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What changed in Sonoma Pharmaceuticals, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Sonoma Pharmaceuticals, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+194 added−207 removedSource: 10-K (2025-06-17) vs 10-K (2024-06-17)

Top changes in Sonoma Pharmaceuticals, Inc.'s 2025 10-K

194 paragraphs added · 207 removed · 150 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

67 edited+24 added−33 removed94 unchanged
Biggest changeWe received a CE certificate for 39 of our Class IIB medical devices, which allows us to affix CE markings on these products and sell them in Europe.
Biggest changeThe European Database for Medical Devices, or Eudamed, will hold and publish information on medical devices collected from the European Commission and the national authorities. 19 We successfully transitioned all of our commercialized products in Europe to the Medical Devices Regulation and received an updated CE certificate for Class IIb wound care solution, wound care hydrogel and dermatological hydrogel and Class IIa dermatological solution, dermatological hydrogel and eyelid solution, which allows us to continue to affix CE markings on our products and sell them as medical devices in Europe.
After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, requires a new 510(k) clearance or could require a pre-market approval. Clinical trials are almost always required to support a pre-market approval application and are sometimes required for a 510(k) pre-market notification.
After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, requires a new 510(k) clearance or could require a pre-market approval. 15 Clinical trials are almost always required to support a pre-market approval application and are sometimes required for a 510(k) pre-market notification.
Unclassified devices are legally marketed pre-amendment devices for which a classification regulation has yet to be finalized and for which a pre-market approval is not required. 15 Class I devices are devices for which safety and effectiveness can be assured by adherence to a set of general controls.
Unclassified devices are legally marketed pre-amendment devices for which a classification regulation has yet to be finalized and for which a pre-market approval is not required. Class I devices are devices for which safety and effectiveness can be assured by adherence to a set of general controls.
Regenacyn® Advanced Scar Gel Regenacyn® Plus Scar Gel Celacyn® Scar Management Gel U.S. 510(k) Prescription and OTC product, for the management of old and new hypertrophic and keloid scarring resulting from burns, general surgical procedures and trauma wounds.
Celacyn Scar Management Gel Regenacyn Plus Scar Gel Regenacyn Advanced Scar Gel U.S. 510(k) Prescription and OTC product intended for the management of old and new hypertrophic and keloid scarring resulting from burns, general surgical procedures and trauma wounds.
Medical Device Regulation To date, we have received 21 510(k) clearances for use of products as medical devices in tissue care management, such as cleaning, debridement, lubricating, moistening and dressing, including for acute and chronic wounds, and in dermatology applications. Any future product candidates or new applications classified as medical devices will require clearance by the FDA.
Medical Device Regulation To date, we have received 22 510(k) clearances for use of products as medical devices in tissue care management, such as cleaning, debridement, lubricating, moistening and dressing, including for acute and chronic wounds, and in dermatology applications. Any future product candidates or new applications classified as medical devices will require clearance by the FDA.
Regulatory Approvals and Clearances To date, in the United States we have obtained 21 U.S. Food and Drug Administration, or FDA, clearances permitting the sale of products as medical devices for Section 510(k) of the Federal Food, Drug and Cosmetic Act.
Regulatory Approvals and Clearances To date, in the United States we have obtained 22 U.S. Food and Drug Administration, or FDA, clearances permitting the sale of products as medical devices for Section 510(k) of the Federal Food, Drug and Cosmetic Act.
We believe we own sufficient factory space and equipment to produce an adequate amount of product to meet anticipated future requirements for at least the next two years. With expansion into new geographic markets, we may establish additional manufacturing facilities to better serve those new markets.
We believe we own or have access to sufficient factory space and equipment to produce an adequate amount of product to meet anticipated future requirements for at least the next two years. With expansion into new geographic markets, we may establish additional manufacturing facilities to better serve those new markets.
For the years ended March 31, 2024 and 2023, research and development expense amounted to $1,871,000 and $207,000, respectively. A small percentage of these expenses were borne by our customers. We manufacture all of our products at our facility in Zapopan, Mexico.
For the years ended March 31, 2025 and 2024, research and development expense amounted to $1,814,000 and $1,871,000, respectively. A small percentage of these expenses were borne by our customers. We manufacture all of our products at our facility in Zapopan, Mexico.
We have also filed for trademark protection for marks used with products in each of the following regions: United States, Europe, Canada, certain countries in Central and South America, including Mexico and Brazil, certain countries in the Middle East and certain countries in Asia, including Japan, China, Hong Kong, the Republic of Korea, India and Australia.
We have also filed for trademark protection for marks used with products in each of the following regions: United States, Europe, Canada, Brazil, certain countries in the Middle East and certain countries in Asia, including Japan, China, Hong Kong, the Republic of Korea, India and Australia.
In the European Union, there is a single regulatory approval process and approval is represented by the presence of a CE marking. 16 Other Regulation in the United States The Physician Payments Sunshine Act The Physician Payments Sunshine Act signed into law in 2010 as part of the Affordable Care Act requires manufacturers of medical devices, drugs, biologicals, and medical supplies to track and report certain payments made to and transfers of value provided to physicians and teaching hospitals as well as to report certain ownership and investment interests held by physicians and their immediate family members.
In the European Union, there is a single regulatory approval process and approval is represented by the presence of a CE marking. 16 Other Regulation in the United States The Physician Payments Sunshine Act The Physician Payments Sunshine Act signed into law in 2010 as part of the Affordable Care Act requires manufacturers of medical devices, drugs, biologicals, and medical supplies for which payment is available under Medicare or Medicaid to track and report certain payments made to and transfers of value provided to physicians and teaching hospitals as well as to report certain ownership and investment interests held by physicians and their immediate family members.
Dermatology In the United States, we offer Lumacyn Clarifying Mist, Regenacyn Advanced Scar Gel and Reliefacyn Advanced Itch-Burn-Rash-Pain Relief Hydrogel for OTC purchase, and Regenacyn Plus Scar Gel and Reliefacyn Plus Itch-Burn-Rash-Pain Relief Hydrogel for office dispense.
We offer Lasercyn Dermal Spray, Lasercyn Gel, Regenacyn Advanced Scar Gel, Reliefacyn Advanced Itch-Burn-Rash-Pain Relief Hydrogel and Lumacyn Clarifying Mist for OTC purchase in the United States, and Regenacyn Plus Scar Gel and Reliefacyn Plus Itch-Burn-Rash-Pain Relief Hydrogel for office dispense.
In January 2024, we launched Lumacyn TM Clarifying Mist, a direct-to-consumer skin care product in the United States. Lumacyn is an all-natural daily toner to soothe skin, reduce redness and irritation, and manage blemishes by reducing infection. Our consumer products are available through Amazon.com, our online store and third-party distributors. We sell dermatology products in Europe and Asia through distributors.
In January 2024, we launched Lumacyn TM Clarifying Mist, a direct-to-consumer skin care product in the United States. Lumacyn is an all-natural daily toner to soothe skin, reduce redness and irritation, and manage blemishes by reducing infection. Our consumer products are available through online retailers, our online store and third-party distributors.
Microcyn® is a HOCl-based topical line of products designed to stimulate expedited healing by targeting a wide range of pathogens including viruses, fungi, spores and bacteria, including antibiotic-resistant strains that slow the natural healing of wounds.
Microcyn Wound Care Management for Professional Use is an HOCl-based topical line of products designed to stimulate expedited healing by targeting a wide range of pathogens including viruses, fungi, spores and bacteria, including antibiotic-resistant strains that slow the natural healing of wounds.
Surface Disinfectants Through our partner MicroSafe DMCC, Dubai, we sell Nanocyn®. Nanocyn is a hospital-grade disinfectant indicated to sterilize hard surfaces by spraying directly onto the surface, for medical devices by submerging the device in Nanocyn, and also for fumigation into the air.
Our MicrocynVS line is veterinarian-strength animal care for use in vet clinics and animal hospitals. Surface Disinfectants Through our partner MicroSafe DMCC, Dubai, we sell Nanocyn®. Nanocyn is a hospital-grade disinfectant indicated to sterilize hard surfaces by spraying directly onto the surface, for medical devices by submerging the device in Nanocyn, and also for fumigation into the air.
These manufacturers must report annually to the Center for Medicare & Medicaid Services any direct or indirect payments and transfers of value of $10 or more, or annual aggregate of $100 or more, made to physicians or to a third party at the request of or on behalf of a physician, including dentists.
These manufacturers must report annually to the Center for Medicare & Medicaid Services any direct or indirect payments and transfers of value of $13.46 or more, or annual aggregate of $134.54 or more in calendar year 2025, made to physicians or to a third party at the request of or on behalf of a physician, including dentists.
Acuicyn Antimicrobial Eyelid & Eyelash Hygiene U.S. 510(k) Prescription product, under the supervision of a healthcare professional, intended for the cleansing, irrigation, moistening, debridement and removal of foreign material and debris from exudating wounds, acute and chronic dermal lesions including stage I-IV pressure ulcers, stasis ulcers, diabetic ulcers, post-surgical wounds, first- and second-degree burns, abrasions, minor irritations of the skin, diabetic foot ulcers, ingrown toe nails, grafted/donor sites and exit sites.
Brand Approval Type Summary Indication HOCl-based Products: Microcyn Wound Care Management Acuicyn Antimicrobial Eyelid & Eyelash Hygiene Epicyn Antimicrobial Facial Cleanser U.S. 510(k) Under the supervision of a healthcare professional, intended for the cleansing, irrigation, moistening, debridement and removal of foreign material and debris from exudating wounds, acute and chronic dermal lesions including stage I-IV pressure ulcers, stasis ulcers, diabetic ulcers, post-surgical wounds, first-and-second-degree burns, abrasions, minor irritations of the skin, diabetic foot ulcers, ingrown toe nails, grafted/donor sites and exit sites.
In June 2022, the Natural Products Association certified Rejuvacyn Advanced as a Natural Personal Care Product. Reliefacyn Advanced received the National Eczema Association Seal of Acceptance TM in 2023.
Rejuvacyn is certified as a Natural Personal Care Product by the Natural Products Association, and Reliefacyn received the National Eczema Association Seal of Acceptance TM in 2023.
The medical-grade surface disinfectant solution is used in hospitals worldwide to protect doctors and patients. In May 2020, Nanocyn® Disinfectant & Sanitizer received approval to be entered into the Australian Register of Therapeutic Goods, or ARTG for use against the coronavirus SARS-CoV-2, or COVID-19, and was also authorized in Canada for use against COVID-19.
In May 2020, Nanocyn ® Disinfectant & Sanitizer received approval to be entered into the Australian Register of Therapeutic Goods, or ARTG, for use against the coronavirus SARS-CoV-2, or COVID-19, and was also authorized in Canada for use against COVID-19.
Rejuvacyn® Advanced Skin Repair Cooling Mist Rejuvacyn® Plus Skin Repair Cooling Mist Lasercyn™ Gel U.S. 510(k) Prescription and OTC product, intended for the management of minor skin irritations following post non ablative laser therapy procedures, post microdermabrasion therapy and following superficial chemical peels, and to relieve itch and pain from minor skin irritations, lacerations, abrasions and minor burns.
Levicyn Gel Lasercyn Post Procedure Gel U.S. 510(k) Prescription and OTC product intended for the management of post non ablative laser therapy procedures, post microdermabrasion therapy and following superficial chemical peels. May also be used to relieve itch and pain from minor skin irritations, lacerations, abrasions and minor burns.
Microcyn® OTC Advanced Wound & Skin Cleanser Microcyn® OTC Advanced Wound & Skin Cleanser is intended for the over-the-counter management of skin abrasions, lacerations, minor irritations and cuts. 7 Microcyn® Wound Care Management for Professional Use Microcyn® offers enhanced healing properties.
Microcyn OTC Advanced Wound & Skin Cleanser is intended for the over-the-counter management of skin abrasions, lacerations, minor irritations and cuts.
We believe relations with employees are very good. Products Our products are all classified as medical devices and categorized as prescription, over-the-counter (OTC) and office dispense products. Below are some of our key products that we either sell through our own efforts or through partnership agreements.
