Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Mar. 31, 2015 | Jun. 11, 2015 | Sep. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | Oculus Innovative Sciences, Inc. | ||
Entity Central Index Key | 1367083 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Mar-15 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -28 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 15,046,080 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2015 | ||
Entity public float | $20,116,830 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $6,136 | $5,480 |
Accounts receivable, net | 1,517 | 1,790 |
Due from affiliate | 0 | 537 |
Inventories, net | 1,402 | 1,088 |
Prepaid expenses and other current assets | 592 | 647 |
Total current assets | 9,647 | 9,542 |
Property and equipment, net | 795 | 971 |
Long-term investment | 4,538 | 10,150 |
Other assets | 68 | 128 |
Total assets | 15,048 | 20,791 |
Current liabilities: | ||
Accounts payable | 932 | 736 |
Accrued expenses and other current liabilities | 782 | 889 |
Deferred revenue | 769 | 2,629 |
Current portion of long-term debt | 87 | 143 |
Derivative liabilities | 11 | 3,175 |
Total current liabilities | 2,581 | 7,572 |
Deferred revenue, less current portion | 413 | 1,152 |
Long-term debt | 0 | 4 |
Total liabilities | 2,994 | 8,728 |
Commitments and Contingencies (Note 12) | ||
Stockholders' Equity | ||
Convertible preferred stock, $0.0001 par value; 714,286 shares authorized, none issued and outstanding at March 31, 2015 and 2014, respectively | 0 | 0 |
Common stock, $0.0001 par value; 30,000,000 shares authorized, 15,045,080 and 8,160,145 shares issued and outstanding at March 31, 2015 and March 31, 2014, respectively | 2 | 1 |
Additional paid-in capital | 157,772 | 149,141 |
Accumulated deficit | -142,213 | -134,010 |
Accumulated other comprehensive loss | -3,507 | -3,069 |
Total stockholders' equity | 12,054 | 12,063 |
Total liabilities and stockholders' equity | $15,048 | $20,791 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Convertible preferred stock par value | $0.00 | $0.00 |
Convertible preferred stock shares authorized | 714,286 | 714,286 |
Convertible preferred stock shares issued | 0 | 0 |
Convertible preferred stock shares outstanding | 0 | 0 |
Common stock par value | $0.00 | $0.00 |
Common stock shares authorized | 30,000,000 | 30,000,000 |
Common stock shares issued | 15,045,080 | 8,160,145 |
Common stock shares outstanding | 15,045,080 | 8,160,145 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Loss (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Revenues | ||
Product | $9,939 | $7,210 |
Product licensing fees and royalties | 3,056 | 5,513 |
Service | 859 | 945 |
Total revenues | 13,854 | 13,668 |
Cost of revenues | ||
Product | 5,908 | 4,510 |
Service | 658 | 761 |
Total cost of revenues | 6,566 | 5,271 |
Gross profit | 7,288 | 8,397 |
Operating expenses | ||
Research and development | 1,533 | 2,887 |
Selling, general and administrative | 12,414 | 11,561 |
Total operating expenses | 13,947 | 14,448 |
Loss from operations | -6,659 | -6,051 |
Interest expense | -3 | -1,058 |
Interest income | 1 | 1 |
Gain due to change in fair value of common stock (See Note 10) | 0 | 1,357 |
Gain on deconsolidation of Ruthigen | 0 | 11,133 |
Gain (loss) due to change in fair value of derivative instruments | 3,164 | -1,566 |
Impairment loss on long-term investment (See Note 3) | -4,650 | 0 |
Other expense, net | -56 | -81 |
Net (loss) income | -8,203 | 3,735 |
(Loss) per common share: Basic | ($0.85) | $0.54 |
(Loss) per common share: Diluted | ($0.85) | $0.54 |
Weighted-average number of common shares outstanding: Basic | 9,657,000 | 6,882,000 |
Weighted-average number of common shares outstanding: Diluted | 9,657,000 | 6,898,000 |
Other comprehensive income (loss) | ||
Net (loss) income | -8,203 | 3,735 |
Foreign currency translation adjustments | -438 | -78 |
Comprehensive (loss) income | ($8,641) | $3,657 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholders' Equity (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Beginning balance, amount at Mar. 31, 2013 | $1,000 | $144,816,000 | ($137,745,000) | ($2,991,000) | $4,081,000 |
Beginning balance, shares at Mar. 31, 2013 | 6,583,150 | ||||
Issuance of common stock offering, net of commissions, expenses and other offering costs, shares | 1,000,620 | ||||
Issuance of common stock offering, net of commissions, expenses and other offering costs, amount | 3,188,000 | 3,188,000 | |||
Fair value of common stock purchase warrants issued with a cash settlement provision | -3,292,000 | -3,292,000 | |||
Reclassification of derivative liability to equity related to the exercise of common stock purchase warrants with a cash settlement provision | 1,683,000 | 1,683,000 | |||
Issuance of common stock in connection with the exercise of common stock purchase warrants, shares | 449,620 | ||||
Issuance of common stock in connection with the exercise of common stock purchase warrants, amount | 1,295,000 | 1,295,000 | |||
Issuance of common stock in connection with the cashless exercise of common stock purchase warrants, shares | 20,774 | ||||
Issuance of common stock for services, shares | 105,981 | ||||
Issuance of common stock for services, amount | 341,000 | 341,000 | |||
Common stock purchase warrants issued to consultants in exchange for services | 3,000 | 3,000 | |||
Employee stock-based compensation expense, net of forfeitures | 1,107,000 | 1,107,000 | |||
Foreign currency translation adjustment | -78,000 | -78,000 | |||
Net income (loss) | 3,735,000 | 3,735,000 | |||
Ending balance, amount at Mar. 31, 2014 | 1,000 | 149,141,000 | -134,010,000 | -3,069,000 | 12,063,000 |
Ending balance, shares at Mar. 31, 2014 | 8,160,145 | ||||
Issuance of common stock offering, net of commissions, expenses and other offering costs, shares | 467,934 | ||||
Issuance of common stock offering, net of commissions, expenses and other offering costs, amount | 1,341,000 | 1,341,000 | |||
Issuance of common stock and common stock purchase warrants, net of commissions, expenses and other offering costs, shares | 6,384,500 | ||||
Issuance of common stock and common stock purchase warrants, net of commissions, expenses and other offering costs, value | 1,000 | 5,443,000 | 5,444,000 | ||
Fair value of common stock purchase warrants issued with a cash settlement provision | 0 | ||||
Issuance of common stock for settlement of service fee payables, shares | 32,501 | ||||
Issuance of common stock for settlement of service fee payables, value | 76,000 | 76,000 | |||
Employee stock-based compensation expense, net of forfeitures | 1,771,000 | 1,771,000 | |||
Foreign currency translation adjustment | -438,000 | -438,000 | |||
Net income (loss) | -8,203,000 | -8,203,000 | |||
Ending balance, amount at Mar. 31, 2015 | $2,000 | $157,772,000 | ($142,213,000) | ($3,507,000) | $12,054,000 |
Ending balance, shares at Mar. 31, 2015 | 15,045,080 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities | ||
Net (loss) income | ($8,203) | $3,735 |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 253 | 284 |
Provision for doubtful accounts | 29 | -6 |
Provision for obsolete inventory | 141 | 6 |
Stock-based compensation | 1,771 | 1,451 |
(Gain) loss due to change in fair value of derivative liabilities | -3,164 | 1,566 |
Impairment loss on long-term investment (See Note 3) | 4,650 | 0 |
Gain on deconsolidation of Ruthigen (See Note 8) | 0 | -11,133 |
Gain due to change in fair value of common stock (See Note 10) | 0 | -1,357 |
Non-cash interest expense | 0 | 863 |
Foreign currency transaction loss (gain) | 24 | -6 |
(Gain) loss on disposal of property and equipment | -13 | 39 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 40 | -88 |
Due from affiliate | 537 | -537 |
Inventories | -627 | -126 |
Prepaid expenses and other current assets | 162 | 458 |
Accounts payable | 222 | 848 |
Accrued expenses and other liabilities | -1 | 271 |
Deferred revenue and other liabilities | -2,515 | -1,158 |
Net cash used in operating activities | -6,694 | -4,890 |
Cash flows from investing activities: | ||
Purchases of property and equipment | -139 | -504 |
Proceeds from sale of long-term investment | 963 | 0 |
Long-term deposits | 51 | 59 |
Net cash provided by (used in) investing activities | 875 | -445 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock and common stock purchase warrants in offerings, net of offering costs | 6,785 | 3,188 |
Deferred offering costs | 0 | 44 |
Proceeds from the exercise of common stock upon exercise of stock options and warrants | 0 | 1,295 |
Proceeds from cash settlement liability (See Note 10) | 0 | 33 |
Principal payments on long-term debt | -176 | -1,615 |
Net cash provided by financing activities | 6,609 | 2,945 |
Effect of exchange rate on cash and cash equivalents | -134 | -30 |
Net increase (decrease) in cash and cash equivalents | 656 | -2,420 |
Cash and cash equivalents, beginning of year | 5,480 | 7,900 |
Cash and cash equivalents, end of year | 6,136 | 5,480 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 3 | 195 |
Non-cash operating and financing activities: | ||
Insurance premiums financed | 116 | 188 |
Issuance of common stock to settle obligations | 76 | 0 |
Non-cash investing and financing activities: | ||
Debt settled in connection with stock purchase agreement (See Note 10) | 0 | 1,131 |
Cash settlement liability settled in connection with stock purchase agreement (See Note 10) | 0 | 2,000 |
Reclassification of derivative liabilities to paid in capital | 0 | 1,683 |
Warrants issued as derivative liabilities in connection with registered direct offering | $0 | $3,292 |
1_Organization_and_Recent_Deve
1. Organization and Recent Developments | 12 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
1. Organization and Recent Developments | Organization |
Oculus Innovative Sciences, Inc. (the “Company”) was incorporated under the laws of the State of California in April 1999 and was reincorporated under the laws of the State of Delaware in December 2006. The Company’s principal office is located in Petaluma, California. The Company is a global specialty device and pharmaceutical company that develops, produces, and markets solutions for the treatment of dermatological conditions and advanced tissue care in the United States and internationally. The Company is pioneering innovative products for the dermatology, surgical, advanced tissue and skin care, and animal healthcare markets. The Company’s key proprietary technology platform is called Microcyn® Technology. This technology is based on electrically charged oxychlorine small molecules designed to target a wide range of organisms that cause disease (pathogens). Several Microcyn® Technology tissue care products are designed to treat infections and enhance healing while reducing the need for antibiotics. | |
Reverse Stock Split | |
Effective April 1, 2013, the Company effected a reverse stock split of its common stock, par value $0.0001 per share. Every 7 shares of common stock were reclassified and combined into one share of common stock. No fractional shares were issued as a result of the reverse stock split. Instead, each resulting fractional share of common stock was rounded up to one whole share. The reverse stock split reduced the number of shares of the Company’s common stock outstanding from 46,080,513 to 6,583,150. The total number of authorized shares of common stock was also proportionally decreased by a ratio of 1:7 and the par value per share of the common stock continued to be $0.0001. | |
All common shares and per share amounts contained in the consolidated financial statements have been retroactively adjusted to reflect a 1 for 7 reverse stock split. | |
Deconsolidation of Ruthigen, Inc. | |
On March 26, 2014, the Company deconsolidated its formerly wholly-owned subsidiary Ruthigen, Inc. (“Ruthigen”) in connection with the completion of Ruthigen’s initial public offering (“IPO”) of its common stock. As a result of the initial public offering, at March 31, 2014, the Company’s ownership interest in Ruthigen decreased to approximately 43%. The Ruthigen results of operations and cash flows through March 26, 2014 have been included in the Company’s consolidated financial statements. At March 31, 2015, the Company’s ownership interest in Ruthigen decreased to approximately 34%. See Note 8. | |
NASDAQ Listing Matters | |
On March 6, 2015, the Company received a letter from the Listing Qualifications staff of The NASDAQ Stock Market LLC, notifying the Company that, for the last 30 consecutive business days, it failed to comply with NASDAQ Listing Rule 5550(a)(2), which requires us to maintain a minimum bid price of $1.00 per share for our common stock. In accordance with Listing Rule 5810(c)(3)(A), NASDAQ granted the Company a compliance period of 180 calendar days, or until September 2, 2015, to regain compliance with the Listing Rule. If at any time during this 180 day period the closing bid price of the Company’s common stock is at least $1.00 for a minimum of 10 consecutive business days, it will regain compliance with the Listing Rule and NASDAQ will close the matter. | |
The letter has no effect on the listing or trading of the Company’s common stock at this time. However, there can be no assurance that the Company will be able to regain compliance with Listing Rule 5550(a)(2). The Company intends to cure the bid price compliance deficiency by effecting a reverse stock split, if necessary. |
2_Liquidity_and_Financial_Cond
2. Liquidity and Financial Condition | 12 Months Ended |
Mar. 31, 2015 | |
Liquidity And Financial Condition | |
2. Liquidity and Financial Condition | The Company reported a net loss of $8,203,000 and a loss from operations of $6,659,000 for the year ended March 31, 2015. At March 31, 2015 and March 31, 2014, the Company’s accumulated deficit amounted to $142,213,000 and $134,010,000, respectively. The Company had working capital of $7,066,000 and $1,970,000 as of March 31, 2015 and March 31, 2014, respectively. The Company expects to continue incurring losses for the foreseeable future and may need to raise additional capital to pursue its product development initiatives, penetrate markets for the sale of its products and continue as a going concern. |
On January 8, 2015, the Company entered into a securities purchase agreement in which it agreed to sell the shares owned in Ruthigen to two accredited investors for an aggregate purchase price of $5,500,000 upon the occurrence of a triggering event during a standstill period of 60 calendar days from the date of the agreement. The securities purchase agreement lapsed according to its terms. On March 13, 2015, the Company entered into a securities purchase follow-up agreement under which it reduced the number of Ruthigen shares to be sold to the investors mentioned above to 1,650,000 at a price of $2.75 per share, provided that 50,000 shares may be sold to another investor prior to closing, and extended the expiration date of the standstill period to March 13, 2015. The aggregate purchase price of the sale will be $4,537,500. This sale has been triggered by Ruthigen’s announcement of its merger on March 13, 2015. The sale is expected to close at the time the Ruthigen merger closes, but prior to August 13, 2015, except that such date may be extended for up to 60 calendar days at the Company’s sole discretion. If the Ruthigen merger does not close by August 13, 2015 or the extended date, there will be no obligation to purchase the shares. If the Company sells the 50,000 shares prior to August 13, 2015, as may be extended, it must retain the voting rights for 50,000 shares until and through the closing of the Ruthigen merger. There can be no assurance provided that the Ruthigen merger will close and the Company will receive the proceeds from the securities purchase agreement. | |
Management believes that the Company has access to additional capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other means; however, the Company has not secured any commitment for new financing at this time, nor can it provide any assurance that other new financings will be available on commercially acceptable terms, if needed. If the Company is unable to secure additional capital, it may be required to curtail its research and development initiatives and take additional measures to reduce costs in order to conserve its cash. If the economic climate in the U.S. deteriorates, the Company’s ability to raise additional capital could be negatively impacted. If the Company is unable to secure additional capital, it may be required to curtail its research and development initiatives and take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These measures could cause significant delays in the Company’s efforts to commercialize its products, which is critical to the realization of its business plan and the future operations of the Company. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. |
3_Summary_of_Significant_Accou
3. Summary of Significant Accounting Policies | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||
3. Summary of Significant Accounting Policies | Principles of Consolidation | ||||||||||||||||
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Aquamed Technologies, Inc. (“Aquamed”), Oculus Technologies of Mexico S.A. de C.V. (“OTM”), Oculus Innovative Sciences Netherlands, B.V. (“OIS Europe”) and Ruthigen (through the date of deconsolidation on March 26, 2014). Aquamed has no current operations. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||||||||
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 reserves and write-downs related to receivables and inventories, the recoverability of long-lived assets, the valuation allowance relating to the Company’s deferred tax assets, valuation of equity and derivative instruments, debt discounts, valuation of investments, and the estimated amortization periods of upfront product licensing fees received from customers. | |||||||||||||||||
Reclassifications | |||||||||||||||||
Certain prior period amounts have been reclassified for comparative purposes to conform to the fiscal 2015 presentation. These reclassifications have no impact on the Company’s previously reported net loss. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
The Company generates revenue from sales of its products to hospitals, medical centers, doctors, pharmacies, and distributors. The Company sells its products directly to third parties and to distributors through various cancelable distribution agreements. The Company has also entered into agreements to license its technology and its products. | |||||||||||||||||
The Company also provides regulatory compliance testing and quality assurance services to medical device and pharmaceutical companies. | |||||||||||||||||
The Company records revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the fee is fixed or determinable, and (iv) collectability of the sale is reasonably assured. | |||||||||||||||||
The Company requires all of its product sales to be supported by evidence of a sale transaction that clearly indicates the selling price to the customer, shipping terms and payment terms. Evidence of an arrangement generally consists of a contract or purchase order approved by the customer. The Company has ongoing relationships with certain customers from which it customarily accepts orders by telephone in lieu of purchase orders. | |||||||||||||||||
The Company recognizes revenue at the time it receives a confirmation that the goods were either tendered at their destination, when shipped “FOB destination,” or transferred to a shipping agent, when shipped “FOB shipping point.” Delivery to the customer is deemed to have occurred when the customer takes title to the product. Generally, title passes to the customer upon shipment, but could occur when the customer receives the product based on the terms of the agreement with the customer. | |||||||||||||||||
The selling prices of all goods that the Company sells are fixed, and agreed to with the customer, prior to shipment. Selling prices are generally based on established list prices. The Company does not customarily permit its customers to return any of its products for monetary refunds or credit against completed or future sales. The Company, from time to time, may replace expired goods on a discretionary basis. The Company records these types of adjustments, when made, as a reduction of revenue. Sales adjustments were insignificant during the years ended March 31, 2015 and 2014. | |||||||||||||||||
The Company consistently evaluates the creditworthiness of new customers and monitors the creditworthiness of its existing customers to determine whether events or changes in their financial circumstances would raise doubt as to the collectability of a sale at the time in which a sale is made. Payment terms on sales made in the United States are generally 30 days and internationally, generally range from 30 days to 90 days. In the event a sale is made to a customer under circumstances in which collectability is not reasonably assured, the Company either requires the customer to remit payment prior to shipment or defers recognition of the revenue until payment is received. The Company maintains a reserve for amounts which may not be collectible due to risk of credit losses. | |||||||||||||||||
Product license revenue is generated through agreements with strategic partners for the commercialization of Microcyn® products. The terms of the agreements sometimes include non-refundable upfront fees. The Company analyzes multiple element arrangements to determine whether the elements can be separated. Analysis is performed at the inception of the arrangement and as each product is delivered. If a product or service is not separable, the combined deliverables are accounted for as a single unit of accounting and recognized over the performance obligation period. | |||||||||||||||||
Assuming the elements meet the criteria for separation and all other revenue requirements for recognition, the revenue recognition methodology prescribed for each unit of accounting is summarized below: | |||||||||||||||||
When appropriate, the Company defers recognition of non-refundable upfront fees. If it has continuing performance obligations then such up-front fees are deferred and recognized over the period of continuing involvement. | |||||||||||||||||
