- Revenues of $5.8 and $11.5 million increased by 22% for the
quarter and 25% for the six months ended September 30, 2020 due to
strong international growth
- Operating Expenses continue to trend down by 33% for second
quarter 2021 versus second quarter 2020
- Net income per share of $0.07 (diluted) from continuing
operations for the quarter
Sonoma Pharmaceuticals, Inc. (Nasdaq: SNOA), 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, 2020. It further announced that it had
to restate its first quarter financial statements for the quarter
ended June 30, 2020 due to material errors.
“We are pleased that our second fiscal quarter results show
continued progress towards our goal of building a sustainable
company that can deliver both growth and profitability,” said Amy
Trombly, CEO of Sonoma Pharmaceuticals. Ms. Trombly continued, “We
continue to invest in growth opportunities by building our pipeline
of products and working with our extensive network of distributors
to commercialize them.”
Ms. Trombly continued, “we are disappointed that a first quarter
restatement was necessary. At the time the first quarter 10-Q was
prepared, we were transitioning offices and staff. The
restructuring of our Finance Department is now complete and we have
hired a permanent CFO, CPA-certified controller and additional
accounting staff to replace the temporary staff. They have been
working exceptionally hard in the past few weeks to correct our
first quarter 10-Q and prepare our second quarter 10-Q. We expect
to be back on track with accurate SEC reporting going forward.”
During the review of Sonoma’s financial statements, our staff
discovered material errors in the first quarter financial
statements that led to a restatement of the quarter ended June 30,
2020. The combined errors led to a correction of net income from
$992,000 to $240,000 and earnings per share of $0.54 per share to
$0.13 per share.
Business Highlights for the Second Fiscal Quarter
During the second fiscal quarter, Sonoma successfully completed
the move from Petaluma, CA to Woodstock, GA. All manufacturing is
now completed in Sonoma’s state-of-the-art facility in Zapopan,
Mexico. Sonoma expects to see a continuing reduction in both
overhead and cost of good sold as a result of this
reorganization.
A joint study by the University of Hong Kong and Queen Mary
Hospital using Dermodacyn® Disinfecting solution, a medical grade
solution manufactured by Sonoma and sold by Sonoma’s partner
MicroDerm Technologies Limited in Hong Kong, was published in the
Journal of Hospital Infection. (Journal of Hospital Infection 106
(2020) pages 226-231). The study showed that Dermodacyn®
Disinfecting solution drastically reduced the viability of
SARS-CoV-2 against other commonly-used laboratory and domestic
disinfectants.
Sonoma’s partner, MicroSafe Group DMCC, Dubai,. received a
“green” designation from “Good Environmental Choice Australia”
(GECA) certifying Nanocyn® Disinfectant & Sanitizer as all
natural. Sonoma manufactures Nanocyn using is proprietary HOCl
technology.
Sonoma’s international business continued to show strength as
the company works with its global network of distribution partners
to expand the number of products and territories where those
products are offered. For example, Sonoma worked with its partner
Te Arai BioFarma to launch two new products in Australia and New
Zealand for nasal and oral care as previously disclosed on
September 9, 2020.
Sonoma’s operating results continue to improve quarter over
quarter with an overall increase in revenue and reduction in
operating costs. While the COVID-19 pandemic has provided a
challenging global environment, Sonoma’s diversity in product
offerings and global markets served has proven to not only insulate
Sonoma from regional downturns, but the Company’s anti-viral and
anti-bacterial products have seen increased demand in certain
regions.
Results for the Second Quarter and Six Months Ended September
30, 2020
Revenue of $5,769,000 for the second quarter ended September 30,
2020, increased by $1,042,000, or 22%, from $4,727,000 for the same
period last year. This increase was primarily the result of
increases in revenue in Latin America and Europe and Rest of World
of $1,076,000 and $191,000, respectively, offset by a decrease in
revenue in the United States of $225,000. Revenue of $11,536,000
for the six months ended September 30, 2020, increased by
$2,315,000, or 25%, from $9,221,000 for the same period last year.
This increase was primarily the result of increases in revenue in
Latin America of $2,638,000 and Europe and Rest of World of
$768,000, respectively, offset by a decrease in revenue in the
United States of $1,091,000. The COVID-19 pandemic continues to
impact our U.S. dermatology revenues. Further, during the six
months ended September 30, 2020, animal care products increased
slightly from the prior year. Acute products are down slightly in
revenue from prior year during the six months ended September 30,
2020.
