Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Mar. 31, 2016 | Jun. 20, 2016 | Sep. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Oculus Innovative Sciences, Inc. | ||
Entity Central Index Key | 1,367,083 | ||
Document Type | 10-K | ||
Document Period End Date | Mar. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --03-31 | ||
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 | 21,000,412 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 | ||
Entity public float | $ 21,136,000 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 7,469 | $ 6,136 |
Accounts receivable, net | 2,274 | 1,517 |
Inventories, net | 1,640 | 1,402 |
Prepaid expenses and other current assets | 1,505 | 592 |
Total current assets | 12,888 | 9,647 |
Property and equipment, net | 850 | 795 |
Long-term investment | 0 | 4,538 |
Other assets | 65 | 68 |
Total assets | 13,803 | 15,048 |
Current liabilities: | ||
Accounts payable | 1,337 | 932 |
Accrued expenses and other current liabilities | 1,526 | 782 |
Deferred revenue | 574 | 769 |
Current portion of long-term debt | 114 | 87 |
Derivative liabilities | 0 | 11 |
Total current liabilities | 3,551 | 2,581 |
Deferred revenue, less current portion | 112 | 413 |
Total liabilities | $ 3,663 | $ 2,994 |
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, 2016 and March 31, 2015, respectively | $ 0 | $ 0 |
Common stock, $0.0001 par value; 60,000,000 shares authorized at March 31, 2016 and March 31, 2015, 20,984,369 and 15,045,080 shares issued and outstanding at March 31, 2016 and March 31, 2015, respectively (Note 13) | 2 | 2 |
Additional paid-in capital | 166,367 | 157,772 |
Accumulated deficit | (152,375) | (142,213) |
Accumulated other comprehensive loss | (3,854) | (3,507) |
Total stockholders' equity | 10,140 | 12,054 |
Total liabilities and stockholders' equity | $ 13,803 | $ 15,048 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Mar. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Convertible preferred stock par value | $ 0.0001 | $ 0.0001 |
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 | $ 0.0001 | $ 0.0001 |
Common stock shares authorized | 60,000,000 | 60,000,000 |
Common stock shares issued | 20,984,369 | 15,045,080 |
Common stock shares outstanding | 20,984,369 | 15,045,080 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues | ||
Product | $ 13,042 | $ 9,939 |
Product licensing fees and royalties | 981 | 3,056 |
Service | 1,061 | 859 |
Total revenues | 15,084 | 13,854 |
Cost of revenues | ||
Product | 6,993 | 5,908 |
Service | 881 | 658 |
Total cost of revenues | 7,874 | 6,566 |
Gross profit | 7,210 | 7,288 |
Operating expenses | ||
Research and development | 1,806 | 1,533 |
Selling, general and administrative | 15,556 | 12,414 |
Total operating expenses | 17,362 | 13,947 |
Loss from operations | (10,152) | (6,659) |
Interest expense | (3) | (3) |
Interest income | 2 | 1 |
Gain due to change in fair value of derivative instruments | 11 | 3,164 |
Impairment loss on long-term investment (See Note 3) | 0 | (4,650) |
Other expense, net | (20) | (56) |
Net loss | $ (10,162) | $ (8,203) |
Net loss per common share: Basic and diluted | $ (.62) | $ (0.85) |
Weighted-average number of common shares used in common per share calculations: basic and diluted | 16,444 | 9,657 |
Other comprehensive loss | ||
Net loss | $ (10,162) | $ (8,203) |
Foreign currency translation adjustments | (347) | (438) |
Comprehensive loss | $ (10,509) | $ (8,641) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income / Loss [Member] | Total |
Beginning balance, shares at Mar. 31, 2014 | 8,160,145 | ||||
Beginning balance, amount at Mar. 31, 2014 | $ 1 | $ 149,141 | $ (134,010) | $ (3,069) | $ 12,063 |
Issuance of common stock in connection with At-the-Market issuances of common stock, net of commissions, expenses and other offering costs, shares | 467,934 | ||||
Issuance of common stock in connection with At-the-Market issuances of common stock, net of commissions, expenses and other offering costs, amount | 1,341 | 1,341 | |||
Issuance of common stock and common stock purchase warrants, shares | 6,384,500 | ||||
Issuance of common stock and common stock purchase warrants, value | $ 1 | 5,443 | 5,444 | ||
Issuance of common stock for settlement of service fees, shares | 32,501 | ||||
Issuance of common stock for settlement of service fees, value | 76 | 76 | |||
Stock-based compensation expense, net of forfeitures | 1,771 | 1,771 | |||
Foreign currency translation adjustment | (438) | (438) | |||
Net loss | (8,203) | (8,203) | |||
Ending balance, shares at Mar. 31, 2015 | 15,045,080 | ||||
Ending balance, amount at Mar. 31, 2015 | $ 2 | 157,772 | (142,213) | (3,507) | 12,054 |
Issuance of common stock in connection with At-the-Market issuances of common stock, net of commissions, expenses and other offering costs, shares | 2,254,596 | ||||
Issuance of common stock in connection with At-the-Market issuances of common stock, net of commissions, expenses and other offering costs, amount | 3,150 | 3,150 | |||
Issuance of common stock and common stock purchase warrants, shares | 3,400,000 | ||||
Issuance of common stock and common stock purchase warrants, value | 2,994 | 2,994 | |||
Issuance of common stock upon exercise of common stock purchase warrants, shares | 11,100 | ||||
Issuance of common stock upon exercise of common stock purchase warrants, value | 14 | 14 | |||
Issuance of common stock in connection with Board Compensation, shares | 65,074 | ||||
Issuance of common stock in connection with Board Compensation, value | 64 | 64 | |||
Issuance of common stock purchase warrants for payment of service fees, value | 128 | 128 | |||
Issuance of common stock for settlement of service fees, shares | 208,519 | ||||
Issuance of common stock for settlement of service fees, value | 286 | 286 | |||
Stock-based compensation expense, net of forfeitures | 1,959 | 1,959 | |||
Foreign currency translation adjustment | (347) | (347) | |||
Net loss | (10,162) | (10,162) | |||
Ending balance, shares at Mar. 31, 2016 | 20,984,369 | ||||
Ending balance, amount at Mar. 31, 2016 | $ 2 | $ 166,367 | $ (152,375) | $ (3,854) | $ 10,140 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities | ||
Net loss | $ (10,162) | $ (8,203) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 244 | 253 |
Change in provision for doubtful accounts | (5) | 29 |
Change in provision for discounts, rebates, distributor fees and returns | 470 | 183 |
Change in provision for obsolete inventory | 77 | 141 |
Stock-based compensation | 2,341 | 1,771 |
Change in fair value of derivative liabilities | (11) | (3,164) |
Impairment loss on long-term investment | 0 | 4,650 |
Foreign currency transaction (gain) loss | (38) | 24 |
Gain on disposal of property and equipment | 0 | (13) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,282) | (143) |
Due from affiliate | 0 | 537 |
Inventories | (382) | (627) |
Prepaid expenses and other current assets | (751) | 162 |
Accounts payable | 429 | 222 |
Accrued expenses and other current liabilities | 919 | (1) |
Deferred revenue and other liabilities | (595) | (2,515) |
Net cash used in operating activities | (8,746) | (6,694) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (345) | (139) |
Proceeds from sale of long-term investment | 4,538 | 963 |
Long-term deposits | (2) | 51 |
Net cash provided by investing activities | 4,191 | 875 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock and common stock purchase warrants in offerings, net of offering costs | 6,144 | 6,785 |
Proceeds from issuance of common stock upon exercise of stock options and warrants | 14 | 0 |
Principal payments on long-term debt | (119) | (176) |
Net cash provided by financing activities | 6,039 | 6,609 |
Effect of exchange rate on cash and cash equivalents | (151) | (134) |
Net increase in cash and cash equivalents | 1,333 | 656 |
Cash and cash equivalents, beginning of year | 6,136 | 5,480 |
Cash and cash equivalents, end of year | 7,469 | 6,136 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 3 | 3 |
Non-cash operating and financing activities: | ||
Insurance premiums financed | 146 | 116 |
Issuance of common stock to settle obligations | $ 96 | $ 76 |
1. Organization and Recent Deve
1. Organization and Recent Developments | 12 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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 specialty pharmaceutical company that develops and markets solutions for the treatment of dermatological conditions and advanced tissue care. The Company’s products, which are sold throughout the United States and 39 countries around the world, have improved patient outcomes for more than five million patients globally by reducing infections, itch, pain, scarring, odor and harmful inflammatory responses. |
2. Liquidity and Financial Cond
2. Liquidity and Financial Condition | 12 Months Ended |
Mar. 31, 2016 | |
Liquidity And Financial Condition | |
Liquidity and Financial Condition | The Company reported a net loss of $10,162,000 for the year ended March 31, 2016. At March 31, 2016 and March 31, 2015, the CompanyÂ’s accumulated deficit amounted to $152,375,000 and $142,213,000, respectively. The Company had working capital of $9,337,000 and $7,066,000 as of March 31, 2016 and March 31, 2015, 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 March 18, 2016, the Company entered into an underwriting agreement with Dawson James Securities, Inc. with respect to the issuance and sale of an aggregate of 3,400,000 units, each unit consisting of one share of common stock, par value $0.0001 per share, together with one quarter or 25% of one warrant to purchase one share of common stock at an exercise price equal to $1.00 per share, in an underwritten public offering. The public offering price for each unit, consisting of one share of common stock together with one quarter or 25% of one warrant, was $1.00. Because the Company is prohibited from issuing fractional shares, the warrants can only be exercised in lots of four, which means that each holder must exercise four March 2016 Warrants to receive one share of common stock, or a total of 850,000 shares. The warrants have an initial exercise price of $1.00 per share and have a term of three years. Pursuant to the underwriting agreement, the Company paid Dawson James Securities, Inc. a cash fee equal to 8% of the aggregate gross proceeds raised in this offering and also paid $50,000 in legal fees and expenses of the underwriterÂ’s legal counsel. The gross proceeds from the sale of the shares of common stock and the warrants were $3,400,000, and net proceeds were $2,994,000 after deducting underwriting commissions and other estimated offering expenses. We also issued warrants to purchase up to 250,000 shares of our common stock to Dawson James Securities, Inc. related to a service agreement. 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 CompanyÂ’s sales agent. To date, the Company has raised an aggregate $4,706,000 in connection with this agreement. During the year ended March 31, 2016, the Company sold 2,254,596 shares of common stock for gross proceeds of $3,263,000 and net proceeds of $3,150,000 after deducting commissions and other offering expenses. 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 cannot provide any assurance that other new financings will be available on commercially acceptable terms, if needed. If the economic climate in the U.S. deteriorates, the CompanyÂ’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 CompanyÂ’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 CompanyÂ’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, 2016 | |