Products Our products are all classified as medical devices and categorized as prescription, over-the-counter (OTC) and office dispense products. Below are some of our key products that we either sell through our own efforts or through partnership agreements. 5 Dermatology In the United States, we offer both prescription and OTC dermatology products.
In 2022, we relocated our principal executive offices from 645 Molly Lane, Suite 150, Woodstock, Georgia, 30189 to 5445 Conestoga Court, Suite 150, Boulder, Colorado 80301. We have two active wholly-owned subsidiaries: Oculus Technologies of Mexico, S.A. de C.V., and Sonoma Pharmaceuticals Netherlands, B.V. Our fiscal year end is March 31. Our corporate telephone number is (800) 759-9305.
Our principal executive offices are located at 5445 Conestoga Court, Suite 150, Boulder, Colorado 80301. We have two active wholly-owned subsidiaries: Oculus Technologies of Mexico, S.A. de C.V., and Sonoma Pharmaceuticals Netherlands, B.V. Our fiscal year end is March 31. Our corporate telephone number is (800) 759-9305. Our websites are www.sonomapharma.com and www.sonomapharma.eu.
They work by first removing foreign material and debris from the skin surface and moistening the skin, thereby improving wound healing. Secondly, our HOCl products assist in the wound healing process by removing microorganisms. HOCl is an important constituent of our innate immune system, formed and released by the macrophages during phagocytosis.
Secondly, our HOCl products assist in the wound healing process by removing microorganisms. HOCl is an important constituent of our innate immune system, formed and released by the macrophages during phagocytosis.
Violations of these laws, which are discussed more fully below, can lead to civil and criminal penalties, damages, imprisonment, fines, exclusion from participation in Medicare, Medicaid and other federal health care programs, and the curtailment or restructuring of operations.
Violations of these laws, which are discussed more fully below, can lead to civil and criminal penalties, damages, imprisonment, fines, exclusion from participation in Medicare, Medicaid and other federal health care programs, and the curtailment or restructuring of operations. Any such violations could have a material adverse effect on our business, financial condition, results of operations or cash flows.
Nanocyn also received the Green Seal ® Certification after surpassing a series of rigorous standards that measure environmental health, sustainability and product performance.
Nanocyn also received the Green Seal ® Certification after surpassing a series of rigorous standards that measure environmental health, sustainability and product performance. Nanocyn is currently sold by MicroSafe in Europe, the Middle East and Australia.
Microcyn® OTC Advanced Wound & Skin Cleanser Ocucyn® Eyelid & Eyelash Cleanser Lumacyn TM Clarifying Mist Podiacyn TM Advanced Everyday Foot Care U.S. 510(k) OTC product for use in the management of skin abrasions, lacerations, minor irritations, cuts and intact skin.
It is also intended for use to moisten and lubricate wound dressings and for use with devices intended to irrigate wounds. 11 Microcyn OTC Advanced Wound & Skin Cleanser Ocucyn Eyelid & Eyelash Cleanser Lumacyn Clarifying Mist Podiacyn Advanced Everyday Foot Care U.S. 510(k) Intended for OTC use in the management of skin abrasions, lacerations, minor irritations, cuts and intact skin.
Ocucyn® Eyelid & Eyelash Cleanser, designed for everyday use, is a safe, gentle, and effective solution for good eyelid and eyelash hygiene. Oral, Dental and Nasal Care We sell a variety of oral, dental, and nasal products around the world. In international markets, our product Microdacyn60® Oral Care treats mouth and throat infections and thrush.
Ocucyn is designed for everyday use as a safe, gentle, and effective solution for good eyelid and eyelash hygiene. In international markets we rely on distribution partners to sell our eye products. Oral, Dental and Nasal Care We sell a variety of oral, dental, and nasal products around the world.
Microdacyn60 assists in reducing inflammation and pain, provides soothing cough relief and does not contain any harmful chemicals. It does not stain teeth, is non-irritating, non-sensitizing, has no contraindications and is ready for use with no mixing or dilution. Our international nasal care product Sinudox™ based on our HOCl technology is an electrolyzed solution intended for nasal irrigation.
In international markets, our product Microdacyn60 Oral Care treats mouth and throat infections and thrush. Microdacyn60 assists in reducing inflammation and pain, provides soothing cough relief and does not contain any harmful chemicals. It does not stain teeth, is non-irritating, non-sensitizing, has no contraindications and is ready for use with no mixing or dilution.
Some of our competitors in the dermatology, wound care, eye, nasal and oral care, podiatry, animal health care and surface disinfectant markets enjoy several competitive advantages.
We believe our HOCl-based solutions are among the most stable therapeutics available. Some of our competitors in the dermatology, wound care, eye, nasal and oral care, podiatry, animal health care and surface disinfectant markets enjoy several competitive advantages.
These side effects include bacterial resistance, stinging, burning and inflammation for topical antibiotics and stretch marks, easy bruising, tearing of the skin and, to a lesser extent, enlarged blood vessels for topical steroids.
These side effects include bacterial resistance, stinging, burning and inflammation for topical antibiotics and stretch marks, easy bruising, tearing of the skin and, to a lesser extent, enlarged blood vessels for topical steroids. Our HOCl-based products are safe, non-toxic and have shown few side effects in clinical studies.
In October 2022, we launched two new over-the-counter dermatology products in the United States, Reliefacyn® Advanced Itch-Burn-Rash-Pain Relief Hydrogel for the alleviation of red bumps, rashes, shallow skin fissures, peeling, and symptoms of eczema/atopic dermatitis, and Rejuvacyn® Advanced Skin Repair Cooling Mist for management of minor skin irritations following cosmetic procedures as well as daily skin health and hydration.
Other over-the-counter dermatology products in the United States include Regenacyn ® Advanced Scar Gel, which is clinically proven to improve the overall appearance of scars while reducing pain, itch and redness, Reliefacyn ® Advanced Itch-Burn-Rash-Pain Relief Hydrogel for the alleviation of red bumps, rashes, shallow skin fissures, peeling, and symptoms of eczema/atopic dermatitis, and Rejuvacyn ® Advanced Skin Repair Cooling Mist for management of minor skin irritations following cosmetic procedures as well as daily skin health and hydration.
In these international markets, we have a network of partners, ranging from country specific distributors to large pharmaceutical companies to full-service sales and marketing companies. We work with our international partners to create products they can market in their home country. Some products we develop and manufacture are custom label while others use branding we have already developed.
We sell dermatology products in Europe and Asia through distributors. In these international markets, we have a network of partners, ranging from country specific distributors to large pharmaceutical companies to full-service sales and marketing companies. We work with our international partners to create products they can market in their home country.
On April 11, 2023, we launched Podiacyn TM Advanced Everyday Foot Care direct to consumers for over-the-counter use in the United States, intended for management of foot odors, infections, and irritations, as well as daily foot health and hygiene. Podiacyn is available through Amazon.com, our online store and third-party distributors.
In Europe, we sell our wound care products for podiatric use through a diverse network of distributors. In April 2023, we launched Podiacyn TM Advanced Everyday Foot Care direct to consumers for over-the-counter use in the United States, intended for management of foot odors, infections, and irritations, as well as daily foot health and hygiene.
In July 2021, we granted MicroSafe the non-exclusive right to sell and distribute Nanocyn in the United States provided that MicroSafe secure U.S. EPA approval.
Through our partner MicroSafe, we sell hard surface disinfectant products into Europe, the Middle East and Australia. In July 2021, we granted MicroSafe the non-exclusive right to sell and distribute Nanocyn in the United States provided that MicroSafe secure U.S. EPA approval.
At March 31, 2024, customer B represented 13% of our net accounts receivable balance and customer D represented 17% of our net accounts receivable balance. At March 31, 2023, customer B represented 22% of our net accounts receivable balance and customer D represented 21% of our net accounts receivable balance.
At March 31, 2024, customer B represented 13% of our net accounts receivable balance and customer D represented 17% of our net accounts receivable balance. For the year ended March 31, 2025, customer B represented 21% and customer C represented 18% of net revenues.
Factors Affecting Competitive Position While some other companies are able to produce small molecule, HOCl-based formulations, based on our research, their products may become unstable after a relatively short period of time or have large ranges of effectiveness. We believe our HOCl-based solutions are among the most stable therapeutics available.
Our opportunity in this space relative to antibiotics is based on the insight that competing antibiotic solutions may have resistance-building properties. 14 Factors Affecting Competitive Position While some other companies are able to produce small molecule, HOCl-based formulations, based on our research, their products may become unstable after a relatively short period of time or have large ranges of effectiveness.
On April 9, 2024, we announced expansion of our Microcyn® Negative Pressure Wound Therapy Solution products line, now available in 250mL, 450mL and 990mL sizes to meet the diverse needs of healthcare professionals and patients.
In April 2024, we announced expansion of our Microcyn Negative Pressure Wound Therapy Solution products line, now available in 250mL, 450mL and 990mL sizes to meet the diverse needs of healthcare professionals and patients. 3 In August, 2024, we entered into a distribution agreement with Medline Industries, LP, for the marketing and distribution of our wound care products in the United States.
In the United States, we sell our wound care products directly to podiatrists as well as hospitals, nurses, and other healthcare practitioners and indirectly through non-exclusive distribution arrangements. In Europe, we sell our wound care products for podiatric use through a diverse network of distributors.
Podiatry Our HOCl-based wound care products are also indicated for the treatment of diabetic foot ulcers. In the United States, we sell our wound care products directly to podiatrists as well as hospitals, nurses, and other healthcare practitioners and indirectly through non-exclusive distribution arrangements.
Intellectual Property Our success depends in part on an ability to obtain and maintain proprietary protection for product technology and know-how, to operate without infringing proprietary rights of others, and to prevent others from infringing on our proprietary rights.
For the year ended March 31, 2024, customer A represented 17%, customer B represented 15% and customer C represented 14% of net revenues. 13 Intellectual Property Our success depends in part on an ability to obtain and maintain proprietary protection for product technology and know-how, to operate without infringing proprietary rights of others, and to prevent others from infringing on our proprietary rights.
Surface Disinfectants Our HOCl technology has been formulated as a disinfectant and sanitizer solution for our partner MicroSafe and is sold in numerous countries. It is designed to be used to spray in aerosol format in areas and environments likely to serve as a breeding ground for the spread of infectious disease, which could result in epidemics or pandemics.
It is designed to be used to spray in aerosol format in areas and environments likely to serve as a breeding ground for the spread of infectious disease, which could result in epidemics or pandemics. The medical-grade surface disinfectant solution is used in hospitals worldwide to protect doctors and patients.
Our products are primarily targeted at the treatment of redness and irritation, the management of scars and symptoms of eczema/atopic dermatitis. We are strategically focused on introducing innovative new products that are supported by human clinical data with applications that address specific dermatological procedures currently in demand.
We are strategically focused on introducing innovative new products that are supported by human clinical data with applications that address specific dermatological procedures currently in demand.
Animal Health Care In the United States and internationally, our HOCl-based MicrocynAH® line offers topical solutions designed to relieve the common symptoms of hot spots, scratches, skin rashes, post-surgical sites and irritated animal skin and promote expedited healing for all animals. 9 Our MicrocynVS® line is veterinarian-strength animal care for use in vet clinics and animal hospitals.
Internationally, we offer Ocudox TM for eye care, Sinudox TM for nasal irrigation, and Microdacyn60® Oral Care to support the treatment of mouth and throat infections and the debridement and moistening of mouth lesions and thrush. 9 Animal Health Care In the United States and internationally, our HOCl-based MicrocynAH line offers topical solutions designed to relieve the common symptoms of hot spots, scratches, skin rashes, post-surgical sites and irritated animal skin and promote expedited healing for all animals.
While compliance with the Compliance Program Guidance materials is voluntary, a California law requires pharmaceutical and devices manufacturers to initiate compliance programs that incorporate the Compliance Program Guidance and the July 2002 Pharmaceuticals Research and Manufacturers of America Code on Interactions with Healthcare Professionals.