For the quarter ended September 30, 2020, Sonoma reported
revenues of $5,769,000 and cost of revenues of $3,267,000,
resulting in gross profit of $2,502,000 or 43% of revenues,
compared to a gross profit of $2,175,000 or 46% of revenues, for
the same period in the prior year. For the quarter ended September
30, 2020, gross margins decreased by 3% when compared to the same
period last year as a result of the product mix sold. For the six
months ended September 30, 2020, Sonoma reported revenues of
$11,536,000 and cost of revenues of $6,779,000, resulting in gross
profit of $4,757,000, or 41% of revenues, compared to a gross
profit of $4,468,000 or 48% or revenues. For the six months ended
September 30, 2020, gross margins decreased by 7% as a result of a
larger share of low-margin Invekra sales compared to total sales.
Sonoma expects profit margins to improve in the future as a result
of the end of the contract with Invekra in October 2020 and moving
U.S. manufacturing to the Mexican facility.
Total operating expenses during the second quarter of fiscal
year 2020 were $2,333,000, down $1,129,000, or 33%, when compared
to $3,462,000 during the same period in the prior year. Total
operating expenses during the six months ended September 30, 2020
of $5,253,000 decreased by $2,273,000, or 30%, compared to
$7,526,000 during the same period last year. The decrease in total
operating expenses was primarily the result of a reduction in
headcount and the closure of the Petaluma facility.
Net income from continuing operations for the quarter ended
September 30, 2020, was $151,000, compared to a net loss of
$(1,288,000) for the quarter ended September 30, 2019. EBITDAS
income for the quarter ended September 30, 2020 of $383,000, was up
$1,469,000, compared to an EBITDAS loss of $(1,086,000), for the
same period last year.
Net loss from continuing operations for the six months ended
September 30, 2020, was $(557,000), compared to a net loss of
$(614,000) for the same period in prior year. EBITDAS loss for the
six months ended September 30, 2020 of $(166,000), was up
$2,323,000, compared to an EBITDAS loss of $(2,489,000) for the
same period last year.
As of September 30, 2020, Sonoma had cash and cash equivalents
of $4,320,000. On May 1, 2020, Sonoma received loan proceeds in the
amount of $1,310,000 under the Paycheck Protection Program. Whether
any amount will be forgiven has not been determined yet.
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 53 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
businessdevelopment@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™ is a trademark 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
Condensed Consolidated Balance
Sheets
(In thousands, except share and
per share amounts)
(Unaudited)
September 30,
March 31,
2020
2020
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
4,320
$
3,691
Accounts receivable, net
5,279
4,062
Inventories, net
3,704
2,192
Prepaid expenses and other current
assets
2,770
2,256
Current portion of deferred consideration,
net of discount
194
182
Total current assets
16,267
12,383
Operating lease right-of-use assets
634
963
Property and equipment, net
370
365
Deferred consideration, net of discount,
less current portion
770
786
Other assets
104
64
Total assets
$
18,145
$
14,561
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
3,202
$
2,086
Accrued expenses and other current
liabilities
932
1,774
Deferred revenue
150
228
Deferred revenue Invekra
48
45
Operating lease liabilities
188
251
Current portion of long-term debt
49
481
Total current liabilities
4,569
4,865
Operating lease
liabilities-non-current
469
746
Long-term deferred revenue Invekra
235
245
Long-term debt
1,310
–
Total liabilities
6,583
5,856
Commitments and Contingencies
Stockholders’ Equity
Convertible preferred stock, $0.0001 par
value; 714,286 shares authorized at September 30, 2020 and March
31, 2020, respectively, 0 and 1.55 shares issued and outstanding at
September 30, 2020 and March 31, 2020, respectively
–
–
Common stock, $0.0001 par value;
24,000,000 shares authorized at September 30, 2020 and March 31,
2020, 2,041,409 and 1,777,483 shares issued and outstanding at
September 30, 2020 and March 31, 2020, respectively
2
2
Additional paid-in capital
188,701
186,559
Accumulated deficit
(171,886
)
(172,246
)
Accumulated other comprehensive loss
(5,255)
(5,610
)
11,562
8,705
$
18,145
$
14,561
SONOMA PHARMACEUTICALS, INC.