The Company recognizes royalty revenues from licensed products upon the sale of the related products. | |||||||||||||||||
Revenue from consulting contracts is recognized as services are provided. Revenue from testing contracts is recognized as tests are completed and a final report is sent to the customer. | |||||||||||||||||
Sales Tax and Value Added Taxes | |||||||||||||||||
The Company accounts for sales taxes and value added taxes imposed on its goods and services on a net basis. | |||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash equivalents may be invested in money market funds, commercial paper, variable rate demand instruments, and certificates of deposits. | |||||||||||||||||
Long-Term Investments | |||||||||||||||||
The Company’s former wholly-owned subsidiary, Ruthigen, consummated its IPO on March 26, 2014. The Company’s long-term investments consist of the Company’s ownership of 1,650,000 and 2,000,000 shares of Ruthigen common stock at March 31, 2015 and March 31, 2014, respectively. The Company has accounted for its ownership of shares of Ruthigen common stock at cost in accordance with ASC 325-20 as a result of (a) the restrictions on voting the shares held as disclosed above, (b) the Company having no representation on the Ruthigen Board of Directors, (c) the Company’s inability to set policy at Ruthigen (d) the Company having no further commitments for funding the operations of Ruthigen and (e) the restrictions on transferability of the shares which extend beyond a one-year period. | |||||||||||||||||
Following the sale of 350,000 shares of Ruthigen common stock for proceeds of $962,500 on March 13, 2015, the Company held 1,650,000 shares of Ruthigen common stock at March 31, 2015 (See Note 8). | |||||||||||||||||
Concentration of Credit Risk and Major Customers | |||||||||||||||||
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents and accounts receivable. Cash and cash equivalents are maintained in financial institutions in the United States, Mexico and the Netherlands. The Company is exposed to credit risk in the event of default by these financial institutions for amounts in excess of the Federal Deposit Insurance Corporation insured limits. Cash and cash equivalents held in foreign banks are intentionally kept at minimal levels, and therefore have minimal credit risk associated with them. | |||||||||||||||||
The Company grants credit to its business customers, which are primarily located in Mexico, Europe and the United States. Collateral is generally not required for trade receivables. The Company maintains allowances for potential credit losses. At March 31, 2015, one customer represented 56%, and one customer represented 14% of the net accounts receivable balance. At March 31, 2014, one customer represented 44%, one customer represented 15%, and one customer represented 12% of the net accounts receivable balance. During the year ended March 31, 2015, one customer represented 47% of net revenues. During the year ended March 31, 2014, one customer represented 38%, and one customer represented 23%, respectively, of net revenues. | |||||||||||||||||
Accounts Receivable | |||||||||||||||||
Trade accounts receivable are recorded net of allowances for cash discounts for prompt payment, doubtful accounts, and sales returns. Estimates for cash discounts and sales returns are based on analysis of contractual terms and historical trends. | |||||||||||||||||
The Company’s policy is to reserve for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance for doubtful accounts is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Other factors that the Company considers include its existing contractual obligations, historical payment patterns of its customers and individual customer circumstances, an analysis of days sales outstanding by customer and geographic region, and a review of the local economic environment and its potential impact on government funding and reimbursement practices. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for doubtful accounts at March 31, 2015 and 2014 represents probable credit losses in the amounts of $20,000 and $8,000, respectively. Additionally at March 31, 2015 the Company has reserves of $183,000 related to potential discounts, rebates, distributor fees and returns. | |||||||||||||||||
Inventories | |||||||||||||||||
Inventories are stated at the lower of cost, cost being determined on a standard cost basis (which approximates actual cost on a first-in, first-out basis), or market. | |||||||||||||||||
Due to changing market conditions, estimated future requirements, age of the inventories on hand and production of new products, the Company regularly reviews inventory quantities on hand and records a provision to write down excess and obsolete inventory to its estimated net realizable value. The Company recorded reserves to reduce the carrying amounts of inventories to their net realizable value in the amounts of $87,000 and $47,000 at March 31, 2015 and 2014, respectively, which is included in cost of product revenues on the Company’s accompanying consolidated statements of comprehensive (loss) income. | |||||||||||||||||
Fair Value of Financial Assets and Liabilities | |||||||||||||||||
Financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The carrying amounts of long-term investments include the investment in Ruthigen and are carried at cost, which management believes approximates fair value. The fair value of capital lease obligations and equipment loans approximates their carrying amounts as a market rate of interest is attached to their repayment. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value: | |||||||||||||||||
Level 1 – quoted prices in active markets for identical assets or liabilities | |||||||||||||||||
Level 2 – quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. | |||||||||||||||||
Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions) | |||||||||||||||||
Financial liabilities measured at fair value on a recurring basis are summarized below: | |||||||||||||||||
Fair Value Measurements at March 31, 2015 Using | |||||||||||||||||
Total | Quoted prices in active markets for identical assets | Significant other observable inputs | Significant other unobservable inputs | ||||||||||||||
March 31, | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||
2015 | |||||||||||||||||
Liabilities: | |||||||||||||||||
Derivative liabilities – warrants | $ | 11,000 | – | – | $ | 11,000 | |||||||||||
Fair Value Measurements at March 31, 2014 Using | |||||||||||||||||
Total | Quoted prices in active markets for identical assets | Significant other observable inputs | Significant other unobservable inputs | ||||||||||||||
March 31, | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||
2014 | |||||||||||||||||
Liabilities: | |||||||||||||||||
Derivative liabilities – warrants | $ | 3,175,000 | – | – | $ | 3,175,000 | |||||||||||
Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting and finance department, who report to the Chief Financial Officer, determine its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting and finance department and are approved by the Chief Financial Officer. | |||||||||||||||||
Level 3 Valuation Techniques: | |||||||||||||||||
Level 3 financial liabilities consist of the derivative liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. | |||||||||||||||||
The Company uses the Black-Scholes option valuation model to value Level 3 derivatives at inception and on subsequent valuation dates. This model incorporates transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, as well as volatility. A significant decrease in the volatility or a significant decrease in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement. Changes in the values of the derivative liabilities are recorded in “Gain (loss) due to change in fair value of derivative liabilities” in the Company’s consolidated statements of comprehensive (loss) income. | |||||||||||||||||
As of March 31, 2015 and 2014, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy. | |||||||||||||||||
Property and Equipment | |||||||||||||||||
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets. Depreciation of leasehold improvements is computed using the straight-line method over the lesser of the estimated useful life of the improvement or the remaining term of the lease. Estimated useful asset life by classification is as follows: | |||||||||||||||||
Years | |||||||||||||||||
Office equipment | 3 | ||||||||||||||||
Manufacturing, lab and other equipment | 5 | ||||||||||||||||
Furniture and fixtures | 7 | ||||||||||||||||
Upon retirement or sale, the cost and related accumulated depreciation are removed from the consolidated balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred. | |||||||||||||||||
Impairment of Long-Lived Assets | |||||||||||||||||
The Company periodically reviews the carrying values of its long-lived assets when events or changes in circumstances would indicate that it is more likely than not that their carrying values may exceed their realizable values, and records impairment charges when considered necessary. Specific potential indicators of impairment include, but are not necessarily limited to: | |||||||||||||||||
· | a significant decrease in the fair value of an asset; | ||||||||||||||||
· | a significant change in the extent or manner in which an asset is used or a significant physical change in an asset; | ||||||||||||||||
· | a significant adverse change in legal factors or in the business climate that affects the value of an asset; | ||||||||||||||||
· | an adverse action or assessment by the U.S. Food and Drug Administration or another regulator; and | ||||||||||||||||
· | an accumulation of costs significantly in excess of the amount originally expected to acquire or construct an asset; and operating or cash flow losses combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with an income-producing asset. | ||||||||||||||||
When circumstances indicate that an impairment may have occurred, the Company tests such assets for recoverability by comparing the estimated undiscounted future cash flows expected to result from the use of such assets and their eventual disposition to their carrying amounts. In estimating these future cash flows, assets and liabilities are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows generated by other such groups. If the undiscounted future cash flows are less than the carrying amount of the asset, an impairment loss, measured as the excess of the carrying value of the asset over its estimated fair value, will be recognized. The cash flow estimates used in such calculations are based on estimates and assumptions, using all available information that management believes is reasonable. | |||||||||||||||||
In connection with entering into the securities purchase agreement at a fixed price of $2.75 per share (See Note 8), the Company determined that the carrying value of the shares held in Ruthigen was impaired. As a result, the Company recorded an impairment loss in the amount of $4,650,000 which represents the difference between the cost and aggregate purchase price of $2.75 per share the Company agreed to sell its interest in Ruthigen. The Company’s interest in Ruthigen is currently reported as a long-term asset on its consolidated financial statements rather than a consolidated subsidiary. Because the Company owns shares in a public company, the value of this asset may further fluctuate and the value stated in the Company’s financial reports may change substantially over time. Given that the Company no longer controls Ruthigen, the Company has very little means to control the value of the asset. If the value of the Company’s holdings in Ruthigen decreases or fluctuates further, it may adversely affect the value of our stock price. During the year ended March 31, 2014, the Company had noted no indicators of impairment. | |||||||||||||||||
Research and Development | |||||||||||||||||
Research and development expense is charged to operations as incurred and consists primarily of personnel expenses, clinical and regulatory services and supplies. For the years ended March 31, 2015 and 2014, research and development expense amounted to $1,533,000 and $2,887,000, respectively. | |||||||||||||||||
Advertising Costs | |||||||||||||||||
Advertising costs are charged to operations as incurred. Advertising costs amounted to $231,000 and $155,000, for the years ended March 31, 2015 and 2014, respectively. Advertising costs are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive (loss) income. | |||||||||||||||||
Shipping and Handling Costs | |||||||||||||||||
The Company classifies amounts billed to customers related to shipping and handling in sale transactions as product revenues. Shipping and handling costs incurred are recorded in cost of product revenues. For the years ended March 31, 2015 and 2014, the Company recorded revenue related to shipping and handling costs of $114,000 and $58,000, respectively. | |||||||||||||||||
Foreign Currency Reporting | |||||||||||||||||
The Company’s subsidiary, OTM, uses the local currency (Mexican Pesos) as its functional currency and its subsidiary, OIS Europe, uses the local currency (Euro) as its functional currency. Assets and liabilities are translated at exchange rates in effect at the balance sheet date, and revenue and expense accounts are translated at average exchange rates during the period. Resulting translation adjustments amounted to $438,000 and $78,000 for the years ended March 31, 2015 and 2014, respectively, and were recorded in other comprehensive (loss) income in the accompanying consolidated statements of comprehensive (loss) income. | |||||||||||||||||
Foreign currency transaction gains (losses) relate primarily to trade payables and receivables between subsidiaries OTM and OIS Europe. These transactions are expected to be settled in the foreseeable future. The Company recorded foreign currency transaction losses of $24,000 and gains of $6,000 for the years ended March 31, 2015 and 2014, respectively. The related gains and losses were recorded in other expense, net, in the accompanying consolidated statements of comprehensive (loss) income. | |||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
The Company accounts for share-based awards exchanged for employee services at the estimated grant date fair value of the award. The Company estimates the fair value of employee stock awards using the Black-Scholes option pricing model. The Company amortizes the fair value of employee stock options on a straight-line basis over the requisite service period of the awards. Compensation expense includes the impact of an estimate for forfeitures for all stock options. | |||||||||||||||||
The Company accounts for equity instruments issued to non-employees at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instrument vests or becomes non-forfeitable. Non-employee stock-based compensation charges are amortized over the vesting period or as earned. | |||||||||||||||||
Income Taxes | |||||||||||||||||
Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. | |||||||||||||||||
Tax benefits claimed or expected to be claimed on a tax return are recorded in the Company’s consolidated financial statements. A tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Uncertain tax positions have had no impact on the Company’s consolidated financial condition, results of comprehensive loss or cash flows. | |||||||||||||||||
Comprehensive Loss | |||||||||||||||||
Other comprehensive loss includes all changes in stockholders’ equity during a period from non-owner sources and is reported in the consolidated statement of changes in stockholders’ equity. To date, other comprehensive loss consists of changes in accumulated foreign currency translation adjustments. Accumulated other comprehensive losses at March 31, 2015 and 2014 were $3,507,000 and $3,069,000, respectively. | |||||||||||||||||
(Loss) Earnings Per Share | |||||||||||||||||
Basic earnings and loss per share are computed by dividing the net income or loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options (using the treasury stock method) and warrants (using the if-converted method). Diluted (loss) income per share excludes the shares issuable upon the exercise of stock options and warrants from the calculation of net (loss) income per share where their effect would be anti-dilutive. | |||||||||||||||||
For the Years Ended | |||||||||||||||||
March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Net (loss) income available to common stockholders - basic | $ | (8,203,000 | ) | $ | 3,735,000 | ||||||||||||
Denominator - basic: | |||||||||||||||||
Weighted average number of common shares outstanding | 9,657,000 | 6,882,000 | |||||||||||||||
Basic (loss) earnings per common share | $ | (0.85 | ) | $ | 0.54 | ||||||||||||
Net (loss) income available to common stockholders - diluted | $ | (8,203,000 | ) | $ | 3,735,000 | ||||||||||||
Denominator - diluted: | |||||||||||||||||
Weighted average number of common shares outstanding | 9,657,000 | 6,882,000 | |||||||||||||||
Common share equivalents of outstanding stock options | – | 12,000 | |||||||||||||||
Common share equivalents of outstanding warrants | – | 4,000 | |||||||||||||||
Weighted average number of common shares outstanding | 9,657,000 | 6,898,000 | |||||||||||||||
Dilutive (loss) earnings per common share | $ | (0.85 | ) | $ | 0.54 | ||||||||||||
Securities excluded from the weighted average dilutive common shares outstanding because their inclusion would have been anti-dilutive: | |||||||||||||||||
Stock options | 2,877,000 | 1,122,000 | |||||||||||||||
Warrants | 7,741,000 | 1,410,000 | |||||||||||||||
10,618,000 | 2,532,000 | ||||||||||||||||
Common Stock Purchase Warrants and Other Derivative Financial Instruments | |||||||||||||||||
The Company classifies common stock purchase warrants and other free standing derivative financial instruments as equity if the contracts (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (iii) contain reset provisions as either an asset or a liability. The Company assesses classification of its freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. The Company determined that its freestanding derivatives, which principally consist of warrants to purchase common stock, satisfied the criteria for classification as equity instruments, other than certain warrants that contained reset provisions and certain warrants that required net-cash settlement that the Company classified as derivative liabilities as more fully described in Note 11. | |||||||||||||||||
Preferred Stock | |||||||||||||||||
The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Shares that are subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares, which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary equity. At all other times, preferred shares are classified as stockholders' equity. | |||||||||||||||||
Convertible Instruments | |||||||||||||||||
The Company evaluates and bifurcates conversion options from their host instruments and accounts for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional as that term is described under applicable Generally Accepted Accounting Principles (“GAAP”). | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Management has evaluated subsequent events or transactions occurring through the date these consolidated financial statements were issued. | |||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
The Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (“ASU”) No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period . This ASU requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations. | |||||||||||||||||
The FASB has issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 (subject to a proposed additional one-year deferral) and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial position and results of operations. | |||||||||||||||||
The FASB has issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The guidance, which is effective for annual reporting periods ending after December 15, 2016, extends the responsibility for performing the going-concern assessment to management and contains guidance on how to perform a going-concern assessment and when going-concern disclosures would be required under U.S. GAAP. The Company has elected to early adopt the provisions of ASU 2014-15 in connection with the issuance of these consolidated financial statements. | |||||||||||||||||
Accounting standards that have been issued or proposed by the FASB, SEC and/or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the condensed consolidated financial statements upon adoption. |
4_Accounts_Receivable
4. Accounts Receivable | 12 Months Ended | ||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||
4. Accounts Receivable | Accounts receivable consists of the following: | ||||||||||||||||||
March 31, | |||||||||||||||||||
2015 | 2014 | ||||||||||||||||||
Accounts receivable | $ | 1,720,000 | $ | 1,840,000 | |||||||||||||||
Less: allowance for doubtful accounts | (20,000 | ) | (8,000 | ) | |||||||||||||||
Less: discounts, rebates, distributor fees and returns | (183,000 | ) | (42,000 | ) | |||||||||||||||
$ | 1,517,000 | $ | 1,790,000 | ||||||||||||||||
Allowance for doubtful accounts activities are as follows: | |||||||||||||||||||
Year Ended March 31 | Balance at | Additions | Deductions | Balance at | |||||||||||||||
Beginning | Charged to | Write-Offs | End of Year | ||||||||||||||||
of Year | Operations | ||||||||||||||||||
2014 | $ | 22,000 | $ | (6,000 | ) | $ | (8,000 | ) | $ | 8,000 | |||||||||
2015 | $ | 8,000 | $ | 29,000 | $ | (17,000 | ) | $ | 20,000 | ||||||||||
5_Inventories
5. Inventories | 12 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
5. Inventories | Inventories consist of the following: | ||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Raw materials | $ | 865,000 | $ | 790,000 | |||||
Finished goods | 537,000 | 298,000 | |||||||
$ | 1,402,000 | $ | 1,088,000 | ||||||
6_Prepaid_Expenses_and_Other_C
6. Prepaid Expenses and Other Current Assets | 12 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||
6. Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following: | ||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Prepaid insurance | $ | 367,000 | $ | 429,000 | |||||
Other prepaid expenses and other current assets | 225,000 | 218,000 | |||||||
$ | 592,000 | $ | 647,000 | ||||||
7_Property_and_Equipment
7. Property and Equipment | 12 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
7. Property and Equipment | Property and equipment consists of the following: | ||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Manufacturing, lab, and other equipment | $ | 2,937,000 | $ | 3,073,000 | |||||
Office equipment | 278,000 | 302,000 | |||||||
Furniture and fixtures | 82,000 | 88,000 | |||||||
Leasehold improvements | 249,000 | 269,000 | |||||||
3,546,000 | 3,732,000 | ||||||||
Less: accumulated depreciation and amortization | (2,751,000 | ) | (2,761,000 | ) | |||||
$ | 795,000 | $ | 971,000 | ||||||
Depreciation and amortization expense amounted to $253,000 and $284,000 for the years ended March 31, 2015 and 2014, respectively. | |||||||||
During the years ended March 31, 2015 and 2014, the Company incurred gains of $13,000 and losses of $39,000, respectively, on the disposal of property and equipment. This amount was recorded within operating expenses in the accompanying consolidated statements of comprehensive (loss) income. |
8_Investment_in_Ruthigen_Inc
8. Investment in Ruthigen, Inc. | 12 Months Ended | ||||
Mar. 31, 2015 | |||||
Investments, Debt and Equity Securities [Abstract] | |||||
8. Investment in Ruthigen, Inc. | The Company’s formerly wholly owned subsidiary, Ruthigen, was incorporated in the State of Nevada on January 18, 2013, and reincorporated from Nevada to Delaware on September 25, 2013. As of March 31, 2014 and on the date of deconsolidation, March 26, 2014, the Company held 2,000,000 shares of Ruthigen common stock. On March 13, 2015, the Company sold 350,000 shares of Ruthigen common stock and holds 1,650,000 at March 31, 2015 pursuant to the agreement described below. | ||||
Additionally, the Company has entered into key agreements with Ruthigen establishing the arrangements between the two companies following the completion of Ruthigen’s Initial Public Offering (the “IPO”), including license and supply and certain shared services arrangements. Each of these agreements was entered into in the overall context of Ruthigen’s separation from the Company (the “Separation”). The effective date for all three agreements is March 26, 2014, the closing date of Ruthigen’s IPO. | |||||
License and Supply Agreement | |||||
On June 6, 2013, the Company entered into a License and Supply Agreement with Ruthigen. Pursuant to the License and Supply Agreement, the Company agreed to exclusively license certain of its proprietary technology to Ruthigen to enable Ruthigen’s research and development and commercialization of the newly discovered RUT58-60, and any improvements to it, in the United States, Canada, European Union and Japan, referred to as the Territory, for certain invasive procedures in human treatment as defined in the License and Supply Agreement. On October 9, 2013 and November 6, 2013, the Company entered into Amendment No. 1 and No. 2 to the License and Supply Agreement with Ruthigen, respectively, to amend certain milestone events set forth in Section 7.1 of the License and Supply Agreement and to amend the terms of the manufacturing equipment purchases set forth in Section 6.13 of the License and Supply Agreement. On January 31, 2014, the Company entered into Amendment No. 3 to the License and Supply Agreement with Ruthigen to further amend certain milestone events and the terms of the manufacturing equipment purchases, and to remove sections of the License and Supply Agreement which related to an exclusive option granted to Ruthigen by the Company to expand the terms of the License and Supply Agreement to dermatologic uses. On March 13, 2015, the Company entered into Amendment No. 4 to the License and Supply Agreement to amend certain definitions and delete the manufacturing option to purchase certain of the Company’s manufacturing equipment granted to Ruthigen. All other terms and conditions of the License and Supply Agreement remain unmodified and in full force and effect. | |||||
Under the terms of the License and Supply Agreement, the Company will be prohibited from using the licensed proprietary technology to sell products that compete with Ruthigen’s products within the Territory, and Ruthigen cannot sell any device or product that competes with the Company’s products being sold or developed as of the effective date of the License and Supply Agreement. | |||||
Ruthigen will be required to make a total of $8,000,000 in milestone payments to the Company for the first product only, as follows: upon completion of last patient enrollment in Ruthigen’s Phase 1/2 clinical study; upon completion of last patient enrollment in Ruthigen’s first pivotal clinical study; upon completion of Ruthigen’s first meeting with the U.S. Food and Drug Administration (“FDA”) following completion of Ruthigen’s first pivotal clinical trial; and upon first patient enrollment in Ruthigen’s second pivotal clinical trial. In addition, as further consideration under the agreement, Ruthigen will be required to make royalty payments to the Company based on Ruthigen’s annual net sales of the product from the date of first commercial sale to the date that Ruthigen ceases to commercialize the product, which percentage royalty rate will vary between 3% and 20% and will increase based on various net sales thresholds and will differ depending on the country in which the sales are made. No assurance can be made that Ruthigen will proceed with the development of RUT58-60 once completion of its merger with Pulmatrix, Inc. Therefore no assurance can be made that the Company will receive any milestone payments or royalties. | |||||
On March 13, 2015, the Company entered into an agreement with Pulmatrix, Inc., a Delaware corporation that has announced its intention to merge with Ruthigen, under which it agreed to (i) waive Ruthigen’s obligation to develop and commercialize the Ruthigen products pursuant to the License and Supply Agreement, until the earlier of August 31, 2016 or one year after the effective date of the Ruthigen merger, and (ii) mutually terminate the shared services agreement, dated May 23, 2013, as amended on January 31, 2014, Pulmatrix agreed to grant the Company a right of first refusal, in case of a sale of the pre-merger Ruthigen business on the same terms as a potential acquiror. If the Company does not exercise its right of first refusal and the aggregate gross consideration received by Ruthigen from a sale of the business exceeds $10 million, then Ruthigen shall pay or cause to be paid 10% of such gross consideration to the Company within 10 calendar days of receipt. | |||||
Separation Agreement | |||||
On August 2, 2013, the Company entered into a Separation Agreement with Ruthigen that contains key provisions relating to its ongoing relationship with Ruthigen following the completion of Ruthigen’s initial public offering. On January 31, 2014, the parties amended the Separation Agreement. The Separation Agreement took effect on March 26, 2014 upon the closing of Ruthigen’s initial public offering and terminates on the earlier of 8.5 years following the closing of the offering, or when the parties mutually agree to terminate it. The Separation Agreement also contains a series of restrictions on the Company’s ability to transfer the Ruthigen shares as well as restrictions on the Company’s ability to vote on the shares it owns. | |||||
The Company is restricted from transferring any of the Ruthigen shares it owns during the first year (the “lock up period”) immediately following the completion of Ruthigen’s initial public offering, unless consent to such transfer has been provided by both the Ruthigen board of directors and the lead underwriter in the Ruthigen IPO. Following the one-year lock up period and during the second year following the closing of the IPO, if Oculus owns greater than 19.9% of the issued and outstanding common stock of Ruthigen, transfers by the Company of the Ruthigen shares are restricted unless the Company obtains consent from the Ruthigen’s board of directors. | |||||
Following the completion of the second year, transfers of the Ruthigen shares must be conducted in accordance with the prescribed requirements for such transfers set forth in the Separation Agreement. These prescribed requirements include that the transfers must be in private placement transactions, the purchase price discount may not exceed certain percentages depending on the transferee, the amount of shares transferred in a given transfer (or series of transfers comprising a single transaction) may not exceed the greater of 5% of Ruthigen’s outstanding shares or $1.5 million in net proceeds to the Company, as well as certain other requirements set forth in the Separation Agreement. In addition to the prescribed manner for the Company to conduct transfers described above, if, following a minimum of 41.5 months following the closing of Ruthigen’s initial public offering have lapsed under the Separation Agreement and the Company has not consummated transfers of the Ruthigen shares it owns resulting in at least $3.8 million in net proceeds to the Company, then the Company has a one-time transfer and registration right to transfer the Ruthigen shares it owns in an amount equal to the difference between $3.8 million and the Ruthigen shares transferred by the Company pursuant to the Separation Agreement as of the time the Company elects to exercise its one-time right. Transfers conducted using this one-time right must be conducted with the consent of Ruthigen’s board of directors or within the prescribed requirements for such transfers set forth in the Separation Agreement, including, for example, that the purchase price discount may not exceed certain percentages, the amount of shares transferred may not exceed $3.8 million in net proceeds to the Company, as well as certain other requirements set forth in the Separation Agreement. | |||||
In addition to the above transfer restrictions, if the Company owns greater than 19.9% of the issued and outstanding common stock of Ruthigen during the 8.5 year term of the Separation Agreement, the Company is required to vote, in person or by proxy, all of the shares it owns in Ruthigen in the same manner as the majority of the votes cast by the holders of all the other issued and outstanding shares of Ruthigen at any duly called meeting of the stockholders or in any action by written consent of the stockholders of Ruthigen. | |||||
On January 31, 2014, the Company also entered into a Funding Agreement with Ruthigen due to certain changes to the terms of Ruthigen’s initial public offering that had occurred in order to govern the terms of certain additional financing which was provided to Ruthigen by the Company, in connection with the Separation, subject to the terms and conditions set forth in the agreement. The amended Separation Agreement disclosed above amended the terms of the prior separation agreement such that the terms of the Funding Agreement shall control the methodology for the allocation of the operational and offering related expenses incurred prior to and in connection with Ruthigen’s initial public offering for which Ruthigen was required to reimburse the Company. The Funding Agreement terminated in connection with Ruthigen’s IPO. | |||||
Since the legal inception of Ruthigen on January 18, 2013 and through the date of the Funding Agreement, the Company had advanced Ruthigen $916,000 in connection with the funding of Ruthigen’s IPO and operations. Pursuant to the Funding Agreement, the Company agreed to continue to fund Ruthigen for a total of up to an additional $760,000 to allow Ruthigen to proceed with its initial public offering. The parties agreed that the Company had no further obligation to fund operations of Ruthigen beyond the amounts detailed in a budget mutually agreed upon by the parties in connection with the execution of the Funding Agreement. The Funding Agreement also required the resignation of all Ruthigen board of director members from the Company’s board of directors at the time Ruthigen’s initial public offering was completed. Furthermore, any funds provided by the Company to Ruthigen pursuant to the Funding Agreement were to be repaid by Ruthigen to the Company at the time of the closing of the Ruthigen initial public offering. Through the date of the Ruthigen IPO, the Company made aggregate advances to Ruthigen in the amount of $1,453,000 (inclusive of the $916,000 disclosed above). | |||||
In connection with the completion of the initial public offering, on March 26, 2014, Ruthigen reimbursed the Company $916,000 and as a result, the remaining $537,000 is included in due from affiliates on the Company’s consolidated balance sheet as of March 31, 2014. On April 1, 2014 Ruthigen reimbursed the Company the remaining $537,000. | |||||
Deconsolidation of Ruthigen | |||||
On March 26, 2014, Ruthigen completed an initial public offering for the issuance of 2,650,000 shares of its common stock to third parties (along with Series A and Series B warrants) for aggregate gross proceeds of $19,212,500. As a result, the Company’s ownership interest in Ruthigen decreased to 43% on March 26, 2014 and the Company deconsolidated Ruthigen. | |||||
The Company accounts for deconsolidation of subsidiaries in which it loses controlling interest in the financial interest of the subsidiary in accordance with Accounting Standards Codification (“ASC”) 810-10-40 – “Consolidation”. In accordance with ASC 810-10-40-5, the Company shall account for the deconsolidation of a subsidiary by recognizing a gain or loss in net income (loss) measured as the difference between: | |||||
a) | The aggregate of the fair value of any consideration received by the Company; plus | ||||
b) | The fair value of any retained non-controlling investment in the former subsidiary by the Company at the date the subsidiary is deconsolidated; plus | ||||
c) | The carrying amount of any existing non-controlling interest in the former subsidiary (including any accumulated other comprehensive income (loss) attributable to the non-controlling interest) at the date the subsidiary is deconsolidated; less | ||||
d) | The carrying amount of the former subsidiary’s assets and liabilities. | ||||
As a result of the deconsolidation of Ruthigen, the Company recorded a gain on deconsolidation of $11,133,000 calculated as follows: | |||||
March 26, | |||||
2014 | |||||
Aggregate fair value of consideration received by the Company | $ | – | |||
Fair value of retained non-controlling interest by the Company | 10,150,000 | ||||
Carrying amount on non-controlling interest in subsidiary | – | ||||
Less: | |||||
Carrying amount of the Ruthigen assets and liabilities | (983,000 | ) | |||
Gain on deconsolidation of Ruthigen | $ | 11,133,000 | |||
At March 31, 2014, the aggregate fair value of the Company’s retained non-controlling interest in Ruthigen was comprised of the 2,000,000 shares of Ruthigen common stock held by the Company as of March 26, 2014 with an estimated fair value of $10,150,000. The fair market value of the 2,000,000 shares held by the Company was determined with the assistance of an independent valuation specialist considering key factors of the nature of the arrangement between the Company and Ruthigen, including but not limited to, the restrictions on transferability associated with the shares, the restrictions on voting the shares, and the limited trading history of the Ruthigen common stock. | |||||
On January 8, 2015, the Company entered into a securities purchase agreement pursuant to which the Company agreed to sell its 2,000,000 shares in Ruthigen to two accredited investors for an aggregate purchase price of $5.5 million upon the occurrence of a trigger event during a standstill period of 60 calendar days. The securities purchase agreement lapsed according to its terms, however, as a result of the Company entering into the agreement, the Company determined that the carrying value of the shares held in Ruthigen were impaired. As a result, the Company recorded an impairment loss in the amount of $4,650,000 which represents the difference between cost and aggregate purchase price of $2.75 per share the Company agreed to sell its interest in Ruthigen. | |||||
On March 13, 2015, the Company entered into a securities purchase follow-up agreement under which it reduced the number of Ruthigen shares to be sold to the investors mentioned above to 1,650,000 at a price of $2.75 per share, provided that 50,000 shares may be sold to another investor prior to closing, and extended the expiration date of the standstill period to March 13, 2015. At March 31, 2015, the aggregate purchase price of the sale will be $4,537,500. This sale was triggered by Ruthigen’s announcement of its merger on March 13, 2015. The sale is expected to close at the time of the Ruthigen merger and prior to August 13, 2015, except that such date may be extended for up to 60 calendar days at the sole discretion of the Company. If the Ruthigen merger does not close by August 13, 2015 or the extended date, there will be no obligation to purchase the shares. If the Company consummates the sale of the Ruthigen shares, the Company would no longer own a shareholder interest in Ruthigen. However, if the sale of the Ruthigen shares is not completed, the Company will continue to own the Ruthigen shares, subject to significant existing voting and resale restrictions described above. | |||||
On March 13, 2015, the Company also entered into a securities purchase agreement with several investors, under which it sold the remaining 350,000 Ruthigen shares at a purchase price of $2.75 per share, or an aggregate of $962,500 for all of the 350,000 Ruthigen shares. The Company agreed to retain the voting rights of the 350,000 Ruthigen shares until and through the closing of the Ruthigen merger. If the Pulmatrix-Ruthigen merger does not close on or prior to September 30, 2015, the shares will become fully tradeable and full voting rights will transfer to the buyers. | |||||
The Company agreed to pay Dawson James Securities, Inc. a finder’s fee in the amount of $200,000 upon the closing of the actual sale of the Ruthigen shares. The Company paid Dawson James $35,000 upon the sale of the 350,000 shares sold on March 23, 2015. | |||||
At March 31, 2015, the aggregate fair value of the Company’s retained non-controlling interest in Ruthigen is comprised of the 1,650,000 shares of Ruthigen common stock held by the Company as of March 26, 2014 with an estimated fair value of $4,537,500, or $2.75 per share. The fair market value of the 1,650,000 shares held by the Company was determined by the value pursuant to the securities purchase agreement entered into on March 13, 2015 described above. |
9_Accrued_Expenses_and_Other_C
9. Accrued Expenses and Other Current Liabilities | 12 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Payables and Accruals [Abstract] | |||||||||
9. Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following: | ||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Salaries and related costs | $ | 545,000 | $ | 516,000 | |||||
Professional fees | 137,000 | 362,000 | |||||||
Other | 100,000 | 11,000 | |||||||
$ | 782,000 | $ | 889,000 | ||||||
10_LongTerm_Debt
10. Long-Term Debt | 12 Months Ended | ||
Mar. 31, 2015 | |||
Debt Disclosure [Abstract] | |||
10. Long-Term Debt | Financing of Automobile | ||
On August 12, 2010, the Company entered into a note agreement for $40,000 with an interest rate of 11.99% per year. This instrument was issued in connection with the financing of an automobile. During the year ended March 31, 2015, the Company made principal and interest payments related to this note in the amounts of $8,000 and $1,000, respectively. The remaining balance of this note amounted to $3,000 at March 31, 2015, of which $3,000 is included in the current portion of long-term debt in the accompanying consolidated balance sheet. | |||
Financing of Insurance Premiums | |||
On January 25, 2014, the Company entered into a note agreement for $188,000 with an interest rate of 4.81% per annum. This instrument was issued in connection with financing insurance premiums. The note is payable in monthly installments of $27,000 with the final payment made on August 25, 2014. During the year ended March 31, 2015, the Company made principal and interest payments of $135,000 and $1,000, respectively. | |||
On January 25, 2015, the Company entered into a note agreement for $116,000 with an interest rate of 5.50% per annum. This instrument was issued in connection with financing insurance premiums. The note is payable in monthly installments of $17,000 with the final payment on August 25, 2015. During the year ended March 31, 2015, the Company made principal and interest payments of $33,000 and $1,000, respectively. The remaining balance of this note amounted to $84,000 at March 31, 2015 which is included in the current portion of long-term debt in the accompanying consolidated balance sheet. | |||
Venture Lending & Leasing, Inc. and Venture Lending & Leasing VI, Inc. | |||
On May 1, 2010, the Company entered into a loan and security agreement and a supplement to the loan and security agreement with Venture Lending & Leasing V, Inc., to borrow $3,000,000 (together, the “VLL5 Loan Agreements”). In connection with those agreements, the Company issued two warrants to Venture Lending & Leasing V, LLC, a Delaware limited liability company (“LLC5”), which, in the aggregate, had a total put option cash value of $750,000 (the “VLL5 Warrants”). | |||
On June 29, 2011, the Company entered into a loan and security agreement and a supplement to the loan and security agreement with Venture Lending & Leasing VI, Inc., to borrow $2,500,000 (together, the “VLL6 Loan Agreements”). In connection with those agreements, the Company issued three warrants to Venture Lending & Leasing VI, LLC, a Delaware limited liability company (“LLC6”), which, in the aggregate, had a total put option cash value of $1,250,000 (the “VLL6 Warrants”). | |||
