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press release

Nov. 15, 2021, 8:01 a.m. EST

Sonoma Pharmaceuticals Reports Second Quarter FY 2022 Financial Results

Revenues hold steady from prior quarter ended June 30, 2021Net loss of $100,000, or $(0.04) per share for the second quarter compared to a net loss of $1.1 million or $(0.52) per share for the prior quarter ended June 30, 2021Break-even EBITDAS for the quarter versus EBITDAS loss of $800,000 for the prior quarter ended June 30, 2021$8.4 million of cash and strengthened balance sheet

WOODSTOCK, Ga., (BUSINESS WIRE) -- Sonoma Pharmaceuticals, Inc. /zigman2/quotes/200164174/composite SNOA +0.62% , a global healthcare leader developing and producing stabilized hypochlorous acid (HOCl) products for a wide range of applications, including wound care, eye care, nasal care, oral care and dermatological conditions today announced financial results for its second fiscal quarter and six months ended September 30, 2021.

“This quarter we focused on our new product launches as well as strengthening our results of operations and balance sheet,” said Amy Trombly, CEO of Sonoma Pharmaceuticals. “We are pleased to see the hard work reflected in improving financial results. Although, we continue to transition away from unprofitable revenues generated by an in-house dermatology sales force and our Latin America partner Invekra, we opened up new, higher margin revenue streams with our OTC sales, expanded partnerships and new product introductions. We also raised funds we intend to deploy commercializing new products and entering new markets.”

Business Highlights for the Second Fiscal Quarter

Sonoma continues to expand the reach of its products through partners and its own commercialization:

In August, Sonoma launched two new dental products. OroGenix Oral Hygiene Rinse, developed with its partner Gabriel Science, LLC, is Sonoma’s second dental product in the U.S. In Switzerland, Sonoma and its partner, Medical Systems Solutions launched Microdacyn® Oral Care for both professional and consumer use.

On September 28, 2021, Sonoma launched its OTC products, Regenacyn® Advanced Scar Gel and Ocucyn® Eyelid & Eyelash Cleanser, on Amazon.com in the U.S., and MucoClyns™ on Amazon sites in Europe. All three products are based on Sonoma’s patented Microcyn® technology and are immediately available for customer orders.

Also on September 28, 2021, Sonoma launched Regenacyn® Plus, a prescription-strength scar gel which is available as an office-dispense product through physician offices.

Together with its partner, Manna Pro, Sonoma now offers three new indications in animal health specifically for cats. The MicrocynAH® Cat Opthalmic Gel, MicrocynAH® Cat Eye & Ear Wash, and MicrocynAH® Cat Wound and Skin Care are now available at PetSmart.

On October 15, 2021, Sonoma and its partner, the MicroSafe Group, announced that the Australian Therapeutic Goods Administration (TGA) approved extended claims for Nanocyn® Disinfectant and Sanitizer, which is manufactured by Sonoma for its partner MicroSafe using Sonoma’s patented Microcyn® Technology with a 15 second kill time against common viruses, including SARS-CoV-2, Norovirus (Gastro), and influenza, and a 30-second kill contact time against common bacteria, such as Staphylococcus aureus (MRSA), E. coli, Pseudomonas aeruginosa, fungi and mold - including Candida Albicans.

Results for the Second Quarter Ended September 30, 2021

Revenue of $3,744,000 for the second quarter ended September 30, 2021, decreased by $2,025,000, or 35%, from $5,769,000 for the same period last year. Revenue increased by $60,000, or 2%, from $3,684,000 for the previous quarter ended June 30, 2021. The year-over-year decrease was primarily the result of decreases in revenue in Latin America of $1,506,000 and a decrease of $637,000 in United States revenue from the EMC deal, offset by an increase in revenue in Europe and the Rest of World of $118,000. The decrease in revenue in Latin America is the result of the low margin contract ending with Invekra in October 2020. Since then Invekra has begun to produce their own product and Sonoma is manufacturing backup orders at a reduced scale at full cost rather than reduced prices.