While compliance with the Compliance Program Guidance materials is voluntary, a California law requires pharmaceutical and devices manufacturers to initiate compliance programs that incorporate the Compliance Program Guidance and the July 2002 Pharmaceuticals Research and Manufacturers of America Code on Interactions with Healthcare Professionals. 17 Due to the scope and breadth of the provisions of some of these laws, it is possible that some of our practices might be challenged by the government under one or more of these laws in the future.
Eye, Nasal and Oral Care Ocucyn® Eyelid and Eyelash Cleanser Ocucyn® Eyelid and Eyelash Cleanser is an OTC product sold directly in the United States.
Ocucyn Eyelid and Eyelash Cleanser is an OTC eye care product sold directly in the United States that provides everyday relief for red, itchy, irritated and swollen eyelids.
In June 2022, the Natural Products Association certified Microcyn OTC as a Natural Personal Care Product in the United States. In June 2023, we announced a new application of our HOCl technology for intraoperative pulse lavage irrigation treatment, which can replace commonly used IV bags in a variety of surgical procedures.
In Europe, the Middle East and Asia, we sell our wound care products through a diverse network of distributors. In June 2023, we announced a new application of our HOCl technology for intraoperative pulse lavage irrigation treatment, which can replace commonly used IV bags in a variety of surgical procedures.
Regenacyn® Plus is a prescription-strength scar gel which is available as an office dispense product through dermatology practices and medical spas. 6 Reliefacyn® Advanced Itch-Burn-Rash-Pain Relief Hydrogel and Reliefacyn® Plus Itch-Burn-Rash-Pain Relief Hydrogel Reliefacyn® Advanced Itch-Burn-Rash-Pain Relief Hydrogel is intended for the alleviation of red bumps, rashes, shallow skin fissures, sunburn, peeling, and symptoms of eczema/atopic dermatitis.
Reliefacyn Advanced Itch-Burn-Rash-Pain Relief Hydrogel is intended for the alleviation of red bumps, rashes, shallow skin fissures, sunburn, peeling, and symptoms of eczema/atopic dermatitis.
In-vitro and clinical studies of HOCl show it to safely manage skin abrasions, lacerations, minor irritations, cuts, and intact skin. We sell our products either directly or via partners in 55 countries worldwide. Business Update Over the past year, we have continued our focus on growing our revenues while maintaining costs.
Our products are clinically proven to reduce itch, pain, scarring, and irritation safely and without damaging healthy tissue. In-vitro and clinical studies of HOCl show it to safely manage skin abrasions, lacerations, minor irritations, cuts, and intact skin. We sell our products either directly or via partners in over 55 countries worldwide.
Animal Health Care MicrocynAH® is an HOCl-based topical product that cleans, debrides and treats a wide spectrum of animal wounds and infections. It is intended for the safe and rapid treatment of a variety of animal afflictions including cuts, burns, lacerations, rashes, hot spots, rain rot, post-surgical sites, pink eye symptoms and wounds to the outer ear.
It is intended for the safe and rapid treatment of a variety of animal afflictions including cuts, burns, lacerations, rashes, hot spots, rain rot, post-surgical sites, pink eye symptoms and wounds to the outer ear. 4 For our animal health products sold in the U.S. and Canada, we partner with Compana Pet Brands.
Overview We are a global healthcare leader for developing and producing stabilized hypochlorous acid, or HOCl, products for a wide range of applications, including wound care, eye care, oral care, dermatological conditions, podiatry, animal health care and non-toxic disinfectants. Our products are clinically proven to reduce itch, pain, scarring, and irritation safely and without damaging healthy tissue.
The websites and any information contained therein or connected thereto is not intended to be incorporated into this report. Overview We are a global healthcare leader for developing and producing stabilized hypochlorous acid, or HOCl, products for a wide range of applications, including wound care, eye care, oral care, dermatological conditions, podiatry, animal health care and non-toxic disinfectants.
For the Asian and European markets, in May 2019 we partnered with Petagon an international importer and distributor of quality pet food and products for an initial term of five years. We supply Petagon with all MicrocynAH products sold by Petagon.
Compana distributes non-prescription products to national pet-store retail chains and farm animal specialty stores, such as PetSmart, Tractor Supply, PetExpress, and Menards. For the Asian and European markets, in May 2019 we partnered with Petagon an international importer and distributor of quality pet food and products for an initial term of five years.
Nanocyn is currently sold by MicroSafe in Europe, the Middle East and Australia. 5 Employees As of June 17, 2024, we employed a total of 9 full-time employees in the United States, and one full-time employee in the Netherlands. Additionally, we had 162 employees in Mexico. We are not a party to any collective bargaining agreements.
Employees As of June 12, 2025, we employed a total of 7 full-time employees in the United States, and one full-time employee in the Netherlands. Additionally, we had approximately 160 employees in Mexico. We are not a party to any collective bargaining agreements. We believe relations with employees are very good.
Business Channels Our core market differentiation is based on being the leading developer and producer of stabilized hypochlorous acid, or HOCl, solutions. We have been in business for over 20 years, and in that time, we have developed significant scientific knowledge of how best to develop and manufacture HOCl products backed by decades of studies and data collection.
We have been in business for over 20 years, and in that time, we have developed significant scientific knowledge of how best to develop and manufacture HOCl products backed by decades of studies and data collection along with manufacturing experience. We sell our products into many markets both in the U.S. and internationally.
It is also intended for use to moisten and lubricate wound dressings and for use with devices intended to irrigate wounds. Endocyn Root Canal Irrigation Solution U.S. 510(k) Endocyn Root Canal Irrigation Solution is intended to irrigate, cleanse, and debride root canal systems including the removal of foreign material and debris during root canal therapy.
Also indicated for the management of irritation and pain from minor burns, including sunburn. 12 Endocyn Root Canal Irrigation Solution U.S. 510(k) Under the supervision of a healthcare professional intended to irrigate, cleanse, and debride root canal systems including the removal of foreign material and debris during root canal therapy.
We continue to invest in research and development, both in the U.S. and internationally, for our core performance-stabilized hypochlorous acid, or HOCl, technology. We have an active pipeline of products and we continue to seek new regulatory clearances to expand potential markets we can sell our products into.
We have an active pipeline of products and we intend to continue to seek new regulatory clearances to expand potential markets for our products. Business Channels Our core market differentiation is based on being the leading developer and producer of stabilized hypochlorous acid, or HOCl, solutions.
In addition, we look for markets where we can provide effective product line extensions and pricing to new product families. 2 In the United States, we partner with EMC Pharma, LLC to sell our prescription dermatology products.
In addition, we look for markets where we can provide effective product line extensions and pricing to new product families. 2 In the United States, we relaunched the direct sale of our prescription and office dispense dermatology products in December 2024, including Epicyn Facial Cleanser, Levicyn Antimicrobial Dermal Spray, Levicyn Gel, Levicyn Spray Gel, Celacyn Scar Management Gel.
Nanocyn has also met the stringent environmental health and social/ethical criteria of Good Environmental Choice Australia, or GECA, becoming one of the very few eco-certified, all-natural disinfectant solutions in Australia. Through our partner MicroSafe, we sell hard surface disinfectant products into Europe, the Middle East and Australia.
Nanocyn has also met the stringent environmental health and social/ethical criteria of Good Environmental Choice Australia, or GECA, becoming one of the very few eco-certified, all-natural disinfectant solutions in Australia. In 2024, the Australian Therapeutic Goods Administration approved extended claims for Nanocyn for use against Candida auris (C. auris) and Clostritium Difficile (C. diff.).
We have created or co-developed a wide range of products for international markets using our core HOCl technology. First Aid and Wound Care Our HOCl-based wound care products are intended for the treatment of acute and chronic wounds as well as first- and second-degree burns, and as an intraoperative irrigation treatment.
First Aid and Wound Care Our HOCl-based wound care products are intended for the treatment of acute and chronic wounds as well as first- and second-degree burns, and as an intraoperative irrigation treatment. They work by first removing foreign material and debris from the skin surface and moistening the skin, thereby improving wound healing.
Sinudox clears and cleans stuffy, runny noses and blocked or inflamed sinuses by ancillary ingredients that may have a local antimicrobial effect. Sinudox is currently sold through Amazon in Europe. In other parts of the world, we partner with distributors to sell Sinudox. 4 Podiatry Our HOCl-based wound care products are also indicated for the treatment of diabetic foot ulcers.
Our international nasal care product Sinudox™ based on our HOCl technology is an electrolyzed solution intended for nasal irrigation. Sinudox clears and cleans stuffy, runny noses and blocked or inflamed sinuses by ancillary ingredients that may have a local antimicrobial effect. We sell Sinudox through international distributors.
Lumacyn TM Clarifying Mist Lumacyn TM Clarifying Mist is intended for use as a daily skin toner, to soothe and cleanse the skin, reduce redness, and manage blemishes by reducing infection. Regenacyn® Advanced Scar Gel and Regenacyn® Plus Scar Gel Regenacyn® Advanced Scar Gel is clinically proven to improve the overall appearance of scars while reducing pain and itch.
Lumacyn Clarifying Mist is intended for use as a daily skin toner, to soothe and cleanse the skin, reduce redness, and manage blemishes by reducing infection. 7 Regenacyn Plus, Reliefacyn Plus, and Rejuvacyn Plus are prescription-strength products available as office dispense through dermatology practices and medical spas.
Our core strategy is to work with partners both in the United States and around the world to market and distribute our products. In some cases, we market and sell our own products. Dermatology We have developed unique, differentiated, prescription-strength and safe dermatologic products that support paths to healing among various key dermatologic conditions.
In international markets, we ship a variety of products into over 55 countries. Our core strategy is to work with partners both in the United States and around the world to market and distribute our products. In some cases, we market and sell our own products.
Our HOCl-based solutions compete with topical anti-infectives and antibiotics, as well as some advanced wound technologies, such as skin substitutes, growth factors and delayed release silver-based dressings. Our opportunity in this space relative to antibiotics is based on the insight that competing antibiotic solutions may have resistance-building properties.
Wound and Acute Care Markets Similar to our dermatology products, our HOCl-based wound and acute care solutions provide improved efficacy at lower costs than traditional acute care products. Our HOCl-based solutions compete with topical anti-infectives and antibiotics, as well as some advanced wound technologies, such as skin substitutes, growth factors and delayed release silver-based dressings.
Eye Care Our prescription product Acuicyn™ is an antimicrobial prescription solution for the treatment of blepharitis and the daily hygiene of eyelids and lashes and helps manage red, itchy, crusty and inflamed eyes. It is strong enough to kill the bacteria that causes discomfort, fast enough to provide near instant relief, and gentle enough to use as often as needed.
Eye Care In the United States, our prescription product Acuicyn ® Eyelid & Eyelash Cleanser is an effective solution for symptoms of blepharitis and the daily hygiene of eyelids and lashes, and helps manage red, itchy, crusty and inflamed eyes.
Reliefacyn® Advanced Itch-Burn-Rash-Pain Relief Hydrogel Reliefacyn® Plus Itch-Burn-Rash-Pain Relief Hydrogel Levicyn™ Dermal Spray, Lasercyn™ Dermal Spray U.S. 510(k) Prescription and OTC product, for the management of skin abrasions, lacerations, minor irritations, cuts and intact skin.
Helps to relieve dry waxy skin by maintaining a moist wound and skin environment, which is beneficial to the healing process. Reliefacyn Advanced Itch-Burn-Rash-Pain Relief Hydrogel Lasercyn Dermal Spray U.S. 510(k) Intended for OTC use to relieve the burning and itching associated with many common types of skin irritations, lacerations, abrasions and minor burns.
Outside the United States, we sell products for dermatological and advanced tissue care with a European Conformity marking, Conformité Européenne, or CE.
Outside the United States, we sell products for dermatological and advanced tissue care with a European Conformity marking, Conformité Européenne, or CE. On January 29, 2025, we received an updated CE certificate under the new EU Medical Devices Regulation covering all of our commercialized products in Europe. The following table summarizes our current material regulatory approvals and clearances by brand.
Our human care revenues have grown as a result of adding new customers and distributors, and through organic growth from existing customers and distributors.