Accounting Policies [Abstract] | |
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”), and Oculus Innovative Sciences Netherlands, B.V. (“OIS Europe”). 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, and the estimated amortization periods of upfront product licensing fees received from customers. Periodically, the Company evaluates and adjusts estimates accordingly. Reclassifications Certain prior period amounts have been reclassified for comparative purposes to conform to the fiscal 2016 presentation. These reclassifications have no impact on the Company’s previously reported net loss. Revenue Recognition and Accounts Receivable The Company generates revenue from sales of its products to a customer base including hospitals, medical centers, doctors, pharmacies, distributors and wholesalers. The Company sells products directly to end users and to distributors. The Company also entered into agreements to license its technology and 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 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 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 are fixed, and agreed to with the customer, prior to shipment. Selling prices are generally based on established list prices. The right to return product is customarily based on the terms of the agreement with the customer. The Company estimates and accrues for potential returns and records this as a reduction of revenue in the same period the related revenue is recognized. Additionally, distribution fees are paid to certain wholesale distributors based on contractually determined rates. The Company estimates and accrues the fee on shipment to the respective wholesale distributors and recognizes the fee as a reduction of revenue in the same period the related revenue is recognized. The Company also offers cash discounts to certain customers, generally 2% of the sales price, as an incentive for prompt payment. The Company accounts for cash discounts by reducing accounts receivable by the prompt pay discount amount and recognizes the discount as a reduction of revenue in the same period the related revenue is recognized. Additionally, the Company participates in certain rebate programs which provide discounted prescriptions to qualified patients. The Company contracts a third-party to administer the program. The Company estimates and accrues for future rebates based on historical data for rebate redemption rates and the historical value of redemptions. Rebates are recognized as a reduction of revenue in the same period the related revenue is recognized. The Company evaluates the creditworthiness of new customers and monitors the creditworthiness of its existing customers to determine whether an event 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 are extended up to 90 days for initial product launches, payment terms internationally generally range from prepaid prior to shipment 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. When appropriate, the Company defers recognition of non-refundable upfront fees. If the Company 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 accounted for its ownership of shares of Ruthigen, Inc. (“Ruthigen”) common stock at cost in accordance with Accounting Standards Codification (“ASC”) 325-20 as a result of (a) the restrictions on voting the shares held, (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 its shares. The Company’s long-term investments consisted of the Company’s ownership of 1,650,000 shares of Ruthigen common stock at March 31, 2015. During the year ended March 31, 2016, the Company sold its remaining 1,650,000 shares of Ruthigen common stock for proceeds of $4,537,500 pursuant to a securities purchase agreement with several investors. Additionally, during the year ended March 31, 2016, the Company paid a $165,000 banker fee related to the sale transaction. 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, 2016, one customer represented 33% of the net accounts receivable balance. At March 31, 2016, one customer represented 40%, one customer represented 15%, one customer represented 14% and two customers each represented 12% of net revenues. At March 31, 2015, one customer represented 56%, and one customer represented 14% of the net accounts receivable balance. During the year ended March 31, 2015, one customer represented 47% 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 represents probable credit losses at March 31, 2016 and March 31, 2015 in the amounts of $15,000 and $20,000, respectively. Additionally at March 31, 2016 and March 31, 2015 the Company has allowances of $653,000 and $183,000, respectively, related to potential discounts, returns, distributor fees and rebates. The allowances are included in Accounts Receivable, net in the accompanying consolidated balance sheets. 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 $164,000 and $87,000 at March 31, 2016 and 2015, respectively, which is included in cost of product revenues on the Company’s accompanying consolidated statements of comprehensive loss. Fair Value of Financial Assets and Liabilities Financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. 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, 2016 Using Total March 31, 2016 Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant other unobservable inputs (Level 3) Liabilities: Derivative liabilities – warrants $ – – – $ – Fair Value Measurements at March 31, 2015 Using Total March 31, 2015 Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant other unobservable inputs (Level 3) Liabilities: Derivative liabilities – warrants $ 11,000 – – $ 11,000 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, 2016 and 2015, 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 an agreement with certain investors to sell its interest in Ruthigen at a fixed price of $2.75 per share, the Company determined that the carrying value of the shares held in Ruthigen was impaired. As a result, during the year ended March 31, 2015, 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. At March 31, 2015, the Company’s interest in Ruthigen was reported as a long-term asset on its consolidated financial statements rather than a consolidated subsidiary given that the Company no longer controlled Ruthigen, the Company and had very little means to control the value of the asset. During the year ended March 31, 2016, 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, 2016 and 2015, research and development expense amounted to $1,806,000 and $1,533,000, respectively. Advertising Costs Advertising costs are charged to operations as incurred. Advertising costs amounted to $175,000 and $231,000, for the years ended March 31, 2016 and 2015, respectively. Advertising costs are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive loss. 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, 2016 and 2015, the Company recorded revenue related to shipping and handling costs of $59,000 and $114,000, 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 $347,000 and $438,000 for the years ended March 31, 2016 and 2015, respectively, and were recorded in other comprehensive loss in the accompanying consolidated statements of comprehensive loss. 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 gains of $38,000 and losses of $24,000 for the years ended March 31, 2016 and 2015, respectively. The related gains and losses were recorded in other expense, net, in the accompanying consolidated statements of comprehensive loss. 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 option 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, 2016 and 2015 were $3,854,000 and $3,507,000, respectively. Net Loss per Share The Company computes basic net loss per share by dividing net loss per share available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of basic loss per share for the years ended March 31, 2016 and 2015 excludes the potentially dilutive securities summarized in the table below because their inclusion would be anti-dilutive. March 31, 2016 2015 Options to purchase common stock 3,769,000 2,877,000 Warrants to purchase common stock 7,424,000 7,741,000 11,193,000 10,618,000 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 In February 2016, the FASB issued ASU 2016-02, Leases In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. 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, 2016 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts receivable consists of the following: March 31, 2016 2015 Accounts receivable $ 2,942,000 $ 1,720,000 Less: allowance for doubtful accounts (15,000 ) (20,000 ) Less: discounts, rebates, distributor fees and returns (653,000 ) (183,000 ) $ 2,274,000 $ 1,517,000 |
5. Inventories
5. Inventories | 12 Months Ended |
Mar. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consist of the following: March 31, 2016 2015 Raw materials $ 1,104,000 $ 865,000 Finished goods 536,000 537,000 $ 1,640,000 $ 1,402,000 |
6. Prepaid Expenses and Other C
6. Prepaid Expenses and Other Current Assets | 12 Months Ended |
Mar. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following: March 31, 2016 2015 Prepaid insurance $ 405,000 $ 367,000 Prepaid rebates 378,000 14,000 Other prepaid expenses and other current assets 722,000 211,000 $ 1,505,000 $ 592,000 |
7. Property and Equipment
7. Property and Equipment | 12 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and equipment consists of the following: March 31, 2016 2015 Manufacturing, lab, and other equipment $ 3,075,000 $ 2,937,000 Office equipment 298,000 278,000 Furniture and fixtures 83,000 82,000 Leasehold improvements 307,000 249,000 3,763,000 3,546,000 Less: accumulated depreciation and amortization (2,913,000 ) (2,751,000 ) $ 850,000 $ 795,000 Depreciation and amortization expense amounted to $244,000 and $253,000 for the years ended March 31, 2016 and 2015, respectively. During the year ended March 31, 2015, the Company realized a gain of $13,000 on the disposal of property and equipment. This amount was recorded within operating expenses in the accompanying consolidated statements of comprehensive loss. |