On October 30, 2012, the Company entered into respective letter agreements with VLL5 and VLL6 to amend the repayment terms of its outstanding debt obligations. Prior to the execution of these agreements, LLC5 and LLC6 held an aggregate of 79,517 warrants (adjusted for the reverse stock split effective April 1, 2013) to purchase common stock, which, in the aggregate, had a total put option cash value of $2,000,000 (the “Cash Settlement Liability”) and was included in long term liabilities on the Company’s consolidated balance sheets. | |||
On that same day, the Company also entered into a stock purchase agreement with LLC5 and LLC6 (together with LLC5, collectively referred to as “WTI”) for the issuance to WTI of shares of its common stock having an aggregate grant date fair value of $3,500,000, or approximately $5.67 per post-split share, in exchange for LLC5’s agreement to surrender the VLL5 Warrants, and LLC6’s agreement to surrender the VLL6 Warrants, and the surrender by WTI of the accompanying Cash Settlement Liability. Accordingly, on November 1, 2012, the Company issued an aggregate of 617,284 restricted shares of its post-split common stock (the “Shares”) to WTI, pursuant to the terms of the stock purchase agreement. The VLL5 Warrants and the VLL6 Warrants were surrendered on October 30, 2012. | |||
As of December 16, 2013, the Shares were sold for an average price of $5.35 per share, resulting in gross proceeds of $3,304,000 and net proceeds of $3,291,000 after deducting certain transaction costs. Pursuant to the stock purchase agreement, the net proceeds from the sale of the Shares were applied as follows: | |||
(a) | $2,000,000 of the proceeds received were retained by LLC5 and LLC6 as consideration for surrendering the VLL5 Warrants and VLL6 Warrants and the underlying put warrant liabilities. | ||
(b) | After the put warrant liabilities were satisfied, the remaining proceeds were applied to the reduction of the Company’s remaining loans outstanding under the VLL5 Loan Agreements and the VLL6 Loan Agreements. As there were no outstanding loans under the VLL5 Loan Agreements, the Company used the amount to prepay the outstanding loans under the VLL6 Loan Agreements, for which $1,131,000 of the proceeds received was applied as a prepayment of the then outstanding debt under the VLL6 Loan Agreements and $94,000 of the proceeds received was applied as a prepayment of all future interest owed in connection with the VLL6 Loan Agreements. | ||
(c) | After the loans were prepaid in full, approximately $66,000 remained in excess of all outstanding obligations owed by the Company. Pursuant to the terms of the stock purchase agreement, such amount was allocated 50/50, and $33,000 was paid to the Company. | ||
In connection with the VLL5 Loan Agreements and the VLL6 Loan Agreements, during the year ended March 31, 2014, the Company made interest payments of $188,000, and aggregate principal payments of $1,379,000. In addition, for the year ended March 31, 2014, the Company recorded $863,000 of non-cash interest related to the loans, respectively. |
11_Derivative_Liability
11. Derivative Liability | 12 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||
11. Derivative Liability | Warrants Issued in Conjunction with the Company’s December 9, 2013 and February 26, 2014 Registered Direct Offerings | |||||||||
The Company deems financial instruments which require net-cash settlement as either an asset or a liability. The common stock purchase warrants issued in conjunction with the Company’s December 9, 2013 and February 26, 2014 registered direct offerings contain a net-cash settlement feature which give the warrant holder the right to net-cash settlement in the event certain transactions occur. Pursuant to the terms of the warrants, if such a transaction occurs the warrant holder will be entitled to a net-cash settlement value calculated using the Black-Scholes valuation model using an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the HVT function on Bloomberg, an expected term equal to the remaining term of the warrants, and applicable risk-free interest rate corresponding to the U.S. Treasury. | ||||||||||
The derivative liabilities relating to the warrants with net-cash settlement provisions were valued using the Black-Scholes option valuation model and the following assumptions on the following dates: | ||||||||||
Fair Value - Issue Date | Measurement | Warrants | Remaining | Exercise | Volatility | Risk-free | Fair | |||
Date | Contract | Price | Interest | Value | ||||||
Term in | Rate | |||||||||
Years | ||||||||||
Placement Agent Warrants | 9-Dec-13 | 16,500 | 2.4 | $ | 5 | 223% | 0.44% | $ | 64,000 | |
Investor - Series A Warrants | 26-Feb-14 | 450,620 | 1.5 | $ | 3 | 100% | 0.44% | 814,000 | ||
Investor - Series B Warrants | 26-Feb-14 | 1,400,000 | 1.5 | $ | 3.63 | 100% | 0.44% | 2,271,000 | ||
Placement Agent Warrants | 26-Feb-14 | 69,037 | 2.18 | $ | 3 | 100% | 0.44% | 143,000 | ||
$ | 3,292,000 | |||||||||
Fair Value – Exercises | ||||||||||
Investor - Series A Warrants | 18-Mar-14 | 315,434 | 1.44 | $ | 3 | 104% | 0.44% | $ | 1,180,000 | |
Investor - Series A Warrants | 19-Mar-14 | 134,186 | 1.44 | $ | 3 | 104% | 0.44% | 503,000 | ||
$ | 1,683,000 | |||||||||
Fair Value – Reporting Date | ||||||||||
Placement Agent Warrants | 31-Mar-14 | 16,500 | 2.09 | $ | 5 | 128% | 0.44% | $ | 37,000 | |
Investor - Series A Warrants | 31-Mar-14 | 1,000 | 1.41 | $ | 3 | 128% | 0.44% | 1,000 | ||
Investor - Series B Warrants | 31-Mar-14 | 1,400,000 | 1.41 | $ | 3.63 | 128% | 0.44% | 2,958,000 | ||
Placement Agent Warrants | 31-Mar-14 | 69,037 | 2.09 | $ | 3 | 128% | 0.44% | 179,000 | ||
$ | 3,175,000 | |||||||||
Fair Value – Reporting Date | ||||||||||
Placement Agent Warrants | 31-Mar-15 | 16,500 | 1.09 | $ | 5 | 100% | 0.26% | $ | 1,000 | |
Investor - Series A Warrants | 31-Mar-15 | 1,000 | 0.41 | $ | 3 | 100% | 0.14% | – | ||
Investor - Series B Warrants | 31-Mar-15 | 1,400,000 | 0.41 | $ | 3.63 | 100% | 0.14% | 5,000 | ||
Placement Agent Warrants | 31-Mar-15 | 69,037 | 1.09 | $ | 3 | 100% | 0.26% | 5,000 | ||
$ | 11,000 | |||||||||
The following table sets forth a summary of the changes in the fair value of our Level 3 financial liabilities that are measured at fair value on a recurring basis: | ||||||||||
Year Ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Beginning balance | $ | 3,175,000 | $ | – | ||||||
Fair value of warrants issued | – | 3,292,000 | ||||||||
Mark to market net unrealized (gain) loss | (3,164,000 | ) | 1,566,000 | |||||||
Reclassification to additional paid in capital | – | (1,683,000 | ) | |||||||
Ending balance | $ | 11,000 | $ | 3,175,000 | ||||||
12_Commitments_and_Contingenci
12. Commitments and Contingencies | 12 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
12. Commitments and Contingencies | Lease Commitments | ||||
On June 15, 2013, the Company leased office space in Mexico with an address of: Av De Las Americas, 1592 Piso 7, en la Colonia Country Club en Guadalajara Jalisco, CP 44637 for 23,400 Mexican Pesos (approximately $1,800 USD) per month. One months’ rent was required as a deposit. If the Company terminates the contract within the second year, a penalty in the amount of 8 months’ rent is applicable. The lease term is for 3 years, beginning on June 15, 2013. | |||||
Also on June 15, 2013, the Company leased warehouse space in Mexico with an address of: Industra Mecanica Numero 2168 en el Fraccionamiento Industrial Zapopan Norte, de esta Ciudad for 35,000 Mexican Pesos (approximately $2,700 USD) per month. A deposit equal to two months’ rent was required. The lease term was from June 15, 2013 to June 14, 2014. The lease expired at the termination date June 14, 2014. | |||||
We also share certain office and laboratory space, as well as certain laboratory equipment, in a building located at 454 North 34th Street, Seattle, Washington. The space is rented for $2,700 per month and requires a ninety day notice for cancellation. | |||||
The Company currently rents approximately 800 square feet of sales office space in Herten, the Netherlands. The office space is rented on a month to month basis at $1,700 per month and requires a sixty day notice for cancellation. | |||||
On October 10, 2012, the Company entered into Amendment No. 7 to its property lease agreement, extending the lease on its Petaluma, California facility to September 30, 2017. Pursuant to the amendment, in exchange for certain improvements on the building, the Company agreed to increase the lease payment from $10,380 to $11,072 per month. | |||||
Minimum lease payments for non-cancelable operating leases are as follows: | |||||
For Years Ending March 31, | |||||
2016 | $ | 348,000 | |||
2017 | 277,000 | ||||
2018 | 185,000 | ||||
2019 | 116,000 | ||||
2020 | 10,000 | ||||
Total minimum lease payments | $ | 936,000 | |||
Rental expense amounted to $446,000 and $413,000 for the years ended March 31, 2015 and 2014, respectively and is recorded in the accompanying consolidated statement of comprehensive (loss) income. | |||||
Legal Matters | |||||
The Company, on occasion, may be involved in legal matters arising in the ordinary course of business including matters involving proprietary technology. While management believes that such matters are currently insignificant, matters arising in the ordinary course of business for which the Company is or could become involved in litigation may have a material adverse effect on its business, financial condition of comprehensive loss. | |||||
On November 13, 2014, the Company received a letter from Exeltis USA Dermatology, Inc. formerly known as Quinnova Pharmaceuticals, Inc., , and herein referred to as “Exeltis”, claiming that the Company breached its Exclusive Sales and Distribution Agreement with Exeltis. Specifically, Exeltis claimed that the marketing and selling of its Alevicyn gel product violates the terms of the Exclusive Sales and Distribution Agreement and demanded the Company cease and desist from any further marketing or sales. The Company believes that the marketing and selling of its Alevicyn gel is not in violation of the Exclusive Sales and Distribution Agreement and that the claims made by Exeltis are without merit. Exeltis continues to purchase products from the Company under a new, non-exclusive distribution agreement for sale to their customers under their own brand. The Company intends to defend this matter vigorously and does not believe an accrual for a potential loss relating to this matter is necessary at this time. While the Company believes this claim is without merit, there can be no assurances provided that the outcome of this matter will be favorable to the Company or will not have a negative impact on its consolidated financial position or results from operations. | |||||
Employment Agreements | |||||
As of March 31, 2015, the Company had employment agreements in place with four of its key executives. The agreements provide, among other things, for the payment of nine to twenty-four months of severance compensation for terminations under certain circumstances. With respect to these agreements, at March 31, 2015, potential severance amounted to $1,130,000 and aggregated annual salaries amounted to $935,000. | |||||
Related Party Agreements | |||||
Shared Services Agreement | |||||
The Company also entered into a shared services agreement with Ruthigen that took effect upon the completion of Ruthigen’s proposed initial public offering, pursuant to which it provided Ruthigen with general services, including general accounting, human resources, laboratory personnel and shared R&D resources while Ruthigen planned to establish an independent facility and systems. As a wholly owned subsidiary of the Company, Ruthigen was financed by the Company until the completion of the initial public offering, and after the IPO, Ruthigen became responsible for its own expenses. On January 31, 2014, the Company entered into Amendment No. 1 to the shared services agreement with Ruthigen to amend the terms of certain standard activities the Company shall provide Ruthigen and the terms related to access to the Company's facilities. All other terms and conditions of the shared services agreement remain unmodified and in full force and effect. On March 13, 2015, the Shared Services Agreement was mutually terminated. During the year ended March 31, 2015, the Company received $41,000 in fees related to this agreement. | |||||
Commercial Agreements | |||||
Pursuant to a commercial agreement with Vetericyn, Inc., dated January 26, 2009, as amended, the Company provided Vetericyn with bulk product and Vetericyn bottled, packaged, and sold Microcyn®-based animal healthcare products branded as Vetericyn®. The Company received a fixed amount for each bottle of Vetericyn® sold by Vetericyn. Pursuant to an agreement with Innovacyn, Inc., dated September 15, 2009, as amended, the Company granted Innovacyn the exclusive right to market and sell certain of the Company’s Microcyn® over-the-counter liquid and gel products. | |||||
Additionally, on July 1, 2011, Vetericyn, Inc. and Innovacyn, Inc. began to share profits with the Company related to the Vetericyn® and Microcyn® over-the-counter sales with Vetericyn, Inc. and Innovacyn, Inc. During the years ended March 31, 2015 and 2014, the Company recorded revenue related to these agreements in the amounts of $1,120,000 and $3,100,000, respectively. The revenue is recorded in product revenues in the accompanying consolidated statements of comprehensive (loss) income. At March 31, 2015 and 2014, the Company had outstanding accounts receivable of $3,000 and $220,000, respectively, related to Innovacyn, Inc. | |||||
In April of 2014, Innovacyn, Inc. notified the Company that over the next year Innovacyn, Inc. would transition to a new supplier for its animal care products. Because of Innovacyn’s failure to perform under the arrangements, the Company terminated the agreements on December 15, 2014. As part of the Company’s search for new animal healthcare partners, on February 1, 2015, the Company entered into an agreement with SLA Brands, Inc. pursuant to which SLA will be the Company’s exclusive sales representative and distributor of pet specialty and equine products within the United States and Canada for pet and equine specialty retailers, catalogs and distributors. The agreement is effective through February 1, 2016, and will continue year-to-year until terminated by either party with 60 calendar days’ notice. For the year ended March 31, 2015, the Company’s revenues in animal healthcare have been adversely impacted by the transition and will continue to be adversely impacted in the future during this transition period. | |||||
On August 9, 2012, the Company, along with its Mexican subsidiary and manufacturer Oculus Technologies of Mexico S.A. de C.V. (“Manufacturer”), entered into a license, exclusive distribution and supply agreement with More Pharma Corporation, S. de R.L. de C.V. (“More Pharma”) (the “License Agreement”). For a one-time payment of $500,000, the Company granted More Pharma an exclusive license, with the right to sublicense, under certain conditions and with the Company’s consent, to all of the Company’s proprietary rights related to certain of its pharmaceutical products for human application that utilize the Company’s Microcyn® Technology within Mexico. For an additional one-time payment of $3,000,000, the Company also agreed to appoint More Pharma as the exclusive distributor of certain of its products in Mexico for the term of the agreement. Additionally, Manufacturer granted More Pharma an exclusive license to certain of Manufacturer’s then-held trademarks in exchange for a payment of $100,000 to Manufacturer. The Company has the ability to terminate the agreement if certain annual purchase minimums are not met. The term of the agreement is twenty-five years from the effective date of August 15, 2012. The term of the License Agreement will automatically renew after the twenty-five year term for successive two year terms as long as More Pharma has materially complied with any and all of the obligations under the License Agreement, including but not limited to, meeting the minimum purchase requirements set forth therein. On January 6, 2015, the Company was notified that More Pharma had been acquired by Laboratorios Sanfer S.A. de C.V (“Sanfer”). | |||||
Additionally, on August 9, 2012, the Company, along with Manufacturer, entered into an exclusive distribution and supply agreement with More Pharma (the “Distribution Agreement”). For a one-time payment of $1,500,000, the Company granted More Pharma the exclusive ability to market and sell certain of its pharmaceutical products for human application that utilize the Company’s Microcyn® Technology. The Company also appointed More Pharma as its exclusive distributor, with the right to execute sub-distribution agreements, under certain conditions, and with the Company’s consent, within a number of Central and South American countries. | |||||
The Company will recognize the $5,100,000 related to the License Agreement and the Distribution Agreement as revenue on the straight line basis consistent with the Company’s historical experience with contracts having similar terms, which is typically over three to five years of the contract. Additionally, the Company capitalized $214,000 of its transaction costs related to the License Agreement and the Distribution Agreement, which will be amortized by the Company as expense on the straight line basis consistent with the related revenue recognition practices. During the year ended March 31, 2015 and 2014, the Company recognized $63,000 in each period as expense related to the transaction costs of the transaction. During years ended March 31, 2015 and 2014, the Company recognized $1,499,000 and $1,501,000, respectively, related to the amortization of the upfront fees received in the transaction. At March 31, 2015, the Company had outstanding accounts receivable of $843,000 due from Laboratorios Sanfer. At March 31, 2014, the Company had outstanding accounts receivable of $609,000 due from More Pharma. |
13_Stockholders_Equity
13. Stockholders' Equity | 12 Months Ended |
Mar. 31, 2015 | |
Stockholders' Equity | |
13. Stockholders' Equity | Authorized Capital |
On December 4, 2014, the Company held a special meeting of stockholders, which approved an amendment to the Company’s Restated Certificate of Incorporation, as amended, increasing the number of authorized common stock, $0.0001 par value per share, from 14,285,715 shares to a total of 30,000,000 shares. The total number of preferred shares authorized was not increased and remains at 714,286 authorized shares. | |
Description of Common Stock | |
Each share of common stock has the right to one vote. The holders of common stock are entitled to dividends when funds are legally available and when declared by the board of directors. | |
December 2013 Registered Direct Offering | |
On December 9, 2013, the Company completed a registered direct offering with accredited investors and issued 550,000 shares of its common stock at $4.00 per share, with no warrant coverage, yielding gross proceeds of $2,200,000 and net proceeds of $2,002,000 after deducting placement agent commissions and other offering costs. The Company retained Dawson James Securities, Inc. as the exclusive placement agent for this offering, and paid them $154,000 in placement agent commissions. In addition to the payment of certain cash fees upon closing of the offering, the Company issued a warrant to Dawson James Securities, Inc. to purchase up to 16,500 shares of common stock. The warrants are exercisable at $5.00 per share and will expire on May 3, 2016. | |
February 2014 Registered Direct Offering | |
On February 26, 2014, the Company completed a registered direct offering to institutional and accredited investors for $1,352,000 and net proceeds of $1,186,000 after deducting placement agent commissions and other offering costs. The Company issued units (the “Units”), consisting of shares of common stock and Series A and Series B warrants (collectively, the “Warrants”). Each Unit was priced at $3.00 and comprised of one share of common stock, a Series A warrant (the “Series A Warrants”) and a certain number of Series B warrants (the “Series B Warrants”). Each investor received Series A Warrants to purchase a number of shares of common stock equal to 100% of the number of Shares purchased by such investor. Each investor received Series B Warrants to purchase a certain number of shares of common stock equal to the investor’s respective percentage of the total Series B Warrant allotment of 1,400,000 shares, whereby such percentage was determined by the respective percentage of the investor’s amount of the total Shares purchased by all investors in this offering; however, we did not issue fractional warrants and therefore, the number of Series B Warrants issued was rounded up or down depending on the total amount invested by each respective investor. The Series A Warrants will have an exercise price per share of $3.00 and expire five years from the date of issuance. The Series B Warrants will not be exercisable for six months following closing, will have an exercise price per share of $3.63 and expire on the later of (a) one year from the earlier of (i) the effective date of an effective registration statement pursuant to which all the Series B Warrant shares are registered for resale and (ii) the date that all Series B Warrant shares may be sold pursuant to Rule 144 (without volume limitations and assuming cashless exercise) and (b) one year anniversary of the closing of the initial public offering of our subsidiary, Ruthigen, Inc., or March 26, 2014. The Series B Warrants vested at the closing of Ruthigen’s initial public offering on March 26, 2014. | |
The Company retained Dawson James Securities, Inc. as the exclusive placement agent for this offering, and paid them $94,630 in placement agent commissions. In addition to the payment of certain cash fees upon closing of the offering, the Company issued a warrant to Dawson James Securities, Inc. to purchase up to 69,037 shares of common stock. The warrants are exercisable at $3.00 per share and will expire on May 3, 2016. The warrant issued to Dawson James Securities, Inc. has no registration rights, but does contain cashless exercise provisions. | |