During our most recent fiscal year, our revenues have grown as a result of continued expansion of our distribution network and customer base, the introduction of new products into multiple markets around the world, as well as organic growth from existing customers and distributors.
Sebuderm™ U.S. 510(k) EU CE Mark Prescription-only product, manages and relieves the burning, itching, erythema, scaling, and pain experienced with seborrhea and seborrheic dermatitis. It also helps to relieve dry, waxy skin by maintaining a moist wound and skin environment, which is beneficial to the healing process.
Helps to relieve dry waxy skin by maintaining a moist wound and skin environment, which is beneficial to the healing process. Rejuvacyn Plus Skin Repair Cooling Mist Rejuvacyn Advanced Skin Repair Cooling Mist Lasercyn Gel U.S. 510(k) Prescription and OTC product for the management of post non ablative laser therapy procedures, post microdermabrasion therapy and following superficial chemical peels.
Any such violations could have a material adverse effect on our business, financial condition, results of operations or cash flows. 17 Anti-Kickback Laws Our operations are subject to federal and state anti-kickback laws.
Anti-Kickback Laws Our operations are subject to federal and state anti-kickback laws.
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Our websites are www.sonomapharma.com and www.sonomapharma.eu. The websites and any information contained therein or connected thereto is not intended to be incorporated into this report.
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Business Update Over the past year, we have continued our focus on increasing revenues and continuing progress towards profitability.
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We have also focused on introducing new products into multiple markets around the world and increasing our regulatory reach by seeking new approvals and clearances. 1 Some of our recent business updates include: · On May 9, 2024, we announced expansion of our MicrocynAH® animal health care products in the Menards ® chain of home improvement stores in the United States, through our partner Compana Pet Brands. · On April 9, 2024, we announced expansion of our Microcyn® Negative Pressure Wound Therapy Solution products line, now available in 250mL, 450mL and 990mL sizes to meet the diverse needs of healthcare professionals and patients. · On January 23, 2024, we launched Lumacyn TM Clarifying Mist, a new direct-to-consumer skincare product, in the United States.
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We have also focused on expanding and strengthening our regulatory reach by seeking new approvals and clearances. 1 Some of our recent business updates include: · We successfully transitioned all of our commercialized products in Europe, including eye care, wound care, scar gel, acne products and atopic dermatitis products to the new European Union (EU) Medical Device Regulation (MDR). · Our manufacturing facility and five of our products were successfully registered with the Medicines & Healthcare products Regulatory Agency (MHRA) in the United Kingdom, including our wound irrigation solution, scar management products, wound hydrogel, and skin exfoliant, and we partnered with a leading health and beauty retailer for the sale of our acne products in over 1,200 U.K. stores. · In January 2025, we partnered with WellSpring Pharmaceutical Corporation for the sale of our Microcyn technology-based products to large retailers in the United States.
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Lumacyn is an all-natural daily toner formulated with Microcyn ® technology to soothe the skin, reduce redness and irritation, and manage blemishes by reducing infection. · On November 3, 2023, we launched our intraoperative pulse lavage irrigation treatment in the United States, a new application of its wound care technology developed in response to an unmet need for a non-toxic irrigation solution that can prevent infection and improve healing time. · On August 15, 2023, we announced that Reliefacyn ® Advanced Itch-Burn-Rash-Pain Relief Hydrogel had received the National Eczema Association (NEA) Seal of Acceptance™. · On August 3, 2023, we announced the establishment of a Scientific Advisory Board, which will serve to inform the company's research and development activities, efforts to address areas of unmet need, and potential new areas of interest.
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In March 2025 and June 2025, we expanded our agreement with WellSpring to include additional consumer focused products. · In September and November 2024, we received two new 510(k) clearances from the FDA, including specific over-the-counter indications for the face, eyelid and eyelashes, as well as improved biocompatibility for our Microcyn-based solution and hydrogel. · In December 2024, we announced the relaunch of our prescription eye care product, Acuicyn ® , our prescription dermatology products Celacyn ® , Levicyn® and Epicyn ® , and our over-the-counter Lasercyn ® Dermal Spray and Lasercyn Gel. · In August 2024, we announced a new distribution agreement with Medline Industries, LP for the marketing and distribution of our wound care products in the United States.
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HOCl is known to be among the safest and most-effective ways to relieve itch, inflammation and burns while stimulating natural healing through increased oxygenation and eliminating persistent microorganisms and biofilms. We sell our products into many markets both in the U.S. and internationally. In international markets, we ship a variety of products to 55 countries.
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In October 2024, we expanded our agreement with Medline for marketing and distribution of our wound care products in Canada, and the sale of OTC wound care products to retailers in both countries. We continue to invest in research and development, both in the U.S. and internationally, for our core performance-stabilized hypochlorous acid, or HOCl, technology.
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Pursuant to our March 2021 agreement with EMC Pharma, we manufacture products for EMC Pharma and EMC Pharma has the right to market, sell and distribute them to patients and customers for an initial term of five years, subject to meeting minimum purchase and other requirements.
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Dermatology We have developed unique, differentiated, and safe dermatologic products that support paths to healing for various dermatologic conditions. Our products are primarily targeted at the treatment of redness and irritation, the management of scars and symptoms of eczema/atopic dermatitis. In Europe and the United Kingdom, we have developed products to treat acne.
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In September 2021, we launched a new over-the-counter product, Regenacyn® Advanced Scar Gel, which is clinically proven to improve the overall appearance of scars while reducing pain, itch and redness. On the same day, we launched Regenacyn® Plus, a prescription-strength scar gel which is available as an office dispense product through physician offices.
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We also relaunched over-the-counter Lasercyn Dermal Spray and Lasercyn Gel .
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In Europe, the Middle East and Asia, we sell our wound care products through a diverse network of distributors. 3 To respond to market demand for our HOCl technology-based products, we launched our first direct to consumer over-the-counter product in the United States in February 2021.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur present and future funding requirements will depend on many factors, including: · the level of research and development investment required to maintain and improve our technology position; · cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; · our efforts to acquire or license complementary technologies or acquire complementary businesses; · changes in product development plans needed to address any difficulties in commercialization; · competing technological and market developments; and · changes in regulatory policies or laws that affect our operations.
Biggest changeWe may need to raise additional capital in the future in order to, among other things: · increase our sales and marketing efforts to drive market adoption and address competitive developments; · sustain commercialization of our current products or new products; · acquire or license technologies; · develop new products; · expand our manufacturing capabilities; and · finance capital expenditures and our general and administrative expenses. 32 Our present and future funding requirements will depend on many factors, including: · the level of research and development investment required to maintain and improve our technology position; · cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; · our efforts to acquire or license complementary technologies or acquire complementary businesses; · changes in product development plans needed to address any difficulties in commercialization; · competing technological and market developments; and · changes in regulatory policies or laws that affect our operations.
Product modifications, including labeling the product for a new intended use, may require the submission of a new 510(k) clearance and FDA approval before the modified product can be marketed. 23 On November 30, 2023, the FDA issued a proposed rule to classify certain wound dressings and liquid wound washes, including hypochlorous acid, into Class II medical devices.
Product modifications, including labeling the product for a new intended use, may require the submission of a new 510(k) clearance and FDA approval before the modified product can be marketed. On November 30, 2023, the FDA issued a proposed rule to classify certain wound dressings and liquid wound washes, including hypochlorous acid, into Class II medical devices.
In the United States, governmental and private payors have limited the growth of health care costs through price regulation or controls, competitive pricing programs and drug rebate programs. There is significant uncertainty concerning third-party coverage and reimbursement of newly approved medical products. Third-party payors are increasingly challenging the prices charged for medical products and services.
In the United States, governmental and private payors have limited the growth of health care costs through price regulation or controls, competitive pricing programs and drug rebate programs. 31 There is significant uncertainty concerning third-party coverage and reimbursement of newly approved medical products. Third-party payors are increasingly challenging the prices charged for medical products and services.
We have not purchased insurance on our accounts receivable balances. 26 We may experience difficulties in manufacturing our products, which could prevent us from commercializing one or more of our products. The machines used to manufacture our products are complex, use complicated software and must be monitored by highly trained engineers.
We have not purchased insurance on our accounts receivable balances. We may experience difficulties in manufacturing our products, which could prevent us from commercializing one or more of our products. The machines used to manufacture our products are complex, use complicated software and must be monitored by highly trained engineers.
In addition, the existence of these provisions, together with Delaware law, might hinder or delay an attempted takeover other than through negotiations with our Board of Directors. 34 Our stockholders may experience substantial dilution in the value of their investment if we issue additional shares of our capital stock or other securities convertible into common stock.
In addition, the existence of these provisions, together with Delaware law, might hinder or delay an attempted takeover other than through negotiations with our Board of Directors. Our stockholders may experience substantial dilution in the value of their investment if we issue additional shares of our capital stock or other securities convertible into common stock.
Additionally, if the effective price of our products were to increase as a result of fluctuations in foreign currency exchange rates, demand for our products could decline and adversely affect our results of operations and financial condition. The markets in which we operate are highly competitive and subject to rapid technological change.
Additionally, if the effective price of our products were to increase as a result of fluctuations in foreign currency exchange rates, demand for our products could decline and adversely affect our results of operations and financial condition. 29 The markets in which we operate are highly competitive and subject to rapid technological change.
We may incur significant costs in the use of third parties to identify and assist in establishing relationships with potential collaborators. We currently use distributors for most of our products. We have limited control over the amount and timing of resources that our current partners or any future collaborators devote to our collaborations or potential products.
We may incur significant costs in the use of third parties and other resources to identify and assist in establishing relationships with potential collaborators. We currently use distributors for most of our products. We have limited control over the amount and timing of resources that our current partners or any future collaborators devote to our collaborations or potential products.
If we fail to realize the anticipated revenue growth of our future international operations, our business and operating results could suffer. If we fail to obtain, or experience significant delays in obtaining, additional regulatory clearances or approvals to market our current or future products, we may be unable to commercialize these products.
If we fail to realize the anticipated revenue growth of our future international operations, our business and operating results could suffer. 23 If we fail to obtain, or experience significant delays in obtaining, additional regulatory clearances or approvals to market our current or future products, we may be unable to commercialize these products.
The delisting of our common stock and warrants from Nasdaq would have a material adverse effect on our access to capital markets, and any limitation on market liquidity or reduction in the price of its common stock as a result of that delisting would adversely affect our ability to raise capital on terms acceptable to the Company, if at all. 35 ITEM 1B.
The delisting of our common stock from Nasdaq would have a material adverse effect on our access to capital markets, and any limitation on market liquidity or reduction in the price of its common stock as a result of that delisting would adversely affect our ability to raise capital on terms acceptable to the Company, if at all. ITEM 1B.
ITEM 1A. Risk Factors Risks Related to Our Business We have a history of losses, we expect to continue to incur losses and we may never achieve profitability and our March 31, 2024 audited consolidated financial statements included disclosure that casts substantial doubt regarding our ability to continue as a going concern.
ITEM 1A. Risk Factors Risks Related to Our Business We have a history of losses, we expect to continue to incur losses and we may never achieve profitability, and our March 31, 2025 audited consolidated financial statements included disclosure that casts substantial doubt regarding our ability to continue as a going concern.
Our Restated Certificate of Incorporation, as amended, allows us to issue up to 24,000,000 shares of our common stock and to issue and designate, without stockholder approval, the rights of up to 714,286 shares of preferred stock. In the event we issue additional shares of our capital stock, dilution to our stockholders could result.
Our Restated Certificate of Incorporation, as amended, allows us to issue up to 50,000,000 shares of our common stock and to issue and designate, without stockholder approval, the rights of up to 714,286 shares of preferred stock. In the event we issue additional shares of our capital stock, dilution to our stockholders could result.
If we were to forgive the debt or if we were to convert the debt to equity, it would be subject to Mexico income tax at 30%, or approximately $10.7 million, as well as Mexican withholding tax of 15%. Mexico’s thin capitalization rules also require taxpayers to maintain a debt-to-equity ratio of 3:1.
If we were to forgive the debt or if we were to convert the debt to equity, it would be subject to Mexico income tax at 30%, or approximately $13.8 million, as well as Mexican withholding tax of 15%. Mexico’s thin capitalization rules also require taxpayers to maintain a debt-to-equity ratio of 3:1.