For the quarter ended September 30, 2021, Sonoma reported revenues of $3,744,000 and cost of revenues of $2,503,000, resulting in gross profit of $1,241,000 or 33% of revenues, compared to a gross profit of $2,502,000 or 43% of revenues, for the same period in the prior year, and compared to a gross profit of $1,453,000 or 39% of revenues, for the for the June quarter. For the quarter ended September 30, 2021, gross margins decreased by 10% when compared to the same period last year as a result of the EMC transition of Sonoma’s dermatological prescription products. EMC is now managing sales and distribution for those products. As a result, Sonoma sells products to EMC for a lower cost than it realized from its own direct sales, however, it also eliminated the overhead of direct sales.

Total operating expenses during the second quarter of fiscal year 2021 were $2,205,000, down $128,000, or 5%, when compared to $2,333,000 during the same period in the prior year. Total operating expenses were down $152,000, or 6%, when compared to $2,357,000 during the June quarter. The decrease in total operating expenses over both periods was primarily related to a reduction in headcount in direct sales, partially offset by increased insurance costs.

Net loss from continuing operations for the quarter ended September 30, 2021, was $(95,000), compared to a net income of $151,000 for the quarter ended September 30, 2020. EBITDAS income for the quarter ended September 30, 2021 of $11,000, was down $354,000, compared to an EBITDAS income of $365,000 for the same period last year. Net loss from continuing operations for the quarter ended September 30, 2021, was down $1,003,000, or 91%, compared to a net loss of $1,098,000 for the quarter ended June 30, 2021. EBITDAS income for the quarter ended September 30, 2021 was down $808,000, or 101%, compared to an EBITDAS loss of $797,000 for the previous quarter.

Results for the Six Months Ended September 30, 2021

Revenue of $7,428,000 for the six months ended September 30, 2021, decreased by $4,108,000, or 36%, from $11,536,000 for the same period last year. This decrease was primarily the result of decreases in revenue in Latin America of $3,267,000, Europe and Rest of World of $175,000, and the United States of $666,000, respectively. The decrease in revenue in Latin America resulted from the contract termination with Invekra in October 2020. Since then Invekra has begun to produce their own product and Sonoma is manufacturing backup orders at a reduced scale at full cost rather than reduced prices.

For the six months ended September 30, 2021, Sonoma reported revenues of $7,428,000 and cost of revenues of $4,734,000, resulting in gross profit of $2,694,000, or 36% of revenues, compared to a gross profit of $4,757,000 or 41% or revenues. For the six month ended September 30, 2021, gross margins decreased by 5% when compared to the same periods last year as a result of the EMC transition of Sonoma’s dermatological prescription products. EMC is now managing sales and distribution for those products. As a result, Sonoma sells products to EMC for a lower cost than it realized from its own direct sales, however it also eliminated the overhead of direct sales.

Total operating expenses during the six months ended September 30, 2021 of $4,563,000 decreased by $690,000, or 13%, compared to $5,253,000 during the same period last year. The decrease in total operating expenses was primarily related to a reduction in headcount as a result of the EMC deal, partially offset by increased insurance costs.

Net loss from continuing operations for the six months ended September 30, 2020, was $(1,193,000), compared to a net loss of $(557,000) for the same period in prior year. EBITDAS loss for the six months ended September 30, 2021 of $(979,000), was up $752,000, compared to an EBITDAS loss of $(227,000) for the same period last year.

As of September 30, 2021, Sonoma had cash and cash equivalents of $8,392,000. During the quarter ended September 30, 2021, Sonoma sold 855,500 shares of common stock through its At The Market Offering Agreement with HC Wainwright & Co., LLC at average sales prices of $8.42 per share for gross proceeds of $7,202,000 and net proceeds of $6,902,000 after deducting commissions and other offering expenses.