8. Investment in Ruthigen, Inc.
8. Investment in Ruthigen, Inc. | 12 Months Ended |
Mar. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment in Ruthigen, Inc. | The CompanyÂ’s long-term investments consisted of the CompanyÂ’s ownership of 1,650,000 shares of Ruthigen common stock at March 31, 2015. During the year ended March 31, 2016, the Company sold its remaining 1,650,000 shares of Ruthigen common stock for proceeds of $4,537,500 pursuant to a securities purchase agreement with two investors. Additionally, in the year ended March 31, 2016, the Company paid a $165,000 banker fee related to the sale transaction. 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 $5,000,000 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. |
9. Accrued Expenses and Other C
9. Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Mar. 31, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following: March 31, 2016 2015 Salaries and related costs $ 693,000 $ 545,000 Professional fees 557,000 137,000 Other 276,000 100,000 $ 1,526,000 $ 782,000 |
10. Long-Term Debt
10. Long-Term Debt | 12 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Financing of Insurance Premiums 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 was 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. During the year ended March 31, 2016, the Company made principal and interest payments of $83,000 and $1,000, respectively. The note was paid in full during the year ended March 31, 2016. On January 25, 2016, the Company entered into a note agreement for $146,000 with an interest rate of 6.25% 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, 2016. During the year ended March 31, 2016, the Company made principal and interest payments of $32,000 and $1,000, respectively. The remaining balance of this note amounted to $114,000 at March 31, 2016 which is included in the current portion of long-term debt in the accompanying consolidated balance sheet. |
11. Derivative Liability
11. Derivative Liability | 12 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
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: Measurement Warrants Remaining Exercise Volatility Risk-free Fair Warrant Placement Agent Warrants March 31, 2015 16,500 1.09 5.00 100% 0.26% $ 1,000 Investor - Series A Warrants March 31, 2015 1,000 0.41 3.00 100% 0.14% – Investor - Series B Warrants March 31, 2015 1,400,000 0.41 3.63 100% 0.14% 5,000 Placement Agent Warrants March 31, 2015 69,037 1.09 3.00 100% 0.26% 5,000 $ 11,000 Warrant Placement Agent Warrants March 31, 2016 16,500 0.09 5.00 100% 0.21% $ – Placement Agent Warrants March 31, 2016 69,037 0.09 3.00 100% 0.21% – $ – 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, 2016 2015 Beginning balance $ 11,000 $ 3,175,000 Fair value of warrants issued – – Mark to market net unrealized gain (11,000 ) (3,164,000 ) Reclassification to additional paid in capital – – Ending balance $ – $ 11,000 |
12. Commitments and Contingenci
12. Commitments and Contingencies | 12 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
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 month’s rent was required as a deposit. The lease was terminated in June 2015. The Company also shares 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, 2017 $ 370,000 2018 222,000 2019 91,000 2020 8,000 Total minimum lease payments $ 691,000 Rental expense amounted to $442,000 and $446,000 for the years ended March 31, 2016 and 2015, respectively and is recorded in the accompanying consolidated statement of comprehensive loss. 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. Employment Agreements As of March 31, 2016, 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, 2016, potential severance amounted to $1,097,000 and aggregated annual salaries amounted to $944,000. Commercial Agreements 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. During years ended March 31, 2016 and 2015, the Company recognized $751,000 and $1,499,000, respectively, related to the amortization of the upfront fees received in the transaction. At March 31, 2016, the Company had outstanding accounts receivable of $912,000 due from Laboratorios Sanfer. At March 31, 2015, the Company had outstanding accounts receivable of $843,000 due from Laboratorios Sanfer. |
13. Stockholders' Equity
13. Stockholders' Equity | 12 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity | |
Stockholders' Equity | Authorized Capital On June 29, 2015, the stockholders of the Company approved a reverse stock split of the CompanyÂ’s outstanding common stock and to proportionally decrease the total number of shares that the Company is authorized to issue at a whole number ratio in the range of 1-for-5 to 1-for-9, such ratio to be determined in the discretion of the CompanyÂ’s Board of Directors, and authorized the CompanyÂ’s Board of Directors to effect the reverse stock split, if in their judgment it is necessary, at any time until June 29, 2016, upon which date the resolution lapses. To date, no reverse stock split has been authorized by the Board of Directors. Effective October 22, 2015, the Company increased its authorized share capital from 30,000,000 shares of common stock to 60,000,000 shares of common stock, $0.0001 par value per share by filing a certificate of amendment with the Secretary of State of Delaware. The share increase was approved by the CompanyÂ’s stockholders at the 2015 Annual Meeting of Stockholders on October 9, 2015. Additionally, the Company is authorized to issue up to 714,286 shares of convertible preferred stock with a par value of $0.0001 per share. 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. 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. To date, the Company has raised an aggregate $4,706,000 in connection with this agreement. 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, 2016 the Company sold 2,254,596 shares for gross proceeds of $3,263,000 and net proceeds of $3,150,000 after deducting commissions and other offering expenses. 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. March 2016 Underwritten Public Offering On March 18, 2016, the Company entered into an underwriting agreement with Dawson James Securities, Inc. with respect to the issuance and sale of an aggregate of 3,400,000 units, each unit consisting of one share of common stock, par value $0.0001 per share, together with one quarter (0.25) of one warrant to purchase one share of common stock at an exercise price equal to $1.00 per share, in an underwritten public offering. The public offering price for each unit, consisting of one share of common stock together with one quarter (0.25) of one warrant, was $1.00. Because the Company is prohibited from issuing fractional shares, the warrants can only be exercised in lots of four, which means that each holder must exercise four March 2016 Warrants to receive one share of common stock, or a total of 850,000 shares. The warrants have an initial exercise price of $1.00 per share and have a term of three years. Pursuant to the underwriting agreement, the Company paid Dawson James Securities, Inc. a cash fee equal to 8% of the aggregate gross proceeds raised in this offering and also paid $50,000 in legal fees and expenses of the underwriterÂ’s legal counsel. The gross proceeds from the sale of the shares of common stock and the warrants was $3,400,000, and net proceeds of 2,994,000 after deducting underwriting commissions and other estimated 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. 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 CompanyÂ’s sales force, for the sale of the CompanyÂ’s tissue 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. The Company has determined that the fair value of the common stock was more readily determinable than the fair value of the services rendered. During the year ended March 31, 2016, the Company issued 208,519 shares of common stock related to this agreement. The fair market value of the common stock was $286,000 at issuance. During the year ended March 31, 2016, the Company recorded $190,000 of expense related to stock issued pursuant to this agreement and settled $96,000 of fees accrued in prior periods. During the year ended March 31, 2015 the Company issued 32,501 shares of common stock in connection with this agreement. During the year ended March 31, 2015 the Company recorded $76,000 expense related to stock issued in connection with this agreement. The expense was recorded as selling, general and administrative expense in the accompanying consolidated statements of comprehensive loss. Common Stock Purchase Warrants On March 31, 2016, the Company issued Dawson James Securities, Inc. a warrant to purchase 250,000 shares of the CompanyÂ’s common stock at an exercise price of $1.00 per share in connection with a service agreement. The warrants were non-forfeitable at date of issuance. The warrants were valued using the Black-Scholes option pricing model. Assumptions used were as follows: Fair value of the underlying stock $0.95; risk-free interest rate 0.01%; contractual life of 3 years; dividend yield of 0%; and volatility of 87%. The fair value of the warrants amounted to $128,000 and was recorded as selling, general and administrative expense in the accompanying consolidated statement of comprehensive loss for the year ended March 31, 2016. |
14. Stock-Based Compensation
14. Stock-Based Compensation | 12 Months Ended |
Mar. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | |
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 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. During the year ended March 31, 2016, the board of directors approved an increase of 250,000 shares authorized for issuance. 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. 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. During the year ended March 31, 2016, the board of directors approved an increase of 2,256,762 shares authorized for issuance. Performance Based Awards Program The Company’s Compensation Committee approved a short-term performance based bonus program for fiscal 2016 with predetermined objectives related to revenue and expense targets. In the event the fiscal 2016 objectives are met, eighty-percent of the options will vest on June 30, 2016. On August 21, 2015, certain executives and senior managers were granted an aggregate of 377,500 stock options in connection with this program. At March 31, 2016, it was determined targets were met related to 252,000 stock options which will vest on June 30, 2016. Additionally, at March 31, 2016, 50,000 stock options expired due to targets that were not met. The remaining 75,500 stock options will vest at the discretion of the Company’s Compensation Committee on June 30, 2016. In the event the objectives are not met the stock options will expire unvested. The stock options have an exercise price of $1.16 and if they vest will expire ten years from the date of grant. At March 31, 2016, it was determined by the Company that it’s probable the discretionary options would vest. The Company approved a long-term market-based stock option bonus program for senior managers. Vesting of the stock options granted as part of this program is contingent upon the achievement of four separate target stock prices. The market-based options vest based on the 30 trading day trailing average of the stock price of the Company’s common stock with options vesting in 25% increments at each of the target stock prices. On the last day of each quarter, the chief executive officer and/or chief financial officer will determine if any of the target stock prices have been met by evaluating the period between the quarter end date and the grant date of the option. In the event that a target stock price has been met, the senior manager will be notified that such options have vested. At the end of five years from the date of the grant, if the stock target prices have not been met, then the unvested portion of the option will expire. On August 21, 2015, certain senior managers were granted an aggregate of 118,750 stock options in connection with this program. The stock options have an exercise price of $1.16 and if they vest will expire ten years from the date of grant. Stock-Based Compensation The Company issues service, performance and market-based stock options to employees and non-employees. The Company estimates the fair value of service and performance stock option awards using the Black-Scholes option pricing model. The Company estimates the fair value of market-based stock option awards using a Monte-Carlo simulation. Compensation expense for stock option awards is amortized on a straight-line basis over the awards’ vesting period. Compensation expense includes the impact of an estimate for forfeitures for all stock options. 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, 2016 ranged from 1.18% to 4.71%. The estimated forfeiture rates used during the year ended March 31, 2015 ranged from 0.21% to 0.85%. The Company estimated the fair value of employee and non-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, 2016 2015 Fair value of the Company’s common stock on date of grant $ 1.18 $ 2.28 Expected Term 6.39 yrs 6.67 yrs Risk-free interest rate 1.63% 1.70% Dividend yield 0.00% 0.00% Volatility 93.0% 93.0% The weighted-average fair values of options granted during the years ended March 31, 2016 and 2015 were $0.89 and $1.92, respectively. Share-based awards compensation expense is as follows: Stock-based Stock-based Cost of revenues $ 364,000 $ 235,000 Research and development 339,000 339,000 Selling, general and administrative 1,320,000 1,197,000 Total stock-based compensation $ 2,023,000 $ 1,771,000 At March 31, 2016, there were unrecognized compensation costs of $1,958,000 related to stock options which are expected to be recognized over a weighted-average amortization period of 1.42 years. No income tax benefit has been recognized relating to stock-based compensation expense and no tax benefits have been realized from exercised stock options. Stock-Based Award Activity Stock-based awards outstanding at March 31, 2016 under the various plans are as follows: Plan Awards Outstanding 2004 Plan 1,000 2006 Plan 859,000 2011 Plan 2,909,000 3,769,000 Awards available for grant as of March 31, 2016 2,917,000 Stock options award activity is as follows: Number of Weighted- Weighted- Aggregate Outstanding at April 1, 2015 2,877,000 $ 6.96 Options granted 1,421,000 1.18 Options exercised – – Options forfeited (190,000 ) 2.23 Options expired (339,000 ) 16.25 Outstanding at March 31, 2016 3,769,000 $ 4.18 7.80 $ 5,000 Exercisable at March 31, 2016 2,075,000 $ 5.97 6.84 $ 5,000 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 $0.95 per share at March 31, 2016. Restricted stock award activity is as follows: Number of Shares Weighted Average Award Date Fair Value per Share Unvested restricted stock awards outstanding at April 1, 2015 – $ – Restricted stock awards granted 65,000 0.99 Restricted stock awards vested (65,000 ) 0.99 Restricted stock awards forfeited – – Unvested restricted stock awards outstanding at March 31, 2016 – $ – Restricted stock activities were issued to non-employee directors for year ended March 31, 2016. The Company did not capitalize any cost associated with stock-based compensation. The Company issues new shares of common stock upon exercise of stock based awards. |
15. Income Taxes
15. Income Taxes | 12 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The Company has the following net deferred tax assets: March 31, 2016 2015 Deferred tax assets: Net operating loss carryforwards $ 36,454,000 $ 36,661,000 Research and development tax credit carryforwards 1,710,000 1,667,000 Stock-based compensation 5,083,000 4,880,000 Reserves and accruals 1,111,000 1,731,000 Other deferred tax assets 241,000 49,000 State income taxes (1,000 ) (1,000 ) Basis difference in assets 8,000 5,000 Total deferred tax assets $ 44,606,000 $ 44,992,000 Deferred tax liabilities: Unrealized gain on Ruthigen – (1,105,000 ) Net deferred tax asset 44,606,000 43,887,000 Valuation allowance (44,606,000 ) (43,887,000 ) 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: Years Ended March 31, 2016 2015 Income tax (benefit) $ (719,000 ) $ (2,613,000 ) Change in valuation allowance 719,000 2,613,000 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, 2016 2015 Expected federal statutory rate (34.0% ) (34.0% ) State income taxes, net of federal benefit (1.8% ) (1.8% ) Research and development credit (0.4% ) (0.2% ) Foreign earnings taxed at different rates 0.7% 0.5% Effect of state net operating loss expiration 5.5% – Effect of permanent differences (3.3% ) (20.6% ) Impact of foreign exchange rate fluctuations on foreign deferred income taxes 8.5% 25.0% Impact of change in foreign net operating loss 6.3% (9.6% ) Cancellation of stock options and other true-ups 0.0% (2.7% ) Adjustment of NOL due to Ruthigen deconsolidation 0.0% 8.6% True-up of state deferred assets 11.4% 3.0% (7.1% ) (31.8% ) Change in valuation allowance 7.1% 31.8% Totals 0.0% 0.0% At March 31, 2016, the Company had net operating loss carryforwards for federal, state and foreign income tax purposes of approximately $92,883,000, $42,588,000 and $11,666,000, respectively. The federal net operating loss carryforwards will expire at various dates, if not utilized, beginning in the fiscal year ending March 31, 2021. The state net operating loss carryforwards will expire at various dates, if not utilized, beginning in the fiscal year ending March 31, 2018. The foreign net operating loss carryforwards will expire at various dates, if not utilized, beginning in the fiscal year ending March 31, 2018. The Company also had, at March 31, 2016, federal and state research credit carryforwards of approximately $870,000 and $790,000, respectively. The federal credits will expire, if not utilized at various dates, beginning in the fiscal year ending March 31, 2026, and the state credits do not expire. The Company also had, at March 31, 2016 foreign tax credits carryforwards of approximately $50,000. The foreign credits will expire, if not utilized at various dates, beginning in the fiscal year ending March 31, 2024. 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 through March 31, 2016. 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, 2016. 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, 2016 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, 2016. Generally, the Company is subject to audit for the years ended March 31, 2015, 2014 and 2013 and may be subject to audit for amounts relating to net operating loss carryforwards generated in periods prior to March 31, 2015. 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, 2016. 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, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
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 employeeÂ’s salary. Company contributions to the plans amounted to an aggregate of $158,000 and $137,000 for the years ended March 31, 2016 and 2015, respectively. |
17. Geographic Information