AND SUBSIDIARIES
Condensed Consolidated
Statements of Comprehensive Loss
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
September 30,
Six Months Ended
September 30,
2020
2019
2020
2019
Revenues
$
5,769
$
4,727
$
11,536
$
9,221
Cost of revenues
3,267
2,552
6,779
4,753
Gross profit
2,502
2,175
4,757
4,468
Operating expenses
Research and development
(85)
270
391
608
Selling, general and administrative
2,418
3,192
4,862
6,918
Total operating expenses
2,333
3,462
5,253
7,526
Income (loss) from operations
169
(1,287)
(496)
(3,058)
Interest expense
(4
)
(2)
(6)
(12)
Interest income
8
42
10
84
Other (expense) income, net
(77)
(41)
(197)
(100)
Gain on sale of assets
55
-
132
2,472
Income (loss) from continuing
operations
151
(1,288)
(557)
(614)
Income (loss) from discontinued
operations
(31)
85
917
126
Net income (loss)
$
120
$
(1,203)
$
360
$
(488)
Net income (loss) per share: basic
Continuing operations
$
0.08
$
(0.98)
$
(0.29)
$
(0.47)
Discontinued operations
(0.02)
0.06
0.48
0.10
$
0.06
$
(0.92)
$
0.19
$
(0.37)
Net income (loss) per share: diluted
Continuing operations
$
0.07
$
(0.98)
$
(0.26)
$
(0.47)
Discontinued operations
(0.01)
0.06
0.43
0.10
$
0.06
$
(0.92)
$
0.17
$
(0.37)
Weighted-average number of shares used in
per common share calculations: basic
2,008
1,317
1,924
1,317
Weighted-average number of shares used in
per common share calculations: diluted
2,159
1,317
2,118
1,317
Other comprehensive income (loss)
Net income (loss)
$
120
$
(1,203)
$
360
$
(488)
Foreign currency translation
adjustments
188
(163)
355
(96)
Comprehensive income (loss)
$
308
$
(1,366)
$
715
$
(584)
SONOMA PHARMACEUTICALS, INC.
AND SUBSIDIARIES
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
(In thousands)
(Unaudited)
Three Months Ended
September 30,
Six Months Ended
September 30,
2020
2019
2020
2019
(1) Loss from operations minus non-cash
expenses EBITDAS loss:
GAAP income (loss) from operations as
reported
$
169
$
(1,287
)
$ (496
)
$ (3,058
)
Non-cash adjustments:
Stock-based compensation
160
133
223
425
Depreciation and amortization
54
68
107
144
Non-GAAP income (loss) from operations
minus non-cash expenses EBITDAS income (loss)
$
383
$ (1,086)
$ (166)
$ (2,489
)
(2) Net loss minus non-cash
expenses:
GAAP net income (loss) as reported
$
120
(1,203
)
360
(488
)
Non-cash adjustments:
Stock-based compensation
160
133
223
425
Depreciation and amortization
54
68
107
144
Non-GAAP net income (loss) minus non-cash
expenses
$
334
$ (1,002
)
$ 690
$ 81
(3) Operating expenses minus non-cash
expenses
GAAP operating expenses as reported
$
2,333
3,462
5,253
7,526
Non-cash adjustments:
Stock-based compensation
(160
)
(133)
(223
)
(425
)
Depreciation and amortization
(54
)
(68)
(107
)
(144
)
Non-GAAP operating expenses minus non-cash
expenses
$
2,119
$ 3,261
$ 4,923
$ 6,957
(1) Loss from operations minus non-cash
expenses (EBITDAS) is a non-GAAP financial measure. The Company
defines operating loss minus non-cash expenses as GAAP reported
operating 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 loss minus non-cash expenses is a
non-GAAP financial measure. The Company defines net loss minus
non-cash expenses as GAAP reported net 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
PRODUCT RELATED REVENUE
SCHEDULES
(In thousands)
(Unaudited)
The following table presents the
Company’s disaggregated product revenues by geographic region:
Three Months Ended
September 30,
(In thousands)
2020
2019
$ Change
% Change
United States
$
1,984
$
2,209
$
(225
)
(10
)%
Latin America
2,024
948
1,076
114
%
Europe and Rest of the World
1,761
1,570
191
12
%
Total
$
5,769
$
4,727
$
1,042
22
%
Six Months Ended
September 30,
(In thousands)
2020
2019
$ Change
% Change
United States
$
3,605
$
4,696
$
(1,091)
(23)
%
Latin America
4,350
1,712
2,638
154
%
Europe and Rest of the World
3,581
2,813
768
27
%
Total
$
11,536
$
9,221
$
2,315
25
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201120005720/en/
Sonoma Pharmaceuticals, Inc. - Media and Investor
Contact: ir@sonomapharma.com
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