During the years ended March 31, 2024 and 2023, approximately 76% and 74% of our total revenue, respectively, were generated from sales outside of the United States. Our business is highly regulated for the use, marketing and manufacturing of our HOCl-based products both domestically and internationally.
During the years ended March 31, 2025 and 2024, approximately 82% and 76% of our total revenue, respectively, were generated from sales outside of the United States. Our business is highly regulated for the use, marketing and manufacturing of our HOCl-based products both domestically and internationally.
The degree of future protection for our proprietary rights is more uncertain in part because legal means afford only limited protection and may not adequately protect our rights, and we will not be able to ensure that: · we were the first to invent the inventions described in patent applications; · we were the first to file patent applications for inventions; · others will not independently develop similar or alternative technologies or duplicate our products without infringing our intellectual property rights; · any patents licensed or issued to us will provide us with any competitive advantages; · we will develop proprietary technologies that are patentable; or · the patents of others will not have an adverse effect on our ability to do business. 27 The policies we use to protect our trade secrets may not be effective in preventing misappropriation of our trade secrets by others.
The degree of future protection for our proprietary rights is more uncertain in part because legal means afford only limited protection and may not adequately protect our rights, and we will not be able to ensure that: · we were the first to invent the inventions described in patent applications; · we were the first to file patent applications for inventions; · others will not independently develop similar or alternative technologies or duplicate our products without infringing our intellectual property rights; · any patents licensed or issued to us will provide us with any competitive advantages; · we will develop proprietary technologies that are patentable; or · the patents of others will not have an adverse effect on our ability to do business.
In addition, 125,556 shares of our common stock were available on March 31, 2024 for future option grants under our 2016 Equity Incentive Plan and our 2021 Equity Incentive Plan. To the extent any additional options are granted and exercised, there will be further dilution to stockholders and investors.
In addition, 14,670 shares of our common stock were available on March 31, 2025 for future option grants under our 2016 Equity Incentive Plan, our 2021 Equity Incentive Plan and our 2024 Equity Incentive Plan. To the extent any additional options are granted and exercised, there will be further dilution to stockholders and investors.
Our operating results and our share price may fluctuate from period to period due to a variety of factors, including: · demand by physicians, other medical staff and patients for our HOCl-based products; · clinical trial results published by others in our industry and publication of results in peer-reviewed journals or the presentation at medical conferences; · the inclusion or exclusion of our HOCl-based products in large clinical trials conducted by others; · actual and anticipated fluctuations in our quarterly financial and operating results; · developments or disputes concerning our intellectual property or other proprietary rights; · issues in manufacturing our product candidates or products; · new or less expensive products and services or new technology introduced or offered by our competitors or by us; · reimbursement decisions by third-party payors and announcements of those decisions; · the development and commercialization of product enhancements; · changes in the regulatory environment; 33 · delays in establishing new strategic relationships; · costs associated with collaborations and new product candidates; · introduction of technological innovations or new commercial products by us or our competitors; · litigation or public concern about the safety of our product candidates or products; · changes in recommendations of securities analysts or lack of analyst coverage; · failure to meet analyst expectations regarding our operating results; · additions or departures of key personnel; and · general market conditions.
Our operating results and our share price may fluctuate from period to period due to a variety of factors, including: · demand by physicians, other medical staff and patients for our HOCl-based products; · clinical trial results published by others in our industry and publication of results in peer-reviewed journals or the presentation at medical conferences; · the inclusion or exclusion of our HOCl-based products in large clinical trials conducted by others; · actual and anticipated fluctuations in our quarterly financial and operating results; · developments or disputes concerning our intellectual property or other proprietary rights; · issues in manufacturing our product candidates or products; · new or less expensive products and services or new technology introduced or offered by our competitors or by us; · reimbursement decisions by third-party payors and announcements of those decisions; · the development and commercialization of product enhancements; · changes in the regulatory environment; · delays in establishing new strategic relationships; · costs associated with collaborations and new product candidates; · introduction of technological innovations or new commercial products by us or our competitors; · litigation or public concern about the safety of our product candidates or products; · changes in recommendations of securities analysts or lack of analyst coverage; · failure to meet analyst expectations regarding our operating results; · additions or departures of key personnel; and · general market conditions. 34 Variations in the timing of our future revenues and expenses could also cause significant fluctuations in our operating results from period to period and may result in unanticipated earning shortfalls or losses.
This would amount to approximately $4.7 million in Mexico withholding tax at March 31, 2024, if all of the interest and technical assistance were to be repaid to us. In general, the foreign related party parent can then claim a credit for these withholding taxes on their U.S. income tax return.
This would amount to approximately $5.1 million in Mexico withholding tax at March 31, 2025, if all of the interest and technical assistance were to be repaid to us. In general, the foreign related party parent can then claim a credit for these withholding taxes on their U.S. income tax return.
As of March 31, 2024, our Mexico subsidiary owes approximately $13.4 million in principal, $9.8 million in technical assistance payments and $12.6 million in accrued interest. The intercompany loans mature in 2027. There is no guarantee that our Mexican subsidiary will be able to pay any or all of the amounts due.
As of March 31, 2025, our Mexico subsidiary owes approximately $10.9 million in principal, $8.6 million in technical assistance payments and $26.4 million in accrued interest. The intercompany loans mature in 2027. There is no guarantee that our Mexican subsidiary will be able to pay any or all of the amounts due.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disrupt our operations and the services we provide to customers, and damage our reputation, and cause a loss of confidence in our products and services, which could adversely affect our business, revenues and competitive position. 32 Our cash and cash equivalents may be exposed to failure of our banking institutions.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disrupt our operations and the services we provide to customers, and damage our reputation, and cause a loss of confidence in our products and services, which could adversely affect our business, revenues and competitive position.
Our international operations are subject to risks, including: · local political or economic instability; · continuing restrictions related to the Covid-19 pandemic; 22 · changes in exchange rates; · changes in governmental regulation; · changes in import/export duties; · trade restrictions; · lack of experience in foreign markets; · difficulties and costs of staffing and managing operations in certain foreign countries; · work stoppages or other changes in labor conditions; · difficulties in collecting accounts receivables on a timely basis, or at all; and · adverse tax consequences or overlapping tax structures.
Our international operations are subject to risks, including: · local political or economic instability; · economic downturn or recession; · changes in exchange rates; · changes in governmental regulation; · changes in import/export duties, tariffs, or trade agreements; · trade restrictions; · lack of experience in foreign markets; · difficulties and costs of staffing and managing operations in certain foreign countries; · work stoppages or other changes in labor conditions; · difficulties in collecting accounts receivables on a timely basis, or at all; and · adverse tax consequences or overlapping tax structures.
Product recalls, product liability claims, even if unmerited or unsuccessful, or any other events that cause consumers to no longer associate our brand with high quality and safe products may also result in adverse publicity, hurt the value of our brand, harm our reputation among our customers and other healthcare professionals who use or recommend the products, lead to a decline in consumer confidence in and demand for our products, and lead to increased scrutiny by federal and state regulatory agencies of our operations, any of which could have a material adverse effect on our brand, business, performance, prospects, value, results of operations and financial condition. 25 If our products do not gain market acceptance, our business will suffer because we might not be able to fund future operations.
Product recalls, product liability claims, even if unmerited or unsuccessful, or any other events that cause consumers to no longer associate our brand with high quality and safe products may also result in adverse publicity, hurt the value of our brand, harm our reputation among our customers and other healthcare professionals who use or recommend the products, lead to a decline in consumer confidence in and demand for our products, and lead to increased scrutiny by federal and state regulatory agencies of our operations, any of which could have a material adverse effect on our brand, business, performance, prospects, value, results of operations and financial condition.
Although we have a significant number of customers in each of the geographic markets that we operate in, we rely on certain key customers for a significant portion of our revenues. For the year ended March 31, 2024, customer A represented 17%, customer B represented 15% and customer C represented 14% of net revenues.
Although we have a significant number of customers in each of the geographic markets that we operate in, we rely on certain key customers for a significant portion of our revenues. For the year ended March 31, 2025, customer B represented 21% and customer C represented 18% of net revenues.
A majority of our business is conducted outside of the United States, exposing us to additional risks that may not exist in the United States, which in turn could cause our business and operating results to suffer. We have material international operations in Mexico, Asia and Europe.
The loss of any of these customers could adversely affect our revenues. 22 A majority of our business is conducted outside of the United States, exposing us to additional risks that may not exist in the United States, which in turn could cause our business and operating results to suffer. We have material international operations in Mexico, Asia and Europe.
Negative economic conditions increase the risk that we could suffer unrecoverable losses on our customers’ accounts receivable which would adversely affect our financial results. We grant credit to our business customers, which are primarily located in Mexico, Europe and the United States. Collateral is generally not required for trade receivables. We maintain allowances for potential credit losses.
Such modifications may pose additional delays in achieving our goals. Negative economic conditions increase the risk that we could suffer unrecoverable losses on our customers’ accounts receivable which would adversely affect our financial results. We grant credit to our business customers, which are primarily located in Mexico, Europe and the United States. Collateral is generally not required for trade receivables.
During the years ended March 31, 2024 and 2023, net cash used in operating activities amounted to $2,398,000 and $6,152,000, respectively. As of March 31, 2024, we had cash and cash equivalents of $3,128,000. We spent the most recent years working to reduce our losses and have made significant progress.
During the years ended March 31, 2025 and 2024, net cash used in operating activities amounted to $88,000 and $2,398,000, respectively. As of March 31, 2025, we had cash and cash equivalents of $5,374,000. We spent the most recent years working to reduce our losses and have made significant progress.
We rely on certain key customers for a significant portion of revenues. At March 31, 2024, customer B represented 13% of our net accounts receivable balance and customer D represented 17% of our net accounts receivable balance.
We maintain allowances for potential credit losses. We rely on certain key customers for a significant portion of revenues. At March 31, 2025, customer D represented 24% of our net accounts receivable balance. At March 31, 2024, customer B represented 13% of our net accounts receivable balance and customer D represented 17% of our net accounts receivable balance.
For the year ended March 31, 2023, customer A represented 11%, customer B represented 16% and customer C represented 18% of net revenues. In the future, a small number of customers may continue to represent a significant portion of our total revenues in any given period.
For the year ended March 31, 2024, customer A represented 17%, customer B represented 15% and customer C represented 14% of net revenues. In the future, a small number of customers may continue to represent a significant portion of our total revenues in any given period.
If the banks where we hold deposits were to become insolvent or enter receivership, our ability to access our cash, cash equivalents and investments, including transferring funds, making payments or receiving funds, may be threatened, and this could have a material adverse effect on our business and financial condition.
If the banks where we hold deposits were to become insolvent or enter receivership, our ability to access our cash, cash equivalents and investments, including transferring funds, making payments or receiving funds, may be threatened, and this could have a material adverse effect on our business and financial condition. 33 Risks Related to Our Common Stock The market price of our common stock may be volatile, and the value of your investment could decline significantly.
If we fail to comply with the FDA’s rules and regulations and are subject to an FDA recall as part of an FDA enforcement action, the associated costs could have a material adverse effect on our business, financial position, results of operations and cash flows.
If any of these events occur, the manufacture, marketing and sales of our products could be delayed which could decrease our revenues. 25 If we fail to comply with the FDA’s rules and regulations and are subject to an FDA recall as part of an FDA enforcement action, the associated costs could have a material adverse effect on our business, financial position, results of operations and cash flows.
We have filed several registration statements with the SEC, so that substantially all of the shares of our common stock which are issuable upon the exercise of outstanding warrants and options may be sold in the public market.
The exercise of the options will dilute the voting interest of the owners of presently outstanding shares by adding a substantial number of additional shares of our common stock. 35 We have filed several registration statements with the SEC, so that substantially all of the shares of our common stock which are issuable upon the exercise of outstanding warrants and options may be sold in the public market.