17. Geographic Information | 12 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Geographic Information | The Company generates product revenues from 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 CompanyÂ’s product revenues by geographic region: Year Ended March 31, 2016 2015 $ Change % Change United States $ 4,371,000 $ 1,978,000 $ 2,393,000 121% Latin America 4,965,000 5,053,000 (88,000 ) (2% ) Europe and Rest of the World 3,706,000 2,908,000 798,000 27% 13,042,000 9,939,000 3,103,000 31% Product license fees and royalties 981,000 3,056,000 (2,075,000 ) (68% ) Total $ 14,023,000 $ 12,995,000 $ 1,028,000 8% In the year ended March 31, 2016, product license fees and royalties revenue declined primarily as a result of the termination of the CompanyÂ’s agreement with its former partner Innovacyn and a decrease in the amortization of upfront fees paid by Laboratorios Sanfer. The following table shows the CompanyÂ’s product license fees and royalties revenue by partner: Year Ended March 31, 2016 2015 $ Change % Change Exeltis/Quinnova $ 201,000 $ 437,000 $ (236,000 ) (54% ) Innovacyn 29,000 1,120,000 (1,091,000 ) (97% ) Laboratorios Sanfer 751,000 1,499,000 (748,000 ) (50% ) Total $ 981,000 $ 3,056,000 $ (2,075,000 ) (68% ) The CompanyÂ’s service revenues amounted to $1,061,000 and $859,000 for the years ended March 31, 2016 and 2015. |
18. Subsequent Events
18. Subsequent Events | 12 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | On June 29, 2015, the CompanyÂ’s stockholders approved an amendment to the Restated Certificate of Incorporation, as amended, and authorized the CompanyÂ’s Board of Directors, if in their judgment it is necessary, to effect a reverse stock split of our outstanding common stock, $0.0001 par value per share, at a whole number ratio in the range of 1-for-5 to 1-for-9, such ratio to be determined in the discretion of the Board of Directors, and to proportionally decrease the total number of shares that the Company is authorized to issue by a factor of 1-for-5 to 1-for-9, such ratio to be determined in the sole discretion of the Board of Directors. On June 2, 2016, the CompanyÂ’s Board of Directors approved the reverse stock split with a ratio of 1-for-5 and authorized the Corporation to take all steps necessary to effect the reverse stock split to become effective June 24, 2016. |
3. Summary of Significant Acc25
3. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Mar. 31, 2016 | |
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”), and Oculus Innovative Sciences Netherlands, B.V. (“OIS Europe”). 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 CompanyÂ’s deferred tax assets, valuation of equity and derivative instruments, and the estimated amortization periods of upfront product licensing fees received from customers. Periodically, the Company evaluates and adjusts estimates accordingly. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified for comparative purposes to conform to the fiscal 2016 presentation. These reclassifications have no impact on the CompanyÂ’s previously reported net loss. |
Revenue Recognition and Accounts Receivable | Revenue Recognition and Accounts Receivable The Company generates revenue from sales of its products to a customer base including hospitals, medical centers, doctors, pharmacies, distributors and wholesalers. The Company sells products directly to end users and to distributors. The Company also entered into agreements to license its technology and 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 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 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 are fixed, and agreed to with the customer, prior to shipment. Selling prices are generally based on established list prices. The right to return product is customarily based on the terms of the agreement with the customer. The Company estimates and accrues for potential returns and records this as a reduction of revenue in the same period the related revenue is recognized. Additionally, distribution fees are paid to certain wholesale distributors based on contractually determined rates. The Company estimates and accrues the fee on shipment to the respective wholesale distributors and recognizes the fee as a reduction of revenue in the same period the related revenue is recognized. The Company also offers cash discounts to certain customers, generally 2% of the sales price, as an incentive for prompt payment. The Company accounts for cash discounts by reducing accounts receivable by the prompt pay discount amount and recognizes the discount as a reduction of revenue in the same period the related revenue is recognized. Additionally, the Company participates in certain rebate programs which provide discounted prescriptions to qualified patients. The Company contracts a third-party to administer the program. The Company estimates and accrues for future rebates based on historical data for rebate redemption rates and the historical value of redemptions. Rebates are recognized as a reduction of revenue in the same period the related revenue is recognized. The Company evaluates the creditworthiness of new customers and monitors the creditworthiness of its existing customers to determine whether an event 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 are extended up to 90 days for initial product launches, payment terms internationally generally range from prepaid prior to shipment 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. When appropriate, the Company defers recognition of non-refundable upfront fees. If the Company 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 accounted for its ownership of shares of Ruthigen, Inc. (“Ruthigen”) common stock at cost in accordance with Accounting Standards Codification (“ASC”) 325-20 as a result of (a) the restrictions on voting the shares held, (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 its shares. The Company’s long-term investments consisted of the Company’s ownership of 1,650,000 shares of Ruthigen common stock at March 31, 2015. During the year ended March 31, 2016, the Company sold its remaining 1,650,000 shares of Ruthigen common stock for proceeds of $4,537,500 pursuant to a securities purchase agreement with several investors. Additionally, during the year ended March 31, 2016, the Company paid a $165,000 banker fee related to the sale transaction. |
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, 2016, one customer represented 33% of the net accounts receivable balance. At March 31, 2016, one customer represented 40%, one customer represented 15%, one customer represented 14% and two customers each represented 12% of net revenues. At March 31, 2015, one customer represented 56%, and one customer represented 14% of the net accounts receivable balance. During the year ended March 31, 2015, one customer represented 47% 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 CompanyÂ’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 represents probable credit losses at March 31, 2016 and March 31, 2015 in the amounts of $15,000 and $20,000, respectively. Additionally at March 31, 2016 and March 31, 2015 the Company has allowances of $653,000 and $183,000, respectively, related to potential discounts, returns, distributor fees and rebates. The allowances are included in Accounts Receivable, net in the accompanying consolidated balance sheets. |
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 $164,000 and $87,000 at March 31, 2016 and 2015, respectively, which is included in cost of product revenues on the CompanyÂ’s accompanying consolidated statements of comprehensive loss. |
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 expenses and other liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. 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, 2016 Using Total March 31, 2016 Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant other unobservable inputs (Level 3) Liabilities: Derivative liabilities – warrants $ – – – $ – Fair Value Measurements at March 31, 2015 Using Total March 31, 2015 Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant other unobservable inputs (Level 3) Liabilities: Derivative liabilities – warrants $ 11,000 – – $ 11,000 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, 2016 and 2015, 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 an agreement with certain investors to sell its interest in Ruthigen at a fixed price of $2.75 per share, the Company determined that the carrying value of the shares held in Ruthigen was impaired. As a result, during the year ended March 31, 2015, 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. At March 31, 2015, the Company’s interest in Ruthigen was reported as a long-term asset on its consolidated financial statements rather than a consolidated subsidiary given that the Company no longer controlled Ruthigen, the Company and had very little means to control the value of the asset. During the year ended March 31, 2016, 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, 2016 and 2015, research and development expense amounted to $1,806,000 and $1,533,000, respectively. |
Advertising Costs | Advertising Costs Advertising costs are charged to operations as incurred. Advertising costs amounted to $175,000 and $231,000, for the years ended March 31, 2016 and 2015, respectively. Advertising costs are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive loss. |
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, 2016 and 2015, the Company recorded revenue related to shipping and handling costs of $59,000 and $114,000, respectively. |
Foreign Currency Reporting | Foreign Currency Reporting The CompanyÂ’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 $347,000 and $438,000 for the years ended March 31, 2016 and 2015, respectively, and were recorded in other comprehensive loss in the accompanying consolidated statements of comprehensive loss. 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 gains of $38,000 and losses of $24,000 for the years ended March 31, 2016 and 2015, respectively. The related gains and losses were recorded in other expense, net, in the accompanying consolidated statements of comprehensive loss. |
