Sonoma Pharmaceuticals, Inc.
Corporate Information
We originally incorporated as Micromed Laboratories, Inc. in 1999 under the laws of the State of California. We changed our name to Oculus Innovative Sciences, Inc. in 2001. In December 2006 we reincorporated under the laws of the State of Delaware, and in December 2016 we changed our name to Sonoma Pharmaceuticals, Inc.
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. 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, 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. 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.
Business Update
Over the past year, we have continued our focus on increasing revenues and continuing progress towards profitability. During our most recent fiscal year, our revenues have grown as a result of continued expansion of our distribution network and customer base including increasing expansion into consumer markets, the introduction of new products into multiple markets around the world, as well as organic growth from existing customers and distributors. We have also focused on expanding and strengthening our regulatory reach by seeking new approvals and clearances.
Some of our recent business updates include:
| · | In March 2026, we announced the U.S. retail launch of our advanced HOCl-based burn relief hydrogel in CVS and Walmart stores in the United States. |
| · | Also in March 2026, we announced the launch of Aquanil® AD, a hypochlorous acid based dermatology product line for sensitive skin, developed exclusively for Persōn & Covey, Inc. for distribution through its established over-the-counter dermatology channels in the United States. |
| · | In October 2025, we announced the registration of our manufacturing facility and listing of our Microcyn-based facial spray under the FDA's Modernization of Cosmetics Regulation Act of 2022 (MoCRA). |
| · | In October 2025, we announced the launch of a new HOCl wound cleanser for Medline Industries, LP, to be distributed into hospital systems, home healthcare and other healthcare channels across the United States. |
| · | In August 2025, Reliefacyn® Advanced Itch-Burn-Rash-Pain Relief Hydrogel earned the National Psoriasis Foundation (NPF) Seal of Recognition, and in November 2025, Reliefacyn earned the National Rosacea Society (NRS) Seal of Acceptance. |
| · | In August 2025, we announced the launch of our HOCl-based diaper rash products for infants and children into Walmart stores and other large retailers in the United States. |
| · | In July 2025, we expanded our partnership with a U.S.-based distributor for the sale of Microcyn technology-based products to large retailers in the United States to include additional consumer-focused products. |
| · | In April 2025, we launched the sale of our hypochlorous acid-based acne products in over 1,200 stores in the United Kingdom through a leading U.K. health and beauty retailer and pharmacy chain. |
| · | In April 2025, we received regulatory approval for the sale of our wound care products in Ukraine as a Class IIb medical device. |
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 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. 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. In international markets, we sell 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.
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 relieving pain and itch from skin irritations, the management of scars and managing symptoms of eczema/atopic dermatitis. In Europe and the United Kingdom, we have developed products to assist in the treatment of acne. 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. In addition, we look for markets where we can provide effective product line extensions and pricing to new product families.
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. We also relaunched over-the-counter Lasercyn® Dermal Spray and Lasercyn Gel.
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. Rejuvacyn is certified as a Natural Personal Care Product by the Natural Products Association, and Reliefacyn received the National Eczema Association Seal of AcceptanceTM in 2023, the National Psoriasis Foundation Seal of Recognition in 2025 and the National Rosacea Society Seal of Acceptance in 2025. In January 2024, we launched LumacynTM Clarifying Mist, a direct-to-consumer skin care product in the United States. Lumacyn is an all-natural daily toner to soothe and cleanse the skin.
Our consumer products are available through online retailers, our online store and third-party distributors.
In January 2023, we launched a line of office dispense products exclusively for skin care professionals, including two new prescription strength dermatology products, Reliefacyn Plus Advanced Itch-Burn-Rash-Pain Relief Hydrogel and Rejuvacyn Plus Skin Repair Cooling Mist. These products, along with Regenacyn Plus Scar Gel, are marketed and sold directly to dermatology practices and medical spas.
We sell dermatology products in international markets through distributors. In these 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 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. 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. Highly organized cell structures such as human tissue can tolerate the action of our wound care solution while single-celled microorganisms cannot, making our products advantageous to other wound-irrigation and antiseptic solutions. Due to its unique chemistry, our wound treatment solution is also much more stable than similar products on the market and therefore maintains much higher levels of hypochlorous acid over its shelf life.