Since September 30, 2021, Sonoma sold 94,600 shares of common stock at an average sales price of $7.39 per share for gross proceeds of $700,000 and net proceeds of $678,000 after deducting commissions and other offering expenses.

About Sonoma Pharmaceuticals, Inc.

Sonoma Pharmaceuticals is a global healthcare leader for developing and producing stabilized hypochlorous acid (HOCl) products for a wide range of applications, including wound care, animal health care, eye care, nasal care, oral care, and dermatological conditions. The company’s products reduce infections, itch, pain, scarring and harmful inflammatory responses in a safe and effective manner. In-vitro and clinical studies of hypochlorous acid (HOCl) show it to have impressive antipruritic, antimicrobial, antiviral and anti-inflammatory properties. Sonoma’s stabilized HOCl immediately relieves itch and pain, kills pathogens and breaks down biofilm, does not sting or irritate skin and oxygenates the cells in the area treated assisting the body in its natural healing process. The company’s products are sold either directly or via partners in 54 countries worldwide and the company actively seeks new distribution partners. The company’s principal office is in Woodstock, Georgia, with manufacturing operations in Latin America. European marketing and sales are headquartered in Roermond, Netherlands. More information can be found at www.sonomapharma.com . For partnership opportunities, please contact busdev@sonomapharma.com .

Forward-Looking Statements

Except for historical information herein, matters set forth in this press release are forward-looking within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements about the commercial and technology progress and future financial performance of Sonoma Pharmaceuticals, Inc. and its subsidiaries (the “company”). These forward-looking statements are identified by the use of words such as “continue,” “reduce,” “develop” and “expand,” among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the company’s business that could cause actual results to vary, including such risks that regulatory clinical and guideline developments may change, scientific data may not be sufficient to meet regulatory standards or receipt of required regulatory clearances or approvals, clinical results may not be replicated in actual patient settings, protection offered by the company’s patents and patent applications may be challenged, invalidated or circumvented by its competitors, the available market for the company’s products will not be as large as expected, the company’s products will not be able to penetrate one or more targeted markets, revenues will not be sufficient to meet the company’s cash needs, fund further development, as well as uncertainties relative to the COVID-19 pandemic and economic development, varying product formulations and a multitude of diverse regulatory and marketing requirements in different countries and municipalities, and other risks detailed from time to time in the company’s filings with the Securities and Exchange Commission. The company disclaims any obligation to update these forward-looking statements, except as required by law.

Sonoma Pharmaceuticals™, Microcyn®, MicrocynAH®, Microdacyn®, Regenacyn®, Ocucyn®, MucoClyns™ are trademarks or registered trademark of Sonoma Pharmaceuticals, Inc. All other trademarks and service marks are the property of their respective owners.

 
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES
 
    September 30,     March 31,  
    2021     2021  
    (Unaudited)        
ASSETS                
Current assets:                
Cash and cash equivalents   $ 8,392     $ 4,220  
Accounts receivable, net     3,416       2,806  
Inventories, net     2,482       2,530  
Prepaid expenses and other current assets     3,519       3,218  
Current portion of deferred consideration, net of discount     212       209  
Total current assets     18,021       12,983  
Operating lease right-of-use assets     700       769  
Property and equipment, net     337       360
Deferred consideration, net of discount, less current portion     694       763  
Other assets     76       112  
Total assets   $ 19,828     $ 14,987  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable   $ 1,876     $ 1,769  
Accrued expenses and other current liabilities     987       1,154  
Deferred revenue     100       267  
Deferred revenue Invekra     53       52  
Operating lease liabilities     276       240  
Current portion of debt - PPP     587       -  
Current portion of long-term debt     199       596  
Total current liabilities     4,078       4,078  
Operating lease liabilities-non-current     424       529  
Long-term deferred revenue Invekra     205       229  
Long-term debt, less current portion - PPP     -       1,310  
Withholding tax payable     3,661       3,478  
Total liabilities     8,368       9,624  
Commitments and Contingencies                
Stockholders’ Equity                
Series C Convertible preferred stock, $0.0001 par value; 714,286 shares authorized at September 30, 2021 and March 31, 2021, 0 shares issued and outstanding at September 30, 2021 and March 31, 2021            
Common stock, $0.0001 par value; 24,000,000 shares authorized at September 30, 2021 and March 31, 2021, 3,004,741 and 2,092,909 shares issued and outstanding at September 30, 2021 and March 31, 2021, respectively     3       2  
Additional paid-in capital     196,438       189,217  
Accumulated deficit     (180,475 )     (179,277 )
Accumulated other comprehensive loss     (4,506)     (4,579 )
Total stockholders’ equity     11,460       5,363  
Total liabilities and stockholders’ equity   $ 19,828     $ 14,987  
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES
       