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 option 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 CompanyÂ’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 CompanyÂ’s consolidated financial condition, results of comprehensive loss or cash flows. |
Comprehensive Loss | Comprehensive Loss Other comprehensive loss includes all changes in stockholdersÂ’ equity during a period from non-owner sources and is reported in the consolidated statement of changes in stockholdersÂ’ equity. To date, other comprehensive loss consists of changes in accumulated foreign currency translation adjustments. Accumulated other comprehensive losses at March 31, 2016 and 2015 were $3,854,000 and $3,507,000, respectively. |
Net Loss Per Share | Net Loss per Share The Company computes basic net loss per share by dividing net loss per share available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of basic loss per share for the years ended March 31, 2016 and 2015 excludes the potentially dilutive securities summarized in the table below because their inclusion would be anti-dilutive. March 31, 2016 2015 Options to purchase common stock 3,769,000 2,877,000 Warrants to purchase common stock 7,424,000 7,741,000 11,193,000 10,618,000 |
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 CompanyÂ’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 In February 2016, the FASB issued ASU 2016-02, Leases In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. 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 Acc26
3. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
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, 2016 Using Total March 31, 2016 Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant other unobservable inputs (Level 3) Liabilities: Derivative liabilities – warrants $ – – – $ – Fair Value Measurements at March 31, 2015 Using Total March 31, 2015 Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant other unobservable inputs (Level 3) Liabilities: Derivative liabilities – warrants $ 11,000 – – $ 11,000 |
Property and equipment estimated useful life | Years Office equipment 3 Manufacturing, lab and other equipment 5 Furniture and fixtures 7 |
Net Loss Per Share | March 31, 2016 2015 Options to purchase common stock 3,769,000 2,877,000 Warrants to purchase common stock 7,424,000 7,741,000 11,193,000 10,618,000 |
4. Accounts Receivable (Tables)
4. Accounts Receivable (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Receivables [Abstract] | |
Accounts receivable | Accounts receivable consists of the following: March 31, 2016 2015 Accounts receivable $ 2,942,000 $ 1,720,000 Less: allowance for doubtful accounts (15,000 ) (20,000 ) Less: discounts, rebates, distributor fees and returns (653,000 ) (183,000 ) $ 2,274,000 $ 1,517,000 |
5. Inventories (Tables)
5. Inventories (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consist of the following: March 31, 2016 2015 Raw materials $ 1,104,000 $ 865,000 Finished goods 536,000 537,000 $ 1,640,000 $ 1,402,000 |
6. Prepaid Expenses and Other29
6. Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of prepaid expenses and other current assets | Prepaid expenses and other current assets consist of the following: March 31, 2016 2015 Prepaid insurance $ 405,000 $ 367,000 Prepaid rebates 378,000 14,000 Other prepaid expenses and other current assets 722,000 211,000 $ 1,505,000 $ 592,000 |
7. Property and Equipment (Tabl
7. Property and Equipment (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | March 31, 2016 2015 Manufacturing, lab, and other equipment $ 3,075,000 $ 2,937,000 Office equipment 298,000 278,000 Furniture and fixtures 83,000 82,000 Leasehold improvements 307,000 249,000 3,763,000 3,546,000 Less: accumulated depreciation and amortization (2,913,000 ) (2,751,000 ) $ 850,000 $ 795,000 |
9. Accrued Expenses and Other31
9. Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consist of the following: March 31, 2016 2015 Salaries and related costs $ 693,000 $ 545,000 Professional fees 557,000 137,000 Other 276,000 100,000 $ 1,526,000 $ 782,000 |
11. Derivative Liability (Table
11. Derivative Liability (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of assumptions for valuation of derivatives | Measurement Warrants Remaining Exercise Volatility Risk-free Fair Warrant Placement Agent Warrants March 31, 2015 16,500 1.09 5.00 100% 0.26% $ 1,000 Investor - Series A Warrants March 31, 2015 1,000 0.41 3.00 100% 0.14% – Investor - Series B Warrants March 31, 2015 1,400,000 0.41 3.63 100% 0.14% 5,000 Placement Agent Warrants March 31, 2015 69,037 1.09 3.00 100% 0.26% 5,000 $ 11,000 Warrant Placement Agent Warrants March 31, 2016 16,500 0.09 5.00 100% 0.21% $ – Placement Agent Warrants March 31, 2016 69,037 0.09 3.00 100% 0.21% – $ – |
Changes in Level 3 on a recurring basis | Year Ended March 31, 2016 2015 Beginning balance $ 11,000 $ 3,175,000 Fair value of warrants issued – – Mark to market net unrealized gain (11,000 ) (3,164,000 ) Reclassification to additional paid in capital – – Ending balance $ – $ 11,000 |
12. Commitments and Contingen33
12. Commitments and Contingencies (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Minimum operating lease payments | For Years Ending March 31, 2017 $ 370,000 2018 222,000 2019 91,000 2020 8,000 Total minimum lease payments $ 691,000 |
14. Stock-Based Compensation (T
14. Stock-Based Compensation (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | |
Weighted-average assumptions of fair value of employee stock options | Year Ended March 31, 2016 2015 Fair value of the CompanyÂ’s common stock on date of grant $ 1.18 $ 2.28 Expected Term 6.39 yrs 6.67 yrs Risk-free interest rate 1.63% 1.70% Dividend yield 0.00% 0.00% Volatility 93.0% 93.0% |
Employee stock-based compensation expense | Stock-based Stock-based Cost of revenues $ 364,000 $ 235,000 Research and development 339,000 339,000 Selling, general and administrative 1,320,000 1,197,000 Total stock-based compensation $ 2,023,000 $ 1,771,000 |
Plan summary | Plan Awards Outstanding 2004 Plan 1,000 2006 Plan 859,000 2011 Plan 2,909,000 3,769,000 Awards available for grant as of March 31, 2016 2,917,000 |
Schedule of option activity | Stock options award activity is as follows: Number of Weighted- Weighted- Aggregate Outstanding at April 1, 2015 2,877,000 $ 6.96 Options granted 1,421,000 1.18 Options exercised – – Options forfeited (190,000 ) 2.23 Options expired (339,000 ) 16.25 Outstanding at March 31, 2016 3,769,000 $ 4.18 7.80 $ 5,000 Exercisable at March 31, 2016 2,075,000 $ 5.97 6.84 $ 5,000 Restricted stock award activity is as follows: Number of Shares Weighted Average Award Date Fair Value per Share Unvested restricted stock awards outstanding at April 1, 2015 – $ – Restricted stock awards granted 65,000 0.99 Restricted stock awards vested (65,000 ) 0.99 Restricted stock awards forfeited – – Unvested restricted stock awards outstanding at March 31, 2016 – $ – |
15. Income Taxes (Tables)
15. Income Taxes (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Deferred tax assets | March 31, 2016 2015 Deferred tax assets: Net operating loss carryforwards $ 36,454,000 $ 36,661,000 Research and development tax credit carryforwards 1,710,000 1,667,000 Stock-based compensation 5,083,000 4,880,000 Reserves and accruals 1,111,000 1,731,000 Other deferred tax assets 241,000 49,000 State income taxes (1,000 ) (1,000 ) Basis difference in assets 8,000 5,000 Total deferred tax assets $ 44,606,000 $ 44,992,000 Deferred tax liabilities: Unrealized gain on Ruthigen – (1,105,000 ) Net deferred tax asset 44,606,000 43,887,000 Valuation allowance (44,606,000 ) (43,887,000 ) Net deferred tax asset $ – $ – |
Schedule of income tax expense | Years Ended March 31, 2016 2015 Income tax (benefit) $ (719,000 ) $ (2,613,000 ) Change in valuation allowance 719,000 2,613,000 Net income tax expense $ – $ – |
Reconciliation of federal income tax rate to effective rate | Years Ended March 31, 2016 2015 Expected federal statutory rate (34.0% ) (34.0% ) State income taxes, net of federal benefit (1.8% ) (1.8% ) Research and development credit (0.4% ) (0.2% ) Foreign earnings taxed at different rates 0.7% 0.5% Effect of state net operating loss expiration 5.5% – Effect of permanent differences (3.3% ) (20.6% ) Impact of foreign exchange rate fluctuations on foreign deferred income taxes 8.5% 25.0% Impact of change in foreign net operating loss 6.3% (9.6% ) Cancellation of stock options and other true-ups 0.0% (2.7% ) Adjustment of NOL due to Ruthigen deconsolidation 0.0% 8.6% True-up of state deferred assets 11.4% 3.0% (7.1% ) (31.8% ) Change in valuation allowance 7.1% 31.8% Totals 0.0% 0.0% |
17. Geographic Information (Tab
17. Geographic Information (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Segments, Geographical Areas [Abstract] | |
Schedule of geographic sales | Year Ended March 31, 2016 2015 $ Change % Change United States $ 4,371,000 $ 1,978,000 $ 2,393,000 121% Latin America 4,965,000 5,053,000 (88,000 ) (2% ) Europe and Rest of the World 3,706,000 2,908,000 798,000 27% 13,042,000 9,939,000 3,103,000 31% Product license fees and royalties 981,000 3,056,000 (2,075,000 ) (68% ) Total $ 14,023,000 $ 12,995,000 $ 1,028,000 8% |
Schedule of product license fees and royalties | Year Ended March 31, 2016 2015 $ Change % Change Exeltis/Quinnova $ 201,000 $ 437,000 $ (236,000 ) (54% ) Innovacyn 29,000 1,120,000 (1,091,000 ) (97% ) Laboratorios Sanfer 751,000 1,499,000 (748,000 ) (50% ) Total $ 981,000 $ 3,056,000 $ (2,075,000 ) (68% ) |
2. Liquidity and Financial Co37
2. Liquidity and Financial Condition (Details Narrative) - USD ($) | 12 Months Ended | 24 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | |
Net loss | $ (10,162,000) | $ (8,203,000) | |