In the United States, we sell our wound care products directly to hospitals, physicians, nurses, and other healthcare practitioners and indirectly through non-exclusive distribution arrangements. 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. The intraoperative pulse lavage container is designed to be used in combination with a pulse lavage irrigation device, or flush gun, for abdominal, laparoscopic, orthopedic, and periprosthetic procedures. It is in trial use by hospitals in Europe and launched in the U.S. in November 2023.
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.
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. The agreement is for an initial term of five years, subject to automatic one-year renewal periods. In October 2024, we entered into an amendment to the agreement which allows Medline to also sell our wound care products in Canada, as well as to sell additional over-the-counter wound care products to retailers in both countries.
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.
We sell Ocucyn® Eyelid & Eyelash Cleanser to consumers through our online store and third party distributors. 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.
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. In Europe, we sell our wound care products for podiatric use through a diverse network of distributors.
In April 2023, we launched Podiacyn® Advanced Everyday Foot Care direct to consumers for over-the-counter use in the United States, intended for daily foot health and hygiene. Podiacyn is available through our online store and third-party distributors.
Animal Health Care
MicrocynAH® is an HOCl-based topical product line that cleans, debrides and supports healing of a wide spectrum of animal wounds and infections. It is intended for 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.
For our animal health products sold in the U.S., we partner with Compana Pet Brands. Compana distributes non-prescription products to national pet-store retail chains and farm animal specialty stores, such as PetSmart, Tractor Supply, 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. We supply Petagon with all MicrocynAH products sold by Petagon.
Surface Disinfectants
Our HOCl technology has been formulated as a disinfectant and sanitizer solution 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.
Through our partner MicroSafe, we sell hard surface disinfectant products into Europe, the Middle East and Australia.
Employees
As of June 12, 2026, we employed a total of 9 full-time employees in the United States, and one full-time employee in the Netherlands. Additionally, we had approximately 250 employees in Mexico. We are not a party to any collective bargaining agreements. 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.
Dermatology
In the United States, we offer both prescription and OTC dermatology products. Our prescription strength products include Epicyn Facial Cleanser, Levicyn Dermal Spray, Levicyn Gel, Levicyn Spray Gel and Celacyn Scar Management Gel.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Critical Accounting Policies
The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to exercise its judgment. We exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenues and expenses, and disclosure of commitments and contingencies at the date of the consolidated financial statements.
On an ongoing basis, we evaluate our estimates and judgments. Areas in which we exercise significant judgment include, but are not
necessarily limited to, our valuation of income taxes.
On an ongoing basis, we evaluate our estimates and judgments. 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. We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications are necessary.
While we believe that the factors we evaluate provide us with a meaningful basis for establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate. Since the determination of these estimates requires the exercise of judgment, actual results could differ from such estimates.
For a summary of all accounting policies, please refer to Notes to Consolidated Financial Statements, Note 3.
Results of Continuing Operations
Comparison of the Year Ended March 31, 2026 and 2025
Revenue
The following table shows our consolidated total revenue and revenue by geographic region for the year ended March 31, 2026 and 2025:
Year Ended March 31, |
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| (In thousands, except for percentages) | 2026 | 2025 | $ Change | % Change | ||||||||
| United States | $ | 5,674 | $ | 2,611 | $ | 3,063 | 117% | |||||
| Europe | 6,904 | 5,523 | 1,381 | 25% | ||||||||
| Asia | 2,900 | 2,317 | 583 | 25% | ||||||||
| Latin America | 2,373 | 2,962 | (589 | ) | (20% | ) | ||||||
| Rest of the World | 1,678 | 875 | 803 | 92% | ||||||||
| Total | $ | 19,529 | $ | 14,288 | $ | 5,241 | 37% | |||||
Revenues in the U.S. increased 117%, primarily as a result of an increase in sales of over-the-counter products and increased sales by new and existing distributors.
Europe revenues increased 25% as a result of increased demand for our products and favorable exchange rates.