We reported a net loss of $4,835,000 and $5,151,000 for the years ended March 31, 2024 and 2023, respectively. At March 31, 2024 and 2023, our accumulated deficit amounted to $194,349,000 and $189,514,000, respectively. We had working capital of $8,829,000 and $10,081,000 as of March 31, 2024 and 2023, respectively.
We reported a net loss of $3,457,000 and $4,835,000 for the years ended March 31, 2025 and 2024, respectively. At March 31, 2025 and 2024, our accumulated deficit amounted to $197,806,000 and $194,349,000, respectively. We had working capital of $8,552,000 and $8,829,000 as of March 31, 2025 and 2024, respectively.
A number of factors may affect the market acceptance of our products or any other products we develop or acquire, including, among others: · the price of our products relative to other products for the same or similar treatments; · the perception by patients, physicians and other members of the healthcare community of the effectiveness and safety of our products for their indicated applications and treatments; · changes in practice guidelines and the standard of care for the targeted indication; · our ability to fund our sales and marketing efforts; and · the effectiveness of our sales and marketing efforts or our partners’ sales and marketing efforts.
A number of factors may affect the market acceptance of our products or any other products we develop or acquire, including, among others: · the price of our products relative to other products for the same or similar treatments; · the perception by patients, physicians and other members of the healthcare community of the effectiveness and safety of our products for their indicated applications and treatments; · changes in practice guidelines and the standard of care for the targeted indication; · our ability to fund our sales and marketing efforts; and · the effectiveness of our sales and marketing efforts or our partners’ sales and marketing efforts. 26 Our ability to effectively promote and sell any approved products will also depend on pricing and cost-effectiveness, including our ability to produce a product at a competitive price and our ability to obtain sufficient third-party coverage or reimbursement, if any.
If our competitors develop products with similar characteristics to HOCl, we may need to modify or alter our business strategy, which may delay the achievement of our goals. Competitors have and may continue to develop products with similar characteristics to HOCl. Such similar products marketed by larger competitors can hinder our or our partners’ efforts to penetrate the market.
If our competitors develop products with similar characteristics to our HOCl technology, we may need to modify or alter our business strategy, which may delay the achievement of our goals. Competitors have and may continue to develop products with similar characteristics to our HOCl technology.
These customers may not consistently purchase our products at a particular rate over any subsequent period. The loss of any of these customers could adversely affect our revenues.
These customers may not consistently purchase our products at a particular rate over any subsequent period.
As of March 31, 2024, we had outstanding options to purchase an aggregate of 1,032,999 shares of our common stock at a weighted average exercise price of $2.42 per share and a weighted average contractual term of 8.91 years.
As of March 31, 2025, we had outstanding options to purchase an aggregate of 73,081 shares of our common stock at a weighted average exercise price of $43.27 per share and a weighted average contractual term of 8.82 years.
Also, we may be unaware of pending patent applications that relate to our technology. Parties making infringement claims on future issued patents may be able to obtain an injunction that would prevent us from selling our products or using technology that contains the allegedly infringing intellectual property, which could harm our business.
Parties making infringement claims on future issued patents may be able to obtain an injunction that would prevent us from selling our products or using technology that contains the allegedly infringing intellectual property, which could harm our business. 28 We could be required to indemnify third parties for alleged intellectual property infringement, which could cause us to incur significant costs.
The subsequent discovery of previously unknown problems with HOCl, including adverse events of unanticipated severity or frequency, may result in restrictions on the marketing of our products, and could include voluntary or mandatory recall or withdrawal of products from the market.
The subsequent discovery of previously unknown problems with HOCl, including adverse events of unanticipated severity or frequency, may result in restrictions on the marketing of our products, and could include voluntary or mandatory recall or withdrawal of products from the market. 24 New government regulations may be enacted and changes in FDA policies and regulations and, their interpretation and enforcement, could prevent or delay regulatory approval of our products.
As a result, we may be forced to modify or alter our business and regulatory strategy and sales and marketing plans, as a response to changes in the market, competition and technology limitations, among others. Such modifications may pose additional delays in achieving our goals.
Such similar products marketed by larger competitors can hinder our or our partners’ efforts to penetrate the market. As a result, we may be forced to modify or alter our business and regulatory strategy and sales and marketing plans, as a response to changes in the market, competition and technology limitations, among others.
We maintain our cash at financial institutions, in balances that exceed current FDIC insurance limits.
Our cash and cash equivalents may be exposed to failure of our banking institutions. We maintain our cash at financial institutions, in balances that exceed current FDIC insurance limits.
Manufacturing processes that are used to produce the smaller quantities of HOCl-based products needed for clinical tests and current commercial sales may not be successfully scaled up to allow production of significant commercial quantities. Any failure to manufacture our products to required standards on a commercial scale could result in reduced revenues, delays in generating revenue and increased costs.
Manufacturing processes that are used to produce the smaller quantities of HOCl-based products needed for clinical tests and current commercial sales may not be successfully scaled up to allow production of significant commercial quantities.
Risks Related to Our Common Stock The market price of our common stock may be volatile, and the value of your investment could decline significantly. The trading price for our common stock has been, and we expect it to continue to be, volatile.
The trading price for our common stock has been, and we expect it to continue to be, volatile.
Supplying the market with our HOCl technology products requires us to manage relationships with an increasing number of collaborative partners, suppliers and third-party contractors. As a result, our success depends partially on the success of these third parties in performing their responsibilities to comply with FDA rules and regulations.
As a result, our success depends partially on the success of these third parties in performing their responsibilities to comply with FDA rules and regulations.
New government regulations may be enacted and changes in FDA policies and regulations and, their interpretation and enforcement, could prevent or delay regulatory approval of our products. We cannot predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation or administrative action, either in the United States or abroad.
We cannot predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation or administrative action, either in the United States or abroad.
If we are unable to establish collaborative agreements, we may not be able to develop and commercialize new products, which would adversely affect our business and our revenues. 29 In order for any of these collaboration or license arrangements to be successful, we must first identify potential collaborators or licensees whose capabilities complement and integrate well with ours.
In order for any of these collaboration or license arrangements to be successful, we must first identify potential collaborators or licensees whose capabilities complement and integrate well with ours.
If we are unable to comply with broad and complex federal and state fraud and abuse laws, including state and federal anti-kickback laws, we could face substantial penalties and our products could be excluded from government healthcare programs.
If a business combination involving a collaborator or licensee and a third party were to occur, the effect could be to diminish, terminate or cause delays in development of a potential product. 30 If we are unable to comply with broad and complex federal and state fraud and abuse laws, including state and federal anti-kickback laws, we could face substantial penalties and our products could be excluded from government healthcare programs.
We could be required to indemnify third parties for alleged intellectual property infringement, which could cause us to incur significant costs. Some of our distribution agreements contain commitments to indemnify our distributors against liability arising from infringement of third-party intellectual property, such as patents.
Some of our distribution agreements contain commitments to indemnify our distributors against liability arising from infringement of third-party intellectual property, such as patents. We may be required to indemnify our customers for claims made against them or to contribute to license fees they are required to pay.
If we do not protect our rights adequately, third parties could use our technology, and our ability to compete in the market would be reduced.
We also rely upon unpatented know-how and continuing technological innovation to develop and maintain our competitive position. These measures may not be adequate to safeguard our HOCl technology. If we do not protect our rights adequately, third parties could use our technology, and our ability to compete in the market would be reduced.
A successful claim against us with respect to uninsured liabilities or in excess of insurance coverage and not subject to any indemnification or contribution could have a material adverse effect on our future business, financial condition, and results of operations. 30 Our ability to generate revenue will be diminished if our partners are unable to obtain acceptable prices or an adequate level of reimbursement from third-party payors, or our partners may face pricing pressure from private third-party payers, including customers, from rebates and restrictive reimbursement practices.
Our ability to generate revenue will be diminished if our partners are unable to obtain acceptable prices or an adequate level of reimbursement from third-party payors, or our partners may face pricing pressure from private third-party payers, including customers, from rebates and restrictive reimbursement practices.
Alternatively, potential collaborators may decide against entering into an agreement with us because of our financial, regulatory or intellectual property position or for scientific, commercial or other reasons.
Alternatively, potential collaborators may decide against entering into an agreement with us because of our financial, regulatory or intellectual property position or for scientific, commercial or other reasons. If we are unable to establish collaborative agreements, we may not be able to develop and commercialize new products, which would adversely affect our business and our revenues.
If we are not able to maintain regulatory compliance, we will not be permitted to market our products and our business would suffer. 24 If any of our third-party contractors fail to perform their responsibilities to comply with FDA rules and regulations, the manufacture, marketing and sales of our products could be delayed, which could decrease our revenues.
If any of our third-party contractors fail to perform their responsibilities to comply with FDA rules and regulations, the manufacture, marketing and sales of our products could be delayed, which could decrease our revenues. Supplying the market with our HOCl technology products requires us to manage relationships with an increasing number of collaborative partners, suppliers and third-party contractors.
We may be required to indemnify our customers for claims made against them or to contribute to license fees they are required to pay. If we are forced to indemnify for claims or to pay license fees, our business and financial condition could be substantially harmed.
If we are forced to indemnify for claims or to pay license fees, our business and financial condition could be substantially harmed. Our international operations are subject to trade policies, tariffs and trade agreements, and recent and future changes could harm our business.
We currently rely on a combination of patents, patent applications, trademarks, trade secret laws, confidentiality agreements, license agreements and invention assignment agreements to protect our intellectual property rights. We also rely upon unpatented know-how and continuing technological innovation to develop and maintain our competitive position. These measures may not be adequate to safeguard our HOCl technology.
Our ability to compete and to achieve and maintain profitability depends on our ability to protect our intellectual property and proprietary technologies. We currently rely on a combination of patents, patent applications, trademarks, trade secret laws, confidentiality agreements, license agreements and invention assignment agreements to protect our intellectual property rights.
Any changes to USMCA (or subsequent trade agreements) could impact our operations in countries where we manufacture or sell products or source components, or materials, which could adversely affect our operating results and our business. 28 Our sales in international markets subject us to foreign currency exchange and other risks and costs which could harm our business.
Any changes to existing trade agreements, like the United States-Mexico-Canada Agreement (USMCA), which went into effect on July 1, 2020 (or subsequent trade agreements), or greater restrictions on free trade generally, could impact our operations in countries where we manufacture or sell products or source components, or materials, which could adversely affect our operating results and our business.
Our international operations are subject to trade policies and trade agreements and unfavorable changes could harm our business. We have significant international operations in Mexico and Europe, and we manufacture products for export in Mexico.
We have significant international operations in Mexico and Europe, and we manufacture all of our products for export from Mexico. New or increased tariffs on goods imported into the United States, particularly tariffs on products manufactured in Mexico, could adversely affect our business.
Our competitive position depends on our ability to protect our intellectual property and our proprietary technologies. Our ability to compete and to achieve and maintain profitability depends on our ability to protect our intellectual property and proprietary technologies.
Any failure to manufacture our products to required standards on a commercial scale could result in reduced revenues, delays in generating revenue and increased costs. 27 Our competitive position depends on our ability to protect our intellectual property and our proprietary technologies.
Removed
If any of these events occur, the manufacture, marketing and sales of our products could be delayed which could decrease our revenues.
Added
If we are not able to maintain regulatory compliance, we will not be permitted to market our products and our business would suffer. If we fail to comply with ongoing regulatory requirements for our European products under the new Medical Devices Regulation, these products could be subject to withdrawal from the market.
Removed
Our ability to effectively promote and sell any approved products will also depend on pricing and cost-effectiveness, including our ability to produce a product at a competitive price and our ability to obtain sufficient third-party coverage or reimbursement, if any.
Added
Our products are classified as medical devices in the European Union (EU). In order to sell medical device products within the European Union, we are required to comply with the requirements of the Medical Devices Regulation, and its national implementations, including affixing CE markings on products.
Removed
At March 31, 2023, customer B represented 22% of our net accounts receivable balance and customer D represented 21% of our net accounts receivable balance.
Added
The Medical Devices Regulation was adopted in the EU on May 26, 2017 to replace the existing Medical Device Directive, and became applicable on May 26, 2021, with a transition period until extended to December 31, 2028 for non-implantable Class IIb and lower risk devices.