April 2014 At-the-Market Offering | |
On April 2, 2014, the Company entered into an At-the-Market Issuance Sales Agreement with MLV & Co. LLC under which the Company can issue and sell shares of its common stock having an aggregate offering price of up to $9,159,000 from time to time through MLV acting as its sales agent. The Company will pay MLV a commission rate equal to 3.0% of the gross proceeds from the sale of any shares of common stock sold through MLV as agent under the Sales Agreement. For the year ended March 31, 2015 the Company sold 467,934 shares for gross proceeds of $1,443,000 and net proceeds of $1,341,000 after deducting commissions and other offering expenses. | |
January 2015 Underwritten Public Offering | |
On January 20, 2015, the Company entered into an underwriting agreement with Maxim Group LLC with respect to the issuance and sale of an aggregate of 6,250,000 shares of common stock, par value $0.0001 per share, together with warrants to purchase an aggregate of 4,687,500 shares of its common stock at an exercise price equal to $1.30 per share in an underwritten public offering. The public offering price for each share of common stock together with 0.75 of a warrant was $1.00. Pursuant to the underwriting agreement, the Company also granted Maxim Group LLC a 45-day option to purchase an additional 937,500 shares of common stock and/or 703,125 warrants to purchase an additional 703,125 shares of common stock to cover any over-allotments made by the underwriters in the sale and distribution of the shares and warrants. On January 21, 2015, Maxim Group LLC exercised the over-allotment option with respect to 703,125 warrants. The offering, including the partial exercise of the over-allotment option, closed on January 26, 2015. On March 3, 2015, Maxim Group LLC exercised the over-allotment option with respect to 134,500 shares of common stock, which closed on March 6, 2015. The registration statement for the sale of the shares of common stock and warrants sold in the public offering became effective January 20, 2015, file number 333-200461. The gross proceeds from the sale of the shares of common stock and the warrants, including the partial exercise of the over-allotment option was $6,392,000, and net proceeds of $5,444,000 after deducting underwriting discounts and commissions and other offering expenses. The Company intends to use the net proceeds received from this offering to increase our direct sales force, to develop and launch new products and for general working capital. | |
Common Stock Issued to Settle Fees for Services Provided | |
On April 24, 2009, the Company entered into an agreement with Advocos LLC, a contract sales organization that serves as part of the Company’s sales force, for the sale of the Company’s wound care products in the United States. Pursuant to the agreement, the Company agreed to pay the contract sales organization a monthly fee and potential bonuses that will be based on achievement of certain levels of sales. The Company agreed to issue the contract sales organization cash or shares of common stock to settle fees for its services. During the years ended March 31, 2015 and 2014, the Company issued 32,501 and 65,645 shares of common stock, respectively, in connection with this agreement. The Company has determined that the fair value of the common stock was more readily determinable than the fair value of the services rendered. Accordingly, the Company recorded the fair market value of the stock as expense. During the years ended March 31, 2015 and 2014, the Company recorded $76,000 and $208,000 of expense related to this agreement, respectively. The expense was recorded as selling, general and administrative expense in the accompanying consolidated statements of comprehensive (loss) income. |
14_StockBased_Compensation
14. Stock-Based Compensation | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | |||||||||||||||||
14. Stock-Based Compensation | 2006 Stock Plan | ||||||||||||||||
The board initially adopted the 2006 Stock Incentive Plan on August 25, 2006. On December 14, 2006, the stockholders approved the 2006 Stock Incentive Plan which became effective at the close of the Company’s initial public offering. The 2006 Stock Incentive Plan was later amended and restated by a unanimous board resolution on April 26, 2007, and such amendments were subsequently approved by the stockholders. On September 10, 2009, the Company’s shareholders approved a subsequent amendment to the 2006 Stock Incentive Plan. The 2006 Stock Incentive Plan, as amended and restated, is hereafter referred to as the “2006 Plan.” | |||||||||||||||||
The 2006 Plan provides for the granting of incentive stock options to employees and the granting of nonstatutory stock options to employees, non-employee directors, advisors and consultants. The 2006 Plan also provides for grants of restricted stock, stock appreciation rights and stock unit awards to employees, non-employee directors, advisors and consultants. | |||||||||||||||||
In accordance with the 2006 Plan the stated exercise price may not be less than 100% and 85% of the estimated fair market value of common stock on the date of grant for ISOs and NSOs, respectively, as determined by the board of directors at the date of grant. With respect to any 10% stockholder, the exercise price of an ISO or NSO shall not be less than 110% of the estimated fair market value per share on the date of grant. | |||||||||||||||||
Options issued under the 2006 Plan generally have a ten-year term. | |||||||||||||||||
Shares subject to awards that expire unexercised or are forfeited or terminated will again become available for issuance under the 2006 Plan. No participant in the 2006 Plan can receive option grants, restricted shares, stock appreciation rights or stock units for more than 26,786 shares (adjusted for the reverse stock split effective April 1, 2013) in the aggregate in any calendar year. | |||||||||||||||||
On November 7, 2006, the board initially authorized a total of 178,571 of the Company’s common stock shares (adjusted for the reverse stock split effective April 1, 2013) for issuance under the 2006 Plan in addition to increases provided for in the 2006 Plan through August 25, 2016. On September 10, 2009, the Company’s shareholders approved an amendment of the 2006 Plan which authorized and reserved an additional 142,858 shares (adjusted for the reverse stock split effective April 1, 2013) for issuance under the 2006 Plan. The number of shares of the Company’s common stock reserved for issuance under the 2006 Plan may increase if such increase is approved by the board, with no further action by the stockholders, at the beginning of each fiscal year by an amount equal to the lesser of (i) 250,000 shares (adjusted for the reverse stock split effective April 1, 2013); (ii) 5% of the outstanding shares of common stock of the Company on the last day of the immediately preceding year, or (iii) an amount determined by the Company’s board of the directors. | |||||||||||||||||
As provided under the 2006 Plan, the aggregate number of shares authorized for issuance as awards under the 2006 Plan increased on April 1, 2012, by 207,199 shares (which number constitutes 5% of the outstanding shares on the last day of the year ended March 31, 2012). During the year ended March 31, 2015, the board of directors approved an increase of 250,000 shares authorized for issuance. The Plan is subject to adjustment on April 1, 2015, at the board’s discretion (Note 18). | |||||||||||||||||
2011 Stock Plan | |||||||||||||||||
On September 12, 2011, upon recommendation of the board, the stock holders approved the Company’s 2011 Stock Incentive Plan (the “2011 Plan”). The 2011 Plan is effective as of June 21, 2012. | |||||||||||||||||
The 2011 Plan provides for the grant of incentive stock options as defined in Section 422 of the Internal Revenue Code to employees, and the grant of non-statutory stock options and stock purchase rights to employees, non-employee directors, advisors and consultants. The 2011 Plan also permits the grant of stock appreciation rights, stock units and restricted stock. | |||||||||||||||||
The board has authorized 428,572 of the Company’s common stock for issuance under the 2011 Plan, in addition to automatic increases provided for in the 2011 Plan through April 1, 2021. The number of shares of the Company’s common stock reserved for issuance under the 2011 Plan will automatically increase, with no further action by the stockholders, at the beginning of each fiscal year by an amount equal to the lesser of (i) 15% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding year, or (ii) an amount approved by the Company’s board of directors. On April 1, 2012, the board determined not to increase the number of shares authorized for issuance under the 2011 Plan on April 1, 2012 as no shares had yet been issued from the 2011 Plan. The number of shares authorized for issuance will be subject to adjustment on April 1, 2015, at the board’s discretion (Note 18). | |||||||||||||||||
Options issued under the 2011 Plan will generally have a ten-year term. | |||||||||||||||||
In accordance with the 2011 Plan, the stated exercise price of an employee incentive stock option shall not be less than 100% of the estimated fair market value of a share of common stock on the date of grant, and the stated exercise price of an nonstatutory option shall not be less 85% of the estimated fair market value of a share of common stock on the date of grant, as determined by the board of directors. An employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company shall not be eligible for the grant of an employee incentive stock option unless such grant satisfies the requirements of Section 422(c)(5) of the Internal Revenue Code. | |||||||||||||||||
Shares subject to awards that expire unexercised or are forfeited or terminated for any other reason will again become available for issuance under the 2011 Plan. No participant in the 2011 Plan can receive option grants, stock appreciation rights, restricted shares, or stock units for more than 107,143 shares in the aggregate in any calendar year. As provided under the 2011 Plan, the aggregate number of shares authorized for issuance as awards under the 2011 Plan automatically increases on April 1 of each year by in an amount equal to the lesser of (i) 15% of the outstanding shares on the last day of the immediately preceding year, or (ii) an amount determined by the board. During the year ended March 31, 2015, the board of directors approved an increase of 1,120,021 shares authorized for issuance. The Plan is subject to adjustment on April 1, 2015, at the board’s discretion (Note 18). | |||||||||||||||||
Stock-Based Award Activity | |||||||||||||||||
The Company had no restricted stock units outstanding at March 31, 2015. | |||||||||||||||||
Options outstanding at March 31, 2015 under the various plans are as follows: | |||||||||||||||||
Plan | Total Number of Options Outstanding in by Plan | ||||||||||||||||
2004 Plan | 40,000 | ||||||||||||||||
2006 Plan | 1,149,000 | ||||||||||||||||
2011 Plan | 1,688,000 | ||||||||||||||||
2,877,000 | |||||||||||||||||
A summary of activity under all option plans for the year ended March 31, 2015 is presented below: | |||||||||||||||||
Number of | Weighted- | Weighted- | Aggregate | ||||||||||||||
Options | Average | Average | Intrinsic | ||||||||||||||
Exercise Price | Contractual Term | Value | |||||||||||||||
Outstanding at March 31, 2014 | 2,536,000 | $ | 7.78 | ||||||||||||||
Options granted | 384,000 | 2.28 | |||||||||||||||
Options exercised | – | – | |||||||||||||||
Options forfeited or expired | (43,000 | ) | (13.89 | ) | |||||||||||||
Outstanding at March 31, 2015 | 2,877,000 | $ | 6.96 | 7.82 | – | ||||||||||||
Exercisable at March 31, 2015 | 1,592,000 | $ | 9.62 | 6.88 | – | ||||||||||||
Options available for grant as of March 31, 2015 | 1,456,000 | ||||||||||||||||
The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the underlying stock options and the fair value of the Company’s common stock, or $0.84 per share at March 31, 2015. | |||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
The Company accounts for share-based awards exchanged for employee services at the estimated grant date fair value of the award. The Company amortizes the fair value of employee stock options on a straight-line basis over the requisite service period of the awards. Compensation expense includes the impact of an estimate for forfeitures for all stock options. | |||||||||||||||||
Employee stock-based compensation expense is as follows: | |||||||||||||||||
Employee | Employee | ||||||||||||||||
Stock-based | Stock-based | ||||||||||||||||
Compensation | Compensation | ||||||||||||||||
for the Year Ended | for the Year Ended | ||||||||||||||||
March 31, 2015 | March 31, 2014 | ||||||||||||||||
Cost of revenues | $ | 235,000 | $ | 126,000 | |||||||||||||
Research and development | 339,000 | 187,000 | |||||||||||||||
Selling, general and administrative | 1,197,000 | 794,000 | |||||||||||||||
Total stock-based compensation | $ | 1,771,000 | $ | 1,107,000 | |||||||||||||
No income tax benefit has been recognized relating to stock-based compensation expense and no tax benefits have been realized from exercised stock options. | |||||||||||||||||
The Company estimated the fair value of employee stock options using the Black-Scholes option pricing model. The fair value of employee stock options is being amortized on a straight-line basis over the requisite service periods of the respective awards. The fair value of employee stock options was estimated using the following weighted-average assumptions: | |||||||||||||||||
Year Ended March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Fair value of the Company’s common stock on date of grant | $ | 2.28 | $ | 3.91 | |||||||||||||
Expected Term | 6.67 yrs | 5.96 yrs | |||||||||||||||
Risk-free interest rate | 1.70% | 1.66% | |||||||||||||||
Dividend yield | 0.00% | 0.00% | |||||||||||||||
Volatility | 93.00% | 86.00% | |||||||||||||||
The weighted-average fair values of options granted during the years ended March 31, 2015 and 2014 were $1.92 and $2.65, respectively. | |||||||||||||||||
The expected term of the stock options represents the average period the stock options are expected to remain outstanding and is based on the expected term calculated using the approach prescribed by the Securities and Exchange Commission's Staff Accounting Bulletin No. 110 for “plain vanilla” options. The expected stock price volatility for the Company’s stock options was determined by using an average of the historical volatilities of the Company and its industry peers. The Company will continue to analyze the stock price volatility and expected term assumptions as more data for the Company’s common stock and exercise patterns become available. The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the Company’s stock options. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company estimates forfeitures based on historical experience and reduces compensation expense accordingly. The estimated forfeiture rates used during the year ended March 31, 2015 ranged from 0.21% to 0.85%. The estimated forfeiture rates used during the year ended March 31, 2014 ranged from 2.53% to 4.77%. | |||||||||||||||||
At March 31, 2015, there were unrecognized compensation costs of $2,737,000 related to stock options which are expected to be recognized over a weighted-average amortization period of 1.89 years. | |||||||||||||||||
The Company did not capitalize any cost associated with stock-based compensation. | |||||||||||||||||
The Company issues new shares of common stock upon exercise of stock options. |
15_Income_Taxes
15. Income Taxes | 12 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
15. Income Taxes | The Company has the following net deferred tax assets (in thousands): | ||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carryforwards | $ | 36,661 | $ | 36,209 | |||||
Research and development tax credit carryforwards | 1,667 | 1,650 | |||||||
Stock-based compensation | 4,880 | 3,941 | |||||||
Reserves and accruals | 1,731 | 2,537 | |||||||
Other deferred tax assets | 49 | 13 | |||||||
State income taxes | (1 | ) | (1 | ) | |||||
Basis difference in assets | 5 | 35 | |||||||
Total deferred tax assets | $ | 44,992 | $ | 44,384 | |||||
Deferred tax liabilities: | |||||||||
Unrealized gain on Ruthigen | (1,105 | ) | (3,111 | ) | |||||
Net deferred tax asset | 43,887 | 41,273 | |||||||
Valuation allowance | (43,887 | ) | (41,273 | ) | |||||
Net deferred tax asset | $ | – | $ | – | |||||
The Company’s recorded income tax expense, net of the change in the valuation allowance, for each of the periods presented is as follows (in thousands): | |||||||||
Years Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Income tax (benefit) | $ | (2,613 | ) | $ | 436 | ||||
Change in valuation allowance | 2,613 | (436 | ) | ||||||
Net income tax expense | $ | – | $ | – | |||||
A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: | |||||||||
Years Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Expected federal statutory rate | (34.0% | ) | (34.0% | ) | |||||
State income taxes, net of federal benefit | (1.8% | ) | (6.6% | ) | |||||
Research and development credit | (0.2% | ) | 0.10% | ||||||
Foreign earnings taxed at different rates | 0.50% | (2.6% | ) | ||||||
Effect of permanent differences on Ruthigen deconsolidation | 0.00% | 29.70% | |||||||
Effect of permanent differences | (20.6% | ) | (19.5% | ) | |||||
Impact of foreign exchange rate fluctuations on foreign deferred income taxes | 25.00% | 14.90% | |||||||
Impact of change in foreign net operating loss | (9.6% | ) | 15.80% | ||||||
Adjustment of NOL due to Ruthigen deconsolidation | 8.60% | 0.00% | |||||||
Cancellation of stock options and true-ups | (2.7% | ) | (6.5% | ) | |||||
Other | 3.00% | (3.1% | ) | ||||||
(31.8% | ) | (11.8% | ) | ||||||
Change in valuation allowance | 31.80% | 11.80% | |||||||
Totals | 0.00% | 0.00% | |||||||
At March 31, 2015, the Company had net operating loss carryforwards for federal, state and foreign income tax purposes of approximately $87,831,000, $64,666,000 and $14,988,000, respectively. The federal net operating loss carryforwards will expire, if not utilized, on March 31, 2020. The state net operating loss carryforwards will expire, if not utilized, on March 31, 2016. The foreign net operating loss carryforwards will expire, if not utilized, on March 31, 2017. The Company also had, at March 31, 2015, federal and state research credit carryforwards of approximately $827,000 and $790,000, respectively. The federal credits will expire, if not utilized, on March 31, 2023 and the state credits do not expire. The Company also had, at March 31, 2015 foreign tax credits carryforwards of approximately $50,000. The foreign credits will expire, if not utilized, on March 31, 2023. | |||||||||
On March 26, 2014, Ruthigen, Inc. ("Ruthigen") filed a certificate of incorporation (the “Restated Certificate”) with the Secretary of State of the State of Delaware in connection with the closing of the Company’s initial public offering of its securities. Upon the closing of the initial public offering, the Company deconsolidated Ruthigen because it no longer had a controlling financial interest in Ruthigen, its former subsidiary. For financial reporting purpose, Ruthigen is considered as a related party after the deconsolidation as long as Oculus still holds a non-controlling financial interest in Ruthigen. Ruthigen maintains a separate accounting function from Oculus as of March 26, 2014. | |||||||||
The Company has completed a study to assess whether a change in control has occurred or whether there have been multiple changes of control since the Company’s formation. The Company determined, based on the results of the study, no change in control occurred for purposes of Internal Revenue Code section 382. The Company, after considering all available evidence, fully reserved for these and its other deferred tax assets since it is more likely than not such benefits will not be realized in future periods. The Company has incurred losses for both financial reporting and income tax purposes for the year ended March 31, 2015. Accordingly, the Company is continuing to fully reserve for its deferred tax assets. The Company will continue to evaluate its deferred tax assets to determine whether any changes in circumstances could affect the realization of their future benefit. If it is determined in future periods that portions of the Company’s deferred income tax assets satisfy the realization standards, the valuation allowance will be reduced accordingly. | |||||||||
As a result of certain realization requirements of Accounting Standards Codification Topic 718, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets at March 31, 2015 that arose directly from tax deductions related to equity compensation in excess of compensation recognized for financial reporting purposes. Equity will be increased by approximately $533,000 if and when such deferred tax assets are ultimately realized. | |||||||||
The Company only recognizes tax benefits from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. To date, the Company has not recognized such tax benefits in its consolidated financial statements. | |||||||||
The Company has identified its federal tax return and its state tax return in California as major tax jurisdictions. The Company also filed tax returns in foreign jurisdictions, principally Mexico and The Netherlands. The Company’s evaluation of uncertain tax matters was performed for tax years ended through March 31, 2015. Generally, the Company is subject to audit for the years ended March 31, 2014, 2013 and 2012 and may be subject to audit for amounts relating to net operating loss carryforwards generated in periods prior to March 31, 2012. The Company has elected to retain its existing accounting policy with respect to the treatment of interest and penalties attributable to income taxes, and continues to reflect interest and penalties attributable to income taxes, to the extent they arise, as a component of its income tax provision or benefit as well as its outstanding income tax assets and liabilities. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments. | |||||||||