Revenues in Asia increased 25% and Rest of World revenues increased 92% due to timing of customer orders and royalty revenue from our customer in India. Revenues from these regions tend to fluctuate due to customers placing larger, but less frequent, orders to benefit from quantity discounts and reduced shipping costs when ordering larger quantities.
Latin America revenues decreased 20%, primarily due to timing of customer orders for overflow manufacturing.
Cost of Revenue and Gross Profit
The cost of revenue and gross profit metrics for the year ended March 31, 2026 and 2025 are as follows:
Year Ended March 31, |
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| (In thousands, except for percentages) | 2026 | 2025 | $ Change | % Change | ||||||
| Cost of Revenues | $ | 12,114 | $ | 8,823 | $ | 3,291 | 37% | |||
| Cost of Revenue as a % of Revenues | 62% | 62% | ||||||||
| Gross Profit | $ | 7,415 | $ | 5,465 | $ | 1,950 | 36% | |||
| Gross Profit as a % of Revenues | 38% | 38% | ||||||||
The gross profit margin of 38% for the year ended March 31, 2026 was consistent with the prior year.
Research and Development Expense
The research and development expense metrics for the year ended March 31, 2026 and 2025 are as follows:
Year Ended March 31, |
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| (In thousands, except for percentages) | 2026 | 2025 | $ Change | % Change | ||||||
| Research and Development Expense | $ | 2,271 | $ | 1,814 | $ | 457 | 25% | |||
| Research and Development Expense as a % of Revenues | 12% | 13% | ||||||||
Increase in research and development expenses for the year ended March 31, 2026 of 25% was primarily due to increased product development to support new product releases.
Selling, General and Administrative Expense
The selling, general and administrative expense metrics for the years ended March 31, 2026 and 2025 are as follows:
Year Ended March 31, |
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| (In thousands, except for percentages) | 2026 | 2025 | Change | % Change | ||||||
| Selling, General and Administrative Expense | $ | 7,605 | $ | 7,361 | $ | 244 | 3% | |||
| Selling, General and Administrative Expense as a % of Revenues | 39% | 52% | ||||||||
The increase in selling, general and administrative expenses for the year ended March 31, 2026 of 3% was primarily due to inflation driven salary increases in Mexico.
Other (Expense) Income, net
Other (expense) income, net for the year ended March 31, 2026 was ($958,000) compared to $803,000 for the year ended March 31, 2026. Other (expense) income, net in the current period primarily relates to exchange rate fluctuations, offset by the recognition of income of approximately $374,000 related to employee retention credits. Other (expense) income, net in the prior period primarily relates to exchange rate fluctuations.
Income Tax Benefit (Expense)
Income tax benefit (expense) for the year ended March 31, 2026 and 2025 was $244,000 and ($550,000), respectively. The benefit for the current period was related to an expected tax loss in Mexico this fiscal year. The expense for the prior period is primarily related to the use of our Mexico deferred tax asset.
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) | 2026 | 2025 | |||||
| Net loss | $ | (3,175 | ) | $ | (3,457 | ) | |
| Weighted-average shares outstanding: basic and diluted | 1,684 | 1,241 | |||||
| Net loss per share: basic and diluted | $ | (1.89 | ) | $ | (2.79 | ) | |
Liquidity and Capital Resources
We reported a net loss of $3,175,000 and $3,457,000 for the years ended March 31, 2026 and 2025, respectively. At March 31, 2026 and 2025, our accumulated deficit amounted to $200,981,000 and $197,806,000, respectively. As of March 31, 2026 and 2025, we had cash and cash equivalents of $2,399,000 and $5,374,000, respectively. Since our inception, substantially all of our operations have been financed through sales of equity securities. Other sources of financing that we have used to date include our revenues, as well as various loans and the sale of certain assets to customers.