    Three Months Ended   Six Months Ended
    2021   2020   2021   2020
                         
Revenues   $ 3,744     $ 5,769     $ 7,428     $ 11,536  
Cost of revenues     2,503       3,267       4,734       6,779  
Gross profit     1,241       2,502       2,694       4,757  
Operating expenses                        
Research and development     10       (85 )     95       391  
Selling, general and administrative     2,195       2,418       4,468       4,862  
Total operating expenses     2,205       2,333       4,563       5,253  
Income (loss) from operations     (964 )     169       (1,869 )   (496 )
Interest (expense) income, net     (4 )     4       (5 )   4  
Other (expense) income, net     723       (77 )     531     (197 )
Gain on sale of assets     150       55       150       132  
Income (loss) from continuing operations     (95 )     151       (1,193 )     (557 )
Income tax expense     (5 )     -       (5 )     -  
Income (loss) from discontinued operations (Note 4)     -       (31 )     -       917  
Net income (loss)   $ (100 )   $ 120     $ (1,198 ) $ 360  
                         
Net income (loss) per share: basic      
Continuing operations   $ (0.04 )   $ 0.08     $ (0.54 )   $ (0.29 )
Discontinued operations     -       (0.02 )     -       0.48  
    $ (0.04 )   $ 0.06     $ (0.54 )   $ 0.19  
                         
Net income (loss) per share: diluted                        
Continuing operations   $ (0.04 )   $ 0.07     $ (0.54 )   $ (0.26 )
Discontinued operations     -       (0.01 )     -       0.43  
    $ (0.04 )   $ 0.06     $ (0.54 )   $ 0.17  
                         
Weighted-average number of shares used in per common share calculations: basic     2,344       2,008       2,219       1,924  
Weighted-average number of shares used in per common share calculations: diluted     2,344       2,159       2,219       2,118  
                         
Other comprehensive income (loss)                        
Net income (loss)   $ (100 )   $ 120     $ (1,198 ) $ 360  
Foreign currency translation adjustments     (234 )     188       73     355  
Comprehensive income (loss)   $ (334 )   $ 308     $ (1,125 $ 715  
     
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES
 
  Three Months Ended   Three Months Ended
  2021   2020   2021   2020
                       
Revenues $ 3,744     $ 5,769     $ 3,684     $ 5,767  
Cost of revenues   2,503       3,267       2,231       3,512  
Gross profit   1,241       2,502       1,453       2,255  
Operating expenses                      
Research and development   10       (85 )     84       476  
Selling, general and administrative   2,195       2,418       2,273       2,444  
Total operating expenses   2,205       2,333       2,357       2,920  
Income (loss) from operations   (964 )   169       (904 )   (665 )
Interest (expense) income, net   (4 )   4       (1 )   -  
Other (expense) income, net   723     (77 )     (193 )   (121 )
Gain on sale of assets   150       55       -       77  
Income (loss) from continuing operations   (95 )     151       (1,098 )     (709 )
Income tax expense   (5 )     -       -       -  
Income (loss) from discontinued operations (Note 4)   -       (31 )     -       949  
Net income (loss) $ (100 ) $ 120     $ (1,098 ) $ 240  
                       