Removed
For example, our European patent that was initially issued on May 30, 2007 was revoked by the Opposition Division of the European Patent Office in December 2009 following opposition proceedings instituted by a competitor.
Added
We received a CE certificate for 39 of our Class IIB medical devices under the Medical Device Directive. Under the new Medical Devices Regulation, certain devices are classified in higher classes, new devices are classified, and certain new obligations are imposed on manufacturers and distributors. In addition, the pre-market approval and post-market surveillance requirements are enhanced.
Removed
There may be changes to existing trade agreements, like the USMCA, which went to effect on July 1, 2020, greater restrictions on free trade generally, and significant increases in tariffs on goods imported into the United States, particularly tariffs on products manufactured in Mexico, among other possible changes.
Added
We have successfully completed transition to the new Medical Device Regulation (MDR) for all of our commercialized products in Europe, including Microdacyn60 Wound Care and Microdacyn60 Hydrogel, our scar gel product Epicyn ® , and Pediacyn ® for atopic dermatitis, which are each classified as Class IIb medical devices, and our eye care product Ocudox and acne products GramaDerm Solution and GramaDerm Hydrogel, which are each classified as Class IIa medical devices.
Removed
If a business combination involving a collaborator or licensee and a third party were to occur, the effect could be to diminish, terminate or cause delays in development of a potential product.
Added
Our nasal product Sinudox, Microdacyn ® Oral and MucoClyns ® , a disinfectant, will not be transitioned without additional studies. We currently have no commercial sales of these products and are evaluating whether to conduct the additional studies necessary to transition these products.
Removed
We may need to raise additional capital in the future in order to, among other things: · increase our sales and marketing efforts to drive market adoption and address competitive developments; · sustain commercialization of our current products or new products; 31 · acquire or license technologies; · develop new products; · expand our manufacturing capabilities; and · finance capital expenditures and our general and administrative expenses.
Added
We can provide no assurance that we will be able to maintain the requirements established for CE markings for any or all of our products in the EU or be able to produce these products in a timely and profitable manner while complying with the requirements of the Medical Devices Regulation and other regulatory requirements.
Removed
Variations in the timing of our future revenues and expenses could also cause significant fluctuations in our operating results from period to period and may result in unanticipated earning shortfalls or losses.
Added
Failure to comply with these requirements could result in these products being withdrawn from the market and could have a material negative impact on our future results.
Removed
The exercise of the options will dilute the voting interest of the owners of presently outstanding shares by adding a substantial number of additional shares of our common stock.
Added
If our products do not gain market acceptance, our business will suffer because we might not be able to fund future operations.
Removed
On September 22, 2023, we received a letter from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that we are not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires companies listed on The Nasdaq Stock Market to maintain a minimum bid price of $1 per share for continued listing.
Added
The policies we use to protect our trade secrets may not be effective in preventing misappropriation of our trade secrets by others.
Removed
On March 21, 2024, we received a notice that Nasdaq had granted us an additional 180 calendar days, or until September 16, 2024, to regain compliance with the minimum closing bid price requirement for continued listing.
Added
Also, we may be unaware of pending patent applications that relate to our technology.
Removed
Nasdaq’s letter has no immediate impact on the listing of our common stock, which will continue to be listed and traded on Nasdaq, subject to our compliance with the other continued listing requirements.
Added
Given the uncertainty regarding the scope and duration of any trade actions by the U.S. government or other countries, we can provide no assurance that the impact on our operations and results in the future will not be material. Our sales in international markets subject us to foreign currency exchange and other risks and costs which could harm our business.
Removed
We may regain compliance at any time during this compliance period if the minimum bid price for our common stock is at least $1 for a minimum of ten consecutive business days.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur management, including our Chief Executive Officer and our Chief Financial Officer, keeps the Board of Directors apprised of significant risks facing our Company and the approach being taken to understand, manage, and mitigate such risks, including with respect to potential cybersecurity threats.
Biggest changeOur management, including our Chief Executive Officer and our Chief Financial Officer, keeps the Board of Directors apprised of significant risks facing our Company and the approach being taken to understand, manage, and mitigate such risks, including with respect to potential cybersecurity threats. 36

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe currently lease the following material properties: Location Rent per month Purpose 5445 Conestoga Court, Unit 150, Boulder, CO 80301 USD 3,573 Principal executive office Industria Vidriera 81, & 87 Zapopan Industrial Norte, Zapopan, Jalisco, 45135, Mexico MXN 209,811 Office, manufacturing Industria Maderera 124, 106, 115 & 815 Zapopan Industrial Norte, Zapopan, Jalisco, 45135, Mexico MXN 213,625 Warehouse We believe that our properties will be adequate to meet our needs for at least the next 12 months.
Biggest changeWe currently lease the following material properties: Locations Rent per month Purpose 1) 5445 Conestoga Court, Unit 150, Boulder, CO 80301 USD 3,680 Principal executive office 2) Industria Vidriera 81, & 87 Zapopan Industrial Norte, Zapopan, Jalisco, 45135, Mexico MXN 209,811 Office, manufacturing 3) Industria Maderera 106, 115 & 815 Zapopan Industrial Norte, Zapopan, Jalisco, 45135, Mexico MXN 213,625 Warehouse We believe that our properties will be adequate to meet our needs for at least the next 12 months.
ITEM 2. Properties At March 31, 2024, we have a corporate office in Boulder, Colorado and our manufacturing facility in Zapopan, Mexico.
ITEM 2. Properties At March 31, 2025, we have a corporate office in Boulder, Colorado and our manufacturing facility in Zapopan, Mexico.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders As of June 12, 2024, we had approximately 291 holders of record of our common stock. Holders of record include nominees who may hold shares on behalf of multiple owners. Dividends We have never declared or paid any cash dividends on our common stock.
Biggest changeHolders As of June 10, 2025, we had approximately 61 holders of record of our common stock. Holders of record include nominees who may hold shares on behalf of multiple owners. Dividends We have never declared or paid any cash dividends on our common stock.
Recent Sales of Unregistered Securities We did not issue any unregistered securities during the year ended March 31, 2024 and through June 17, 2024.
Recent Sales of Unregistered Securities We did not issue any unregistered securities during the year ended March 31, 2025 and through June 12, 2025.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeITEM 6. Selected Financial Data As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item. 37
Biggest changeITEM 6. Selected Financial Data As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

21 edited+6 added−10 removed9 unchanged
Biggest changeResearch and Development Expense The research and development expense metrics for the year ended March 31, 2024 and 2023 are as follows: Year Ended March 31, (In thousands, except for percentages) 2024 2023 $ Change % Change Research and Development Expense $ 1,871 $ 207 $ 1,664 804% Research and Development Expense as a % of Revenues 15% 2% Increases in research and development expenses for the year ended March 31, 2024 of $1,664,000 was primarily due to increased product development and expanded regulatory efforts in the U.S. and Europe to support new product releases. 39 Selling, General and Administrative Expense The selling, general and administrative expense metrics for the years ended March 31, 2024 and 2023 are as follows: Year Ended March 31, (In thousands, except for percentages) 2024 2023 Change % Change Selling, General and Administrative Expense $ 7,575 $ 8,840 $ (1,265 ) (14% ) Selling, General and Administrative Expense as a % of Revenues 59% 67% The decline in selling, general and administrative expenses for the year ended March 31, 2024 of $1,265,000 was the result of ongoing efforts to contain expenses across all parts of the company.
Biggest changeSelling, General and Administrative Expense The selling, general and administrative expense metrics for the years ended March 31, 2025 and 2024 are as follows: Year Ended March 31, (In thousands, except for percentages) 2025 2024 Change % Change Selling, General and Administrative Expense $ 7,361 $ 7,575 $ (214 ) (3% ) Selling, General and Administrative Expense as a % of Revenues 52% 59% The decrease in selling, general and administrative expenses for the year ended March 31, 2025 of $214,000 was the result of ongoing efforts to contain expenses across all parts of the company.
Capital Expenditures We currently forecast capital expenditures in order to execute on our business plan and maintain growth; however, the actual amount and timing of such capital expenditures will ultimately be determined by the volume of business. We currently do not anticipate that a material amount will be purchased for the year ended March 31, 2025.
Capital Expenditures We currently forecast capital expenditures in order to execute on our business plan and maintain growth; however, the actual amount and timing of such capital expenditures will ultimately be determined by the volume of business. We currently do not anticipate that a material amount will be purchased for the year ended March 31, 2026.
Management believes that we have access to capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other means; however, we cannot provide any assurance that new financing will be available on commercially acceptable terms, if at all. If the economic climate in the U.S. deteriorates, our ability to raise additional capital could be negatively impacted.
We believe that we have access to additional capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other means; however, we cannot provide any assurance that new financings will be available on commercially acceptable terms, if needed. If the economic climate in the U.S. deteriorates, our ability to raise additional capital could be negatively impacted.
Net cash provided by financing activities for the year ended March 31, 2024 was $1,676,000 primarily related to proceeds of $1,784,000 from the sale of common stock.
Net cash provided by financing activities for the year ended March 31, 2025 was $3,030,000, primarily related to proceeds of $3,079,000 from the sale of common stock. Net cash provided by financing activities for the year ended March 31, 2024 was $1,676,000, primarily related to proceeds of $1,784,000 from the sale of common stock.
Net cash used in investing activities for the year ended March 31, 2024 was $2,000, primarily related to the purchase of capital property and equipment. 41 Net cash used in investing activities for the year ended March 31, 2023 was $258,000, primarily related to the purchase of capital property and equipment.
Net cash used in investing activities for the year ended March 31, 2025 was $80,000, primarily related to the purchase of capital property and equipment. Net cash used in investing activities for the year ended March 31, 2024 was $2,000, primarily related to the purchase of capital property and equipment.
The increase in Europe revenue for the year ended March 31, 2024 of $730,000 was the result of a general increase in demand for our products and, more specifically, an increase in demand for our wound care products from our customer in Poland due to recent world events.
The increase in Europe revenue for the year ended March 31, 2025 of $742,000 was the result of a general increase in demand for our products and, more specifically, an increase in demand for our wound care products due to recent world events.
At March 31, 2024 and 2023, our accumulated deficit amounted to $194,349,000 and $189,514,000, respectively. As of March 31, 2024 and 2023, we had cash and cash equivalents of $3,128,000 and $3,820,000, respectively. Since our inception, substantially all of our operations have been financed through sales of equity securities.
At March 31, 2025 and 2024, our accumulated deficit amounted to $197,806,000 and $194,349,000, respectively. As of March 31, 2025 and 2024, we had cash and cash equivalents of $5,374,000 and $3,128,000, respectively. Since our inception, substantially all of our operations have been financed through sales of equity securities.
Net Loss The following table provides the net loss for each period along with the computation of basic and diluted net loss per share: For the Year Ended March 31, (In thousands, except per share data) 2024 2023 Net loss $ (4,835 ) $ (5,151 ) Weighted-average shares outstanding: basic and diluted 9,090 3,394 Net loss per share: basic and diluted $ (0.53 ) $ (1.52 ) 40 Liquidity and Capital Resources We reported a net loss of $4,835,000 and $5,151,000 for the years ended March 31, 2024 and 2023, respectively.
Net Loss The following table provides the net loss for each period along with the computation of basic and diluted net loss per share: For the Year Ended March 31, (In thousands, except per share data) 2025 2024 Net loss $ (3,457 ) $ (4,835 ) Weighted-average shares outstanding: basic and diluted 1,241 455 Net loss per share: basic and diluted $ (2.79 ) $ (10.63 ) Liquidity and Capital Resources We reported a net loss of $3,457,000 and $4,835,000 for the years ended March 31, 2025 and 2024, respectively.
The following table presents a summary of our consolidated cash flows for operating, investing and financing activities for the years ended March 31, 2024 and 2023 as well balances of cash and cash equivalents and working capital: Year ended March 31, (In thousands) 2024 2023 Net cash provided by (used in): Operating activities $ (2,398 ) $ (6,152 ) Investing activities (2 ) (258 ) Financing activities 1,676 2,489 Effect of exchange rates on cash 32 345 Net change in cash and cash equivalents (692 ) (3,576 ) Cash and cash equivalents, beginning of the period 3,820 7,396 Cash and cash equivalents, end of the period $ 3,128 $ 3,820 Working capital (1) , end of period $ 8,829 $ 10,081 (1) Defined as current assets minus current liabilities.