Since April 1, 2025, substantially all of our operations have been financed through cash on hand and the following transactions:
| · | Proceeds of $427,000, net of offering expenses, from the sale of common stock at various dates; and |
| · | Proceeds of $374,000 stemming from employee retention credits. |
The following table presents a summary of our consolidated cash flows for operating, investing and financing activities for the years ended March 31, 2026 and 2025 as well as balances of cash and cash equivalents and working capital:
| Year ended March 31, | |||||||
| (In thousands) | 2026 | 2025 | |||||
| Net cash (used in) provided by : | |||||||
| Operating activities | $ | (3,933 | ) | $ | (88 | ) | |
| Investing activities | (192 | ) | (80 | ) | |||
| Financing activities | 477 | 3,030 | |||||
| Effect of exchange rates on cash | 673 | (616 | ) | ||||
| Net change in cash and cash equivalents | (2,975 | ) | 2,246 | ||||
| Cash and cash equivalents, beginning of the period | 5,374 | 3,128 | |||||
| Cash and cash equivalents, end of the period | $ | 2,399 | $ | 5,374 | |||
| Working capital (1), end of period | $ | 7,268 | $ | 8,552 | |||
| (1) | Defined as current assets minus current liabilities. |
As of March 31, 2026 and 2025, we had cash and cash equivalents of $2,399,000 and $5,374,000, respectively.
Net cash used in operating activities during the year ended March 31, 2026 was $3,933,000, primarily due to our net loss of $3,175,000 offset by stock compensation of $255,000, a increase in accounts receivable of $122,000, an increase in prepaid expenses of $1,312,000 and a decrease in accounts payable of $871,000.
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.
Net cash used in investing activities for the year ended March 31, 2026 was $192,000, 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 provided by financing activities for the year ended March 31, 2026 was $477,000, primarily related to proceeds of $427,000 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.
We believe that our existing cash and operating plans are sufficient to fund our anticipated operations for the next twelve months. We also have access to additional capital resources, which may include public or private equity offerings, debt financings, corporate collaborations, or other means, if and when appropriate to support strategic initiatives. However, there can be no assurance that such financings will be available on commercially acceptable terms, or at all, if pursued in the future. If the economic climate in the U.S. deteriorates, our ability to access additional capital could be negatively impacted. If we elect to pursue additional financing in the future, we may do so to support growth initiatives, extend our financial flexibility, or fund strategic opportunities. Any such activities could result in delays or changes to planned commercialization activities depending on timing and market conditions.
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 anticipate spending $500,000 to purchase equipment to increase efficiency in operations for the year ended March 31, 2027. We expect to pay cash for those expenditures or to finance them through equipment leases.
Material Trends and Uncertainties
We rely on certain key customers for a significant portion of our revenues. In the future, a small number of customers may continue to represent a significant portion of our total revenues in any given period. 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. Risk related to foreign currency valuation tends to be unpredictable and can be affected by various factors outside of our control.
We face a substantial Mexico tax liability, intercompany debt, unpaid technical assistance charges and accrued interest. These amounts are due in 2032. 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.
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.
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. Actual results could differ from these estimates. Significant estimates and assumptions include the valuation allowance relating to the Company’s deferred tax assets. Periodically, the Company evaluates and adjusts estimates accordingly.
Off-Balance Sheet Transactions
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Next expected filings
- ~2026-08-06 10-Q expected by 2026-08-06 (in 43 days)
- ~2026-11-03 10-Q expected by 2026-11-03 (in 132 days)
- ~2027-02-09 10-Q expected by 2027-02-09 (in 230 days)
- ~2027-06-16 10-K expected by 2027-06-22 (in 357 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-06-18 8-K Other Events; Financial Statements and Exhibits
- 2026-06-16 10-K Annual Report
- 2026-04-30 8-K Material Agreement Entered; Other Events; Financial Statements and Exhibits
- 2026-04-23 S-1/A AMENDMENT NO. 1 TO FORM S-1
- 2026-04-17 S-1 Registration Statement
- 2026-04-09 8-K Material Agreement Entered; Financial Statements and Exhibits
- 2026-02-10 10-Q Quarterly Report
- 2026-01-28 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-01-12 8-K Other Events; Financial Statements and Exhibits
- 2026-01-02 8-K Officer/Director Change
- 2025-11-04 10-Q Quarterly Report
- 2025-10-23 8-K Officer/Director Change
- 2025-10-09 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-09-29 8-K Other Events; Financial Statements and Exhibits
- 2025-09-26 8-K Material Agreement Entered; Financial Statements and Exhibits