Net income (loss) per share: basic  
Continuing operations $ (0.04 )   $ 0.08     $ (0.52 )   $ (0.39 )
Discontinued operations   -       (0.02 )     -       0.52  
  $ (0.04 )   $ 0.06     $ (0.52 )   $ 0.13  
                       
Net income (loss) per share: diluted                      
Continuing operations $ (0.04 )   $ 0.07     $ (0.52 )   $ (0.38 )
Discontinued operations   -       (0.01 )     -       0.51  
  $ (0.04 )   $ 0.06     $ (0.52 )   $ 0.13  
                       
Weighted-average number of shares used in per common share calculations: basic   2,344       2,008       2,093       1,839  
Weighted-average number of shares used in per common share calculations: diluted   2,344       2,159       2,093       1,843  
                       
Other comprehensive income (loss)                      
Net income (loss) $ (100 ) $ 120     $ (1,098 ) $ 240  
Foreign currency translation adjustments   (234   188       307     167  
Comprehensive income (loss) $ (334 $ 308     $ (791 $ 407  
 
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES
    Three Months Ended     Six Months Ended
    2021     2020     2021   2020
(1) Loss from operations minus non-cash expenses EBITDAS loss:                          
GAAP income (loss) from continuing operations as reported   $ (95 )   $ 151       $ (1,193 )   $ (557 )
Non-cash adjustments:                          
Stock-based compensation     55       160         114       223  
Depreciation and amortization     51       54         100       107  
Non-GAAP income (loss) from operations minus non-cash expenses EBITDAS income (loss) $ 11 $ 365 $ (979 ) $ (227 )
                           
(2) Net loss minus non-cash expenses:                          
GAAP net income (loss) as reported   $ (100 )   $ 120       $ (1,198 )   $ 360  
Non-cash adjustments:                          
Stock-based compensation     55       160         114       223  
Depreciation and amortization     51       54         100       107  
Non-GAAP net income (loss) minus non-cash expenses   $ 6     $ 334       $ (984 )   $ 690  
                           
(3) Operating expenses minus non-cash expenses                          
GAAP operating expenses as reported   $ 2,205     $ 2,333       $ 4,563     $ 5,253  
Non-cash adjustments:                          
Stock-based compensation     (55 )     (160 )       (114 )     (223 )
Depreciation and amortization     (51 )     (54 )       (100 )     (107 )
Non-GAAP operating expenses minus non-cash expenses   $ 2,099     $ 2,119       $ 4,349     $ 4,923  
 (1) Income (loss) from continuing operations minus non-cash expenses (EBITDAS) is a non-GAAP financial measure. The company defines operating income (loss) minus non-cash expenses as GAAP reported operating income (loss) minus operating depreciation and amortization, and operating stock-based compensation. The company uses this measure for the purpose of modifying the operating loss to reflect direct cash related transactions during the measurement period.
 (2) Net income (loss) minus non-cash expenses is a non-GAAP financial measure. The company defines net income (loss) minus non-cash expenses as GAAP reported net income (loss) minus depreciation and amortization, stock-based compensation, and non-cash foreign exchange transaction losses. The company uses this measure for the purpose of modifying the net loss to reflect only those expenses to reflect direct cash transactions during the measurement period.
 (3) Operating expenses minus non-cash expenses is a non-GAAP financial measure. The company defines operating expenses minus non-cash expenses as GAAP reported operating expenses minus operating depreciation and amortization, and operating stock-based compensation. The company uses this measure for the purpose of identifying total operating expenses involving cash transactions during the measurement period.
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES
    Three Months Ended     Three Months Ended
    2021   2020     2021   2020
(1) Loss from operations minus non-cash expenses EBITDAS loss:                          
GAAP income (loss) from continuing operations as reported   $ (95 )   $ 151       $ (904 )   $ (665 )
Non-cash adjustments:                          
Stock-based compensation     55       160         59       63  
Depreciation and amortization     51       54         49       53  
Non-GAAP income (loss) from operations minus non-cash expenses EBITDAS income (loss)   $ 11 $ 365 $ (797 ) $ (549 )
                           