The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized tax benefits will increase or decrease within 12 months of March 31, 2015. The unrecognized tax benefits may increase or change during the next year for items that arise in the ordinary course of business. |
16_Employee_Benefit_Plan
16. Employee Benefit Plan | 12 Months Ended |
Mar. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
16. Employee Benefit Plan | The Company has a program to contribute and administer a qualified 401(k) plan. Under the 401(k) plan, the Company matches employee contributions to the plan up to 4% of the employee’s salary. Company contributions to the plans amounted to an aggregate of $137,000 and $131,000 for the years ended March 31, 2015 and 2014, respectively. |
17_Segment_and_Geographic_Info
17. Segment and Geographic Information | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||
17. Segment and Geographic Information | The Company generates product revenues from wound care products which are sold into the human and animal healthcare markets, and the Company generates service revenues from laboratory testing services which are provided to medical device manufacturers. | ||||||||||||||||
The following table shows the Company’s product revenues by geographic region: | |||||||||||||||||
Year Ended March 31, | |||||||||||||||||
2015 | 2014 | $ Change | % Change | ||||||||||||||
United States | $ | 1,978,000 | $ | 1,406,000 | $ | 572,000 | 41% | ||||||||||
Mexico | 5,053,000 | 3,758,000 | 1,295,000 | 34% | |||||||||||||
Europe and Rest of the World | 2,908,000 | 2,046,000 | 862,000 | 42% | |||||||||||||
9,939,000 | 7,210,000 | 2,729,000 | 38% | ||||||||||||||
Product license fees and royalties | 3,056,000 | 5,513,000 | (2,457,000 | ) | (45% | ) | |||||||||||
Total | $ | 12,995,000 | $ | 12,723,000 | $ | 272,000 | 2% | ||||||||||
In the year ended March 31, 2015, product license fees and royalties revenue declined primarily as a result of the termination of the Company’s agreement with Innovacyn and a decline in unit volume sold by Exeltis/Quinnova. Additionally, in the year ended March 31, 2014, the Company’s agreement with Onset/Precision was terminated. | |||||||||||||||||
The following table shows the Company’s product license fees and royalties revenue by partner: | |||||||||||||||||
Year Ended March 31, | |||||||||||||||||
2015 | 2014 | $ Change | % Change | ||||||||||||||
Exeltis/Quinnova | $ | 437,000 | $ | 807,000 | $ | (370,000 | ) | (46% | ) | ||||||||
Onset/Precision | – | 27,000 | (27,000 | ) | (100% | ) | |||||||||||
Innovacyn | 1,120,000 | 3,100,000 | (1,980,000 | ) | (64% | ) | |||||||||||
Laboratorios Sanfer and More Pharma | 1,499,000 | 1,501,000 | (2,000 | ) | 0% | ||||||||||||
China distributor | – | 78,000 | (78,000 | ) | (100% | ) | |||||||||||
Total | $ | 3,056,000 | $ | 5,513,000 | $ | (2,457,000 | ) | (45% | ) | ||||||||
The Company’s service revenues amounted to $859,000 and $945,000 for the years ended March 31, 2015 and 2014. |
18_Subsequent_Events
18. Subsequent Events | 12 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
18. Subsequent Events | On June 1, 2015, the Board of Directors of the Company approved an increase of 250,000 shares authorized for issuance under the 2006 Stock Plan as of April 1, 2015, and an increase of 2,256,762 shares authorized for issuance under the 2011 Stock Plan as of April 1, 2015. |
Pursuant to an At-the-Market Issuance Sales Agreement with MLV & Co. LLC dated April 2, 2014, the Company may issue and sell shares of common stock having an aggregate offering price of up to $9,159,000 from time to time through MLV acting as the Company’s sales agent. The Company sold 500,000 shares of common stock on June 9, 2015, for gross proceeds of $907,000 and net proceeds of $879,000 after deducting commissions and other offering expenses. The Company has sold an aggregate 967,934 shares of common stock to date, for gross proceeds of $2,350,000 and net proceeds of $2,220,000 after deducting commissions and other offering expenses under the agreement with MLV. The Company pays MLV a commission rate equal to 3.0% of the gross proceeds from the sale of any shares of common stock sold through MLV as agent. |
3_Summary_of_Significant_Accou1
3. Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||
Principles of Consolidation | Principles of Consolidation | ||||||||||||||||
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Aquamed Technologies, Inc. (“Aquamed”), Oculus Technologies of Mexico S.A. de C.V. (“OTM”), Oculus Innovative Sciences Netherlands, B.V. (“OIS Europe”) and Ruthigen (through the date of deconsolidation on March 26, 2014). Aquamed has no current operations. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||||||||
Use of Estimates | 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 reserves and write-downs related to receivables and inventories, the recoverability of long-lived assets, the valuation allowance relating to the Company’s deferred tax assets, valuation of equity and derivative instruments, debt discounts, valuation of investments, and the estimated amortization periods of upfront product licensing fees received from customers. | |||||||||||||||||
Reclassifications | Reclassifications | ||||||||||||||||
Certain prior period amounts have been reclassified for comparative purposes to conform to the fiscal 2015 presentation. These reclassifications have no impact on the Company’s previously reported net loss. | |||||||||||||||||
Revenue Recognition | Revenue Recognition | ||||||||||||||||
The Company generates revenue from sales of its products to hospitals, medical centers, doctors, pharmacies, and distributors. The Company sells its products directly to third parties and to distributors through various cancelable distribution agreements. The Company has also entered into agreements to license its technology and its products. | |||||||||||||||||
The Company also provides regulatory compliance testing and quality assurance services to medical device and pharmaceutical companies. | |||||||||||||||||
The Company records revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the fee is fixed or determinable, and (iv) collectability of the sale is reasonably assured. | |||||||||||||||||
The Company requires all of its product sales to be supported by evidence of a sale transaction that clearly indicates the selling price to the customer, shipping terms and payment terms. Evidence of an arrangement generally consists of a contract or purchase order approved by the customer. The Company has ongoing relationships with certain customers from which it customarily accepts orders by telephone in lieu of purchase orders. | |||||||||||||||||
The Company recognizes revenue at the time it receives a confirmation that the goods were either tendered at their destination, when shipped “FOB destination,” or transferred to a shipping agent, when shipped “FOB shipping point.” Delivery to the customer is deemed to have occurred when the customer takes title to the product. Generally, title passes to the customer upon shipment, but could occur when the customer receives the product based on the terms of the agreement with the customer. | |||||||||||||||||
The selling prices of all goods that the Company sells are fixed, and agreed to with the customer, prior to shipment. Selling prices are generally based on established list prices. The Company does not customarily permit its customers to return any of its products for monetary refunds or credit against completed or future sales. The Company, from time to time, may replace expired goods on a discretionary basis. The Company records these types of adjustments, when made, as a reduction of revenue. Sales adjustments were insignificant during the years ended March 31, 2015 and 2014. | |||||||||||||||||
The Company consistently evaluates the creditworthiness of new customers and monitors the creditworthiness of its existing customers to determine whether events or changes in their financial circumstances would raise doubt as to the collectability of a sale at the time in which a sale is made. Payment terms on sales made in the United States are generally 30 days and internationally, generally range from 30 days to 90 days. In the event a sale is made to a customer under circumstances in which collectability is not reasonably assured, the Company either requires the customer to remit payment prior to shipment or defers recognition of the revenue until payment is received. The Company maintains a reserve for amounts which may not be collectible due to risk of credit losses. | |||||||||||||||||
Product license revenue is generated through agreements with strategic partners for the commercialization of Microcyn® products. The terms of the agreements sometimes include non-refundable upfront fees. The Company analyzes multiple element arrangements to determine whether the elements can be separated. Analysis is performed at the inception of the arrangement and as each product is delivered. If a product or service is not separable, the combined deliverables are accounted for as a single unit of accounting and recognized over the performance obligation period. | |||||||||||||||||
Assuming the elements meet the criteria for separation and all other revenue requirements for recognition, the revenue recognition methodology prescribed for each unit of accounting is summarized below: | |||||||||||||||||
When appropriate, the Company defers recognition of non-refundable upfront fees. If it has continuing performance obligations then such up-front fees are deferred and recognized over the period of continuing involvement. | |||||||||||||||||
The Company recognizes royalty revenues from licensed products upon the sale of the related products. | |||||||||||||||||
Revenue from consulting contracts is recognized as services are provided. Revenue from testing contracts is recognized as tests are completed and a final report is sent to the customer. | |||||||||||||||||
Sales Tax and Value Added Taxes | Sales Tax and Value Added Taxes | ||||||||||||||||
The Company accounts for sales taxes and value added taxes imposed on its goods and services on a net basis. | |||||||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||||||||||||||
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash equivalents may be invested in money market funds, commercial paper, variable rate demand instruments, and certificates of deposits. | |||||||||||||||||
Long-Term Investments | Long-Term Investments | ||||||||||||||||
The Company’s former wholly-owned subsidiary, Ruthigen, consummated its IPO on March 26, 2014. The Company’s long-term investments consist of the Company’s ownership of 1,650,000 and 2,000,000 shares of Ruthigen common stock at March 31, 2015 and March 31, 2014, respectively. The Company has accounted for its ownership of shares of Ruthigen common stock at cost in accordance with ASC 325-20 as a result of (a) the restrictions on voting the shares held as disclosed above, (b) the Company having no representation on the Ruthigen Board of Directors, (c) the Company’s inability to set policy at Ruthigen (d) the Company having no further commitments for funding the operations of Ruthigen and (e) the restrictions on transferability of the shares which extend beyond a one-year period. | |||||||||||||||||
Following the sale of 350,000 shares of Ruthigen common stock for proceeds of $962,500 on March 13, 2015, the Company held 1,650,000 shares of Ruthigen common stock at March 31, 2015 (See Note 8). | |||||||||||||||||
Concentration of Credit Risk and Major Customers | Concentration of Credit Risk and Major Customers | ||||||||||||||||
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents and accounts receivable. Cash and cash equivalents are maintained in financial institutions in the United States, Mexico and the Netherlands. The Company is exposed to credit risk in the event of default by these financial institutions for amounts in excess of the Federal Deposit Insurance Corporation insured limits. Cash and cash equivalents held in foreign banks are intentionally kept at minimal levels, and therefore have minimal credit risk associated with them. | |||||||||||||||||
The Company grants credit to its business customers, which are primarily located in Mexico, Europe and the United States. Collateral is generally not required for trade receivables. The Company maintains allowances for potential credit losses. At March 31, 2015, one customer represented 56%, and one customer represented 14% of the net accounts receivable balance. At March 31, 2014, one customer represented 44%, one customer represented 15%, and one customer represented 12% of the net accounts receivable balance. During the year ended March 31, 2015, one customer represented 47% of net revenues. During the year ended March 31, 2014, one customer represented 38%, and one customer represented 23%, respectively, of net revenues. | |||||||||||||||||
Accounts Receivable | Accounts Receivable | ||||||||||||||||
Trade accounts receivable are recorded net of allowances for cash discounts for prompt payment, doubtful accounts, and sales returns. Estimates for cash discounts and sales returns are based on analysis of contractual terms and historical trends. | |||||||||||||||||
The Company’s policy is to reserve for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance for doubtful accounts is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Other factors that the Company considers include its existing contractual obligations, historical payment patterns of its customers and individual customer circumstances, an analysis of days sales outstanding by customer and geographic region, and a review of the local economic environment and its potential impact on government funding and reimbursement practices. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for doubtful accounts at March 31, 2015 and 2014 represents probable credit losses in the amounts of $20,000 and $8,000, respectively. Additionally at March 31, 2015 the Company has reserves of $183,000 related to potential discounts, rebates, distributor fees and returns. | |||||||||||||||||
Inventories | Inventories | ||||||||||||||||
Inventories are stated at the lower of cost, cost being determined on a standard cost basis (which approximates actual cost on a first-in, first-out basis), or market. | |||||||||||||||||
Due to changing market conditions, estimated future requirements, age of the inventories on hand and production of new products, the Company regularly reviews inventory quantities on hand and records a provision to write down excess and obsolete inventory to its estimated net realizable value. The Company recorded reserves to reduce the carrying amounts of inventories to their net realizable value in the amounts of $87,000 and $47,000 at March 31, 2015 and 2014, respectively, which is included in cost of product revenues on the Company’s accompanying consolidated statements of comprehensive (loss) income. | |||||||||||||||||
Fair Value of Financial Assets and Liabilities | Fair Value of Financial Assets and Liabilities | ||||||||||||||||
Financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The carrying amounts of long-term investments include the investment in Ruthigen and are carried at cost, which management believes approximates fair value. The fair value of capital lease obligations and equipment loans approximates their carrying amounts as a market rate of interest is attached to their repayment. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value: | |||||||||||||||||
Level 1 – quoted prices in active markets for identical assets or liabilities | |||||||||||||||||
Level 2 – quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. | |||||||||||||||||
Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions) | |||||||||||||||||
Financial liabilities measured at fair value on a recurring basis are summarized below: | |||||||||||||||||
Fair Value Measurements at March 31, 2015 Using | |||||||||||||||||
Total | Quoted prices in active markets for identical assets | Significant other observable inputs | Significant other unobservable inputs | ||||||||||||||
March 31, | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||
2015 | |||||||||||||||||
Liabilities: | |||||||||||||||||
Derivative liabilities – warrants | $ | 11,000 | – | – | $ | 11,000 | |||||||||||
Fair Value Measurements at March 31, 2014 Using | |||||||||||||||||
Total | Quoted prices in active markets for identical assets | Significant other observable inputs | Significant other unobservable inputs | ||||||||||||||
March 31, | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||
2014 | |||||||||||||||||
Liabilities: | |||||||||||||||||
Derivative liabilities – warrants | $ | 3,175,000 | – | – | $ | 3,175,000 | |||||||||||
Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting and finance department, who report to the Chief Financial Officer, determine its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting and finance department and are approved by the Chief Financial Officer. | |||||||||||||||||
Level 3 Valuation Techniques: | |||||||||||||||||
Level 3 financial liabilities consist of the derivative liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. | |||||||||||||||||
The Company uses the Black-Scholes option valuation model to value Level 3 derivatives at inception and on subsequent valuation dates. This model incorporates transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, as well as volatility. A significant decrease in the volatility or a significant decrease in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement. Changes in the values of the derivative liabilities are recorded in “Gain (loss) due to change in fair value of derivative liabilities” in the Company’s consolidated statements of comprehensive (loss) income. | |||||||||||||||||
As of March 31, 2015 and 2014, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy. | |||||||||||||||||
Property and Equipment | Property and Equipment | ||||||||||||||||
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets. Depreciation of leasehold improvements is computed using the straight-line method over the lesser of the estimated useful life of the improvement or the remaining term of the lease. Estimated useful asset life by classification is as follows: | |||||||||||||||||
Years | |||||||||||||||||
Office equipment | 3 | ||||||||||||||||
Manufacturing, lab and other equipment | 5 | ||||||||||||||||
Furniture and fixtures | 7 | ||||||||||||||||
Upon retirement or sale, the cost and related accumulated depreciation are removed from the consolidated balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred. | |||||||||||||||||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets | ||||||||||||||||
The Company periodically reviews the carrying values of its long-lived assets when events or changes in circumstances would indicate that it is more likely than not that their carrying values may exceed their realizable values, and records impairment charges when considered necessary. Specific potential indicators of impairment include, but are not necessarily limited to: | |||||||||||||||||
· | a significant decrease in the fair value of an asset; | ||||||||||||||||
· | a significant change in the extent or manner in which an asset is used or a significant physical change in an asset; | ||||||||||||||||
· | a significant adverse change in legal factors or in the business climate that affects the value of an asset; | ||||||||||||||||
· | an adverse action or assessment by the U.S. Food and Drug Administration or another regulator; and | ||||||||||||||||
· | an accumulation of costs significantly in excess of the amount originally expected to acquire or construct an asset; and operating or cash flow losses combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with an income-producing asset. | ||||||||||||||||
When circumstances indicate that an impairment may have occurred, the Company tests such assets for recoverability by comparing the estimated undiscounted future cash flows expected to result from the use of such assets and their eventual disposition to their carrying amounts. In estimating these future cash flows, assets and liabilities are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows generated by other such groups. If the undiscounted future cash flows are less than the carrying amount of the asset, an impairment loss, measured as the excess of the carrying value of the asset over its estimated fair value, will be recognized. The cash flow estimates used in such calculations are based on estimates and assumptions, using all available information that management believes is reasonable. | |||||||||||||||||
In connection with entering into the securities purchase agreement at a fixed price of $2.75 per share (See Note 8), the Company determined that the carrying value of the shares held in Ruthigen was impaired. As a result, the Company recorded an impairment loss in the amount of $4,650,000 which represents the difference between the cost and aggregate purchase price of $2.75 per share the Company agreed to sell its interest in Ruthigen. The Company’s interest in Ruthigen is currently reported as a long-term asset on its consolidated financial statements rather than a consolidated subsidiary. Because the Company owns shares in a public company, the value of this asset may further fluctuate and the value stated in the Company’s financial reports may change substantially over time. Given that the Company no longer controls Ruthigen, the Company has very little means to control the value of the asset. If the value of the Company’s holdings in Ruthigen decreases or fluctuates further, it may adversely affect the value of our stock price. During the year ended March 31, 2014, the Company had noted no indicators of impairment. | |||||||||||||||||
Research and Development | Research and Development | ||||||||||||||||