Accumulated deficit | (152,375,000) | (142,213,000) | $ (152,375,000) |
Working capital | 9,337,000 | 7,066,000 | 9,337,000 |
Proceeds from sale of equity, gross | 6,144,000 | 6,785,000 | |
At-the-Market Issuance Sales Agreement [Member] | |||
Proceeds from sale of equity, gross | 3,263,000 | 1,443,000 | $ 4,706,000 |
Proceeds from sale of equity, net | $ 3,150,000 | $ 1,341,000 | |
Shares issued | 2,254,596 | 467,934 | |
Dawson James Securities, Inc. [Member] | |||
Warrants issued | 250,000 | ||
Common Stock and Warrants [Member] | |||
Proceeds from sale of equity, gross | $ 3,400,000 | ||
Proceeds from sale of equity, net | 2,994,000 | ||
Legal fees and expenses related to offering | $ 50,000 |
3. Summary of Significant Acc38
3. Summary of Significant Accounting Policies (Details - Fair Value) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 |
Liabilities: | |||
Derivative liabilities - warrants | $ 0 | $ 11,000 | $ 3,175,000 |
Fair Value, Measurements, Recurring [Member] | |||
Liabilities: | |||
Derivative liabilities - warrants | 0 | 11,000 | |
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 | $ 0 | $ 11,000 |
3. Summary of Significant Acc39
3. Summary of Significant Accounting Policies (Details-Useful lives) | 12 Months Ended |
Mar. 31, 2016 | |
Office equipment [Member] | |
Useful asset life | 3 years |
Manufacturing, lab and other equipment [Member] | |
Useful asset life | 5 years |
Furniture and fixtures [Member] | |
Useful asset life | 7 years |
3. Summary of Significant Acc40
3. Summary of Significant Accounting Policies (Details-Antidilutive shares) - shares | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Total securities excluded from computation of basic net loss per share | 11,193,000 | 10,618,000 |
Stock Options [Member] | ||
Total securities excluded from computation of basic net loss per share | 3,769,000 | 2,877,000 |
Warrants [Member] | ||
Total securities excluded from computation of basic net loss per share | 7,424,000 | 7,741,000 |
3. Summary of Significant Acc41
3. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Long-term investment | $ 0 | $ 4,538,000 |
Allowance for doubtful accounts | 15,000 | 20,000 |
Allowance for sales discounts, rebates, distributor fees and returns | 653,000 | 183,000 |
Inventory reserves | 164,000 | 87,000 |
Impairment on investment | 0 | (4,650,000) |
Research and development expenses | 1,806,000 | 1,533,000 |
Advertising costs | 175,000 | 231,000 |
Shipping and handling costs | 59,000 | 114,000 |
Foreign currency transaction gain (loss) | 38,000 | (24,000) |
Foreign currency translation adjustment | (347,000) | (438,000) |
Accumulated other comprehensive loss | $ (3,854,000) | (3,507,000) |
Ruthigen [Member] | ||
Long-term investment | $ 4,538,000 | |
Long-term investment, shares held | 0 | 1,650,000 |
Proceeds from sale of investment | $ 4,537,500 | |
Banker fee on sale of investment | $ 165,000 | |
Impairment on investment | $ (4,650,000) | |
Accounts Receivable [Member] | One Customer [Member] | ||
Significant customer concentration | 33.00% | 56.00% |
Accounts Receivable [Member] | Customer Two [Member] | ||
Significant customer concentration | 14.00% | |
Revenues [Member] | One Customer [Member] | ||
Significant customer concentration | 40.00% | 47.00% |
Revenues [Member] | One Customer [Member] | ||
Significant customer concentration | 15.00% | |
Revenues [Member] | One Customer [Member] | ||
Significant customer concentration | 14.00% | |
Revenues [Member] | One Customer [Member] | ||
Significant customer concentration | 12.00% | |
Revenues [Member] | One Customer [Member] | ||
Significant customer concentration | 12.00% |
4. Accounts Receivable (Details
4. Accounts Receivable (Details) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Receivables [Abstract] | ||
Accounts receivable | $ 2,942,000 | $ 1,720,000 |
Less: allowance for doubtful accounts | (15,000) | (20,000) |
Less: discounts, rebates, distributor fees and returns | (653,000) | (183,000) |
Accounts receivable, net | $ 2,274,000 | $ 1,517,000 |
5. Inventories (Details)
5. Inventories (Details) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw Materials | $ 1,104,000 | $ 865,000 |
Finished goods | 536,000 | 537,000 |
Inventories, net | $ 1,640,000 | $ 1,402,000 |
6. Prepaid Expenses and Other44
6. Prepaid Expenses and Other Current Assets (Details) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid insurance | $ 405,000 | $ 367,000 |
Prepaid rebates | 378,000 | 14,000 |
Other prepaid expenses and other current assets | 722,000 | 211,000 |
Total prepaid expenses and other current assets | $ 1,505,000 | $ 592,000 |
7. Property and Equipment (Deta
7. Property and Equipment (Details) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Manufacturing, lab, and other equipment | $ 3,075,000 | $ 2,937,000 |
Office equipment | 298,000 | 278,000 |
Furniture and fixtures | 83,000 | 82,000 |
Leasehold improvements | 307,000 | 249,000 |
Property and equipment, gross | 3,763,000 | 3,546,000 |
Less: accumulated depreciation and amortization | (2,913,000) | (2,751,000) |
Property and equipment, net | $ 850,000 | $ 795,000 |
7. Property and Equipment (De46
7. Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization | $ 244,000 | $ 253,000 |
Gain on disposal of equipment | $ 0 | $ 13,000 |
8. Investment in Ruthigen (Deta
8. Investment in Ruthigen (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Long-term investment | $ 0 | $ 4,538,000 |
Ruthigen [Member] | ||
Long-term investment | $ 4,538,000 | |
Long-term investment, shares held | 0 | 1,650,000 |
Proceeds from sale of investment | $ 4,537,500 | |
Banker fee on sale of investment | $ 165,000 |
9. Accrued Expenses and Other48
9. Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Payables and Accruals [Abstract] | ||
Salaries and related costs | $ 693,000 | $ 545,000 |
Professional fees | 557,000 | 137,000 |
Other | 276,000 | 100,000 |
Accrued expenses and other current liabilities | $ 1,526,000 | $ 782,000 |
10. Long-Term Debt (Details Nar
10. Long-Term Debt (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Note payable, current portion | $ 114,000 | $ 87,000 |
Insurance Premiums [Member] | ||
Debt issuance date | Jan. 25, 2015 | |
Debt face amount | $ 116,000 | |
Debt interest rate | 5.50% | |
Debt maturity date | Aug. 25, 2015 | |
Principal payments made | 83,000 | $ 33,000 |
Interest payments made | 1,000 | $ 1,000 |
Debt balance at year end | $ 0 | |
Insurance Premiums 2nd [Member] | ||
Debt issuance date | Jan. 25, 2016 | |
Debt face amount | $ 146,000 | |
Debt interest rate | 6.25% | |
Debt maturity date | Aug. 25, 2016 | |
Principal payments made | $ 32,000 | |
Interest payments made | 1,000 | |
Debt balance at year end | 114,000 | |
Note payable, current portion | $ 114,000 |
11. Derivative Liability (Detai
11. Derivative Liability (Details - Valuation Assumptions) - Warrants [Member] | 12 Months Ended |
Mar. 31, 2016USD ($)$ / sharesshares | |
March 31, 2015 [Member] | |
Fair value | $ 11,000 |
Placement Agent Warrants [Member] | March 31, 2015 [Member] | |
Warrants outstanding | shares | 16,500 |
Remaining contract term in years | 1 year 1 month 2 days |
Exercise price | $ / shares | $ 5 |
Volatility | 100.00% |
Risk-free interest rate | 0.26% |
Fair value | $ 1,000 |
Placement Agent Warrants [Member] | March 31, 2016 [Member] | |
Warrants outstanding | shares | 16,500 |
Remaining contract term in years | 1 month 2 days |
Exercise price | $ / shares | $ 5 |
Volatility | 100.00% |
Risk-free interest rate | 0.21% |
Fair value | $ 0 |
Investor - Series A Warrants [Member] | March 31, 2015 [Member] | |
Warrants outstanding | shares | 1,000 |
Remaining contract term in years | 4 months 28 days |
Exercise price | $ / shares | $ 3 |
Volatility | 100.00% |
Risk-free interest rate | 0.14% |
Fair value | $ 0 |
Investor - Series B Warrants [Member] | March 31, 2015 [Member] | |
Warrants outstanding | shares | 1,400,000 |
Remaining contract term in years | 4 months 28 days |
Exercise price | $ / shares | $ 3.63 |
Volatility | 100.00% |
Risk-free interest rate | 0.14% |
Fair value | $ 5,000 |
Placement Agent Warrants 2 [Member] | March 31, 2015 [Member] | |
Warrants outstanding | shares | 69,037 |
Remaining contract term in years | 1 year 1 month 2 days |
Exercise price | $ / shares | $ 3 |
Volatility | 100.00% |
Risk-free interest rate | 0.26% |
Fair value | $ 5,000 |
Placement Agent Warrants 2 [Member] | March 31, 2016 [Member] | |
Warrants outstanding | shares | 69,037 |
Remaining contract term in years | 1 month 2 days |
Exercise price | $ / shares | $ 3 |
Volatility | 100.00% |
Risk-free interest rate | 0.21% |
Fair value | $ 0 |
11. Derivative Liability (Det51
11. Derivative Liability (Details-Level 3) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Beginning balance | $ 11,000 | $ 3,175,000 |
Fair value of warrants issued | 0 | 0 |
Mark to market net unrealized loss (gain) | (11,000) | (3,164,000) |
Reclassification to additional paid in capital | 0 | |
Ending balance | $ 0 | $ 11,000 |
12. Commitments and Contingen52
12. Commitments and Contingencies (Details) | Mar. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease due 2017 | $ 370,000 |
Operating lease due 2018 | 222,000 |
Operating lease due 2019 | 91,000 |
Operating lease due 2020 | 8,000 |
Total minimum lease payments | $ 691,000 |
12. Commitments and Contingen53
12. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Rent expense | $ 442,000 | $ 446,000 |
Potential severance | 1,097,000 | |
Aggregated annual salaries | 944,000 | |
Service fees recognized | 981,000 | 3,056,000 |
License Agreement and Distribution Agreement [Member] | ||
Service fees recognized | 751,000 | 1,499,000 |
Laboratorios Sanfer [Member] | ||
Accounts receivable | $ 912,000 | $ 843,000 |
13. Stockholders' Equity (Detai