The following table presents a summary of our consolidated cash flows for operating, investing and financing activities for the years ended March 31, 2025 and 2024 as well as balances of cash and cash equivalents and working capital: Year ended March 31, (In thousands) 2025 2024 Net cash provided by (used in): Operating activities $ (88 ) $ (2,398 ) Investing activities (80 ) (2 ) Financing activities 3,030 1,676 Effect of exchange rates on cash (616 ) 32 Net change in cash and cash equivalents 2,246 (692 ) Cash and cash equivalents, beginning of the period 3,128 3,820 Cash and cash equivalents, end of the period $ 5,374 $ 3,128 Working capital (1) , end of period $ 8,552 $ 8,829 (1) Defined as current assets minus current liabilities. 41 As of March 31, 2025 and 2024, we had cash and cash equivalents of $5,374,000 and $3,128,000, respectively.
These customers may not consistently purchase our products at a particular rate over any subsequent period. We are exposed to risk from decline in foreign currency for both the Euro and the Mexico Peso versus the US dollar. Most recently there has been a sharp decline in the Euro versus the U.S. Dollar which has impacted our financial results.
These customers may not consistently purchase our products at a particular rate over any subsequent period. We are exposed to risk from foreign currency devaluation for both the Mexico Peso and the Euro versus the US dollar.
We also closely monitor overall economic conditions and consumer sentiment and the prospect of a recession in the United States which may impact our financial results. 42 Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
These measures could cause significant delays in our continued efforts to commercialize our products, which is critical to the realization of our business plan and our future operations. These matters raise substantial doubt about our ability to continue as a going concern.
These measures could cause significant delays in our continued efforts to commercialize our products, which is critical to the realization of our plan and future operations.
Since April 1, 2023, substantially all of our operations have been financed through cash on hand and the following transactions: · Proceeds of $1,446,000, net of offering expenses, from the sale of common stock on October 26, 2023. · Proceeds of $343,000, net of offering expenses, from the sale of common stock on January 11, 2024.
Since April 1, 2024, substantially all of our operations have been financed through cash on hand and proceeds of $3,079,000, net of offering expenses, from the sale of common stock during the fiscal year ended March 31, 2025.
We base our estimates and judgments on a variety of factors including our historical experience, knowledge of our business and industry, current and expected economic conditions, the attributes of our products, the regulatory environment, and in certain cases, the results of outside appraisals.
Areas in which we exercise significant judgment include, but are not necessarily limited to, our valuation of accounts receivable, inventory, income taxes, and equity transactions (compensatory and financing). 38 We base our estimates and judgments on a variety of factors including our historical experience, knowledge of our business and industry, current and expected economic conditions, the attributes of our products, the regulatory environment, and in certain cases, the results of outside appraisals.
Results of Continuing Operations Comparison of the Year Ended March 31, 2024 and 2023 Revenue The following table shows our consolidated total revenue and revenue by geographic region for the year ended March 31, 2024 and 2023: Year Ended March 31, (In thousands) 2024 2023 $ Change % Change United States $ 3,058 $ 3,428 $ (370 ) (11% ) Europe 4,781 4,051 730 18% Asia 2,298 2,451 (153 ) (6% ) Latin America 1,726 2,383 (657 ) (28% ) Rest of the World 872 959 (87 ) (9% ) Total $ 12,735 $ 13,272 $ (537 ) (4% ) 38 The decrease in United States revenue of $370,000 for the year ended March 31, 2024, was primarily the result of fluctuations in over-the-counter animal health care sales.
Results of Continuing Operations Comparison of the Year Ended March 31, 2025 and 2024 Revenue The following table shows our consolidated total revenue and revenue by geographic region for the year ended March 31, 2025 and 2024: Year Ended March 31, (In thousands, except for percentages) 2025 2024 $ Change % Change United States $ 2,611 $ 3,058 $ (447 ) (15% ) Europe 5,523 4,781 742 16% Asia 2,317 2,298 19 1% Latin America 2,962 1,726 1,236 72% Rest of the World 875 872 3 0% Total $ 14,288 $ 12,735 $ 1,553 12% The decrease in United States revenue of $447,000 for the year ended March 31, 2025, was primarily the result of fluctuations in demand for over-the-counter animal health care products.
The decrease in Rest of World revenue for the year ended March 31, 2024 of $87,000 was primarily due to timing of customer orders.
The increase in Asia revenue of $19,000 for the year ended March 31, 2025 was primarily due to timing of customer orders. The increase in Latin America revenue for the year ended March 31, 2025 of $1,236,000 was primarily due to an increase in manufacturing orders.
Actual results could differ from these estimates. Significant estimates and assumptions include reserves and write-downs related to receivables and inventories, the recoverability of long-lived assets, the valuation allowance related to our deferred tax assets, valuation of equity and derivative instruments, debt discounts, valuation of investments and the estimated amortization periods of upfront product licensing fees received from customers.
Actual results could differ from these estimates. Significant estimates and assumptions include reserves and write-downs related to receivables and inventories, the valuation allowance relating to the Company’s deferred tax assets, and the valuation of equity.. Periodically, the Company evaluates and adjusts estimates accordingly.
Cost of Revenue and Gross Profit The cost of revenue and gross profit metrics for the year ended March 31, 2024 and 2023 are as follows: Year Ended March 31, (In thousands, except for percentages) 2024 2023 $ Change % Change Cost of Revenues $ 7,990 $ 8,795 $ (805 ) (9% ) Cost of Revenue as a % of Revenues 63% 66% Gross Profit $ 4,745 $ 4,477 $ 268 6% Gross Profit as a % of Revenues 37% 34% The increase in gross profit margin of $268,000 for the year ended March 31, 2024, as compared to the prior year, was primarily due to overall product mix, redeployment of labor to research and development projects in the current year and higher costs of materials and transportation in the prior year.
The increase in Rest of World revenue for the year ended March 31, 2025 of $3,000 was primarily due to timing of customer orders. 39 Cost of Revenue and Gross Profit The cost of revenue and gross profit metrics for the year ended March 31, 2025 and 2024 are as follows: Year Ended March 31, (In thousands, except for percentages) 2025 2024 $ Change % Change Cost of Revenues $ 8,823 $ 7,990 $ 883 10% Cost of Revenue as a % of Revenues 62% 63% Gross Profit $ 5,465 $ 4,745 $ 720 15% Gross Profit as a % of Revenues 38% 37% The gross profit margin of 38% for the year ended March 31, 2025 was consistent with the prior year.
Other Expense, net Other expense, net for the year ended March 31, 2024 was $330,000 compared to $614,000 for the year ended March 31, 2023. The changes in other expense, net primarily relate to exchange rate fluctuations. Income Tax Benefit Income tax benefit for the year ended March 31, 2024 and 2023 was $196,000 and $33,000, respectively.
Other Income (Expense), net Other income (expense), net for the year ended March 31, 2025 was $803,000 compared to $(330,000) for the year ended March 31, 2024. The change in other income (expense), net primarily relates to exchange rate fluctuations and to a lesser extent income of $245,000 for employee retention credits approved from calendar year 2020.
We face a substantial Mexico tax liability, intercompany debt, unpaid technical assistance charges and accrued interest. These amounts are due in 2027. At this time, management believes there are sufficient assets on the balance sheet to more than cover any tax obligation without interrupting the Company’s operations or business.
At this time, management believes there are sufficient assets on the balance sheet to cover any tax obligation without interrupting our operations or business. We have engaged tax professionals to review all options to limit our exposure to these amounts and to proceed in a manner that is most advantageous to us.
Net cash used in operating activities during the year ended March 31, 2023 was $6,152,000, primarily due to net loss of $5,151,000 and a decline in deferred revenue.
Net cash used in operating activities during the year ended March 31, 2025 was $88,000, primarily due to our net loss of $3,457,000, offset by stock compensation of $224,000, a decrease in accounts receivable of $434,000, a decrease in prepaid expenses of $1,086,000 and an increase in accounts payable of $416,000.
Removed
Areas in which we exercise significant judgment include, but are not necessarily limited to, our valuation of accounts receivable, inventory, income taxes, equity transactions (compensatory and financing) and contingencies.
Added
Research and Development Expense The research and development expense metrics for the year ended March 31, 2025 and 2024 are as follows: Year Ended March 31, (In thousands, except for percentages) 2025 2024 $ Change % Change Research and Development Expense $ 1,814 $ 1,871 $ (57 ) (3% ) Research and Development Expense as a % of Revenues 13% 15% Decrease in research and development expenses for the year ended March 31, 2025 of $57,000 was primarily due to decreased product development expenses in the U.S. in the current period and decreased regulatory efforts in Europe following the successful transition to MDR.
Removed
The decrease in Asia revenue of $153,000 for the year ended March 31, 2024, was primarily due to timing of orders. Revenues from our international distributors tend to fluctuate from period to period due to customer placement of larger but less frequent orders to benefit from quantity discounts and reduced shipping costs.
Added
In fiscal 2026 we expect to recognize income of approximately $350,000 related to approved calendar year 2021 employee retention credits. 40 Income Tax (Expense) Benefit Income tax (expense) benefit for the years ended March 31, 2025 and 2024 was $(550,000) and $196,000, respectively.
Removed
The decrease in Latin America revenue for the year ended March 31, 2024 of $657,000 was primarily due to a one-time event in the prior year related to the sale of machinery to a customer. We recorded $750,000 of service revenue in the prior year in connection with this transaction.
Added
The expense for the current year is primarily related to the use of our deferred tax asset in Mexico and, to a lesser extent, an increase in our deferred tax asset in Netherlands. The benefit for the prior year was related to our Mexico deferred tax asset.
Removed
The increase is primarily related to the release of our valuation allowance on deferred tax assets in Europe.
Added
This uncertainty along with our history of losses indicates that there is substantial doubt about our ability to continue as a going concern within one year after the date that our financial statements are issued. The accompanying consolidated financial statements do not include any adjustments that may be necessary should we be unable to continue as a going concern.
Removed
As of March 31, 2024 and 2023, we had cash and cash equivalents of $3,128,000 and $3,820,000, respectively.
Added
Risk related to foreign currency valuation tends to be unpredictable and can be affected by various factors outside of our control. 42 We face a substantial Mexico tax liability, intercompany debt, unpaid technical assistance charges and accrued interest. These amounts are due in 2027.
Removed
Net cash provided by financing activities for the year ended March 31, 2023 was $2,489,000 primarily related to proceeds of $2,868,000 from the sale of common stock, proceeds of $515,000 from short-term notes, offset by payments on our PPP loan and short-term notes.
Added
We also closely monitor global economic conditions, including the risk of economic downturn or recession, the prospect of new or increased tariffs, as well as overall consumer sentiment, any of which may impact our financial results.
Removed
We expect revenues to fluctuate and may incur losses in the foreseeable future and may need to raise additional capital to pursue our product development initiatives, to penetrate markets for the sale of our products and continue as a going concern. We cannot provide any assurances that we will be able to raise additional capital.
Removed
We have engaged tax professionals to review all options to limit our exposure to these amounts and to proceed in a manner that is most advantageous to the Company. The effects of the recent pandemic continue to impact economies worldwide, and we are closely watching inflation, increased volatility within financial markets, shipping costs, supply chain issues and labor costs.
Removed
Any impact to our business operations, customer demand and supply chain due to increased shipping costs may ultimately impact sales. We continue to evaluate our end-to-end supply chain and assess opportunities to refine the impact on sales. Currently, most of our customers pay for shipping expenses, including increased shipping costs, if any.
Removed
We have not yet faced labor shortages however it is possible we may have difficulties retaining and finding qualified employees in a tight labor market in the future. Furthermore, overall inflation tendencies may put pressure on our product pricing and/or costs.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.
Biggest changeITEM 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item. 43

Other SNOA 10-K year-over-year comparisons