Research and development expense is charged to operations as incurred and consists primarily of personnel expenses, clinical and regulatory services and supplies. For the years ended March 31, 2015 and 2014, research and development expense amounted to $1,533,000 and $2,887,000, respectively. | |||||||||||||||||
Advertising Costs | Advertising Costs | ||||||||||||||||
Advertising costs are charged to operations as incurred. Advertising costs amounted to $231,000 and $155,000, for the years ended March 31, 2015 and 2014, respectively. Advertising costs are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive (loss) income. | |||||||||||||||||
Shipping and Handling Costs | Shipping and Handling Costs | ||||||||||||||||
The Company classifies amounts billed to customers related to shipping and handling in sale transactions as product revenues. Shipping and handling costs incurred are recorded in cost of product revenues. For the years ended March 31, 2015 and 2014, the Company recorded revenue related to shipping and handling costs of $114,000 and $58,000, respectively. | |||||||||||||||||
Foreign Currency Reporting | Foreign Currency Reporting | ||||||||||||||||
The Company’s subsidiary, OTM, uses the local currency (Mexican Pesos) as its functional currency and its subsidiary, OIS Europe, uses the local currency (Euro) as its functional currency. Assets and liabilities are translated at exchange rates in effect at the balance sheet date, and revenue and expense accounts are translated at average exchange rates during the period. Resulting translation adjustments amounted to $438,000 and $78,000 for the years ended March 31, 2015 and 2014, respectively, and were recorded in other comprehensive (loss) income in the accompanying consolidated statements of comprehensive (loss) income. | |||||||||||||||||
Foreign currency transaction gains (losses) relate primarily to trade payables and receivables between subsidiaries OTM and OIS Europe. These transactions are expected to be settled in the foreseeable future. The Company recorded foreign currency transaction losses of $24,000 and gains of $6,000 for the years ended March 31, 2015 and 2014, respectively. The related gains and losses were recorded in other expense, net, in the accompanying consolidated statements of comprehensive (loss) income. | |||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation | ||||||||||||||||
The Company accounts for share-based awards exchanged for employee services at the estimated grant date fair value of the award. The Company estimates the fair value of employee stock awards using the Black-Scholes option pricing model. The Company amortizes the fair value of employee stock options on a straight-line basis over the requisite service period of the awards. Compensation expense includes the impact of an estimate for forfeitures for all stock options. | |||||||||||||||||
The Company accounts for equity instruments issued to non-employees at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instrument vests or becomes non-forfeitable. Non-employee stock-based compensation charges are amortized over the vesting period or as earned. | |||||||||||||||||
Income Taxes | Income Taxes | ||||||||||||||||
Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. | |||||||||||||||||
Tax benefits claimed or expected to be claimed on a tax return are recorded in the Company’s consolidated financial statements. A tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Uncertain tax positions have had no impact on the Company’s consolidated financial condition, results of comprehensive loss or cash flows. | |||||||||||||||||
Comprehensive Loss | Comprehensive Loss | ||||||||||||||||
Other comprehensive loss includes all changes in stockholders’ equity during a period from non-owner sources and is reported in the consolidated statement of changes in stockholders’ equity. To date, other comprehensive loss consists of changes in accumulated foreign currency translation adjustments. Accumulated other comprehensive losses at March 31, 2015 and 2014 were $3,507,000 and $3,069,000, respectively. | |||||||||||||||||
(Loss) Earnings Per Share | (Loss) Earnings Per Share | ||||||||||||||||
Basic earnings and loss per share are computed by dividing the net income or loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options (using the treasury stock method) and warrants (using the if-converted method). Diluted (loss) income per share excludes the shares issuable upon the exercise of stock options and warrants from the calculation of net (loss) income per share where their effect would be anti-dilutive. | |||||||||||||||||
For the Years Ended | |||||||||||||||||
March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Net (loss) income available to common stockholders - basic | $ | (8,203,000 | ) | $ | 3,735,000 | ||||||||||||
Denominator - basic: | |||||||||||||||||
Weighted average number of common shares outstanding | 9,657,000 | 6,882,000 | |||||||||||||||
Basic (loss) earnings per common share | $ | (0.85 | ) | $ | 0.54 | ||||||||||||
Net (loss) income available to common stockholders - diluted | $ | (8,203,000 | ) | $ | 3,735,000 | ||||||||||||
Denominator - diluted: | |||||||||||||||||
Weighted average number of common shares outstanding | 9,657,000 | 6,882,000 | |||||||||||||||
Common share equivalents of outstanding stock options | – | 12,000 | |||||||||||||||
Common share equivalents of outstanding warrants | – | 4,000 | |||||||||||||||
Weighted average number of common shares outstanding | 9,657,000 | 6,898,000 | |||||||||||||||
Dilutive (loss) earnings per common share | $ | (0.85 | ) | $ | 0.54 | ||||||||||||
Securities excluded from the weighted average dilutive common shares outstanding because their inclusion would have been anti-dilutive: | |||||||||||||||||
Stock options | 2,877,000 | 1,122,000 | |||||||||||||||
Warrants | 7,741,000 | 1,410,000 | |||||||||||||||
10,618,000 | 2,532,000 | ||||||||||||||||
Common Stock Purchase Warrants and Other Derivative Financial Instruments | Common Stock Purchase Warrants and Other Derivative Financial Instruments | ||||||||||||||||
The Company classifies common stock purchase warrants and other free standing derivative financial instruments as equity if the contracts (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (iii) contain reset provisions as either an asset or a liability. The Company assesses classification of its freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. The Company determined that its freestanding derivatives, which principally consist of warrants to purchase common stock, satisfied the criteria for classification as equity instruments, other than certain warrants that contained reset provisions and certain warrants that required net-cash settlement that the Company classified as derivative liabilities as more fully described in Note 11. | |||||||||||||||||
Preferred Stock | Preferred Stock | ||||||||||||||||
The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Shares that are subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares, which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary equity. At all other times, preferred shares are classified as stockholders' equity. | |||||||||||||||||
Convertible Instruments | Convertible Instruments | ||||||||||||||||
The Company evaluates and bifurcates conversion options from their host instruments and accounts for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional as that term is described under applicable Generally Accepted Accounting Principles (“GAAP”). | |||||||||||||||||
Subsequent Events | Subsequent Events | ||||||||||||||||
Management has evaluated subsequent events or transactions occurring through the date these consolidated financial statements were issued. | |||||||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||||||||||
The Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update (“ASU”) No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period . This ASU requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations. | |||||||||||||||||
The FASB has issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 (subject to a proposed additional one-year deferral) and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial position and results of operations. | |||||||||||||||||
The FASB has issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The guidance, which is effective for annual reporting periods ending after December 15, 2016, extends the responsibility for performing the going-concern assessment to management and contains guidance on how to perform a going-concern assessment and when going-concern disclosures would be required under U.S. GAAP. The Company has elected to early adopt the provisions of ASU 2014-15 in connection with the issuance of these consolidated financial statements. | |||||||||||||||||
Accounting standards that have been issued or proposed by the FASB, SEC and/or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the condensed consolidated financial statements upon adoption. |
3_Summary_of_Significant_Accou2
3. Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||
Financial liabilities measured at fair value on a recurring basis | Financial liabilities measured at fair value on a recurring basis are summarized below: | ||||||||||||||||
Fair Value Measurements at March 31, 2015 Using | |||||||||||||||||
Total | Quoted prices in active markets for identical assets | Significant other observable inputs | Significant other unobservable inputs | ||||||||||||||
March 31, | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||
2015 | |||||||||||||||||
Liabilities: | |||||||||||||||||
Derivative liabilities – warrants | $ | 11,000 | – | – | $ | 11,000 | |||||||||||
Fair Value Measurements at March 31, 2014 Using | |||||||||||||||||
Total | Quoted prices in active markets for identical assets | Significant other observable inputs | Significant other unobservable inputs | ||||||||||||||
March 31, | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||
2014 | |||||||||||||||||
Liabilities: | |||||||||||||||||
Derivative liabilities – warrants | $ | 3,175,000 | – | – | $ | 3,175,000 | |||||||||||
Property and equipment estimated useful life | Years | ||||||||||||||||
Office equipment | 3 | ||||||||||||||||
Manufacturing, lab and other equipment | 5 | ||||||||||||||||
Furniture and fixtures | 7 | ||||||||||||||||
(Loss) earnings per share | For the Years Ended | ||||||||||||||||
March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Net (loss) income available to common stockholders - basic | $ | (8,203,000 | ) | $ | 3,735,000 | ||||||||||||
Denominator - basic: | |||||||||||||||||
Weighted average number of common shares outstanding | 9,657,000 | 6,882,000 | |||||||||||||||
Basic (loss) earnings per common share | $ | (0.85 | ) | $ | 0.54 | ||||||||||||
Net (loss) income available to common stockholders - diluted | $ | (8,203,000 | ) | $ | 3,735,000 | ||||||||||||
Denominator - diluted: | |||||||||||||||||
Weighted average number of common shares outstanding | 9,657,000 | 6,882,000 | |||||||||||||||
Common share equivalents of outstanding stock options | – | 12,000 | |||||||||||||||
Common share equivalents of outstanding warrants | – | 4,000 | |||||||||||||||
Weighted average number of common shares outstanding | 9,657,000 | 6,898,000 | |||||||||||||||
Dilutive (loss) earnings per common share | $ | (0.85 | ) | $ | 0.54 | ||||||||||||
Securities excluded from the weighted average dilutive common shares outstanding because their inclusion would have been anti-dilutive: | |||||||||||||||||
Stock options | 2,877,000 | 1,122,000 | |||||||||||||||
Warrants | 7,741,000 | 1,410,000 | |||||||||||||||
10,618,000 | 2,532,000 |
4_Accounts_Receivable_Tables
4. Accounts Receivable (Tables) | 12 Months Ended | ||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||
Accounts receivable | March 31, | ||||||||||||||||||
2015 | 2014 | ||||||||||||||||||
Accounts receivable | $ | 1,720,000 | $ | 1,840,000 | |||||||||||||||
Less: allowance for doubtful accounts | (20,000 | ) | (8,000 | ) | |||||||||||||||
Less: discounts, rebates, distributor fees and returns | (183,000 | ) | (42,000 | ) | |||||||||||||||
$ | 1,517,000 | $ | 1,790,000 | ||||||||||||||||
Schedule of allowance for doubtful accounts activity | Year Ended March 31 | Balance at | Additions | Deductions | Balance at | ||||||||||||||
Beginning | Charged to | Write-Offs | End of Year | ||||||||||||||||
of Year | Operations | ||||||||||||||||||
2014 | $ | 22,000 | $ | (6,000 | ) | $ | (8,000 | ) | $ | 8,000 | |||||||||
2015 | $ | 8,000 | $ | 29,000 | $ | (17,000 | ) | $ | 20,000 |
5_Inventories_Tables
5. Inventories (Tables) | 12 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Schedule of inventories | March 31, | ||||||||
2015 | 2014 | ||||||||
Raw materials | $ | 865,000 | $ | 790,000 | |||||
Finished goods | 537,000 | 298,000 | |||||||
$ | 1,402,000 | $ | 1,088,000 |
6_Prepaid_Expenses_and_Other_C1
6. Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||
Schedule of prepaid expenses and other current assets | March 31, | ||||||||
2015 | 2014 | ||||||||
Prepaid insurance | $ | 367,000 | $ | 429,000 | |||||
Other prepaid expenses and other current assets | 225,000 | 218,000 | |||||||
$ | 592,000 | $ | 647,000 |
7_Property_and_Equipment_Table
7. Property and Equipment (Tables) | 12 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Schedule of property and equipment | March 31, | ||||||||
2015 | 2014 | ||||||||
Manufacturing, lab, and other equipment | $ | 2,937,000 | $ | 3,073,000 | |||||
Office equipment | 278,000 | 302,000 | |||||||
Furniture and fixtures | 82,000 | 88,000 | |||||||
Leasehold improvements | 249,000 | 269,000 | |||||||
3,546,000 | 3,732,000 | ||||||||
Less: accumulated depreciation and amortization | (2,751,000 | ) | (2,761,000 | ) | |||||
$ | 795,000 | $ | 971,000 |
8_Investment_in_Ruthigen_Inc_T
8. Investment in Ruthigen, Inc. (Tables) | 12 Months Ended | ||||
Mar. 31, 2015 | |||||
Investments, Debt and Equity Securities [Abstract] | |||||
Schedule of gain on deconsolidation | March 26, | ||||
2014 | |||||
Aggregate fair value of consideration received by the Company | $ | – | |||
Fair value of retained non-controlling interest by the Company | 10,150,000 | ||||
Carrying amount on non-controlling interest in subsidiary | – | ||||
Less: | |||||
Carrying amount of the Ruthigen assets and liabilities | (983,000 | ) | |||
Gain on deconsolidation of Ruthigen | $ | 11,133,000 |
9_Accrued_Expenses_and_Other_C1
9. Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Payables and Accruals [Abstract] | |||||||||
Schedule of accrued expenses and other current liabilities | March 31, | ||||||||
2015 | 2014 | ||||||||
Salaries and related costs | $ | 545,000 | $ | 516,000 | |||||
Professional fees | 137,000 | 362,000 | |||||||
Other | 100,000 | 11,000 | |||||||
$ | 782,000 | $ | 889,000 |
11_Derivative_Liability_Tables
11. Derivative Liability (Tables) | 12 Months Ended | |||||||||
Mar. 31, 2015 | ||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||
Schedule of assumptions for valuation of derivatives | Fair Value - Issue Date | Measurement | Warrants | Remaining | Exercise | Volatility | Risk-free | Fair | ||
Date | Contract | Price | Interest | Value | ||||||
Term in | Rate | |||||||||
Years | ||||||||||
Placement Agent Warrants | 9-Dec-13 | 16,500 | 2.4 | $ | 5 | 223% | 0.44% | $ | 64,000 | |
Investor - Series A Warrants | 26-Feb-14 | 450,620 | 1.5 | $ | 3 | 100% | 0.44% | 814,000 | ||
Investor - Series B Warrants | 26-Feb-14 | 1,400,000 | 1.5 | $ | 3.63 | 100% | 0.44% | 2,271,000 | ||
Placement Agent Warrants | 26-Feb-14 | 69,037 | 2.18 | $ | 3 | 100% | 0.44% | 143,000 | ||
$ | 3,292,000 | |||||||||
Fair Value – Exercises | ||||||||||
Investor - Series A Warrants | 18-Mar-14 | 315,434 | 1.44 | $ | 3 | 104% | 0.44% | $ | 1,180,000 | |
Investor - Series A Warrants | 19-Mar-14 | 134,186 | 1.44 | $ | 3 | 104% | 0.44% | 503,000 | ||
$ | 1,683,000 | |||||||||
Fair Value – Reporting Date | ||||||||||
Placement Agent Warrants | 31-Mar-14 | 16,500 | 2.09 | $ | 5 | 128% | 0.44% | $ | 37,000 | |
Investor - Series A Warrants | 31-Mar-14 | 1,000 | 1.41 | $ | 3 | 128% | 0.44% | 1,000 | ||
Investor - Series B Warrants | 31-Mar-14 | 1,400,000 | 1.41 | $ | 3.63 | 128% | 0.44% | 2,958,000 | ||
Placement Agent Warrants | 31-Mar-14 | 69,037 | 2.09 | $ | 3 | 128% | 0.44% | 179,000 | ||
$ | 3,175,000 | |||||||||
Fair Value – Reporting Date | ||||||||||
Placement Agent Warrants | 31-Mar-15 | 16,500 | 1.09 | $ | 5 | 100% | 0.26% | $ | 1,000 | |
Investor - Series A Warrants | 31-Mar-15 | 1,000 | 0.41 | $ | 3 | 100% | 0.14% | – | ||
Investor - Series B Warrants | 31-Mar-15 | 1,400,000 | 0.41 | $ | 3.63 | 100% | 0.14% | 5,000 | ||
Placement Agent Warrants | 31-Mar-15 | 69,037 | 1.09 | $ | 3 | 100% | 0.26% | 5,000 | ||
$ | 11,000 | |||||||||
Changes in Level 3 on a recurring basis | Year Ended March 31, | |||||||||
2015 | 2014 | |||||||||
Beginning balance | $ | 3,175,000 | $ | – | ||||||
Fair value of warrants issued | – | 3,292,000 | ||||||||
Mark to market net unrealized (gain) loss | (3,164,000 | ) | 1,566,000 | |||||||
Reclassification to additional paid in capital | – | (1,683,000 | ) | |||||||
Ending balance | $ | 11,000 | $ | 3,175,000 |
12_Commitments_and_Contingenci1
12. Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Minimum operating lease payments | For Years Ending March 31, | ||||
2016 | $ | 348,000 | |||
2017 | 277,000 | ||||
2018 | 185,000 | ||||
2019 | 116,000 | ||||
2020 | 10,000 | ||||
Total minimum lease payments | $ | 936,000 |
14_StockBased_Compensation_Tab
14. Stock-Based Compensation (Tables) | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | |||||||||||||||||
Plan summary | Plan | Total Number of Options Outstanding in by Plan | |||||||||||||||
2004 Plan | 40,000 | ||||||||||||||||
2006 Plan | 1,149,000 | ||||||||||||||||
2011 Plan | 1,688,000 | ||||||||||||||||
2,877,000 | |||||||||||||||||
Schedule of option activity | Number of | Weighted- | Weighted- | Aggregate | |||||||||||||
Options | Average | Average | Intrinsic | ||||||||||||||
Exercise Price | Contractual Term | Value | |||||||||||||||
Outstanding at March 31, 2014 | 2,536,000 | $ | 7.78 | ||||||||||||||
Options granted | 384,000 | 2.28 | |||||||||||||||
Options exercised | – | – | |||||||||||||||
Options forfeited or expired | (43,000 | ) | (13.89 | ) | |||||||||||||
Outstanding at March 31, 2015 | 2,877,000 | $ | 6.96 | 7.82 | – | ||||||||||||
Exercisable at March 31, 2015 | 1,592,000 | $ | 9.62 | 6.88 | – | ||||||||||||
Options available for grant as of March 31, 2015 | 1,456,000 | ||||||||||||||||
Employee stock-based compensation expense | Employee | Employee | |||||||||||||||
Stock-based | Stock-based | ||||||||||||||||
Compensation | Compensation | ||||||||||||||||
for the Year Ended | for the Year Ended | ||||||||||||||||
March 31, 2015 | March 31, 2014 | ||||||||||||||||
Cost of revenues | $ | 235,000 | $ | 126,000 | |||||||||||||
Research and development | 339,000 | 187,000 | |||||||||||||||
Selling, general and administrative | 1,197,000 | 794,000 | |||||||||||||||
Total stock-based compensation | $ | 1,771,000 | $ | 1,107,000 | |||||||||||||
Weighted-average assumptions of fair value of employee stock options | Year Ended March 31, | ||||||||||||||||
2015 | 2014 | ||||||||||||||||
Fair value of the Company’s common stock on date of grant | $ | 2.28 | $ | 3.91 | |||||||||||||
Expected Term | 6.67 yrs | 5.96 yrs | |||||||||||||||
Risk-free interest rate | 1.70% | 1.66% | |||||||||||||||
Dividend yield | 0.00% | 0.00% | |||||||||||||||
Volatility | 93.00% | 86.00% |
15_Income_Taxes_Tables
15. Income Taxes (Tables) | 12 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Deferred tax assets | March 31, | ||||||||
2015 | 2014 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carryforwards | $ | 36,661 | $ | 36,209 | |||||
Research and development tax credit carryforwards | 1,667 | 1,650 | |||||||
Stock-based compensation | 4,880 | 3,941 | |||||||
Reserves and accruals | 1,731 | 2,537 | |||||||
Other deferred tax assets | 49 | 13 | |||||||
State income taxes | (1 | ) | (1 | ) | |||||
Basis difference in assets | 5 | 35 | |||||||
Total deferred tax assets | $ | 44,992 | $ | 44,384 | |||||
Deferred tax liabilities: | |||||||||
Unrealized gain on Ruthigen | (1,105 | ) | (3,111 | ) | |||||
Net deferred tax asset | 43,887 | 41,273 | |||||||
Valuation allowance | (43,887 | ) | (41,273 | ) | |||||
Net deferred tax asset | $ | – | $ | – | |||||
Schedule of income tax expense | Years Ended March 31, | ||||||||
2015 | 2014 | ||||||||
Income tax (benefit) | $ | (2,613 | ) | $ | 436 | ||||
Change in valuation allowance | 2,613 | (436 | ) | ||||||
Net income tax expense | $ | – | $ | – | |||||
Reconciliation of federal income tax rate to effective rate | Years Ended March 31, | ||||||||
2015 | 2014 | ||||||||
Expected federal statutory rate | (34.0% | ) | (34.0% | ) | |||||
State income taxes, net of federal benefit | (1.8% | ) | (6.6% | ) | |||||
Research and development credit | (0.2% | ) | 0.10% | ||||||
Foreign earnings taxed at different rates | 0.50% | (2.6% | ) | ||||||
Effect of permanent differences on Ruthigen deconsolidation | 0.00% | 29.70% | |||||||
Effect of permanent differences | (20.6% | ) | (19.5% | ) | |||||
Impact of foreign exchange rate fluctuations on foreign deferred income taxes | 25.00% | 14.90% | |||||||
Impact of change in foreign net operating loss | (9.6% | ) | 15.80% | ||||||
Adjustment of NOL due to Ruthigen deconsolidation | 8.60% | 0.00% | |||||||
Cancellation of stock options and true-ups | (2.7% | ) | (6.5% | ) | |||||
Other | 3.00% | (3.1% | ) | ||||||
(31.8% | ) | (11.8% | ) | ||||||
Change in valuation allowance | 31.80% | 11.80% | |||||||
Totals | 0.00% | 0.00% |
17_Segment_and_Geographic_Info1
17. Segment and Geographic Information (Tables) | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||
Schedule of geographic sales | Year Ended March 31, | ||||||||||||||||
2015 | 2014 | $ Change | % Change | ||||||||||||||
United States | $ | 1,978,000 | $ | 1,406,000 | $ | 572,000 | 41% | ||||||||||
Mexico | 5,053,000 | 3,758,000 | 1,295,000 | 34% | |||||||||||||
Europe and Rest of the World | 2,908,000 | 2,046,000 | 862,000 | 42% | |||||||||||||
9,939,000 | 7,210,000 | 2,729,000 | 38% | ||||||||||||||
Product license fees and royalties | 3,056,000 | 5,513,000 | (2,457,000 | ) | (45% | ) | |||||||||||