13. Stockholders' Equity (Details Narrative) - USD ($) | 12 Months Ended | 24 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | |
Proceeds from sale of stock, gross | $ 6,144,000 | $ 6,785,000 | |
Fair value of warrants | $ 128,000 | ||
Advocos [Member] | |||
Issuance of common stock for services, shares | 208,519 | 32,501 | |
Issuance of common stock for services, amount | $ 286,000 | ||
Stock expense related to transactions | 190,000 | $ 76,000 | |
Stock issuance costs paid accrued in prior periods | $ 96,000 | ||
Dawson James Securities, Inc. [Member] | |||
Warrants issued | 250,000 | ||
Fair value of warrants | $ 128,000 | ||
Common Stock and Warrants [Member] | |||
Proceeds from sale of stock, gross | 3,400,000 | ||
Proceeds from sale of equity, net | 2,994,000 | ||
Legal fees and expenses related to offering | $ 50,000 | ||
At-the-Market Issuance Sales Agreement [Member] | |||
Stock sold new, shares issued | 2,254,596 | 467,934 | |
Proceeds from sale of stock, gross | $ 3,263,000 | $ 1,443,000 | $ 4,706,000 |
Proceeds from sale of equity, net | $ 3,150,000 | 1,341,000 | |
January 2015 Underwritten Public Offering [Member] | |||
Proceeds from sale of stock, gross | 6,392,000 | ||
Proceeds from sale of equity, net | $ 5,444,000 |
14. Stock-Based Compensation (D
14. Stock-Based Compensation (Details-Assumptions) - $ / shares | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Weighted average assumptions for calculating fair value of stock options | ||
Fair value of common stock on date of grant | $ 1.18 | |
Expected term | 6 years 4 months 21 days | 6 years 8 months 1 day |
Risk-free interest rate | 1.63% | 1.70% |
Dividend yield | 0.00% | 0.00% |
Volatility | 93.00% | 93.00% |
14. Stock-Based Compensation 56
14. Stock-Based Compensation (Details-Stock-based compensation) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Total stock-based compensation | $ 2,023,000 | $ 1,771,000 |
Cost of revenues [Member] | ||
Total stock-based compensation | 364,000 | 235,000 |
Research and development [Member] | ||
Total stock-based compensation | 339,000 | 339,000 |
Selling, general and administrative [Member] | ||
Total stock-based compensation | $ 1,320,000 | $ 1,197,000 |
14. Stock-Based Compensation 57
14. Stock-Based Compensation (Details-Plans) - shares | Mar. 31, 2016 | Mar. 31, 2015 |
Options and restricted stock units outstanding | 3,769,000 | 2,877,000 |
Awards available for grant | 2,917,000 | |
2004 Plan [Member] | ||
Options and restricted stock units outstanding | 1,000 | |
2006 Plan [Member] | ||
Options and restricted stock units outstanding | 859,000 | |
2011 Plan [Member] | ||
Options and restricted stock units outstanding | 2,909,000 |
14. Stock-Based Compensation 58
14. Stock-Based Compensation (Details-Option activity) $ / shares in Units, $ in Thousands | 12 Months Ended |
Mar. 31, 2016USD ($)$ / sharesshares | |
Options | |
Outstanding at beginning of period | shares | 2,877,000 |
Granted | shares | 1,421,000 |
Exercised | shares | 0 |
Forfeited | shares | (190,000) |
Expired | shares | (339,000) |
Outstanding at end of period | shares | 3,769,000 |
Exercisable at end of period | shares | 2,075,000 |
Weighted Average Exercise Price | |
Outstanding at beginning of period | $ / shares | $ 6.96 |
Granted | $ / shares | $ 1.18 |
Exercised | $ / shares | |
Forfeited | $ / shares | $ 2.23 |
Expired | $ / shares | 16.25 |
Outstanding at end of period | $ / shares | 4.18 |
Exercisable at end of period | $ / shares | $ 5.97 |
Weighted Average Contractual Term | |
Outstanding at end of period | 7 years 9 months 18 days |
Exercisable at end of period | 6 years 10 months 2 days |
Aggregate Intrinsic Value | |
Outstanding at end of period | $ | $ 5 |
Exercisable at end of period | $ | $ 5 |
14. Stock-Based Compensation 59
14. Stock-Based Compensation (Details Narrative) | 12 Months Ended |
Mar. 31, 2016USD ($)$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | |
Aggregate intrinsic value per share | $ / shares | $ .95 |
Unrecognized compensation costs | $ | $ 1,958,000 |
Weighted average amortization period | 1 year 5 months 1 day |
15. Income Taxes (Details-Defer
15. Income Taxes (Details-Deferred taxes) - USD ($) | Mar. 31, 2016 | Mar. 31, 2015 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 36,454,000 | $ 36,661,000 |
Research and development tax credit carryforwards | 1,710,000 | 1,667,000 |
Stock-based compensation | 5,083,000 | 4,880,000 |
Reserves and accruals | 1,111,000 | 1,731,000 |
Other deferred tax assets | 241,000 | 49,000 |
State income taxes | (1,000) | (1,000) |
Basis difference in assets | 8,000 | 5,000 |
Total deferred tax assets | 44,606,000 | 44,992,000 |
Deferred tax liabilities: | ||
Unrealized gain on Ruthigen | 0 | (1,105,000) |
Net deferred tax asset | 44,606,000 | 43,887,000 |
Valuation allowance | (44,606,000) | (43,887,000) |
Net deferred tax asset | $ 0 | $ 0 |
15. Income Taxes (Details-Incom
15. Income Taxes (Details-Income tax expense) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Income tax (benefit) | $ (719) | $ (2,613) |
Change in valuation allowance | 719 | 2,613 |
Net income tax expense | $ 0 | $ 0 |
15. Income Taxes (Details-Recon
15. Income Taxes (Details-Reconciliation of tax rate) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Expected federal statutory rate | (34.00%) | (34.00%) |
State income taxes, net of federal benefit | (1.80%) | (1.80%) |
Research and development credit | (0.40%) | (0.20%) |
Foreign earnings taxed at different rates | 0.70% | 0.50% |
Effect of state operating loss expiration | 5.50% | 0.00% |
Effect of permanent differences | (3.30%) | (20.60%) |
Impact of foreign exchange rate fluctuations on foreign deferred income taxes | 8.50% | 25.00% |
Impact of change in foreign net operating loss | 6.30% | (9.60%) |
Cancellation of stock options and other true-ups | 0.00% | (2.70%) |
Adjustment of NOL due to Ruthigen deconsolidation | 0.00% | 8.60% |
True-ups of state deferred assets | 11.40% | 3.00% |
Total effective rate | (7.10%) | (31.80%) |
Change in valuation allowance | 7.10% | 31.80% |
Totals | 0.00% | 0.00% |
15. Income Taxes (Details Narra
15. Income Taxes (Details Narrative) | 12 Months Ended |
Mar. 31, 2016USD ($) | |
Foreign tax credit carryforward | $ 50,000 |
Foreign tax credit expiration date | Mar. 31, 2023 |
Federal [Member] | |
Net operating loss carryforwards | $ 92,883,000 |
Operating loss beginning expiration dates | Mar. 31, 2020 |
Federal research credit carryforwards | $ 870,000 |
Research credit expiration date | Mar. 31, 2025 |
State and Local Jurisdiction [Member] | |
Net operating loss carryforwards | $ 42,588,000 |
Operating loss beginning expiration dates | Mar. 31, 2017 |
State research credit carryfowards | $ 790,000 |
Foreign Tax Authority [Member] | |
Net operating loss carryforwards | $ 11,666,000 |
Operating loss beginning expiration dates | Mar. 31, 2017 |
Foreign tax credit carryforward | $ 50,000 |
Foreign tax credit expiration date | Mar. 31, 2023 |
16. Employee Benefit Plan (Deta
16. Employee Benefit Plan (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | ||
Company contributions to 401(k) plan | $ 158,000 | $ 137,000 |
17. Geographic Information (Det
17. Geographic Information (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Sales revenue from geographical territories | $ 13,042,000 | $ 9,939,000 |
Product license fees and royalties | 981,000 | 3,056,000 |
Total product, licensing fees and royalties | 14,023,000 | 12,995,000 |
Increase (decrease) in sales revenue | 3,103,000 | |
Increase (decrease) in product license fees and royalties | $ (2,075,000) | |
Percent change in sales revenue | 31.00% | |
Increase (decrease) in total product revenues | $ 1,028,000 | |
Percent change in total product revenues | 8.00% | |
Service revenues | $ 1,061,000 | 859,000 |
License fees and royalties [Member] | ||
Increase (decrease) in product license fees and royalties | $ (2,075,000) | |
Percent change in sales revenue | (68.00%) | |
Sales Revenue, Segment [Member] | United States [Member] | ||
Sales revenue from geographical territories | $ 4,371,000 | 1,978,000 |
Increase (decrease) in sales revenue | $ 2,393,000 | |
Percent change in sales revenue | 121.00% | |
Sales Revenue, Segment [Member] | Latin America [Member] | ||
Sales revenue from geographical territories | $ 4,965,000 | 5,053,000 |
Increase (decrease) in sales revenue | $ (88,000) | |
Percent change in sales revenue | (2.00%) | |
Sales Revenue, Segment [Member] | Europe and Other [Member] | ||
Sales revenue from geographical territories | $ 3,706,000 | $ 2,908,000 |
Increase (decrease) in sales revenue | $ 798,000 | |
Percent change in sales revenue | 27.00% |
17. Geographic Information (D66
17. Geographic Information (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Product licensing fees and royalties | $ 981,000 | $ 3,056,000 |
Increase (decrease) in product license fees and royalties | $ (2,075,000) | |
Percent change in sales revenue | 31.00% | |
Exeltis [Member] | ||
Product licensing fees and royalties | $ 201,000 | 437,000 |
Increase (decrease) in product license fees and royalties | $ (236,000) | |
Percent change in sales revenue | (54.00%) | |
Innovacyn [Member] | ||
Product licensing fees and royalties | $ 29,000 | 1,120,000 |
Increase (decrease) in product license fees and royalties | $ (1,091,000) | |
Percent change in sales revenue | (97.00%) | |
Laboratorios Sanfer [Member] | ||
Product licensing fees and royalties | $ 751,000 | $ 1,499,000 |
Increase (decrease) in product license fees and royalties | $ (748,000) | |
Percent change in sales revenue | (50.00%) | |
License fees and royalties [Member] | ||
Increase (decrease) in product license fees and royalties | $ (2,075,000) | |
Percent change in sales revenue | (68.00%) |