
Operating lease right-of-use assets | 1,442,000 | |
Operating lease liabilities – current | 497,000 | |
Operating lease liabilities – non- current | 1,005,000 | |
Property, plant and equipment | 95,000 | |
Current portion of capital leases | $ 141,000 |
5. Condensed Consolidated Bal_5
5. Condensed Consolidated Balance Sheets (Details - Other lease information) | 3 Months Ended |
Jun. 30, 2019USD ($) | |
Inventories Details | |
Operating lease cost | $ 150,000 |
Operating cash flows from operating leases | $ 155,000 |
Weighted-average remaining lease term ? operating leases (in months) | 49 months 27 days |
Weighted-average discount rate - operating leases | 6.00% |
5. Condensed Consolidated Bal_6
5. Condensed Consolidated Balance Sheets (Details - Minimum lease payments) | Jun. 30, 2019USD ($) |
Inventory Disclosure [Abstract] | |
2020 (excluding the three months ended June 30, 2019) | $ 419,000 |
2021 | 309,000 |
2022 | 271,000 |
2023 | 248,000 |
2024 | 223,000 |
Thereafter | 83,000 |
Total minimum lease payments | 1,553,000 |
Less imputed interest | 183,000 |
Total minimum operating lease payments | $ 1,370,000 |
5. Condensed Consolidated Bal_7
5. Condensed Consolidated Balance Sheets (Details Narrative) | Jun. 30, 2019USD ($) |
Inventories Details | |
Cumulative adjustment resulting from adoption of ASU | $ 59,000 |
6. Commitments and Contingenc_2
6. Commitments and Contingencies (Details Narrative) | Jun. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Potential severerance payments | $ 454,000 |
7. Stockholders' Equity (Detail
7. Stockholders' Equity (Details Narrative) - $ / shares | Jun. 30, 2019 | Mar. 31, 2019 |
Equity [Abstract] | ||
Convertible preferred stock authorized | 714,286 | 714,286 |
Convertible preferred stock par value | $ 0.0001 | $ 0.0001 |
Common stock par value | $ .0001 | $ 0.0001 |
Common stock shares authorized | 24,000,000 | 12,000,000 |
8. Stock-Based Compensation (De
8. Stock-Based Compensation (Details-Stock-based compensation) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Total stock-based compensation | $ 292,000 | $ 347,000 |
Cost of revenues [Member] | ||
Total stock-based compensation | 17,000 | 35,000 |
Research and development [Member] | ||
Total stock-based compensation | 22,000 | 32,000 |
Selling, general and administrative [Member] | ||
Total stock-based compensation | $ 253,000 | $ 280,000 |
8. Stock-Based Compensation (_2
8. Stock-Based Compensation (Details-Option activity) | 3 Months Ended |
Jun. 30, 2019USD ($)$ / sharesshares | |
Options | |
Outstanding at beginning of period | shares | 165,000 |
Granted | shares | 0 |
Forfeited | shares | (2,000) |
Expired | shares | (8,000) |
Outstanding at end of period | shares | 155,000 |
Exercisable at end of period | shares | 84,000 |
Weighted Average Exercise Price | |
Outstanding at beginning of period | $ / shares | $ 72.88 |
Granted | $ / shares | |
Forfeited | $ / shares | 57.91 |
Expired | $ / shares | 127.10 |
Outstanding at end of period | $ / shares | 70.33 |
Exercisable at end of period | $ / shares | $ 115.33 |
Weighted Average Contractual Term | |
Outstanding at end of period | 7 years 3 months 8 days |
Exercisable at end of period | 5 years 8 months 2 days |
Aggregate Intrinsic Value | |
Outstanding at end of period | $ | $ 77,000 |
Exercisable at end of period | $ | $ 0 |
8. Stock-Based Compensation (_3
8. Stock-Based Compensation (Details-Restricted stock activity) | 3 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Restricted stock award activity | |
Unvested restricted stock awards, beginning balance | shares | 4,000 |
Restricted stock awards granted | shares | 0 |
Restricted stock awards forfeited | shares | 0 |
Restricted stock awards vested | shares | (1,000) |
Unvested restricted stock awards, ending balance | shares | 3,000 |
Weighted average award date fair value per share, outstanding beginning balance | $ / shares | $ 27.96 |
Weighted average award date fair value per share, granted | $ / shares | |
Weighted average award date fair value per share, forfeited | $ / shares | |
Weighted average award date fair value per share, vested | $ / shares | 53.38 |
Weighted average award date fair value per share, outstanding ending balance | $ / shares | $ 48.15 |
8. Stock-Based Compensation (_4
8. Stock-Based Compensation (Details Narrative) | 3 Months Ended |
Jun. 30, 2019USD ($)$ / shares | |
Stock Options [Member] | |
Unrecognized compensation costs - Options | $ 444,000 |
Weighted average amortization period | 10 months 25 days |
Aggregate intrinsic value per share | $ / shares | $ 7.92 |
Restricted Stock [Member] | |
Unrecognized compensation costs - Options | $ 35,000 |
Weighted average amortization period | 1 year 8 months 23 days |
10. Segment and Geographic In_3
10. Segment and Geographic Information (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | $ 4,711,000 | $ 4,369,000 |
Product [Member] | ||
Revenues | 4,385,000 | 4,095,000 |
Product [Member] | UNITED STATES | ||
Revenues | 2,487,000 | 1,971,000 |
Product [Member] | Latin America [Member] | ||
Revenues | 654,000 | 1,079,000 |
Product [Member] | Europe and Rest of the World [Member] | ||
Revenues | $ 1,244,000 | $ 1,045,000 |
10. Segment and Geographic In_4
10. Segment and Geographic Information (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | $ 4,711 | $ 4,369 |
Service [Member] | ||
Revenues | $ 326 | $ 274 |
11. Significant Customer Conc_2
11. Significant Customer Concentrations (Details Narrative) - Revenues [Member] - One Customer [Member] | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Concentration risk percentage | 14.00% | 25.00% |
Concentration risk percentage | 14.00% |