Total | $ | 12,995,000 | $ | 12,723,000 | $ | 272,000 | 2% | ||||||||||
Schedule of product license fees and royalties | Year Ended March 31, | ||||||||||||||||
2015 | 2014 | $ Change | % Change | ||||||||||||||
Exeltis/Quinnova | $ | 437,000 | $ | 807,000 | $ | (370,000 | ) | (46% | ) | ||||||||
Onset/Precision | – | 27,000 | (27,000 | ) | (100% | ) | |||||||||||
Innovacyn | 1,120,000 | 3,100,000 | (1,980,000 | ) | (64% | ) | |||||||||||
Laboratorios Sanfer and More Pharma | 1,499,000 | 1,501,000 | (2,000 | ) | 0% | ||||||||||||
China distributor | – | 78,000 | (78,000 | ) | (100% | ) | |||||||||||
Total | $ | 3,056,000 | $ | 5,513,000 | $ | (2,457,000 | ) | (45% | ) |
1_Organization_and_Recent_Deve1
1. Organization and Recent Developments (Details Narrative) (Ruthigen) | Mar. 31, 2015 |
Ruthigen | |
Equity interest percentage in Ruthigen | 34.00% |
2_Liquidity_and_Financial_Cond1
2. Liquidity and Financial Condition (Details Narrative) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Liquidity And Financial Condition | ||
Net loss | ($8,203,000) | $3,735,000 |
Accumulated deficit | -142,213,000 | -134,010,000 |
Working capital | $7,066,000 | $1,970,000 |
3_Summary_of_Significant_Accou3
3. Summary of Significant Accounting Policies (Details - Fair Value) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2013 |
Liabilities: | |||
Derivative liabilities - warrants | $11,000 | $3,175,000 | $0 |
Fair Value, Measurements, Recurring [Member] | |||
Liabilities: | |||
Derivative liabilities - warrants | 11,000 | 3,175,000 | |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | |||
Liabilities: | |||
Derivative liabilities - warrants | 0 | 0 | |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||
Liabilities: | |||
Derivative liabilities - warrants | 0 | 0 | |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | |||
Liabilities: | |||
Derivative liabilities - warrants | $11,000 | $3,175,000 |
3_Summary_of_Significant_Accou4
3. Summary of Significant Accounting Policies (Details-Useful lives) | 12 Months Ended |
Mar. 31, 2015 | |
Office equipment | |
Useful asset life | 3 years |
Manufacturing, lab and other equipment [Member] | |
Useful asset life | 5 years |
Furniture and fixtures | |
Useful asset life | 7 years |
3_Summary_of_Significant_Accou5
3. Summary of Significant Accounting Policies (Details-Earnings per share) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Accounting Policies [Abstract] | ||
Net (loss) income available to common stockholders - basic | ($8,203,000) | $3,735,000 |
Denominator - basic: | ||
Weighted average number of common shares outstanding | 9,657,000 | 6,882,000 |
Basic (loss) earnings per common share | ($0.85) | $0.54 |
Net income (loss) income available to common stockholders - diluted | ($8,203,000) | $3,735,000 |
Denominator - diluted: | ||
Weighted average number of common shares outstanding | 9,657,000 | 6,882,000 |
Common share equivalents of outstanding stock options | 0 | 12,000 |
Common share equivalents of outstanding warrants | 0 | 4,000 |
Weighted average number of common shares outstanding | 9,657,000 | 6,898,000 |
Dilutive earnings (loss) per common share | ($0.85) | $0.54 |
3_Summary_of_Significant_Accou6
3. Summary of Significant Accounting Policies (Details-Antidilutive shares) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Total securities excluded from computation of basic net loss per share | 10,618,000 | 2,532,000 |
Stock Options | ||
Total securities excluded from computation of basic net loss per share | 2,877,000 | 1,122,000 |
Warrants | ||
Total securities excluded from computation of basic net loss per share | 7,741,000 | 1,410,000 |
3_Summary_of_Significant_Accou7
3. Summary of Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2013 | |
Long-term investment | $4,538,000 | $10,150,000 | |
Allowance for doubtful accounts | 20,000 | 8,000 | 22,000 |
Allowance for sales discounts, rebates, distributor fees and returns | 183,000 | ||
Inventory reserves | 87,000 | 47,000 | |
Research and development expenses | 1,533,000 | 2,887,000 | |
Advertising costs | 231,000 | 155,000 | |
Shipping and handling costs | 114,000 | 58,000 | |
Foreign currency transaction gain (loss) | -24,000 | 6,000 | |
Foreign currency translation adjustment | -438,000 | -78,000 | |
Accumulated other comprehensive loss | -3,507,000 | -3,069,000 | |
Ruthigen | |||
Long-term investment | $4,538,000 | $10,150,000 | |
Long-term investment, shares held | 1,650,000 | 2,000,000 | |
Accounts Receivable [Member] | One Customer | |||
Significant customer concentration | 56.00% | 44.00% | |
Accounts Receivable [Member] | Customer Two | |||
Significant customer concentration | 14.00% | 15.00% | |
Accounts Receivable [Member] | Third Customer | |||
Significant customer concentration | 12.00% | ||
Revenues [Member] | One Customer | |||
Significant customer concentration | 47.00% | 38.00% | |
Revenues [Member] | Customer Two | |||
Significant customer concentration | 23.00% |
4_Accounts_Receivable_Details
4. Accounts Receivable (Details) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Receivables [Abstract] | ||
Accounts receivable | $1,720,000 | $1,840,000 |
Less: allowance for doubtful accounts | -20,000 | -8,000 |
Accounts receivable, net | $1,517,000 | $1,790,000 |
4_Accounts_Receivable_DetailsD
4. Accounts Receivable (Details-Doubtful accounts) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Receivables [Abstract] | ||
Allowance for doubtful accounts, beginning balance | $8,000 | $22,000 |
Additions charged to operations | 29,000 | -6,000 |
Deductions write-offs | -17,000 | -8,000 |
Allowance for doubtful accounts, ending balance | $20,000 | $8,000 |
5_Inventories_Details
5. Inventories (Details) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Raw materials | $865,000 | $790,000 |
Finished goods | 537,000 | 298,000 |
Inventories, net | $1,402,000 | $1,088,000 |
6_Prepaid_Expenses_and_Other_C2
6. Prepaid Expenses and Other Current Assets (Details) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid insurance | $367,000 | $429,000 |
Other prepaid expenses and other current assets | 225,000 | 218,000 |
Total prepaid expenses and other current assets | $592,000 | $647,000 |
7_Property_and_Equipment_Detai
7. Property and Equipment (Details) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Property, Plant and Equipment [Abstract] | ||
Manufacturing, lab, and other equipment | $2,937,000 | $3,073,000 |
Office equipment | 278,000 | 302,000 |
Furniture and fixtures | 82,000 | 88,000 |
Leasehold improvements | 249,000 | 269,000 |
Property and equipment, gross | 3,546,000 | 3,732,000 |
Less: accumulated depreciation and amortization | -2,751,000 | -2,761,000 |
Property and equipment, net | $795,000 | $971,000 |
7_Property_and_Equipment_Detai1
7. Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization | $253,000 | $284,000 |
Loss on disposal of equipment | $13,000 | ($39,000) |
8_Investment_in_Ruthigen_Detai
8. Investment in Ruthigen (Details) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Gain (loss) on deconsolidation of Ruthigen | $0 | $11,133,000 |
Ruthigen | ||
Aggregate fair value of consideration received by the Company | 0 | |
Fair value of retained non-controlling interest by the Company | 10,150,000 | |
Carrying amount on non-controlling interest in subsidiary | 0 | |
Less: Carrying amount of the Ruthigen assets and liabilities | -983,000 | |
Gain (loss) on deconsolidation of Ruthigen | $11,133,000 |
8_Investment_in_Ruthigen_Detai1
8. Investment in Ruthigen (Details Narrative) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Long-term investment | $4,538,000 | $10,150,000 |
Ruthigen | ||
Long-term investment | $4,538,000 | $10,150,000 |
Long-term investment, shares held | 1,650,000 | 2,000,000 |
9_Accrued_Expenses_and_Other_C2
9. Accrued Expenses and Other Current Liabilities (Details) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Payables and Accruals [Abstract] | ||
Salaries and related costs | $545,000 | $516,000 |
Professional fees | 137,000 | 362,000 |
Other | 100,000 | 11,000 |
Accrued expenses and other current liabilities | $782,000 | $889,000 |
10_LongTerm_Debt_Details_Narra
10. Long-Term Debt (Details Narrative) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Note payable, current portion | $87,000 | $143,000 |
Non-cash interest expense | 0 | 863,000 |
Financing of Automobile | ||
Debt face amount | 40,000 | |
Debt interest rate | 11.99% | |
Principal payments made | 8,000 | |
Interest payments made | 1,000 | |
Debt balance at year end | 3,000 | |
Note payable, current portion | 3,000 | |
Insurance Premiums | ||
Debt face amount | 188,000 | |
Debt interest rate | 4.81% | |
Debt maturity date | 25-Aug-14 | |
Principal payments made | 135,000 | |
Interest payments made | 1,000 | |
Insurance Premiums 2nd | ||
Debt face amount | 116,000 | |
Debt interest rate | 5.50% | |
Debt maturity date | 25-Aug-15 | |
Principal payments made | 33,000 | |
Interest payments made | 1,000 | |
Debt balance at year end | 84,000 | |
Note payable, current portion | 84,000 | |
VLL5 and VLL6 [Member] | ||
Principal payments made | 1,379,000 | |
Interest payments made | 188,000 | |
Non-cash interest expense | $863,000 |
11_Derivative_Liability_Detail
11. Derivative Liability (Details-Warrant information) (USD $) | 12 Months Ended |
Mar. 31, 2015 | |
Fair Value Issue Date | |
Fair value | $3,292,000 |
Fair Value Issue Date | Placement Agent Warrants | December 9, 2013 | |
Warrants outstanding | 16,500 |
Remaining contract term in years | 2 years 4 months 24 days |
Exercise price | $5 |
Volatility | 223.00% |
Risk-free interest rate | 0.44% |
Fair value | 64,000 |
Fair Value Issue Date | Placement Agent Warrants | February 26, 2014 | |
Warrants outstanding | 69,037 |
Remaining contract term in years | 2 years 2 months 5 days |
Exercise price | $3 |
Volatility | 100.00% |
Risk-free interest rate | 0.44% |
Fair value | 143,000 |
Fair Value Issue Date | Investor - Series A Warrants | February 26, 2014 | |
Warrants outstanding | 450,620 |
Remaining contract term in years | 1 year 6 months |
Exercise price | $3 |
Volatility | 100.00% |
Risk-free interest rate | 0.44% |
Fair value | 814,000 |
Fair Value Issue Date | Investor - Series B Warrants | February 26, 2014 | |
Warrants outstanding | 1,400,000 |
Remaining contract term in years | 1 year 6 months |
Exercise price | $3.63 |
Volatility | 100.00% |
Risk-free interest rate | 0.44% |
Fair value | 2,271,000 |
Fair Value Exercise Date | |
Fair value | 1,683,000 |
Fair Value Exercise Date | Investor - Series A Warrants | March 18, 2014 | |
Warrants outstanding | 315,434 |
Remaining contract term in years | 1 year 5 months 8 days |
Exercise price | $3 |
Volatility | 104.00% |
Risk-free interest rate | 0.44% |
Fair value | 1,180,000 |
Fair Value Exercise Date | Investor - Series A Warrants | March 19, 2014 | |
Remaining contract term in years | 1 year 5 months 8 days |
Volatility | 104.00% |
Risk-free interest rate | 0.44% |
Investor - Series A Warrants | March 19, 2014 | |
Warrants outstanding | 134,186 |
Exercise price | $3 |
Fair value | 503,000 |
Fair Value Reporting Date [Member] | March 31, 2014 | |
Fair value | 3,175,000 |
Fair Value Reporting Date [Member] | March 31, 2015 | |
Fair value | 11,000 |
Fair Value Reporting Date [Member] | Placement Agent Warrants | March 31, 2014 | |
Warrants outstanding | 16,500 |
Remaining contract term in years | 2 years 1 month 2 days |
Exercise price | $5 |
Volatility | 128.00% |
Risk-free interest rate | 0.44% |
Fair value | 37,000 |
Fair Value Reporting Date [Member] | Placement Agent Warrants | March 31, 2015 | |
Warrants outstanding | 16,500 |
Remaining contract term in years | 1 year 1 month 2 days |
Exercise price | $5 |
Volatility | 100.00% |
Risk-free interest rate | 0.26% |
Fair value | 1,000 |
Fair Value Reporting Date [Member] | Investor - Series A Warrants | March 31, 2014 | |
Warrants outstanding | 1,000 |
Remaining contract term in years | 1 year 4 months 28 days |
Exercise price | $3 |
Volatility | 128.00% |
Risk-free interest rate | 0.44% |
Fair value | 1,000 |
Fair Value Reporting Date [Member] | Investor - Series A Warrants | March 31, 2015 | |
Warrants outstanding | 1,000 |
Remaining contract term in years | 4 months 28 days |
Exercise price | $3 |
Volatility | 100.00% |
Risk-free interest rate | 0.14% |
Fair value | 0 |
Fair Value Reporting Date [Member] | Investor - Series B Warrants | March 31, 2014 | |
Warrants outstanding | 1,400,000 |
Remaining contract term in years | 1 year 4 months 28 days |
Exercise price | $3.63 |
Volatility | 128.00% |
Risk-free interest rate | 0.44% |
Fair value | 2,958,000 |
Fair Value Reporting Date [Member] | Investor - Series B Warrants | March 31, 2015 | |
Warrants outstanding | 1,400,000 |
Remaining contract term in years | 4 months 28 days |
Exercise price | $3.63 |
Volatility | 100.00% |
Risk-free interest rate | 0.14% |
Fair value | 5,000 |
Fair Value Reporting Date [Member] | Placement Agent Warrants 2 | March 31, 2014 | |
Warrants outstanding | 69,037 |
Remaining contract term in years | 2 years 1 month 2 days |
Exercise price | $3 |
Volatility | 128.00% |
Risk-free interest rate | 0.44% |
Fair value | 179,000 |
Fair Value Reporting Date [Member] | Placement Agent Warrants 2 | March 31, 2015 | |
Warrants outstanding | 69,037 |
Remaining contract term in years | 1 year 1 month 2 days |
Exercise price | $3 |
Volatility | 100.00% |
Risk-free interest rate | 0.26% |
Fair value | $5,000 |
11_Derivative_Liability_Detail1
11. Derivative Liability (Details-Level 3) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Beginning balance | $3,175,000 | $0 |
Fair value of warrants issued | 0 | 3,292,000 |
Mark to market net unrealized loss (gain) | -3,164,000 | 1,566,000 |
Reclassification to additional paid in capital | 0 | -1,683,000 |
Ending balance | $11,000 | $3,175,000 |
12_Commitments_and_Contingenci2
12. Commitments and Contingencies (Details) (USD $) | Mar. 31, 2015 |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease due 2016 | $348,000 |
Operating lease due 2017 | 277,000 |
Operating lease due 2018 | 185,000 |
Operating lease due 2019 | 116,000 |
Operating lease due 2020 | 10,000 |
Total minimum lease payments | $936,000 |
12_Commitments_and_Contingenci3
12. Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Rent expense | $446,000 | $413,000 |
Potential severance | 1,130,000 | |
Aggregated annual salaries | 935,000 | |
Service fees received | 41,000 | |
Innovacyn | ||
Accounts receivable | 3,000 | 220,000 |
More Pharma | ||
Accounts receivable | 609,000 | |
Amortization of transaction fees | 63,000 | 63,000 |
Transaction costs | 1,499,000 | 1,501,000 |
Vetericyn and Innovacyn | ||
Revenue earned | 1,120,000 | 3,100,000 |
Laboratorios Sanfer | ||
Accounts receivable | $843,000 |
13_Stockholders_Equity_Details
13. Stockholders' Equity (Details Narrative) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Proceeds from sale of stock, net | $6,785,000 | $3,188,000 |
Issuance of common stock for services, amount | 341,000 | |
April 2014 At-the-Market Offering | ||
Stock sold new, shares issued | 467,934 | |
Proceeds from sale of stock, gross | 1,443,000 | |
Proceeds from sale of stock, net | 1,341,000 | |
January 2015 Underwritten Public Offering | ||
Proceeds from sale of stock, gross | 6,392,000 | |
Proceeds from sale of stock, net | 5,444,000 | |
Advocos | ||
Issuance of common stock for services, shares | 32,501 | 65,645 |
Issuance of common stock for services, amount | $76,000 | $208,000 |
14_StockBased_Compensation_Det
14. Stock-Based Compensation (Details-Plans) | Mar. 31, 2015 | Mar. 31, 2014 |
Options and restricted stock units outstanding | 2,877,000 | 2,536,000 |
2004 Plan | ||
Options and restricted stock units outstanding | 40,000 | |
2006 Plan | ||
Options and restricted stock units outstanding | 1,149,000 | |
2011 Plan | ||
Options and restricted stock units outstanding | 1,688,000 |
14_StockBased_Compensation_Det1
14. Stock-Based Compensation (Details-Option activity) (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Options | ||
Outstanding at beginning of period | 2,536,000 | |
Granted | 384,000 | |
Exercised | 0 | |
Forfeited or expired | -43,000 | |
Outstanding at end of period | 2,877,000 | 2,536,000 |
Exercisable at end of period | 1,592,000 | |
Options available for grant, ending | 1,456,000 | |
Weighted Average Exercise Price | ||
Outstanding at beginning of period | $7.78 | |
Granted | $2.28 | $3.91 |
Forfeited or expired | ($13.89) | |
Outstanding at end of period | $6.96 | $7.78 |
Exercisable at end of period | $9.62 | |
Weighted Average Contractual Term | ||
Outstanding at end of period | 7 years 9 months 25 days | |
Exercisable at end of period | 6 years 10 months 17 days | |
Aggregate Intrinsic Value | ||
Outstanding at end of period | $0 | |
Exercisable at end of period | $0 |
14_StockBased_Compensation_Det2
14. Stock-Based Compensation (Details-Stock-based compensation) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Total stock-based compensation | $1,771,000 | $1,107,000 |
Cost of revenues | ||
Total stock-based compensation | 235,000 | 126,000 |
Research and development | ||
Total stock-based compensation | 339,000 | 187,000 |
Selling, general and administrative | ||
Total stock-based compensation | $1,197,000 | $794,000 |
14_StockBased_Compensation_Det3
14. Stock-Based Compensation (Details-Assumptions) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Weighted average assumptions for calculating fair value of stock options | ||
Fair value of common stock on date of grant | $2.28 | $3.91 |
Expected term | 6 years 8 months 1 day | 5 years 11 months 16 days |
Risk-free interest rate | 1.70% | 1.66% |
Dividend yield | 0.00% | 0.00% |
Volatility | 93.00% | 86.00% |
14_StockBased_Compensation_Det4
14. Stock-Based Compensation (Details Narrative) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Aggregate intrinsic value | $0.84 | |
Weighted average fair values of options granted | $1.92 | $2.65 |
Unrecognized compensation costs | $2,737,000 | |
Weighted average amortization period | 1 year 10 months 20 days |
15_Income_Taxes_DetailsDeferre
15. Income Taxes (Details-Deferred taxes) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Deferred tax assets: | ||
Net operating loss carryforwards | $36,661,000 | $36,209,000 |
Research and development tax credit carryforwards | 1,667,000 | 1,650,000 |
Stock-based compensation | 4,880,000 | 3,941,000 |
Reserves and accruals | 1,731,000 | 2,537,000 |
Other deferred tax assets | 49,000 | 13,000 |
State income taxes | -1,000 | -1,000 |
Basis difference in assets | 5,000 | 35,000 |
Total deferred tax assets | 44,992,000 | 44,384,000 |
Deferred tax liabilities: | ||
Unrealized gain on Ruthigen | -1,105,000 | -3,111,000 |
Net deferred tax asset | 43,887,000 | 41,273,000 |
Valuation allowance | -43,887,000 | -41,273,000 |
Net deferred tax asset | $0 | $0 |
15_Income_Taxes_DetailsIncome_
15. Income Taxes (Details-Income tax expense) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Income tax (benefit) | ($2,613) | $436 |
Change in valuation allowance | 2,613 | -436 |
Net income tax expense | $0 | $0 |
15_Income_Taxes_DetailsReconci
15. Income Taxes (Details-Reconciliation of tax rate) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Expected federal statutory rate | -34.00% | -34.00% |
State income taxes, net of federal benefit | -1.80% | -6.60% |
Research and development credit | -0.20% | 0.10% |
Foreign earnings taxed at different rates | 0.50% | -2.60% |
Effect of permanent differences on Ruthigen deconsolidation | 0.00% | 29.70% |
Effect of permanent differences | -20.60% | -19.50% |
Impact of foreign exchange rate fluctuations on foreign deferred income taxes | 25.00% | 14.90% |
Impact of change in foreign net operating loss | -9.60% | 15.80% |
Adjustment of NOL due to Ruthigen deconsolidation | 8.60% | 0.00% |
Cancellation of stock options and true-ups | -2.70% | -6.50% |
Other | 3.00% | -3.10% |
Total effective rate | -31.80% | -11.80% |
Change in valuation allowance | 31.80% | 11.80% |
Totals | 0.00% | 0.00% |
15_Income_Taxes_Details_Narrat
15. Income Taxes (Details Narrative) (USD $) | 12 Months Ended |
Mar. 31, 2015 | |
Foreign tax credit carryforward | $50,000 |
Foreign tax credit expiration date | 3/31/23 |
Federal [Member] | |
Net operating loss carryforwards | 87,831,000 |
Operating loss beginning expiration dates | 31-Mar-20 |
Federal research credit carryforwards | 827,000 |
Research credit expiration date | 3/31/23 |
State and Local Jurisdiction [Member] | |
Net operating loss carryforwards | 64,666,000 |
Operating loss beginning expiration dates | 31-Mar-16 |
State research credit carryfowards | 790,000 |
Foreign Tax Authority [Member] | |
Net operating loss carryforwards | $14,988,000 |
Operating loss beginning expiration dates | 31-Mar-17 |
16_Employee_Benefit_Plan_Detai
16. Employee Benefit Plan (Details Narrative) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ||
Company contributions to 401(k) plan | $137,000 | $131,000 |
17_Segment_and_Geographic_Info2
17. Segment and Geographic Information (Details) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Sales revenue from geographical territories | $9,939,000 | $7,210,000 |
Product license fees and royalties | 3,056,000 | 5,513,000 |
Total company revenues | 12,995,000 | 12,723,000 |
Sales Revenue, Segment [Member] | UNITED STATES | ||
Sales revenue from geographical territories | 1,978,000 | 1,406,000 |
Sales Revenue, Segment [Member] | MEXICO | ||
Sales revenue from geographical territories | 5,053,000 | 3,758,000 |
Sales Revenue, Segment [Member] | Europe and Other | ||
Sales revenue from geographical territories | $2,908,000 | $2,046,000 |
17_Segment_and_Geographic_Info3
17. Segment and Geographic Information (Details Narrative) (USD $) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Product licensing fees and royalties | $3,056,000 | $5,513,000 |
Exeltis | ||
Product licensing fees and royalties | 437,000 | 807,000 |
Onset | ||
Product licensing fees and royalties | 0 | 27,000 |
Innovacyn | ||
Product licensing fees and royalties | 1,120,000 | 3,100,000 |
Laboratorios Sanfer | ||
Product licensing fees and royalties | 1,499,000 | 1,501,000 |
China Distributor | ||
Product licensing fees and royalties | $0 | $78,000 |