(2) Net loss minus non-cash expenses:                          
GAAP net income (loss) as reported   $ (100 )   $ 120       $ (1,098 )   $ 240  
Non-cash adjustments:                          
Stock-based compensation     55       160         59       63  
Depreciation and amortization     51       54         48       53  
Non-GAAP net income (loss) minus non-cash expenses   $ 6     $ 334       $ (991 )   $ 356  
                           
(3) Operating expenses minus non-cash expenses                          
GAAP operating expenses as reported   $ 2,205     $ 2,333       $ 2,357     $ 2,920  
Non-cash adjustments:                          
Stock-based compensation     (55 )     (160 )       (59 )     (63 )
Depreciation and amortization     (51 )     (54 )       (48 )     (53 )
Non-GAAP operating expenses minus non-cash expenses   $ 2,099     $ 2,119       $ 2,250     $ 2,804  
 (1) Income (loss) from continuing operations minus non-cash expenses (EBITDAS) is a non-GAAP financial measure. The company defines operating income (loss) minus non-cash expenses as GAAP reported operating income (loss) minus operating depreciation and amortization, and operating stock-based compensation. The company uses this measure for the purpose of modifying the operating loss to reflect direct cash related transactions during the measurement period.
 (2) Net income (loss) minus non-cash expenses is a non-GAAP financial measure. The company defines net income (loss) minus non-cash expenses as GAAP reported net income (loss) minus depreciation and amortization, stock-based compensation, and non-cash foreign exchange transaction losses. The company uses this measure for the purpose of modifying the net loss to reflect only those expenses to reflect direct cash transactions during the measurement period.
 (3) Operating expenses minus non-cash expenses is a non-GAAP financial measure. The company defines operating expenses minus non-cash expenses as GAAP reported operating expenses minus operating depreciation and amortization, and operating stock-based compensation. The company uses this measure for the purpose of identifying total operating expenses involving cash transactions during the measurement period.
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES
    Three Months Ended          
(In thousands)   2021     2020     $ Change   % Change
United States   $ 1,347     $ 1,984     $ (637 )     (32 %)
Latin America     518       2,024       (1,506 )     (74 %)
Europe and Rest of the World     1,879       1,761       118       7 %
Total   $ 3,744     $ 5,769     $ (2,025 )     (35 %)
    Six Months Ended          
(In thousands)   2021     2020     $ Change   % Change
United States   $ 2,939     $ 3,605     $ (666 )     (18 %)
Latin America     1,083       4,350       (3,267 )     (75 %)
Europe and Rest of the World     3,406       3,581       (175 )     (5 %)
Total   $ 7,428     $ 11,536     $ (4,108 )     (36 %)
    Three Months Ended          
(In thousands)   2021     2020     $ Change   % Change
United States   $ 1,592     $ 1,620     $ (28 )     (2 %)
Latin America     565       2,327       (1,762 )     (76 %)
Europe and Rest of the World     1,527       1,820       (293 )     (16 %)
Total   $ 3,684     $ 5,767     $ (2,083 )     (36 %)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211115005455/en/

SOURCE: Sonoma Pharmaceuticals, Inc.

Media and Investor Contact:
Sonoma Pharmaceuticals, Inc.
ir@sonomapharma.com

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/zigman2/quotes/200164174/composite
US : U.S.: Nasdaq
$ 3.61
+0.02 +0.62%
Volume: 15,460
Jan. 27, 2022 3:43p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$11.12 million
Rev. per Employee
$73,338
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